Whitestone REIT (WSR) Q1 2023 Earnings Report, Transcript and Summary

Greetings, and welcome to the Whitestone REIT First Quarter 2023 Earnings Conference 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. It is now my pleasure to introduce our host, David Mordy, Director of Investor Relations. You may begin, sir.

Good morning and thank you for joining Whitestone REIT's First Quarter 2023 Earnings Conference Call. Joining me on today's call are Dave Holeman, Chief Executive Officer; Christine Mastandrea, Chief Operating Officer; and Scott Hogan, Chief Financial Officer. Please note that some statements made during this call are not historical and may be deemed forward-looking statements. Actual results may differ materially from those forward-looking statements due to a number of risks, uncertainties and other factors. Please refer to the company's earnings news release and filings with the SEC, including Whitestone's most recent Form 10-Q and 10-K for a detailed discussion of these factors. Acknowledging the fact that this call may be webcast for a period of time, it's also important to note that this call includes time sensitive information that may be accurate only as of today's date, May 03, 2023. The company undertakes no obligation to update this information. Whitestone's third quarter earnings news release and supplemental operating and financial data package have been filed with the SEC and are available on our website in the Investor Relations section. We published first quarter 2023 slides on our website yesterday afternoon, which highlight the topics to be discussed today. I will now turn the call over to Dave Holeman, our Chief Executive Officer.

Thank you, David. Good morning and thank you for joining Whitestone's first quarter 2023 earnings conference call. We are pleased to deliver another quarter of strong results on multiple fronts and are solidly on track to achieve our FFO guidance for the year and the underlying key drivers we previously have communicated. In terms of leasing activity, 2022 was a record year for us and 2023 has shown no slowdown in demand for spaces in our centers, as evidenced by our sector leading leasing spreads in Q1. It seems commercial real estate is often one category in many of the headlines today. So, I wanted to make a straightforward point that investors know, but that sometimes seems to get lost. Simply put, not all commercial real estate is the same. Whitestone is in the most desirable markets, has the right types of tenants, the most flexible and in-demand size of leasable spaces and continues to benefit from limited supply and strong population and job growth in our markets. And also continues to benefit from hybrid work as consumers spend less time in offices and urban centers and more time at home and in their neighborhoods. The lane we've been in for the last decade is exactly what is in greatest demand today. We specialize in smaller spaces and populating our centers with service oriented businesses. As people continue to migrate to Texas and Arizona, we see the fundamental drivers of our business are not just remaining strong, but accelerating in the current environment. In the first quarter, we signed new and renewal leases at a blended 20.8% increase over the prior leases on a straight line basis and 13.3% increase on a cash basis. During the first quarter, we grew our top line revenue over 5%, produced strong 2.8% same store growth, NOI growth, and achieved FFO per share of $0.24. And we strengthened our balance sheet reducing our exposure to variable rate debt and improving our liquidity. Our occupancy at quarter end was 92.7%, up 170 basis points from a year ago and our net effective annual base rent per square foot was $22.22, up 4.7% from 2022. Christine and Scott will provide greater detail of our operating and financial activities and results in their comments. We are pleased with our start to 2023 and our focus for the remainder of the year will be growing shareholder value through operational and financial performance, FFO share -- FFO per share growth and delivery of consistent results. The new managed team has delivered five quarters of strong results and understands the value of building on those results. We will continue to focus on the balance sheet and cost of capital with improvements to debt leverage in 2023 and future years and remain disciplined stewards of capital. We recognize the value of a strong balance sheet and we recognize the importance of reaching the leverage milestones we have set. We will continue to focus on accretive recycling of capital. As we highlighted on the fourth quarter call, in 2022 we made a number of strategic dispositions that funded our Lake Woodlands acquisition and allowed us to improve our debt leverage. We are targeting similarly accretive activity probably of about the same magnitude within the next few quarters. And finally, we will continue to focus on monetizing our underperforming joint venture investment in Pillarstone. Our team is aligned, our focus is clear and we are confident in our ability to add value from a unique business model and a great portfolio of high quality, open air, convenience and necessity based centers that are positioned to serve their respective communities on a daily basis and drive consistent cash flow growth. With that, I will now turn the call over to our Chief Operating Officer, Christine.

Good morning, everyone. As Dave mentioned, we remain confident in terms of achieving our 2023 objectives and are on track with our internal monthly and quarterly goals. Our leasing efforts remain very strong in the quarter, although the actual leases signed were a little lower than previous quarters. We expect the very active first quarter to show positive results in future quarters in terms of leases signed, leasing spreads and overall occupancy. Occupancy remains high at just under 93%, up 170 basis points from a year ago and down slightly from the last quarter as a result of remerchandising efforts, which are going well. We achieved renewal spreads of 23% and new leasing spreads of 9.5% for a combined overall positive leasing spread of 20.8% in the quarter. It is gratifying to see the number of trends that we acted upon a decade ago really accelerated in the recent quarters and we're working hard to capitalize on those trends. Probably the most important activity we do in order to ensure we're skating to where the puck is going is the mix of businesses we select for our centers. Getting this mix right drives traffic for every tenant in the center and paves the road for additional leasing successes, both with new and renewing tenants. It underpins our philosophy that shorter leases allow us to better share in the success of our tenants, providing our investors with a better protection against inflation. In turn, the shorter leases allow us to be much more nimble in terms of optimizing our tenant mix to best service the surrounding neighborhood. Where active managers are by centers and the shorter refresh rate allows us to ensure that our centers are thriving for their communities. Proactive management requires that we know how our tenant businesses are performing and we do. We're continually verifying that local customer demand is being met and were designed Whitestone to take better action of the business if not meeting those needs. We have a very low number of big box tenants outside of grocery stores and a risk dispersed tenant mix with minimal tenant concentration. Our largest tenant makes up only 2.2% of our base rent. In the news recently, we have one Bed Bath & Beyond. Our mix focuses instead on restaurants, medical, self-care, education and entertainment offerings. The Bed Bath & Beyond we have is located in our center of McKinney, Texas just north of the Dallas Platinum corridor. The center is anchored by Trader Joe's and we look forward to having this space back as it is already in very high demand. Instead of big box tenants and power centers, we have entrepreneurial tenants. Often fast growing regional franchises and we've anchored either by grocery restaurants or combination of high traffic tenants. We've averaged over 25 tons per center and we have a very high retention rate providing a high dispersion of risk for our investors. One of the advantages that arises from the closeness that we have with our tenants is that we have a very good pulse on the current business environment in Texas and Arizona. Consumer demand remains very strong within our markets. Additionally, many service oriented businesses within our center are low capital businesses because they don't have capital tied up in inventory. We're keeping an eye out to see if credit conditions become a concern, but we're seeing no evidence currently in either Texas or Arizona. Scott?

Thank you, Christine, and good morning. Our solid first quarter results demonstrate the strength of our high quality portfolio of properties as evidenced by robust leasing spreads and positive same store NOI growth. Our NAREIT funds from operations per diluted share was $0.24 for the quarter versus $0.30 for the same period in 2022. Notably, last year's figures include a benefit of $0.04 from forfeiture of restricted equity compensation stock. Our first quarter results were driven by strong NOI growth, largely due to higher base rent of $900,000, offset by higher interest rate cost. In addition, pro rata FFO from our joint venture was lower by approximately $500,000. Same store NOI was a positive 2.8% increase fueled by strong leasing spreads and increased year-over-year occupancy. In addition, furthering our ability to narrow in on our guidance target and minimize interest rate risk, we entered into an interest rate swap on $50 million of variable rate debt on the last day of the quarter, reducing our variable rate debt to $63 million or approximately 10% of our total debt. While the SOFR curve would indicate rates will flatten or fall soon, we are well positioned to sustain a higher interest rate market duration. As shown on Slide 9, while we estimate higher interest rates to be a drag on 2023 earnings, we expect same store NOI growth and scaling of G&A infrastructure to positively contribute to our 2023 results. We continue to strengthen our balance sheet with improved debt leverage from $8 million in lower net debt and increased EBITDAre with lower variable rate interest exposure. Our EBITDAre ratio improved to 7.8 turns as compared to 8.1 turns a year ago excluding stock forfeiture benefit in 2022 and our variable rate debt as a percentage of total debt improved to 10% from 17% at year end. We have a well laddered debt stack with limited maturities coming due over the next three years and we expect to continue to focus on strengthening our financial position to position us for opportunities as they occur. Let me conclude my prepared remarks by reaffirming our full year 2023 guidance. As Christine and Dave both said, our results are in line with our internal monthly and quarterly expectations and have us well on track for achieving our 2023 full year targets. And with that, we'll open the line for questions.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Anthony Hou with Truist Securities. Please go ahead.

Good morning, guys. Can you guys please provide a little bit more color on the interest on the Bed Bath & Beyond space and the mark to market opportunity there? And what's getting the space back [indiscernible] the initial guidance?

Thanks for the call. Thanks for the question, Anthony. So, a couple of things regarding that space. It's a nice size, it’s well sized for the market. It's by -- its right across from a Trader Joe's. So it's a heavily traffic center. The Trader Joe's does very, very well there. I would say that we're getting an interest from kind of a broad range really. It goes from fitness to possibly splitting the space. It's something we're taking a look at, which whenever we do a splitting of the space, we're looking for a premium. In addition, [furniture] (ph), I can tell you just -- ever since there has been trouble with Bed Bath & Beyond, we are receiving inquiries that's been happening since the beginning of the year. And I think it's just important for us to evaluate all those opportunities, pick the best one for the mix. And because that center has so much traffic and has a little bit of challenges with the parking lot being so full from the Trader Joe's that we blend that appropriately with the right user.

Hey, Anthony, it's Dave. And I think the second part of your question was, is it included in our guidance? I'm going to let Scott respond to that.

Yes, the answer to that is no, we didn't anticipate Bed Bath & Beyond bankruptcy, but we view that as upside. There might be a short re-tenanting period, but no, that's not in the guidance. Very small percentage of our NOI.

It's small, but we also look forward to -- when you get the opportunity of a well-placed box like this. Number one, it was heavily restricted and at the same time, we had a number of caps on it as well. So I think when we turn this, we're going to see some upside.

Do you mind quantifying that mark to market upside?

No, I think it'd be premature probably to do that. All of us are kind of looking each other, but we feel very strongly that there is upside. As Scott said, it's granular. If you remember, we have a really nicely risk diversified tenant base with no huge tenant concentration. So biggest tenant is 2.5%, so Bed Bath & Beyond is one tenant is not a large part of our revenue, but we do feel confident that it's going to be a positive upside and a positive to the center when we re-tenant that space.

Got you. And how was the Whataburger space at Windsor Park? Because I think right now it's hybridized as a 24,000 office space. Just curious what's the plan there for that space and what's the interest for that space as well?

So, it’s similar in nature. Let me just walk back and explain how we look at when we get these spaces back. It was very similar to when we -- last year when we replaced the Randalls with an EoS. First of all, we look at the demand in the market. Number one. What type -- what do we need to do to lend that center with the right merchandising mix? That's the first thing we look at as far as -- now we look at the comp set to not directly compete necessarily with what the comp set is, but what is -- what's missing in that market. And then the third thing is that, we look at the space itself and say, what do we need to do here that we utilize that space in appropriate way, whether it means demising it so we get the best premium for it or does it mean keeping the current infrastructure in the space so we're not having to make an extreme change to the value of that space. So in this case, this is a little bit of different type space that we normally have in our portfolio. So we're being very, very selective as to who we should put in there. So this might be, in this case, we're a little more selective than because of the infrastructure already built into the space. So we have interest in it, but I think it's making again the right choice. And I'd rather evaluate making the right decision because these tend to be a little bit longer at leases than what's normal in our portfolio.

And I'll just add that that vacancy is factored into the guidance.

Anthony, its Dave. I'll add one more thing. This one was, obviously, we've known this. This is a training space for Whataburger University, knew that they had plans to move out. And so, once again, this was known and it is part of our re-tenanting efforts. We think that once we re-tenant it, it will be a positive for the space, but this was now included in the guidance and we feel very good about the re-leasing.

And when does that office depot lease expires at this center.

I think I heard a little bit of it, when does office depot do what?

Lease expires at the center?

The office depot lease at our Windsor Center in San Antonio…

I think that's a couple of years out. So it's not -- yes, I mean that center is very stable. Really hasn't had -- I think the turn that occurred in that center was years ago. That's really about seven to 10 years ago. And that center has been very stable ever since. It's well established at sort of gateway entrance into San Antonio with two major highways and coming in. So it's a desirable location. It's a little bit of an unusual center for us. It's part of the legacy portfolio. But again, it's not our type of center generally speaking, but it has the office depot, it has a PetSmart, it has [indiscernible]. And those tenants really have a -- they've been there for quite some time. So relatively stable again, a little unusual center for our type of mix.

Got you. Thanks for taking my question, guys.

Thanks Anthony.

Our next question comes from Mitch Germain with JMP Securities. Please go ahead.

Hey, good morning. Just back to the decline in occupancy, I think you characterized it as remerchandising efforts. But we're at about a 100 basis points. So anything more specific you can provide there?

Yes. I think really our focus on quality of revenue has been to look through the current portfolio and so I'm going to walk this back a little bit, but we started this during COVID and looking at what type of tenants were successful, really diving into understanding their performance during COVID and then going forward. And rather than nurse attended along, if they're not really serving this the community successfully, we've taken an active role in making changes quicker and faster because I find that if you leave a tenant on the roles that's not performing well rather than taking an active stance against them, the leasing agents don't market as they should. And so we changed our philosophy. It's worked really well for us. I think I'll be showing some data really the next time around about retention and why this is healthy for our portfolio. And so, I think a number of those active stance that we've taken over the last year has probably pushed some tenants out quicker than we normally would. Because I'd rather have the space actively marketed in a very, very hot market right now. In addition to that, it's not unusual that we do have this on the first quarter. The last two years, we had such hot demand in the first quarters. It was a little unusual. But normally, we always have a little bit of a falloff in first quarter. It's not out of theme for us. But that being said, we're right on track with where we expect to be for the year.

Yes, Mitch. It's Scott here. I'll just mention that when we do our forecasting, we look all 1,500 tenants and forecast those out for the entire year. And we're just a little bit above the forecast, actually for first quarter in terms of occupancy. So there's nothing unexpected with where we are right now.

To that point, Scott, are you -- is there a little bit of a bias maybe toward the lower to the midpoint because of some of the uncertainty that or the unknowns like Bed Bath? Or are you still confident that the plan can evolve as the year progresses?

I think we're confident that we're going to end up where we expected around the midpoint of the guidance.

Okay. Last one for me. Just curious about tenant demand, I think Christine said or maybe it was Dave said, obviously, it's kind of -- the sweet spot is that smaller part of the market, but I'm just curious about how the pipeline looks this year versus kind of -- or pipeline looks today versus like maybe this time last quarter?

Let me just clarify, Mitch. Are you talking about the leasing pipeline?

Yes, please.

Okay, great. Thank you. I'll let Christine comment on that.

Yes. What we're seeing is that, the stronger operators are very, very active in the market and that's what we prefer. So this last quarter we've had same thing with our restaurant spaces, which if you have a second generation restaurant space, I'd rather have that available to market if we have a weak tenant, which again we've been very active in replacing. I haven't seen the demand pull back for our restaurants at all. In fact, it's still increasing. And again, what we're finding is those that are seeking those types of locations are quality, well developed operators that have scale. So we haven't seen a change with the exception of, I would say, that there's little less new entrepreneurs coming to the market with less experience. If anything, it's been consistency with those that know the strength of our markets, have strong business -- strong businesses and are continuing to grow.

Great. Last one. Scott, was there any one timers this quarter? I think I saw a lease term fee. Is there anything that we should be aware of?

No, not really. We list out the lease term fees in our same store reconciliation. So you can look to see that. If anything will lock in the interest rates, we might have a little bit of upside on interest rate versus where we forecasted. And so, no, I can't really think of any one timers that we need to call out.

Great. Thank you.

Thanks, Mitch.

Our next question comes from Craig Kucera, B. Riley Securities. Please go ahead.

Yes, good morning, guys. You've had a significant amount of variability in your Pillarstone results. I think it was about $0.01 per share year-over-year. I guess, can you give us some color on how we should think about you know, what Pillarstone will contribute or maybe take away from Whitestone this year. And I know you mentioned there weren't any one timers, but speaking specifically to the Pillarstone resorts -- Pillarstone results, were there any adjustments there? Thank you.

Hey, Craig. Good morning. And thanks for your comment. This is Dave, I'll start out and then I may hand it over to Scott to talk more financially about it. But one of the things we've communicated is a goal for us is to exit our JV relationship with Pillarstone. We've said we'd like to monetize that, the asset is underperforming and not returning what we expect for our shareholders. So we as a company are working toward that in a lot of ways, toward exiting that partnership. That's largely through the court system at this time, but we are committed to exiting that partnership. That said, right now, I think we are doing our best to estimate the financial performance. Pillarstone is a public company and is delinquent in their SEC filings for a few quarters. And so we're using the information that's available. We're having some communication and doing our best to estimate it, but that investment is significantly underperforming and we are committed toward -- working toward an exit of that. Scott, you want to add anything?

Yes, I would just add that when we think about Pillarstone from a cash flow perspective, it's 100% upside for us at this point. There's not distributions coming from Pillarstone and we do have some legal fees that are embedded in our G&A costs for last year or so. So exiting, I think we'll see improvement in G&A when we're able to exit and when we ought to monetize some of that investment that we have on the balance sheet right now. But -- so from a GAAP basis, while we see some amount of loss right there, there's no cash flow going out other than legal fees to try to monetize it. And I think in the future, it should be thought of as upside from a cash flow perspective.

Got it. And we're able to transact successfully in the fourth quarter. And I know you kind of are thinking about capital recycling again. But, Dave, I guess, would be curious sort of what your thoughts are on this year and in this current environment and what you're seeing?

Yes, Dave, once again, Craig. The transaction market continues to be shallow. I think you've probably heard that theme from others. We are seeing a little bit of movement in cap rates, but not a lot. We are at targeted -- we're targeted very much in the markets we're in. So we are deeply looking for opportunities. I think there's, obviously, a need for the interest rates to stabilize or get some predictability. But as we did last year, last year we recycled about $40 million in dispositions. We use those proceeds to buy a great acquisition in Woodlands, Texas as well as contribute to our deleveraging. So I think we would expect to do the same this year. We're actively looking for opportunities. We're continuing to recycle, if you think about our portfolio just like a portfolio of stock, it's important that we look at each asset and look to when is the right time to sell and when is the right time to own. So not a big amount, but probably similar to you saw us do last year from a recycling perspective with the goals being to sell assets and buy new assets that are more accretive kind of day one and in the future, as well as contributing to strengthening of the balance sheet.

Okay, great. And just one more for me. Christine, circling back to your remerchandising efforts, I'd be curious if there's any sort of themes that you see that are either consistent with where they were last year or maybe changing in this environment? I feel like last year, Whitestone was pretty positive on a number of the restaurants and the strength of the QSRs and fitness. And I guess kind of what are you looking thematically if there is a theme as far as moving tenants in versus getting rid of some other categories.

No, restaurant still very hot this year. I mean, again, this is why we're proactively making changes because if you have a restaurant that's not performing well in this market. We believe being active with that tenant and making a shift to somebody else that would better serve that community is the right thing do. It has not slowed down in that space at all. It's the same thing, its QSRs. In addition to the QSRs, I think it's still that affordability factor that we look for. Restaurants that really serve and the ticket price that works for families, works for a consistent stickiness to a client that comes back often as we're staying within that range and that's really worked well for us. In addition, we're seeing -- so this is something that -- again, I'm just watching this more than anything, but we are seeing -- have an interesting change with the workforce coming back and owners of businesses that want to attract talent going into horizontal, I call, horizontal office space. It's kind of unusual, but it's something that when we have a space available at some of our mixed use centers, which have a little bit of this component. It fills up and those space sizes are they tend to be again the same range small, about 1000 to maybe 1500 square feet and when they're ready, we just clean them up, paint them up, maybe have to re-carpet them sometimes, but they lease up, they've been leasing up very, very quickly in our markets. Little unusual. It's not something that we focus on too deeply, but it started with some of our [indiscernible] space, which has always been well occupied in our centers and it drives that daytime traffic. So really the last two quarters we saw -- last quarter last year and this first quarter, we've had some interesting trends there. Again, we look at that as being closer to the suburbs. Being out, where amortization is really important and convenience is really important as well. In addition, I'd say a little bit of a pullback in fitness, I think that's just because last year there was such a demand for it. And I think it's just normalized. But not just across all of our groups, we've seen pretty good strong demand, especially again in the size spaces that we have, which again are about that 1500 to 2500 square feet, easy to lease, flexible to shift towards the demand of the market.

Great, thanks.

Our next question comes from Gaurav Mehta with EF Hutton. Please go ahead.

Yes, thanks. Good morning. I wanted to ask you on your asset recycling comments again. So if you were to acquire any properties this year, should we expect that would be match funded by dispositions?

Hey, Gaurav. This is Dave. Thanks for your question. I think your question was on the disposition acquisition side, should we expect those to be in balance. Is that your question?

Yes.

Okay. Yes, I think that's absolutely correct. We are given right now, given the position and we're very disciplined on our capital allocation. And right now given the current market conditions, we've identified that from an acquisition disposition standpoint, we believe that recycling is what's best for us to do. Obviously, we continue to look for opportunities in the marketplace and be aware of those. But right now from an acquisitions perspective, we've targeted funding that through recycling.

Okay. Second question I wanted to ask you on your debt maturity for 2023, the 4.28% note that you're expiring in June. Should we expect that you will replace that with credit line?

I think right now that's the most likely scenario. We'll look at all refinancing options, but more than likely we'll roll it into the revolver. It's part of the reason we locked down $50 million of debt. We're down to 10% floating rate debt right now and that gives us the ability to be flexible and use the facility to handle these maturities that are coming due in the three years which are on the smaller side.

Okay. And where are the rates today for fixed rate notes?

I'm sorry, I didn't understand the question.

What are the rates for the fixed rate notes versus credit line, if you were to issue a new note?

So while Scott's looking, I think the question was what are the rates -- fixed rates versus the credit line? Credit line is -- the revolver is priced at a variable rate that is SOFR plus, I think we're at about 160 today. So I think that's in the SOFE is around four-ish, I believe. So in the 5% to 6% range. Fixed rates, Scott's looking at that and should be able to give it from you from our sub data.

Yes, it looks like the fixed rate note that's expiry is 2023 is around 4.25% and 2024 closer to 4.5% or 5%. So a bit of an increase on the rate, but that is factored into our guidance and the way we've forecasted that is to roll it into the facility using the SOFR curves.

Okay. Thank you.

Thanks, Gaurav.

Our next question comes from Michael Diana with Maxim Group. Please go ahead.

Hey, Dave. I think you may have partly answered this on your -- when you talked about recycling -- your recycling plant. But is there any update on outparcel developments or any redevelopments?

Hey, Michael. It’s Dave. Thanks for your question. I'm going to give you just a quick thought and then I'll ask Christine to maybe give more on it. As we've communicated in the past, one of the things that Whitestone has as far as embedded value is the opportunity to develop some pad sites and a few land parcels that we acquired when we bought centers, really looking for future value add. So continue to have those and I'll turn it over to Christine to give a little bit of an update on those activities?

The demand is there. I think it's frustratingly slow with cities with approvals. It started during COVID and you would think that some of the pipeline has moved through a little quicker, but we're just finding that it's been very challenging from what you would consider as a pre development aspects of a project and the pre development aspects of a project are working with the approval rights with the city, working with your architects and engineers. It has not been for lack of demand. It's really been for, what I would say, is the timing of taking twice as long as it normally takes to work through the early -- the pre -- what would again be the pre-construction of a project. Once you -- and so we are finding though that costs are coming down a little bit for those. So that's been good. But just that it has been very sluggish working these things through the approval process.

But think about it in terms of -- I think one of our assets we recycled in 2022 was the pad site that we had built for Dunking Donuts. We've got a few of those in our portfolio that we can do similar, but I think we've built that pad side at probably about double the return or the closer to 10% kind of return on cost and we were able to sell it at probably half of that from a cap rate perspective. So small amount, we've got the number of pad sites. I think one of the things that Christine has commented on before is, from a use perspective, we continue to see smaller pad sites. There's some really interesting folks out there that are doing even smaller sites. So the ability to put those on our properties continues to increase because they take up less space and potentially less of our parking.

Great. Thanks for the update.

Thanks, Michael.

There are no further questions at this time. I would now like to turn the floor back over to Dave Holeman, Chief Executive Officer for closing comments. Please, sir, go ahead.

Thank you and thanks to all for joining today's call and we really appreciate your interest in Whitestone. I would like to share that we're very pleased to have [Julia Bussmann] (ph) as a nominee for the Whitestone Board of Directors at our upcoming annual meeting of shareholders on May 12. Julia will be our third new addition to our Board since the beginning of last year and she brings strong skills to our board after a 35 year career, really investing in senior debt, subordinated debt and structured equity with prudential largely. Julia's upcoming addition to our Board is going to continue to strengthen our governance, continue to strengthen our alignment with shareholders, and really making our Board a better reflection of society and our customers with 50% female representation on our Board. We're super excited and really wanted to welcome Julia. And with that, I will now conclude the call and wish everyone a great day. Thank you.

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