Industrial Logistics Properties Trust (ILPT) 2021 Q4 法說會逐字稿

Good morning, and welcome to the Industrial Logistics Properties Trust Fourth Quarter 2021 Earnings Conference Call. (Operator Instructions). Please note this is being recorded. I'd now like to turn the conference over to Kevin Barry, Director of Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining us today. With me on the call are ILPT's Chief Executive Officer, John Murray; Chief Financial Officer, Rick Siedel; and Chief Operating Officer, Yael Duffy. In just a moment, they will provide details about our business and our performance for the fourth quarter of 2021, followed by a question-and-answer session with sell-side analysts. First, I would like to note that the recording and retransmission of today's conference call is prohibited without the prior written consent of the company.

Also note that today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other earnings laws. These forward-looking statements are based on ILPT's beliefs and expectations as of today, Wednesday, February 16, 2022, and actual results may differ materially from those that we project. The company undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made in today's conference call. Additional information concerning factors that could cause those differences is contained in our filings with the Securities and Exchange Commission, or SEC, which can be accessed from our website, ilptreit.com or the SEC's website.

Investors are cautioned not to place undue reliance upon any forward-looking statements. In addition, we will be discussing non-GAAP numbers during this call, including normalized funds from operations or normalized FFO, adjusted EBITDA and cash-based net operating income or cash basis NOI. A reconciliation of these non-GAAP figures to net income and the components to calculate cash available for distribution, or CAD, are available in our supplemental operating and financial data package, which also can be found on our website. With that, I will now turn the call over to John.

Thank you, Kevin. Good morning, everyone, and welcome to the fourth quarter earnings call for Industrial Logistics Properties Trust. On today's call, I will provide a summary of our performance for the fourth quarter and give an update on our planned acquisition of Monmouth Real Estate Investment Corporation. I'll then turn the call over to Yael and Rick for additional color on ILPT's leasing activity and financial results. We finished the year with strong leasing momentum and solid growth. During the quarter, we entered new and renewal leases and completed rent resets for approximately 1.6 million square feet at weighted average rental rates that were over 15% higher than prior rental rates for the same space.

Portfolio occupancy increased to 99.2% at year-end. We achieved normalized FFO growth of 5% and same-property cash basis NOI growth accelerated to 4.5%. In late December, we announced the sale of 6 recently acquired properties to our joint venture for an aggregate price of $206 million, representing a gain of $11 million and a cap rate below 5%. The 6 properties contained 2.5 million square feet of industrial space, and they have a weighted average remaining lease term of 4 years. With this sale, our joint venture now owns 18 industrial properties in 12 states with a total of 11.7 million square feet of space.

ILPT continues to own a 22% equity interest in the joint venture, and we plan to place approximately $134 million of mortgage debt on these 6 properties. Upon completion of the related debt financing, ILPT's total net proceeds from this joint venture transaction will be approximately $190 million. This illustrates the value of ILPT's high-quality industrial portfolio and also demonstrates the strength and growth potential of our relationships with strong institutional private capital partners. Our access to private sources of equity capital through our joint venture represents a compelling strategy for ILPT to raise equity capital at property level net asset value and enhance our balance sheet to support our growth priorities.

Since our November announcement that ILPT agreed to acquire Monmouth for approximately $4 billion, we have been focused on executing our financing and integration plans, so we are ready to successfully complete this accretive transaction. The level of initial joint venture equity capital assumed and newly placed secured debt and possible asset sales remains in line with the ranges we have discussed since November. ILPT has a proven track record of successfully executing portfolio acquisitions, and we are confident that the depth of real estate operations and asset management expertise provided by our manager of the RMR Group, will enable us to efficiently integrate the new assets into ILPT's portfolio.

Tomorrow, Monmouth will have its shareholder meeting to vote on the proposed merger with ILPT. Assuming Monmouth shareholder approval, we expect to close the transaction later this month and remain very excited about the benefits of this acquisition for our company. It creates a stronger ILPT with enhanced scale, additional high-quality, e-commerce-focused Mainland properties and increased tenant and geographic diversity. We do not plan to provide greater detail on our financing of the Monmouth acquisition in advance of tomorrow's shareholder vote. Assuming a positive vote, we expect to provide more specific details in the press release following the closing of the transaction later this month. Now I'll turn the call over to Yael.

Thanks, John, and good morning, everyone. I'll start with a brief overview of industry and market trends and provide an update on ILPT's portfolio following the sale of 6 additional properties into the joint venture. From there, I will summarize leasing activity for 2021 as well as the fourth quarter and look ahead to 2022 expirations. To end, I will provide an overview of the steps we are taking to integrate the Monmouth portfolio into ours. Consumer spending on retail goods, both online and in stores is at historical levels.

This, in conjunction with the expansion of e-commerce and the shift in philosophy of inventory management from just in time to just in case, has created an exceptional environment for the industrial sector. Demand continues to outpace supply with the lack of available space contributing to record low vacancy rates and increased asking rents. As of December 31, 2021, ILPT's portfolio consisted of 288 warehouse and distribution properties in 31 states, totaling approximately 34 million square feet. The portfolio achieved 99.2% occupancy, representing a 20 basis point increase sequentially and an increase of 80 basis points compared to prior year.

Our mainland portfolio includes 62 properties in 30 states, totaling approximately 17.3 million square feet that are 100% leased. The balance of the portfolio is comprised of 16.7 million square feet of industrial land and properties in Hawaii. Occupancy in Hawaii was 98.3% at quarter end, which represents a 110 basis point improvement compared to the prior year. ILPT's portfolio has a weighted average remaining lease term of approximately 9 years incurred by tenants with strong business profile and well-recognized brands that will continue to benefit from the acceleration of e-commerce.

ILPT's top 25 tenants account for nearly half of our total annualized rental revenues, and more than 70% of our revenues come from investment-grade-rated tenants or subsidiaries or from our secure Hawaii land leases. On the Mainland, investment-grade-rated tenants or subsidiaries of investment-grade-rated care entities account for half of ILPT's revenues. During 2021, we entered 7 new and renewal leases for approximately 3.1 million square feet, nearly 3x the leasing volume of 2020. Rents were 14.1% higher than prior rents with an average lease term of 9.6 years and commitments for leasing capital and concessions of $0.35 per square foot per lease year.

We also completed 10 rent resets for 462,000 square feet of land in Hawaii at rental rates that were approximately 33.2% higher than prior rental rates. In the fourth quarter, we completed 19 new and renewal leases totaling 1.2 million square feet with an average lease term of 10.2 years and commitments for leasing capital of $0.28 per square foot per lease year. Of the $4.1 million spent on capital expenditures in the fourth quarter, approximately 2/3 are attributable to tenant improvements and leasing conditions, predominantly on the Mainland.

Additionally, we completed 336,000 square feet of rent resets with 7 tenants that were 32.1% higher than prior rental rates. Overall, fourth quarter leasing totaled 1.6 million square feet and resulted in a 15.1% roll-up over prior rent. We anticipate ILPT's strong leasing momentum to continue into 2022 as we look to capitalize on strong market dynamics to achieve favorable lease terms. In 2022, 5.8% of total annualized revenue is rolling, mainly driven by Hawaii where 9.8% of annualized revenue is up for renewal.

Our leasing pipeline is strong, and we are currently tracking 52 deals for approximately 5.5 million square feet, including 44 deals for 4.1 million square feet in Hawaii and 8 deals for 1.4 million square feet on the Mainland. We anticipate a near-term conversion of 28% of our pipeline, given that roughly 1.5 million square feet of current activity is in advanced stages of negotiation or lease documentation. Turning now to the planned acquisition of Monmouth. Like ILPT's existing portfolio, the Monmouth properties are ideally located near population centers and transportation hubs with prominent access to airports, seaports, rail and interstate highways, which are all key components of the supply chain.

Since the announcement of the merger, the RMR Group has partnered with the Monmouth team to deepen our understanding of the properties and tenants. Additionally, Monmouth has provided introductions to its merchant builders, which will allow ILPT to expand on its developer relationships to provide for a seamless integration. As previously announced, we intend to finance a portion of the transaction through property dispositions. We have identified a portfolio of Monmouth's properties that are representative of the larger portfolio, geographically diverse properties and markets experiencing robust rent growth that are leased to a high-quality tenant base.

We have engaged a broker to aid in the sale of these properties and expect to be in the market by the end of the month and to close in mid-2022. In summary, we are encouraged by all we have accomplished in 2021 and look forward to ILPT's continued growth in 2022. I'll now turn the call over to Rick to provide details on this quarter's financial results.

Thanks, Yael, and good morning, everyone. Total portfolio same-property cash basis NOI for the fourth quarter increased 4.5% year-over-year, driven by a 10% increase in Hawaii, which was the result of new leasing activity, combined with higher occupancy year-over-year. Fourth quarter normalized FFO was $31.7 million or $0.49 per share, up 5% year-over-year. This increase reflects our same property performance along with a year-over-year decrease of 15% in general and administrative expense, primarily driven by declines in our business management fees and share-based compensation expense.

Adjusted EBITDA for the quarter came in at $42.2 million, and we ended the quarter with debt-to-EBITDA of 4.8x, which is approximately 1 turn lower on a sequential quarter basis. During the fourth quarter, we paid down our revolving credit facility with $160.5 million of net proceeds from the sale of 6 properties to the JV. As John mentioned earlier, we intend to place secured debt on these properties in the near future, which will result in additional proceeds to ILPT of approximately $30 million. ILPT ended the year with $597 million in total liquidity, including cash on hand of $29 million and availability on our revolving credit facility of $568 million.

During the quarter, we exercised our option to extend the maturity of our credit facility by 6 months until June of 2022 to provide short-term flexibility as we weigh our financing options for the acquisition of Monmouth. Consistent with our previous disclosures, we currently expect to fund the transaction with a combination of joint venture equity, secured debt and a bridge loan facility. As Yael mentioned, we plan to undertake a property disposition program in order to reduce leverage following the closing of the transaction.

In January, we declared our regular quarterly distribution to shareholders of $0.33 per share, which represents an annualized dividend yield of approximately 6% of our current share price. Our dividend remains well covered at a normalized FFO payout ratio below 70%. That concludes our prepared remarks. Operator, please open the floor for questions.

(Operator Instructions) Our first question comes from Bryan Maher with B. Riley.

I know Yael, you talked about the Monmouth transaction, and I don't think you're going to give materially more information than was in the November deck. But has there been any change kind of in the dollar amount? Or can you give us an idea or a range of the dollar amount of assets being sold? And I know you touched on it a little bit, but is there a specific property type or tenant that might be in that package that you're going to go out to market?

So I think it's -- I think our original estimates were $400 million to $1.3 billion. And so it is in the midpoint or so of that, I would estimate, at least for now. And it really is -- the portfolio is really indicative of the greater Monmouth portfolio. So there will be some FedEx properties there, but also other properties as well that aren't leased to FedEx.

Okay. So from a modeling standpoint, to try and get a handle on what we're looking at for 2022 and 2023, suffice to say we should just kind of take a midpoint of $0.4 billion to $1.3 billion for our models? Is that what you're suggesting for now until you can provide more detail?

Bryan, this is Rick. I do think it's important. We will -- once the vote goes through and the transaction closes, there will be some SEC filing requirements. So we will be providing additional color. But I think if you go back to our November slide deck that kind of provided the ranges. I think our expectation right now is that the sales will probably be in the midpoint or so. And the JV equity is probably on the -- towards the lower end for now, just as we work to get everything set up and closed. But I think the ranges we've provided are still pretty solid, and you can probably model accordingly, and we'll try to get more information out as soon as we can.

Okay. And shifting gears, and again, Yael, you provided some information on the 2022 expectations, 5.8 of rents rolling. Given the success that you had in 2021, specifically in the fourth quarter, does it seem to you like the increases in rents will be similar in 2022 to 2021? Or to be safe, should we model for a little bit less?

I think it will be consistent with '21.

Okay. And then for Rick, on the credit facility that you extended out to, I guess, a late June, would you expect to upsize that? And how are you thinking about what rates might look like given the upward trajectory in the 10-year?

Sure. I think -- again, I mean, we did the 6-month extension to kind of provide flexibility. Obviously, the way we close the Monmouth transaction will have a big impact. There's a pretty likely scenario that we closed with a portion of it on a bridge loan. And that bridge loan will take out our revolving credit facility as well, just in the interest of making sure we've got all the collateral available for us. So -- and then I think when the bridge comes out, we'll put a new recap credit facility in place in the future. So rates certainly have moved a little bit since -- over the last few months.

But I think we're still pretty comfortable with where we are based on indicative pricing. I think we're probably in the low to mid-3s on fixed rate and probably 2 to 2.25 over SOFR on the floating rate. So again, we think we're pretty well positioned for this to get done.

Okay. And just last for me. With net debt to EBITDA like 4.8x at the end of the fourth quarter, with the Monmouth transaction, where do you think that, that peaks out to and roughly when? And what would be the goal of ILPT to kind of get it back down to?

The peak is tougher to predict because it will depend on how much JV equity comes in and how many assets we sell. But I think looking towards the end of the end of '22 or into '23, then we expect to be in that kind of 6 to 8x range.

Our next question comes from Jason Idoine with RBC Capital Markets.

Just with the M&R deal, will the final capitalization structure of that deal be determined once it's closed, so will those 2 things be announced in conjunction? And also, is that capitalization? Is there a potential maybe to bring in another JV partner down the line? It sounds like you're going to be coming in at the lower end of that range in the beginning.

I think just talking about the range, I guess, that range is largely indicative of kind of one partner or multiple partners. And I think just in the interest of getting it closed, it's probably -- there's -- the easiest scenario is where we close it ourselves and then bring in a partner later, which we've clearly shown we can do. I think our preference is to start with a partner, and we're just trying to get everything lined up in order to do that, but we will be looking to provide more information on that as soon as it closes.

I think we'll issue a press release after the transaction closes that will provide detail on how we initially financed it. And to the extent that there are changes expected soon after that, what those changes might be. And that will be before the end of the month. So...

Yes. Okay. And then the contribution to the JV that you made during the quarter, it sounds like those were at a lower cap right now. Obviously, the industrial space and cap rates have compressed quite a bit since the initial deal was struck. But just curious if you could give us some insight on how those valuations are determined as we think about maybe potential future contributions to those?

Sure. I guess I'll just speak specifically to those properties. The -- we have a good relationship with our existing joint venture partners. And once we were awarded those transactions, and even maybe slightly before, we started talking with our partners about those acquisitions. And we're sharing our underwriting, and they were interested in having the properties added to the joint venture. And so on 2 of -- the first 2 properties, we went down a path with a financing that for a variety of reasons, didn't end up working out and it sort of cost us 6 to 9 months.

And by that point, we had acquired the other 4 properties. And so rather than continue to try to finance them separately, we pooled the 6 properties together and have been working on the financing, which the debt financing is not yet in place. But -- and so we -- because of the passage of time, our partners agreed to -- even though initially we discussed that -- we discussed the pricing at the time we were buying the property. So we were going to contribute to the properties to the joint venture at our acquisition cost.

We did get a 2% increase in the value of the properties, the first 2 properties because of the passage of time, which I think reflects the good relationship we do have with our partners that we were -- that they recognize the passage of time and that even though the pace of the financing wasn't necessarily an issue on their side. So long story short, we agreed to the pricing and agreed to these properties going into the joint venture at the time we were making the acquisitions. And -- so the pricing was -- aside from the 2% increase on the initial 2, the pricing was the same to our partners as it was for our purchase price.

(Operator Instructions) Our next question comes from Tom Catherwood with BTIG.

John, kind of sticking on that last question. We -- obviously same thing jumped out to us that there's roughly 10 basis points or so of cap rate compression over a whole period seemed a bit low compared to what happened last year in the industrial market. But if those prices were effectively agreed to when the transaction happened, it makes a little bit more sense to us. But I guess maybe more broadly, as you think of either contributing or selling, however you term it, some of your existing assets into your joint venture, what is the valuation process that you go through?

Do you have it set up with third parties that you have to agree to? Do you go out and market these on the open market as well? It just seems like in this specific transaction, there would have been more value to sell these wholly on the open market than contribute them. So any kind of color on the broader valuation process, a third party, would be helpful.

Sure. Yes, I mean, a year sort of transpired between the time we acquired those first 2 properties and when we sold them, but we did agree on the pricing upfront. So in the spirit of being good partners, we got a slight increase, but I understand your concern. We don't have a specific formula that we've agreed to in the joint venture agreements with our partners. We -- if we were to provide -- if we were to consider contributing or selling into the joint venture properties that we acquired a couple of years ago or at some other time, then we would value them based on current market conditions.

We're in the market every day evaluating transactions, and we -- I think we have a pretty good pulse on what the market is for industrial properties and various markets with various attributes to the properties, including the tenant quality. And so I think that we know where the pricing should be, and we would offer the properties to the joint venture at that value. So in this case, we felt like we identified what those -- that value was, and that's what we were buying them at. And that's when they agreed to add them to the venture, and that's why the pricing was what it was. The fact that the financing first time around proved challenging was a complication that, that's kind of thrown everybody for a loop, but...

Understood. Just to make sure I understand, are there any more assets that you've acquired recently where you have a similar agreement on selling them into the joint venture at the purchase price that you have?

No, no, that's -- just those.

Got it. Okay. Maybe switching over to some of the leasing. Obviously, saw the more than 900,000 square feet of renewal activity in the Mainland portfolio this quarter. When we look back to the end of 3Q, you had obviously no expirations left in '21, and I think there was just a little more than 300,000 square feet left in '22, which suggests that you were pulling forward kind of a big chunk of leasing, whether it was from '23 or potentially even beyond, which, though you've done some kind of early renewals in the past, this seemed like a much higher percentage. Is that a fair kind of assessment? And is that tenants coming to you? Or is that you're trying to take some risk off the table and just get renewals done early?

Yes. So it's -- really, the Mainland was predominantly one big lease for 645,000 square feet for a property in Ohio. And this was a little bit of a unique situation where we knew the tenant was thinking to consolidate its locations to another facility out of state. And so we proactively went to them and tried to work out a blend and extend where we got 7 years of additional lease term. So we got 10 years of term in totality. We didn't give them any TI, but we did tear out some rent and kind of incentivized them to stay at the building.

So this is a little bit of a unique situation because it's a building that while industrial, it has a very large component of office, it's mostly in a residential area. So it kind of didn't check all of the boxes of the booming industrial market. But I guess -- I mean, just to note, if we excluded that deal from our statistics this quarter, our roll-up in rents would be 32% versus the 15%. So it did -- it was at a roll down, given that we had to restructure the terms, but we're still happy with the outcome because we did secure the tenants.

Understood. And then kind of last question for me. In Hawaii, it looks like you guys got something in the neighborhood of 90,000 square feet of vacancy leasing done. It's obviously a more high-touch portfolio. In the past, you've talked about how it's been a little bit slower given the downturn in tourism and a slower recovery from the pandemic. But it seems like between leasing you did in 4Q and the pipeline that you mentioned in your prepared remarks that, that market has rebounded. Can you give us some kind of more color on how demand is trending in that market? And then kind of what that means as far as getting the renewals done when it comes to '22?

Yes. So I think we feel really good about our activity in -- for 2022 on our prospects. In general, we -- the tenants in Hawaii are usually slower to respond and kind of wait until the -- kind of they have a month or 2 left to come to the table and get their deals finalized. And we've really been seeing that they're nervous, especially if they don't have a renewal option that they're proactively coming to us and asking us to either provide them an expansion opportunity or to renew.

And really, we haven't had much pushback on the rents, and we've been able to continue to push the rents. So we feel pretty good that we'll be able to achieve what we're aiming for in 2022. We do have one vacancy 70,000 square feet that came back to us at the end of the year that we're actively marketing. So we feel good.

Our next question comes from Jamie Feldman with Bank of America.

Great. I guess just sticking with Hawaii. So your outlook for rent resets in '22. Is that pretty similar to what you saw in '21 based on your comments on the market?

Yes. We've been achieving about 30%. So we feel good. We'll continue that.

Okay. and then as you look at the same-store stats for the fourth quarter, your Mainland was negative, Hawaii was positive. Was that -- is that due to the Ohio lease? Or is there something else going on there?

No. Jimmy this is Rick. I would say the Mainland portfolio is really pretty flat. Our printed cash NOI was slightly negative, but it really comes down to 1 parking lot seal and strike job that exceeded a tenant's reimbursable cap. So if you were to take that out, we'd be slightly positive. So again, it's pretty steady, steady as she goes in the Mainland, but we do from time to time have either in Hawaii, we could get a parcel back like Yael mentioned or we could have a repair or something unique on (inaudible) from time to time. But overall, the portfolio is really strong.

So what would you say is like your normalized same-store run rate for the Mainland?

I think it's probably around 0.5% to 1%. We are in some long-term leases. As Yael mentioned in her prepared remarks, we've got a fairly long wall and some of these leases were acquired. So the new deals that the team is doing, have larger rent steps, but considering where we are and some of the inflationary costs that are going through, we're probably looking at somewhat muted growth on the Mainland.

Okay. So you're saying 0.5% to 1% is kind of -- even in the next couple of years, that's like a good number?

I wouldn't go multiple years. I'm really talking next 3 to 6 months kind of thing. But again, the portfolio is strong and our team is doing a great job managing the assets. But from time to time, things will come up. And the rent steps that are in a lot of those leases are not always enough to offset some of the cost increases.

Okay. What are your average bumps or escalators?

So on the Mainland, it's about 2% to 2.5% and in Hawaii, 2.5% to 3.5%.

Okay. So you're getting 2% to 2.5%, you're saying the drag to get it down to 0.5% to 1% is occupancy loss and then nonreimbursable expenses. Is that -- am I thinking about that right?

We don't have any occupancy loss at the moment on the Mainland. But I think the way it works is that we have some tenants that have a cap on their operating expenses. So for example, that we can only charge back $100,000 and a -- of a project. And so if we're doing a parking lot project, that's $500,000. The only portion of that that's recoverable is $100,000. And sometimes we try to push it back over multiple years. But in some cases, the leases don't allow us to do that. So that's leakage right there in reimbursement income.

Okay. And is it the same story in Hawaii? Or that's just the Mainline issue?

No. It's a Mainland issue. It's really the larger sophisticated tenants who are negotiating that into their leases.

Okay. And do you think the Monmouth portfolio will be different in terms of what it means for your same-store growth?

I think that there's -- I mean, we've looked at it and looked at all of the leases. And so I think it's similar to ILPT's existing portfolio where some tenants will be able to recover 100%. Some tenants pay all the operating and any of the capital themselves and some there's the cap. So I don't think it should be a material change.

Okay. So it sounds like the key growth in the portfolio is still going to be coming from Hawaii over the long term just based on the structure?

We see exceptional growth in Hawaii, which I think is hard to me -- or anywhere else, but in Hawaii.

Okay. And then I guess, just thinking about the JV, do you think those will be time right when the deal closes? Or do you think there's a lag before you can get those done?

On the -- I'm sorry, on the sale?

Yes, the asset sales from Monmouth.

I think that, that's going to happen reasonably quickly. We'll launch the sales sort of simultaneously with the shareholder vote. And -- it's a very -- it's a good time to be in the market with industrial properties. So it won't be a very long marketing period. Typically in today's transaction market, diligence starts when you get an access agreement within a day or so of being awarded a transaction. So the timing from being awarded a transaction and closing is maybe 45 days. So I think sometime around the end of the second quarter, probably, the asset sales would be completed.

And you're saying the asset sales and the joint ventures? Same schedule?

No, I'm talking about the asset sales that we're contemplating in connection with the Monmouth transaction. The joint ventures, we're -- our preference -- and we're not there yet. Our preference would be to close into a joint venture. But we'll see how the timing works, whether we close on the bridge and then have the joint venture financing or if we are able to get all the ducks in a row so that we can close into the joint venture. The joint venture will be set up very soon We'll provide more color on that by the end of the month.

Okay. And then -- so the update you guys plan to provide, so just to be clear, is that after those shareholder votes -- before the closing or that will be after the closing?

After the closing.

Okay. Then you'll put out -- then you submit the SEC filings that has more of the data?

I think the plan would be to issue a press release, probably the business day after the close. And that would -- we would tell people how we got it done.

Okay. But no communication really on structure or anything between the shareholder vote and the closing?

It's only 5 days -- business days. So it's a pretty short window.

Yes, that's a great point. Okay. And then last question for me. The joint venture partners, I mean, are these already active in existing joint ventures? Or do you think it will be a new group?

We'll tell you shortly.

This concludes our question-and-answer session. I'd like to turn the conference back over to John Murray, President and CEO, for any closing remarks.

Thank you very much for joining us today.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.