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American Realty Capital Properties Inc. (NASDAQ:ARCP)

Q4 2013 Earnings Conference Call

February 27, 2014 01:00 PM ET

Executives

Nicholas Schorsch - Chairman and CEO

David Kay - President

Brian Block - CFO

Analysts

Chris Lucas - Capital One

Chris Lucas - Capital One Securities

Mitch Germain - JMP

Mitch Germain - JMP Securities

Josh Patinkin - BMO Capital Markets

Dan Donlan - Ladenburg Thalmann

Michael Gorman - Janney Capital Markets

Operator

Good day and welcome to the American Realty Capital Properties’ Fourth Quarter 2013 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct the question-and-answer session. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Nicholas Schorsch, Chairman and CEO. Please go ahead.

Nicholas Schorsch

Thank you, operator and good morning and welcome to American Realty Capital Properties’ Fourth Quarter 2013 Earnings Conference Call. Joining me today are David Kay, our President; Brian Block, our Chief Financial Officer and Lisa Beeson, our Chief Operating Officer.

And before we begin, as a reminder, we will make certain comments during this call that maybe considered forward-looking statements under federal securities law. The company’s actual and future results may differ significantly from the matters discussed in any such forward-looking statements.

Now let’s get started. David will be recapping our accomplishments of the last 100 days as well as detailing the success of our acquisitions team and our private capital management business. Brian will review our record operating results in 2013 and detail our execution on several strategic balance sheet initiatives and Lisa will discuss our high quality real estate portfolio which we will help you appreciate just how powerful the origination capability is of our team. She will also spend a moment on the integration of our operations across our offices and our teams are now working together post merger.

But first I’m going to talk about the future for a moment. We see the net lease sectors transforming itself in an accelerated pace and we believe we’re at the forefront of defining this sector. On day one this industry -- of this industry transition we have already built the largest most diversified and strongest investment grade net lease REIT in the industry. Being the best net lease REIT is not all we want to accomplish. We want to be one of the best REITs in the entire industry regardless of sector or property type and we believe we have assembled the team and the portfolio to make that happen.

Our share size now gives us a strategic advantage but it’s not just size, it’s what we have done inside of that scale that really matters. We have strengthened our balance sheet, a balance sheet that compares favorably to our peers. We have lowered our leverage while reducing floating rate debt exposure with an eye towards continuing de-levering and terming our balance sheet as we grow the company. We have shown the ability to build the portfolio to accretive acquisitions and we have built an acquisition machine like no other.

We already partnering with leading developers and large scale built to suit opportunities and we can easily do a billion dollar sale leaseback transaction without any portfolio concentration issues. We are becoming choice partner for corporations with large concentrations of real estate on their balance sheet and we are in a position to think innovatively about sale leaseback structures and really build the premier portfolio of durable income for our investors. And because the talented team we’ve assembled from top to bottom, we have the intellectual capital to bring true innovation and great strategic execution to our industry.

I am now going to focus a lot of my attention in the coming months on the best strategic fit for our multitenant portfolio. Not only will we see great success in 2014 but our investors should confidently expect that our success will continue well into the future.

With that I’m going to turn the call over to David Kay our President. Hiring David during the fourth quarter of last year which was an integral part of becoming self managed has been one of our key accomplishments. I am grateful to have such an experienced and well respected executive leading this world class organization along with Brian Block, Lisa Beeson, Lisa McAlister and most recently, our General Counsel Richard Silfen who joined us last -- just this week.

That completes the [C3] build out that I was intent on complete and I think it’s really important because the team really matters. David, I’ll turn the call over to you.

David Kay

Thank you, Nick. It's with great excitement that I join you and the rest of the management team on this earnings call. I would like to start with a brief recap of the accomplishments as well as discuss some of the key drivers for the coming year.

What we’ve been able to accomplish in the last 100 days is quite remarkable. As mentioned before, we have closed the cap lease, American Realty Trust four Inland and Fortress transactions all ahead of plans in terms of timing and in terms of completion. We became self-managed. The best in class management team with engineered and investment grade balance sheet resulting in investment grade ratings from both S&P and Moody’s.

We’ve executed on over $3.9 billion of high quality paper including one of the largest unsecured bond deals in REIT history. We added convertible notes, long term preferred stock to our capital structure, we’ve upsized the senior corporate unsecured credit facility to allow for total financing capacity of now more than $3 billion with the inclusion of Goldman Sachs and another institution that came in today for $75 million.

We have done all this while reducing our interest cost to a weighted average interest rate of 3.5%, with a blended maturity of over five years. Our list of accomplishments goes on. At the same time, we have successfully completed the merger of Cole, catapulting ARCP into the top tier of publicly traded REITs. We have built the largest, most diversified, strongest investment grade net lease REIT in the industry period.

It is truly amazing to see how well and how quickly we have integrated the two operating companies and the two cultures while establishing a unified strategic course for the future.

When I say that we are integrated, I mean it. Lisa, Brian and I are regularly in Phoenix, in fact we are conducting this call from our Phoenix office today and we recently held the town hall meeting with over 300 in attendance.

We have one team, one structure and one mission. Collectively our proven ability to close and integrate major scale transactions speaks to one of our many competitive advantages and is a skill we believe is essential in the net lease evolution. You can see where we are today and now let’s focus on what’s to come.

Two of our key drivers of our success in 2014 are self-originated acquisitions and our private capital management business. Let’s look at the acquisitions first. As many of you know, we have the largest and most experienced team of acquisition professionals in the industry who have proven their ability to acquire high quality, high yielding assets. We see every deal in the marketplace including many that aren’t broadly marketed.

Our acquisitions are cautiously underwritten and highly selective. In the first quarter of this year, we will underwrite nearly $10 billion worth of net lease assets, submit LOIs for half of that amount and close on just 10%.

Looking at our portfolio in 2013 when you include the Cole acquisitions, we acquired $2 billion of assets across 634 properties at an average cap rate of 7.7%. We have already originated over $1 billion in the first quarter of 2014 comprising 260 properties in 83 individual transactions at an average cap rate of 8.3% and an impressive 8% cash cap rate. Our build-to-suit business has already completed a $120 million year-to-date and we have approximately $800 million of additional assets in the pipeline.

Given the strength of our acquisition team, we are well positioned to surpass the high end of the Company’s projected $2 billion to $3 billion of self-originated acquisitions targeted for 2014. In addition to our property-by-property acquisitions we are actively looking to grow through large scale sale lease back portfolios as well as looking at other strategic opportunities we are privy to.

Now let’s look at the private capital management side of the business. 2013 was a record setting year for Cole Capital, our exclusive net lease brand and now the premier capital aggregator in this space. We were able to record $3.7 billion in 2013 with 1.1 billion raised in the fourth quarter alone which included the successful closing of CCIT, a net lease office and industrial product where we finished with $1.9 billion of equity.

CCIT II's $2.5 billion offering has been launched and we have already seen inflows. We expect to raise approximately 950 million dollars during the first quarter of 2014 with 865 million already raised and are well on track to exceed our target of 3.1 billion for the year. This month we have completed the capital raise for CCPT IV, a retail net lease REIT with over $2.9 billion of equity raised. CCPT IV is a bid fund and the series will soon follow.

The acquisitions team acquired $3.8 billion of real estate assets on behalf of the managed funds in 2013 and has purchased nearly 300 million year-to-date. In total, managed funds owned 496 properties comprised to 29 million square feet occupied by nearly 50% investment grade corporate tenants with a weighted average remaining lease term of 12.3 years. These properties are located in 46 states and include 464 tenant concepts, operating in 36 distinct industries with a total of $4.9 billion of gross real estate assets.

Looking beyond our acquisitions volume and the PCM business, our entire team is intensely focused on our 2014 goals, while also maintaining the flexibility to maximize on any unique opportunities that may arise. Given our past success, we'd be disappointed if we don’t have an even stronger year in 2014.

I’d like to now turn the call over to Brian to discuss the operating results for the quarter and our capital markets activity which has been significant. Brian?

Brian Block

Great, thanks David and hello everyone. We appreciate your participation on today’s call. We are very pleased to be sharing such impressive results for 2013 and the beginning of 2014.

Today, [indiscernible] results for the fourth quarter and the full year 2013 I will discuss the strategic initiatives we’ve undertaken to further fortify our already strong balance sheet. I will also discuss our current run rate relative to the activities that have taken place in the first quarter.

For the fourth quarter we increased revenues over 200% to $94.1 million as compared to $30.1 million in the fourth quarter of 2012. We also improved adjusted funds from operations available to our common stockholders by 159% to $55.8 million resulting in a 110% increase in AFFO per diluted share to $0.25.

In December, we grew our dividend to $0.94 per share coincident with the closing of CapLease and earlier this month we’ve raised a dividend yet again to $1 per share upon the closing of the Cole acquisition. At this point we have now raised our dividend a total nine times in our history resulting in more than a 14% increase overall.

For the full year ended December 31, 2013, we increased revenues over 260% to $240 million as compared to approximately $67 million for 2012. Our AFFO improved more than 240% to approximately $164 million producing a 70% increase of AFFO per share on a fully diluted basis to $0.86. The strength of our AFFO is directly related to our investing $3.4 billion in 676 new real estate properties and the closing and successful integration of the $2.3 billion acquisition of ARCT III the $2.2 billion acquisition of CapLease and the $774 million acquisition of the GE/Trustreet portfolio.

With regards to our balance sheet activity, we have significantly de-levered and further de-risked the balance sheet with the close of the Cole transaction. With impressive execution, we have reduced our cost of borrowings, decreased our secured debt exposure, lengthened the duration of the debt maturities and improved flexibility with respect to our capital structure and debt instruments.

As of the first quarter 2014, we successfully obtained investment grade ratings from both S&P at a BBB minus and Moody’s Baa3. We are very pleased with the outcome in this process and the speed at which we’re able to accomplish this goal so early on in our life cycle. We believe the strength of our real estate portfolio particularly our high percentage of investment grade tendency coupled with our already solid balance sheet were important factors in the ratings agencies decisions.

Having high quality tenants with low probabilities of default creates particularly strong durable income, income that better supports leverage when compared to lesser quality net lease portfolios. We believe fixed income investors agreed as we were able to execute one of the largest unsecured bond deals in recent history issuing $2.55 billion of senior unsecured notes with a weighted average interest rate of 2.8% and a blended to maturity of five years in the first quarter of 2014.

We successfully added long term debt into the mix when we secured an aggregate of $1.2 billion of 10 year fixed rate interest only paper consisting of two parts one was $693 million or mortgage debt and the second fees was the $500 million tranche of our senior unsecured notes. This is an important point relative to our $2.55 billion bond offering. As I just mentioned $500 million of our senior unsecured notes was a tenure of 10 years. From our perspective we shouldn’t overlook the fact that we also put in place 10 year mortgage financing that took place in connection with the ARCT IV transaction. Again this $1.2 billion of tenure money is at fixed cost of only 4.66%.

Lengthening our overall debt duration further we have prepaid approximately $730 million of mortgages with an weighted average remaining maturity of two years with our $740 million of five year $750 million tranche of bonds. This reduces our interest cost by approximately $16 million annually.

Lastly, we paid off the Cole line of credit with our $1.3 billion three year tranche essentially extending net maturity by two years. This is a savings of an additional $7 million annually. In aggregate, we have a weighted average maturity today of 5.4 years for the entire balance sheet financings.

Other notable capital structure activities include our convertible notes offering where we arrange $690 million of notes with a weighted average interest rate of 3.4% and a blended maturity of six years that’s occurred in the fourth quarter of 2013.

Additionally, we have strategically upsized our senior unsecured corporate risk credit facility to allow for total financing capacity today of over $3 billion. The combined impact of our balance sheet initiatives and the reduced interest rate cost of a very advantage weighted average interest rate of 3.5% which like our weighted average maturity compares particularly well to our net lease peers.

In addition to lower interest rate cost, we're also well underway to lowering our overall G&A expenses. The closing of our previously announced transactions has generated immediate synergies providing a meaningful and unparalleled cost of capital advantage. We have fully identified the approximately $70 million of G&A savings to be realized over the course of the year. As a result of these savings, our G&A is expected to run at an annualized rate of approximately 40 basis points relative to growth assets. Our low expense ratio will only improve as we continue to grow the value of our assets and realize even more long-term beneficial synergies.

Based on the strength of our acquisitions, success in our private capital management business, strategic execution of our balance sheet initiatives and the continued savings in G&A cost, we comfortably affirm our 2014 AFFO guidance of a $1.13 to a $1.19 per share. I want to take a minute and walk you through out run rate numbers. As you know we filed our 10-K this morning which includes updated year-end pro-forma financials on the consolidate company. These required financial statements don’t show a complete picture of ARCP as we sit here today. Pro-forma results are based on historical information only as appropriate in accordance with GAAP. Accordingly, the numbers omit certain financial activities that need to be considered to reconcile to current run rate results. Certain of these activities include, one, our reduced leverage as well as lower overall borrowing rates that significantly reduced interest expenses.

Two, the billion dollars plus of acquisitions that Dave mentioned earlier that will be acquired in the first quarter of 2014 at cap rates just north of 8%. The G&A synergies that we have will be realized this year also are not included. And then lastly, efforts put forward to grow earnings within the private capital management business, don’t show up on those pro-forma results. With this in mind and to avoid confusion for those updating their respective models, I like to go over a few numbers here on our current run rate, bear with me these numbers are detailed, I am going to do it at a high level but I am getting little bit granular here because I know inquiring minds will be calling us shortly, so I might as well hit it right on.

Total rental revenues of $1.3 billion that’s inclusive of the $1 billion of acquisitions this year, however excludes any further acquisitions will be completed. So, again $1.3 billion of total rental revenue.

Net revenues from the PCM business of $274 million and then coupled with other income equates to total revenue of approximately $1.6 billion.

Operating expenses and G&A expenses of approximately $200 million. In that number I am excluding acquisition related cost of the $1 billion that we'll acquire often as you know they are added back to arriving at AFFO, so I am omitting them for this illustration.

As we've shown in our three running perspectives our $9.6 billion of financing cost as of the Cole merger has the weighted average interest cost of 3.47%. We will also use our line of credit and cash on hand to acquire the $1 billion of acquisitions this year we noted. Total interest expense on a run rate basis equates to approximately $350 million annually.

Our preferred stock carries a dividend load of $72 million annually. We then have other income and expenses related to taxes. This resulted in core AFFO, again that’s FFO plus acquisition costs that I have omitted to approximately $953 million, you then have to adjust for straight line rent, non-cash expenses and other customary items to arrive at AFFO of approximately $900 million. We currently have today 812.5 million shares and share equivalents outstanding on a fully diluted basis. The end result of all these numbers, I just mentioned is a run rate of around a $1.11 to a $1.13 per share AFFO. Again, this number is a run rate through what we know today. If we didn’t do anything else as of April 1st, we would achieve this roughly $1.12 per share for the prospective 12 months. We of course will continue to acquire more than $1 billion we have discussed over the next nine months and therefore achieve higher results.

These results demonstrate tremendous success and are result of the equally tremendous hard work. I want to thank everyone who works so diligently not just the entire year but especially just the past few months. We were balancing a number of moving parts with the transition to self-management, the multiple acquisitions and overall integration of the platforms. We are now seeing these efforts pay off as systems, processes and procedures become more streamlined and efficient. So, thank you and with that I will turn call over to Lisa.

Lisa Beeson

Thank you so much Brian. As Nick stated earlier, our real estate portfolio forms the foundation of our success. To be the best REIT you need high quality diversified assets and our portfolio is just that. From a portfolio composition perspective as of yesterday, we currently have 3,771 properties on balance sheet with nearly 103 million square feet and a total enterprise value of 22.3 billion. Our weighted average lease term is now 10.8 years with half of the portfolio tendency rated investment grades and another 20% rated. This is for actual rated entities on our leases and does not include shadow ratings.

We have the most adorable portfolio in the net lease space. These properties are located in 48 states plus Puerto Rico and include 183 tenants operating in 32 distinct industries. Our property type industry tenant in geographic diversification are in parallel. When broken down by property type we have 48% in retail and restaurants, 24% office, 15% industrial and distributions and 14% at our multi-tenant retail business.

Our top 10 tenants are less than 24% of our NOI with no single tenant comprising more than 3.5% of our portfolio; further 75% of our top 10 tenancy is rated investment grade. The NOI of our portfolio continues to grow from our high yielding acquisitions as well as from our 1.6% contractual rent increases across our portfolio with an additional 8% of the portfolio having CPI bumps and percentage rents. The durability and growth of our income is impressive.

Each of our real-estate sectors is led by specialized experience and dedicated investment professionals. Paul McDowell oversees our office and industrial business, Tom Roberts and Carrington Guy oversee our retail and distribution business, and Glenn Kindred is responsible for our restaurants, Mike Happel heads up our private capital management business. We have compiled a truly impressive team focused on building the business.

Our multi-tenant retail portfolio is also impressed with over 2 billion of assets and is superior in size and quality to many standalones strip center REITs. It is 96% occupied and consists of high quality power centers and grocery anchor shopping centers managed by a dedicated specialized team and acquisitions, asset management and leasing would yield years of multi-tenant experience.

Our built-to-suit opportunity is also very strong and growing, as David mentioned we have approximately $1 billion of opportunities contractually agreed to across our entire platform. This is a business we intend to continue to grow on one where we can drive value as the spreads are greater than on a standalone asset acquisition basis.

We’re keenly focused on increasing our overall portfolio diversification, credit quality and weighted average lease term. The size of our portfolio, the quality of our execution and the respect of our teams have enabled us to build deep industry relationships, both within the real-estate markets and our broker dealers, overwhelmingly everyone understands the benefits of partnering with our organization and these partnerships will create real value for our shareholders.

We successfully -- we have the best in class organization and we have successfully integrated over 300 people from multiple entities into one cohesive enterprise. As Brian mentioned, our teams have been working diligently and have already identified the $70 million of benefits we previously highlighted. We will continue to focus on working better and smarter to drive that number higher. Now we have already identified best practices and have adopted procedures and aligned our teams fully, and we’re highly confident in our ability to increase our synergies over time.

We will also continue to be proactive in sharing our story, our business model and our passion for creating one of the most successful REITs in the market.

And with that I am going to turn the call back over to David.

David Block

Thank you Lisa. As you have gathered these are exciting times for ARCP, we have the human capital, the intellectual capital and the ability to raise capital like no equal in the net lease industry. The motto inside our organization is hard work, smart work and team work. We believe that this is the only way to deliver great results for our shareholders. We are all very excited to be here and I hope that you can hear that in our voices, we look forward to a successful 2014 and I want to thank you all for joining us today.

Now I’ll turn the call over to Nick for some closing comments.

Nicholas Schorsch

Thank you David, Lisa and Brian. You’ve heard us all talk today about record results for ‘13 and we have told you about the success we have already experienced in 2014. We have a best in class management team; we have an unparalleled acquisition capability. The earnings from our private capital management business is immensely valuable and is best compared to the multiples and should be compared to the multiples of successful asset managers with stable and recurring revenue. We have proven our ability to deliver. We have closed every one of our transformative transactions and we have done so with great precision. Our earnings guidance is solid with room for upside, and the success we have delivered is real and we will strive to deliver even more.

Our dividend yield is higher and our AFFO multiple is lower than our peers. Yet we compare favorably on multiple fronts including quality, diversification, leverage profile, the discrepancy is where the value of stock squarely lies. Our current share price represents a tremendous buying opportunity as we see it. As we perform, we believe the value of our stock will become realized and our multiple will go up and we will continue to strive everyday towards that goal. Once again I want to thank you very much for joining and operator we’ll open up for questions.

Question-and-Answer Session

Operator

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Chris Lucas with Capital One Securities. Please go ahead.

Chris Lucas - Capital One Securities

Good afternoon everyone thanks for taking my questions. Nick and team, congratulations on the numerous accomplishments particularly the move to self-management, that’s been quite an active 100 days. I was wondering if you could talk a little bit about just the Cole merger in the sense of, are there any positive or negative surprises that you have come through as part of that integration process.

Nicholas Schorsch

Let me start with -- this is Nic. Let me just start real quick with -- I want to make sure you can hear me, so let me move closer to the phone. I would say that we’ve had some pretty significant positive surprises. I think the build to suit business is gelling very-very rapidly and it’s an area we believe we will dominate pretty substantially in the marketplace because primarily kind of our macro view that market has been dominated by insurance companies and banks who are providing balance sheet to large corporates and there continues to be a need as the economy grows and the developers are looking to that process. So we’re seeing very strong growth there and there is a serious spread differential for us. So we see great opportunity there.

The other thing we’re seeing is a little bit of price movement I think partially due to the merger we’re seeing probably 15 to 20 basis points back up in cap rates in the high quality net lease the corporates in the marketplace kind of again on a macro view of the markets. We’re seeing it generically across the markets lot of production come into market but not as many buyers and particularly seeing that with the merger we are one buyer rather than two buyers and it’s proving out to be a slight pickup in cap rate to the positives for us and that is directly derivative we believe to the merger on the buy side.

And I think that’s a positive and the other thing we’re seeing is increase and Lisa can talk about the increase in the capital management business. We have a significant increase in revenue from the capital raising side. But on an organic basis I think David you’re going to have to answer that.

David Kay

Yes, I mean I think Nick touched upon most of the positives let’s say on a self-originating basis in terms of acquisitions it’s all been positive. The teams actually have very similar culture in terms of granularity of the deals that we look, two, three stores at a time. We see 100s of deals each week and I think that there has been really it’s been what we expected. I’d say the biggest negative surprise and on the newest to the team here I’d say the biggest negative surprise has actually been the slow response to what we’ve really created in the merger by the market.

I think that the debt markets obviously got it very quickly I think the agencies got it extremely quickly and I’d say that there is just in my judgment there is more of a lag to actually what we’ve created than what we're being given credit for. I think that because of the size and the scale of the organization we can do acquisitions in the granular fashion that we always have but not we can also do large scale deals and still be very small as a total composition of the portfolio. We have greater assets to capital as seed by the big bond deal and we’ve created actually just in our debut deal quite a following.

And so I think that all those things mean that you can garner more spread and this is a spread business we look to garner it on the acquisition side as well as on the financing side. Our PCM business is clipping extremely well raising a lot of capital and we’re putting that money to work and the fees are being generated and I would say that the only negative surprise that frankly I’ve experienced so far has been just the slow response by the market. But it’s coming. And the stock's obviously moved in the right direction but I still think that we are vastly undervalued compared to the 22 plus billion dollar organization that we have.

Chris Lucas - Capital One Securities

Okay. And then on the $70 million of synergies that have been identified. Could you maybe breakout what you have already sort of incorporated into the activities and what is yet to be realized. In other words so what’s the time frame that those $70 million should be recognized, between sort of first quarter and then by the end of year?

Brian Block

I'll start with the latter; I mean in our model, Chris, is the fact that we've identified today roughly $50 million to $60 million that are in various stages of implementation. We’re very confident, if you look at our four quarters, that annualized savings will be at or in excess of $70 million annually. Today, coming out of really the first month or so, about $ 55 million that would be identified, that will be in place within the 30 days.

Chris Lucas - Capital One Securities

Okay, and then I just have a couple of housekeeping questions, really just trying to understand where specific numbers are coming from, so for the fourth quarter specifically what was the level of organic acquisition volume, so in my mind I’m thinking there is exclusive transactions related to Inland, Fortress, CapLease.

Lisa Beeson

Chris, I have to sort of circle up and get that for you. But it's around $700 million across both companies, as you can imagine it was not as great as it would have been, given we had so much to do. We were very much focused on closing CapLease, closing IV, and the Cole transaction. So I don’t think it’s appropriate to look at the fourth quarter as any sort of normal run rate. I think what we've been able to accomplish thus far in the first quarter, with frankly the merger, only closing on the [seventh] if there is something more towards the normal self-originated opportunity.

Brian Block

Definitely more indicative of the future, you should look at our first quarter, much more indicative than the last quarter of last year.

Chris Lucas - Capital One Securities

Okay, so then for the first quarter, I just want to make clear I understand what the 818 million includes and the 205 under contract include?

Lisa Beeson

The 2013 is closed, done, signed, money we own the assets on our balance sheet.

Chris Lucas - Capital One Securities

Does that include the Inland transactions that closed last week, and the Fortress assets that closed in January?

Lisa Beeson

Yes but just a small portion of it. We still have more to go on Inland.

Brian Block

And keep in mind that's just through February, the $800 million

Chris Lucas - Capital One Securities

And then on the -- just thinking about it from a guidance perspective, I think you guided, low end was $2 billion. First quarter you already got $1 billion under essentially done or under contract; what’s the deal flow look like? Why -- what's the likelihood that the $1 billion of the remaining flow is -- really is a low-ball number, quite honestly?

Lisa Beeson

So David mentioned earlier, we actually looked at just about $10 billion worth of transactions in the first quarter. We submitted a little over $5 billion of LOIs and closed on 1.5 across the balance sheet and for our funds it is a very low number. We have a high degree of confidence in our ability to significantly exceed that. And there is lots of great opportunities out there and given where we are on our size and our scale you know the conversations that we were having around being the corporate owner, the owner of choice for corporate real estate, there are great opportunities we were pursuing.

Brain Block

Chris, I think the goal of management is to continue to make strides going forward conservatively. And you’ve seen how we managed the other businesses that we've run, particularly me. And I think from looking at acquisitions on a go forward basis, yes we have $1 billion in the first quarter. We've estimated 2 to 3 during the year. Obviously timing makes a difference towards earnings. We’re going to be conservative. We'd like to continue to exceed expectations, under-promise, and over-perform. And I think that that’s what you’re going to see from us in the future.

Chris Lucas - Capital One Securities

Okay. And then on a similar vein just thinking about the PCM side of the business, first quarter 865 million raised so far, your guidance numbers only 950; you got another month of effective selling time as it relates to that number; is there something going on here as it relates to the piece of capital raised relative to acquisition opportunities, or is it related to the product availability you actually have actually have of shares to sell in the PCM business?

Brain Block

Yes, you are going to see a lot more volume because ARC is no longer in the net-lease non-traded space. I mean Cole Capital is the brand, is the only real provider of non-traded, and so yes, we're seeing increased inflows. Again we wanted err on the conservative side. We're the dominant party. We are the dominant player. We have a tremendous infrastructure, through the Cole; the brand is extremely solid as we've talked about, we've have kept the Cole Capital brand. It resonates well throughout the industry. We have been having lots of meetings. We have some going on of out here today, in Phoenix. And I'd say that, yes the capital raising is going very-very well. But we are erring on the side of conservative. I think we continue to want to under-promise and over-perform and I think that you’ll see that. Yes, we've an abundance of activity over the last 100 days and I think now is the time to is to show the market and to you guys that we can execute and continue to execute not just a quarter or two quarters or three quarters but infinitely, quarter after quarter, hit our numbers, make marks and then move onto the next quarter, and so I think that’s the tone that you’re going to see from us on a go forward basis.

Chris Lucas - Capital One Securities

Okay and then again related to guidance. Brian, just in terms of getting to the low end of the numbers, we should just assume that, that $1.13 at the low end is reflective of just essentially what you’ve talked about before which is what’s done and nothing more, is that effectively how we should be thinking about the low end?

Brian Block

That’s correct. So to repeat Chris, if we didn’t do anything past March 31st, we'd be at the low end of the range and that’s fact that we have a lot more acquisition potential for the duration of the year.

Chris Lucas - Capital One Securities

Okay and then last question for me. Nick, you started out the talk with a comment about evaluating the multitenant portfolio. Do you have any thoughts at this point about that and if nothing else what sort of time frame are you thinking about in terms of thinking through the opportunities with that portfolio?

Nicholas Schorsch

Well thank you, Chris. First of all, now that we have a team here and that’s running the day-to-day operations in such good stead. I’m free to do a little more strategic view of what we’re doing in the portfolio. We’re spending a lot of time right now looking at where these different assets trade, where they should be. The assets we have are super high quality top MSAs. The power centers are excellent, well positioned and newly acquired. So these are not legacy power centers, or areas that have problems, there’s some real upside there.

So we’re trying to discern the best outcome for the company and where we want to be long term. It’s going to be a very concentrated effort. I would say next 60 days, we’re going to be focusing a lot of energy, I am, and our executive team is going to be focusing a lot of energy on that process. So it’s not going to be a nine-month program. This is probably the next 60 days and we'll have a response for the market on exactly what we’re doing and how we’re doing it and an execution plan.

Operator

The next question comes from Mitch Germain with JMP Securities. Please go ahead.

Mitch Germain - JMP Securities

Good morning guys or good afternoon. Just as a follow-up to that Nick, I’m assuming you’re going to be watching closely what happens with Simon and their spin-out is that kind of what’s shaping this for you?

Nicholas Schorsch

Well obviously, that’s on our mind as well as we’ve recently watched what Ashford did and we keep our eye on, you know you saw it with the PSA and this is obviously an opportunity. There’s also what other firms have done as far as JVs and those type of structures and then the other side of it is, remember we have a best of class team that runs that business. So we have a tremendous -- we have 50 people full-time just in our multitenant strategies leasing and acquiring those type of assets.

So Tom Roberts and his team, you saw what Kite did recently with Inland. So our portfolio is a great portfolio, it’s probably better than that portfolio, more of power centers and more growth. And so we’re looking at every opportunity that’s out there for us and we obviously are keenly aware of what Simon has done, so obviously we have to take everything into consideration and we certainly haven’t missed that one.

Mitch Germain - JMP Securities

Great and I know, last question for me. I know, David and there's a slide in the presentation as well, supplemental as well, it talks about the deals underwritten, the LOI submitted and what you guys closed on. With regards to the LOIs, did some of those deals maybe go to private capital or is this really just the REIT itself and the activity that the REIT has right now?

Nicholas Schorsch

Yes. Some of those deals go to private capital. This is total deals that we've underwritten. Remember it's one cohesive group so when we say that we've underwritten $10 billion a deal, that's the total deals that we've underwritten as a group. And so yes some of those LOIs and acquisitions would go obviously into the funds in the non-traded.

David Kay

Some of them haven't been traded yet either. Some of those are out in the marketplace and they haven’t all traded.

Operator

The next question comes from Josh Patinkin with BMO Capital Markets. Please go ahead.

Josh Patinkin - BMO Capital Markets

Hi, good afternoon everyone. Can you remind me on the guidelines you use on what kind of assets gets acquired by the REIT versus the managed funds?

Nicholas Schorsch

Sure. The managed funds, obviously the REIT has the ability to buy assets. There’s an allocation agreement to keep everything in an appropriate structure and there are a series of investment committees that are followed. And the allocation agreement allows for the larger transactions to first go to the balance sheet because they really are not appropriate because the capital is so granular coming into the PCM business, they don’t really belong in those non-traded REITs because it would over concentrate the non-traded REITs. So the larger transactions would automatically go to the REITs first and then the other ones are in a rotation. So there's nobody picking in and inappropriately choosing, so it's done in an appropriate and kind of best practices manner, and there is two committees that oversee that inside of the company as well as the individual Boards.

Josh Patinkin - BMO Capital Markets

Okay and what was the average deal size on the $1 billion of self-originated this quarter?

Lisa Beeson

It was small, 83 deals for a $1 billion, so 100 million.

Josh Patinkin - BMO Capital Markets

Okay and is that you think what enabled you such an attractive initial yield going into smaller deal size?

Lisa Beeson

Absolutely, that is how we distinguish our self, no other company has the acquisition machine that we have built here that enables us to cost effectively do smaller one-off transactions and that’s how we’re able to get the pricing differential. We can buy three assets at a 775 or an 8 cap that another competitor buys in a portfolio at a 6.7 cap, that’s a significant spread differential and we do that because we’re able to and will do granular level acquisitions.

Nicholas Schorsch

It was 260 properties also, so on a per property basis you’re only talking about $4 million per property. I mean that’s as granular as you can get in this industry and that’s really what diversification and creating durable income and consistent portfolio performance when you combine the granularity with the investment grade concentration that we have, that’s how you’re going to continue to perform and collect rents over long periods of time.

Josh Patinkin - BMO Capital Markets

Interesting, okay, and so as I reconcile that against the idea of doing larger corporate deals, $1 billion of concentrated real estate, is that more of an opportunistic thing or I would assume that would come with a lower cap rate just because of the size and profile of the company you're buying?

David Kay

Not necessarily, not necessarily, because we actually look at both ends of the barbell. We have fewer competitors on the granular side because really nobody has a team like ours to cover the country they’re used to bidding on larger portfolios. But when I say larger, those are typically a couple hundred million, 300 million, 400 million, $1 billion than you’re on the other side of the barbell and that you have very few companies that could actually take down a $1 billion of assets. So I’d say on either end of the scale, we actually have less competition which ultimately comes -- will derive more rates for us.

It also is a way where in the build-to-suite business as an example you can cut out the middleman and provide a better cap rate to your customer while still garnering more spread. So I think at every sort of spectrum we will compete obviously on the $200 million or $300 million portfolios. It’s just those are going to be much more highly competitive because that’s really where the rest of the industry is.

Nicholas Schorsch

There is a number of examples of that by the way, in the marketplace, you saw us in the GE transaction on trust REIT that was almost mid to high sevens on an average cap rate. And it was broken up in two pieces because they couldn’t generate competitive bidding. And we ended up buying two pieces and putting it back together, but there is that and you also saw recently with the Kite transaction with Inland where that was broken into two pieces and done in two separate transactions, again, size was an issue. So again, there is some value as David said to both ends of the spectrum. So I wouldn’t necessary assume that the bigger deals are going to draw a lower cap rate until you hit that sweet spot kind of in the middle where you have the $300 million to $400 million transaction where there’s 30 buyers.

David Kay

Josh, I would also say, one of the most important things and I said it in my prepared remarks, we see every single deal. If you’re selling a net lease asset somewhere in the US, you have to show it to us. And so it becomes then just, do you want to, how aggressively do you want to bid and do you want to own those assets after you’re underwriting. So that’s why we’re looking at $10 billion of deals to do a $1 billion, $1.5 billion because we’re being selective both on a real estate side and obviously on a credit side with the investment grade concentration that we have, but we’re going to look at every single deal and I think that’s what you want out of a business.

Josh Patinkin - BMO Capital Markets

Okay, well so bigger picture question then. Obviously, we’ve seen a ton of consolidation in the net lease sector over the last decade or even less than that. What inning do you think we are in, in terms of consolidating at least real estate in this country? Are we even close to coming toward the middle of the game?

Nicholas Schorsch

No. We’re not. We’re early like first or second inning. Obviously, we did kickoff the game and we may have created the game. But I think there’s a lot of, this is what I do because this is what I do in the net lease space and that doesn’t necessarily play when you look at scale. You have a lot of G&A and that’s on smaller companies that they can’t really get out from under. You’ve got a number of companies that are trading inside the box, the proverbial box. You also have some of these transactions that are starting to trade in the market that are so big that the smaller players kind of the -- this is what you saw in the banking industry. The smaller players can’t fundamentally compete because the deals are too big and then they end up in the very-very small transactions where we’re playing competitively and finding great volumes.

So I think you’re going to see a lot more, we had this conversation in NAREIT on the panel there and I think you’re going to continue to see. You’ve also got more non-traded REITs that are looking for liquidity that are in the net lease space, which throw an additional $15 billion or $20 billion of assets into the market over the next four years. And not just from the ARCP Cole platform but from many others that have been accumulating assets over the last five years. And those assets are going to come to market also, so lots of opportunities. The question is who dances with what partner, and I think it can we’re very exciting few years for all of us. But we certainly don’t need more scale, and we don’t need to do a transformative deal. We've done that. But we are focused on roads based on organic and the granular acquisitions as well as the opportunistic ones, where we can get the right price for the right assets that make our portfolio better. But I think there’s other people that are going to look for dance partners and they are going to stretch to see those deals work.

Operator

The next question comes from Dan Donlan with Ladenburg Thalmann; please go ahead.

Dan Donlan - Ladenburg Thalmann

It must be nice to be in Phoenix right now versus New York. The first question I have is, I guess for Brian, how much cash and debt and stock do you have outstanding today?

Brian Block

As we sit here today? I couldn't tell you with exact precision. I can get back to you on that. I know that I have $1 billion of capacity on our line of credit, we have $275 million of cash today, and we have 812 million shares outstanding. So if you need me to be more precise, I’m happy to give it you.

Dan Donlan - Ladenburg Thalmann

Okay, so I’m just looking at the page 9 of the presentation you put out and it has 807 million shares outstanding and this is the pro forma income statement, I’m just trying to figure out why the shares are lower than what you just said in terms of how you’re going to finance future acquisitions, or is that pro forma number that you're given there, is that just as the company exists today or, what’s included in those revenues?

Brian Block

That’s the weighted, on slide 9, when I talked about the number of shares I have outstanding today, that’s not the weighted average. What’s on slide 9 is a weighted-average throughout the balance of 2014.

Dan Donlan - Ladenburg Thalmann

And then as far as what you’ve acquired or what you have acquired in the first quarter, I appreciate some of the color you gave, but what exactly are you buying? You know it seems that the 8% cash cap rate that you are quoting is really high and attractive. Is it retail, is it office, is it industrial; what are you buying?

Lisa Beeson

Dan, it’s actually Lisa. Frankly, it's a mixture across all asset types. It’s some restaurants, it’s office, it’s industrial, it’s retail, it’s everything. Yes, but it’s still probably more retail, it’s about little, probably 50-55-ish percent retail, but it’s across the board.

Brian Block

And it’s not high, it’s what our expectations were, I mean the expectations that we put out continuously have been aiding the quarter and that’s where our numbers are coming in right around there.

Dan Donlan - Ladenburg Thalmann

Well I guess its high relative to what some of your peers have been saying. Is it investment grade rated, non-investment grade rated, is it lower lease duration?

Brian Block

Similar to what’s in the existing portfolio today, where we're seeing 50%, there’s the investment grade rated, and same lease terms on a weighted-average basis, same credits, the same dollar general CVS, Walgreens. You're articulating our story for us right here with that question. That’s the question that I want to answer on every single call, as why are we able to obtain the rates that we are able to obtain, and that is really where the story is. We are able to do that because we’re buying small portions of assets at a time, two, three, four stores at a time. And there is nobody out there doing that. And there is additional rate in that where if you buy a $200 to $300 million portfolio and you going to pay in the 6s for it, we can buy the same exact assets, you know it’s 7.75 towards 8 on an individual basis. And so we would rather do that than participate with the rest of the crowd, and just did that way. Nobody else has a platform like we have. And actually there was only two companies that had it. Cole, and ARC, and now we are both in the same locker room. And so it is a much easier story it’s a much easier transaction to do. We are not beholden to brokers. We’re beholden to our own, ourselves, that they are self-originated deals. And that's where you get more arbitrage. There's only two ways to do that. You either buy it better or you financing better, and we are going into both. And that’s why you’re seeing the strategy, you know on the opposite side on the balance sheet.

Lisa Beeson

We have so many of the different opportunities that we look out before they go to market because we have the relationship. We have almost 50 acquisition professionals across the U.S. focused on buying smarter, better than the average person, all of whom have relationships. Plus, David and I and Nick and Brian, and Paul and Glenn et cetera have senior level relationships as well where we can have those corporate discussions on a constructive sale leaseback basis where we can get better pricing, what we’re focused on day in, day out. And we did it last year. We’re doing it this year. We will continue to do it. This is not aberration. This is how we do the business.

Nicholas Schorsch

I mean last year’s rating was rated A, it's like 795 plus, I don’t have the exact number in front of me but it was right around 8%, I mean this is what we’re going to do year in and year out.

Dan Donlan - Ladenburg Thalmann

The question is more or less, your competitors can do the exact same thing. They can acquire stuff on a one-off basis, as well. I guess what I'm asking is, is there something that you offer them that some of your competitors do not?

Nicholas Schorsch

I don’t see of our competitors out there that have 50 acquisition guys around the country, I see where they have 3000 brokers that they contacted and they’re happy to bid on larger portfolios and those are fine businesses the way that they’re run and they’re just not going to generate the same type of cap rates that we’re going to give, I mean we, it’s hard to create a scalable team like this, it’s not easy to that and that’s why everybody hasn’t done it and it’s similar to be honest to what in Capital Automotive it’s knocking on an individual asset by asset door to get those deals, and it is just a completely different strategy than anybody else is using and this has really been the way that Nick and ARC has operated all of their businesses from the get go, and a very hands on approach, I mean, to be honest when I came over, one of the first things that I looked at was the way that the due diligence and the underwriting was all done in house. Moving away entirely from external law firms to underwrite real estate due diligence and frankly that was totally different than what I’d experienced in my previous company. And what you find is, is not only does it save you a lot of money and you can do the deals quicker but most importantly you actually control the process so that you can actually do better underwriting, because they’re in house, you don’t have an associate or a lawyer that isn’t connected to your firm other than a client relationship, whether they’re working on 10 other companies some of which may be your competitors and so I think bringing everything in house, from the diligence side to what we just talked about on the acquisition side is how we do this business better. And frankly that’s why I’m here, this is a better mousetrap for this type of real estate and it’s one that you can scale and continue to scale and you can see that it doesn’t cost any more, it actually costs less. Our G&A rate’s only 40 basis points, so I mean it is difficult to set up and you got to hire the right people but we’ve been able to do that. Interestingly enough Dan, I don’t too many of our competitors that actually publish cap rates, those on a GAAP by cash basis, that’s we like to be as transparent as we do and have those numbers vetted through our external auditors.

Dan Donlan - Ladenburg Thalmann

Understood. And then just last question on the leverage, how should we be modeling that going forward? Somewhere between 7 to 7.5 times net debt to EBITDA, is that the range we should be looking at?

Nicholas Schorsch

I mean in the interim you’ll see it in that range but the overall objective over longer periods of time, is to bring leverage in some, I mean it’s that delicate balance between looking at your balance sheet on a risk adjusted basis and because there’s a high concentration that we have in investment grade credit, unlike anybody else we can carry more leverage and the agencies are fine with it obviously by giving us investment grade ratings. But we want to continue to bring our leverage down in hopes of improving those ratings and our cost to capital over time, and so I think that you’ll see us bounce around as you said maybe upper sixes, mid seven right now, but the bias is, is to continue to drove leverage down, and I think that that is not only prudent but I think that it’s the right business model to effectuate improvement in our ratings and therefore improvement on the spreads of our bonds.

Operator

The next question comes from Michael Gorman with Janney Capital Markets, please go ahead.

Michael Gorman - Janney Capital Markets

I just wanted to go back to Chris' question at the beginning just to make sure I understand. More on a go-forward basis because obviously you had a lot going on in the fourth quarter. But can you just reconcile for me -- you talked about in the third quarter $1.1 billion pending obviously with all the other stuff going on in the fourth quarter that came in lower. So the $1 billion in the first quarter so far, how much is carried over from the fourth quarter transactions that didn't close?

Nicholas Schorsch

No, it’s not a carryover, it’s just what we generated I mean, I think maybe your confusion a little bit would stem from the fact that yes in the fourth quarter we were trying to close call in the AIR CTDO and so we obviously had a lot going on in our plate and so, and we were utilizing obviously our acquisitions and diligence teams to underwriting diligence those companies. And so, as you then roll into the first quarter you’re back now to the typical going out and buying the two-three-four assets at a time, and so we’re at $1 billion for this anticipated closing for the quarter, we’ve already closed $800 million of it, most of that’s in the granular section of the business and so I think as you look forward we’ll continue to be moving forward in that same light.

Lisa Beeson

And this is Lisa, if I can just, one additional thing, right. There are still more transactions that could still possibly close in the first quarter where we have letters of intent outstanding right now that we’re in negotiation on, I mean there is a significant pipeline above and beyond that, that is hard, that we are actively pursuing through the second and third quarters, there are tremendous number of opportunities that are out there on a very granular level basis that we’re looking at, I mean, every week we have several hundreds of millions of dollars coming in for us to be pursuing, there’s at least a $1 billion of opportunities that we’re out there hard on. We just gave you the Q1, that’s going to close with certainty.

Michael Gorman - Janney Capital Markets

Okay, got it. And then just going back, I think Nick was the one who mentioned about a little bit of a backup in cap rates, just because now you guys are functioning as one versus two competitors in the market. Has that had an impact on the close rate early on? You talked about the $10 billion, you put 50% LOIs and you're looking to close to 10%. Is that a similar ratio that you would have seen before or has your close rate gone up, as well?

Nicholas Schorsch

It’s almost identical to what we did as two companies last year, we looked at about 40 billion, this is before David and Lisa’s time, but we looked at about 40-42 billion of assets last year and we closed on about 2.5 billion as two separate companies, maybe a little more maybe 3 billion, and plus the office and distribution business which brought it up to about 4 billion and change of organic granular acquisitions, no M&A, if you look at all of Cole and all of ARCP in 2013, but on top of that you have to remember that ARC 4 and ARC 3 and ARC 5 which are no longer in business also bought $4 billion of assets, so it was almost 8 billion of originations last year combined for all the companies, and this year we’re only looking, we only guided to 2-3 billion, so there’s less demand on our side, we can be more selective and 10% really represents a more selective program than what we had last year which is somewhat derivative in that, that cap rate backup, and that hasn’t all been seen yet in our numbers because some of that’s happening real time, and when Lisa says a 1.04 billion this year for the end of the quarter that’s what we’re closing, not what we’re going hard on or going under contract for.

So we have to really be careful because this is an ongoing and continuous business, we’re not eyeing a deal and then we’re scurrying and it was a comment that was made earlier when Dan was talking with David, I just want you to understand a lot of the industry historically are relatively modest in their acquisition platform, so they’ve been buying and then waiting and then buying and then waiting whereas we are and have built a reputation for being continuously in the market.

So as Lisa says we’re looking at multiple billions of dollars a month of opportunities and then we’re being selective based on what we need 90 days or a 120 days out, and some of the deals that need to close real quick we may not want, we may want. So we have lots of options and we’re being more selective but we’re also seeing a little bit more supply coming to the market which is causing that cap rate backup and also there’s worries about interest rates and you know there’s a little bit of movement for the buy side, and we don’t know whether that’s a permanent condition but that’s a macro in the market. You may not be hearing that from other REITs because they’re not in the market everyday but you will hear it from the brokers you will hear it in the market place and we think that 10-12 bps or 15 bps right now is just, we’re just watching it, and we’ll it see where it ends up at the end of the year but there is a little softening in the price.

Michael Gorman - Janney Capital Markets

Okay, great. And then, Nick, just one last one, maybe more from a strategic perspective. Obviously, you've talked about the valuation discrepancy between the shares and some of the competitors. Could you just talk about how you think about your cost of equity right now? You have plenty of liquidity with the line of credit and cash on hard, potential proceeds from the multi-tenant. But as you think about looking at these large-scale corporate transactions that might require an additional slug of equity later this year and next year, whenever they may pop up, can just talk about how you think about the cost of equity in those transactions versus the share price today?

Nicholas Schorsch

Well you’re kind of getting into the -- this is very macro conversation but I’ll be happy to kind of get into it, but when you look at it strategically one of the things that we weigh as a Company and as a Board is the idea, this continues the whole discussion about the multitenant assets again, there’s a great source of a lot of capital and it doesn’t put us to the market, to come to the market for equity, it allows us to recycle equity in a more productive way if we can generate the right yields and there’s a great way to reduce potentially our need for capital this year almost completely depending upon how we structure that so there’s a lot of ways for us, we’re not looking to come to market to raise a lot of equity but then again as David said, if we’re looking at a large transaction that’s at the right cap rate and we can get our stock price to a level we’re comfortable as we said before we’re certainly not comfortable selling equity at $14 and we haven’t, we said we weren’t going to sell equity at $13 and we didn’t.

We said we weren’t going to sell equity no matter what anybody said at $12, and people were saying we’re coming to the market directly, we didn’t. So right now if you look at our business plan we've got a modest equity rates plan for 2.5-3 billion of equity, excuse me, 2.5-3 billion of assets, it’s for the acquisition program for 2014 which has about a $600-700 million equity component, and that equity component could be lessened, not increased based on what we end up doing with multitenant portfolio. So lots of opportunities, we are looking at it globally and we do look at our cost of equity with a very caustic eye because I’m not anxious to issue equity at a price that is not what we believe is fair for our stockholders, so we’ve been very stingy with that.

Thank you.

Operator

This concludes our question and answer session, I would like to turn the conference back over to Nicholas Schorsch.

Nicholas Schorsch

Thank you, I’d like to end with just a quick remark, I don’t know if you can hear what I hear in our Phoenix office today but we are excited about what we’re doing, this is a story that’s just not been told yet. We have pride in our results and this is one team with one mission and that’s to provide our shareholders with value and we’re looking at every opportunity to create that value. This is just one step and we have ways to go, we want to bring our leverage down as you heard David say. We want to look caustically at our cost to capital, we want to be very careful with how we address the multitenant portfolio because we have a great team and we’re one of the best producers of that kind of product and we have an untraded REIT strategy in that space, so there’s lots of growth there.

We look at everything we’re doing and now I have the time to actually spend time on these more strategic initiatives because David and Brian and Lisa and the existing team are well entrenched in our businesses. They’ve taken over the day to day operations and we’re really getting leverage. This is a big company, we need a big team and I’m proud that this team is with me, I’m honored that they all chose to be here. These are strong players and they’re all on our team together so on behalf of the Board and all the shareholders we’re pleased that they’re here and I hope you can hear the excitement and the energy and the passion for what we’re doing. We think we built a better mousetrap and now it’s time to unlock that value and this is the first quarter, first call we’ve had where we’re not talking about some major acquisition and I want you to understand the power of the organic platform and those granular transactions, and I think the questions today from the analysts have really focused on that and we appreciate the intention and the focus for the analyst community. So thank you all for joining us today, we went a little over our allotted hour but we thank you for your support and your attention to us today. Have a great day.

Operator

The conference is now concluded, thank you attending today’s presentation, you may now disconnect.

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