Q1 2025 H&R Real Estate Investment Trust Earnings Call
Good morning, and welcome to H No real estate investment Trust 2025 first quarter earnings conference call before beginning the call each and I would like to remind listeners that certain statements, which may include predictions conclusions forecast or projections and then amongst that follow may contain forward looking information.
The current expectations of management regarding future events or performance and speak only as of today's date.
Forward looking information requires management to make assumptions or rely on certain material factors and are subject to inherent risks and uncertainties and actual results could differ materially from the statements and the forward looking information.
In discussing <unk> financial and operating performance and then responding to questions. We may reference certain financial measures, which do not have any meaning recognized or standardized and I have a rash of Canadian generally accepted accounting principles and are therefore unlikely to be comparable to similar measures presented by other reporting of choice.
non-GAAP measures should not be considered as alternatives to net income are comparable metrics determined in accordance with the idea of furbish as indicators.
That's great.
Liquidity cash flows and profitability.
H guys management uses these measures.
Speaker Change: I think Duane.
Yeah.
Speaker Change: But I'm just curious.
Speaker Change: Okay.
Speaker Change: But that's starting to take cost.
Speaker Change: Got it.
Speaker Change: Yeah.
Speaker Change: Statements.
Speaker Change: And then just switching.
Speaker Change: No.
Speaker Change: Yeah.
Speaker Change: She started to ease the non-GAAP financial measures.
Speaker Change: Okay.
Speaker Change: Any public funds it could be.
Speaker Change: But right at Www Dot C plus dot com.
Speaker Change: I would now like to introduce Mr. Tom Hofstetter, Chief Executive Officer of H&R Beach. Please go ahead Mr hostile.
Speaker Change: Good morning, everyone and thanks for joining us.
Speaker Change: Passive.
Speaker Change: Yeah.
Speaker Change: I liked it.
Speaker Change: Pat.
Speaker Change: Uh huh.
Speaker Change: Power.
Speaker Change: Thanks, a lot.
Speaker Change: Thank you Tom and good morning, everyone.
Speaker Change: Okay.
Speaker Change: And increases in operating results.
Speaker Change: Unless stated otherwise alright referenced three months.
Speaker Change: Most of the first 2020 compared to the three months ended March 31.
Speaker Change: 44.
Speaker Change: 2020.
Speaker Change: We sold $429 million.
Speaker Change: Thank you.
Speaker Change: 25 with eight retail.
Speaker Change: For $60 million.
Speaker Change: 70%.
Speaker Change: I suppose that you are now.
Speaker Change: Right.
Overall, given the headwinds we faced multifamily construction.
Speaker Change: After the market inflation.
Speaker Change: Inflation was a tariff war general market uncertainty, we are very pleased with our results.
Speaker Change: Thanks, a lot.
Speaker Change: Perfect.
Speaker Change: Property net operating income or cash basis.
Speaker Change: Great.
Speaker Change: And between Us.
Speaker Change: The dental segment.
Speaker Change: Net operating income on a cash basis decreased five 8% in U S dollar.
Speaker Change: The news.
Speaker Change: Residential markets.
The positive immigration.
Speaker Change: Okay. That's helpful.
Speaker Change: Yes.
Speaker Change: Emily will provide more detail shortly.
Speaker Change: Our office segment same property net operating income.
Speaker Change: Increased one 2%.
Speaker Change: Primarily due to the strengthening of the U S dollar.
Speaker Change: There's no straight back to the office policies from different companies and it seems clear that for us.
Speaker Change: Getting back to the office, which is talking about the sector as a whole.
Speaker Change: Our office portfolio of 16 properties, which includes four properties.
Speaker Change: Resulting opportunities now.
Speaker Change: 18%.
Speaker Change: Total portfolio by value.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: First revenue.
Speaker Change: Great.
Speaker Change: So the quality.
Speaker Change: Office properties.
Speaker Change: Also occupancy.
Speaker Change: Hum.
Speaker Change: And $96.
Speaker Change: Average remaining lease term of five.
Speaker Change: Hey, guys.
Speaker Change: Hello.
Speaker Change: At March 31st 2020 comprises.
Speaker Change: Okay.
Speaker Change: Overall portfolio.
Speaker Change: Retail.
Speaker Change: Property.
Speaker Change: Operating income increased eight 2% due to occupancy.
Speaker Change: And for them.
Speaker Change: Tenants in our retail portfolio predominantly.
Speaker Change: At a portfolio.
Speaker Change: Yeah.
Speaker Change: Same property net operating income increased 4%.
Speaker Change: Great.
Speaker Change: Hi, Patrick.
Speaker Change: 65 property at March 31, 2025.
Speaker Change: Approximately 80%.
Speaker Change: Yeah.
Speaker Change: It continues to perform well.
Speaker Change: Since the announcement of a substitute.
Charles: Hey, Charles.
Speaker Change: Industrial revenues increased from $7 17.
Speaker Change: At June 30 of 2021 to $9 50.
Speaker Change: <unk> per square foot.
Speaker Change: March 31 2025.
Speaker Change: In addition, industrial properties located.
Speaker Change: 9% of H&R industrial.
Speaker Change: And that's the truth.
Speaker Change: 'twenty one.
Speaker Change: Compared to six 9%.
Speaker Change: Oh yeah.
Speaker Change: 2020.
Speaker Change: Headline <unk> per unit.
Speaker Change: For Q1, 2025 was $29 seven.
Speaker Change: The statements.
Speaker Change: We're pleased with these results.
Speaker Change: $499 million of real estate.
Speaker Change: Yes.
Speaker Change: Since January one 2024.
Speaker Change: She remains strong desktop access of the written questions.
Speaker Change: For 2025 or 44, 1%.
Speaker Change: With a healthy nine three times.
Speaker Change: Liquidity at March 2025.
Speaker Change: $170 million.
So the unencumbered properties.
Speaker Change: $4 5 billion.
Speaker Change: Unencumbered assets.
Speaker Change: The coverage ratio was two <unk>.
Speaker Change: Three times.
Speaker Change: Martin.
Speaker Change: Got it.
Speaker Change: Yes.
Emily: And with that I will turn the call over to Emily.
Emily: Thanks, Larry and good morning, everyone.
Emily: I am happy to share.
Emily: For our multifamily platform and some operational highlights.
Emily: Our first quarter results have aligned with our expectations. Our multiple multifamily platform continues to benefit from strong demand as evidenced by stable resident retention and a delta to homeownership.
Emily: Italy continued job and wage growth further demonstrates strengthening drivers for our industry.
Emily: Rather than opining on headlines we remain focused on the fundamentals of our business and continue to create NOI expansion. They were already repositioning opportunities and other innovative value add strategies that add to our bottom line.
Emily: Given the declining levels of new supply ahead, and growing demand in our market, we are well positioned for substantial growth and value creation and coming year.
Emily: Same property net operating income from residential properties in U S dollars decreased by 82 basis points for three months ending March 31, 2025 compared to the respective 2024 period, primarily due to a decrease in average rental rates and higher property operating costs from H&R Sunbelt property.
Emily: This was partially offset by rental growth from H&R Gateway City properties.
Emily: Same as that occupancy ended the quarter at 94, 4%, a 60 basis point decrease over the fourth quarter and no change from Q1 of 2024.
Emily: They met that occupancy in the Sunbelt decreased 70 basis points in Q1 to 93, 7% over the fourth quarter.
Emily: Jackson Park with 98, 9% occupied with 75% retention.
Emily: Sunbelt continues to show strong demand metrics and supply deliveries have passed their peak.
Emily: Our sunbelt resident retention was 57% in Q1 and achieved a 60% resident retention in April.
Emily: Blended lease trade out for the Sunbelt markets were negative two 1% in the first quarter, an improvement of 380 basis points over fourth quarter <unk>.
Emily: Q2 blended trade out our positive 10 basis points today.
Emily: These results demonstrate the worst is behind us and we will continue to see improvement at supply decreases throughout the year.
Emily: Based on a third party appraisal and a handful of sunbelt sales comp we have maintained our fair market value Sunbelt cap rate at $4 96, and believe the rate is appropriate and supported cap.
Emily: Cap rates are expected to remain low relatively speaking for institutional quality assets in the Sun belt with capital flows interested and focused on long term heavy sunbelt multifamily allocation.
Emily: On the development front, Landstar, Westwood and Dallas, Texas continues to lease well despite the record level of deliveries in Dallas.
Emily: The community is currently 65, 4% occupied and 70% leased the.
Emily: The property was completed on time and on budget.
Emily: Also in Dallas, Texas Land tower in Midtown is currently 58, 6% occupied and 62, 6% leased.
Emily: Both properties are leasing well with an average monthly velocity at 24 leases per month, which is above industry report farm market and a testament to the superior product and unparalleled amenities our development team has delivered.
Emily: Midtown was also completed on time and on budget.
Emily: Read it properties are progressing well and remain on budget with completion expected mid 2026.
Emily: Blantyre currently has an additional nine development project in the Sun belt pipeline totaling over 2900 suites at H&R ownership interest with multiple sites ready and prepared for construction, we are progressing through different phases of design, drawing and permitting on the remainder of our sunbelt development pipeline and current.
Emily: We have four projects fully for a minute.
Emily: In summary Lane towers platform has demonstrated remarkable resilience and performance relative to our peers.
Emily: Our teams have navigated supply challenges and remain laser focused on innovative practices, including centralization property wide Wi Fi opportunities and AI applications that enhance NOI margin and continue to yield positive results.
Tom Hofstetter: I want to extend my gratitude to our incredible teams, whose dedication to excellence and innovation has been pivotal in achieving these outcomes and with that I pass a lot of the conversation to Tom.
Operator.
Tom Hofstetter: Thank you.
Tom Hofstetter: Okay.
Tom Hofstetter: Are we ready for questions at this time.
Tom Hofstetter: Yes, we are.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the one on your Touchtone phone you will hear a prompt that you had has been raised.
Speaker Change: Should you wish to decline from the polling process. Please press star followed by the <unk> and if you are using a speaker phone. Please lift the handset before pressing any keys.
Speaker Change: The first question comes from Mario stomach at Scotiabank. Please go ahead.
Speaker Change: Hi, good morning.
Speaker Change: Just maybe starting off with.
Speaker Change: Emily Atlanta Tower can you just I may have missed the numbers, but can you just go through what the blended lease spreads were.
Speaker Change: In Q1, where are they kind of stand so far in Q2, and what the expectation is in terms of them coming.
Speaker Change: Sustainably positive.
Speaker Change: Timing wise going forward.
Mario: Morning, Mario that's a great great question. So our same store blended trade outs were negative one four.
Mario: With the new lease negative seven three and renewals were three three.
Mario: For the Sun belt, specifically, the new lease trade outs were negative five six which was an improvement it was 13, 8% in the fourth quarter.
Mario: And renewals were $3, three which is an increase from two 2% in the fourth quarter. So the blend and sunbelt alone were negative $2 one.
Mario: Compared to a negative $5 nine so.
Mario: We are positive 10 basis points in the Sun belt as of.
Mario: Yesterday so.
Mario: We still have some headwinds ahead of us on the supply you know supply is expected to be about 75000 units.
Mario: <unk> 24, and 25 with pretty heavily in Q1, and Q2, and then drops off in Q3 and Q4. So I still maintain that I think will still maybe come in a little bit negative in Q2 and that will start being positive in Q3 and Q4.
Mario: Got it okay. So no no real change from three.
Mario: Three months ago.
Mario: Yeah, our renewals are a little bit better than what I had anticipated.
Mario: Our retention is better than ever we're real pleased with the 60% retention in April so.
Mario: And we've already closed out April above a 3% renewal and we have four four and it's still really early for our May Army for our June.
Mario: But theyre coming in around 5% so.
Mario: Definitely see momentum picking up but still on the same cadence that I had originally anticipated that Q3, and Q4 going to be really where we've seen some pick up.
Speaker Change: Got it Okay. My second question is maybe just for Tom on.
Speaker Change: Capital recycling, specifically asset sales I think in the press release.
Speaker Change: And I highlighted.
Speaker Change: Perhaps a desire to do more transaction volume, but Larry kind of lose my read of the factors that may be preventing that in the short term. So could you just give us an update in terms of what your thoughts are and what if anything has changed with respect to timing on echo.
Speaker Change: And some of the other initiatives.
Speaker Change: One.
Speaker Change: There is no news that has as far as the Chevron has tissue goes we expect it to go to the courts in June with a resolution sometime in September we're looking to put that behind us I think with the market doesn't like about that is the uncertainty once a certainty. We can actually then go forward with something.
Speaker Change: We can sell it at that point in time until that point in time, we really can't do anything nothing new and there is nothing you on echo.
Speaker Change: <unk>, we're still planning to go forward as was previously discussed we're not going to push sales into this illiquid world right. Now I think the summer is going to be very very sleepy overall, and we'll look to September to see if there is a little more.
Speaker Change: Vitality, a little more weakness in the market and then resume some sales.
Speaker Change: In your view what are kind of the one or two top macro factors that are going on.
Speaker Change: Driving the.
Speaker Change: Liquidity in the market.
Speaker Change: Well, the illiquidity of the market Theres, no debt or equity so let's start there.
Speaker Change: In order to have a sale you need both of them and you kind of equity or debt to.
Speaker Change: The equity so both of them have to wake up.
Speaker Change: The Trump created with this tariffs a coal pile of uncertainty in the marketplace. It's primarily obviously industrial and office and until that's a little bit settle down I think there's going to be people are going to be reluctant to go ahead and jump into industrial or office. So I think I need a little bit more visibility to whats the whats going on United States and geopolitical as well therefore I.
Speaker Change: As I say that too.
Speaker Change: Not a whole lot to happen and hopefully we'll look to September where people will have.
Speaker Change: Want to start doing business again, hopefully will be more of a positive momentum but overall.
Speaker Change: The situation not only Canada everywhere is very very lethargic right now.
Speaker Change: Wait and see game too, we'll see what happens geopolitical and the tariffs and recession and interest rates and everything else that's out there.
Speaker Change: Okay, I'll make sense. Thanks, Tom.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Thank you. The next question comes from so my eyesight at CIBC capital markets. Please go ahead.
Speaker Change: Thanks, Good morning.
Speaker Change: Firstly on online towers. It sounds like there was sequentially. There was improvement there I saw some reference in addition to the lower rent commentary around some higher operating cost.
Speaker Change: Wondering what's the outlook, there and what the cost just higher on seasonality or something else there.
Speaker Change: A great question, so not really it in Q1 of 24, we had well I should say in Q4 of 'twenty three we overestimated the bad debt.
Speaker Change: A lot more people paid in Q1 than what we had anticipated our Q4 and what we anticipate into it was really a reversal our bad debt. So it shows an increase in bad debt, our bad debt in Q1 with 53 basis points, which we're really pleased with so that was part of it. We also had a little bit higher.
Speaker Change: Payroll costs due to well a couple of things one we usually run about 7% vacant and open positions and we've been running about 4% so that kind of good news is.
Speaker Change: That we are more fully faster than what we have had in the past.
Speaker Change: As well as bonus attainment was a little higher in Q1 than what it was in Q1 of last year. So nothing that I think will be that concerns me at all our NOI margins are still 50, 960%. So I think what we're doing is working but not anything that Allison.
Speaker Change: <unk> with rental rate supply driven so we are seeing more concessions in the market that will burn off which kind of pleased that people are seeing the optimism in what's coming ahead in Q3 and Q4.
Speaker Change: Yeah, nothing I am.
Speaker Change: Concerned about and kind of.
Speaker Change: Aligned with our expectations.
Speaker Change: Okay got it.
Speaker Change: And then just moving on to the retail.
Speaker Change: That strategy, maybe a question for Tom So besides equity you have about 600 million of other retail and putting aside river landing the remaining assets I guess appear to be more liquid and into bad well what would be the outlook for disposing of that bucket and could that be more near term than resolving a cool.
Speaker Change: If we don't look to sell that on bulk. So if we look to do the same program, we did with our oil and gas oil.
Speaker Change: <unk> in the United States would be selling them gradually over the past few years, one at a time of achieving solid pricing those assets are worth more on a one off basis. So we could look to start the program of selling them, but it's not going to be 300 or $400 million of sales at one time I don't think thats the right way to go with that portfolio.
Speaker Change: Okay got it.
Speaker Change: Thank you I'll turn it back thank you.
Speaker Change: <unk>.
Mac Hornack: Thank you. The next question comes from Mac Hornack at National Bank Financial. Please go ahead.
Mac Hornack: Good morning, guys, just we've talked a lot about the supply picture in the U S multifamily space.
Mac Hornack: But just interested in your view on demand and just the drivers I know, obviously theres been a lot of interest.
Mac Hornack: Migration to the sunbelt.
Mac Hornack: How should we think I mean interest rates are high so presumably homeownership is not necessarily an alternative but.
Mac Hornack: Are you fully expecting that the demand will be stable as the supply comes off to drive kind of that inflection.
Matt: Good morning, Matt I do yeah.
Mac Hornack: In fact, Q1 set a record for Q1 demand.
Mac Hornack: So the <unk>.
Mac Hornack: Our in our respective markets, we absorbed 28000 units.
Speaker Change: And projected 86000 for the year, so just to put some perspective around that or all of our sunbelt markets. In 24 absorbed 98000. So for 28000 in Q1, we were really encouraged by that.
Speaker Change: And we see the momentum picking up in different areas. So I doubt, we still have people that are relocating headquarters to Dallas.
Speaker Change: Austin.
Speaker Change: We're not subjected really to the port anything that happens with the tariffs in Houston, So I I definitely anticipate the demand to them instead of the economy.
Speaker Change: You've probably read the same headlines that I do but yeah. We are seeing things that are supporting the forecasted demand in all of our Sun belt market.
Speaker Change: And it's still a 60% discount to if you own your own home in our market. So that's a pretty big Delta but.
Speaker Change: And you still see delay in marriage, having babies and kind of all of those fundamentals are ringing true. So I don't see anything that would suggest otherwise, but the demand is not going to be sustainable.
Speaker Change: Okay.
Speaker Change: Okay. So there.
Speaker Change: Okay.
Speaker Change: A portion of that would be.
Speaker Change: Destined for redevelopment versus stuff that you'd be trying to kind of renew tenants or if it is destiny for redevelopment would you try to renew on a short term basis at this point.
Speaker Change: Matt I'm, sorry, I missed half of your question because the phone cut out do you mind repeating it.
Speaker Change: But it was an asset so emily okay.
Speaker Change: Okay.
Speaker Change: So I think we all missed the question what was that okay.
Speaker Change: I just I was looking at your lease maturity profile and you do have about a 1 million square feet of office maturities over the next two years in Canada, and just wondering how much of that would be destined for redevelopment versus re leasing and if it is destined for redevelopment.
Speaker Change: At this point or are you kind of trying to renew people on a short term basis as opposed to letting.
Speaker Change: Letting those go vacant.
Speaker Change: So there was no residential market to speak of so we're looking to renew them on a short term basis over the sale of demo costs and that will be applicable to the leases that are rolling in front street. The leases that are rolling in eight states and the Hess that'll be.
Speaker Change: Right now with tenants and we have completed some of those leases that is going to be released that sounds good.
Speaker Change: Bouchard, which is a 2026 that is not.
Speaker Change: Toward redevelopment that will not be released then may be extended by bill as they need to take a little longer but we're not looking to really step.
Speaker Change: Okay. So you wouldn't expect a material increase in vacancy in the office portfolio in the near term at this point.
Speaker Change: What I just mentioned you have 140 ish or you have front street, which again that'll be built was released its vacancy and so you have bouchard, which is 2026, which will stay vacant 104.
Speaker Change: Five Wilmington, which is slated for ultimate redevelopment, that's 10 years plus down the road. So that's not going to be released Theres nothing there anyhow, though just mentioning it as a footnote to the fact that it's a residential development.
Speaker Change: And yes, as I mentioned with his 2026 that will be released and that'll take downtime.
Speaker Change: There is leasing up and that is this emissions. So it takes time.
Speaker Change: Fair enough thanks, guys.
Speaker Change: Thank you. The next question comes from Jamie Shen at RBC Capital markets. Please go ahead.
Jamie Shen: Thanks, So just first on the HBC industrial lease it looks like.
Speaker Change: There's a decent amount of upside here so what's the what's the sequence of events from here and what's the prospect of using that space.
Speaker Change: When when you get the space back.
Speaker Change: I think within a matter of weeks.
Speaker Change: Subject to the courts, and releasing and we are already talking to potential re leasing is strong and the rental rate. My guess is there'll be $14 ish something like that.
Speaker Change: Okay.
Speaker Change: We're already in negotiations with us with potential tenants.
Speaker Change: I'm not going to be a problem child that'll lease so a little bit of a downtime and then probably probably sometime in the back half of the year.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay. So on Echo I noticed in Q1.
Speaker Change: Q1, the NOI dropped a decent amount from Q4 of 24.
Speaker Change: I was wondering if there is some seasonality there would account for that for that drop.
Jeremy: Good morning, Jeremy.
Speaker Change: And then sorry, I'll have to get back to you on that one there wasn't anything substantial.
Speaker Change: So from there I think if you're looking at it just be careful when youre looking at up to back out the 21, because we would have us sort of crude royalty, Texas for the whole year and the.
Speaker Change: Echo portfolio, maybe looking at it.
Speaker Change: Can you back that out that might be it yes, okay.
Speaker Change: Okay, and then on still on nickel.
Speaker Change: You mentioned, you're not going to push yourself.
Speaker Change: Have you tried to put for sale.
Speaker Change: In the last few months and then when you're thinking about potentially putting it into the market, which number are you looking to sell just your LP interests or could your entire portfolio. You also considered for sale.
Speaker Change: So we haven't put it on the market. It's still we Havent, We Havent award it gives them an investment banker to proceed with <unk>.
Speaker Change: Having discussions with potential candidates in that regard it will be we don't know really if we're going to put it out there and youll see without where you land you will see if there is an interest for our interest or the interest in somebody coming in and taking our interest in treasury.
Speaker Change: It can be anywhere where the best deal of life, 100% Everything's on the table.
Speaker Change: Okay, and again timing wise, you're thinking probably default.
Speaker Change: I don't really know.
Speaker Change: It's not market conditions, driven it's just getting all of that again, there's many many investors you can look at it as a public company. So it's not just it's not H&R definitely saying, let's go and it's not necessarily the board tango.
Speaker Change: The fact is like I would say close to 500 investors family of multiple family. This this is a company that's probably a 130 years old.
Speaker Change: Many many layers of families. So till they get all their votes and all the ducks in a row I can't really control the timing. So I don't want to say fall, it's hard to have predicted that level of surety, but in the near future or in the foreseeable future I expect that to happen.
Speaker Change: I am not I don't think and I'm not as anxious for it to happen as you may be its acts solid company and they will have no debt on when can we start finally close that transaction will have zero debt sales are very strong we have total visibility into each store, how it's doing it's primarily grocery anchored theres no theres no risk over here whatsoever. So it's not a burning issue.
Speaker Change: <unk> for me to sell it the only reason that it sounds like you guys keep on asking the question when my selling it if I had my choice I Wouldnt sell it.
Speaker Change: So stop asking or sell it.
Speaker Change: Okay.
Speaker Change: And then just last question remind me again I know you've talked about it you got a $400 million debenture coming up.
Speaker Change: What was the plan again.
Speaker Change: On the debenture.
Speaker Change: Hey, Jimmy we plan to use our bank clients to pay it off.
Speaker Change: Just trying to find a time to see what sales will come down the Pike, we Havent mentioned, Jimmy as we have the Calvert and Lance.
Speaker Change: For the future highway extension and Thats going to happen has to happen. They have to go the highway. So that's not really it's market driven it's really dictated by US is dictated by the government My guess is it'll happen.
Speaker Change: Sooner rather than later on that.
Speaker Change: Significant amount of money that can come in and that would solve this answer. This question. So when we have more visibility on this decision we are talking to the government in that regard.
Speaker Change: That's kind of that's why we're that's why we are procrastinating on that the debenture issue.
Speaker Change: We're going to have to make a decision sooner than later, but again, we are in discussions and we'll have better visibility. If we don't then obviously, we'll just we'll roll into a new unsecured.
Speaker Change: Okay, and what would be rough quantum would it be half of the debenture amount.
Speaker Change: Youre talking about.
No minimum of 150 of proceeds minimum.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Thanks.
Speaker Change: Thank you.
Tom Hofstetter: Thank you we have no further questions I will turn the call back over to Tom <unk> for closing comments.
Tom Hofstetter: Thank you everybody for joining us have a great day.
Tom Hofstetter: Yeah.
Speaker Change: Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and we ask that you. Please disconnect your lines.
Tom Hofstetter: [music].
Tom Hofstetter: Okay.
Tom Hofstetter: Okay.
Tom Hofstetter: [music].