Calloway REIT's (CWYUF) CEO Huw Thomas on Q2 2014 Results - Earnings Call Transcript

Aug. 8.14 | About: Calloway Re (CWYUF)

Calloway Real Estate Investment Trust (OTC:CWYUF) Q2 2014 Results Earnings Conference Call August 8, 2014 9:00 AM ET

Executives

Huw Thomas - President and CEO

Rudy Gobin - EVP Asset Management

Mario Calabrese - Interim CFO

Anthony Facchini - VP Operations

John Darlow - VP Leasing

Analysts

Michael Smith - RBC Capital Markets

Pammi Bir - Scotia Capital

Operator

Good day and welcome to the Calloway REIT Second Quarter 2014 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Huw Thomas, President and CEO. Please go ahead sir.

Huw Thomas

Thank you very much operator and good morning everyone, very dramatic music to start our call this morning. Welcome to Calloway's Q2 Conference Call. It's Huw Thomas, President and CEO here and with me are our regular management group Rudy Gobin, our EVP Asset Management; Mario, our Interim CFO; Anthony Facchini, VP Operations; and John Darlow, our VP Leasing.

As usual I'll make some opening remarks about the quarter overall and then we'll open it up to questions. My comments will mostly refer to the first four pages of our supplemental information package which is posted on our website and I refer you specifically to the cautionary language at the front of that material, which applies to any comments that any of us may make this morning.

Overall we are pleased with the results for the quarter, considering the general economic climate and the overall retail market conditions. FFO increased 9% to $66.3 million and 7% to $0.488 on a per unit basis compared to the Q2 of last year. There were no material onetime items that influenced the quarter's results and these increases reflect contributions from all of our business initiatives and I think a very solid performance overall.

Same property NOI growth increased to 1.2% and well after four consecutive years, it may continue to appear easy to achieve this market leading occupancy level at 99%. The reality is it takes a great deal of hard work and is also a clear reflection of the quality of our assets. Renewals completed for 2014 lease maturities are already at 73% with over 1.1 million square feet now renewed and as despite ongoing rationalizing by a select few of our tenants.

So far we have a 7.2% increase in this year’s renewal rates and I expect it will be slightly higher than this by the end of the year and for tenants who haven’t renewed 45% of the space has already been fully replaced at an average rental increase of around 14%. The weighted average rent per square foot excluding anchors is up to 21.13 square foot at the end of the second quarter and that’s versus $20.71 at the same time last year and again that’s a performance which continued to reflect the increasing quality of the portfolio.

Overall, we’re generally pleased with the current tenant demand, while it is becoming a little harder each quarter to maintain our exceptional occupancy level, impart a reflection I believe of overall concerns about the Canadian economy and unemployment which still exists. For vacated space, we’ve been able to release in reasonable timeframes at higher rents than previously obtained. And I think that reflects the strength and drawing power of our centers and in particular the significant traffic that’s created by Walmart adding food and 82% including shadows of our Walmart-anchored sites and our super-centers and would have another two sites to convert in the next six months.

With respect to CIU the category showing the largest growth still remains the Dollar Store industry where we’re up to now 55 stores just from Dollarama and Dollar Tree alone and then together with demand from other retailers such as Canadian Tire, Winners, Sport Chek, Toys R Us, Michaels and just general category growth in pharmacy, beer, liquor, fitness, banks and restaurants. That will ultimately provide reasonable demands for space in most categories across the country. Our core business proposition is to provide dominant retail centers anchored by major retailers and in any particular Walmart all of which drive significant traffic to our centers and which provides good opportunities for our other tenants to best serve their customer needs and also obviously simultaneously grow their business.

With respect to challenge retailers, the recent [Jacob] bankruptcy will have almost no effect on portfolio with only one location. We expect Staples and Best Buy to continue look for ways to improve performance. But to-date, there has been no further adverse effects on Calloway’s portfolio, again into this strong growing power of newer and larger centers. We also expect no impact due to the recent proposed changes; they’ll be safe rate portfolio.

With yesterday's announcements of the Bombay Bowring and Benix CCAA filing, Calloway will be impacted and we have in total just over 78,000 square feet in nine locations. However, these are all in dominant retail centers and over time, we would expect to re-lease at same or better rents.

And clearly while a bankruptcy is always unfortunate in the short term, over the last few years, there have been a number of retail bankruptcies and these have been in the end an opportunity to bring in vibrant new tenants to our sites and improve the overall tenant mix.

Turning to future growth, my comments may be by now be a little repetitive but this because our philosophy on growth is unwavering. There is no doubt that the Calloway platform is able to deliver a stable income stream and we continue to show that quarter-after-quarter but market driven increases in rents based on strong tenant demand and quality assets, building both momentum and the suite of initiatives to drive accelerated growth while closely managing risk is however a complex balancing act. But I continue to believe Calloway has excellent building blocks to achieve this and we are obligating to show the results of our hard work. No one initiative will either dramatically drive enhanced growth or overstress the business, but collectively, our growth portfolio will ultimately provide our unitholders with both the stable platform and an improving distribution stream.

For the 2014 and beyond, assuming of course no major market downturn or further significant retail bankruptcy, I see growth in our FFO accelerating due to continued same property rent increases, our ongoing assets to capitalize on intensification across our existing sites, continued refinancing benefits, our existing pipeline of development and earnouts which total approximately here 3 million square feet, a growing group of potential mix use properties that are located in major markets, and then continued selective accretive acquisitions.

I’m very conscious I would say in my both actions and comments that investors have come to expect Calloway to deliver a very stable performance. And our strategy and tactics will continue to respect that stability. But we’ll also recognize that business conditions, both generally and in retail are changing with new factors affecting business every day. And therefore our business and our focus has to adapt to if we to remain amongst the most respected and attractive REITs for investors.

Extremely successful opening of the Toronto Premium Outlets site, Highway 401 and Trafalgar in August last year provided a clear indication our residents of the GTA felt about the attraction of outlet shopping with continued record traffic counts compared to other premium outlets in the U.S.

This strong sales performance has continued since the opening and we continue to bring designer and other high value labels including new stores such as Burberry which opened just before Christmas Tory Burch that opened this April and in September we’ll bring Armani, all of whom operate at truly discount outlet prices that customers come to expect. And based on updated sales numbers the stabilized yield on a - side is expected to be at least 9% as the property continues to perform close to a mature property in a major market in the U.S. rather than the startup premium outlet center.

Our JV partners Simon Property Group extremely pleased with the performance to-date, and we recently have started preliminary discussions on how future expansion of the site will work, what site changes would be needed et cetera.

Our next venture is in Montreal which continues to move forward despite what was a very challenging winter for construction and a fall 2014 opening is still expected for Montreal leasing is moving at a steady pace and we expect to open with at least 85% of the project leased to tenants with further tenants committed to open either later in the year or early in 2015. Ultimately overtime we see this as another very successful value driven outlet location with healthy returns and I should also note that we continue to have active discussions with Simon on additional outlet sites.

For acquisitions, while we did not add any properties during the quarter, after the quarter closed and after a competitive bidding process we executed a conditional purchase of two Walmart anchored Supercenters in Edmonton and Montreal totaling approximately 601,000 square feet with an additional 112,000 square feet of future development space available and we will acquire a 50% interest in both sites along with investors real property fund and these represent two excellent sites in major markets with very good tenant rosters and strong growth potential.

For the development in our pipeline just over 40,000 square feet came onstream this quarter for the healthy yield of 7.7% and our committed pipeline is growing just under 400,000 square feet now with an expected yield of 7.8%. So, this together with a significant further pipeline of future development means Calloway can continue to deliver high quality space at healthy yields for a number of years.

The Vaughan Metropolitan Center or VMC development continues to move forward and we started the construction of 360,000 square foot office complex that has KPMG as the lead tenant. Site conditions for the development are good and the co-foundation work is largely complete. We're in the final stages of negotiating the project financing with a consortium of lenders for both the initial and the associated infrastructure and we are actively moving forward to lease up the balance of the office and retail space available in this first phase and we now have a broker that’s supporting us on the office leasing.

Overall we continue to be very excited about the long-term opportunities of this site and continue to be very pleased with the level of support we are receiving from all levels of government. As we continue to develop the massive plans for the site, we're looking to preserve the largest range of options for the occasion of the next component of the project and are looking at RFPs in the market for further office space, the potential residential building, the best locations for a large scale retail and optimizing the access to the site from Highway 400, to name just a few of the many areas that are under consideration.

One issue, I continue to note in any investor meetings is the confusion that exists over the transit strategy in the DTA. So, I will emphasize again with subject extension of the VMC still progressing well, still fully funded and is expect to open in 2016 as the same time as the KPMG office complex. And early indications now are that a portion of the Vaughan bus transit hub and Beaver Express Bus station which will link to the VMC will also be opened by the end of 2016. And ultimately this level of transit access we believe significantly increases the site’s potential success. I’d mentioned before we do expect to host an event to site in September to allow both yourselves and the broker communities at large to get a better understanding of the development plans and to see the properties first time and I’ll be back to you shortly with proposed date for that.

Consistent with the focus on creating a number of growth opportunities the team have been working with support from SmartCentres and we’ve identified several opportunities within the portfolio to intensify existing sites with further retail space or significantly increase the value of certain sites through mixed use development, combination the tenant demand municipality has been more flexible and tenant rationalization, we’ve already identified opportunities to intensify existing sites with up to about 300,000 square feet of new space overtime. The largest of these sites currently is in North Montreal where (inaudible) out there leased in the first quarter of this year. We’re now moving forward to repurpose the space and have signed a long-term lease with Canadian Tire to build the new larger format Canadian Tire store which will be more than doubled the size of their existing store in the market.

And we’re also developing an additional 32,000 square feet of CIU space within the mall and have the potential for a further 35,000 square feet of space on pads on the site. And ultimately overtime we expect to align the site with our existing adjacent Montreal north property to create dominant center with over 500,000 square feet of retail space which will include a Walmart, the new Canadian Tire, SuperC and IGA as well as the full range of supporting retail. Also where we have vacant big boxes such as the Rona location (inaudible) we continue to look for opportunities to release this space and we’re in active discussion with a range of new tenants and we’ll update you when we have further information on the redevelopment of that property.

In addition to BMC, as I have noted before, we have identified a handful of sites with mix-use potential that total between 3 million and 4 million square feet of new retail office and residential space. These sites continue to be in the early stages of zoning and other approvals and are certainly long term in nature but do represent further significant opportunities for Calloway. And we have previously identified that the largest of these sites Westside Mall along Eglinton in Toronto. This site will contain a new LFT station as well as a new go station immediately adjacent.

And the significant increase in transit capabilities supported by a densification study from the City which has designated the site as one of only six major growth nodes along the new LRT line. Preliminary estimate show will potential incremental of in excess of a million square feet of mix-use for this site and of course will continue to move this opportunity forward in the coming months.

Two other opportunities have been identified in both Toronto and Ottawa to provide in excess of another 2 million square feet of additional density. And again these sites are in the early stages of approval but are receiving good support from the relevant levels of government. So in turn will be opportunities already identified provide the potential for well over 6 million square feet of future developments for Calloway over the longer term.

Overall, over the last few months we've identified a number of opportunities which will help begin moving Calloway from a business that’s simply owned and operated Walmart anchor shopping centers so business with a broad set of short, medium and long term growth initiatives principally in major markets based on either existing locations or in exciting new developments.

Notwithstanding the high-quality of the overall portfolio I previously indicated that we would see the ongoing review of both existing assets and future development lands as a component of our strategy and we've identified a number of properties which are targeted there disposition or restructuring. With the proceeds realized being reinvested in higher quality growth assets.

After the end of the quarter, it was announced that we have signed a conditional contract to sell same smaller properties and secondary markets to Retrocom Real Estate Investment Trust for approximately 111 million. This sale occurred after an expensive process review of how best to maximize value based on a portfolio sale, we were very sensitive to ensuring that the potential buy was capable of closing on all of the assets and obviously given the buyer we undertook independent valuations on all the properties and obtained approvable from our Independent Trustees.

While, I don't see any further sale transactions in the short-term, we'll continue to review the portfolio on an ongoing basis to assess capital recycling opportunities as part of our portfolio management process to further improve the location in growth potential of our overall portfolio.

So turning to the balance sheet. We are well positioned to take advantage of growth opportunities as they arise. Our unencumbered pool of assets has grown to approximately 1.7 billion. Debt-to-total assets is 43.1% and interest coverage is planned to 2.6 times. And as a result of all of our capital market activity over the last year, we've been able to reduce the average interest rate on our total debt portfolio by 44 basis points which I view certainly as very positive.

Throughout the last 12 months, we continue to look for opportunities to refinance our various debt obligations to take advantage of the lower interest rate environment based on historic norms. We are active in the first quarter with respect to debenture refinancing and we just start to the quarter ended, we had two transactions. One we reopened at the Series I unsecured debentures on a private placement basis for 50 million transactions with the proceeds used to repurchase 50 million of the series B 5.37% debentures, and the second where we issued $150 million of unsecured to finance the acquisitions already noted with a balance available to repay maturing mortgages in the second half of this year.

We expect to further upgrade our financial flexibility in the third quarter with a new unsecured operating line which will provide us with an unencumbered asset pool well in excess of $2 billion by the end of the third quarter. On the mortgage front, we repaid some mortgages in Q1. And as just noted, we do expect to repay close to $100 million of maturing mortgages with an average interest rate of 5.89% with the proceeds of the last debenture issue by the end of the year.

Quickly looking at 2015, we’ve got a further $169 million of mortgages maturing at an average rate of 5.67% and that will obviously provide further future benefits to FFO and we will consider in the coming months the best option to maximize the refinancing benefit that we can create. Overall, I believe all of our capital market activities have positioned Calloway very well to move forward with a strategic agenda while significantly improving our overall key metrics and future flexibility.

If we consider the potential from our suite of growth drivers together with an already superior covenant and a portfolio with exceptionally consistent occupancy levels, we are very well positioned to provide strong growth potential for Calloway over time.

Turning to distributions for a moment, our payout ratio continues to decline and is now at 84.3% versus 90.4% at the same time in 2013 and that’s well within our updated targeted range of 82% to 87%. Our current preference is to continue to looking to maintain our payout ratio in this lower range; and over time, we expect Calloway to provide a balance of regular modest distribution increases while still retaining a certain amount of a cash flow to fund future growth initiatives.

And the platform, we are building, will I believe allow us to do that. And of course the distribution increase that we announced in our results today is the first step in that program.

Overall, I would say, I remain very excited about our future and certainly look forward to spending more time with yourselves and our investors continuing to discuss Calloway and its future growth in the coming weeks and months.

So, with that operator, we’ll open up the call for any questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). And our first question comes from the line of Mr. Michael Smith of RBC Capital. Please go ahead, sir.

Michael Smith - RBC Capital Markets

Thank you. I wanted to know, for your acquisitions, I know Investors Group is a good partner, but why would you bring them in given the size of Calloway and your ability to take down an acquisition like that on your own?

Huw Thomas

It's Huw, Michael. I mean we like the idea, we are bringing in a partner; we like the idea of building a relationship with somebody that -- who has significant funds available for potential opportunities. And I think relationships take time to build based on trust, based on the quality of the working relationship, the quality of how we maintain the properties and so on. So, we don't view this as just simply a one-off, but the building of a relationship as we continue to think of opportunities that may become relevant over time.

And obviously, we earned some management fees out of the process, which can help with respect to the returns on some of the projects. So, it’s a combination of different things basically.

Michael Smith - RBC Capital Markets

Okay. And just turning to growth, I’m happy to see, you increased your outlook for FFO growth to 5 to 6 from 4 to 5. But it seems to me or my sense is, is that it’s going to be tough to keep the occupancy high at the current level. Is that -- so could we expect you see a slightly higher growth based on all the initiatives and factors that you mentioned but maybe a slightly bump down in occupancy?

Huw Thomas

Yes. I think that’s realistic, Michael. I mean I think as you’ve listened to some of our other competitor organizations talk about overall market conditions, then the market is very competitive. I think retailers are being very disciplined in their decisions about new property. Obviously announcements of a bankruptcy, has happened yesterday was I’ll say unexpected. There are obviously some very strong retailers in the market and some that haven’t necessarily been able to adjust their business models as much as others. So, I think occupancy will be challenging going forward. But I come back to the quality of our sites, the quality of our tenant base, 90% national coverage and so on. So, while you might see some minor variation, I think our occupancy will still stay very high. And as I say, there are some sites where we have properties that are at the moment vacant but retailers are paying rent where we’re seeing good interest from tenants to in essence come in to those sites and so they will become a redevelopment but ultimately we’ll have higher rents on the sites than we were achieving. And similarly with the bankruptcy, the reality is that the underlying rents on those properties assuming that over time we will be re-leasing those sites. And I would expect that the rents we would achieve would be higher because the market rent would certainly be higher than the retailer was actually paying.

Michael Smith - RBC Capital Markets

Okay. And last question. Just on the RONA properties that you are in the process of releasing few inches of -- carving it up into multiple uses?

Unidentified Company Representative

Yes. I'm Michael [Trudi] We're looking at both scenarios, scenarios where we would have single use and scenarios where we would have multiple tenants using the space. So yes, that is something we're looking at. I mean

Michael Smith - RBC Capital Markets

And with the -- Sorry I was going to say what’s more, what is more likely?

Unidentified Company Representative

Again it depends on -- we're not going to be cutting it up until to 2,000 or 3,000 square feet spaces. It's going to be - if it is sub-divided, it will be sub-divided into what we call in our mid box space given the size of these boxes are 100,000 to 120,000 square feet. So, we look at it from what's the best sort of mix for the overall property in terms of driving traffic.

So, whichever ways and whichever tenant achieve that benefit for the overall center, that's what we'll be doing.

Michael Smith - RBC Capital Markets

Okay. Thank you.

Huw Thomas

You're welcome.

Operator

(Operator Instructions). And your next question will come from the line of Mr. Derek [Lam] of TD Securities. Please go ahead.

Unidentified Analyst

Hi. Good morning guys.

Huw Thomas

Good morning.

Unidentified Analyst

Just want to ask on the developments for 42,000 square feet that came online. That's a little bit lower than the past two quarters. Just wanted to see what drove that slow pace. And what total level you're expecting for 2014 and 2015?

Rudy Gobin

I think the quarter is probably a not expected given the seasonality of when tenant take possession of their space. We have -- it’s a cycle where tenants and a lot of tenants come on in the last part of the year, than they will jump in the first part, the second quarter is usually a slower part. I think generally I say generally in the market is slowing though in terms of leasing, the whole market is slowing a little bit and we are certainly seeing that in our property. Our pipeline where we have our 3 million square feet coming on stream that pipeline is generally located within centers that already have tenants on there, it's not Greenfield development of brand new sites. So it's partially leased up and then the leasing up at the rest of the site will happen overtime. But generally I would say your intuition is right, it's probably slowing compared to what we would have thought last year.

Huw Thomas

And I would say that estimate at this point, you going to get about a 160,000, 170,000 service square feet that will come on in the balance of this year. And then we've got over 200,000 is committed in terms of next year already. So that gives you a sense as to Rudy's point that would have certainly more back and loaded this year versus the first and second quarters.

Unidentified Analyst

Great, thanks very much. I was wondering if you were on to share the cap rates on the acquisition of the two properties subsequent to the quarter and also if you wanted to share, the actual property names?

Rudy Gobin

Well, we're into due diligence right now and we haven’t waved that due diligence so we rather not get into that, just yet until that happen, if you don't mind.

Unidentified Analyst

Yes, no, no problem. And then I guess just following on where I don't know if you’d be able to share this either. But were the Wal-Mart's today the 20 year leases added inception?

Rudy Gobin

Yes. These are, yes, Wal-Mart anchored super centers, so yes.

Unidentified Analyst

And then if is there, it's been about 9 years since the (inaudible) opened up, I'm just wondering why there would still be the development potential on these sites?

Rudy Gobin

The nature of our portfolio and the purchases we have made in the past long lease sites are not 100% complete I think we have 75% to 85% complete generally and the vendor would have the rights to continue what we call earning them out which is completing the development overtime. So that’s why you see a pipeline that’s attached to this.

Unidentified Analyst

Okay, got you.

Huw Thomas

But the Edmonton location for instance while that’s an older site it’s gone through a redevelopment in the last year, so in essence it’s converting it to a newer site in effect.

Unidentified Analyst

Got you. Alright and finally I just wanted to know if you would be able to prioritize your development pipeline in terms of completion dates and probably dollar amounts specifically thinking about the VMC, Westside Mall, Studio Center, the Premium Outlets in (inaudible)?

Huw Thomas

Well (inaudible) will be the first development with Canadian tie would be substantially complete by next 12 months. The Montreal Premium Outlet will open on October 30th we are if we were talking about the Toronto Premium Outlet and its expansion we have basically that’s probably two years out something like that by the time you go through all the building these leasing book any (inaudible) that might be necessary and the other work that will be need to be done. VMC the KPMG Tower complex is scheduled to open in the fall of 2016, Studio Center we are simply going through the zoning process right now. So there is an active film studio on the site at the moment and that business continues to develop and we are doing work on the site and bringing in tenants to existing buildings on the site that we are redeveloping, so that's a major initiative, it would be a longer term initiative. Westside Mall, I would say would be truly long-term, realistically (inaudible) won’t be open until 2019, 2020.

Having said that, we already getting inquiries from potential JV partners about residential develop on one of the site and depending on how the zoning process goes and so on then it's possible obviously that you would have activity on that site sooner than that.

So, that would be I think all of the relevant dates that you mentioned.

Unidentified Analyst

Alright. Thanks very much. I'll turn the call back now.

Huw Thomas

Thank you.

Operator

(Operator Instructions). And your next question comes from the line of Pammi Bir of Scotia Capital. Please go ahead.

Pammi Bir - Scotia Capital

Thanks and good morning. Just going back to the Bombay borrowing locations. What's the gross NOI impact there and when would that hit take effect?

Rudy Gobin

The hit will probably, just into a process now with legacy protections. So that could be anywhere from a month to six months in terms of how long it takes to go through that core process. In the meantime, they have to continue obviously paying rent on an accelerated basis to maintain the location. So it all depends on whether or not a buyer showed up or they are able to restructure some all of the locations. In terms of the impact, it was a little over $2.5 million coming annual basis.

So, it's -- I don't know what it is. But half of 1% or something small in terms of the overall impact and I would also mention that a lot of the Bombay and borrowings are co-located, because it's part of the same family companies and therefore if you look at where they are located, they are located in nine locations of which 8 of them are in Walmart super center major markets, dominant centers for us. So, we’ve looked at the rents, we’ve analyzed it and it’s not good use. However, the locations are strong locations for us in terms of if we were to have to look at re-leasing those spaces.

Pammi Bir - Scotia Capital

Okay. And sorry, was that 2.5 million gross?

Huw Thomas

Gross, yes.

Pammi Bir - Scotia Capital

Gross, okay. All right. Maybe just turning back to the distribution bump for a second, you talked about only raising it and if you thought that you’d be in a position to hike annually. Do you feel that you’re there now? And looking at your 2014, better guidance for this year at least, do you expect to be able to deliver something in a similar range for 2015?

Mario Calabrese

I mean, you’re exactly right in your comment Pammi. We wouldn’t have done this unless we felt comfortable that with all of the things that we’re doing that we’re going to be able to provide modest increases for I’ll call it the foreseeable future. So, yes, that’s the answer to the first question. And with respect to next year, we’ll be there or thereabouts. I mean the unexpected news yesterday will have some implications in the short-term; we’ll work our way through that quickly. Having said that, there are some things obviously that will be positive that will affect our business. So, we’re building a model that can at least deliver 4% to 5% FFO growth over the longer-term. And we’d hope and expect to deliver modest distribution increases as part of that process going forward.

Pammi Bir - Scotia Capital

Great. Just maybe last one, you mentioned in terms of your AFFO reserves or for your maintenance CapEx, some incremental cost associated with the LED retrofit program as that gets rolled out. Is that already reflected in your normalized reserve? And maybe if you can just provide some color around the potential spending on that program overall?

Huw Thomas

Yes. I think it is reflected in our reserve and with the maximum amount of money that we could contemplate spending would probably be $4 million to $5 million but that would be spread over at least two years and might be longer, depending on making sure we’re realizing the benefits that we expect and so on.

Pammi Bir - Scotia Capital

Okay, great. Thank you.

Operator

Gentlemen, there are no further questions at this time. I will now hand the call back over to Mr. Thomas for closing remarks.

Huw Thomas

As always, thank you very much for your interest and participation today. And if there any follow-up questions, then please contract myself or Mario and otherwise we look forward to continue to work with you in coming weeks and months. Have a great day and a good weekend. Thank you.

Operator

Thank you. Ladies and gentlemen, this concludes the conference call for today. We thank you for your participation. You may now disconnect your line. And a have great day.

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