Piedmont Realty Trust Inc (PDM) 2011 Q1 法說會逐字稿

Greetings, and welcome to the Piedmont Office Realty Trust's first-quarter 2011 earnings conference call.

At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Bobby Bowers, Chief Financial Officer of Piedmont Office Realty Trust. Thank you, Mr. Bowers, you may begin.

Good morning. I'm Bobby Bowers, the Chief Financial Officer for Piedmont Office Realty Trust. Welcome to our first-quarter 2011 conference call.

Last night, in addition to posting our earnings release, we also filed our quarterly Form 10-Q and our Form 8-K, including our unaudited quarterly supplemental information. This information is also available for your review on our website at www.piedmontreit.com under the Investor Relations section.

On today's call, the Company's prepared remarks and answers to your questions will contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters which are subject to risk and uncertainties that may cause actual results to differ from those discussed today. Examples of forward-looking statements include those related to Piedmont Office Realty Trust's revenues, operating income, financial guidance, as well as leasing and acquisition activity. You should not place any undue reliance on any of these forward-looking statements and those statements speak only as of the date they are made.

In addition, during this call we will refer to certain non-GAAP financial measures such as funds from operations, core FFO, AFFO, and EBITDA. We encourage all of our listeners to review the more detailed discussion related to risk associated with forward-looking statements contained in the Company's filings with the SEC, and the definitions and reconciliations of our non-GAAP measures contained in the supplemental financial information available in the Company's website.

I will review today our financial results in detail in a few moments. In addition to Don Miller, our CEO, I'm also joined today by Ray Owens, our EVP of Capital Markets; Laura Moon, our Chief Accounting Officer; and Bo Reddic, our EVP of Real Estate Operations, all who can provide additional perspective during the question-and-answer portion of the call.

I will now turn the call over to Don Miller.

Good morning. Thanks to everyone for joining us this morning as we review our first-quarter 2011 results. We are pleased with our first quarter, and have a number of important issues to address during our call this morning. As we have said many times, our objective is to achieve the best risk adjusted returns possible and to build enterprise value for our organization.

In addition to the inherent strengths of Piedmont's balance sheet and quality of portfolio, we strive to create value for our shareholders through well-executed capital recycling, which we believe will lead to restructured, more focused geographic concentration, and also aggressive but targeted leasing efforts. Our first quarter 2011 efforts have contributed to these objectives.

First off, last evening, we reported funds from operations per share of $0.41 for the first quarter of 2011, which slightly exceeded our expectations for the quarter. Bobby will go into greater detail in the financial results later in the call.

Before that happens, I would like to address several key messages from Piedmont's first quarter. First, we are seeing an uptick in capital transactions activity in general and the opportunity to recycle capital specifically.

For example as we have announced, Piedmont took back the 500 West Monroe building in the West Loop submarket of downtown Chicago at the end of March through a UCC foreclosure. Although that transaction increases our exposure to Chicago, a market that we have repeatedly said we will be de-emphasizing, the metrics of our ownership are consistent with our objectives of creating value opportunistically.

By negotiating ownership of the building, we have acquired a double A quality building, containing a 1330 car parking garage sitting right between the 2 commuter train stations in the West Loop submarket of CBD Chicago for a very attractive basis in the low $200 per square foot range. Admittedly, we have a total leasing task as the building is 67% leased today, with 2 major tenant leases expiring over the next 2 years.

Having said that, given that a number of buildings in Chicago have traded in the $350 to $500 per square foot range in the recent past, we believe there is ample opportunity to create enterprise value for our shareholders in this asset.

At the same time, we are continuing our quest to pare our Chicago holdings by negotiating a sale or joint venture interest in our 35 West Wacker building. Although, we are not prepared to make an announcement at this time, we are progressing well on achieving our objectives in that process, and hope to complete it by the end of the third quarter 2011.

During the quarter, we are also successful in acquiring the 1200 Enclave building, a 150,000 square-foot office building in the Energy Corridor submarket in Houston. We were able to buy this asset out of foreclosure at a very attractive basis of $123 per square foot due to its 18% leased status.

Given the strength of the Houston market, the limited supply of large blocks of available space and our knowledge of the submarket given our ownership presence at 1430 Enclave just down the street, we are very optimistic that we can achieve a quick lease up of the property with a strong value-added result.

Subsequent to quarter end, we have continued to be busy by acquiring an off market, high-quality office building in Atlanta called The Dupree, a 138,000 square-foot, 83% leased asset that fits nicely into our low-risk value-oriented strategy.

We have also committed to sell 2 assets in nonstrategic markets, Denver and Seattle. These dispositions will be discussed in further detail on the next quarterly call. But in summary, we believe that we have achieved very attractive pricing by timing the sale to either the completion of leasing, or by finding a strategic buyer that values an asset more [broadly].

What is important to note is that these recent capital transactions have complicated our occupancy rate comparisons to prior periods. Today, 87.3% of our total space is leased, down due to the acquired vacancies primarily of West Monroe and Enclave.

Looking back at our same-store analysis however, we are currently 89.2% leased in buildings we owned 1 year ago. When the lease percentage was comparatively 89.3%. We believe these recently acquired large blocks of vacancies should serve us well at this point in the economic and leasing cycle.

Although our market concentration statistics do not yet represent the progress we are making on achieving our objectives, of 60% to 70% of our revenues from our concentration markets, we believe, we have set the stage for strong progress in the coming quarters.

The second theme that we are witnessing is the strong pickup in leasing activity across our markets. Although rents are not yet increasing in most markets, leasing activity has improved. And more importantly to Piedmont, large blocks of contiguous space, which comprise most of our vacant space, are becoming much more scarce in most markets. We hope that this is a harbinger of market strengthening.

Our first quarter leasing activity of 843,000 square feet is an indicator of that strengthening. The most significant lease took place in Washington, DC, where I'm pleased to report that NASA renewed for 15 years beginning in 2012.

This signing represents the largest lease negotiation in Piedmont's history for almost 600,000 square feet. This is a net gain of 45,000 square feet due to a BOMA remeasurement of the building space. This lease has a 13.1% rent increase on a cash basis, 16.4% increase on a GAAP basis.

We're also very pleased to complete a number of large new leases, including long-term transactions with Bosch and Siemens Home Appliances for 50,000 square feet in Irvine, California; First Solar for 40,000 square feet of Bridgewater Crossing in Bridgewater, New Jersey; Eide Bailly, a leading Midwest accounting firm for over 40,000 square feet in Minneapolis at US Bank Center; and 35,000 square feet with steel manufacturer, Evraz, at Aon Center in Chicago. All of this activity is further delineated in our supplemental package.

Collectively, these leases increased our weighted-average lease term to 6.2 years from 5.8 years at the end of fourth quarter of 2010. This leasing momentum has continued into the second quarter. As an example yesterday, we announced a new lease that runs into 2019 to Chrysler Corporation for 210,000 square feet at our 1075 West Entrance building in Auburn Hills, Michigan.

During the past 2 years, we executed leases, which had a net effective rent roll down on both a cash basis and a GAAP basis. Many of those executed leases did not commence until late last year or early this year.

Consequently last quarter, we adjusted down our operating guidance for 2011. This quarter same-store NOI compared to the first quarter of 2010 reflects this decrease with cash basis NOI down 1.3%, and accrual basis NOI down 3.7%. We expect to see similar results in the second quarter of 2011 as renewal of the State Street Bank lease in Boston, which was signed last year commences in April.

As we've discussed on prior calls, even with challenging leasing conditions in some of our markets, we believe that our roll downs and newly executed leases will subside in 2011. Our spreads on newly executed leases were positive for the first quarter of 2011 with cash rents on executed renewals or new tenant leases up an average of 8% on a cash basis and 12% on a straight line GAAP basis, largely on the back of the NASA renewal mentioned above.

Our challenges on the leasing front remain with the upcoming lease expirations at Windy Point in Chicago about 3,000 square feet, which expires in August of this year, and Bridgewater Crossing, which has a total of about 400,000 square feet expiring in March of 2012 in northern New Jersey, and then 2 federal government agency leases in Washington, DC, that expire sometime before the end of 2012.

Although these renewals or expirations will not be easy, and we'll see some roll downs of rents in Chicago and New Jersey, we are very encouraged by the amount of activity at those assets, the quality of those buildings, and the advantage of having large blocks of space available in high-quality buildings at this point in the cycle. Although there is substantial speculation surrounding the future weakening of the DC market, it's too early to tell if that will impact our portfolio occupancy.

Finally, our Board in contemplation with management has decided to maintain our dividend as current level in the second quarter. We have communicated for a number of quarters we are evaluating our long-term dividend policy in light of our transition to publicly traded status.

We have also been evaluating our future cash flow forecast and dividend relative to potential sales transactions, their effect on taxable income, and taking into account the strength of the balance sheet and expected uses of capital due to current lease expirations, and we'll continue to closely monitor these factors.

In summary, our emphasis upon quality, stabilized assets in concentration markets, coupled with our value-added strategies should start to pay off over the next year as leasing markets continue to improve, and Piedmont is able to execute leases on large blocks of space.

We believe we're in a formidable position. We are one of the largest office REITs with a diversified portfolio in terms of tenant concentration, and in terms of geographic locations in the top US office markets. We have a very strong balance sheet, and the expertise, resources, and discipline to continue to grow.

So I'd like to, now, turn the call back over to Bobby.

Thank you, Don. Last night, we reported net income available to common shareholders of $34 million or $0.20 per diluted share for the first quarter. FFO and core FFO totaled $71.3 million or $0.41 per diluted share for the quarter. This compares to $0.42 per share for the first quarter of 2010.

AFFO for the quarter totaled $52 million or $0.30 per diluted share versus $0.36 per share a year ago. As a reminder, all of our common shares have now converted into Class A common stock as a last tranche of approximately 40 million shares of Class B common shares converted January 30th. All of our shares are now publicly traded on the New York Stock Exchange.

Now looking at our balance sheet, our balance sheet remains stable and is in position for growth. Most of the significant changes to the balance sheet since year end are related to our acquisition activity, particularly the 500 West Monroe building. At year end, we had approximately $62 million in 2 West Monroe related notes receivable with 1 note in default.

In connection with the foreclosure on the collateral for this note, we also assumed $185 million of secured debt with a variable interest rate of 1% to 1.5% over LIBOR, and LIBOR is kept at 1%.

In exchange for the debt and satisfaction of the notes, we recorded $227.5 million in building-related assets. Also approximately $18 million in cash, related primarily to cash escrowed for tenant improvements and a small $1.9 million gain, which is included in other income in this quarter's financial statements.

We have a $250 million unsecured term loan that's maturing in June 2011. And we expect our $500 million credit line will be the likely source to pay down this loan. $15 million was outstanding on the line at quarter end, but it's been paid off shortly after the end of the quarter.

We also have [$1.15 billion] of secured debt, in addition to the $185 million (sic - see press release) West Monroe debt. All of these debt has an average effective interest rate of 4.54% at quarter end. I'll ask you to look at our Form 10-Q or our quarterly supplemental information for detail on our debt and the maturities.

Our debt coverage ratios remain strong. We ended the quarter with a net debt to core EBITDA ratio of 4.3 times as compared to 3.8 times at year end. Additionally, our fixed charge coverage ratio is 5.2 times up from 4.9 times at December 31, 2010. And Piedmont's operations continued to exceed by a wide margin all debt covenant limits.

Don has discussed our success thus far in leasing transactions, and we're optimistic about the amount of activity we're seeing. However, leasing has its own significant capital requirements, including leasing commissions and tenant improvements.

I'd like to call your attention to page 25 of our quarterly supplemental information; we detailed the tenant improvements and leasing commissions for leases signed during the first quarter of 2011, and indicate that these leases have an average capital requirement of $5.82 per square foot per year of lease term.

This largely relates to the long-term extension at NASA and the capital associated with this retention. This capital commitments calculation includes discretionary tenant concessions, which may potentially be used for tenant improvements.

In total, contingent tenant improvement commitments at March 31, 2011 for $131.4 million with over $41 million related to leases at the 35 West Wacker building, which may be adjusted if this property is either sold or joint ventured.

Reviewing our operating results for the quarter; our total operating revenues were flat this quarter, compared to the same quarter a year ago. However, tenant reimbursements were down due to lower property taxes, which we've discussed in previous quarters, reimbursable operating expenses being included in base rents associated with our new leasing, and lower reimbursements due to occupancy reductions.

This reimbursement reduction was offset by $3 million in termination fee income. However, I should point out this termination fee income is offset on the expense side of the income statement. Operating expenses increased $1.8 million over the first quarter of 2010, related primarily to increased non-cash depreciation and amortization expenses related to $2.2 million of early termination expenses.

Interest expenses included in this quarter's results were about $1.9 million down, due primarily to a reduction in fixed swap rate on our $250 million unsecured term debt, which was renewed in June of last year with an all-in-interest rate reduction on the swap from 4.97% to 2.36%.

Interest and other income includes one unusual item that I'd like to also point out. This quarter, $2.5 million of residual property level net operating income on the 500 West Monroe building was recognized on March 31, once the ownership foreclosure was finalized.

We had deferred recognition of this income from the time we began foreclosure on the property in September of last year, until we received final ownership. Beginning in the second quarter of 2011, property level operating revenues and expenses related to this building will be included in our real estate operating results.

I discussed the $1.9 million net gain on the consolidation of the 500 West Monroe variable interest entity previously. The last income statement item I want to review is the $1.2 million in discontinued operations. This item relates to the 111 Sylvan Avenue property that was sold in December of last year.

Now looking at this quarter's results without the net termination fee income of $1.1 million and the prior quarters deferred residual net operating income at the 500 West Monroe building of about $1.3 million that we recognized this quarter, our FFO yield per share was approximately $0.39 per share for the quarter in line with our guidance. We're anticipating that this run rate to be in the range of about $0.36 to $0.37 in future quarters, as previously executed leases for the rent roll downs commence.

With that, I'd like to reiterate our guidance for 2011 that we provided on our last quarter's call. We are anticipating net income up between $106 million to $118 million, and depreciation in the range of $150 million to $156 million. This results in a core FFO range of $256 million to $269 million, or $1.48 to $1.56 per diluted share.

I do want to point out, however, that we have to update this guidance based upon potential acquisitions and disposition activity that Don has discussed. We'd also like to remind you that the results may vary quarter to quarter on both a cash and accrual basis due to the timing of various one-time items.

This concludes my prepared remarks, operator. Will you open the lines to tell our listeners how they can ask questions? And let me ask this, will each caller please limit their questions to one follow-up question, so that we can address as many callers as possible? Thank you.

(Operator Instructions). Anthony Paolone, JPMorgan.

Thanks. Good morning. My first question is, Don, can you talk a little bit about the acquisition environment? And it seems like you all have been able to find a couple of deals here recently? But I think given your balance sheet capacity, your capabilities are probably far greater than that. And so, I'd like just a little bit of discussion on how you see the deal pipeline coming along and where you guys think you can be competitive?

Hey, Tony, thanks for joining the call. We I think, as we mentioned at the beginning of the prepared remarks, the acquisition environment has actually picked up pretty dramatically.

We probably got our deepest pipeline we've had in some time, partly because we're starting to find some of the value that we've been looking for, not that prices are dropping by any stretch but just more products coming out. And because that more greater level of products coming out, it's giving us a better opportunity to find things that are either mispriced or priced along the lines of what we're looking for.

And so, we're going after a couple of larger things that both have been publicly announced, at least not by us but by others that are out there, as well as some larger one-off assets that are both in our concentration markets and then in some smaller assets in our opportunistic markets.

So it's the most active pipeline we've seen in some time, and that's why we felt like it was worthwhile commenting on it at the beginning of the call is we don't have anything else to announce or we would bring that forth right now but we are more optimistic than we've been in sometime that we could have a very productive latter half of the year.

Got it. My second question is on CapEx. Even if you take NASA out of the mix, the number was fairly high. Can you give us a sense as to whether or not that's just where the levels are? Or is there something in the quarter that drove it even on the new leases because it's still trended on a little bit higher?

Yes. Let me see if I can answer. If you look at the vast majority of our leasing outside of NASA was done in a series of new leases, and several of those new leases were in high capital markets like Chicago. And so, I think, that's what's driving the higher capital needs for the first quarter because of the higher percentage of new leases.

On the NASA lease thing, it's important to note, and I'm glad you asked about it, I think, it's sometimes maybe a little misunderstood how the GSA leasing process works. We don't really have any control. And I'd say that in all seriousness, we have very little control on a government renewal of what the capital number looks like because as is typical with the GSA, what they would do is they would put out a capital requirement in their FFO, which would basically be a requirement for the landlord to respond to say that they can meet those capital needs, and then it's our job to price that into our transaction.

And so in the NASA situation, the good news was obviously we had a really nice rent roll up. We were able to remeasure the building. And so as a result, we've got some both really nice cash and GAAP roll ups on that lease. Obviously, the bad news is that comes with some capital, some of which was just a function of the age of the building and needing to be upgraded, and some of it was just whatever NASA's needs were that they dictated to us.

And so as a result, I don't think we would expect that this is an expectation that we're going to see these numbers consistently across the board by any stretch. I would expect you'd see more of a return to normalcy in the next few quarters on our capital, but largely it was because of two unusual items. One is the NASA lease was asking for a lot of capital. And second, the rest of the leases that we did were almost all new leases this quarter, at least the larger ones were.

Okay. Was that NASA roll up? Was that on just the total rent you will receive? Or was that per square foot?

That was on the total rent we would receive.

Okay. Thank you.

John Stewart, Green Street Advisors.

Thank you. Just following up on the last question, Don, given both the size and the CapEx, can you give us the rent per square foot to and from on the NASA lease?

Yes. Could you give us a minute we can do that? Do you have any follow-ups while we're searching for that?

Sure. Particularly with respect to your comment that you see a bigger pipeline than you have in some time and some of which sounds like larger portfolio deals. Just wondering which markets you would expect that some of these deals might play out in?

Well, clearly for us to have an interest in a larger portfolio deal, unless there's something unusually strategic about it in another way, it would largely be a concentration market-driven strategy. And so, it would be in those markets were we intend to continue to increase our presence over time -- New York, Boston, Washington, and LA. I think, Ray Owens wants to add something to that so --

Yes, Don is certainly correct that it has to have a concentration market [focused to where we could] demonstrate we're moving in our objective. By the other important piece to that is the properties that would be involved [within our] transaction like that, the vast majority, if not all of them, would have to be in places where we already have existing assets and operating presence. So those are the things that are really driving our interest in some of those larger portfolio type of transactions.

Got it. It's helpful. Thank you. And then, one last thing just real quick. I know, Don, you mentioned that you all talk more about deals when they actually close, but can you give us a sense for what pricing on a per pound basis might look like in Denver?

Yes. Well, the Denver deal is at one of our little joint ventures that we have, still left over that we're trying to rationalize quickly. That price per pound will be upper [1s], and in Seattle will be north of [2].

Great. Thanks a lot.

I'm answering your first question. If you equate square footage now, John, which I think is what you're asking, and you equate the square footage to the higher square footage today -- we could probably do it the other way if you need to as well -- but we are basically on a cash rent basis on the higher square footage, we would have been about $42 on the old rent, and about $47.50 on the new rent. And again, that's on our new square footage, it would be higher in both cases on the old square footage by about 10%.

Chris Caton, Morgan Stanley Smith Barney.

Hey, Don, I was hoping you could talk a little about Chicago. It seems that you got the most leasing to do both in the CBD and the suburbs. How does that market trending in the last 6 months? Are you seeing a shift in capital? Can you run through what you're seeing?

Yes. Hey, Chris. The Chicago is a tale of two markets as we've talked about probably for some time in these calls. The suburban markets are still very weak, very little pricing power at all. And although typically we've got the highest quality building with among the best sponsorship competing for a deal, you're still being dragged down into the morass if you will, when you're trying to negotiate a lease extension or get a new lease in your building.

Downtown is fairly different scenario. We're seeing much more activity. It's a pretty vibrant active market right now. And most importantly, and this what's going to play into, we hope, our strategy on 500 West Monroe, but also what we're seeing happening at Aon Center right now is there's very, very few blocks of space in that market.

In fact, if you go and spent any time with the tenant brokers downtown, they'll tell you that there's some real concern on tenant's part that they're only going to have 1 or 2 places to go if you got anything over maybe 150,000 square feet coming up, particularly in the West Loop.

And so -- although, we're not going to be acting too proud when you have the leasing assignment that we have 500 West Monroe to get done, we are going to be pressing that advantage to the extent that we can, given the quality of the building we've got and the sponsorship the tenants would be able to be moving into.

So we remain pretty bullish on downtown Chicago. I don't know that we're going to see a substantial spike in rent, but I think larger blocks of space are going to have a lot more leverage that they've had in the last few years. And fortunately or unfortunately, we have a couple of those.

Yup. And then just a follow-up question on Seattle. I think CoStar has that as a vacant building. I know you to want to talk about it really on the next call. But can give us a sense of the expenses that you had been carrying there and then won't be following through going forward?

Yes. I don't want to go into too much detail but I guess I'll give you a little bit of snippet. We actually are leased through June 30 at a higher level than it is showing in CoStar, we're almost 50% occupied, and the building is throwing off cash flow through June 30.

And so part of the reason we structured the sale on July 1 which is -- we're scheduled to close it on is that we're collecting that cash flow through June 30, and then the building would actually become an expense drain if we weren't to sell it. And so it actually works very nicely that the timing of the sale is happening when it is.

Thank you.

(Operator Instructions). Brendan Maiorana, Wells Fargo.

Thanks. Good morning guys. Just a follow-up on the discussion on Chicago, have you guys had any discussions with Aon? I think they have a 2013 expiration. I was wondering about their options. I know you mentioned the West Loop but options that are in the East Loop, and any color you can shed there?

Yes, sure, Brandon. We have been in lease negotiations, and I think that it's actually been reported in the press there with Aon, at Aon Center for some time. For them, it's their corporate headquarters. It's a major decision for them in a variety of ways, particularly given that they've just merged with Hewitt. So there's all kinds of cultural and important other things for them to consider. So it's been a long thoughtful, very engaged, and very friendly negotiation. And it's a continuing to progress.

Obviously, that's still 2.5 years away, but it's an important lease negotiation for us. And it's an important occupancy decision for them. So I don't anticipate a near-term announcement one way or the other on that but we're going to be actively working -- continue to work on that for the months to come.

But it's a, like I said, we have very close relationship with them. That doesn't mean we'll renew them necessarily, but we have very good negotiation -- or a very good relationship with them. And their options, although they have some are -- so to find one contiguous block of space in that prominent of a building, with that amenity package and keeping their branding and everything is very hard for them to do, so we're encouraged by those kinds of factors.

And do they fully occupy all the space they have?

Yes. I think we've probably gone through this in the past. They're actually subleasing. Let me see if I can try and walk through this. That is a prime lease as you probably recall with BPM [I recall] going way back.

Yes.

And then Aon subleased the substantial portion of about 700,000 feet that BP leases in the building from BP coterminous with the lease at the end of the 2013.

Similarly, Aon has subleased several multiple floors of that space to the point where they occupy about half of that total space themselves, but we released or have long-term extensions already in place and have announced those negotiations some time ago with a number of tenants that take the other half of that space. So Aon's intentions are to look at a block of space of about half of that amount going forward.

Okay. And then just my second question, Don, can you frame up the disposition targets that you guys have. I think as you had your IPOs at the beginning of last year, my recollection was, maybe, there was $500 million or $600 million of assets, ultimately that you'd like to sell out of over time? And then can you contrast that with what you view as your balance sheet capacity as the transaction market picks up? And how much of a net increase in assets you think you can take, given where your balance sheet is today?

Yes, Brendan, I think your memory is pretty good. I would tell you that we probably expanded that target list somewhat as we've looked at our strategic plans and market conditions and just timing of assets. And so, where we're talking about the fact that capital transaction market is heating up, we're also getting much more active on the disposition side of the equation.

Whereas we may have, I think, the number you quoted was $500 million or $600 million of disposition activity in the foreseeable future for us at the time of the IPO, I would tell you that number has probably creeped over $1 billion, particularly when you take into account the fact that we've got 35 West Wacker on the market as we speak. And so that number has creeped up. And there's a long list of what we call nonstrategic assets and nonstrategic markets that are included on that list.

The key is obviously having the time to execute because that's not something that happens in a couple of months, it's something that happens over a couple of year period as we finish leases off, and as we are able to position expenses the way we want them, and things like that. We think we're going to be a pretty active, consistent, disposer of assets over the next couple of years unless markets change pretty dramatically.

Having said that, I think our capacity -- we said, recently there our capacity of about $600 million today without really changing anything about what's going on within the business would be easily done without any disposition activity. And as that number goes up dollar per dollar without raising any new equity by the amount of disposition activity we execute on.

Great. Thank you.

Okay. There are no further questions in queue at this time. I would like to turn the floor back over to Mr. Bowers for closing comments.

Well, thank you all for joining us today. We certainly have a number of transactions we're working on and we have a significant amount of leasing activity we have to address. We look forward to updating you on that progress. Thank you all for joining us today.

This concludes today's teleconference. The replay will be available at 1 PM Eastern time today. The number to listen to the replay is 877-870-5176. For domestic international is 858-384-5517. The pin number to access the replay is 370839. The replay will be available until May 20. You may disconnect your lines at this time. And thank you for your participation.