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Northstar Realty Finance Corp. (NYSE:NRF)

Q4 2008 Earnings Call

February 24, 2008 2:00 pm ET


Richard J. McCready – Chief Operating Officer & Executive Vice President

David T. Hamamoto – Chairman of the Board, President & Chief Executive Officer

Andrew C. Richardson – Chief Financial Officer, Executive Vice President & Treasurer

Daniel R. Gilbert – Executive Vice President

Albert Tylis – General Counsel


David Fick – Stifel Nicolaus & Company, Inc.

Jim Shanahan – Wachovia Capital Markets

[Claus Von Sutterheim – Deutsche Bank]


Welcome to the Northstar Realty Finance fourth quarter conference call. During today’s presentation all parties will be in a listen only mode. Following the presentation the conference will be open for questions. (Operator Instructions) This conference call is being recorded today, Tuesday, February 24, 2009. I would now like to turn the conference over to Mr. Rick McCready, Chief Operating Officer for Northstar Realty Finance.

Richard J. McCready

Welcome to Northstar’s fourth quarter and full year 2008 earnings call. Before the call begins I’d like to remind everyone that certain statements made in the course of this call are not based on historical information and may constitute forward-looking statements. These statements are based on managements’ current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

I refer you to the company’s filings made with the SEC for a more detailed discussion of the risks and factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. The company undertakes no duty to update any forward-looking statements that may be made in the course of this call.

Additionally, certain non-GAAP financial measures will be discussed on this conference call. Our presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with generally accepted accounting principles. Reconciliation of these non-GAAP financial measures to the most comparable measures prepared in accordance with generally accepted accounting principles can be accessed through our filings with the SEC at

With that I’m now going to turn the call over to our Chairman and Chief Executive Officer, David Hamamoto.

David T. Hamamoto

In addition to Rick McCready our COO, I’m joined today by Andy Richardson, CFO; Dan Gilbert, CIO and Al Tylis, our General Counsel. Northstar completed a very challenging year in which we’ve seen unprecedented stress in global financial services institutions and increasingly poor macroeconomic conditions.

Since 2007 we have discussed on these quarterly calls our concerns that market conditions would become increasingly challenging and that Northstar’s priorities given these economic realities would be to create a rock solid balance sheet by extending debt maturities and minimizing mark-to-market risk, aggressively raising capital, exercising extreme caution and discipline in deploying liquidity and focus senior management professionals on managing credit in our existing asset base.

These strategies have proven to be the correct ones as Northstar is one of the few commercial real estate finance companies with liquidity, very little near term maturity risks and an asset base that has performed reasonably well in this environment. Furthermore management collectively owns 11% of Northstar and our constituents can be assured that we will make the decisions that we believe are in the best long term interest of the company.

We’ve also discussed in the past our view that the banking sector has significant problems and that major intervention by the US government through capital programs would be needed to begin healing the asset backed market to [inaudible] lending. In the fourth quarter of 2008 we saw massive capital infusions and loss sharing deals between the government and some of the largest US banks. Federal assistance continues to evolve and be a major focus as a lynchpin to any broad based recovery.

More recently we are encouraged that the government has signaled its intent to include highly rated CMBS securities in the most recent proposal for the TALF lending program and are awaiting more details. Federally backed term financing for these securities should result in decreasing credit spreads and eventually enable new lending to the sector. During 2008 we have discussed the ongoing and increasing challenges in our market.

Looking forward to 2009 we should recall that similar periods in the past have created outstanding opportunities for those investors like Northstar with cash, expertise and successful investment track records. This market feels very similar to the late 80s, early 90s except the scope and size of potential bank failures will probably be much larger.

As bank failures and seizures increase the Fed will be under increasing pressure to find buyers and managers of the assets and it is unlikely that existing banking sector participants have the capital, resources or expertise to deal with these assets including non-performing commercial real estate portfolios. I believe that the government will eventually look to solve today’s issues with programs to get rid of problem assets similar to those developed during the last crisis.

My experience during the last cycle in buying distressed portfolios with some downsize protection provided by the government convinced me that though times like this can be extremely difficult, they also present rare opportunities to make outside returns. I believe that Northstar is a strong investment platform that could benefit from these extraordinary times. Today we are not seeing meaningful volumes of distressed commercial real estate investment opportunities but it is very clear that the pressure is increasing and we anticipate that transactions will increase later this year.

The CMBS markets have to a certain extent already reflected extraordinary market conditions in their yields especially late in the fourth quarter when senior AAA CMBS securities with virtually no risk were being traded for high teens to low 20% returns. During the last 18 months we have consistently stated that patience and conservative capital management would be needed to not only survive through the growing storm but also to thrive afterwards.

This mean conserving liquidity and prioritizing our investments even at the cost of significant earnings dilution. We also heard a lot of voices announcing that we were close to the bottom when in fact there was much further to go. The prices of our owned issued debt securities decreased dramatically in the fourth quarter demonstrating not just market illiquidity and distress selling but also the value embedded in the long term nature and low coupons associated with our debt securities.

Our view is that our owned securities have been and continue to be the best investment that we can make with our capital. We did not make any new third party investment commitments in the 2008 fourth quarter. Andy will walk you through the numbers shortly but during the fourth quarter and 2009 to date we repurchased $89 million face amount of our debt at an average 64% discount to par.

This means that Northstar will not have to repay $57 million of debt issued over the past few years and the benefit of that savings goes directly to our shareholders. These repurchases also reduce Northstar’s leverage and future debt maturity obligation. Our capital preservation strategy is also reflected in the dividend we are paying this month.

Northstar’s lower cash dividend reflects our view that in the longer term Northstar’s value will be enhanced by conservative liquidity management and that repurchasing Northstar’s debt at 40% return reducing future maturity risk and being even more cautious in an economic environment that gets worse each month is a better use of capital than paying a 30% plus yield on our common stock.

As significant owners of Northstar our long term interest are aligned with shareholders and we too are impacted in the near term by a lower payout on stock. Briefly covering the fourth quarter we deployed approximately $27 million of equity capital of which $4 million related to prior period loan commitments and was non-discretionary and $16 million were for Northstar corporate security repurchases.

As we expected, repayment activity slowed dramatically and as reflected with the increasing scarcity of capital which was exacerbated by the September Lehman Brothers’ bankruptcy. To summarize, while we are not immune to prevailing market conditions, we will continue to stick to our strategy of actively deleveraging our capital structure, increasing and hording liquidity and aggressively managing our portfolio to preserve value.

Through these measures we believe we will enhance our franchise and successfully manage through this period in order to take advantage of the exceptional opportunities which will arise during these times. I’d like to turn the call over to Andy Richardson.

Andrew C. Richardson

For the fourth quarter our GAAP net income inclusive of FAS 159 adjustments was $284.9 million or $4.51 per share. AFFO for the quarter was $14.9 million or $0.21 per share inclusive of $3.8 million or $0.06 per share of charges related to our corporate reorganization and downsizing and $5.6 million or $0.08 per share impairment charge relating to three office buildings leased to Washington Mutual Bank and who’s lease will be terminated by the FDIC effective March 23rd.

During the fourth quarter we downsized our company staffing which results in an approximate 30% decrease on Northstar’s headcount. We also wrote off approximately $2.9 million of intangible assets relating to our purchase in 2006 of NRF Capital, our Dallas based loan origination team.

With respect to the WAMU net lease properties, even though FFO excludes gains and losses from property sales and the likely outcome is that we give the properties to the non-recourse mortgage lender, FAS 144 and the SEC require us to include the write down of our carrying value in FFO.

We invested approximately $27 million of equity capital during the fourth quarter and received approximately $1 million of equity capital from loan repayment. Net interest income which is interest, rental and advisory fee revenues less interest expense, property operating costs and asset management fees were $35.9 million nearly flat to $35.8 million in the third quarter despite the fourth quarter one month LIBOR rate averaging approximately 39 basis points lower than the third quarter.

Prepayment penalties and other income totaled about $2 million during the fourth quarter, approximately $7 million lower than the 2008 third quarter. The decrease was principally due to a $9 million lease termination fee recognized in the third quarter relating to our Reading Pennsylvania distribution property partially offset by miscellaneous participation income.

General and administrative expenses excluding non-cash stock-based compensation totaled approximately $22.1 million for the fourth quarter. Cash compensation cost were higher for the fourth quarter due to a much higher proportion of cash versus equity compensation awards for 2008. Equity compensation is amortized over approximately three year vesting period and the value of 2008 total compensation including salaries and cash and stock bonuses was down $8 million or 20% compared to 2007. Auditing and professional fees were approximately $1.4 million higher than the third quarter due to a portion of the 2008 audit fees being incurred during the fourth quarter of ’08.

During the quarter, net mark-to-market adjustments increased Northstar’s book value by approximately $318 million. The increase this quarter was again principally driven by a $429 million decrease in value of our issued CDO notes but all of our securities assets, CDOs, convertible notes and trust deferred liabilities were in the aggregate valued much more cheaply at the end of the year compared to earlier periods in 2008.

These levels are driven by several factors including decreased market liquidity during the fourth quarter, selling pressure driven by investor redemptions in the various funds which had purchased our securities and balance sheet driven selling pressure for many institutions. Consequently, our GAAP book value as of December 31st was $19.50 per share. The earnings release contains a detailed reconciliation between our third and fourth quarter book value. If all the mark-to-market adjustments and accumulated depreciation were excluded from book value, book value would be about $8.40 per share at December 31st.

Our major discretionary use of capital was to acquire Northstar debt securities at an average aggregate 71% discount of par resulting in $22 million of extinguishment gains compared to the beginning of 2008 carrying values and a $49 million reduction in outstanding debt. For the fourth quarter we bought $31 million face of our CDO notes having ratings ranging from AA to BBB, $12 million face amount of our convertible notes and $6 million face of our trust preferred securities. Subsequent to yearend we also purchased an additional $40 million face of our convertible notes at an average 56% discount to par.

These acquisitions continue to be made opportunistically and as we attractive offers in the market. Our fourth quarter 2008 and year-to-date purchases will result in approximately $6 million of annual interest savings based on current interest rates. During the fourth quarter we also purchased about 475,000 shares of our common stock at an average price of $2.91 per share.

During the fourth quarter we funded $53 million of commitments under existing loans representing approximately $4 million of equity capital and we made no new net lease or joint venture investments during the quarter. Our $1.3 billion of real estate assets based on undepreciated book values are subject to long term net leases that have a weighted average remaining term of 8.5 years as of December 31st.

Of the $1.3 billion, $751 million represent healthcare related assets which are fully leased at December 31st. The remaining $549 million of assets are office, industrial and retail net lease properties. As noted earlier the FDIC recently notified us that WAMU will vacate our facilities in Chatsworth California on March 23rd. Rent is due from the FDIC until WAMU vacates and we will likely give the buildings to our non-recourse mortgage lender later this year.

For the fourth quarter, we took a $5.6 million impairment charge relating to this investment and expect no material P&L impact in the first quarter resulting from the transfer of these buildings to the lender. For details on these facilities including related non-recourse debt financings please see the tables in the back of this quarter’s release.

We continue to manage approximately $2.2 billion face of commercial real estate securities for the REIT of which $644 million are consolidated and $1.5 billion are accounted for in off balance sheet financing. Many are seasoned with 83% of our CMBS portfolio issued in 2005 and prior years and the entire portfolio has an average investment grade credit rating of BBB-. All the securities are current and paying according to their contractual terms.

Nevertheless, each of the rating agencies continue to adjust the ratings model for more conservative assumptions resulting in massive sector wide downgrade action especially for the more recently originated securitizations. We have experienced and expect to continue to see net downgrade actions in our portfolio resulting from rating agency model changes and Moodys recently downgraded most commercial mortgage securitizations issued since 2006. We expect the other agencies to follow with their own downgrade action.

Given the more seasoned nature of our portfolio, we do not expect a material impact on our assets but the overall trend continues to be heavily weighted towards downgrades rather than upgrade action. Furthermore, such downgrades may not necessarily be indicative of the performance of the security. Our securities are mark-to-market each quarter and the portfolio has continued to decrease in value as market credit spreads have widened. Virtually all of our securities are financed to maturity in CDO term financing or are held unleveraged so we not only have the intent but also the ability to hold these assets to maturity.

Our $2 billion commercial real estate loan portfolio consists of 108 separate loans at December 31, 2008. As expected underlying collateral performance has weakened along with the decline in macroeconomic conditions and business contraction partially offset by cheaper debt service costs with current one month LIBOR approximately 223 basis points cheaper than the average 2.7% LIBOR during 2008.

These weaker conditions mean that we are continuing to aggressively manage these assets, increasing credit loss reserve estimates for those assets where our principal might be impaired. We are also working with borrowers who cannot otherwise refinance or sell in this market and where we also do not think an immediate foreclosure and sale strategy maximizes recovery value.

In these situations we seek to obtain improved economics and/or structure from the borrower. We are generally able to work directly with our borrowers because approximately 78% of our portfolio loan balance was directly originated by Northstar. This means that we typically have more control in credit enhancements built in to these loans than was available from Wall Street product.

Also, approximately 42% of our loans have some sort of recourse obligation to the sponsors such as debt service reserve funding. Our experience to date that the ability to go after a recourse guarantee provides significant leverage in negotiations with borrowers. Also, funded reserves underlying our loans totaled about $115 million at December 31st. We received approximately $250 million of loan repayments during 2008 but all but $6 million were received in the first nine months of the year.

As expected, loan repayment activity has dropped dramatically because there were very few institutions committing new capital to the sector. For 2009 we expect this trend to continue and repayment activity to be light with just $46 million final maturities assuming all of our borrowers meet and exercise extension options in their loans. We continue to evaluate the opportunity cost of repayments and we may sell or otherwise elect to receive amounts less than we are contractually entitled to if the economic return from redeploying the proceeds is more attractive than no repayment at all.

During the quarter we recorded $9.2 million of new credit loss reserves relating to five loans and reversed $3.7 million of previously recorded reserves on three loans totaling $49 million. We also have one non-performing loan, a $21.4 million first mortgage which has an unresolved maturity as of yearend. No other loans are delinquent on contractual interest or principal payment.

The non-performing loan is secured by a permanent and improved condo/hotel development in Manhattan. The first mortgage is also secured by recourse guarantees from the sponsor and its investors and we are pursuing several options with respect to preserving our capital. Our fourth quarter credit loss provision consisted of a $4.5 million provision against the $9.4 million mezzanine loan on a multifamily development property in Washington DC where the sponsor is unable to complete the project due to financial difficulties.

A $1.5 million provision on a $20.8 million mezzanine loan backed by a California multifamily property who’s repositioning plan is behind expectation having the same sponsor as the Washington DC property. A $2.2 million provision which was taken on a $43 million first mortgage loan secured by an office building in Austin Texas who’s leasing plan is much slower than underwritten and an additional $500,000 reserve was taken against an $1.2 million mezzanine loan backed by a portfolio of six limited service hotels. We also took a $500,000 reserve against the non-performing loan.

We reversed $3.7 million of credit loss reserves relating to three loans totaling approximately $49 million. These loans were sold for par in January, 2009 as part of the $70 million sale of a portfolio of loans previously on our watch list. The investor provided approximately $9 million of equity capital and we financed the purchase with a mortgage loan collateralized in part by the sold loans.

This transaction allowed us to obtain more protection for our capital through the new credit supporting cross collateralization and freed up Northstar Asset Management resources because our new borrower will be actively working these assets with a strategy to obtain control of the property.

Our watch list decreased by approximately $45 million to $160 million at December 31st. We added there loans totaling approximately $70 million and removed six loans totaling $115 million including the $70 million of loans sold in January. The watch list is our internal management tool for allocating resources. It’s subjective and not necessarily indicative of potential future credit losses.

We believe that non-performing loans, delinquencies and credit loss reserves are more objective and comparable metrics to compare Northstar to other financial services companies. For these reasons we plan to focus on reporting more in these metrics in our reported results and may not publish our watch list in future periods.

On the right side of the balance sheet and with respect to near term debt maturity, the secured credit facility with JP Morgan is our only significant final maturity in 2009. We have just $45 million outstanding on the line as of December 31st and the outstanding balance currently is $15 million. The next significant final debt maturity exclusive of this facility does not occur until October of 2010.

At December 31st, we were in compliance with the financial covenants in our debt facilities and our CDO financing were in compliance with the related interest and collateral coverage [inaudible]. In this quarter’s release we included a table in the supplemental information section of the earnings release recording the status of the CDO coverage [tests]. We hope that this detailed information provides enhanced transparency with respect to these financing structures and the respective subordinated cash flow Northstar receives from each of these deals.

If we were to fail any of these [tests], cash flow from the respective financing would temporarily diverted from Northstar to repay senior debt until the failed [test] was back in compliance. Credit ratings downgrades of CMBS collateral backing our security CDOs can negatively impact OS [tests] if downgrades reach certain levels even if the security is fully performing typically the minimum amount of CCC rate securities. The agencies also may downgrade our issued CDO notes but such downgrades would have no liquidity impact on Northstar.

Consolidated assets totaled approximately $3.9 billion at December 31st down slightly from $4.1 billion last quarter due principally to mark-to-market adjustments. Northstar’s liquidity position remains solid with approximately $134 million of unrestricted cash and $123 million of uninvested cash in our CDO term financings for total liquidity of $257 million at yearend.

Future funding commitment under our loan investments remain our only non-discretionary future funding obligations. Typically borrowers must meet performance hurdles to obtain additional funds and we expect that some will not be able to draw on these amounts in the future. All future fundings of loans that are financed in our CDOs will be funded 100% within the CDO by a revolving class of notes which means there is no cash requirement from Northstar.

Of our $271 million of future funding requirements as of December 31st, $134 million will be funded in our CDOs. We must fund the unfinanced portion of the loans that are collateral for our secure credit facilities and term loans. We currently expect to fund approximately $77 million from available liquidity through the end of 2009.

This concludes are prepared remarks for today. Now, let’s open up the call for questions.

Question-and-Answer Session


(Operator Instructions) Your first question comes from David Fick – Stifel Nicolaus & Company, Inc.

David Fick – Stifel Nicolaus & Company, Inc.

Can you talk about the Moodys pending downgrade of CMBS deals? By the way thank you a lot for putting the OC and IC test chart in your disclosures but, I’m just wondering how concerned you might be able the potential for downgrades coming from Moodys going forward?

Andrew C. Richardson

I think Moodys had made those downgrade actions already and whether they would affect deals would be our deals that use Moodys ratings with would be our [inaudible] one, two, seven and nine deals. All those actions have occurred and we’re still in compliance with our OC and our IC tasks. The reason for that is those rating actions occurred principally on everything from 2006 onward and we don’t have much exposure to those vintage deals.

David Fick – Stifel Nicolaus & Company, Inc.

You think they’re done at this point?

Andrew C. Richardson


David Fick – Stifel Nicolaus & Company, Inc.

Assuming that all of your borrowers meet extension requirements you sort of made that statement, I’m just wondering how much soft maturity is there this year and how are you handicapping or monitoring the extension status and what kind of triggers do they have for meeting their extensions?

Andrew C. Richardson

I think that there’s a certain amount of automatic extensions and then there’s extensions where borrowers need to meet certain coverage tests and given economic conditions I think that – first of all we expect to have minimal repayments this year and the borrowers that don’t meet those tests or we don’t think are going to meet those tests, we’re in discussions with them right now and we’re actively seeking to get something in turn for an extension if we’re going to give them an extension.

I think nobody wants to be selling collateral today but we also obviously want to get our capital back so it’s a different discussion with each borrower. All of the extensions that we have given to date have been if they haven’t met a test we’ve gotten something in return for it.

David Fick – Stifel Nicolaus & Company, Inc.

Which would typically be more equity?

Andrew C. Richardson

More equity, a partial pay down, funding interest reserves to carry the loan for the next couple of years, those types of things.

David Fick – Stifel Nicolaus & Company, Inc.

Are you taking any equity?

David T. Hamamoto

Additional equity from our borrowers?

David Fick – Stifel Nicolaus & Company, Inc.

Any sort of residual or kicker equity?

Andrew C. Richardson


David T. Hamamoto

Not to date. We’ve focused on getting borrower equity and then increasing our economics on the loans or fees or increased rate also in structure so we haven’t to date taken equity kickers.

Andrew C. Richardson

But David, to give you a sense of order of magnitude, I think last year in terms of the extensions that were not contractual that we gave were around $96 million of loans that were basically due that we worked out a new deal with the borrower.

David Fick – Stifel Nicolaus & Company, Inc.

Your debt gains have to be distributed. Obviously, it’s very positive that you can buy at a discount but there is the new deferral law, have you analyzed how that applies to you and whether or not you are sheltered?

Andrew C. Richardson

Yes, I think that’s a positive for us. We are generating pretty significant gains and I think we’re certainly going to on a quarterly basis evaluate our dividend policy based on the need not to distribute those gains for a significant period of time.

David Fick – Stifel Nicolaus & Company, Inc.

That was my next question, do you anticipate paying a quarterly dividend or would you wait until later in the year to see how things true up?

David T. Hamamoto

I think David with this new pronouncement I think what we would do is reevaluate it depending on the magnitude of the contractual obligation for the quarter. But, I think there’s certainly a chance that to the extent there was not taxable income in the quarter potentially defer the decision until yearend.

David Fick – Stifel Nicolaus & Company, Inc.

My last question is you’ve got a lot of interest reserves built in to your loan structures many of which are value add loans and I’m wondering if you have an aggregate handle on the amount of remaining reserves and the current burn rate?

David T. Hamamoto

I think the remaining reserves we have are $115 million. We don’t have the exact burn rate handy but we can get back to you David on that.


Your next question comes from Jim Shanahan – Wachovia Capital Markets.

Jim Shanahan – Wachovia Capital Markets

I was wondering if there was a chance you could go through towards the end of Andy’s prepared remarks he was talking about the potential impact of additional ratings agency downgrades, could you walk through those comments again?

Andrew C. Richardson

I think I made a general comment that our security CDOs like many others that were issued in the market have provisions that if securities are downgraded to a certain level, it’s typically in the CCC range, then you basically automatically take an overcollateralization hit for that security. In other words it’s contractually deemed to be impaired even though it’s fully performing.

So, what we wanted to make sure everybody is aware of is that sometimes these OC cushions can be eroded because of rating agency actions. So, we have managed through that to date but obviously the market continues to get worse and I think what we’re seeing from the rating agencies is the fact that they’re becoming more conservative in their ratings actions as well as incorporating the increasingly poor economic outlook.

Jim Shanahan – Wachovia Capital Markets

Then with regards to David Fick’s question, you feel like at least in the near term that Moodys has acted on their potential ratings downgrades? There could be more of course in the future but you don’t expect any additional actions any time near term, is that correct?

Andrew C. Richardson

We think they’ve done most of their actions.


Your next question comes from [Claus Von Sutterheim – Deutsche Bank].

[Claus Von Sutterheim – Deutsche Bank]

I have two questions, I was trying to figure out what would happen to the structure and business model of Northstar if the CBMS market actually didn’t come back if it just never came back? How would you guys be operating? Is that a reasonable question?

David T. Hamamoto

It’s a reasonable question. I think now I think in this environment if you look at what most financial institutions are doing people are very focused on managing liquidity and managing credit and effectively staying solvent and I think that’s where we spend the bulk of our time. But, on a longer term basis in terms of a sustainable business model, I think that’s something that the overall financial system has got to figure out.

I think a lot of it will come out of some of the decisions that end up getting made by the government in terms of how the overall banking system gets funded. The only positive thing we’ve seen for the commercial real estate industry recently has been inclusion of CMBS in TALF which we believe is a significant step in terms of at least getting some liquidity back in to the market and having the market start to develop.

I think on the good news front in terms of once we do start making third party investments the fact that yields are high enough so basically we can earn our required ROE without leverage today given the opportunities in the market. I think near term seller financing will be a big driver in terms of how people get outside leverage returns reminiscent of what we saw the RTC and the financial institutions in the early 90s and disposing of their problem portfolios.

[Claus Von Sutterheim – Deutsche Bank]

The other question, you said something about a condo in Manhattan and I was wondering if you could be more specific? How much of the total portfolio is it?

David T. Hamamoto

It’s our only non-performer. They had default at the end of the year, it’s $21 million of exposure, there is a big recourse guarantee by a group of the sponsors some of which we believe have significant net worth. It’s a viable hotel condo project in a very good location and we have numerous parties interested in recapping the project.


Ladies and gentlemen that’s all the time we have for questions. Management I’ll turn the call back over to you for closing comments.

David T. Hamamoto

No further comments. Thanks everyone for joining the call and we look forward to speaking with you next quarter.


Ladies and gentlemen that will conclude today’s teleconference. If you would like to listen to a replay of today’s conference please dial 303-598-0300 or 1-800-405-2236 and enter the access code of 11126028 followed by the pound sign. We thank you again for your participation and at this time you may disconnect.

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