Kite Realty Group Trust (KRG) 2012 Q1 法說會逐字稿

Good day, ladies and gentlemen and welcome to the first quarter 2012 Kite Realty Group Trust earnings conference call. My name is Larry, and I will be your operator for today. At this time all participants are in a listen-only mode. Later we will conduct a question and answer session. (Operator Instructions). I would now like to turn the conference over to Mr. Dan Sink, Chief Financial Officer. Please proceed.

Thank you, Larry. If you have not received a copy of the earnings press release, please call Kim Holland at 317-578-5151, and she will be happy to send you a copy. Our first quarter supplemental financial package was made available yesterday on the Company's website at KiteRealty.com. The filing has also been made with the SEC in the Company's most recent Form 8-K.

The Company's remarks today will include certain forward-looking statements that are not historical facts and may not (sic) constitute forward-looking statements in the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown facts, uncertainties and other factors which may cause the actual results of the Company to differ materially from historical results or from any results expressed or implied by such forward-looking statements. The Company refers you to the documents filed by the Company from time to time with the SEC which discusses these and other factors that could adversely affect the Company's results.

On the call with me today from the Company, our Chief Executive, John Kite, and Chief Operating Officer, Tom McGowan. And now I would like to turn the call over to John.

Thanks, Dan. Good morning and welcome to our first quarter earnings call. We had another productive quarter. FFO as adjusted for the quarter was $0.11 per diluted share while our retail portfolio was 93.4% leased, reflecting a 110 basis point increase over the prior year.

We have disclosed FFO as adjusted to reflect a one-time litigation charge of $1.3 million relating to an arbitration ruling in the first quarter in favor of a former tenant. The former tenant claimed that the Company unreasonably withheld its consent to an assignment of the tenant's lease to a third-party. In reliance on advice from outside litigation counsel, the Company believed that its actions related to the requested assignment were proper. We have recorded the full charge in the quarter.

We achieved another positive NOI growth in the quarter for the portfolio. Our same property NOI was up 5.4% over the prior year. This is the fifth consecutive quarter of strong NOI growth. In addition, our cash rent spreads for the quarter were 7.2%, our 10th consecutive quarterly increase.

We also continue to see consistent growth of revenue from property operations as a result of our development and leasing efforts. Property operating revenue was up 9.8% over the prior year.

On the balance sheet, our finance team has executed on several important objectives. Last month, we amended and restated our line of credit to improve the interest rate by 35 basis points. We also extended the maturity to June 2017 inclusive of a one-year extension option, and modified several provisions within the document. Simultaneously, we closed on a new 7-year, $115 million term loan that we plan to expand to $125 million later in the second quarter. We were able to secure attractive pricing ranging from LIBOR plus 210 to 310 and project an all-in rate after the execution of a hedge in the low- to mid-4% range.

The term loan and line of credit modifications have significantly improved our debt maturity schedule over the next several years. We have no remaining maturities in 2012, and more importantly, our annual debt maturities will not exceed $48 million between 2013 and 2015. In addition, the weighted average maturity of our debt increased from 4.2 to 5.4 years. We will also improve our balance sheet metrics including the reduction of our floating rate debt from 42% to approximately 26% upon the planned closing of the term loan hedge in the second quarter.

The execution of the term loan provided an opportunity to significantly increase the size of our unencumbered asset pool and achieved additional financial flexibility by retiring the debt on five of our shopping centers. In addition, we paid off a 7.38% loan on the Plaza at Cedar Hill with a draw on the line and subsequently reopened our 8.25% Series A Perpetual Preferred, generating $31 million of net proceeds to reduce the balance on our line of credit. With the execution of these transactions, we increased the unencumbered asset pool to approximately $475 million, which is 40% of our total assets.

During the quarter we also executed on our disposition strategy by selling Gateway, Marysville, in the Seattle area consistent with our planned asset sales noted in our 2012 guidance. We are analyzing other assets in geographic areas where we don't anticipate future growth or the specific assets don't possess a long-term growth profile.

On the development side of the business, we continue to make significant progress on several major in-process projects. At New Hill Place Phase I in Holly Springs, North Carolina, we finalized the anchor lineup by closing on the sale of a land parcel and executing a site development agreement with Target.

The leasing momentum on this project has increased quarter over quarter as the leasing committed percentage increased approximately 11% from 65% to 76.2%. In addition to Target, we have executed anchor leases with Dick's Sporting Goods, Marshalls, Michaels, and Petco, totaling approximately 100,000 square feet. We have received the loan commitment from one of our relationship banks and anticipate closing the construction loan in the second quarter.

At Delray Marketplace, the construction schedule is on track for the November 2012 opening. The site work and foundations are nearly complete and vertical construction will commence this month.

Four Corner Square located in Maple Valley, Washington, a Seattle suburb, increased to 83.5% preleased. We have executed leases with three anchor tenants totaling 68,000 square feet at this redevelopment. We have also received a loan commitment from one of our other relationship banks on this asset and anticipate closing the construction loan in the second quarter.

Oleander Place in Wilmington, North Carolina, is progressing on schedule as Whole Foods is planning for a late May opening.

During the quarter, our consolidated CIP balance was reduced by $10 million to $138 million primarily as the Whole Foods at Cobblestone Plaza opened and the related costs on the development were moved to fixed assets. Our objective is to continue to reduce our CIP balance as a percentage of our total assets to less than 10%.

We expect the CIP balance to grow during the construction of the five in-process development projects and will likely peak in the third quarter of 2012 prior to several project openings. However, upon the completion of the in-process developments the consolidated CIP balance remaining will be approximately $50 million or less than 5% of total assets.

We are reaffirming our 2012 FFO as adjusted earnings guidance with a full year range from $0.42 to $0.46 per share. I would like to reiterate the primary goals that we are focused on for the remainder of 2012. Opening Delray Marketplace in the fourth quarter of 2012. Preparing New Hill for a spring 2013 opening. Partially opening the redeveloped Four Corner/Maple Valley in late 2012. Pursuing opportunistic acquisitions to increase NOI while reducing our debt--to EBITDA. Continuing our strong leasing momentum and selling noncore assets to provide capital for acquisitions or reducing debt.

In closing, I'm pleased with our team's efforts and execution to start the year. We have substantially strengthened our balance sheet and enhanced our financial flexibility with the term loan and line of credit extension. Our developments are progressing well and our high quality properties are attracting best-in-class retailers.

While we have been focused on blocking and tackling over the last few years, opportunities are beginning to surface, and we believe we can simultaneously further improve the balance sheet and grow the Company. This concludes our prepared remarks. We are ready for questions, operator.

(Operator Instructions). Our first question comes from the line of Nathan Isbee of Stifel Nicolaus. Please proceed.

Good morning.

Good morning.

Just focusing on the guidance for a minute. The same store guidance was I think 1% to 2% for the year. You clearly came in significantly stronger than that in the first quarter. Are you maintaining that 1% to 2%?

Yes, we are maintaining that, Nate. I mean, as we have been talking about over the last couple quarters, same store NOI obviously won't hold up in the 5% range as we begin comparing quarters over previous strong quarters. So we are going to maintain that, and it is going to, as we said, begin to come down from an elevated level, and then we want to try to maintain the guidance of that 1% to 2% but more likely towards the higher end of that.

Sure. I mean, just looking at the numbers, your rent spreads are generally positive. What are you assuming in terms of occupancy for the rest of the year?

I think the occupancy guidance we gave was the 93% to 94%. You know, right now we are a little above 93%, so we are assuming we are going to be within that range. And again, it is, you know, the push is more likely to be on the small shop side, so that is why it is probably a little more difficult to project. Because the small shop deals can -- when they happen they can happen quickly, and we are pretty focused on trying to move that needle.

So I think we are trying to be reasonably conservative, but I think it is fairly accurate to say that we will be in that range towards the higher end of that.

Okay. I guess that is a good segue to the small shop leasing at Delray. The leasing went up, I think, 140 basis points this quarter. What is in the near-term pipeline? What should we expect in terms of leasing progress over the next few quarters?

Tom, do you want to --

Nate, this is Tom. From a leasing standpoint, to start off, second quarter-wise where we'd like to see the percentage get to is about 80%. And then our goal as we work through the third and fourth quarter is to really try to drive somewhere between 85% and 90% upon the end of the year. So we have a good pipeline as it ties back to deals in the works, and we are going to hopefully continue to drive that effectively through the end of the year.

Okay. And then could you just remind me on the land parcel you sold to Target? How does the price you got compare to your original cost?

I mean, Nate, that is a deal where it is actually a sale and a site development agreement, so we kind of combine how that works relative to -- it's actually we are entering into an agreement. There is an exchange of the property; and then we, of course, will be doing site work that they are going to be paying for their pro rata share.

So it is not as simple as just saying we are selling a parcel of land. It is really from an accounting perspective, it is part of the total cost of the asset, I believe.

You pick up a lot of offsite improvements as well.

Okay, thanks.

Our next question comes from the line of Carol Kemple of Hilliard Lyons. Please proceed.

Good morning.

Hi, Carol.

What was the spread between lease and occupied at the end of the quarter?

At end of the quarter, it was about 250 basis points. And the majority of that are tenants that have signed leases but have not occupied. We only had a couple -- we have one dark anchor at Tarpon Springs, and then maybe another couple small shops that are paying rent that aren't occupied. But the majority of it is, say, for instance, a DSW or a Home Goods that we have at the Plaza at Cedar Hill where the leases are signed but they don't occupy until the end of the year.

Carol, that number is down obviously because at the peak, that was over 300 basis points. So the number is coming down fairly rapidly as tenants open in these development deals. So historically, we -- that number is going to be more like 100 to 150 basis point as we mature. But that is really all upside, so that is a good thing.

So at this point would you think it is reasonable to assume it would be about 200 basis points at year end?

Probably. I mean probably in that range. Maybe -- depends, could be slightly better, slightly higher but in that range.

And I notice your reimbursements from tenants was a little bit higher than it has been in the past. Do you expect it to stay at that level?

I think this quarter is probably representative of the type of reimbursements we will be getting. So I think it's -- I would do a run rate on this quarter because as we have -- our infrastructure is allowing for these developments to come on into the income statement without having to add a lot of additional costs. So I think it would be pretty consistent to run rate this quarter.

Okay. Thank you.

Thank you.

(Operator Instructions). Our next question comes from the line of Rich Moore of RBC Capital Markets. Please proceed.

Good morning, guys.

Good morning, Rich.

On the $125 million term loan, Dan, are you going to swap the whole thing out?

Our objective is to swap it out, Rich, at the end of the second quarter.

Okay. You don't do that for the whole term, do you? You do that for a shorter period of time, I assume, right?

Our objective would be do it for the whole term. Because right now with the rates and how attractive they are with the swap in place, we think it is a good piece of paper to lock up for the 7-year period.

Okay. All right, good, thanks. And then, John, on the construction loan front it seems like you guys are getting them all over the place and I think that is great. I wasn't -- I mean, you had said to me before and said to us before that construction loans, you were seeing a loosening there but it sounds like it is really loosening. What are your thoughts on construction loans as you go forward here?

Yes. You know, I think yes, we did. We have been talking about it for the last couple quarters that construction loans are available in the right circumstances, and I think you have got a couple -- you have got a litmus test that starts with the sponsor. I think construction loans related to these type of deals are very important as to who the sponsor is. The quality of the project, the tenancy, the preleasing, the equity.

So when you look at that and then you look at, as Dan has talked about many times, the strength that we have -- the strength of our relationships with these banks which goes back over 20 years. That is why we are in the position to get these deals done.

And I think it makes a big difference that when you look at us as a company, they can look back at a long history of completing projects on time and on budget and having very high quality product at the end.

So I think as I have tried to say maybe even last year, this is going to be our advantage, and now we are seeing it come to fruition. Not only are we getting the loans, Rich, but if you look at the terms that we are getting, that also gives you an indication of the quality of the assets. So we feel like it is going to continue.

Very impressive. I agree with you. You mentioned that you have some opportunities that are beginning to surface. Would those be also more developments, do you think?

No, Rich, I think, really our focus is more on executing the existing developments that we have. We have, as you know, five ongoing, and we have a few coming in behind that. So we have enough development in our own hopper right now that we don't have to go looking for a lot of new stuff.

When I look out over the next three years, and you look at NOI growth, we will generate significant NOI growth from our organic pipeline. In terms of the opportunistic things that are out there that we are seeing, you know, we see some great opportunities to acquire assets. We are working on several deals right now that are very interesting. And our ability to acquire something and add value to it is the differentiator that we he have.

We have a lot of peers that are great at acquiring assets at the highest price, but we are more focused on finding deals that are different that we can add a lot of value to and make a bigger spread.

So we are -- it is interesting. It is just all in the last few months it has really changed, and so that is why I'm feeling optimistic about our ability to significantly grow and delever at the same time.

Okay. Good. Thank you, John. And then the last thing I had is really there is only -- as far as I can tell the way I kind of look at it, there's only three projects in the future development pipeline that are sizeable. One is the second phase at New Hill; so the other two, Broadstone Station and Parkside, any thoughts on where you are at with those?

Sure, I mean, as you know, we are pretty conservative about what we are going to say on these future projects relative to where we are. But suffice to say that each of those we are very actively working on and have activity on each of those. In particular, I would say that Parkside is a JV, as you know, with Prudential and it is in Raleigh. Obviously, we are finding a lot of leasing success in Raleigh and Holly Springs, so it is only natural that that kind of flows into Parkside as well as Apex at Broadstone. So yes, I feel like they are coming exactly the way we anticipated they would.

We have got -- I will let Tom elaborate, but we have definitely have good momentum that is moving the ball forward and they will be happening just like the in-process are happening. Tom, do you want to?

And then as it relates to Parkside; the population, the growth, the completion of 540, the outer loop, all these things continue to improve our real estate as well as Research Triangle Park. So the good thing for us is the market continues to improve, and as we really dig in to the development process it should line up from a timing standpoint to make for a very good project. So things are starting to align, and we are going to spend basically the rest of the year really trying to align these points to get a project ready to go.

Okay, very good. Thank you, guys.

Thank you.

Our next question comes from the line of Quentin Velleley of Citi. Please proceed.

Hi. Good morning.

Good morning.

Just sticking with some of the opportunities that you are seeing, for new acquisitions, I guess with some redevelopment upside. Sort of given where your cost of capital is, what kind of return expectations, whether that be project yield or internal rate of return, do you need to get for these deals to make sense?

Quentin, I think it is going to depend on really what the transaction is. I don't want to say that we are only looking at acquisitions that have major redevelopment associated with them. So to the extent we are looking at an acquisition that would have major redevelopment associated, I think you might be looking at it on an IRR basis.

And those, generally if we are acquiring an asset that has a major redevelopment and we acquire that somewhere in the mid 7 cap range to higher 7 cap range, you could expect to get an IRR in the teens. You know, depending on what sort of leverage you would be using, if any. So if you weren't using any leverage at all, then you would be more looking at a cash on cash -- call it in the 9 range.

So and then I think there is some opportunities that we are into right now that we are finding kind of a couple off-market opportunities that are pretty strong centers that have just been overlooked, frankly, and are locally owned, that there might be an opportunity just for us to enhance the tenancy, which by its nature enhances the rents.

So both of those things, again, we are finding. I think what is happening is you have got so many large companies out there trying to do major portfolio deals that you find some of these smaller deals falling through the cracks. And we are happy to go out and buy a $15 million center on a one-off basis that we see upside in, whereas, a pension plan advisor or actually one of our peers would look at that and say, I'm not sure that is worth the effort. That is where -- both of those buckets, we are seeing opportunity.

And are you like, just over this year, you're thinking two or three $10 million to $15 million deals or are you thinking about something potentially larger than that?

I think we are looking at it one at a time, but as we do that, we are starting to see opportunities that are bigger than one at a time. So to the extent that it is hard to line things up perfectly right in terms of where the capital markets are and where the acquisitions are. But if we feel like we see something that is large that we could do something with, as I mentioned in the past, we definitely have institutional investors that would want to partner with us.

So I think what we do is we start underwriting these deals, and then we look and see what the capital structure needs to be and that is how we make a decision on whether or not this is something we will just do ourselves or bring in a partner. But definitely, we are interested in finding opportunities to accelerate our deleveraging.

So these acquisitions can help us do that, and to the extent that we think that we are going to give -- we are going to get the shareholders a good long-term return, we want to be aggressive where we can.

And then I think you mentioned some of the asset sales. Are you currently marketing anything at the moment? If so, how many assets?

Yes. Dan, do you want to --

Yes. We've got an asset in Chicago that we are marketing now that is the recent development that we did up there with LA Fitness, and Toys, and Ross. And that currently is being marketed, and we hope to sell that the middle of the year this year. I think some of the other things that we are marketing, Quentin, are some of the unanchored strip centers that we would like to sell and recycle some of that capital into the acquisitions that John is talking about that we are seeing, where you have got anchored properties with good long-term growth in markets that we want to be in.

So I think our objective is, you know, to continue to look to sell some assets that are unanchored or don't fit the overall long-term growth profile that we are looking for.

Quentin, I think we are still comfortable with the guidance we gave in disposition. If anything, we will exceed it. And if we exceed it from a capital perspective, as I said, we will first be looking to redeploy the capital. And if we can't redeploy it in an accretive way, then we will reduce debt with it.

But I think we have enough going on, and we are seeing enough opportunities that to the extent we sell two or three more assets than we thought we would, that is going to probably be a good thing because we are going to be moving up the scale in quality and growth. So we're feeling pretty good about that.

Okay. And then just lastly from me. In terms of guidance, I think you had the term line bank swapped out at around 5%?

We did. And we assumed $80 million on that.

Right. So -- okay, so you are going to look at doing a higher volume but at a lower rate?

Correct, correct.

So it probably washes out a little bit in the end.

Okay. Thanks, guys.

Thank you.

(Operator Instructions). Our next question comes from the line of Todd Thomas of KeyBanc Capital Markets. Please proceed.

Good morning. This is Grant Keeney on for Todd. I know you touched on small shop occupancy, but could you just elaborate on some of the trends you are seeing in small shop leasing year-to-date?

Sure. I mean this was a -- the quarter was -- I think we did 13 shop deals in the quarter that were new deals. And generally, we did a combination of national deals, regional deals, and local deals as we have been for the last several quarters.

You know, the national and regional deals, we did more of those than we did locals. But it was a small enough sampling that I wouldn't look at that as looking through that in terms of major macro things.

But again the trends are good. Our ability to continue to negotiate is good. Supply and demand characteristics just get better by the day for landlords. I have been saying that for over a year. And that continues to be the case. There continues to be very, very limited supply.

And we have high quality assets. I want to emphasize to everybody that they need to look at our -- go on our website, look at our portfolio. Look at our demographics. Look at the asset quality. Look at the architecture. Look at the tenancy.

I'm not sure we talk about that enough. We just have a high quality portfolio and we are going to continue to do well. So I feel good about that down the road. We have an emphasis on the shop side in terms of what our goals are for the Company and we will continue to push that.

The only thing I would add is as it relates to new developments, John talked about supply and demand. If you look at a project like our New Hill Place project in Holly Springs, North Carolina. There is so little new supply in that market that we are really able to pick up momentum probably far beyond what we expected.

And with the Target deal and the 100,000 square feet of boxes executed and now momentum on the small shops with nine months to go before we open the project, we are actually in a position to be very selective and push rents. So the supply and demand factor has been very important on ground-up development.

Okay. Thank you. And then in terms of development, I guess. For Delray, I know you mentioned it is on track to open in November. But if I remember correctly, I think you were hoping for the vertical construction to start in March. And now it appears to be set for sometime this month. Is there any potential delay that we should be aware of or what is going on with that?

I mean, projects like this always ebb and flow but we are on schedule for sure. We feel confident that we will deliver. You got issues with weather and things like that that make things move around and tenants changing, coming into the mix that we do different layouts for. But from my perspective, that is what we do, so we will deliver it.

That is a good way to say it, and any delays that occurred just tie back to permitting, and those issues are behind us. And the fact that foundation, slabs, and coat wall's in a position to go up, that puts us in a comfortable position to get this done on time.

Okay. Okay. Good. And then real quick, I'm not sure if you mentioned it, but could you just provide us with the current line balance today following the new term loan? And is the balance of the line fully available?

Yes. The line balance right now after the term loan pay down is about $108 million and that is before the additional $10 million that we are anticipating. So we will be sub-$100 million once that comes into place.

The full amount of the line is not available. We still have some room, as John mentioned, when we acquire assets to put them in the line to give additional availability. I think right now, the amount that is available is probably in the $160 million to $170 million range.

I think right now we have about $70 million of liquidity between availability and cash. And so we feel comfortable with the year. And we obviously project out over the next two years, and we have adequate liquidity to execute what we are doing.

And we will -- I think if anything, we continue to add to that liquidity over the next few years vis-a-vis these transactions. It, of course, ebbs and flows with TI and things like that. But we are in a pretty good place right now.

Okay. Great. Thanks very much.

Our next question comes from the line of Tammi Fique of Wells Fargo. Please proceed.

Hello.

Hi, Tammi.

I was just wondering -- the property that you sold during the quarter what the cap rate was on that sale?

That cap rate was below a 7.

Below a 7. And then for the remaining properties you are looking to sell this year, should we expect similar cap rates or what kind of cap rates are you seeing on the unanchored strips?

Obviously we are selling some different types of products. The asset that we are going to sell -- likely to sell in Chicago is a more of a low 7 cap type transaction. Unanchored strip centers depending on markets are probably more like in the 8-something range.

Again, we are not looking at the unanchored strip cap rates to be the driver of that decision. We're looking at exiting centers that we just don't see growth in, so we are not going to be too focused on that. I think if we sell centers like that, we are going to be NAV accretive in the end because we are going to end up with better assets.

And then, so, any other types of centers that we would put up out there, it is going to depend on what they are. You know, power centers, depending on location, are kind of trading in a very low 7 cap range. And then grocery anchor centers are trading in the 6s essentially. So again, when you look at our pool of assets, it is why it is a little frustrating from perspective of the misallocation between the stock price and our asset value.

And then what portion of your portfolio do you think falls into that unanchored strip bucket?

It's small. We're talking maybe 10%, if.

Okay. And then one more question. So on Oleander I'm just curious; the lease committed rate dropped from the end of the year to the first quarter.

Right.

But also the GLA dropped. So could you just remind us what is going on there?

I will answer real quickly. The only reason the GLA dropped is because we typically allocate 4,000 square feet for outlots. We were negotiating a deal with a user that will ultimately have less square footage, so we made that modification. So that is the GLA question.

The reason the lease percentage went down is we had one tenant that did not renew and another tenant that took slightly less space, so the net impact was only 2,300 square feet. It's just a sensitivity that ties back to the size of the center. But this is a project, being a Whole Foods-anchored center, that we are comfortable that this deal will be 100% leased by the end of the year.

Okay. Thank you very much.

Thanks.

Our next question comes from the line of Josh Paquin of BMO Capital Markets. Please proceed.

Hi. Good morning.

Good morning, Josh.

My question is on Best Buy and the two locations there, if you had any discussions with them, and how you perceive those?

We have. We have one of them that they will vacate.

Okay. And how do you feel about that space going forward? Is it positive on releasing it?

Yes, I feel -- it is in a new Super Target-anchored shopping center. The center is strong, and we feel very good about it. There is a long-term lease in place. I think it goes in the teens like 2018, 2020, something like that. 2019.

And so we have got plenty of income from them for us to go out and find a great -- a better, frankly, a better tenant and have capital from them to put the tenant in. So again, I have always said it is all part of the business. The real estate always outlasts the tenant.

Okay. And then on Naples and more generally south Florida, how do you view that market going forward? Are you positive on it? Has it been a sweet spot or a general weakness?

No, it's not been a general weakness. Naples is obviously an important market to us. We have been in the market for several years. We are positive on it. We are seeing improvement generally in Florida.

Frankly, we are bullish on Florida. People have to remember you've still got 18 million people there. It is a strong market -- in the state of Florida, I should say.

But as far as Naples itself all of our assets there are the best in their sub-markets. I mean, everything we have in Naples is either anchored by Publix or Target. We have one in Fort Myers basically that's a Lowe's-anchored center.

But other than that, everything is very strong. So we feel good, and we are seeing the residential market there actually pick up, which is obviously important. But we never saw the commercial market turn down as violently as the residential market did, which really was a fact for us that we had the best assets in the market.

This is -- the thing people forget is in a major downturn is when it is really important that you own good real estate. When things are great, it kind of flattens out. People make dumb decisions and go into bad real estate. But when things are tough, they only go into good real estate, so that is why we are doing well.

Okay. That is it for me. Thank you.

Thanks.

Thanks.

(Operator Instructions). With no further questions, I would like to turn the call over to Mr. John Kite for closing remarks.

Thank you very much. We really appreciate everyone joining us for the call, and we look forward to talking to you next quarter. Have a great weekend.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may disconnect at this time. Have a great day.