SITE Centers Corp. (SITC) Q1 2013 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the First Quarter 2013 DDR Corp. Earnings Conference Call. My name is Janet, and I will be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Mr. Samir Khanal, Senior Director of Investor Relations. Please proceed.

Good morning, and thank you for joining us. On today's call you will hear from CEO, Dan Hurwitz; Senior Executive Vice President of Leasing and Development, Paul Freddo; and President and CFO, David Oakes. Please be aware that certain of our statements today may be forward-looking. Although we believe such statements are based upon reasonable assumptions, you should understand those statements are subject to risks and uncertainties and actual results may differ materially from the forward-looking statements. Additional information about such factors and uncertainties that could cause actual results to differ may be found in the press release issued yesterday and filed with the SEC on Form 8-K and in our Form 10-K for the year ended December 31, 2012 and filed with the SEC. In addition, we will be discussing non-GAAP financial measures on today's call, including FFO. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in our earnings press release issued yesterday, this release and our quarterly financial supplement are available on our website at www.ddr.com. [Operator Instructions] At this time, it's my pleasure to introduce our CEO, Dan Hurwitz.

Thank you, Samir. Good morning, and thank you for joining us. Over the past several quarters, and most recently in our year-end review report, we have openly articulated our aspirations to earn blue chip status in the REIT space and in the market generally. According to the New York Stock Exchange and notwithstanding the requirements of market capitalization, a blue chip is a corporation with a national reputation for quality, reliability and the ability to operate profitably in good times and in bad. As a management team, we continue to execute our strategic plan, and our focus remains on building and maintaining a high-quality organization that delivers consistent and compelling results across all business segments quarter-after-quarter and year-after-year. Our shareholders can expect quality and reliability, and with continued performance and discipline, we are confident our strategic direction will lead to achieving our goals. Now that we are a quarter into the year, I would like to address what the market can expect from DDR today and going forward. Operationally, the market can expect us to not only lease more than 10 million square feet and raise occupancy, as previously guided, but to do so with minimal CapEx while raising rental rates, achieving true organic growth and not playing the role of subordinate lender to retailers. CAM charges will increase below the rate of inflation in an effort to operate more efficiently and give our tenants room to breathe as we optimize our portfolio-wide occupancy cost ratio and focus on the opportunity to raise rents. Financially, the market can expect us to continue to de-lever by growing EBITDA while funding acquisitions with discipline and primary consideration given to NAV accretion, although we realize that FFO cannot and will not be ignored. Capital allocation decisions will continue to be evaluated on a…

Thank you, Dan. Over the past 4 years, we have leased over 40 million square feet of space to high-credit, best-in-class retailers dramatically improving our portfolio of tenant mix and credit profile and contributing to significant gains in our leased rate and same-store NOI. As a result of the progress we've made, one might think there is less obvious vacancy remaining in our portfolio and there is. But strong platforms don't need obvious vacancy to produce continued gains. When you review our embedded organic growth, driven by an improved leased rate across the portfolio, continued improvement in deal spreads, a higher retention rate, our ability to purposely create vacancy through downsizings and lease terminations and the advantageous supply and demand dynamic, the story gets even better. These trends and market conditions, when combined with our platform, will result in occupancy gains and organic growth similar to the stellar numbers that we have achieved over the past few years. And with the continued improvement in asset quality and the integration of recent acquisitions, these results may exceed prior performance. Starting with our embedded growth, as discussed on prior calls, our 94.4% leased rate is a forward-looking metric. Within this 94.4% is 1.2 million square feet of currently signed but not yet rent-paying leases, which doesn't include renewals or new leases for currently occupied spaces that will vacate in the future. So based on current leasing velocity, we are very optimistic about our ability to add to our leased rate. Over the past few years, we increased our leased rate by 160 basis points and fully expect to achieve a comparable increase over the next few years. Occupancy gains through lease-up is the most obvious opportunity for future organic growth, and importantly, we will achieve this improvement in leased rate through an…

Thanks, Paul. Operating FFO was $86 million or $0.27 per share for the first quarter, 13% above last year. Including non-operating items, FFO was $82.5 million or $0.26 per share. Non-operating items were primarily the noncash write-off of financing cost related to the refinancing of our unsecured revolving credit facilities and secured term loan as part of the maturity that occurred in January. We are pleased to continue to upgrade the quality of our portfolio during the quarter with the acquisition of attractively-priced prime assets located in major MSAs and the disposition of non-prime properties and non-income-producing assets. The prudent funding of investments continues as well, which has significantly advanced our objective to improve the balance sheet. We will continue to lower our cost of capital by extending duration, improving our fixed charge coverage ratio and lowering leverage, while also growing EBITDA through portfolio lease-up and external growth, primarily off-market acquisitions and select redevelopment and expansion of our prime shopping centers. We were net acquirers in the first quarter as we purchased 2 prime assets for $81 million in the major markets of Dallas and Oakland, expanding relationships with high credit quality retailers such as Walmart, Whole Foods, T.J. Maxx and PETCO. Our joint ventures continue to provide an additional pipeline of unique acquisition opportunities as well and, in late April we acquired our partner's 85% interest in 5 prime power centers located in the southeastern MSAs of Atlanta, Tampa and Richmond for $94 million. We have managed and leased centers for over 6 years and this low-risk investment was funded primarily with proceeds from asset sales and the issuance of $45 million of common shares in April. The 5 prime power centers totaled 1.3 million square feet are currently 98% leased and are anchored by national credit quality tenants…

[Operator Instructions] Your first question comes from the line of Samit Parikh with ISI.

Dan and David, your recovery ratio and NOI margins have really improved year-over-year and continue to sort of move up. And the CapEx is really remaining low right now. Can you sort of just explain how you feel those will move going forward for the remainder of the year?

Yes. I would certainly agree with you that we've seen improvements in that recovery ratio. And I think it is very important to note there are a lot of these items that we'll talk about each quarter in terms of improving portfolio quality, higher credit quality of cash flows, but the question then comes up, how does that actually flow into results? And it doesn't happen immediately, but I do think it's exactly why the improved trend you're seeing in those ratios has occurred and is sustainable on a go-forward basis. It represents the sale of non-prime assets that usually have lower or declining recovery ratios, it represents the acquisition of higher quality assets with higher occupancy and with better credit quality of cash flows. And so you do see a sustained improvement in those metrics that doesn't happen immediately when those transactions are made, but over time, as those results flow into our overall operating results, you'll certainly get that improvement in recovery ratios that is reflective of portfolio quality. It's also reflective of the continued lease-up that we've had that certainly benefits those results, as well as overall, just a landlord-favorable environment, where we have been able to put less CapEx into deals and yet it still generated record leasing volumes and industry-leading leasing volumes. And so I think some of the metrics you highlighted are particularly important because they aren't the top headline metrics when you think about the focus that gets paid to a same-store NOI and the focus that gets put on re-leasing spreads, but a lot of these improvements in real operating stats, lower CapEx, lower bad debts, higher recovery ratios are extremely important to the overall economics of deals and the overall economics for our portfolio. And we do think this improvement is sustainable going forward and we do you think there can be more to come on those items.

Your next question comes from the line of Craig Schmidt with Bank of America.

I was wondering if there was any more news on the DDR Blackstone group acquisition of 7 shopping centers?

Craig, we -- as you know, we continue to be active in the market. And we have a terrific relationship with Blackstone and we are pursuing that opportunity with them. Lots of things can happen in these transactions, and which is why we have hesitated to announce anything historically until it's closed, particularly in the markets -- in the market that we're in today. But I think it's safe to assume that because of our relationship with Blackstone and the fact that the assets in question are prime power centers, that we absolutely have interest and we are pursuing it in conjunction with Blackstone in a structure similar to the structure that we established with them last year with the EDT acquisition.

Your next question comes from the line of Paul Morgan with Morgan Stanley.

You opened with talking about your aim to be a blue chip and I had a kind of follow-up on that. Where do you think kind of among all those different elements, the biggest gap where DDR is right now versus the blue chip group that you're looking to join? And is there anything you're looking to do to narrow that gap on an accelerated basis, whether -- I don't know, whether you think it's kind of the non-prime share of your portfolio or your leverage or other factors? Or is it really just something that's going to have to take time and there's really no way for you to accelerate it?

Yes. I think you're exactly right, Paul. I mean, the way we accelerate is by performing on a consistent basis quarter-over-quarter, year-over-year, and it's very difficult to accelerate it otherwise. Now, there's some absolute blue chip companies certainly in our mind that have very extensive non-prime portfolios, but yet, they still perform on a very, very high level and on a very consistent basis. So I think with us, it's time. I think the market has appropriately looked at DDR as a show-me story and that we needed to prove a lot in regard to our strategy and then the execution of the strategy. I think we've come a long way in doing that. But I do think it will take more time for us to achieve that status. And I think it's not an operational metric as much as it's -- or any 1 operational metric. I think it's giving good guidance, it's delivering on what we say we're going to be delivering, it's being a prudent steward of shareholder capital over an extended period of time. And I think it -- you sort of merge into it. I don't think -- I think it's a process. I don't think it's an event. I don't think you wake up one day and you say, "Geez, we're blue-chip and the market thinks we're blue chip." I think it's going to happen over time and we're very focused on that and -- which is one of the reason why we're so disciplined in our approach to our strategic plan and we're very careful on how we articulate the message to the market because we just don't want to disappoint. So I think time will help us and obviously, in that period of time, our consistency of performance would be the quintessential element, I think, in order for us to be successful.

Your next question comes from the line of Todd Thomas with KeyBanc Capital Markets.

Just had a question. As occupancy in the portfolio continues to rise here, I guess the space that's left to lease is a little more challenging space to lease overall. And Dan, you mentioned that we should expect to see lower CapEx in the future, and this quarter, I recognize it's just one quarter, but we've seen net effective rents for new leases down relative to 2012, both landlord work and tenant allowances are up slightly. But this space is more difficult to lease. Can you just help reconcile the view that landlord CapEx will decrease? I would think it might go the other way?

Yes, Todd, this is Paul. We feel very good about how we controlled CapEx on our new deals and will continue to. You're always going to see a little volatility, a little fluctuation quarter-by-quarter based on the deals that are made. It's important, when you look at that net effective rent page in the supplement, to understand that we're trying to show the spread, really, if you will, between the starting rent and the net effective rent, which continues to be pretty tight. Again, always going to be fluctuations. But if you look at a lower net effective rent, the net number this quarter really is a function of lower starting rent and that clearly goes back to the type of deals that are made. If you're making more box deals in a quarter, you're going to have a lower starting rent than more small-shop deals. So we feel very good about it. You should expect to continue to see some volatility quarter-to-quarter, but we have it under control and the trend is absolutely in our favor.

Your next question comes from the line of Andrew Schaffer with Sandler O'Neill.

So I was wondering, given the strong open-to-buy tenants and the shortage of box space, I was wondering if you can comment on the competitive nature of these tenants introducing bidding wars for the space. Or if this -- are these open-to-buy numbers are just traditionally well over availability?

There's clearly more competition and we've been talking about that really for about the past -- almost 2 years now, Andrew. Back 4 years ago, I was very clear in mentioning that if somebody came and there was a taker for space, we were all for it unless the filled space couldn't afford any more vacancy. That has -- that's done a 180. There's a lot of competition. It doesn't always have to be similar lines of business for the retailers either. You may have a hardlines retailer competing with a softlines retailer. And that's exactly what we're seeing though. There's -- these guys while they are being very careful about how they talk about their open-to-buys and their commitment to the Street to meet those open-to-buys, there's clear competition. And that's clearly what's driving the new deal spreads and what we see continuing to drive it for the next couple of years. We've talked a lot on these calls about how the limited new development that will be done will not have any significant impact on these dynamics and that's still the case today.

Your next question comes from the line of Tayo Okusanya from Jefferies. Omotayo T. Okusanya - Jefferies & Company, Inc., Research Division: Quick question about the acquisition that were made during the quarter, especially the buyout of your partners. Was that portfolio already at 98% leased? Just kind of curious what the potential upside you see is on those assets?

I think, for those specific assets that we have managed for 6 years, there's a good story about what we've accomplished in the venture over the past few years to get the occupancy that high. But in line with Paul's comments earlier, we still certainly look at highly-leased centers as still an opportunity, not just a risk of losing that. And so we're pleased that with our partner, we were able to generate considerable lease-up in that portfolio, but obviously, because we're acquiring them, we do think there's more to go over the next several years as we see opportunities to increase rents, and increase NOI in those centers.

I think one of the things also to keep in mind, even at centers that are 97%, 98% leased, and we see this all the time, is that there's always opportunities in good real estate. That's why the quality of the real estate is so important on these acquisitions because we do have downsizing opportunities, we do have tenants that will leave. Do we have tenants that will leave? We don't even know who they are yet, but they will. And you really don't have a hard time backfilling that space and the mark-to-market opportunities are pretty exciting. So whether it's a consolidation of small shop space because tenants come and go over time, or downsizing of boxes and just making sure that the retail community knows that we are creatively looking at ways to expand some of those assets and to increase the NOI, good things happen to good real estate. And I think this is going to be another example of that.

Yes. And if we would have been buying a 98% leased portfolio from a third party, I think there's a little more credence to the comment about a concern about downside versus upside. But this is a situation where we've known these assets for a long time, and I think gives us extraordinary confidence that Dan's exact comments are what we can experience over the next few years as we see potential further opportunities even in a portfolio that's highly leased like this one.

Your next question comes from the line of Rich Moore with RBC Capital Markets.

You've made good progress on the sale of your non-prime assets over time, yet -- and I realize they only represent about 10% of the portfolio in terms of NOI. But when I think about the number, it's still 1/3 of your assets. And Dan, you were talking about making a point, kind of a show-me story, making a point to the Street. Is there some reason you can't accelerate the disposition of that portfolio? Is it debt-related? Is it JV partnership-related, something like that? Or is there some way to, I guess, drive that forward faster?

Yes, there are a few reasons, several of which you mentioned, Rich. And I think first, the perspective overall that's important to have is we have sold dramatically more than anyone in this sector. Over the past several years, we have done the overwhelming majority of that through one-off transactions, which can be slower at times or less press release-worthy but we believe do end up with better execution. On the specifics of what's left in terms of the non-prime pool, you're exactly right. There are some wholly-owned assets that are tied up in debt pools that make that a challenge or make it economically unattractive to sell even if you'd like the underlying asset pricing. There are other penalties that go along with that. There are a number of assets in joint venture where it's simply not our decision. However, we do have some very thoughtful partners that have seen an improving pricing environment today and certainly are more active in pursuing the strategy we've talked to them about for a while, in liquidating some of their non-prime assets. And so the portfolio we bought in April was accompanied by a number of assets that we will not be buying that are going to market. And so we expect to continue to make progress on that metric, but not in a massive portfolio fashion. More in the measured pace that we've gone about where you can continue to see progress every quarter, but not just looking to do the massive portfolio deal. We are encouraged by the sale environment where an improving CMBS market is particularly important for the sale of non-prime assets, which is generally how those are financed. And as you get a more and more attractive and aggressive CMBS market, I think it only makes the environment more receptive to off-selling assets and so I think you'll continue to see us active on that front, both on a wholly-owned basis and within our joint ventures.

Also, I think some of the larger numbers, too are the single-tenant assets, and that -- and we do have some term issues there. It's very difficult to sell assets today to a leveraged buyer who have with less than 10 years of term left on the lease. We have a number of single-tenant assets in the 6 to 7 year, some even fewer than that, and these are assets that are doing extremely well. So your faced with a question, do you go and ask the tenant to renew their lease early, which will cost you a lot of money? Or do you just hang in there knowing full well that they are going to exercise their options and they are going to renew the lease and then make the property immediately saleable? So those are discussions we have all the time, Rich. But the asset, it's a large number of assets but they're often very, very small assets, rather relatively insignificant asset. And as we -- as you noted in your comment, represents roughly 10% of our NOI and declining each year.

Your next question comes from the line of Jason White with Green Street Advisors.

I was just curious when you look at acquisitions, what role do demographics play? And do you have a threshold where you need to clear certain level demographics or is it really just part of the mosaic that drives you to make an acquisition or to turn one down?

Well, demographics are absolutely a part of the consideration. They're not independent of all the other factors including performance of the asset, tenant sales, population trends, things of that nature. But the demographics are a decent sanity check. The problem with the demographic reports that we see on a consistent basis is they take the ring approach not the market share, not the trade area approach. And when you look at centers that are typically our size, it's easy to draw a ring and say this is the trade area, but if you talk to the tenants and you ask them what their trade area is, it's extraordinarily different. No retailer just draws a circle. That's why while we provide a retailer with some demographic information, they typically ignore it. I mean, I could tell you, and I'm sure Paul will confirm, we were on the department store side of the business, it was very of developers to show us demographic reports and trade area reports, but we absolutely ignored them and did our own. Because the retailer knows the market better than anyone who's just drawing rings. So while demographics, I think, are interesting, and I think they're a good sanity check, they don't you a great story in a lot of cases. We can point to an awful lot of very, very, very good centers where tenants make a lot of money in a light demographic area, and we can also point you to a lot of terrible, terrible centers in very high demographic urban areas or suburban areas. So it really is on a case-by-case basis. In other asset classes, it's not the same. In multi-family and residential, even in office, it's very different. It's very different. Demographics tell a much clearer story. But we have so many diverse retailers who have so many proprietary trade areas and they know who the consumer is and how they reach their consumers. And that -- it's a nice sanity check, but it doesn't drive necessarily the decision because if it did that, you'd buy a lot of very, very bad assets in some high demographic areas. And a lot of people are doing that.

Your next question comes from the line of Quentin Velleley with Citi.

Just with the positive commentary on fundamentals, occupancy heading to 98% on the box space and growing market rents and pricing power, firming cap rates. How far are we from more widespread development across the market? And how should we be thinking about this cycle versus the prior cycle?

That's a great question, Quentin, and we get it. People intuitively assume that when you have the situation we're in now with the supply and demand metric and just the open-to-buys continuing to grow, that one would think that development's going to become more prevalent. But it just hasn't for a number of different reasons. Number one, in our particular sector, on a risk-adjusted basis, it really doesn't make sense to take development risk when you can buy at the cap rates we're currently buying at. So that's something that is -- it won't last forever, but it's something we should take advantage of while we can. The one thing that people have to keep in mind about the development is that unlike other recessions where we came out the other side and there was massive cooperation from municipalities who were looking for tax revenue, we're not seeing that now. There are obviously some exceptions to that rule, but the entitlement process today is still incredibly burdensome. It takes an extended period of time, it takes a massive amount of risk capital, I mean millions, not hundreds of thousands, of risk capital and in many cases, you may be forced to buy land that's unentitled. And that's not something that we're interested in doing and I know it's not something that a lot of folks in our sector are not interested in doing. The risk of buying unentitled land today is very, very high. So even if the numbers work, even if the numbers work on a risk adjusted basis, they may not be more compelling than redevelopment or acquisition, and being a prudent steward of shareholder capital, we have to pursue those other opportunities. So I think you're going to see some new development like, I mean, the deal we're doing in Belgate's great and we have a few others that we'll look at, but it's not going to be enough to move the needle and alter the supply and demand dynamic from the existing assets.

[Operator Instructions] Your next question is a follow-up from the line of Tayo Okusanya. Omotayo T. Okusanya - Jefferies & Company, Inc., Research Division: Yes. This one is directly for Dan. Dan, earlier on you made a comment during the call about a potential to exceed, and you're a man who chooses his words very carefully. So I was just curious what you meant by that and where you saw the opportunities to actually exceed guidance.

Well, I think there's a number of things going on in the market. I mean, if -- we have a lot of tailwinds right now in our sector. And while we're very cautious, we beat our FFO projection for the first quarter, we beat our same-store NOI projection for the first quarter. And if things continue, we think that there's going to be opportunity for us to show more improvement in those areas than we had previously guided. But it's early. But it's early. And while I think it's -- we just gave guidance in January and while first quarter was better than we had anticipated being and we don't see a particular slowdown in the second quarter, we will wait and see what happens. Because we think that in a very fluid economy like we're in today, that being prudent and having some discipline is important. That being said, if things continue to go the way they're going, we clearly have the opportunity to exceed our expectations in small shop leasing, and that's something that could move the needle to some extent. But we will wait and see and we will give more direction on that after -- at the second quarter call.

And you've heard it from us many times. It's a long-term focus, it's not a pure focus on 2013 FFO per share. And so there are times, and some of the initiatives that Paul talked about earlier with downsizing and with improving tenant quality, that it could be actions we take on that actually caused some pressure on '13, and everyone would agree it's the right long-term thing to do, which is absolutely our focus. But we do want to make sure we have the flexibility to make the right long-term decisions. And aren't just held to 1 specific year of FFO.

We've also -- we said in an earlier time, I mean, we would be disappointed if we only met our guidance on acquisitions, and we're almost there now based on our annual guidance for acquisitions. So we will exceed, I would hope, our acquisition guidance. But again, I don't want to put us in a position where we have to do done deals in order to prove a point. So we will continue to pursue things the way we're pursuing them, but we're very close. We're very close to exceeding our guidance in acquisitions, and I'd be disappointed if we don't exceed in that area for 2013.

Your next question comes from the line of David Wigginton with DISCERN Securities.

Dan, you mentioned in your remarks about the cap rates for you asset type tightening. I was wondering if you might be able to give us a sense of the magnitude of tightening, maybe on a year-to-date basis, and whether that's accelerated over any period of time or if it's been just a gradual tightening. And then maybe comment on potentially where you kind of envision the cap rates going from here. If you've kind of tightened as much as we're going to tighten or if there is more tightening ahead of us.

Well, I think for quality assets, Dave, we have seen 50, 60 basis points of tightening over the last 6 or 7 months. And I think there's a number of reasons for that. One is I do think we were mispriced. And markets are too smart to let that happen forever. And I also think that the -- if you just look at retail results and the credit quality of cash flow, who's gaining market share and who's losing market share, our asset class is pretty attractive. It doesn't have a lot of the pressures that some of the other asset classes have, and people are recognizing that. For example, just the last 2 weeks, I've seen 2 different offerings for funds to buy power centers where people are out trying to raise capital to buy power centers, 1 of which, I think, is pretty far along and 1 of which seems to have some positive momentum. I haven't seen that in years. I haven't seen that in years. So there's more capital clearly looking to chase the credit quality of the cash flow that power centers represent and, I think, the flexibility that power centers represent, because tenants do come and go. And one of the things about power centers is they've proven to be incredibly resilient, and occupancy levels, while they did fall, are right back to where they were and will be at peak levels if not exceed peak levels, in the not-too-distant future. So I think people recognize that. I think a lot of people -- no one could argue that the superior investment in A malls and people, I think, have done that. I think a lot of people are looking at the traditional grocers with some concern. But then you look at the specialty grocers and you get very, very excited. And the specialty grocers are the people that are coming for our centers. So as power centers are establishing themselves as a destination for specialty grocers, now all of a sudden you go from just being mass merchandising to mass merchandising and grocers. So I think it's just a much more attractive investment from a credit perspective, from market share perspective, and if you look at balance sheets, clearly from a profitability perspective.

Your next question comes from the line of Tammi Fique with Wells Fargo.

I'm just following up on NOI growth again. Obviously for the first quarter, it came in above the guidance range for the year. And in the guidance you said that it would be second half-weighted. So I guess I'm just kind of curious to know, should we see it accelerate at this point as we head into the second half or was there something that was pulled forward a bit? I was just wondering if you could give us any color on that. And then I guess it relates to the move outs, which was why the expectation was supposed to be lower in the first half. And did you just not see those yet? Or was there, again, some type of delay?

Sure. Your point is a good one, both on the outperformance for the quarters, as well as a better-than-expected move out and bankruptcy situation for the first quarter of the year. So I think that really did drive better performance than we had budgeted for the first quarter. We still see a situation where the latter part of the year, the fourth quarter particularly, will be the strongest quarter for same-store NOI. And you'll see an acceleration, to that point, in the interim. Based on the way our budget looks today and our experience today, we'd expect second and maybe even third quarter to be slightly lower than what the outperformance led us to in the first quarter. But still, we're encouraged by everything we see. We're in a situation where I think we continue to be a bit ahead of budget on those metrics and we'll continue to update you as we do get further into the year and have greater confidence on how the whole year looks. But what we're standing by today is noticeable outperformance from less move-outs and bankruptcies in the first quarter and some of that flows through to later in the year. But we'd still say the next quarter or so will be a little bit slower. And again, as we mentioned earlier, some of the best opportunities for us for long-term value creation might involve lease terminations, downsizings and other actions that could actually create a little short-term pressure. But again, long-term significant opportunity to create value.

And at this time, we have no further questions. Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.