Q3 2024 Alpine Income Property Trust Inc Earnings Call
Thank you for watching.
Unknown Executive: Good day and welcome to Alpine Income Property Trust Q3 2020 for Ernie's call. At this time, all participants are in listening mode. After the speaker's presentation, there will be a question and an intercession; instructions will be given at that time. As a reminder, this call may be recorded.
Episode 2
Good day and welcome to Alpine!
Speaker Change: Income Property Trust Q3 2024 earnings call, at this time, all participants are on list only mode. After the speaker's presentation, there will be a question and answer session, instructions will be given at that time. As a reminder, this call may be recorded. I would like to turn the call over to John Albright, President CEO. Please go ahead.
John Albright: I would like to turn the call over to John Albright, President CEO. Please go ahead. Good morning, everyone. And thank you for joining us today for Alpine Income Property Trust Q3 2020 for conference call.
John Albright: Good morning, everyone. And thank you for joining us today for alpine income property trust 3rd quarter 2020 for conference call. Before you begin, I'll turn it over to Phil's provide customer and disclosures regarding today's call.
Phil: Before we begin, I'll turn it over to Phil's, provide customary disclosures. We are in today's call.
Phil: Phil. Thanks, John.
Phil: I would like to remind everyone that many of our comments today are considered forward-looking statements under federal securities law. The company's actual future results may differ significantly from the matters discussed in these forward-looking statements. And we undertake no duty to update these statements. Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the company's Form 10-K, Form 10-Q, and other SEC filings.
Speaker Change: Thanks, John. I would like to remind everyone that many of our comments today are considered forward-looking statements under federal securities law. The company's actual future results made different significantly from the matters discussed in these forward-looking statements. And we undertake no duty to update these statements.
Speaker Change: Factors and Wriths that could call the actual results to different materially from expectations, are disclosed from time to time in greater detail in the company's form 10K, form 10Q, and other SEC violence.
Phil: You can find our SEC reports, earnings release, and most recent investor presentation, which contain reconciliation of the non-GAAP financial measures we use on our website at www.alpineread.com.
Speaker Change: You can find our SEC reports, earnings, release, and was recent investor presentation, which contain reconciliation of the non-gap financial measures we use on our website at www.outfinread.com With that, we'll turn the call back to John.
John Albright: With that, we'll turn the call back to John. Thanks, Phil. We are very pleased with our third quarter results across all aspects of our strategy. As we successfully continue to secrete a VESA recycling, originated a high yielding loan, raised our quarterly dividend, reduced our Walgreens exposure, and lengthened our weighted average lease term. These combined efforts resulted in another quarter of strong earnings growth, reduced leverage, and enabled us to again raise full-year earnings and investment guidance. Beginning with property acquisitions, during the quarter-wave part, four net lease properties for $37.5 million at a weighted average initial cap rate of 8.8%.
John Albright: Thanks for your help!
John Albright: We are very pleased with a third quarter result across all aspects of our strategy.
John Albright: As we successfully continue to the creative asset recycling, originated a high yielding loan. Raise our quarterly dividend, reduce our Walgreens exposure, and lengthen our weighted average lease term. These combined efforts resulted in another quarter of strong earnings growth, reduced leverage and enabled us to again raise full year earnings and investment guidance.
John Albright: Beginning with the property acquisitions, during the quarter-weird, four net least properties for $37.5 million at a weighted average initial cap rate of 8.8%.
John Albright: Three of these properties, all located in the greater Tampa Bay area, were purchased for $31.4 million at a sell-leaseback transaction with a subsidiary of each side hospitality group. The leases for these properties have a lease term of 30 years, include 2% annual escalations. While these properties did sustain some damage during Hurricane Helene and Milton, the operator expects to have them open and operate again toward the end of the year or the first part of next year. Further, our leases require robust insurance requirements, and these properties have more than adequate insurance coverage. Accordingly, we don't expect to have any material interruption in collecting rent from these properties due to the recent hurricanes.
John Albright: Three of these properties, all located in the Greater Pimp Bay Area, will purchase for 31.4 million at a cell lease back transaction with a subsidiary of each side of South Saudi Group. The leases for these properties have a lease term at 30 years and include 2% annual escalations.
Speaker Change: Well, these properties, this is St. Damaged during Hurricane Haleen and Milton. The operator expects to have them open and operate in the year or the first part of the next year.
Speaker Change: Further, our Lisa's require robust insurance requirements, and these properties have more than adequate insurance coverage. Accordingly, we don't expect to have any material, interruption and collecting rent from these properties to the recent hurricanes.
John Albright: Additionally, in September, we purchased and amended a first mortgage construction loan secured by a public sanitary shopping center in Charlottes, North Carolina. The current loan commitment is for $17.8 million, of which $10 million was funded at closing, and has an initial yield of 10.25%. On the decision front, we saw late properties during the quarter for $48.6 million at a weighted average cash cap rate of 6.8%. These sales generated aggregate gains of $3.4 million, and included two Walgreens locations, as well as properties leased to Hobby Lobby, Lowe's, Chick-fil-A, Tractor Supply, and Lululemon.
Speaker Change: Additionally, in September we purchased and amended a first mortgage construction law.
Speaker Change: Secured by Public Sanker, Shopping Center in Charlotte, North Carolina. The current lung commitment is for 17.8 million, which 10 million was funded at closing and has initial yield of 10.25%.
Speaker Change: On the decision front, we sold eight properties during the quarter for 48.6 million that awaited average cash cap rate of 6.8 percent.
Speaker Change: These cells generated error in games of 3.4 million and included two Walgreens locations as well as properties, fleece to Hobby Lobby, Gloves, Chick-fil-A, track or spy, and long-done silverers.
John Albright: Awards. As previously disclosed, we are actively reducing our exposure to Walgreens, and with the sale of the two Walgreens during the quarter, Walgreens is dropped from our largest tenant concentration to the second largest. Additionally, given the attractive locations of our remaining Walgreens assets, we expect to continue reducing our exposure for them to continue moving down our tenant concentration list. Overall, for the quarter, our $55 million investment activity, including both acquisitions and structured investments, generated a weighted average yield of 9.2%, a positive spread of 240 basis points to the 6.8% weighted average cap rate on this position is completed.
Speaker Change: As previously disclosed, we are actively reducing our exposure to law Greens and with the cell of the two law Greens during the quarter of the law Greens is dropped from our largest tenaconstration to the second largest.
Speaker Change: Additionally, given the attractive locations of our remaining Walgreens assets, we expect to continue reducing our exposure for them to continue moving down our 10-concentration list.
Speaker Change: Overall, for the quarter, our $55 million investment activity including both acquisitions and structured investments generated a weighted average deal of 9.2%, the positive spread of 240 basis points to the 6.8%, weighted average cap rate on this position is completed.
John Albright: As a result of our strategic asset recycling efforts, investment-graded Dix is now our largest tenant at 11% of ADR, and the beach side hospitality group is now our third largest. Notably, over 52% of our AVR is still derived from investment-grade tenants, and we have increased our weighted average lease term to 8.8 years. Regarding our investment strategy going forward, we continue to see attractive opportunities across the tenant landscape, including higher yielding investments. Accordingly, while we continue to invest in attractive investment-grade opportunities, we are also comfortable allocating additional capital to more creative opportunities, given the attractiveness of risk-adjusted yields.
Speaker Change: As a result of our strategic asset recycling efforts, investment grades rated Dix is now our largest tenant at 11% of ADR and the B-side hospitality group is now our third largest.
Speaker Change: Notably, over 52% of our ABR is still derived from investment grade 10 at some. We have increased our weighted average at least turn to 8.8 years.
Speaker Change: Regarding our investment strategy going forward, we continue to see attractive opportunities across the tenant landscape, including higher yielding investments.
Speaker Change: Accordingly, while we continue to invest in attractive and best-for-great opportunities, we're also comfortable allocating additional capital to more creative opportunities given the attractive use risk-adjusted yields.
John Albright: We expect our investment activity will result in a barbell approach with longer term investment-grade activity balanced by investments in higher yielding and more creative assets. Now, turning to the loan investment front at the end of the quarter, our loan portfolio had an aggregate outstanding balance of 43.2 million at a weighted average yield of 10.4%. Generally, we target our structured investment portfolio to be about 10% of the total asset value, but this will scale up or down to some extent, depending on the quality of the opportunities we see. As we're currently seeing a lot of opportunities that originate high-quality, high-yielding loans to care about real estate, this portfolio is likely to scale up a bit in the near-term future.
Speaker Change: We expect our investment activity will result in a barbell approach with longer-term investing great activity balanced by investments in higher yielding and more creative assets.
Speaker Change: Now turning to the loan investment front at the end of the quarter, our loan portfolio had an aggregate outstanding balance of 43.2 million at a weighted average yield of 10.4%.
Speaker Change: Generally, we target our structure to investment portfolio to be about 10% of the total acid value, but this will scale up or down to some extent depending on the quality of the opportunities we see.
Speaker Change: and we're currently seeing a lot of opportunities to originate high-quality high-yielding lungs to care about real estate. This portfolio is likely to scale up a bed in the near-term feature.
John Albright: One quick balance sheet, though, during the quarter, we were also pleased to opportunistically access the equity capital markets, utilizing the company's common ATM program, raising the net proceeds of 11.1 million. Phil will discuss our balance sheet and earnings in more detail and provide our increased outlook for the remainder of the year.
Speaker Change: One quick balance sheet note during the quarter we were also pleased to optionistically access the equity capital markets, utilized in the companies common ATM program, raising the net proceeds to 11.1 million.
Speaker Change: Phil, we'll discuss our balance sheet in earnings and more detail and provide our increased outlook for the remainder of the year.
John Albright: However, before turning to call or to fill, I wanted to take a moment on behalf of all here at the company to send our best wishes to the many impacted by the recent severe weather and our hope for them to have a speedy recovery.
Speaker Change: However, before turning the call over to Phil, I wanted to take a moment on behalf of all here at the company to send our best wishes to the many impacted by the recent severe weather and our hope for them to have a speedy recovery. And with that, I'll turn the call over to Phil.
Phil: And with that, I'll turn to call over to Phil. Thanks, John. Beginning with financial results, FFO was 45 cents per diluted share for the quarter and increased the 22 percent compared to the 37 cents reported in the third quarter of 2023. AFFO was 44 cents per diluted share for the quarter and increased the 16 percent compared to the 38 cents reported in the third quarter of 2023. Total revenue was $13.5 million for the quarter, including lease income of $11.7 million and interest income from commercial loans of $11.7 million.
Phil: Thanks, John, beginning with my next story, that's a close with 45 cents per diluted share for the quarter and increase the 22% compared to the 37 cents reported in the third quarter of 2023.
Speaker Change: AFO was 44 cents per diluted share for the quarter and increased a 16% compared to the 38 cents reported in a third quarter of 2023.
Speaker Change: Total revenue was $13.5 million for the quarter, including leasing income of $11.7 million and interest income from commercial loans of $1.7 million. There are two notable counting matters that may have caused loan interest income to be hired and some of you anticipated, and leasing income to be lower than anticipated.
Phil: There are two notable counting matters that may have caused low interest income to be hired, and some of you anticipated and leads income to be lower than anticipated. First, the three properties acquired this quarter are through a sales leaseback transaction. These properties come to real estate from both legal and tax purposes, and consequently, we include them in our property portfolio statistics. However, because the tenants have purchase options, gap requirements, transactions to be treated as a financing. Second, as discussed last quarter, we still include an A1 participation interest in our portfolio loan, and GAP also requires this transaction to be reported as a financing.
Speaker Change: First is a repeat property required this quarter of the rest of Lisa's back transaction. These properties constitute real estate for both legal and tax purposes. And consequently, we include them in our property portfolio statistics. However, because attendance have purpose options, gap requires this transaction to be treated as a financing.
Speaker Change: Second, as it's got a last quarter, we filled in a one-participation interest in our portfolio loan and get all the requires this transaction to be reported as a financing.
Phil: If you exclude these two items from our commercial loan investment, they told a 43.2 million outstanding a quarter in consistent with the amount John discussed earlier, whereas our gap balance sheet reflects the loan investments of $86.6 million.
Speaker Change: The exclude leads to items from our commercial loan investments. They told her 43.2 million offstanding a quarter-in, consistent with the amount of John that's got to earlier, whereas our gap down sheet reflects the loan investments of 86.6 million dollars.
Phil: While the gap reporting for these matters may cause some wine item classification differences, it does not have any significant impact on FFO or AFFO. Now moving to the balance sheet during the quarter, we utilize our common equity ATM program to issue approximately 620,000 shares at a weighted average share price of $18.9 per share, resulting in total net proceeds of $11.1 million. As a result of this equity raise, along with increasing our earnings from a creative asset recycling and growing commercial loan portfolio, we were able to implementally improve leverage, ending this quarter with net debt to E with a $6.9 times compared to the last year.
Speaker Change: While the gap reporting for these matters may cost them why not on classification differences. It does not have any significant impact on FFO or AFFO.
Speaker Change: Now moving to the downstairs during the quarter we realize our common equity ATM program to the show approximately 620,000 shares and a weighted average share price of $18.9 since per share resulting in total net proceeds of $11.1 million.
Speaker Change: As there's all of this equity raised along with the increase in our earnings from a creative asset recycling and growing commercial loan portfolio we were able to incrementally improve leverage ending the quarter with net deputy with a 6.9 times compared to the 7.4 times reported last quarter.
Phil: Further, we currently have approximately $80 million of liquidity in no debt maturing until 2026. With regard to our common dividend, given our increased earnings and forward outlook, we raise our quarterly common dividend from 27.5 cents per share to 28 cents per share. Our dividend remains well covered, as this represents a healthy AFFO payout ratio of 64%.
Speaker Change: Further, we currently have approximately $80 million of liquidity and no debt maturing until 2006.
Speaker Change: With regard to our common dividend given our increased earnings and four-doubt look, we raise our quarterly common dividend from 27.5 cents per share to 28 cents per share. Our dividend remains well covered as it sort of results at healthy AFFO's payout ratio of 64%.
Phil: Lastly, with regard to guidance, we are raising our full year 2024 outlook to an FFO range of $1.67 to $1.69 per share and an AFFO range of $1.69 to $1.71 per share. We have now closed $84 million of investments and $69 million of dispositions, inclusive of both property and structured investment activity. Accordingly, we are increasing our investment guidance to a range of $100 million to $110 million and nearing our disposition to a range of $70 million to $75 million.
Speaker Change: Lastly, with regards to guidance, we are raising our full year to 2024 outlook to an FFO range of $1.67 to $1.69 per share, and an AFFO range of $1.69 to $1.71 per share.
Speaker Change: We have now closed $84 million of investments and $69 million of dispositions, including a both a property and structured investment activity.
Speaker Change: Accordingly, we are increasing our investment guidance to a range of $100 million to $110 million, and nearing our disposition to a range of $70 million to $75 million. But that operator opened a line for questions.
Unknown Executive: But that operator opened the line for questions.
Unknown Executive: Thank you. If you'd like to ask a question, please press Star 11. If your question has been answered and you'd like to remove yourself from the queue, please press Star 11 again.
Speaker Change: Thank you. If you'd like to ask a question, please press star one one. If your question has been answered and you'd like to remove yourself in the queue, please press star one again.
Michael Goldsmith: Our first question comes from Michael Goldsmith with UBS. Your line is open. Good morning. Thanks a lot for taking my questions.
Speaker Change: Our first question comes from Michael Goldsmith with UBS, your line is open.
John Albright: You know, transaction activity picked up pretty materially from the first quarter and the second quarter. And he just talked a little bit about the transaction environment. What you're seeing out there is the increased activity reflective of just a more liquid environment overall.
Michael Goldsmith: Good morning, thanks for all for taking my questions.
Speaker Change: Transaction Activity picked up pretty materially from the first quarter and the second quarter. He just talked a little bit about the transaction environment. What you're seeing out there is the increased activity, reflective of just a more liquid environment overall.
John Albright: Yeah, thanks, Michael. Yeah, it's definitely the liquid environment has improved. So you are seeing more folks that have wanted to sell assets go ahead and come to market and move through that sort of strategy. And so there are more opportunities out there. We're bidding on more acquisitions and in finding assets that we like and like the risk-reward. And so we're very pleased to see the environment be much more improved as far as opportunities, both on core acquisitions and on some loan investments.
Speaker Change: Yeah, thank you Michael. Yeah, it's definitely the liquidity environment. It has improved so you are seeing more folks that have wanted to sell assets go ahead and come to market. And...
Speaker Change: and move through that sort of strategy. And so there are more opportunities out there. We're bidding on more acquisitions and finding, you know, assets that we like and like to risk or ward.
Speaker Change: and so we were very pleased to see the environment being much more improved as far as opportunities both on core acquisitions and on some low investments.
John Albright: Yeah, and my second question is related to the sale-leaseback of the properties in Tampa.
Speaker Change: And my second question is related to the sale leaseback of the properties in Tampa. Can you provide a little bit more color on the insurance arrangement? Many of these restaurants are closed right now, so it is providing some...
John Albright: Can you provide a little bit more color on the insurance arrangement? Many of these restaurants are closed right now, so it is providing some more detail there.
John Albright: And then, separately, one of these has increased the wealth of the portfolios; also, reduce the investment grade percentage. So can you just talk about how you're thinking about those two offsetting factors as you continue to build out the portfolio? Thanks.
Speaker Change: and some more detail there and then separately, you know, what, while these have increased the, the warmth of the portfolio is also reduced the investment grade percentage. So can you just talk about how you're thinking about kind of those two offsetting factors as you continue to build out the portfolio, thanks.
John Albright: Yeah, so on the restaurants, so they really had more impact from the first storm, Haleen, and then the second storm, Melbourne really didn't do much more damage. And so they're rapidly working to get those back open, and there'll probably be better news on that as far as it's happening next 30 days rather than at the end of the year. And as far as on insurance, there are two years of business interruption, and then there's full replacement insurance, and so words good shape and word in contact with the operator, and the good thing is the operator has, you know, a significant amount of restaurants throughout the state.
Speaker Change: Yeah, so on the restaurant, so they really had more.
Speaker Change: Impact from the first storm.
Speaker Change: Elaine, and then the second store, Milton really begins to much more damage.
Speaker Change: and so they're rapidly working to get those back open and they're probably better news on that as far as happening next 30 days rather than.
Speaker Change: at the end of the year and as far as on insurance there are two years of business and inerruption and then there's full replacement insurance.
Speaker Change: and so words, good shape and word contact with.
Speaker Change: The operator and the good thing is the operator has a significant amount of restaurants throughout the state.
John Albright: There are ones that they have on the East Coast have been open, the ones that haven't clear water open really fast after the storm. And so they're busy getting these reopened, and they're going to be in a pretty good shape because, unfortunately, there are some other people that probably won't be reopening as fast. And so there's going to be less competition, so there's going to be some pent-up demand for those restaurants.
Speaker Change: They're one that they have on the East Coast, have been open, the ones that have in clear water are open really fast after the storm.
Speaker Change: and so they're busy getting these reopen and...
Speaker Change: They're going to be in a pretty good shape because, unfortunately, there are some other people that probably won't be reopening as fast and so
Speaker Change: There's got to be the last competition, so there's got to be some pent-up demand.
John Albright: And as far as on your question on, you know, weighted average life, you know, basically it is closer to nine now than before. And we'll look to keep on increasing the weighted average term, at least term of our portfolio, but we're not going to let it really be the telewagged dog. We can go to a lot of the tenants right now if we want to and quickly do least extensions early, but they're going to want some sort of benefit as far as a reduced rate. And if you look at our portfolio, you know, our basis is so low compared to our competitors, and our lease rates are already so low that we would just really be giving away the store for no reason, but to satisfy Wall Street.
Speaker Change: for the restrons and that as far as I'm your question on.
Speaker Change: You know, wait at every drive, you know, basically it is closer to nine now than before.
Speaker Change: and we'll look to keep on increasing the weighted average term lease term of our portfolio, but we're not going to let it really be to tell the wagons dog we can go to a lot of the tenants right now if we want to and quickly do lease extensions early, but they're going to want some sort of benefit as far as a reduce rate.
Speaker Change: and if you look at our portfolio, our basis is so low compared to our competitors and our least raised already so low.
Speaker Change: that we would just really be given way the store for no reason but to be a satisfy wall street. So if we thought that we really had to do that and do that, we could quickly go to tenets and do early.
John Albright: So if we thought that we really had to do that and you do that, we could quickly go to tenants and do early extensions. But, you know, that's been part of our strategy is to take advantage of leases with maybe six, seven years, get a higher cap rate because they're great real estate, and there's other tenants that would take over those spots. And so that's always been the strategy, and, but, you know, we can definitely will try to load up some more and extend the term when we see fit, but it's really been the opportunity to to grab some really good real estate, it's really good yields and having a little bit lower lease duration, but knowing that the rents below market and way below replacement cost basis.
Speaker Change: Extensions, but that's been part of our strategy is to take advantage of Lisa's with maybe six, seven years, get a higher.
Speaker Change: Caprate because they're great real estate and there's other tenants that would take over those spots.
Speaker Change: and so that's always been the strategy and you know we can definitely we'll try to you know load up some more and extend the term when we see fit fit but it's really been the opportunity to grab some really good real estate it really good yields and having a little bit lower least duration but knowing that the rents below market and way below replacement cost basis that's been kind of strategy.
John Albright: That's been kind of strategy.
John Albright: Very helpful if I can squeeze one more in. You know, you talked about the loan portfolio, you know, being kind of, you know, 10% of the overall portfolio, but you know, at times like now when there could be a little bit more activity there, you would take it higher.
Speaker Change: We're very helpful, if I can squeeze one more in, you talked about the loan portfolio, you know, being kind of, you know.
Speaker Change: 10% of the overall portfolio, but at times like now, when there could be a little bit more activity there you would take it higher. How high would you take it? And then inherently, like with the loan portfolio, it adds a little bit more on penis to the earning. So how do you go about managing that going forward? Yeah, so I think it's filled mentioned in the remarks that we're looking to kind of not go about 10% of total enterprise value as far as our loan.
John Albright: How high would you take it, and then inherently, like with the loan portfolio, is it adds a little bit more lumpiness to the earnings? So how do you go about kind of managing that going forward. Yeah, so I think it's filled mentioned in as remarks that, you know, we're looking to kind of not go about 10% of total enterprise value as far as our loan book, but we could, if we saw some opportunities and as the loan book naturally pays off. You know, they'll come down, but you know, given that we have some great relationships with these developers and we're starting to do.
Speaker Change: But we could if we saw some opportunities and as the long book naturally pays off, you know, they'll come down.
Speaker Change: But, you know, given that we have some great relationships with these developers and we're starting to do, you know, second transactions with them and third transactions with them now that they know the process and we have the loan docs.
John Albright: You know, second transactions with them and third transactions with them now that they know the process and we have the loan docs. You know, maybe, you know, we'll support the situations where, you know, the deal we just did with a public anchor. Shopping center in Charlotte with, you know, Chase padside, a Water Burger padside, so incredibly great credits long duration leases 20 year leads on public 15 years or so on, on Chase. And so, you know, the property is only, you know, nine months away from being finished, and they had a situation where construction costs have increased.
Speaker Change: You know, maybe we'll see in situations where the deal we just did was a public anchor.
Speaker Change: Shopping Center in Charlotte with Chase Padside, Waterbird or Padside, so incredibly great credits, long duration, Lisa's 20 year leads on public 15 year or so on Chase.
Speaker Change: And so, you know, the property is only nine months away from being finished and they had a situation where construction costs have been increased.
John Albright: And there's a gap in and basically between the first mortgage and what needs to be to complete it. We would love to own it. And in this developer has other public sort of developments, and if that happens where same sort of situation, we're here to help. And we have first our refusal to buy the public and the chase if the cap rates go above a certain level. So we love the opportunity; it is great risk-adjusted yields and great markets. So we're going to wave it in if we see the opportunities. We're looking at one additional one, but it's a couple months away.
Speaker Change: and there's a gap in and basically between the first mortgage and what needs to be completed, we would love to own it.
Speaker Change: and in this developer has other public sort of development and that happens where same sort of situation we're here to help.
Speaker Change: and we have first of our refusal to buy.
Speaker Change: and the public and the chase if the cap rates go about a certain level.
Speaker Change: So, we love the opportunity, it's great risk adjusted yields and great markets so we're going to wave it in if we see the opportunities. We're looking at one additional one but it's a couple months away but yeah, we like it and it keeps us abreast with a lot of the merchant developers and it's great for the pipeline.
John Albright: But yeah, no, we like it, and it keeps us abreast with a lot of the merchant developers, and it's great for the pipeline.
John Albright: Thank you very much. Good luck in the fourth quarter. Thank you.
Speaker Change: Thank you very much. Good luck in the fourth quarter. Thank you.
RJ Milligan: Our next question comes from RJ Milligan with Raymond James. Your line is open. Thank you. Good morning, guys.
Speaker Change: Thank you. Our next question comes from RJ Milligan with Raymond James. Your line is open.
John Albright: Obviously, in the quarter, John, you took 10-year Walgreens exposure a little bit with some of the dispositions and now under 10%. I'm just curious how you feel about your current exposure to Walgreens, and maybe you could give us a detail on the nearest least term exploration for the Walgreens and average least duration?
RJ Milligan: Hey, good morning guys. Obviously in the quarter, John , you took 10-year Walgreens exposure a little bit with some of the dispositions and now under 10% I'm just curious how you feel about your current exposure to Walgreens and maybe you could give us a detail on the nearest lease term exploration for the Walgreens and average lease duration.
John Albright: Sure. So the average least duration RJ is 7.6 years. The nearest coming up is six years, and we have a lot of these on the market, and we're getting active bids. We're being selective. If we have a larger acquisition to do, we may push through a couple more, but we're getting good bids because the locations we have in the least duration, and obviously Walgreens had a bit of a lift this week from good earnings. So it's a very manageable portfolio. It's only 11, but obviously, given our small size, it kind of sticks out a bit.
John Albright: Sure, so the average at least duration of our day is 7.6 years, the nearest coming up is 6 years and we have a lot of these on the market and we're getting active beds, we're being selective.
John Albright: You know, if we have a larger acquisition to do, we may push through a couple more.
John Albright: But, you know, we're getting, we're getting good bit because of the locations we have in the Laceration, and obviously you saw Walgreens Ed.
Speaker Change: A bit of a less this week from Good earnings.
Speaker Change: So it's a very manageable portfolio. It's only 11, but obviously given our small size.
John Albright: But as you can tell, given that we sold to, and we have bids on additional two, it doesn't take much to get this off the top 10 if we really wanted to, but it would be nice to match it up with an acquisition.
Speaker Change: You know, it kind of sticks out a bit, but as you can tell given that we sold to and we have bizzed on additional to it, it doesn't take much to get this off the top 10 if we really wanted to, but it would be nice to match it up with an acquisition.
RJ Milligan: Thanks, it's helpful.
RJ Milligan: And so, more broadly, how do we think about the current macro environment and the potential impact on credit loss? And obviously I know that you guys can't provide 2025 guidance, but as you're looking into 2025, what's your outlook for potential credit loss and just given the current macro environment? Yeah, I mean, really our portfolio is in pretty good shape, and we've been proactive early on in selling things that could be issues. I would say the only one really is that home that clearly at home has a balance sheet issue, not an operations issue. And so I suspect that the lenders will negotiate something with the company that they're not going to harm their position.
Speaker Change: Thanks to self-ful and so more broadly, how do we think about the current macro environment and the potential impact on credit loss and obviously I know that you guys can't provide 25 guidance, but as you're looking into 2025, what's your outlook for potential credit loss and just given the current macro environment?
Speaker Change: Yeah, I mean, really, you're part of the pre-gitchade, but we've been proactive early on until things that.
Speaker Change: You could be issues that would say the only one really is at home that...
Speaker Change: Clearly at home has a balance sheet issue, not an operation issue, and so I suspect that the lenders will negotiate something with the company that, you know, they're not going to harm their position.
John Albright: So I assume they'll work that out. And I would say, if there's any sort of your credit issue at home, would be the one. But, you know, there's very low basis type properties, and we can split up these big boxes and do leasing of smaller tenants to fill it up. That's helpful.
Speaker Change: So I assume they'll work that out, but I would say if there's any sort of your credit issue, I'd say at home would be the one, but those very low basis type properties, and we can split up these big boxes and do a leasing smaller tenants to fill it up.
RJ Milligan: That's it for me. Thanks, Chris. Thanks.
Wesley Galaday: Thank you. Our next question comes from Wesley Galaday with Beard. Your line is open. Hey, good morning, guys. I'm just sticking with the tenant front. Any plans to reduce exposure to the dollar source? You know, very good question. There's this so small. There are like 800,000 apiece or a million apiece. And it's really, you know, we've just been focused more on the wall grain side. But yes, the answer is we do have some of them on the market for sure. It just hasn't been a priority given that the wall grain properties are more kind of three to four million.
Speaker Change: That's helpful, that's it for me, thanks guys.
Speaker Change: Thanks!
Speaker Change: Thank you. Our next question comes from Wesley Gaudet with Beard. Your line is open.
Wesley Gaudet: Hey, good morning, guys. I'm just sticking with the Tenet front. Any plans to reduce exposure to the dollar stores?
Speaker Change: Hi, you know, I have a very good question, there's this so small, like $800,000 in a piece or a million of piece.
Speaker Change: And this really, you know, we're just been focused more on the Walgreens side. But, yes, the answer is we do have some of them on the market for sure. It just hasn't been a priority given that the Walgreens properties are more half three to four million. So that's really been the real push rather than the family dollar and dollar generals.
Wesley Galaday: So that's really been the real push, rather than the Family Dollar and Dollar Generals. Okay.
John Albright: Can you get some background on the Tampa deal? How did that come about? How quickly were you able to close? And then I think you mentioned there was a purchase option. Can you talk about the timing on that with the cap rate would be?
Speaker Change: Okay, can you get some background on the Tampa deal? How did that come about? How quickly were you able to close? And then I think you mentioned there was a purchase option. Can you talk about the timing on that with the cap rate would be?
John Albright: Sure. So the relationship with Crabi's, as you know at CTO, we built two restaurants on the beach, and we had, let's go back, you know, seven years ago. We had an operator that didn't work out that didn't, didn't perform. So we brought in Crabi to take over a different concept, and they've done fabulous. They really know how to operate, and they the cells have been very high performing. And so we've stayed in touch with them about other things we can do together.
Speaker Change: Sure, so the relationship with diabetes, as you know at CTO, we...
Speaker Change: We built two restaurants on the beach and we had, let's go back, you know, seven years ago. We had an operator that didn't work out that didn't perform.
Speaker Change: So we brought in a craving to take over a different concept.
Speaker Change: and they've done fabulous, they really know how to operate and the cells have been very high performing. And so we've stayed in touch with them about other things we can do together and they had a unique opportunity to purchase.
John Albright: And they had a unique opportunity to purchase some real iconic restaurants over on the West Coast. They're very big, big-ticket sort of items as far as this restaurant group that they were purchasing, roughly $50 million in value. We came in in the low 30 million to buy the real estate cell lease back to them. They have a lot of equity in they can bring a lot of operating synergies to the properties. And then we we we structured it where after a certain amount of years, after six years, they have an option, not the obligation, to buy out the lease.
Speaker Change: So we're all iconic restaurants over on the west coast.
Speaker Change: They're very big ticket sort of items as far as this restaurant group that they were purchasing roughly $50 million in value.
Speaker Change: We came in at a low 30 million to buy the real estate.
Speaker Change: Selleaf back to them, they have a lot of equity in, they can bring a lot of operating synergies to the properties and then we structured it where after certain amount of years, after six years they have an option, not the obligation to buy out the lease. And that would be at an RR that's basically double digits to us.
John Albright: And that would be at a an RR that's basically double digits to us. So, you know, we love the real estate, love the yield, love the annual escalation. So worst case scenario in our minds is, you know, six years gets sold out at big numbers for us for the shareholders. Okay, that sounds good.
Speaker Change: So, we love the real estate, love the yield, love the annual escalation, so worst case scenario in our minds is six years gets sold out at big numbers for us for the shareholder.
Phil: The presentation of the press for the syndicate of the end of period rent was $41.5 billion.
Speaker Change: Okay, that sounds good. The presentation of the press will be sent to care that the independent rent was 41 and a half million. Can you clarify that as a cash rent number and does that include the cap of properties?
Phil: Can you clarify that as a cash rent number? And does that include the cap of properties? Yeah, that's a number. It is a gap number. The cash number is just a little wider than that. It's not that difference, like 39. But the number you refer to is the gap number and the gap run rate.
Speaker Change: I wanted to see him for that one. Yeah.
Speaker Change: Yeah, this is that number is a gap number. The cash number is just a little lighter than that. It's not that difference like 39. But the number you refer to is the gap number and the gap run rate.
Phil: Okay, fantastic.
John Albright: And then one last one for me, when you look at the balance sheet of capital markets, any plans for the fourth quarter? You do have a little bit floating on the line; would you clear that out or get more swap? You know, I think we're okay with a little floating right there. Obviously, depending on the capital markets, you know, we might look to utilize the ATM again, but you know, we have 280 million a dead 200 million fixed rate. We got 80 million floating; that rate is coming down. So we're okay with a little floating rate exposure there.
Speaker Change: Okay, fantastic. And then one last one for me. When you look at the balance sheet of capital markets, any plans for the fourth quarter, you do have a little bit floating on the line, would you clear that out or get more swaps?
Speaker Change: You know, I think world chaos is a little floating right there, obviously depending on the capital markets, we might look to utilize the ATM again.
Speaker Change: But, you know, we have 280 million in debt, 200 million sixth rate, we got 80 million floating.
Speaker Change: that rate is coming down. So we're okay with a little floating rate exposure there.
Unknown Executive: Okay, thanks everyone. Thank you.
Speaker Change: Okay, thanks everyone. Thank you.
Rob Stevenson: Our next question comes from Rob Stevenson with Janie Montgomery Scott. Your line is open. Good morning.
Speaker Change: Thank you. Our next question comes from Rob Stevenson with Jenny Montgomery Scott. Your line is open.
John Albright: John, beyond the Walgreens and maybe some of the dollar stores, how much of the portfolio today is stuff that you really want to sell over time? You know, it's really opportunistically selling at this point, so where we have an acquisition lined up, maybe the capital markets are still trading us at a big discount to what we think the company is worth, and so we may sell something that we would like to keep, but more the recycling, Rob has seen us in the past. So I would say we're kind of, you know, everything I left is really muscle versus, you know, things that we'd like to discard, so not a lot beyond the Walgreens and dollar stores and that sort of thing.
Rob Stevenson: Good morning, John. Beyond the Walgreens and maybe some of the dollar stores, how much of the portfolio today is stuff that you really want to sell over time?
Speaker Change: It's really opportunistically selling at this point, so we have an acquisition line maybe a capital market still or training us at a big discount too.
Speaker Change: to what we think a couple of these words and so we may sell something that we...
Speaker Change: We would like to keep, but more of the recycling rubbish you've seen us in the past, so I would say we're kind of...
Speaker Change: You know, everything I left is really muscle versus you know, things that we'd like to discard, so not a lot beyond the Walgreens and Dollar Swords and that sort of thing. Is that how you would characterize the low sale in the quarter?
John Albright: Is that how you would characterize the low sale in the quarter? The low sale was basically a group that had a 1031 need, could not find anything to buy in the market, and were really desperate to acquire the property because they knew the property very well and they were very comfortable, so we were able to sell that at a premium price just given that their situation, not our desire. Okay, and you've talked about the Walgreens exposure. How are you guys feeling about the Dix exposure and the prospect of potentially taking it above the current 11%?
Speaker Change: The low cell was basically a group that had a 1031 need to not find anything to buy in the market and would really desperate to acquire the property because they knew the property very well and they're very comfortable so we
Speaker Change: We were able to buy a cell that at a premium price just given that their situation, not our desire.
Speaker Change: Okay, and you've talked about the, you know, the Walgreens exposure, how are you guys feeling about the dick exposure and the prospect of potentially taking it above the current 11%.
John Albright: I don't think it's going to grow beyond 11%, unless there's some sort of unique opportunity, but then we might look to sell down property, so I wouldn't expect it to go above where it is right now.
Speaker Change: I don't think it's going to grow beyond 11% unless there's some sort of unique opportunity, but then we might look to sell down for operating. So I went out when expect to go above where it is right now.
John Albright: Okay, and then fourth quarter is typically big transaction volume in the triple net space in a normal year. Can you talk about the size of your funnel today and how, you know, that's looking today, you know, given the, you know, the interest rate cuts, the sort of buyers and sellers and how we should be thinking about the next couple of quarters in terms of volume of transactions, etc. Yeah, I mean, is the really the funnel right now is kind of a plus or minus 200 million. They're rather chunky, so it's not, you know, a bunch of $5 million deals that's maybe a portfolio here and there.
Speaker Change: Okay, and then fourth quarter is typically big transaction volume in the triple net space in a normal year. Can you talk about the size of your funnel today and how that's looking today given the interest rate cuts, the sort of buyers and sellers, and how we should be thinking about the next couple of quarters in terms of...
Speaker Change: Volume of Transactions, et cetera.
Speaker Change: Yeah, I mean, is the really the funnel right now, it's kind of a plus or minus 200 million.
Speaker Change: their rather chunky, so it's not a bunch of $5 million deal, it's maybe a portfolio here and there. And so...
John Albright: And so, you know, we're being picky as always, but it seems like, as we do a transaction, there's always something else behind it coming to us. So we feel very good about the ability to take advantage of the market right now, given that there are, there is more capital out there, a lot more buyers, but, you know, the lending market is still constrained. And so we're trying to be aggressive here as still feel like it's a good opportunity for us. Okay.
Speaker Change: You know, we're being picky as always, but
Speaker Change: It seems like as we do a transaction, there's always something else behind it coming to us. So we feel very good about the ability to take advantage of the market right now. Given that there is more capital out there, a lot more buyers, but the lending market is still constrained.
Speaker Change: and so we're trying to be aggressive here as still feel like it's good opportunity set for us.
Phil: And then Phil, when you look at the, you know, roughly 1.7 of interesting come from commercial loans and investments, you still got, I think, almost 8 million to fund on the public stuff. How much else is in the portfolio today that's committed, but not yet funded that we should be expecting to flow through there over the next couple of quarters? Well, listen, you know, the low portfolio is a little gross stuff because the sales lease back transaction is treated as a financing. And then we have the participation sale that I talked about in my comments of about 13 million that kind of grosses up the portfolio also.
Speaker Change: Okay. And then, so, when you look at the, you know, roughly 1.7 of interesting come from commercial loads and investments.
Speaker Change: You still got, I think, almost 8 million to fund on the public stuff. How much else is in the portfolio today that's committed, but not yet funded that we should be expecting to flow through there over the next couple of quarters?
Speaker Change: Listen, you know, the lone portfolio is a little grossed up because it sells least back transaction, it's treated as a financing.
Speaker Change: and then we have the participation sale that I talked about in our comments about 13 million. This kind of grows up to portfolio also. And when you net all that out, it's about 43 million currently outstanding. The commitments are for about 55.
Phil: And when you net all that out, it's about 43 million currently outstanding. The commitments are for about 55. So a little over $10 million spread there between outstanding and the commitments.
Speaker Change: So a little over $10 million plus spread there between outstanding and the commitment.
Phil: Okay, but neither the three restaurants that are being treated as a financing transaction nor the sale. That should continue to impact on a quarter of that line on a quarterly basis, similarly going forward. There isn't any fall offer step ups with that. It's just the incremental $10 million of deployment and timing from the $10 million that you did deploy in the third quarter, right? Yes, generally correct.
Speaker Change: Okay, but neither the three restaurants that are being treated as a financing transaction or the sale that should continue to impact.
Speaker Change: On a quarter of that line, I don't want to quarterly basis, similarly going forward, right? Is it there? Isn't any fall off or step ups with that? It's just the incremental $10 million of deployment and timing from the $10 million that you did deploy in the third quarter, right?
Phil: Keep in mind that the selling lease back there's not a full quarter in there. So it'll be a little higher next time. So the amount kind of coming through interest income, if you will, related to that is close to $700,000 on a full run rate going forward.
Speaker Change: Yes, just keep in mind that there's not a full quarter in there so it'll be a little higher next time so the amount coming through Interested and come if you will related to that as close to 700,000 on a full run right going forward.
Phil: Okay, that's very helpful.
Matthew Erdner: Thanks, guys, and have a good weekend. Thanks, you too.
Speaker Change: Okay, that's very helpful. Thanks guys, and have a good weekend.
Matthew Erdner: Thank you. Our next question comes from Matthew Erdner with Jones Trading. Your line is open. Hey, morning guys. Thanks for taking the question. I noticed that quarter of a quarter of the Florida exposure went up, and Texas kind of went down.
Speaker Change: Thank you. Our next question comes from Matthew Erner with Jones Trading. Your line is open.
Matthew Erner: Hey morning guys, thanks for taking the question. I noticed that quarter of a quarter of the four-to-exposure went up in Texas kind of went down. Can you talk about where you're seeing the most transaction activity and kind of where the sellers are popping up in the market?
John Albright: Can you talk about where you're seeing the most transaction activity and kind of where the sellers are popping up in the market? Yeah, I wouldn't say it's any kind of geographic, you know; it really just goes to the big big states. There's a lot of stuff in California that's still priced pretty tight. We are seeing a fair amount in Texas and Florida. Those are favored sort of acquisitions for 1031 market. So, you know, the pricing is sometimes challenging. So, you know, I wouldn't say there's any kind of scene to one jurisdiction over the other. But you're just seeing it from, you know, more of the major states is where the predominance of the volumes coming from.
Speaker Change: Yeah, I went out and say it's any kind of geographic, you know, it really just goes to the big big state so, you know, there's a lot of stuff in California that still price pretty tight.
Speaker Change: We are seeing a fair amount of Texas and Florida.
Speaker Change: Those are favored sort of acquisitions for 1031 markets.
Speaker Change: Yeah, the pricing is sometimes challenging.
Speaker Change: So, you know, I wouldn't say there's any kind of theme to one jurisdiction over the other, but you're seeing it from, you know, more of the major states, where the predominance of the volumes coming from.
John Albright: Yeah, that's good to know. And then I'm glad you guys made it out mostly unscathed in Florida down there. But do you think that kind of presents an opportunity going forward, you know, with sellers kind of wanting to get out of those markets? You know, are you seeing anything like that starting to happen? Yeah, I mean, we're not seeing it starting to happen, but we're certainly keeping our eyes out for those opportunities where maybe someone suffered some damage and really don't want to go through. The restoration work or there is kind of, you know, done with it and, you know, we're, you know, I don't we don't see anything right now.
Speaker Change: Good to know, and then I'm glad you guys made it out, mostly unscathed on Florida down there, but do you think that kind of presents an opportunity going forward with sellers kind of wanting to get out of those markets? Are you seeing anything like that starting to happen?
Speaker Change: Yeah, I mean, we're not seeing it starting to happen, but we're certainly keeping our eyes out for those opportunities where maybe someone suffered some damage and really don't want to go through.
Speaker Change: Restoration Word, or there's kind of, you know, done with it and, you know, I don't, we don't see anything right now, but, you know, certainly, you know, keeping our eyes out for it and if there are some, that's a unique sort of circumstances.
Matthew Erdner: But, you know, certainly, you know, keeping our eyes out for it that there are some unique circumstances. Great.
Matthew Erdner: Thank you, guys. Thank you.
John Massocca: And our last question comes from John Massocca with B. Raleigh Securities. Your line is open. Good morning.
Speaker Change: Thank you and our last question comes from John Masaka with B. Raleigh Securities. Your line is open.
John Masaka: Good morning.
John Massocca: So sorry to miss this earlier in the call, but as we think of the kind of remaining investments, kind of inviting guidance for the rest of the year, what's kind of the split between mortgages and net lease acquisitions? You know, there's kind of, I would say, a mix of a third on the loan investment side and the balance being core property. Okay, that's very helpful. And then in terms of kind of cap rate, I mean, you know, the beach at hospitality portfolio was just kind of its own things, maybe backing that out seemed like the cap rate on the Golf Galaxy was like in the high sevens.
John Masaka: Good morning. I'm sorry that this is earlier in the call, but as we think of the kind of remaining investments, kind of inviting guidance for the rest of the year, what kind of the split between mortgages and net least acquisitions?
Speaker Change: You know, there's kind of, I would say, a mix of, you know,
Speaker Change: A third on the London Betsonside in the balance being poor properties.
Speaker Change: Chips.
Speaker Change: Okay, that's very helpful. And then in terms of kind of cap rate, I mean, you know, the beach at hospitality portfolio was kind of its own thing, maybe backing.
John Albright: I mean, is that typical of what you're seeing in the market today? Well, I mean, for what we're looking at, we're targeting predominantly seven and a half caps and above, but we may see an opportunity to bring in investment grade exposure or maybe find a lows to replace the lows we had. So, we wouldn't mind. We wouldn't be opposed to dipping down the sixes to bring our lows exposure back up. So it's a little bit of, you know, kind of as Phil mentioned earlier, barbell, but that's roughly what we're seeing is on the straight up acquisition side, non-investment grade come in seven and a half and above.
Speaker Change: That out, you seem like the cap rate on the golf galaxy was like in the high sevens, I mean is that typical of what you're seeing in the market today?
Speaker Change: Well, I mean, for what we're looking at, we're targeting predominantly seven-and-a-half caps in above. But we may see an opportunity to bring in investment grade exposure, maybe find a lows to replace the lows we had.
Speaker Change: We weren't mine, we weren't the opposed to dipping down the sixes to bring our lowest exposure back up.
Speaker Change: So, it's a little bit of, you know, kind of as Phil mentioned earlier of our bill, but that's roughly what we're seeing is on the straight up acquisition side, Donnivets and Gray, kind of in the seven and a half and in above.
John Albright: Okay, is that specific to lows or, you know, given, you know, the non-investment grade exposure increased in the quarter to the big portfolio transaction, are you looking systematically to kind of increase investment grade exposure again or any kind of agnostic. Agnostic a little bit. I mean, we, we, we like to have the exposure, but it doesn't seem like the market really appreciates it. So we're not going to get, you know, really wedded to it, but if opportunistically, we can kind of, you know, put, as I mentioned, like a lows back in higher up in our credit stats, I think that would be helpful.
Speaker Change: Okay, is that specific to lows or you know, given?
Speaker Change: You know, the non-investment-grade exposure increased in the quarter due to the big portfolio transaction. Are you looking systematically to kind of increase?
Speaker Change: Investing great exposure again or are you kind of agnostic.
Speaker Change: Agnostic a little bit. I mean, we'd like to have the exposure, but it doesn't seem like the market really appreciates it, so we're not going to get really wedded to it, but if opportunistically we can kind of put, as I mentioned, like a lows back in higher up in our credit stats, I think that would be helpful. So we'll look to do that, but not kind of a merry to it.
John Albright: So we'll look to do that, but not, not kind of a merry to it.
John Albright: Okay, and then last one for me, in terms of the three assets in Florida, you bought in the quarter or in the restaurant assets in Florida, you bought in the quarter. How big a percentage of Crabby's business are those. And I guess what was kind of, you know, the hurricane creates some disruption in terms of metrics, but what was kind of the trailing coverage on those assets rent covered. You know, roughly where we were basically buying the real estate, it was like a 15% kind of yield to our, our basically valuation on, on their ROI.
Speaker Change: Okay. And then last one for me, in terms of the three assets in Florida, you bought in the quarter or in the restaurant assets in Florida, you bought in the quarter. How big are percentage of crabby's business are those? And I guess what was kind of, you know, the hurricane creates some disruption in terms of metrics, but what was kind of the trailing coverage on those assets rent coverage?
Speaker Change: You know, roughly where we were basically buying the real estate, it was like a 15% kind of yield to our basically valuation on their ROI.
John Albright: Okay. And in terms of the size of the overall portfolio for them as an operator. I, well, they're 11% film as far as, you know, they're in our credit stats are 11%. I mean, I mean, that was three assets. Oh, sorry, I would, sorry, I would say there is about 25%. Maybe 20 percent. Really appreciate the color.
Speaker Change: and in terms of the size of the overall portfolio for them as an operator.
Speaker Change: Well, they're 11% still as far as, you know, they're in our credit stacks as stats, they're 11% So I mean, I mean, that was a pretty high stats, it's a better fit. I would say there is about 25%
Matthew Erdner: That's it for me. Thank you.
Speaker Change: May be 20%
Speaker Change: I really appreciate the color. That's it for me. Thank you.
Craig Sarah: We have a question from Craig Sarah with Lucid Capital Markets. Your line is open. Hey, good morning, guys. I noticed your GNA had picked up a bit this quarter due to legal expenses. Was that just a function of the higher transaction volume during the quarter, or should we expect somewhat higher GNA going forward? No. Yeah, that was one time. It didn't have to do with the certain amount of acquisitions, but that was a little bit of it. But that was really more one time legal. Okay.
Speaker Change: Writer, thank you. Thank you. We have a question from Craig Cacera with Lisa Capital Markets. Your line is open.
Speaker Change: Hey, good morning, guys. I noticed your GNA had picked up a bit this quarter due to legal expenses. Was that just a function of the higher transaction volume during the quarter, or should we expect somewhat higher GNA going forward? No, that was one time. It didn't have to do with the certain amount of acquisitions, but that was a little bit of it, but that was really more one time legal. Thank you.
Phil: Great. Thanks.
Unknown Executive: Thank you. There are no further questions at this time.
Speaker Change: Okay, great, thanks.
Speaker Change: Thank you!
Unknown Executive: This doesn't conclude the question.
Unknown Executive: You may now disconnect.
Unknown Executive: Everyone have a great day. Okay. Thank you.