Q1 2021 STAG Industrial Inc Earnings Call
Greetings and welcome to the Stag industrial first quarter 2021 earnings call. At this time all participants are in a listen only mode of question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference of please press Star zero on your telephone keypad. As a reminder of this conference is being recorded I would now like to turn the conference over to your host Mr. Matts Pinard Senior Vice President of Investor Relations for Stag industrial.
You may begin.
Thank you welcome to the Stag Industrial conference call covering the first quarter 'twenty 'twenty. One results. In addition to the press release distributed yesterday, we've posted an unaudited quarterly supplemental information presentation on the company's website at stag industrial Dot com under the Investor Relations section on.
On today's call of the company's prepared remarks and answers to your questions will contain forward looking statements as defined in the private Securities Litigation Reform Act of 1995.
Forward looking statements address matters that are subject to risks and uncertainties that may cause actual results of different from those discussed the that examples of forward. Looking statements include forecasts of Corp of both same store NOI G&A acquisition and disposition volumes retention rates and the other guidance.
Using prospects rent collections of industry and economic trends and other matters. We encourage all of our listeners to review the more detailed discussion related to these forward looking statements contained in the company's filings with the SEC and the definitions and reconciliations of non-GAAP measures contained in the supplemental informational package available on the company's website as a reminder, forward looking statements represent.
Its estimates as of today Stag industrial assumes no obligation to update any forward looking statements on today's call you will hear from Ben Butcher, Our Chief Executive Officer, and Bill Crooker, Our President and Chief Financial Officer, I will now turn the call over to Ben.
Thank you, Matt Good morning, everybody and welcome to the first quarter earnings call for Stag Industrial we're pleased to have you join us and look forward to telling you about our first quarter results.
Let me first start by mentioning our recent action of promoting our CFO Bill Crooker to the additional title of President Bill has been an important part of the stag success as the public company and this promotion reflects the ongoing maturation as a leader of our company. We're excited to have bill as our president and CFO and look forward to the future and today's call Bill will discuss the bulk of the financial.
The operational data.
Also with US today are Steve Mackey, our Chief operating officer, and Dave King Our director of real estate operations. They will be available to answer questions specific to the area of focus.
10 years ago, we entered the public market with a differentiated approach to real estate.
Traditional strategies relied on arbitrary decision rules that regularly influence investment decisions. The result was the concentration of similar platforms, where the narrow view of the industrial landscape. This created the opportunity for stag.
Stag was built with an emphasis on quantitative analysis unconstrained by decision rules the focus on cash flow of mechanization and evaluate returns using a probabilistic model investments in the inland Empire of California, and secondary markets in Ohio can be compared on a risk neutral basis by using our robust probabilistic model.
This allows stag the take advantage of relative mispricing of the individual assets.
This approach provides the largest the opportunity set available in the industrial space and one that we have successfully taken advantage of during our tenure as a public company.
The execution of our investment strategy has resulted in our ownership of the third largest portfolio of industrial real estate in the public market.
100 millions of square foot portfolio of its spread across almost 500 properties nationwide.
Over our 10 year run we are continually investing in the platform broadened our use of data and refined our processes. We have remained consistent in our search for relative value across the industrial sector. Most importantly, we have delivered great return of store investors along the way.
Without question, we are fortunate or is the company to be 100% focused on industrial real estate.
Consistent with the past several years, the industrial sector of benefits from strong underlying fundamentals and broad based tenant demand the pandemic accelerated the pace of E. Commerce adoption. This change in the consumer behavior is permanent as highlighted the importance of warehouse distribution within the supply chain.
The companies can no longer delay or ignore ecommerce, resulting in a sustained demand for functional and fungible industrial real estate.
The strength of our acquisition team and the breadth of our inquiry has allowed us to continue to identify and evaluate a large number of attractive potential investments.
True cost of capital has allowed us to maintain our accretive return thresholds across a broader range of potential acquisitions of the large size of our acquisition pipeline reflects the cotton the continuing opportunity for stag.
On April 20th we participated in the closing Bell ceremony of the New York socket change in commemoration of our 10 years as a public company.
I want to thank all of our employees, who helped turn what began as an investment thesis on the back of the napkin 20 years ago and to the company. We are today the future for our company is bright indeed.
With that I'll turn it over to Bill who will discuss our first quarter operational results.
Thank you Ben good morning, everyone.
Core of peso was 49 for the quarter, an increase of four 3% as compared to the first quarter of 2020.
As discussed on our previous earnings call.
$1.5 million related from the implementation of our retirement plan was added back to core of a foe.
Note that this is a noncash add back with the outstanding shares already included in our diluted share count.
Cash available for distributions totaled $72 $5 million, an increase of 29, 5% as compared to the first quarter of 2020.
This impressive growth in cash flow has brought us closer to our targeted payout ratio.
Net debt to run rate adjusted EBITDA increased to four eight times as we re lever the balance sheet.
Our guidance range reflects the return to normalized leverage levels after operating with very low leverage in response to in response to the pandemic last year.
Acquisition volume totaled $102 million with stabilized cash and straight line cap rates of 6.0% and six 4% respectively.
Consistent with past years volume in the first quarter is relatively low and is expected to increase as the year progresses.
During the quarter, we commenced 20 leases totaling $2 6 million square feet, which generated cash and straight line leasing spreads of nine 6% and 18, 7% respectively.
Our leasing efforts included the successful renewal of 100% of our $2 3 million square feet expiring in the quarter.
Cash same store NOI grew two four per cent for the quarter.
Moving to the capital market activity as previously discussed.
In February we refinanced our $300 million term loan G to pre COVID-19 pricing and extended the maturity to 2026.
We also upsized, our revolving credit facility capacity to $750 million.
We raised gross proceeds of $22 million through our ATM program at a weighted average share price of $32 and 35 in the first quarter.
Subsequent to quarter end, we raised an additional $76 million through the ATM program at a weighted average share price of $34 47 assets.
$50 million of the amount raised in April was raised on a forward basis.
In total we have $186 million of unfunded forward equity proceeds available to us today.
Finally in March we retired our series C preferred and no longer have any preferred outstanding.
Our guidance is included on page 21 of our supplemental reporting package.
We have updated our guidance related to stabilize the acquisition cap rate to a range of $5 five per cent to six point O per cent decrease equal to 25 basis points at the midpoint.
We have also updated our guidance related to retention to a range of 75 per cent to 80 per cent and increase to the low end of the range of about five per cent.
Finally, we have updated our guidance related to corporate flow per share.
The range of $1 96 to $2 an increase.
<unk> to one penny at the midpoint.
With that I will now turn it back over the bad.
Thanks Bill.
You can see by our first quarter results and our preceding comments the future is indeed bright for stag.
I am confident that we will continue to deliver great risk adjusted returns of our shareholders as we continue to grow in the coming years. Thank you for your time. This morning, I'll now turn it back to the operator for questions.
Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the Kim from participants using speaker equipment, it may be necessary to pick up your handset.
Pressing the star keys.
Our first question comes from the line of Sheila Mcgrath with Evercore ISI. Please proceed with your question.
Yes, good morning, Ben Congratulations on the 10 year anniversary I'm, just wondering if you could give us big picture thoughts on lessons learned or anything that you shifted in your strategy yet.
Along the way or just looking at systems. The infrastructure you may have added just some insights there yeah. Thanks, Sheila as you know is unequivocally been a good run obviously for us and I think for our shareholders.
The it's hard to imagine it's been 10 years I think what we've learned is that the investment basic investment thesis is valid and can be applied and it has been successfully applied to the industrial market I think what we've learned along the way is a it.
It can be.
The refined and can be applied probably across the across a broader range of assets than we originally anticipated that's reflected I think in some of our more recent activity and then finally I'd say I've learned the the power of the team you know we've we've grown from at our IPO I think we're around 20 employees, we've grown to about eight.
<unk> today and the of the interaction among the team and the power of the culture and the innovative the attitudes of that team is impressive for me to watch so learned a few things along the way and.
All of them good but thanks for the question.
And then one other question of the pipeline in the supplemental was the.
<unk> three 5 billion I think that was a record of what's driving that now and are just sellers hitting the bid given appreciation of what's making that so large yeah. I certainly think that's part of the a part of the answer is that there has seen a lot of sellers are out there looking at the prices that are being paid and thinking this is a good time to the running their assets.
The market there is still pent up the cell.
Seller activity from the the from the pandemic, our pipeline has probably a little bit more portfolio of component to it.
But for the most part is just more assets. It's also reflective of the fact that we have more acquisition and more season. The acquisition people out there and they are identifying in conjunction with our friends in the brokerage community off market transactions unsolicited of transactions that we can approach.
Okay. Thank you.
Thank you Sheila.
Thank you. Our next question comes from the line of Emmanuel Korchman with Citi. Please proceed with your question.
Pricing has evolved from certain of your markets.
Okay I'm sorry go ahead.
Alright, and just how pricing has evolved in some of your markets do you anticipate another heavy <unk> transaction volumes.
So I mean that has been our history as of the fourth quarter and sometimes the third quarter of our heaviest transaction volume that is reflective of sort of how the market work people tend to look at it.
The things, we're wrapping up as the year wraps up and coming back from summer activities.
Activities in embarking on the process to sell assets. So that continues to be our expectation we have seen cap rate compression.
In the markets. We've also seen a mix change in the markets.
So our reflect that is reflected in our guidance is the slightly lower cap rates as is the the.
Market compression, probably half of that and probably mix changed probably half of that.
Got it and then are there any specific tenants or markets that you're more worried about today than others and how of these conversations adapted following positive vaccine rollout in more recovery potential.
Well you know it was one of the beauties, obviously of having 500 assets and I forget the what the tenant count is 400 tenants or something like that is that we're so well diversified as the we're immune to a lot of the concentrated risk issues that other people may face, we are seeing the impact of the reopening in the vaccinate.
[noise] etcetera, and the reduction in cash basis tenants and the.
Potentially of reduction in watch list tenants, so the the market and the tenants appear healthy and healthier.
Got it thank you.
Thank you.
Thank you. Our next question comes from the line of Elvis Rodriguez with Bank of America. Please proceed with your question.
Good morning, guys and congrats on the quarter and Bill Congrats on your promotion just a quick question, so equity Commonwealth of announced Theyre going to be acquiring monmouth's any read throughs on the pricing for that portfolio versus your portfolio today.
Well, you know were somewhat familiar with them on the portfolio and then we've looked at it from time to time over the last few years. It is a hell of it has a heavy kind of well all of the go to the positive. It's it's a there of young assets and long lease terms the heavy concentration of Fedex leases without underwriting the specific aspects of those leases of Fedex leases tend to be.
The at or above market and flat which is.
Again, not necessarily in their portfolio of but that's been our experience with Fedex leases. So.
The the pricing that we've heard you know as everybody else has in the public information somewhere in the mid to upper fours, perhaps I think that given the what I would expect as a relatively flat profile of those of that the income off of those assets, it's probably a pretty full price.
But without knowing the details of the transaction without knowing the certainly the portfolio of more detail of it that's just the speculation on my part.
Thanks, and then just the follow up so acquisition cap rates are lower.
25 basis points at the midpoint and you mentioned.
Some portfolios in the $3 5 billion of our pipeline.
Pipeline that you have is this the reflection that portfolios or you have to pay up to gather a larger amount of assets and cash.
Or anything you can share on that would be helpful. Thanks, well I mean, it's always been the case in our experience and our observations that portfolio of premium certainly exists in industrial real estate as long as there is you know the individual assets are not you know all of 15 year leases the Amazon in Ontario, California.
As long as there's some aspect of risk the aggregation of portfolios as head of decided impact on the on the cap rate of those portfolios of our experience.
Specifically in our in our sale of portfolios has been one hundreds of 150 basis points of compression between the individual cap rates contemporaneous with that portfolio of cap rates, so but all the.
The cap rate guidance that we're giving you is not necessarily reflective of the of the.
Pipeline, it's reflective of what we expect to acquire within that pipeline.
And as I mentioned earlier in my answer to Bob the.
Higher call or prior of the questioner it's.
It's about half due to cap rate compression and about half due to mix change out and the cap of I might note also the cap rate compression is reflective of the ever increasing contractual rent bumps. So it's.
The only or is demand.
The driving.
The market rent growth, but it's also demand has driven.
Two higher contractual rent bumps, which allows you to pay Ah I, obviously lower cap rates and still maintain the same returns overtime.
Thanks Pat.
Okay.
Thank you. Our next question comes from the line of Dave Rodgers with Baird. Please proceed with your question.
Yes. Good morning, everybody Bill maybe you want to start with you Ben had made a couple of comments I think about the leasing spreads and have the and as well as the rent bumps in the leases talk about cash same store NOI versus GAAP. It's about a 260 basis point spread currently can you give us a sense of where the in place of bumps are now and kind of where you're trying to push those then.
And I guess, how do you see the delta in the GAAP and the cash same store NOI trending throughout the year of the current spread seems to be wider than we would typically see.
Sure. Thanks, Thanks, Dave and the bumps in the same store pool right now are averaging about two in a quarter. That's up from about 175 of few years ago, We're seeing as Ben mentioned higher contractual rental escalators in our acquisitions anywhere to the half to 3% as well as higher contractual escalators.
And the leases we're signing in the same range.
So that continues to increase and our portfolio in terms of the delta between the GAAP and the and the cash same store NOI.
There was a unique item in the prior period.
For the GAAP same store NOI, we did move of tenant to cash basis, which had.
Call it of negative straight line number.
Cause of the tenant put of roof on and pay for it we straight line that asset into income. So we accelerated that income stream in the prior quarter, which is why youre seeing a.
A small negative change in your same store GAAP NOI period over period, we don't expect a 2.6% delta between our cash in the same store NOI.
Going forward.
Okay. That's helpful.
And then maybe just one for you on the competition I mean, where are you seeing more competition and how do you continue to have the confidence that youll continue to kind of win. These deals is it just the the total amount of volume that youre looking at the systems I mean, I imagine with all of that but just kind of curious I'm aware of that competition is coming from.
Well I certainly would say that it's all of that we just have the ability and the the people systems and process to look at all at a large number of deals where where our hit rate has been the little lower the percentage of deals that we acquire is the percentage of those we bid on all of its been a little lower to start the year we.
We're seeing competition from sources that we had not seen before you know theres a lot of a lot more private equity shop.
Shops have been embarking on the industrial asset acquisition.
But we're you know one of the beauties of we've always talked about in the industrial real estate market is the the very fragmented nature of ownership and so.
And the lack of perfect.
The information that you need for an efficient market and so by looking at broadly across the markets and in being active in so many markets, we're not able to identify I E. The three and a half billion dollar of pipeline, but of acquired continue to acquire in volume.
We haven't been asked the question yet, but we do feel very confident about our ability to.
To meet our guidance for acquisitions for the year. Despite the fact, the first quarter was probably a little bit below what we would have anticipated.
Alright, Thank you Paul.
Thanks, Dave.
Thank you. Our next question comes from the line of Michael Carroll with RBC Capital markets. Please proceed with your question.
Yes. Thanks, I guess, then you're talking in the in your prepared remarks earlier about the pipeline, having some type of portfolio of component to it.
How many portfolios are in that.
And that pipeline today, and I know there was a really big increase in the total size between <unk> and <unk> I mean was that driven by some from.
From larger portfolios being added to that.
So typically our portfolios are 10, 15% and we might be 15% to 20% right now but that is not the entire increase the increases is comes largely from our you know our typical one off transactions of the so a small increase in portfolio, but it does make up the whole delta for sure.
Okay, how large of those portfolios or are they just a few assets or I guess, when you say portfolio. I mean can you kind of define that a little bit.
So we're not talking about the 1 billion of half dollar of portfolios that you might see of Blackstone or someone like that pursuing these are of portfolios that are small enough that we think we have and the brokers who are represented of them believe that we have a chance to win so they wouldn't go into our pipeline unless we thought we had a chance to prevail Mike generally its a just a hair.
Full of assets, so you're talking $40 million to $50 million, maybe up to $200 million, but nothing more than that.
Okay, Great and then is shifting towards the the leasing activity. Obviously, you had a really good leasing quarter.
Can you talk about the cash lease spreads of about 10% I know that that's the pretty volatile number that can bounce around but going forward what could we expect the cash let's briefly at lease spreads to be I mean is that kind of the top end of the range or is that just kind of indicating the health of the market.
We can expect spreads in those high single digits going forward.
Yes. It does of strong leasing spreads were very happy with the outcome of our of our operations of our leases this quarter.
We are still expecting mid single digits for the sheer Mike the 10% was the strong number the the 100% retention, we're very happy with I do want to note that the leases the new and renewal leases were spread across 20 leases there werent, one or two leases that were driving that leasing spreads those leasing spreads.
So it was broad based demand and we're still affirming our mid single digits leasing spreads for the year.
Okay and was there any geographic concentration what's the the leasing activity that drove those spreads.
No. It was broad based we saw it in a number of markets and as I said 20 leases end and the mix across new and renewals as you see it.
It's pretty consistent eight per cent for new and 10 per cent for Knowles.
Okay, great. Thank you.
Well thank you.
Thank you. Our next question comes from the line of Sean The search out with Ladenburg Thalmann. Please proceed with your question.
Good morning.
Alright.
So does the transaction like the equity Commonwealth Monmouth transaction change your thinking at all of them portfolio sales and capital recycling I know, it's always a balance versus your cost of capital, but does the transaction and to keep moving the pricing environment might be more favorable than you thought earlier.
Well I mean, the this seems like an answer we're going to give you. The same answer we always give wishes we look at various sources of a capitalization of our business moving forward.
We believe that are continuing to raise common equity.
At this given current current equity pricing remains the best result for our shareholders is an important component of that is operating leverage where we get the spread our fixed costs across larger portfolios are larger portfolio.
So again, we look at that.
At the pricing.
And would say to the extent that the you know the Monmouth pricing of the implied cap rate inside of our implied cap rate.
It's interesting.
We would believe we would perhaps suggest.
That are the pricing for our assets and for our management team as the combined entity should be more it would probably be closer to the MSR pricing, but that's only of C O talking.
Okay.
And then in terms of the pipeline for acquisitions I mean, how indicative of you think that is of maybe where we sit and kind of the broader interest rate cycle.
Indicating at all of that.
Sellers of kind of coming to market, maybe due to concerns about.
The rising interest rates or do you think there is other factors that are kind of driving the size of that pipeline.
Yep.
You know we're looking as you know we're looking broadly across a market that may be a trillion dollars of assets and of our pipelines three of 5 billion. So it's not like everything is for sale of our pipeline is larger than are the has been which I think is due in part of what youre alluding to but it's not it's again, it's not like everything's for sale, it's still a relatively small part.
Of the overall market.
And certainly people are looking at the prices being paid.
Perhaps they're worried about are increases in interest rates on the other hand and increase in interest interest rates probably is indicative of the places. So rents are probably going to go up too. So maybe you know they should be looking to to hold on and achieve a.
The higher NOI and reflected the higher higher prices in the future. There's a lot of lots of balance there, but we're certainly seeing more activity.
And then I mean in terms of the potential inflation impact have you seen any change in maybe you know premiums or discounts for duration on the in place leases today.
You go out and buy assets in the market.
No nothing nothing material.
At this point.
Okay.
That's it for me thank you very much.
Thank you.
Thank you. Our next question comes from the line of Mike Mueller with Jpmorgan. Please proceed with your question.
Yes, hi.
I guess, when you're looking out to the lease expiration schedule in 'twenty 'twenty two.
Are there any known kind of.
Speed bumps at this point to be aware of.
No there you know where the the the last year, when we had 2 million photos and of years and certainly the anomaly.
Again, it's a very large diversified portfolio of there's nothing that stands out as a is of particular issue.
Got it and then on the Capex side, I know you call like roofs, and everything non recurring.
But when we look at your your non recurring Capex bucket. It's it's running right now at about half of what it was last year I guess was that all just roofs and just kind of how do you expect the balance of the year spend to be.
Yeah, it's a good I mean, we.
We do call it non recurring but I do want to say it is included in our in our CAD number of Ddos.
The year over year, we did replace a large roof last year in Q1 generally the roof replacements are seasonal so you see those more so in Q2 and Q3, which is what we're tracking this year, but last year, we replace the roof in a in a warmer climate.
In Q1, so that's the difference that you saw that you saw in the quarter over quarter.
Got it okay.
Okay. Thank you that was it.
Okay.
Thank you, ladies and gentlemen, as a reminder, if you'd like to join the question queue. Please press star one on your telephone keypad.
Our next question comes from the line of Chris Lucas with capital One Securities. Please proceed with your question.
Hey, good morning, guys.
Just a couple of quick ones from me.
Then on the.
Renewals for the quarter.
Was there anything that stood out in terms of size I mean, how many deals does that include.
I think there were 16 renewals in the quarter something like that nothing unusual no anomalies was brought in you know the results were broad based and fairly uniform.
Okay, and then for the.
Just to follow up on Mike's question about sort of for the remainder of the year.
What's your sense about fallout and is there anything that's looming that is particularly large.
No nothing you know nothing significant let's say of discussed last year had the couple of significant leases. There is a couple of them you know three.
Three of 400000 square foot range, but out of millions of 100 million square foot portfolio.
Just not that are not that meaningful yet Chris no millions of square the floaters.
And the and the 100% retention in Q1 was a driving factor for why we increased our retention guidance for the year.
Sure.
And then last question from me just as it relates to the pipeline is there any geographic.
And one of them laser concentrations.
Are reflected in that number.
I don't think so you know, it's obviously, a large and diverse pipeline.
Nothing unusual in terms of in terms of the geographic dispersion.
Thank you.
<unk>.
Thanks, Chris.
Thank you. Our next question comes from the line of Jon Petersen with Jefferies. Please proceed with your question.
Great. Thanks, Congrats on 10 years and congrats to bill on the promotion.
Yeah, just one question from me with cap rates compressing on acquisitions do you guys anticipate maybe being a little more proactive in terms of finding development opportunities or is that outside of the the <unk>.
<unk> of of how you want stag to be over the next few years, let's say the next 10 years. So.
So we of the capacity to develop as we demonstrated in our Burlington assets that we retain the capacity you know we're not set up to do you know of hundreds of millions of dollars of development or in any year, where where we havent staffed for that and we don't have a land bank for that but we evaluate opportunities are continuously that have excess land that would include the potential for <unk>.
Development, either immediately or in the future I think the we will continue to.
Obviously, the need to look of those things didn't you evaluate them on as much of a risk neutral basis as we do simply cash flowing assets. The word we're not afraid of development. We just find that as we're better able to deploy our capital Accretively.
<unk> cash flow and assets.
On a risk adjusted I should say on a risk adjusted basis.
Okay, Great. That's helpful. Thank you.
Thank you.
Thank you. Our next question is from the line of Elvis Rodriguez with Bank of America. Please proceed with your question.
Hey, guys just a quick follow up so you added in the Amazon warehouse in the quarter.
And I'm, just trying to tie that into perhaps the lower cap rates are you in the market bidding to have this become a bigger tenant of your portfolio or is this just another quarter, where you were able to add another asset with that tenant.
Yeah all of US. Thank you for the question. So we're reacting to all opportunities on the basis of the cash flow that we can derive from owning them going forward. This was an opportunity of that came to us. It has met the our accretion thresholds and we were.
Successful in bidding and acquiring the assets. So it wasn't the conscious decision to pursue an Amazon assets. So much as an opportunity arrived that had an Amazon tenancy in it.
So again not a specific goal of of having any particular level of Amazon tenancy within our portfolio just reacting to opportunities as they present themselves.
Great and just a quick follow up so you mentioned concentration not being an issue in the portfolio, but you know and obviously this is the great tenant, but how do you feel from a single tenant perspective, you of concentration or where would the upper limit would be to this type of tenant.
Obviously pay attention with Amazon of the current level I think we'd be comfortable with Amazon probably as high as maybe 10%.
But you know 10 per cent of our pollo of portfolio is a pretty big number and I wouldn't expect us to get there anytime.
Anytime soon.
Alright, Thank you guys.
Thank you, ladies and gentlemen that concludes our question and answer session I'll turn the floor back to Mr. Butcher for any final comments.
Well. Thank you all again for joining us this morning.
It's certainly been a.
A time for celebration as we achieved our 10 year anniversary we.
We are at or around 100 million square feet in the end of the assets, we crossed the $5 billion equity market cap.
Few months back.
A lot of a lot of positive milestones and are in our journey.
In the future as I've mentioned, a couple of times of the scrip is indeed bright as we move forward. So thank you again for joining us from I look forward to providing.
Continuing to provide great returns to our shareholders going forward.
Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.