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Vector Group (NYSE:VGR)

Q3 2013 Earnings Call

October 31, 2013 10:00 am ET

Executives

Howard M. Lorber - Chief Executive Officer, President, Director and Member of Executive Committee

Ronald J. Bernstein - Director, Chief Executive Officer of Liggett Group LLC, Chief Executive Officer of Liggett Vector Brands, President of Liggett Group LLC, President of Liggett Vector Brands and Director of VGR Holding

Richard J. Lampen - Executive Vice President and Executive Vice President - VGR Holding

J. Bryant Kirkland - Chief Financial Officer, Principal Accounting Officer, Vice President and Treasurer

Analysts

Kenneth P. Bann - Jefferies LLC, Fixed Income Research

Mitchell Pindus

Brian Greenberg

Operator

Welcome to Vector Group Ltd. Third Quarter 2013 Earnings Conference Call. During the this call, the terms adjusted operating income, adjusted net income, adjusted EBITDA and tobacco adjusted operating income will be used. These terms are non-GAAP financial measures and should be considered in addition to, but not as a substitute for, other measures of financial performance prepared in accordance with GAAP.

Reconciliations to adjusted operating income, adjusted net income, adjusted EBITDA and tobacco adjusted operating income are contained in the company's earnings release, which has been posted to the Investor Relations section of the company's website located at www.vectorgroupltd.com.

Before the call begins, I'd like to read a Safe Harbor statement. The statements made during this conference call that are not historical facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in, or implied by, forward-looking statements.

These risks are described in more detail in the company's Securities and Exchange Commission filings.

Now I'd like to turn the call over to the President and Chief Executive Officer of Vector Group, Howard Lorber.

Howard M. Lorber

Good morning, and thank you for joining us for Vector Group's Third Quarter 2013 Earnings Conference Call. With me today is Ron Bernstein, the President and CEO of Liggett Vector Brands and Liggett; and Bryant Kirkland, Vector Group's Chief Financial Officer. I will provide an update on our business and review Vector Group's financials for the 3 and 9 months ended September 30, 2013. Ron will then address Liggett's performance for the period and provide an update on company and industry developments.

After that, we will answer your questions. As you may be aware, on October 23, Vector Group and Liggett announced a settlement relating to the Engle tobacco litigation in Florida. Pursuant to the settlement, more than 4,900 of the 5,300 individual Engle plaintiffs will be dismissing their claims against Vector Group and Liggett.

We are pleased to have reached this landmark settlement, which has resulted in a $53 million after-tax charge in the third quarter as it prudently resolves substantially all of the Engle cases pending against us. The Engle cases have been the company's biggest litigation overhang over the past decade and the settlement will substantially reduce our ongoing litigation risks, as well as related legal expenses.

Turning to our business operations. We performed very well in the third quarter and our balance sheet remains strong. Furthermore, we continue to have significant liquidity with cash and cash equivalents of $260.5 million and investment securities and partnership interests with a fair market value of $178.5 million as of September 30, 2013.

In the real estate business, through New Valley, we have made a number of investments this year on development projects, primarily focused in the New York City area. There continues to be strong demand in residential real estate in the city and we have been fortunate to partner with several talented developers on various projects.

Recently, New Valley and our partners closed on the purchase of 101 Murray Street, one of the largest development sites in Lower Manhattan. Additionally, with other partners, we signed a definitive purchase agreement for the Park Lane Hotel on Central Park South. With respect to our Escena real estate investment in Palm Springs, California, in October, we sold 200 of the 867 finished lots for approximately $22.7 million. We will continue to assess new opportunities and selectively pursue those with the best partners, terms and long-term value potential.

I will now review the key financials for the 3 and 9 months ended September 30, 2013 for Vector Group. For the third quarter ended September 30, 2013, Vector Group revenues were $271.5 million compared to $272.8 million in 2012. The decline in revenues was primarily due to an approximate 3.6% reduction in cigarette volumes during the period, which was partially offset by higher pricing. The company recorded adjusted operating income of $46.6 million in the 2013 third quarter, which is compared to adjusted operating income of $43.2 million in the 2012 period, an increase of approximately 8%, primarily due to increased margins.

Third quarter 2013 adjusted net income was $18 million or $0.19 per diluted share compared to 2012 third quarter adjusted net income of $20.9 million or $0.23 per diluted share. For the third quarter 2013, adjusted EBITDA was $50.1 million compared to $46.6 million for the year-ago period, an increase of approximately 7%, primarily due to increased margins in 2013.

For the 9 months ended September 30, 2013, Vector Group revenues were $761 million compared to $807 million in the 2012 period. The decline in revenues was primarily due to an approximate 9.5% reduction in cigarette volumes for the 9-month period, which was partially offset by higher pricing. For the 9 months ended September 30, 2013, adjusted operating income was $127 million compared to $117.6 million in 2012. The 8% increase was primarily due to increased margins. Adjusted net income for the 9 months ended September 30, 2013 was $45.4 million or $0.48 per diluted share compared to the 2012 9-month period, where adjusted net income was $43.3 million or $0.48 per diluted share.

For the 9 months ended September 30, 2013, adjusted EBITDA was $136 million compared to $127.9 million for the year-ago period, an increase of approximately 7%, primarily due to increased margins in 2013.

I will now turn the call over to Ron Bernstein to discuss our tobacco business. Ron?

Ronald J. Bernstein

Thanks, Howard, and good morning, everyone. As Howard indicated, on an operating basis, our tobacco business had a strong third quarter despite challenging industry dynamics. We remain pleased with our year-to-date performance and our position going forward. As mentioned in previous calls, during the first quarter, the participating manufacturers of the MSA, including Liggett and Vector Tobacco, entered into an agreement with 20 of the 52 MSA states and territories to resolve the long-standing nonparticipating manufacturer adjustment dispute for the years 2003 to 2012.

During the second quarter, 2 additional states joined the settlement. In the third quarter, the NPM adjustment arbitration panel ruled that 6 of the 15 states that did not settle had not diligently enforced their MSA obligations in 2003. As a result, Liggett will receive a credit of approximately $6 million against this 2013 MSA obligation. This was recognized in the current quarter, with $4 million applied to operating income and $2 million to interest income.

The NPM adjustment arbitration process will continue with the non-settling states, as we still need to resolve years 2004 through 2012. We obviously would prefer a negotiated solution to this process. Excluding the income from the arbitration ruling, the Engle progeny settlement and litigation judgment, our third quarter operating profit increased by nearly 6% over the prior year period. The increased profit was primarily the result of higher margins across all brands and effective cost control, the benefits of which were partially offset by anticipated lower volumes.

Before I elaborate further on performance, let me turn to the financials. Please note that financial reporting for Vector Tobacco is combined with Liggett. For the 3 and 9 months ended September 30, 2013, Liggett revenues were $271.5 million and $751 million compared to $272.8 million and $807 million in the corresponding period in 2012. Tobacco adjusted operating income for the 3 and 9 months ended September 30, 2013 was $50.9 million and $139.4 million, respectively, compared to $48.1 million and $130.2 million in 2012. Thus tobacco adjusted operating income increased by 5.8% in Q3 and 7% year-to-date over the prior year period. We continue to maintain a balanced approach to pursuing volume and margin opportunities in the market. In essence, we work to maximize short-term opportunities while maintaining focus on brand strength and long-term profit growth.

As you may recall, in 2011 and '12, market conditions led us to pursue higher margins on our brand portfolio while continuing to build on the national strength of our PYRAMID brand. Earlier this year, we determined that the time was right to also drive longer-term volume growth by leveraging our strong position in the deep discount segment. To that end, in January, we introduced a new national brand, Eagle 20s. The key goal of Eagle 20s is to stabilize our overall volume trends by offsetting losses in non-core brands, as well as to develop a second brand that is complementary to PYRAMID. Eagle 20s is building on its good start and is clearly benefiting from the robust distribution base we've built with PYRAMID over almost 4 years. Through the first 9 months of 2013, the brand gained active distribution in over 26,000 retail outlets with more than 3,000 added since the end of the second quarter.

In addition, we believe there are a variety of growth opportunities for both PYRAMID and Eagle 20s, and we have recently implemented targeted programs that feature in more aggressive, tactically-oriented approach in marketplace discounts.

We're very pleased with the early results of these programs, which are meeting their objectives. While PYRAMID, Eagle 20s and our other conventional cigarettes will clearly remain our primary focus long term, we are also pleased to announce that we have entered the fast-growing e-cigarette category, a $1.5 billion industry in the U.S. at this point, with a limited shipment this past September. The plan is to substantially expand our market presence early in 2014. It's important to point out that while we recognize the potential of this category, we enter it cautiously, as there are currently many unknown factors that are beyond our control. These include long-term consumer acceptance, taxation and the impact of likely FDA regulation.

With that in mind, we've developed our e-cigarette brand, Zoom, with Xeo, a company based in Germany that has significant experience in the E cigarette category. This approach has allowed us to take advantage of new and emerging technologies, while minimizing the cost of developing a new high-quality product from the ground up.

Zoom will be manufactured in China, where the first e-cigarette appeared into the market in 2000 and will feature proprietary e-liquid made in the United States. We will discuss Zoom in more detail, including specifics on timing and the scope of our market expansion, in future conference calls. We believe that we'll enter the market with an appealing product, and that if the category continues to grow, we will succeed with Zoom.

Turning back to the conventional cigarettes. In the third quarter, the overall market, including our brand, showed some improvement. Despite this modest improvement, consumers continue to search for low-cost alternatives. Unfortunately, due to the failure of Congress and regulators to adequately address the tax evasion and avoidance of companies selling mislabeled pipe tobaccos and filtered cigars, these under-regulated and undertaxed products are ubiquitous in the market, offering consumers ready access to low-cost smoking options.

In previous calls, I have noted the genesis of the mislabeled pipe tobacco situation. Without revealing that, it's clear that the government's failure to date to properly enforce its tax codes and existing law has led to the loss of billions of dollars of tax revenue and has adversely impacted the legitimate tax-paying industry. While some progress was made by Congress last year in passing legislation that classifies retailers making cigarettes and they're scored manufacturers, unfortunately, the mislabeled type of category appears stronger than ever.

Another undertaxed product that regulators in Congress have failed to address is filtered cigars, cigarette equivalents that are currently sold under an unintended tax loophole. While these products are not generally as popular as mislabeled pipe tobaccos, we believe they currently comprise approximately 8 billion cigarette equivalents or almost 3% of the total cigarette market annually, and their appeal in the current economic climate continues to grow. The GAO recommended that Congress consider equalizing tax rates on roll-your-own and pipe tobacco, and in consultation with treasury, consider options for reducing tax avoidance due to tax differentials between small and large cigars. We, of course, continue to support full tax equalization. We remain hopeful that FDA and TTB will use the existing enforcement authorities that they have to properly regulate these mislabeled products, so regulatory activity has been fairly slowed by the recent government shutdown.

Additionally, the FDA is in the process of revisiting its authority to regulate other tobacco products. It was encouraging to learn that the FDA recently sent warning letters to several companies that it believes are marketing roll-your-own tobaccos as pipe tobaccos to evade tax.

Additionally, a number of states have recently taken legislative or regulatory actions to address aspects of the mislabeled pipe tobacco problem, a trend that we hope continues and extends to filtered cigars. As noted previously, large domestic and international cigarette manufacturers have moved into the deep discount segment, presumably to offset the declining premium volumes. Not surprisingly, the big 3 companies now comprise the majority of this segment, according to Management Science Associates data, and we continue to see periodic aggressive pricing from foreign companies in an attempt to capture volume and share.

More importantly though, we remain pleased with the performance of our PYRAMID brands amidst all of these factors. PYRAMID has a well-established national presence and is currently sold in more than 115,000 stores with a distribution base that continues to grow. PYRAMID remains the seventh-largest brand and third-largest discount brand in the United States.

According to Management Science Associates, for the third quarter 2013, overall industry wholesale shipments were flat, due primarily to strong performance by Altria and Lorillard. Retail shipments declined by 3.2% in the quarter, with Lorillard partially offsetting other declines. Of note, the second quarter trend of deep discount-focused companies declining at a greater rate continued in the third quarter. Liggett's third quarter decline in wholesale and retail shipments were approximately 3.5% and 7%, respectively, versus the year-ago quarter. Importantly, this marked a substantial improvement over the prior quarter.

For the 2012 year, TTB reported industry taxable shipments declined by less than 2%. For the current year, we are now anticipating that taxable shipments will decline in the 4% range, as cigarette shipment shows some improvement in the second half of this year.

As we look ahead, we will continue to implement our plan to grow PYRAMID and Eagle 20s as we introduce Zoom nationally in 2014, while at the same time, working carefully to control costs. We're pleased with our 2013 performance and market position and are confident in our ability to continue to perform.

Thanks for your attention, and back to you, Howard.

Howard M. Lorber

Thank you, Ron. As I noted at the start of the call, we are pleased with our recent performance and continue to believe that Vector Group is well positioned. We have strong cash reserves, have consistently grown profit margins in recent years and will continue to benefit from our favorable terms under the MSA.

Additionally, we are proud of the company's uninterrupted track record of paying a regular quarterly cash dividend since 1995 and an annual 5% stock dividend since 1999. The company once again reaffirms that our cash dividend policy remains the same.

Now operator, would you please open the call for questions?

Question-and-Answer Session

Operator

[Operator Instructions] And our first question comes from Ken Bann with Jefferies.

Kenneth P. Bann - Jefferies LLC, Fixed Income Research

I was just wondering, on the settlement, what will -- any negotiations going on with the other plaintiffs, the other cases in that? Or would you expect to be able to settle them also in similar terms in the near future?

Howard M. Lorber

You mean the remaining ones that have not [indiscernible] yet?

Kenneth P. Bann - Jefferies LLC, Fixed Income Research

Right, right. I think it's like 400 or so?

Howard M. Lorber

Yes, there's a couple of lawyers that control most of those and we are going to continue conversations to see if we can settle them.

Kenneth P. Bann - Jefferies LLC, Fixed Income Research

Okay. Is there a hope there that you can, or is that -- are they...

Howard M. Lorber

Ron, you want to comment on?

Ronald J. Bernstein

Yes, a couple of things. First, there is a number of them, maybe as much as half of the remaining where people simply have not been able to be found by their attorneys. So when you whittle that out, there's, as Howard said, there are 1 or 2 attorneys who control a substantial portion. We continue to have discussions and obviously, we would be pleased on the same relative terms. But it's a process that's going to have to play out over time.

Kenneth P. Bann - Jefferies LLC, Fixed Income Research

Okay. And also on the negotiations with Prudential over the Douglas Elliman stake, do you have anything to report there? Is it on-going or...

Howard M. Lorber

Yes. Dick, what do we say about that at this point?

Richard J. Lampen

We're still in the process of trying to complete that. We hope we're getting close to the end.

Kenneth P. Bann - Jefferies LLC, Fixed Income Research

Okay. And any other thoughts about any other price increases on your brands this year?

Ronald J. Bernstein

Well, as I'm sure you know, we would never broadcast pricing intentions for the future. We're always looking for opportunities to enhance our margins and taking a look at where our volume sits relative to that. So I wouldn't be able to give any guidance at this point.

Operator

[Operator Instructions] And our next question comes from Mitch Pindus, Wells Fargo.

Mitchell Pindus

My question relates to Prudential. Obviously, according to the statements you've made in the past, you're talking to them right now about timing evaluation of which to buy out their 20%. My question relates, though, to the, I guess, the royalty fee or whatever fee Prudential will do from you for sales out of Douglas Elliman? Is that ongoing or is that finished based on the agreement?

Howard M. Lorber

We -- our position is it's finished. Their position is, it may not have been finished the same time exactly that we thought it was finished. And you sort of have 2 different organizations. You have the franchise company, which is now owned by Berkshire Hathaway and the stock in Prudential -- and the stock that was owned by Prudential was owned by something called Presto, which was Prudential Real Estate Finance Subsidiary, which is still owned by Prudential. So it's a little a bit complicated, but we believe at the end of the day that our obligations are ceased and it's just a matter of some period of time from the time we actually gave notice, when they felt that it was over, that there could be a claim.

Richard J. Lampen

And Mitch, this is Dick Lampen. I mean, a large risk. Remember, agreement terminated in March, so certainly, since March, no fees are owed. The only issue Howard is alluding to is whether several months before that, the obligation also ceased. But clearly, as of -- Mitch, I was just saying that I think -- I clarifying that definitively, as of March, when the...

[Technical Difficulty]

Howard M. Lorber

It looks like our phone doesn't reach to Miami.

Mitchell Pindus

Well, we hear you all. Dick, you want to finish what you're saying?

Howard M. Lorber

His phone might have reset.

Operator

Ladies and gentlemen, please hold for a moment, we're having technical difficulties. Please stay on the line.

[Technical Difficulty]

Howard M. Lorber

Okay I don't know what happened to our system, but we lost it.

Richard J. Lampen

I'm back, I don't know what happened.

Howard M. Lorber

Okay. So I guess we were talking about the -- for Mitch. Mitch, are you still on? Oh, he maybe have gone. Are there any other questions. Operator can you ask.

Operator

We have a question from Brian Greenberg with Greenberg Advisors.

Brian Greenberg

On the Douglas Elliman business, do you have a report? I think -- I couldn't figure out in your press release about how that business performed in the quarter.

Howard M. Lorber

Yes, it should be in there. I'll have ...

Brian Greenberg

I think it's not a minority interest, but there's no comment about it.

Howard M. Lorber

B.K, you have a comment on that?

J. Bryant Kirkland

That's an interesting business, and we should know more about it.

Brian Greenberg

How about Miami? Will that go into Miami?

Howard M. Lorber

Yes, okay. I will -- all right, B.K, would you answer that?

J. Bryant Kirkland

I didn't hear the question.

Brian Greenberg

The question refers to little more color on Douglas Elliman, how that's doing in the last -- I think in last quarter report, you had more to say about -- you had a little bit to say, but I didn't see any numbers. Maybe it's in your minority interest.

J. Bryant Kirkland

Yes, correct. Yes, right. It's Bryant Kirkland. I don't have all numbers in front of me, because I'm in another office. But we -- I believe Douglas Elliman did $18.5 million of EBITDA this quarter compared to the year-ago period of $10.5 million, and we did $33.3 million, I believe, for the 9 months compared to $23.1 million. And as far as revenues, the revenues were -- they went from about $103 million to $127 million this quarter. And last year, they went from -- they were $272 million, and this year, they were $316 million for the 9-month period.

Brian Greenberg

So that's fabulous growth, that's for sure.

Howard M. Lorber

So we're in a very strong market.

Brian Greenberg

Yes, I'm sitting right in the middle of it, on Madison, in 89th street.

Howard M. Lorber

Yes. It's a good place to be.

Brian Greenberg

Yes, it's a good view. So you're going to consolidate this -- but you're going to bring it as an equity line, or you're going to bring it into the top line or and the bottom line without -- consolidate it?

Howard M. Lorber

When we consolidate, we...

Brian Greenberg

Okay. Would that have any impact on your -- well, it will have an impact to your top line, right, integrating it into your rev. If you have integrated this, off the top of my head, into your revs for this year and the third quarter, you would obviously have a significantly better rev line. Has anyone pro-forma-ed that? Can you tell us what the what would look like in the future?

Howard M. Lorber

Yes, Brian. If we didn't have Douglas Elliman for this quarter, we would have had around $399 million of revenues.

Brian Greenberg

And what would that look like for your VDR year-over-year as one business just doing the math?

J. Bryant Kirkland

Sure. We would have gone from around $375 million of revenues to $399 million.

Brian Greenberg

Okay, so the revs would be up.

J. Bryant Kirkland

Right.

Brian Greenberg

And the bottom line, if I assume there's no -- well, if you buy the 20%, of course, you're buying more earnings. Okay. Someone just tapped me on the shoulder now, I'm back to the question. If we consolidate, as I said, an operating sub, like any other sub, is the bottom line business, does that impact the income, operating income, or is it already done by the equity line?

J. Bryant Kirkland

No. The operating income would have increased for the quarter by $18.5 million. It would -- the operating income would have been higher by $18.5 million for the quarter and the year-over-year increase and operating income for the quarter would have been around $8 million.

Brian Greenberg

Okay. So it's sort of -- could we all say this, that by this process, which is coming to an end point, the company does look more like a little more of a healthy growth company? Howard, how would you think that. From your point of view is [indiscernible].

Howard M. Lorber

Obviously, the real estate business has growth. Some business, as we know, doesn't have growth. Although we've managed to grow our earnings. So obviously, I guess you could say, the overall picture looks better from a growth perspective.

Brian Greenberg

Right. Have you -- we talked -- I talked about this, and I don't think you'll do it. The evaluation for real estate of this quality, like if you look at Toll Brothers or their builder into, you're in the right neighborhood, so to speak.

Howard M. Lorber

Look at Realogy, I mean.

Brian Greenberg

Yes, that's a service business, sure. That's actually right, first cousin. Would you spin this off ?

Howard M. Lorber

We always think. Whatever we're going to do, whatever we think, it's in the best interest of the shareholder.

Brian Greenberg

Yes. I think the answer, I sense, was no, because the -- it interrelates with your other strategic investments in real estate, which actually sounds good. It sounds good from operating a company, from being a stock jockey, like I was at Goldman Sachs, in that phrase, the spin would obviously give you total higher value, I think, for the Corporation.

Howard M. Lorber

If we believe that and we think it's good for all the shareholders, ultimately we're going to consider it.

Brian Greenberg

Are you considering it?

Howard M. Lorber

We can't comment about what we talk about.

Brian Greenberg

Okay. Well I think you're a good businessman. It's fixed in my mind that you bought that for almost nothing, from something on Long Island or...

Howard M. Lorber

Yes, about $1 million.

Brian Greenberg

What's your next one?

Howard M. Lorber

I don't know, we're still looking.

Brian Greenberg

You never know until it's over, right?

Howard M. Lorber

Exactly.

Brian Greenberg

Okay. And I'm glad you're getting into the electronic delivery system. You're delivering -- and my background, of course, is medical. You're delivering, in effect, what it's in a pack. You're delivering nicotine, right?

Howard M. Lorber

Nicotine, right. It's the nicotine, yes, actually.

Brian Greenberg

Did you ever think of going to Miami and talking to our mutual friend about developing this into a pharmaceutical?

Howard M. Lorber

No, we really haven't.

Brian Greenberg

Okay. I think you're busy in deliveries right now.

Howard M. Lorber

Yes. Any other calls out there?

Operator

[Operator Instructions] We have another question from Mitch Pindus with Wells Fargo.

Mitchell Pindus

So we were talking about through and the franchisee and...

Howard M. Lorber

Yes. So the point is, we took the position that we terminated the franchise, and I think it's in the end of October, beginning in November of last year. By contract, it was over anyway at the end of March of '13. So there is -- there could be possibly a dispute for a number of months. But from the end of March going forward, there cannot be any further dispute.

Mitchell Pindus

And what do those number look like? Is it 5% of gross sales?

Howard M. Lorber

No, no, no. It's based on commissions, not net sales. And basically, it could be probably about $6 million a year we were paying in the last couple of years, $5 million, $6 million, $7 million.

J. Bryant Kirkland

That's correct, Howard. [indiscernible] Yes, we do file those elements financials in our 10-K every year.

Mitchell Pindus

Okay. So my next question is switching over to the tobacco bus, e-cigs, are we involved in that at all? You've always been sort of cutting edge when it came to the technology side of that business.

Howard M. Lorber

Ron?

Ronald J. Bernstein

Yes. As I said, we have -- we did a limited distribution. We're going to be introducing -- or not introducing, but expanding our position in e-cigarettes in the first part of next year. Our brand is named Zoom. We've developed it in coordination with a German e-cigarette company, Xeo, who's been quite active in Germany. But the product is going to be manufactured in China. The liquid is proprietary and is formulated in the United States. We did some limited distribution in September and will be expanding it on a national basis, again, early in 2014.

Mitchell Pindus

Great. So my last question really relates to some of these outside investments that you've done in the past, which have been very successful for you. I'm talking about the Auscos [ph] of the world. And I'm just wondering, in order to find a lot of these investments, you really have to do some sleuthing. Actually, you have to do quite a bit of sleuthing in order to find something.. I'm wondering if you're planning, at some point, just to put out a schedule where we can see you own x number of shares of this company, x of that company, that type of thing.

Howard M. Lorber

I don't think so, because -- a couple of reasons. There are situations, if you go back in time, when we had made a substantial -- took a substantial position in strategic holdings, and we were hoping to make a bigger investment in the company and then the stock just took off and we ended up selling, and I think we made $20 million or $25 million. Things like that, you really don't want to report until you have to report it anyplace. And so unless it becomes a filing position, it probably doesn't make any sense for us to report it.

Mitchell Pindus

And what about...

Richard J. Lampen

Mitch, we're very transparent with the real estate investments that are being made. But as Howard said, with respect to publicly securities, we only file them in 3D [ph] position.

Mitchell Pindus

Right. Well, I guess what I'm talking about is after you're at that 13D position, have you considered just putting out a schedule and really opening the kimono, so to speak?

Richard J. Lampen

Well, once we have 13D position, it's fully transparent. But we don't presently have any 13Ds that are outstanding.

Howard M. Lorber

I think we do, Dick. We got Morgans Hotel. Morgans Hotel.

Brian Greenberg

[indiscernible] .

Howard M. Lorber

Right, right.

Operator

Speakers, at this time, we have no further questions in the queue.

Howard M. Lorber

Okay. Well, thanks, I'd like to thank everyone, for participating in this call. And as always, B.K, Ron and myself are available if anyone has any questions in the future. Thank you and we look forward to speaking with you on the next call. Have a good day.

Operator

Ladies and gentlemen, this concludes today's teleconference. You may now disconnect.

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