EPR Properties (EPR) Q2 2017 Earnings Report, Transcript and Summary

Good afternoon, ladies and gentlemen. And welcome to the Q2, 2017 EPR Properties Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to the conference call over to your host Mr. Brian Moriarty, Vice President of Corporate Communications. Please go ahead, sir.

Thanks Amenda. And thanks to everyone for joining us today for our second quarter 2017 earnings call. As always, I’ll start the call by informing you that this call may include forward-looking statements as defined by the Private Securities Litigation Act of 1995, identified by such words as will be, intend, continue, believe, may, expect, hope, anticipate, or other comparable terms. The company's actual financial condition and results of operations may vary materially from those contemplated by such forward-looking statements. Discussions of these factors that could cause results to differ materially from these forward-looking statements are contained in the Company's SEC filings, including the company's report on Form 10-K and 10-Q. Now, I will turn the call over to the company President and CEO, Greg Silvers.

Thank you, Brian, and good afternoon, everyone. Welcome to our second quarter 2017 earnings call. Before we get started I'll remind everyone that slides are available to follow along via our website at www.eprkc.com. With me on the call today is the company's CFO, Mark Peterson.

Good afternoon.

And CIO, Jerry Earnest.

Hello.

As usual, I'll start with our quarterly headlines and then pass the call to Jerry to discuss the business in greater detail. Today's first headline strong revenue and earnings growth. We are pleased to announce another quarter of record setting results. As compared to the same quarter previous year, our top line revenue grew by 25% and adjusted FFO per share grew by 10%. These results reflect the outcome of our non commodity focus and broad demand in our primary investment segments. Our second headline. Record investment spending anchored by CNL Lifestyle Properties transaction. As we discussed on our last call, our second quarter investment spending was anchored by our $731 million CNL Lifestyle Properties transaction. The integration process associated with these properties has proceeded smoothly. And we are excited to significantly expand our recreation portfolio with such high quality properties and tenants. We also made significant investments across each of our primary segments totaling over $200 million, and we maintain a robust pipeline of opportunities. Jerry will have more detail on these investments. Third headline. Increasing investments spending guidance and reaffirming earnings guidance. We are excited to be able to raise our investment spending guidance as we continue to demonstrate the momentum of our focused business model and the growing demand in our segments. Jerry will elaborate on this in his comments. With regard to our earnings guidance, as we've updated you on our previous earnings call, we have an early childhood education tenant that is challenged by rapid expansion. We've discussed that we are in negotiations to restructure certain leases to provide some degree of relief, and in fact we've entered into a temporary agreement with the tenant to receive payments while the terms of permanent restructuring are finalized with all interested parties. These payments are consistent with the levels of rent that were assumed in the guidance that we affirmed on both our year end and first quarter earnings call. Our increased investment activity and strong second quarter results could have resulted in EPR tightening our guidance range and raising the midpoint of guidance. However, due to the fact that we've not yet finalized the complete restructuring solution, and we were recently approached by another landlord of the tenant about potentially acquiring a substantial number of our properties with this tenant, we are electing not to change our earnings guidance at this time. Our current guidance incorporates the $0.02 to $0.03 potential impact that we believe could be associated with either of these outcomes. Fourth headline. Theater exhibition remain resilient despite headline noise. Recent headlines would suggest that box office has seen significant declines and the Premium Video On Demand also known as PVOD is an eminent outcome. Neither is the case. First, let's address box office. At the end of the quarter, box office was actually up 1.5% year-to-date. Through July box office is down approximately 2%. However, please remember that box office growth has been exceptional with over 9.8% cumulative growth during 2015 and 2016. This year's box office performance is well within the normal deviation we see during annual box office cycles and in line with our expectations that box office will finish essentially flat for 2017. Quality of content continues to be the ultimate driver of box office success. While some third quarter softness in box office is anticipated, fourth quarter is expected to be an exceptionally strong with excellent lineup of movies. Larger quarter-to-quarter swings are not a typical in this business. But annual performance has been remarkably consistent. Additionally, coverage for our theater portfolio on a trailing 12 months basis was at 1.7x to the end of Q1, basically flat with the comparable 2016 period. We expect that our Q2 trailing 12 months coverage will be approximately the same. Separately the topic of the exhibition window and the potential impact of PVOD has again become a topic of interest. In addressing this I want to focus on the most salient facts. First of all, there is no simultaneous release model that the industry will broadly support. Historical efforts have failed and both exhibitors and studios have conducted consumer research which demonstrates that willingness to pay at the required breakeven price point is negligible. Two, the base price for movie streamed at home has been established with consumers at a range of $5 to $7. Asking consumers to pay $30 to $40 has proven to be unacceptable. Number three. Consumers have already been flooded with subscription video on demand options. At an average price of $8 to $10 per month, providers such as Netflix and Amazon and Hulu are beginning to compete directly with traditional TV networks by offering a wide variety of new content. This further adds to the price value expectation for at home viewing and reduces the likelihood for consumers to pay $30 to $40 for a single title. Lastly, it is most important to remember that the experience provided by a theater setting is the reason why many consumers choose to view in theaters. This is what PVOD is truly competing with. It's the sight, even 60 inch TVs can't compete with the visual story telling power of a 60 foot screen. It's the sound, reviews of the recent released of Dunkirk speak to the incredible full emergent it creates. It is the experience. Theaters create an insulated environment free from interruption which is even further improved by the offering of enhanced amenity theaters. In summary, we direct your attention to the many exhibition analysts that track this issue more closely. They have largely concluded that PVOD lacks consumer demand and that this issue is largely over blown. We agree with that conclusion. Now I'll turn it over to Jerry.

Thank you, Greg. Our investment spending during the second quarter of 2017 was very strong in part due to the closing of the CNL Lifestyle Properties transaction, but also as a result of continued strong deal flow across all three investment segments. The CNL Lifestyle Properties transaction investment spending totaled $731 million with the balance of the investment spending consisting of $205 million or total of $936 million spending for the second quarter. And bringing year-to-date spending to $1.2 billion. The strong spending pays reflect the depth of business demand by our tenants and the strong execution across all our investment segments. As such I am pleased to announce that we anticipate this momentum continuing and we are raising the midpoint of our 2017 investment guidance by $150 million to a range of $1.45 to $1.5 billion. As Greg noted in his headlines, box office revenue is stable. However, our forecast for the year is not quarter-to-quarter estimate rather where we believe it will end the year. This year is heavily weighted for the holiday season with the latest installment of the Marvel franchise Thor, the DC offering Justice League and a next installment of the Star Wars franchise. We still believe the 2017 will be essentially flat to 2016, a record breaking year. Also please note the slight variation of performance have little impact on our rent coverage. Overall, the business is healthy and continues to demonstrate that the out-of- home entertainment experience offered by exhibition tenant is valued by consumers. In its headlines Greg mentioned the concerns regarding premium video on demand. I think it is important to note that our exhibition partners are investing millions of dollars to reinvent and enhance the out-of-home movie experience for consumers through conversion to the high amenity theater format. The overwhelming consumer demand for these theaters and their enhanced performance demonstrate the success of this investment. Our exhibition operators have seen substantially increased revenue generation with this format. This renovation has also benefited EPR not only in terms of expanding a property lease term but also from a performance standpoint. As we noted in year end call, for renovated theaters that have been opened for a full year, we've seen over a 40% improvement in total theater revenues, which has translated into higher coverage and greater opportunities for percentage rent. Further, in addition to the conversion of theaters in our existing portfolio, the opportunity to purchase additional theaters for conversion to the high amenity format has continued to expand our theater acquisition opportunities. For the second quarter, investment spending in our entertainment segment totaled $84.1 million, consisting primarily of build-to-suit development, redevelopment and acquisitions of megaplex theaters, entertainment retail centers and family entertainment centers. In summary, at the end of the second quarter the company had over $2.7 billion invested in the entertainment segment with six properties under development, 159 properties in service and 22 operators. In the recreation segment during the second quarter, we significantly expanded our portfolio of ski properties and attraction with casino lifestyle properties transaction. In addition, we have continued the successful expansion of our portfolio of high performing Topgolf properties. We are excited with the additional diversification at the Northstar ski property brings to our collection of ski properties; performance for all of our ski properties has been strong on a year-over-year basis. For the trailing 12 months period to the end of April, revenues were up 17%, fueled by double digit tenant's growth and our overall lease coverage is an excess of 2x. The company also provided a $251 million five year 8.5% secured loan to OZRE real estate for its purchase of 14 CNL Lifestyle ski properties valued at $374.5 million. The overall debt service coverage on the loan based on the underlying rental income is approximately 2.5x. We are pleased to report that our traction portfolio including the CNL Properties are performing as expected. Even as we transition to a new operator on several properties. While these results are promising, it remains early in the seasons and we'll have a clear picture on our third quarter call. During the second quarter, our Topgolf properties continue to enjoy strong consumer acceptance and maintain their robust performance with strong overall lease coverage. As the Topgolf rollout continues in numerous new cities, we are pleased with the rapid ramp up and reliable performance of our investments. At the end of the second quarter, we had four Topgolf properties under construction with 27 open and operating properties. Recreation spending including the CNL Lifestyle Properties transaction totaled $775.6 million during the second quarter with $24.3 million spending on Topgolf properties under construction and $18.9 million in waterpark spending including Adelaar. In summary, at the end of the second quarter, the company had over $2 billion invested in recreation segment with five properties under development, 78 properties in service and 19 operators. In our education segment, all three of our education property types which include public charter schools, early childhood education centers and private school set us for the continued consumer demand which translates into opportunities for us. As mentioned previously, our performance continues to demonstrate our extensive operator relationships, combined with our industry knowledge and build-to-suit program provide us with a competitive advantage financing the growing need for high quality education facilities. As we've discussed on previous calls, we remain committed to increasing the tenant diversity of our public charter school portfolio and reducing our concentration of Imagine School. As part of this effort, we've engaged various brokers to help in this process. Part of the feedback that we've received to this process was a need for additional lease term on these assets. To facilitate this change we entered into an agreement with Imagine to restructure the leases on six properties in exchange for lowering existing annual cash payments by approximately $500,000 and restructuring remaining lease terms to 10 years, Imagine agreed that upon the sale of these properties the new buyers would have the right to enter into a new 20 years lease. These were two benefits of this transaction. First, we believe that it will add disposition of these assets and second a changes resulted in the lease structure no longer been classified as a direct financing lease. This change however did result in a non cash impairment charge which Mark will discuss in greater detail in his comments. During the second quarter, investment spending in our education segment totaled $76.3 million, primarily consisting of build-to-suit development, redevelop and acquisition of public charter schools, early childhood education center and private school. In summary, at the end of the second quarter, the company had over $1.4 billion invested in the education segment with 16 properties under development and 140 properties in service and 61 operators. Montreign Resort Casino by Empire Resort continues to have steady construction progress to open on and before March 31, 2018. As we noted previously, Montreign Resort Casino announced that it had entered into a license agreement to be rebranded as a Resorts World property which we believe will strengthen Montreign Casino and ultimately its performance. Construction of a waterpark hotel located at the Adelaar casino and resort development continued during the second quarter. We invested approximately $2.7 million on this development during the quarter. We presently anticipate opening a waterpark hotel property in the first half of 2019. In terms of capital recycling during the second quarter, in addition to the five small family entertainment centers from CNL transaction we sold eight other properties for total of $112.4 million. Four properties were sold in the education segment consisting of three charter schools and one early childhood education facility. Two of the charter schools exercised their lease termination by adoptions and the third charter school is sold through a third party. The other properties consisted primarily of one Megaplex Theater and one entertainment retail center anchored by Megaplex Theater. Net gains on the sale of these properties totaled $25.5 million. As we've discussed we view dispositions as both offensive and defensive opportunities. Where the charter school buyer who receive a significant premium leading to the exercise of lease termination buyout before the entertainment properties we aware that both of these properties will be subjected to new competitive pressures and use this opportunity to sell weaker properties at nice gains. We have a number of pending disposition transaction which we anticipate closing during the balance of the year. Our disposition guidance is $175 million to $250 million for 2017. However, as Greg mentioned there is a possibility of a transaction involving an early childhood education tenant and these numbers do not anticipate better rent. Property occupancy for all our properties remains strong at 99%. In summary, we are extremely well positioned with our focus on the experienced economy. Our momentum and outlook remain very strong as we continue to achieve significant transaction flow based on our focused and disciplined strategy. And to repeat, we are raising our 2017 investment spending guidance to $1.45 billion to $1.5 billion. With that I'll turn it over to Mark for discussion of financial and I'll join you for questions.

Thank you Jerry. I'd like to remind everyone on the call that our quarterly investor supplemental can be downloaded from our website. We hope you like the updated format of this report. Now turning to the first slide, net income for the second quarter was $74.6 million or $1.02 per share compared to $49.2 million or $0.77 per share in the prior year. FFO was $85 million compared to $72.2 million in the prior year. Lastly, FFOs adjusted for the quarter increased to $94.9 million, or $74.7 million in the prior year and was $1.29 per share for the quarter versus $1.17 per share in the prior year, an increase of 10%. Before I walk through the key variances, I want to discuss certain of the adjustments to FFO to come to FFO as adjusted. First, we prepaid in full our mortgage note payable during the quarter for $87 million and recognize the gain on early extinguishment of debt of $1 million that has been excluded of FFO adjusted. Second, we recognized a gain on insurance recovery of $606,000 related to a theater has suffered flood damage last fall which has also been excluded from FFO adjusted. Third, pursuant to a tenant purchase options, we completed the sale of two public charter schools during the quarter for net proceeds of $22.2 million and recognized a termination fee included in gain on sale of $3.9 million which has been added to get to FFO as adjusted. Lastly, as Jerry discussed, we continue to take steps to further reduce our Imagine holdings. To help facilitate future property sales, during the quarter we entered in negotiations with Imagine to restructure the leases on six properties in exchange for reducing the future rental payments and/or the remaining lease terms. Imagine agreed that upon the sale of the properties, they would enter a new 20 year leases with the buyer or buyers. As a result of the change in lease terms, we've evaluated our investment in these direct financing leases as of quarter end. This evaluation along with the annual evaluation of the un-guaranteed residual value on the remaining properties in the direct financing lease resulted in a total impairment charge of $10.2 million. $2.9 million of this amount was a charge against the un-guaranteed residual value and thus has been added back to FFO as real estate impairment. The remaining $7.3 million relates to the non-cash income that we recognized through June 30th due to the direct financing lease structure, and this amount has been added back to get to FFO as adjusted. As Jerry mentioned, we anticipate that the amended leases will be classified as operating leases going forward. Note that had these leases been accounted for as operating leases from the dates of acquisition, the properties would have been depreciation and are basis in them would have been lower by about $5 million at June 30th which would have eliminated the $2.9 million real estate portion of the impairment charge. Please also note while the current annual cash rental payments on these leases will reduce by approximately $500,000. The impact on our annual FFO run rate is approximately $1.2 million due to the additional non cash income that was previously recognized under the direct financing lease structure. Now let me walk through the key line item variances for the quarter versus the prior year. Our total revenue increased 25% compared to the prior year to $147.8 million. Within the revenue category, rental revenue increased by $23.4 million versus the prior year to $119.5 million and resulted primarily from new investments including the impact of the CNL transaction. Percentage rents for the quarter included in rental revenue were $1.6 million versus $422,000 in the prior year. The increase was primarily due to percentage rents accrued related to our private schools and a recreation property. As in prior years, we expect percentage rents to be much higher in the second half of the year versus the first half. Other income decreased by around $800,000 for the quarter versus last year and was primarily due to less insurance recovery gains recognized in the current year than in the prior year. As I mentioned earlier, insurance recovery gains are excluded from FFO as adjusted. Mortgage and other financing income was $23.1 million for the quarter, an increase of approximately $7.1 million versus the prior year. The increase was due to additional real estate lending activities during 2016 and 2017 including the funding of $251 million mortgage note receivable with OZRE real estate during the quarter in connection with the CNL transaction. This was partially offset by the sale of eight public charter schools in the latter part of 2016 that were classified as direct financing leases. On the expense side, G&A expense increased to $10.7 million for the quarter compared to $9 million in the prior year due primarily to increases in our payroll and benefit costs and professional fees. The increase in payroll and benefit costs is due to the additional personnel to support our growing asset base as well as increases in amortization of share-based awards. Our net interest expense for the quarter increased by $10.2 million to $33 million. This increase resulted primarily from higher average borrowings. Transaction cost decreased to $218,000 from $1.5 million in the prior year due to decrease in cost associated with the potential and terminated transactions, as well as our early adoption of Fas V clarification of the definition of a business. Gain on sale of real estate was $25.5 million for the quarter and related to the sale of the properties Jerry described for total proceeds of $112.4 million. The prior year gain on sale of real estate was $2.3 million and related to the exercise of one tenant purchase option on a public charter school. Turning to the next slide, for the six months ended June 30th, our total revenue was up 17% and our FFO as adjusted per share was up 6% to $2.48, certainly strong performance through the first half of our fiscal year. Turning to next slide, I'll review some of the company's key credit ratios. As you can see our coverage ratio is continue to be strong with fixed charge coverage at 3.1x, debt service coverage at 3.6x, interest coverage at 3.6x and net debt to adjusted EBITDA ratio at 5.3x. Also our FFO as adjusted payout ratio was 79%. Adjusted net debt to annualize adjusted EBITDA which I have previously discussed eliminates the penalty for the build-to-suit projects under development and annualizes projects place and service during the quarter was 5.08x or about 20 basis points lower. Now I’ll turn to the next slide for capital markets and liquidity update. At quarter-end, we had total outstanding debt of $2.8 billion, 97% of this debt is either fixed rate debt or debt that has been fixed through interest rate swaps with a blended coupon of approximately 5%. We had no balance on our $650 million line of credit and we had $70.9 million of unrestricted cash on hand. During the quarter, we prepaid in four five mortgage notes for $117.2 million which were secured by 15 theater properties and had weighted average interest rate of 4.5% for GAAP purpose but an actual cash weighted average interest up 7%. Subsequent to quarter we prepaid in full three mortgage notes payable total in $24.9 million which were secured by theater properties and had a weighted average interest rate of 5.8%. After these paydowns we have only $12 million in maturities through 2019 with manageable maturities thereafter. We are now substantially out of secured debt. In May, we issued $450 million of 4.5% senior unsecured notes in a registered public offering at our lower spread ever for a 10 year bond. Due to the strength of the demand for this issue and the attractiveness of the terms, we upsize the bond by $150 million over initial expectations despite these additional proceeds being dilutive to FFO in the short term. As a seasoned issuer with over $2.4 billion of unsecured bonds outstanding represented by eight different issues, we continue to have strong access to the public debt market. Additionally, during the quarter, we issued approximately 8.9 million common shares in connection with the CNL transaction, valued at our $657 million, or $74.28 per share. As you can see our balance sheet and liquidity position continues to be in excellent shape such that we do not anticipate the need to access the capital markets over the remainder of the year, rather we can be more opportunistic in raising capital when market conditions are most favorable. Turning to the next slide, as Greg discussed we are conformation our guidance for 2017. FFO as adjusted for share at a range of 505 to 520. And increase in our guidance for investment spending to a range of $1.45 billion to $1.5 billion from a range of $1.3 billion to $1.35 billion. Disposition proceeds are expected to total of $175 million to $250 million for 2017, and this range does not include the potential sale of properties related to one of our early childhood tenant as Jerry described. Guidance for 2017 is detailed on page 30 of the supplemental. Now with that I'll turn it back over to Greg for his closing remarks.

Thank you, Mark. As you can tell by our results, our strategy of focused investments continues to be successful. And not withstanding the hand ringing about threats to box office, our business remains very stable. We continue to be the market leader in experiential real estate. We believe that investors are becoming increasingly aware of the value of these experiential assets and our position gives us the unique opportunity to take advantage of this sociable shift. With that why don't I open it up for questions? Amenda?

[Operator Instructions] Your first question comes from the line of Craig Mailman from KeyBanc. Your line is open.

Hey, guys, how are you? So Greg I hear you on the movie theater side and that was helpful that you gave us kind of what you think show into most courageable comment, just curious as it related AMC with a news earlier this weekend, the impact they had on them kind of if you guy see at all any concerns about coverage levels.

Craig, we don't on our properties. I know they got a significant amount of integration that they are trying to do with their recent acquisitions but and our properties we have not -- our properties are trending kind of with the kind of box office that was up, I mean as I said, there were headlines that reflected that box office was down and I know there was a discussion of quarter-over-quarter box office being down comparing to 2016, but for the year we were up. And so we still feel really good about our properties and their performance has been kind of consistent.

Their parents coming to the news too which is some of the regulations in China. Have you guys had any kind of monetize plan for some of their theater fall through or is there any impact from that kind of pressure on the parent company.

We haven't seen that yet. I mean clearly that something that we monitor and even in their announcement their CapEx spending didn't come down significantly. So it appears that they are still very committed to the continuation of the monetization program. And so for our direct involvement with them, we have not seen any impact to date.

That's helpful. And then maybe just turning to Imagine real quick. Just I guess on the - I get that people want longer lease terms and you guys are restructuring but why couldn't you guys have just put new 20 years leases on it and market it that way. Was there something that the specific buyers want to sign their own lease and have their own kind of terms in there?

Yes. I mean I think they want to control, again kind of stepping into their own kind of new lease and so that's kind of the feedback that we've had. The good thing is we are in active negotiations on several of these properties. So this is direct feedback in support of those transactions.

And if you guys were to sell of the ones that you are marketing kind of what was the exposure that left Imagine?

Mark do you --

We've got about $153 million on our books between the note we have and the properties on our book whether be in the direct financing lease or otherwise, so $153 million. We expect sales -- just call it 50 so it take it down 100 or about lower the exposure back.

Your next question comes from the line of Nick Joseph from Citi. Your line is open, sir.

Thanks. Just maybe spend on the Imagine sales, what's the expected timing of this deal now that you are able to renegotiate the leases.

Again, as always sales kind of move -- we've said that we plan $50 million by the end of the year for this so we are going to stick with that. Again, some of these are in more active negotiations than others but we still feel comfortable Nick with that kind of guidance that we provided.

Would you expect to sell them as a portfolio or as individual properties?

I don't think that -- we are not going to comment on that right now just because if we are in active negotiation with several people. Some maybe bigger transactions and others and I don't want to penalize discussions on that. So again we talk about these six as the opportunities that we are marketing and we think we can move those.

Thanks, appreciate that. And then in terms of AMC obviously there pre announcement earlier this week, one thing that they talked about were attempted expense reduction going forward at Imagine rent, is a large component of that. So how do you think or you had discussions with them in terms of rent reductions just given their lower EBITDA expectation for the year.

Nick, we had no discussion on that and given our coverage we wouldn't anticipate having those. In fact, they called out lot of specific expense line items and rent wasn't one of them.

And then finally just can you sense any change in their appetite for monetize theaters or the ability to invest in these theaters going forward?

Yes, Nick, what I said was that I don't know if you follow their 8-K that came out the following evening. They really did not substantially move down their kind of planned CapEx spending. So at least at this point it doesn't look like they are in anyway materially changing their outlook on monetization. I am sure as they talk on their earnings call next well there will be -- tomorrow I think as they moved -- they will give more color on that but from what we've seen we continue to move forward on the projects that we are working and from their at least release documents it still looks they are like their commitment still is there.

Your next question comes from the line of Rob Stevenson from Janney. Your line is open, sir.

Good evening, guys. Question on the theaters from a different standpoint. Of your 144 megaplex theaters which you guys on what percentage have already been converted into one of the new formats? And then how many you currently are working on with an operator to convert?

We probably have about 25% Rob of ours that have been converted. We probably have another 13 to 15 that are actively being converted now. As we talked about before Rob, it really is a situation of seat turn, we actually have theaters that are so productive at this point, and it doesn't make sense for them to convert. If you have high enough seat turns in an existing theater, it doesn't necessarily work to convert. So again I would interpret that the fact we are kind of approaching kind of 30% that's all that we are going to do. What we said I think on our last call is that we would be probably half to three quarters of ours over the next 18 to 36 months.

Okay. And then how many Topgolf are still under construction or yet to be constructed on your agreement?

We have four that we have under construction right now. We probably have an additional two beyond that that are in planning phases. So again that would take us to about 33, we always thought this number would be somewhere in the low to mid 30s and it looks it's going to be under our existing arrangement.

Okay. And then one last one for Mark what is the known nonrecurring FFO items in the second half of the year at this point? In other words, what's the known gap between NAREIT and as adjusted FFO in the back half of the year thus far?

I don't know if I have that number on my finger tips but obviously we don't plan any impairment charges so that won't be a case. Those transactions cost the typical line items I don't have -- and we don't give guidance at that level, each of those line items but it's more the typical sort of adjustments we've had in previous quarters. With the exception of the fact FFO is adjusted we will have termination fees will be larger in the back of the year weighted, if you look at our guidance you'll see a larger termination fees, so be a larger add back from FFO to get the FFO as adjusted for those fees.

I am showing no further questions at this time. I'd now like to turn the call back over to Mr. Greg Silvers, CEO and President.

Again, we greatly appreciate everyone's time and attention today. And we thank you and look forward to talking to you on our next earnings call. Thank you.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may now disconnect.