Good day, and welcome to the Host Hotels & Resorts, Inc. Third Quarter 2013 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Gee Lingberg, Vice President. Please go ahead, ma'am.

Thank you, Tiffany. Good morning, everyone. Welcome to the Host Hotels & Resorts third quarter earnings call. Before we begin, I'd like to remind everyone that many of the comments made today are considered to be forward-looking statements under federal securities law. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed, and we are not obligated to publicly update or revise these forward-looking statements. In addition, on today's call, we will discuss certain non-GAAP financial information such as FFO, adjusted EBITDA and comparable hotel results. You can find this information together with reconciliations to the most directly comparable GAAP information in today's earnings press release, in our 8-K filed with the SEC and on our website at hosthotels.com. With me on the call today is Ed Walter, our President and Chief Executive Officer; and Greg Larson, our Chief Financial Officer. This morning, Ed will provide a brief overview of our third quarter results and then will describe the current operating environment, as well as the company's outlook for the remainder of 2013. Greg will then provide greater detail on our third quarter results, including regional and market performance. Following their remarks, we will be available to respond to your questions. Before I turn the call over to Ed, I'd like to remind everyone that at the beginning of this year, we adopted calendar quarter reporting period. And to enable investors to better evaluate our performance, we have presented 2012 RevPAR and certain historical results on a calendar quarter basis we call the 2012 as-adjusted-results. The following discussion of quarterly and year-to-date operating performance will include a comparison between the 3 months and 9 months of operations ended September 30. And now here's Ed.

Thanks, Gee. Good morning, everyone. We are pleased to report another quarter of solid operating results of strong demand in our transient business and better-than-expected short-term group bookings fostered solid rate growth across all segments of our business. We are also pleased to report some activities that we believe have added value to the company. We continue to feel very positive about the fundamentals in the business and our outlook, which I will discuss in more detail in a few minutes. First, lets review our results for the quarter. Overall comparable revenue growth for the quarter was 4.6%. This was driven primarily by a comparable hotel RevPAR increase of 5.5% to $150 as average rate improved 4.8% to $192, and occupancy increased to 0.5 percentage point to 78.4%. We also had comparable hotel food and beverage revenue growth of 3.1%, driven by increases in banquet sales. As anticipated, the third quarter had difficult margin comparisons to last year, which included items that increased profit in 2012. As a result, our comparable hotel adjusted operating profit margins for the quarter were unchanged. Adjusted EBITDA for the quarter increased slightly to $270 million, and our adjusted FFO per diluted share was $0.25, an increase of nearly 9%. On a year-to-date basis, comparable hotel RevPAR increased 5.5%, driven by a 4.3% increase in average rate and an 8 percentage point improvement in occupancy. Total year-to-date comparable revenue growth of 4.6%, combined with adjusted operating profit margins that increased 100 basis points, resulted in year-to-date adjusted EBITDA of $984 million, representing an increase of 12.5%. Adjusted FFO per diluted share increased 22.5% to $0.98. The key drivers of our third quarter room revenue results were strong increases in rate across all segments of our business. We also benefited from mix shift in both our…

Thank you, Ed. Before I present the individual market information, let me provide an overall summary of comparable hotel RevPAR by region. RevPAR growth was strongest in the west, increasing 10.5%, driven by 8% ADR growth. 5 markets, 4 of which represent our West Coast target markets grew RevPAR by double digits. In the central and south region, RevPAR increased 3.9%, in line with our expectation. While Atlanta and Houston have strong double-digit RevPAR growth, weak group demand in San Antonio, Tampa and New Orleans resulted in a combined 11.5% RevPAR decline. In the East, ADR grew by only 1.6%, contributing to a 3.1% RevPAR growth. Results were slightly lower than expected, especially in Philadelphia and Washington, D.C. due to declines in group demand. With that in mind, let me begin by giving you specific market data. Houston is once again our best performing market in the third quarter. Houston has continued its impressive RevPAR growth with gains of 18.8% on a difficult comp of last year's strong third quarter. Occupancy improved 60 basis points, and ADR grew an impressive 17.8% due to the continued high transient demand from energy in energy-related business in Houston. Strong demand enables the hotels to implement a strategy of shifting the mix of business to higher-rated segment. We expect Houston to continue to perform well [ph] related to the government budget crisis and fewer fourth quarter city-wide events. RevPAR at our San Francisco hotels continue to perform well with the robust increase of 15.8%, moving up to the #2 spot from #4 last quarter. Occupancy grew 1.9 percentage point, and ADR increased at a very strong 13.3%. The strong rate increase was mainly driven by business mix shift from contract, the higher-rated transient and group business. With continued high transient demand, we expect our…

[Operator Instructions] We'll take our first question from Felicia Hendrix with Barclays.

Ed, just to touch on your group business for a minute. Last quarter, you mentioned that 2014 group was 50% booked at the time at an increased rate and pace year-over-year. I was just wondering if you could update us on that statistic.

Yes, at this point, we probably booked about 2/3 of our 2014 group business. Well, we would be expecting to, by the time we get to the end of the fourth quarter, we'd be expecting to be somewhere around 70% to 75% of that business booked at that point in time.

And is the pace and the rate meeting your expectations?

Yes, I'd -- we're up -- we're sort of up just short of 6% in terms of the combination of improvement in room nights and improvement in rates, so just short of 6% in terms of revenues for '14 compared to last year. I think this was one of the things as we look at this quarter that we were very encouraged by, because as I think we all know, as we had been working our way through 2013, we were typically finding that bookings in the quarter for the quarter were really not as strong as they had been in the prior year. And depending upon the individual quarter, some of the bookings for the rest of the year were not necessarily as strong as they had been. One quarter doesn't necessarily make a trend, but the reality is, as I indicated in my comments, our bookings in the quarter for the quarter were up meaningfully. Our bookings for the second half of the year, meaning in the third quarter for the third quarter and for the fourth quarter, were up 10% compared to the prior year. And then our bookings for '14 were up 16% compared to what we did last year. And last year was a good year for bookings for the year out. So yes, we want to be thoughtful and cautious about trying to carry this too far but the bottom line is, is we were very pleased with the increase in group bookings that we saw over the last 3 months.

That's helpful. And while I have you or maybe Greg, just as a follow-up, given that commentary, assuming that you make asset sales next year, the comment referring to -- Greg, your commentary about how strong your balance sheet is the strongest it's ever been, your free cash flow should be quite attractive next year. Your balance sheet is strong and everything seems to be operating well. Just wondering how we should think about your targets for payout relative to cash available for distribution next year.

Yes, I would say that at this stage, while we're certainly -- as we think about the dividend, I think it's still going to generally be driven by what our taxable income is. That's going to be affected by 2 things. It's going to be affected by both -- how our operations perform next year, which we, of course, we would be expecting would be higher than this year. And then secondly, it's going to depend upon the asset sales that we do, the profits that we generated on those sales and whether we tax-free exchange the proceeds from those sales into other investments or not. But I'd say that in general, we certainly -- all the points you made about the strength of the balance sheet are true. And it would, in general, be our goal to continue to see our dividend increase but it will be tied to those factors in general.

We'll go to our next question from Joshua Attie with Citi.

You mentioned improvement in group business and some other companies have as well. And it's sometimes difficult for us to translate some of the statistics into overall RevPAR growth for the portfolio. Do you think if the current momentum you're seeing in that segment is maintained, it will be enough to drive an acceleration of RevPAR growth for the company next year, or is the magnitude of the group pickup not quite that large yet?

Josh, it's a little hard to predict that at this point in time, especially since I think the results that we've seen the last couple of years have all been pretty solid. So what I -- if the trends that we see today continue through the quarter and into next year, I think it's reasonable to assume that we would see more balanced growth between group revenues and transient revenues next year, whereas this year, it's been more -- far more heavily weighted towards transient revenue growth. So I think you'd have that opportunity for better balance. We're at pretty high occupancy levels already. So that suggests that most of what we should see should be in the rate side. And I think then it's just going to come down to how aggressively can we push rate between the 2 segments. I think it would probably suggest you might find that the occupancy increase next year is generally attributable to group, and transient will really be more of a rate story.

Okay. And separately, you've been issuing about $100 million a quarter of new equity through the ATM this year. I noticed you completed the program and you didn't put a new one in place. Can you just remind us where your leverage is today in terms of what your target is, and should we interpret the lack of putting in a new program as a sign that the future equity issuance will diminish or have you just not gotten around to putting a new program yet?

Josh, this is Greg. So our leverage, we ended the quarter at 3.46 leverage. And as I mentioned in my comments, it's the best leverage level in the last 20 years, so we're quite happy with that. But as you also know, our ultimate goal is to push that leverage ratio to 3x. And so what we've always sort of said consistently through the cycle that, in general, what you'll see us do, until we hit our goal of 3x, is that when we sell assets, we'll use the proceeds to pay down debt and when we buy assets, we will finance those acquisitions with about 75% to 80% equity. And I think if you look at what we've accomplished from the beginning of this cycle to today, that's exactly what's happened. And we've sold just over $1 billion worth of assets. We used those proceeds to pay down debt. We've acquired just over $2.5 billion worth of assets and refinanced those acquisitions for the past 75% to 80% equity. And I do think -- I think your point is correct that we did issue $100 million per quarter sort of in the past. But as you can tell, we're getting closer to 3x leverage and we ended the year with a pretty good cash balance. And subsequent to quarter end, we sold the Portland property for north of $80 million. So I think we're in pretty good condition at this point.

We'll take our next question from Steven Kent with Goldman Sachs.

This is Anto Savarirajan for Steve Kent. Broadly, what are your internal thresholds for ROI investments? The reason I asked given the ROI investments you've made in the Newark Airport Marriott, how are bookings trending ahead of the Super Bowl and how should we, in general, think about some of these ROI investments you make?

The thresholds that we establish for ROI investments will differ a bit based on the size of the investment and also the certainty of achieving those results. And broadly speaking, I would say to you that when we look at adding a ballroom, such as what we're doing in Newark, what we ultimately will be doing out in San Diego, we're generally looking at IRRs on those transactions that will be in the high teens. When we're looking at some of the energy saving improvements or enhancements that we've implemented over the years, we have enough of those to be perfectly honest, but we typically have targeted a threshold north of 20% just to make certain that we stay focused on the most rewarding of those types of opportunities. As it relates to bookings in Newark, I don't have any specific numbers. The ballroom just opened up in the last 30 days. Our sense is that it's certainly going to do -- we're going to do fine out there around the Super Bowl because we're so close. But obviously, what will matter more for the success of the investment is the long-term bookings for that space. We feel pretty confident, though, that, that space will be a big plus for that particular hotel.

Over the past few years, you've indicated to us that you -- the quality of the asset portfolio has been getting better as you prune some of your assets. Tying your commentary that you may be selling a few more assets than you actually buy, how should we think of these assets and how you're bucketing them? And really, which are these assets that you are thinking of selling over the next, say, few quarters?

That's a good question because it's an important part of our overall strategy. Generally, what we're trying to do with asset sales is sell assets that are located in nontarget markets where we generally expect lower growth. And then, if we're selling assets that might be in target markets such as, say, the sale of the San Francisco Airport Marriott in San Francisco, what we're doing is selling an asset in a target market but it's in a part of that market where we generally have lower expectations for overall growth. So the idea is to ultimately end up with a portfolio that is generally focused in the target markets and in the best submarkets for those target markets. One thing I'd also add to that is as we gauge in the sale process because Portland is a good example of that, we try to be pretty thoughtful about exactly what's the best way to sell the hotel. So in the case of the Portland transaction, we first renovated the lobby and the meeting space for that hotel because we figured that, that would help improve the performance of the hotel. And in fact, over the last 2 years, we saw a 20% increase in RevPAR. We picked up all the market shares that we had dropped the 2 years prior. We saw a 30% increase in NOI in that asset that took us back to where we were in '07, and then we look to put the hotel on the market to take advantage of that because we generally thought that we captured most of the surge that you get in the recovery in terms of performance. And if it wasn't a primary market for us, it was a good time to be a seller of that hotel.

We'll take our next question from Robin Farley with UBS.

Just a couple of clarifications. Your RevPAR guidance range for the full year at the top end is down a little bit more than the government shutdown impact. So I wonder if you could just give us some color around whether there are issues you're maybe feeling less optimistic about. And then for Q3, I just want to make sure I understand the EBITDA. The calendar shift, I think, would have been a benefit to you. I understand there was $5 million of asset sales dispositions affecting year-over-year comps and then some property-specific things last year of $5 million, but I'm still wondering why we're not seeing the benefit of the calendar shift, we're not seeing positive EBITDA, and maybe it's just there are too many moving parts of it. If you can help us with that.

I'm going to -- we'll split this up. I'll try to answer the RevPAR question, and them I'm going to let Greg handle the EBITDA question. I think on the RevPAR, what I would -- probably the simplest answer to that is that the third quarter was solid, but it didn't outperform our expectations. And so as we looked at the high end of our guidance for the full year, it felt like we needed to make an adjustment to reflect the fact that the third quarter was in line with expectations, which would have been -- think of that more as the middle of the guidance that we've previously given as opposed to the high end. And then given the combination of the government shutdown and what that meant for that guidance, it just felt that we should -- the 5.5% to 5.7% was probably the right range for here. But in general, coming back to the -- our overall perspective on the guidance, I would say that we generally looked at this as essentially -- if you looked at the midpoint from where we were, when you look at the midpoint for where we are now, the difference there is essentially the government shutdown. So yes, we did not meaningfully outperform in the third quarter compared to our thoughts, which would have taken us to a higher level, but the bottom line is in terms of our expectations, the real difference between the 2 different forms of guidance is really related solely to the government shutdown.

And, Robin, look, I agree with you that this year has been difficult because of our calendar shift and that's one of the reasons why last quarter, I tried to get a little bit of color and guidance on that. What I said last quarter is that in the third quarter, our EBITDA would be about 20% to 21% of our full year EBITDA. I think if you take your full year EBITDA and multiply that by 20% to 21%, my guess is, is your EBITDA for the quarter would have been less than our 270 that we achieved.

Okay. And then can you, just finally, remind us what remaining capacity you have for sales agency financing agreements now after the issuance in the quarter?

You mean on the continuous equity plan?

Yes.

We exhausted it.

So there's nothing in place with any other agreements. I know you completed the ones in the quarter but nothing else at the moment in place?

That's correct.

We'll take our next question from Thomas Allen from Morgan Stanley.

I appreciate the comments you've given so far on 2014, but just for our modeling, can you update us on your thoughts around seasonality and other factors that could impact RevPAR growth, just specifically how the Super Bowl could impact renovations, citywide calendar, things like that?

I don't know that we're in a position to give you much insight into that right now. We haven't seen our first budget for next year. We won't see the those for a couple more weeks so we really don't have a lot of specific insights. If I were thinking quickly off the top of my head, we are certainly hoping that a Super Bowl in New York City is going to be a benefit to us. But conversely, on a year-over-year basis, while the inauguration in D.C. was not anything to write home about, it still had a favorable effect on Washington in the first quarter and roughly around the same time. So beyond that, we really haven't had a chance to think through the year from a seasonality perspective. And the one thing that should be easier for all of us next year, and Greg was sort of referring to this in his answer to the last question, is at least next year, we're going to be matching up against calendar quarters where we all have the benefit of being able to look back at both the top line and the bottom line where on a year without having to do a lot of adjustments to try to capture those numbers.

Okay. And then just in terms of your JV EBITDA, guidance came down slightly for the year. What drove that? And -- yes, what drove that?

Part of that is probably related to the sale of the asset because we would have lost a chunk there. I don't know that there was any particular factor of significant -- none that I -- Greg...

I mean, you're right, I think our number for the full year has been only a few million. So part of it was Courtyard and maybe just a snitch from an operating perspective.

We'll go to our next question from Andrew Didora with Bank of America.

Typically, in the past, the ATM was a predecessor to some transaction activity, but it certainly doesn't seem like you have anything lined up for the rest of the year. Can you maybe expand on what you're seeing on the deal front, and what does your lack of activity right now imply for your thoughts on where we are in the cycle right now?

Yes, I would say that we have been -- we certainly feel comfortable, as I mentioned in my comments, that we'd like to be investing more. There has not been as many transactions or properties that are in the markets that we're interested in that have come on the market over the last 12 months. We are looking at a few things both in the U.S. and outside the U.S. But as I highlighted in my comments, as I look at the timing for those, I think it's unlikely that they would have any kind of an effect on this year. But I think part of what you're seeing in the U.S. is that transactions, in general, are probably being driven more by the strategy of the owner as opposed to any duress or anything like that. I think most folks would share our insight that supply is relatively low, not expected to accelerate meaningfully except in a couple of markets. And consequently, no one is sitting there sort of starting to anticipate that it's the end of the cycle, and consequently, they should be a seller because of that reason. So you're seeing good levels of activity. I think overall, the level of activity that we're seeing in the market and across the world is a little bit higher than what we saw last year. Unfortunately, a lot of that's happening in asset quality and price points that are of less interest to us.

Great. And then just finally, one of the themes we've been seeing this earnings season has been some of the greater strength on the West Coast versus the East Coast and your results in the quarter didn't really seem to deviate from that. What do you think are the key drivers of that outperformance are, and what are your expectations for sort of East Coast versus West Coast over, call it, the next 18 to 24 months?

I suspect that, at least looking into next year, that we'll probably see that same pattern, strength in the West, weakness in the East continue. Supply on the West coast is very low. Demand, both in the U.S. domestic demand, as well as international demand, is quite strong on the West Coast. So that same -- sort of the same set of facts that has been driving great results this year should continue to drive the West Coast next year. And then when you look at the East Coast, and I think, unfortunately, all the data that we're all looking at is suggesting that Newark is going to continue to get hit by high levels of supply. I think the numbers we're looking at right now would say industry-wide across all segments, New York will be up north of 7% next year in terms of supply. But while the story is better, considerably better in upper upscale, I think the number is closer to 2% to 2.5%. The reality is that much supply coming into a market even as strong as New York, is still going to lead to probably relatively anemic levels of RevPAR growth in that market. I think Washington, as Arnie commented last week, and we would echo, is that while the center city -- the downtown part of Washington will continue to do better than the suburbs, the overall market is still going to be facing some challenging headwinds in 2014. So as you -- if you look broadly at the East Coast, those are 2 big important markets and neither one of them will likely perform at the industry average next year.

And we'll go to Smedes Rose with Evercore. Smedes Rose - Keefe, Bruyette, & Woods, Inc., Research Division: I wanted to -- I saw in your release, you have your select service asset with White Lodging opening later this quarter. And I'm just wondering, as you look forward -- how do you think about select service assets? I mean, that one I know is a JV, and it probably doesn't really move the numbers for you, but you did buy that property in Hawaii, and kind of -- do you see that becoming a more significant piece of your portfolio going forward?

The short answer is yes. I think we -- as we look at owning hotels in urban locations, urban select service is something that we think can work and can make sense, this means we'd love to add more properties like that. I would say that one of the things we're watching carefully in some markets in New York, witnessing the comments I just made, would be we want to be thoughtful, is that this is a segment of the business that tends to see supply first. So our investments in this area need to take the supply risk into account. But we're -- we would be comfortable owning more urban select service in the markets that we identified as targets. Smedes Rose - Keefe, Bruyette, & Woods, Inc., Research Division: And then on -- in -- for your European joint venture, just the Stockholm asset, I was just wondering, is there any pricing commentary you can give on trailing cap rates or forward cap rates or maybe how that came to be in that transaction?

Yes, this was an interesting acquisition for us. The Swedish -- Sweden is not part of the eurozone from a currency perspective and so has not been dragged down by a lot of the factors that have otherwise affected Europe. So while the rest of Europe has struggled a bit over these last couple of years, the Swedish economy continue to do reasonably well and is projected to continue to do quite well. If we look at this acquisition, we paid about EUR 220 million per room in euros for the hotel. We think that's probably a 30%, 30-plus percent discount through a replacement cost. And on a cap rate basis, it's just a hair north of the southern cap rate.

We'll take our next question from Wes Golladay with RBC Capital Markets.

I'm wondering if I could get a better grasp on what's driving the ADR growth. Are you raising prices across the customer segment or is it more of the mix shift that you talk about?

I think it's probably more that we're raising prices, although we're clearly benefiting from mix shift, too.

Okay. And how much do you think the mix shift can benefit you into 2014?

I've got a quick percentage off the top of my head but I see no reason why we shouldn't continue to see mix shift be a factor next year. Just simply because we're going to -- when you look at the occupancy, I think we're going to finish this year somewhere 75.5%, maybe a touch better in terms of occupancy. So we're, obviously, at a great place in terms of having -- filling up the hotels many nights during the week. So if the group booking pace continues to do well, as we feel it is at this point in time, operators are going to be pretty confident about their ability to sell out during the normal nights during the week where we sell out, which means that the discount business and the government business is already down. But those 2 segments of our business, which tend to be cheaper, will be segments that we will be trying to effectively weed out by not reducing prices to make our hotels attractive for that customer, which will lead to mix shift.

Okay. Okay. And turning to the Memphis and Calgary opportunities you guys have this quarter, how many of those do you expect over the next few years?

There always seem to be a few per year. It's hard to predict when opportunities like this are going to come up. So I don't know that I -- but I could tell you, it's going to be 3 or 4 a year, but we're -- we certainly have a few other hotels where we see redevelopment opportunities next year that we're trying to sort through right now. And I'd like to think that we'll -- that those sorts of things will continue to crop up in the portfolio.

We'll take our next question from Joe Greff with JPMorgan. Joseph Greff - JP Morgan Chase & Co, Research Division: Most of my questions have been asked and answered. Given that maybe in the near term, at least you're more of a net seller, Ed. When you look at next year and you look at the levels of capital investment you've made the last couple of years, do you think 2014 levels of capital investment, CapEx, project CapEx, however you want to categorize them, that the direction of that will be down in '14 versus what you are budgeting for '13?

I don't know that it will be down a lot. We'll see some reduction. My guess is, is that what we would call maintenance CapEx will be generally consistent with the levels that we've been this year. Then the acquisition CapEx is probably down a bit simply because our acquisition pace this year has been lower. So there's really not a lot of meaningful CapEx that relates to '13's acquisition. We will be finishing up some work on the 2 Hyatts that will carry into next year. And then it's the ROI piece of it that we're really looking at right now and trying to decide how much of that to do next year. We do hope to be able to start the ballroom out in San Diego, which we still are comfortable will be a good investment. So those -- that's probably the areas swings the most. Kind of flowing back to our question that occurred earlier in this conversation, these ROI investments, they generally work, and they generally drive pretty high return. So we have made a conscious internal effort to reprioritize pursuing those types of investments. I don't know how much of that will show up in '14 versus '15. But given the returns that we can get, especially compared to the other opportunities we're seeing, we'd like to exploit those opportunities in our portfolio but that will affect our investment spending.

We'll go to Nikhil Bhalla with FBR. Nikhil Bhalla - FBR Capital Markets & Co., Research Division: Just a question in terms of -- you talked about seeing acceleration in bookings in the quarter for the quarter. Any signs on like why that may be the case and what's probably driving that kind of near-term acceleration?

I don't know that we have any particular insight into that. I think we have long felt that there was -- there is linkage between employment growth and GDP growth and group bookings. It's -- you'd look at it a little bit and perhaps suggest that in general corporate America because it's really our corporate bookings that are driving this activity. Maybe on the margin, feeling a bit more optimistic and sort of looking to take advantage of whatever is happening within their individual company to try to meet more often, but I don't know that we have a great explanation for why it picked up other than that general sense that perhaps the economy is improving. Nikhil Bhalla - FBR Capital Markets & Co., Research Division: Okay. And just a follow-up on the sale of some assets that you referred to earlier. If you can probably give us some sense of what the amount is that we can think about and the possible use of the proceeds.

It's hard to predict the amounts because they tend to be somewhat lumpy. But I guess, I would say in general, is the level of asset sales you've seen over the last couple of years from us was, Greg, has been roughly $400 million or so.

$450 million or so.

Yes. I mean, I would certainly think that our goal for 2014 would be in that range, conceivably higher. And what was the -- I'm sorry, what was the second part of your question? Nikhil Bhalla - FBR Capital Markets & Co., Research Division: Just the use of proceeds from...

Use of proceeds. Nikhil Bhalla - FBR Capital Markets & Co., Research Division: Yes.

Well, Greg gave a great description of what we've done so far as we're getting so much closer to achieving our balance sheet objectives, and we certainly hope to kind of get the rest of the way there next year, primarily on EBITDA growth. When we sell an asset today, I think, one option is to invest that in incremental -- in new investments, in new hotels. Another would be some of these ROI-type investments that I described. The third option would be to invest the proceeds from that sale into paying down debt. Most of these transactions are at varying levels of tax -- generating varying levels of taxable income. So if we don't exchange the proceeds on a tax-free basis into a new investment, we're probably going to need to dividend out incremental taxable income so the dividend would go up. And then the other 2 options to really use the proceeds for and what we've been doing, which is paying down debt. And lastly, as the cycle progresses, I mean, one thing we always come back and look at is does it make sense to buy our stock as an investment as opposed to some of the other investment opportunities I described. So all of those things will get looked at as we continue our asset sale program.

We'll go to our next question from Ryan Meliker with MLV and Co. Ryan Meliker - MLV & Co LLC, Research Division: Most of my questions have been answered, but I was hoping you could talk a little bit more about what you're seeing in the acquisition and disposition market. Are you at the point now where you're struggling to find the right acquisitions because values have gotten too steep and numbers don't pencil out? Is that reminiscent to 2006-2007 time frame of the last cycle? Are things very different in Europe and maybe outside the U.S. than what you're seeing in the U.S.? Just some color on that would be really helpful.

Yes. I would not describe our market here as back to '06-'07 levels where in hindsight, and frankly, at that time, we felt pricing was crazy. We're not at those types of levels. I think pricing is competitive but, yes, we're not at points where people are paying what will later look like absurd prices for assets. I think the bigger issue is that while volumes a relatively high this year or higher than where they were last year, they're just -- it's been some limited service portfolios that have not been of interest to us. It has been second -- you're starting to see some pickup in some of the secondary markets. Those are not markets we're interested in acquiring. And generally, a lot of the other assets that have traded have just not been ones that we thought made sense to invest in. But I would not look at the market as it stands right now and say that it's being stretched or the people are really using unrealistic assumptions to justify a purchase. I would contrast Europe, which is really the other markets that's been more active with U.S. and say that there, you're -- there's been less activity in Europe, and the activity that you're seeing there is generally driven more by maturing debt or debt issues as opposed to the sales that are happening in the U.S., which I think are happening more because of the strategy of the individual owner. And maybe they're looking -- they own a fund to cash in essentially or if they're not a fund investor, then they're in a mode where they just want to redeploy the proceeds for other uses. So Europe activity has been at lower levels but it seems to be driven more by the debt issue than anything else so far. Ryan Meliker - MLV & Co LLC, Research Division: That's helpful. And with regards to -- has the buyer pool in the U.S. change over the past few months and know that we -- maybe it's a one-off in paper, but we've now seen 2 different hedge fund opt for 2 different publicly traded companies over the past weeks. Are we at the point now where we're starting to see a lot more private equity, a lot more [indiscernible] buyers getting involved, or are we not there yet?

Certainly, the recent offers that we've seen would suggest that we're seeing more private activity. One group -- I think right now, part of what you're seeing is that while debt issuance is certainly not back to the levels that we've been in '05, '06 and '07, you are seeing some increasing activity on the debt side. And since a lot of your opportunity fund, private buyers tend to use higher leverage than, say, the REIT universe. They probably sees them being more comfortable in bidding for assets because they're more comfortable that they're going to be able to get the best that they need to provide for that. I think the other buyer that you're seeing is the nonlisted REITs are continuing to raise capital. And so those folks, as they continue to raise capital, continue to invest. So that buyer has been active over the last 12 to 24 months, but they certainly continue to be active today, too.

And that concludes today's question-and-answer session. At this time, I'll return the conference back to President and CEO, Mr. Ed Walter, for any additional or closing remarks.

Great. Well, thank you all for joining us on the call today. We appreciate the opportunity to discuss our third quarter results and outlook with you. We look forward to talking with you in February to discuss our year end results and then give you some more detailed insights into 2014. Have a great day. Bye.

And that concludes today's conference call. Thank you for your participation.