Brookfield Property Partners L.P. (BPY) CEO Brian Kingston on Q2 2019 Results - Earnings Call Transcript

Aug. 02, 2019 5:14 PM ETBrookfield Property Partners L.P. (BPY)
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Brookfield Property Partners L.P. (NASDAQ:BPY) Q2 2019 Results Conference Call August 2, 2019 11:00 AM ET

Company Participants

Matthew Cherry - Senior Vice President of Investor Relations

Brian Kingston - Chief Executive Officer

Ric Clark - Chairman

Bryan Davis - Chief Financial Officer

Sandeep Mathrani - Global Head of Retail.

Conference Call Participants

Sheila McGrath - Evercore ISI

Mark Rothschild - Canaccord

Mario Saric - Scotiabank


Good day, ladies and gentlemen and welcome to the Brookfield Property Partners’ Second Quarter 2019 Financial Results Conference Call. As a reminder, today's call is being recorded.

It is now my pleasure to turn the call over to Mr. Matt Cherry, Senior Vice President of Investor Relations. Please go ahead, sir.

Matthew Cherry

Thank you, Daniel and good morning. Before we begin our presentation, let me caution you that our discussion will include Forward-Looking Statements. These statements that relate to future results and events are based on our current expectations. Our actual results in future periods may differ materially from those currently expected because of a number of risks, uncertainties and assumptions. The risks, uncertainties and assumptions that we believe are material are outlined in our press release issued this morning.

With that, I will turn the call over to Chief Executive Officer, Brian Kingston.

Brian Kingston

Thank you, Matt, and good morning, everyone. Thank you for joining the call today. With me on the call today are Ric Clark, Chairman of BPY; Bryan Davis, our CFO; and Sandeep Mathrani, our Global Head of Retail.

In my prepared remarks, I will recap our operating performance for the quarter as well as provide an update on our various ongoing strategic initiatives. Bryan will then provide a detailed update on our quarterly financial results and after that we would be happy to take questions from any of our analysts on call today.

So as you would have seen in our disclosure this morning, the second quarter of 2019 was highlighted by Company FFO, and realized gains growth of 6% and the continued monetization of matured de-risked assets. We have continued to allocate additional capital to unit repurchases as we believe those represent the highest returning investment opportunity available to us today.

Following the $400 million closing of our substantial issuer bid in the first quarter, we invested a further $56 million under our normal course issuer bid in the second quarter and an additional $7 million in July.

We also continue to monetize mature assets, in the second quarter, we completed $1.3 billion of asset disposition. 331 million at our, at share prices that were 9% above our IFRS carrying value. These sales generated or created $178 million of net proceeds to BPY an included in office building in Washington DC, and another in Brisbane, Australia and the sale of Marina Village Office Park in Alameda, California.

Following the end of the quarter, we entered into further contracts to sell additional assets that will generate $500 million of net proceeds to BPY. With total proceeds realized year-to-date of approximately $1 billion. We are on pace to reach our target of between $1 billion and $2 billion of capital recycled through sales in 2019.

In our core office business, we leased 1.2 million square feet in the second quarter at rents that were 25% higher than leases expiring during the period. This mark-to-market on rents help drive same-store NOI growth of 3% over the prior year. The strong leasing result, coupled with performance-based fee at Five Manhattan West led to a 26% increase in cash flow from operations this quarter.

Last quarter, we announced our intention to move ahead with construction of Two Manhattan West, the second of two million square feet towers at our mixed use development on the west side of Manhattan with an estimated completion in early 2023. Leasing interest in the building has been very strong and our target is to have 25% of the building leased by the end of this year, more than three years in advance of its scheduled completion.

We are excited about the future of this brand-new seven million square foot mixed-use neighborhood in the heart of New York City's most vibrant submarket. In addition we are excited to be delivering two other office development fleet around this year, one Manhattan West and 100 Bishopsgate in London are both nearing completion, these two towers are 86% and 75% preleased respectively and will yield nearly 10% on our equity investment when fully stabilized.

Our Core Retail business has leased over 9.8 million square feet over the past 12-months and with the exception of a few short-term transitional leases, rental spreads were up 7.2%. At quarter end, the portfolio was 95% leased and we expect to about 96% by the end of the year. In-place rents increased 2.2% through the portfolio and NOY weighted sales increased 5.2% to $777 per square foot which is a new high watermark for the portfolio.

This performance in a challenging market environment speaks to the high-quality nature of our retail portfolio which continues to see strong demand from an ever widening array of tenants. We are on-track to lease over 10.3 million square feet this year well ahead of our budget, this is a strong indicator of the value bricks and mortar stores sell, where consumers are able to browse, purchase, pickup and return online orders.

We have a very active anchor box redevelopment pipeline that is bringing in new tenants to our malls and we also continue to identify opportunities to increase the density for our malls to ground up mixed used development.

Earlier this year, we indicated that we are focused on 12 such opportunities that we believe will create an additional $3 billion of value in our portfolio. Almost all of the development programs include a residential component with others featuring hotels, office, medical office as well as entertainment and food offerings. We look forward to providing you with further details on these projects later this year.

Before I turn it over to Brian for a recap of the quarterly financial results, I wanted to briefly update you on our latest financing initiatives. Consistent with our strategy of placing non-recourse investment grade debt on each of our assets, during and subsequent to quarter we executed the following.

In our core office business, we raised $1.1 billion of fixed rate mortgages, with an average term to maturity of nine-years and average interest rate of 4.28%. As well as $1.2 billion of floating rate mortgages, with an average term of five-years. Net proceeds of $772 million were generated from these financing.

In our core retail business, we raised $1.4 billion of fixed rate mortgages, with an average term to maturity 10-years at an average rate of 4.32% as well as $515 million of floating rate mortgages with an average term of five-years. Net proceeds of $569 million were generated and were used to pay down a portion of the term loan, which helped finance the acquisition of GGP.

With that, I will now turn the call over to Bryan for a detailed financial report.

Bryan Davis

Thank you, Brian. During the second quarter of 2019 BPY earned Company FFO and realized gains of $362 million compared with $250 million for the same period in 2018 an increase of the $112 million, this increase is due to a combination of additional capital raised and invested in our core retail business. Higher earnings from our LP investments and same property growth and higher fees earned in our core office business.

On a per unit basis Company FFO unrealized gains for the current quarter was $0.38 per unit, compared with $0.36 per unit earned in the prior year. Realized gains from our LP investing activities for the quarter were $27 million, compared with $4 million earned in the prior year.

Again this quarter was earned on the sale of a one million square-foot office complex in California as Brian had mentioned. This complex was purchased in our first real estate opportunity fund where we have an approximate 30% LP investment. The profits of the fund on the sale was over $130 million and represented a 30% gross IRR and a four times multiple of capital.

Net income attributable to unit holders for the quarter was $127 million or $0.13 per unit, compared with net income of $534 million or $0.76 per unit earned in the prior year. The most significant variance to the prior year relates to FairValue movements.

In the current quarter, we recorded unrealized net FairValue losses of $41 million on our investment properties, primarily related to our retail properties or estimates of future cash flows were further adjusted to reflect the current operating environment.

These losses were offset in part by unrealized FairValue gains in our core office business where we benefited from a combination of higher property level cash flows, market comps and reduced risk as we progress our active development pipeline.

In addition, we had unrealized FairValue losses of $135 million mainly driven by interest rate contracts that we have in place to reduce our exposure to floating rate. We have 5.6 billion of these contracts, which reduce our overall floating rate exposure by 1200 basis.

Our core office business earned $187 million Company, FFO compared with the $149 million in the prior year. The current quarter benefited from 3.2% same property net operating income growth on a natural currency basis, and an increase in fee income as this quarter in addition to higher property management fees was benefited from $38 million performance-based fee earned at Five Manhattan West to reflects an increase in value since we sold a 44% interest in the property in 2015.

These increases in earnings were partially offset by an impact of asset sales over the last 12-months or proceeds were either reinvested into another business segment or were invested in our development and redevelopment projects that are not yet generating a similar level of current earnings. In addition, higher interest rate environment and the resulting strong U.S. dollar continue to have a negative impact on earnings.

In our core retail business, we earned $170 million of Company, FFO compared with 119 million earned in the prior year. Our additional investment in this portfolio contributed to this increase. Results this quarter continue to be impacted by the bankruptcies that took place since the beginning of 2018, as Brian had mentioned.

These bankruptcies have reduced net operating income by an incremental $7.7 million in the current quarter and by almost $14 million on a year-to-date basis, when compared to the prior year and as a result has put pressure on a same property results.

But a significant progress has been made in releasing the space, we expect this to be only temporary. In addition, we had an incremental $8 million in general and administrative expenses this quarter as a result of the requirement to expense internal leasing costs that were previously capitalized.

Lastly, the prior year benefited from significantly termination gains of $7 million at our share. Our LP investments earned $106 million of Company FFO and realized gains compared to $87 million in the prior year.

The increase of 19 million includes the realized gain I previously mentioned, in additional to increase earnings in our third real estate opportunity fund to reflect capital deployed since the fund launch, and this was partially offset by investment realizations in our first and second opportunity fund investment.

Compared to the prior quarter, Company FFO and realized gain on an overall basis remains flat at $0.38 per unit. In the prior period, we earned realized gains of $60 million related to asset sales in China and Brazil in our real estate opportunity funds. Excluding these realized gains, Company, FFO for the current quarter was $28 million higher than Q1 of this past year.

This increase is largely due to improved core office results as a result of higher fee, termination income and same property growth and the positive impact of seasonality in our hospitality investments, offset by a reduction in core retail earnings and a $17 million merchant build gain that we earned in the prior quarter.

Our proportionate balance sheet ended the quarter with equity attributable to unit holders of $28 billion or $28.89 per unit. Our overall assets were largely unchanged at $85.6 billion. We do that assets held for sale as we expect to transact on some core office property sales and addition, realizations in our LP investments which we detailed in the press release.

During the quarter, we did reopen our latest bond issuance and raised an incremental Canadian 250 million, reflecting the strength of our program since we launched our first issuance in 2018. We use the proceeds to repay higher-yielding and shorter duration capital securities.

Lastly, as a reminder, we adopted the new leases standard IFRS16, which resulted in an increase in our proportionate assets and liabilities by a little over $630 million to reflect land lease liabilities and offsetting right of these assets.

The impact to the P&L is increase in net operating income of $10 million and a corresponding increase in interest expense. To reflect the re-characterization of these land lease payments to a principal payment and an associated interest charge.

With those as our planned remarks. Operator, we are now pleased to open up the line to analyst for question.

Question-and-Answer Session


[Operator Instructions] And our first question comes from Sheila McGrath with Evercore. Your line is now open.

Sheila McGrath

Yes. Good morning. You already hit a billion of realizations this year, you mentioned in your comment Brian. If you get towards the top end of your guidance of two billion should we consider that there is more potential capital that you might allocate to share buyback and also can you explain the conditions when it makes more sense to purse the substantial issuer bid for share buyback rather than just inter quarter buys.

Brian Kingston

Yes sure Sheila. I guess sort of answering them in reverse order. The decision around substantial issuer bid versus normal course issuer bid is - one I think we sort of consider from time-to-time. As you know in January when we did launch this substantial issuer bid, it wasn’t fully taken up, which we view the SIP as an opportunity to sort of buy in larger scale.

It wasn’t fully taken up, which tells us there is not a lot of large volume necessarily that is available that way. So the normal course issuer bid is a way for us to be in the market on daily basis and sort of providing liquidity to the market and so that is largely what we have been doing for the remainder of years.

And so as I mentioned at the outset, we did about 400 million through the SIP, we have done about the 60 or so million dollars now since then, through the normal course issuer bid. And I would expect we will be continue to be pretty active on the NCIB over the balance of the year. As far as like whether the asset sales or the volume of recycling that we do has an impact on that or not.

Again as I mentioned earlier, we think that our shares are the best investment opportunity available to us right now. So we will continue to dedicate more capital toward it and logically if we get larger end of that range, it might allow us to be a little more active. But I actually think at this point we are more limited by the market as opposed to the capital in terms of size of buybacks that we are doing.

Sheila McGrath

Okay thank you that’s helpful. And then on retail maybe you or Sandeep can talk more about the retail environment lease and bankruptcies and what kind of tenants are back filling this space at this point?

Sandeep Mathrani

Hi Sheila its Sandeep. So since the beginning of 2018 we have actually encountered about 2.7 million square feet of bankruptcy and that is about a $150 million hit. We have leased back about 2.1 million square feet to-date, which will all be open this year.

And actually net-net we recovered $110 million of the $150 million again taking to expand of our portfolio. And again, we do feel that we will end the year at 96% occupancy and we are about 95% today. So high quality retail real estate has tremendous demand from all sorts of retailers.

On the big box side for example, seniors announced closer of five stores in our portfolio and they were at Natick, Willowbrook, Pembroke, Oakbrook and Coronado and literally within a 60 days period of their announcement we leased all five, two to entertainment uses, one to supermarket, one to a wholesale club and one to a home furnishings.

So it’s a wide verity of retailers that are taking the big box spaces, sporting goods is another category that is taking quite a bit of our big box space in the portfolio. So the Anchors stores seems to be very good demand, because again the retailers go after the best retail real estate.

On the in line side I think again wide variety of retailers. I might just add that I think Bryan Davis, talked about our sales productivity being highest its ever been and I will say that every category in the A and B plus mode, every category has sales increase including the tower in our portfolio.

And so the growth comes from our feature, it comes from native companies like Casper and Warby Parker, Untuckit, Bonobos, a large variety of home furnishings is another category that is expanding quite well within our shopping centers.

So it’s a wide verity of foot locker, again announced during these larger format stores of 10,000 to 12,000 square feet, so they expand it within the properties. So we are seeing this across the Board whether it be home furnishing, entertainment, restaurant and food and so demand is across the Board.

Sheila McGrath

Okay thank you and then just last question for me on office just wondered if you can comment more specifically on the level of tenant interest at Two Manhattan West, you did mention some potential preleasing there. Just an update on that project.

Ric Clark

Sure. Hi good morning its Rick. Things are going incredibly well in Manhattan West, you didn’t ask about one, but I think there are talk about two that is important just to reference one a little bit. In September we cut the ribbon on One Manhattan West, we have only eight floor left between the unexpected demand from tenants in the building.

A couple of new deals and executing our spec suite and flex space program. Our leasing teams thinks that building will be 100% done by the end of the year, a couple of floors may role into the first quarter, but we have got a clear path of that being completely done.

Actively at Two Manhattan West is strong, we are targeting getting about a quarter of the building leased by the end of the year. Our goals for next year are to have the building 50% to 75% leased and we will have by the end of next year, two years to go before the building is completely finished.

And so we have got a level of activity that give us confidence in pursuing those targets. So things are looking good, demand is great on the West side.

Sheila McGrath

Who is the biggest competition would you say, tenants are looking at which other buildings?

Ric Clark

You know the management that comes and talk to us, talks to related and talks to testament for their building, potentially Moynihan and also Coronado. So talking to all of this, I think what we like about our building, Two Manhattan West was designed to be attractive to service firms, professional firms, where most of the other products in the Huston Yards area it has bigger place and its more going after I would say financial service firms or technology firms that want big base floor place. So I think we are positioning really well on that submarket.

Sheila McGrath

Okay, great. I will get back in line. Thanks.

Ric Clark

You are welcome.


Thank you. And our next question comes from Mark Rothschild with Canaccord. Your line is now open.

Mark Rothschild

Thanks. Good morning guys. In regards to the office portfolio, you spoke about getting occupancy up over next while, the two markets where you have expiring over next year or two Huston and DC. Can you talk a little bit more about your expectations for market maintaining or even growing occupancy in those markets specifically.

Ric Clark

Yes. So maybe I will start its Rick. We have a little bit of role in DC and we are also developing a building 655 New York, but I would say similar to New York there is lots of activity. Our expectation is occupancy might dip just a little bit, but should be probably in the 90s next year.

So the DC market is historically other than last four or five year has been sub 10% occupancy that has crept up, but I think you know we are holding our own and we should be sort of low 90s approaching mid 90s by the end of next year in that market. Huston…

Brian Kingston

Yes Mark. I think the reason those two - some - from an occupancy prospective with 655 coming in this quarter its brought down the overall portfolio occupancy and there is I think 64% pre let, but it is recently completed and we are...

Ric Clark

Yes Brian maybe I will just add. We have a leased out that will take that building well into the 90s, hopefully it will be done in next couple of months.

Brian Kingston

Right and then in Huston the repositioning that Alan Center also is having some short-term impact on occupancy. If you look at our overall Huston number, which that market has actually been - certainly the Texas market overall has been very strong with what is happening in the Permian basin, we starting to see that come back in Huston, demand is pretty good there.

We have got a bit of time as we work through the repositioning that Alan Center anyway to get that lease backup, so we are seeing - we feel pretty good about that one over the next 18-months, as well as that gets completed. But I think there is a couple of particular things going on in those two markets, which is why the number jumped.

Mark Rothschild

Okay great thanks. I have a question maybe for Bryan Davis and you might have a spike here, but earlier in the year you were negatively impacted or maybe a little - some closing rates debt. To what extent that it helps this quarter if you have that information.

Bryan Davis

Yes. It didn’t help a tremendous amount this quarter, I think when I look back to Q1. In Q1, we had an average one-month LIBOR of about 2.5%, the second quarter, the average one-month LIBOR was only 2.47%. But as you can see, particularly with respect to the rate cut that we saw the other day, the momentum through the first part of Q3 has LIBOR down in the low sort of 2.2% range.

So we do expect there will be a 25 basis points improvement in the floating rate interest environment, which will of course help our earnings. As you look at our floating rate exposure in aggregate its about $14 billion that split amongst many different market, but I would say 65% of that sits in the U.S. and sort of the extent that we have a lower floating rate environment in the U.S. that will benefit our earnings.

Mark Rothschild

Okay. Great. Thanks so much guys.


Thank you [Operator Instructions] Our question come from Mario Saric with Scotiabank. Your line is now open.

Mario Saric

Good morning. Maybe just coming back to the office segment. the occupancy is down a little bit quarter-over-quarter I think what Brian and Rick you highlighted, maybe some of the reasons why in Huston - but on the portfolio wide basis how do you see that occupancy trending over the next year or so - developments coming online.

Brian Kingston

Yes. So I think there is always two things that we are working against on occupancy, which is often times when the buildings get fully stabilized and leased up, we saw them and then we buy something with vacancy.

And so on a like-for-like basis, which is really what your question is occupancy is trending up, so on a same-store basis we are seeing pretty good demand across almost all of our markets, and if you sort of just go around the world Australia is very hot right now in terms of occupancy we are repositioning Georgetown there and you don’t complete empty building out, we have already got leases completed on half of the building and probably will have to the remaining half of it completed by the end of the year.

London despite all of the turmoil around Brexit et cetera continues to see very good demand there, and so we saw good leasing momentum both at Canary Wharf and in our city portfolio. So overall on a like-for-like basis you will see good occupancy growth there and then here in the U.S. I think we touched on most of the markets as Rick said New York is strong, DC and Huston we touched on and LA we have got a little bit of leasing out, but Downtown continues to get stronger. And then of course Toronto is - the portfolio is virtually full there. So there is not a lot of gains to be at.

Mario Saric

Okay and then maybe switching to retail and there is no lot of press recently about China, U.S. trade negations and the retailer stocks were down quite a bit yesterday. Are you seeing any impact of the political uncertainty in terms of current expansion plans, capital allocation plans to-date and how does that impact kind of your target 96% occupancy at the end of the year or heading into next year.

Bryan Davis

So for this year again I thought it was at least 10.3 million square feet, we have actually leased 10.4 million square feet already. So we think we will exceed that even 10.4 million square feet number. So feel pretty comfortable at the 96% by the end of this year.

Again we are benefited by the strength of our portfolio, what we are seeing in this environment is you read about store closers, but certain going on its consolidation in growth and so retailers are going into the best shopping centers and increasing their footprints in the best shopping centers, which is benefiting the high quality retail portfolio that we have.

I sort of sit back and say when I look at cost going up, costs going up would create a little bit of inflation, a little bit of inflation will actually give us an increase in sales productivity. So we actually don’t view that to be negative and again the power - not only 35% of our portfolio, which could have the most impact by food, entertainment, sporting goods, those kind of activity don’t have - they are not reporting any merchandize. So I think because of new creation of our portfolio we actually think will be okay.

Mario Saric

Okay that is helpful and then maybe a broader question in terms of operations over the next year or two. You highlighted kind of DGP repositioning opportunity that will get more color on that at the investor day in late September, construction there really starts in 2021 as you noted in your discloser. So if we look at over the next year or two from an operational prospective like internally, what do you think are the biggest game changers in terms of positively impacting investor sentiment in operational...

Brian Kingston

Well I think from an operational perspective on the core office and retail business, the focus is the same as its always been which is leasing up the vacant space, getting our occupancy stabilized and we have been recycling that capital into other investment opportunities.

I think on the repositioning specially on retail, some of the larger ones are kicking in 2021, but there is a number are projects that are underway currently, it will probably be 2021 before you to start to see the NOI coming through.

And you are right we are going to touch on - lot more detail in investor day in September, but what you will start to see over the next six to 12-months is at least progress against milestones where we are getting shovels in the ground.

We are progressing on leasing or progressing on the developments and although it may take till 2021 before you see the bottom line impact or these things coming through in NOI. I think that is really where I think we will be focusing investors attention over the next couple of years is just on the progress towards that goal.

Mario Saric

Okay my last question just comes to capital – specifically kind of the tension between balance sheet and share buyback activity. So you have communicated you are very comfortable with your balance sheet average today given the non-recourse nature of that and you have also communicated desire to kind of lower your leverage overtime. How much of a governor is desired debt reduction to optimal buyback activity, or I guess it maybe said differently, how do you kind of decide the balance between reducing leverage and ultimately kind of creating value given steep discount now that you are trading on today.

Brian Kingston

Yes. So the leverage that we are specifically targeting to reduce over the next couple of years really is at the corporate level as you said and really is from two principal areas, one is the GGP acquisitions facility and then the other is the overall BPY revolving credit facility.

So as part of the first one the GGP acquisition facility, there is a very specific capital plan that is set out and how that gets reduced. As we mentioned, it’s really comes about through to specific things, further asset sales within the retail portfolio and to bring in partners on individual assets or some rate sales and up financings at the asset levels over the next couple of years. And so the combination of those two things will reduce that leverage just naturally overtime.

At the BPY corporate level that is more driven around core office asset sales, as well as some of the capital that is coming back to our LP opportunistic investments. And so there is a bit of - that is where there is a little bit of it decision time around what do we allocate toward buyback versus the leverage, but at the moment they interest has been towards both.

And as I sort of said in response to Sheila’s questions at the start of the call, we have done what we can with respect to very large scale buybacks and I think in the context of the normal course issuer a bid, we are able to dedicate as much capital as we want towards those buybacks to do that and still maintain the plan on corporate debt pay down. So it’s a bit of mix between two, but lot of it is already earmarked capital like I said in the mall sales, et cetera for that debt reduction.

Mario Saric

And you mentioned planned mall sales, does the U.S Fed potentially entering into an easing cycle, does that improve your ability to sell the desired malls or...

Brian Kingston

Absolutely. Yes, no it is. Look I think there is a huge difference in overall investor sentiment today versus December with respect to where interest rates are going and as a result of that institutional investors are finding - when they look at their portfolios today, they think they are under allocated to real estate and are looking around for places to invest. So I think its people having a outlook in particular for lower for longer on interest rate is very helpful for that liquidity.

Mario Saric

Okay. Thanks for the color.

Brian Kingston



Thank you and our next question as a follow up from Sheila McGrath with Evercore. Your line is now open.

Sheila McGrath

Yes. Brian, you have a fair amount of capital tied up in for sale condominiums in London, I was just wondering if you could give us some insight when you will start receiving capital back from those sales and how are pre-sales tracking at those projects.

Brian Kingston

Yes. So it's in three places primarily one is principal place, which is the apartment building we built next door to the Amazon headquarters and we begin handing over apartments there in October, November of this year in sort of stage over about six months period.

Pre sales there are 84%. So they are virtually locked in, it’s really just a matter of collecting the receivables. All of those buyers have significant down payment on, so we don’t expect any surprises with respect to settlement.

Number two and three are really through Canary Wharf. One is it was all new state and then the others are off the state, self bank place. Self bank place start to settle next Q4 of this year sorry. And so we will start to get cash in on those. One that Canary Wharf later on in 2020.

So there should be substantial amount of material comes in over the next 12-months and all it should be in the next I will say 24-month.

Bryan Davis

Yes. And just to get context, because I think we have in the past. In aggregate across the four projects which are principal place self bank and the park drive development in the Canary Wharf estate, there is about $110 million, £120 million in profit left to be recognized as we hand over the condominium units to their respective purchasers.

Sheila McGrath

Okay and then one. Kind of big picture question on the opportunistic segment, as you can imagine from our seat, it’s hard for us to project that line item, if you have a fair amount of realizations in the back half of the year, should we expect that to go down or is the new fund investing at a similar pace that it would not go lower.

Brian Kingston

Yes. So if you have a lot of realizations then the overall number would go down, because the size of our commitment to the new fund, you will recall we reduced our commitment to that fund to below the one that is coming back in. So it would end up as net reduction.

Sheila McGrath

Okay. Alright. Thank you.


Thank you and I’m not showing any further questions at this time. I would now like to turn the call back over to Brian Kingston, CEO for any closing remarks.

Brian Kingston

Great. Thank you everyone for joining our call today and we look forward to seeing you at our annual investor day on September 26th here in New York, as well as giving you an update on our next quarterly call.


Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program and you may all disconnect. Everyone have a wonderful day.

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