WP Carey Inc (WPC) 2008 Q4 法說會逐字稿

Greetings and welcome to the W. P. Carey fourth-quarter and year-end 2008 earnings call.

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

It is now my pleasure to introduce your host, Susan Hyde, Director of Investor Relations for W. P. Carey. Thank you. Ms. Hyde, you may begin.

Thank you. Good morning and welcome, everyone, to our fourth-quarter and full-year 2008 earnings conference call. Joining us today are W. P. Carey's Chairman, Bill Carey, CEO Gordon DuGan, and Acting Chief Financial officer, Mark DeCesaris.

Today's call is being simulcast on our Web site, WPCarey.com, and will be archived for 90 days.

Before I turn the call over to Gordon, I need to inform you that statements made in this earnings call that are not historic fact may be deemed forward-looking statements. Factors that could cause actual results to differ materially from W. P. Carey's expectations are listed in our SEC filings.

Now, I'd like to turn the call over to Gordon.

Thank you, Susan. Good morning, everyone, and thank you for joining us.

As you see in the numbers in the release this morning, we had a solid performance in the fourth quarter of last year and a good performance for 2008. Mark DeCesaris will go into greater detail on the numbers and the various components of the results.

I wanted to take kind of a different tack and step away and just talk about why I think our business continues to perform well. Obviously these are some very, very difficult macroeconomic conditions -- but highlight a few reasons I think we are different than many other businesses and a few reasons why I think we are faring better than many of these other businesses.

As I thought about the different components or different aspects of our business that make us different, the theme that I came to was the theme of cash flow. Our business, our investments, have always been focused around cash flow, the generation of cash from what we do and the ability to pay dividends with that cash.

I think that, without getting into how other people have looked at their businesses over the years, having a singular or nearly singular focus on cash flow is a way to keep yourself from getting into trouble because you look at everything from the standpoint of what type of cash flow is this going to generate. I think that's one reason that -- one of the big reasons why I think we are a little bit different. We've always been focused on cash flow, not only in a difficult credit environment and macroeconomic environment like today, but that's what we've always focused on.

Let me just give a couple of the components of that. The sale-leaseback investment, which is what we do -- buying corporate real estate and leasing it back to companies on a long-term basis -- is more credit-oriented and more credit-dependent than commercial real estate fundamental-dependent. I think that's a very important point.

To the extent our tenants survive and continue to pay rent, we are not subject to the whims of commercial real estate. We are not developers; we are not trying to generate capital gains through repositioning of assets, etc. We are buying assets, leasing them back to corporations, and generating cash flow from those leases.

The sale-leaseback was always meant to be a more defensively positioned investment strategy relative to many other investment strategies and certainly relative to other commercial real estate-related strategies. Again, we are more credit-dependent than commercial real estate fundamental-dependent. I think that's very important in an environment where commercial real estate fundamentals are bad and deteriorating.

Another reason I think we are different is our financing strategy has always been more conservative than most people. We use nonrecourse debt primarily. Across our managed funds today, we have roughly $8 billion in assets, and we have no recourse debt in those entities. It doesn't mean they couldn't or wouldn't have a very modest amount, but we don't have any today. It goes to, again, the conservative nature of how we finance these companies.

If you can borrow without guaranteeing that borrowing by the company, it's always safer for the equity investors to do that than to give a guarantee of the company to your borrowing. So, we've always preferred nonrecourse debt; it's safer for the equity investors. Again, I think that financing strategy is more conservative.

We've always borrowed long-term. Long-term for us is 10 to 20 years. It is more difficult in this market, and I will talk a little bit about that in a moment, but we try to match up the longest-term borrowing we can. We don't like short-term debt because then you have a balloon you have to refinance. Again, in this market, that's not a great situation to be in unless they are very modest.

Our CPA funds are -- because they are focused on sale-leaseback investing and financed more conservatively using nonrecourse and long-term debt, they continue to perform well. I will talk about a little of the pressure that they will face. But our founder and chairman always makes the point that an investment manager is only as good as the performance of the investments they are managing.

So we are very focused on the performance of our CPA funds. They have high occupancy rates today, in excess of 98%. I will talk a little about our cautiousness on corporate defaults in a minute, but they also are well capitalized.

Cost of funds, we have $500 million in cash. That cash can be used for two primary purposes. There are other things we can use it for, but one is managing the debt maturities, the nonrecourse debt maturities in those funds. They are relatively light for '09 and '10. As well, we could make high yielding investments and increase the cash flow in those funds with that cash as well.

Another thing that I think makes us different -- risk management. We have an investment committee made up of independent investment professionals, people that have been in the investment business for many, many years. They approve all of the investments we make. They have seen every fad, every cycle, and it's an unbelievable discipline for an organization to have to pass by your investment ideas, each investment, by a committee of this sort. Bill put this in place many years ago. I don't want to steal his thunder, but it's been one of the secrets of our firm's success and one that we rely on heavily, and it tends to keep us out of trouble.

The other risk-management area is fund-raising discipline. In 2005, 2006, 2007, clearly looking back now at the height of the capital and credit cycle, we were out of fund-raising for two of those three years basically. I think that we saw there was an imbalance of the supply of capital versus investment opportunities that our investment committee would approve, and we had the discipline to not take in money from investors for most of those three years.

We were out of fund-raising mode. We are an investment manager. We are obviously paid to manage investments, but we had the discipline to not take new investor money for most of '05/'06/'07. I don't know many investment managers who could say the same thing, and I think that will prove to be a benefit to us.

The last thing is, because we invest in the sale-leaseback of corporate real estate, we use what is termed a net lease. In a net lease, the capital expenditures for owning that commercial real estate, subject to the net lease, are the responsibility of the tenant. What that means is we have very light capital expenditure requirements for the funds and for W. P. Carey, relative to many other organizations. Again, that goes to the cash flow nature of investing in sale-leaseback investments and net leases. We don't have the capital expenditure requirements to reposition them all, to bring in apartment tenants every six months or what have you. We do have some capital expenditure requirements, obviously, but they are much, much less in a net lease portfolio.

(multiple speakers)

Well, from time to time, Bill, we will have a tenant leave a property and we will have to reposition that property and spend money on leasing commissions, tenant improvements --

(multiple speakers) every 20 years, something like that.

so, while obviously net leases are, as you point out, Bill, less susceptible to --

(multiple speakers) possible for maintenance (inaudible) taxes and all of that of every description.

That's exactly right.

In terms of what we are cautious about, among other things is corporate defaults. I don't need to tell anybody it's a terrible macroeconomic climate. We have not experienced corporate defaults that have caused significant stress in the portfolios, but there is a lag on corporate defaults. We've mentioned this in all of the calls. We are cautious about it.

We have rent increases contractually, but to the extent we have corporate defaults where we lose rent, that will eat into those rent increases and may exceed them, given, again, a very, very difficult macroeconomic environment.

We do try to ameliorate --

Right now, according to what -- if these numbers are telling the truth, our revenues, our net revenues have been going up for every one of our funds, or as far as I can read. Maybe you see something I don't see.

Well, we are --

(multiple speakers) every one of the funds financials and every quarter last year, they went up. This year, it's not going to improve by the accountants yet but we have no reason to believe that trend isn't going to continue. The same with public companies -- we see the --

You know, Bill, I think that

That cash flow going up and of course I can wait until I talk, talk (inaudible) cash (inaudible) (multiple speakers).

Yes, as you can tell, we feel very passionately about cash flow here.

We are cautious about corporate defaults, as I mentioned. We ameliorate that by attempting to buy critical operating facilities of these businesses so that, even in a downturn, even in a cash crunch for a business, we want to have them have to pay our rent to keep their business going. We seek to diversify the portfolios by tenant and tenant industry.

In terms of capital, we are in equity fund-raising mode as we've disclosed. We've raised $380 million. The end of last year slowed a bit. We are pleased that the beginning of this year has picked up. February was better than January, and January was slightly better than December. These aren't big increases but they are slightly better which, again, in this macroeconomic environment, is a positive. We'd like it to be higher than it is, and we've raised $380 million. We wish we had raised more, but we have a terrific team out in the field working very hard on that.

There are a couple of reasons to be optimistic about the capital raise. We have a track record going back to 1979 that we think is a terrific track record and a track record that our funds have performed through various downturns in the economy.

Secondly, sale-leasebacks, as I've mentioned, are defensively positioned relative to certainly other commercial real estate investments, so that would be another reason to be optimistic.

The third reason is, as these funds aren't traded, they are not correlated with the traded markets, which many of the investors and the financial advisors prefer. Once they are invested, they get an annual NAV, and they don't have the same volatility. There's obviously a pro and con to that volatility.

The reason to be less optimistic or cautious would be it's a very, very difficult macroeconomic environment, and the markets reflect that. It's always harder to raise money in a market like this, but from our marketing group, we have been gaining market share, and so we are pleased with that.

You will also see, in a release, that we have brought in $30 million partner to our self-storage business, not an easy task to do in this environment. That's a small business for us, so I don't want to spend a lot of time on it, but we did manage to raise that.

Then on the debt capital side, it's a very challenging market. It's a "needle in a haystack search" is the quote that I use. With all of the financial institution stress that exists and is continuing, we don't expect that to get much better. So we have to be cautious about that.

On the flip side, this very difficult capital environment has presented us with a lot of terrific investment opportunities. We closed a transaction earlier this year that we disclosed, but the general investment environment that we see is that we are able to get very attractive returns, very attractive investments on a risk/return basis.

Where there's this much fear, there is opportunity, and we are seeing this opportunity today. We hope to capitalize it by accessing both equity and debt capital to take advantage of that opportunity.

To wrap up, the very difficult micro economic environment will not leave us unscathed, but we have shown through the years that we have been able to ride through these storms and relatively thrive in downturns in the past.

Since cash flow has always been the focus of our business, that continues to be the focus. Cash flow is back in vogue, but we've always looked at things through a cash flow perspective. I think that's one reason that we've been able to survive as long as we have, to do as well as we have for as many years as we have. This focus on cash flow is a very good way to think about W. P. Carey and what it is that we've always focused on.

With that, I will turn it over to Mark to get into the details of the financial results.

Well, thanks, Gordon, and good morning.

For 2008, we have reported relatively flat earnings and a 6% increase in our adjusted cash flow.

What I'd like to point you to in our earnings release is a page that we have included which reflects our results on a comparable basis over the past three years. We've adjusted these results for nonrecurring items, and we feel it better reflects our core operation. You'll note, on that page, that net income, FFO, and adjusted cash flow from operations have all increased year-over-year over the last three years.

You've heard me discuss before that we primarily have three main revenue streams -- our management revenues, which come from an annual revenue that we earn on our Assets Under Management in the managed CPA funds; we have a lease revenue stream that comes from our own portfolio of net leased assets; and a structuring revenue stream where we earn revenues for structuring investments on behalf of the managed CPA funds.

We view the management and lease revenue streams to be very stable and predictable. At 12-31-08 approximately 80% of our total revenues came from these two streams.

Let's talk about our management revenues for a minute. In 2008, we recognized approximately $80.7 million in annual management revenues. On a comparable basis with the prior year, this represents an increase of approximately 13.5% or $9.6 million.

You'll note we will be filing our supplemental report in the next few days. We will detail the revenue streams and how we've adjusted them for comparability as well, so you can see that in the supplemental report that we will be filed.

This revenue stream is supported by an asset base of over $8 billion in long-term net leases that's spread across four individual funds with over 210 tenants. It's well diversified in that these leases span 28 different industries and have an occupancy ratio today of approximately 99%. It has both geographical diversification in both the US and across Europe as well. We are currently receiving approximately 50% of these revenues in cash. The remaining revenues we take in shares of the funds in which we receive dividends on these investments.

The lease revenue stream, which was relatively flat at 12-31-08, nevertheless is a very stable source of revenue for us. We recognized approximately $76 million in revenues. In 2008, we completed lease extensions on two tenants and are currently working on 2009.

We are currently in active discussions regarding two mortgages which are coming due. The total is about $26 million in 2009. We are cautiously optimistic that we will either be able to extend or refinance these, but are also comfortable that, with the amount available we have on our line of credit, this won't create an issue for us.

The last revenue stream, structuring revenues, in our investment volume was down in 2008. We did restructure approximately $450 million in investments in 2008 versus $1.1 billion in 2007. While that investment volume was down, the $450 million of volume is incremental to our growth in our Assets Under Management. We view this revenue stream to be somewhat less predictable than the other two, but nevertheless it is incremental to our growth in our AUM and always a positive contributor to both earnings and cash flow as well. We are currently, as Gordon mentioned, we are currently raising capital for CPA.17 and through February 23 have raised approximately $380 million.

As both Gordon and Bill have already mentioned -- (inaudible) -- as both Gordon and Bill have already mentioned this morning, we view, from a dividend coverage standpoint, we view adjusted cash flow to be a very important metric for our business. This year, our adjusted cash flow increased approximately 6% year-over-year and totaled $89.4 million or $2.22 a share for 2008. The reduction in cash flow from below-average investment volume was offset by additional cash flow from our management revenue stream, increased distributions from our ownership in the managed CPA funds, and steps taken in developing a more efficient tax structure.

The current dividend payout ratio on this metric is approximately 88%.

The other metric we utilize for dividend coverage is FFO. On a comparable basis, FFO increased approximately 11% to $124.5 million, or $3.09 per share. The payout ratio on this metric for 2008 is approximately 63%.

On our balance sheet, we continue to have a very, very strong balance sheet for a public company. Included on this balance sheet are receivables of approximately $50 million of the managed CPA funds that are mainly due over the next three years. Our ownership in these funds has increased to approximately $200 million, and we received, in 2008, approximately $12.1 million in distributions.

As I mentioned before, we have approximately $26 million of debt maturities in our net lease portfolio coming due in 2009, which we are addressing. We have a fully committed, $250 million line of credit with a term that runs through June of 2011 and carries a one-year extension option.

Current recourse debt to total market cap is approximately 6%. Our current total debt to total market cap is approximately 23%.

As Gordon mentioned, subsequent to the end of the year, we did close a transaction on our self-storage assets. We formed a joint venture with Harbert Management Corporation --

Mortgage debt (inaudible) not secured by the Company.

Mortgage debt is non-recourse debt and not secured by the Company at all.

Yes (inaudible) should not be.

The total amount of the joint venture is $50 million, $30 million of which comes from Harbert Management and $20 million from W. P. Carey. As a result of this transaction, we received cash of approximately $11.2 million. In addition, subsequent to the transaction, we paid off a $35 million note at a 20% discount and refinanced approximately $25 million of the remaining balance with ten-year debt for the Company.

So with that, I'd like to turn the call -- I'd like to ask our Founder and Chairman, Mr. William Polk Carey, to make a few comments. Bill?

Well, thank you very much.

It's wonderful to have a team like this that (technical difficulty) extremely competent partners and Associates. We are moving forward in a very, very good fashion. I think we can move forward even faster and will keep encouraging people to do that.

We have the best track record, as far as I know, of any financial institution in the United States, and the best risk management. There's just no one -- most financial institutions seem to have lost risk management. We've got the best management pool, and it all started with Chairman Emeritus of our Investment Committee, George Stoddard, who came to us. His experience include a Bachelor's degree in Economics from Brigham Young, an MBA from Harvard, a Jurist Doctor from Fordham which he got at night, and he did everything for his dissertation for his PhD in Economics at NYU. He spent 30 years in the bond department of Equitable, rising to be the head of it, and arguably the most respected long-term credit person in the United States. Then, after that experience, fortunately, he came to W. P. Carey and gave us the benefit of his experience. He was there. He attracted others to join us, such as Frank Hoenemeyer, the Vice Chairman and Chief Investment Officer of the Prudential Insurance Company, which was at one time the largest insurance company in the world, and also Nathaniel Coolidge, whom he (inaudible) gave up being Chairman of the Investment Committee because of his health situation (inaudible) and moving on to too far away to commute and come to meetings in person. He picked [a child in his] 60s, Nathaniel Coolidge, who is a Harvard graduate who is the head of the Bond and Corporate Finance Department of John Hancock for many years.

I think it's always interesting to -- interesting to share is the note but an interesting note that Anne Coolidge is descended from two presidents of the United States -- Calvin Coolidge; he's a collateral descendent of Calvin Coolidge, and he's a direct descendent of Thomas Jefferson. He succeeded John Quincy Adams in the same role as John Hancock, and John Adams is also descended from two presidents. So, we've got some pretty good connections in that group.

Most people are really even sometimes more impressed with the fact that we have large clients, as Nobel Laureate in 1980 father of econometrics, the creator of project LINK for the United Nations and the person that's widely believed to be the world's foremost living economist also on our investment committee. To that, we've added Trevor Bond, who is a child in his 40s who has good experience at Credit Suisse, brought the average age down [laughter]. Then we added three brilliant (inaudible) which, because we are investing more in Europe and we wanted to balance it out with it. But these people have approved every single transaction, every single investment, and nobody in management as a vote on these investments. I don't have a vote; Gordon doesn't have a vote; the officers don't have a vote. That's a lesson I learned when I was running investment banking for a large firm in the securities industry and used to see guys get together, working on deals and sort of wink at each other and maybe suggested movements that suggested maybe, if you support my deals, I will support yours. But we put a stop to that.

We've put in some truly impartial people and we brought in good analytical capabilities. We've ended that and then the firm I was running the investment bank for (inaudible) New York Times did a ranking of how various firms did in the aftermarket performance of their public under writings. My firm was number one, beating such famous names as Morgan Stanley and Goldman Sachs (inaudible) number one, and part of it was risk management. Risk management that we've adopted I believe is the best of any financial institution. If anybody knows one that's better, please let me know. [laughter]. People say I need to diversify more but (inaudible) -- let me know what those are.

I might mention that I also bought, last year -- how much did I buy? Does anybody know the number? Hundreds of thousands of shares of W. P. Carey at $23. I felt that was a bargain, and I think, at these kinds of prices, under $20, it's an amazing bargain. I have been prohibited from buying during a blackout period, but I can confess that I may reenter the market when the lawyers tell me I can do so. But there are two of our lawyers here at the table, but when I can get back into the market, I will buy at these prices. It's a very good buy, and anybody who sells does so -- they just don't know -- I don't know any investment which would be safer and better in this kind of market.

So with that, I thank you so much for listening to me and thank you for being fellow shareholders in W. P. Carey.

Thank you, Bill. That concludes our presentation this morning. We will now open the call up to any questions that you may have.

Thank you. We'll now be conducting a question-and-answer session. (Operator Instructions). Alex [Cripps], HG Wellington.

Good morning, Gordon and all. A nice year.

I'm just wondering if you can give us a ballpark on how much, in terms of lease revenue, is up for renegotiation in '09.

Yes, in (multiple speakers) -- good morning, Alex. In 2009 it's 7%, and in 2010, it's 19% in our own portfolio.

Okay, thank you -- owned and managed.

I think, in the owned portfolio, maybe there was just slightly lower occupancy than a couple of quarters back, I mean nothing meaningful. I think it's 1% down. But can you comment on particular tenant industries or sectors that are seeing weakness or that you are worried about in terms of making payments through '09?

You know, I think it's probably a continuation of what we may have said in the past. I know what we've put in the SEC filings, but we have -- we are broadly diversified, so no tenant industry tends to be a very significant portion of revenue. But we do have some exposure to the automotive sector, and that is a complete air pocket at this point. That would probably be at sort of the top of the list. We have some exposure to the home building sector, and that's not -- there are a lot of sectors that are not very good.

But we do disclose, in various materials, the different exposures (multiple speakers) they are not significant, the auto probably being the worst. I mean it just completely seems to have shut down, and we are seeing stress from our auto tenants, but it's a small percentage of the overall portfolios.

Understood. Then last question, I think maybe this is still in the future -- when do we see the annual asset value appraisals I think that happen for the properties in the fund?

They typically come out some time in March.

Okay, so not yet. Okay, thank you, guys.

(multiple speakers).

One of the things that's interesting about those that I think one should take and remember, that the investors in our funds are not just buying real estate. They are buying a stream of cash flow which keeps going up. That's a hell of a lot different from buying real estate because real estate doesn't necessarily keep going up, and most real estate is going down.

Your point is well taken.

Richard [McGregor], Private Investor.

Yes, I love you guys! This is Dick McGregor. I am retired in Florida from Paine Webber 39 years and was on your honorary brokers advisory board and have been following your company for 25 years or more and own a good position, and am very happy with the way it goes. I wondered if you have any plans on taking 14 and 15 under the wing of the [C]. P. Carey listing.

Well, thank you for those very kind words. No better endorsement than that.

At this time, we don't have anything that we've disclosed in terms of liquidity plans for 14 and 15, so that's something we will just have to wait on.

I think I am open-minded to a number of different possibilities, but the market conditions will have something to do (inaudible) -- like taking a publicly traded (inaudible) probably want to wait until the market is stronger before doing that, but their track record is so outstanding that if somebody, some great underwriter, wants to put a premium on what these underlying values are and understand that increasing income and safe increasing income is just not available in many alternative investments.

We recognize that.

So somebody might be bright enough to understand it. Now, if they get back to looking at the investment banking business instead of gambling in trading, they might be able to figure out that this is the kind of thing that would be very good for their investors.

Andrew Dizio, Janney Montgomery Scott.

Just a question -- you had talked about the slowdown in the mortgage markets. If you saw attractive deals out there, would you be adverse to making all-cash acquisitions on behalf of the CPA fund?

No, we wouldn't be. The all-equity returns today are attractive enough, given the lack of -- the difficulty in the capital markets, that we very much would be open-minded to that.

Okay, thank you. Also, in terms of redemptions out of the CPA funds, what are you seeing with that? I am aware you have the 5% limit, but how does that look this quarter?

I know, 2008, we were below the 5% limit across the fund, so we also -- those are, in many cases, fully funded and in some cases partially funded by dividend reinvestment. We don't have anything -- we haven't disclosed anything for the first quarter in terms of redemptions.

Susan, do you have anything to add to that?

No. I mean I think that last year we certainly did see an increase over time, but they hold steady. We haven't hit the 5% for any of the funds, and we continue to monitor them and speak with our investors about other possibilities.

Okay, thanks. Those are all my questions.

(Operator Instructions). Ben Archer, UBS.

You guys back in mid-December bumped your distribution, set a trend that you think we will continue to see moving forward?

Well, as you can appreciate, we don't make forward-looking comments in terms of dividends or earnings. We've always stayed away from that.

The one thing I would say is we all are very cash-flow oriented and we tie dividends to cash flow. That adjusted cash flow from operations number that Bill referred to in his quote is the best measure to see a guide for our dividends.

It has been going up every quarter for as long as I can remember. If we raise the dividend a little bit, then it would be the 32nd in a row.

[Kenneth Pace], Pace Holdings.

It looks like your buyback ability was stated as $10 million in potential buyback. It looked like you bought back about $2 million worth of the shares. That buyback is expiring fairly soon. Do you have plans or comments on utilizing that $8 million of buyback and putting another buyback in place to take shares out of the market?

You know, I think what you're looking at, we put up buyback in place in mid-December, a $10 million program. Through December 31, we had repurchased approximately $1.9 million worth of our shares. That program will expire March 4, but it's been in place throughout January and February of this year as well.

We have not made the determination at this point. That's a Board decision when it comes to repurchasing our shares. We look at it frequently. We have been putting in programs of shorter duration, in limited amounts, that will help us react to the environment fairly quickly. I think, in 2008 overall, we had repurchased a total of approximately $15 million to $16 million of our shares throughout 2008 as well.

So would that mean that there is about $8.1 million left on your buyback through March 4 that you could utilize if you chose to do it?

There was about $8.1 million left on that program at 12-31-08. We have utilized a portion of that this year. We have not disclosed that in any of our filings. At this point, I really can't discuss it, but I would expect more clarity on that after we come out of the blackout period next week.

One last question -- you know, there are so many values in the real estate business right now in the public markets. Have you been looking or thinking about looking at other public companies that you might be able to buy at a significant discount to what you think their value is?

It's a very good question. There is obviously a lot of distress in terms of how people are trading.

The two things that always concern us are, one, companies with company-level debt that may be coming due. Obviously, the market is worried about that, and so that tends to be a gating issue.

The other thing is -- and maybe this is -- I don't know what the right word for this would be -- but our point of view on the world. But we like our portfolios better than other people's portfolios. So every time we look at somebody else's portfolio, we conclude we like ours better. Whether that's true or not, I don't know, but that is (multiple speakers) --

I think, as far as my personal choice -- this is Bill Cary -- I would rather increase our net lease business. We are the leading firm in the world. We've got the formulas down, and companies need long-term financing good, worthy companies need long-term financing. We want to help the economy of this country and the other countries we serve. (multiple speakers) provide long-term financing for worthy companies and help them keep growing and creating jobs and prosperity.

Last question -- thank you -- last question. In round numbers, your yield on your stock today is around 11%, round numbers. The yield that you can receive on your net leasebacks, looking at 5, 10, and 20-year periods, is less than that. Doesn't that make your stock the compelling investment that you should be making before you make net leasebacks going forward?

You know, I think, as Mark described in our earlier discussion, the public company is in the investment-management business, so we are making those investments on behalf of investors who are investing in our funds. We rarely make direct net lease investments, not because they are bad investments but because our job is to do [SHERI] for the funds and putting investment opportunities into those funds.

We will make investments, from time to time, where we are helping to diversify a portfolio's investment, but if you look at the past, W. P. Carey doesn't tend to invest directly into the net lease investments. We tend to invest on behalf of our funds, and then we manage those funds. But those types of situations do exist from time to time where the yield on the stock is either higher or lower.

I just wonder if your funds could be actually buying your stock as well, kind of like Public Storage does with all of their preferred -- the actual company buys into their preferreds when they see them trading at a discount.

Yes, I think we looked at that at one point, but I believe that they are not allowed to buy (multiple speakers)

We have to check, we have to check with the counsel. I think I agree; it sounds like a good idea.

The is a good place to put your money when you have money waiting for investment.

Our TC Counsel sitting next to me, he shook his head. [laughter].

I hope he shook it up and down "yes"! [laughter]

It looked a little more side to side!

Well, maybe you should, you know, when you do the next deal or two, say that you can park money in your own stock if the yield is higher than the yield on the long-term net lease.

That's a good point.

Anyway, I've taken my time. Thank you very much. I love the stock. I've held it in portfolio for about 15 years, as has my family, and we are looking forward to it coming back. It should be trading at twice what it is.

Thank you very much. We appreciate that.

(Operator Instructions). We have no further questions. I'd like to turn the floor back over to management for any closing comments.

Well, thank you all for joining us today. A replay of the call will be available after 2 PM. The information to access that call is contained within our earnings release, and the call will be available through March 12.

Thank you for joining us. We look forward to speaking with you again next quarter.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time, and we thank you for your participation.