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W. P. Carey Inc. (NYSE:WPC)

Q1 2013 Earnings call

May 7, 2013 11:00 am ET

Executives

Christian Brown – Vice President, Investor Relations.

Trevor P. Bond – President and Chief Executive Officer

Catherine D. Rice – Managing Director and Chief Financial Officer

Analysts

Dan Donlan – Ladenburg Thalmann Securities

Lou W. Taylor – Paulson & Co., Inc.

Sheila McGrath – Evercore Partners Inc.,

Operator

Good morning, and welcome to the W. P. Carey Earnings Conference Call. (Operator Instructions) Please note this event is being recorded. I'd now like to turn the conference over to Ms. Christian Brown, Vice President, Investor Relations. Ms. Brown please go ahead.

Christian Brown

Thank you, Rimmy. Good morning, and welcome, everyone, to our First Quarter Earnings Conference Call. Joining us today are W. P. Carey’s President and CEO, Trevor Bond and Chief Financial Officer, Katy Rice. Today’s call is being simulcast on our website, wpcarey.com, and will be archived for 90 days.

Before I turn the call over to Trevor, I need to inform you that some statements made on this call are not historic fact and may be deemed to be forward-looking statements. Factors that could cause actual results to differ materially from our expectations are listed in our SEC filings.

Now, I'd like to turn the call over to Trevor.

Trevor P. Bond

Thanks, Christian and thanks everyone for joining us today. There was a strong quarter with some highlights that I’ll discussed before turning the floor over to Katy. As we’d expected and discussed on earlier calls, decreasing resulting from our merger last year with CPA 15 lead to the approval by our Board of 24% dividend increase back in March, which brought our annualized dividend rate to 324 per share.

This was our 48 consecutive quarterly increase. We feel comfortable with that dividend rate. Our adjusted funds from operations for the quarter was $1.3 per share, most of it earned through our real estate segment. In a moment Katy will break that number down into more detail and she will also provide an overview of the W. P. Carey Inc portfolios.

Turning to our investment activity W. P. Carey invested approximately $262 million in the first quarter and an additional $56 million so far this quarter for a total of about $318 million year-to-date. This encompasses 13 transactions including two for W. P. Carey totaling about $111 million, four CPA 17 totaling about $82 million, and an additional $125 million in six properties for carry watermark investors our Managed REIT that is a dedicated hotel fund.

As this typical for us, the assets represent a diverse pool of opportunity types. For CPA 17, we invested in manufacturing and office facility in Wisconsin for Penta, which is the leading designer and supplier of thermoformed products to the auto industry. CPA 17 also purchased with the House of Blues located in Victory Park in Dallas, Texas. Our lease which are guaranteed by the parent company Live Nation. CPA 17 also purchased land in the CBD of Chicago, there was subsequently to ground leased to GEMS, a for-profit provider of secondary education.

CPA 17 also initiated a build-the-suite of 1 million square foot, expansion of distribution space for an existing tenant of ours. Harbor Freight Tools, the facility is the hub of Harbor Freight East Coast supply chain, a critical facility to its operations and as an added benefit we were able to extend the existing lease to 20 years to be co-terminus with the new lease on the expansion space. And finally, we closed on a small portfolio of self storage assets on behalf of CPA 17.

The balance of the acquisitions on behalf of the managed REITs come through CWIR hotel fund, which purchased six hotels valued at $125 million as I said. And I’d like to emphasize that this fund which is managed by W. P. Carey in conjunction with the subadvisor one of our partners. And as a different set of Directors and an independent investment committee that is comprised of deeply experienced hotel veterans.

Turning now to W. P. Carey Inc’s investments, we purchased two buildings for our own balance sheet this year, one of which was the $72 million Kraft headquarter transaction that we had discussed back in February. More recently, we acquired for $39 million Tommy Hilfiger’s primary European logistic center in Vanlo, the Netherlands. Vanlo is a core logistics hub in the Netherlands with close proximity to the German border and the two largest ports in Europe.

It’s worth noting that both of these W. P. Carey purchases were made after determining that they did not meet the investment parameters or CPA 17. Typically that decision will be based on return requirements not being met, which is generally going to be due to the higher threshold mandated by the organization and offering cost of the managed REITs. That’s over simplifying a bit. There are other considerations as well as such as lease-term leverage ratios et cetera.

But to restate our policy with respect to this sort of decision while were in active investment periods for any given fund. Each new opportunities it comes to our attention, at first we evaluate, pursuit ability for the managed REIT.

As we stated on earlier calls, the deals at W. P. Carey Inc has purchased for itself represent a new source of growth because they would have been passed over prior to the time when we are sales for an active buyer. The cap rates for all these transactions very widely as you might expect given the diversity of product type, industry and geography et cetera.

I can give you a range the range of an initial cap rates with 6.9% to 10.7% and the overall average was 8.66%, which actually represent somewhat of an increase over last years average of 8.4%, but again it’s difficult to small sample size, difficult to tell say whether that is in fact the trend given the wide variety.

Turning now to the general investment climate, we continue to feel positive about our ability to meet our goals for the year. In Europe, we’re still seeing transactions which sack up well to comparable U.S. deals in terms of risk adjusted returns.

We’re also beginning to get some traction in building pipelines in the emerging markets and East Asia. Some of those emerging markets including Brazil and India have cooled of somewhat in terms of foreign investor enthusiasm, which creates a better buying environment for ourselves. We still think those markets have good growth prospects in the long run and will provide the managed REIT with good possibilities in the future.

With respect to the U.S. market, well it’s true that more capital has flowed into the net lease sector, as we said on many occasions the market have large and deep and diverse. And then we try, wherever possible to stay off the main highways – the highly market of transactions. We preferred to folks instead on transactions that fall into the category of less price efficient opportunistic deals that are overlooked by the wider market for one reason or another.

We tend to study those opportunities longer and just station period for them is longer than for them is longer than for the more liquid types of net lease deals. So for this reason and because we have the resources and experience to tap into international markets, we remain confidence in our ability to continue growing both the owned portfolio and assets under management even in this more competitive climate.

And with that, I’m going to turn the microphone now over to our CFO, Katy Rice.

Catherine D. Rice

Thanks, Trevor, and good morning, everyone. I’d like to review our financial results for the first quarter, walk you through our portfolio metrics and then finish with the discussion of some of our initiatives for the year ahead.

Before we get to the numbers, let’s quickly review how we make money. Again our AFFO is derived from two sources; our Real Estate Ownership segment and our Investment Management segment. Our real estate segment can be broken down into four buckets. First, is the rental income from the properties that we directly own, second, is the pro rata share of rents from properties that we own jointly, third, is the income we receive from our ownership stakes in the Managed REITs, and fourth, is the real estate revenues we earn through the general partnership interest that we hold in the Managed REIT.

These GP interests entitle us to 10% of the available cash flow of the Managed REITs. The second business segment is Investment Management, which is the business of managing approximately $8.5 billion of assets, primarily in CPA REIT 16 and 17.

AFFO from our Investment Management segment, which is reconciled to GAAP income on Page 8 of the supplemental, is derived primarily from two sources. First, each time we acquire an asset on behalf of one of the Managed REITs, we earn structuring revenue, which is essentially an acquisition fee.

Second, we earn annual asset management fees equal to 50 basis points of the growth asset value of the managed REITs. In addition, we’re entitled to various other fees in connection with services provided to the Managed REITs. This includes fees payable upon liquidation of a Managed REIT subject to performance hurdles.

Okay. With that as a backdrop let’s move on to our earnings this quarter. Our first quarter earnings reflect the impact of CPA 15 merger, which we completed last September. Our AFFO was $72.3 million or $1.03 per diluted share. Of the $1.03 per share, $0.90 or 87% was generated from our Real Estate Ownership segment and $0.13 was attributed to our Invested Management segment.

As expected, AFFO from our real estate segment improved significantly with AFFO up 190% compared to the first quarter of last year. This improvement was primarily due to addition of the CPA 15 asset. Our Investment Management segment AFFO was down 17% compared with the same quarter last quarter, primarily due to loss of the asset management revenue associated with CPA 15.

Structuring revenues were down somewhat as investment volume was light this quarter. Dealer manager fees, which we used to call wholesaling fees, declined as we completed our fundraising activities for CPA 17 in January.

From balance sheet perspective, at the end of the quarter, our debt to total asset ratio was 43% and the weighted average cost of our debt was 4.7%. Refinancing activity in 2013 is modest, with $29 million of debt refinanced year-to-date and few additional loans totaling about $36 million maturing throughout the remainder of the year.

We continue to have several million dollars of capacity on our line of credit for additional acquisitions. At the end of the quarter, the WPC Group, which includes both WPC Inc as well as our three managed REIT had approximately $15 billion of total assets under management.

Now let’s review the WPC Inc. portfolio metrics, as of March 31, 2013, our well diversified portfolio consisted of 424 properties with $39.2 million square feet leased to 124 different tenants. We are truly global with properties in eight different countries and 72% of our contractual minimum based rent it’s from properties located in the U.S. with 28% international.

We have a proactive asset management approach that is focused on lease extensions, opportunistic dispositions and the leasing or redevelopment of vacant properties. At the end of the quarter, our portfolio occupancy rate was 98.8% up 9 basis points from the end of 2012. Our weighted average lease term at the end of the quarter was 8.8 years.

This quarter we sold two small properties for approximately $11 million booking to small laws. We entered into two new leases and extended the terms on two existing leases. For the remainder of 2013, we have only four leases expiring representing less than 80 basis points of portfolio revenue.

Looking forward to 2014, we have 19 leases expiring representing 7.6% of total portfolio revenues.

We’re actively working with each of this tenant to access their needs and formulate a game plan. In most cases we expect the tenants to renew. However we do expect some of the properties to become vacant. And are working on alternative outcome including leasing the property to a new tenant or selling to or joint venturing with a local entrepreneurial developer who can reposition the property.

Some of these transactions are complex we have an outstanding team of asset managers in the U.S., Europe and Asia who are focused on managing and optimizing outcome each assets in the portfolio.

Finally, as we announced earlier in the quarter and as Trevor mentioned, we increased our quarterly dividend by 24% to $0.82 per diluted share or $3.28 per share on an annualized basis. This increase reset our base dividend rate to reflect the positive impacts of the CPA 15 merger. And as a result we would expect that any quarterly dividend increase is going forward would not be of this magnitude.

With respect to our earnings for the remainder of the year, we think that the first quarter is a good proxy for the year ahead. While structuring less revenues which tend to be lumpy were down a bit. But the Kraft transaction closed in mid January, so we picked up the majority of accretion from this transaction in our quarterly result.

As I mentioned on our call, we expect to access a greater variety of capital sources to fund our growth and lower our cost of capital. In the coming quarters, as our secured debt rolls off, we plan to build an unencumbered asset pools in the anticipation of becoming an unsecured borrower.

We expect this to take 12 months to 18 months and will be dependent on the timing of our investment volume and the expense involved in prepaying certain secured debt obligation. And last but not least one of our goals this year is to increase our equity research coverage. We’re pleased to announce that our research coverage increased 100% yesterday when Sheila McGrath of Evercore initiated coverage. So now we have two analyst covering WPC Inc.

And with that, let me open it up to questions.

Question-and-Answer Session

Operator

Thank you. We will now begin the question-and-answer session (Operator Instructions). Our first question is from Dan Donlan with Ladenburg Thalmann.

Dan Donlan – Ladenburg Thalmann Securities

Hi, good morning,

Trevor P. Bond

Hi, Dan.

Dan Donlan – Ladenburg Thalmann Securities

Trevor, could you guys just talk about what you guys have seen on the investor management side in terms of flowing to the funds and have you seen kind of pick-up recently in kind of what’s the mood of the retail investors that you guys invest just given kind of all the activity going on in the non-traded space.

Trevor P. Bond

You’re referring them to the fund raising flows Dan?

Dan Donlan – Ladenburg Thalmann Securities

Yes.

Trevor P. Bond

Sure. It’s been good I would say the one thing that I should mention is that as we mentioned on the last call CPA 17 closed it’s fund raising period at the end of last year and we have not been in the market with another CPA fund during that time. We have however been in the market with CWI, the hotel fund that I mentioned which is still in its fund raising period and sales for that have been brisk. And I think generally speaking the industry has seen flows continue to be strong. I think the low yield environment continues to be a big factor there and sales have been strong. So, we would expect that to continue for the foreseeable future.

Dan Donlan – Ladenburg Thalmann Securities

Yeah, I guess what I meant was. I mean have you seen people, your wholesalers want more products vis-à-vis CPA 18. I mean that’s I was looking for more color there, most of the anything else sorry.

Trevor P. Bond

Certainly, yeah, now our wholesalers there always eager to their good group and they’re always eager to have product to sell and because of the tract record and of the earlier CPAs and it’s a product for them to sell. And we anticipate that at some point soon.

Dan Donlan – Ladenburg Thalmann Securities

Okay. And then as for as acquisitions are going, how to you feel about Europe now versus the U.S. in kind of how are you deciding on one versus the other? Is it just kind of an asset by asset or do you feel more comfortable now with Europe? And when do you think you might venture maybe into some of the southern countries?

Trevor P. Bond

Sure, well as you know last year, our volume in Europe did declined somewhat not because we redlined Europe, but we did become more selective and really raised or affectively raised our return requirements. We continue to see deal flow through the years. So that we had the funnel, we just made them out somewhat narrower. And I would say that the funnel itself is wider right now than it was at this time last year.

And so – and I’m of course applying that to all our investment activities, W. P. Carey, the Managed REIT as well, but we’re seeing quite a lot and I think there will be most of the investments that we do in Europe would be through the managed funds. We’re seeing the best opportunities in Northern Europe. As I had mentioned on the last call, we prefer to focus on the more fiscally disciplined countries that have the stronger currencies in the unlikely event of our euro break up and then have better export markets and things.

Dan Donlan – Ladenburg Thalmann Securities

Okay.

Trevor P. Bond

The other parts of the world, as you know we had done our first deal in Japan at the end of last year. We continue to evaluate transactions in Japan. It’s gotten a bit more expensive with the renewed optimism under the new Prime Minister and his stated goal to try to stimulate inflation. And so, that has increased the invest market somewhat, but we still continue to pursue our model of off market transactions and what not, and I think eventually we’ll get more volume there.

In the other markets, we have full time personnel in Brazil and India, but as I’ve said in the past we’re cautious about pulling the trigger. We’re looking at deals, evaluating them, getting comfortable with the market and all the factors that we usually like to do, but we haven’t pulled the trigger yet. Again that would be for the managed funds. We do anticipate growth in that area over the next year or so.

Dan Donlan – Ladenburg Thalmann Securities

Okay. And where are you seeing cap rates in Europe relative to U.S. and maybe relative to Asia?

Trevor P. Bond

Well, Asia, the cap rates are still fairly tight. They had widened in Japan somewhat following the tsunami and then the nuclear incident that they had, and that scared some investors away, but as I mentioned just a moment ago, some of that concern has been laid and so cap rates have come down somewhat in Japan where of course the debt is very cheap there, sub 2%, so that you still have attractive spreads over the so called risk free the benchmark rates over there.

Cap rates in Europe pound-for-pound are wider than here in the U.S. for comparable credits, and on the last call I think I mentioned a range of about 50 to 100 basis points, which is not a scientifically derived number, but that’s my gut feel. The transactions that we’ve done had they been close to the market here in the U.S. would have been at least 100 points wider.

So I think that opportunity still remains and I think on the positive side, what we hope is that the corporate users of real estate over there and Europe of course has more generally more corporate owned real state as a percentage than the U.S. that’s why we always favor that market, but we expect that over time as market conditions improve and cap rates and more capital goes into Europe perhaps looking for opportunities at first, but eventually driving the prices of all assets up that more sellers will begin to come to market, with their products, we did see that following the crisis in ’09. That as market conditions improve you start to see more supply as well as more competition for the deal.

Dan Donlan – Ladenburg Thalmann Securities

Okay, and then looking at the balance sheet Cathy, I think your taxes for the domestic manager, I think it was actually a benefit for the quarter, so what was going on there, and anything kind of one-time mission that, we are working after that.

Catherine D. Rice

Sure, yeah the provision for taxes, which obviously is usually an expense this quarter was a benefit and that was really driven by a couple of things, our investment management revenues are obviously taxable, they are not good REIT income, so they are taxable and we run them through TRS, and we this quarter had a loss in the investment management segment from a taxable income perspective, so that drove some of the provisions.

And then we also had some additional expense this quarter related to the actual payment we take at annual comp in Q1, which most people do, so 2012 bonus comp which was paid in Q1 was an additional expense there, also driving that down and creating the provision or benefit, if you will.

Dan Donlan – Ladenburg Thalmann Securities

Okay. So you expect to share that the stock comp that didn’t come down and versus in the second and third quarter, fourth quarter then versus the first.

Catherine D. Rice

Yeah that actually wasn’t related to stock comp but it was related to the actual cash bonuses paid.

Dan Donlan – Ladenburg Thalmann Securities

Okay.

Catherine D. Rice

That’s obviously a one quarter event each year, but we do expect the tax provision to be back in the provision column not the benefit column in coming quarters.

Dan Donlan – Ladenburg Thalmann Securities

All right, I think that’s it from me, I’ll circle back in the queue.

Catherine D. Rice

Thank you.

Trevor P. Bond

Thanks Dan.

Operator

Your next question is from Lou Taylor with Paulson. Go ahead please.

Lou W. Taylor – Paulson & Co., Inc.

Thanks good morning, can you just get into your AFFFO reconciliation calculation, you got some adjustments, equity earnings from the equity investments, what adjustments are in there that aren’t the normal (inaudible) FFO adjustments plus calculation?

Trevor P. Bond

Are you looking at the supplemental?

Lou W. Taylor – Paulson & Co., Inc.

No, I’m just really reading in the press release.

Catherine D. Rice

Yes, it’s really just, it’s the pro rata share of our equity investments in the – if you’re looking in the press release, the things below FFO was defined by NAREIT, it’s really our pro rata share of those various line items.

Lou W. Taylor – Paulson & Co., Inc.

Yeah, I realized that, but it’s a pretty big number, the only thing in the rest of the calculation is on straight line or above and below market lease…

Catherine D. Rice

Right. So straight line above and below market lease, I am sorry, which one are you focused on?

Lou W. Taylor – Paulson & Co., Inc.

This is AFFO adjustments equity earnings from equity investments about $9.2 million and it just seems like unusually large number for that type of line items. So I am just curious as to what might be contribute to that?

Trevor P. Bond

It’s actually, I mean, it flows through I think that on pages 8 through 12 of the supplement, we break that down. So that you can see sort of what the contribution is from our director investments in the joint ventures, which are mostly with our own CPA REIT. And that’s on one column and the adjustments are made. And then the other, what you’re talking about is our investments in the managed REIT themselves. Because we look at

Catherine D. Rice

Yes

Trevor P. Bond

We can follow-up, but really what we’ve done is just taken the income from the equity pickup and then adjusted all of the FFO calculations that you would ordinarily do with respect to any normal, any AFFO calculation, but applied to those equity investments.

Lou W. Taylor – Paulson & Co., Inc.

I understand the methodology just seems like an usually large number, but I’ll go through it.

Catherine D. Rice

Yeah, so it’s really just a compilation of all of those equity investments. And then the adjustments we make at the top line for them for our pro rata share.

Lou W. Taylor – Paulson & Co., Inc.

Yeah, no, no I understand the methodology it seems like unusually a large number. So, I’ll take a looking and then I’ll come back to you, thank you.

Trevor P. Bond

Okay, Thanks.

Catherine D. Rice

Thanks [Jim]

Operator

Our next question is from Sheila McGrath with Evercore. Go ahead please.

Sheila McGrath – Evercore Partners Inc.,

Hi, yes, good morning, I’m sorry I dialed in a little late as this is already addressed, but on acquisitions in the managed REIT for Q2 the watermark and I’m just wondering if you could give us some insight on CPA 17 if you think the pipeline is how it shaping up if are you concern that about opportunities at this point?

Catherine D. Rice

Right now, I’m now Sheila. I think the skewing just happened to be because there were some deals that Carey Watermark fund has been working on towards the end of the year with longer lead times and ended up getting close and so. That was just a very successful quarter for that fund. What it doesn’t say that much about CPA 17 for us typically the first quarter is one of the slower quarters and because each of our deals does have long lead time and their seasonality involved in terms of when the sellers who are mostly represented by their CFOs really start to get focused on what they wanted to do and after they sort through other alternatives as apposed to our sale lease back, we tend to start to see more activity in the second, third and then picking up towards the fourth quarter and it’s always somewhat difficult for us to make projections just because of that. But right now, in terms of when we compare the current pipeline which is that funnel that I refer to the so the funnel size had other first quarters are in the past it’s looking fine.

So, we don’t have particular concerns, with respect to the capital that we’ve available, we have plenty of dry powder and it’s late – and because the fund is closed and we’re in the final investment stages of the fund, we know where we stand with respect to potential concentrations of new deals and I think that we could do some large transactions this year with capital that we have. And briefly to review the capital that we do have, we had $635 million available as of May 1, but $278 million is earmarked for built the two projects and expansions and what not.

And then when you add in about $40 million that we expect or see from an asset sale and refinancings, we’re left with about $400 million of dry powder for CPA 17. And as I said, we’re comfortable that there’s pretty good opportunities out there for us to deploy that capital, but we’re not in a rush and we try to careful about each individual investment and also it’s very difficult to say exactly when we would be fully invested in the fund.

Sheila McGrath – Evercore Partners Inc.,

Okay. Next question on CPA 16. I know you’re limited on what you can say, but I was just wondering if you could remind us when CPA 15 or CPA 14, for example, when they hired an outside advisor, about how long does the process take for them to evaluate opportunities?

Trevor P. Bond

Well, it was different in both those cases, and I think that six day a week is a reasonable timeframe at least in terms of past.

Sheila McGrath – Evercore Partners Inc.,

Okay. Okay, that’s helpful.

Trevor P. Bond

It can go longer. There’s a lot of factors that go into that. So what happened in the past may not be replicated in the future.

Sheila McGrath – Evercore Partners Inc.,

Okay. And just on the estate shares, I see in the Q you executed your last purchase. Is the number in the proxy, the 10.7 million shares, is that now down closer to 10 million shares or did already include this transaction that just occurred?

Catherine D. Rice

Yeah. Sheila, we might not have made that completely clear in the proxy, but it’s 10.7 million shares and net of that sale was – the shares would be still under about 10.1 million or about 15%.

Sheila McGrath – Evercore Partners Inc.,

Okay. That’s helpful. And then, one big picture question. Just on the non-traded REIT and environment, we heard a lot of commentary that there could be a broadening of distribution channels beyond the traditional ones for non-traded REITs. And that might have the impact of having lower fees i.e.; a lower cost of capital for the non-traded REITs. I’m just wondering how you think – what your thoughts on this is, could this translate into larger demand for non-traded REIT product, just wondering big picture how you view that Trevor?

Trevor P. Bond

Well, I assume you’re referring the daily – what’s called the daily [now] products.

Sheila McGrath – Evercore Partners Inc.,

Well, and also I think that non-traded REIT, though people are considering distributing them through channels that would have a lower cost or a lower load like traditional brokerage firms like Schwab or Fidelity.

Catherine D. Rice

Yeah, I mean, I think Sheila, the commission is not something that necessarily impacts us. Obviously that would affect the brokers and what not who sell the products, but from our perspective that would not change anything and if it’s broadened out, the market, that would probably be a very good thing for us.

Sheila McGrath – Evercore Partners Inc.,

Right. Yeah, I understand you would benefit from you don’t get a free necessarily from that. But also I was wondering if that in effect would lower the kind of hurdle rate on the cost of the non-traded REIT if those kind of load shrink then maybe it could broaden out the Cap rate of acquisitions you might be able to consider.

Catherine D. Rice

Yeah, I mean I think somewhat obviously they would have a slightly lower cost of capital because you wouldn’t have the load factor or not as larger load.

Sheila McGrath – Evercore Partners Inc.,

Okay, all right. I think that’s it. Thank you.

Trevor P. Bond

Thank you.

Operator

Our next question is a follow up from (inaudible). Go ahead.

Unidentified Analyst

Yeah, thanks just one real quick one and have you guys, given that you guys haven’t really shied away from special purpose assets, have you guys looked at potential sale lease backs with any of the gaming companies, there is a lot of activities to be a pretty large markets. We’re just curious what your thoughts where there?

Trevor P. Bond

Yes, we’ve looked at those transactions in the past internationally and in the U.S. and for one reason or another it could not get comfortable with the underlying real estate or with the credit. It is a specialized business and each of the cases was different when we looked at one in Canada, we looked at one over Macau and it’s a highly regulated and most of these markets it’s highly regulated and so. You exposed to regulatory source of risks and in some cases even political risks that are somewhat difficult to underwrite. And so, and then should the underlying credit not work out and there is questions about how you can replace the existing operator. So it’s a whole host of reasons why we passed on the deals this time, not at say, we wouldn’t do it with the right circumstances. But it’s so far nothing has been appealing to us.

Unidentified Analyst

Okay, thanks. Good afternoon.

Trevor P. Bond

Sure.

Operator

This concludes our question-and-answer session. The conference is now concluded. Thank you for attending today’s presentation. You may disconnect your lines.

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