Pennsylvania Real Estate Investment Trust (PEI) 2015 Q2 法說會逐字稿

Good morning and welcome to the PREIT Second Quarter Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) I would now like to turn the conference over to Heather Crowell. Please go ahead.

Thank you. Good morning and thank you all for joining us for PREIT's Second Quarter 2015 Earnings Conference Call. During this call, we will make certain forward-looking statements within the meaning of Federal Securities laws. These statements relate to expectations, beliefs, projections, trends and other matters that are not historical facts and are subject to risks and uncertainties that might affect future events or results. Descriptions of these risks are set forth in the Company's SEC filings. Statements that PREIT makes today might be accurate only as of today, July 29, 2015 and PREIT makes no undertaking to update any such statements.

Also, certain non-GAAP measures will be discussed. PREIT has included reconciliations of such measures to the comparable GAAP measures in its earnings release and other documents filed with the SEC. Members of the management on the call today are Joe Coradino, PREIT's CEO and Bob McCadden, our CFO.

It is now my pleasure to turn the call over to Joe Coradino.

Thank you Heather and good morning everyone. We've consistently communicated our beliefs in improving the quality of our portfolio. Through dispositions, remerchandising and redevelopment we'll differentiate PREIT from our historic peer group. Today, the stage is set for PREIT's transition into the next peer set where we begin to benefit from improved multiple afforded to companies with higher quality portfolios. The strategic vision outlined in all of our investor communications since 2012 is being actualized. We will have sold seven non-core malls with three more under contract, two additional agreements of Shell being negotiated and double-digit portfolio sales growth, creating a higher quality portfolio that is more compelling to shoppers, retailers and investors. We're now in a position to deliver strong earnings results in the coming years that will reflect the quality of our properties. Make no mistake, we are taking these portfolio improvement steps to grow NOI and enhance total shareholder return.

Over the past few years, we've spoken frequently about our transformation and its importance in creating value for our shareholders. Today's announcement, combined with our peers' disposition activity and two assets nearing agreement of sale, indicates that we are approaching the finish line with respect to dispositions.

We believe the best capital allocation strategy is harvesting the value of our non-core assets to reduce leverage and recycling capital in the high quality properties through redevelopment opportunities, which will pave the way to earnings growth and multiple expansion. As we look to the future, we're excited that the elements of The Gallery are coming together and falling into place. Legislative approvals have been secured, de-tenanting is proceeding rapidly and we're making great progress with respect to anchor lease up. We expect the project will take its place as another premier asset upon completion in 2017.

Since acquiring Springfield Town Center, we've opened over 75,000 square feet of stores and are pleased to report that sales for the mall, shops and restaurants are forecast to exceed $500 per square foot in its first year of operation, based on tenant performance to-date. And we do have some exciting opportunities underway to enhance the retail line-up and drive NOI, and we continue to drive to our goal of being 90% leased by year-end.

Now, let me spend some time looking toward the future, introducing you to the new PREIT in the context of where we came from. Assuming the disposition of the five malls, currently under agreement or in negotiation, our overall number of properties will be concentrated down to 30 in ten states. But worth noting is that half of these are in major metro markets, half by count, notably more by valuation.

The number of senior stores in our portfolio will be down to 16 from 29 in 2012, a 45% reduction in exposure. And after reducing our GLA footprint by 7.3 million square feet since 2012, we expect to generate over 95% of the NOI we delivered prior to the reshaping of the portfolio, when you include a redeveloped FOP in a stabilized Springfield Town Center.

We're also forecasting growth in CAM recoveries based on the dispositions of pending and anticipated properties of 980 basis points. And over 96% of our mall same store NOI is expected to come from premier and core growth properties, compared to just over 82% in 2012.

Sales per square foot now at $418 already up over 10% are expected to exceed $450 a foot. This new portfolio is contributing to stronger positioning with respect to relationships with retailers and an attitudinal shift in the Company, both of which fuel the opportunity to continue to enhance our shopping centers and create shareholder value. This new paradigm we've created has allowed us to secure five transactions with H&M for 100,000 square feet opening in 2016 in our core growth properties, over 50% of which will be absorbing existing vacancy. We've executed a 55,000 square foot lease with a natural and organic grocer at Exton Square, which is a catalyst to attract other high-quality tenants to this property, consistent with the excellent demographic profile of the trade area. This is a great start as we contemplate a redevelopment that would include a remerchandising of the existing malls.

We also opened our portfolio's first Lululemon, Tumi, and Adidas stores at Cherry Hill Mall this quarter. Cherry Hill now boasts sales of $659 per square foot, a historic high. And with some of the tenants we're adding, we can see our way to $700 a foot, a real carrot to enhance our standing with bridge and luxury retailers.

We've also signed over 8,000 square feet of new leases at Moorestown Mall and look forward to signing over 30,000 square feet of transactions that are underway. And we look forward to opening the fifth restaurant Yard House, in the fourth quarter of this year.

With all of these leases in effect, non-anchor occupancy is expected to grow to 93% with corresponding NOI growth. On the re-leasing of bankruptcies, we secured replacements for over 60% of the GLA which is either open, leased or being finalized and have prospects for additional 16%. In spite of a slight decrease in mall occupancy, occupancy of properties where we've initiated remerchandising efforts are up substantially and sales were similarly up at properties like Viewmont, Moorestown and Washington Crown.

Moving past these highlights to our quarterly performance and expectations for the future, sales grew during the quarter by over 10%, another milestone for us. With nearly all properties experiencing increases in sales, driven by electronics, athletic footwear and restaurants, Cherry Hill Mall, continues to climb its way to $700 a foot and Willow Grove, continues to make strides towards $600 a foot. Same-store NOI results, while softened by the effect of significant bankruptcies earlier this year, are consistent with our expectations and we have reaffirmed our full-year same-store NOI guidance.

So clearly, as a transformed company we are positioned to deliver quality earnings results that would be reflective of the improved portfolio. We view our occupancy costs, which are under 13% in the transformed company as an opportunity to drive revenue, based on the outpaced growth in tenant sales that has occurred.

With that, I'd like to turn the call over to Bob McCadden.

Thank you, Joe. We've had an active quarter on a number of fronts. I'll cover the operating results for the quarter in more detail, summarize the work we've completed on the balance sheet and review our guidance for the balance of the year.

Let me start with the key highlights for the quarter. FFO as adjusted for the quarter was $30.5 million or $0.39 per diluted share, compared to last year when we reported FFO as adjusted of $33.1 million or $0.47 per diluted share. Key drivers of the decrease in FFO per share include the dilutive effect of 2014 asset sales and the impact of first quarter bankruptcies.

Same-store NOI of $62.8 million was essentially flat when compared to the prior period. The NOI contribution from bankrupt tenants was $1.6 million or $0.02 per share, low in the second quarter of this year compared to second quarter of 2014. These bankruptcies also impacted our same store non-anchor occupancy by 227,000 square feet or 200 basis points.

Also worth noting is that 2014 quarter having received the benefit of a favorable adjustment to bad debt expense, resulting from an adjustment to our straight-line rent receivable reserve, due to improved historical collections experience. When compared to last year, our bad debt expense for the second quarter was $800,000 or $0.01 per share higher. Non same-store NOI decreased by $2.4 million compared to last year. The largest factor contributing to this decrease is the dilution from the 2014 asset sales, including our reduced share of the income from The Gallery. Including our interest savings, the asset sales were $4.3 million or $0.06 dilutive to this quarter's operating results.

We also incurred bad debt charges and other write-offs totaling $600,000 or a $0.01 per share, related to the business failure of an office tenant at Voorhees Town Center. Both of these factors were partially offset by the inclusion of Springfield Town Center's NOI for the quarter.

Portfolio total occupancy was up by 10 basis points from reported occupancy a year ago, partially driven by calling lower performing properties. Same-store non-anchor mall occupancy was down about 60 basis points from last year, reflecting the impact of store closings from the bankruptcies that we experienced in the first quarter. Not including Springfield Town Center, Gloucester and Fashion Outlets of Philadelphia, we currently have about 400,000 square feet of executed leases for future occupancy, including the transactions that Joe mentioned in his remarks. These leases are expected to generate annualized revenue of $9 million to $9.5 million when they take occupancy later in 2015 and into 2016. We believe that our improved sales performance environment will continue to allow us to deliver strong renewal spreads and attract new retailer to the portfolio.

Average gross rents for small shop tenants in our same-store mall properties were up 4.3% as compared to in-place rents a year ago, driven by a 3.1% increase in our premier malls and a 4.7% increase in our core growth malls.

Interest expense for the quarter was $23.7 million compared to $24.3 million last year, reflecting average borrowings that were approximately $220 million higher than last year, partially offset by average interest rates that were 50 basis points lower than last year.

This year's quarter includes prepayment penalty in (inaudible) Patrick Henry Mall refinancing and deferred financing write-offs aggregating $1 million, while last year's quarter included $1.2 million of hedge ineffectiveness. At the end of the quarter, our average borrowing rate was 4.36% and our weighted average time to maturity on our mortgage loans was 4.9 years.

Outstanding debt at the end of the second quarter, including our share of partnership debt was $2.1 billion, an increase of $351 million from the end of 2014, reflecting borrowings used to complete the acquisition of Springfield Town Center.

Our bank leverage ratio stood at 50.3%, up slightly from March 2015's ratio. We anticipate the leverage ratio remaining near this level for the balance of the year. At the end of the quarter, approximately 86% of our debt was fixed. We expect that proceeds from any asset sales will go towards repaying amounts borrowed under our revolving credit facility, providing us with adequate liquidity to satisfy our anticipated capital needs.

Renewal spreads on over 255,000 square feet of small shop leases executed during the quarter came in at 4.6%. Historically, we've reported renewal spreads on cash basis gross rents including minimum rent, CAM charges, real estate taxes and marketing fund contributions. Our spreads are computed by comparing final expiring gross rents on the prior lease to initial gross rents under the renewal lease.

As you all know, there's very little consistency of reporting of operating metrics by the public mall companies. We're in the process of reviewing our approach disclosure and anticipate making changes in an attempt to make our metrics more comparable to other companies. For example, if we were to include new leases for recently occupied spaces, average our rents over the lease term and only include escalations in minimum rent and CAM, since real-estate taxes are passed through, our releasing spreads during the quarter would have been approximately 8%. We have more work to do in this area and would welcome input from the analyst community on what presentation they feel is most meaningful from their perspective.

During the quarter, we closed almost $650 million of financings, including an extension to our $400 million credit facility, the addition of a new five-year $150 million term loan, and the refinancing of our mortgage loan at Patrick Henry Mall.

Key terms of the amended credit facility include, a new maturity date of June 2018 with two additional one-year extension options available, a reduction in pricing and effective in August, borrowings under the credit facility will be at a rate of LIBOR plus 130 basis points, the rate on our new and existing five-year term loans will be at LIBOR plus 160 basis points, and the rate on the seven-year term loan will be at LIBOR plus 215 basis points. The unencumbered debt yield, which establishes our maximum unsecured borrowing capacity, was reduced from 12% to 11%, reflecting the improved quality of our unencumbered asset pool.

We've also entered into a new ten year loan, secured by Patrick Henry Mall with an interest rate of 4.35%, which will result in annual interest savings of almost $1.7 million on the previous loan balance. Our near-term maturity schedule will give us additional opportunities to reduce our average cost of debt. Over the next nine months, we have $388 million of loan maturities on four high quality assets, with an average interest rate of 5.52% on these loans; we have a significant opportunity to realize additional interest savings by refinancing these upcoming maturities at current rates.

Regarding our outlook for 2015, we've revised our previous estimates of FFO as adjusted to be in the range of the $1.84 to $1.89 per share, after giving effect to $0.03 per share dilution from the sale of Uniontown Mall and Springfield Park. We are reaffirming our expectations that same store NOI will be in the range of 1.7% to 2.7%.

We now expect GAAP earnings per share to be a net loss between $0.49 and $0.54, reflecting the dilution from asset sales, the prepayment penalty and the impact of the second quarter's impairment charge, offset by the anticipated gain on the sale of our interest in Springfield Park.

With that, we'll open it up for questions.

(Operator Instructions) Ki Bin Kim, SunTrust Robinson Humphrey.

Thank you. I thought the litigation costs were [down] by the first quarter. So, I was little surprised that you had another $0.5 million, so just curious where that came from. Are we going to be finished with those targets this quarter?

Ki Bin, this is Bob. These costs are really residual costs from the matter that we had earlier in the year, some of the service providers that we provide services to us effectively billed on a value-add basis. So the final bill wasn't negotiated and settled until the second quarter. But those costs really related to expenditures incurred prior to our settlement with the activist.

Okay. And are those targets added back to your adjusted FFO number?

They are not added back.

Okay. And I really had this question, but just given some of, I guess volatile quarter-quarter earnings, just curious you guys maintain your guidance for the year, adjusted for the asset sales, could you provide a little guidance on how third quarter and fourth quarter shape up because I think you have the average about $0.52 a quarter from your current $0.39 or maybe $0.40 you had better litigation cost run rate. So I think it will just help us to mitigate any future volatility of annual guidance on quarter-by-quarter earnings.

I think the key thing is the NOI run rate and I think as we mentioned, when we started the year that we expected obviously, having a strong first quarter, very flat second quarter and the third and fourth quarter would begin to improve. So given this side of their NOI pool different names can move the numbers, but we expect on the 1.5% to 2% same-store NOI in the last couple of quarters of the year.

Okay. And the gallery de-leasing is that fully baked in by now, by the second quarter, or is there more NOI leakage that we can expect in the second half?

Yes. There is additional NOI leakage but we have that baked into our overall guidance.

Okay. All right. That's it from me now. Thank you.

Christy McElroy of Citibank.

Hi. Good morning, guys. Just regarding those three assets under agreement for sale of the new three. What's sort of the expected timing of close? And are there any financing contingencies related to the agreement for sale and how is the buyer financing the purchase?

Well, there are traditional contingencies in there which would include financing, Christy. And it would be, the buyer is seeking financing as we speak, but it is quite a credible buyer with capital available to close.

So, you don't have any concerns that the financing might not come through?

Sure. I mean, look selling as I've always said selling these lower quality assets is an adventure. You saw the pending word is related to Uniontown because we had to have a career drive from New York City (inaudible) to collect their signature. So it's over when it's over, so I'm off concerns until we tend to (Technical Difficulty) We expect closing will likely be toward the end of this year or the early part of 2016.

And then, just related to that Palmer Park, I think was under contract last quarter, what's the status of that one?

Yes. Palmer Park. Another illustration, Palmer Park fell out of agreement. We had been under agreement of Shell, really driven by the buyer having concerns about the lease up. But we do have two additional assets that we are negotiating agreements of Shell at this point.

Is that Lycoming and Washington Crown, the other two?

Its Lycoming and Washington Crown, that's correct.

Okay and then just on the $95 million, the three assets. What's the average cap rate as far as the agreement is concerned?

We really don't want to talk about that at this point. It's still in negotiations, we prefer staying away from the cap rate discussion.

(Operator Instructions) Michael Mueller, JPMorgan.

Hi. I guess first just sticking with the dispositions, you said the timing on these three end of the year, beginning of next year. Should we expect similar timing for the other two that you're negotiating contracts for?

That would certainly be fully or like that happen, yes.

Okay. And then just a quick clarification. I guess the portfolio of sales in Q2 of $418 versus $378 that's not on a same-store basis is it or is it?

Yes. Yes it is.

It is same-store for the same portfolio. Okay. That was great. Thank you

Ki Bin Kim of SunTrust Robinson Humphrey.

Thank you. So just curious about your (inaudible) pipeline obviously you guys announced that grocer moving into Exton Square. With that and Springfield and Gallery after they're all done and then maybe it will premature, but when you look to your portfolio, are there any other opportunities where you might get harvest more value?

Sure. I mean, well, first off, the organic grocery at Exton is a first step if you will. We can build it on a stand-alone basis and we will, but it also leads the way to a redevelopment of that property as part of getting back the 12 acres from K-Mart. So there's clearly an opportunity there, there's an opportunity at Mall at Prince Georges Center that's beginning to move towards $500 a foot in sales production. Then in the D.C. market, we think there is opportunities for a re-merchandising and redevelopment there. And of course Woodland Mall in Grand Rapids, Michigan which is another $500 a foot asset, where we think there is an opportunity to re-merchandise and potentially bring in a fashion anchor and either downsize and replace Sears.

Okay. And just to clarify on the Exton Square, the grocer moving in is in addition to (inaudible) you've talked about in the past.

Yes. That, as Joe mentioned, Ki Bin that would be likely the first step in a potential redevelopment.

Okay. And going back to the asset sales with the sellers or buyers looking for a financing, do you know what LTVs are seeking?

We understand 65.

Okay. And if it was close to that number, but not hitting that number, would you be open to seller financing in some fashion?

No, we've stayed away from that to-date. We would prefer selling the assets as opposed to staying in for a piece. And again we are starting to get pretty good at this sort of thing and we think we'll be able to bring these either to this buyer or another buyer to closure.

Okay and just last one. How much NOI are you currently booking from the Springfield Town Center at the end of the second quarter and how should we think about the run rates for the second half of the year?

We typically don't give individual NOIs, but let me kind of give you some --

The big project and it could move the numbers around us.

Yes, let me give you kind of a frame a reference. I mean if we would take the existing rent roll, add in the tenants that we have basically in lease negotiations, we would be looking at an annualized run rate of about, call it $19 million to $20 million today. Obviously, those tenants aren't in place, we so have a significant fourth quarter lease up. But if you turn to the first quarter of 2016, maybe in the second quarter, we would expect to be at about $19 million to $20 million annualized run rate.

Okay, but some of our retail, I've been understanding the starting point is somewhat important.

Yes. Again, keep in mind, we're not -- at this point, not prepared to disclose that amount.

Okay, thank you very much.

Nathan Isbee, Stifel.

Hi, good morning.

Hi, Nate.

Just going back to the 1.5% to 2% same-store NOI expectations for the second half of the year, what type of store closure environment does that envision? I guess what is your broader outlook for the store closure environment over the next six to 12 months?

We think we've absorbed a good deal of it at this point. The one concern that we had is gap, then we think we understand the impact of the gap have a good deal of that handled and that's kind of baked into that performance.

Did you mention how many gaps you expect to close?

We did not.

Would you care to share?

At this point, it's a very small number. We have one that's trying to terminate that we're working at a termination agreement and a lot have significant term. So, we won't be terribly impacted by gap at this point.

And then just moving to the asset sales, have the collection of those three assets that are on their contract -- have you done business with this buyer before and have they provided any hard money at this point?

No, they have not provided any hard money at this point, but there is a provision for that to occur at some point in the process. We have not done business with the buyer, but it is a credible buyer.

Alright. Thank you so much.

Thank you.

D.J. Busch, Green Street Advisors.

Thank you. Just wanted to touch on the sales growth reported during the quarter and your comments earlier out, potentially getting more apples-to-apples to some of your peers. I know that you're one of the few that want tenants do have 24 months of reported sales before you enter them into the pool and I think that's the case with Willow Grove Park that had Apple open in late 2012. So it's been in the numbers for about three quarters now. I guess my assumption or understanding was that, the reason you did that was so you can have true comp number from this year compared to last, but it doesn't seem like that's the case given the huge increase at Willow Grove Park. Can you just give me an understanding on why, what's the rationale for the 24 month lag and is that something that you guys potentially may change to get more in line with some of your peers?

Yes, essentially when a tenant reaches the 24 month date as you mentioned, we include that in our comp store sales. So, effectively what you see at Willow Grove Park is the inclusion of the Apple store in the reported numbers, beginning in the fourth quarter of 2014. But we are looking at whether or not we should shorten that to a 12-month period. But quite frankly, we've put that in past, so it doesn't materially change the portfolio in number, but it's something we are looking at as part of our overall review of our reporting of metrics.

Okay. The reason I ask is because the $430 a square foot that Willow Grove Park was doing last year that didn't include the Apple, either I am just trying to get a sense on if it's a--

That did not include the Apple. We don't necessarily go back, whatever we report for these the mall sales, we don't go back and restate them if you will, for the comp store pool. So it represents tenants who qualified for the comp definition at any quarter end and we hold that reported number for the following year as well. So the $430 -- to specifically to address your point, did not include Apple sales in the previous year.

Okay. And do you know or have you done the math as to what it would be, if you start including them after 12 months?

As I said earlier, I think when we looked at in the past, it's generally pretty darn close to our reported numbers, but we'll look at that again in the third quarter and then report out.

Now that the financing looks like it's set up for The Gallery, are you guys prepared to kind of give the total spend and potential returns that you're expecting there? And then on top of that, I know we've talked about in the past but one of the things you may look to add is some type of development schedule to the supplemental package?

Yes. And as it relates to The Gallery, we still have one more piece of public financing to put in place with the State of Pennsylvania that we're working on. So we've not laid out the entire package because that's moving around a little bit. There is a lot of tension in Harrisburg right now with our new Governor. So, we didn't get it done as quickly as we would have liked to. That's why you're not getting the full story on The Gallery. As it relates to total spend, again depending upon how much public financing we get, it will determine how much we spend. So again, it's a little bit of a moving target.

Okay, thank you guys.

Linda Tsai, Barclays.

Hi. We discussed Willow Grove, could you also talk about some of the strong sales improvements at few of the other malls like Valley View, Crossroads or Cumberland?

This is really a result of a couple of events happening. One is a retenanting program. It was really a response to a sort of an economic development in the market. The Boy Scouts moved their national training facility to Beckley, West Virginia. As a result, we brought in a Dick's Sporting Goods and a number of other tenants and we've seen significant sales growth at that property given that. Right? So it was really a response to economic development that was happening.

I don't have specific answers, but we can get back to you offline on those particular properties.

Okay and then just kind of a follow-up along the same lines. The 10.6% was a nice gain, how much did the improved momentum vary as it relates to premier and core, like are you seeing the same level of improvement, say at the upper end of core as opposed to the lower end?

I think the growth in core is really across the portfolio. If you look at our portfolio among all the assets, we only had one asset that did not have a positive same-store growth over the last 12 months.

Thanks.

Christy McElroy, Citi.

Hi, can you talk about what happened at Voorhees Town Center? You mentioned the losses incurred, is that just lost rents or something more and maybe since it been a year since we saw it, maybe you could update us on sort of overall leasing progress of the center?

Well the loss is really a result of -- there was a 48,000 square foot office building located at Voorhees that was almost entirely occupied by the Star Group. They have ceased to be in business. I say that because they've not formally filed bankruptcy, but their business, they're are an advertising agency and their business was tied to the casino industry. And mostly in (Technical Difficulty) not a great business right now. As a result they closed and that was a significant hit that we took as a result of that. As it relates to the lease up of Voorhees, most of the work that we're doing right now is around populating the second level with non-retail users. We just opened up a children's neurological center, it took about 18,000 square feet, they moved in few months ago. We're working with a deal to relocate the Voorhees library there, which would pretty much conclude the lease-up up on that second floor. And the street retail, there is a couple of slots in there, but we also have a friendly deal that is going to be moving on to the street, which will end up being the sixth or seventh restaurant in that street. That's really what's making up the bulk of the leasing effort.

What was the NOI impact from Star moving out? So how much an annual NOI were they paying and what was the timing that they stopped paying rent?

The impact in the second quarter is about $600,000. That reflected both rent, as well as the write-off of some lease inducement assets, as well as straight-line rent receivables. On an annualized basis, it's about a $1.2 million revenue contribution that they made.

Okay. Can you tell us the name of the grocer that you signed at Exton Square to replace the K-Mart and what's the timing of the opening and are they taking the entire K-Mart box?

No. Well, first off we are bound by our agreement within, not to reveal the name but you can expect the press release in the next day or so. In any event we'll be demolishing the K-Mart and reconfiguring that site, that will allow for this organic grocer to be built as part of a -- either on a stand-alone basis which they can do, or as part of a redevelopment with a number of additional stores.

On that parcel?

That's correct.

It's separate from the Mall? Okay.

That's correct. But we'll ultimately conclude in a connection into the mall.

Okay. Got you. So I guess on the mall, your sort of your overall plans for and you touched on that a little bit, but your sort of plans for re-merchandising, redevelopment, would it involve ultimately replacing that they can anchor parks on the one end or -- ?

If they can anchor right now, we have prospects in terms of a dine-in movie theatre that we're working with and a bowling and entertainment concept to take that. So, that's being done irrespective of the work, as it relates to the organic grocer.

Okay, thank you.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Joe Coradino for any closing remarks. Thank you.

First of all, thank you all for being on the call today. We are pleased with the significant steps we took this quarter with respect to our strategic objectives. We believe that our quarterly results were within our expectations, were a function to timing, timing of bankruptcies and asset sales and over the long term, we will deliver our results in line with a higher quality portfolio. We look forward to sharing the details of our medium-term plan with you at an Investor Day we're planning this fall and wish you all an enjoyable balance of the summer. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.