Gladstone Commercial Corporation (GOOD) Q3 2013 Earnings Report, Transcript and Summary

Good morning, and welcome to the Gladstone Commercial Corporation Third Quarter Ended September 30, 2013, Shareholders' Conference Call. [Operator Instructions] Please note that this event is being recorded. Now I would like to turn the conference over to David Gladstone. Mr. Gladstone, please go ahead.

All right. Thank you, Keith, for that nice introduction, and thank you all for calling in. We always enjoy this time we have with you and wish we could figure out another way to have some more calls, but, right now, it's just once a quarter. Here in the Washington, D.C. area, please come by and visit us. You're always welcome to come by and say hello. We're located in a suburb of Washington, D.C. called McLean, Virginia. Again, you have an open invitation to come by. You'll see a great team at work, or at least some of them, and you can find many of them on the road. There are about 60 members of the team now, so we're no longer a small business. And even a couple of people, we're dog friendly, who will bring their dogs to work, so we have a lot of fun with those puppies. Let me read this statement for looking forward, this report that we're about to give may include statements that may constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, including statements with regard to the future performance of the company. These forward-looking statements involve certain risks and uncertainties that -- and we believe those plans to be reasonable. There are many factors that may cause the actual results to be materially different from any future results expressed or implied in these forward-looking statements, including all those factors that are listed under the caption Risk Factors of our company’s 10-Ks and 10-Qs and filings with the SEC. Those 10-Ks and 10-Qs can be found on our website at www.gladstonecommercial.com and also on the SEC's website. The company undertakes no obligation to publicly update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise. In our talks today, we plan to talk about funds from operation or, as we call it, FFO. And since FFO is a non-GAAP accounting term, I'll define it here. FFO is net income, excluding any gains or losses from the sale of real estate and any impaired losses from the property, plus depreciation and amortization of the real estate assets. The National Association of Real Estate Investment Trusts has endorsed the FFO as one of those non-accounting standards that we can use in discussing our REIT, as well as all the other REITs out there. Please see our 10-Q filed yesterday with the SEC and our financial statements for a much more detailed description of how our FFO was arrived at. As always we'll begin today from hearing from our President, Bob Cutlip, and so, Bob, go ahead, please.

Thanks, David. Good morning, everyone. During the quarter, we acquired 2 properties and simultaneously closed long-term financing on both of these properties, closed on 1 additional long-term financing on an existing property we acquired in the second quarter, closed on a new unsecured line of credit, extended leases on 3 of our properties that were set to expire in 2014, released one of our previously vacant properties, issued common equity under our ATM program and hired a Managing Director to lead our Western region acquisition program, a fairly active quarter for our team. We're having a great good year. So far during this fiscal year ending December 31, we have acquired a total of $109 million in new properties, exceeding our 2012 annual performance with 2 months remaining. Our pipeline is robust, and we hope to announce additional acquisitions in the near future. Now for some details. During the quarter ended September 30, we acquired 2 additional properties. The first property acquired was a 320,000-square-foot multi-story office building in Austin, Texas. The property serves as 1 of 4 national Innovation Centers for General Motors Company. The purchase price was $57 million which equates to an average cap rate of 8.3% over the life of the lease. We funded this acquisition with proceeds received from our common equity raise in June and the issuance of $35.3 million of mortgage debt on the property. GM has 7 years remaining on the lease and has several renewal options. We really like the building's location in Austin's technology corridor, which is also home to the likes of Apple, Samsung, Oracle and Dell, among others. The second property acquired was a 115,200-square-foot office building purchased for $15.2 million, with an average cap rate of 9.3% over the life of the lease. The property is located in Allen, Texas, a northern suburb of Dallas. We purchased this property with cash proceeds from our June 2013 common offering, as well as the issuance of $8.9 million of mortgage debt on the property. This transaction is an example of what we have labeled as our anchored multi-tenant product line. There are 2 tenants in this property, and the largest of which -- the largest of which occupies 73% of the space and has 9 years remaining on the lease and has several options to renew. The other tenant has 8 years remaining on the lease and also has several options to renew their lease. Shifting to our overall portfolio, as of today, all but 3 of our buildings continue to be fully occupied, and all of the occupied buildings' tenants continue to pay as agreed. During the quarter, we had a new tenant sign a 10-year lease on our previously vacant property located in Hazelwood, Missouri. The tenant moved into the entire property effective August 1. Two of the noted and referenced properties are 100% vacant, and one is partially vacant. The leases on these 2 vacant buildings comprise less than 1% of our total square footage as of September 30, 2013. One of the vacant properties is located in Richmond, Virginia, and we currently have 3 active prospects for this property, each requiring the entire building. We've seen activity increase dramatically over the past few months at this property as a completed retail development anchored by a Kroger megastore was completed nearby and has stimulated demand for space. The other vacant property is located in the Houston, Texas, submarket and is a 12,000-square-foot medical facility in close proximity to a hospital. We have active prospects at this building as well. Our building located in Roseville, Minnesota, remains partially vacant, and we continue to aggressively pursue new tenants for this building. To this end, we have 3 prospects for this property, ranging from 25,000 to 100,000 square feet in size. But loan on this property matures in mid-2014, and we expect to begin discussions with lenders in the next few months. Turning to our tenants. We continue to improve the value of our existing portfolio of properties by reviewing and renegotiating existing leases and performing improvements at our properties. To this end, during this quarter, we renewed 3 of the leases that were originally scheduled to expire in 2014. We continue to work diligently on the remainder of our leases that come due in 2014 and 2015 and, to this end, have already renewed 5 of the 6 leases that were originally set to expire in 2014. The remaining 2014 lease expires in December, and this building is located in a strong industrial submarket of Chicago. The existing tenant in this property has already vacated as they have grown in size by 2 times and moved to another facility. However, they have prepaid their rent through the end of the term in December of 2014. We are actively marketing this property now and have 2 prospects, 1 of which would occupy the entire building. In 2015, we have 10 leases expiring, and our team is in negotiations with 8 of those tenants at this time. Locating new tenants and signing leases with existing tenants for these buildings usually require some capital outlays for tenant improvements and leasing commissions. Switching to mortgages. Debt financing is available for multiple sources. We have seen an increase in interest rates over the past several months, as the yields on U.S. Treasury securities and interest rate swaps have increased. However, interest rates continue to remain at historically low levels, and we continue to actively try to match-fund our acquisitions with cost-effective mortgages. Depending on several factors, including the tenant credit rating, the location of the building and the terms of the lease, we're seeing interest rates in the marketplace today ranging from the upper-4s to the low-5% level. To this end, we issued $52.4 million in 3 new mortgage loans in July, all placed on recent acquisitions, with interest rates ranging from 4.2% to 5%, and these are 10-year loans with 25 years of amortization on them. In summary, at quarter-end, all of our existing tenants are paying as agreed, and our portfolio was 96.7% leased. We also acquired 2 additional properties during the quarter, which was our eighth consecutive quarter of increasing our asset base. We have consistently increased our acquisition volume over the past 3 years, and we currently have approximate $45 million of potential acquisitions in due diligence. All of these properties may not close, but this number reflects our continued pipeline of activity. Our pipeline also includes 3 properties totaling $67 million in the letter of intent stage and over $230 million of properties under initial review. As you may recall, our objective is to have at least $250 to $300 million in the pipeline with properties at each of the phases of initial review, indication of interest, letter of intent and, of course, due diligence and closing. At this point, we are exceeding that target, and our team is very active. And we thank our broker relationships for the opportunities they are presenting to us. As noted earlier, we have also hired a Managing Director, who is based in California, to help us expand our acquisition opportunities to the western part of the country and to continue to diversify our portfolio. We hope to close on additional properties in the upcoming months. Please stay tuned. And now let's turn it back to David.

All right. Good presentation. Now let's turn to our Chief Financial Officer and Treasurer, Danielle Jones, for a report on the financial results. Danielle?

Thanks, David, and good morning, everybody. Our quarterly results were strong and reflect our growth from our recent acquisitions. This is evidenced by our total assets increasing to $666 million from our new acquisitions during the quarter, which is a 12% increase from last quarter and a 27% increase in assets over the past 12 months. The amounts outstanding under long-term mortgages and our line of credit also increased to $438 million as a result of the funding of our new acquisitions. Reviewing our upcoming long-term debt maturities, we have mortgage debt in the aggregate principal amount of $10.5 million payable during the remainder of 2013 and $25.3 million payable during 2014. The 2013 and 2014 principal amounts payable include balloon principal payments due in December of this year and June of 2014. We have signed a term sheet with a lender to refinance the debt that matures in December of this year and anticipate closing on this mortgage by the end of this month. We intend to pay the additional debt amortization payments from operating cash flow and borrowings under our line of credit. The weighted average interest rate in our existing mortgages dropped 10 basis points this quarter to 5.5% from low rates we achieved on new mortgages this year. Now let's turn to equity. These -- $49 million of common equity raised in the second quarter to fund our second and third quarter acquisitions. We were also able to utilize our at-the-market program, or the ATM program, during the quarter. We raised about $1.5 million in net proceeds until we elected to halt the program with the increased volatility in the equity market. The ATM continues to be a great way for us to raise additional equity in a cost-effective manner. We may use the ATM program in the fourth quarter, as we deem advisable, to raise additional common equity to continue our goal of reducing our leverage without impacting our stock price. Turning to our line of credit. As Bob mentioned, we closed on a new unsecured line of credit with KeyBank in August. The new line is a $60 million line with a capacity to expand to $75 million. It's a 3-year term and has a 1-year extension option. We repaid our previous line of credit with Capital One in full with proceeds from KeyBank lines. We are excited about this new unsecured line, as it gives us more flexibility and ease of use since we are no longer required to pledge assets to the line. This will also save us money in the costs we were incurring to add or remove properties to the borrowing base under our old line of credit. We had $28.9 million outstanding under the line at end of the quarter at a weighted average interest rate of about 3.2%. We continue to only use our line of credit to make acquisitions that we believe can be financed with longer-term mortgage debt or that we believe are good additions to our unsecured property pool required under our new line of credit. As you may recall, our customary business model calls for us initially to borrow from the line to buy properties. We then obtain longer-term fixed-rate mortgages as soon as we can. By doing this, we are able to secure the difference or spread between the rent coming in and the mortgage payments going out, thus, locking in the profit 5 to 10 years or, in some cases, longer. From a liquidity perspective, the proceeds from the mortgages then pay down our line of credit, thus, making the line available for the purchase of our next property. With the current aggressive credit and equity market, our business model adjusted so that we are matching as closely as possible long-term leases with longer-term mortgages. If we do not believe that we'll be able to source attractive debt on new acquisitions, then we will only buy properties that already have long-term mortgages on them or well-suited to be funded on our line. Currently, we have enough availability to fund our current operations, deals in our pipeline and any known upcoming improvements at certain of our properties. Our debt-to-equity ratio at the end of the quarter, excluding our Term Preferred Stock, was approximately 2.6:1. We will continue to focus on decreasing our debt-to-equity ratio for the next couple of years as we continue to issue more common stock to both overnight offerings and under our ATM program, reducing our loan-to-value on new and refinanced mortgages. As of today, our available liquidity is about $23.6 million which is comprised of $6 million in cash and an available borrowing capacity of $17.6 million under our line of credit. The borrowing capacity in our line of credit is limited to a percentage of the asset value of our unencumbered properties, thus, both the amount outstanding under the line and our outstanding letters of credit. With the capacity under the line and our current cash flow from operations, we have sufficient liquidity to fund our operations, to service our debt this year, perform capital improvements to our property and maintain our distribution to our common shareholders. In addition, we updated our existing shelf registration statement in September for $300 million, and we have the ability to raise this additional equity and preferred or common equity through the sale of securities that are registration under this shelf registration statement in one or more future public offerings. And now I'll discuss the operating results. Please note that per share numbers reference are fully diluted weighted average common shares. FFO available to common stockholders for the quarter was approximately $5.5 million, or $0.38 per share, which is about a 19% increase when compared to the second quarter and was approximately $14.3 million, or $1.11 per share, year-to-date. FFO increased primarily because of the 11% increase in rental income derived from the 2 properties acquired this quarter, coupled with the full quarter of earnings from the 2 properties we acquired during the second quarter. This was coupled with a decrease in our shareholder-related fees. We've incurred more fees in the second quarter related to the preparation of our annual report and proxy and a decrease in professional fees during the quarter because of higher costs we incurred in the second quarter for the preparation of our tax return. This was partially offset by an increase in interest expense due to the mortgage issued at the beginning of the third quarter and financing fees that were written off related to our old line of credit. We were not able to pay out a large portion of our incentive fee this quarter because of the dilution from the equity offerings during the previous quarter. However, we believe our payout ratio will increased next quarter since we deployed these proceeds early in the third quarter. We also believe the reminder of 2013 will allow us to continue to grow our FFO as we've put over $100 million of assets from the books for the past several months. And now I'll turn the program back over to David.

All right. Thank you, Danielle. That's a good report. Again, we encourage all the listeners to read our press release and our quarterly reports that are filed yesterday with the SEC, called Form 10-Q. There's just a lot of good information in that material and those documents. And you can find them on our website www.gladstonecommercial.com and also on the SEC website. I encourage you also to stay up to date with the latest news involving this company and our other public companies. Please follow us on Twitter using GladstoneComps, C-O-M-P-S at the end, and on Facebook under the keywords The Gladstone Companies. And you can go to our general website to find out more information about all the Gladstone entities at www.gladstone.com. The main news to report this quarter is that we were able to acquire 2 additional properties and simultaneously closed financing on these properties. We've got a new unsecured line of credit in place and renewed several leases that were set to come due next year. So we are also able to release one of our previous vacant buildings, and I think you'll see a couple more of those as time goes on. This is very positive news for all the shareholders that we have added quality real estate to our portfolio, we shored up the existing investments and grown our assets in excess of $100 million during 2013. As we continue to grow and our market capitalization increases, we hope to see higher trading volumes in our stock and hope to see a corresponding uptick in the stock price. Even though we recently acquired a large amount of properties, we continue to have a very nice pipeline of properties that we're looking at, and we're certainly interested in acquiring a lot more properties, so stay tuned for that. Because of this pipeline, we hope to be able to grow the asset portfolio even more during the fourth quarter and, certainly, into 2014. With the increase in portfolio of properties comes greater diversification for all of the shareholders and, we believe, much better earnings. On another note, we've been able to find some attractive long-term mortgages to finance our unencumbered properties, and the mortgage market continues to be very good for banks, and I think it's getting even better with all of the areas that we look at for mortgages now. So we continue to look for properties with mortgages on them already that we can assume or secure financing to close simultaneously with the acquisition. But when we don't close the debt simultaneously with the acquisition of the real estate, we've been successful in obtaining debt on the properties a few months later or selective choosing properties that remain unencumbered to give some credibility to our unsecured line of credit, and we need to have those in place to keep them feeling good about the credit line that they've offered us. We are focusing our efforts on finding good properties and long-term financing that match our long-term leases, being able to lock in long-term financing and would be good for us in the future, as we are much more optimistic about things going to be positive for us in the next year, so 2014 should be an excellent year as well. So while we're continuing to proceed cautiously, we're expecting a lot of new transactions as we go forward. People always ask us about the economic outlook and much of the industrial base that rents industry -- industrial and commercial properties, like our properties, remain steady. And most of them are paying their rents, so we're seeing good strength out there in the marketplace. There are still some businesses that are having problems, and the economy is still not in good shape. However, we expect good growth in 2014 and in the rest of 2013 for this real estate investment trust. While I'm optimistic that our REIT will be fine in the future, we'll continue to be cautious in our acquisitions, as we've done in past years, made it through the last recessions without cutting our dividends or having a lot of problems with our tenants. And if there is another recession lurking in the background here, I think our portfolio will continue to stand the test again. We're successful in raising common equity this year, and it's been very good for all of us, as we continue to strengthen our equity base. And we'll put the new equity to work reasonably quick and fund recent acquisitions that we announced. We're also seeking to utilize our ATM program during the fourth quarter of 2013 and probably in 2014 as well to continue to fund our pipeline. In October 2013, the board voted to maintain our monthly distribution at $0.125 per common share for October, November and December or an annual run rate now of $1.50 per year, and this is a wonderful attractive rate for people in -- that like real estate investment trusts, we now have 111 consecutive common stock dividends since inception, and we went through the recent recession without having to cut any of those as well. Because the real estate can be depreciated, we're able to shelter the income of this company. The distributions in 2012 were 100% return of capital, and that means it's tax-free as you receive those dividends. And this is a very tax-friendly stock and, in my opinion, a very good one for personal accounts that are seeking income. This return of capital is due to the fiction that goes on in the IRS of being able to depreciate a real estate asset and other items that cause the earnings to remain low after depreciation is applied, and that's why we talk about FFO because that's adding back the real estate depreciation. The depreciation of the building is a fiction, and that depreciation period of the building -- after-the-depreciation period, the building is still standing, of course, so if you own stock in a non-retirement account, as opposed to having an IRA or other retirement plan, you don't pay any taxes on the part of the sheltered income. That is depreciation. That's considered a return of capital. However, the return of capital does reduce your cost bases in the stock, which may result in larger capital gains when the stock is sold. With the stock now trading in the $18.50-or-so range, the distribution yield on our stock's about 8% so many of the REITs are trading at much lower yields today. We see some of them trading at a -- universal REITs trading at about 4.1%, 4.2%. If we were trading at that level, we'd be in the $36 range. And many of the triple-net leases -- or REITs are trading at 5.5%. That give us about $27. And I just want to emphasize that, again, we're trading at about a 12x dividend. Most of the triple-nets are trading at 18x dividends. We're certainly hopeful that we'll have an increase in the multiple, that is a multiple expansion over the next years so that we can move the stock price up. We will vote in early January during our regular scheduled quarterly board meeting on the declaration of the monthly distributions for January, February and March. At this point, I'd like to stop and ask Keith to come on and get some questions from those of you who are on the line that would like to ask some questions. Keith?

[Operator Instructions] And the first question comes from Daniel Donlan with Ladenburg Thalmann. Daniel P. Donlan - Ladenburg Thalmann & Co. Inc., Research Division: David or, actually, Bob, I'm sorry if I missed this, did you give any update on the Roseville property and kind of what you're seeing there from a prospect as -- on the prospect side and what's the determination on what to do with that existing vacancy you have there?

Sure, Dan. We have now 3 prospects for that building. As I think you know and as we've reported before, this building is a B Class office building in a B submarket. And so the only types of users that really make sense for this property are the call center types. And we have a collection agency interested in it. We have a 100,000-square-foot prospect, which is a state agency, and then we have an undisclosed for 25,000 to 30,000-square-feet. The building, it has large floor plates, so it is attractive to those types of users but not for the typical office user that is in the 10,000- to 15,000-square-foot range because of the depths of the building. With that said, I mean, I think our team is doing as best they can to try to uncover opportunities for the property. Daniel P. Donlan - Ladenburg Thalmann & Co. Inc., Research Division: Okay. I think there was a chatter of you guys maybe thinking about doing some type of -- a data center type of tenant. Is that off the table now?

We have a prospect who has gone quiet on us to -- who is a data center user, it's a 15,000-square-foot user, but that has been quiet for the last 30 to 45 days. Daniel P. Donlan - Ladenburg Thalmann & Co. Inc., Research Division: Understood. And then I appreciate the commentary on the lease expirations in '14, how much progress you've made. Could we maybe talk about the leasing commissions and the capital improvements and how that may trend in 2014? Have you pulled a lot of that forward into '13 because -- in renegotiating these leases? Or what can we kind of expect? If I look at your leasing commissions paid, you're on a $340,000-per-quarter type of run rate, and your capital improvements is about $1.7 million per quarter. What can we expect on that in 2014?

I'll probably have to get back to you with the specifics on that because of the expected lease up. I can tell you that we're expecting lease up of the 12,000-square-foot facility and the 42,000-square-foot facility in the first half of next year, and those are probably going to run anywhere from $10 to $12 a square foot, so that would probably be during the first half of next year. Commissions are going to be higher than you would like them to be, but they're probably going to be around 6%. And the rents for those buildings are going to be $18 to $20 for the medical facility and about $8 to $10 for the other facility. So that's about as good as I can give you on a generic basis, but we do have those plan to be leased to be leased up at the part of next -- the first half of next year. Daniel P. Donlan - Ladenburg Thalmann & Co. Inc., Research Division: Right. But it sounds like both, in my eye, should be down a decent amount in 2014 versus '13. Is that right?

That is correct. That's what we're thinking right now, yes. One of the things to think about, though, also, Dan, and maybe we can get some of that information for you, is that we are working on our 2015 leases. Because the team is out there doing, I think, a great job of getting out in front with our clients 18 to 24 months before expiration, so we will probably have a -- since we have 10 that are expiring in 2015, and we're talking to 8 of them at this time, I would anticipate that we would be expending some of those dollars for sure in the 2014 time frame, depending upon what the tenant really wants to do, because if they want to wait, then they could be delayed until 2015. But to encourage them to extend and to extend for a much longer term, we may willing -- be willing to spend a little bit of CapEx to get them lease signed earlier. Daniel P. Donlan - Ladenburg Thalmann & Co. Inc., Research Division: Okay. And then, David, just I went back and looked through my model, and you guys have done an excellent job of maintaining the dividend, but it hasn't seen any growth since, I think, 2007. And it looks like the credit that you're giving back to the investment advisor is kind of keeping a dent on your ability to grow the dividend. Have you given any thoughts of potentially restructuring your incentive fee agreement to maybe lower that in order to allow dividend growth to flow through to the company?

It's an interesting discussion, but what I look at is what we're able to do in terms of moving the earnings up faster. And so as we look at it, we're up $0.38, $.385 really, in that range, over $0.37 last quarter. So you're seeing a movement up, and that movement is the earnings moved up by about 19.2%, but the number of shareholders only moved up by about 14.7%. So you're starting to gain on what you're talking about, that is having the ability to bring in more income and raise less money in terms of that same number. So our goal is keep that going. And as the earnings grow -- or FFO grows faster than the number of shares that we have to put out, you'll see that being able to jack up the dividend at some point in time. It's just -- what happens with us is, because we raise such small amounts when we do the equity offerings, it takes us a little while to get that raise and get that invested in. So as a result, there's that lag. And as we get bigger, we'll be able to master that gulf between the time we raise the money on the one hand and the time we are able to get it to work. That's always the problem. When there is a raise and don't have closing shortly thereafter, there is a dilution to the existing shareholders because we're still so small. I mean, you're talking about a company that's $164 million in total equity, and you raise $20 million, that's -- that can be a big dilutive effect. And if we raise $30 or $40 million, it is a big one. So our goal is, again, to raise smaller amounts, get it to work faster, and just have to come to market more frequently, unfortunately. We're in good shape right now. The last one we have, the building that we think we're going to close on, we have money to do that. So sometime in the not-too-distant future, we'll have to do some kind of offering, perhaps, but right now we're in great shape. Daniel P. Donlan - Ladenburg Thalmann & Co. Inc., Research Division: Okay. And then just lastly, I'm looking at your implied cap rate, and it's roughly north -- barely north of 8%. It's one of the highest implied cap rates in the net lease sector. You're seeing lots of net lease portfolios trade sub-7% cap. Would you ever consider, looking at exploring a liquidity event with somebody that's larger, given there's so much chatter about consolidation in net lease space?

I don't think so. I think our niche is so different from most of the net lease people. They're all doing leases that are -- get at least a double-B or a triple-B. None of our smaller transactions are rated. We've got about 50% of our tenants are rated, and so we're very different from just about anybody out there. I'm not sure any of the larger REITs would want to buy somebody like us, nor do we really want to sell. It's a good fit with what we do on our entire group. The entire group is fixed dramatically on small and mid-sized businesses, and so this just goes along with our abilities over there as well. So our goal is, at this point in time, to continue to grow and continue to pay good, strong dividends to our shareholders.

[Operator Instructions] And our next question comes from Jeff Rudner with UBS.

I'd like to follow up, though, a little bit on the questions raised by the previous caller, specifically regarding the dividend. You pointed out that the investment income has gone up steadily, and you anticipate that the NII will go up over the next number of quarters, if not years. Could you possibly give us some kind of guidance as to when you think the NII would be sufficient that you could raise the dividend to any -- on any meaningful level?

I don't know what you mean by meaningful level, but I'll...

Well, even like $0.13 a month as opposed to the current $0.125.

Yes, that's probably a year off, I would guess. At the rate we're going now, if we can do quarters like we just did, which was a very strong quarter, then it would be sooner. But at our current pace, I think you're looking at ways off yet. As you know, one of my hallmarks of running these companies is never cut the dividend. And so our goal is to make sure we never put ourselves in a position of having to cut the dividend, so we like to be very strong in terms of earnings before we phase the dividend.

Okay. Also you mentioned that a number of leases are coming up in 2015, and you're already working with the tenants on potential new leases. Would you anticipate the new leases to be at higher rates than they currently are at?

Depends on, obviously, the market where you are, the tenant and those kind of things. But generally speaking, we do raise our rents when we have new leases now. In this last round, trying to remember, there were a couple that were not -- that were less because the marketplace had changed. It's all dependent on the market that they're in. And so I think the goal is always to increase the rate, but you can only increase it if the marketplace is there for you. And that's why we're working right now very hard on 2015, simply because we don't know what 2015 is going to look like. And if we wait until 2015 to try to work it, it may be higher, it may be lower, but we would be really nice to lock up during this year all of the 2015 leases and start working on 2016 next year, staying way ahead of the curve rather than waiting for it to come or come in real quick.

There are no more questions at the present time. Do you have any closing comments?

No. We appreciate the opportunity to give out some information, and we'll try to do a better job and give a little more detailed information on our leases next time. But thanks again to everybody, and that's the end of this call.

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