NexPoint Residential Trust Inc (NXRT) 2018 Q1 法說會逐字稿

Good day, and welcome to the NexPoint Residential Trust, Inc. First Quarter 2018 Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Ms. Marilynn Meek. Ma'am, please go ahead.

Thank you. Good day, everyone, and welcome to NexPoint Residential Trust's conference call to review the company's results for the first quarter ended March 31. On the call today are Brian Mitts, Executive Vice President and Chief Financial Officer; and Matt McGraner, Executive Vice President and Chief Investment Officer.

As a reminder, this call is being webcast through the company's website at www.nexpointliving.com. Additionally, a copy of the company's first quarter 2018 supplemental information is available for your review on the Investor Relations section of the company's website.

Before we begin, I would like to remind everyone that this conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management's current expectations, assumptions and beliefs. Forward-looking statements can often be identified by words such as expect, anticipate, intend and similar expressions and variations or negatives of these words. These forward-looking statements include, but are not limited to, statements regarding NexPoint's strategy and guidance for financial results for the full year 2018. They are not guarantees of future results and are subject to risks, uncertainties, assumptions that could cause actual results to differ materially from those expressed in any forward-looking statement. Listeners should not place undue reliance on any forward-looking statements and are encouraged to review the company's most recent annual report on Form 10-K and the company's other filings with the SEC for a more complete discussion of risks and other factors that could affect the forward-looking statements. Except as required by law, NexPoint does not undertake any obligation to publicly update or revise any of the forward-looking statements.

This conference call also includes analysis of funds from operations or FFO, core funds from operations or core FFO, adjusted funds from operations or AFFO and net operating income or NOI, all of which are non-GAAP financial measures of performance. These non-GAAP measures should be used as a supplement to and not a substitute for net income/loss computed in accordance with GAAP. For a more complete discussion of FFO, core FFO, AFFO and NOI, see the company's earnings release that was filed earlier today.

I would now like to turn the call over to Brian Mitts. Please go ahead, Brian.

Thank you, Marilynn. Thanks to everyone who's joining the call. Appreciate your time today. I'm Brian Mitts, and I'm going to start the call. Go through some of the highlights for the quarter, touch on some of the more important numbers and talk about guidance. And then I'm going to turn it over to Matt McGraner, who is also joining me, talk through the portfolio, some of the things we're seeing in the marketplace and I think kind of highlight where we're trading versus where we see some things going on in the -- particularly in the private market, kind of pull everything together and put it into context.

Let me start with some of the highlights for the quarter. I'd say it was definitely a quiet quarter by our standards. But we basically executed our plan and tried to allocate capital in a smart way, which I'll get to here in a second. On that front, we had no acquisitions this quarter. We had one disposition, which we already discussed. It was put out in our subsequent event on the 10-K. And we talked about it last quarter, but that was the Timberglen property located in Dallas, 304 units, sold it for gross proceeds of $30 million, retired the mortgage on that property, $17.2 million. With that transaction, we closed out the reverse 1031 exchange for the Atera property, which is also in Dallas. And then with some of the proceeds, we paid down the remainder of the bridge facility of $8.6 million that we had taken out last year to buy out our JV partner and partially fund the acquisition of the Rockledge asset in Atlanta. On that property, we realized a 45% IRR and a 2.8x multiple on our invested equity. So again, kind of showing the power of the value-add strategy, put up some good returns for our investors.

On the debt side, we reduced our total debt at the end of 2017 of $793 million. At the end of the quarter, it was $767 million. Again, we paid down the Timberglen mortgage when we sold it and then retired that bridge facility. Our effective interest rate through at least June of 2021 is 3.22%. That's as a result of the 6 swaps that we put on over the last few years. And to put that into some context, if you assume LIBOR remains kind of where it is today, which I don't think any of us think that, but if it did, through June of 2021, when the first of these swaps begin to expire, that's a savings to us of $12.5 million, which is about $0.59 per share. So obviously, a pretty powerful tool that we've implemented while still maintaining the flexibility that we get from the floating rate debt. As evidenced by the Timberglen sales, 1% prepayment penalty, no defeasance or any extraordinary cost to sell that property.

On dividends, we had our board meeting yesterday. The board set a dividend of $0.25 per share for the second quarter, be payable, I believe, June 29, for record holders of June 15. That's in keeping with where we set the dividend at the end of the year, which was an increase. In our supplement, we kind of show the increases over the years since we went public. Part of our goal is to maintain a pretty good, healthy coverage from core FFO and then to increase dividends as we increase core FFO. Today, we're still covering our dividend by 1.54x our core FFO, so still in good shape on that front.

On the rehab front, Matt will go through more detail here, but highlights, we completed 298 partial or full upgrades. For the inception-to-date numbers for units we still hold in the portfolio, we've rehabbed 4,527 at an average cost of about $5,000 per unit. We've seen rent growth of 10.8% or about $91 per unit per month from those rehabbed. So I think that's a -- as you see the numbers coming out today and previously and what's going to be reported here in the next week or so, obviously, a 10.8% increase is extremely healthy in this market. So again, showing the power of this strategy and how it brings value to the shareholders. What we see on those historical renovations is a 21.2% return on investment. So again, that's pretty good numbers.

Quite a few rehabs left in the current portfolio. At $5,000 a unit, roughly, that's another $12 million if we figure we got about 2,400 units left in the portfolio. So we think that, that can add quite a bit to core FFO here over the next few quarters and into 2019.

Per usual, in our supplement, we publish our NAV slide to show everybody how we're thinking about value. I'm going to touch on a very high level. Matt will go into a little more detail on how we came about some of the thinking of our cap rates in some of the markets. We lowered them in a couple of markets based on some of the things that we're seeing. And based on all of that, we feel that our NAV at the midpoint is $30.68, well north of where our stock is trading in the $26 context. There's been some market transactions that we've been aware of, that we see and that are public as well as some of the more private ones that we have some information on. Again, Matt will go through those in a little more detail, but I think it highlights how our strategy and our assets are perhaps underappreciated in the public markets versus where they're trading in the private markets.

So with that, I would say one of the biggest highlights in this quarter for us was the share buybacks. If everyone's been following this company for a few years, we put a program in place not quite 2 years ago for $30 million. We've used it pretty aggressively. Certainly, this quarter where you saw a lot of weakness in REITs, we were trading at what we think was a pretty significant discount. So we bought in the first quarter 203,953 shares at an average cost $24.80 per share for $5.1 million. Subsequent to the quarter, we were even, I'd say, more active in the last 30 days, buying 167,267 shares at an average price of $25.75 for a total of $4.3 million. So inception-to-date, over the last 7 quarters, we've bought 725,737 shares at an average price of $22.58 or $16.4 million. So of the $30 million, we've gone through over half of that. And think that based on where we're seeing transactions take place today and where our stock has been trading, we think that's a great use of capital.

As Matt will talk about, we see a lot of kind of 30-year-old assets in secondary markets trading at a 5% cap or lower. So we think buying our stock when we're trading at sort of a 6% cap implied basis or as we look at it also, a discount of about 26% to the average cost of where we've been buying versus where we think NAV is at the midpoint of $30.68. So we think that's a good use of the capital. We think that's very accretive. And because of that, we asked the board yesterday, and they agreed to expand the program to $40 million, which gives us another $23.6 million of dry powder, if you will, and asked them to extend it for 2 years, so through June of 2020. I think we've shown in the past we'll aggressively use that if it's warranted. And if the stock continues to underperform versus where we think NAV is, we'll continue to utilize that.

Let me move on to the results. I'm not going to read through everything here. It's in detail in our release, in our supplement. But just to hit some of the high points. Our total revenues for the first quarter of '18 were $35.1 million. That's versus $37 million for the first quarter of '17, a decrease of 5%. However, I'd note that for the first quarter of '18, we had 32 properties versus 40 properties for the first quarter of '17. So quite a significant drop in properties we own, but only 5% drop in revenue.

Net income, as measured using GAAP, was $10.1 million for the first quarter of '18, $0.47 per diluted share, driven mostly by the gain on the Timberglen sale versus a loss of $3.3 million (sic) [$3.6 million] for the first quarter of '17 or a $0.17 loss per diluted share. Our NOI was $19.1 million for the first quarter 2018 versus $19.7 million for the first quarter of '17, a 2.9% decrease. Again, that's on 32 properties in '18 versus 40 in '17.

Our FFO was $7.7 million for the first quarter of '18 or $0.36 per share versus $8 million for the first quarter of '17 or $0.38 per diluted share. Core FFO was $8.3 million for the first quarter of '18, that's $0.39 per diluted share versus $8.1 million or $0.38 per share for the first quarter of '17. Core FFO is kind of the number we really focus on. So we saw an increase there. AFFO, $9.5 million for the first quarter of '18 or $0.45 per diluted share versus $9.1 million or $0.43 per diluted share in the first quarter of '17, so again, an increase there. For the same-store pool, we had 29 properties in our same-store pool for first quarter. Occupancy was 94.1% versus 94.6% for the first quarter of '17, so a 50 basis point drop, pretty much in line with where we predicted.

Same-store revenue was $30.2 million versus $29.1 million or a 3.6% increase for same store. Same-store NOI was $16.5 million for the first quarter of '18 versus $15.6 million for the first quarter of '17, a 5.9% increase. If you look through our supplement and our earnings release, you'll see that we had a very good quarter from the standpoint of expenses. We're able to get some tax refunds, et cetera, from some of the taxing municipalities as well as better G&A costs. So that helped to drive that same-store NOI number.

Before I turn it back to -- before I turn it over to Matt to go through some of the detail here and then open it up for questions, let me go to guidance. So we are reaffirming our 2018 guidance. Our numbers were well within our range for the first quarter so we feel pretty good going forward.

Just to reiterate, and again, I'm not going to cover all of it here because we disclose it in the earnings release and the supplement. But at the midpoint, we believe NOI or net operating income will be $78.4 million. Core FFO per diluted share, $1.65 at the midpoint; same-store revenues, 5.5% increase at the midpoint; and same-store NOI, 6.5% increase at the midpoint. We were right in that range for our same-store NOI so we feel good about that going forward.

Let me turn it over to Matt to go through some of the details of the portfolio and our markets and give you a little color on what we're seeing versus kind of where we are trading. So Matt?

Yes. Thanks, Brian. To flesh out the same store a little bit more in detail, as Brian mentioned, we did 5.9% same-store growth in the first quarter. The average rent ticked up from $899 last year or last quarter to $933 for the first quarter. That's a 3.9% increase.

The revenues accelerated 3.6% and expenses grew just 90 basis points, as Brian mentioned. Top line growth for the entire portfolio was incredibly strong, 8 out of our 10 markets growing at least by 3.3% or more for historically the worst quarter for seasonality.

Same-store results by market, Dallas had a healthy 9.2%; Houston was negative 9.8%, which we'll get to in a minute; D.C. Metro was 3.8%; Atlanta was 3.4%; Nashville, 10%; Charlotte, 6.5%; Phoenix, 8.2%; West Palm Beach, 10.1%; Orlando, 7.4%; and Tampa, 7.8%, so very healthy in Florida and our 4 markets.

The leasing activity continues to be really strong, especially for the first quarter despite the seasonality. We experienced new lease growth of 4.3% with our top 5 markets being Orlando, Tampa, Phoenix, West Palm and DFW. Orlando came in at 9.5%, Tampa at 8%, Phoenix at 7.6%, West Palm Beach at 7.2% and DFW at 4.5%.

Renewal increases were also strong, averaging 3.9%. Our top markets being Orlando, again, Nashville, Dallas and West Palm Beach. Orlando led with 6%; Nashville, 5.1%; Dallas, 4.8%; and West Palm at 4.4%.

We continue to focus on renewal retention. We did a great job in the first quarter, remained very strong at 52.7%.

Some of the highlights that Brian mentioned that we want to talk about briefly in the market as far as transactional activity. Obviously, we continue to allocate capital to our internal growth initiatives and share repurchase activity. As Brian mentioned, we asked the board and they agreed to extend the plan by 2 years and increase capacity by $10 million. The private market for acquisitions has never been stronger, in our view, and we'll continue to take advantage of the cap rate disconnect between the public and private markets.

In today's market, it's incredibly difficult for us to purchase a value-add asset north of a 5% cap. We've highlighted that in our supplement on Page 8. We give you a sense of 2 trades or 1 deal in play and the other one that was announced late last year and mentioned previously on the call. But to hit the highlights, the Pure Multi-Family REIT process, it's a 7,000-unit portfolio, Southeastern, Southwestern United States. That's reportedly in play at 4.52% cap rate. That's an implied per unit of about $165,000 a unit. And then the Steadfast recap by Blackstone which occurred late last year in November. That's a Southeastern, Southwestern-based portfolio of value-add assets. That transaction was reportedly struck at a 5% cap rate with an implied unit per door value of $185,000 a unit. At our midpoint of our NAV, we're valuing us at 5.64% cap rate and $121,000 a unit is what it equates to on a per unit value. So a pretty good disconnect that we'll continue to use the buyback to take advantage of.

Competition for assets that was a portfolio or competition for assets on a one-off basis are -- they're equally as strong. We received several BOVs and unsolicited offers in certain markets during the quarter which, as Brian mentioned, together with independent third-party analysis, led us to revise our midpoint upwards to $30.68 a share, which again is a 5.64% cap rate.

The summary of cap rate changes, I'll just hit them briefly. Dallas, we moved to a midpoint of 5.5%, down 25 basis points as a result of the Timberglen sale and unsolicited offer on Venue. Charlotte, we moved to down 25% (sic) [25 basis points] as a result of an unsolicited offer and a BOV process on Timber Creek. Nashville moved 25 basis points down to 5.75% as a result of an offer on Willow Grove and a process that we ran on -- or an acquisition that we offered on -- it's a deal called Hamptons in our submarkets. Orlando moved down to 25 basis points, now 5.5%, as a result of a Cornerstone BOV and an offer on that asset. Tampa moved 35 basis points down to 5.5% as a result of offers and BOV processes run on Courtney -- Courtney Cove and The Summit at Sabal Park. Then West Palm moved 25 basis points down to 5.75% mid as a result of the Seasons offer or an offer we had on Seasons.

On the financing front, fixed and in particular, floating rate GSE spreads for multifamily assets remain constructive for asset values. B-piece buyers have bid down spreads from LIBOR plus 1,000 a year ago to about LIBOR plus 750 to 800 today. That has allowed Fannie and Freddie, of course, to continue to tighten spreads and originate loans.

Also, material increases in labor and material costs are constructive for our portfolio's value. Today, our implied per unit value again is $120,000 a unit. That's roughly 2/3 of replacement cost. So still feels pretty cheap relative to private market bid, especially considering the spike in labor and material costs we've seen recently in the market.

Replacement cost is obviously increasing and now developers need to achieve, in our estimate, $1,500 in net effective rent to justify 5% CapEx for a brand-new garden deal today, which is nearly a $600 delta in rent to our portfolio's average effective rent. And what this means to us is, that this demonstrates both the value proposition of our assets to tenants and then the healthy headroom we have to grow rents at an above-average clip.

Let me end with the strong leasing activity we experienced in April. Our portfolio today sits at 95.26% physically occupied, an incredibly strong 97% leased. April's renewal retention ratio was up to 54.77%. And new leases have been signed at an average of 5.2% increases while renewals have seen a 4.6% increase.

So needless to say, we're excited about Q2 and the rest of 2018. I appreciate all the hard work for our team members here at NexPoint and BH. That's all I have for prepared remarks.

Thank you. So to kind of summarize. We think a very good quarter. We think the year looks pretty strong from where we sit. We don't have the supply issues that maybe some of our peers in the multifamily sector are dealing with. We think that our portfolio, at least as it's priced in the public markets, are somewhat underpriced based on what we're seeing. So we're taking advantage of that by continuing to invest in the rehab front, put out more units, to Matt's point, try to drive the rents up. And we think we have a long runway on that given what we're seeing out there as far as newer product or some of the competing product. We're also doing a second-generation type of rehab, which we talked about last quarter in some detail, which is helping us to push rents as well. And then, of course, we're taking advantage of the disconnect between what we think the value of the portfolio is versus where it's priced in the public markets.

So with that, Marilynn, we'll turn it over for questions.

(Operator Instructions) Our first question comes from Rob Stevenson, Janney.

You talked about accelerating redevelopment given the difficulty in redeploying capital into acquisitions. I mean, given what you are doing currently, how significant is your capacity to ramp on a quarterly basis over and above what you're doing? Or where do you just sort of run out of manpower to be able to accomplish the renovations on a cost-effective basis?

Yes. I think that we have the ability to do another 150-or-so units per quarter. It was harder in the first quarter to achieve that run rate for a couple of reasons. One, we just renewed more folks at a higher rent, which is probably smart during this season. But we expect and have, at least for the month of April, that for the rest of the year, the remainder of the year, that we should be tracking at 400 to 500 range per quarter, which has historically been fairly consistent. But that is a focus of ours.

Okay. And then Matt, you sort of faded out when you were talking about Houston. What was behind the drop-off in revenues there on a same-store basis?

Yes. I appreciate the question. So rental revenue was down 6.3%. And that was largely as a result of 3 deals and leased-up that are surrounding, Tate Tanglewood, Everly and Alexan 5151. Those are all stabilized now and actually March was great. It was on budget. The asset -- and this is -- I'm speaking about Old Farm, which is a 734-unit deal that we bought in the Galleria area. And it's performing exceptionally well now and expect it to be one of the best performers here on out throughout the year. For example, we signed, I think, almost 85 leases in the last 4 weeks. Current occupancy is up to 93%. And it's leased by almost 98% now. So we think it's a blip on the radar, but it did affect results for the first quarter. Also, the city overbilled us for water, pretty dramatically, so we expect that we'll get a credit back in the later quarters. So it should work itself out, but it was a large contributor to the negative for the first quarter.

Okay. And then in terms of expenses, what are you guys spending these days on a per unit basis on hard turnover costs?

What do you mean by hard turnover costs, like repairs?

Obviously, not the lost rental rate, but what are you spending to do any work on a unit, on average, between the time somebody moves out and the next tenant moves in, in terms of painting, carpet cleaning, carpet replacement, the sort of repairs and maintenance, not so much of the wholesale kitchen and bath renovations.

Yes. It's about $300 a unit. I mean, on the low end, depending on the market, $300 to $500 a unit.

Okay. And then lastly for me, the insider ownership moved up from 19.5% to 20.7% this quarter. How much of that 120 basis points was the lower share count from you guys buying back versus how much was it management putting more money in?

Both were a factor. In February, there was a stock vesting on the LTIP, so that contributed. Obviously, we bought back quite a few shares, that contributed. And then Jim continues to put money to work in the stock. So I'd say, the buybacks had an effect, but the probably bigger factor was the vesting of shares in February.

Our next question comes from John Massocca from Ladenburg Thalmann.

So would you ever consider selling individual assets solely to buy back shares or are the tax consequences of that just too severe?

I think we have. We did that early on in June of '16 when we sold our Jacksonville portfolio to retire debt and then we instituted the buyback plan shortly thereafter. So yes, we'd be open to it for sure.

Yes. And I would add that if you look at the history of the company, we've never raised outside equity. We aren't paying out everything, obviously, so we're well covered by 1.5x on core FFO. So, it's a little bit of cash flow left there to deploy into acquisitions, rehabs or share buybacks. So yes, it comes from a number of sources, but I think, in general, to buy $16 million of the stock over the last 2 years, it gets a little bit into the proceeds from sales.

Understood. And then are you seeing any difference in pricing for Class B multifamily assets being sold as part of portfolios versus individual assets? I know you had mentioned both markets were pretty strong, but do you think you could maybe sell a portfolio, i.e., what you did with the NAVA portfolio and recycle that accretively into assets on a one-off basis or are both markets just really too tight right now?

Well, the good thing about when you sell assets and recycle the capital, what we've done, we compound the equity returns on the original cost of our fund. So we always continue to do that. So we don't necessarily look at it in a binary manner that we can't redeploy assets. In large part, what we have done is recycle capital into higher margin, higher NOI margin properties in better locations. So that's something that I think that we'll continue to focus on. But it is a difficult market. We were at a Green Street conference in New York a couple of weeks ago. And David Schwartz at Waterton said this in front of a large group. He said that -- well, basically what I said. You can't find any garden deal or value-add asset that's north of a 5% cap. So you just got to be really selective. And that's the single asset and portfolios. There's a lot of capital chasing these assets right now. What I think it is, is the conversions of value-add buyers and core-plus buyers chasing the same assets. Obviously, core-plus buyers have a lower cost of capital and then the value-add guys haven't gone away. And with the leverage that the private market can get, these are still relatively attractive yields in a stable asset class so. I think it's going to continue to be strong. It's a good time to own our assets.

Yes. And what Matt mentioned is reflected in the numbers, where we're buying higher margin, little higher quality assets. The fact that total revenues and total NOI hasn't really dropped that much although our portfolio is 8 properties less than it was this time last year.

Makes sense. And then kind of a little bit more on a granular level. Your tax expense on a same-store basis declined 2.3%. How much of that was from new tax appeals versus flow through from tax appeals in prior quarters, generally speaking?

When you say 2.3%, you mean it decreased 2.3%?

Sorry, correct. Yes. I was just trying to think some of that's obviously got to be from stuff that's happening in 2Q, 3Q and flowing through. How much of it is that versus a new tax appeal that lowered your expense there?

Most of our processes are -- well, really all of our taxes are disputed, so every single property every year. Depending on the municipality, they settle in different times. So it's hard to say that the negative -- the reduction of 2.3% will occur in any specific quarter. I think, for this quarter, I think it was largely as a result of settlements that we had disputed in '17 in our Texas markets, which we think that we've received a favorable result. That being said, the municipalities aren't necessarily getting any easier. So it's hard to pinpoint exactly an answer to your question, but I would just qualitatively say that, that's, yes.

But would you kind of expect this then to normalize here in the coming quarters given that those Texas appeals kind of overlap?

Well, as Matt said, we pretty much dispute everything and the municipalities have been pretty aggressive. The public markets may not appreciate the value of our assets, but the municipalities certainly do. So I think you'll see, to the extent that we can have success in that process, we'll continue to see some favorable tax numbers in the next few quarters vis-à-vis the prior year, but it's hard to predict. I think what you saw this quarter, or the vast majority, was a result of what we had done in '17 finally coming to fruition and settling or getting a better answer and then paying that than what we had experienced just on the initial assessments.

Yes. If you want to get granular, I can give you sort of 2 markets that I think we'll largely see savings in. In the rest of the year, once we appeal, and that's Atlanta and Charlotte, Atlanta was up 17% -- was up 17.5%. And we're obviously disputing that with vigor. And then Charlotte was up 7%.

(Operator Instructions) Our next question comes from Craig Kucera from B. Riley FBR.

I would like to know if we can get an update on Southpoint Reserve at Stoney Creek. I think we were looking for a sale price maybe around $19 million in the second quarter. Has anything moved in regard to your expectations there, whether timing or pricing?

Definitely pricing, so NOI has gone up materially. We think that now we can get north of $22 million, or around $22 million. And then we are obviously mining the acquisition front and trying to find a use of proceeds to recycle or replacement property to cycle that capital into or buy back shares. But I think that -- I would expect, at least for the first half of the year that we could -- that you'll see us recycle out of that.

Got it. And what is the -- based on that revised NOI, is that still around a 5% cap or can you give us some color there?

Think 5.25% on in place. But as I mentioned, our budgeted NOI was up -- our budgeted NOI, not under it, but our budgeted NOI was almost up 12% from same-store basis. So if we achieve that, the cap rate might be higher on our budgeted number. But on our T3 number, we'll look to dispose of that at a 5% to 5.25%.

Got it. And one more for me, just given the amount of inbound calls, when you think about your guidance, are there any other dispositions embedded in that guidance or any incremental share buybacks beyond what you guys have already completed here in the first and early here in second quarter?

I'll take the buyback question. I think, yes, there absolutely is depending on where the stock is trading. We telegraph it quite a bit by putting out the NAV slide. So $30.68 is kind of where we think value is. To the extent we're trading in the $26, $27 context, I think you can expect that we would take advantage of the fact that we have even more ability to buy stock in a longer time frame with the renewed and expanded program. And, then all, come out on the dispositions.

Yes. I think that's the only one that we're seeing today. And it would be sort of an apples-to-apples, like selling something for $22 million, buying something for $22 million to $25 million at a higher NOI margin. So I wouldn't expect from a core FFO basis any earnings leakage. We would try to recycle it in an effective manner so as not to dilute the earning stream.

At this time, I'll turn the call back over to Ms. Meek.

Yes. Thank you for the time. That's all we have today. We appreciate it. We'll, I think, see some of you at NAREIT here in a month or so and look forward to that. We'll talk to you in 3 months. Thank you.

Thank you. Ladies and gentlemen, this concludes today's teleconference. You may now disconnect.