WP Carey Inc (WPC) 2009 Q1 法說會逐字稿

Greetings, and welcome to the W. P. Carey First Quarter 2009 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded.

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

Thank you. Good morning and welcome, everyone, to our First Quarter 2009 Earnings Conference Call. Joining us today are W. P. Carey's Chairman, Bill Carey, CEO Gordon DuGan, Acting Chief Financial Officer, Mark DeCesaris, and Chief Operating Officer, Tom Zacharias.

Today's call is being simulcast on our website, 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.

Thanks, Susan. Good morning, everyone. Thank you for joining us this morning. As you see from our press release, it was another solid quarter for us. Adjusted cash flow from operations was up slightly to $39 million from $38.7 million in the first quarter of last year. Again, we think this is a useful metric to evaluate the cash flow generation of our core business. And what you see is that we're continuing to generate steady cash flow in the business.

FFO for the quarter was up nicely to $28.9 million versus $21.5 million in the first quarter last year. Mark's going to go down-- will break down the components of both of these measures, as well as get into the numbers in a little bit more detail. I wanted to touch on a few highlights and a few trends that I think are impactful on our business today.

In terms of a highlight, investment activity for the first quarter, we did $271 million of investments. The largest piece of this, of course, was our sale-leaseback with the New York Times. And I think it's very indicative of the types of opportunities that are available to us today.

Many of you may know the building. It's on 8th Avenue between 40th and 41st Street. Recently completed, brand new, Class A building. We were able to buy it at a 1070 cap rate, 1075 on the net purchase price. We have annual rental increases of the rent. And we paid less than half what the New York Times invested in the building. We paid roughly $300 a square foot versus Midtown office market trades, which have been significantly higher; as great as over $1000 a foot at the top of the market in 2007.

And interestingly, it houses the crown jewel of the New York Times Company. The New York Times Company is a larger company than just the New York Times newspaper itself. And the profitable piece of it, and the crown jewel of it, of course, is the New York Times, all of which is housed within the space that we transacted with the New York Times on.

And again, I think this is indicative, we've been waiting for the investment opportunities to get more attractive. They have been getting more attractive. Prices are better. We can structure better transactions. And we can get better returns. So we think investment opportunities are very good today.

One reason for that is we're sometimes misclassified as a real estate company. It's a misnomer. Our opportunities and our returns are generated when companies need capital. They turn to us to transact the sale-leaseback where they raise capital and then we get the steady returns from owning that property.

And that contrasts very markedly with conventional commercial real estate investors where their opportunities and returns are generated when companies need additional space. And if you look at the fundamentals that drive both businesses, they're different. So again, our opportunities exist today, and we are able to-- we believe we have a variety of very attractive investments.

One of the things we've been cautious about, we continue to be cautious about is corporate defaults. Tom Zacharias will outline the status of those. Obviously, corporate defaults have increased worldwide in this significant economic downturn. But because we have such a conservative nature, we have a nice cushion in our funds. Tom will discuss that in a little greater detail.

And one thing to keep in mind in thinking about a situation where a default may result in a loss, but also may not result in a loss because we own critical assets of these companies, and depending on the jurisdiction, the companies continue to pay rent if they need that property to operate a profitable part of their business.

The other thing we have in our funds is these are not fixed income instruments. We have rental increases in all of our leases. There may be an expectation, but basically all of our leases. And the majority of those rental increases are tied to the CPI, which is unique to how we invest.

The reason that we're very-- we think that's very important is that as inflation begins, may raise its ugly head, our leases are well-hedged against inflation through a CPI index. And investors are looking for that type of protection from inflation should inflation be the next phase of the global economy.

Another area where we're focused is debt maturities. While we have very manageable debt maturities, and those debt maturities are all non-recourse debt maturities, it's still an area of focus for us as these come due. Tom will again outline that in greater detail. Financing is very, very difficult to get, but it is available. Not always, not everywhere, but it is available, and we're working very hard to manage those. Luckily, again, our funds are very liquid and have very manageable debt maturities. But it is an area of focus for us.

Switching gears a little bit to talk about opportunities. Assuming the world isn't coming to an end, this is really the environment we've been waiting for. This is a great time to grow a business. In the 2005 to 2007 area, we were cautious about what was happening. We mentioned that there were too many people-- there was too much money chasing deals. And it was a good time to be cautious because there was so much money and so much liquidity flooding the world.

Today, it's the opposite, obviously. It's a great time to grow a business. You can get good people. If you have access to capital, it's a great time to invest that capital. And the people that are going to have access to capital are the people that didn't take too much risk at the top of the market. And we believe we're one of those companies. We clearly didn't take too much risk at the top of the market, and we're now not paying for those mistakes at the top of the cycle.

We have a great track record. We talk a lot about that. It's a 30 year track record. Our funds continue to perform well-to-date. Tom will outline that in greater detail. And they have the ability to perform through difficult economic times as they did in the early 1990s.

And again, we didn't take too much risk at the top of the cycle. We emphasized to investors that one of the things that really differentiates us is that in 2005, 2006, and 2007, we were basically shut down for two of those three years in terms of taking new investor capital. We wouldn't take new investor capital because we have a disciplined investment process, an investment committee that won't let us take too much risk. And so we wouldn't take new investor capital.

And I would ask you to ask other investment managers to find other investment managers who said, no, we will not take your money through that period of 2005 to 2007. For two of those three years, we wouldn't take new investor money. That's very rare. And if you know of other investment managers that did, let us know about them because we'll invest with them as well.

I mentioned investment activity looks promising. We are seeing better pricing on investments. Very attractive returns, because again, it's a time that companies need capital.

In terms of our access to capital, while our channel for fundraising is seeing a decline in overall fundraising, it's very different for us. The good news is because of our track record, our current performance, and we've missed a lot of the excesses of the last market, we're seeing a nice pickup in fundraising.

April was the best month for fundraising since last August. April was better than March. March was better than February. February was better than January. You get the picture. These aren't massive increases in terms of month to month, but they're nice, steady increases in terms of fundraising as investors see what we do, and differentiate between us and other investment managers. We focus a good number of resources to access capital, and it's paying off right now. And we're very pleased with the pickup in fundraising that we're experiencing.

I'll just finish by saying hopefully all of you have or will be receiving our annual report. I thought it was very-- it's a very nice picture to see, to be reminded of the story of the tortoise and hare. Not that we're exactly a tortoise, but you get the point. We believe in steady growth. And we also saw a market that we wanted to side step a lot of the risk and the excess of that market from 2005 to 2007 when we were cautious, didn't take new investor money, and mentioned publically that there was a lot of money chasing deals and you had to be very, very careful.

We're still conservative about managing our existing portfolios for our investors, and are very focused on that. But this is the time to grow our business. So we're looking to grow our business at this point in the cycle. Again, assuming the world's not coming to an end, this is the right point in the cycle to grow. This is the time we've been waiting for, and it's our time to grow.

With that, I'll turn it over to Mark for his detailed comments on the financial results of the first quarter.

Well thanks, Gordon, and good morning, everyone. As Gordon mentioned in this morning's earnings release, we reported increased Q1 earnings and adjusted cash flow on a comparative basis with the prior year. My comments this morning will provide some insight into those results.

In our investment management segment, our manager revenue stream, revenues were down approximately $1 million for the quarter. That's primarily reflects a reduction in the appraised value of the asset base of roughly 7%. New investments made during the quarter of approximately $231 million helped to offset that decrease. And as we continue to make new investments, this base will increase by the amount invested.

The point I want to make here is that the same discipline that you heard Gordon mention that the Company has had over the last three to five years in staying on the sidelines for the majority of that time in what turned out to be the top of the market has made the value of our asset base very stable. It's held up very well through what has turned out to be a very tough economic environment. That asset base continues to support a manager revenue stream, which provides a very stable and predictable source of cash flow for this Company.

In addition to the manager revenues, we structured a total of $271 million in investments in the first quarter; $231 million of that on behalf of the CPA funds. We also co-invested approximately $40 million in the New York Times deal, alongside CPA 16 and CPA 17. As a result of this investment activity, we recognized approximately $10.4 million in structuring revenues for the quarter.

We looked at our net lease segment. Our lease revenues were down slightly in the first quarter as a result of some dispositions and lease terminations that Tom will address in his remarks. But looking forward, our share of the New York Times deal will generate approximately $4.3 million annually in lease revenues, which we will recognize through our equity income line on the income statement.

While the FFO for our portfolio of net leases was down slightly, primarily as a result of the decrease in lease revenues, overall FFO for the Company increased by approximately $7.3 million as a result of increased structuring volume. The takeaway for this segment is that with the addition of the New York Times investment, I would expect both on a net-net basis -- net of the dispositions and terminations that have occurred -- that both our lease revenue streams and the FFO for our net lease segment will improve over 2008.

The other item I wanted to touch on is our general and administrative costs. As you look through our results, you will see an increase in this quarter versus the first quarter of last year. Included in those costs for the quarter was approximately $2.8 million that related to severance costs and some transactions costs related to restructuring the storage fund, which we needed to do to bring in a new investor.

Gordon mentioned adjusted cash flow, and we continue to focus on this metric for determining the cash that's generated by the core operation of the Company. We expect our adjusted cash flow to improve in 2009 as compared to 2008. The New York Times investment alone will generate approximately $3.6 million in lease revenue this year and $4.3 million on annualized basis thereafter.

In addition, as we've spoken in previous calls, we take a share of the manager revenues from the CPA funds in both cash and shares of that fund. We modified that mix this year, and in '09, we'll take approximately 60% of the manger revenues from CPA 14 and CPA 15 in cash. These two funds represent approximately 60% of the current asset base under management.

We exclude from the adjusted cash flow metric revenues that we receive in shares from the CPA funds. And for this quarter, we received approximately $6.9 million in shares from those funds. We do, however, include the cash distributions that we get on the shares that we own of the CPA funds. And in the first quarter of this year, distributions received from that investment were approximately $3.3 million.

We utilize this metric in part to evaluate our dividend coverage. And our core operation continues to provide strong coverage of the dividend. As you look at Q1 cash flow, it is impacted by the receipt of approximately $22 million in deferred acquisition revenue. As you know, when we make an investment on behalf of the funds, we defer a portion of that revenue and receive it, with interest, over roughly a three-year period. That money is typically received in January each year, and to some extent, increases the adjusted cash flow in Q1, and then it gets to a normalized over the last three quarters.

From a balance sheet perspective, we continue to maintain strong balance sheet with relatively low leverage. Our total debt-to-market cap ratio is approximately 28%, and our unsecured debt-to-total market cap rate ratio is approximately 9%.

We saw an increase in our line usage in the quarter with the acquisition of the New York Times. The balance at March 31st is $116.5 million. And we are currently paying an average interest cost of approximately 1.3% on the line.

That line is, in total is a fully committed $250 million line that runs through June of 2011 and carries a one-year extension. We have approximately $29 million in debt maturities in 2009, and approximately $11.6 million in 2010. We are in very good shape in the Company-related debt maturities. Tom is going to talk about the activity in that area, but we have enough availability on the line to put us in very good shape there.

With that, I'd like to turn the call over to Tom Zacharias, our Chief Operating Officer.

Thank you, Mark. I would like to provide a brief portfolio report for the first quarter of 2009. We believe that our portfolio, and those that we manage for the CPA REITs, are well-diversified and do not contain any unusual concentrations of credit risk. In these economic times, our asset management and investment teams are monitoring the performance of our tenants very closely.

Year to date in 2009 across the five funds, we have had five tenants at of over 280 tenants enter bankruptcy protection. These tenants represent about $8.2 million in annual rent, or just 1% of the total rent across the five funds. Because we have large diversified funds, it is not a significant amount of cash flow in each fund. In addition, because we seek to acquire critical asset of these companies, we historically experience a very high recovery rate in the reorganization process, as Gordon mentioned.

At the end of the first quarter, occupancy was at approximately 94% in the LLC portfolio. No significant change from the prior quarter. We sold one small property in the first quarter for $2.3 million in net proceeds.

As Gordon also mentioned, rent increases in our leases are generally indexed to the CPI increase. The annualized same tenant rent increases in the LLC portfolio from first quarter '08 to first quarter '09 totaled $2.2 million. And this works out to about a 2.9% same tenant property rent increase over the last 12 months. So just out of what we own, there's good income generation from the increases from the CPI index.

For the three-month period ended March 31, 2009 as compared to the same period in 2008, FFO from our real estate ownership segment of the LLC owned assets decreased by about $900,000 or 5.7%. This is due primarily to the impact of two property sales, five lease expirations, and a 12% weaker euro for the euro-denominated rent, which is about 10% of the rent.

As Mark mentioned, as a result of the New York Times transaction, which closed at the end of the first quarter, revenue from the real estate portfolio will be growing nicely as that will result in an increase of $4.3 million per annum. And we expect over the next few years to continually upgrade the portfolio of assets owned by the public company in transactions such as the New York Times transaction.

For the remainder of 2009, we have very little lease revenue expiring, and it is a total of about 4% of the total annual rent in 2009. We are in negotiations will all six tenants to renew or extend their leases.

In 2010, annual rent expirations increased to 17%. And again, we are in discussions with all 20 tenants involved and expect a very significant portion of the tenants to renew their leases. In fact, I feel very positive about how these discussions are proceeding.

Going forward to 2011, total annual rent revenue expiring is approximately 18%, and we are in discussions with these 14 tenants to renew their leases early. [Car 4] represents about half of the lease revenue expiring in 2011, and we have had very positive discussions about them renewing all their leases for their space.

Mark has previously mentioned that we have a modest amount, $29 million, of mortgage debt coming due in the LLC in 2009. It's in three mortgages, and we are currently negotiating refinancing of these three mortgages. In 2010, it drops to $11.6 million and three mortgages. 2011, it's eight mortgages for $47 million. So we are, in summary, very well-positioned as a Company with very little debt to refinance over the next three years.

Again, in summary, there are no significant lease expirations or mortgage maturities for the public company for the remainder of 2009. We do not see any significant risk in 2010 or 2011. I'm very encouraged by our efforts to renew these leases early and the success we've had in financing our mortgages, which are generally only 50% of the value.

As of March 31st of this year, the occupancy rate of the 93 million square feet of real estate owned by the CPA REIT funds was approximately 98.5%. But there are not significant lease maturities in the CPA funds over the next three years. The average lease term in these four funds is between 11 and 17 years, which are rather long. And these long-term leases are a large contributor to the stable valuations for these funds.

And now I'd like to turn the call over to our Founder and Chairman of the Company, Mr. William Polk Carey.

Thank you very much, Tom. And thank you, all of you who have worked hard to keep our cash flow rising.

As a large shareholder who takes the dividends and uses them-- I use them mostly for charitable activity, but nonetheless, it's important to me that those dividends keep rising. So I watch cash flow, where dividends come from, more than I watch net income, of which I pay my taxes.

And of course I know that among financial institutions, we have had the best risk management and the best rising cash flow of anyone. Again, Gordon said, if you know of another one, let me know. Maybe I'll buy some of that. But this has been a great experience to me and to see those dividends keep inching up. So thank you all for your hard work.

Thank you. Well that concludes our presentation this morning, and we'd now like to open the call up for a Q&A session.

Thank you. (Operator Instructions). Our first question is from the line of Mike Beallwith Davenport & Company. Please state your question.

Good morning, and pleasing quarter here. Could-- maybe you've explained it on a prior call, but could you give a little more color on the transaction in the storage business? I know that's small, but if I'm reading this right, we rejiggered it and paid off some debt at a discount-to-face value. I'm just curious as to quick update on that.

Sure. Thanks, Mike, and good morning. It is a small business for us, but something that we got into opportunistically. And what we did is we brought in an institutional investment partner, Harbert Investment Management. They have a commitment of $30 million to fund the purchase and ownership of self-storage assets.

It all goes back to, if I can just take a second, it all goes back to a large sale-leaseback we did with U-Haul on their self-storage properties, which was a just terrific investment for us, and a sort of very well-known deal in the storage business as a quite a good deal for us. And the team that worked on that decided that they wanted to find other opportunities in the storage business, away from the net lease structure, which is what the U-Haul deal was.

And we have a team dedicated to this. We closed on a $30 million investment from Harbert. As part of the investment, we purchased the existing loan that we had on these properties back from the lender, which is a large financial institution. We bought it back at a discount and refinanced it with a new lender who was still in the business of making loans as opposed to the old lender which had exited the business of making loans. So we were able to get a nice discount. About a 20% discount on the loan to buy it back at a discount.

It's obviously a performing loan, the properties continue to improve in performance and do well. And we were able to replace that lender with the new lender. And the discount, basically, obviously goes to the equity holders who are [Cellus] and Harbert.

We are looking to raise more money for that venture. But it will be a small contributor to us, one way or the other, at least in the foreseeable future. The team running it is led by a woman by the name of Anne Coolidge, and I wouldn't bet against Anne on many things. So I don't know where this thing could be in five years, but right now, it is what it is, and Harbert Investment is what we've disclosed so far.

Switching to the assets that need to be refinanced, and typically we've had a loan-to-value of 50%, I assume it's something like that. Are the rates that we're begin quoted by lenders, or can you give us an idea of what that world looks like, and are they still willing to do it on a non-recourse basis as in the past?

The good news is the rates are very similar to the rates that the loans have that are expiring. One that we refinanced earlier was our refinanced loan was lower than the expiring loan. And the overall mix is it's about the same. Obviously spreads are very wide, but treasury yields are very low. So it's about the same. So there's not a lot of interest rate exposure on the refinancing.

In terms of the non-recourse nature of it, there are still non-recourse loans, there are still non-recourse lenders. The very large banks have little desire to make non-recourse loans. But other portfolio lenders, insurance companies, and regional banks are still making non-recourse loans.

I don't-- I would be a little cautious about-- there is pressure on the non-recourse nature of loans, but the loans we're getting are still non-recourse. And the trend is not good in terms of-- we love non-recourse, and the trend is away from that. But we're still able to get them without recourse.

Is the tradeoff maybe a shorter maturity?

Yes. And sometimes-- the lenders and the cap (inaudible) in some ways so they get a little better structure, shorter maturity. And the loan, again, as Tom pointed a very important thing out, these loans-to-value are-- the loan-to-value typically is quite low. So we have a lot of wiggle room in terms of refinancing that a lot other people wouldn't. The trend-- there's a negative trend on the non-recourse nature of the loans, but we're still able to get it right now.

So how does that sort of affect your business model for your funds if the non-recourse world sort of dries up? How would you restructure these loans?

Well you know, it's I'd say two things -- one, we're still getting non-recourse loans, so we haven't planned for the contingency that there will be no non-recourse debt. If we see that market, we will have to adjust. We're assuming we'll probably have a little less leverage than we have had historically in 17, just because of the difficulty in finding acceptable non-recourse debt. But it won't be substantially different. We've never used high, high levels of leverage, and so it doesn't have the same impact on us that it does-- an opportunity fund can't buy anything today without-- that whole business is premised on high leverage. Our business isn't premised on high leverage. And we're still getting loans because of the types of assets we purchase.

So it's a good question, Mike. The worst case is that we have less leverage in the funds than we would otherwise have. But, the returns on the assets we're seeing today give us a return that still meets investor expectation.

It might be of note that all the CPA REITs have no recourse debt. Not one dollar's worth. Everything they bought is without recourse. And this is not just for properties. This is the credit of the tenants. And it's approved by a brilliant investment committee which is totally independent, and they approved it through each transaction.

Well they've certainly done a good job so far. In terms of the negotiations with tenants where leases are coming up, can you give us a feel for are rates likely to be higher or lower? With spreads higher, you would think that that's an important part of it, and it would help support higher rents. But can you just talk about that?

Yes. This is Tom Zacharias, Mike. Generally, it's all over the map. On the renewals, the rents basically are coming to market, whatever the market rent is at the time. And then we have certain cases where we have leases have indexed to be above market, and so we'll renew it at a lower rent. Sometimes the market has moved more than the leased rate has, and we'll be able to get a bump on renewal. So it moves around a bit.

I certainly wouldn't expect a big bump, Mike.

Right. Well, if we could just--

The bias it probably down rather than up.

So you would take flat in aggregate right now at this--?

Yes, we would take flat.

We would. That's the new up. That's the new up.

Yes, right. Right.

The last thing -- and it was encouraging to hear that the flows into your funds have picked up -- would you still say it's a world at where there are more opportunities than you have money? And I guess you're doing some sort of triage. And just as part of that, are you considering capping institutional money? Maybe that's harder to get than retail money, but just any color you want to add to that?

Sure. It's definitely a world where there's more opportunity than money. We manage a small amount of institutional capital today, but we have a great pedigree in the institutional capital world. We were CalPERS's investment advisor for net lease and managed a co-mingled fund with a variety of pension funds. In the early 90s, we wanted to augment our existing capital sources because of the opportunity set. And that may well be the case today as well.

So I think we have the pedigree to do so. We certainly have the track record and the market position. Fund flows are picking up, which is great. And I think we have-- we will have the ability to access institutional capital. There is not a lot of-- there is more individual capital today, though, than institutional capital ready to invest today. That won't be true, necessarily, in the coming quarters. And so that's something we're looking at, Mike.

And are you seeing whole portfolios of assets? I mean obviously the New York Times was a very attractive, big deal. Is it more a situation of one-offs, or are you seeing people who are in this world that have whole portfolios that you might look at?

Well we're looking at some situations where a company wants to sell owned assets-- a number of their owned assets to us and lease them back. We're really not looking at any purchases of other people's net leases. The pricing isn't-- it just isn't attractive enough relative to our structuring our own lease. So everything we're looking at now is the purchase-- almost everything is the purchase of the property directly from the company and leasing it back. And in some cases, it's a group of properties rather than just one.

But in aggregate, your new opportunities in this new world are probably getting our investors a better rate of return than we've seen in years. Would that be a fair statement?

I think that's a fair statement.

I'll hop off now. Thank you all very much.

Thanks, Mike.

Our next question is from the line of Andrew Dizio with Janney Montgomery Scott. Please state your question.

Hi. Good morning. You talked about the effect of the CPI rising built into your lease. Is there any effect if we see negative CPI?

Well, the good news is that the way the leases are structured, the CPI is an upward-only adjustment. We are obviously expecting lower CPI adjustments in the immediate term because of the deflationary pressures. There is a small exception to that. I think in Germany the rent is actually going to go down. But for the most part, our leases are structured. The vast majority are structured as upward-only adjustments, so they don't fall if the CPI were to fall.

But, again, short of the world coming to an end, the worst CPI numbers I've seen aren't really all the bad relative to-- they're not hugely negative.

All right. Thank you. And then also, looking at your funding channels, have you expanded your broker lineup at all with the CPA funds?

We have. We've not only added new broker dealers and new sales organizations, those sales organizations are making up an increasing part of our sales. And so we're not only-- you not only want to add them, but you want to penetrate them, and we're doing both.

Sure. So I guess there's better diversification in there.

That's exactly right.

Okay. And you touched on this briefly before with Mike, but as far as looking at institutional money, is that something you're actively marketing, or are you still just kind of feeling out the market?

I'd put it as more preliminary than that, than actively marketing. And part of that is there isn't a lot to-- the people we've talked to say that the institutions are on the sidelines at this moment. That will change, obviously, but today, there's nothing to actively market in most cases.

Okay. And then just one final question. Is this the same situation as far as your looking at expansion in Asia? Still taking a look at the market, but not moving forward anywhere yet?

We have a team that is looking at opportunity. Obviously it's not a big contributor right now. It's a market of a lot of potential. But I wouldn't count on anything short term. It's a longer term project.

Okay. Thank you.

(Operator Instructions). Our next question is from the line of Alex Cripps with HG Wellington & Company. Please state your question.

Hi. Good morning. I'm just curious about the deals you're being shown for sale-leaseback transactions. Has the industry groups changed? Are they different? Are there different people looking to raise funds from you guys this way? And as a follow up to that, has there been any activity -- I know you've worked with some private equity groups in the past on these deals -- do those guys see any rise in the ability to do transactions yet?

Good morning. No, I think, historically, we've always had a diversified group of industries that we've transacted with, and that's still the case. I can't pick out any single trend of a type of industry that is looking for sale-leaseback financing that we're in discussions with. It's pretty broad. It's a variety of different companies.

And I would say that the one trend is it's focused away from the private equity space. We're looking at very little right now with private equity firms, and it's focused on a variety of companies, some publically traded, some not publically traded. But if there's any one trend, it's focused away from private equity, and it's focused very broadly by industry.

Thanks.

Thanks, Alex.

Thank you. There are no further questions at this time. I would like to turn the floor back over to management for closing comments.

Well, that concludes the call this morning. We'd like to thank you all for joining us. And we look forward to speaking with you again next quarter. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.