Welcome to the CST Brands and CrossAmerica Partners Joint Year End and Fourth Quarter 2015 Earnings Call. My name is Christie and I will be the operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Mr. Randy Palmer, Director of Investor Relations. Mr. Palmer, you may begin.

Thank you, operator. Good morning, and thank you for joining the CST Brands and CrossAmerica Partners year end and fourth quarter 2015 earnings call. With me today are Kim Lubel, CST Chairman and CEO; Clay Killinger, Chief Financial Officer; Hal Adams, President of Retail Operations; Jeremy Bergeron, President of CrossAmerica Partners: Steve Stellato, Chief Accounting Officer at CrossAmerica Partners; and other members of our executive leadership team. Kim will provide an overview of the CST operation performance for the year and the fourth quarter and current strategic initiatives and then we will turn the call over to Clay to discuss the CST financial results. Hal will provide a brief update on our merchandizing efforts and then Jeremy will follow with an overview of the operational and financial performance of CrossAmerica Partners, and at the end we will open the call to questions for both organizations. I should point out that today’s call will follow some presentation slides that our team will utilize during this morning’s event. These slides are available as part of the webcast and will be posted on the CST Brands and CrossAmerica websites. Before I begin, I would like it remind everyone that today’s call, including the question-and-answer session may include forward-looking statements regarding expected revenue, future plans, future operational metrics and opportunities and expectations of the organizations. There can be no assurance that the management’s expectations, beliefs, and projections will be achieved or that actual results will not differ from expectations. Please see filings with the Securities and Exchange Commission including Annual Reports on Form 10-K and quarterly reports on Form 10-Q for a discussion of important factors that could affect our actual results. Forward-looking statements represent the judgment of the Company’s management as of today’s date, and the organizations disclaim any intent or obligation to update any forward-looking statements. During today’s call, we may also provide certain performance measures that do not conform to US Generally Accepted Accounting Principles or GAAP. We have provided schedules that will reconcile these non-GAAP measures with their referral results on a GAAP basis as part of our earnings press release. We should also note that the results provided today by CST represent the business operations of CST on a standalone basis before the consolidation of CrossAmerica Partners LP, but include the income associated with CST owning a percentage of the outstanding common units and all the IDRs of CrossAmerica. Full consolidation information is included in the 2015 Form 10-K which will enable you to arrive at our completed consolidated financial results. Today’s call is being webcast, and a recording of this conference call will be available for a period of 60 days. And with that, I’ll now turn the call over to Kim Lubel.

Well, thanks, Randy, and good morning everyone and welcome to our year end and fourth quarter 2015 earnings call. As you turn to Slide 4, CST reported full year 2015 gross profit of $1.2 billion and adjusted EBITDA of $602 million. These strong results in 2015 were driven by year-over-year increases in the inside sales and fuel volumes. As we look back at 2015, CST, along with CrossAmerica began the year with a joint purchase of 22 Shell-branded convenience stores from Landmark Industries located in the San Antonio and Austin, Texas markets. And furthering CST’s strategic vision for growth, the company announced its largest acquisition to-date with the purchase of Flash Foods, the 165 convenience stores located in Georgia and Florida will allow the company to continue to grow and bridge the geographic gap between its existing retail networks. The transaction closed just a few weeks ago, and integration and synergy capture initiatives are well underway. During the year, CST completed two fuel drop transactions and one real estate drop transaction with CrossAmerica. By the end of 2015, CrossAmerica had 17.5% of CST fuel supply and CST owned 18.7% of the total CrossAmerica units. The company’s focus on organic growth also continued in 2015 with opening up 31 new stores in the US and 11 in Canada. Currently, the company expects to open a total of 45 to 50 new stores in the US including two in Georgia, and 10 to 15 new stores in Canada during 2016. These new stores provide a much larger footprint that accommodates broader merchandize categories and food offerings as well as an expanded fuel island. And as we noted during the last earnings call, our fuels business remains very important to our profitability and we continue to work to maximize fuel gross profit dollars.…

Thanks, Kim. I will provide a brief overview of the fourth quarter results for CST and then turn it over to Hal for to discuss our retail operations. Today, CST reported net income of $25 million or $0.34 per share for the fourth quarter of 2015. This compares to net income of $94 million or $1.21 per share for the fourth quarter of 2014. For both periods, we had certain one-time expenses that included asset impairment charges, acquisition expenses, legal expenses, professional fees, and tax effects on cash repatriation as outlined in our earnings release. The after-tax income effect of these items was approximately $16 million for the fourth quarter of 2015 and approximately $15 million for the fourth quarter of 2014. Excluding these items, our earnings would have been $42 million or $0.55 per share for the fourth quarter of 2015 compared to $79 million or $1.2 per share for the fourth quarter of 2014. As I discuss our fourth quarter CST highlights in more detail, I will be referring to Slides for our US and Canadian segment operating results. We have provided slides for the full year operating results as well. In regards to CST’s US segment, if you turn to Slide 6, fourth quarter 2015 net motor fuel gross profit decreased by $70 million or 44% when compared to the fourth quarter of 2014. The year-over-year decline was attributable to near record fourth quarter margins in 2014 resulting from the rapid decline in crude oil prices experienced in the fourth quarter of 2014. Although crude oil declined in the fourth quarter of 2015, the volatility accrual prices was lower than in the comparable quarter. We experienced a decrease in the average cents per gallon fuel margin, net of credit card fees of $0.13 per gallon between the…

Thanks, Clay. As Kim has mentioned in the past, one of our same-store sales growth initiative is our grocery expansion project, which is currently in 100 stores. Based on the success of this project and the needs of our customers for grocery fill-in items to complement their milk bread and egg purchases, we will have expanded this to another 100 stores by year end. We have also implemented our refreshed Corner Store image in 11 legacy stores in South San Antonio. This pilot which includes an advertising component will be monitored for the next few months. We will use our learnings to make the necessary changes before we roll the project out more broadly which could include up to 300 stores in the second half of this year. This is the first phase of the three year process. If you turn to Slide 13, I want to briefly discuss the initial success of made to order food program that we have transferred from Nice N Easy in New York. If you look at the chart from left to right, you can see the impact the program has on the sales mix in these stores. This slide shows that while the results are early, the program has quickly moved to higher margin food mix in these stores to more than 30% of sales. We are currently planning to add this food program to at least 20 additional NTIs in our 2016 growth program. And finally, I wanted to note that with our newly announced organization changes and alignment of our marketing operation team, we will have a heightened focus on operational cost as we rollout these new marketing programs. With that, I will turn it over to Jeremy.

Thank you, Hal. If you please turn to Slide 15, I would like to touch on our overall fourth quarter and full year results of CrossAmerica. Today, we reported a very strong fourth quarter with adjusted EBITDA of $25 million, up 74% compared to last year. For the full year of 2015, adjusted EBITDA was $90 million reflecting an increase of 47%. Our DCF per unit increased 48% during the quarter and 8% for the year. As we look at how each of our segments contributed on the next slide, you will see that, thanks to the fuel volume and rental income growth achieved from our acquisitions, our Wholesale segment grew adjusted EBITDA by 26% for the year. This is despite the reduction in our terms discount due to wholesale gasoline prices averaging over $0.70 below last year. While our retail segment EBITDA declined during the quarter due to a thinner rack to retail margin, we experienced a significant increase during the year reflecting the contributions of the Erickson and One Stop Chain as we continue to integrate those operations. It is also worth noting that in 2015, we converted 77 company-operated stores to lessee dealer accounts. As we have said, a key part of our long-term strategy to stabilize cash flow for our unit holders is to find lessee dealers to operate our locations. By doing this, we maintained wholesale supply to these sites and our exchanging non-qualifying retail fuel and merchandize margins for qualifying rental income and lower operating expenses. This focus on expenses and the success of the strategy is evident on the next several slides. On Slide 17, we have detailed a chart to demonstrate the differences between the performance of this quarter compared to the comparable period in last year. As noted previously, we are…

Thank you. [Operator Instructions] Our first question comes from Damian Witkowski from Gabelli and Company. Please go ahead.

Hi, good morning. Can we focus on same-store sales, in the US in particular, if you look at just not your average per store per day, but just same-store sales, it looks like, fuel was down about 2.5% little bit less than that, merchandize did well, but then on the new two industry stores, the bigger stores, in the fourth quarter, gallons again as fuel gallons were down over 4% and merchandize sales per store per day were down as well. I mean, just some thoughts around that will be great.

Same-store sales for the quarter in the total network are up 2.4% and the same-store NTI figure is a 3% increase. So, help me understand what you are looking for.

Okay, so, maybe I am looking at the wrong thing. I am just looking at your core same-store sales information that you have on 944 stores year-over-year comparison on a per site per day motor fuel gallons went from 5043 a year ago to 4921 in the fourth quarter of last year. Am I looking at the wrong thing?

Right, so fuel volume has decreased a bit, but the sales volume is up. So that – is that correct?

Merchandize sales is up.

That’s right. So, we are down a bit in fuel volume.

Damian, we had – the fourth quarter, we got hit hard with the holidays and with some bad weather here in – particularly in the Texas market with very severe weather in DSW, Houston, and San Antonio with heavy rain and we had snow in Houston, unlike these weather, I mean, snow in Denver, I am sorry, snow in Houston would be worst.

The unusual thing.

So we did get hit with some weather at very good pace going and at the end of the year, overall same-store sales was just slightly down just barely less than 1%, which I think was a pretty good year overall considering this good work with try and maintain the high gross margins and fighting the competition over out there as well. So – but the fourth quarter we did hit some through the holidays and that hurt us a bit. And even…

And then 2015 was the rainiest on record for Texas.

Okay. If I just look at the first quarter guidance for per store per day numbers again, what should we use, how should we think about the actual number of stores for the first quarter?

Store counts.

Right, I would use the year end number that we show.

Okay.

End of period number.

Right.

So that does include Flash Foods?

That’s correct.

Okay. All right, thanks.

Thank you. Our next question comes from Betty Chen from Mizuho Securities. Please go ahead.

Thanks, good morning. I was wondering how if you can talk about the learnings – on that slide you mentioned the significant increase in food sales penetration, what’s on working allow, what may not be and how we could see all of that implemented and longer-term, where can we see merchandize gross margin trend to? We are looking for that to be up significantly now in the Q1 guide. How should we think about the opportunity for that margin segment going forward longer-term? Thanks.

Definitely, as we’ve been very encouraged with the success we’ve had with moving the Nice N Easy Food program to the first five stores that we have here in San Antonio. We opened the first one in November. So, the majority of them were opened in the month of December. So, as you can see on the slide, we get a significantly larger piece of our business in food in those stores. So we’ve re-tooled our NTI stores for 2016, mostly towards second half of the year to be able to accommodate this program to enjoy the higher food sales from that program. So as you can see in our guidance for the first quarter, we are going to see a significant increase in margins, most – a lot of that benefit is coming from the stores that we opened in the fourth quarter. So they are kicking in and in the first quarter, they’ll be open through the whole quarter and as we open more stores and have those stores ramp up they will begin to add more to our merchandize margin. We also made some changes in pricing in some of our key categories towards the end of last year and so that’s helping some of the same-store margin percent increase as well. So, then the other thing I would point out as Clay mentioned, in the fourth quarter of last year, we had a benefit for a credit card settlement that went through merchandize margin. So our merchandize margin in the fourth quarter actually increased at a higher rate than what we are showing if you were to do a comparable. So we are up 60 basis points apples-to-apples in the fourth quarter. So, in the first quarter you see that carrying over and throughout the rest of the year.

Got it, helpful. I was wondering, maybe, I think, Kim you mentioned three pillars of growth, can you talk a little bit more about also the NTI opportunity? How should we think about where the number of NTIs could shake out eventually and whether we should expect this pace of opening to at least continue in the next three, five years? Thanks.

Sure, sure. So, when we did our third quarter earnings call, we did lay out our five year NTI plan. So I’d refer you back to the investor slide there that certainly kind of details it by year. But yes, we definitely are planning to continue this level of growth and then some. So that, by the end of 2020, we have about 500 stores or so that are in this NTI category. So significant growth ramping up over the outer years as well. We are very pleased with the results that we see. We are getting the returns there and the opportunity to bring in food as Hal just mentioned, really enhances those stores as well.

Okay, thanks.

Thank you. Our next question comes from Ben Bienvenu from Stephens. Please go ahead.

Thanks, good morning.

Morning.

So, just thinking about capital allocation, I know that acquisitions and NTIs are a priority. Could you talk a little bit about how share repurchase fits into that paradigm? We didn’t see as much share repurchases, maybe I thought we would in the fourth quarter and then how are you thinking about that going forward?

Sure, Ben. This is Clay. We did have a very large capital expenditure program that occurred in the fourth quarter. So we had to back-off a little bit on our share repurchases and we also implemented a CrossAmerica unit buyback program and if you look at that, you will see that we did take some of our available cash and used to support the Partnership and do a buyback program there. And so we had some competing dollars for NTI CapEx as well as there was some great investment opportunities for the Partnership unit given what’s happened in the MLP market that we utilized cash there. Then we got out into blackout period and so now we are coming out of that period beginning with the filing of the 10-K and so, you’ll have to see us evaluate opening up that program again for Q1.

Okay, thanks. That’s helpful. Can we talk about Canada for a little bit? You showed results that had a little bit of improvement in the most recent quarter, but I’d be curious about sort of going forward, what your plans are there? It looks like the guidance suggests some continued weakness in that segment. I realize that the economics of your geography there are challenging, but how are you thinking about navigating through that going forward?

Sure, well, I think some of the first quarter guidance you see is that, first quarter is going to be very cold snowy weather impacted quarter up in Canada in particular. So some of that seasonality that you will see in those numbers there. Canada is predominantly a fuel-focused business for us and it’s about two-thirds of our stores up there are being fuel only for CST. It has been a consistent contributor of those from a cash flow basis over the years, it is a consistent kind of fuel margin environment and so, it certainly provides that level set there. In terms of just the economic impacts, I think, kind of the only sector that we see some impact is the E&P downturn on the west coast seems to be impacting a little bit of the commercial truck traffic and we see that in our card lock industry. So our card lock volumes are down. But overall, we are very pleased with the merchandize sales increases. We are pleased with the improvement on that end and I think we are seeing a consistent margin driver from Canada.

Okay, thanks. And then, just two quick housekeeping items. How much taxes that you guys pay on the repatriated cash from Canada? And then, what was the thought process for why you repatriated that cash during the quarter?

So the total tax – the net tax effect was $14 million and the reason why we repatriated $185 million from Canada, the Canadian repatriation tax is 5%. It was really a repatriation of our tax basis from Canada. So Canada has been growing its cash positively over the last several years. It was building the cash balance. We needed the cash in the United States as we just funded the large acquisition in Flash Foods. And so, the tax strategy that we employed, needed to be employed at the end of the year, which we did, but what the taxes effect – the tax effect was really based on our full basis amount of $360 million. So we have now employed the capability of repatriating an additional $175 million of cash out of Canada in the future that we will not be incurring any tax expense on. So, we needed the cash, because we did the – for the Flash Foods acquisition, and it was the right time to do the tax repatriation strategy.

Okay, thanks for that color. And then, just one last one. If we look at the expense guidance that you all gave for the fourth quarter, for operating expenses of 178 to 182 and G&A expenses of 34 to 36, did that include or exclude some of these acquisition-related expenses that you called out in the quarter?

The fourth quarter would not had the Flash Foods which is the biggest increase that we are seeing in the first quarter of 2016.

Sorry, I was referencing the fourth quarter guidance that you gave on the third quarter earnings call. You guys called out some of the one-time expenses this morning, I was just curious, trying to get an apples-to-apples?

Definitely, right, so it included some acquisition costs.

The guidance did include the acquisition cost?

Yes.

Yes.

Okay, thanks.

Thank you. Our next question comes from David Hartley from Credit Suisse. Please go ahead.

Hi, good morning everyone and just quick first question on other income. I think it’s a $13 million item there. Can you talk a little bit about that? Is that related to cash balances held in Canada that you had hedging gains on that hedge? Or maybe talk a bit about that?

Yes, that’s what it was David. We converted Canadian dollars into US dollars in the midpoint of last year.

Okay, and are you expecting that to recur in coming quarters?

We do intend to continue to repatriate cash from Canada down in the US and so as Canada – the short answer is yes, to that extent, it’s only when we convert cash at the US dollar that of course depends on what the exchange rate does. But we now have a mechanism to repatriate cash out of Canada. There really is no need to have Canadian dollar exposure there, because we do intend to repatriate the cash flow.

Got it. And so, when I think about the – I think there is a withholding tax of $6.7 million incurred in the year. I think it was even in just this quarter, so when I look at that $16 million of one-time items that you talk about, how much of that gets attributed or kind of caught back from SG&A? And then, how much would be caught back from taxes? Is that the way I should be thinking first of all, and maybe you can take me through that a bit?

If you are talking about the one-time items, the largest piece of that is the tax expense, the $14 million that will not – that’s not recurring. I would not expect necessarily the other income to be as high as $10 million, $13 million in Q1, but there could be – there certainly could be Canadian currency …

And then…

I am sorry. Go ahead.

No, I just wanted to know that, $6.7 million withholding tax. Is that part of the $14 million there? What is that?

Well, I said, it’s a 5% withholding tax on the full amount of the 360. So that’s how you get. There was a – the gross amount of tax in Canada was $17 million to $18 million, but there was some offsetting tax deductions in the US that we are able to take to net it down to $14 million.

Okay, and so, how was that attributed now, when I shake it out in – if I am looking at normalized presentation. If you took away the $16 million from your financials, where would I take them out to normalize? Would it all come out of SG&A or would just $2 million come out of SG&A in 14 out of tax or how should…

The latter. That’s where it is David, it’s $14 million in the tax expense line and then two comes out of G&A.

Got it, okay. That’s really helpful. Thanks guys. And just on – I guess, the market for acquisitions as we look forward, how does that look nowadays? Prices have gone up in the industry on assets and is it prohibitive now right to make acquisitions hence more focus on NTIs or maybe little color there would be helpful?

Well, with the Flash Foods acquisition, that’s obviously our largest one to-date. So, we certainly are focusing on integration of that acquisition and CrossAmerica just announced their acquisition in Minnesota, Wisconsin. So we continue to see opportunities, I think that are good opportunities for both CrossAmerica and CST from an acquisition standpoint.

Did you announce the amount of synergies you hope to get on Flash Foods?

We did. If you look exactly the last slide of our presentation deck.

Okay, I’ll visit that and just…

Sure, sure, it’s about $10 million a year. We’ve already got about almost 20% of that so far recognized.

Okay, great. Thanks. That’s helpful. And the last question, just on the big picture on gasoline margins in the US. Certainly not as high as last year, but industry-wide still very high, well, I have asked you this question in the past, but what’s your take on where these things, gasoline margins settle out on a net basis for you in the coming months?

We will be posting our January margins today and we ended up January at $0.20 per gallon in the US and $0.19 in Canada in US dollars. If you did in Canadian dollars, $0.26, which is actually quite a bit stronger than the January of 2015. So, comparing kind of month-to-month comparison, we started off stronger in 2016, much stronger in 2016 than we did in 2015. But, you know, it all depends on what – at what pace crude changes and we’ve certainly seen a lot of volatility both up and down here recently. And as we said before, for us, the margin is really more dependent on the amount of volatility as opposed to the absolute price of the crude, but we are certainly seeing quite a bit of up and down in the crude markets.

Yes, I totally agree with that and I mean, I think in the past, you’ve kind of given out in our discussions normalized kind of long-term gasoline margin that you think would be reasonable. Would you be able to give one now?

No, we’ve just said historical margins have been and we are running about a three year average of about $0.17 a gallon in the US, sorry five year average. This is a consistent quarterly correction here from Randy which I appreciate. But we are on a five-year average at $0.17 a gallon in the US and Canada tends to stay in the same range that $0.23, $0.24 Canadian dollars.

Great. Well, thanks a lot guys.

Sure. Thank you.

Thank you. Our next question comes from Sharon Liu from Wells Fargo. Please go ahead.

Hi, good morning. Maybe if you could just touch on the key factors I assume to support the target distribution growth at CrossAmerica. Are you factoring, I guess, the benefit of certain amount of dropdowns of acquisitions?

Sure, Sharon. This is Jeremy. I’ll answer that. I mean, it’s reflective of our recently completed acquisitions last year. The cash flow we expect to build acquisitions to add to the Partnership as well as the pending acquisition of SSG Corporation add just up in the Wisconsin, Minnesota market. And just a continual execution by the team to continue to grow our cash flow. So I mean, it really is everything involved and as we said in the – earlier on the call, we do expect to conduct more drop downs of the fuel assets from CST and so all of those things go into the additional cash flow we expect to generate with the Partnership, which should translate to additional distributions for our unitholders.

Okay. And maybe if you can just touch on the level of accretion expected from the Holiday acquisition?

Sure, so I mean, we are not in the habit of talking about overall multiples and what we purchase, but I would say that, as we’ve said the market – the availability of capital in the marketplace is something that I think everyone is having to deal with and that hopefully we can position ourselves to be opportunistic with the acquisition opportunities that are out there and with the – acquisition we paid a very good multiple. It’s on the low-end of what we’ve paid over the past couple of years in terms of multiple standpoints. So, it’s going to be a good return for the Partnership.

Okay. And maybe if you could just touch on the distribution policy and I guess your discussion to increase the distribution in light of the valuation and just alternative uses for the cash?

I am sorry. I missed that question. I apologize.

Just trying to understand, I guess the rationale of the distribution target opting to increase the distribution in light of the valuation versus perhaps using conserving that cash for other uses?

Sure, sure. So, Sharon, I mean, it’s a balanced approach that we take this year. I mean, we understand the expectation of our unitholders and what they would like to see and we understand our availability of capital and what we can spend and it’s going to be a balanced approach. We ended 2015 growing distributions per unit 8%. We go into this year understanding our capital availability in what we think we can execute on. And we certainly think that growing that distribution another 5% to 7% this year is certainly a prudent of that capital and able to generate a very solid coverage ratio in continuing target 1.1 times. So we think it’s the right approach and it’s the right mix.

Great. Thank you very much.

Thanks, Sharon.

Thank you. [Operator Instructions] Our next question comes from Bonnie Herzog from Wells Fargo. Please go ahead.

Hi good morning. It’s actually Adam on behalf of Bonnie.

Hey Adam.

Just a couple of quick questions. First related to the merchandize margins just following up on an earlier question. I wanted to get a little sense on kind of expectations going forward, obviously, you have a pretty impressive expansion projected for Q1. Is that’s something that we can expect to go forward based some of the fresh food initiative, or is that driven more by sort of one-time items for the quarter? It’s the first question I had.

No, you should expect that to go forward.

Okay, and then, second related to the OpEx guidance that you provided which is – I believe largely driven by Flash. Is that’s something that is one-time in nature or should we kind of consider the OpEx to be more in that range going forward based on the acquired stores?

That’s the new runway down. We have the last – it’s really being driven by our acquisitions that are NTIs and obviously throughout – as we get throughout the year, that OpEx will increase as well as we continue to open new industry stores.

Right, of course. And then lastly, as it relates to the real estate venture, just wondering if you have any updates in terms of rest or further details based on what you provided earlier?

Sure, Adam. We actually have made tremendous amount of progress. We’ve solicited offers and opened up dayrooms to kind of initiate this venture process. We got a very good response that was very robust with a lot of potential participants. We are moving – kind of ahead of pace that I would say as even advanced – more advanced than what we had originally thought. And so, we are clearly on track to try to complete something in the second quarter.

All right. Great. Thanks so much.

Thank you.

Thank you. Our next question comes from David Hartley from Credit Suisse. Please go ahead.

Hi, sorry for that. Thanks for the follow-up. Just curious, on the other revenue line, I guess, you reclassified into your merchandize profits and provide some nice comparables. I am just wondering, what was the dollar amounts in sales in gross margins that were ultimately reclassified over this quarter?

Just a second, David, we are going to pull out that sheet out of the big binder here.

Sure, do you want me ask another question?

David, what we are doing - this is Randy, we did post on the website. There is a spreadsheet the 2014 and 2015 moving from the merchandize category to the merchandizing services category showing per store per day and the margins.

So it can be comparables.

You can see the comparables.

For the quarter, it was $13 million for 2015 and $12 million for 2014.

Okay. Great. That’s fantastic and that would be like straight revenues and gross margins, or there is no cost to that, right?

Yes, pretty much.

Okay. And on the real estate venture and the potential real estate venture that you are looking into, I mean, I guess, this is just so I am clear on the opportunity here. I guess really just an opportunity be more capital light and in developing your new real estate and stores. By not being able to drop it anymore into CAPL, first of all is that correct? And secondly, would you agree that, you probably lose a bit of the valuation pick up you would have gotten previously?

Well, I wouldn’t say that, it’s necessarily has to replace what we were doing with the Partnership, this is a current cost to capital for the Partnership and so we will prohibit it for dropping down real estate because the implied multiples, even at the 7.5% triple net lease rate was over 13 times and that’s higher than the enterprise value multiple that the MLP has right now. So, as the market stabilizes, that could change in the future, but you are correct what this is intended to do is to provide a sale lease-backed deal for CST that that will enable us to fund a substantial portion of NTI cost. Hopefully, in the future, we – beginning maybe – as early 2017, we hope to use the venture for a build-to-suit program. So that the venture is actually constructing the NTIs as they are the ones providing the capital in the construction program. And so, there will not be this drag on CST’s capital if you will, because during the construction period, obviously there is no return. And so once it’s completed, we would receive the keys of the front door then we would start generating operating income. So, that’s really kind of levering the overall NTI investments and it will remove or lower the investment that CST has to make about $1.5 million per store which is really just the real – in the personal property with the equipment in the store. And in our previous investor deck, we provided what that does to the cash flow returns, it takes up from about 15% over 30%. And you can see, if you – and take some time to look at the slide we have in the appendix that shows the NTI return. They are over 15% and this is the stores that have been open for two years and that’s year versus year it’s important information. We also are now providing the total capital investment we had. You can see what we give some levered and unlevered returns on that, because we did do an asset drop with – in the middle of the year to CrossAmerica and that does show the power leverage and it does increase the NTI returns. So, we are very optimistic about the venture, we did yet. So I would put that copy out in there, but we’re proceeding along nicely.

And just finally, would that then potentially give you cost to increase your NTI builds in 2016, like increase your guidance that you provided now or are you already contemplating that in your guidance?

This was all part of the large 2020 strategic plan that Kim rolled out.

Yes, okay. Okay, great, thanks.

Thank you.

And operator, I think we have time for one follow-up question.

Yes. We have one follow-up question from Damian Witkowski from Gabelli and Company. Please go ahead sir.

Yes, hi, thanks for taking the question. Just looking at your CapEx guidance for this year, 450 to $0.5 billion, can we get into a little bit more detail in terms of how much of it is for the new stores, how much is maintenance and how much is it really for buying land for other – next year’s NTI developments?

Sure, I can give you a breakdown of that Damian. For the full year, our sustaining capital was about – it’s a $140 million range. And we give the range, it’s there, the NTI land bank is somewhere between $80 million and $100 million and the total construction will be somewhere in this $220 million $240 million range. There is a little bit of capital expenditures in the sustaining to complete and finish out our new corporate service center location. That’s about $10 million, $15 million, like it’s the total of somewhere with

450.

450.

450, 500 range. The maintenance capital is somewhere between, I’d say 50 to 60.

Thank you. I will now turn the call back over to Randy Palmer for closing remarks.

Okay, thank you operator. We appreciate each of you joining us today for the call. And if you do have follow-up questions, please feel free to let us know. Thanks.

Thank you and thank you, ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may now disconnect.