NNN REIT Inc (NNN) 0 Q0 法說會逐字稿

Welcome to the Commercial Net Lease Realty, Inc. year-end 2005 earnings conference call. [OPERATOR INSTRUCTIONS]

It is now my pleasure to introduce your host, Mr. Craig Macnab, Chief Executive Officer.

Thank you.

Mr. Macnab, you may begin.

Thank you very much.

And good morning and welcome to our fourth quarter 2005 earnings release call.

I have with me Kevin Habicht, our Chief Financial Officer, who will report on fourth quarter financial results after certain brief opening comments from me.

We're delighted to be announcing record FFO per share of $1.54 from operations.

We're very satisfied with what all of us at NNN accomplished in 2005 as well as our performance in the fourth quarter.

Late in December, NNN set a record when we closed our single largest transaction to date.

This portfolio acquisition, plus other activities we're working on, provides us with excellent momentum and visibility for 2006.

We closed out 2005 with a well-diversified portfolio of 524 properties located in 41 states.

Our portfolio continues to be in excellent shape, with occupancy improving to 98.3%.

We have nine lease renewals in 2006; hence, we're optimistic that the occupancy percentage will continue to be very high.

In the most recent quarter, we acquired 60 properties for $156.7 million for our investment portfolio, at a weighted average cap rate that is in line of our guidance of 8.75% for 2006.

The largest acquisition that we made was a portfolio of Circle K-branded convenience stores.

These properties are located in Texas and Oklahoma, and the operator of these convenience stores is the overwhelmingly dominant operator in their market, and we have considerable respect for the extremely competent management team.

For the 12 months ended December 31, 2005, we acquired $332 million of investment properties, which is significantly in excess of the annual goal that we established 12 months ago.

However, the large convenience store acquisition that was made in late December will really only impact 2006, given the timing of that closing.

In the fourth quarter, we announced that we're marketing our large office building that is located in the Pentagon City area and leased to the U.S. government.

We're in the early stages of this process and encouraged with the interest in this high-quality asset.

I expect that by the time of our next conference call, we will be able to provide more details, and I regret that we're unable to further discuss this subject on this call.

The sale of this property, combined with tax-efficiently reinvesting the proceeds in a portfolio of retail properties, will help us grow our FFO in 2006 and beyond.

Over the past two years, our acquisition program and team went through a successful metamorphosis, and although the team has made changes, our focus continues to be on retail properties.

We continue to see the more significant retail properties that are brought to market, but more importantly, our team is doing a good job of directly calling on acquisition prospects.

These missionary sales activities, where we are seeing to develop relationships with retailers, have be fruitful, as evidenced by our activity in 2005, as well as our current pipeline.

We are focusing more of our efforts on portfolio transactions, rather than individual property acquisitions.

There are several implications of focusing on larger portfolio transactions.

By definition, immediately after closing a portfolio acquisition, our tenant concentration will alter.

However, this will mitigate over time, as we acquire other properties.

Also, these portfolio acquisitions provide us the opportunity to remarket, on an individual basis, some of the properties we acquire in those portfolio transactions.

As a result, we expect our gains from selling properties in our taxable REIT subsidiary to increase in the next 12 months.

In 2005, our development group had a productive year.

We completed the development of and sold seven drugstores, three other free-standing projects, and one multi-tenant retail property.

In the fourth quarter, we closed on the purchase of the prop -- of property and began construction on three free-standing projects.

As the scope of our development activity expands, we also expect that, over time, we will be able to develop retail properties for our own portfolio at double-digit type yields.

In summary, we had a very successful and productive 2005, and are optimistic about the way we're positioned to continue to grow our FFO per share in 2006.

I will now hand over to Kevin, who will review our results, as well as update our guidance for 2006.

Thanks, Craig, and let me start with the cautionary statement that we will make certain statements that will be considered to be forward-looking under federal security laws.

The Company's actual future results may differ significantly from the matters discussed in any forward-looking statements, and we may not release revisions to those forward-looking statements to reflect changes after those statements are made.

Factors and risks that could cause actual results to differ materially from expectations are disclosed from time-to-time in greater detail in the Company's filings with SEC and in this morning's press released.

With that handled, I'm glad to report that 2005 was a year of improved results and a year of activities and progress that will allow us to continue that trend in 2006.

The results of the fourth quarter were impacted by our previously reported investment in a status quo mortgage residual assets that we acquired in May, 2005, when we invested $9.4 million to acquire the 79 -- 80.9% interest in the Orange Avenue Mortgage Investments.

In connection with that acquisition, during the fourth quarter we obtained a third-party valuation of mortgage -- of the mortgage residual assets that was owned by Orange Avenue, as well as converted Orange Avenue from a 'C' corp to a REIT.

So while these -- these actions produced a large positive impact on our bottom line, it did add a layer of reporting to our results.

For the quarter, these actions resulted in a $3 million extraordinary gain, and $2.4 million impairment charge.

For the year, the extraordinary gain was $14.8 million.

While I'm not going to be going into the details FAS 41, which produced this, on today's call, both of these items are noncash items, but we believe are indicative of the significant positive -- net positive value creation of this investment.

While we have reported the customary earnings per share and FFO per share amounts in our press release, for purposes of our analyzing our operating results, we have also reported FFO numbers, excluding both the extraordinary gain and the mortgage residual impairment for 2005, as well as the transition charges in 2004, for comparative purposes.

On that basis, we reported FFO operations for the fourth quarter of 2005 of $21.942 million or $0.40 per share, which compares with $0.40 for the same period in '04.

Likewise, for the year, FFO increased to $84.185 million or $1.54 for 2005, compared with $1.48 per share in 2004, and this represents the 4.1% increase in per share results.

We're pleased with the improved results, and we see 2006 continuing that trend, And I'll talk about our increased guidance for '06 in just a moment, but first some fourth quarter details.

Looking at the income statement line items, total revenues for the fourth quarter were $41 million.

The increase from the fourth quarter of '04 is primarily a result of the revenues from investments made over the past year.

As Craig indicated, acquisitions in the core portfolio have totaled $157 million in the fourth quarter and just over $332 million for the year.

Occupancy at year-end '05 was 98.3%, which is down 90 basis points from the immediately prior quarter, primarily from two Winn Dixie leases that were rejected in bankruptcy.

But the occupancy was up 90 basis points from the year-ago numbers.

Also in our revenue section, we reported a $1.3 million gain on sale from disposition of three properties in our taxable REIT sub, which were not rent producing at the time of sale.

Accordingly, the sales are showing up in our revenue section of continuing op, rather than the disc ops, like most property dispositions.

Interest income -- interest income and other income from real estate transaction consists primarily of mortgage and mezzanine loan income and some miscellaneous items.

The $988,000 decrease to $1.3 million came primarily from our lower mezzanine loan balances compared to last year.

At the end of the quarter we had $28 million outstanding in structured mezzanine loans.

The $2.6 million of interest income from mortgage residuals assets was produced again by the -- our May 2005 equity -- acquisitional equity interest in Orange Avenue Mortgage Investments, which is -- since then has been consolidated on our books.

Prior to that, as we reported, on the revenue side this investment produces interest income from the residual interest in the mortgage loans securitizations, offset by some interest expense on $28 million in notes payable and some G&A on the expense side.

Given the activity that we had in this entity in the fourth quarter, we have included some additional disclosure on this entity in our press release.

G&A expense was $6.6 million for the quarter and largely in line with the guidance previously given.

For the year, G&A was up 1.8% from prior-year amounts.

As a percent of revenues, though, G&A declined 200 basis points to 16.1% for 2005.

Property expenses were $3.9 million, which was up $826,000 from prior quarter, offset by about a $300,000 increase in tenant reimbursements, and most of this came from office properties.

I have already discussed the context of the $2.4 million impairment charge and $3 million extraordinary gain in condection -- in connection with our mortgage residual investment We will complete evaluations of the mortgage residual assets quarterly going forward, which could add some variability to our bottom line, as prepayment speed related to the underling loans may accelerate or decelerate from assumed levels.

But, importantly, given our $9.4 million investment to acquire this equity interest, the net benefit of return to the Company should be meaningful, even under less than optimal market conditions.

In other expenses and revenues, interest and other income increased modestly to $862,000 for the quarter, primarily from interest income from higher cash balances and interest rates, offset partly by a lower outstanding loan balance to one of our subsidiary units.

Interest expense for the fourth quarter increased to $10.8 million from $8.3 million, primarily to the higher outstanding debt balances and higher short-term rates.

At year-end '05, we had $183 million or 20% of our $900 million total liabilities were floating rate; however, floating rate as a percent of total growth assets -- which I frankly think is a more meaningful metric -- was 10% at year end.

The equity and earnings from unconsolidated entities was a negative $82,000.

That compares with $1.03 million of income last year, and compares with $111,000 last quarter.

The significant decline from 2004, and relatively flat comparison with third quarter '05, is primarily, again, due again to the May 2005 purchase of the equity interest in Orange Avenue.

The minority interest we previously held in these mortgage securities were recorded as equity and earnings previously; now being consolidated, as I mentioned.

Currently and going forward, this line item -- this equity and earnings line item will primarily represent the GAAP results from our 25% equity interest in our headquarters office building.

In discontinued ops, the investment portfolio portion, we sold three properties from our core portfolio, generating $3.4 million of net proceeds, primarily as a part of our portfolio pruning.

The gain in the operating results of these properties are included in the supplemental information in the press release.

Discontinued ops, inventory properties, we sold a total of ten properties from our taxable sub, three of which I mentioned previously in my comments on the revenue section.

Four of the ten properties sold were from our development unit, and generated a gain of $3.3 million, net of minority interests, with net proceeds of $16.7 million.

The other six properties were sold out of our 1031 exchange unit and generated a gain of $688,000, with net proceeds of $4.8 million.

With our active acquisition pace in the fourth quarter, we have an above average amount of inventory held for sale in our taxable subsidiary, which we'll be actively -- we will be actively marketing in 2006.

The market for the disposition of properties developed or acquired for sale continues to be robust, and we expect good gains this year.

As indicated there will be choppiness in our reported gain on sale number from quarter-to-quarter, depending on the timing of the sales.

With regard to FFO guidance, we are -- increased our guidance to $1.58 to $1.62 per share for 2006, increasing the top end of the range by $0.02, and representing a 4% increase from 2005, $1.54 to mid-point '06.

The guidance is based on $130 million of portfolio acquisitions, disposing of the Washington, D.C. office building, plus $40 million of additional portfolio dispositions, G&A expense of $25.3 million, $8.7 million of income from our mortgage residual interest income, taxable [REIT-considered] gain on sales of approximately $20 million.

That's pretax, but after any minority interest.

And we anticipate a por -- a mezz loan payoff of $24.3 million in the second quarter of '06.

As always, these projections are based on a number of factors and uncertainties discussed in our filings.

Moving to the balance sheet, we finished '05 with total liabilities of $900 million.

Of that amount, $151 million was mortgage debt.

Approximately 17% of our total assets are encumbered by mortgages, leaving nearly 83% of the assets unencumbered.

During the fourth quarter, we did complete $150 million ten-year unsecured notes offering at 6.18% effective rate.

Additionally, we issued 705,000 shares of common stock from our stock purchase REITprogram, which generated net proceeds of $13.9 million.

At year end, total debt [with] total assets on a gross-book basis was 49.2%.

On a market cap basis, leverage 42.9%.

With our acquisition pace in the fourth quarter, our overall leverage has drifted higher at year end, but will decline meaningfully with our sale of our TSA DC office property.

Interest coverage was 3.2 times for the fourth quarter and 3.6 times for the year.

Fixed charge coverage 2.6 for the quarter, and 2.9 times for the year 2005.

Again, we expect these coverages to rise with the sale -- reduce leverage from the sale of our TSA DC office property.

In closing, we felt pretty good about 2005.

Progress was made on several fronts, and we see a solid 2006 in front of us.

We believe we have additional opportunities to create value through targeted acquisitions, developments, dispositions and drive incremental per share results.

We do have a solid portfolio of properties in equally solid capital structure and are focussed on growing the bottom line, and are very optimistic we'll be able to do that again in 2006.

With that, I think we'll take questions.

Dan, thank you very much.

[OPERATOR INSTRUCTIONS] Our first question is coming from Ross Nussbaum of Banc of America.

Please proceed with your question.

Hi, guys.

Good morning.

A couple questions.

First, Kevin, let me start with the inventory portfolio.

I just want to make sure I understand your comments here.

The balance at year end was about $130 million?

Correct.

And it was about half that a year ago.

So are you assuming the profits in that business are going to be double in '06 what they were '05?

Not really.

If you look at our total gain on sale from our taxable REIT subsidiary last year, there's about $17 million of gain on sale, and we're projecting $20 million of gain on sale in '06.

Why wouldn't it be higher, considering the inventory balance is doubled?

Well, I think we're not necessarily projecting all of it -- that the inventory level will go back to the, prior year amount, necessarily, first of all.

And some of the properties in that entity may end up -- we may move to the REIT some of the development properties.

Okay.

Then I just wanted to clarify, you said $17 million in '05?

Yes.

But I'm looking in -- you have a table from earnings from discontinued operations in the press release where it says for '05, it was $9.3 million from the inventory portfolio?

I'm not -- if you look at our note 1, the supplemental information on the real estate, because what you have to kind of -- unfortunately, because of GAAP, we have some gain reported in our continuing ops in the revenue section and then the balance is in dis ops --

Right.

-- in the inventory portfolio.

So, if you get back to that page that has the real estate disposition summary on it, you'll see $15.6 million from our inventory portfolio, net of minority interest.

And there was about $1+ million or so of additional income that didn't flow through gain on sales thr -- flow through like fee income and those kind of line items.

So, round numbers, $17 million for '05 was about what was generated from taxable REIT from sale -- subsidiary gains.

And is that a pretax or after tax number?

That is a pretax number.

Okay.

That made part of the difference.

Okay.

Can you discuss maybe, Craig, what impact you expect Office Max to have on the Company?

Yes.

Russ, thank you.

Just -- before doing that, just as a reminder, we are increasing -- you know, the gist of your question is, do we expect more activity in our taxable REIT subsidiary?

And I think our development activity's going to remain about the same.

But given some of our recent activity on the acquisition side, our inventory of currently leased properties that we are planning to try to resell is at a higher level.

I think it's at a seasonally high level, at present; but we do expect more profitability in the taxable REIT subsidiary in 2006 than in 2005.

In terms of Office Max, yes, they are closing some stores and we do expect that a small number of our stores will be closed and, in fact, the number is two, one of which -- and let's remind ourselves that Office Max continues to be obligated to pay rental income.

We already have pretty good interest on one of these properties from a high-credit, mid-sized box retailer, and it's a very well-located store in south Texas and it's going to be just fine.

In terms of the other one, we've probably got a little more work to do to lease it up, but we will gladly continue to take Office Max's rental.

Okay and the last question, Kevin, can you explain -- I may have missed this -- during the quarter, you had an income tax benefit that was actually almost equivalent to what you reported for the first nine months of the year, combined.

What -- what's going on with that line item?

Yes, and unfortunately, again, some of this relates to you have to kind of consolidate back the disc ops, because we have a lot of tax expense over there.

And secondly, it was connection -- in connection with with the REIT conversion of Orange Avenue.

We picked up some benefit there during the quarter in connection with that.

Okay.

I'll follow-up -- take on some of this.

Okay, thank you.

Our next question is coming from Eric Rothman of Wachovia Securities.

Please proceed with you question.

Good morning.

I was hoping to get a bit more information on the impairment charge respect to Orange Avenue.

I guess, what triggered that?

Yes.

Really, when -- and I don't want to get too far in the weeds at all.

Frankly, on 141, I'm happy to talk about it at length, because it is a little complex.

In connection with the acquisition, in May, when we acquired the assets, we -- you put down an estimated value for all the assets and liabilities of the company.

And to the extent you have more complex assets or liabilities, you go get a valuation to make sure you put it down the right amount, and that's all under FAS 141 And so we engaged a third- party to do a valuation on those residuals and made adjustments for that, as well as the tax liability related to the REIT conversion.

Eric, let's just step back for a second.

And it's aggravating to us here that the GAAP accounting around this Orange Avenue investment obscures what's, number one, a good investment in Orange Avenue, but number 2, makes our financial statements at the end of this year more complex that what they should be, given what we thought was a good quarter and a good year.

But if you just step back to spend a little more time on Orange Avenue, as Kevin mentioned, we invested about $9.4 million.

We have now converted it to a REIT.

That took a lot of work, a lot of time, But it was very creative by Kevin and his team, because what it's going to do is it's going to save us millions of dollars in future benefits, which is going [annuit] to our shareholders.

But that $9.4 million is going to produce multiples of that to our shareholders over the next several years.

Having said that, it's a small part of commercial lease realty going forward.

Messy in accounting, I'm embarrassed to admit.

Sure.

So this is purely triggered by an accounting adjustment, not necessarily -- I guess I don't quite understand.

When you say that you had a valuation done in the fourth quarter, I guess I would have assumed that you would have had a valuation done when you purchased it.

Just it's surprising that there would be this charge --

We did -- I mean, the valuation is effectively being done at the date of acquisition, but given there's -- you know, the securitizations have a thousand loans in them.

It's a complex -- it's not like appraising a property.

There's a lot of assumptions built in, and prepayment speeds, and loan loss assumptions, and all kinds of good things -- discounts rates.

So it's a complicated thing to produce a valuation on, and FAS 141 actually gives you one year to get that resolved.

We wanted to get it resolved before year end, obviously, but that's what's required.

Sure.

Then, I guess, how was the valuation determined for what you paid for?

Say that again?

How did you determine what you would pay for it?

Our $9.4 million investment?

Yes.

That was an option that we had that originated in the year 2000, and we had an option to exercise it or not exercise it.

Okay so that $9.4 million was the exercise?

That was a fixed number, yes.

Okay.

And so the carrying value today is $7 million?

The carrying value?

I guess of your investment in Orange Avenue, If you've got a $9.4 million acquisition price, a $2.4 million impairment?

Not exactly, because we're now consolidating the whole Orange Avenue entity onto our balance sheet, which we've included a summary of those numbers on our balance sheet.

And I can kind of walk through you how that works.

But just step back, again, Eric, and your questions are most appropriate, given the press release.

But that $9.4 million, we think over a period of time is going to lead to income coming our way of about $40 million, which is what we projected when we first talked about this.

These impairments and the tax, the impact of converting it to a REIT, let's remind ourselves. are noncash.

Yes, just to kind of wrap up on that topic, I mean, we -- in terms of how we think of the operation of the Company, we came to the conclusion that, excluding the gain and the impairment was the way that we thought about our operations and is why we presented those numbers, as well, to you all.

Sure.

Moving on, just a couple of quick items.

The 8.75% cap rate that you quoted, I assume that's a GAAP cap rate, is that correct?

Correct.

What would that roughly be cash?

Initial year?

Every property is different, but it's slightly higher than 8% --

So, closer to an 8?

In terms of --

Slightly higher, yes.

But closer to an 8%.

You're right.

Sure. straight-line rent for the quarter, how much straight-line rent was there?

Yes, let me get that for you.

Let me circle back to you on that.

I'm --

Just a moment, here.

Sure, sure.

I --

Any other questions?

Yes, the last question.

I noticed in the recent days there's been a number of new hires or promotions.

What can you tell us about that?

Is this part of a change in strategy, of filling out your team?

Anything we should should intuit from it?

Eric, almost all of these people -- I think all of them were internal promotions.

For example, we recently promoted our Assistant General Council to General Council.

He's played a terrific role in helping us complete some of these acquisitions and is a accomplished, experienced real estate attorney.

A development director in our midwest office, Peter [Gofstein] has been promoted.

It's just recognition of the job that several of our key associates are performing.

So you're not actually expanding your team?

Not really.

I mean, we have hired a new development director in the southeast who's an experienced developer, comes from a large multi-tenant development organization.

We were very pleased to hire him.

But other than that, I really don't believe there were many external hires.

An IT executive is being promoted, Dan [Turbo], but it was really internal promotions, Eric.

Great.

I guess just lastly, related to that -- maybe I missed it -- what do you expect for G&A in '06?

$25.3 million was the guidance.

Great.

Thank you very much.

Let me circle back to you on your straight-line rents question. $501,000 for the fourth quarter '05 on straight-line rent.

The offsetting capital lease -- direct financing lease adjustment is going the other way.

It's $731,000.

Right.

Thank you very much.

Our next question is coming from David Carlisle of Citigroup.

Please proceed with your question.

Hi, good morning.

Jonathan Litt and Michael Bilerman are here with me also.

I wanted to follow-up on the $20 million of gains that you mentioned.

How much of that will actually be included in FFO on an after tax basis?

Well, after tax -- I mean there's -- you know, I guess you could argue that it's 60% of that number, call it $12 million, but then you've got overhead associated with that.

So, after tax, after overhead, it's less impactful to the bottom line than that $20 million might appear.

But your overhead's included in G&A?

Correct.

And so you would expect, basically, a 40% tax increase off of the $20 million?

No.

For example, the bottom line impact from a taxable sub in '05 was about $5 million, after tax, after overhead, after -- all gains in G&A, et cetera.

And that number will go up modestly, about $6 million in '06.

Meaning that, you know, the incremental $3 million or so of gains, once you tax affect it and have some overhead, is not going to all drop to the bottom line, obviously.

Move to another topic.

I was wondering if you could comment on the press release where Bob Evans Restaurants put out where they said that you and a JV partner, Woodmont, had purchased ten of their properties, including eight restaurants that they closed?

David, thanks very much.

We are -- that press release, frankly, is a little premature.

But, we are going to be closing on a -- Bob Evans;

I guess, is closing these operations in the Dallas/Fort Worth area, and we are acquiring these with the intent of releasing them and marketing them for sale.

It's a fairly small transaction.

The early indications are quite promising in terms of the releasing.

We have a couple of financial institutions, banks interested, a number of high quality restaurants, and we expect to make -- you know, over the next 18 months, on a pretax basis, a couple of million dollars from that.

Okay.

And then, in regards to Sports Authority, obviously there's a bid from Leonard Green.

Do you -- how do you see that potentially affecting your Sports Authority stores?

Well, I think the good news -- Sports Authority's obviously an important tenant of ours.

The good news is Sports Authority, with their reenergized management team, the addition of some of the people they brought, their improved merchandising, is executed quite well over the last 12, 18 months.

Leonard Green has meaningful presence in this catagory and, in fact, has had a previous involvement in the Sports Authority.

And it's good recognition of the accomplishments of the management team at Sports Authority that there's this pending transaction.

In terms of activity for us going forward or the impact on any landlords, I see it as being pretty small.

One small benefit is that prospectively, in order to produce the types of returns that Leonard Green will be expecting from this investment, Sports Authority needs to more aggressively open stores, which they are well positioned to do, as they've improved their internal store economics.

So I think niche, niche, niche, it's a positive for the industry.

For us, it's going to have more -- little or no impact.

Okay, great.

I think Michael Bilerman has one more question for you.

Craig, can you argue that maybe to make it -- the numbers work for him, you would need to close stores and get rid of maybe some underperforming and raise capital?

I think they've already done that in their operations, Michael.

I think they've already closed a number of stores.

They did that -- they've done that in the last 15-18 months.

Maybe they need to do some more, I don't know about that.

And then, just getting back to the gains, is there any other gains outside of the $20 million adjusted for taxes, included in your FFO guidance of $1.58 to $1.62?

No.

Okay, great.

Thank you --

And again, just putting that in perspective with the numbers that Kevin mentioned, as a percent of FFO, it is a small number.

It sounds bigger when you talk $17 to $20 million, but when you back out the overhead and you back out the taxes, it's a small amount.

Obviously our opportunity is to increase it, but even if we increase it as a percentage, it is small change.

Great.

Thank you.

[OPERATOR INSTRUCTIONS] Our next question is coming from David Fick of Stifel Nicolaus.

Please proceed with your question.

Good morning.

I know, Craig, that you don't want to talk about the TSA transaction in detail.

I'm just wondering if, generally, you can comment on its impact on your guidance?

And on the numbers this year.

David, I think that, as we've looked at our guidance for this year, we --we have -- if the process of marketing the TSA building continues to make progress, which right now it is, we may have the opportunity to realize higher sales proceeds from this building than we're currently budgeting.

But that's -- in order to take advantage of that, we need to reinvest the proceeds in well underwritten retail properties at a higher spread.

So there's a couple of things that need to occur for it to have further positive impact.

But I think, going into the second half of '06 and into '07, there might be that opportunity.

You have made some adjustments, obviously, to your revenue projections in terms of that asset, you know, not producing NOI and, perhaps, a timing gap in getting the capital redeployed?

Yes, we have.

Our projection does assume selling that building.

I'm hopeful that we'll be able to sell it for more money than we've currently budgeted.

And the gain on that would be excluded from FFO, in any case?

Yes, it would be.

Yes.

Okay, great.

Thank you.

Gentlemen, I show no further questions in the queue at this time.

Do you have any further comments?

Thank you very much.

We appreciate your support and interest, and we're encouraged about our opportunity to build value for shareholders this year.

Thanks very much.

We look forward to talking to you in a couple of months.

Ladies and gentlemen, this does conclude today's teleconference.

You may disconnect your lines at this time.

Thank you for your participation.