Sonida Senior Living Inc (SNDA) 2007 Q1 法說會逐字稿

Good day everyone and welcome to the Capital Senior Living First Quarter 2007 Earnings Release Conference Call. Today's conference is being recorded. Any forward-looking statements made by management in this conference call are subject to certain risks and uncertainties that could cause results to differ materially, including but not without limitation to, the Company's ability to find suitable acquisition properties at favorable terms; financing; licensing; business conditions; risks of downturns and economic conditions generally; satisfaction of closing conditions, such as those pertaining to licensure; availability of insurance at commercially reasonable rates; and changes in accounting principles and interpretations, among others; and other risks and factors identified from time to time in the Company's reports filed with the Securities and Exchange Commission.

At this time, I'd like to turn the call over to Mr. Larry Cohen. Please go ahead, sir.

Thank you. Good morning and welcome to Capital Senior Living's First Quarter Earnings Conference Call. Our business plan is focused on increasing shareholder value by providing significant income and asset growth, strengthening our balance sheets and improving the Company's profitability. I am pleased to report that we accomplished all of these objectives and achieved solid results in the first quarter of 2007. We increased our income and grew our assets.

Compared to first quarter 2006 results, our revenues increased 26% to $46.2 million and EBITDAR, which we define as "income from operations plus depreciation and amortization and facility lease expense," increased 49% to $13.2 million. Our adjusted EBITDAR margin improved 430 basis points from the first quarter of 2006 to 28.5% and adjusted first quarter 2007 net income was $1 million, or $0.04 per diluted share, compared to an adjusted net loss of $1 million, or $0.04 per share for the first quarter of 2006.

These comparisons exclude gains on the sale of a parcel of land in the write-off of deferred loan costs and exit fees as a result of a mortgage refinancing in the first quarter of 2007.

Adjusted cash earnings defined as net income, plus depreciation in amortization for the first quarter, increased 61% to $3.7 million, or $0.14 per diluted share, compared to $2.3 million, or $0.09 per diluted share for the first quarter of 2006, excluding the effects noted previously.

During the quarter we leased a community that a health care repurchased from a third party for approximately $8 million. We had previously managed this community which in lease-up and this transaction is expected to increase net revenues by approximately $1.8 million in the first year of the lease. The initial lease rate on this transaction is 7.25% subject to conditional escalation provisions.

We strengthened our balance sheet during the quarter. We refinanced $9.5 million of mortgage debt for a 10-year term at a fixed rate of 5.75% during the first quarter.

Also in the quarter, we retired $5.0 million of variable rate debt at an interest rate of LIBOR, plus 250 basis points. This past Monday we announced an additional $30 million refinancing of mortgage debts on four of our own communities for a 10-year term with a fixed interest rate of 5.9%. We have now fixed the interest rates on our entire wholly-owned portfolio.

Over the last 12 months, we have reduced our mortgage debt by $51.6 million, refinanced or retired $162 million of variable rate debt, and reduced our average interest rate from 7.5 to 6.1%.

We achieved solid community operating results during the quarter. In the first quarter, 59 of our communities were stabilized with a 90.6% average physical occupancy rate. Operating margins before property taxes, insurance and management fees were 47% in our stabilized, independent and assisted-living communities.

Same-store revenues at 50 communities under management in both the first quarter of 2007 and 2006; these include revenues generated by our consolidated communities, communities owned in joint ventures, and communities owned by third parties and managed by the Company, increased 5.5% as a result of a 5.5% increase in average monthly rents.

Same-store expenses increased 2.8% and net income increased 10.1% from the comparable period in 2006. The operating leverage in our business model is reflected in the 68% incremental EBITDAR margin realized from these same-store revenue increases.

The number of communities we consolidated in the first quarter increased 33% to 48 from 36 a year earlier. Financial occupancies of these communities improved to an average of 89.4% during the quarter. Operating margins at our consolidated communities improved to 45% during the quarter, compared to 42% in the prior year. Average monthly rents increased 7.7% to $2,326.00. Attaining a 93% financial occupancy with a 5% increase in average monthly rents at our consolidated communities would generate approximately $15 million in additional annual consolidated revenues over annualized March 2007 results. At a 75% incremental EBITDAR margin, these additional revenues will increase the Company's EBITDAR by $11.5 million.

Seventeen of our consolidated properties of Waterford/Wellington communities, which we developed between 1999 and 2002; in the first quarter 2007, these communities enjoyed a 91.6% financial occupancy, compared to 90.6% in the first quarter of 2006, and average monthly rents grew 5.7% to $1,962.00. This performance generated a 6.4% increase in revenues while expenses increased by 1.8% resulting in a 15% increase in net income, compared to the first quarter 2006. Operating margins also improved at the Waterford/Wellingtons to 45% from 40% a year earlier.

First quarter results typically suffer from the effects of the winter season, such as harsh weather and higher health-related attrition. We benefited from the mark-to-market effect of releasing units at higher rents, the collection of community fees, and sound expense controls and additional savings on the cost of food, supplies and service contracts through our group purchasing program. Our deposits taken during the first quarter of 2007 match those taken during the first quarter of 2006. Our average attrition rose slightly to 37% during the quarter and our outlook is bright as our stabilized communities are currently leased to 91.6%. As we expect occupancies will grow throughout 2007, we should enjoy even better same-store sales results in future quarters.

I'd like now to comment on the seniors' housing acquisition market. The seniors' housing acquisition market continues to be robust, and as evidenced by our recent refinancing and lease transaction, Capital Senior Living continues to benefit from low cost of capital. Our strong relationships with major health care REITs and private equity investors provide us access to attractive capital enabling us to be a prolific acquirer.

While the quality of the portfolios that came to market during the first quarter were lower than we have seen throughout 2006, I am pleased to report that there are a number of attractive portfolios that have recently been presented to us. We are pursuing these opportunities with our Capital partners. Our relationships continue to generate significant yield flow and we are optimistic that we will be successful in acquiring additional senior living communities throughout the year.

Our existing infrastructure and national platform allow us to integrate the acquisitions operationally and at very low incremental costs. This was demonstrated in the most recent quarter by the reduction in general and administrative expenses as a percentage of revenues under management and in our strong EBITDAR margin growth.

We will commence construction on a premier independent and assisted-living community in Ohio with a joint venture partner this quarter and expect to commence construction of other sites this year. We are actively working on additional sites primarily in strong barrier-to-entry markets for a limited number of joint venture developments.

New development of seniors' housing continues to be severely constrained with new supply growing at a compounded growth rate of 1.3% per annum since 1999. A scarcity of well-located sites, increasing land and construction costs, complexities with zoning, and limited sources of capital, have restricted new construction in many markets. This is exacerbated by the limited number of markets that can afford the higher rents necessary to generate an adequate return on significantly higher replacement costs. Constrained development combined with strong industry fundamentals is providing an environment where values of existing seniors' housing communities are rising, as institutional buyers are more confident about the outlook for their acquired communities in the senior living industry.

We currently own directly, or with a joint venture partner, 58% and lease 38% of the communities we operate. As such, we should benefit from the higher valuations of our communities, dynamic growth opportunities generated by our operating platform, and strong industry fundamentals. We are fortunate to be aligned with many of the dominant investors in the industry allowing us to remain active as an acquirer of additional communities. As substantiated again by our strong same-store sale results, the operating leverage in our business model creates considerable organic growth.

We have now fixed our mortgage debt at very attractive rates strengthening our balance sheet. Combined with exciting external growth opportunities, I believe we are well positioned to create significant value for our shareholders by continuing to execute from the business plan.

I would now like to introduce Ralph Beattie, our Chief Financial Officer, to review the Company's financial results for the first quarter of 2007.

Thanks Larry, and good morning. I hope everyone has had a chance to see the press release which was distributed last night. In the next few minutes, I'm going to review and expand upon highlights of our financial results for the first quarter of 2007. If you need a copy of our press release, it has been posted on our corporate website at capitalsenior.com.

I'd like to begin by reviewing three recently-completed transactions; one involving a new lease for the Company, and two, reflecting changes to our debt structure.

The new lease involves Crescent Place, an 80-unit assisted living community in Cedar Hill, Texas, that a health care repurchased from a third party for approximately $8 million. The Company previously managed this community, which is in lease-up, and also leases an adjacent community, Crescent Point, a 112-unit independent living community. This transaction is expected to increase the Company's net revenues by approximately $1.8 million in the next 12 months.

The second transaction was a refinancing of $9.5 million of mortgage debt on the Gramercy Hill property. The Company reduced the interest rate on this loan by approximately 180 basis points and fixed it for a 10-year term, enabling us to receive over $2 million of proceeds with no increase in our interest expense.

Third, the Company repaid a term loan of approximately $5 million to Key Bank. This note bore interest at LIBOR, plus 250 basis points, or approximately 7.8%, and originated in January of 2006 when the Company settled a treasury rate lock liability.

Moving to the financial results, the Company reported revenues of $46.2 million for first quarter of 2007, compared to revenues of $36.6 million for the first quarter of 2006, an increase of over $9.6 million or 26%.

The number of consolidated communities has increased by 12 since the first quarter of last year from 36 to 48. Financial occupancy of the consolidated portfolio averaged 89.4% for the first quarter, an increase of 30 basis points from a year ago.

Revenues under management increased approximately 18% to $54 million in the first quarter of 2007 from $45.6 million in the first quarter of 2006.

Revenues under management include revenues generated by the Company's consolidated communities, communities owned in joint ventures and communities owned by third parties that are managed by the Company. At these communities under management, same-store revenue increased 5.5% versus the first quarter of 2006.

Along with over a $9.6 million increase in revenues, operating expenses increased by $5.2 million in the first quarter of 2006. As a percentage of resident and healthcare revenues, operating expenses decreased from 64.3% in the first quarter of last year to 61.5% this year, reflecting 280 basis points of margin improvement.

General and administrative expenses of $3.1 million were $0.2 million higher than the first quarter of 2006. As a percentage of revenues under management, G&A expenses declined from 6.3% in the first quarter of 2006 to 5.8% in the first quarter of 2007.

Facility lease expenses were $6.5 million in the first quarter of 2007, nearly $4.4 million higher than the first quarter of 2006, reflecting 23 leased communities this year versus seven last year.

Adjusted EBITDAR for the first quarter of 2007 was approximately $13.2 million, an increase of 49% from $8.8 million in the first quarter of 2006. Adjusted EBITDAR margin was 28.5% for the period, a 430 basis point improvement from the comparable period of the prior year.

Interest expense of $3.3 million in the first quarter of 2007 was $1.9 million less than the first quarter of 2006, reflecting the debt retirements and refinancing accomplished in the second quarter of last year.

The Company reported a gain on sale of assets of $0.8 million in the first quarter of this year, reflecting the amortized portion of $28.9 million in deferred gains on lease transactions. We also reported a small profit from the sale of a parcel of land.

The Company earned a net profit of $0.9 million, or $0.03 per diluted share, in the first quarter of 2007 versus a net loss of $1 million, or a $0.04 loss per share, in the first quarter of 2006. Excluding the write-off of deferred loan costs and a prior-year gain on the sale of a treasury rate lock, net income improved from a loss of $1 million, or a $0.04 loss per share, in the first quarter of 2006 to a profit of $1 million, or $0.04 profit per share, in the first quarter of 2007.

On this same basis, adjusted cash earnings were $3.7 million, or $0.14 per diluted share, in the first quarter of 2007 versus $2.3 million, or $0.09 per diluted share, in the first quarter of 2006.

Capital expenditures for the first quarter of 2007 were approximately $1.4 million. An estimate of cash flow for the quarter, excluding financing and changes of working capital, can be derived by taking cash earnings of $3.7 million, adding stock-based compensation of $0.3 million, and subtracting CapEx of $1.4 million and amortized gains of $0.8 million. That would provide a pre-cash flow estimate of approximately $1.7 million for the quarter.

Along with the refinancing of the Gramercy Hill mortgage and retirement of the $5 million term loan, the Company announced earlier this week the refinancing of $30 million of mortgage debt on four owned communities. The $30 million of fixed rate debt at a 5.9% interest rate replaced $32.7 million of variable rate debt, which carried an effective interest rate of 7.6%.

By paying down approximately $2.7 million of principal and reducing the interest rate on the remaining balance by approximately 170 basis points, the Company expects annual interest savings of $0.7 million per year. With the completion of this refinancing, the Company has approximately $191.3 million of mortgage debt at fixed interest rates averaging less than 6.1%. Combined with the amortization of deferred loan costs the Company anticipates approximately $3.1 million of quarterly interest expense at current levels of debt. We have achieved approximately $8.3 million of annual interest savings, compared to our capital structure a year ago.

We would now like to open the call to questions.

Thank you. [OPERATOR INSTRUCTIONS] We'll go to Jerry Doctrow of Stifel Nicolaus.

Good morning. I just had a couple of general things, I guess for Larry. You know, you had a great success in controlling operating costs this quarter, certainly compared to some of your peers. I was just wondering whether there's anything sort of unusual going on there, or what kinds of things you're doing to kind of bring in that number the way you did?

Jerry, in the last 10 years, we have had a consistent practice. Actually, my 10 years of experience has proceeded my being at the Company, quite frankly. One of the attributes of Capital Senior Living's management is controlling costs. We have -- and it really goes back to the culture of our Company and the way that we operate. First of all, we believe in the budgets being prepared onsite. Every department head has impact and input into the budget with their executive director. It's reviewed by the regional. It's negotiated with Keith Johannessen, our Chief Operating Officer, and that becomes a tool that we sit down as a management team.

For example, just last Thursday we sat down and review every property every month. Our regionals are on top of our properties, and as we see indications of occupancies we adjust our expenses. We have group purchasing procurement programs that have been very, very effective. Our insurance premiums continually go down based on very good risk management and a great track record as far as claims history. So, this is nothing unusual. If you look at our results for last year, they were very similar to this. As I said, I think in my 10-year tenure at Capital, we have typically seen our revenues grow at about twice our expense growth. That's just a function of just a very detailed approach to how we manage our business and I would expect that will continue.

Okay, and just one or two other things if I could. You've talked about doing something with ancillary services. I was just wondering if we could get an update on that.

Sure. We continue to meet with and visit with a number of different homecare agencies, some of whom are operating in our properties; others complement our platform. We have been analyzing ways of structuring an alignment in that fashion. We are benefiting from the fact that in the last three years we have rented space in all of our independent living communities through homecare agencies, so the ancillary services are in the buildings. That has been successful in maintaining our occupancies, as well as minimizing our attrition. So, we are serving our residents.

We are looking at ways that we can bolster our revenues by having some type of a -- whether it be an ownership or an investment in some of these companies. We also continue to add assisted-living units and look at ways to add assisted-living units to our existing portfolio. We are working for example now in Illinois on licensing the entire buildings that we operate, both independent and assisted. We're looking at other states as well where we can convert wings or add more assisted-living units to serve some of our independent-living residents.

Okay, and then the last one. You talked about this new construction project and I just wanted to get a little bit better feel for sort of what the mix is. I don't know if it's a prototype that you use going forward between IL/AL? I don't know if you've got any sense of price point at this stage.

Then, you said something I thought about, or maybe Ralph did, about doing some development go-forward in JVs, and I wanted to just sort of clarify that if you're sort of a managing partner with a finance source, or doing something else.

Sure, I'd be happy to respond to that. We do have a prototype. It has 146 units; 101 independent and 45 assisted. The building costs about roughly $150,000 per unit. On land, again, our first building is going to be built outside of Dayton, Ohio on land that we have owned since 1999. Our basis in the land is $600,000. We are forming a joint venture with a financial partner. I'd expect a press release will be issued shortly to really divulge more of the details. We're very close to finalizing all the documents. We have a construction loan that's ready to be taken out by the venture.

But our structure will be very similar to our other joint venture structures. We will typically invest around 10% of the equity. The venture will borrow about 65% of the total cost from a bank. We will be compensated as a developer earning development fees. We will be operating those properties and then earn management fees, typically commencing about six months before opening.

The prototype, again, we're looking at two sites we own in Ohio. We have a third site under contract and we have numerous negotiations on other sites. I'm hopeful that we could probably start rebuilding for this year and then look at perhaps six building in 2008. So, we're very excited.

The other aspect of this prototype is that we recognize the fact that our residents have more needs and our buildings will accommodate that by having offices for medical doctors, offices for wellness centers, offices for rehab. They will be available to our residents as well as to the general market. There are larger units.

I mean one of the aspects -- I go back to your question about ancillaries and also your comments, Jerry, about our portfolio. We have benefited -- and our cost structure also represents the fact that we have large properties. Part of the reasons that we have such good expense controls at such high margins is our properties average about 140 units per, and because of that we've always been able to adequately staff our properties and spread our costs over a larger base of operations driving better economic performance.

The other aspect of our buildings is that we have nice units; one bedroom, two bedroom, full kitchens. Yesterday, we took our Board on a tour of a property here outside Dallas, and it was wonderful to see the acquire of the kitchens and talk to residents who are talking about baking biscuits for breakfast and bacon and eggs; that they can use their kitchens. That's a big appeal to our residents. So, we are very excited about the fact that we have a great asset base with large units; walk-in closets, full kitchens, that is very attractive to residents, both independent and assisted. Our new buildings, the 45 assisted-living units, have no studios.

So we understand that, and through our focus groups, through our interaction with our staff, our regionals, our residents, we recognize that seniors want large apartments to live in, very residential in feel; and our independent-living properties are very well positioned for that. So, as we are able to bring in third-party homecare, as we are able to effect more assisted-living conversions, we think we have a product that's very well suited for the future of the senior population of our country.

Okay. All right, thanks.

[OPERATOR INSTRUCTIONS] We'll go to Todd Cohen of MTC Advisors.

Good morning. Larry, in your remarks, you referred to a figure of 91.6% that you were currently at in the quarter.

That's a lease number. Let me explain it, and Todd as we've said before .

You gave us a lot of numbers. I didn't quite get what that referred to.

That is a lease-to number, which reflects the actual occupancies currently, taking into account deposits that are scheduled to move in, less any notices we have to move-outs.

Okay.

But that is a forward-looking number. As of today, we are looking at the number of leases that are in place to move into our buildings on that basis.

Okay, and what was that number that you reported in the first quarter?

It was 91.6% at the end of -- well again, I don't have the exact number. It's a current number as of last week, but it was about 91%.

Okay, now I'm just saying so it's up from the end of the first quarter?

Yes, and the reason I made that comment is that .

What I show, Larry, in your press release is that an average physical occupancy was 90.6% at the end .

Correct.

So it's not 90, it's actually 90.6?

That physical occupancy is 90.6. That is correct.

So is 91.6, is that the same number you're referring to? Is that also the average physical occupancy rate?

No. The average physical occupancy rate that we referred to, the 90.6, is actually based on occupancy for the average for the quarter.

Right.

91.6 adds to that the number of deposits that we have with scheduled move-ins, taking out any notices we have for move-outs.

So, all things being equal, you're up about a point in occupancy from where you were at the end of the first quarter?

When residents move in, we will be up 1%. That's correct.

Okay. All right. Then, you referred to getting to some targets and how that drives your EBITDAR. You referred to price increases and 93% financial occupancy.

Yes.

What are you guys doing to get there? I mean I understand the numbers and I understand the economics of what occurs when you get there, but I'd like to know what are you guys doing specifically to kind of drive those numbers?

I'd be happy to respond to that. We have, again, one of the benefits of our operating platform is because our communities are large enough we have full marketing staff onsite. We have a marketing director. We'll have a timing counselor. Very often we'll have a salesperson as well complementing the marketing director. We are constantly involved.

One of the fun things we do as a Company when we review our properties is talk about some of the events going on in our communities. We are constantly both using in-reach and out-reach; and that's bringing seniors into our communities, as well a going out, dealing with discharge planning, dealing with professionals, dealing with seniors having events. We have seminars. We have activities ongoing. We have beauty pageants in some of our properties. We'll have tailgating parties. I mean it's a constant source of activity that we are using continually to market our properties.

We mentioned the fact that we have homecare in our buildings. That is a very significant draw to family members having their parents move into our properties, because there is ability to provide some more care to our residents who are enjoying their independent living apartments. So when we target 93% and we look at the industry averages, we look at our portfolio and our history, and we look at the growing demand and unlimited supply, we believe that that is a reasonable number that could be attained using the efforts we have.

In addition to the onsite staff, we have seven regional managers responsible for marketing, overseeing on average about eight properties to date. We also have here in Dallas a senior marketing staff. Rod [inaudible], who's our VP of Marketing, has been involved in the senior housing industry for more than 25 years. We have weekly calls. We have summits. We just had a gala here in Dallas about two weeks ago where we had an award banquet recognizing our super achievers.

We had our Top 10 properties by different categories from resident satisfaction. Again, we're very pleased going to marketing. Our resident satisfaction surveys came in for 2006 averaging 95%, which is outstanding. Our best source of referrals happen to be our residents.

So, all of these activities are constantly ongoing. We have very handsome budgets for our properties for marketing, and with the efforts of the onsite staff, with our resident networks, with our corporate and regional support, we think we can reach those goals.

Then, Larry, one other question just as a refresher. I think you've discussed this in the past, but is the first quarter typically kind of a funny quarter from a seasonal point of view?

Definitely Todd. There's definitely seasonality in our industry. We deal with higher levels of attrition. There seems to be more illness, more deaths, harsher winters which limits tours and people coming in. So, that's a very good observation that we definitely, this industry does have a seasonality. I think all of the companies who have reported have shown that there is a seasonality in the first quarter.

We did seem to have a particularly bad, bad weather I guess in Texas and in other places, I think in February, if my memory serves me right. I'm assuming that may have had an impact on the traffic?

We had winter effects; heavy snow in the Midwest, Buffalo, Ohio. I mean, remember how much snow Buffalo had, so that definitely impacted us. What encourages me, quite frankly, is we still had great same-store sales without the occupancy growth. What we're finding out now is that our strategy to add community fees, our mark-to-market effect of raising rents as we re-lease units, all are generating very strong revenue growth, but with very tight control on our expenses we still experienced double-digit, same-store income growth without the occupancy growth.

The last question, Larry. Monthly rents were up 8% year-over-year; however, they were up as well about 2.5% the first quarter from fourth quarter which is outstanding. How much of your portfolio kind of rolls on a monthly or quarterly basis as it relates to being able to raise rents?

Our residents sign annual contracts.

Okay.

So, it's going to be -- it's a continuum throughout the course of the year. It's not like we open a building and you have 12-month leases that roll. You know, when you look at commercial space, you can look at them and know exactly when your leases are coming up, what percent is rolling every year, going out over a lease term.

In our business, we have attrition; again, 37% attrition the first quarter. We typically average about 33% to 35%. We have monthly -- so again, during the course of the year, we're going to have residents move out for higher care. We're going to have deaths. So, we will continually see those leases roll throughout the year and that's a benefit of ours. We should see continuing up-ticks in those rental rates driving very strong same-store sales results throughout the course of the year.

Great. Thank you.

Thank you Todd.

We'll go next to Jerry Doctrow, Stifel Nicolaus.

I just had a couple follow-ups. Let's see, the things I guess -- wanting just the ending share count for one. Do you have that number?

Yes, Ralph has that.

Ralph, maybe while you're looking, or Larry, I was wondering about your disability to refinance additional debt. Obviously, it's been a huge improvement you're making. Is there more of that to come do you think, or we sort of done?

I think we're done, Jerry. I think right now all of our debt is fixed. We have made great strides, so I think -- and that's the reason for Ralph's comments and in our press release we're giving guidance that with the current debt level that is the interest rate every quarter; because the debt is all fixed and we don't expect anymore adjustments on that.

Okay.

Jerry, the diluted shares for the first quarter were 26,636,000. The actual share count outstanding was 26,458,000.

That's end of quarter?

That's end of quarter, but the one to use for earnings per share diluted would be 26,636,000.

Okay. Then, the last thing I had, again, one of your competitors there talked about entrance fee and a little bit of slippage in entrance fees. Do you do entrance-fee communities? It seemed to me you had a couple and their comments that are related to the housing markets. I guess I really want to ask whether any softness in the housing market is affecting move-ins? It doesn't seem like that, and particularly if you've got entrance-fee communities whether it's an issue there.

We do not have entrance-fee communities. We do have two CTR fees and they are both rental properties. We do have community fees, but we do not have entrance fees, so we are not affected by the home sales. Because unlike the entrance-fee model where people are selling their home and using those proceeds to buy into a community, our residents again don't have those burdens. So, it's a rental property. I would say, generally, we have not seen the effects. There are, you know, fortunately we have one property in Florida and Florida does have an effect I think on the homes sales, but that's only one community.

Across the country we really have not seen much, but we've been proactive. Going back to Todd's question on marketing, we actually now hold seminars throughout the country with seniors on selling their home. So, we are ahead of the curve anticipating that, based on what we're seeing in the media around the country, that there may be an effect of softening of home markets.

We actually began doing that in the third and fourth quarter of last year of having seminars on helping seniors prepare the home for sale, understanding that they have tremendous equity in their home. That just because your neighbor got $50,000 more a year ago doesn't mean you shouldn't sell, and realize there may be a risk of further deterioration if you hold on to it.

So, that's one of the strategies we have been using in marketing. Again, we started this at the end of, probably at the end of the third quarter in 2006, and as you can see from the results, we're really not seeing any impact from the home sales.

Okay, thanks.

Gentlemen, at this time I'll turn the conference back to Mr. Cohen for any additional remarks.

Well, we thank everybody for, again, your support and being part of our call. We're again very pleased with the solid performance and look forward to talking at the end of the second quarter. Thank you very much.

That does concludes today's Conference Call. We thank you for your participation. You may disconnect at this time.