WP Carey Inc (WPC) 2010 Q1 法說會逐字稿

Good morning, and welcome to the WP Carey First Quarter 2010 Earnings Results Conference Call. All participants will be in a listen-only mode. (Operator Instructions). I would now like to turn the conference over to Ms. Susan Hyde, Director of Investor Relations. Ma'am, please go ahead.

Thank you. Good morning and welcome everyone to our first quarter 2010 earnings conference call. Joining us today are WP 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 facts may be deemed forward-looking statements. Factors that could cause actual results to differ materially from our expectations are listed in our SEC filings. Now I'd like to turn the call over to Gordon.

Thanks Susan, and welcome everyone, thank you for joining us today. As you saw from our news release this morning, we released our quarterly results. Mark will spend some time going through the numbers in greater detail. FFO was down a little bit. Cash flow is down and Mark will discuss some of the factors that influenced that. And we had a few more impairments in the quarter both at WP Carey and at the CPA at our fund level. But all that having been said, we are very happy with where we are today and I'll talk a little bit about why that is.

From an investment volume standpoint, we closed $197 million in the first quarter versus $271 million in the first quarter of last year. As you'll recall, first quarter of last year is when we closed the New York Times transaction, which was $225 million of that. So that was a tougher comparable from a quarter to quarter investment volume standpoint. But for Q2 and Q3 of last year, we did a combined $125 million of acquisitions for both quarters. The second quarter this year, we've already done $135 million of investment volume and the pipeline is quite good, I will talk about that in a second. So, obviously Q2 is a very easy comp, it was $3 million of investment volume, and Q3 was $122 million of investment volume.

So, we are coming up on a couple of good quarters from a comparable standpoint going back to 2009. So that's just to put perspective on our investment volume, which I think I've mentioned in the past calls has been looking better and better and the pipelines have been building and we are pleased with where that is.

In addition, fund raising continues to be strong and I'll talk about that. On a comparable basis it was quite good. And so, as we sit today, there are a few things negatively impacting our business what I call headwinds and then some tailwinds, some things that are positive to the business right now.

In terms of headwinds one of the issues that we are managing through that Tom will talk about is a drop in real estate income from the same-store portfolio. Some of this is due to some increased vacancy, some of this is due to lease renewals that we've accomplished, but we had a drop in NOI. It's not unusual with the net leased asset that at the end of the term of the lease if the tenant does not need that property, it's not unusual for the NOI for that property to drop. In some cases, these are specialized to that tenant's use, so we have to spend some money to get somebody else in. The NOI may not match where that tenant has been paying and obviously the economy is soft today. So, it's not a great time to be renewing leases as all landlords are trying to keep properties full and are willing to concede on price to do so.

So, we are getting a little bit of an impact there. On the other hand and Tom will discuss but the good news is we've been able to extend out the average lease term in the portfolio. So that's the good piece of it. But we have had an experience. We are experiencing a drop in real estate income. We are supplementing that with the JP Morgan building repurchase in the New York Times, but that's the headwind.

Another headwind, competition. A year ago, we thought it would be several years before we started seeing a pickup in competition. We are seeing a pickup in competition. It's nothing like '06 -- '05, '06, '07, but there are more people who are capitalized and ready to compete for net leased assets. The good news again is we are winning our first share of deals. But I just like to put on everybody's radar screen that we are seeing a -- we are seeing a pickup in competition.

And then the last headwind is the euro. As you all know we have about $2.7 billion in assets in the Eurozone across WP Carey in the funds. If you pickup any financial newspaper today, obviously the top story is the Eurozone and it's a very, very complicated issue that I just wanted to not touch so much on predictions of what's going to happen in the future, but backup and discuss why we started investing in the Eurozone in the first place and what's happening over there, how it's impacting us and what our view point is on that.

We started investing in the Eurozone in 1998 before it was the Eurozone. We started investing in France. We setup a Paris office at that time and a setup of a London office in 2000. And our idea was that it was good for our investors to have diversification from the dollar. And, we were -- and remain largely agnostic -- as to the dollar euro long-term, but felt that there were sufficient attractive sale lease back opportunities in the Eurozone that warranted our being able to -- our effort to find and invest in those opportunities. So there was a diversification aspect going to the Eurozone and we remain, long-term investors agnostic about the long-term currency fluctuations.

Short-term is a different story; it's become more volatile clearly. But, we still see long-term value in Europe and we see a lot of opportunities there. The Eurozone as the sale lease back market is four to five times the size of the sale lease back market in the United States. So, it's still a very important place to be. It's a big market. We are seeing a lot of opportunities and so that -- those are all the reasons why we went there initially and why we remain there.

Short-term, obviously a drop in the euro impacts cash flow that we received from the -- our tenants, either in our funds or in WP Carey, as well as, the values of those assets if the euro continues to fall.

Long-term, again we are long-term investors, so we don't see the need to focus so much on the short-term, but there are some short-term impacts from the fall in cash flow and the fall in value if that were to continue.

I would also say though that there are opportunities that come out of what's happening in the Eurozone. We completed the transaction in Croatia. It was a sale lease back with the leading company in Croatia, and it's in large measure the reason the company wanted to transact the sale lease back, the reason we found it attractive to do so is the -- there has been a decline in the amount of credit available in countries like Croatia, and so we were able to buy Class A assets with the leading company in that country there, again another food retailer, and we like food retailing businesses because they tend to be much steadier than most businesses. They are obviously selling a necessity, and so we are very happy with that.

And to just give a global picture to our Eurozone exposure. Of the roughly $2.7 billion that we have invested in the Eurozone, $100 million is in Spain. We don't have anything invested today in Ireland, Greece, Italy or Portugal. Our three largest countries of investment are Germany, France and Finland. And we still see opportunities in the Eurozone. We like the opportunities in the Eurozone, and we are committed to continuing to invest there.

And that brings me to one of the tailwinds, or one of the positive things that's happening. Hopefully everybody saw the announcement of Cabot Lodge taking over our European investment team. We said it was the goal of ours to build up our presence in London and in Europe, which I felt we had an opportunity to do to take advantage of the opportunities there. We've hired Cabot. We've made and we've hired one other investment officer for the London office, who will be coming in at a more junior level and we are looking to continue to add for the team to grow the opportunity set that we can accomplish there and we are very excited about the potential for continuing to grow our presence there.

The second that's going well is our pipeline. Our pipeline remains good. It has been good for the last couple of quarters. It's always lumpy. Some of these deals won't happen in my experience that we have signed up. But, so it's impossible to predict exactly how it all plays out. But the general feeling is the pipeline is pretty good. Although we have seen some increased competition, we are still winning our fair share of deals and we are seeing more deals come to market because of the return of capital to the commercial real estate market in general and the credit markets in general.

Fund raising continues to be good not surprisingly and I think three primary reasons just continue to create that. Number one, income-oriented products are very popular with investors. Low interest rate world, income-oriented products are popular and will continue to be so. Number two, the fact that we stopped fundraising in 2005 and 2007 resonates well with investors. And three, investors can see that we have been able to take advantage of a changed investment environment with investments like the New York Times, which again, I think was very much an opportunistic investment. At a point in time that deal would not be available, today, it would not be available on those terms. We see seized on it at exactly the right time and I don't know of any other institution that would have written that $225 million check at the time I've said that. I honestly don't think anyone else would have written that check. So, we are benefiting from the fact that we stepped up and made a great investment at a very opportunistic time and that market's changed. We would not have those terms today, no way, know-how. So, we are gratified that our investors in CPA 17 are benefiting from that.

The debt markets have also returned. The CMBS programs at all the banks are restarting. They are restarting on very -- what, I guess, that's a fundamentally sound underwriting term. So, we haven't seen -- when I say that debt markets are returning, we haven't seen people doing crazy things like they were at the top of the market. They are underwriting very sound and profitable transactions, and we are borrowing today primarily from insurance companies, but we are seeing a return of the CMBS market, and that's a positive.

And then, lastly, we have two sector-specific investment themes that we've been working on. One is self-storage where we have an institutional joint venture partner for that, and we are seeing some investment opportunities there and then a hospitality fund that we filed for, and the hospitality fund is in joint venture with a very experienced hospitality investor. It's not our -- the investment side of that is not our core competency but our JV partner is extremely experienced and very thoughtful in this area. So, we see some other opportunities outside of the core business.

With that overview, I will turn it over to Mark DeCesaris for walkthrough of the financial results.

Well, thanks Gordon and good afternoon everyone. This morning we released our Q1 financial results, which from an operational standpoint were in line with the prior year. Overall, FFO was in line with the prior year. Our investment management segment was down slightly, approximately $1.6 million on lower acquisition volume where we structured total investments of just under $200 million for the quarter, $149 million of that was on behalf of the CPA funds and our restructuring revenue of approximately $6.8 million. We also invested in an asset for our owned net lease portfolio of approximately $47.6 million, which will generate lease revenues of approximately $3.8 million annually.

While in Q1 of 2009, the majority of the investment volume came from one deal, the New York Times, Q1 of 2010 volume was spread over five deals and we have closed two deals in April for a total to date of approximately $330 million. So, we are seeing more deal flow now than we have over the last two years that on average are in that $50 million to $60 million range.

We did record impairment charges on two assets in our lease portfolio of approximately $7.2 million. Both assets are currently vacant and are under contract to sell. These impairments will bring the carrying value down to the offers we have received. While we continue to focus the growth of the company on the investment management segment of the business, we also understand the cash flow generated by our own portfolio of net leases and as we have stated previously we worked towards stabilizing that cash flow. In the first quarter, we saw a drop in cash flow from the segment of approximately $3 million. This is a combination of timing issues related to winning SOA assets and reinvest in new assets similar to the asset we acquired in February, as well as leases being renewed for less rent. Tom, will discuss this portfolio in more detail in his comments.

Let's discuss our adjusted cash flow metric for a minute. In our earnings release today, we reported a drop in adjusted cash flow of approximately $11.4 million. There are a couple of reasons for this, but one of the main drivers is a change in how we receive our deferred acquisition fees from the CPA funds. Historically, when an investment was made, we deferred a portion of the structuring fee and took the initial payment of that deferral in the following January, and then every January for the next couple of years on an annual basis. In CPA17, we have modified this to when we close a deal and defer that portion of the acquisition fee, we take the initial payment in the very next quarter and then we will take the same payment in that same quarter the following two years. So, rather where we used to receive a lump sum deferred acquisition fee payment in January of each year, we now really receive that payment throughout the year and while on a comparative basis, you see a drop in adjusted cash flow because of that change in payment methodology, a significant portion of that drop will be made up throughout the rest of this year, as we receive deferred acquisition fees in the second, third, and fourth quarters of this year.

Although I expect a slight decline in our cash flow this year, as we work through these challenges, our dividend coverage is sound and will continue to be. Our balance sheet is also sound. Our total debt-to-market cap ratio is 22% and our non-recourse debt-to-market cap ratio is about 9%, and we have approximately $5 million in debt coming due in the Public Company throughout the remainder of 2010. The strong balance sheet and again our strong dividend coverage historically will help to see us through the challenges we face this year.

So, with that, I'll turn it over to Tom Zacharias, our Chief Operating Officer.

Thank you very much, Mark. I would like to now provide a brief portfolio report for the first quarter for the Public Company, and the four managed CPA funds. The credit quality of the lease streams in our portfolios continued to improve in the first quarter, in line with general improvements in the economy. Other factors contributing to the improved credit quality are increased M&A activity amongst the tenant base, which has resulted in credit upgrades and several tenants completing their restructurings and exiting bankruptcy.

First, I will focus on the WPC portfolio and then the managed REIT portfolio. At the end of the first quarter, occupancy was at approximately 94% in the WPC portfolio, the same as at the end of the prior quarter. However, in 2010, as has been mentioned, we do have a fair amount of tenants whose leases are expiring, and we are working through a program to re-lease and in certain cases sell these assets.

In April, we did lease a formerly vacant 120,000 square foot building. However, also in April, a large tenant, Lucent, vacated a 437,000 square foot facility outside of Charlotte at the end of its lease. So, there was a net occupancy decrease of 2.2% year-to-date. We are very focused on working this portfolio for the remainder of the year. We do have about 8.4% of the revenue expiring in 2010, 9.7% in 2011, and 10.5% in 2012. We have worked the rollover risk down. However, there are several tenants that we know will not be able to renew and we will have experience in occupancy drop and revenue drop while we either re-lease or sell the buildings and reinvest the proceeds in the Public Company.

Second point we will be focusing on the CPA REITs. The average lease term in the WPC portfolio has been expanded as a result of recent investments that have been made and is now 6.5 years. Our total lease revenues including our pro rata share of equity investments was actually flat in the first quarter of 2010 versus 2009 on a GAAP basis, while as Mark mentioned it was down on a cash flow basis. The primary reason it was reported as flat is that we did renew two significant leases in France last year at lower rents, but with fixed increases and the GAAP accounting straight-lines of the rents.

In the first quarter, the Public Company sold four small properties for gross sales price at $10.8 million and a GAAP gain of $2.9 million. One was an equity investment, the tenant exercised his purchase options, the other three were small buildings with short lease terms and unlikely lease renewals. The plan is that these proceeds will be reinvested in new assets as we plan to aggressively manage the portfolio and recycle capital from assets sold on older investments into new investments.

On the financing front, in the Public Company, in April we completed the refinancing of the (inaudible) distribution facility for $4.75 million for five years at 6.45% fixed. The Public Company only has one other mortgage loan coming due in 2010. And in 2011, it's seven loans totaling $47 million, 2012 five loans totaling $28 million. While, on the liability side, we are well positioned as a company with very little mortgage debt to refinance the Public Company over the next three years.

Now, on to the four CPA REIT funds, with real estate assets of $7.9 billion. At the end of the first quarter, the occupancy rate of the 93 million square feet owned in aggregate by the CPA funds was approximately 98% occupied. There are not significant lease maturities coming due in the CPA funds over the next three years and there the combined weighted average lease term is 12.4 years. These high occupancy levels and long lease terms are the contributing factors to the stable valuation of these funds. Annual reports have just gone out to our CPA investors, which includes information on the total annual return and that's distributions plus change in net asset value and for CPA 14 in 2009 it was down 3.1%, for CPA 15 down 0.7%, for CPA 16 up 0.6%, and we feel these results are very attractive in the difficult 2009 environment.

As has been mentioned, we received a portion of our asset management performance revenue in CPA shares and we now own $223 million in CPA REIT shares and the quarterly distribution from the shares is a growing source of revenue for the Public Company.

There is activity on the mortgage debt side in the CPA funds with 16 loans coming due totaling $89 million in 2010, it increases to $300 million in 2011, and we are very focused on these refinancings. So that's an overview of the portfolio report. And now, I would like to turn the call over to our Founder and Chairman, Mr. William Poke Carey.

Thanks very much Tom and Mark and as we are moving along we have as was indicated we have a lot of capability to invest and so I am happy to announce that I asked our President and CEO to assume the additional duties being Global Head of Investments. And he agreed to do it and that's the strategy that he will have to do some more work (inaudible) of decent investments but I believe he will and I am looking forward.

But I wanted to -- we years ago, we were increasing assets under management at 20% a year and that all came to -- it slowed down terribly during the summer, but our performance during the turmoil was also the best of any financial institution in the country as far as (technical difficulty).

I took out the 10-Ks and 10-Qs for (inaudible) I took out (inaudible) 14 and 16 (inaudible). So, every tenant paid (inaudible) as our year, everyone and these funds have figures in the (inaudible) and has lot of assets in Europe (inaudible). And every single of the tenants (inaudible) embarrassing to a significant increase in revenues for our investors from that. And I believe we're going to continue to turn back to where they were before the turmoil, but we still did better during the turmoil than any other financial institution. If anybody knows of anyone that's did better than we did, not be known, maybe I will buy substantial. It just happened (inaudible) across our corporate (inaudible) yesterday and (inaudible) is we believe our first responsibilities are to the investors in our managed funds in meeting their needs everything we do must be of high quality.

We shall serve our tenants and other financing clients to the best of our abilities, developing ways we can serve them better. We shall be concerned with the needs of our officers and employees, including recognition for their achievements on behalf of our investors, tenants and financing clients. We shall be guided by the highest ethical standards and adhere to the spirit as well as the letter of all laws and regulations covering our business. We shall serve the society and our communities as best we can and strive to make the world better than we found it.

Our final responsibility is to our shareholders because of our ability, our best judgment and transparent accounting of our stewardship, we measure our success over the long run, not quarter-by-quarter. We will operate by following these principles and the shareholders should realize a favorable return. Thank you.

(Inaudible) which are somehow incorporated in that (inaudible). One is doing good while we are doing well and the other is investing for the long run and if we stick to those all of our shareholders are going to be happy campers. Thank you very much.

Well, that concludes the presentation part of our call this morning. And now we'd just like to open it up for everyone for a Q&A session.

(Operator Instructions). Our first question comes from Andrew DiZio from Janney Capital Markets. Please go ahead.

Yes, thank you and good morning. My first question, Gordon you touched a little bit on competition. Can you talk about what you're seeing as far as corporate interest and sale lease backs in the US market?

Yeah, Andrew it's a double-edge sword as I mentioned. We are seeing a pickup in competition. Investors able to buy large portfolios of properties. There has been a rumor, but I think it's now announced the dividend capital is buying $1.4 billion portfolio of net lease assets from iStar and State of California is trying to -- is in the process of selling $2 billion of office buildings. So there is clearly a pickup in capacity to take down large investments that just wasn't here a year ago.

The flip side of that coin or the other side of the sword is that we are seeing a pickup in company interest in sale lease backs and a pickup in the desire of companies and in the case of State of California obviously governmentally entities to sell real estate and lease it back is a form of raising capital in part because there is realization that there is capital available in this market place and that it's not a distressed marketplace, there is capital and that it's not, it's a good way for companies to raise capital to meet their needs. So we are seeing a pickup of competition, but a pickup of deal flow as well. And right now that dual pickup is I would describe in -- is pretty much in balance. In '05, '06, '07 it got way out of balance. There was much more competition and deal flow, but it's in balance now. A year ago it wasn't in balance, but there was very little deal flow. Other than the New York Times, we just didn't see that much deal flow. So we are seeing a pickup in deal flow and that's again the flip side of the coin.

Okay. And outside of California, which I understand there is a leasing structure there isn't really the type of thing you get involved and are there any other government entities looking to do sale leasebacks?

Not that we've heard, announced, no.

Okay. And then changing the topic a little bit. Looking at the Carry interest legislation that's potentially going through Congress, does that have any impact on the LLC and the potential recognition of promotes?

Based on what we know today and again this bill could change, but based on what that we know today what they are talking about is the -- in effect the rate that this would be taxed out at the investment level. So in our case where we see the impact would be on our investors and in something like the CPA 17 structure, where our backend is really structured as a carried interest. Rather than flowing through to the investor at the capital gains rate, it would flow through to them at their ordinary income rate. So, it wouldn't be any company level dilution in that case but the investor would see a higher tax on that type of event, when it occurs.

We have to look into that very carefully.

We stay on top of it through both NAREIT, NAREIM as well. So there is a -- that's the impact answer.

Okay, thanks. And then just with the filings for watermark, have you -- are you able to gauge interest at all from your existing distribution channels and carrying that as well?

No, we don't have any comment on that. We filed with the SEC and we are hopefully to begin raising that money this year.

Okay, thank you.

Which money is that?

The Carry watermark.

Okay.

Our next question comes from Michael Beal from Davenport. Please go ahead.

Good morning.

Good morning Mike.

The $2.7 billion in Eurozone asset, is that gross or net debt that we have?

Those are gross assets so that includes the debt and the debt --

So, the net exposure would be roughly half or 50% levered.

35%.

It's 65% levered.

Okay.

Slightly higher leverage levels in Europe.

So obviously it impacts our earnings stream but the debt mitigates any impact of large currency swing.

That's exactly right. We are hedged essentially on 65% of that.

Coming back to the deal flow opportunity discussion, you read about the impending commercial real estate train wreck where a lot of debt is coming due and properties that may be performing but the leverage ratios are not what people can do at this time. Is that something we will see a lot of perhaps or help our deal flow or those kinds of loans typically not on net leased assets and I guess, sort of coinciding with that is do we ever see these loan to own opportunities where you might end up owning a piece of property through initially buying the debt, or is that a little too complicated for us well to get involved in --

Mike, I wouldn't say it's too complicated, it's just a little outside the net lease arena in that if you have a net leased asset where the tenant is still in business it just tends not to be distressed because you are getting the cash flow from that asset.

Now, we have seen a situation where the net lease assets being sold as a way to raise capital for an investor that has other assets that have gone bad. And so, there will be some indirect benefit, but it is not a -- the loan to own scenario is much less a likelihood in the net lease sector where you have a, let's say you have a 15-year lease with a company, the loan on that is likely to be either money good or a real mess if the company has defaulted and moved out. And so, it doesn't really play to the opportunity set that we have and the opportunity set that we have though I think will grow because of the continued need for companies to raise capital through the sale leaseback into a marketplace that's recovered pretty well, surprisingly well.

So, there is all this that overhang that you hear about on commercial real estate debt but I think that's really outside of our strategy on the net lease side. It doesn't really play into it directly. Now, there are always some indirect effects. We purchased an asset or two from competitors of ours that got overlevered. I mentioned that iStar sold a $1.4 billion or in the process of selling a $1.4 billion portfolio. They got overlevered. So, they have had to dispose off some net lease assets. We didn't find the pricing attractive on that portfolio. But, there are some indirect effects of the marketplace getting high on leverage and valuations in the '05, '06, '07 timeframe.

In our urban assets that we earned in W.P. Carey, we had those shorter lease situation not coming up. I guess, you already said, that's why maybe I just want to hear again, I mean, presumably we know the properties that we are going to have a problem with and we would be working on things that are coming up in a year or 18 months, we would be working on them now. Can you just comment on --

Thank you, Mike. Gordon DuGan (inaudible) that are taking care of all the properties that have five years or less to go or five years or less to have a (inaudible) makes the tenants fix them up, are absolute net leases. We are required to maintain the properties in good condition and to have good condition you have got to go clean them up and keep them in good condition (inaudible) and this would be so pretty nicely (inaudible) pretty well. We've got very, very good leverage through, the best track record of any measure that of which I am aware. And I credit that to risk management largely, and risk management has been active. I don't have a vote or any investment manager or anybody can manage that. We have an independent investment committee, which approves all investments. It was chaired by (inaudible) but he went back to his reward (inaudible) charted over (inaudible) of John Hancock and his Vice Chairman, [Connie Myer] who is Vice Chairman and Chief Investment Officer of the Prudential Insurance Company of America and others of comparable (inaudible), professors of economics and finance. But [Barry Harn] also is a well-known (inaudible) foremost economist (inaudible). So, we go into a new country. We check these guys, we just don't go in and everything is deemed (inaudible) investment job and they are all going to go heaven.

Not for a few years, Mike, we are all hoping. That's all from the future.

Well, I guess what I was getting to, our order bit was, if we see a property that we know is coming up to be renewed in a year and there is no way the tenant is going to renew the property, and at the moment we have no prospects for another tenant. Do we ever take an impairment change and advance that or are we still in a situation where it is not easy for us to see on the outside, we have a $7 million impairment charge this quarter. We never take those in advance even if we are pretty sure that one is coming. Is that still the way GAAP makes us treat these situations?

Yes. Mike's question just for the group here was the timing for taking the impairment charges on assets that we will need to sell. And, what we do is we meet every quarter on this. We update where we are on possible transactions and when we know we are going to end up selling something, which was the case this quarter, it triggers an impairment charge.

If there is a potential trickle effect though Mike, that you may have seen which is once an asset has been moved into the sale category, the impairment treatment is different. And in that case to the extent your costs go up to sell the building or to the extent the price goes down, you take additional impairments as you go. So, if you are selling a building and the price is going down, it's a little bit of a dying by a thousand cuts because every quarter you might be taking another $50,000 or $100,000 or whatever on that same facility. Now, on the other hand if prices are going up, then you don't have that problem. But, there can be this trickle effect on an asset held for sale that would cause you to shake, to scratch your head and say, didn't we just take one last quarter. But, the accounting treatment for those is such that you take it, you have to keep looking at it each quarter. So, there is a little bit of that.

My feeling about properties (technical difficulty). One of the reasons why our asset management piece went down because again [our appraisers] were influenced by the general market conditions going turbulent. So, they traced our assets downward even though the revenues were coming up. It's hard to believe if anybody could have this kind of track record of revenues coming up that we have. So they brought them down to the market that we could sell them, but we don't want to sell them, we want to keep them, reinvest for the long run, and make them take care of their properties, keep them as long as we possibly can.

Thank you very much.

Thanks Mike.

So I believe that's the end of the Q&A session. We'd just like to remind you that we will have a replay of the call available after 2 o'clock today through May 20th. The call in number is 877-344-7529 with a pass code of 439691. Thank you for joining us today and we look forward to speaking with you again next quarter.

Thank you. The conference has concluded. You may now disconnect.