Summit Hotel Properties, Inc. (INN) Q2 2019 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Summit Hotel Properties Second Quarter 2019 Earnings 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] I would now like to hand the call over to Mr. Adam Wudel, SVP of Finance and Capital Markets. You may begin.

Thank you, Amanda, and good morning. I am joined today by Summit Hotel Properties Chairman, President and Chief Executive Officer, Dan Hansen; and Executive Vice President and Chief Financial Officer, Jon Stanner. Please note that many of our comments today are considered forward-looking statements as defined by federal securities laws. These statements are subject to risks and uncertainties, both known and unknown, as described in our 2018 Form 10-K and other SEC filings. Forward-looking statements that we make today are effective only as of today, August 1, 2019, and we undertake no duty to update them later. You can find copies of our SEC filings and earnings release, which contain reconciliations to non-GAAP financial measures referenced on this call on our website at www.shpreit.com. Please welcome Summit Hotel Properties Chairman, President and Chief Executive Officer, Dan Hansen.

Thanks, Adam, and thank you all for joining us today for our second quarter 2019 earnings conference call. To start out today, I wanted to highlight the announcement of our new joint venture with GIC. We are absolutely thrilled to kick off a partnership with a well-respected investor that shares our long-term view of the business and our goal of creating value through thoughtful capital allocation. We're looking forward to growing scale of this relationship, and Jon will provide more details later in the call. Shifting to our operational performance, we are pleased with the stable top and bottom-line performance of our portfolio this past quarter, as a continued focus on operating expense control allowed us to maintain margins in what continues to be a challenging operating environment. For the second quarter, we reported pro forma RevPAR growth of 1.2%, which was driven by a 1.2% increase in rate and a 0.1% increase in occupancy. This compares favorably to second quarter results for the total industry, top 25 markets, and the upscale chain scale, which reported RevPAR changes of positive 1.1%, positive 0.2%, and negative 0.4%, respectively. This is our second consecutive quarter, outperforming all three benchmarks. Our same-store portfolio posted RevPAR growth of 1.1% for the quarter, driven by a 1.3% increase in rate and a 0.2% decrease in occupancy. Our pro forma portfolio, once again, gained market share among its competitive sets in the second quarter, with an average RevPAR index of 113.5, which represents a market share gain of 162 basis points compared to the second quarter of 2018. I'd like to take a moment to highlight a few of our strong performing markets during the quarter, including San Francisco, Atlanta, Boulder, Baltimore and Louisville. Our three San Francisco hotels posted a combined RevPAR increase of 12.4% in the quarter, benefiting not only from the reopening of the Moscone Convention Center, but more importantly, from comprehensive renovations at our Holiday Inn Express in Fisherman's Wharf and our Four Points by Sheraton at the airport. In Atlanta, a strong convention calendar drove a 10.6% increase in citywide room nights during the quarter, and our four hotels posted average RevPAR growth of 4.3%, which outpaced the overall Atlanta market by 244 basis points and represents an average market share gain of 262 basis points versus our respective competitive sets. RevPAR growth at our hotels was driven by a 5.6% increase in rate, resulting from strong increases in both group and corporate demand, which saw room nights increase by more than 25% during the quarter. The recently renovated Marriott in Boulder posted another strong quarter, with RevPAR increasing nearly 20%, partially driven by renovation tailwinds from the second quarter of 2018. Adjusting for the displacement from that renovation, RevPAR still increased over 11%. The upgraded room product and public spaces facilitated significant growth in the high rated corporate and retail segments which saw RevPAR increases of 11.0% and 32.0%, respectively during the quarter. Our Baltimore hotels benefited from a second consecutive quarter of strong convention demand, which drove compression, specifically to our downtown hotels. RevPAR at our four hotels in the market increased by a combined 9.3% in the quarter, which was nearly 830 basis points better than the competitive set’s growth. Adjusting for the moderate displacement in the second quarter of 2018 at our Residence Inn Downtown, the hotels posted an average RevPAR gain of 6.1%. Ongoing revenue management strategies to layer in higher rated business on top of a strong group base proved successful during the quarter as RevPAR in the negotiated and retail segments grew by 18.4% and 5.4%, respectively. In Louisville, our two hotels were able to shift segmentation towards higher rated group and transient business following the reopening of the Convention Center. This resulted in a 10.7% increase in RevPAR during the quarter, which was driven by a 10.6% increase in rate. RevPAR growth at our hotels significantly outpaced the overall Louisville market, the Downtown submarket, and the competitive sets and gained more than 750 basis points of market share on average. We continue to find ways to thoughtfully shift guest segmentation within our portfolio, validated by positive trends in the group, corporate negotiated and advanced purchase segments. We’ve also made significant progress on our capital recycling program in the first half of 2019. Year-to-date, we have sold eight hotels, totaling 945 guestrooms for a total gross sale proceeds of $146.6 million. The cumulative purchase price resulted in a blended trailing 12 month cap rate, including estimated capital expenditures of 7.0% at the time of sale. Finally, during the second quarter, we invested $15.3 million into our portfolio on items ranging from common space improvements in bar areas to complete guestroom renovations, including comprehensive renovations at our Hampton Inn & Suites hotels in Austin and Tampa, and our Courtyard by Marriott in Fort Worth. Today, our hotels have an average effective age of 3.4 years, demonstrating our commitment to provide a best-in-class guest experience. And with that, I’ll turn the call over to our CFO, Jon Stanner.

Thanks, Dan, and good morning, everyone. For the quarter, our pro forma hotel EBITDA was $55.2 million, a 2.7% increase from the same period in 2018. And hotel EBITDA margins contracted by just three basis points to 39.0% despite modest pro forma RevPAR growth of 1.2%. Expenses were well contained during the quarter as hotel operating expenses increased just 2% on a per occupied room basis. During the second quarter, our adjusted EBITDAre decreased 5.0% to $52.4 million, and adjusted FFO per share decreased 6.7% to $0.37 per share, both driven by our recent asset sale activity. As Dan mentioned, we are thrilled to announce an agreement for a newly formed joint venture with GIC, the sovereign wealth fund of Singapore. This partnership will provide us with an excellent source of long-term capital with a value creation thesis that is highly aligned with our core principles that have driven tremendous value creation since the Company's inception. The venture will target similar types of assets to what the Company owns today, and we are excited to scale our business with such a well-respected partner. As general partner for the joint venture, we will have the opportunity to earn fees for our services. And importantly, incentive fees for achieving certain return thresholds. Summit will control a 51% majority interest in the venture with GIC contributing 49%, and investments are anticipated to be financed at a modest leverage target of 50%. For accounting purposes, we will consolidate the joint venture on our financial statements. We hope to scale the venture significantly, but opportunistically over the next several years and believe our partnership with such a highly regarded global real estate investor serves as further validation of our business model and provides significant capital for us to execute on our strategy of creating long-term shareholder value through opportunistic investment. The joint venture's initial investment will be the 88-guestroom Hampton Inn & Suites in Silverthorne, Colorado, which we expect to close in the third quarter. The purchase price of $25.5 million equates to an 8.3% cap rate on the next 12 months estimated net operating income, including minimal required capital expenditures for PIP related items. The hotel's trailing 12-month RevPAR of $153 represents a 23.0% premium to our pro forma portfolio for the same period and a hotel EBITDA margin of 45.1% is 780 basis points higher than our portfolio. Combined with our previously announced asset sales, we believe the new joint venture and its first acquisition exemplifies our ability to thoughtfully and deliberately recycle and reallocate capital in a manner that will create significant long-term value for our shareholders. Our balance sheet continues to be well positioned with more than $400 million of current liquidity, no maturities until the end of 2022 and an average remaining term of nearly five years. As of June 30, we had total outstanding debt of $834 million, with a weighted average interest rate of 4.21%. As Dan mentioned, we have made great progress on our capital recycling program with the sale of eight hotels year-to-date for a combined sales price of $146.6 million, which has reduced our net debt to trailing adjusted EBITDAre to approximately 4.2x on a pro forma basis. Nearly 86% of our EBITDA is unencumbered today as we continue to assemble a highly flexible balance sheet. On July 29th, we declared a quarterly common dividend for the second quarter of 2019 of $0.18 per share or annualized $0.72 per share. The annualized dividend results in a prudent AFFO payout ratio of approximately 58.0% at the midpoint of our 2019 outlook. We updated our full year guidance in the press released yesterday, which includes the formation of the joint venture with GIC and the pending acquisition of the Hampton Inn & Suites in Silverthorne. Our revised full year 2019 guidance for adjusted FFO is $1.20 to $1.28 per share and adjusted EBITDAre of $179.6 million to $187.9 million, which reflects the midpoint of both guidance ranges being increased to account for the pending acquisition and joint venture. We tightened our full year estimate for pro forma RevPAR growth to 0.5% to 2.5% and revised our range of same-store RevPAR growth to 0.0% to 2.0%. We've adjusted our full year outlook for capital improvements to $50 million to $60 million for 2019. No additional acquisitions, dispositions, equity raises or debt transactions beyond those previously mentioned are assumed in the full year 2019 guidance. With that, I'll turn the call back over to Dan.

Thanks, Jon. In summary, we are pleased with our second quarter performance as our high-quality portfolio continued producing solid results, and we're excited about our opportunities for internal and external growth in the future. And with that, we'll open the call to your questions.

[Operator Instructions] Our first question comes from the line of Bill Crow of Raymond James.

Dan, I'm curious, the Silverthorne Hampton. Is that something you would have bought for your own portfolio, had you not had this JV cooking?

Yes, it's a good question, Bill. We would. I mean, it does have some of the dynamics and characteristics that we would really seek, which is stable and broad demand generators. Actually, the summers in that area have actually gotten very robust as far as demand. It's very hard to build, as you'd expect, in the mountains. And clearly has great RevPAR and a great location. So yes, while it's on the smaller size of some of the things we've announced, still does meet the criteria that we would look for in an acquisition.

So then my follow-up on that subject is, how do we take that very attractive 8.3% cap rate and think about the, your portfolio as a whole?

This is a fair question. I think that each individual asset probably doesn't in totality add up to the value of a company, right? There's an inherent platform value, which, for us, we're incredibly proud of. There are times when we find these, what we would call kind of diamonds in the rough or unique opportunities. They're hard to find, but I think we found one here with pricing that is consistent with how we would hope to find them. But I don't think the cap rates are leading to any other valuation metric.

Yes. Okay. I appreciate that. One final one from me. Congratulations on the market share gain. And I think you said your RevPAR index was 113-point-something. I'm just curious, if you were to look at the brands and do kind of a composite, Hampton Inn is here and Courtyard is here, and this is the weighting that we have in our portfolio. How would you compare to those national statistics from the brands?

Not actually sure what the national statistics are. There's so many of them in so many different markets. And I think some of the metrics might be skewed, at least in the short-term with some of the newer brands being introduced into some of these markets. As we've talked about before and a very common knowledge, newer and cleaner usually wins and the brands, while Hampton and Residence Inn, in particular, Courtyard and Hilton Garden Inn, some of those historic brands and some of the newer brands that are gaining strength in market share, Hyatt Place in particular, still have some recognition. More and more the value of that is aligning with their -- the strength in their platform. And so I wouldn’t say that we look at the brand penetration as the most important thing. I think there are markets where, like our Hampton Inn in Austin here, punches very much above its weight, not because of the Hampton just because it’s got a great location. So, I’m not sure if that is a long enough answer or not. But I don’t know that there is a direct tie into the brand because it is hundreds of different markets all across the country. I don’t think you can really tie those together too closely.

Yes. I just -- as Analysts we hear, Marriott and Hilton fighting about is at 115 or 117 or 118, et cetera. I just didn’t know if you had that data at hand, but all right, that’s great.

I do think that the value of their loyalty programs is part of our core thesis and where we find a lot of value. I don't think we pick a Hampton over Hilton Garden Inn or a Residence Inn over a Courtyard because of the penetration. I think to kind of restate it, its loyalty matters to us, but also location and demand drivers.

Thank you. And our next question comes from the line of Neil Malkin of Capital One. Your line is open.

I just wondered if you guys can give us an update on the three mezz loans on the development you have going and the buyout options there. Are any of them getting close to completion? And then I think two are this year? Any updates on that you plan to execute those options? Or any commentary about the market or your appetite to do more of those things as these three come get completed?

Sure. Neil, this is Dan. We do have a window that opens up in the back half of the year, it doesn’t close immediately, so we’ve got some flexibility. And I think our plan all along is to see ramp in these markets and that validates our underwriting assumptions before we would make the commitment there. As far as identifying the assets, we would do that as we get closer and have a commitment made.

Okay. And then in terms of just your operating efficiencies, you talked about, looks like F&B margins, sort of like the other non-room margins have been performing well. Can you maybe talk about some of the things you’re doing? Maybe new initiatives you’re implementing to drive those efficiencies on the non-room side. I know a lot of the REITs have been talking about sort of maximizing the use or efficiency of non-room spaces. Wondering what -- how you guys kind of approach that? And given that we’re a little bit late in the cycle and RevPAR isn’t super strong, how you kind of combat that to keep margins flat or from deteriorating?

Yes. Thanks. It’s Dan, again. I do think that we pride ourselves on running a very efficient organization. So, while many have talked about a lot of this low hanging fruit, we’ve already gone through that. So, we tend to operate at a very high efficiency. So, the options are harder. But we’re finding a few. We have done some additional renovation work, sped up some renovation work, kind of expanded some bar areas to drive more revenue there. So there are some things that we've been doing to add additional value. But I think what we find has been our sweet spot is that the same old issue that we've used to drive performance in the past, which is just paying attention. We have a great asset management team and revenue management team that work tirelessly day in and day out, making sure rate is set right, making sure that sales teams are going after the right accounts, making sure our mix is good. And I think that, that change in segmentation, some markets may be light in business and some may be light in leisure. And so to work through there and paying attention to the details I think is the real driving force behind our success in managing those costs. We've got a great relationship with our third-party managers and work well with them. So I wouldn't say that we're not doing a lot of the low level things, but that it was run pretty efficient before it started.

And our next question comes from the line of Amanda Sweitzer of Baird.

Congrats on the JV announcement. Can you guys just start by talking about GIC's motivation for pursuing the JV today? And then does the JV, are they targeting a certain scale or have either you or GIC made any firm investment commitments?

Amanda, this is Dan. Jon and I probably share the question there. I think we've looked for a long time to try to find a good joint venture partner. And this conversation with GIC goes back over a year. And to find somebody that actually shares our long-term value or long-term view on value creation, sees the value in our unique value-add platform, which includes, as you would expect, asset management, revenue management, a strong e-commerce focus, along with design and purchasing and construction. That's hard to find. But they are a long-term investor. And I think this, in and of itself kind of validates our view on this better operating model type of asset that we target. It also shows kind of the scalability of our platform and the value that can be unlocked from all the talent we have here. And I think GIC, as we've had discussions, sees value in the space. They were kind enough to come to Austin and spent some time really to understand not just how we buy and sell, but also how we manage and create value. And I think seeing that there's a real operating component to value creation kind of convinced them or validated that our part of -- or the need to have a good partner in doing this. So as we've said before, clearly thrilled to have them as a partner. It was a long time to find the right partner. But I do think it shows that there is value in this space that is attractive to institutional investors.

Yes. Amanda, this is Jon. I would just add on kind of the size question. There isn't a mandate from a size perspective. We, obviously, as you would expect, would like to scale the venture. We didn't go through it just to buy one asset for $25 million. And our intention is to try to grow the -- to try to grow the venture significantly overtime. That being said, there's no mandate if we will continue to pursue acquisitions opportunistically.

That's helpful and just following up on that. Do you expect development to become a bigger part of your external growth story following the JV announcement just given that land parcel that you purchased in Silverthorne?

Amanda, it's Dan. No, we don't. That was, I think, a unique opportunity. We've obviously demonstrated our ability to create value through select developments as we did in Orlando last year. But I think that would be more of the exception. I think you should expect, as far as investment criteria and asset types, a lot of the same in the joint venture, as you've seen from Summit over the years. But yes, development would be very opportunistic and not a big change from our standpoint.

That makes sense. And then last question for me. Can you guys talk about the reduction in the same-store RevPAR growth guidance? And kind of what you've seen in terms of fundamentals and how your outlook for the second half of '19 might have changed over the past 60 days or so?

Yes, sure, Amanda, it's Jon. I do think that we have seen the second quarter finish slightly softer on the top line than our expectations going into the quarter. As you'll recall, I think the first quarter was stronger than our expectations going in. Our expectations for the back half of the year have come down a little bit. And we've seen it more on the same-store portfolio. The pro forma portfolio has been the beneficiary of some of the recent acquisitions and the strength we've seen there. Notably, the Hyatt House that we just opened in Orlando, and to a lesser extent, the Residence Inn in Watertown, those assets have performed relatively better and the pro forma, and held up the pro forma portfolio slightly better than the same-store portfolio.

Our next question comes from the line of Wes Golladay of RBC Capital Markets.

Sticking with capital allocation. As we look to the second half, do you expect to be a net buyer and then for your acquisitions, are they going to mostly be with your new JV partner? Do you guys have a, I guess maybe a 100% overlap in strategy, investment philosophy? Or where do you differ?

Yes, sure, Wes, it's Jon. I think that we will continue to be opportunistic on both the buy side and the sell side in the back half of the year. As we've talked about, we were successful in selling quite a few assets at the beginning of the year, and it has created some capacity for us to go out and selectively find acquisition opportunities, and we obviously now have a partner where it allows us to scale that ambition a little bit more. So I think, again, we'll continue to be opportunistic from that perspective.

Okay. And then looking at renovations, slower RevPAR, would you pull any projects maybe for 2020 into 2019? Any major projects you're looking at?

Wes, it's Dan. It's kind of late near to be able to pull anything from '20 to '19. There are some smaller projects that we could maybe enhance. We spent a lot of time over the last year, taking a look at every renovation and making sure that every dollar is spent as an investment, and we can get that same expected return on that dollar. And that's resulted in a little bit higher spend on some bars and fitness centers and things like that. It's also postponed some renovations, put them off a year with the thesis that we could spend more a year later and feel a little bit better about it. We've been really thoughtful about the type of furniture and the type of flooring and the type of fabrics and all the things that get us that extra year of usage out of that capital. So most of that stuff is done pretty far in advance, so while we did have some from 2017 that drifted into 2018, that’s unlikely to be able to switch for this year.

Thank you. Our next question comes from the line of Chris Woronka of Deutsche Bank. Your line is open.

Hi. Good morning guys. And congratulations on another really solid quarter on the margin front given the RevPAR growth. And I’m going to ask along those lines. I know you mentioned some efficiencies and some other things that you guys do specifically, but can you maybe give us color on, are there some of the brand things and whether it relates to Marriott or not, but things like OTA fees and green programs, how much are those contributing to your keeping the margins stable?

Sure, Chris, it’s Jon. I do think one of the kind of one of the stories, even though the first half of the year has been kind of a very deliberate effort to remix the business. And group business, in particular has been strong for us in the first half of the year, we’re up about 9.0%. It’s not a huge piece of the pie for us, as you know, but it is kind of a lower-cost segment for us, and we’ve been able to replace some of the more expensive OTA channels with some of the lower-cost group and negotiated an advance purchase. So part of what’s helped drive margins, one is it’s clearly a very deliberate effort on making sure costs are contained, but also a favorably remixing from a segmentation perspective.

Okay, great. And then I just want to ask a supply question, but maybe in a different way, which is we continue to see some of these kind of older 3.5, 4 star full-service hotels that have probably been underperforming and then either link up with a new brand or they renovate. And I know some of your kind of upscale product probably competes with that in certain markets. Is that something you guys monitor in terms of it’s not a net supply addition, right? But it’s kind of a – it’s kind of a fringe supply addition because it becomes more competitive. Is that something you guys look at? And is there any impact going forward, do you think?

Chris, it’s Dan. Yes, for sure, we monitor that. And in fact, we look at some of those opportunities to create a value add. And there are some that come up. Some, as you would expect, are have a greater effect than others. Part of that is location. It is very hard to take an old full service building and make it new and clean. It takes an incredible amount of capital and investment. It's just not as simple as putting a different sign on it and shutting down the restaurant. So I think there's been some missteps by some that have thought that it worked that way. But it just doesn't change quite that fast. It still has to have a great location. You have to have a great team and it has to be new and clean and better than anything else in the market. So I would say that there are certain instances where we've seen that have an effect, but some that has had relatively little effect at all.

Okay, great. And just lastly for me on the joint venture question for you. Does this make you guys closer to maybe doing bigger portfolio deals that you wouldn’t do independently? And the second part of that is, can you give us a little bit of color maybe on how your promote or asset management fees work and how significant they might become over time?

Sure. Yes, Chris, it's Jon. I do think we'll continue to pursue an acquisition strategy similar to what we've pursued historically for the Company. We haven't been large buyers of large portfolios in the past. We certainly look at things. But we do -- as you know, we have fairly stringent underwriting standards when it comes to that. So I would expect the overall philosophy and acquisition strategy to mirror what we've done historically. From a fee perspective, kind of out of respect for the confidentiality of our partner, we won't go into details on the fees. We will report them as they are earned, they will flow through the income statement, so you will see them. What I would say is that we're happy with the structure. It does create a nice incentive for us. It helps facilitate higher yields and better overall returns for us.

And our next question comes from the line of Austin Wurschmidt of KeyBanc Markets. Your line is open.

Another question, I guess, as it relates to the joint venture. Just curious how you guys determine what deals go into the venture versus what's wholly owned by Summit? And have you considered contributing any existing Summit assets into the venture at this time?

Sure. Yes, Austin, it's Jon. There is a period of time where we will take them, all the deals that we're looking at. There's obviously, as you would expect, a mechanism for us to get out of that arrangement. We don't expect this -- we don't anticipate this to be kind of a perpetually exclusive relationship. But again, we will take deals to them initially, but over time, we won't have to do that. And then what was the second part of your question, Austin?

And then I was just curious if you have considered or are considering contributing any existing Summit assets into the venture?

We haven't done it initially, as you know. It's certainly an option for us, although I will say the focus initially has been on more of an external growth strategy.

Okay. And then to the extent that the venture, your partner decides that you'd like to sell an asset. Does Summit get a right of first offer on any deals? Or how does that process? How is that negotiated?

Yes, we do -- we will have an option to buy out their interest overtime. So we do think that it will create a kind of a nice shadow pipeline for us over time.

Appreciate that. And then just last one for me on fundamentals. As you talked about, you took down the same-store range due to some softness in the second quarter and maybe what you're seeing in the back half. But mistake me if I'm -- correct me if I'm wrong, but I believe that the first quarter and third quarter you previously expected to be your strongest quarters of the year, is that still the case? Or has anything changed based on what you're seeing in terms of pace as you look out into the third quarter?

Yes. I think that, clearly, first quarter of the year was what we expected to be the strongest quarter. Our expectation kind of all along was for a stronger first half and a little bit slower second half. Our expectations for the third quarter have come down. But as you can see from kind of the implied guidance range, we've got a stronger first half than a second half of the year. We were never expecting kind of the second half re-acceleration that I think some of our peers had assumed. So we're flatter in the back half of the year versus being up a few percent in the first half of the year.

And we do have a follow-up question from the line of Bill Crow of Raymond James. Your line is open.

It's really along those lines. Jon, if you were flattish in the back half of the year, there's no way you'd hit the bottom end of your RevPAR guidance, right? It would take some pretty, a negative quarter or 2. What are you seeing in July that might bring us some clarity on the bottom end of your range?

I'm not sure I fully understand the question. The kind of the midpoint of the pro forma range is 1.5%. Year-to-date, we're up 2.3%. And so there is some expectation for growth in the back half of the year. It isn't 0, we haven't given quarterly guidance. Obviously, we can kind of infer what that is. July has softened, specifically to answer your question. Some of that was related to some disruption in New Orleans from the hurricane. But again, we, the point was more, our expectation was for growth to be stronger in the first half of the year than the back half of the year.

Yes. I was just wondering how bad things would have to get to get to the bottom end of your range, which is zero on a same-store, I think, and 50 basis points on a pro forma basis, and it just doesn't seem like that's on the table unless things get materially worse?

That's fair. I mean the math kind of is what it is, I do think we feel good about where the range is. We have operated with a little bit wider range than we have historically given some of the volatility in the business. And again, I think we're pleased with where we finished the first half of the year. I think we feel good about being able to maintain the range. That doesn't change the fact that it is still a difficult environment out there. There's still some volatility in the markets today.

And this does conclude our question-and-answer session for today. I'd like to turn the conference back over to Mr. Dan Hansen for any closing remarks.

So I want to thank everybody, as always, for joining us today. We're very proud of our renovated properties and our continued focus on operating costs have continued to deliver the strong results that you'd expect. Our goal of creating long-term shareholder value through opportunistic investments remains unchanged and our partnership with GIC provides significant capacity to do so. We are as excited as ever for the future of Summit. And we look forward to talking with you again next quarter.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.