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Executives

Tom Heslip - Chief Executive Officer

Mike Forsayeth - Chief Financial Officer

Jennifer Tindale - Executive Vice President & General Counsel

John De Aragon - Executive Vice President - Real Estate Investment

Lorne Kumer - Executive Vice President - Real Estate Portfolio & Asset Management

Analysts

Sam Damiani - TD Securities

Neil Downey - RBC Capital Markets

Granite Real Estate Investment Trust and Granite REIT Inc. (GRP) Q1 2013 Earnings Conference Call May 9, 2013 8:30 AM ET

Operator

Good morning ladies and gentlemen and welcome to the conference call of Granite REIT. Speaking to you on the call this morning at Tom Heslip, Chief Executive Officer; and Mike Forsayeth, Chief Financial Officer.

Before we begin today’s call, I would like to remind you that statements made in today’s discussion constitute forward-looking statements and that actual results could differ materially from any conclusion, forecast or projection. These statements are based on certain material facts or assumptions, reflect management’s current expectations and are subject to known and unknown risks and uncertainties.

Theses risks and uncertainties are discussed in the company’s material filed with the Canadian Securities Administrators and the U.S. Securities and Exchange Commission from time to time, including the Risk Factors section of its annual information form for 2012 filed on March 5, 2013.

Readers are cautioned not to place undue reliance on any of these forward-looking statements. The company undertakes no intention or obligation to update or revise any of these forward-looking statements, whether as a result of new information, future events, or otherwise, expect as required by law. In addition, these remarks this morning may include financial terms and measures that do not have a standardized meaning under international financial reporting standards.

Please refer to the Q1 2013 condensed combined financial results for Granite Real Estate Investment Trust and Granite REIT Incorporated and other materials filed with the Canadian Securities Administrators and U.S. Securities and Exchange Commission from time to time for additional relevant information.

As a reminder, this conference is being recorded today, Thursday, May 9, 2013.

I would now like to turn the call over to Mr. Tom Heslip. Please go ahead sir.

Tom Heslip

Thank you and good morning. Joining me on the call today are Mike Forsayeth, our CFO; Jennifer Tindale, our Executive Vice President and General Counsel; John De Aragon, our Executive Vice President - Real Estate Investment; and Lorne Kumer, our Executive Vice President - Real Estate Portfolio and Asset Management.

Given the significant impact of the re-conversion and the IFRS on reported results that Mike will be covering in his remarks and to leave time for your questions, I will keep my comments fairly brief this morning.

The first quarter of 2013 represented the first quarter in which Granite enjoyed the tax saving benefits of being a REIT. We completed our first acquisitions, developed an important new joint venture relationship to accelerate our diversification strategy and growth phase, began making monthly distributions to our unit holders and we adopted the IFRS accounting framework. These important milestones, combined with the improved operating performance resulted in a very successful quarter for Granite.

The repositioning for Granite REIT for the future was a major accomplishment last year. It has allowed us to now fully focus our resources and act as a true value oriented real-estate investment trust. We believe that the results for Q1 show that we are on track.

Granite is now, more than ever before fully engaged in portfolio management, property repositioning, leasing, potential selected sales and very importantly, new acquisitions and selective value creation development.

With the imminent closing of Portal Way in Portland Oregon, an acquisition of approximately $21 million U.S., Granite will have completed over $60 million in acquisitions, totaling over 1 million square feet of new state of the art multi-tenant facilities, which are measurably accretive to FFO and have enhanced the quality profile of our portfolio.

We’ve also added two quality development sites, one in Louisville, Kentucky and the other in Berks, Pennsylvania, representing potential development of an additional 1.37 million square feet, over $60 million in development costs and very significant potential, new ALP to come.

With these initiatives and a healthy acquisition pipeline we are step-by-step, quarter-by-quarter progressing on expansion of our tenant base and diversity, the quality of our properties, the overall diversification to our portfolio that is an essential part of our strategic plan.

We do not look at acquisitions and selected development as a race, but rather as a disciplined building processes focused on quality and long-term property fundamentals that not only add new and accretive income, but also enhance the overall value of Granite.

Taking into consideration that if we adjust through Q1, 2013 and the overall capital value and investments we have made this year, we see steady strides and progress being made towards the overall portfolio target mix we set out in our strategic plan.

Regarding our leasing activity, as I have said in the past and must note again, Granite cannot comment on the specifics of lease renewals or negotiations until such are fully completed and signed. That being said, we could say that with some 33 leases that had or have 2013 expiration dates, we have now renewed nine of these are and are engaged in active negotiations on the majority outstanding.

As of today there are 24 remaining leases expiring this year, representing 4.5 million square feet and annual lease payments of approximately $23 million. Of these 24 properties, we are certain that Magna will vacate or already has vacated four, with some degree of uncertainty as to Magna’s intentions to remain in a couple of additional properties.

The remaining 18 to 20 properties have lease expiring towards the end of 2013, and we expect that we’ll take all of the coming three quarters to complete resolutions on these, while we also work on the releasing and repositioning of those properties Magna vacates.

As to new business, as I mentioned at the outset, diversification, growth and new acquisition is the primary focus and will continue to be so throughout this year and the years ahead. We are actively reviewing opportunities in various markets, with specific focus on the United States and Germany. Overall, we continue to see greater depth in these markets in terms of quality, pricing, and opportunities, something we are not seeing a whole lot of in Canada at this time.

In summary, Q1, 2013 was a very good quarter for Granite, though there is still much to be done. We remain focused on achieving results that demonstrate progress on our strategic initiatives.

With that, I will turn it over to Mike Forsayeth.

Mike Forsayeth

Thanks Tom. As Tom said, the first quarter of 2013 was a solid one and it was also another quarter in first for Granite. It was our first quarter as a REIT, our first quarter reporting our results under IFRS. We completed our first acquisitions and began paying distributions to our unit holders monthly.

The REIT conversion and the change to IFRS has significant impacts on our reported results and I’ll review each of it separately in a minute.

From an operating standpoint, there were no surprises. We slightly exceeded our tax saving targets as a REIT. The top line benefited from some contractual rent increases. We have four favorable foreign exchange rates. Our comps are in line and we are winding down the expenses associated with the re-conversion and related corporate reorganizations.

Before I get into the details of the quarter’s results itself, let me give you some more background on the impact of changing from U.S. GAAP to IFRS and separately the re-conversion itself.

First, the change to IFRS. Although the underlying complexities of changing from U.S. GAAP to IFRS are immense and the disclosures are much more extensive, as demonstrated by our 35 pages of financial statements, the practical reality of the impact on our financials is primarily found in the accounting for our real estate properties.

From a January 1, 2012 opening balance sheet perspective, the big entry is debit real estate for the fair value bump, credit deferred taxes and the increased difference between tax and book and credit equity.

To be more specific, the major balance sheet impact as a result of changing to IFRS include firstly real estate properties are recorded at fair value, not depreciated costs. As of January 1, 2012 the fair value bump was $737 million. These fair values were determined by management and in support of establishing those values, an external appraisal was completed for all of our real-estate properties with the information and results derived from those appraisals being integrated into management’s fair value determinations.

Deferred rent receivable and deferred revenue, resulting primarily from straight lining the rents, deferred leasing commissions and tenant improvements are no longer separate line items on the balance sheet, as they are encompassed in the fair value determination.

Also as allowed under the transition rules, our foreign currency translation account was zeroed out as of January 1, 2012 to form part of the opening retained earnings. Only the currency movements since January 2012 are reflected in this account.

Our deferred tax balances are substantially higher due to the recording of approximately $164 million of additional deferred taxes, the vast majority of which was associated with the fair value bumps in all jurisdictions. This amount includes approximately $65 million attributable to our Canadian properties, while Granite was a Corporation. As of January 1, the initial offset to the deferred tax liability entry was booked to the opening deficit.

As it relates to our income statement, the major IFRS items we’re highlighting include, no depreciation being recorded on our income producing properties, but depreciation does continue to be incurred on our office furniture and fixtures. Fair value changes relating to our real estate are recorded in the income statement, and we gave the fair value changes for our financial instruments, which will include our forward exchange contracts, a separate line in the P&L. Deferred income taxes of anything if any, pertaining to the fair value changes are also recorded.

Funds from operations calculated under REALPAC are different than under new REIT in U.S. GAAP. The significant differences pertaining to Granite are that REALPAC adds back deferred taxes, business transaction costs and fair value changes in financial instruments, like our foreign exchange contracts, but does not add back depreciation on our fixed assets.

As previously reported on January 3 of this year, Granite became a REIT. That had the following three impacts on the IFRS financial statements: Upon conversion to a REIT, $41.9 million of the $65 million I just referred to of deferred taxes relates to the fair value bump of the Canadian Properties, were reversed into income this quarter. This reversal is in addition to approximately $23 million of deferred taxes that under IFRS, but not U.S. GAAP, were reversed in to income of Q4, 2012 and that related to one of the corporate reorganization steps that occurred just before 2012 fiscal year end.

Although the U.S. Properties are also contained in a REIT, under current tax legislation there could be corporate level taxes at regular income tax rates, should any of those properties be sold. Accordingly, this deferred tax liability was not reversed, as deferred tax opportunities were not available. Lastly, all stock in unit based compensation is recorded as a liability as of January 3.

With that as background, I’ll now turn to the first quarter operating results of the business. As I said at the outset from an operating standpoint, there were no surprises and we are very pleased with the results. Here are some of the highlights.

On a reported basis our quarterly net income was $94.4 million or $2.01 and this compares with $28.3 million or $0.60 per share for the first quarter of 2012. Our reported net income is distorted not only by the natural impacts associated with the changing to IFRS, but also the added distortions caused by the REIT conversion.

The significant items of note when reviewing our net income include; the quarter’s tax provision contained to $41.9 million reversal of Canadian differed tax liabilities as a result of converting to a REIT that I just mentioned; there were fair value gains of $18.7 million before tax on our investment properties, largely attributable to the cap rates compression in North America, and we had a $5.1 million gain on the settlement of a meadows holdback.

Our Funds From Operation or FFO was perhaps the more useful financial measure, and for the first three months of 2013 Granite’s reported FFO was $34 million, up $4.5 millions from Q1, 2012, largely due to the increase of rental revenue of $2.4 million and the lower current income taxes of $2.5 million. These were partially offset by approximately $500,000 of increased interest and financing charges.

Turning to some of the line items; from a revenue prospective the increased revenue over the comparable quarter last year was mainly attributable to $1.5 million of contractual rent increases, primarily in our Austrian property; $500,000 related to the acquisition completed in February; and approximately $300,000 of favorable foreign exchange rates. Additional rent from completed projects on-stream was largely offset by vacancies in the straight-line rent adjustment.

Property operating costs were in-line with last year, and as a result of recent acquisitions now includes a separate line for those operating costs recoverable from tenants. As we complete more acquisitions, we expect that you’ll see this line grow.

Our G&A in the quarter was $7.1 million and includes $1.4 million of REIT and related reorganization costs. For Q1, 2012 our G&A was $6.5 million, and that included $1.1 million of REIT and severance costs. We had total foreign exchange gains of $1.1 million, $500,000 of which pertains to our forward contracts outstanding and the balance relates to translating certain foreign currencies denominated balances.

Net interest expense to the quarter relative to last year was $500,000 higher due to costs associated with setting up our new $175 million credit facility, the new interest expense associated with the mortgage financing and lower interest income earned on cash balances.

The details of our tax provision as you might expect are complex, but I’ll try and explain it. In somewhat over simplified terms, our total tax provision comprises of a net current tax provision of $900,000 and a net deferred tax recovery of $35.5 million.

Our current expense reflects a provision of $1.8 million, being the current taxes pertaining to the first quarter’s earnings of those jurisdictions other than Canada and the U.S. That amount is reduced by the recognition of some previously unrecognized tax benefits and the settlement of tax audits in Canada, Germany and the U.S.

For purposes of our FFO calculation we used the $1.8 million. Our deferred tax recovery reflects the $41.9 million reversal discussed earlier and reduced by the deferred taxes associated with the fair value increases recognized in the quarter and certain other timing differences.

Some additional financial metrics and matters that I’d like to highlight include our annual lease payments at the end of the first quarter are up $8.7 million from the end of 2012, the two primary reasons for the increases are contractual rent adjustments of $4.9 million and $3.2 million related to the February acquisitions.

In the quarter we invested $2.4 million in capital expenditures for various small projects and during the first three months we declared $24.6 million of distributions to unit holders, of which $16.4 million was paid in the quarter. At the end of the quarter of Q1, we had $63.6 million of cash in the bank, always a good thing.

Lastly and in closing, I’d really like to acknowledge our staff and in particular our finance and accounting people in Toronto and in Vienna, Australia. In the last four months accounting for the REIT conversion, the multiple corporate reorganizations we undertook completing a year-end audit and then immediately converting to IFRS was a huge assignment and an accomplishment, and I wanted to both thank and recognize them for their tremendous efforts. It was no easy task.

With that, I’ll turn it back to Tom.

Tom Heslip

Well, thank you Mike. Operator, we’re open for questions.

Question-and-Answer Session

Operator

Certainly. (Operator Instructions). And our first question comes from the line of Sam Damiani with TD Securities. Please proceed with your question.

Sam Damiani - TD Securities

Thanks and good morning. Just on the tax front, there’s a lot of detail there and a little bit confusing, but at the end of the day are you sort of suggesting that the $900,000 is kind of a recurring number going forward or the $1.8 million there?

Mike Forsayeth

The $1.8 million is more the recurring number Sam, and $900,000 is I’ll call it a reversal of just prior reserves.

Sam Damiani - TD Securities

Okay, and what would cause that to change materially over the course of the next year or two?

Mike Forsayeth

The $1.8 million?

Sam Damiani - TD Securities

Yes.

Mike Forsayeth

The $1.8 million’s going to be driven by income in the foreign jurisdictions.

Sam Damiani - TD Securities

Okay, all right. Just from the acquisition front, you’ve talked about pipeline of a few hundred million dollars in the past; you’ve made a couple of deal so far this year. As you say, around $60 million odd. Can you give us more color as to where some of those pipeline opportunities are today versus a couple of months ago?

Mike Forsayeth

Sure. Just commenting on the overall process of acquisitions and as well as selective development. It’s not a sprint, but it definitely requires pace and we have gone after some larger portfolios, very, very intensely in the United States and (Inaudible) getting those. But we are able to continue at quarterly pace and I sort of looked at it as the first thing that drives us is quality and over the course of two to three years of an acquisition and development program, what’s going to differentiate us is the quality of assets we have.

Our strategy is not only to diversify the tenant base and less reliance on Magna as a tenant, but it’s to enhance the quality of our overall assets, moving away from special purpose into high depth tendency potential for the assets we acquire.

We look at that quarter and say, just barely through first quarter we’ve done over $60 million of income producing property, the development pipeline based on the two sites we’ve acquired could add another $60 million. We do look at those sites as very high quality sites that with some breaks we would be developing over the next year and bringing on between $4 million and $5 million of NOI, if, again if, we’re successful on the lease front for them.

I view our acquisition process as a pace, quarter-by-quarter. If we can maintain where we’ve come, looking at this between $65 million and $120 million in pipeline that we’ve brought on this first quarter and can maintain that pace, we’re going to reach our goals.

In between, if a high quality portfolio comes up, we’re going to pursue it. We’re not seeing that high quality portfolio in Canada. We are in the United States. There’s competition. As I say, one big one we went after, we just missed, but we’ll keep that going and I’d like to view it as if we have on the income producing property acquisition front, the pace we had in the first quarter, that’s going to lead to $200 million to $250 million or more of acquisitions straight up, as well as selected development.

The other side is, what we’ve done to-date, that’s worked well, has worked well with Dermody Properties, a great JV partner, a tremendous development experience and obviously have delivered three high quality assets to us at North of 7% cap rates, something you just don’t see in Canada.

We want to do more direct on our own front, 100%, that’s what we are pursuing right now. We are looking very seriously at some opportunities in Germany and some opportunities in the United States, but they are still under a competitive framework. So there can’t be guarantees that we get them.

One of the dilemmas that I find is what is the definition of pipeline? Is it things we are looking at? Is it things we have under contract? Right now if pipeline is things we are looking at, it’s very large. If its what we can land, that remains to be seen.

But we certainly have a strong, strong objective of maintaining the space that we completed in barely the first four months of 2013 and if we can maintain it, we’re not only adding good new rental revenue and significant FFO, but we are adding quality.

And I hope in time, what’s unique about Granite is we go from very unique special purpose properties, to potentially being known as a company with some of the highest quality industrial logistics and warehouse properties in North America and parts of Europe, and that’s our objective.

And if some quarters we are able to write $200 million, and other quarters it’s $40 million, as long as its rooted in quality, we are going to get to where we want to get, and all in disperse with our efforts to look at certain selective sales, none of which are firm right now, but discussions are going on, and we are pulling that into high quality.

So no apologies for the pace, but a commitment to maintaining it and a hope that in between, a couple of large portfolios will break for us. We’re pretty comfortable more than anything with the high quality of asset we are bringing on and that’s what’s going to serve us well in the long run.

Sam Damiani - TD Securities

Thank you. I mean just a couple of clarification questions on the acquisition side. The three deals announced last night, were those bought from Dermody?

Tom Heslip

There is one that the income producing property in Portland, Oregon was acquired from Dermody. The site in Louisville, Kentucky and Berks, Pennsylvania we acquired with Dermody through some degree of sole sourcing by them. They were tied up several weeks ago, but we have been going through due diligence and planning and we bought together from third parties those sites with Dermody.

Sam Damiani - TD Securities

Got you, okay. And as you mentioned $4 million to $5 million of NOI on, I think you sort of mentioned a $60 million aggregate total cost on those two sites, representing around a 7% to 8% yield. Is that the right math we should be thinking about on those two sites?

Tom Heslip

Well cautioning and stressing, we don’t like to do forward-looking statements, but when we look at development, we look at enhanced yields to investment straight up and we certainly pro forma North of seven, in some cases closer to eight, yes.

Sam Damiani - TD Securities

But, I mean if you are even buying income-producing properties in the low seven and these development yields aren’t a whole lot higher…

Tom Heslip

Well, I think what you have to – Sam, I really have to stress there, Dermody have been better than a great partner to us. They have delivered these three properties to us North of seven and unequivocally I believe they would trade in the market openly at the low seven. Dermody did that as part of building a relationship with us.

I believe the quality of property we would be developing, particularly Louisville and Berks, an those sites would trade at close to six to six and a quarter yield. So the spread between where we’re developing and where that brand new asset would trade is potentially 200 basis points. So it is quite substantial.

Sam Damiani - TD Securities

Right, okay. And just on that $200 million that officially got away. I mean has that been firmed up by another player? Is there any detail you can put to it at this point?

Tom Heslip

It’s a portfolio that was actually closer to $300 million and it was bought by U.S. REIT.

Sam Damiani - TD Securities

Which one?

Tom Heslip

I’m not sure I can say due to confidentiality agreement.

Sam Damiani - TD Securities

Okay, okay. All right, and just on the ALP, there was a nice increase in the quarter due to the contractual rent step-ups, almost $5 million. That I assume is not going to recur on any sort of recurring basis. But how much of that benefit would actually hit the Q1 revenues?

Tom Heslip

About $1.5 million.

Sam Damiani - TD Securities

So you got $1.5 million I think was the year-over-year comparison, but just from December to March, the ALP rose by almost $5 million, is that…

Tom Heslip

That’s an annual number, so you’ve got a chunk of the ALP. If you look at the ALP December to March, I think it was 8.7, because it was 185 or so to 193, just being from memory. Of that 4.9 was contractual rent increases, then you get sort of a quarter of that in the quarter.

Sam Damiani - TD Securities

Okay. So in other words, those rent increases were all in place at the beginning of the quarter?

Tom Heslip

January 1.

Sam Damiani - TD Securities

Okay, got it. Okay, I’ll turn it back. Thank you.

Operator

(Operator Instructions). Our next question comes from the line of Neil Downey with RBC Capital Markets. Please proceed with your question.

Neil Downey - RBC Capital Markets

Hi guys, good morning. I admittedly have not been through all of your documentation, but Mike a quick question on the accounting for the Dermody income producing assets. Are you fully consolidating those assets on your balance sheet?

Mike Forsayeth

Yes.

Neil Downey - RBC Capital Markets

Okay. And that was about a US $40 million deal at 100% basis, is that right?

Mike Forsayeth

Yes.

Neil Downey - RBC Capital Markets

So the $3.2 million increase in your income in the ALP roll forward, well I guess would equate actually to probably closer to an 8% NOI yield on $40 million; does that make sense?

Mike Forsayeth

You’ve got in there Neil, you have in there the recoverable, the recoveries from the operating costs in that 3.2. That’s going to be your difference.

Neil Downey - RBC Capital Markets

I see, that brings it together. And one other question on the investment properties as it relates to your fair valuation process. I was curious with regard to the sizeable difference in the discount rate and terminal cap rates between the Canadian properties and the U.S. properties. Can you comment further on why the significant difference in the math and characteristics of the assets?

Tom Heslip

Well Neil, Tom Heslip here. I do want to stress that we undertook external appraisals on all 106 properties. The appraisers in Canada was a separate firm from that in the United States.

The methodology used by both was similar. It was 10-year discounted cash flow approach, cost of some residual value. Canada and the appraisals and our interaction with them and our auditors with Deloitte, we thought were as candidly more realistic on discount rates give the quality of the tenant in the facility and pretty good quality facilities.

In the United States we have some terrific long-term leases in place and some very committed tenants. The discount rates used by the appraisers, which we ultimately sell and with Deloitte accepted were a little higher discount rates than expected.

I don’t have a great rationale for why they believe those are higher. I think there’s potential for more compression on those discount rates in the United States now, just given what’s happened over the last 6 months to 12 months, particularly in the last quarter in the United States.

So your question is a great one, because they were cautious, they were conservative on discount rates in the United States, and yet some of our most committed tendencies are in place such as South Carolina, Kentucky and Tennessee, where we have longer leases that go beyond 2017. So maybe some upside there, but difference of a view on the appraisals and we accepted their discount rates.

Neil Downey - RBC Capital Markets

Okay. Time will tell. Thank you.

Operator

Our next question is a follow-up from the line of Sam Damiani with TD Securities. Please proceed.

Sam Damiani - TD Securities

Yes, thanks. Just on the IFRS, I didn’t quite discern from your comments. The external appraisers, the values were higher than your own estimates or they were lower. Did you move them higher from the appraisal amounts or lower?

Tom Heslip

It varied from jurisdiction to jurisdiction. There were some we were lower, there were some we were higher, but we undertook those appraisals all last year and then adjusted through certain assumptions on tenant renewal probabilities that increased some, decreased others, but overall adjusting for a year later and some cap rate compression that they advised us on, we weren’t very far off, overall.

Sam Damiani - TD Securities

Overall, right. Okay, and with these appraisals, I guess they are using comps of other specialized/manufacturing properties? How much…

Tom Heslip

You had some commentary in a preliminary report you put out this morning that I thought was very, very accurate, just in terms of the difficulty and dilemma that goes, the value in the special purchase assets, which accounts for over half of the value. I’m not sure they necessarily used comps of other special purpose.

The discount rates, particularly the United States and Mexico are somewhat arbitrary. Why a discount rate would be as high as 11 to 12 versus 9 to 10 wasn’t really rationalized, but at the same time in order to be transparent, in order for us to be objective, we have to accept to some extent those external advised discount rate and Deloitte scrutinizes them as well.

But no, it remains a difficult asset to value. The most important component of the process is that it be done on a discounted cash flow basis and not a income in place static cap rate. The discussion has to be probability in tenant retention rate upon which that tenant is renewed.

One of the things the appraisers tend to do is while a lease may state a specific renewal rate, in terms stated in the lease, the appraisers will defer to fair market rent in their assessment, and that may differ from the actual rent contracted in the lease. That can lead to some value discrepancies. But overall, there was an arbitrariness to the Mexico and the United States discount rates that we don’t have a complete explanation for, but we accept.

Sam Damiani - TD Securities

Right and so I hear you on the renewal rent, but to the extent that there are contractual rent increases within a term, were those accepted by the appraisers in their DCF forecast?

Tom Heslip

Yes.

Sam Damiani - TD Securities

And when you said they were cautious on the residual, I mean on average, were they assuming – what sort of percentage not renewing were they assuming and how much down time were they baking into their DCF? I assume every property was done on a 10-year, so there would have definitely captured some significant down time in that DCF securities. If you could add a little bit of color on what they were thinking there.

Tom Heslip

You would see probably a year down time on average and implied market rent. In some cases that was similar to rents being paid, in other cases it could be as much as 25% to 40% lower.

Sam Damiani - TD Securities

And what percent renewal probability were they on average?

Tom Heslip

On average 75/25.

Sam Damiani - TD Securities

75 percent renewal?

Tom Heslip

Yes.

Sam Damiani - TD Securities

Okay, that’s great. Thank you very much.

Operator

There appear to be no further questions at this time. Please continue with your presentation or closing remarks.

Tom Heslip

Well, I appreciate the questions and the time people took, and we will be pursuing our goals. Thanks very much.

Operator

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.

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