Q1 2022 NorthWest Healthcare Properties REIT Earnings Call
Okay.
Good morning, ladies and gentlemen, and welcome to the Northwest Health care properties Real estate investment Trust first quarter 2022 results conference call. At this time all lines are in a listen only mode. Following the presentation. We will conduct a question and answer session. You require immediate assistance at any time, Please press star zero for the operator.
This call is being recorded on May 13th 2022.
I would now like to turn the conference call over to Paul Dell, Atlanta, Chairman and CEO . Please go ahead.
Thank you operator, and good morning, everyone.
I appreciate you joining us today.
And by channel in China.
<unk> Chief Financial Officer.
We are pleased to share our results for the first quarter of 2022.
So first I would like to point out that during today's call. We may make forward looking statements as defined under Canadian Securities law well such.
Such forward looking statements reflect management's expectations regarding our business plans and future results. They arent necessarily based on assumptions that are subject to uncertainties and risks, which could cause actual results to differ materially we direct all of you to the risk factors outlined in.
Our public filings.
And now to the quarter post completion of the <unk> acquisition, the rich high quality in defense of $10 billion portfolio delivered strong financial results highlighted by one 5% and 15, 4% <unk> and net asset value per unit growth, respectively, all well.
Proportionate leverage declined by 320 basis points.
Underpinning. These results are the REIT is foundational pillars, which include a high quality defensive portfolio.
<unk> delivered a strong operational results, including a two 2% constant currency SPP NOI growth supported by 97% occupancy and long term inflation index leases.
<unk> of the U S acquisition previously mentioned in April further enhance the defensiveness of the Reits cash flow as a result of improved geographic and tenant diversification as well as tenant credit quality.
They're each active development program delivered three new fully these projects in Q1 with a combined value of $103 million at an accretive approximately 6% yield and with a further $306 million under construction and fully committed.
There looks to be more development conversions coming throughout 2020 to these new projects will also improve our overall portfolio quality and advance a number of the REIT sustainability objectives.
The REIT continues to advance various capital formation objectives. So it's pro rata participation in vitals recent $174 million equity offering and in Australia.
It's Australia and JV.
By $2 2 billion.
With GIC, the investment of $48 million in vitals.
Raise will enhance investment initiatives, which have included approximately $395 million of acquisitions and new developments at the entity again building on its strong track record as.
As well as enhancing future management fee streams.
In both the institutional joint venture and the vital manager going forward.
Finally, the REIT has progressed its U S and the UK joint venture initiatives, which are expected to close in Q2 and Q3, respectively.
Yes.
<unk> continues to increase commitments and deploy capital in each of its joint venture platforms with total deployments exceeding $5 6 billion.
<unk> up 19% year over year with an additional $4 eight an outstanding capacity available post completion of the previously noted joint venture activities deployed capital in total commitments are forecasted to increase to $14 5 billion.
Seven $4 billion, respectively with.
With target ownership, ranging between 20 and 30% across its global capital platforms. The REIT expects to generate significant uplift in both <unk> and NAV on a per unit basis by leveraging its capital light model to fund future growth over the next 12 months, we expect management fees to more than double from the currently.
$60 million to $120 million.
Which will both drive accretion and value creation and the manager.
The REIT continues to find attractive growth opportunities with $878 million of acquisitions completed year to date, including the $753 million U S acquisition that closed in April with an incremental $155 million under contract in various markets over the last 12 months. The REIT has also created a <unk>.
Pipeline of development opportunities exceeding $2 billion that aligns with its global health care pricing strategy with.
The significant capital generation expected to regional JV formation in the UK and the USA. The REIT remains focused on deploying internally generated capital into fee bearing vehicles to enhance returns and accretion.
While the macroeconomic environment is creating uncertainty around future inflation and interest rates.
Remains well positioned with more than 80% of its revenue indexed and local inflation measures, which include over 99% indexation in its international markets through.
<unk> balance sheet is well optimized and post completion of the U K and U S. JV will have achieved the target debt metrics, while decreasing weighted average interest rates and extending term to maturity ultimately reducing.
Its sensitivity to interest rate fluctuations as well.
During the quarter that completed a $172 million equity issuance of $12 five minute.
$12 5 million units.
$13 80 per unit price and issued a further $15 million of trust units Genworth, Australia partners through a private placement on similar terms, which is expected to close in may.
Net proceeds were deployed towards the completion of the U S acquisition in April and for general corporate purposes at quarter end the reach proportionate LTV ratio was 48, 8%.
To complete its UK and U S assets in joint ventures, the capital generated will be deployed sure.
Shorter term debt with.
With longer term property financing are facing regional short term debt facilities post JV formation proportionate LTV is expected to decrease to less than 45% with a weighted average interest rate decreasing by 40 basis points to two 9% and a weighted average term to maturity increasing one two years to just under four years.
For the quarter our results were in line with our expectations with 21 cents per unit of <unk> implies an annualized payout ratio of approximately 95% earnings accretion from recent investment and financing activity was as expected while foreign exchange movements saw the Canadian dollar depreciated by approximately one 1% over the last.
At year relative to the rates average foreign currency exposure reported net asset value increased 15% year over year to $14 73 per unit driven by fair value gains across the portfolio and expansion of the global asset management platform.
Liquidity, the read as well position with over $120 million.
This is expected to exceed $290 million is the right seeds, its current UK portfolio and future U S portfolio and two new funds.
Operationally our results were in line with expectations with constant currency cash recurring SPN NOI growth of two 2% largely driven by contractual rent indexation and underpinned by a 97% occupancy at a weighted average lease term of almost 15 years in all regards highly defensive portfolio.
Segue mentally I note. The following in Brazil were on plan with steady 100% of occupancy and continued strong current cash current CSP NRI growth of nine 9%.
Operationally, we note that the major tenant in Brazil reached Dor continues to deliver exceptionally strong results and is among Brazil's top 10 companies by market capitalization.
In Canada, we were on plan continuing solid performance with portfolio occupancy remaining stable at 91% during the quarter. The re completed 58000 square feet of renewal leasing at rates slightly above plan.
We continue to focus on regional sustainability initiatives, and our ambulatory care and life Sciences initiatives, which are gaining momentum and expected to be accretive in the near term.
Europe continues to perform well.
With constant currency SPP NOI growth of six 9% and occupancy stable at 97, 3%. We continue to find good investment opportunities in Europe , allowing us not only to increase scale and critical mass in our existing agents to us, but also to consider opportunities in adjacent markets and.
In Australia, our largest market occupancy remained steady at over 99% and delivered constant currency Spi NOI growth of four 6% with a weighted average lease term of 16 years and that vital the business reported SPN NOI growth of three 4% driven by the inflationary environment with occupancy similarities.
Stable at 99% and a weighted average lease term of 18 years.
I'm pleased with the progress made during the during and post quarter end, which advance the strategic objectives and produced solid operating results with deep relationships best in class regional operating platforms and strong access to both public and private capital. The REIT continues to transition to an asset light best in class Global healthcare real estate investment manager.
I'll now ask the operator to open up the call for questions.
Thank you ladies and gentlemen, we will now begin the question and answer session. If you have a question. Please press star followed by one on your Touchtone phone, you'll hear three ton problem acknowledging your request on your questions will be pulled in the order they are received.
The decline from the polling process. Please press star followed by <unk>.
On a speaker phone please lift your handset before pressing.
One moment for your first question.
Your first question comes from Frank Lee with BMO capital markets. Please go ahead.
Good morning Shannon.
Yes, hi, good morning.
Alright, so congrats on the solid Q1 results and the completion of the U S acquisition.
Falloff on the US side looking forward do you expect that further expand your platform.
The near term.
In addition to that could you provide some.
<unk> is bringing a capital partner into existing you asking announcement.
So, yes and yes.
Just.
To answer that.
As we know the U S is the largest.
Health care and the market market in the world and by extension healthcare real estate market. So.
We've gone there expressly for the opportunity.
To grow and evolve the business.
Integral to that of course is our capital.
Capital partner in region.
And as we've indicated sorry, I may have mixed the wording in the beginning of the script, but we.
We expect our U.
U S partner to be in in the third quarter of this year and to be supportive of future growth initiatives as we have had with other investment.
<unk> in other regions and strategies.
Thanks, Paul that's great.
I guess like.
Just turning back to the rising interest rate.
With the rising rate in mind can you steal catheter like <unk> and Martha Akshay.
Near term.
I mean, that's I have a lot of cost initiatives.
But I mean, given the steel costs that are all support market.
Sure.
I might.
Just turn that over to Shannon to respond.
To the narrow point around the unsecured market, but.
I'll start there.
Hi, Frank good morning.
So a couple of comments around the balance sheet more generally and then chime in on the unsecured market.
As we look through our UK and U S. JV initiatives, our balance sheet will be very conservatively structured with less than 45% Leverages Paul It previously noted.
A fairly substantial weighted average term to maturity increased to more than five years and with relatively limited floating rate debt.
<unk> be less than 30%, so we see our balance sheet, providing us with lots of flexibility as it stands. We also note that the majority of our assets will be transitioning into.
Long term capital platforms, which will have independent capital structures.
As we think about it.
Unsecured.
Our accessing the unsecured debt markets as well as achieving investment grade metrics I think for the most part of the business has achieved is the best investment grade metrics objectives, and now it's a matter of thinking about where unsecured debt.
That could fit in with our capital structured it's clearly less travel less attractively priced than where it was perhaps six to nine months ago, especially relative to where secured asset pricing is.
And if we do see opportunities to access unsecured debt market, it's likely to be within our capital platforms, noting that we have a very conservatively structured corporate balance sheet.
Thanks, Ed.
Makes sense.
Like I don't see much color on the HPE side.
Which might provide some update or.
<unk> has been part of <unk>.
All right.
I would just referred to our comments from the last call.
Continue to be actively considering.
Next steps there and working through.
With our capital partner and region nothing more than that to update on.
Thanks, Paul.
I mean, it's very in cargo to see the solid organic growth, but just looking at Canada theres. Some a small year over year decline, which are expiring small by your comment.
You mentioned that that was like something crazy Laurie carbo salaries.
Do you see sunlight wage pressure.
Got it.
Or this is just I call.
Typical like year over year change on a Saturday.
Yes.
Talk to that I think the bulk of the change really relates to.
One specific.
Portfolio situation that we've been working through so still relatively minor and not illustrative in Canada, we do see.
Maybe more importantly.
<unk> volumes and activity levels, increasing through our portfolio. As you know there is a level of sort of traffic that exists in our in our business and I think when we consider.
The first quarter in particular, this year still having some omicron moments in them and people.
A number of restrictions that were in place probably slightly impacted the business not not materially, but slightly and we see sort of as is.
Post quarter sort of.
The reduction in those in those restrictions and certainly the movement to a more.
Consistent pre pandemic operating environment have been quite nicely, so we'd say our portfolios.
Slight uptick in terms of activity and we see that through parking we see that a little bit through leasing velocity and we see that through.
Through general activity levels.
The property is as people are returning.
More fully back to Theyre getting.
Getting their house care and the ways that they want to get there. So that's one of the things that we've seen sort of clearly over that over the course of the last couple of years.
I see okay. Thanks, Paul.
Congrats again on the quarter.
Turn it back.
Thank you.
Your next question comes from Sudan's Rivas with core Mark. Please go ahead.
Thank you Linda good morning follow the money Taylor and congratulations on a good quarter.
Thank you.
So Mike to your comments on the list you have seen our debt and more specifically just on the higher lead and rising inflation environment.
Obviously, we see how the public markets and thinking about it but I was just curious.
Javier institutional partners are thinking about this.
Does that change the outlook towards health care.
And do you see more or less caprica, Jayson the sector going forward.
Yes.
So great question. So thank you for that and obviously, we're at the coal face on all of these issues so to speak and thinking very much about what's changing.
In the short term.
Clearly I think we.
See it translating into opportunity for the business as probably the near term impact takes maybe a little bit of froth out of the market that we were experiencing and again, noting that there is an incredible amount of capital formation in general coming into alternatives and in particular coming into to the house.
Care real estate.
So just having a more.
A more balanced.
Balanced market moment, I would say helps us as a long term investor really looking for core core things and so we see that positively in terms of some of the more highly leveraged our structured competitors, perhaps considering where they want to go and what they wanted to do.
Whereas we're a very long term investor looking for high quality.
<unk> opportunities and in major markets with major partners generally so that's the tenure that I would convey may be and does that translate into some opportunities for us to perhaps disintermediation anything thats something we always ask ourselves in these moments, but over the long term I think the defensiveness of health care real estate.
The general capital flows into.
The alternatives asset class quote unquote are still that pronounced trends in terms of capital formation and in terms of industry moment.
Link the trends that I've spoken to before.
Pandemic and even in this moment has.
We continue to be impactful on the decision that we see happening in our industry, which is really.
Core non core decision.
A very asset heavy industry. So we consider this sort of short term pressures is being <unk>.
Drivers to that decision and sort of see the moment as being quite constructive of course in all of that is the price of oil and yes, it's a combination of rates and higher growth through indexation in our lease.
Can can have.
Nuanced effects, but we think probably they balance each other out over time, and we're taking the long view and all of that so we're not too fussed about what's happening.
In the next months or quarter or overnight in the trading environment.
As we've also emphasized the business is increasingly growing capital light and so we're able to use a lot of internal capital to consider.
In our growth initiatives. So we're not overly sensitive from from the equity side of the world, which would be the other place to think about it. So a lot in that answer but I would just say in general we expect the near term.
Changes in maybe volatility set properly to perhaps drive even better opportunities for us in and none of it is enough to sort of change fundamentally the structural sort of capital formation and strategies that we have in the moment, knowing what we know today.
Well, that's a lot of color, Paul and obviously, depending on what the cash rich part of the business and self sufficiency.
Definitely a positive.
Just focusing down onto the U S and I know this is a new market for Nautilus, so, but really getting into the weeds over that but.
In terms of asset demand, obviously, the U S market has a life that ideal.
We expect to move assets between like medical office buildings hospitals and lots of entities.
Do you see that lead.
With smaller on a specific.
End of article out there or does it.
All right.
On the.
Right based approach.
Is it procurement in that market.
Yes, I think over time as you would expect our strategy will evolve and become maybe a little more.
Pronounced in focus, but I would call out a couple of the big global strategies that we have underway today and that will inform I think fundamentally our our approach to things so.
Just talk about healthcare precincts are academic medical centers, maybe in U S. Lexicon. So I think that's a pretty natural area of focus for us. The current portfolio is not particularly pronounced in that direction, but that's very much a core strategy.
For us in that intersection of healthcare research education, and all the ancillary things that go on there, we really like that trend and of course, there's many opportunities for that in the U S. A lot of different entry points. So that is likely to be very clear.
Equally the other global strategy that we have which is quite clear.
Quite pronounced in the US a global leader in this of course is the ambulatory and outpatient environment and that really almost defines the portfolio that we acquired over the last little debt and so.
Compared to the first strategy, which is that what's happening in hospitals, and an even higher acuity and connectivity. The ambulatory outpatient strategy is as much about what's happening out of hospitals in the U S has many many entry points and opportunities there we see a lot of natural adjacencies with existing operators in this portfolio and really.
Asian ships that we think we can develop and of course through the broader industry. So I think those would be a couple of takeaways of course, we've come to the industry as you know being an mob specialist in Canada and have built a very operating business. So over time I think it is likely that we would have domestic capability to provide that.
Level of real estate service and so we focus on that in.
In terms of building and operating platform over time, and I think it's logical to expect that that would lead to some.
Some critical mass and scale in certain markets, given given that thats boots on the grounds and so those are things that we think about in the U S. All of which are available attractively in good growth markets and so it's.
It's an incredibly deep and liquid market. So theres. Many many opportunities to consider we do like the attractive pricing in certain segments. So we'll be focused on those big strategies, and then on bringing precision to the the best opportunities in the best geographies.
Overtime.
But the color Paul Thank you for that.
And my last question and just kind of digging in non U S platform building.
Approach.
Would you expect G&A to kind of generally in terms of labor and employee cost line over the next couple of quarters, just a factor in building that platform all debt.
I don't think so and that the current platform as.
The current acquisition is big enough I think to support the things that we're doing and to get us moving.
Onboard initially and so that's the benefit of being able to do let's say a large portfolio acquisition like this versus an individual.
Investment so I think we see a pretty good opportunity to phase in.
Our our platform costs in conjunction with this platform and in the JV and other growth initiatives. So I think it will be a little bit more balanced of course, it never lineup perfectly on top of each other but I wouldnt see a pronounced change in the near term I think we have a pretty good feeling of how to.
Build and grow operating platforms, as we build and grow businesses.
Sure.
Thank you for that.
Your next question comes from Fred <unk> with Laurentian Bank. Please go ahead.
Thank you and good morning, I remember you guys mentioned, the $20 billion threshold entering in the new year.
Four at the end of this year I was wondering if we were still on track.
To get there this year at our things have slowed down a bit and how should we view the growth platform for the next 12 18 months it looks like from your previous comments that.
Youre seeing healthy LC demand for such partnerships. So I was wondering how we should view the growth from here. Thank you.
Yes. Good question, so I think.
In today's call and in the materials, we've put out pretty clear visibility into the just around $14 billion.
As capital 14, $15 billion of capital formation.
Through the U S and the UK JV initiatives I guess, the other initiatives that we have at a slightly earlier stage as the healthcare precinct.
Develop.
Core initiatives that we have underway in Australia, and that's a $5 billion initiative or so so there is the 20 and we do expect those to be in place this year.
In terms of deployment of the capital I think we continue to see.
Attractive set of regional risk adjusted returns opportunities all of which fits within those capital platform. So it's really a question of execution.
I think we have a pretty good track record of being able to to find good opportunities and deploy capital as evidenced by the recent JV upsize in Australia as an example, so.
I think we're feeling reasonably constructive about the go forward environment and I wouldn't change anything from the first quarter call other than saying, we're increasingly focused on on using internal capital.
And let's say in priority and.
And again, we think.
Comments, just a little bit earlier on the market moment that.
There is certainly.
Good opportunities, but I think we're being sort of.
More precise about how we're doing them in the next little bit as we as we go through this moment, so I'm not sure that leads to any different pacing, but ultimately those are things that we're thinking about today.
That's totally fair.
In terms of your development activity. It looks like you guys were able to generate solid returns in Q1 and was wondering how should we be you expected yields on costs from here.
Yes.
The $200 million of their construction.
Yes, everything under construction is pretty locked in as you know that.
Development late in that.
The majority of it is brownfield expansion, where we have 100% lease commitments and return on cost contracts of course in those contracts all of them are fixed price or lump sum contracts. So we're really managing managing the moment, which is not a small thing, but sort of we have lots of experience in this and there is nothing.
Particularly exotic so we would see that.
Circa five 5% to 6% development yield holding comfortably through the piece and again I would just say that this is a continuation of.
The development program that we that we see that exists within the space.
Obviously, and we have lots of.
Lots of track record and an experienced and sort of delivering on these things on the newer sort of more healthcare precinct things.
We're like a lot of others looking very very closely at costs I mean, clearly the environment for construction and development is.
Challenging in a moment.
Again, we bring all of our thinking about de risking as much as you can.
Say theres lots of new thinking about procurement models out there and being able to get things done probably limited capacity more than costs being a driver in our thinking about project formation. We do expect though is that $2 billion to $3 billion pipeline that we've mentioned.
A number of.
Highly attractive.
Significant projects coming over the next little bit and certainly this year we've been.
Spending a lot of time and energy on that and when we see it as a great long term strategy, but we've been doing a lot of work to put ourselves in a position to generate attractive opportunities. So in.
In addition to the brownfield sort of expansion program, which is continuous in our business and likely to be circa 5% of the overall hospital portfolio being reinvested and improved over time, which is a number that we've seen continuously now we start to add some of these bigger greenfield opportunities that just have longer lead times.
Our more significant and very attractive projects and we're quite focused on bringing <unk>.
Low risk fully led or nearly fully that versions of these to the market over the rest of the year. So.
Do think that we'll start to see more more visibility into that sort of $2 billion to $3 billion initiative as the year advances and we're again being driven as we know by incredible demand bye bye.
Providers and by educational institutions and by research institutions for space and some of the best precincts in campuses in the world. So we're quite excited about this and we see it as a long term trend that we've been working very hard now for a couple of years to to get this to a position in and we see this coming.
Nicely into the rest of the business over the balance of the year.
So.
But.
Managing and executing on it is the key risk in.
In all our markets in a moment.
We're making sure that we're dotting dotting is crossing Ts as needed.
That we have.
Preet levels of.
Risk management and structure in place to allow US to proceed both in terms of leasing but also in terms of.
Nice protected contracts in.
All of the contingencies that you need to.
To be comfortable.
Alright.
Paul.
Yes.
Yes.
Your next.
Question comes from Scott <unk> with CIBC. Please go ahead.
Alright, good morning, gentlemen, so you've covered a lot of ground in this call.
Gross.
Excuse me disclosures on growth.
I'm just wondering if capital recycling forms any part of the internally sourced capital strategy.
Yes.
So it does although I think.
I would put that in and around the edges sort of set of parameters and they might be.
Two or $300 million of assets that we think would be.
Maybe not in our core strategies or perhaps offer some some opportunities we've had numbers like that through the business historically and so we're always looking to optimize portfolios no massive shifts so in terms of key geographies or key sort of segue.
The segments that we're in.
In that type of thinking.
And would you consider putting any capital in selling them or sell.
Selling methods.
Thank you Phil.
Yeah.
It's a great question, such a such a granular answer.
To do that but of course, we're always looking to optimize.
The price of things that we would we would sell and if there are compelling investment opportunities to do that we would do them naturally as an owner. So I'd just say it like that the things that we might sell today in the portfolio in general does not have huge capital requirements. So it is a relatively stable portfolio just to call that out.
No.
Other than a few things here and there like everyone has and 225 assets, where we're pretty confident that there arent big.
Big capital Bogies that are driving our decisions per se.
Thanks, Paul appreciate the patients.
No worries.
Ladies and gentlemen, as a reminder, if you do have any questions. Please press star one.
Next question comes from Paul Bieber with RBC capital markets. Please go ahead.
Thanks, Good morning, just.
I wanted to go back to the comments on doubling the management fees within 12 months to I think you said $120 million some of that of course should be driven by the new JV formations coming up but can you maybe just talk about what other assumptions on capital deployment are baked into that figure.
Hey, Bobby.
Yes, I mean, I would comment that at a high level and say, we've obviously put out some guidance in terms of where we see our capital formation of new capital formation coming from principally around the UK and the U S. So those will clearly be new fee bearing streams.
Then incrementally to that within our existing.
I mean, our existing facilities and commitments.
We really model out normal course deployment, averaging around four to five years of deployment of those total size of the facility, which is really a target for the for each of those individual funds. So I'd say, it's really bringing on the UK and the U S. And then continuing to deploy our existing capacity over that 3% 4%.
Five year run rate.
Okay, but just in terms of the next 12 months getting to that sort of I presume that was an annualized figure of 120 million thats predominantly just from the anticipated U K U S JV formations.
Correct.
Within our existing funds.
Have significant capacity in our.
Our European JV, and the new capacity in our Australian JV in.
Our capital ready vehicle and vital as well so all of those sort of taken.
Yes.
An average of let's say one quarter of the of the capacity.
Being deployed each year.
Okay.
And Paul just one last one just considering how you've allocated capital in both the public and the private markets over the years.
Curious whether any dislocation in the public markets were seeing has or might be peak your interest in and if so if you care to share any particular geographies that might look more interesting today.
Yes, it's a great.
That's great.
A question I mean.
Again, maybe I had called out a couple of it at a high level, where we're seeing sort of attractive risk adjusted returns, we'd probably do see.
At the margin.
Our moment in Brazil, coming in particular with our existing operators.
And that certainly in the seven 5% to 8% kind of cap rate range today offers us some attractive opportunities and I think we've always said that we like that portfolio in proportion to the rest of the business. So as the businesses grow and there's probably some incremental capacity there as well.
We have attractive partners and some attractive reinvestment opportunities that we're considering so that would be at the higher yield standpoint.
The rest I think follow sort of a very informed set of strategies, we do see.
Europe is offering in the.
<unk>.
Continued sort of risk adjusted.
Set of returns against still relatively attractive debt terms available in Europe , not quite the sub 1% ones that we had before and relatively attractive yields in the segments that we're focused in.
The U S. It is a newer market of course screens very well and again, we've talked about the average entry point of the portfolio. We have seen in that five five cap rate range, we're certainly seeing opportunities between that and a little bit above that and some of the.
More for profit activities that we consider so those would be a few examples.
Okay.
We know that we have.
A very significant business in Australia, and New Zealand and a very evolved business. So we certainly consider those precinct development opportunities in some of the specific things that we have on with our partners there.
Equally attractively again, noting that those are.
The most core things that we're doing in and fit within these very core capital platforms that we have there so.
I wouldn't want to deemphasize that we see still a lot of opportunity in that market over time, but I think at the margin trying to differentiate I pick those three themes as areas.
Sure.
Incremental focus.
Thanks, very much I'll turn it back.
There are no further questions at this time. Please proceed.
Okay, well. Thank you operator, we appreciate the call and everyone's participation today and wish everyone a good good.
Rest of the day, thank you very much.
Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines have a great day.
Excuse me.