Q4 2019 Earnings Call
[music].
Welcome to the Washington Real estate investment Trust, your and 2019 earnings Conference call.
As a reminder, today's call is being recorded.
Before turning the call over to the company's President and Chief Executive Officer, Paul Mcdermott, Amy Hopkins, Vice President of Investor Relations will provide some introductory information Amy. Please go ahead.
Thank you and good morning, everyone. Before we begin please know that forward looking statements may be made during this discussion.
Statements involve known and unknown risks and uncertainties that may cause actual results could differ materially we undertake no duty to update on the actual events unfold.
I heard a certain of these risks and our FTC filing.
Conciliation of the GAAP and non-GAAP financial measures discussed on this call are available in our most recent earnings press release and financial supplement, which we distributed yesterday and can be found on the Investor Relations page of our website participating in today's call with Middleby, Paul Mcdermott, President and Chief Executive Officer, Steve Riffee Executive Vice President and Chief.
Financial Officer drill Hammond, Vice President, Chief Accounting Officer, and Treasurer, and Grant Montgomery Director of research now I'd like to turn the call over to Paul.
Thank you and good morning, everyone.
Thanks for joining us on our yearend 2019 earnings conference call.
Today I'll discuss our gross out block in the context of our strategy for long term value creation.
But before focusing on the path.
I think it's important to take stock of our recent accomplishments.
Going to begin with a recap of how we deliver shareholder value first strategic capital allocation and leasing during 2019.
2009 team with the pivotal year for wash read on multiple fronts.
We executed the largest and most transformative strategic capital allocation and the history of the company.
We delivered strong results from our multifamily portfolio and further validated our value oriented investment strategy.
We also achieved the primary goal has laid out at the beginning of last year, which was to create visibility on future revenue growth by executing commercial leases.
Starting with our strategic capital allocation, we executed $1.3 billion of transactions that recycled capital at a high risk capital intensive commercial assets into multifamily assets with value add potential.
These transactions approved our risk adjuster growth profile.
The volatility of our cash flows and improved our fad growth prospects.
The multifamily acquisitions doubled our pipeline for unit reservations, which generated a average return on investment up 14% and 2019 and are expected to generate double digit returns in the future.
With lower capital requirements at a four scope renovation pipeline, we have solidified foundation for multiple years of value creation, what that our multifamily portfolio.
We were able to do all while maintaining our balance sheet flexibility and liquidity.
[noise] the assets that we acquired and 29 chain follow our stated multifamily investment strategy.
The Washington area continues to Underproduce, new housing units all types. Despite the housing shortage in the region.
Over the past decade, the Western region has produced on average 17000 units of single and multifamily housing per year, which is well below the need for nearly 29000 units. According to an analysis by George Mason University.
Due to the high cost of construction land and labor is increasingly difficult for the new product that is being delivered to be affordably priced for the midmarket renters.
Wash REIT has focused on investing in assets that offer value out potential in locations, where there is a wider than average differential and price or gap between having options that are affordable for mid market rent or income segments versus new apartment supply.
Our research indicates that that market rent or households drive, 25% original rental demand yeah, only 5% of new construction built over the past seven years is affordable for these renters.
Prior to 29 team, we were predominantly focused on urban multifamily infill locations.
However, close monitoring of trends, let us to expand our strategy to the suburbs.
The DC region has one of the longest average commutes and the country due to the high cost of home ownership near major job centers, which unlike many other U.S. cities are more spread out rather being concentrated in the city.
Over 70% of regional household growth is projected to occur in the suburbs over the next five years.
Driven largely by age millennial looking for more space and better schools no major employment centers.
Given the car high cost of home ownership.
The wave a millennial age into their late thirties and early forties.
They will continue to rent at rates greater than previous generations.
Driving up this age group share of new rental households over the next five years from 30% to nearly 70% according to NMHC.
Turning to our commercial asset sales the assets that we sold last year demonstrate the continued execution of our plan to eliminate major risk to cash flow stability within our portfolio.
We liquidated our exposure to big box retailers this past year and since our last earnings call, we monetized our exposure to single tenant assets and we'll close on the sale of our final single tenant office building next month.
Moving onto our commercial wasting achievements alongside the execution of our strategic capital allocation. Our team delivered same store NOI at the top end of our guidance range and exceeded our 2019 leasing targets.
As we foreshadowed in late 2018, 29 team would be a challenging year with an elevated number vacancies due to several large commercial lease expirations.
Thanks to the strong efforts of our leasing team, we have a dress not only the significant vacancies incurred and 29 team, but also 70% of our original 2020 expirations.
Additionally, the leases that we signed last year set us up for strong growth trend during 2020.
Lastly, we have to lever phase one of our wash rent led ground up multifamily development.
The trove offers a unique value <unk> value proposition has the only community along the Columbia Pike court or with substantial rooftop amenities at a price point that's below every other new building and national landing.
We are now in lease up for phase one m. remain on track to deliver phase two later this year.
With stabilization expected to occur in 2021.
Moving forward, we are in a much stronger position that we work just a year ago was significantly less commercial and Hawaii at risk and multiple growth drivers across both our multifamily and commercial portfolios.
We have previously communicated that 2020 won't be an inflection year.
We expect strong growth and the second half of the year driven by key office lease Commencements on vacancy that was backfill during 2019.
Along with consistently strong multifamily and NOI growth.
We remain confident and the growth outlook for our multifamily portfolio given the demand we're experiencing for our value oriented assets, our ability to drive renovation led value creation.
And the strategic operating improvements we are implementing over the near and long term.
Moreover, we expect the true multifamily development to lease up throughout 2020 and to contribute to strong year over year growth and 2021 and beyond.
We have designed a renovation programs within each community to provide our value oriented renters winter prove living experience and compelling value proposition.
We attribute our ability to design attractive cost effective renovation projects toward deep knowledge of the local markets.
The renovation programs for the assembly portfolio and Cascade Atlanta market have been appropriately scope to an early feedback from residents and onsite team members indicates that our programs are well designed and position for success.
These programs are now underway and we expect to complete over 350 renovations within our non same store portfolio in 2020 at an average cash on cash return and the low teens.
Looking forward, we're positioned for multiple waves of growth from our multifamily portfolio driven by renovation, let value creation as well as our near term development deliveries and longer term development opportunities.
Regional supply demand dynamics continue to support our value oriented multifamily investment strategy and geographic focus.
On the supply from Wal projected deliveries for the DC Metro area are expected to increase in 2020 over 50% of the new supply is concentrated in the district.
Deliveries and northern Virginia, where 80% of our multifamily assets are located are expected to decline by nearly 30% and 2020 According to Delta associates.
What's new deliveries declining at high labor construction costs translating to higher price points, we're confident in our multifamily portfolios relative positioning.
Our multifamily investment strategy focused on the largest and most underserved runner cohorts in our region, which are largely insulated from new supply because building to rent levels that are affordable for the highest growing renter income segments is economically challenging due to high land labor immature.
Cereal costs.
In our region the supply of apartments with comparable class B price points remains constrained.
Turning to regional multifamily demand indicators are assets are positioned to benefit from Amazon's emerging presence combined with the recently enacted infrastructure and education spending as well as regional growth and the technology sector overall.
Over 90% of our class a and class B urban infill assets are located within a mile of the metro and over 75% are located within a five mile radius of HQ too.
The Wellington and the trove are located less than two miles or five minutes shuttle ride.
From HQ too.
The Maxwell is located less than a mile from George Mason, Arlington campus, which would come home to a brand New Institute for digital innovation.
Moreover, Riverside, where we have the opportunity to add 767 additional units and will likely Blake ground and the second half of this year. It's located five metro stops from H. Q2, and three miles from Virginia Tech future innovation campus.
Turning to the regional office demand indicators, approximately 60% of our office portfolio is located in northern Virginia, which posted its large that's positive net absorption since 2006.
Check and cyber security demand drove 60% from northern Virginia leasing volume last year and looking forward, we expect tech and cyber demand to continue to grow.
The defense budget is up 16% since 2017, and a 2020 budget delays have been resolved, which is a positive for the Dulles Tech corridor, which captures 37% of all federal technology contracts.
The government is awarding over $25 billion of cloud computing contracts to local private market tenants over the next 12 months according to JLL.
Since migrating legacy systems to the cloud is a federal spending priority, we expect government spending to be a positive driver for real estate demand in this region.
Space plus our flexible office program continues to drive strong leasing volume at above market rates with less downtime and lower second generation Capex.
In 2019, we grew the space plus program by more than 100000 square feet of lease space and achieved a weighted average market premium of 10%.
We had a new high of 13% in the fourth quarter, where the downtime of less than two months.
We believe that space plus they also need that is differentiated and likely here to stay compared to pure co working providers.
Space, plus appeals to the graduates of co working or willing to pay for a separate identity more flexible lease terms and shared amenities.
Our deep understanding of the tenant size that we are targeting allows us to maximize our operating efficiency.
For example, we built our spaces to be easily demised or joint without spending significant ti dollars a.
Additionally, we design branding opportunities in our spaces that can be update in altered at a low incremental costs as leases turnover.
Our ability to effectively design our spaces to reuse Capex spend has resulted in 90% of our first generation T I spend being re utilized for second generation leases.
Overall, we're very pleased with the economics, we're generating from our space plus program.
Another shift we are seeing and the market is the tenants are showing more interest in tenant experienced programs that provide services beyond traditional office amenities.
As a landlord we view this as an opportunity to deepen our relationships with our tenants.
This year, we're rolling out an app based experiential amenity named and you.
Aims to simplify life for our tenants in and out of the office.
And you is already in the piloting phase at Silverline, Arlington Tower, and Watergate 600.
For our tenants the value proposition is twofold.
The average employee can access surfaces and information to streamline their lives both at work and that home for the office managers HR teams and the C suite the program contributes to employee attraction and retention.
Lowers the burden on their staff and provides important emergency communications to the broader employee base.
We expect to and you to have a positive impact on tenant retention and more specifically the conversion of shorter term space plus tenants into longer term office leases.
And with that I would like to turn the call over to Steve to discuss our fourth quarter financial and operating performance and our 2020 guidance.
Thank you Paul and good morning, everyone as Paul describe the highlight of the year, what's the successful execution of the most significant capital recycling in the history of our company.
I'm pleased that we were able to execute these complex transactions, while maintaining our targeted balance sheet liquidity and flexibility and successfully executing the steps we laid out last spring.
Turning to our financial performance net income attributable to controlling interest per 2019 was $384 million or $4.75 per diluted share compared to $26 million or 32 cents per diluted share in the prior year.
The large increase is primarily due to net gains on asset sales from our execute the strategic capital allocation transactions.
Core FFO of $1.71 cents per diluted share for full year 2019 was in line with the midpoint of our guidance range on a year over year basis core AFFO per share declined 15 cents due to our asset sales, partially offset by the acquisition of the assembly portfolio and Cascade as well as the pre.
Previously disclosed office vacancies that we've now substantially backfill.
Overall same store NOI declined 0.2% year over year on a GAAP basis and increased 0.5% on a cash basis for the full year 2019.
Due to the 4.6% gap declined in the 3.6% cash decline in same store office in Hawaii.
Having executed the heavy lift to release space. We delivered same store results at the higher end of our guidance range.
As we've discussed throughout 2019, the primary driver the same store office in Hawaii decline was the expiration of two large leases at Watergate 600 at the beginning of the year. The majority of which has been backfill and the lease for the top to force kmis prior to year end.
Multifamily same store NOI increased 4.6% for the year and 4.8% in the fourth quarter, driven primarily by rent growth.
[noise] new lease rates increased 220 basis points during 2019 up from 180 basis points of increase in 2018, driven by renovation led value creation.
Renewal lease rates increased 430 basis points up from 410 basis points of increase in 2018.
On a blended basis, new and renewal lease rates increased 340 basis points for the full year compared to 300 basis points in 28 today.
As lease rate growth remained strong we are maintaining occupancy levels in the mid ninetys, allowing us to optimize into why growth.
Additionally, our focus on customer service resolved and they 200 basis point increase in resident retention in 2019% to 56% on a same store basis.
Last year, we completed approximately 360 renovations and our same store portfolio at a weighted average ROI a 14%.
While our same store property renovation programs are now 70% complete.
Programs for our newly acquired assets are still in the very early stages.
We have over 3300 units and our pipeline and we expect our recently acquired assets to contribute the majority of our renovation led value creation within our portfolio over the next several years.
Same store gap in Hawaii increase that our remaining retail centers, which we reported another 3.4% and cash NOI increased by 4.9% year over year, driven by higher value lease Commencements at spring Valley village as well as higher recoveries.
Turning to leasing activity for the fourth quarter and the full year, we signed approximately 46000 square feet of new office leases and 57000 square feet of office renewals in the fourth quarter.
We achieved solid rental rate increases of 34% on a GAAP basis, and 20% on a cash basis for new office leases and 27% on a GAAP basis, and 12% on a cash basis profits renewals.
Primarily due to demand for our reposition assets in the district and Northern Virginia.
Retail signed approximately 9000 square feet of new leases and 8000 square feet of renewal leases during the quarter. The majority of our Luis volume was a 16 year lease for the entire second for the New building a spring valley village to a conspiracy pediatric practice that has been operating in DC for over 90 years.
This particular at least drove the increase in tenant improvements during the quarter.
On a full year basis, we signed 268000 square feet of new leases and 257000 square feet of renewal leases at our same store assets.
As we previously message 29 team was an important leasing year for office portfolio due to several large lease expirations.
As a result of our focused efforts we signed several large lease large long term leases that are expected to generate growth in the second half 2020.
Now turning to our 2020 outlook.
We are guiding a full year core AFFO per share range of $1.53 cents.
Pershare to $1.59 cents per share.
This range does not assume any acquisitions are completed during this year and incorporates the assume completion of the self John Marshall to in Tysons corner, Virginia in late March.
We expect core AFFO to bottom in the first quarter of 2020, driven primarily by our year end asset sale.
We expect strong growth in a second half of the year driven by commercial rent Commencements.
Multifamily rent growth and renovation led value creation as well as incremental revenue opportunities, resulting for multifamily initiatives.
Since our last earnings call, we issued approximately 1.4 million shares through our ATM program at an average price of 30, Dollarss and 77 cents per share.
And entered into a contract to sell John Marshall to.
We estimate that these two initiatives to further strengthen our balance sheet reduced our 2020 core FFO guidance by approximately three and a half cents per share.
We expect our overall same store NOI to increase by 1% to 2% in 2020 comprised the multifamily into why growth in the range of three in a quarter to for the quarter percent.
Office said why growth in the range of negative one to positive 1%. This office growth occurs in the second half of the year when leases commence.
We expect other rental <unk> 13 in the quarter to 13 in three quarters million dollars.
Additionally, we expect non same store multifamily NOI to range from 28 in the quarter to 29 in the quarter million dollars.
We expect GE, they including leasing expenses to range from 22 in a quarter to 23 in a quarter million dollars and interest expense to range from approximately 42, and a quarter to 43 and a quarter million dollars.
Well development expenditures are expected to range from 42, and a half the 47 and a half million dollars.
For 2020, we project, our fad payout ratio to be temporarily in the high Eightys followed by a return to our targeted level of 80% or even lower and 2021 with additional improvement forecasted thereafter.
Our capital recycling efforts over the past several years, most notably during 2019 has stabilized our cash flows reduced our recurring capital requirements and improved our fad growth prospects.
As planned we ended the year with a strong balance sheet, providing further optionality to grow and improve our multifamily portfolio and to drive future growth through development.
We ended the year with a net debt to EBITDA of 5.6 times on a trailing 12 month basis. Although this is an earnings reset year. Our current guidance continues to reflect your in 2020 net debt to EBITDA ratio that is within our targeted range of six to six and a half times.
Since year end, we paid off our final mortgage and eliminated our secured debt, which further increases our flexibility.
We see opportunities to extend our doesn't matter and 2020 and beyond what looks to be favorable debt markets.
And before I turn the call back to Paul I want to speak briefly about our S. T initiatives over the past year, which represent an aspect of institutional strength that is important to this management team.
As well as our internal and external stakeholders.
Wall Street is focused on making a difference in this region that we call huh.
In 2019, we won the district sustainability award for being a leader in sustainable building management.
We partner with a Washington, D.C. nonprofit to donate you electricity generated.
In solar panels installed on wall Street rooftop space to low income families in DC.
That's really our employees logged over 1800 active volunteer hours during 2019, and a variety philanthropic activities geared towards improving the communities, where we work in live and providing support for at risk populations.
Finally, we improved our grocery score again in 2019.
Woshurettos been assessing our performance to gross me since 2014, we've improved our score by 29 points over that period.
And achieved a green star rating for several years.
We expect to continue our commitment to iasci related initiatives.
The more thoroughly report our efforts and results in our 2020 U.S.G. report later this year.
And with that I'll now part of the call back to Paul.
Thank you Steve.
To recap we completed the most transformative strategic capital allocation and the company's history. This past year.
We significantly de risked our commercial portfolio and improved the stability of our cash flows.
More importantly, we improved our long term fad growth prospects by replacing capital intensive commercial assets, what multifamily assets that offer better cash flow growth prospects.
Our newly acquired multifamily assets are located in strong Submarkets with limited new competitive supply and we have the opportunity to drive long term renovation led value creation at these assets.
Looking forward I.
I believe this is the most solid foundation to wash freed has been on in recent history.
Nearly 50% of our NOI is driven by our multifamily portfolio with strong value add growth prospects.
The true multifamily development lease up throughout the year and we expect to break ground on Riverside later this year.
Lastly, following a significant reduction in our 2020 expirations and commercial and a lie at risk we are positioned for strong growth in the second half of the year driven by key lease commencements.
All in all we expect a very strong year over year growth in 2021 and beyond.
Now we would like to open the call to answer your questions.
Thank you at this time, we will be conducting a question and answer session, who would like to ask a question. Please press star one on your telephone keypad.
The confirmation Tony will indicate your line is in the question Q.
A press star too if you would like to remove your question from the Q.
Participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.
One moment, please while we pull for questions.
Our first question comes from the line of John Guinee of Stifel. Please proceed with your question.
John could you see if your phone is on mute Oh, sorry, a nice quarter. Thank you nice quarter.
Booz Allen, what's the GAAP yield on that.
Just for modeling purposes.
We put it in our.
In our guidance points, John but it's contributing about $1.1 million of into why a quarter.
Oh, I'm, sorry, I missed that okay, great. Okay.
Second.
Commodity office asset sales or are tough in DC. These days and you guys have about 1.5 to 1.8 billion.
Left to go.
What do you think what kind of.
Uh huh.
Timing is that are you going to try to sell up 100 million a year for next 18 years or 500 million a year for the next three years and when you reinvest that into multifamily is that up 100 basis points dilute over 300 basis points dilutive.
John Hi, it's a it's Paul first off I think what we've said in the past is that we're going to overweight.
Multifamily because we like the demographics.
In the region M., we particularly like the runner cohort that we're focusing on I think today, we see better opportunities for value creation and the multifamily space and that's that's why we're allocating capital Aaron and when I look at the the Midmarket runner cohort that we're targeting I think we see a nice runway in front of Watson so.
We're not shy about saying, we're going to grow our multifamily portfolio either through acquisitions renovations or development I think when you look at the office that we have monetized I think we've tried to be very opportunistic.
In the disposition, but I'd like to just take a second and reflect on 2019, because it has a direct correlation to your question I mean, we leased over 1 million square feet last year and that wasn't just about creating value for our investors that's about creating optionality for this company. So.
I don't feel like we have a gun to our add too you know sell out our biggest focus this year is really to make sure that all these leases.
Commence.
In terms of dilutive prospects I think we took some of our most challenging assets last year and sold them at less than 100 basis points. So.
I can't speak to that the timing right now because we're watching the markets like everybody else is watching but when I look at what's going on in Northern Virginia, right now having its biggest absorption years. Since 2006, we're definitely seeing tangible rent movement in northern Virginia and by the way in Northern Virginia, 60% of our commercial.
Our portfolio.
I like our prospects, if we need to monetize about I also like our prospects to create value in that sub market also.
Great, Okay, what what I'm just concerned about it.
I think you were down 15 cents 18 to 19 and that was off an artificially high number up 2018 was I think enhanced by the.
FFO generated from the Arlington tower in the 600, Watergate acquisitions, but 15 cents down 18 to 19 in the 19 to 20 is another 15 cents down and I'm just asking this to hopefully you get a little color that does not going to happen again in 21.
John that that if so.
That's a I mean I understand the question and we took dilution I think.
Obviously, we have strategic opportunities that they could ultra things, but I think what we've been setting up since the spring when we had the opportunity to buy assembly was we pretty much we're able to lay out although there were many moving parts.
What we were going to execute and what kind of dilution. There was and we also knew that we were doing that in the year, where we had to get all that leasing done. So we have been trying to and I think showing a very clear path of execution to growth.
And I think we have been actually getting those leases signed I think we've been pretty clear that 20 is a year of you up at reset the bottom was supposed to be and I think we still expect that to be the first quarter. This year following the last.
Asset sale at the end of last year.
And that leases commence we've allocated capital to multifamily that has the higher same store growth and will be leasing up the trove again this year. So.
Our pattern.
Of expectation, although we don't give quarterly guidance is we believe the first quarter is the bottom we believe the second quarter should be slightly higher in the first quarter might've been a little bit more except for our last single asset sales happening at the very end of the first quarter, we see growth in the second quarter I mean in the third quarter from the second quarter, we see another job.
Okay and growth in the fourth quarter, if all these leases commence on schedule and in our renovations continue in our pipeline and we think Thats a pretty good run rate going into 2021 and really the trove hasn't contributed much in 20, but it's another big growth of 20 over 21, so you're right. If there are other major moving parts.
That it could change the trajectory, but that is stuff that we've done a lot of execution on that we think there's a pretty clear path to progress. So that's I mean, that's what we've got out there so far.
Perfect. So just one follow up because.
We're just trying to get the numbers right. If you take the John Marshall sale and then the trove stabilizing and you look at your up forward EBITDA when you factor those two in.
And you look at your debt balance do you have any capacity to be a net acquirer.
Once you just take a look at.
John Marshall out Troll, then debt balance.
At the beginning of 20 to 21.
Yeah, I think that's good question.
I think obviously, we're going to feel the John Marshall absence first the truth is going to be leasing up as you go through 2020, so it's going to be growing EBITDA in 21.
We've got a pretty good low net debt balance starting the year and what we've had an EPS instead was prefund the opportunity to to fund more development and to break ground. This year on the Riverside.
But and then stay within our regular guidelines of six six and a half, but you're absolutely right. We look at it that way to our E. R NOI growth or AFFO grows and our EBITDA growth, which could continues to create capacity today today. We do have optionality, we don't always have as much optionality, but we have optionality to continue the.
Grow up but right now because of the development is more visible than the aquas than acquisitions would be or you would say we've at least covered the development spend for the year.
Okay. So essentially if I look at that say up EBITDA of 180 million in 2021 do you have optionality to be a net acquirer or are your sources and uses such that.
It's pretty much limited to.
The trove plus Riverside.
I would I would say.
We're not going to give our 21 guidance, but our own models, assuming that we execute everything we have in 20 shows EBITDA growing and that will have optionality on 21.
Great. Good news thank you.
As a reminder, if you would like to ask the question. Please press star one on your telephone keypad.
Our next question comes from the line of Chris Lucas of capital. One. Please proceed with your question.
Hey, good morning, guys, Steve if I could can just digging into the.
Non same store apartment contribution for 2020, how much of the true lease up do you guys have sort of modeled in to contribute to that number.
We're going to be conservative right now, Chris we were in lease up now the.
That we'd be we were able to begin lease up in the first quarter of this year.
So we have breakeven in the last half of the year. So we're not going to assume that theres much contribution above breakeven for now.
And to see how it at least piece goes for 20, but that sets us up for a big step in 21, and that's kind of how we're thinking about it right now.
And then okay. Thanks, Steve and then as it relates to the portfolio that is that you acquired but is.
Stabilized what sort of.
Organic growth do you see from that.
Well this year as it relates to sort of is it's consistent with the sort of legacy pool or is it is it better what what's your expectation there.
Well, we're we've again put that out in dollar ranges because we don't have a prior year for full year to compare it to and we've just begun leasing up we're pretty happy for instance, with.
The January reported renewal trade out.
In that portfolio. We obviously are just getting started on the renovation programs there when we whenever we onboard multifamily we.
Start working on optimizing that lease expiration schedule and all of that.
The operations team as a good sense on how to manage expenses more efficiently. So we see a lot of initiatives I.
We're reluctant to put a percentage out yet because we just don't have enough track record, but quite frankly, the expectation is that our growth rate for the second half of the year over last year's second half of the or when we own the.
For both compared appearance is going to be higher than our same store growth and but we'd like to have a little bit more time before we give.
Clearer guidance and ranges for those percentages.
Okay great.
Okay. That's all I have for now thanks.
There are no further questions at this time I'd like to turn the floor back over to management for any closing remarks.
Thank you everybody again I would like to thank everyone for your time today, and we look forward to thing many view at the upcoming conferences over the next several weeks good afternoon.
This does conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation have a great day.