WP Carey Inc (WPC) 2010 Q4 法說會逐字稿

Hello. This is the Corus Call operator. Welcome to the W.P. Carey fourth quarter and year-end earnings call. As a reminder, all participants will be in a listen-only mode. There will be an opportunity for you to ask questions at the end of today's presentation. (Operator Instructions). Today's conference is being recorded.

And at this time, I would like to turn the conference call over to Ms. Susan Hyde, Director of Investor Relations. Ms. Hyde, you may begin.

Thank you. Good morning, and welcome, everyone, to our fourth quarter and year-end 2010 earnings conference call. Joining us today are W.P. Carey's Chairman, Bill Carey, CEO, Trevor Bond, 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 Trevor, 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 our expectations are listed in our SEC filings.

Now I'd like to turn the call over to Trevor.

Thanks, Susan, and thanks, everyone, for being on the call today. For those of you who joined us back in November for our third quarter call, you may remember that we discussed how, despite the uncertainty in the global economy, and in some ways because of that uncertainty, W.P. Carey was positioned to perform well. At that time, we didn't report significant acquisition volume for the third quarter per se, but felt optimistic about the pipeline and our ability to generate volume in the fourth quarter. And that's in fact what happened and I'll get into the details about that in a moment.

The second point of emphasis on that third quarter call was how our balanced business model was enabling us to perform well on a relative basis during the volatile period of the early economic recovery and again, as our results show, that model continues to serve our investors well, providing a stable income stream and attractive dividend coverage.

Specifically, our adjusted funds from operations in 2010 rose to $3.27 per share, up from 3.09 in each of the prior two years. A key driver of this improvement was the structuring revenue which we earned from making new acquisitions on behalf of the non-traded REITs that we manage, CPAs 14, 15, 16 Global and 17 Global.

As I said a moment ago, a relatively quiet third quarter gave way to a very active fourth quarter. We closed approximately 595 million in investments in the quarter and ended up the year with total volume for both the CPAs and for our own portfolio of approximately 1.1 billion, which is roughly double last year's volume of 548 million.

The fourth quarter acquisitions included a $257 million sale leaseback with Carquest for 29 distribution centers and four office buildings throughout the US and Canada. Also, we closed on $113 million sale leaseback with DTS (inaudible), a subsidiary of PRISA, the Spanish media giant, for its office and television production space in Madrid.

For the year as a whole, our investments represented a good cross-section of industries, credits and geographic locations, including Croatia, with that country's dominant food processor and retailer, a firm called Agricore, and our first transaction in China with Fosun which is the largest firm in China that's not state-owned. International investments made up about 43% of the total, up from 36% in 2009.

A critical factor that sustained our investment volume was the capital that our broker-dealer subsidiary, Carey Financial, raised for CP-17 Global. In 2010, Carey Financial raised 590 million, which was a record for the firm. Significantly, of this amount, approximately 47% was raised through sales by new dealers. This is part of a longer term effort to diversify and expand the number of financial advisors selling our funds. So we've gone from working with 12 broker-dealers in 2008 to 64 in 2010 and we think that creates more stability and growth potential in this critical area of our business.

At the same time, we never lose sight of the fact that we're an investment-focused firm, as opposed to being sales-focused, and we continually monitor the balance of funds raised versus opportunities that make sense for our investors.

As we mentioned during our last call, equilibrium was good during 2010 and we expect that to continue in 2011, but obviously, that's not something that we can guarantee.

We're proud of these achievements that demonstrated how senior management, and really all the members of each functional team, from our acquisitions group to our salespeople to our asset managers, and everyone else whom we count on to execute our game plan, did a terrific job coming together during a transitional year. And we're looking forward to continuing that trend in 2011.

Already, we've closed on approximately 300 million of investments in the first quarter. Of course, that's not necessarily indicative of what our pace will be for the whole year given how lumpy investment activity can be, driven as it is by many factors not in our control, some of which I'll talk about in a moment.

Included in this first quarter activity was our third transaction in the Netherlands, a $200 million sale leaseback of distribution centers to C-1000, which is a leading Dutch food retailer, and also capital raising continues to be strong.

We're also pleased about the progress made to date on the proposed merger between CPA-14 and CPA-16. As we've previously disclosed, these two REITs entered into a definitive agreement late last year to merge, subject of course to the approval of the shareholders of CPA-14 and other closing conditions. And while we can't provide assurance as to the timing of the merger, or even the likelihood of success, quite a lot of effort and thought went into the merger agreement itself and it shows W.P. Carey's continued commitment to providing liquidity options for its REIT shareholders.

Another milestone for us in 2010 was our launch of a new fund, Carey Watermark Investors, which will be focused on the hospitality sector. We've devoted a lot of time and effort to putting in place the right mix of resources and controls to ensure that this new initiative meets our quality standards.

To turn briefly to the global economic climate and how it might affect our business in 2011, it appears that as some questions are getting resolved, new ones are being raised. The fear and uncertainty that characterized the last few years seems to have given way to a guarded optimism, but now we're starting to see inflation concerns arise and with them, concerns about interest rates and of course, the political unrest in the Middle East. It's hard to gauge the impact this will have on the Middle East business.

Certainly, we've seen the debt markets become more accessible in recent months to a broader mix of borrowers, which has given our potential clients an alternative source of long-term capital that had been absent for a couple of years, but also, sellers have continued to gain confidence that they're not selling at the bottom of the market. So even as more capital becomes available to purchase net lease properties, at the same time, there seems to be a growing supply of opportunities from which to choose.

It's hard to tell how all this shakes out in terms of pricing, but generally speaking, we've seen a decline in average cap rates relative to last year. That could eventually result in higher NAVs on our owned and managed portfolio, but it may make new acquisitions a bit more expensive.

The key question will be how the cost of debt responds to an increase in the benchmarks on the one hand, and on the other hand, a tightening of spreads in response to more competition in the CMBS and other debt markets. All that said, for now, the spread between cap rates and risk-free rates in the US and Europe continues to be attractive and we continue to see potential transactions that deliver solid risk-adjusted returns to our investors.

And with that, I'll turn the floor over now to our Chief Financial Officer, Mark DeCesaris, who will walk you through the numbers and talk about the composition of our income and how each segment performed in 2010. Mark?

Thanks, Trevor, and good morning. As Trevor mentioned, we had a strong year overall and a very strong fourth quarter. Let's discuss our results and get into some of the activity behind the numbers. We reported AFFO of approximately 130.9 million or 3.27 per share, an increase of approximately $8 million or $0.18 per share over the prior year.

One of the primary drivers was our acquisition volume. We made acquisitions totaling approximately 1.1 billion this year. A billion of that was on behalf of the CPA funds. This volume generated approximately 44.5 million of structuring revenues, an increase of about 21.3 million over the prior year.

We raised approximately 600 million in capital on behalf of CPA-17 this year. Our rate of capital inflows for CPA-14 has stayed pretty consistent at approximately 50 million per month and that continues into January and February of this year.

Our asset management revenue stream was relatively flat at 76.2 million in 2010. We are paid management revenues based on the total appraised value of the assets held by the CPA funds and in 2008 and 2009, we did see some pressure on the appraised value of those assets. That pressure was pretty much offset by the investment volume in those years, where we averaged about 500 million a year in total acquisitions on behalf of the CPA funds, below our normal average.

At December 31, '09, that value that we were paid on was approximately 7.8 billion. This year, that number at December 31, 2010, after the appraisals have taken place, is about 8.5 billion. The big -- obviously, the driver for the increase was the acquisition volume. While we like the structuring revenues on the acquisition volume, they also increased that base and were paid approximately a 1% fee annually on that base over the life of the fund.

Our pro rata lease revenue stream was down approximately 6.3 million in 2010. We've sold six properties from our own portfolio. We received approximately 19 million in proceeds from these sales and these proceeds, along with approximately 37 million in proceeds from a sale which occurred in December of 2009, were used in part to fund acquisitions in 2010.

We'll note that as part of the proposed CPA-14-16 merger, we do expect to acquire CPA-14's interest in three assets that we already own an interest in. If that merger is completed, we expect these properties to generate an additional 8.8 million in lease revenue and roughly 4 million in cash flow for the LLC. We are working toward stabilizing this portfolio. Tom will have some additional comments as well when I turn it over to him.

We increased our ownership in the CPA funds this year by approximately 35.2 million, bringing our total investment in these well diversified funds to approximately 245 million. AFFO increased by approximately 1.7 million as a result of the investments in the CPA funds this year. Overall, coverage ratio based on AFFO for our dividend is 161%, so very strong coverage from that aspect.

Our adjusted cash flow from operations dropped this year to approximately 80.6 million. This was not totally unexpected. It was a decrease of approximately 5.2 million. The two main reasons for the decrease or the drop in lease revenues, and we received lower deferred acquisition fees from the CPA funds.

On the first item, again, we've spoken of our intent to stabilize this portfolio, but there will be some volatility in the short-term. As I mentioned before, we do expect to purchase some assets from CPA-14 in the merger, which if completed, will generated roughly 4 million in cash flow.

The second factor was a relatively low acquisition volume in 2008 and 2009. As you recall, a portion of our structuring revenue is deferred over a three-year period. The amount of deferred acquisition fees and interest we received in 2010 declined by approximately 3.9 million to $21.2 million. The increased acquisition volume in 2010, and the start we had in 2011, should help to reverse that trend going forward.

These decreases were offset somewhat by the cash flow we receive on our investment in the CPA funds. Distributions from the CPA funds increased approximately 2.4 million to $16.6 million and our distribution from the participating interest in the cash flow from CPA-17 increased 2.3 million to approximately $4.5 million in 2010. In total, this represents a 28% increase in our distribution stream over 2009. I would expect these trends to continue as we both increased our ownership stake in the CPA fund and CPA-17 continues to grow from an invested asset standpoint. Even though ACFO dropped, our coverage ratio is -- remains at about 109%, still solid coverage over our current dividend, and we're comfortable with the ratio we have and -- that supports this current dividend.

From a balance sheet perspective, we continue to maintain a solid balance sheet with a total debt to total market cap ratio of approximately 22% and recourse debt to total market cap ratio of approximately 9%. As I mentioned before, we added two new leased assets this year. The total acquisition cost of these assets were 66.4 million and they're expected to initially generate 5.5 million in annual rents and roughly 3.1 million in cash flow on an annual basis.

Our line of credit expires in June of 2011. We currently intend to extend this facility for an additional year through June 11 of 2012. It is our option to do that and we are well within the covenant structure on this facility.

With that, I'm going to turn the call over to Tom Zacharias, our Chief Operating Officer. Tom?

Thank you, Mark. There are three areas I would like to cover in today's portfolio report. Specifically, I would like to provide an update on the significant activities related to the upgrading of the portfolio owned by the public company, a review of the improving performance metrics over the past year for the WPC portfolio and the four managed CPA REIT portfolios, and finally, give an update on the positive current environment as far as leasing, sales, refinancings and the credit quality of our tenants.

Let me turn first to the WPC-owned portfolio. It continues to be a significant activity as we aggressively manage our own portfolio. As you know, this is the smallest portfolio of the five portfolios, with only 13.9 million square feet and we have been s4electively harvesting and reinvesting in this portfolio. As Mark mentioned, in 2010, we sold six properties that were either vacant or near the end of the lease term for 18.1 million in net proceeds, and we added the JPMorgan Eroski investments at a combined purchase price of 66.4 million.

As Mark also mentioned, the proposed liquidity event for CPA-14, if completed, will provide an opportunity for WPC to acquire additional assets. It is proposed that WPC buy from CPA-14 the joint venture interest in three investments that it currently has with CPA-14. The fair market value of the JV interest is approximately 95 million. The WPC equity requirement is 32 million.

The venture interests are attractive investments that include the following -- a four-building office complex leased to Fed Ex for their global technology operations in Collierville, Tennessee, an office and lab complex leased to [Ammons] Pharmaceuticals for their headquarters in San Diego, California, and corporate headquarters leased to [Check Free], Norcross, Georgia. If completed, we would expect additional net cash flow of approximately 4 million per annum from these investments. The JV interest totaled approximately another 420,000 square feet of high quality office real estate.

And now a few details regarding the WPC-owned portfolio -- the weighted average lease term of the owned portfolio has increased to 6.8 years at the end of 2010 from 5.8 years at the end of 2009. This increasing lease term was a result of the addition of the previously mentioned Morgan Eroski investments, sales of the shorter term lease term investments, as well as lease renewals.

In 2010, we completed lease renewals and new leases in the WPC portfolio totaling over 2.2 million square feet and 10.6 million in annual revenue. The year-end occupancy, as we reported, was at 89% in the owned portfolio, as was expected as we [reworked] this portfolio.

Leasing activity has picked up. Since the beginning of the year, we have completed a new long-term lease with Google for the entire 70,000-square foot landmark building in Venice, California, designed by Frank Gehry. This building is known fondly as the "Binoculars Building" due to its iconic façade and is a fitting building for the world's largest search company. The rent that Google is paying is significantly above the rent formerly paid by [Onacom].

We've also recently signed a new lease with Lockheed Martin for 48,000 square feet of office space in Houston, Texas, and a new lease with a design firm for 35,000 square feet in Beaumont, Texas.

Occupancy is currently above 90% in the WPC portfolio as a result of the completion of these transactions. The vacant space available for lease in the LLC portfolio, we currently have leases out, or sale contracts out, for roughly a third of the vacant space.

Looking forward in 2011, we have 10 tenants with leases expiring, representing about 7% of the annual revenue. We expect that one asset will be sold back to the tenant, and at this point, we expect at least half of the remaining revenue will be renewed by the existing tenants.

The refinancing pipeline for the WPC portfolio is very manageable. In 2011, there's only four loans totaling 21.8 million and in 2012, there's only five loans totaling 28 million.

In summary, where the real estate revenue was down in 2010 due to vacancy from tenant turnover, the portfolio quality is improving and it is performing well.

Now, turning to the portfolio report for the CPA REITs -- occupancy in the four managed funds averaged 97% over the 99 million square feet at year-end. The weighted average lease term is 12.4 years and in the latest fund, CPA-17 Global, it is 17.7 years. WPC's ownership in the REITs represent another 6.2 million square feet of real estate with longer lease term and less vacancies than the directly owned portfolio.

The debt coming due to refinancing the CPA REITs is very manageable. We have 202 million in 2011, 217 million in 2012. As a point of reference, in 2010, we refinanced 212 million of mortgage debt with 12 loans and a weighted average rate of 5.7% for 9.1 years. These refinancings were approximately 150 to 200 basis points below existing debt. This has been positive for improving the equity cash flow of the funds.

The third-party appraisals for CPA-14 and CPA-16 have been completed and we released the 2010 net asset values. Both NAVs were down slightly, but on an annual total return basis, including distributions, shareholder returns for CPA-14 were up 4.2% and CPA-16 up 2.8%. We expect to release the NAV for CPA-15 in the next few weeks.

Before concluding my report, I would like to provide a few thoughts about the current environment.

What was the total return for 14 and 16? Oh, excuse me.

Yes. I'll get back to you. Before concluding my report, I'd like to provide a few thoughts about the current environment. Beginning in the third quarter of last year, we noticed an uptick in leasing and sales activity for our portfolio. We are now working down vacant space at a faster rate than we did in 2010. We have proposals out, or contracts out, on roughly 50% of the total available space. The refinancing markets today are attractive for our transactions. With leverage levels of 50 or 60%, we are doing mortgages with conduits, banks, life insurance companies at spreads of 200 to 250 over 10-year treasuries.

In 2010, we experienced significantly fewer tenant defaults. In our credit watch meetings, where we review tenant financials, generally company profits and net incomes have been improving. There have been -- and there has been significant deleveraging of the balance sheets. These income-producing long-term lease streams (inaudible) to inflation and prudently leverage, we believe, remain very attractive.

In conclusion, the portfolios are performing well and we have seen an uptick in leasing and sales activity as it relates to vacant space. The credit quality of our tenant lease streams continues to improve.

Now, I would like to turn the call over to our Founder and Chairman of the Company, Mr. William Polk Carey.

Thank you very much, Tom, and I want to thank -- before I go any further, I want to thank the team, the whole team of officers of this company who have just done such an incredibly good job over the last year.

And I'll mention first Trevor Bond, the President and Chief Executive Officer, who's just a -- and came on and did a good job, although he'd been a director of both our REITs and our public company for a number of years, and earned the love and respect of the directors, and deservedly. And now, he's become a respected and beloved CEO at our company and he's just doing a wonderful job, and I hope for and expect will be doing a lot better in the coming years. I can't guarantee that [particularly], but I'm working very hard on it myself and I have confidence in this team to pull it off.

Now, I'd also like to mention that the driver of our firm that keeps us going is our investment team and they basically make the investments and the assets under management grow because they're making more good investments, and our revenues grow and without them, we'd be a shrinking violet by comparison to where we are.

And I'd like to introduce both the senior investment officers of the -- of Investment International for a few remarks and then you can give it back to me for my finale.

Jason, since you're the youngest of the three in that role -- and then I'll let you start. Jason Fox is [the new] head of investments in the United States and he's the Managing Director and he's an amazing talent. I went to the Wharton School and he seemed to be (inaudible) by Harvard MBAs and Jason is one of them. And give us a few words of wisdom.

Sure. Thank you, Bill. We had a great year of domestic investments this year. We're very happy with the investments we were able to uncover, about $600 million, and we hope to continue that in 2011 with the goal of finding good, credit-worthy tenants, and we can do strong, long-term (inaudible) stocks and we're well on the way this year to having another strong year.

Thank you, very nice. Now, I'd like to introduce Henry Cabot Lodge, III, who's the head of our Domestic and Overseas Investments for Europe. I guess he's the President of W. Carey Europe (sic) (inaudible) and is in charge of all of our -- most all of our investments (inaudible) investments are almost all in Europe. And then give us some words of wisdom. I appreciate your coming over from the London office (inaudible).

Thank you, Bill. It's always good to come back to New York. I started working for Bill in 1983 right out of business school. Unfortunately, I didn't go to Wharton; I couldn't get in. I went to Harvard Business School, but I had a great experience at W.P. Carey and it's a pleasure being back here. I'm now coming on to my first year of running European operations for W.P. Carey. We also had a good year, not quite the level of Jason's volume. We did about 500 million in Europe this year, but we started off with a -- 2010 with a large transaction and we hope to exceed the levels of investment volume that we were able to capture in 2010. It's good to be back and thank you, Bill.

All right. There's some closing remarks I'd like to reiterate, that our job is to invest for the long run and we have a new principle (inaudible) investing for the long run. Now that it's doing good, we're doing well and when I (inaudible) officers asked us to add the [Speaking foreign language]. Everybody doesn't have to know what that means, so I won't (inaudible) with it. It's "Make love, not war," but we have the main one that we live -- the first one we live by, investing for the long run, and caring about our investors, caring about the investors in our company and caring about investors in our funds, and putting them ahead of ourselves.

But what they've accomplished here is amazing, and for investors in a public company are concerned, they get the benefit of all the company, all the -- because we're the largest investor in the fund in addition to the real estate investments we have (inaudible) all the others, which gives us huge diversification, I think something like 272 (inaudible) with 1,000 properties and that -- it's just a tremendously safe investment as far as I'm concerned, because diversification is part of what it's all about.

But the other part of what it's all about is risk management and our risk managers are the best in the world. We have an independent Investment Committee which approves every single one of our investments, and people on that committee are totally independent and they've been senior investment officers. We have representatives from all the major life insurance companies in America.

The Vice Chairman and Chief Investment Officer of Prudential, the head of (inaudible) Finance Department, is the Vice Chairman of our committee -- the Chairman of our committees, Nat Coolidge, Nathaniel Coolidge, who's head of the (inaudible) Finance Department with John Hancock. He happens to be a descendent of two presidents, Calvin Coolidge and Thomas Jefferson, which was appropriate since he succeeded John Quincy Adams in that role as head of the (inaudible) Finance Department.

But we also have the former head of the (inaudible) Finance Department of New York Life that recently joined us and that we're very (inaudible) to have her on board, and we have (inaudible) how many -- what have I missed?

(Inaudible).

(Inaudible), well, we have John Miller, who was (inaudible) Investment Officer. John doesn't have a vote on the committee because he's too close to the management, but he's head of our Finance Department (inaudible). And then we have another representative who is in the Real Estate Department of the (inaudible). He doesn't have a vote. But then -- and then a former head of the Chairman and Chief Investment Officer of (inaudible) Real Estate back in Europe (inaudible). It's just an amazing group of people, a Nobel Laureate in Economics, Lawrence Klein, an expert in -- one of the foremost experts in foreign exchange (inaudible) of the Wharton School.

And these people get together and I don't have a vote on any investment and I'm afraid to go into the meeting because I might -- they might think I was trying to influence an investment by blinking or smiling or doing something. And I'm not -- I know that they won't tolerate that if I would start -- would have resigned on the spot if they thought we were doing that. This is totally independent.

So we have the best combination of diversification and [bond]-type investments from credit-worthy companies and diversified, and [potentially] against inflation and (inaudible) CPI increases in our leases, and it's just the best investment for people looking for income.

And I forgot to mention one more thing, that there was a listing and the memo which I received from Seeking Alpha, which mentioned that they were (inaudible) dividend champions (inaudible). They began preparing in the 2011 edition of top dividend stocks, and he mentioned (inaudible) dividend champions and they list 56 companies. And they've been paying their dividends over a long period of time and raised them regularly, didn't cut their dividends.

This doesn't include any of the major banks because they all cut their dividends and (inaudible). They're a lot of regional banks on here that didn't play the game and (inaudible) taking bad risks, but W.P. Carey is listed at the top as a top champion, dividend stock among financial institutions in the United States.

So thank you for being our investors and don't hesitate to contact us. We're here for you and we're going to work like the devil to give you the best job (inaudible).

Well, thank you, Bill, and thanks, everyone, for your remarks this morning. That concludes our presentation. So now, Operator, we can open the floor up for questions.

We will now begin the question-and-answer session. (Operator Instructions). And our first question comes from Andrew Dizio from Janney Capital Markets. Please go ahead with your question.

Thanks. Good morning. I wanted to start, I guess, just asking a question about your own portfolio. When you look at your 2011 lease maturities, it looks like you have a couple of big ones that are coming up in May. And Tom, I wondered if you had any ideas if those tenants were seeking to renew? I think they have some options they can exercise, or what's going on there?

Yes. You're talking about the Brown Institute lease in May and that's an ongoing negotiation. They're in the market. We have a proposal in front of them. We're being very aggressive to try and keep them there. There are reasons why they went into the market to seek other space and we're doing the most we can to keep them there, but it's too early to claim victory or anything on that.

Okay. Well, we'll keep our eyes out. And the -- I think there's a Spring Spectrum going off the third quarter disclosure that was out there. Is that lease tied up or is it a similar situation?

The Sprint Spectrum lease has already been renewed.

Okay, great, thank you.

Yes.

And then if you could talk a little bit -- again, I guess for Tom -- about some of the warehouse industrial space that you have out there that's vacant where you've been hearing about strength in some of the industrial REITs in terms of getting interest in their properties. I wanted to see if you're seeing the same thing.

Yes, interesting that you focus on that. I mean, we have three large vacant industrial buildings and that is about 7% of the vacancy. Two are in North Carolina, one is in Jacksonville. We have been working deals on these things, trying to get them leased. We have activity on Jacksonville for the whole building. It hasn't -- nothing is final yet. And we're also working transactions in the Salisbury, North Carolina, Charlotte, North Carolina. We have seen a significant uptick in activity and we believe that our Charlotte building will probably be the next one to land a tenant in that market. So we think 2011 should be positive as far as working down some of the vacancy we have from existing tenants not renewing.

Okay, thanks. And then I guess probably more a question for Mark or Trevor, you mentioned in the prepared remarks the level of CMBS debt offerings that have been coming back into the market, and I know you guys have taken advantage of CMBS financing in the past. I wondered if you're looking at that going forward or if the spreads just aren't attractive enough for you?

Actually, we are quite active in looking at that and the Carquest deal was completed with CMBS debt, so it's something that we're very attuned to and have good coverage with all the major providers.

Okay.

(Inaudible) expansion of other sources as well from the -- from local lenders and some insurance companies as well, but the CMBS, we expect to continue to come back this year.

Okay, thanks. And then just a question on Watermark, if you guys can comment on how the fundraising has been there? And also, what kind of investment pipeline do you think your Mr. [Mazigian] and his team are seeing out there?

Well, can't talk too much about it. The fundraising has been according to expectations and -- but of course, we're still not out of escrow and until we're out of escrow, we can't actually make investments, but we continue to be optimistic about the opportunity in the pipeline.

Okay, thanks. That's all for me.

(Operator Instructions). Ladies and gentlemen, it's showing no additional questions. I would like to turn the conference call back over to management for any closing remarks.

Wonderful. Well, thank you so much, everyone, for joining us this morning. A replay of our webcast will be available after 2PM this morning and we look forward to speaking with you again next quarter. Thank you.

Thanks, everyone.

That concludes today's conference call. We thank you for attending. You may now disconnect your telephone lines.