NNN REIT Inc (NNN) 2018 Q1 法說會逐字稿

Greetings, and welcome to the National Retail Properties First Quarter 2018 Operating Results.

(Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Jay Whitehurst, Chief Executive Officer for National Retail Properties.

Thank you.

Mr. Whitehurst, you may begin.

Thanks, Doug.

Good morning, and welcome to the National Retail Properties First Quarter 2018 Earnings Call.

Joining me on this call is our Chief Financial Officer, Kevin Habicht.

After some brief opening remarks, I'll turn the call over to Kevin to discuss our financial results in more detail.

I'm pleased to report that National Retail Properties posted impressive results for the first quarter of 2018 in every aspect of our business.

Based on this strong start to the year, we're increasing our guidance for 2018 core FFO per share by $0.02 per share to $2.62 to $2.66.

At the midpoint, this equates to almost a 5% increase over actual 2017 core FFO per share results.

As we've said many times, our business model is designed and executed to produce consistent mid-single-digits per share growth on a multiyear basis, and we believe we're on track to continue that outstanding record in 2018.

Perhaps the most notable highlight of our first quarter is the sale of a single property for almost $40 million at roughly a 2% cap rate.

This is the disposition that we alluded to in last quarter's call, and it exemplifies our focus on acquiring good real estate then actively managing our portfolio to maximize the value of each property.

I want to acknowledge the efforts of our dispositions, asset management and legal teams for their hard work and dedication in the execution of this important transaction, including particularly Paul Bayer, our Chief Investment Officer; and Erik Nelson, our Director of Dispositions.

This transaction, plus our other property sales in the first quarter, altogether totaling $72 million at a weighted average cap rate of 4% validates our business plan to utilize dispositions as a source of capital when the equity markets are choppy.

Combining capital from dispositions with our retained earnings and the ample dry powder provided by our low-leverage balance sheet, National Retail Properties is well positioned to maintain our anticipated acquisition pace and otherwise address any opportunities or challenges we may encounter.

During the first quarter of 2018, our broadly diversified portfolio of 2,800 single-tenant retail properties remained healthy, with an occupancy rate above 99%.

The primary lines of trade in our portfolio focus on customer services, customer experiences and e-commerce-resistant consumer necessities, with little exposure to apparel or other more mall-based concepts that are struggling and getting negative headlines.

Moreover, our top tenants continue to perform well in their respective businesses and grow their store count.

During the quarter, 7-Eleven completed its acquisition of Sunoco's retail units, and 7-Eleven is now our top tenant, with 152 properties spread across 5 states and comprising 6.2% of our total annual base rent.

I want to point out that our 7-Eleven stores were initially leased to high-quality regional operators with which we did recurring sale leaseback business.

Our original tenants grew through expansion and consolidation, and our stores were ultimately acquired by 7-Eleven.

Thus, we've ended up with leases to an investment-grade tenant, 7-Eleven, on terms materially better than would have been possible in a direct transaction with such a creditworthy company.

On the acquisition front, in the first quarter, we invested $177 million in 52 single-tenant retail properties at an initial cash cap rate of 6.7% and with an average lease duration of just under 20 years.

As usual, our primary strategic focus was on doing direct, recurring, off-market business with relationship tenants, and that relationship business accounted for over 75% of our dollars invested in the first quarter.

With a strong balance sheet and access to well-priced capital, a healthy portfolio and a solid acquisition pipeline, National Retail Properties remains well positioned to continue producing consistent mid-single-digits core FFO per share growth on a multiyear basis.

Let me now turn the call over to Kevin for his additional comments on our results.

Thanks, Jay, and I'll start off, as usual, with the cautionary statement that we will make certain statements that may be considered to be forward-looking statements under federal securities law.

Company's actual future results may differ significantly from the matters discussed in these forward-looking statements, and we may not release revisions to these forward-looking statements to reflect changes after the statements were 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 the SEC and in this morning's press release.

With that, headlines from this morning's press release.

Report -- record quarterly results of $0.67 per share for the first quarter of 2018, which represents an 11.7% increase over prior year results and a 6.3% increase over the immediately preceding fourth quarter of 2017.

So a solid start to the year, which positions us to increase our core FFO guidance by $0.02 per share to $2.62 to $2.66 per share for 2018, which is a 5% increase over 2017 results.

We're optimistic 2018 will be a continuation of our mid-single-digit per share multiyear growth goal while maintaining a strong and liquid balance sheet and not relying on large amounts of short-term and/or floating-rate debt.

Our AFFO dividend payout ratio was 70.9% for the first quarter.

Occupancy ticked up 10 basis points to 99.2% at March 31.

I will note, as the leases on 20 SunTrust properties expire April 1, the occupancy is expected to tick down a bit in second quarter, but that's all fully baked into our guidance.

We continue to drive additional operating efficiencies, with G&A expense decreasing to 5.7% of revenues for the first quarter of 2018, and that's compared to 6.3% a year ago and compared with 5.8% in the immediately preceding fourth quarter.

For purposes of modeling 2018's results, the annual base rent in place for all leases as of March 31, 2018, was $594 million.

This allows you to take some of the guesswork or estimation out of the timing of Q1 acquisitions and dispositions as you think about 2018 projections.

As I mentioned, we did increase our 2018 core FFO guidance by $0.02 per share, implying 5% growth in annual results.

The only change in the guidance assumptions on Page 6 of our press release was the $20 million increase in disposition volume to $100 million to $140 million for the year.

During the first quarter of 2018, we did not issue any common equity via our ATM equity program.

However, the combination of our retained AFFO of $30.1 million, that's after all dividend payments, plus the $71.6 million of disposition proceeds provided 58% of the $177 million invested in new acquisitions, allowing us to maintain a leverage-neutral posture while still growing first quarter results versus fourth quarter 2017 results.

We ended the first quarter with only $176 million outstanding on our bank line, leaving $724 million of availability.

We've not been big users of that short-term variable rate part of our capital stack for many years.

We remain very well positioned from a liquidity perspective and a leverage position.

With the exception of our bank line, all of our outstanding debt is fixed rate.

Our balance sheet remains in good position to fund future acquisitions and weather potential economic and capital market turmoil.

Looking at the quarter-end leverage metrics.

Debt-to-gross book assets was 35.5%, nearly unchanged from 12/31/17 numbers.

As you know, we've never managed our balance sheet around market cap-based leverage metrics.

More relevant, we believe, is debt to EBITDA was 4.9x at March 31, and that's -- compares with 4.9x for the fourth quarter of 2017 as well.

Interest coverage was 5.1x for the first quarter of 2018, and fixed charge coverage was 3.8x for the first quarter.

Only 5 of our 2,800 properties are encumbered by mortgages, totaling only $13 million.

In closing, I'll note that 2017's 7% increase in core FFO per share results follows 2016's 6% growth, and we believe 2018 will be another year of solid growth in operating results.

When sourcing capital and making capital allocation investment decisions, driving per share results on a multiyear basis is at the forefront of our minds, not volume nor size.

So with that, we will open it up for any questions, Doug.

(Operator Instructions) Our first question comes from the line of Nick Joseph with Citi.

What's the latest update on your plans for the SunTrust properties?

If you're talking about the now-vacant SunTrust properties, we -- as Kevin mentioned, we've disposed -- resolved 11 of them.

We've got another 10 that are pending.

We don't want to count all those chickens yet, but we are just working our way through the -- through those vacant SunTrust properties in a timely fashion.

The bigger headline -- or perhaps, your question, Nick, was about the SunTrusts that have renewed, and we are -- those 80 SunTrust properties that we own or the leases have been renewed for 12 years remain excellent disposition fodder for future capital recycling.

They didn't make up, I don't think, any of this [coordinate] first quarter's dispositions, but they are -- some of those properties we're marketing, and they're very good fodder to very accretively sell those properties and redeploy the capital into new acquisitions.

And then what's the timing of potential resolution for the 10?

Our typical vacancies are in the kind of 9- to 12-month range.

We've had time with these SunTrust -- the vacant SunTrusts to do a lot of marketing already.

Job one is always to try to re-lease the properties.

And if we just don't feel like there's a good fit there, then we will sell the properties.

So it's hard to say what the timing will be on these last units, but it's really not very material.

It's immaterial to our numbers at this point.

And probably, I would expect that by the end of 2018, almost all of them will be resolved.

And then just given the rise of interest rates, I'm curious to hear your thoughts on the transaction market.

Any changes that you've seen over the last, call it, 6 to 9 months?

Nick, cap rates have not moved upward at all for the types of properties that we are pursuing.

So it's still what we think of as a low cap rate environment out there for large regional and national non-investment-grade operators with good business and good real estate.

That said, the low cap rate environment is also working on the positive side for us with our dispositions.

So it allows us to sell into that low cap rate market and redeploy the assets into our acquisitions, which are primarily driven from our relationships as opposed to being the lowest bidder -- the highest bidder, lowest cap rate bidder in a competitive marketed environment.

Our next question comes from the line of Brian Hawthorne with RBC Capital Markets.

When you guys are selling a property, have you seen any change in the number of potential buyers?

Brian, the -- no is the short answer to that question.

Our properties are, on average, $2 million to $3 million.

We had that one very big sale.

But typically, we're selling $2 million, $3 million, $4 million, $5 million properties.

And the universe of buyers for those small single-tenant retail properties is huge and very aggressive.

So right now, we think that one-off market is still very hot.

Okay.

And then are there any specific lines of trade that you're trying to -- or you would like to buy more into?

We've got a broadly diversified portfolio right now.

And our primary focus on our acquisitions is through building these recurring relationships with growing retailers.

So our focus is less on line of trade and more on good real estate regardless of the line of trade that's being operated on and then a good operator in that business.

So the -- if you take the other end of your question, the convenience store industry is a very good, strong industry.

We've got great relationships with good operators in that business, and we think that real estate is the -- some of the best and safest in our portfolio.

It's very fungible and well located at a good price.

So we like the real estate that underlies convenience stores.

We like the industry.

And then we build relationships with good operators.

And that's kind of the way we focus on our acquisitions as opposed to kind of redlining any particular line of trade.

Our next question comes from the line of R.J. Milligan with Robert W. Baird.

Jay, can you give a little bit more color on that $40 million disposition?

What was the industry type and sort of the background behind that?

Sure.

I can give some amount of color.

That -- we had a property that was leased to one of our tenants that has adjacent land as part of the overall lease, and that adjacent land was encumbered with a variety of restrictions.

And so the money that we spent in the previous quarter that we talked about on the last quarter's call was to get that property, the adjacent vacant property unencumbered.

And then we sold the entire parcel, the leased property and the vacant property, to one buyer.

There are a bunch of confidentiality agreements involving all that, R.J., so I can't go into a whole lot more detail than that.

But we got this vacant property cleaned up and then sold the whole piece to one buyer.

Okay.

That's helpful.

And so with that $40 million disposition, you guys were able to sell assets at a lower cap rate than where you were buying.

Do you think that that's still a possibility going forward, even removing that one-off opportunity?

Yes, very much so.

There's hundreds, if not thousands, of properties in our portfolio that would trade for cap rates lower than our average acquisition yields.

The 2 particular tenants and properties to -- or property types to talk about in that vein are our SunTrust Bank branches that have been renewed.

We have around 80 SunTrust branches that were renewed for 12-year terms not too long ago with SunTrust, and those trade in the 5s and, call it, around a 6% cap rate in the one-off market.

So they're great fodder for recycling capital.

Also, in my opening comments, we talked about 7-Eleven acquiring the Sunoco properties and becoming a bigger tenant for us.

7-Eleven convenience store properties also trade for very low cap rates, and so we've got opportunities there as well.

But beyond those 2, we've got a lot of other opportunities in the portfolio to sell properties at lower cap rates and recycle into the business that we're doing with our relationship retailers and other properties that we find to buy out in the market.

That's helpful.

And I guess my last question, Jay, is a more general question on net lease.

We've been hearing some tenants in the net lease space are looking to sign shorter lease duration leases.

And I don't know if that's anything that you've noticed out there.

Obviously, your acquisition average lease term this quarter was significantly longer, 20 years.

Just curious if, in sale-leaseback negotiations, if you're seeing a push for shorter lease durations.

Yes.

R.J., I would say we're not seeing a significantly greater push than we always have.

It is important to us when we are negotiating with our relationship retailers to try to get as long a lease term as we can.

And we will trade some other things to get a longer term.

A longer lease term is important to have.

It is why we like the relationship business.

It allows us to have that kind of broad-range discussion with the retailer when you're negotiating the overall lease.

But I think what you're hearing in the market is not inconsistent with what I think a lot of other people are seeing, which is that they're -- more tenants are trying to keep their leases limited to 10 years or so when possible.

Our next question comes from the line of Collin Mings from Raymond James.

Just going back to R.J.'s question, just as far as dispositions.

Just curious, are there any other hidden opportunities kind of embedded in the portfolio or things that you think about [similar to count the unique one you execute] on in 1Q?

Not to be too facetious, but we're 2,800 properties.

I'm sure we've got some other hidden opportunities.

I just think they're hidden.

We have great -- our focus is on buying good, well-located real estate, and so that improves our odds of having good things like this happen occasionally.

Okay, fair enough.

So nothing else kind of in the pipeline currently, but again, as you think about your strategy, do you think it will lend itself to have other opportunities like this as you look at dispositions in the future?

Is that fair?

We -- you should definitely expect us to continue to be marketing and selling some of our lower cap rate properties to recycle back into acquisitions.

Okay.

And then just recognizing your comments again about how broadly you look at acquisition opportunities, but again, looking at automotive service as an example here, that's something that's up sequentially and year-over-year as far as the exposure there.

Can you just maybe talk a little bit more about the opportunities you've been sourcing there and just maybe the competition in that bucket just given that category is just generally viewed as being less exposed to e-commerce?

Correct.

And the -- there's competition in all the lines of trade where we're trying to grow our business, and we're just trying to build relationships with good operators in some of those more e-commerce-resistant lines of trade.

In this case, a lot of the auto service uptick has been with tire stores, and we've built some good relationships in those areas that have generated good risk-adjusted returns for us.

Okay.

And then...

I can't remember -- go ahead.

No, I was just -- just as it relates just to the acquisition strategy.

Just curious, recognizing again a lot of relationship-based deals, but just certainty of close.

How important is that as you -- whether it be relationships or potentially new sources of acquisition in the current environment are -- while you haven't seen a change in cap rates in terms of the acquisition environment, have you seen kind of the sellers being drawn more to the certainty of close you guys offer?

Well, I can't say that we've seen the sellers be more drawn to it, but it is part of the -- certainly, the value proposition for dealing with National Retail Properties is that we have this great line of credit that allows us to close on things at any given time.

And we don't have financing contingencies in our term sheets.

We don't have any partners in our ownership of the property.

And all of those components do often resonate well with those operators and -- with some operators, and those are the folks that we end up forming long-term relationships with.

Certainty of close -- in choppy markets, certainty of being able to close is very valuable to the retailer.

Absolutely.

Our next question comes from the line of Vikram Malhotra with Morgan Stanley.

Our next question comes from the line of Joshua Dennerlein with Bank of America Merrill Lynch.

Just looking at your line of credit, any thoughts on terming that out yet?

Or at what level would you start to think about that?

Yes.

Josh, it's Kevin.

Yes.

I mean, that's definitely on our radar, and we've signaled that to some degree in our disclosures in last quarter's 10-K or fourth quarter of 2017, where we noted that we have put in place 2 forward-starting swaps, which -- in connection with the potential issuance of long-term debt later in 2018.

So that's definitely on our radar.

We've prided ourselves over a lack of usage of that line and still are using less than 20% of our line compared to others who, I think, have been more reliant on that as a form of somewhat permanent capital.

But my benchmark is when the first digit starts with a 2 in the bank line balance, Kevin starts to get a little nervous.

So I don't think that will change much in 2018.

And most importantly, our goal is to continue to drive per share results on a leverage-neutral basis, and so we're working dispositions, et cetera, to make that happen.

But yes, at some point, we'll pay down the bank line.

For the last 6 years -- consecutive years, we've operated with a weighted average bank line balance of under $100 million, and so we're -- just to underline my point that we've not been big users of that credit facility to drive results, despite the fact that it's available and very cheap.

Got it.

And maybe on the opposite end of the spectrum, on equity, how do you think about potentially reactivating the ATM and using that as a source of funds?

Yes.

I mean, it's a great program.

We've used it for a long -- for many years.

We don't give guidance as it relates to specific capital markets activity, so I don't have a lot to tell you there.

I will say last year, when we issued equity on the ATM, it was at an average price of $42 a share.

We did not issue any in the first quarter of 2018.

We understand we could issue equity at this price and still be accretive.

Our issue has -- over the years and then we've had many discussions with many of you on this call, investors, is that we just think our capital decisions need to be sufficiently accretive, not just accretive but sufficiently accretive to make sense to do that.

So the good news is we were able to issue equity -- I'm sorry, to make dispositions in the fourth quarter at about a 4% cap rate, which, if you pencil through the math, creates a -- equivalent of selling stock at $70 a share in round numbers.

And so we've attacked it at a slightly different angle in this environment, and we think we'll be able to continue to do that for a period of time.

Our next question comes from the line of John Massocca from Ladenburg Thalmann.

So if you look at your Sunoco plus your 7-Eleven exposure at the end of last quarter, it was 201 properties.

That 7-Eleven exposure is now 152 properties.

What happened to the balance?

And how many of them ended up in that commission agent structure that Sunoco ended up forming in West Texas?

Yes.

The balance of the properties remained Sunoco's.

So we've got 49, give or take, Sunoco stores that are about a little under 2% of our rent, 1.9% or something like that percent of our rent.

And I think, John, it's around a dozen of our stores out in West Texas became part of that commission marketer acquisition of a bunch of stores from Sunoco.

The rest are -- remain Sunoco-operated stores.

And John, let me just say also, we're really agnostic as to how all that comes out.

They're both good operators.

They're both -- they're good credit, and we owned those properties at what we think are good prices and reasonable rents.

And so we feel good about it no matter how it came out.

Okay.

And with those dozen that are -- or so that are in that commission agent structure, is Sunoco still the last, I guess, line of credit there?

Or is that transferred to whoever ended up taking over those properties?

No.

Sunoco remained on the lease liability for all of those.

Okay, makes sense.

And then you had a decline quarter-over-quarter in the amount of Camping Worlds.

You had -- it went from 46 to 40.

What kind of drove that?

We just sold a small portfolio of existing Camping World stores.

We thought perhaps someone might ask about that.

These were not -- we did not sell any of the Gander Outdoor stores that Camping World has taken over from our former Gander Mountain locations.

Those stores are still kind of getting ramped up and -- but we had the opportunity to just sell a small portfolio of our existing Camping Worlds.

Okay.

And then maybe kind of the other side of the coin.

You guys completed about 30% of the top end of your acquisition volume guidance in 1Q '18.

Understanding there's always kind of limited visibility in your business once you get more than a couple quarters out, is there some reason you would expect the next 3 quarters to be less robust in terms of acquisitions versus what you did this quarter?

Well, John, just like Kevin said, he always worries when the line of credit starts with a 2. We're always concerned that the acquisition volume in the unforeseeable future might dry up, but there's nothing in particular in the environment that would kind of raise that concern for us.

You just can't see very far ahead on your acquisition volume, notwithstanding the high level of acquisitions that we do with our relationship tenants.

Even there, we still don't know -- don't have a great feel for what their volume will be in any particular year.

But there's nothing specific to this quarter in terms of like a portfolio closing or something like that, that would have made this a particularly robust quarter?

No, nothing particular.

It's just timing.

Our next question comes from the line of Todd Stender with Wells Fargo.

Just a quick one for Kevin.

You spoke about the retained cash flow and disposition proceeds from Q1.

Do you have a free cash flow estimate for the full year just as we model out potential for maybe no equity to be raised from the ATM?

Just looking at your free cash flow.

Yes.

It will be around $110 million to $120 million for the year is our estimate.

And so that's an important source and -- plus dispositions.

And then from the dispositions, are there any mortgages on those assets that you potentially could sell?

Or that's really kind of free and clear?

No.

Yes -- no, everything is free and clear.

We really barely have any mortgages at all.

Only 5 properties in our 2,800 portfolio had mortgages on them, so no.

So it's all -- you have pure proceeds whatever we sell.

Our next question comes from the line of Michael Knott with Green Street Advisors.

I just wanted to ask you about how you're thinking about your cost of capital.

I mean, it looks like you trade in kind of the mid-6% type [implied] cap rate range.

Just curious how you're thinking about allocating the degree of capital that's in your guidance today and how you're looking at that for the rest of the year.

Yes.

Thanks, Michael.

It's an important question, we think.

And we don't -- our thought process in deploying capital hasn't changed materially because we really -- despite the fact where our share price might be trading, and I think you said the mid-6s or low-6s.

For equity, we tend to want to burden our cost of equity at a higher cost than that regardless of that 6% kind of trading -- implied cap rate today.

And so we tend to think of our cost of equity as really costing us something closer to 8-plus percent and making those decisions, and then we layer in long-term -- the cost of long-term debt as well as our preferred that's in our capital stack.

And we end up getting to a weighted average cost of capital for purposes of making investment decisions in kind of the low-6% range, and so you've not seen us do any transaction sub-6%.

And frankly, I'm not sure we've done much below 6.5%, but -- so we view that as an important part of our philosophy.

And getting back to what I've alluded to earlier, it's driving sufficient accretion in capital that we deploy.

We could make sub-6% cap acquisitions and still be accretive.

I understand how the math works, but we just don't think it's sufficiently accretive, and we think shareholders are expecting more than that and so are we.

And so I think in terms of how we view our cost of capital today, we think of it as being in kind of the low-6% range for a weighted average cost of capital, including debt and preferred.

Right.

Certainly, I always appreciate the way you guys think about that and -- so it sounds like you're still seeing a sufficient spread over your cost of capital to make value-accretive investments today.

Correct.

Absolutely.

And then, Kevin, can you just comment maybe a little bit more specifically on what caused you to increase the guidance for AFFO a little bit?

Was it the low cap rate sale?

Was it something else?

It looked like the depreciation per share was going up and the net income contribution was going down.

Just curious on sort of what drove that.

Yes.

Nothing -- the dispositions, the low cap rate dispositions in the first quarter.

So $72 million at a 4% cap clearly was the piece of the puzzle for increasing the guidance as well as just a little more visibility into 2018, 3 months more visibility versus where we were a quarter ago.

So really, nothing notable in terms of the assumption changes to drive that.

But just felt better about the assumptions behind all that, so it felt comfortable -- a fairly modest increase in the guidance.

Right.

Okay.

And last one for me would just be -- just a little bit more color on the answer you gave earlier to the lease duration question.

Does that have to do with sort of the pending accounting changes on the lease accounting side that I think are taking effect next year?

What are you seeing there?

Maybe a little bit more color.

Yes.

We don't think so.

It's interesting, in our conversations and in our execution of transactions, that topic, despite the fact that you think it would be on the minds of a number of lessees, would come up, and it really does not.

And so I don't -- we have not seen the pending accounting change next year for leases change any conversation or change any behavior of our customers at this point.

And to be honest, I doubt it will.

Most of the retailers in the United States, including all the ones we do business with, leased many properties and leased many assets beyond real estate.

And so they're going to have to deal with this accounting change, and it will make notable differences to their balance sheets.

So even if they all decided to change their behavior, the balance sheet change is already baked in.

And so I think it's unlikely you're going to see them change their structure of leases going forward, I don't think.

And the rules I don't think are going to allow a material loophole to allow them to do that to escape some of the accounting changes.

So at the moment, we don't see any change from that lease accounting change.

(Operator Instructions) Our next question comes from the line of Chris Lucas with Capital One Securities.

Most of the questions have been asked already, but I did want to follow up on the Gander Mountain dispositions with you, Jay.

Just kind of curious as to what characteristics were present in those particular assets that made you think about selling those.

And are there others in that pool that you'd look to -- sort of look to sell over the next year?

Sure.

Just to clarify, what we sold were some Camping World RV dealerships.

We did not sell any of the Gander Outdoor properties.

So I apologize if I misled you on that.

No, my mistake.

And in that instance, it was just an opportunity to sell this small portfolio that felt like the right thing for us to do.

So there wasn't -- nothing really strategic or trend-worthy to talk about in that disposition.

Okay.

And then, Kevin, on your -- as you think about your potentially issuing long-term debt later this year, any thoughts about what to do with the 2021 [debt]?

I know it's out there as it relates to sort of the only what I would call interest savings opportunity on your debt stack?

Just curious as to how do you think about -- I know the costs are there related to make-whole, but just kind of curious as to how you think about that.

Yes.

Today -- and we've seen a number of companies write very large checks for those make-wholes.

And I understand that you're, in essence, just paying the interest early effectively and kind of pulling forward that expense.

But yes, to date, we've opted not to do anything on the 2021.

It is a bit of an expensive make-whole, and so we've been on the sidelines on that regard.

I think as the year unfolds, we'll -- we continue to think about that, but to date, we just felt like it's a little too expensive to pull the trigger on that.

There are no further questions in queue.

I'd like to hand the call back to management for closing comments.

We thank you for joining us this morning, and we look forward to seeing many of you at the upcoming conferences this summer.

Have a good day.

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

Thank you for your participation.

You may disconnect your lines at this time, and have a wonderful day.