Rexford Industrial Realty, Inc. (REXR) Q3 2017 Earnings Report, Transcript and Summary

Greetings, and welcome to Rexford Industrial Realty Third Quarter 2017 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the call over to [Karen Smith] with Investor Relations.

We would like to thank you for joining us for Rexford Industrial's third quarter 2017 earnings conference call. In addition to the press release distributed yesterday after market closed, we have posted a quarterly supplemental package with additional details on our results in the Investor Relations section on our website at www.rexfordindustrial.com. On today's call, management's remarks and answers to your questions may contain forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are usually identified by the use of words such as anticipates, believes, estimates, expects, intends, may, plans, projects, seeks, should, will, potential, predicts and variations of such words or similar expressions. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today. Examples of forward-looking statements include those related to revenue, operating income or financial guidance. As a reminder, forward-looking statements represent management’s current estimates. Rexford Industrial assumes no obligation to update any forward-looking statements in the future. We encourage listeners to review the more detailed discussions related to these forward-looking statements contained in the company’s filings with the SEC. In addition, certain of the financial information presented on this call represents non-GAAP financial measures. The company’s earnings release and supplemental information package, which were released yesterday afternoon, and are available on the company’s website, present reconciliations to the appropriate GAAP measures and an explanation of why the company believes such non-GAAP financial measures are useful to investors. Today’s conference call is hosted by Rexford Industrial’s Co-Chief Executive Officers, Michael Frankel and Howard Schwimmer together with Chief Financial Officer, Adeel Khan. They will make some prepared remarks, and then we will open the call for your questions. Now, I’ll turn the call over to Michael.

Thank you and welcome to Rexford Industrial’s third quarter 2017 earnings call. I will begin with a summary of our operating and financial results. Howard will then provide an overview of our markets and transaction activity. Adeel will follow with more details on our quarterly results, our balance sheet and our guidance for 2017. We are very pleased with our third quarter results. The quality of our internal and external growth reflects the strength of our value-driven and value-added business model focused on the extremely supply constrained in-fill Southern California industrial market. We achieved same property NOI growth of 9.8% on a GAAP basis and 11.3% on a cash basis. Our 18 million square foot consolidated portfolio which includes 790,000 square feet of space held vacant for value-add repositioning is 92.9% occupied and 94.1% REIT. Our stabilized portfolio was 97.2% occupied. We signed approximately 1.3 million square feet of leases which were evenly split between new and renewal leasing activity. We are very pleased to report that our leasing volumes set another new record for Rexford’s quarterly leasing activity. And we are once again able to achieve exceptional double-digit leasing spreads. On new leases we achieved leasing spreads of 33.6% on a GAAP and 21.4% on a cash basis. And on renewal leases we grew spread only 1.2% on a GAAP basis and 13.4% on a cash basis. So far, this year we have acquired 3.6 million square feet for approximately $534 million and expanded our footprint by 20%. To-date we have increased our portfolio square footage by 3.3 times since our IPO and we have increased our NOI by 4 times over that same period. As a result of the strong activity company’s share of core FFO grew by 27% for the third quarter compared to the prior year quarter. We also generated 13.6% year-over-year increase in core FFO per share for the quarter while maintaining a low leverage balance sheet with ample capacity. On top of the strong growth we still project about 18% or almost $23 million of NOI growth embedded within our in-place portfolio assuming we have to buy another asset. About half of this embedded NOI growth is derived from our major repositioning projects. Our in-place portfolio is also well positioned for NOI growth as we capitalize on about 3.3 million square feet expiring through the end of next year with in-place rents with our currently estimated be about 10% for the market. Our value-add repositioning expertise has a key differentiator. For example, the recently announced 317,000 square feet of repositioning and resale at our Valley Boulevard and Western Avenue projects we achieved unlevered yields on total investment of 6.9% and 5.9% respectively. Put these strong yields into context, similar quality of products and A plus instore location reached to similar high-quality tenants is currently trading at a low 4% cap rates. Our ability to generate substantially better than market or better than core yields is directly the result of our additional work through our intensive research that allows us to source and close off-market and lightly marketed transaction. With over 1 billion square feet prior to 1980 within our infill Southern California market we are mining a limitless wealth of value-add opportunity. Our singular focus as the expert sharpshooter at infill Southern California enables us to create value and substantial has an advantage. While national industrial trends remain positive in many location, not all industrial markets are fairly equal. And we believe infill Southern California that’s head and shoulders above the rest in terms of long-term supply and demand fundamental. Our markets continue to operate well below 2% overall vacancy to some major infill submarkets operating at below 1% vacancy. Core activity continues to reflect the unique position of Southern California as a nexus of trade between the United States and the Pacific Rim. After record volumes of 2016 at port of Long Beach reported container volume increased 8.9% year-to-date through September compared to the prior year and the port of Los Angeles reported an 8.2% increase over the same period. And e-commerce continues to drive incremental demand as we feel real estate [game] is our game. We continue to see a dramatic increase in the movement of boxes between our infill warehouses to end users that are increasingly bypassing the retail channel. No market will benefit from e-commerce at but the same magnitude at infill Southern California as being the largest population and consumption in the United States with over 40% of the entire nation containerized imports travelling through our ports of Los Angeles and Long Beach. Our leasing activity also reflects a growing impact of e-commerce with about 30% of this year’s new leasing activity driven in large part by e-commerce and despite robust growth and demand with rents that are sold 70% higher than the average for the next five largest markets in the nation, it is nearly impossible to build new or leased industrial products due to the scarcity of land and high cost of construction. In fact, we continue to lose industrial product as it is converted alternative leasing. As we look at that it could not be more excited Rexford is nearly in the beginning stages of building a great and substantial business that we envision with our IPO. We have gratitude the entire Rexford team which we believe to be best in the business for driving our outstanding performance as we are making our future growth possible. And with that I am very pleased to turn the call over to Howard.

Thanks Michael and thank you everyone for joining us today. I’ll start with a brief update on our market, utilizing data from CBRE and discuss our recent acquisition, disposition and pipeline activity which look to be robust. In the third quarter market fundamentals remain strong with Southern California infill market. Excluding the Inland Empire East, asking rents increased 6% on a weighted average basis versus one year ago, and occupancy ended at 98.3%, down 10 basis point from the third quarter. All of our infill markets continue to experience strong rental growth which CBRE projects to continue over the next couple of years. Moving on to our recent investment activity. We completed $293 million of [success positions] of core and value-add industrial properties in the third quarter. The largest transaction this quarter is the acquisition of Rancho Pacifica industrial park an additional quality industrial complex at this stage fix build totaling 1.17 million square feet on 56 acres or $270.5 million. As previously stated, this acquisition meaningfully increased Rexford's scale and operating margin in a low vacancy high demand self-grade submarket. We just completed our first lease renewal in the process and are already outperforming project, where we estimated in place strength with over 25% below market. the 75% of square feet rolling over the next three years, we are well on our ways to achieving 5% or better stabilize yield on top. Additionally, we purchase Inland Empire of $26.9 million this full leased 218,000 square foot modern industrial complex is located in the Inland Empire West submarket which has over 500 feet of permit and interstate in the freeway. The project is leased in furnace within place brand expanded over 20% below market enabling us to grow the initial yield of just under 4.5% for approximately 5.5%. In the off market transaction we’ve completed the acquisition King's view, a two tenant, 100% leased, 100,000 square foot warehouse building located in [indiscernible] submarket $14 million. The initial yield in this acquisition was just over 5% and is projected to stabilize approximately 5.5%. Now, let me market the transaction, Rexford required a 201,000-square foot single tenant investment property and [indiscernible] drive in the Inland Empire West for $19.8 million. We place rents for this is visible 26 square building are estimated to be 16% below market today enabling us to move the 5% initial yield were projected 5.5% yield upon renewal or lease kind. We acquired [indiscernible] an 87,000-square foot newly constructed industrial property in the San Gabriel Valley submarket for $14.6 million. The building is fully leased with two tenants but was constructed as four units which we expect for our increasing rental rates enroll initial deal is just under 5%. In September we acquired a 25,000-square foot single tenant industrial property on [indiscernible] in Los Angeles submarket for $3.5 billion. The initial yield was 5% and is projected to stabilize approximately 6.3% below market in place. And finally, temporary purchase were down the road of fully leased of 400,000 square foot in land side for the 15,000-square foot industrial program is South Bay submarket of $3.9 million. The initial yield on this acquisition is 5.9%. year-to-date, we’ve completed $534 million back existing. We continue to discover opportunities in our core feel market and have approximately $98 million of deal on LOI of fast track and our platform and new opportunity to see we are strong. So, what we are close to growing our portfolio within our Southern California submarket. Lease has been able to – on value for the sale of deferred assets. Year-to-date we’ve completed approximately $66 million in disposition and we have incremental $64 million at disposition on the market today. Of this, $33 million is expected to close in the fourth quarter. In addition to our acquisition and disposition activity we continue to unlock internal growth successfully feeling repositioning project in our pipeline. During the third quarter we completed [indiscernible] REIT positioning for 317,000 square feet. In August, we’ve signed a five-year triple rent lease for a luxury park company at [indiscernible] a single tenant 109,000 square foot industrial building located in the [indiscernible] submarket. We completed an extensive exchange program including a new building – renovation of office area. 19 new hand loading positions in the asset for our – choosing a 6.9% year-over-year. We also completed repositioning on western avenue, a 208,000-square foot desktop investor building and we always found these markets not just in April 2015, but the portfolio transaction. As of the original business, we completed a full part of renovation including office areas, - and other functional and cosmetic improvement. We signed a 10-year lease in October to streamline the industry and that’s where our engineering firm. This lease which includes 3% annual rent increases is expected to commence at year end from a result in a 5.9% yield on total cost. Scarcity in infield industrial products in Southern California, increasing demand and virtually no ability to deliver for this supply continues to drive the value of our portfolio. With $10.9 million of projected NOI growth yet to be realized in our existing repositioning framework and a $2 million already locked in with the two deals that I mentioned, we have a strong opportunity to drive further growth in our portfolio as we deliver and lease out these assets. I’ll now turn the call over to Adeel.

Thank you, Howard. And my comments today, I’ll reveal our operating results for the third quarter, then I’ll summarize our balance sheet and recent financing activities. And finally, I’ll update you on the guidance for 2017. Beginning with the operating results. In the first quarter 2017, net income attributable to common stock holder was approximately $586,000 or $0.01 or fully diluted share. This compares to $2.3 million of seasons for a fully diluted basis for the third quarter of 2016. For the three months ending September 30, 2017 company shares core FFO was $18 million or $0.25 for fully diluted share. This compares to $14.2 million or $0.22 per fully diluted share in the third quarter of 2016. Core FFO per share increased to a strong acquisition activity completed in the past 12 months and same property portfolio growth which was partially offset by higher interest and higher diluted share count. Same property NOI was $ 21.5 million in the third quarter which compares to $19.5 million for the same quarter in 2016, an increase of 9.8%. Our same property was NOI was driven by a 7.7% increase in total rental revenue and a 2.2% increase in operating expenses. On a cash basis, same property NOI increased by 11.3% year-over-year. Turning now to our balance sheet and financing activity. We continue to maintain a healthy and flexible balance sheet which supports our growth objective. In July, we issued a $125 million in senior guaranteed notes in a private placement which bear interest of 3.93% that matured in July 2027. Also during the quarter, we launched a new $300 million program in September after exhausting our prior $150 million program. In the third quarter under both programs were issued approximately 6.8 million shares of common stock at a weighted average price of $29.09 per share providing net proceeds of approximately $195 million. As a result of these and other activities we ended the quarter with $13 million was available cash and $300 million of availability on our $315 credit facility. We also have a cost $247 million of available capacity on our $300 million ATM program. As near-term debt maturities of just $5 million to 2018, we believe well position from a liquidity prospective to continue to fund our growth strategies. With regard to our dividend, on October 30, our Board of Directors declared a cash dividend of $0.0145 per share for the fourth quarter of 2017 payable on January 15, 2018 with common stock and unitholders of record on December 29, 2017. Additionally, our Board of Directors declared a cash dividend of approximately $0.37 per share for the fourth quarter of 2017 payable on December 29, 2017 to our preferred stockholders on December 15, 2017. Finally, I’d like to update our outlook for 2017. Our guidance refers only to our AFFO portfolio as of today, and does not include any assumptions for acquisitions, dispositions or capital transactions, which have not just been announced. For 2017, we’re increasing the low end and tightening our guidance for core FFO to a range of $0.94 to $0.96 per share, while our previous range of $0.93 to $0.96. Please note that our guidance for core FFO does not include acquisition costs or other costs that typically includes but are calculated in this metric. Our guidance is supported by several factors. We’re tightening our expectation for year-end same property occupancy to a range of 95% to 96% which is an increase of 94% on the low end. We're also updating our other operating portfolio metrics, we're tightening our year end stabilized same property occupancy guidance to a range of 97% to 98% which is an increase of 96% on the lower end and we're increasing guidance for same property NOI growth for the year to 7.5% to 8.5% from our previous range of 6% to 8%. For G&A, we’re increasing our guidance to range of $21.3 million to $21.7 million, including about $5 million of non-cash company-wide equity compensation. That completes our prepared remarks. With that, we’ll open the line to take any questions. Operator?

Thank you. At this time, we’ll be conducting question-and-answer session. [Operator Instructions] Thank you. Our first question is coming from the line of Manny Korchman with Citigroup. Please proceed with your question.

Looking at the pace of acquisitions, it looks like you're really, really busy in July and then same growth to the quarter and it sounds like, looking at what you serve under contract, picking up a little bit but sort of slower than it was at the beginning of the year. Is there more to read into that or is it just sort of what's coming now and what’s in your pipeline that’s going to pick up again this next year.

Manny its Michael thanks so much for joining us today. The acquisition activity has been very, very strong and robust through the year, we've acquired almost $540 million of product and as you know week to week, to month to month always start to predict but in no way there is any weak slow down last few weeks reflect the slowdown in our activity or pipeline, the pipeline looking forward is as robust as ever and frankly if you reflect on the activity, not only have we increased our footprint already this year by that 20%, but since beginning of 2016, we've increased the footprint by a full 50%. And I think the most important thing about the growth is not only do we see it abating. But remember our -- what we call our information advantage in terms of our tracking of opportunities that have catalyst driving those opportunities is increasing. Each year the research that we do is cumulative and so the depth of our reach in our markets is increasing every single year. I think the most important thing about that growth is not just the magnitude but the quality. And you see NOI, you see portfolio growth having grown by 3 times since our IPO but NOI I think is growing about 4 times. So that’s really key to our business.

The G&A increased, it seems big at this point of the year. What’s driving that specifically?

Hey Manny. So, the G&A increase is a projected increase to potential match the cash bonus payout for the full year 2017. And we did that also last year. Again, we don’t have much visibility early on in the year but around this time we can start to maybe see how the year might wrap up. So, this is a projected true-up to max payout and this was all disclosed in the proxy as to what the underlying measurement mechanisms are and obviously the board still have to weigh in into -- the [indiscernible] still has to weigh in, but this is the initial true-up to those targets. And this involves obviously named executive employees and then key employees in the company.

So that was providing the offset to sort of better fundamental to maintain guidance if I think about that correctly?

That is the part of it. The guidance obviously is there’s a couple of things. We did issue a lot of stock from the ATM this quarter so you don’t see the full impact here in the next quarter so that obviously is keeping that but the fact that the FFO per share increased to $0.25 this quarter prior quarter was $0.23. So even in the high end right we can still be at a $0.25 if we were to just maintain this quarter. So, you are definitely seeing that piece of it. The other part obviously you talked about the G&A and the other piece that I think is worth noting is that we have 781,000 square feet of expiring leases in Q4. 58% or so of same store which we have already guided, and there is still another 42%. So naturally we feel very optimistic and that is going to be very productive quarters similar to what the last three quarters have been. But there is still some exposure there that we need to still think about and budget for. But we have seen very optimistic.

Our next question is from the line of John Guinee with Stifel. Please proceed with your question.

Hey we noticed just in the last couple of quarters big property tax increases primarily Manhattan a lot of multi-family portfolios. Refresh our memory as to how property taxes work in your part of the world with your assets?

Hey John, how are you? We have something here called [Crop 13] which essentially [decreases] your tax. Your tax is based on your sale price and only allows for a maximum of 2% annual increase. So, a lot of the older assets we have in our portfolio have about tax advantage of having more of the income to the bottom-line versus some of the newer transactions that reflect current valuations.

Okay. So, the property values are going up 10% a year you are pretty much capped at 2% property tax increase?

That’s correct.

And then the second question was I think I heard you say something about Inland side with a current 5.9 yield. Can you expand on exactly what you can do to that land site? What is going to cause you to build what you build in this day and age, if I got that right.

Yeah. That’s actually a sight right in the South Bay of the Long Beach freeway so that has proximity to the port, it’s fully paid and has a small investor building on it. So, down the road if the tenant that didn’t would happen to leave we would really just rent it for container storage or a light industrial that needs outside storage. That tenant notably just actually renewed their lease, and I think it was around five-year deal. So, that 5.9% yield has increases in the lease and has walked in for several years.

But, there is no additional FAR et cetera?

Well there could be, but we don’t -- sometimes these land sizes that are paid were actually worth more as land for container parking than they are to build a building on in that market.

Not in Indianapolis?

That’s why we’re laser focus and so I think was California.

The next question comes from the line of Jamie Feldman with Bank of America. Please proceed with your question.

Great. Thank you. Adeel, I want to focus on footnote two on page 11, where you talk about same-store portfolio excluding probably under repositioning. So, it looks like this was fixed line, is that on a GAAP basis and can you also talk about on a cash basis. And then just remind us how you calculate this metric? A –Adeel Khan: Sure, Jamie. So, yes that footnote is disclosing the GAAP on number and just to remind everybody on the call, our same-store definition is using the period of ownerships so anything that was comparable in terms of ownership is part of the same-store pool. We have added that ancillary data point starting last couple of points ago to strip out any potential impact from repositioning efforts that’s being going on in the comparable period and that’s what that number reflects. So, the number in the footnote reflects 6.1% for the three months ending and for the nine months ending was 5.2%. What’s not disclosed there which I’ll disclose right now was on a cash basis for three months ending it was 7% and for the nine months ending it was 6%. So, that’s the only thing that’s not there.

Okay. And then as Howard was talking about some of the stabilize yields on these redevelopments. Can you maybe talk through that difference in cap rates to submarkets? And should we start to see as cap rates continue to come in maybe start to see go it somewhere the more the higher cap rate or the higher yield submarkets. Just how do you think about the balance of quality versus yield versus location as you think about your pipeline?

Yeah. Sure, Jamie. Yeah, it’s interesting that one thing that we’ve seen overtime now is a narrowing of those cap rates spread between the markets and fee, A or B quality building. But the market is extraordinarily tight, we’re still seeing sales occurring in the 4% range. We’ve seen a few larger Class A institutional deals go down sub for, but I think the key here is that there is just not enough product. Southern California today is the number one choice I think from a lot of the polls we’ve seen in terms of where people want to buy product and because of that demand we’re not really seeing anything on the horizon in terms of the change in cap rates, in terms of moving up, could be something pulling in like some of the Class A but you know all-in-all its hard to say that there is one market that we would focus on more or less than the other. The smallest markets that we buy in are San Diego and Terra County where we really don’t put much of a focus in terms of new acquisitions, when those come up that really meet our strict guidelines we will occasionally buy in those markets and the cap rates there are a bit higher than the Orange County, [England] Empire and Greater LA markets.

Okay, that’s helpful and then did you say what your current high potential pipeline looks like as we’re heading into ’18?

Well we’re typically monitoring plus or minus about a $1 billion worth of product any one time. You know I mentioned we had $98 million and I think it was under contract or elevated right now. We’ve got quite a few other transactions, we’re circling right now that some of which is fallout into Q1. So, we’re very optimistic about 2018. There is a lot of -- like I mentioned earlier a lot of the research work we’re doing that we have a lot of deals in the pipeline from. So, we don’t really expect any dramatic change going forward in terms of what we’ll be able to buy and kind of deals that are different pipeline at the moment.

Our next question is from Michael Mueller with JPMorgan. Please proceed with your question.

Yeah hi, can you spend a minute just talking about the different types of properties that you’re selling, what’s making it to disposition pool, its properties that are tapped down or is it stuck you as non-core, just a little bit more color on that?

Sure, hi Mike, its Howard. Yeah, intentionally a lot of the dispositions we’ve done in the past really were assets that significantly outperformed our cap rate values. You might recall we sold a property in San Diego in the first quarter and that was mid-way asset where we are about to start redevelopment on and we were going to sell it to a company that is now converted residential and creative office and had a 47% IRR. So we take advantage of those type of opportunities and we’ve sold a couple of multi-tenant buildings in the portfolio and we have a few smaller projects that we’re eyeing to sell as well that a little more management intensive for us and a little off the per fury from where our management teams are located and we’re really taking advantage of low cap rate and high demand for that product right now in the marketplace and a lot of the multi-tenant is selling for a significantly low 5% cap rates. So those are quite opportunistic to be able to sell the multi-tenant building, let’s say with you know 40 to 50 tenants in it and do a trade into a building that has one tenant or two tenants and create a lot of efficiencies in our management teams and our cost basis as well in terms of operating the asset. So next year we’ll continue to go this portfolio and probably expect to see a few more probably multi-tenant deals or non-essential assets that we might look at selling.

And is there like a ballpark cap rate on a blended basis that you can share?

Well it varies, I mean typically I think we’ve sold, where the assets have been all sub five in terms of those yields.

Okay I'm just looking.

I mean which one, we have midway I mean obviously was taken, so there really wasn’t a cap rate associated with it, but, the coloration that we could make to the rental value of the asset, would have probably been more on a three range on that deal.

Our next question is from the line of John Benda with National Securities. Please proceed with your question.

So quickly repositioning these two-large car driver of increases NOI etcetera, can you talk about what really dives the decision to put a property into repositioning either acquisition or one that’s currently operating, [tenants] into the repositioning mix.

Sure, it's not really a decision that’s made late in the game, in other words once we own a property, its typically something, we’re buying it from and we have a plan to create value in as we continue to emphasize, Rexford is not a cap rate buyer, we're typically thinking about how we can drive those rents and revenues and stabilize assets significantly higher than market cap rate. Let me give you a couple of examples of that, today on the call mentioning the 6.9% and 5.9% yields on those two assets, the 100,000 and 200,000 link that will stabilize and those were building from day one, we knew what our plan was going to be, and just took a while on of them to get the tenant out and create that value. So, what we do in our market place is really look at a building upside, size way, upside down, size way you name it and we try to decline that last bit of value that would mature our, we have a team of 7 people on our construction department there that are doing everything from our internally here from space planning to third party managing the construction process. And its--you're right it is really a strong plan with our business and one that we will continue to focus on and bring a lot more asset is the portfolio.

John its Michael add a little more, I try to quantify what we look forward, gets us excited about our repositioning activity and trends since you look at the repositioning stage and the supplemental, the aggregate yield and total cost and that not just acquisition that total cost against the yield, including subsequent CapEx and other investment is about 6.6% yield, on unleveraged unlevered yield on total cost. And if you look at the return on dollars we’re investing, it's about 24% return on incremental spending of about just under $40 million, that’s good use of capital and I think the main thing to recall, that we’re repositioning and the deals that Howard mentioned and the ones I just referenced is that beyond the few deals and typically there is anywhere from eight to a dozen deals on our repositioning stage and the supplemental but to make it on that page, space or property has to go vacant for at least six months. And I think a key take way for Rexford is that beyond those deals that make it for that page, consistently and extensively working on properties throughout the portfolio, where space doesn’t go down for six months but we're making substantial value add improvement and driving value and increasing cash flow. And that’s really the heart of our business. So, I think hopefully that helps in giving you more color. Thanks again for joining us today.

Yes, simply. And then just quickly second question. On the dividend front it seems like you guys have been paying now below 65% of core FFO and the most recently announced dividend I think there is likely room for a pay or two more to be under that ratio. So, can you talk about with all the increases we have had in NOI and core FFO and FFO et cetera, how you guys play with the dividend?

Hey John it’s Adeel. Good question. And just to recall for everybody we increased the dividend in Q1 ‘17 and that was about 7.4% increase from the prior level. So, the board value set each quarter and obviously we are in the fourth quarter at this current $0.0145 per share and yes, we’ve had a really productive year in FFO growth and NOI growth and will evaluate that for next quarter. So, we will look to sleep now as soon as that’s done. But thirdly I think going back to Michael’s and Howard’s point and to earlier point we are certainly making a very, very good use of that capital in terms of repositioning and what that does in terms of returns and yields coming back. but again, the discussion is being these live every quarter and the Board evaluates it based on all the factors and fundamentals that we presented them and we will let you know as soon as the next quarter is there and there is going to be an interest.

At this time, I will turn the call back to management for closing remarks.

This is Adeel. We'd like to thank everybody for joining the call and your focus in the company and we look talking to you guys on the next quarter call. And Go Dodgers!

Thank you. This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.