Q2 2019 Earnings Call

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He may have the conference I'd number please.

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Hi, good number please.

Yes. It is.

775.

Hi, Dave.

Okay.

Again, they have the spelling of your first and last name. Please.

Yeah.

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Not the spelling I'll be afraid and laughing.

Your name please.

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Hello.

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I'm, sorry, I, yes, your first and last name.

Brain elite.

Our wives and eight.

L y.

Yeah.

My God Ryan the White, then H.A. out you line is that correct.

Yes.

Okay and they also have a starting up their company. Please.

Era.

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I'm, sorry can you repeat that please.

We are.

I got a I know our aim is that correct.

Correct, yes.

I will tell you know.

Thank you.

Otherwise this represents nearly 70% of the currently vacant department store space with portfolio.

This is great progress and we truly appreciate the team approach that via development construction legal groups to make this happen.

We also remain confident in our originally projected estimate of around $350 million of additional capital spend necessary to transition all 29 locations over the next three to five years.

If you just focus on the 22 boxes currently vacant projected spend drops to under $300 million remember the full pipeline excludes the 13 boxes owned by non retailers, including Seritage.

Now, let me turn to our quarterly financial results, our FFO for the second quarter was 27 cents per diluted share leaning towards the upper end of the guidance range going into the period, primarily driven by larger than expected outparcel gains in terms of cop and why it was generally in line with forecasts and Expectedly challenge, primarily by last year's anchor bankruptcies and this year's inline tenant liquidations.

In fact, when neutralizing for the impact of Sears Bon ton and toys R. Us in the first quarter in line bankruptcies, we would've seen closer to flat and ROI performance for the quarter from our core portfolio versus the negative 6.8% that we reported.

As discussed during our last earnings call, we were expecting the second quarter to be the most difficult in terms of growth performance, but we should start seeing improvement as we begin to comp against the second half of last year that was already burdened by loss anchor rents and co tenancy.

Accordingly, we expect to deliver improved trends in comp NOI for the third and fourth quarters of 2019 with negative growth of only 1%, 2% on average for the second half of this year.

This should result in overall negative comp NOI performance of around 3% from our tier one and open air portfolios for the full year 2019.

In terms of our outlook, we did reaffirm our 2019 FFO guidance within the range of $1.16 to $1.24 per diluted share. This is supported by no major changes to the significant assumptions driving our previous guidance.

While operating results have been pressured over the last several years, we do continue to see a tangible roadmap for meaningful growth next year, especially when factoring in state of progress being made on the department store repositioning front.

As we look to 2020 and beyond we remain confident in our ability to not only replace the lost rents and addressed.

Related co tenancy from these closings, but to make our properties better.

Assuming we experienced some stabilization and tenant bankruptcies and when factoring in over $10 million of estimated additional in Hawaii next year from our redevelopment of vacant Department store space, along with other major leasing activity, we continue to anticipate generating meaningful comp NOI growth in 2020 of at least 2% from our combined tier one and open air portfolios.

With that we will now open the call to any of your questions. Thank you.

Ladies and gentlemen, if you have a question at this time. Please press Star then one on your Touchtone telephone. If your question has been answered and you'd like to remove yourself from the queue. Please press the pound key our first question comes from the line of Ki bin Kim from Suntrust. Your question. Please.

Hey, good morning, guys.

Can we talk about the economics for the ground lease deal things like cap rate the rent coverage ratio and if there are any other contractual requirements on your end for things like capital reserve ratios or anything like that.

Yep.

Key bad I mean, it really starts at a as as Lou mentioned the pricing on the ground lease will be at around the mid seven 7.47, 0.5%.

It will escalate at a modest 1.5% per year.

The coverage is probably four times just in terms of the NOI thats in place, but remember I mean, it's just collateralized by the fee interest the ground.

Not necessarily the improvements we continue to own the improvements those would be financed will in the future. If we choose to do that and we thought it was just a very creative way for us to raise capital probably on assets that would have been more challenging to raise it in a traditional manner. So from our perspective, we really evaluate his 30 year debt thats when the redemption rights in place and if you look at the implied cost of capital is going to be in the mid eights and we think for where we are right now the importance of that capital today to extend out the debt maturity of the profile, we think thats, a attractively price capital for us.

And are you looking to do any other opportunities in terms of ground leases.

I think we'll always continue to evaluate opportunities, we probably could have done a larger transaction. We chose not to we thought this was good size in terms of our various levers that we have to raise liquidity.

So I'm not sure right now we have any plans to look at this type of transaction.

Going forward.

And with this transaction be treated as secured debt.

Talking about your.

Total debt to asset covenant ratio, which is 60% your inching up toward 55%.

Just curious how much room, you have left and if thats would be part of that equation.

Well, we have we have ample capacity as relates to our secured debt I think you're talking about our overall leverage and this will be neutral to that because its just swapping out that for debt. If you remember, though the improvements where the bulk of the value as remain unencumbered.

I think the other thing to keep in mind as it relates to our covenants and where we stand specifically as of June Thirtyth that does not reflect the transition of town west that happened on July Onest and the expected transfer.

Back to the servicer of our West Ridge properties, so collectively thats $95 million of debt.

That will come off the books and that certainly helps our covenants along with continued proceeds from the Outparcel sales. So from that perspective, we feel comfortable with where we are with our covenants.

Okay and.

I know we've talked about this a lot but.

The nine new ground lease for $99 million.

You're right.

You have cash flow of 223 million that you're paying out in dividends.

I think last time, we spoke directs rules still allow you to pay out your dividend the foremost stock that would allow you to retain that cash flow when does that.

Decision to start to become more appealing.

A cash versus stock versus cash.

Or just cutting the dividend.

Well, we've been well.

Our dividend policy.

Unequivocally remains the same.

And.

Hey, guys.

Giving away if we didn't have the conviction that.

This is we are a sorely undervalued company, giving away an incremental share would be a permanent.

Impairment to our other shareholders.

So that answers the first part and the second question is the board.

And Mark and myself and lease at all we are always evaluating and we haven't done anything imprudent.

And nor will we ever do anything and we will.

We will in conjunction with our board.

Figure out what is best 2019.

Maintaining the dividend we have growth in the portfolio as Mark and I have.

Discussed I thought this would be a congratulatory.

The question at.

Commentary from you Haven.

[laughter] marks smart capital raise on if you deconstruct what.

Per our property is its land and building.

Land unproductive Mark long term debt, our long term capital and effect.

Alright, so I answer that the dividend question.

Yeah, I mean, you know why we ask that right I mean, it seems like easy fourth of capital maybe tough on your stock price in the short term but.

I mean, its $220 million of cash flow that you could retain right I'm not going to capture and our second and I and you know I love. It. We appreciate your your your your thoughtfulness.

But I'm not going to conjecture with respect to impact upon share price.

I did but albeit I am going to conjecture can I do this.

I think our share price will go up lift a dividend cut we are not here to play around with share price. We are here to build a world class company that is operationally and financially has operational infrastructure and financial wherewithal and our dividend.

Obviously always under review and our dividend policy is always under revealed will kind of go from there.

All right just last question.

Year to date, you are seeing kind of why its down about 5.5% your guidance for the year, 3% negative 3% around there.

It does basically implied a pretty significant ramp up in the second half so.

I guess, what are you seeing in your leasing pipeline or or items or events that you're expecting it that gives you confidence that you can hit that.

Guidance number for the full year.

Yes, Ki bin as I talked about in the prepared remarks, I think the biggest factor is we're going to start comping up in the third and fourth quarters of this year against periods, where we had already loss anchor rents, where we started to experience a co tenancy. So just in that self.

That factor is the biggest driver when you really get down to it.

And you think about what really drove the negative performance in the second quarter on top of that we are going to start seeing the impact of us replacing.

Those those department stores and toys R us boxes, and we probably could go through a long list of whats going to start coming online, but it's really the combination of those two factors.

That really will lead to a better second half still still down because were still got co tenancy, we're working through but much closer to flat than where we were in the first half of the year and really lays the foundation for the growth that we're confident and as it relates to 2020 I think about it sequentially.

We continue to lease inline space.

Dan and the entire team have.

Dealt with 15 out of 22 of our vacant space as they come on line and to that extent some of our sales from our rental that are rented come online at various times.

It addresses co tenancy.

And obviously replaces rental income and this is an iterative process and it seems like Theres always a goddamn disconnect with respect to the leasing that Josh and Dan are doing I mean, it clearly, beating our estimates are our expectations.

And we provided absolute.

Visibility and transparency with respect to co tenancy.

And so with that being said.

The lease space.

You resolve boxes, when you get the forecast, 2% same store NOI growth.

And the 15 boxes that you've addressed.

Once those cash flow how much.

The co tenancy losses cure itself.

Well I mean, we talked about the incremental growth in 2020 of $10 million plus so certainly a chunk of that is co tenancy.

But you're also going to get the benefits, it's not all going to happen I mean, we talked about roughly 6 million dollar impact of co tenancy in our tier one and open air.

In 2019.

Even with that $10 million of incremental does not cure all the co tenancy. So thats something that we will continue to see the benefits as we move forward off in in 2021, but if I had to put a number on it maybe a third.

Yeah.

Yes.

Okay. Thank you.

Thanks.

Thank you. Our next question comes from the line of Caitlin Burrows from Goldman Sachs. Your question. Please.

Hi, Good morning, guys I, maybe back to the total debt to total assets topic and that it is getting closer to 60% I guess would you say that on the covenant requirement is why you chose to do the sale lease back which was non traditional and unique but more expensive financing and some of the other things you've done in the past.

We both want to answer Mark Youve, one no I mean, it's not Kevin a covenant driven because it's really from a covenant perspective, it's going to be treated as debt versus that.

As I mentioned I, just want to make sure. When you look at our covenants are evaluating them, we had $95 million of that that's going to come off from where we were at the end of the second quarter plus we have proceeds that I went through of another $80 million between the four corners and some loan reserves that were going to get back so.

We're comfortable with where on the covenants on we're keeping an eye on.

And we've also talked about the fact that we're going to continue to look for ways to raise capital and we want to bring our leverage back in line with where we want to be longer term and we're working on that every day.

I guess just on that leverage target.

Have you stated what that is long term recently have not changed over the years it's in the.

Six to six and a half times.

Got it and then leave right now are we second or third best the third best in the sector third best Anna and I in our sector.

The great SPG number one.

Who is number two.

Tanker I think and then.

I guess when you guys look at that metric are you looking at trailing 12 months EBITDA or next 12 months EBITDA or something else.

I mean, we're I mean, we're looking as you know kind of in place, where we don't have yet.

Got it.

Okay, and then just in terms of value. So guidance. This year includes the transition of one to three properties to the lenders in 2019, and we know this can create taxable income so just wondering.

You could tell us or give any color on how much net taxable income you're expecting in 2019, I think we have been on the record and nothing has changed when we look at the various transactions weve talked about here that.

We're going to be.

Good portion of one dollar per share dividend to cover our estimated taxable income for this year.

I guess any further way to quantify it or just a good portion of the dollar.

Hi, I, just I would look if I would look at last year, where we had no return of capital and I think we're within that range.

Framework and range so.

Good chunk a means of the bulk of the dollar per share.

Okay, and then I know keep an asset, but I guess, perhaps phrase a different way I'm thinking about it that the dividends currently at $220 million cash used per year can you kind of go through how you guys think it is in the best interest of remaining a kind of going concern company to find the annual redevelopment needs with the mix of debt like at Waterford Lakes, I parse the dispositions or the sale leaseback when adjusting the dividend is also an option maybe not in 2019 because of those lender transitions that perhaps in 2021 that may not be happening.

You know again dividend policy is always under review by our board.

And if we were.

As an outlier in it.

I evoke Miller amended liani in terms of the prudent use of debt in the capital structure, we want to get our debt down led but again, we would you know less leverage.

As better we've seen those companies that didn't have that.

Option.

Mark and lease at all we've maintained tremendous optionality, whether it be the unencumbered pool, whether it just be just great financial prudency and.

In general, but you know our 2019 dividend policy is the same.

I discussed like share versus cash.

Doesn't.

You know you know.

Something to be always we'll consider everything that really doesn't make much sense and.

You know, we will we will continue to balance, while we grow and energize our portfolio.

Okay, and then maybe on 2020 I guess, what factors would you consider in determining the right dividend for that and in order to sustain your redevelopment capex needs.

Okay.

Again, its a function of our board is a function of return on versus return of.

Capital.

My Ad.

I mean, I would have done dividend dividend the dividend coverage taggart like kind of the common you know that kind of have the kinds of things that we think about every single waking moment, while we're doing things.

You know such as increasing sales per square foot, making if im making our tenants profitable as occupancy cost you know.

Yeah, and all under the framework of a absolute bullshit.

You know kind of valuation on our company.

I guess, when you think though about that dividend coverage and what I guess, if the numerators dividend what the denominator is do you think of that as like F. AFFO, and then take out maintenance capex and the development or redevelopment capex or is that not part of that.

Oh, absolutely we look at what our funds are available for distribution and we think we're pretty close to covering the dividend in 19 and that will be part of the comprehensive review in terms of setting the dividend policy. The board goes through on a quarter to quarter basis, but it starts with Evercore you back out what your.

Routine maintenance capex and leasing or we look at whatever kinda noncash <unk> arrival, what we believe our funds are available for distribution maps.

One of the factors that goes into the decision making.

But then what about the redevelopment need so like the anchor boxes and any other kind of redevelopment that is the cash needs. In addition to that.

If I mean, it's a function of.

Of surplus cash flow as well as the liquidity and raising $400 million in a very short period of time.

You know quite frankly.

You know.

Yes, all things being equal you know.

Satisfies that our schools are three to 350 million Bucks that we've talked about.

Okay. Thanks, I have a couple of more but I'll go back in the queue I keep going.

Okay and then the other one was in terms of that Sears boxes. So I know you guys have been making good progress on refilling those if we look though at what portion of your.

Enclosed properties have eyes, Sears, whether they're open today or ones that you're still working through and JC Penney, there's definitely concern out there on JC Penney I hear it from people I'm guessing you guys here too. So I was wondering if you could give any sort of sensitivity or detail on the impact on tier I know why if 10 20, 30% of those is currently open Sears or J.C. Penney locations did go dark when we have seven I'll I'll turn it over to Mark in a second so how many remaining Sears so.

Seven centers and again, you know just like Ki bin I thought that people will be saying Holy Cow you guys really have hit 15 out of 22 vacant.

You know, but instead less lift lifts.

Take a the let's take the other side so of those seven I don't think Theres, One instance, where we would not want that box back.

Yesterday.

I haven't really I'm, sorry, Mark I should say as it relates to Sears and we talked about this in connection with the first quarter the impact of the Sears locations thing in our portfolio and things a little over a million dollars.

And half of it relates to one location that we would be very excited to get back to you ultimately down the road. So you know that's not a significant impact and then as it relates to JC Penney I mean, maybe Dan just share your thoughts in terms of what we think of pennies Oh. The fact that they are relevant in our portfolio and are we like the direction. We're heading yeah. I don't think any of us can predict the future, but I think five years from now JC Penney will still be around that said I do think that they will be closing some stores in the future. Obviously I don't know that for a fact, but we think we have opportunities to re tenant the JC Penney some of the JC Penney boxes in the future as well as far as our portfolio goes we have on the lease and we have all the renewals complete for the next two years, except for one and that one does probably 50% more than what is typical JC Penney thousand they pay very low rent. So we.

I don't think we have much risk in the near term with JC Penney alright.

Caitlin.

Yes, as it relates to JC Penney and.

And you know generally us providing lots and lots of visibility.

In the most right here.

I think actually make a preparatory that.

From a merchandising standpoint.

This is the new c. the CEO and.

The team has done a pretty darn good job actually better than darn good job JC Penney is our JC penney's are always well merchandise. They look good but let's play the world goes to have Gillingham baskets. The most draconian case.

Which we have calculated.

What is the.

The total impact the income statement impact.

If including co tenancy if every single one of our JC Penney, which is goofy.

Goes away what do you think that number is.

And let me mention one other thing we have been we are always unsolicited lead being approached about interesting as about ended about interesting you know larger box space and you know why because we sold all the crap and weve gotten rid of all the crap, but with that being said, what's the JCP number.

I don't know $10 million.

Little more than 10, I know, that's probably or you're probably right, but with co tenancy were under $20 million.

And look at the velocity by which we released our departments or look at a velocity, which we lease inline and again, we have a portfolio that is the dominant town center generally the dominant town center, because we've gotten rid of all the crap. That's the interesting analysis as is the fact that our tier one which is now at 410 Bucks trades at a 29% cap rate and just to be clear that number and that assumes no releasing in any of the JC Penney space. It also does not assume the fact that.

The Department store Repositions that we're working on the 15, we announced very well could satisfy co tenancy that's right there's overlap there so.

We just don't even see as one we are confident of the JC Penney is going to navigate through their important.

To this industry, they're important within our portfolio.

But even if something would would would transpire you know we we can navigate through this work through this and I don't know what more we can do to prove that there is demand in our town centers.

And I guess just thinking about this that died potential upper Max of 20 million dollar impact is a correct or irrelevant to think about it like it said that it was like if a 100% of them close to 50% of them close would it be like $10 million or doesn't work that way as it has done is pretty good I mean, it is not exactly co linear a linear but something like that.

Something like that because every co tenancy and I really didn't understand this and let's just say that you know les that leaves it takes out puts on or green eyeshade and kind of calculates one by one man as other than because it's completely idiosyncratic heavy.

To the asset and to the to the to the coal part of the tenants.

Got it Okay and then maybe just in terms of the 2020 outlook I know I'm. Originally you guys were talking about maybe that same store NOI could be up 2% to 3% next year now it's at least two which is pretty similar I was wondering if anything has changed and with the announcements by a guy like Dressbarn No. I mean, I. Just you know you said a minimum threshold and yet.

You manage expectations any over deliver.

Yes, Okay I got it because they are you know you you.

Yeah.

Our goal is how and over deliver I'm gonna get harder by attorney, but yes.

And then a last one in terms of Forever 21 was in the news in June as potentially closing or shrinking some stores I guess in terms of your footprint. There. How many do you have and what is your expectation for their presence going forward in your portfolio. Okay. Let it's Josh So we've got 16 in the portfolio their average size and 15000 square feet inside of our portfolio. So they are right sized their healthy we don't have any exposure to the large.

You know 60, 70, 80000 square foot boxes that they took you know several years ago.

Hey.

You know and.

Again, and given the catchment of with within which they're located there is not a what I call Bookable, we can kind of characterize as the bastard as Asian, if there are stores to be closed.

Yeah, we haven't we've evidenced that historically, we fare quite quite well you know and if not you know if there is if its certainly and that certainly but I would I would assume if anything happened that the.

Reward versus.

Yeah liquidation would agree yeah, you know, let them and let US make you know a good concept, let us make them stronger and.

We continue to.

To solve.

Well everything you know that they get to this does have before us.

Look at our leasing look at our sales per square foot and we do it because we aren't burdened with those assets with with crap, we gotten rid of 14 15 assets.

But you know we're going to work with forever 21 and.

Josh is wearing up 21 as we speak.

It is it is a very acute midriff t. shirt.

[laughter] okay. Thanks, thanks, everyone.

Thank you once again, ladies and gentlemen, if you have a question at this time. Please press Star then one on your Touchtone telephone. Our next question comes from the line of Jim Sullivan from <unk>. Your question. Please.

Thank you. Thank you good morning, guys.

First of all just have a question on the guide for 2019.

You didn't change your.

But Chris same property NOI from a range of down one down three that to down three yeah. You kept the same AFFO guide AFFO per share guide and I'm. Just curious why you didn't kind of take down the top end of that range.

And also you know I guess to find out if there was something that was offsetting.

They are the weaker same store outlook that.

Ladies who to not take down the top end, yeah right Jim its Mark a you know a good question I think if you went back and looked at what we had talked about coming out of the first quarter. We said we were very focused on the bottom end of the range. So as we provided guidance coming after the first quarter, we had really been focused on on being down 3%. So there was no change there and one really look at the impact of a 100 basis points in terms of our overall comp NOI growth.

You know it doesn't take much that offset that so we still feel comfortable with our original guidance.

Okay and then.

In terms of tenants and tenants that are kind of on your watch list obviously.

There are other tenants that we're all aware of that.

You know announced significant closings in Q1.

And maybe some immaterial ones as far as you're concerned in the early part of Q2 like Dressbarn.

But I just wonder if there's any other tenants that have moved to kind of the so called critical watch list during the second quarter.

That.

Maybe you know we have now been thinking about but they do have a heightened focus on I mean, we don't typically share our our watchlist publicly all I can tell you is somebody just asked the question about one of the tenants that certainly has moved on to the watch list.

Okay.

And then shifting the focus to the ground lease transaction that you announced.

[noise], you talked about and Hawaii coverage here four times, so I'm, assuming that's something like a $30 million NOI generated by the four assets.

That is subject to the ground lease.

And just to make sure.

I understand.

This is not a taxable transaction you're trading at is that it's the advising us to penetrate list at.

So not a taxable transaction.

I guess, that's because you have the option to buy back.

Number one.

From an accounting perspective, that's correct I think the tax a you know could be treated a little bit differently.

Got it Okay, and then with and then we think about the balance of unencumbered NOI.

So the other way associated with these four assets is not treated as unencumbered.

Because of the nature of the transaction is that right.

You know I think though I'm not quite sure I asked that but you know the way we look at it is a you can almost look at the ground lease payment you deduct that remaining analyze unencumbered because it's funny ansible.

Okay. So so the best way to think about it is that.

It's like that $30 million ballpark number for in a life unless they close to 7 million and the balance is unencumbered and therefore, when you talked about you mentioned in the prepared comments that the.

The.

The non land asset segment of the asset remains Financeable can you just talk about what kind of financing would be available.

For the personal property here.

Given that adjusted same property NOI number.

Yeah, I mean, it's still pretty good and I you know in previous.

Lives, we believe you know ground lease ground lease.

Realestate.

Is is ubiquitous and.

You'd be surprised.

In my hometown of Chicago, how much of the dirt is owned by the Baptists Theological Union No. There's no you know tend to have it because they own the lands and you know 19, though too yeah, well I mean, we we have pearlridge. That's on a long term ground lease and we have over $200 million of financing. So you know I think it can be it gets back to today in today's market. A you know would these be properties that you get traditional CMBS financing, that's where it will be a challenge and we found a great way to so to tap into some capital and it's going to be predicated upon the same.

You know that service coverage of I answered that service coverage divided by your yeah with Liberty and take a constant into account you know is there going to be a little bit of a premium.

Tiny, but we don't ask for you know, we're not matching proceeds ever.

So that's just not an issue for US I think this is a brilliant financing I also want to be clear, we're not necessarily a assuming.

Part of our capital plan that we would put financing on we're just trying to make the point that it is financial.

Correct correct.

And so.

Yeah carrying through with that thought near description. So this is a brilliant financing and you know you get duration.

And you preserve the majority of the NOI for purposes of future financings can you just kind of indicate whether you expect to do more of these.

Or not and number one it kind of number two I mean, I think you're just I do not look into mass.

The financing here, but.

What is the.

What is the likelihood that deal look to for example put some financing on.

On.

The remaining unencumbered NOI from these four assets as opposed to putting financing on.

Other assets that you did not own subject to a ground lease.

I I mean, what I can tell you right now Jim as we look into our forward capital plan I mean, we do not have any specific assumptions to go to another two to encumber a further EUR unencumbered assets at this point. So you know I think I mentioned, we could have probably done a larger ground lease transaction, we were targeting a certain level of raised that's how we came up with it we have no plans to income or the remainder of these properties today I think our point is we still have over 56% of our rental why is is unencumbered at this point and that gives us all a lever and gives us flexibility as we continue to navigate through a where we are on a you know in our business, we love that unencumbered pool.

And here.

Naysayers.

You know say you don't have access to capital.

We have lots of levers, we pull we pulled one of them, which I think was a very.

Creative.

Cool and getting long dated 30 year long dated though.

And.

You know if we leave we live we've leased spoke of the $300 million to $350 million of redevelopment capital.

You know.

Capital is fungible, but think about them 100 going towards that as well as all the other stuff we've done to date and being you know between redevelopment spend and you know de levering.

We are doing exactly what we said.

Okay. So just to just to make sure I have this right. So when you talk about the 56% unencumbered NOI here simply taking will lower the prior assumptions that haven't changed very much and then deducting from that.

The financing cost on the ground lease.

That's the way we would look at me up and it gets you in the near to mid Fiftys.

Okay perfect. Thanks, guys. Thanks Buddy.

Thank you. Our next question is a follow up from the line of Caitlin Burrows from Goldman Sachs. Your question. Please.

Hi, guys, sorry, just one follow up on that ratios again, just wanted to confirm for the one that's the total debt to total assets with the sale leaseback transaction does that total debt number the numerator get impacted by the sale leaseback by call. It 100 million I get that the other transitions you're gonna do you are going to make it go down by 95, but does this make it go back up or is it not actually debt.

Sale leaseback will have no impact on the numerator denominator.

Okay got it okay. That's all.

Thanks.

Thank you.

And.

This does conclude the question.

Once again, if you have a question at this time. Please press Star then one on your Touchtone telephone.

[noise].

Thank you and this does conclude the question and answer session as well as todays program. Thank you everyone for your participation everyone have a great day. Thank you.