Plymouth Industrial REIT - Q2 2024
August 1, 2024
Transcript
Operator (participant)
Good day, and welcome to the Plymouth Industrial REIT second quarter 2024 earnings call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star then one on your touchtone phone, and to withdraw your question, please Press Star, then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Tripp Sullivan with Investor Relations. Please go ahead, sir.
Tripp Sullivan (Head of Investor Relations)
Thank you. Good morning. Welcome to the Plymouth Industrial REIT conference call to review the company's results for the second quarter of 2024. Yesterday afternoon, we issued our earnings release and posted a copy of our prepared commentary and a supplemental deck on the quarterly results section of our investor relations page. In addition to these earnings documents, a copy of our 10-Q can be found on the SEC Filings page of the IR site. Our supplemental deck includes our full year 2024 guidance assumptions, detailed information on our operations, portfolio, and balance sheet, and definitions of non-GAAP measures, and reconciliations to the most comparable GAAP measures. We will reference this information in our remarks.
With me today is Jeff Witherell, Chairman and Chief Executive Officer, Anthony Saladino, Executive Vice President and Chief Financial Officer, Jim Connolly, Executive Vice President of Asset Management, and Anne Hayward, General Counsel. I'd like to point everyone to our forward-looking statements on page one of our supplemental presentation and encourage you to read them carefully. They apply to statements made in this call, our press release, our prepared commentary, and in our supplemental financial information. I'll now turn the call over to Jeff Witherell.
Jeffrey Witherell (CEO)
Thanks, Tripp. Good morning, and thank you for joining us today. I hope that everyone had a chance to review the commentary and supplemental information. I'll hit a few highlights first, and then we'll go to Q&A. First, we're pleased to be back in a growth posture. The acquisition in Memphis is accretive and significantly expands our presence in this core market to almost 7 million sq ftt. This portfolio fits the Plymouth model perfectly. A strong initial NOI yield and the ability to realize the mark-to-market opportunities relatively quickly to drive returns higher. Second, we've kept our balance sheet in good shape and maintained our liquidity by using disposition proceeds to help fund this acquisition. Leverage came down in the quarter to 6.4x. Even with the Memphis acquisition, we will still operate in the 6x range in 2024.
The Q2 results were better than we expected, with a one-time benefit from favorable real estate tax appeals within our Chicago portfolio, driving the FFO per share up sequentially and the same-store NOI growth above our range. In our commentary, we outlined a couple of challenges in the portfolio that we need to lease up and the one tenant that muted the growth in the quarter. This caused us to tighten the top end of our full-year guidance range. We outlined the moving parts regarding this in the commentary. Lastly, with the development program getting close to 100% leased, we can begin to see the benefit from full stabilization in those properties in 2025. I'm confident our team is ready for the opportunities we have in 2024 and 2025. I would now like to turn it over to the operator for questions.
Operator (participant)
We will now begin the question-and-answer session. To ask a question, you may press Star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please Press Star, then two. We will take our first question for today, and that will come from Mr. Todd Thomas with KeyBanc Capital Markets. Please go ahead, sir.
Todd Thomas (Analyst)
Hi, thanks. Good morning. First, I just wanted to ask about the Memphis investment, going in 8% with rent upside over time. You know, with regard to the near-term expirations, what kind of tenant retention do you anticipate as you look to capture that mark-to-market, and what's the timeline for that?
Anthony Saladino (EVP and CFO)
Tenant retention within that particular acquisition is estimated to be around 70%. And in terms of capturing the full mark-to-market, we anticipate that will be realized over the next, call it, three years. There's significant lift with respect to yield, which could climb above 9.5%.
Todd Thomas (Analyst)
Okay. And it sounded like you were seeing an increase in investment opportunities and that the window was opening a bit. You know, I'm assuming this is, you know, what you were referencing on some level, but just curious if you could talk about your appetite and if there's, you know, more behind Memphis that you're seeing today.
Jeffrey Witherell (CEO)
Hey, Todd. Yes, it's still a kind of a fractured market out there. I mean, you've seen some big portfolios trade. I think everyone's aware now of Brookfield's acquisition of the DRA portfolio, you know, 14 million sq ft at a fixed cap. Pretty good barometer on the market. So we have a pretty robust pipeline, as we usually do. Runs the gamut of small portfolios to one-off deals. Our appetite, if it's accretive, we have an appetite for it.
Todd Thomas (Analyst)
... Okay. And then, in Cleveland, so the tenant moved out at 2100 International Drive. Can you talk about the timeline to backfill that space and what kind of mark-to-market opportunity you see achievable there?
James Connolly (EVP of Asset Management)
I don't wanna get into too much detail on the mark-to-market, but it's fairly substantial. Well, it's fairly substantial. The other – just because we're in negotiations with the tenant. The timeline is they're out in June, and we've got half the building lined up for occupancy in September or October, and we have a backup prospect as well.
Todd Thomas (Analyst)
Okay, got it. And, so that's for half of the building. And there's other... What's tenant demand look like in general, for the balance of the space? And is the backup for also half the space, or would that be, you know, potentially for more?
James Connolly (EVP of Asset Management)
That's a full user that just came up in the last day.
Todd Thomas (Analyst)
Okay. Okay, and then I just... Last question I just had on, the Chicago property tax appeal. A shopping center reported sort of a similar outcome in their Chicago portfolio, which, which they benefited from, in the quarter. They're also gonna see a, a longer-term improvement from that as well. And I'm just wondering if the tax environment, in Chicago has changed a little bit in your view, and, and are there more potential, tax wins, in the Chicago portfolio that, that you see that might be possible, you know, with Chicago being about 20% of the portfolio's APR?
James Connolly (EVP of Asset Management)
Yeah. At 16801 Exchange, we've had some vacancy in there during the year. The, the tax break does not include any benefit for that vacancy, which we should be receiving probably about $300,000 break right there. The assessments are valid for, you know, two more years after this, and the rates are just going to probably increase at an inflation rate of, like, 3%-4%.
Todd Thomas (Analyst)
Okay. Do you feel that the tax environment, though, in Chicago, you know, has improved a little bit? I know that that's been, you know, a difficult market for property taxes in the past. Do you feel that there's been a little bit of a change in taxes in Chicago and Cook County?
James Connolly (EVP of Asset Management)
Yes. You know, again, it's locked into the... locked into is a strong word, but it's laid out for three years, and I can't tell you exactly how it's gonna be in the fourth year, but I think it's positive.
Todd Thomas (Analyst)
Okay. All right. Thank you.
Operator (participant)
The next question will come from Rich Anderson with Wedbush. Please go ahead.
Richard Anderson (Managing Director)
Thanks. Good morning, and thanks for having me on the call. First time caller, long time listener, I guess. So, the 9.7, maybe you said this in the commentary in terms of the cash same-store NOI. What would it have been without the tax situation in Chicago?
James Connolly (EVP of Asset Management)
It would've been 6.4.
Richard Anderson (Managing Director)
Okay. And when you, you know, back to the Memphis transaction, and you used dispositions to fund some of that, is there any dispositions within that that you think that, you know, is there something, anything in there that's non-core that you acquire that, you know, maybe would be sold over time, or do you want all of it?
James Connolly (EVP of Asset Management)
Yeah. I mean, there's always a couple of buildings there that you might wanna move, but it's still a little early to tell which ones that's gonna be. You know, there's a lot of-
Richard Anderson (Managing Director)
And-
James Connolly (EVP of Asset Management)
There's a lot of work to do in there, which I think is why, you know, it's a perfect Plymouth product.
Richard Anderson (Managing Director)
Okay. In terms of the cash releasing spreads, you know, you did sort of 14, 15-ish. This, this Memphis is 18-20 in terms of future and mark-to-market. You know, you're, you're way down by, you know, fixed renewals. Talk to me about the impact of that on, on, you know, what you could be achieving in the absence of the fixed renewals, and, and when does that sort of truly burn off, that we get the full, full gamut of cash releasing spreads out of the company?
James Connolly (EVP of Asset Management)
Yes. They burn off. There's still quite a bit in 2025, at the beginning of the year. But then in 2026, they drop in half, and then it continues to trend down from there. The actual rates, without it would be probably about 2% higher across the board.
Richard Anderson (Managing Director)
Okay. You said you're closing on in the end of your phase one of your development program. You know, in my conversations as you're going through the launch, the phase II process was sort of undefined. And if that's the wrong word, I apologize, but I wonder, you know, how defined has that become now that you're kind of nearing the end of phase one and you know, where you're looking to deploy capital in the phase two process of your development pipeline?
Jeffrey Witherell (CEO)
... Hey, Rich, this is Jeff. I mean, I think it was defined, so I don't know if that's the right word, but-
Richard Anderson (Managing Director)
Okay, fair enough.
Jeffrey Witherell (CEO)
We've been pretty vocal on the fact that we are not gonna start spec development at this time. So it's really based on a build-to-suit, and we continue to have discussions regularly on potential build-to-suit opportunities, especially in Cincinnati. We've got one site left in Jacksonville, and then a variety of other sites. In fact, the Memphis portfolio comes with a piece of land to build just over 100,000 sq ft. So we'll evaluate that. It's a very strong-
Richard Anderson (Managing Director)
Yeah
Jeffrey Witherell (CEO)
... sub-market, low vacancy. I could see us doing something on that. But again, right now, it's gonna be on build-to-suits.
Richard Anderson (Managing Director)
Okay. And then last for me, just to take your temperature on, you know, the whole onshoring movement. You know, it's an important part of your thesis, you know, where you guys exist. Do you have any view about whether it's real or political? And by political, I mean, you know, get somebody elected, and then come 2025, suddenly it's not moving as fast as we saw. I'm wondering where you stand. I hate to ask a cynical question, but can't help myself.
Jeffrey Witherell (CEO)
No worries. No, it is real. I think if you look through the data that we put forth, you know, on our website, we have our white paper that's been updated on the Golden Triangle. If you look at where the majority of the, you know, mega projects and even less than mega projects, if you look at where they're sited in the United States, the majority of them fall within the Golden Triangle. And this goes back to our thesis about infrastructure. And I hate to, you know, take up a lot of time, but I think it's important. In my 30 years in this business, I have never seen the amount of tenants requesting additional power like I've seen now. And so-
Richard Anderson (Managing Director)
Mm-hmm
Jeffrey Witherell (CEO)
... availability of power, water, you know, just the infrastructure alone. I mean, to reshore America, you're gonna need infrastructure. And, you know, rail is becoming an important part of it. The water ports are becoming an important part of it. Skilled labor is very important. So all these things coming together. And again, we have anecdotal information, but we also have some specifics. We have tenants that have leased space because they've brought manufacturing or expanded manufacturing into the United States. So if you go to reshorenow.org, a shout-out to our friend, Harry Moser, over there. It's a ton of information, all facts. This phenomenon is real, and it's not gonna change.
There's obviously a political component to it, but the facts are that we will be bringing back a lot of manufacturing to the United States.
Richard Anderson (Managing Director)
Okay, good stuff. Thanks very much.
Jeffrey Witherell (CEO)
Thank you.
Operator (participant)
The next question will come from Nick Theilman with Baird. Please go ahead.
Nicholas Thillman (Director of Equity Research)
Hi, guys. Hoping to get a little more commentary on the leasing front, just 2Q volume, a little bit slower than 1Q. Understand the pipeline here is around 900,000 sq ft. I guess, the slowdown in 2Q, is it just kind of the spaces that you guys have available or willing to address, seems a little bit more larger, chunkier deals? I guess, maybe talk about the lease gestation sort of timeline you're dealing with today.
Jeffrey Witherell (CEO)
Yeah, as far as Q2 is concerned, the actual volume was the third highest in the company's history. I would say there was probably a little bit of a lull at the beginning of the quarter, but right now, leasing is probably stronger than it, than it's ever been. In the prepared remarks, I put down that there was... We're working on roughly 2 million sq ft of leases that people have called. That's gone up like 1 million sq ft in the past week. We've gotten a lot of calls for people wanting to renew 2025 leases now. I think, they think interest rates are gonna go down and rents are gonna go up, so they're very eager to get their space locked up.
Nicholas Thillman (Director of Equity Research)
Then maybe touching on the disposition sort of front, I guess, what is the remaining you outlined kind of Columbus as the one buying that, but is there any other sort of disposition sort of slated for the back half of the year in terms of outlook?
Jeffrey Witherell (CEO)
Hey, Nick. Yeah, there's a few things that we're looking at, and we look at that all the time, and then we do get, you know, when an owner user comes in and wants to buy something, you know, we pay particular attention to that. So I think you'll see something this year, but we're not, we're not gonna put out... I think we put out a dollar figure in the past of about $40-$50 million, and we're almost there. So I don't know what we wanna throw out for people to start modeling, but it's— there won't be a lot of sales between now and the end of the year.
Nicholas Thillman (Director of Equity Research)
And then, Anthony, just on clarification, basically, the reduction on the top end of the range is essentially you're not really expecting the FedEx space to kind of be leased at, like, in the next quarter or so, maybe by year-end or something along those lines, and that's kind of the moving piece to help offset some of the accretion from the Memphis portfolio, correct?
Richard Anderson (Managing Director)
That's exactly the way to look at it. That upper bound was predicated all along on the assumption that the space in St. Louis would have a positive leasing outcome, you know, right about now. We're still bullish on lease up, and I think the timing that you just articulated is likely to be executed on.
Nicholas Thillman (Director of Equity Research)
That's it for me. Thank you, guys.
Jeffrey Witherell (CEO)
Thank you.
Operator (participant)
The next question will come from Brian Maher with B. Riley. Please go ahead.
Bryan Maher (Managing Director)
... Thanks. Just a couple from me. Most have been asked and answered. You know, expenses seem pretty under control, you know, aside from the future potential for more tax appeals, and I'd be interested to hear if there are, you know, in other markets, the potential for more tax appeal success. Is there anything going on in the variability of expenses, positively or negatively, that we should be thinking about?
Anthony Saladino (EVP and CFO)
Not other than has been articulated. You know, in terms of tax appeals, we do that regularly with the consultation of a third-party tax consultant. We don't anticipate meaningful reductions across the portfolio outside the ones that we've realized, but we are currently evaluating fiscal year 2024 estimates, which may yield some potential favorability on a net reimbursement basis.
Bryan Maher (Managing Director)
Okay. And then, are there any other potential vacates that would be of material in nature that's on your radar screen that maybe we should be thinking about?
Jeffrey Witherell (CEO)
Going through the 25 upcoming expirations, it's pretty, pretty solid. We're still trying to get definitive word from Maersk. That's, that's about the only one, but they, they can't leave, they at this point.
Bryan Maher (Managing Director)
Okay, good enough. And just last for me, and maybe a little bit on an open-ended question, would love a little commentary on. But you know, between you guys and other industrial REITs we cover, you know, this kind of 15, +20% rent increases on renewals that have been going on for some time and seem like it will go on for a bit longer, given the demand that you talked about. You know, it can't go on forever. So how are you thinking about that, you know, not in the next 1-2 years, but more in the next, you know, kind of 3-5 years?
Jeffrey Witherell (CEO)
Well, I mean, we base our projections off of market rate increases, which continue to go up. At some point, there may be a reset, but I think with onshoring, the demand is still high.
Anthony Saladino (EVP and CFO)
Yeah, I think in combination with the catalyst that is reshoring and onshoring, there's also the market advantages that we have, and more importantly, the fact of the lack of new supply for our types of buildings and our sizes of buildings will be, we think, a sizable advantage, sequentially for many years to come.
Bryan Maher (Managing Director)
Thanks. That's, that's helpful. And maybe just one, if I could slip it in. Yeah, you guys have a pretty specific niche, and, you know, you target, you know, a handful of certain markets, but I'm sure that you explore other markets as well. Without necessarily identifying, you know, a new market for Plymouth, is there something out there on the radar screen that would kind of fit your niche that you may explore, that it would be kind of news for us?
Jeffrey Witherell (CEO)
Yeah, Brian, the short answer is yes. I mean, we continue to look at deals, but I think you saw that we just exited Kansas City. We pay close attention to our costs, and to have one asset in a market that you have to go out and visit, and you have to pay attention to, and I have to answer crazy questions from people like you about, you know, 50,000 sq ft in the market, like, we're just wasting time talking about a market that we own 50,000 sq ft in. So, and I'm being a little facetious on that, but... So, you know, there's a lot of room for us to grow. I think, you know, Memphis, we just hit the $6.8 million mark.
I'm sorry, 6.8 million sq ft mark. We've got a full team of people in Memphis, and the ability to scale the markets we're in with our, with our own property management people, is, is exciting. It's, it's exciting for all of us to grow that aspect of the business. So we look at new markets, but I think there's just a ton of opportunity in the markets where we, where we have boots on the ground.
Bryan Maher (Managing Director)
Thanks, and I hope we don't ask too many crazy questions.
Jeffrey Witherell (CEO)
Not at all. Thank you.
Operator (participant)
Your next question will come from Mitchell Germain with Citizens JMP. Please go ahead.
Mitch Germain (Managing Director)
Thank you. You know, you did 7% same-store growth in the first quarter, 9.7 this quarter. Seems like you maintained your guidance for the year. Just, you know, is that just a hint of conservatism, or is there a real deceleration that's gonna, you know, come about in the back part?
Anthony Saladino (EVP and CFO)
No, we don't anticipate that. I think we were trying to be thoughtful in terms of the variability that was brought forth by the pickup in real estate taxes, offset by the surprise credit loss. There is a little leasing to do as it relates to that one particular tenant in Q3, but as Jim outlined, there's tenant demand lining up to take that space, and so we think that same store will ramp back up in the fourth quarter. We did leave a little conservatism with respect to the balance of the year as it relates to nonspecific vacancy and credit loss, but beyond that element of conservatism, we're bullish that the outcome will be range-bound.
Mitch Germain (Managing Director)
Thank you. I know you're fully leased on the development now. How much of that is actually income producing, or, or there's still some sites that are obviously, there's one lease that you just did, but or some of that's still in process of commencing?
James Connolly (EVP of Asset Management)
Just back up. The one lease that we've come to terms with, the 53,000, that's actually not signed yet, but we're working to get it signed, like, the next couple of days or two or a week. But as far as the income generating, there's one other building coming online in Jacksonville, in the fourth quarter. Other than that, it's all income generating.
Brendan Lynch (Analyst)
Gotcha. Okay. Last one for me. Jeff, maybe just if you could just talk a little bit about the process around Memphis. You know, you've bought assets for, you know, bulk of your career. I'm curious, you know, kind of what your sense of the potential bidding pool, you know, kind of how much organized capital was involved, or maybe just even out bidding on properties would be... I'd be curious.
Jeffrey Witherell (CEO)
Yeah, I don't think we were the highest bidder on that, necessarily, but I know we're the best bidder, right? So there's no financing contingencies. I think in the +7 years we've been public, we just don't retrade deals. I think if you ask brokers, we have a pretty good reputation in the marketplace, and our guys are, you know, our people are experts at this. This is what we do. Having a full staff of people on the ground in Memphis helped facilitate this. I think part of why there may not be a lot of bidders is there's a lot of work on this, right? So, I mean, to get an yield, you know, there's a lot of work, but that work is upside for us.
It's -- there's some re-tenanting going on, you know, moving people around. We've got a little bit of CapEx here and there over time. A lot of tenant relations. I mean, there's 45 tenants here. So I think a lot of people might have backed away because they don't have the boots on the ground to efficiently take advantage of all the opportunities. That's probably the best way I say it. And that seems to be the theme for us as we win deals. Because, again, we're just not gonna overpay. We don't want to be the top bidder. So-
Brendan Lynch (Analyst)
That's super helpful. Thanks.
Jeffrey Witherell (CEO)
Yeah. All right, thanks.
Operator (participant)
The next question will come from Nikita Bely with JP Morgan. Please go ahead.
Nikita Bely (Executive Director)
Hey, good morning. In your prepared comments, you talked about occupancy dipping in 3Q and then picking back up in 4Q. If we were to look at year-end occupancy, where exactly would you expect your year-end same store and the overall company occupancy to be at December 31, roughly?
Jeffrey Witherell (CEO)
So as it relates to same store, I think what guidance we provided, if you will, was that we'd see a dip in Q3, as you mentioned, down to around 96.5%, and then an expectation that we would return to, let's call it the 98% level by year-end.
Nikita Bely (Executive Director)
Yeah, and that's year-end figure. Okay. In the same-store.
Jeffrey Witherell (CEO)
Yep.
Nikita Bely (Executive Director)
Yep. Got it. Any other one-time items that there's potentially embedded in your second half of this year's outlook?
Jeffrey Witherell (CEO)
No. You know, I think we tried to do a comprehensive job of articulating the credit loss and resulting impacts. I mean, we were certainly surprised by the velocity of the tenant decision. We consider that impact anomalous relative to, you know, our average lease tenor of under four years. That particular tenant had executed a 10 year lease with six months of free rent, resulting in the outsized impact on Q2, as we articulated in the prepared commentary.
Nikita Bely (Executive Director)
Mm-hmm. All right. And, for the tenants that you guys are discussing for your St. Louis property, when would you expect for them to take occupancy and commence the rent payment? I know that's a big lease, what, 770 sq ft, right?
James Connolly (EVP of Asset Management)
Yes. We expect the occupancy roughly beginning of the year, probably, rent starting in Q2, cash rent starting in Q2.
Nikita Bely (Executive Director)
25. Got it. Okay. Thank you.
James Connolly (EVP of Asset Management)
Thank you.
Operator (participant)
The next question will come from Anthony Hau with Truist. Please go ahead.
Anthony Hau (Director)
Good morning, guys. Thanks for taking my question. So it seems like manufacturing is slowing down, with companies laying off employees, cutting production to counter falling orders and rising inventories. Just wanna get your thoughts on that subject, and whether you guys have any concern on the potential impact to demand in your markets.
James Connolly (EVP of Asset Management)
Just, we have not seen that to be the case in our markets with our tenants. Demand's strong. I think the one company that did have the issue, a logistics company that was trying to, you know... It was really a tech company trying to be a logistics company, and they kind of didn't succeed on that, so.
Anthony Hau (Director)
Okay, thank you.
James Connolly (EVP of Asset Management)
Thanks.
Operator (participant)
The next question will come from Brendan Lynch with Barclays. Please go ahead.
Brendan Lynch (Analyst)
Great, thanks for taking my question. Joined a bit late coming from another call, so I apologize if this has already been addressed. But with the St. Louis asset, there was a suggestion that some of the prospective tenants were looking to take the available space and would potentially commission a build-to-suit asset on the adjacent land. Are they still in the mix?
Jeffrey Witherell (CEO)
... There's one of the tenants that wanted to expand is still in the mix. The one dropped out.
Brendan Lynch (Analyst)
Okay, that's helpful. And maybe to the extent you haven't already discussed it, just any additional commentary that you could give on the two that you're further along in the negotiations with? What are the considerations that are kind of being ironed out now?
Jeffrey Witherell (CEO)
So, sorry, on St. Louis?
Brendan Lynch (Analyst)
Yes.
Jeffrey Witherell (CEO)
Yeah, right now, I think we're seeing across the board that the larger Class A space is just taking a long time for people to make decisions. And, there's been a lot of companies inquiring about the space, and they're putting together their plans. But, a manufacturing company requires, you know, a lot of financing equipment, so they're still working those details through.
Brendan Lynch (Analyst)
Okay. Thanks for the color.
Jeffrey Witherell (CEO)
Thanks.
Operator (participant)
The next question will come from Steven Dumansky with Janney. Please go ahead.
Steven Dumansky (Analyst)
Thank you. Can you please provide further insight on the Jacksonville market, especially in reference to your current development and the recent completions?
Jeffrey Witherell (CEO)
Maybe you could refine that question a little bit. You know, our recent developments, I mean, we have... Outside of the industrial, you know, properties that we have that are single site, we have three significant industrial parks that form the core of our portfolio in Jacksonville. I mean, occupancy there is always high 90s. Strong demand. We do have one pad site left that we can build. It's another 40,000-50,000 sq ft building on that we're entertaining build-to-suits on. So-
Steven Dumansky (Analyst)
Thank you.
Jeffrey Witherell (CEO)
Again, maybe you can give, you know, some more color to what the question...
Steven Dumansky (Analyst)
I just, I guess I wanted to see if do you currently see a significant difference between yields rather than between the secondary and primary markets?
Jeffrey Witherell (CEO)
The Jacksonville market's been very strong.
Steven Dumansky (Analyst)
Thank you.
Jeffrey Witherell (CEO)
Thank you.
Operator (participant)
This concludes our question and answer session, as well as our conference call for today. Thank you for attending today's presentation. You may now disconnect.