Agree Realty Corporation (ADC) Q1 2019 Earnings Report, Transcript and Summary

Good morning, and welcome to the Agree Realty First Quarter 2019 Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Joey Agree, President and CEO. Please go ahead, Joey.

Thank you, Operator. Good morning, everyone, and thank you for joining us for Agree Realty's First Quarter 2019 Earnings Call. Joining me this morning is Clay Thelen, our Chief Financial Officer. I'm pleased to report that we're off to a strong start to the year as we continue to capitalize on opportunities across all faces of our business. During the quarter, we further strengthened our portfolio through strategic investment activity and proactive asset management, while continuing to fortify our balance sheet through capital markets activity. Subsequent to quarter end, we commemorated our 25th anniversary as a public company by ringing the closing bell of the New York Stock Exchange. Our compounded average annual total shareholder return since the IPO is 13.2%, an impressive accomplishment that touched the bar for our future performance. Before we move on to our traditional update, I'd like to take a couple of minutes to clarify and expand upon our investment philosophy and underwriting standards, given some of the recent discussions we've had with investors during this busy conference season. I think the simplest place to start is what we're avoiding. First, private equity backed and other retailers with over-leveraged balance sheet that lacks the capacity to adapt to a dynamic retail environment and invest in an omni-channel future. Second, retailers that are overly susceptible to e-commerce due to commoditization and consumer price leverage. Third, retailers at traffic and highly discretionary and luxury goods that are susceptible to recessionary pressures. Fourth, we avoid an overemphasis on a store-level performance as a barometer for real estate and tenant quality. It is a data point, not a driver of our underwriting. In today's omni-channel retail world, store-level performance is becoming increasingly difficult to measure using traditional methods, such as store sales, EBITDA and rent coverage. Retailers today are increasingly favoring locations that nail them to penetrate a market through a variety of distribution methods, including BOPUS, home delivery, in-store returns, as well as maintain a physical presence. The market penetration that a retailer can achieve through these methods is often misrepresented by historic four-wall performance metrics. The most successful 21st century retailers have effectively blurred the line between these different distribution channels. And lastly, we avoid nonfungible single purpose boxes that have limited residual value, a very narrow retenanting options that inhibit the future value of the real estate. This includes larger boxes where the tenant has entered into a traditional turnkey lease. Our risk mitigation here is best demonstrated through our ground lease portfolio, where we own the land and the tenant has paid to construct their own improvements. The tenant's investment and the improvements decreases the likelihood that are looked to relocate, increases the probability of renewal as well as drive residual upside through retenanting or outlot creation at a variable basis. As usual, I will discuss our ground lease portfolio in more detail shortly. Now that I've addressed what we avoid, let's focus on our continued acquiring and developing of the highest quality retail net leased assets in the country. Today, our proverbial sandboxes comprise primarily of 30 to 35 in the country's strongest retailers that have a comprehensive omni-channel strategy of value-oriented business model for a strong service-based component. We think about quality as the unique combination of industry-leading tenants, lease structure and strong underlying real estate. With almost 50 years of development expertise, our emphasis is on fundamental retail real estate characteristics, rather than simple spread investing or contract structure. With that allow me to return to our standard update. During the first quarter, we invested approximately $145 million in 57 high-quality retail net lease properties across our 3 external growth platforms. Of those 57 investments, 48 properties were sourced through our acquisition platform, representing aggregate acquisition volume of more than $141 million for the quarter. The properties were acquired at a weighted average cap rate of 7% and had a weighted average remaining lease term of 12.8 years. The acquired properties are located in 22 states and are leased to leading operators in 16 different retail sectors, including off-price, convenience stores, auto parts, tire and auto service, home improvement, health and fitness, grocery and craft and novelties. Notably, we're very pleased to add our first Trader Joe's, HomeSense as well as CarMax to our portfolio during the quarter. Other properties acquired during the quarter include O'Reilly Auto Parts, AutoZone, Bridgestone, NTB Tire and Service Centers, Hobby Lobby, T.J.Maxx, Ulta, Tractor Supply, 7-Eleven and Gerber Collision. Our focus on industry-leading tenants is evidenced by the continued increase in our investment-grade concentration. More than 71% of annualized base rent acquired during the quarter was derived from investment-grade retailers. At quarter end, our total investment-grade exposure was 52.4%, representing a year-over-year increase of approximately 680 basis points. Based on the high-quality nature of our current acquisition development pipeline, we anticipate our investment-grade concentration to continue this upward trajectory. Given our strong acquisition volume in the first quarter and our robust in high-quality pipeline, we are increasing our 2019 acquisition guidance to a range of $450 million to $500 million for the year. While increasing our full year acquisition guidance, I want to, again, reiterate that we remain intently focused on constructing the highest-quality retail portfolio in the country. Our acquisition team has done an outstanding job originating best-in-class opportunities with industry-leading retailers. While significantly increasing our investment-grade concentration, we've also grown our ground lease portfolio by 140 basis points year-over-year to almost 9% of annualized base rent at quarter end. 7-Eleven is the newest addition to the many leading retailers to comprise our ground lease portfolio, including Home Depot, Lowe's, Walmart, Wawa, Aldi, AutoZone, McDonald's and Starbucks. At quarter end, approximately 88% of our ground lease portfolio's rents were derived from retailers that carry an investment-grade credit rating and only 1% was leased to sub-investment-grade retailers. The remaining 11% of the portfolio was leased to leading retailers that are unrated, such as Chick-fil-A and Texas Roadhouse. We continue to seek to expand this portfolio and currently have under control a number of assets that are ground leased to the country's best operators. In addition to our ground lease portfolio, we also have several exceptional urban assets. One such asset is our Harris Teeter on West Sixth Street in Charlotte, North Carolina. Notably, Harris Teeter recently announced that the 18,000 square foot store will be the first in the chain to implement self-checkout to increase the number of lanes available to customers and reduced checkout times. We continue to look for similar opportunities to add unique urban assets to our portfolio. The strength of our portfolio is also evidenced by our changing tenant roster. During the quarter, we added TBC Corporation to our top tenant list via fixed property sale leaseback with National Tire and Battery Service Centers. Simultaneously, AMC was eliminated from our top tenant list during the quarter. Turning to our Development and Partner Capital Solutions platforms, we had 9 Development and PCS projects either completed or under construction during the quarter that represent total committed capital of approximately $30 million. 3 of those projects were delivered during this past quarter, representing total capital deployed of almost $8 million. The projects delivered during the quarter include the company's third and fourth developments with Mister Car Wash in Orlando and Tavares, Florida and our first completed project with Sunbelt Rentals in Maumee, Ohio. Subsequent to quarter end, the company delivered its second project with Sunbelt Rentals in Batavia, Ohio. In addition to our completed projects in Maumee and Batavia, construction continued during the quarter at our third Sunbelt Rentals and our first ground up project in Georgetown, Kentucky with them. Finally, we're pleased to announce that we commence construction in our fourth Sunbelt Rentals projects during the first quarter in Carrizo Springs, Texas. The project is anticipated to complete by the fourth quarter of this year, and we look forward to continuing to expand the relationship with Sunbelt in the future. In addition to the Sunbelt Rentals project in Georgetown, Kentucky, construction continued during the quarter on 3 other Development and PCS projects, with total anticipated cost of nearly $16 million. The projects consist of the company's first development with Gerber Collision in Round Lake, Illinois; the company's redevelopment of the former Kmart in Mount Pleasant, Michigan for Hobby Lobby; and the company's redevelopment of the former Kmart in Frankfort, Kentucky for Aldi, Big Lots and Harbor Freight Tools. While our year-to-date investment activity has improved the quality of our portfolio, we've also solidified and diversified our portfolio through proactive asset management and disposition efforts. These efforts continued during the first quarter as we sold 2 Walgreens assets for gross proceeds of approximately $10 million. As a result of our disposition efforts, our Walgreens concentration has been reduced to 4.6% at quarter end. This represents a decrease of approximately 300 basis points year-over-year. Similarly, our pharmacy exposure decreased 400 basis points year-over-year to 7.6%. We currently have an additional Walgreens asset under contract to sell, which is subject to customary due diligence, and we anticipate closing in the next few weeks. Our asset management team also continues to focusing on addressing upcoming lease maturities. As a result of these efforts at quarter end, we had only five remaining lease maturities in 2019, representing less than 1% of annualized base rents. During the quarter, we executed new leases, extensions or options on approximately 111,000 square feet of gross leasable sales. As of March 31, our rapidly growing retail portfolio consisted of 694 properties across 46 states. Our tenants are comprised primarily industry-leading retailers operating in more than 28 distinct retail sectors, again with 52.4% of annualized base rents coming from investment-grade tenants. The portfolio remains effectively fully occupied in 99.7% and has a weighted average remaining lease term of 10.2 years. Thank you for your patience. And with that, I'll turn it over to Clay to discuss our financial results for the quarter. Clay?

Thank you, Joey. Good morning, everyone. I'll begin by quickly running through the cautionary language. Please note that during this call, we will make certain statements that may be considered forward-looking under federal securities laws. Our actual results may differ significantly from the matters discussed in any forward-looking statement. In addition, we discuss non-GAAP financial measures, including core funds from operations or core FFO, adjusted funds from operations or AFFO and net debt to recurring EBITDA. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in our earnings release. As a reminder, beginning in the first quarter, we modified our calculation of Nareit FFO to exclude the add back of the amortization of above and below market lease intangibles and introduced core FFO, which includes the add back of this noncash item. Core FFO will be consistent with our historic reporting of FFO. Core funds from operations for the first quarter was $28.6 million, representing an increase of 29.8% over the first quarter of 2018. On a per-share basis, core FFO increased to $0.74 per share, a 4.7% year-over-year increase. Adjusted funds from operations for the first quarter was $27.7 million, a 27.3% increase over the comparable period of 2018. On a per-share basis, AFFO was $0.72, an increase of 2.7% year-over-year. In addition to the inclusion of core FFO this quarter and in accordance with the updated lease accounting standards effective January 1 of this year, we've updated our presentation of revenues on the income statement and consolidated our historical reporting of revenue line items into a single line item, rental income. Additionally, we began including the amortization of above and below market lease intangibles as contra revenue in the new rental income line item. It is important to note that both of these changes are purely geographic and do not have an impact on our key earnings metrics. The inclusion of amortization related to above and below market lease intangibles is simply a reclassification as this was historically reported in depreciation and amortization expense. To help with modeling, we have added a new schedule to our press release tables, providing further detail as well as comparability with our historical reporting. General and administrative expenses in the first quarter totaled $4 million. G&A expense was 9.5% of total revenue or 8.8%, excluding the noncash amortization of above and below market lease intangibles. We continue to anticipate G&A as a percentage of total revenue to be an approximate 50-basis point improvement from 2018 or in the upper 7% range, excluding the impact of above and below market lease intangible amortization in total revenues. The inclusion of above and below market lease intangible amortization is contra revenue increase the G&A as a percentage of total revenue roughly 50 basis points for the full year. The company recognized an income tax benefit of approximately $170,000 for the first quarter. The benefit is the result of a onetime tax credit related to the termination of one of the company's taxable REIT subsidiaries totaling $475,000. This credit was included in our calculation of core FFO and excluded for the purposes of calculating AFFO. For the full year 2019, inclusive of this onetime credit, we anticipate total income tax expense to be in the range of $350,000 to $400,000. On a quarterly basis, core FFO per share and AFFO per share were impacted by dilution required under GAAP related to the forward equity offering we completed in September of 2018. Treasury stock is to be included within our diluted share count in the event that prior to settlement, our stock trades above the deal price from the offering. The dilutive impact related to the offering was almost $0.02 to both core FFO and AFFO per share for the 3-month period ended March 31. To the extent that prior to settlement, our stock continues to trade above the deal price of the September forward offering, we will continue to record treasury stock dilution. To date, we have not settled any of the 3.5 million shares and view this as a meaningful equity backed stock to fund our investment pipeline. Now moving on to our capital markets activity. During the first quarter, we issued nearly 900,000 shares of common stock through our aftermarket equity program at an average price of $66.83, raising gross proceeds of $59.3 million. We continue to view the ATM as an efficient tool to raise equity, given the granular nature of our investment activity. Our balance sheet continues to be in phenomenal position to execute. As of March 31, our net debt to recurring EBITDA was approximately 5x, at the low end of our stated range of 5 to 6x. Pro forma for the settlement of the approximately $190 million in proceeds from our September forward equity offering, our net debt to recurring EBITDA is approximate 3.7x. Total debt to enterprise value was approximate 22.5% and our fixed charge coverage ratio, which includes principal amortization, remains at a very healthy 4x. We ended the quarter with approximately $500 million of liquidity, including cash on hand, capacity under our revolving credit facility, free cash flow and available proceeds from our forward equity offering. The company paid a dividend of $0.555 per share on April 12 to stockholders of record on March 29, 2019, representing a 6.7% year-over-year increase. I'm pleased to report that this was the company's 100th consecutive cash dividend since its IPO just over 25 years ago. Our quarterly payout ratios for the first quarter were conservative 75% of core FFO per share and 77% of AFFO per share. These payout ratios are at the low end of the company's targeted ranges and continue to reflect a very well covered dividend. With that, I'd like to turn the call back over to Joey.

Thank you, Clay. To conclude, I'm very pleased with our performance at the start of the year, we're in excellent position for the remainder of 2019, and I look forward to seeing many of you at the upcoming RECon and May REIT conferences. At this time, operator, we will open it up for questions.

[Operator Instructions]. Our next question comes from Collin Mings from Raymond James.

First for me, can you just maybe expand on the entry of TBC into your list of top tenants, maybe some more details around the sale leaseback that was completed during the quarter? And then just more broadly, just as you think about your tire and automotive exposure, what you feel like is a natural limit to that in terms of overall portfolio exposure there?

Sure. So obviously, TBC is a subsidiary of Sumitomo Corporation. They're a leader in the tire and automotive service industry for over 60 years with 3,200-plus stores. The primarily -- primarily the exposure came through -- additional exposure came through a portfolio of fixed assets under sale leaseback with just over $14 million. And then we had a couple one-off acquisitions as well in the quarter. So in terms of our aggregate exposure to tire and auto service, again, our focus is on the industry leaders here. So it's National Tire and Battery, it's Goodyear, Bridgestone, Firestone. We're sitting today at approximately 8.8%. I think that's about the right place. So we would have no problem taking that up a couple of hundred basis points.

Okay. And then just bigger picture, just curious, Joey, your portfolio and team continuing to grow and obviously with Royalty Income announcing its entry into Europe yesterday, just curious to what extent could international expansion make sense for the company just begin out against they raising yesterday, up, raising acquisition guidance continuing to kind of grow that investment pipeline? How do you think about potential international opportunities?

Yes, I think, it's not a focus for us. Our focus remains disciplined on our sandbox of 30 to 35 industry leaders, really in the continental United States a couple of trillion dollars in net leased assets in this country. And we feel like given our market positioning and the depth of the opportunity pool, we get a significant runway in domestically in this country.

The next question comes from Rob Stevenson with Janney Capital Markets.

Joey, you spent some time early in the call talking about the investment-grade portfolio, et cetera. Can you talk about a little bit about how you guys value the fact that somebody is an investment-grade tenant in the underwriting process in terms of what that's worth to you when you underwrite an acquisition versus another acquisition that where the tenant may be good quality, but not investment grade?

Yes, look, it's a good question, it is a data point for us, it isn't really necessary a driver of our underwriting. Again, the 30 to 35 retailers that we're focused on and the vast majority of those frankly happen to be investment grade because they're industry-leading traditionally or typically they're public entities and they're the leading operators in their respective sector. That said, we have a number of tenants that are on that list, our top tenant list, frankly that don't carry a rating and then a couple that are sub-investment grade like Burlington, which we believe the future of off-price retail of their business trajectory is on the upswing. So if you look at our tenant roster, Tractor Supply, a publicly traded company lease adjust and leverage around approximately 2x or even lower, doesn't have a credit rating. We don't impute channel credit ratings, but I think it's fairly obvious that they will be an investment-grade retailer. Similarly Hobby Lobby, $900-plus million of EBITDA, private-held -- a privately-held company, founder doesn't really believe in long-term debt. So again that would be an investment-grade retailer. So it's a data point for us. Our focus is on, again, it's on those industry leaders in those retail categories where they are the -- having omni-channel presence and/or a significant mode around their business that precludes disruption in the future.

Okay. And then Walgreens is now down to 4.6%, the overall pharmacy is at 7.6%. How are you thinking about the non-Walgreens pharmacy, the CVS', the Rite Aid's in relation to Walgreens? Are you selling Walgreens specifically to bring down the individual tenant exposure? Because for a long period of time, it was outsized and you've got hit by that. Are you looking to bring down the overall pharmacy exposure below the current 7.6% and will sell CVS' and Rite Aid's as you go along as well?

I think, it's all of the above. We sold Walgreens obviously because of the historic concentration and opportunistically recycle their capital into other assets. As you mentioned, it's down to 4.6%. As I mentioned in my prepared remarks, we have another one under contract, which we anticipate closing in the next few weeks. I'll tell you pharmacy as a whole in this country, I think, similar to other spaces inclusive of grocery, furniture, among others will continue to see ongoing disruption. Now we're not overly fearful of the PillPack acquisition by Amazon or the online penetration at this time, but I think the pharmacy space, in general, really has some work to do on the front-end predominantly of those stores. And we'd like to see some ingenuity and creativity driving traffic into those stores and driving margin as well as top line revenue to the front end of those stores. So we're very comfortable where our pharmacy sits today. Again, just a few years ago, it was over 40%. Today, it's about 7.5%. So we're very comfortable where that sits. But we'll also continue to optimistically dispose of the assets like we did in the first quarter.

Our next question comes from Ki Bin Kim with SunTrust.

You already made some comments about this, but can you talk a little bit about how Hobby Lobby, Big Lots and Sunbelt Rentals, the thinking behind those investments and how that fits into some of the kind of parameters you already described on what do you want to buy and what you don't want to buy?

Sure. Again, look, we're looking for those industry leaders in those respective sectors. You may have noticed this morning that Ashtead Group prepared to Sunbelt got upgraded by S&P, so their investment grades from all 3 major rating agencies, the equipment rental business obviously has some barriers to entry, they're the leading operator along with United Rentals in a highly fragmented space in this country. We got a fantastic relationship with Sunbelt Rentals, and we've executed across really all three of our platforms to create value, acquisitions, Partner Capital Solutions as well as development with our 4 projects. Hobby Lobby, a very interesting company, a vertically-integrated retailer that frankly creates, manufacturers many of their goods, including their fixtures, really the 800-pound gorilla in the space today. We aren't interested investing in operators, such as Jo-Ann with a fabric basis and significant online penetration and margin erosion. And then Big Lots in Frankfort is a fantastic addition next to Aldi and Harbor Freight Tools. Again, there is a experience component of Big Lots, people are shopping, bargain hunting in that off-price space. So we think all 3 of those retailers, 2 of the 3 which carried about the big credit rating makes sense for -- in our portfolio today.

Okay. And in terms of balance sheet, obviously, your balance sheet is in great shape. And if you include the forward equity offering, your leverage is probably up 4% -- 4x? So how does that -- how do you think about continued equity usage going forward? You tapped the ATM this quarter. How should we think about your willingness to use equity going forward?

Sure. Ki Bin, so in terms of the forward, we haven't till September 3 to settle the 3.5 million shares or $190 million in available proceeds. Given our stock price in the fourth and first quarters, issuing on the ATM was accretive relative to the forward deal price, and we're confident certainty in the future uses of capital, given an evidence by our updated guidance. We'll continue to be opportunistic as it relates to the ATM. We raised $240 million since December. In terms of settling the forward between now and December, we'll settle amounts in order to staying within our stated leverage range. Today, the balance sheet 75% equity, 25% debt. We'll continue to match the uses of capital with this consistent disciplined approach and the future uses of capital merit will continue to be opportunistic with the ATM as well.

And so if the capital markets are there for you via a, attractive stock price, are you okay with may be going, may be adjusting the range for your debt leverage that you're okay with? I mean, I think it was 5x or above a little bit, previously, but are you okay with a lower-bound range at this point?

Well, I think, as you look at historically, over the past couple of years, we really operated under 5x. Now our stated range, we haven't changed that from 5 to 6x, I think that's frankly purely common in the net leased space. But again, we look at all sources of capital to relative cost both actual and virtual cost to those capital and then the risks associated with those capital, and then we look at the uses in our pipeline and we try to keep up conservative leverage profile and the flexibility that will continue to allow this company to grow on a similar trajectory. So I would tell you that inclusive of the forward, our balance sheet is at what 3.7x. 3.7x includes the full set of -- full settlement of the September forward. And so we got fantastic optionality to fund our growing pipeline.

Our next question comes from Todd Stender with Wells Fargo.

Just looking at some of the tenants, I guess, to go back to Sherwin-Williams, were there more properties that were closed in Q1? I know the bulk was done by Q4, but I thought a couple bled into the first quarter.

That's right. Todd, so the remaining 5 properties that were under contract those projects is in diligence closed during the first quarter. So the total transaction was approximately $152 million I believe in 103 properties.

Okay. Got it. And then you spoke about Trader Joe's, did you close something in the first quarter and it's net new for you guys, right?

We did. So during the first quarter, we closed on our first CarMax in Columbia, South Carolina, a fantastic site, modernized facility, brand-new photo boost, approximately 20 acres on the freeway. And so that was our first entry into that space with CarMax, obviously the leading operator in the used-car sector in this country. And then we closed on our first HomeSense, which is T.J.Maxx, those are TJX's newest concept, parallel to HomeGoods, as well as a Trader Joe's in Paramus, New Jersey. So across the Lamborghini dealership there, right in the heart of Paramus. So our first CarMax, our first Trader Joe's, our first HomeSense, again we think fantastic operators, and I think everyone is familiar with them.

Is the Trader Joe's a sale-leaseback or that was you acquired it from another land?

No, acquired from a third-party land, where the only sale-leaseback during the quarter was a National Tire and Battery's sale leaseback for about 14-plus -- $14.5 million that I referenced, everything else was acquired through third-party sellers though our traditional amount.

[Operator Instructions]. Our next question comes from John Massocca with Ladenburg Thalmann.

So just to clarify on the disposition front in the quarter, those were all Walgreens, correct?

Yes, two Walgreens, very different stores, one had about 16 years left that we sold at effectively a 5%, 6% cap in Florida. The other one was a dark store that Walgreens had purchased from Rite Aid with just over four years left. So a two very different assets blended together at a 7% or 9% cap, just over 11 years of weighted average lease term.

So wouldn't really be fair to extrapolate that cap rate to the rest of Walgreens portfolio is probably more weighted towards the 5% obviously?

Correct. The dark store was over four years which is a Rite Aid what Walgreens purchased, that was a high single digit cap rate, so I wouldn't extrapolate.

But the other store, I thought like it's on either end of the bell curve as you will, the other store, the first one you sold is more typical of the portfolio?

Correct.

Okay. And then on the kind of PCS and Development pipeline front, what percentage of current projects being developed is the Kmart redevelopments versus the Gerber and Sunbelt development?

In terms of total costs?

Yes.

So you're looking at approximately $30 million in total cost and total committed capital there. I would tell you that approximately a third is the Kmart in Mount Pleasant, Frankfort redevelopment and then $20 million is the announced projects that are either heavy that are going through the process of just complete.

And how far do you think you can expand the Sunbelt kind of development program, you've been able to put it in place?

Good question, it depends on a multiple number of factors. Our team is working aggressively. I think they're a fantastic partner for us. We're pleased to commence the fourth store. It's unique that we're buying existing buildings and doing retrofit and redevelopments of existing structures and now we've commenced the ground-up in Georgetown, Kentucky, but our team is working in a number of states with Sunbelt. And hopefully, we'll continue to expand that relationship as we go forward in the year.

All right. Actually one more. On the last call, you talked a little bit urban condos and the other kind of unique opportunities. Was that something you were able to close in the current quarter? Is that still -- is that maybe further along -- further out in the pipeline?

No, nothing that closed during the quarter as I mentioned, the news about the Harris Teeter in the fourth quarter just in Charlotte was very interesting than instituting the first store with self-checkout, again that's an 18,000 square foot store in urban condo in a multi-store and mixed-use complex, small stores selling primarily prepared wine, food for off-premises consumption, nontraditional grocery. So that's a very unique asset. We have our Walgreens in Ann Arbor, obviously which is a very unique asset. And then we're working on multiple fronts to continue to find value in those urban environment. So nothing notable during the quarter, but we continue to explore all different types of net lease retail opportunities with those industry leaders.

This concludes our question-and-answer session. I would like to turn the conference back over to Joey Agree for any closing remarks.

Well, thank you, operator, and thank you, everybody for joining us. And we look forward to seeing many of you at the upcoming RECon and REIT conferences. Talk to you soon. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.