Public Storage (PSA) 2010 Q4 法說會逐字稿

Good afternoon. My name is Jackie, and I will be your conference Operator today. At this time, I would like to welcome everyone to the Public Storage fourth quarter and full year 2010 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)Thank you. Mr. Teng, you may begin your conference.

Good morning, and thank you for joining us for our fourth quarter earnings call. Here with me today are Ron Havner, CEO; and John Reyes, CFO. We will follow the usual format, followed by a question-and-answer period. However, to allow for equal participation, we request that you ask only one question when your turn comes up, and then return to the queue for any follow-up questions.

Before we start, I want to remind you that all statements, other than statements of historical facts, included in this conference call are Forward-looking statements. These Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected in these statements. These risks and other factors that could adversely affect our business and future results are described in today's earnings press release, as well as in our reports filed with the Securities and Exchange Commission.

All Forward-looking statements speak only as of today, February 28, 2011; and we assume no obligation to update or revise any Forward-looking statements, whether as a result of new information, future events, or otherwise. A reconciliation to GAAP and the non-GAAP financial measures we are providing on this call is included in our earnings press release. You can find our press release, SEC reports, and audio webcast replay of this conference call on our website at www.publicstorage.com. Now, I will turn it over to John Reyes.

Thank you, Clem. As outlined in our press release, our fourth quarter core FFO per share was $1.45, compared to $1.33 last year, a 9% increase. Three items drove this growth -- first, our Same-store net operating income increased by 4.2%, or approximately $11 million, representing $0.06 per share. Second, we redeemed fixed-rate securities in 2010 with available cash that added $0.03 per share. Third, properties acquired in 2010 added another $0.02 per share.

Our Same-store net operating income benefited from higher revenues of 2.4%, along with lower operating expenses of 2.1%. Operating expenses were lower, due to a decrease in property taxes and advertising expenses, partially offset by higher repairs and maintenance expenses. Property taxes were lower, due to refunds and lower assessments. These adjustments resulted in a decline of $5 million. We expect property taxes will be 3% higher in 2011 than last year. Advertising expenses were lower, due to a decrease in Yellow Pages and television, offset in part by higher Internet costs.

Repairs and maintenance costs were higher, primarily due to higher snow-removal costs. FFO from our investment in Shurgard Europe declined approximately $1 million, principally caused by the conversion ratio of euros to dollars, which was 8% lower. We retained approximately $100 million of our operating cash flow during the quarter. At year-end, our cash and marketable securities were over $500 million. During February of 2011, we paid off a $103 million, 7.75% unsecured note, having an effective interest rate of 5.7% for accounting purposes. This repayment will reduce our annual interest expense by approximately $6 million. With that, I will now turn it over to Ron.

Thank you, John. Our pricing and promotional strategies worked well during the quarter. We rented nearly 13,000 more units in Q4 compared to last year, for a 7% increase. This is offset by higher move-outs of 15,000 customers. For all of 2010, we rented about 22,000 more units; offset by 2,000 more move-outs, resulting in 20,000 more net customers.

Our spread and year-over-year occupancy at December 31 remained healthy at 1.5%, compared to 1.7% at September 30, and 1.1% at June 30. Same-store revenue per available foot grew by 2% in Q4, compared to 1% in Q3. At the end of January, both occupancy and in-place rents were higher than the prior year. Asking or street rents were also above last year during January. Going into the prime rental season, we are in solid position with higher occupancies and rental rates.

19 of our 20 largest US markets achieved positive year-over-year revenue growth in the fourth quarter, compared to 16 in Q3 and only six in Q2. The Washington, D.C./Baltimore market led the country at 5.1%, followed by New York at 4.6%. Los Angeles, our largest market, grew by 0.1% in Q4, compared to a decline of 0.7% in Q3. The Florida and Georgia markets were also our most improved, sequentially growing by 2.6%, up from 0.1% in Q3. Our net customer acquisition costs were lower primarily due to higher move-in volume, lower marketing costs, and higher rental rates.

Going into the first quarter, we expect our media spend will be comparable with last year. In Europe, same-store top-line growth continued to improve. Higher asking rates were offset in part by lower occupancy, leading to 2% revenue growth in Q4. Net operating income was equal to last year, despite higher advertising and property taxes. Property acquisition activity in the US accelerated nicely in 2010, and we expect this trend to continue into 2011. For all of 2010, we closed on 42 properties, totaling 2.7 million square feet, for approximately $240 million. With that, Operator, let's open it up for questions.

(Operator Instructions)Your first question comes from the line of Smedes Rose with KBW.

Hello, thanks. I just was wondering, with your occupancies at such high levels now, would you expect price increases to start rolling through your system, I guess, that we're put in place last year -- should we start to see that come through early this year? I mean, something like 3% to 4% or something? It seems like your stays are longer and occupancies are high. So, when do you think that kicks in on the price side?

Smedes, let me see if I understand your question, and I will try to answer it. And if I am not answering your question, please interrupt me. Our rates are about -- I would say, during the fourth quarter, we were running about 4.5% higher. I am talking about street rates.

Yes.

So, move-in volumes were coming in at about 4% to 4.5% higher than they were last year during the fourth quarter. As we move into the first quarter of this year, our rates are still higher, although we're keeping them conservative, as we discussed in the past. And we are now starting to send our rental rate increase letters to our existing tenants. We started sending those letters out with effective dates of February of this year. And we've already sent, obviously, March, and we're sending them out for April now. Whereas last year, we did not send out letters until an effective date of May, so we're ahead of last year in terms of sending our letters out. And we are also slightly ahead of last year, in terms of the amount of increase -- the percentage increase in rates that we are applying to those letters.

That's great. That's very helpful. Thank you.

You're welcome.

Your next question comes from the line of Ki Bin Kim with Macquarie.

Just a follow-up on the previous question. What percent, if you look at it on a revenue basis, what percent of the $1.5 billion or so of revenue is eligible for the rent increases?

Ki, this is Ron. At the end of the year, we had about 56%, 57% of our customers -- 56% of our customers had been in the portfolio greater than a year. And that compares to 54.8% that had been in the portfolio at the end of 2009.

And can you give guidance on what the rent increase amount will be?

It is a range. It varies by market.

Okay. Thank you.

Your next question comes from the line of Eric Wolf with Citi.

Thanks. Just wanted to get your thoughts on the dividend. Obviously, you increased it last year, to meet the 90% requirement. Just wondering if you might run up against the same issue this year, and if there is a desired payout level you're targeting?

Our dividend philosophy hasn't changed. We increased the dividend last year, as a result, as you mentioned, of the increase in taxable income. So, we were basically forced to increase the dividend, and that would be the same going into 2011. As our taxable income increases, we will adjust the dividend accordingly.

So, the plan is to stay at the minimum, then?

Yes.

Okay. Thank you.

Your next question comes from the line of Todd Thomas with Keybanc Capital Markets.

Hi, good afternoon. Just a real quick follow-up on the existing customer rent increases. I was just wondering if there is a way you can quantify what the difference that you might put -- try to push through this year is, versus last year?

Todd, well, Ron kind of touched on the potential volume difference, which is -- we generally don't send letters out unless a customer has been here with us for 12 months. And as Ron mentioned, the aging of our tenant base, at least as of December 31, was 56% versus 48. -- excuse me, 54.8% last year. So, we have a positive volume variance. And in addition to that, I think we talked about in the past, that we plan on being more aggressive than we were last year. And in fact, we are becoming more aggressive on the percentage increase as we move forward.

Okay. All right.And then, Ron, I know in the past you said that PSA wasn't very interested in third-party management business, that you wanted to own the property, not manage them. But I was just wondering if you could share your thoughts on that business today, given some of the success that others in the sector have had, acquiring assets that they've previously managed?

You know, we manage, I think, for third parties, 80 -- 30 or 40 properties, so we have done third-party management for 25 to 30 years. One of the issues that we face in doing third-party management is cannibalization of our own customer base. Because if you -- if you're managing -- for us, anyway, if we're managing a property that we don't own, near a property that we do own, our system is blind to who owns the property. But, you can -- it's easy to figure out.

There is going to be some cannibalization, in terms of customer flows going to the third party property versus our property. So, that's one of the principal reasons we have kind of stayed away from it. The -- the other thing is, managing properties to fill them up so that you can buy them at a higher price -- we just had a little trouble with that intellectually, how that makes sense in terms of -- beneficial to our organization.

All right. Thank you.

Your next question comes from the line of Michael Salinsky with RBC Capital Markets.

Good afternoon. In terms of advertising, you said you plan to keep advertising costs flat year-over-year in the first quarter. Yet you're running at higher occupancy. Just wondered if that's a trend you expect to continue throughout the year, or you should expect to dial back on advertising, just given the occupancy levels?

Yes, the -- it's hard for me to say what's going to happen in May, June, or July. Our advertising decisions are pretty much made month by month, although we have a sense of -- maybe trajectory-wise, where things might be going. But we won't know, really, how the second quarter is going to pan out until we have our first-quarter earnings call and we'll update you on that. We have changed our mix of advertising this year a little bit, both in weightings, frequency, number of markets. And so, we're actually getting more advertising this year, for every dollar we spend, than we did last year. And that's helping us in markets that we traditionally would not do advertising in.

Thank you.

Your next question comes from the line of Jay Haberman with Goldman Sachs.

Good morning, everyone. You know, Ron, as you look at your growth -- and obviously, the pickup in sort of underlying fundamentals at this point in the cycle is encouraging. But you guys also did a lot of capital markets activity, buying back preferreds, common stock, paying down some debt. So, as you think about that 9% growth level versus your current level of internal growth, should we see less of that capital markets activity in the next 12 months, and more of a focus on cooperations?

Well, I will have John touch on the preferreds that we have outstanding, and our opportunity to possibly refinance those. But I think in terms of the capital markets activities, if I understand correctly, the ones you're referring to that we did last year, I think you have two or three more quarters of year-over-year benefit of that for the balance of 2011. So, you will see some of the that in the first quarter. For example, we did not redeem the equity stock, the Series Equity A stock, until April of last year. So, when you look at first quarter this year, you won't have the Equity A dividends, whereas you had them in the first quarter of last year. So, that's going to play out quarter to quarter over the balance of 2011. Do you want to touch on the preferred?

Jay, we have two series of preferreds that are at 7.25% that become callable at our option sometime during this year -- one in May and one in August. And if we could go out and issue preferreds at a nice spread below that, we will do that to take them out. But I think, if I understand your point, the capital market activity that we have experienced in terms of benefiting our FFO is going to diminish as we move forward. And -- because there aren't that many more preferred series out there that we can call at a positive spread, there isn't another equity stock Series A that we can call. So, it's really putting the capital to work that we currently have on balance sheet, and the organic growth that we have embedded in our existing same-store pool of properties. That's going to drive our growth as we move forward.

What are you seeing today in terms of the investment opportunities that exist?

Jay, as I touched on in my comments, last year we did $240 million plus activities. I think we bought $15 million, $20 million in Q1 of this year. I think you have seen the other public self-storage companies all bought properties, I believe, in Q4. So, that compares to no one buying anything in Q1 of last year. So, acquisition activity has accelerated during 2010. It continues to be robust into 2011. So, I think you will see higher overall acquisition activity in 2011 versus 2010, just because more and more product is coming to the market, and it gets better every quarter.

Thank you.

Your next question comes from the line of Tayo Okusanya with Jefferies & Company.

Hi, guys. Good afternoon. Just wanted to get a sense of street ranks, and what was happening within that world. And, similar to the price increases for your in-place tenants, if there was an ability to start to raise a street rates, to have better economics on our new tenants.

Tayo, on the -- street rates, they're all over the board, depending on what market we're talking about. In our better markets -- better performing markets, which is the Northeast, street rates are much higher this year than they were last year. And, obviously, in our tougher markets, we may even be backwards compared to last year. But overall, as a portfolio, as I mentioned earlier, our rates during the fourth quarter were up about 4.5% versus last year.

They continue to be up, as of yesterday, compared to last year. But we're going to be conservative on the street rates, and we're really going to focus more on the existing tenant increases that we sent out. And as we've mentioned, over a little over half of our portfolio we expect to be sending increases over the next few months. And those increases that we are sending out are higher than the percentage increases that we were sending out last year. If you recall, in past conferences -- conference calls, I mentioned that I thought we were too conservative last year in our increases; well, we are rectifying that this year.

Okay. Thank you.

Your next question comes from the line of Lukas Hartwich with Green street.

Hi, guys. Ron, it sure seems like PSA has got more capital than opportunities these days. I am wondering -- 20/20 is hindsight, but do you somewhat regret selling off the stake in Shurguard Europe?

No.

Okay.

Your next question --

Lukas, if you recall, we sold that in March of '08, and we used a fair amount of that capital in the fourth quarter of '08 and first quarter of '09 to buy back a fair amount of our preferred stock and debt. Cash is kind of fungible, so we've had capital flows in and out, and we've retained cash flow, but a good chunk of that cash was used to, in hindsight, take tremendous advantage of the illiquidity in the preferred markets. And we earned double-digit returns, cash on cash, on that capital deployment. So, it was a great -- great timing in terms of the transaction, and we felt very comfortable taking advantage of the illiquidity in the preferred market, given our strong liquidity position at that time.

Thanks.

Your next question comes from the line of Michael Mueller with JPMorgan.

Yes, hi. Sticking with Europe for a second, is there any update on the loan to Shurguard Europe, maybe the financing environment over there? And, also, if you could just touch on anything you're seeing, anything they're seeing, in terms of acquisitions over there?

Okay. That's three questions.

Into one. (laughter)

Okay. So, the inter-Company loan between Shurgard Europe and Public Storage, that has a maturity of March 2013. And they have the ability to pay down that loan with excess cash flows that they generate when they deem appropriate. And so, you have seen some principal reduction over the last -- in Q4 and year-to-date 2010. Once they make those principal reductions, they're not able to re-borrow on that line. So it is not a revolving credit line, but they can make principal reductions whenever they want.

The acquisition opportunities in Europe I touched on, I think, last quarter. There is 1,200 to 1,500 self-storage properties in Europe, by industry data. A lot of those properties are not purpose built, and so, are not of interest to us. So, the acquisition market is much more limited in Europe than it is here in the US. Last year, I believe they acquired two properties, both out of bankruptcy -- but small in relation to the total portfolio side. I think the last question is the bank financing market. Do you want to touch on that?

Mike, the finance -- the bank market in Europe is, I would say, probably still not as good as here in the US, but nonetheless improving. It is not at the point yet where we think we can refinance the loan, either through banks or through the public issuing public debt. But we continue to monitor that, and it's possible that before the maturity date of March 2013 that the loan does get refinanced. Don't know yet, but there is a reasonable possibility that it could be.

Okay. Great. Thanks.

Yes.

Your next question comes from the line of Ki Bin Kim with Macquarie.

Thank you again. John, I think the last time we spoke, you guys were doing a study on possibly sending out rent increase letters in the winter -- so basically, throughout the year, and maybe not waiting the full year term for a customer. I was wondering if you had an update on the results of that study, and if that would possibly indicate a different pricing structure going forward, or pricing strategy going forward?

Yes, we did send out some letters during the winter -- not a whole lot, just to kind of stick our toe in the water and see what the results would be. We were quite pleased with that. But for the most part, I think our planned schedule is kind of reverting back and trying to get all of our letters out during the period of February through the point -- probably August would be the last thing. So, we would still pick up some people who may not have been here a full year.

We would pick them up in August -- for example, we might pick up people in October/November, who moved in October and November of 2010, and give them an increase in August. So, although kind of the rule of thumb for us is 12 months, we will pick up some of those people. So, we will probably still avoid the winter months of sending out letters, but try to get all of our letters out before the end of summer.

So, maybe, if I could kind of summarize that, maybe incrementally you'll be sending out more rent increase letters throughout the year?

Well -- but not as a result of anything of that so-called test, only because we have more tenants that fit the 12-month length of stay period of time this year than last year.

Okay. Thank you.

You're welcome.

(Operator Instructions)Your next question comes from the line of Eric Wolf with Citi.

Yes, it's Michael Bilerman. Good morning out there. Ron, just wanted to -- a question about PSB. You're a 43% shareholder with the units and the stock. And clearly, the loan that you made down to them, as sort of a cash flow management, is a -- think about where they are in terms of raising capital, sort of highlighted, I guess, your capital position and your access to capital, relative to theirs. And then, you look at the valuation differential between you and them. You're at 20 times FFO, they're 13.5. You trade at a little over a five cap, they're north of a seven cap. And while I recognize your organizations are still relatively close, sharing an office space, and are run on an extraordinarily lean basis relative to REITs overall, I guess at some point does it just make sense to put the companies back together, if you are going to act in this way of lending capital downstream?

Well, Mike, I will try to address the loan. This is not the first time Public Storage has loaned PS Business Parks money -- it's probably the fourth or fifth time over the -- let's see, PSB has been public about 12, 13 years. It's probably the fourth or fifth time. And each time, the arrangement is basically the same -- what does PSB pay on its credit line? What does Public Storage earning on its cash? We split the difference, and that's basically the terms of the loan. So, I would just interpret it as, we're long cash. They could use some cash, and it's a win-win for our shareholders, and it's a win-win for their shareholders.

I guess -- but at some point, do you step back and say, the property types are different, but maybe the access of bringing it back in-house and having the combined organization have a better cost of capital. And certainly, the accretion that you would get, from a PSA perspective, just given where your multiple is, would be substantial. And so, why wouldn't you just buy the stock, versus lending money? And I recognize you've done this in the past. But, I guess, in this environment, where we sit today, why doesn't a merger make sense?

Mike, I will go back to the loan. I think the loan was a win-win situation for both shareholders.

So, you're not going to talk about M&A?

I never talk about M&A on conference calls.

Okay. Well then, let me ask you a different way. How about just in the storage space?

I never talk about M&A on conference call, Michael.

All right. Thank you.

Thank you, Michael.

Your next question comes from the line of Michael Salinsky with RBC Capital Markets.

Just a follow-up there. Can you talk about the CapEx plans for 2011, relative to 2010? And also, just curious if there is any plans to restart some development in Europe, just given the limited acquisition opportunities that you talked about in the past?

Yes. Let me -- Cap -- maintenance CapEx in the US is going to be comparable to last year, I think, on a run rate. I have David Doll here, who's in charge of that -- what is that, $65 million, $70 million? Maintenance CapEx last year will be about the same this year. We'll probably also redevelop eight to 10 stores this year, which will -- not really maintenance CapEx, we really reposition the property, some of those will be the A Americans. We have the last pickup and delivery facility we're converting to self-storage this year. So, that's not maintenance CapEx, that's kind of redevelopment or billing out. It will add a couple hundred thousand units to the system. Now, your question on Europe, can you repeat that? Development?

Yes. The prospects for restarting development over in Europe there.

Yes. The thing with Europe, we have to get fixed over there, is the balance sheet and getting them to a position to where they can kind of self-fund that, and do it with external capital, and get in a position to where they can establish their own borrowing with third-party lenders and repay the Public Storage loan. Where the lending market is -- John has touched on it earlier, in terms of Europe. It's not as good as it is here in the US. And on a company-only basis, for Shurgard to go out and try to refinance the Public Storage loan on it's basis -- it's still a little bit overleveraged.

I think debt to EBITDA over there, on a standalone, is north of six times. And we need to get it down into the 4 to 4.5 range. So, their plan and what they're doing is paying down the Public Storage loan, as well as improving store operations, will give them kind of a crossover period of hopefully a year or two where they will be able to go out and refinance that debt, and then, be able to self-generate capital for development.

Thank you.

Your next question comes from the line of Ross Nussbaum with UBS.

Hello. Good morning, guys. Two questions. First, as you think about financing for the preferreds that you have the ability to repay this year, why not issue common, if you're trading at implied AFFO yield of just under 5%? Is that not a cheaper source of capital than tapping the preferred market at this point?

Is that one question, or do you have another question?

I just took a breath and decided I would let you answer the first one. (laughter)

Okay, Ron. Well, I think, depending on how you calculate it in terms of the cost of common equity, I think part of what you have to put in that number is growth.

So, it's not as simple as a straight-up calculation of AFFO yield versus preferred costs.

Right.

But is it to a point now, given that you're trading at one of your highest valuations in modern history, that that becomes at least a topic of conversation?

Well, like I said, I don't want to get too far out here in terms of the value of the common versus the preferred. But I think one of the things that you have to put in the calculation on the common is the growth rate on the earnings, not just a point-in-time AFFO calculation. At least, that's what we do. I am not saying you have to do it. But -- at least, that's what we do in our thinking.

Yes. No, makes sense. Part II is a bigger picture question, which is -- Ron, you have been at this quite a while in the self-storage business. As you sit here and look back over, say, the last 20 years or so, how do you feel about the health of your customers, the health of your business, the ability to continue to push through price increases here, and say, relative to other periods of time in the last two decades where you've also had pricing power? Are you cautiously optimistic? Are you really confident? How does it stack up?

Well, Ross, 20 years is a long time. 20 years ago we didn't have the pricing -- we didn't have a central pricing group. We didn't have anywhere near the pricing analytics that we have today. So, to benchmark 20 years ago to today is a little apples and oranges. So I really can't make that comparison of 20 years ago. What I can tell you is, over the last 20 years there has been -- unfortunately, for us, a lot of supply come into the market. So, it's made the marketplace more competitive, certainly, than it was 20 years ago. That's the negative. And we have seen that in kind of the is severity of the downturn, although our product type performed far better than most other food groups in real estate. We saw that in the downturn, and now have you seen the recovery.

The big picture positive is, there is virtually no new supply coming into the markets. There hasn't been for a year or two, and the outlook is pretty weak going forward, at least at this juncture. So, as I think about that -- absence of new supply, coming through the downturn, where we are positioned in various markets, I am feeling relatively optimistic for our growth for the next couple of years, in terms of an organic growth. And as I touched on earlier, in terms of acquisition opportunities, there is still a lot of properties that have to get worked through with the lenders, that were overleveraged. And so, there is kind of a forced acquisition pipeline that's going to be coming our way over the next three to five years. So, acquisitions, as well as pretty solid organic growth -- I am feeling pretty good about our business.

Thanks.

Your next question comes from the line of Tayo Okusanya with Jefferies & Co.

Actually, Michael, that answered my question. So thank you very much.

Your next question comes from the line of Paula Poskon with Robert W. Baird.

I have a small housekeeping question. I realize this is a small charge, but there was a charge for asset impairment, and I am just curious what that was related to in the quarter.

Paula, you almost stumped us there. We had to look at Todd for that answer. He whispered to me that it has to do with a piece of -- parcel of land that we have for sale. And we wrote it down to what we think the sales price for that land is, which was less than what the book carrying value was.

Thanks a lot.

You're welcome.

Your next question comes from the line of Todd Thomas with Keybanc Capital Markets.

Hello. I will keep this quick. It's Jordan Sadler here with Todd.I just wanted to circle back on Ross' first question on equity, and your answer, really, Ron, you said factoring in the growth. And, we're trying to get a better sense of that ourselves. And, we're just trying to get a sense of how -- how significantly increases could be on the 56%, 57% of the portfolio that's in place for over a year, as you look forward. I know that some of your -- of the other competitive public -- self-storage REITs are talking about 6% to 8%, or 7% to 9% bumps on existing customers. And I just was curious if that's in the range on an overall or average basis, what we could see across your portfolio?

Hello, Jordan, this is John. The ranges that you indicated are very similar to the ranges that we are experiencing on the letters that we have been sending out over the past two months, which is higher than last year.

Which is higher than last year.

That's correct.

And is there -- sort of, if you looked back throughout history, is there sort of a range of increases that you have been able to push through? I mean, your occupancies are, right now, higher than they were, certainly over the last couple of years, heading into a new year. Just give us a sense of where these increases are relative to where we have been historically.

Well, as I indicated, they're higher than last year, and hopefully they will continue to be higher. We don't know that. It's going to depend on the reaction in our tenant base -- reacts, I guess I should -- their reaction to these increases, as well as to holding our occupancy. Remember, we still want to maintain a certain level of occupancy. So we have indicated that we will be conservative on pricing to new incoming tenants, and we would be more aggressive on increases to the existing tenant base, which is kind of the strategy we've outlined over the past couple of quarters when we had conference calls. So, we're continuing that strategy. The increases that we have been sending out are in the 8%-ish range, the 8% to 9% range. And that compares to all of last year, where we were around the 5.5% to 6% range increase.

And did you say what the spread was in January, between street rates and in-place?

I didn't say, but I told you in the fourth quarter that it was about 4.5%, and it probably remained very similar into January and February of this year.

Street rates are 4.5%, or so, above?

Right.

Thank you.

You're welcome.

Your final question comes from the line of Michael Mueller with JPMorgan.

Yes, hi. Going back to US acquisitions for a second, Ron talked about how -- seeing more and more activity with each month. Are you seeing it -- is it primarily still one-offs, or are you seeing a greater number of portfolios, as well?

I have David Doll here, head of real estate, so I will let him give you some color on that, Mike.

Yes, Mike. We have seen -- during 2010, there was an awful lot of institutional stuff that came through, whether it was the Wells Fargo or JPMorgan moving off -- things off their balance sheet. We continue to see one-offs. The large portfolios are -- we're seeing more people sell pieces of portfolios, rather than the entire portfolio. So, it's a mixed bag throughout the industry.

Okay. Thanks.

That was our final question. I will now turn the floor back over to Mr. Teng for any closing remarks.

Okay. Thank you for attending our conference this morning, and we'll look forward to talking to you next quarter. Have a good day. Thank you.

Thank you. This concludes today's conference call. You may now disconnect.