Ramco-Gershenson Pptys Q2 2010 Earnings Call Transcript

Jul.28.10 | About: Ramco Gershenson (RPT)

Ramco-Gershenson Pptys (NYSE:RPT)

Q2 2010 Earnings Call

July 28, 2010 01:00 pm ET

Executives

Dawn Hendershot, Director, IR

Dennis Gershenson - President & CEO

Gregory Andrews - CFO

Thomas Litzler - EVP

Michael Sullivan - Senior Vice President

Analysts

Vincent Chao - Deutsche Bank

Todd Thomas - KeyBanc Capital Markets

Michael Muller – JP Morgan Chase

Rich Moore - RBC Capital Markets

Vincent Chao - Deutsche Bank

Operator

Greetings and welcome to the Ramco-Gershenson Properties Trust second quarter 2010 conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Dawn Hendershot, Director of Investor Relation for Ramco-Gershenson. Thank you Ms. Hendershot, you may begin.

Dawn Hendershot

Good afternoon and thank you for joining us for Ramco-Gershenson Properties Trust, second quarter conference call. At this time, management would like me to inform you that certain statements made during this conference call which are not historical, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although, Ramco-Gershenson believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors and risks that could cause actual results to differ from expectations are detailed in the press release and from time-to-time in the company’s filings with the SEC. Additionally, we want to let everyone know that the information and statements made during the call are made as of the date of this call. Listeners to any replay should understand that the passage of time by itself will diminish the quality of the statements made.

I would now like to introduce Dennis Gershenson, President and Chief Executive Officer and Gregory Andrews, Chief Financial Officer, both of whom who will be presenting prepared remarks this afternoon. Also with us today are Thomas Litzler, Executive Vice President of Development and Michael Sullivan, Senior Vice President of Asset Management.

At this time I would like to turn the call over to Dennis, for his opening remarks.

Dennis Gershenson

Thank you, Dawn. And good afternoon ladies and gentlemen. I am very pleased to report that even in this continuing, uncertain economy, our balance sheet and operating statistics, be they debt ratios or liquidity, leasing velocity, rental comps, occupancy, same center net income comparisons or operating margins have all improved as compared to our numbers in the first quarter of this year.

Also, we have signed more tenant lease agreements this quarter than in any comparable period in the last five years. Further, we have made substantial progress in completing our named value-add redevelopments and we continue to fill our mid-box vacancies. In the second quarter, we signed three anchored tenant agreements, bringing the number of new national and regional destination retailers in excess of 20,000 square feet to seven for the first six months of 2010.

At the end of the third quarter of 2009, and again at the beginning of this year, we articulated a commitment to achieve two specific goals for the near term. First, we announced that we would take affirmative action to substantially improve our balance sheet and second, we promised to chart a clear course to credible sustainable earnings growth. We believe that our actions over the last nine month have demonstrated that we are well on our way to achieving both of these objectives.

Concerning our balance sheet, in addition to our asset sales and equity raised in the third quarter of 2009, our recent $79 million public offering in May has substantially improved our debt position allowing us to pay down our term loan early retire two long-term mortgages with above market interest rates and we added additional flexibility to our liquidity position by reducing the outstanding balance on our revolving line of credit. Our debt to EBITDA ratio improved 170 basis points from this time last year and 30 basis points from as recent at March 31.

We told you last year that we had set a goal for a debt to EBITDA ratio by year-end 2010 of between 70 and 72 time. At the six months mark we have met this objective. Therefore our capital activities for the second half of the year will focus on generating additional [goals] to meet the requirements of our business plan as well as to further improve our liquidity.

We anticipate that we will generate these sums through the sale or contribution to the joint venture of several fully valued asset. We are also reviewing the potential for settling one non-strategic center. Although we are pleased to report our progress to date, you should know that we continue to consider maintaining a strong balance sheet a primary objective. As per our operations, I trust you can see from our supplement and press release that we have begun to gain real traction in 2010. Our same center net operating income portfolio-wide occupancy and operating margins all show improvement over the first quarter.

Our leasing progress includes both large format users and smaller retailers who are taking spaces in all of our market with an emphasis on Michigan and Florida. Our lease renewal rate to date is about 75% and although our rental rates for new leases and lease renewals averages are still negative as compared to prior leases executed in much better times, our spreads are substantially improved as compared to Q1 of this year.

Our mid-box leasing activity in the second quarter includes the execution of agreements with Golfsmith and Fresh Market to fill the Albertson’s vacancy which was created just last quarter at our Mission Bay shopping center in Boca Raton, Florida. These two new retailers are bringing an exciting destination use to the center and replace the supermarket [void]. They will also produce a double digit return on our modest capital investment after applying the termination fee we received from Albertson’s as both tenants are paying higher rental rate than Albertson’s this year. Both Golfsmith and Fresh Market plan to open in February of 2011.

Obviously, the good news is that we have traded a vacant but a paying Albertson’s for two new tenants, but a right move for the shopping center. The consequence of this transaction is a loss of rental income for a period of time that affects same center comparisons and net income overall. I would like to take this opportunity to briefly update you on the progress we’re making to fill our Linens ‘n Things and Circuit City opportunities.

Of the 11 location, seven Linens and four Circuit City, we have signed leases for six of the vacancies with TJ Maxx, Ross Dress For less, Golfsmith, Staples, Best Buy and in this latest quarter, Total Wine. In addition, two locations are guaranteed by CBS leaving three non-paying vacancies. Of these three, we are presently negotiating letters of intent for two of the locations. One with the national credit and the other with a regional credit tenant.

Our success in attracting the lineup of quality recognized destination mid-box retailers that I have just mentioned is a testament to the strength and desirability of our shopping centers and our trade areas in Michigan, Ohio and Florida. Several of the aforementioned anchors have opened. Two others will open in the fourth quarter of 2010 and the balance will open in 2011.

As I have reported in the last several quarterly calls, our acquisition team has continued to comb through numerous opportunities in an attempt to find a shopping center or centers. It’s been our criteria for purchase. As of this week, we have completed our due diligence on a super-market anchorage center. This potential acquisition reflects our interest in diversifying our portfolio into major, metro-markets beyond those where we have a significant concentration. The demographics for the trade area are superior. The supermarket anchor is the number one grosser in the States and we believe that the cap rate for the center is above market.

Also, there's an opportunity to lease up a number of existing vacancies. The purchase price for this asset approximates $15 million. As pleased as we are with the results of our efforts in the first six months of this year, we are committed to extending this performance through the third and fourth quarters. Because new tenant leases and an increase in occupancy are the most obvious and cost effective means of driving our earnings, we will continue to convert the growing interest by national and regional retail chains in our centers into signed leases. These agreements will begin to impact our numbers in the later part of this year and will achieve full year effect in 2011.

I would now like to turn this call over to Greg Andrews who will provide the details on our financial performance for the quarter. Greg?

Gregory Andrews

Thank you Dennis. Before turning to our financial results for the quarter, I would like to note that since starting in February, I've had a chance to visit 75% of Ramco-Gershenson’s portfolio including all of our Michigan properties and all of the five of our Florida properties. What I have found is first, well located real estate with solid trade area demographics. Second, strong anchor lineups evidenced by TJ Maxx, Publix, and Home Depot as our top three anchors. And third, opportunities to add value both near term and long term through leaseups, re-tenanting, reconfigurations, out parcel sales, and ancillary income. In the hands of our talented leasing, management, development, construction and acquisition teams, I'm confident that our high quality real estate is capable of generating predictable cash flow for our shareholders.

Now turning to the balance sheet, in mid-May we issued 6.9 million shares of common stock at $11.50 per share. Also in May, we obtained a five-year mortgage loan secured by our office building at the Town Center at Aquia. Net proceeds of approximately $76 million from the equity offering and $15 million from the mortgage loans were used to pay down debts and improve our balance sheet as follows.

Number one, we paid down $37 million outstanding under our term loan more than four months before the scheduled amortization payment was due. The current outstanding balance under our term loan is 30 million and it’s not due until next June. Number two, we paid out two mortgages totaling $15.8 million that were scheduled to mature later this year.

One at Promenade at Peachtree Hill in Atlanta, Georgia and the other at River Crossing in Tampa, Florida. These properties are now unencumbered. We also paid off the mortgage encumbering Cypress Pointe, a joint venture property in Clearwater, Florida. Our share was approximately $4.3 million.

Three, we paid off our Aquia revolving loans down to zero. This facility remains available to us but at a reduced commitment. Four, to reduce our line of credit borrowings by $7 million to $60 million. Our total line of credit commitment is a $150 million and extends to December 2012 and five, we bolstered our cash to $12.7 million at quarter end.

As a result of these actions we have greatly strengthened our balance sheet. Our net debt to EBITDA based on our consolidated EBITDA in the first half of 2010 is 7.25 down from 8.9 times last year. At the end of the second quarter our net debt to market capitalization was 54%. We have extended the weighted average term of our debt from 5.25 years to approximately 5.75 years. We have increased our unencumbered wholly owned assets by two properties and finally as of today we have only one loan for less than $5 million due for the remainder of this year.

I would like to note that our interest and fixed charge coverage ratios dipped slightly this quarter compared to the first quarter. This reflects one time items in both the numerator, EBITDA and the denominator interest expense that I will discuss in a moment. Adjusting for these one time items our fixed charge coverage would have been 2.0 times for the quarter and we anticipate it being at that level in the second half of the year.

In short, our balance sheet is stronger and more flexible today. We are now better positioned to execute our business plan while at the same time maintaining a strong and flexible capital structure with access to a wide variety of capital sources.

Turning now to the income statement, we reported FFO of $0.27 per share for the quarter. Same-center NOI for the consolidated portfolio decreased by 1.3%. For the first half same-center NOI decreased by 1.5%. These results reflect a combination of lower occupancy and rent partly offset by tight expense and control and vigorous collection efforts.

Our provision for credit loss for the quarter was $768,000 compared to $618,000 in the first quarter of 2010 and $254,000 in the comparable period last year. The fact that the second quarter’s provision was higher than the first quarter is more reflected of a deliberately cautious approach to our receivables than any trends in collections. In fact, we believe credit loss trends will improve in the second half of the year.

Let me comment on a number of one time or unusual items included in the second quarter. In the plus column, we recorded lease rejection income from Old Time Pottery as part of their emergence from Chapter 11, of $674,000. In addition, we recorded a gain on the sale of an out parcel at our River City property of $499,000. That gain is included in FFO.

In the minus column, we have three items. First, our joint venture income was down compared to the first quarter. This resulted from both a higher provision for credit loss due to the resolution of the tenant dispute and higher interest expense related to the Cypress Pointe mortgage loan that was paid off in the second quarter.

Second, general and administrative expense was higher than the first quarter because we incurred approximately $500,000 of legal expenses and severance costs that are non-recurring. Third, we booked the charged interest expense of $167,000 for terminating a swap agreement prior to expiration.

We expect expenses in all of these areas to normalize in the third and fourth quarters. Now I’d like to comment on our outlook. Due to the non-recurring items mentioned earlier, our G&A expense will likely be modestly higher than previously expected. We now anticipate full year G&A expense will be in the range of $17 million to $18 million. Despite this change, we are maintaining our full year FFO guidance range of $1.04 to $1.12 per diluted share primarily because our property operations are delivering results that are better than originally forecasted.

Our guidance continues to be predicated on full year same center NOI decreasing 2% to 3%, which is somewhat lower than our year-to-date pace of the decrease of 1.5%. In addition, we continue to forecast year end occupancy of 90% to 91%. We are encouraged by our latest forecast because we expect the gains made in driving our NOI above our earlier expectations will be long lasting whereas the divisional costs we recorded and G&A expense are not likely to be recurring. Now I’d like to turn the call back to the operator for Q&A.

Question and Answer Session

Operator

Thank you. Ladies and gentlemen, at this time we will be conducting a question-and-answer session. (Operator Instructions). Our first question comes from the line of Vincent Chao from Deutsche Bank. Please proceed with your question.

Vincent Chao - Deutsche Bank

Just a quick question on the guidance I mean, with the increase in G&A the maintenance of guidance range, it looks like the underlining core metrics of same-store NOI and occupancy, that hasn't really changed. So I was just wondering is there a conservatism built in there or what else are you seeing that's making you more comfortable with the fundamental outlook?

Gregory Andrews

I think we have not changed our guidance on our core, in terms of same center NOI or occupancy but I think we have a little bit of a bias based on the trend so far this year that we will be at the better end of those respective ranges. But having said that, we have maintained the guidance just to build-in as you said a little bit of conservatism until we have a clear outlook in the third quarter.

Vincent Chao - Deutsche Bank

Can you provide a little bit more color on the acquisition that you're potentially looking at? Exactly where is that property and is that an area that you're looking for growth to expand in more or which areas are you looking at or targeting?

Dennis Gershenson

We obviously have attempted to be a little bit vague. I will merely say that it is in a trade area where we already have representation but it’s not in a trade area where we have a significant number of shopping centers. You will be very pleased by the metro market that it’s in as well as the anchor. Consistently, we look for assets with some upside and we have consciously picked an acquisition with a price that is well within the range that would allow us to buy something to show some reasonable upside and yet not stress the balance sheet

Vincent Chao - Deutsche Bank

And just one last question on the JV contributions and potential, it sounded like in your prepared remarks that that was more geared towards maybe repaying some 2011 maturities possibly. Is that fair to say? And with only $15 million I think in this acquisition, is it safe to say that those contributions will be used more for balance sheet improvement?

Gregory Andrews

Well, I think we continue to strive to maintain a strong balance sheet but at the same time we continue to look for opportunities to invest capital in places we think we can make money like the acquisition that Dennis mentioned. If we can find another deal like that, I think it’s certainly something we would consider using a capital for just again depending on the timing of proceeds from the sales or contributions and the timing of potential acquisition opportunities.

Operator

Our next question comes from the line of Todd Thomas from KeyBanc Capital Markets. Please proceed with your question.

Todd Thomas - KeyBanc Capital Markets

I noticed that you now include the weighted average lease term with new renewal leases in the supplement and the lease term on the leases you signed this quarter did increase in the first quarter and I know you previously mentioned that you were strategically signing some shorter term leases. Has the need to sign shorter leases abated in your portfolio?

Dennis Gershenson

Well, I certainly can have Mike Sullivan amplifying with my comments but I think you would see if you actually saw the list of retailers is the majority of the reason for a slightly longer term is we are signing more national tenant leases than the regional and the locals and obviously the nationals are interested in a five or 10-year term. Michael would you add anything?

Michael Sullivan

I think that states it pretty well Todd unless you were talking about something more specifically.

Thomas Litzler

Todd, the other point I would make is our rent spreads were greatly improved this quarter verses last quarter. So, on a comparable basis only down 1.6%. Obviously when you are getting a better rack you are more willing I think to commit to some term versus when you are getting comps that are down more you view that in light of kind of a shorter term solution and then you ultimately want to re-lease that space at better rents.

Todd Thomas - KeyBanc Capital Markets

In terms of leasing spreads how do you expect that trend to continue, do you think we will the positive leasing spreads in the third or fourth quarter?

Michael Sullivan

Well, Mike Sullivan here, we certainly hope for a positive leasing spread. We think there will be gradual improvement in both the renewal and new lease spreads. We are hoping to break towards the end of the year into positive territory. Q3 should be again another good quarter for us from the leasing perspective. We do see continuing improvements. I would like to push for flat as opposed to positive but through the third we will have some more indication of how we are going to end up at the year.

Todd Thomas - KeyBanc Capital Markets

Okay and then just circling up to the guidance, you maintain the negative 2%, negative 3% same store NOI, you mentioned the Albertson’s is that, can you quantify how much that will be in terms of occupancy and NOI and how that will drag the back half of the year?

Gregory Andrews

Todd, I don’t have those numbers in front of me, specific leases but clearly the fact that they were the rent payer last year and not this year. It is going to contribute to that and we also previously had talked about a couple of other vacancies, the Wal-Mart at our Village Lakes and the Old Time Pottery and Promenade which also are contributing to that. So, I think all of those things together are built into our projection and we feel confident down two to three as the range for the full year.

Todd Thomas - KeyBanc Capital Markets

Okay and then lastly did you, what’s the cap rate on the $15 million acquisition?

Dennis Gershenson

I didn't mention that, I might have forgotten to mention it, I’m not prepared to mention it at the moment but as you know there's been very little of information on cap rates for supermarket anchor centers. Again this is in the metro market and at the time that we truly are prepared to close and announce that, I believe you’ll see that as above market cap-rate.

Operator

Our next question comes from the line of Michael Muller from JP Morgan Chase. Please proceed with your question.

Michael Muller – JP Morgan Chase

Yes, hi. A few questions, first of all for the boxes that you were talking about, the boxes that you and when you are looking at the portfolio occupancy of I think we saw it at maybe around 89.7 or so. How much incremental occupancy is to come from the boxes that are already in place?

Gregory Andrews

Is that, I am sorry unlike the boxes that are not in place or not leased you mean.

Michael Mueller - JPMorgan Chase & Co.

Well, yes I mean, basically you mentioned a handful of them are leased and some aren't leased. So if we're looking at the occupancy, I know there's a difference between the occupancy and the lease stats. So, particularly where focusing it on the occupancy of how much incremental occupancy is there from the boxes.

Gregory Andrews

I think the question is sort of what’s in the pool of signed leases that makes up that difference and it is the combination of anchor boxes and shop tenants, and I don’t know the exact divisions but there's certainly a representation of signed leases for shop space as well as for in anchors.

Michael Sullivan

Michael I could deal with this in Q1 for those boxes that we signed in Q1 is the larger format that represents a pure (inaudible) which was 90,000 square feet, in Q2 we lost 75,000 square feet so these are junior anchol losses tat have filled the pure vacancy and also as opposed to a swap of Q1-Q2. For shop it’s about 85,000 Q1 and about 92,000 Q2. So those are the total square footage of the leases signed with still fewer vacancies in the portfolio.

Michael Mueller - JPMorgan Chase & Co.

Okay, and focusing on the boxes the 90,000 and the 75,000, are they in occupancy or were they just signed and you're waiting for occupancy?

Michael Sullivan

These are signed, they are leased but net not yet opened our delivered and of course we schedule the opening to the best of our estimate based on construction and permitting events.

Michael Mueller – JPMorgan

And then, Greg, when you gave the year-end occupancy guidance is that for the consolidated portfolio and is that leased, or is that occupancy?

Gregory Andrews

That's percent leased and it’s in the same basis that we report our occupancy which is the entire portfolio.

Michael Mueller – JPMorgan

Last question, when you talk about asset sales, can you give us an idea of what is based in the guidance for the incremental. Actually I know you talked about some potential joint ventures, and selling assets into joint ventures. Can you give us an idea of either magnitude, what may be in 2010 or even what a base case could be thinking about for say over the next year or so in terms of what the potential for asset sales could be?

Dennis Gershenson

We are estimating Michael somewhere between $25 and $40 million that would be a combination of assets that have some debt on it and cash.

Michael Mueller – JPMorgan

Okay and is that for this year or that's just the overall bucket and when it hits but you are looking at 2012 (inaudible)

Dennis Gershenson

Well, you can't predict with precision the timing of posing of these kinds of things so those are sales that were looking to close this year.

Operator

Our next question comes from the line of Rich Moore with RBC Capital Markets. Please proceed with your questions.

Rich Moore - RBC Capital Markets

On the maturities that you guys have said next year, the mortgage maturities, is the plan to try to refinance those with additional secured debt or would you be unencumbering those

Assets too you think and using the line of credit for that.

Gregory Andrews

Well, I don't think we would want to use the line of credit which is really more designed for flexibility not long term financing. We certainly want to refinance any long term debt that comes to deal with long term debt but from that case whether its additional mortgage financing or some other means will depends somewhat on the market but I think we have a high degree of confidence in the refinance ability of all of that. I looked at for the next two years of the mortgage debt coming due from now to feel kind of the net of health and on an average the loan to value is moderate. It’s around 60% so I think we are not going to have great challenges in refinancing in the mortgage if that is indeed the path we choose.

Rich Moore - RBC Capital Markets

Ok and then Greg on the $30 million term loan does that eventually end up on the line of credit you think or can you do something to sustain that in some sense.

Gregory Andrews

Well I think again you have sort of a variety of options right, one would be to sort of rolling in the line at this point and maybe expand the line. So that it’s kind of using up any of the existing capacity but you get a little bit of extra time to refinance that and the other option might be to term it out with another loan. So I think there's some flexibility there. We paid off two-thirds of the term loan at this point and I think because the balance sheet is so much stronger we didn't have our choice of some option as to what to do there.

Rich Moore - RBC Capital Markets

Okay, part of the reason I asked was just, it strikes me that you guys have a good balance sheet from an overall debt standpoint but in fact you could still line up fairly quickly and I'm trying to figure out you would need additional common equity to take care of some of these things, I mean how do you view that?

Rich Moore - RBC Capital Markets

Well, I think it depends on sort of opportunities are that present themselves but there's a substantial capacity on the line today with more than $60 million drawn out of $150 million. So I’m not sure what fairly quickly means but I think we feel like that a fair amount of flexibility there and I think we have the ability to turn you know, now that we have been building up some, a little bit on the encumbered side, we have the flexibility as to how we turn out debt.

Rich Moore - RBC Capital Markets

And then staying with the balance sheet for a second, when we look at the total amount of debt you have, its obviously gone down, but interest expense rose during the quarter and I’m wondering is there more capitalized interest that wasn't capitalized, I am sorry that was capitalized and now it's being expensed or anything different in there that would make interest expense rise even though the debt is obviously shrinking?

Gregory Andrews

Yes, in fact I caught the same thing as we prepared for our call and we were giving all the numbers and, the couple of things stand out, one of which is if identified there was of additional interest capitalized in the first quarter compared to the second quarter, kind of huge amount but, it is one of the explanations. I think the bigger explanation is we had our swaps termination costs in our interest expense this quarter and so obviously that's a non-recurring item. And then thirdly, there were some fees related to the new loans and even unused fees on the line of credit. So, all those things or any of them I think you will see interest expense reduced in the quarters going forward Rich.

Rich Moore - RBC Capital Markets

Did you give us all those numbers? I can't remember for each of (inaudible) cost and all that so we can back them out?

Gregory Andrews

Yes, that was in my prepared remarks.

Rich Moore - RBC Capital Markets

Okay. And then the last thing I have was, do you have a number for maintenance CapEx, TIs, leasing commissions that kind of thing for the quarter?

Gregory Andrews

Not the total number. We don’t have a sort of global number for that Rich but what I can say is that in terms of tenant allowance it is obviously you can't do leasing deals in this environment without offering something and certainly on the anchor deals that's the piece that generates the biggest piece of allowance that I think we feel very comfortable with the amount that we are spending there given a number of things.

First of all, that we are filling these vacant boxes with primarily credit tenant like Staples or (inaudible) and the like. Secondly, that the terms of the leases are 10-year terms and thirdly the costs are actually pretty reasonable and I think in line with kind of market norms.

Rich Moore - RBC Capital Markets

And you didn't have any plans, Greg to put those in the supplemental?

Gregory Andrews

Well, we are looking at it, I think generally that’s a good disclosure process of the peer group. I just want to make sure that before we do anything on that front that we are gathering the data in an accurate and consistent manners so that we are not misreporting anything but I think you have been looked up adding some of that data at some point in the future.

Operator

Our next question is a follow up question from the line of Vincent Chao. Please proceed with your question.

Vincent Chao - Deutsche Bank

Just a clarifying question on the guidance. I thought I heard you say that the 90% to 91% was on a lease basis not on occupied basis. Is that correct?

Gregory Andrews

Correct

Vincent Chao - Deutsche Bank

So you are at 90.8% today, and that sort of implies at midpoint a little bit of a tick down in occupancy, that's the right way to think about that?

Dennis Gershenson

I think Vincent that the guidance at the end of the year ‘09 at 91% really is principal occupancy of the entire portfolio, not the lease. The lease you will better number.

Vincent Chao - Deutsche Bank

So it's the percent occupied number that you guys reported at 89.7%.

Michael Sullivan

It might be the bulk numbers falling in that same range. The different isn’t that big so it may well be on both the physical and I am sorry on at least an economic basis in the 90% to 91%.

Vincent Chao - Deutsche Bank

Okay, so I mean if you look at one versus the other, just relative to where you are today, it implies certain things about the trajectory of occupancy. That's why I just wanted to clarify that, but thank you. And the other thing was on the contribution the $25 million to $45 million of contribution/asset sales. You said you were looking to close this year but is that actually baked into the guidance range? The actual closure of those?

Gregory Andrews

Yes, they are.

Operator

There are no further questions in the queue at this time. I would like to turn the floor back over to management for closing comments.

Dennis Gershenson

As always we thank everyone for their interest and their attention and we look forward to talking to you if not before or 90 days.

Operator

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.

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