Q1 2025 Alexander & Baldwin Inc Earnings Call

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Unknown Executive: Good afternoon, ladies and gentlemen, and welcome to the first quarter 2025 Alexander & Baldwin Earnings Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct question and answer session.

Speaker Change: Good afternoon, ladies and gentlemen, and welcome to the first quarter 'twenty 'twenty five Alexander Bell and Baldwin earnings Conference call. At this time all lines are in listen only mode.

Speaker Change: Following the presentation, we will conduct a question and answer session. If at any time. During this call you require immediate assistance. Please fresh.

Unknown Executive: If at any time during this call you require immediate assistance, please press For more information visit www.FEMA.gov Press star and the number zero.

Speaker Change: Yes.

Speaker Change: And the number is zero.

Unknown Executive: For the operator, this call is being recorded on Thursday, April 24th, 2025.

Speaker Change: Or the operator Umm this call is being recorded on Thursday April 24 at 2025.

Unknown Executive: I would now like to turn the conference over to Aloe Shadow. Please go ahead. Thank you, Operator.

Hal: I would now like to turn the conference over to Hal.

Speaker Change: How long Shadow. Please go ahead.

he shuttle: Thank you operator, Aloha and welcome to Alexander <unk> Baldwin's first quarter 'twenty 25 earnings Conference call. My name is he shuttle and I am a property manager at Alexander <unk> Baldwin.

Alohi Chateau: Aloha, and welcome to Alexander & Baldwin's first quarter 2025 earnings conference call. My name is Lohi Chateau, and I am a Property Manager at Alexander & Baldwin.

Alohi Chateau: With me today are A&B's Chief Executive Officer, Lance Parker, and Chief Financial Officer, Clayton Chun. We are also joined by Kit Millan, Senior Vice President of Asset Management, who is available to participate in the Q&A portion of the call. During our call, please refer to our first quarter 2025 financial presentation available on our website at investors.alexanderbaldwin.com event.

Speaker Change: With me today are A&D is chief Executive Officer, Lance Parker, and Chief Financial Officer of Cleats in China. We are also joined by Kitten Mellon Senior Vice President of asset management, who is available to participate in the Q&A portion of the call during our call. Please refer to our first quarter 'twenty 25 financial.

Speaker Change: Orientation available on our website at investors that Alexander Baldwin Dotcom flash events.

Alohi Chateau: Before we commence, please note that statements in this presentation that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding possible or assumed future results of operations, business strategies, growth opportunities, and competitive position. Such forward-looking statements speak only as of the date the statements were made and are not guarantees of future performance. Forward-looking statements are subject to a number of risks, uncertainties, assumptions, and other factors that could cause actual results and the timing of certain events to differ materially from those expressed in or implied by the forward-looking statements.

Speaker Change: Before we commence please note that statements in this presentation that are not historical facts are forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties that could cause actual results to differ materially from those contemplated.

Speaker Change: The relevant forward looking statements.

Speaker Change: These forward looking statements include but are not limited to statements regarding possible or assumed future results of operations business strategies growth opportunities and competitive position such forward looking statements speak only as of the date. The statements were made and are not guarantees of future performance.

Speaker Change: Forward looking statements are subject to a number of risks uncertainties assumptions and other factors that could cause actual results and the timing of certain events.

Speaker Change: Differ materially from those expressed in or implied by the forward looking statements. These factors include but are not limited to prevailing market conditions and other factors related to the company's REIT status and the company's business. The evaluation of alternatives by the company related to its noncore assets and the risk fat.

Alohi Chateau: These factors include, but are not limited to, prevailing market conditions and other factors related to the company's REIT status and the company's business, the evaluation of alternatives by the company related to its non-core assets, and the risk factors discussed in the company's most recent Form 10-K, Form 10-Q, and other filings with the Securities and Exchange Commission. The information in this presentation should be evaluated in light of these important risk factors.

Speaker Change: As discussed in the company's most recent Form 10-K Form 10-Q, and other filings with the Securities and Exchange Commission. The information in this presentation should be evaluated in light of these important risk factors, we do not undertake any obligation to update the company's forward looking statements.

Alohi Chateau: We do not undertake any obligation to update the company's forward-looking statement.

Alohi Chateau: Management will be referring to non-GAAP financial measures during our call today. Please refer to our statement regarding the use of these non-GAAP measures and reconciliations included on our first quarter 2025 Supplemental Information and Presentation Materials.

Speaker Change: Management will be referring to non-GAAP financial measures during our call today. Please refer to our statement regarding the use of these non-GAAP measures and reconciliations included in our first quarter 'twenty twenty-five supplemental information and presentation materials.

Alohi Chateau: Lance will start today's presentation with an overview, then hand it off to Clayton for a discussion of financial matters. To close, Lance will return for some final remarks and we will open it up for your questions.

Speaker Change: We'll start today's presentation with an overview then hand, it off to Clayton for a discussion of financial matter to close lesser return for some final remarks, and we will open it up for your questions with that let me turn the call over to Les.

Lance Parker: With that, let me turn the call over to Lance. Thank you, Alohi. Great job. And aloha to everyone joining us today. I am pleased to say that we started the year strong, beating both internal and external expectations, and made tremendous progress against the three priorities for 2025 that I laid out in our last call. They are improving our CRE portfolio performance, internal and external growth, and streamlining our business and cost structure. Thanks to Alohi and our other property managers, our CRE portfolio performed well, with same-store NOI growing by 4.2% for the quarter. Performance benefited from a large lease at Kaka'ako Commerce Center, bringing the assets leased occupancy up to 95.6% at quarter end, compared to 83.2% last quarter.

Thank you, Hello, Hey, great job and Hello to everyone joining us today.

Les: I am pleased to say that we started the year strong, beating both internal and external expectations and made tremendous progress against the three priorities for 2025 that I laid out in our last call.

Les: They are improving our CRE portfolio performance internal and external growth.

Les: Streamlining our business and cost structure.

Les: Thanks to a low he and our other property managers, our CRE portfolio performed well with same store NOI growing by four 2% for the quarter.

Les: Performance benefited from a large lease at Kaka Aqua Commerce Center, bringing me assets leased occupancy up to 95, 6% at quarter end compared to 83, 2% last quarter.

Lance Parker: From a growth perspective, we transferred a 5-acre lot at Maui Business Park out of our land operations segment into our ground lease portfolio and signed a 75-year lease to a prominent self-storage developer. This ground lease is notable for two reasons. First, it's a good example of strategically moving commercial land inventory into immediately recurring FFO, specifically contributing nearly a penny in 2025. And two, this transaction provides an opportunity for an equity investment in the development and operation of the self-storage facility if we choose. I have often mentioned our commitment to the Hawaii-focused, asset-class diverse strategy. And while this deal is part of our ground lease portfolio, it represents our first investment into self-storage.

Les: From a growth perspective, we transferred a five acre lot at Maui business Park out of our land operations segment into our ground lease portfolio and signed a 75 year lease to a prominent self storage developer.

Les: This ground lease is notable for two reasons.

Les: It's a good example of strategically moving commercial land inventory into immediately recurring F. F O specifically contribute contributing nearly a penny in 2025.

Les: And to this transaction provides an opportunity for an equity investment in the development and operation of the self storage facility if we choose.

Les: I have often mentioned our commitment to the whole what you focused asset class diverse strategies and while this deal as part of our ground lease portfolio. It represents our first investment into self storage.

Lance Parker: Finally, on our third priority, streamlining, we sold 90 acres of primarily agricultural zone land, which contributed to land operations earnings of approximately $0.06 for the quarter. Turning to our first quarter CRE metric. We executed 42 leases in our improved property portfolio, representing approximately 237,000 square feet of GLA and $5.6 million of ABR. Our blended leasing spreads remain strong at 10.2% on a comparable basis. Our leased occupancy was 95.4%, up 80 basis points sequentially and 140 basis points compared to the first quarter of last year. Economic occupancy at quarter end was 93.9%, up 100 basis points from last quarter and 160 basis points from the same period last year.

Les: Finally on our third priority streamlining we sold 90 acres, primarily agricultural zoned land, which contributed to land operations earnings of approximately six cents for the quarter.

Les: Turning to our first quarter CRE metrics.

Les: We executed 42 leases in our improved property portfolio, representing approximately 237000 square feet of GLA and $5 $6 million of ABR.

Les: Our blended leasing spreads remained strong at 10, 2% on a comparable basis.

Les: Our leased occupancy was 95, 4% up 80 basis points sequentially, and 140 basis points compared to the first quarter of last year.

Les: Economic occupancy at quarter end was 93, 9% up 100 basis points from last quarter at 160 basis points from the same period last year.

Lance Parker: The improved occupancy quarter over quarter reflects the backfill of two floors of vacant space at Kaka'ako Commerce Center. The year-over-year improvement also reflects the backfill of space at Y&I Mall that occurred in the fourth quarter of 2024. S&O at quarter end was $3.4 million and includes $700,000 for our ground lease at Maui Business Park. I am pleased with our first quarter accomplishments and based on these results, we are raising our total FFO per share guidance, primarily reflecting favorable results in our land operations segment. We are maintaining our initial guidance for same-store NOI and CRE and corporate-related FFO.

Les: The improved occupancy quarter over quarter reflects the backfill of two floors are vacant space that Kaka Aqua Commerce Center.

Les: The year over year improvement also reflects the backfill of space at one time, all that occurred in the fourth quarter of 2024.

Les: So no at quarter end was $3 4 million and includes $700000 for our ground lease at Maui business Park.

Les: I am pleased with our first quarter accomplishments and based on these results. We are raising our total <unk> per share guidance, primarily reflecting favorable results in our land operations segment.

Les: We are maintaining our initial guidance for same store NOI and CRE and corporate related F. F O.

Lance Parker: The decision to main to maintain versus raise our CRE related guidance reflects the strong performance we achieved in the first quarter and recognition of the macro economic uncertainty that exists for the remainder of the year.

Les: The decision to Maine to maintain versus raise our C. R. E related guidance reflects the strong performance, we achieved in the first quarter and a recognition of the macro economic uncertainty that exists for the remainder of the year.

Clayton Chun: With that, I'll turn the call over to Clayton to discuss financial results and guidance. Thanks, Lance and aloha, everyone. We began the year strong with our portfolio continuing to perform at a high level. For the first quarter, the commercial real estate portfolio generated $33.2 million of NOI, representing a 4.6% increase from Q1 of last year that was due primarily to higher portfolio occupants. We reported $0.30 of CRE and corporate FFO per share for the quarter, which reflects an 11.1% increase when normalized for the $0.02 of swap and financing related adjustments embedded in our Q1 2024 FFO.

Les: With that I'll turn the call over to Clayton to discuss financial results and guidance. Please.

Clayton: Thanks, Lance and Aloha, everyone. We began the year strong with our portfolio continuing to perform at a high level for the first quarter. The commercial real estate portfolio generated $33 2 million of NOI, representing a four 6% increase from Q1 of last year that was due.

Les: Merrily to higher portfolio occupancy.

Clayton: We reported 30 series.

Clayton: Syria corporate <unk> per share for the quarter, which reflects an 11, 1% increase when normalized for the <unk> of swap and financing related adjustments embedded in our Q1 2024.

Clayton Chun: Total FFO was $0.36 per share for the first quarter of 2025, consisting of $0.06 of FFO per share from land operations, in addition to the $0.30 of FFO from CRE and corporate previously mentioned. Included in land operations FFO was approximately 2.2 million of margin realized from the sale of agricultural zone land during the quarter, as well as approximately $3 million of JV income that was due primarily to a favorable resolution of certain contingencies at a legacy joint venture. We continue to carefully manage our operating and overhead costs. For the first quarter of 2025, G&A was approximately $7 million, a decrease of $200,000, or 3.4% as compared to the same period last year, largely reflecting timing differences.

Clayton: Total <unk> was 36 per share for the first quarter of 2025, consisting of six cents of <unk> per share from land operations. In addition to the 30 <unk>.

That's F O from CRE corporate previously mentioned.

Clayton: Included in land operations at <unk> was approximately $2 2 million of margin realized from the sale of agricultural land during the quarter as well as approximately $3 million of JV income that was due primarily to a favorable resolution of certain contingencies at our legacy joint venture.

Clayton: We continue to carefully manage our operating and overhead costs for.

Clayton: For the first quarter of 2025, G&A was approximately $7 million, a decrease of $200000 or three 4% as compared to the same period last year.

Clayton: Largely reflecting timing differences.

Clayton Chun: For the full year 2025, we continue to expect GNA to range from a penny to range from flat to a penny per share lower as compared to 2024. Turning to our balance sheet and liquidity, we continue to maintain a strong balance sheet that provides us with the liquidity and flexibility needed to operate the business in an agile manner. At quarter end, we had total liquidity of over $300 million, and our net debt to adjust debit ratio stood at 3.6 times. Approximately 97% of our debt was at fixed rates with a weighted average interest rate of 4.65%.

Clayton: For the full year 2025, we continue to expect G&A to range from a penny.

Clayton: To range from flat to a penny per share lower as compared to 2024.

Clayton: Turning to our balance sheet and liquidity.

Clayton: We continue to maintain a strong balance sheet that provides us with the liquidity and flexibility needed to operate the business in an agile manner.

Clayton: At quarter end, we had total liquidity of over $300 million and our net debt to adjusted EBITDA ratio stood at three six times.

Clayton: Approximately 97% of our debt was at fixed rates with a weighted average interest rate of 465%.

Clayton Chun: With respect to our dividend, we paid a first quarter dividend of 22.5 cents per share on April 7, and our board declared a second quarter 2025 dividend of 22.5 cents payable on July 9. Turning to our guidance, as previously mentioned, we are raising our total company FFO guidance to a range of $1.17 to $1.23 per share, reflecting the better-than-expected first quarter land operations results. We are maintaining our guidance for same store and a wide growth of 2.4% to 3.2% as well as for FFO related to Siri and corporate of $1.11 to $1.16 per share. Despite our strong first quarter performance, our decision to maintain guidance for these metrics reflects an acknowledgment of the macroeconomic uncertainty affecting the overall market.

Clayton: With respect to our dividend, we paid our first quarter dividend of 22, and a half cents per share on April seven.

Clayton: Our board declared a second quarter of 2025 dividend of <unk> 22, and a half since payable on July at night.

Clayton: Turning to our guidance as previously mentioned, we are raising our total company <unk> guidance to a range of $1 17 to $1 23 per share, reflecting the better than expected first quarter land operations results were.

Clayton: We are maintaining our guidance for same store NOI growth of two 4% to three 2% as well as for ethical related to CRE and corporate of $1 11 to $1 16 per share.

Despite our strong first quarter performance our decision to maintain guidance for these metrics reflects an acknowledgement of the macroeconomic uncertainty affecting the overall market.

Clayton Chun: On our last call, I specifically referenced 50,000 square feet of industrial vacancy in our guidance. During the first quarter, we backfilled approximately 75% of that exposure by signing a lease at Kaka'ako Commerce Center. It is important to note that the tenant does have a contingency in the lease, but we are confident that we can resolve it later this year. Importantly, the space was economic on day one. Our guidance also assumes a penny of FFO related to internal or external growth. We have effectively achieved that with the execution of our ground lease at Maui Business Park.

Clayton: On our last call I, specifically referenced 50000 square feet of industrial vacancy in our guidance.

Clayton: During the first quarter, we back filled approximately 75% of that exposure by signing a lease at Takako Commerce Center.

Clayton: It is important to note that the tenant does have a contingency in the lease but we are confident that we can resolve it later this year.

Clayton: Importantly, the space was economic on day one.

Clayton: Our guidance also assumes a penny of <unk> related to internal or external growth.

Clayton: Have effectively achieved that with the execution of our ground lease at Maui business Park, and we're optimistic that we can compete more growth related deals in the year.

Clayton Chun: And we're optimistic that we can complete more growth related deals in the year.

Lance Parker: With that, I will turn the call over to Lance for his closing remarks. Thanks, Clayton. Together we achieved what I believe are great first quarter results.

Clayton: With that I.

Lance: I'll turn the call over to Lance for his closing remarks.

Lance: Thanks Nathan.

Speaker Change: Together, we achieved what I believe are great first quarter results I should however, acknowledge the current macroeconomic backdrop.

Lance Parker: I should, however, acknowledge the current macroeconomic backdrop. In these times of uncertainty, we are focusing on the things that we can control, being expeditious in lease negotiations and pre-purchasing tariff impacted construction materials for better pricing. We screen real time tenant health metrics so we can be responsive if necessary. Our needs-based retail portfolio is not resistant to market fluctuations, but it is more resilient.

Speaker Change: In these times of uncertainty we are focusing on the things that we can control being expeditious in lease negotiations and pre purchasing tariff impacted construction materials for better pricing.

Speaker Change: We screen real time tenant health metrics, so we can be responsive if necessary.

Speaker Change: Our needs based retail portfolio is not resistant to market fluctuations, but it is more resilient.

Lance Parker: As a 155-year-old company, A&B has navigated challenging times before, and I believe our experienced team has the skill to manage through this exposure and deliver long-term results.

Speaker Change: As a 155 year old company ANV has navigated challenging times before and I believe our experienced team has the skill to manage through this exposure and deliver long term results.

Lance Parker: Before ending my remarks, I'd like to give a special shout out to Tom Lewis, the legendary Reed CEO who just turned off the A&B board. Tom, thank you, or as we say in Hawai'i, mahalo bruddah, for your service to A&B, your guidance, and most importantly, your friendship.

Speaker Change: Before ending my remarks, I'd like to give a special shout out to Tom Lewis the legendary Reid CEO, who just turned off the A&P board.

Speaker Change: Tom Thank you or as we say in Hawaii Malo Greta for your service to A&D Your guidance and most importantly, your friendship with that I'd like to turn the call over to questions.

Unknown Executive: With that, I'd like to turn the call over to questions. Thank you.

Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the number one on your touch tone phone you will hear a problem that your hand has been raised should you wish to decline from there.

Unknown Executive: Ladies and gentlemen, we will now begin the question and answer session.

Unknown Executive: Should you have a question, please press star followed by the number 1 on your touchstone phone. You will hear a prompt that your hand has been raised.

Unknown Executive: Should you wish to decline from the polling process, please press the star followed by the number 2.

Speaker Change: Total process. Please press the star.

Speaker Change: Star followed by the number two if you are using a speaker phone. Please flip the handset before pressing any keys.

Unknown Executive: If you are using a speakerphone, please flip the handset before pressing any keys. And one moment, please, for your first question.

Speaker Change: And one moment. Please for your first question.

Gaurav Mehta: First question. It's from Gaurav Mehta from Alliance Global Partners. Go ahead. I wanted to talk about the self-storage transaction. I wonder if you could get some color on the transaction background. And then I think you also mentioned there's opportunity for equity investment in self-storage. I'd like to learn more on that aspect of the transaction as well.

Speaker Change: First question.

Speaker Change: It's from Manta.

Speaker Change: From Alliance Global Partners go ahead Sir.

Speaker Change: Uh huh.

I wanted to.

Speaker Change: Self storage.

Speaker Change: Transaction I Wonder I get some color on.

Speaker Change: Transaction background, and then I think you also mentioned there's opportunity for equity investment in south shortage.

Speaker Change: I'd like to learn.

Speaker Change: More on that aspect of the transaction as well.

Lance Parker: Yeah, hey Gaurav, it's Lance. Thanks for the question. So, you know, I'll start with maybe at a high level, you know, this was a really good deal for us. Importantly, I view this as kind of a strategic transaction where we were able to convert non-income producing land from Maui Business Park into long-term rental income, unlike what we've done in the past where it's been traditionally property sales. So that said, this was a 75-year ground lease, and we structured it with 45 years of known rent. That gave enough certainty to the tenant to be able to fill the rest of the capital stack in terms of the development.

Gaurav: Yes, Hey, Gaurav.

Lance: It's lance thanks for the question.

Lance: So I'll start with maybe at a high level. This was a really good deal for US importantly, I view this as kind of a strength strategic transaction, where we were able to convert non income producing land for Maui business Park.

Lance: Into long term rental income unlike what we've done in the past, where it's been traditionally property sales.

Lance: So that said.

Lance: This was a 75 year ground lease.

Lance: And we structured it with 45 years of known rent that gave enough certainty to the tenant to be able to fill the rest of the capital stack in terms of the development.

Lance Parker: And their plan is to build approximately 87,000 square feet of net rentable self-storage in that sub-market. So, you know, and I guess the immediate financial benefit to us is about a penny of FFO for 2025. So, you know, great strategy checks the boxes there. But in terms of financial benefits, you know, being able to turn on the FFO immediately was also, you know, hugely accretive for us. And I've spoken in the past about our commitment to the Hawaii-focused geography, but really sort of embracing the asset-diverse approach. And self-storage is something that I've mentioned as sort of a natural adjacency for us to consider going into in the future.

And their plan is to build approximately 87000 square feet.

Lance: Net rentable self storage in that sub market.

Lance: So.

Lance: And I guess, the immediate financial benefit to US is about a penny of <unk> for 2025, so great strategy checks the boxes, there, but in terms of financial benefits.

Lance: Being able to turn on the <unk> immediately what's also hugely accretive for us.

Lance: And I've spoken in the past about our commitment to the Hawaii focused geography, but really sort of embracing the asset diverse approach.

Lance: Self storage is something that I've mentioned as sort of a natural adjacency for us to consider going into in the future and so this was a nice way to do it we take a very secure position in a long term ground lease with the opportunity to invest on the development side and the capital stack. So if the nominal amount of equity that we're able to put in.

Lance Parker: And so this was a nice way to do it. We take a very secure position in a long-term ground lease with the opportunity to invest on the development side in the capital stack. So it's a nominal amount of equities that we're able to put in, about 20% of the equity capital stack. But again, a good opportunity for us in a joint venture type structure to enter into this asset.

Lance: 20% of the equity capital stack, but again, a good opportunity for us in a joint venture type structure.

Lance: To enter into this asset.

Gaurav Mehta: Okay, second question I have is around your comments around some of the macroeconomic uncertainty. I wanted to learn, you know, what have you seen and heard from your tenants so far? Have you seen any, any concerns or softness from your tenants and how you're feeling about your 2025 lease expiration?

Lance: Okay.

Lance: Second question I have is around your comments around some of the macroeconomic uncertainty.

Lance: I was wondering if you know what have you seen and heard from your time. So far have you seen any any concerns or softness from your tenants and how youre feeling about hey.

Lance: Our 2025 lease explorations.

Lance Parker: So, you know, I would say that, well, there's definitely some uncertainty around tariffs, you know, well, I guess I'll answer the question twofold. So first, specific to the question about tenants, we have not seen any sort of real time concerns or issues related to tenants. So, you know, we continue to screen sort of our real time metrics, which include weekly, you know, volume of weekly letter of intent. So registering and measuring tenant interest, we continue to screen on tenant sales. We're screening real time foot traffic to all of our centers and today those all remain positive.

Lance: So I would say that well.

Lance: While there is definitely some uncertainty around tariffs.

Lance: Well I guess I would answer the question twofold. The first specific to the question about tenants.

Lance: We have not seen any sort of real time concerns or.

Lance: Issues related to tenants. So we continue to screen sort of a real time metrics, which include.

Lance: Weekly volume of weekly letter of intent, so registering and measuring tenant interest.

Lance: We continue to screen on tenant sales were screening real time foot traffic to all of our centers.

Lance: And today those all remain positive.

Lance Parker: I could, you know, cite probably a couple of examples where maybe execution timelines have been extended, but these are really individual data points, nothing to form a trend line.

Lance: I could see.

Lance: <unk>, probably a couple of examples where maybe execution timelines have been extended but these are really individual data points nothing to form a trend line.

Lance Parker: And then the one sort of direct impact that we have started to see on the tariff side is in construction costs. And so we do have the bill to suit at Maui Business Park, we have been in discussions with others for some potential opportunities as well. And so to try to get ahead of that, to the extent that there are opportunities for us to pre-purchase materials specifically on the steel side to get pre-tariff type pricing, we're taking advantage of that.

Lance: And then the one for the direct impact that we have started to see on the tariff side is in construction cost and.

Lance: And so we do have the build to suit at Maui business Park, we have been in discussions with others for some potential opportunities as well.

Lance: And so to try to get ahead of that to the extent that there are opportunities for us to pre purchase materials, specifically on the steel side to get pre tariff type pricing, we're taking advantage of that.

Lance: Okay.

Lance Parker: Okay, and then then maybe lastly, as a follow up on the on the bill to suit, I did see that the construction completion moved to 1Q26 from 4Q25. Is that related to your comments around tariffs and macroeconomic uncertainty? No, that was really, you know, we broke ground late last year. And so once we started moving dirt on site, we had a better sense of what that timeline was going to look like. And realistically, just given the natural course of construction, it'll be completed in sometime in Q1 of 2026.

Lance: Okay, and then maybe now she has a follow up on the on the build to suit I did see that the.

Lance: The construction completion move to 126 from <unk> 45 is that related to your comments around tariffs and macroeconomic uncertainty.

Lance: No that was really we broke ground late last year and so once we started moving dirt on site, we had a better sense of what that timeline, we're going to look like.

Lance: And realistically just given the natural course of construction it.

Lance: It will be completed sometime in Q1 of 2026.

Gaurav Mehta: Okay, thank you.

Okay. Thank you that's all I had.

Unknown Executive: That's all I had. Okay, thanks for the question.

Lance: Okay. Thanks for the question.

Alexander Goldfarb: All right, for your next question, it's coming from Alexander.

Speaker Change: Alright for your next question is coming from Alexander.

Alexander Goldfarb: Goldfarb from Piper Sandler Please go ahead. Bye. Okay. Good morning out there. I think it's still good morning. So, just a few questions here.

Alexander Goldfarb: Goldfarb from Piper Sandler.

Speaker Change: Please go ahead.

Alexander Goldfarb: Okay.

Speaker Change: Good morning out there I think its still good morning.

Alexander Goldfarb: So.

Alexander Goldfarb: Just a few questions here first off just to go back on the tariff.

Alexander Goldfarb: First off, just to go back on the tariff discussion. Here's the what is the leasing discussions, or when you talk to the tenants, are people, is it just sort of like a cocktail conversation? Or are our tenants legitimately having concerns about either future leasing plans, or what may happen to their business, as far as cost of running their operations? I'm just trying to understand if it's just, you know, theoretical and just banter, or if people are actually having a practical impact to the way they lease, or are thinking about ordering or opening stores.

Alexander Goldfarb: Okay.

Alexander Goldfarb: Is that what is the.

Alexander Goldfarb: The leasing discussions or when you talk to the tenants are people is it just sort of like.

Alexander Goldfarb: Cocktail conversation or are our tenants legitimately, having concerns about either future leasing plans or what may happen to their business as far as cost of running their operations I'm just trying to understand is it just.

Alexander Goldfarb: Theoretical lens, just banter or people are actually having a practical impact to the way they lease or are thinking about ordering or opening stores.

Alexander Goldfarb: Yeah.

Lance Parker: It's a great question, Alex. And this is Lance. Now, it's, we're in obviously some very uncertain times. And for us, sort of in real time, you know, we're trying to sort of differentiate between soft data and hard data. So certainly on the soft data side, there's a lot of talk, there's concern. But as I mentioned earlier, on the hard data side, we're not really seeing any real time impacts. Leasing activities still remains robust. Again, I can think of a couple of examples where signing of leases took a little longer than we might have expected, but really hard to say whether that was tariff related.

Lance: It's a great question Alex this is lance.

Lance: We're in obviously, some very uncertain times and for us sort of in real time, we're trying to sort of differentiate between soft data and hard data. So certainly on the soft data side. There is a lot of talk there's concern.

Lance: But as I mentioned earlier on the hard data side, we're not really seeing any real time impact.

Lance: Leasing activity still remains robust.

Lance: Again, and I can think of a couple of examples where signing of leases took a little longer than we might have expected, but really hard to say whether that was tariff related is there exposure certainly going forward, but in terms of what we're seeing in real time, we really haven't seen that flow through yet.

Lance Parker: Is there exposure? Certainly going forward, but in terms of what we're seeing in real time, we really haven't seen that flow through yet.

Alexander Goldfarb: Okay, and then as we look to the guidance, I think you raised it sort of three cents, but you had a six. I can understand, you know, some caution. Yeah, sorry, everyone's doing the same. But that seems like a lot of caution, doesn't it? Well, you know, we've taken some steps to try to differentiate between our overall FFO and our CRE and corporate related FFO, which really focuses just on the core part of the business. And we did have strong results in Q1. You know, for a variety of reasons, we felt it was appropriate to maintain guidance there.

Lance: Okay.

Lance: And then as we look to the guidance I think you're right, it's sort of three cents, but you had a 6% gain.

Lance: And I understand you know some caution.

Lance: Yes, sorry, everyone's doing the same but.

Lance: Lot of caution doesn't it.

Speaker Change: Well, we've taken some steps to try to differentiate between our overall <unk> and our CRE and corporate related <unk>, which really focuses just on the core part of the business.

Speaker Change: And we did have strong results in Q1.

Speaker Change: For a variety of reasons, we felt it was appropriate to maintain guidance. There. We did have a bigger beat in terms of expectations on the land upside and so similarly, we felt it was appropriate to flow that through and that's where the <unk> is really coming from we've talked in the past about land ops and I think our midpoint when we gave.

Lance Parker: We did have a bigger beat in terms of expectations on the land off side. And so similarly, we felt it was appropriate to flow that beat through. And that's where the three cents is really coming from. You know, we've talked in the past about land ops. And I think our midpoint when we gave initial full year guidance was at about three cents attributed to that side of the business. We obviously came in stronger than that. And it's always a little difficult for us to predict, but it is still a focus of ours. And so I was really pleased to be able to see that performance.

Speaker Change: <unk> initial full year guidance was at about <unk> attributed to that side of the business.

Speaker Change: We obviously came in stronger than that and it's always a little difficult for us to predict but it is still a focus of ours and so I was really pleased to be able to see that performance.

Lance Parker: And I think we're trying to sort of flow that through for the rest of the year.

I think we're trying to sort of flow that through for the rest of the year.

Lance Parker: Right, but you also added Penny from LA. On the development, so it just seems like the guidance increase is. overly conservative based on what you executed in the first quarter, plus Yeah, look, it's a it's a fair observation, Alex, I would say on that penny for development, we did, and I'm pretty sure I mentioned this in our first quarter call, that in our full year guidance, we were carrying a penny for growth in the guidance. And so effectively, what we've been able to do with this dxd deal is cover that nut. So feeling pretty good about the fact that we were able to in the first quarter sort of cover that penny.

Speaker Change: Right, but you also added Anthony.

Speaker Change: Yes.

Speaker Change: On the development. So it just seems like the guidance increase is.

Speaker Change: Overly conservative based on what you executed in the first quarter plus the incremental investment and we're only at the start of the year.

Alexander Goldfarb: Yes look it's a fair observation, Alex I would say on that Penny for development.

Alexander Goldfarb: It did and I'm pretty sure I mentioned this in our first quarter call that in our full year guidance, we were carrying a penny for growth in the guidance and so effectively what we've been able to do with this dx CDO as cover that nut.

Alexander Goldfarb: So feeling pretty good about the fact that we were able to in the first quarter sort of cover that Penny and then I would say just sort of forward look.

Lance Parker: And then I would say, you know, just sort of forward look On acquisitions, it's, you know, we're still seeing dislocation in the market, but our investment team is very active. We're looking at a lot of other opportunities. And so I am hopeful that we'll be able to place additional capital going forward. We're just not going to carry it in the guidance.

Alexander Goldfarb: On acquisitions, it's we're still seeing dislocation in the market, but our investment team is very active we're looking at a lot of other opportunities and so I am hopeful that we'll be able to place additional capital going forward, we're just not going to carry it in the guidance. So Alex. This is Clayton just to follow up on what <unk> is saying the Maui business Park.

Clayton Chun: So Alex, this is Clayton. Just to follow up on what Lance is saying, the Maui Business Park plot where we had executed that ground lease, we had in connection with this lease, we transferred it from land operations into CRE. And so the penny that's being referenced is resulting from this deal. It's going to be applicable towards CRE and corporate FFO.

Alexander Goldfarb: But where we had executed that ground lease we had in connection with this this lease we've transferred it from land operations into CRE.

Alexander Goldfarb: CRE and so the penny that's being referenced as.

Alexander Goldfarb: Resulting from this deal it's going to be applicable towards CRE incorporate SSO.

Alexander Goldfarb: Okay, and then just finally, just point of clarification, you mentioned that you that you signed, you addressed 75% of the 50,000 square feet of industrial vacancy outlined in the fourth quarter, but you mentioned something about the tenant having some contingency. Is that contingency on the 75% of space leased? So perhaps it's not time sealed delivered or what is this contingency reference?

Alexander Goldfarb: Just wanted to make sure.

Alexander Goldfarb: That was understood. Okay and then just finally just point of clarification, you mentioned that you're that you've signed you addressed 75% of the 50000 square feet of industrial vacancy.

Alexander Goldfarb: Outlined in the fourth quarter, but you mentioned something about the tenant having some contingency is that contingency on the 75% of the space leased so perhaps it's not.

Alexander Goldfarb: <unk> delivered or what is this contingency referencing.

Kit Millan: Hi, Alex, this is Kit. So we leased two full floors at Kaka'ako Commerce Center. And that represents over 60,000 square feet of space. And it backfills both the storage facility we referenced previously, as well as the office space on the sixth floor that had been vacant for about two years, that we talked about quite a bit earlier. And it's a very important deal for both A&B and the tenant, so we moved really quickly to effectuate that lease, and it went economic immediately. Now there are some landlord and tenant obligations around capital that we need to resolve, but we're pretty confident we can get there.

Alexander Goldfarb: Hi, Alex this is Curt.

Curt: We leased two full floors at <unk> Commerce center and that represents over 60000 square feet of space.

Curt: And it backfill as both the storage facility, we referenced previously as well as the office space on the sixth floor that had been vacant for about two years that we talked about quite a bit earlier.

Curt: And it's a very important deal for both A&P and the tenants. So we move really quickly to effectuate that lease and it went economic immediately now there are some landlord and tenant obligations around capital that we need to resolve but we're pretty confident we can get there and the tenants already building out that space demonstrating their commitment to the deal.

Kit Millan: And the tenant is already building out that space, demonstrating their commitment to the deal. Okay, so just to put that into context, Alex, that the backfield does include that deal with the contingencies. And while we do have a high degree of confidence that we'll be able to work through them, if for whatever reason we couldn't, that would basically reverse out from the occupancy. Okay, just so I'm clear, did I confuse it? Is this the industrial vacancy you were talking about? Or this is a different, this is also? So, so about 30,000 plus square feet of that was in the original guidance that we talked about, and then the additional amount was that office space on the sixth floor.

Okay. So just to put that into context Alex.

Curt: The backfill. It does include that deal with the contingencies and while we do have a high degree of confidence that we'll be able to work through them.

Curt: For whatever reason we couldn't.

Curt: That was the biggest basically reverse out from the occupancy.

Curt: Okay, just so I'm clear did I see.

Speaker Change: Travel vacancy you were talking about and this is a different this is office.

Curt: Yeah.

Curt: So.

Curt: About 30000, plus square feet of that was in the original guidance that we talked about and then the additional amount was that office space on the sixth floor, it's still in the industrial portfolio, but it was build out his office originally.

Alexander Goldfarb: It's still in the industrial portfolio, but it was built out as office originally. Awesome. Okay.

Curt: Okay listen thank you very much.

Unknown Executive: Listen, thank you very much. Thanks, Alex.

Curt: Thanks, Alex.

Rob Stevenson: Alright, and for the next question, we have Rob Stevenson from Janney. Go ahead, sir. Afternoon, Lance, back to the tariff question, how big of a spike have you seen or are expecting to see on building materials? And what is the ability that you and others have to really stockpile, you know, wood, steel, other items, for, you know, given the, you know, ability there at Maui Business Park and other places to store Yeah, hey, Rob. You know, It's kind of hard to answer on a Ford look. I guess, you know, some real time examples, steel, for example, we saw about an 8% increase, and we were able to pre-price based on that and to lock that in.

Speaker Change: Alright and forward. The next question, we have Rob Stevenson.

Curt: Jamie.

Speaker Change: Go ahead Sir.

Speaker Change: Good afternoon, let's back to the tariff question, how big of a spike have you seen or are expecting to see on building materials and what is the ability that you and others have to really stockpile.

Speaker Change: Would deal other items.

Speaker Change: Given the ability there at Maui business Park, and other places to store stuff.

Speaker Change: Yes, Hey, Rob.

Speaker Change: It's.

Speaker Change: It's kind of hard to answer on a forward look I guess some real time examples steel for example, we saw about an 8% increase.

Speaker Change: And we were able to pre price based on that and to lock that in.

Lance Parker: Obviously, here in Hawaii, we also have the logistical challenge of getting materials. And so one of the things we've been able to do is to buy, I guess anyone could, but we've been buying and then just storing on site, just to take advantage of that. And it's, you know, again, kind of forward looking, it's really tough to say what sort of price increases we might expect on what materials, but we're trying to take advantage any way we can.

Speaker Change: Obviously here in Hawaii, we also have the logistical challenge of getting materials.

Speaker Change: And so one of the things we've been able to do is is to buy I guess anyone could but we've been buying and then just storing onsite just to take advantage of that and it's again kind of forward looking it's really tough to say what sort of price.

Speaker Change: Increases we might expect on what materials, but we're trying to take advantage of any way we can.

Lance Parker: Obviously, sometimes it requires us to make commitments sooner in the development process or the TI build out process that we might otherwise do. And I think like a lot of people, we're having conversations with both our distributors, as well as our tenants in trying to sort of share in that risk profile. And so I'm thinking of one example where we did have a tenant who was willing to basically make a commitment up front to try to get that that cost down. And so we were able to, you know, sort of share in that risk profile, but you know, like, like everyone else, we're just doing what we can to try to Try to mitigate that as much as possible.

Speaker Change: Obviously, sometimes that requires us to make commitments sooner in the development process or the Ti build out process that we might otherwise do.

Speaker Change: And I think like a lot of people were having conversations with both.

Speaker Change: Our distributors as well as our tenants and trying to sort of share in that risk profile and so I'm thinking of one example, where we did have a tenant.

Speaker Change: Who was willing to.

Speaker Change: Basically make a commitment upfront is trying to get that cost down.

Speaker Change: And.

Speaker Change: So we were able to sort of share in that risk profile, but like everyone else. We're just doing what we can to try to.

Speaker Change: Try to mitigate that as much as possible.

Speaker Change: Okay, and then how active given all the turmoil with both rates as well as the stock market. How active is the Hawaii retail industrial transactional market been year to date in terms of deals either completed or stuff. That's out there in the marketplace today, how would you characterize that versus the last cut.

Speaker Change: <unk> of years through.

Speaker Change: Through the beginning of May.

Lance Parker: Yeah, so not a lot that I could point to in terms of actually closed transactions. But I had mentioned earlier that our investment team is very active right now.

Speaker Change: Yeah.

Speaker Change: So not a lot that I could point to in terms of actually close transactions.

But I had mentioned earlier.

Speaker Change: That our investment team is very active right now so there are a lot of opportunities that were circling and.

Rob Stevenson: So there are a lot of opportunities that we're circling and, you know, The reason I said I'm, you know, sort of hopeful, maybe even optimistic that we'll be able to land a couple of deals sometime in the remainder of the year. Okay.

Speaker Change: The reason I had said.

Speaker Change: Hopeful maybe even optimistic that we'll be able to land a couple of deals sometime in the remainder of the year.

Rob Stevenson: And a point of clarification, the storage development, is that on the entire five acres there? Or is there some piece of that left over for you to do something else with? Is that ground lease the entire five acres? It's for the entire five acres. Yes. Okay.

Speaker Change: Okay.

Speaker Change: A point of clarification the storage development is that on the entire five acres there or is there some piece of that leftover for you to do something else with us that ground lease the entire five acres.

Speaker Change: The entire five acres, yes, Okay, and then a couple for Clayton the 30 cents of <unk> related CRE in corporate and <unk> 25.

Rob Stevenson: And then a couple for Clayton, the 30 cents of FFO related CRE incorporated 1Q25. Any expected drags on that as we move throughout the year? Any notable move outs where occupancy is going to fluctuate down temporarily, etc? Anything else that sort of hits that number and produces any type of material drag as we think about the remainder of 25 at this point?

Speaker Change: Any expected drags on that as we move throughout the year any notable move outs, where occupancy is going to fluctuate down temporarily et cetera, anything else that sort of hits that number and produces any type of material drag as we think about the remainder of 'twenty five at this point.

Clayton Chun: Hey, Rob. I would say that with respect to what what's known, there is no known blitz that we're anticipating due to move outs or the like. So So as far as that JVN come that that as I was mentioning in the prepared remarks, it was somewhat of a of a A one time type of event with respect to the resolution of of those contingencies. And so we're not anticipating there to be anything else unusual. That's not to say that that. There wouldn't be variability, but we're not anticipating anything over the balance of the year. Okay.

Rob: Hey, Rob.

Rob: I would say that with respect to what what's known there is no known.

Blips that were anticipating due to move outs or the like so.

Rob: Okay. That's helpful. And then lastly, the $3 million of JV income is there any else anything else abnormal that you're expecting in that line over the remainder of 'twenty five or does that lines.

Rob: Go back to the 700000 million dollars a quarter, it's typically been over the remainder of the year or is there something else coming through there as.

Rob: As we think about the remainder of 2005.

Rob: So as far as that JV income.

Rob: As mentioned in the prepared remarks, it was somewhat of a.

Rob: Sure.

Rob: A one time type of event with respect to the resolution of that.

Rob: Of those contingencies and so we're not anticipating there to be.

Rob: Anything else unusual alright, thats not to say that that.

Rob: There wouldn't be variability, but we're not anticipating anything over the balance of the year.

Rob: Okay. Thanks.

Mitch Germain: Thanks, guys. Appreciate the time. Have a good night.

Rob: Thanks, guys I appreciate the time and have a good night.

Speaker Change: Thanks, Rob.

Mitch Germain: All right, we are down for the last question. As a reminder, if you wish to ask a question, please press star and then the number 1. And for the next one, we have Mitch Germain from Citizens Bank. Go ahead, sir. Thank you. Let me ask Rob's question. First of all, guys, congrats on the quarter. Clayton, let me ask Rob's question differently. Are there any other kind of legacy issues that could be recollected that... Could be, you know, in the numbers going forward or was that just a one-off situation?

Rob: Alright.

Rob: Down for the last question.

Rob: Minder, if you wish to ask a question. Please press number star and then the number one alright.

Rob: Alright.

And for the next one we have Mitch Germain from citizens Bank go ahead Sir.

Speaker Change: Thank you let me ask Rob's question first of all guys congrats on the quarter.

Speaker Change: Let me ask Rob's question differently are there any other kind of legacy issues that could be recollected.

Speaker Change: Could be.

Speaker Change: First of all forward or was that just a one off situation.

Mitch Germain: Hey Mitch, it's Lance. I'd say there's always that possibility, you know, we want to sort of leave that door open, in that this is an area of the business that we're looking to simplify out. So there are some opportunities there. It's very difficult to predict when or if they may occur. But it's certainly possible. But just to support Clayton's comments in terms of our forward look over the next three quarters, we're not anticipating anything out of the ordinary. Gotcha. When you guys originally put your guidance together, was there any anticipation of external growth that was included in those numbers?

Lance: Hey, Mitch its lance.

Speaker Change: I would say there is always that possibility, we wanted to sort of leave that door open and that this is an area of the business that we're looking to simplify out. So there are some opportunities there.

Speaker Change: Very difficult to predict when or if they may occur, but it's certainly possible, but just to support <unk> comments in terms of our forward look over the next three quarters were not anticipating.

Speaker Change: Anything out of the ordinary.

Speaker Change: Got you.

Speaker Change: When you guys originally put your guidance together.

Speaker Change: Was there any anticipation of.

Speaker Change: External growth that was included in those numbers or.

Mitch Germain: Or is Maui Business Park, the self-storage ground lease, is that just additive? How should we think about that?

Speaker Change: Is Maui business Park, the self storage ground leases that just additives.

Speaker Change: How should we think about that.

Clayton Chun: Yeah, Mitch. Hi, this is Clayton. So with respect to the growth and our guidance, we did have a penny of FFO for the 2025 year. And so effectively, what happens as a result of this Maori Business Park deal that we just closed, that covers it. And so we do have obviously the balance of the year. Hopefully, we will see other opportunities be realized. And so We'll see how it plays out. And I would just add, we certainly have aspirations of placing additional capital later this year. But of course, as the months go on, the impact to FFO for the calendar year is going to diminish.

Speaker Change: Yes, Mitch Hi, this is Clayton so with respect to the growth in our guidance. We did have a penny of <unk> for the 2025 year.

Speaker Change: So effectively what happens as a result of this.

Speaker Change: Maui business Park deal that we just closed that covers that and so we do have obviously the balance of the year hopefully we will see other opportunities.

Speaker Change: Realized and so.

Speaker Change: We'll see how it plays out.

Speaker Change: And I would just be certainly have.

Speaker Change: Now I will just add we certainly have aspirations of facing additional capital later this year, but of course as the months go on the impact of <unk> for the calendar year is going to diminish.

Mitch Germain: And that's why we felt like the penny was the right number when we put together our initial guidance. Gotcha.

Speaker Change: And that's why we felt like the Penny was the right number when we put together our initial guidance.

Speaker Change: Gotcha.

Mitch Germain: Last one for me, Singapore. Obviously, strong 1Q. You got the leasing, you got some leasing done in your industrial portfolio.

Speaker Change: One for me.

Speaker Change: Obviously strong lung Q.

Speaker Change: You got the leasing you've got some leasing done in your industrial portfolio.

Mitch Germain: But, you know, obviously your guidance implies a deceleration, so... Is there anything specific that you want to call out as to what could be driving a reduced pace of growth in the back part of the year?

Speaker Change: Obviously your guidance implies a deceleration so.

Speaker Change: Is there anything specific that you want to call out as to what could be.

Speaker Change: Driving.

Speaker Change: A reduced pace of growth in the back part of the year.

Lance Parker: So I'll take this from a big picture and then, you know, I'll ask Clayton and Kit to add any additional color they may want to. We had identified up front a handful of very important leases and other operational milestones that we needed to hit. That was factored into our full year guidance. I know that Clayton was purposeful in comments in providing that full year guidance initially about the fact that the earnings may be episodic throughout the year. But, you know, this is how we looked at that full year. And so really strong results. Some of that, quite frankly, was just kudos to the team for being able to tackle a lot of the things that we identified over the course of the year in Q1.

Speaker Change: So I'll take that from a big picture and then ill.

Speaker Change: Escalated and kept add any additional color they may want to.

Speaker Change: We had identified upfront.

Speaker Change: Handful of very important leases and other operational milestones that we needed to hit that was factored into our full year guidance.

Speaker Change: No that Clayton was purposeful and comments and providing that full year guidance. Initially about the fact that the earnings may be episodic throughout the year, but this is how we looked at the full year.

Speaker Change: And so really strong results some of that quite frankly was just kudos to the team for being able to tackle a lot of the things that we identified over the course of the year in Q1, So I would describe as less of slowing for the remainder of the year as opposed to just sort of pulling forward some of them.

Clayton Chun: So I would describe it less of slowing for the remainder of the year, as opposed to just sort of pulling forward some of the things that we had identified into Q1. And just to add on to what Lance is saying, what we also explicitly stated in the prepared remarks is the fact that the guidance does acknowledge the fact that we have this uncertainty overhang. And so we did take that into consideration as we as we settled in on on this guidance.

Speaker Change: The things that we had identified into Q1.

Speaker Change: And just to add on to what Lance is saying well we also.

Speaker Change: <unk> stated in the prepared remarks is the fact that the guidance.

Speaker Change: Does acknowledged the fact that we have this uncertainty overhang and so we did take that into consideration as we as we settled in on on this guidance.

Speaker Change: Yeah.

Mitch Germain: Great.

Unknown Executive: Appreciate your time guys.

Speaker Change: Great.

Ed: Appreciate your time guys. Thank you so much okay. Thanks Ed.

Unknown Executive: Thank you so much.

Unknown Executive: Okay. Thanks.

Clayton Chun: Alright, since there are no further questions at this time, I will now turn the call over to Clayton Chun. Please continue. Thank you, operator. And thank you all for joining us today.

Speaker Change: Alright.

Speaker Change: Since there are no further question at this time I will now turn the call over to Clayton Chen.

Please continue sir.

Clayton Chen: Thank you operator, and thank you all for joining US today. If you have any follow up questions. Please feel free to call us at 808, 5% to $584 75 or E Mail us at Investor Relations at <unk> Dot Com Aloha and have a great day.

Clayton Chun: If you have any follow up questions, please feel free to call us at 808-525-8475 or email us at InvestorRelations at abhi.com. Aloha and have a great day.

Unknown Executive: Alright, ladies and gentlemen, this concludes today's conference call. Thank you for your participation.

Clayton Chen: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.

Clayton Chen: Okay.