LTC Properties Inc (LTC) 2010 Q2 法說會逐字稿

Welcome to the LTC Properties second quarter 2010 analyst call. (Operator instructions) This presentation contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933 as amended and Section 21E, of the Securities Exchange Act of 1934 as amended, adopted pursuant to the Private Securities Litigation Reform Act of 1995. Statements that are not purely historical may be forward looking. You can identify some of the forward-looking statements by their use of forward looking words such as believes expects may, will, should, seeks, approximately, intends, plans, estimates, or anticipates, or the negative of those words or similar words. Forward-looking statements involve inherent risks and uncertainties regarding events, conditions and financial trends that may affect our future plans of operation, business strategy, results of operations and financial position. A number of important factors could cause actual results to differ materially from those included within or contemplated by such forward-looking statements including but not limited to the status of the economy, the status of capital markets including prevailing interest rates and our access to capital, the income and returns available from investments in health care related real estate, the ability of our borrowers and lessees to meet their obligations to us, our reliance on a few major operators, competition faced by our borrowers and lessees within the health care industry, regulation of the health care industry by federal, state and local governments, compliance with and changes to regulations and payment policies within the health care industry, debt that we may incur and changes in financing terms, our ability to continue to qualify as a real estate investment trust, the relative liquidity of our real estate investments, potential limitations on our remedies when mortgage loans default and risks and liabilities in connection with properties owned through limited liability companies and partnerships.

For a discussion of these and factors that could cause results to differ from those contemplated in the forward-looking statements, please see the discussion under risk factors contained in our annual report on Form 10-K for the fiscal year ended December 31, 2009, and in our publicly available filings with the Securities and Exchange Commission. We do not undertake any responsibility to update or revise any of these factors or to announce publicly any revisions to forward-looking statements whether as a result of new information, future events or otherwise. Please note this event is being recorded. I would now like to turn the conference over to Wendy Simpson. Please go ahead.

Thank you, Amy. Good morning and afternoon. Thank you for joining us for our second quarter 2010 earnings call. With me are Pam Kessler, our Senior Vice President and CFO, who will be giving some specifics about our quarter earnings. And Clint Malin, Vice President and Chief Investment Officer, who will comment on potential investments for the remainder of the year based upon the flow of transactions that we are currently seeing.

Yesterday we announced that we had entered into an agreement to sell 1.5 million shares of our common stock and a registered direct replacement. This morning before the market opened we announced that the total number of shares sold in the direct placement increased to 1.970 million shares. We sold these shares at a price of $24.70 a share. Our common stock closed yesterday at $25.26. So this price was as a 2.22% discount before costs. Total proceeds from this issuance was approximately $48 million. Or will be approximately $48 million.

For several months we have been contemplating a way to redeem our preferred shares by using common stock. LTC operates as a low levered REIT. During the quarter, we completed a great financing with Prudential Investment Management. I need to add that Pam was a total lead on this transaction from the first meeting of Prudential to the signing of the document. Prudential spent significant time getting to know our Company and our goals. As a result, they gave us pricing that I believe would rival investment grade companies. Prudential also provided us with an agreement to issue under certain conditions and at rates then applicable another $50 million. This commitment is good for a three year period.

While we have enjoyed the use of preferred stock as a capital source over our history, it became very clear to me when considering how to finance acquisitions that preferred stock is looked at as debt and not as equity no matter that it is never required to be redeemed. So all of our preferred dividends are included in our fixed charge ratio and the value of the stock is included as debt when determining leverage. So if we issue common stock to redeem preferred and use the exact same total cash that was paid to preferred dividends to pay common dividends, our fixed ratio will go up and our leverage will go down.

A couple of months ago when our stock was trading at a more reasonable level, we contemplated doing a large underwritten issuance of common stock to do larger redemption of preferreds. Since January of 2009 there have been 14 equity transactions done by healthcare REITs with a gross spread of at least 4%, and a discount to last trade of at least 6%. So that's 10% discount to last trade. In order for LTC to get $24.70 in this market looking for these discounts, our last trade would have had to be $27.50. That price would have had to hold for several weeks as we did discounts marketed and priced. Did documents marketed and priced.

Additionally, some advisors were telling us that an offering to just issue common stock to buy back preferreds was not necessarily going to be a positively reviewed transaction in the market, that was looking for deal-type equity raising. Regardless of this advice, we still believe that common equity was a right thing to do but not with this attitude. As I have mentioned in the past, we endeavored to do transactions that will not be dilutive to our common shareholders over a long period of time. I determined that a large issuance at what I considered a steep discount was not what LTC needed to do.

We do not need to issue cheap common shares. We recognize that another challenge to LTC is to increase the flow of our common shares. I hear quite often that investors find it difficult to get in and out of our stock because of the number of shares that trade daily. I also know that placing these 1.970 million shares in a few hands doesn't necessarily immediately help this. But while these investors are long time holders and supporters I also expect that they have sold down their positions at various times and probably have enjoyed a gain.

I received a call from the largest buyer in this direct placement asking if we would be interested in selling them a significant number of common shares at a slight discount. This was not of interest to us at prices lower than would generate reasonable funds and make a reasonable call on our preferreds. After discussions with our Board advisors it was determined to proceed with the direct placement if we could get our net pricing goals. Last week it looked like it could happen and yesterday the stock held fairly well and we agreed to the first 1.5 million shares. And late yesterday a couple of other long time holders and supporters bought the additional 470,000 shares.

We did consider using our ATM but decided against it for various reasons of complexity and timing. We are renewing our ATM to a $75 million level. Pam will make further comment on that.

We will be using these proceeds to redeem all of our series E preferred stock and as many of our series F preferred stock as cash will allow. We will definitely use the remainder of these proceeds and will be making a determination over the next few days as to how much other cash we want to use to apply to this redemption. Prior to any redemption we have 37,816 shares of series E and 5,894,216 shares of series F outstanding. We can call these shares at $25 per share plus accrued interest to the date of redemption. Each share of series E is convertible in to two shares of common. So, it is possible that these last hold outs of the series E will convert rather than receive the $25. The series F not convertible but has a dividend rate of 8%. We need to give a 30 day notice period for redemption of the preferred.

So for at least a month, we will have dividends payable both on these newly issued shares and on the preferreds that we will be redeeming. Additionally, we will have a one time charge for the discount we had when we issued the preferreds. For series E, the charge will be $44,000 in total and for series F, it will be approximately $1 per share. So if we redeem 1.9 million shares of series F, the one time charge will be $1.9 million. So, our third quarter will have these additional charges and some temporary dilution.

This morning one of the analysts that follows LTC issued a report that used the term troubled tenant referring to our properties operated by Skilled Healthcare. As you are probably aware Skilled CEO, Boyd Hendrickson is one of our Board members, And Skilled has recently been hit with enormous jury verdict in Humboldt County California. This is a very interesting litigation and all the press I have read has indicated that it was a total runaway jury. Most important to note is that the plaintiffs did not claim physical harm, but only that Skilled had violated a California regulation for a staffing ratio. Skilled has announced that they are in mediation with the plaintiffs. And as such, there has been no judgment issued in regards to the jury's verdict.

Boyd is not as liberty to tell us any more than he could tell anyone else. And right now all we know is what the public knows. Skilled is hopeful that mediation will be successful but can give no assurances that it will be. Skilled has not reported for the quarter, but will report before the end of the week. The properties that Skilled operates for us are all in New Mexico and not directly part of this litigation.

Skilled has not given us their quarterly operating results for these properties because they understandably do not give out partial financial information before they have issued publish information. I do not anticipate their coverage ratios will have deteriorated on these properties. The last coverage information we had was the first quarter and the coverage ratio was approximately 1.4 times after a 5% management fee. Additionally we hold 6.5 million of Skilled's unsecured notes. They pay a face rate of 11%. We evaluated our carrying value of these notes and determined that we have the ability and the intention to hold them to maturity, that the interest to be collected over the term of the notes would cover the value of the notes and that the potential decline in market value is temporary and not permanent. Skilled did pay on time the scheduled July interest payment. At this time, we do not contemplate selling these bonds and have not provided for any reserve against the value of the bonds.

LTC is trading at what I consider a large discount to our peers. Even though an analyst believes 24 discount is modestly attractive, in quotes, I as an insider and an executive of the Company consider it a large discount. Right now with all the moving pieces, I cannot give you an accurate FFO number for the year. We have not had the time to push all the possibilities through our model. I had previously given a range of $1.92 to $1.96. And that was assuming using our bank line at very low interest rates rather than more permanent debt at higher rates. Now that we have done the Prudential financing at a blended rate of 5.5%, factoring in this the Prudential impact and not the new issuance of the common stock or the preferred buy back or the charge we took at the first quarter, I would still have been giving the same guidance of $1.92 to $1.96. So our same store operating without these unusual transactions still is very steady and very in line with what we expected at the beginning of the year. This of course, does not anticipate that Skilled will have a significant problem. That we will have an issue with the notes. I don't expect that we would have an issue with the operations. It's also not including any further acquisitions for 2010.

Clint and Andy Stokes, our VP of Marketing and Strategic Planning have identified several investment opportunities this year. Some we have been successful with, some we've walked away from and some we were just not the chosen buyer. But I want to say, I and the Board could not be happier with their efforts and successes, Clint is especially skillful in taking opportunities Andy identifies and marshaling them through due diligence and purchase agreements. He deals directly with the sellers and/or brokers and is very open as to our return goals and our terms. Clint does not spend time on deals that are on their face too expensive or look like the seller is expecting to yield low returns to the buyer. We have not in the past and do not in the future expect to grow by just adding assets that do not provide a positive return to our shareholders. Additionally, Clint's many contacts in the industry provide us with opportunities. LTC's acquisition team is operating effectively and if there are deals to be done within our goals, I believe we will see our share of them. Before I take any questions I'm going to ask Pam to make comments and Clint will comment on our current acquisition efforts.

Thank you, Wendy. I'm going to discuss quarter over quarter results and I will refer you to the 10-Q that was filed yesterday for our year-over-year results. Revenues increased this quarter approximately $322,000 primarily attributable to rental income increases due to acquisitions and CapEx projects. Straight line rent for the quarter was $930,000 and amortization of lease inducement costs was $167,000. Mortgage interest income decreased $143,000 due to the normal amortization of mortgage loans. Interest and income are comparable between the two quarters. Interest expense increased $18,000 due to an increase in the outstanding balance on our line of credit related to acquisition, which was partially offset by a decrease in interest expense due to the payoff of a mortgage loan on May 1, of this year. The provision for doubtful accounts and notes decreased $867,000, primarily due to a specific loan loss reserve that was recorded in the first quarter on a mortgage loan secured by a private school in Minnesota that ceased operations. Operating and other expenses decreased $43,000 this quarter because transactions costs were higher in the first quarter than in the second which was related to previous acquisitions.

Net income available to common shareholders increased $1 million, due to an increase in revenues and one time charge for doubtful accounts recorded in the first quarter as previously discussed. Fully diluted FFO per share was $0.49 this quarter compared to fully diluted FFO per share of $0.45 last quarter. Excluding the provision for doubtful accounts related to the mortgage loan, secured by a private school in Minnesota, fully diluted FFO per share was $0.48 in the first quarter compared to $0.49 per share this quarter.

Turning to the balance sheet, we acquired one skilled nursing property and one combination skilled nursing assisted living and independent living property in Virginia for $22 million. We invested $339,000 in capital improvements at a weighted average yield of approximately 9.2%. And $939,000 in capital improvements at yields already reflected in the leased rate. We received $990,000 in scheduled principal payments on mortgage loans receivable. Subsequent to June 30, we invested $1.6 million net of closing fees and a mortgage loan secured by a skilled nursing property in Missouri to finance the expansion of that property. And we extended the loan for an additional five years at an interest rate of 1.9% increasing 13 basis points annually. And this loan will now mature in January 2018.

We had net borrowings under our unsecured revolving line of credit of $12.5 million related to the acquisitions previously discussed. Subsequent to June 30, we repaid the $41 million outstanding on June 30, under our line of credit and therefore we have $110 million available for borrowing. Subsequent to June 30, we sold $50 million of senior unsecured term notes to affiliates in managed accounts at Prudential. The notes are in two, $25 million tranches, one at a fixed rate of 5.26% due in 2015 and one at a fixed rate of 5.74%, due in 2019. Additionally, we entered into an uncommitted private shelf agreement with Prudential which provides for the possible issuance of up to an additional $50 million of senior unsecured fixed rate term notes over the next three years. We paid off a $7.6 million mortgage loan secured by an assisted living property in California. Accrued expenses and other liabilities increased approximately $1.5 million due to property tax impounds. And during the second quarter, we paid $13 million in preferred and common dividends. In discussing liquidity, in the second quarter, we filed a $400 million shelf registration statement which essentially replaced our shelf registration statement that was expiring in August. So, currently we have $110 million available under our line of credit, $50 million available under the Prudential shelf agreement, $400 million on our shelf registration statement. And we are in the process of renewing our ATM to align it with our new registration statement which would be $75 million. So after that is completed, we would have $75 million available under the ATM, and $325 million under the shelf registration statement. The ATM comes off the new shelf registration statement.

In discussing operator statistics, I will give the general caveat that these numbers come from our operators. They are unaudited and have not been independently verified by us. Occupancy and lease coverage in our op portfolio was essentially flat quarter over quarter. Occupancy in our properties that provide independent living or a combination of independent living, assisted living, and skilled nursing decreased 1.6% quarter over quarter to 88%. Lease coverage after a 5% fee assumption was 1.6 times. Before management fee or EBITDAR coverage was 2.1 times. For our SNF properties that have provided us with current information occupancy remains stable and lease coverage for our SNFs after a 5% management fee assumption ws 2.1 times. Before management fee or EBITDAR coveragefor for our SNF portfolio was 2.8 times. And now I'll turn it over to Clint.

Thank you, Pam. As Pam mentioned on June 1, we closed on our previously announced acquisition in Virginia. We are very excited about establishing a relationship with this privately owned operating company. Since closing the Virginia transaction, we have had the opportunity to evaluate additional acquisition opportunities with this company, which unfortunately did not come to fruition. We believe there will be opportunities in the future to expand our relationship with this Company. During the second quarter and continuing into the third quarter, we have been busy looking at numerous transactions, a number of which we have simply passed on for various reasons such as extremely overpriced assets, antiquated physical plans, or significantly distressed operations.

As of today, we do not have any executed letters of intent or purchase agreements but we are working towards this goal. Recently, we were close to executing letters of intent on a couple of transactions which we spent a fair amount of time evaluating, but in the end it came down to a pricing disconnect. Although asking prices have continued to come down from their highs over the past few years, sellers in some cases continue to believe they can command a premium for their assets.

From what we have seen, this pricing premium seems to be more evident for multiple property transactions containing somewhere between five to ten properties. These multiple property deals appear to attract a fair amount of interest from potential buyers which undoubtedly is one of the reasons sellers believe they can command a premium. What remains to be seen is if buyers can secure financing for premium pricing in this market. We continue to see a number of multiple property transactions come to market in the five to ten property range. As stated in the past, smaller transactions that we have looked at tend to offer better pricing metrics compared to these multiple property deals.

Currently we have approximately $50 million to $60 million of investment opportunities in our pipeline. Pipeline currently consists of six transactions, which range from single property transactions to a few deals consisting of three to four properties. Asset type among these opportunities is split about evenly between assisted living and skilled nursing properties. Transaction structures range from typical sale lease backs to acquisition lease, to opportunities to purchase properties subject to existing leases. In a couple of circumstances, we are considering originating first mortgage loans however I do not anticipate loans making up a large portion of our new investments. Geographically these opportunities span the country mainly in states where we hold investments. But there are a couple of opportunities in states where we do not hold any investments. Some transactions are with existing customers and in other cases companies that would be new to our portfolio. Sourcing of transactions has varied from deals being marketed by brokers to companies contacting us directly about recapitalizing via a sale lease back transaction or financing acquisitions for them to opportunities from our proactive marketing efforts. We have been pleased with the diversity of deal sourcing.

Our marketing efforts continue to be fruitful. Andy has been successful in making numerous new contacts. In today's financing environment operators are much more willing to schedule meetings with us as well as having a renewed interest in utilizing sale lease back financing whether it be for recapitalization within their portfolio or financing of acquisitions.

On last quarters earnings call, we provided investment guidance for the remainder of the year of $34 million, following our $22 million acquisition in Virginia, and the $4 million expansion of a property we own in Kansas. We are maintaining this guidance for 2010. We are continuing to target our initial investment yields in the mid to high 9% range. We continue to see our investment niche being in transactions ranging from $5 million to $20 million, but we have the ability and willingness to finance larger transactions if they meet our underwriting criteria. Most of the investment opportunities that we are currently evaluating fall within the $5 million to $20 million range. We are not favoring skilled nursing or assisted living investments but rather evaluating both property types as opportunities present themselves. Although we are hopeful to close at least an additional $34 million in investments this year, the actual amount may be more or less depending upon opportunities available in the marketplace, meeting our underwriting criteria.

We continue to evaluate additional opportunities for capital improvement projects within our portfolio. Recently, we were approached by a few of our lessees about LTC providing financing for various renovation projects and/or additions. We will provide updates in the future as we make progress in evaluating and hopefully funding these opportunities. The $4 million addition to the Kansas property which we discussed during the last earnings call continues to be on schedule with an anticipated completion date in January 2011. We anticipate funding the majority of this investment during the remainder of 2010.

In conclusion, we are excited about the number of opportunities we are seeing in the market. And we are hopeful of converting some them to new investments for LTC. Now I will turn the call back to Wendy.

Thanks Pam and Clint. Amy, I'm ready to open it up for questions.

Thank you. (Operator Instructions) First question comes from Jerry Doctrow at Stifel Nicolaus.

Hi. I guess good morning, still in California. Just a few different things on Skilled Health Care, one specific question. Does your senior sub debt have you talked to attorneys as to whether assuming the judgment is issued if that is kind of subordinate to the judgment, peri-pasu to the judgement, or superior to the judgment in terms of claims hierarchy.

It would be peri-pasu. But Skilled would probably fie for bankruptcy and appeal through that and not have to post a judgment.

Right, in the creditor stack, you would be there with the lawyer so.

Yes, we would be there with those lawyers.

All right. We will forego whatever adjective you were thinking of. So, on the accounting for r the preferred, I guess if I understood you and I want to clarify the expense issues, but your sense, is you don't know how much Fs you are going to buy because obviously if the E holders are acting rationally, they will convert to common rather than take your buyout. In which case, you might have more capital available to buy Fs. Is that the right way to think about it?

Yes, And we also have the ability to use our certain amount of borrowed money if we can pay it back with equity. So I mean if we think we might be able to use our ATM for a little bit more between now and the 30 days, we might use a little bit more cash to round things out and stuff like that.

Okay. Again that was going to be my other part of the question. It sounded like, do you think this deal, net of all the one time charges, and that sort of thing, obviously you're substituting what would be lower cost equity at this point for higher cost preferred. So you would do more of it if you could.

I would have probably done the whole thing if I could. But that's not what the market was telling me.

And then the ATM would be one way to round it out, as you said.

Yes.

And just on the cost, it's $44,000 I think for the E's in terms of the cost. And then it was $1 per share, that was $1 of absolute cost per share, is that right?

That was the discount we took, when we, the original issue discount, which is in our equity.

So that's what gets charged off

It's not a real dollar of cash. I guess it was then, but.

Okay.

So, it's a charge. It's a non-cash charge.

Of $1 per share.

Correct.

Okay. I guess the question is how rational the E's will be. You have no, you are not providing guidance at this point. You don't have better sense than an estimate we could make on how much of the F you will actually buy back?

No, we don't have. Pam and I really have to sit down in the next day or so and look at cash and our need and use of cash.

Shifting gears, medicare and medicaid, there have been couple of earnings calls already from operators and from REITs where people have been fairly optimistic. But I wanted to specifically get your sense on medicare and then also medicaid maybe in some of the states where you got concentrations.

Yes. We are happy that the medicare rate increase went through and I think our operators are benefiting from that. We have not been advised by any operator relative to state issues that they're very concerned about the states of course. That we are watching are Florida because of our concentration in Florida. We don't have much in the state of California at all and Ohio.

So those states we don't have anything in Illinois or any of the mid western states that I think are in dire financial conditions. So our operators seem to be fairly comfortable with where they're going to be reimbursed at least over the next year. As we are looking at some acquisitions, there is even some potential of rate increases in some states, Massachusetts being one of them. But we don't currently have any assets in Massachusetts. So right now Jerry, all of our operators seem to be very comfortable. They seem to be continuing to be profitable and we are just ever watchful.

Some of the things that are still kinds of up in the air like rugs for or the senate extending or not extending F map. In the end, you don't see more risks out there or do you see any of those as materially positive.

We haven't heard anything one way or the other from any of our operators that they are very concerned about these issues.

Thanks.

The next question comes from John Roberts at Hilliard.

Hi Wendy.

Hi, John.

Just following up on what Jerry had to say. Have you changed strategy at this point in replacing all preferred if you can?

If I could get the right common stock price, John it makes a lot of sense. The common dividend could go up considerably and we have a lot more market cap and we would have a lot more float. But at a significant discount to what I think are the current value of our stock is, we wouldn't do it.

I understand that as well.

Yes.

How about the NH IP? Can you call that now as well?

No it's not callable. But if we increase our dividend to over $1.64. I think that's what they get is a dividend, he could convert and sell the common. But it's not a convertible.

Okay.

It is a convertible. I'm sorry, it's a convertible REIT but we can't make it happen -- So the only two issues you have right now are the ADF, right? Other than the NHM? Correct.

You can't use any of the debt, the Prudential debt to acquire preferred.

We can for 90 days.

For three months. $25 million.

A limit of $25 million. Yes

That would get a big chunk of it. Because it's $5 million shares out?

$5 million shares out. Yes. The $25 million would get probably another third of it. But then we would have to be pretty comfortable we would be able to issue the common stock within the 90 days to replace it. And with the way, the volatility. We will maybe take a little bit of a gamble but we don't gamble much here.

I understand that. Have you had discussions with Justin about the preferred and what he wants to do?

No. We haven't. I think I have been told that he is enjoying the dividends.

You can't blame him, right?

No I can't. I enjoy my common dividend myself.

Can you maybe talk a little bit more about the acquisition at this point. You went in to it a lot. I'm interested in, are you looking at anything outside of your core SNFs and ALFs senior housing type stuff. Other why guys obviously are going to a lot of other places? Are you looking outside of your core area?

Well, in our Q, we created a new category called other because we have been getting independent living assets. We always have a few and we left them with assisted living generally. So it's not that we are actively looking at independent living but in most of the meetings that Andy goes to and Clint goes to, independent living operators are going to these meetings also.

So, we are not eliminating them as a possible asset category. And so we bought a few including this one in Virginia that was three services in one building. Right now we are not targeting anything like rehab facilities or surgi-centers or anything like that. We are finding some activity in the skilled and assisted living and a little bit of the independent living.

Great. Well, thanks Wendy.

You're welcome, John.

The next question come from Mark Latinsky with BMO Capital Markets.

Hi. Good morning.

Good morning, Mark.

Couple of questions for you. Sounds like you got a couple of deals in the pipeline but also a little bit of caution I guess on that as well. Do you guys see a return to the $40 million a year in acquisitions. Is that in the cards for you?

Do you think, do I think that we will only do 40 million a year in acquisitions?

No. But historically that was a target for you guys. And I was wondering for that is something that you would like to target going forward.

No I would like to target more but it all depends on what is available. Over the last couple of years we have positioned ourselves by increasing our liquidity to be able to take advantage of opportunities. So, if he were just going to limit yourselves to the $40 million as a target we are spending a whole lot in unused fees to do that. So, the fact that we want to maintain our bank line is totally available, and get this shelf from Prudential, it would indicate we are more hopeful we will be able to use this money than in the past.

Okay. And I saw in the Q, it looks like a tenant is exercising a purchased option on a property. Do they have other purchase options available?

We only have one other purchase options that Colorado, a very small property in Colorado.

So, that's not something typically structured into your leases?

Correct.

I was wondering if you could provide update on if coverage levels for sunrise and assisted living concept any change there?

Hold on, Pam is pulling the schedule.

They were essentially for ALC, they were flat increased 36 basis points from an increase they are not decreasing any longer. So, that's positive. Sunrise however had a decrease of 97 basis points. Then from coverage ALC increased coverage to their EBITDA coverage is 1.3 and Sunrise's coverage is 1.

So, is that before or after (inaudible) fees.

Before fees. And the Sunrise appears to be in one property in Pennsylvania. And we are following up to see. They had an additional rent accrual.

Additional real estate tax accrual, we didn't understand. And they've also had a drop in occupancy at this one property in Pennsylvania. So we are initiating a dialog with them to try to get a better understanding as to why that's occurring.

So it's one specific property.

And we've visited the property for routine inspection within the last few months. So from a physical plant standpoint there were no significant issues that needed immediate attention. So, we are continuing to monitor and keep our eyes on that portfolio.

Okay. Thank you.

You're welcome.

(Operator Instructions) This concludes our question-and-answer session. I would like to turn the conference back over to Wendy Simpson for any closing remarks.

Thank you, Amy. Thank you all for spending your time to listen to our report. And if anybody has any questions please feel free to call Pam or me before 2PM today since we were in at 5AM We maybe leaving a little early today. Thank you all and have a good week. Bye-bye.

The conference is now concluded thank you for attending today's presentation, you may now disconnect