Earnings Call: Q3 2017

Nov 9, 2017

Thank you for standing by. This is the conference operator. Welcome to the Brookfield Asset Management Third Quarter 2017 Conference Call and Webcast. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. I would now like to turn the conference over to Suzanne Fleming, Managing Partner, Branding and Communications. Please go ahead, Ms. Fleming. Thank you, operator, and good morning, everyone. Welcome to Brookfield's 3rd quarter conference call. On the call today are Bruce Flatt, our Chief Executive Officer and Brian Lawson, our Chief Financial Officer. Brian will start off by discussing the highlights of our financial and operating results for the quarter, and Bruce will then give an overview of our market outlook and Brookfield's investment approach. After our formal comments, we'll turn the call over to the operator and take your questions. We ask that you refrain from asking multiple questions at one time in order to provide an opportunity for others in the queue. We'll be happy to respond to additional questions later in the call as time permits. I'd like to remind you that in responding to questions and talking about new initiatives in our financial and operating performance, we may make forward looking statements, including forward looking statements within the meaning of applicable Canadian and U. S. Securities laws. These statements reflect predictions of future events and trends and do not relate to historic events. They are subject to known and unknown risks and future events may differ materially from such statements. For further information on these risks and their potential impacts on our company, please see our filings with the securities regulators in Canada and the U. S. And the information available on our website. Thank you. And I'll now turn the call over to Brian. Thank you, Suzanne, and good morning to all of you on the call. We're pleased with the results we reported this morning. Funds from operations or FFO totaled $809,000,000 And looking at the key components, fee related earnings increased 8% by 8% in line with the year over year growth in fee bearing capital, which now stands at $120,000,000,000 I would note that the growth in fee related earnings is below trend, but that's simply because we brought nearly $30,000,000,000 of new funds online in 2016 and we are in that window between these closings and the next series of flagship funds. In that regard, we continue to make good progress on investing these funds. As you're aware, once we have 75% to 80% of a fund, we can move on to raising a successor fund. We are through 80% on a real estate fund and so we're currently fundraising in that sector and our infrastructure and private equity funds are through 45% and 70% respectively. We're also making good progress in building out our credit business, are continuing to grow our core real estate fund and advancing several other important new funded strategies to develop broader product offerings for our clients and opportunities to continue expanding our fee bearing capital. We're also seeing an increase in the amount of carried interest generated as a number of our larger funds raised several years ago are now through their investment period and into the value creation and monetization phases. This quarter, we generated $367,000,000 of unrealized carry, dollars 786,000,000 on an LTM basis, which would be brought into FFO and net income down the road as the funds are distributed and the clawback potential dissipates. Performance in the funds has been strong across the board and benefited particularly from the sale of a European industrial business within our 1st global real estate opportunity fund at exceptional returns and are also benefiting particularly from a very successful turnaround in a large industrial business within one of our private equity funds. I will now turn to FFO from our invested capital, which increased by 19%. The pickup reflects the contribution from acquisitions, particularly in our infrastructure business as well as higher generation and pricing in our renewable power business and strong performance in our short term investment portfolios. Realized disposition gains in the current quarter included gains on the sales of several office properties as well as a portion of our investment in Norbord and we booked $25,000,000 of previously generated carry that was no longer subject to clawback. Net income prior to tax was $1,300,000,000 versus $1,000,000,000 in 2016 due to the aforementioned operating improvements and fair value gains. After including the impact of tax, which reflected a $1,000,000,000 recovery in the prior quarter, net income was $992,000,000 compared to $2,000,000,000 Some of you may have noticed that we included in our shareholders' letter a discussion on our use of International Financial Reporting Standards or IFRS and in particular the use of fair value accounting. As a Canadian company, we are required to report under IFRS as are companies in 100 other countries, but not the U. S. So understandably, U. S. Investors are therefore less familiar with it and so we like to periodically touch on this point. We encourage you to read our letter as well as our disclosures in our annual and interim reports to provide more detail on this matter. However, I will recap the highlights here. First of all, under IFRS, there are a number of asset classes, real estate in particular, that are carried at fair value as opposed to depreciated cost. So it differs from U. S. GAAP in this regard. Most REITs outside the U. S. Use IFRS and report their properties at fair value. So we are hardly unique. And this includes Europe, Australia, Canada and the United Kingdom among others. 2nd, we have extensive 2nd, we have extensive expertise and robust processes around valuing our assets. As an asset manager, valuing assets is a core competency and something that we do day in and day out. Valuations are subject to extensive scrutiny both internally and are also benchmarked against external valuations on a regular basis. 3rd, we believe that fair value information is useful to investors, but needs to be considered in the context of other metrics and that it is at the end of the day an estimate. In fact, our primary performance metric funds from operation does not include fair value changes. We believe that our ability to increase FFO is the primary determinant and creator of value in the long run. Finally, the real test of our performance and our valuations come when we sell an asset. We are very comfortable with our record on this. Of the more than 400 assets sold over the past 5 years, we've realized aggregate value of $44,000,000,000 compared with the associated IFRS values of $41,000,000,000 representing 110 percent of the value we held them at. And finally, I'm pleased to confirm that our Board of Directors has declared the regular $0.14 dividend payable at the end of December. And with that, I will hand the call over to Bruce. Thanks, Brian, and good morning, everyone. As Brian noted, assets under management and fees associated with them continue to grow at a rapid pace. Most of our operations performed well and we continue to find ways to invest capital despite a competitive environment. We put that down to largely our 3 main competitive strengths, which are size, global presence and our operating platforms. Fundraising in both private and public markets for rail assets remains strong as institutional funds continue to allocate greater amounts of capital to our sectors. And with interest rates still very low, this should continue for the foreseeable future. As a number of you know, we held our 13th Annual Investor Day in New York this quarter. For those not able to attend, the presentation materials and transcripts are on our website. We believe they provide a good summary of our business plan, so we encourage you to read them to understand where we're going with the business. We covered overall Brookfield and each of the 4 partnerships that trade on the stock market. And our short story is that we are now benefiting from the work over the last 20 years of building up our institutional relationships. These investors that we built the relationships with are allocating more capital now to real assets because of a few factors. The first one being low volatility, the second being strong returns compared to alternatives and the third being yield and upside from the assets that we purchased for them. We expect the percentages of overall capital pools to continue to increase substantially from today's level, and the size of capital institutional funds is growing and the compounding effect of both will be significant on allocations to real assets. As a result of that, if we achieve our plans over the next 5 years, we should double the size of our business by most metrics, which should result in significant growth in intrinsic value of a BAM share. The keys to doing this are successfully looking after all of our fund investors, performing for them and growing each of our listed partnerships both in size and in returns. And in our presentations, we laid out the goals for each of these businesses. And I'll just mention a couple of things on each. In our property partnership, Brookfield Property Partners, we're focused on bringing to completion several major development projects, investing our opportunistic capital that we have available and capitalizing on the retail property changes occurring in the United States. In Brookfield Infrastructure, we're building out each of our businesses that we've built over the last 10 years, and we see but we see today significant opportunity in the global telecom tower build out and growth in India coming from both population growth more broadly, but more specifically from an under financed corporate sector. In Renewable Partners, we're one of the few well financed renewable companies amid what we see as a once in a generation shift over the next 25 years of the energy stack in most countries to renewables. Lastly, our business partners launch has been successful and we're positioned now to make long term focused decisions because of our permanent capital and the ability to make long term commitments to both partners and counterparties. These days, the most asked question to us as a management group by investors is how do we put the capital to work and why are we able to acquire certain assets in an otherwise competitive environment. I will highlight our TerraForm investment as it is a great example of why we earn the returns we earn and what differentiates some of the things that we do. Bottom line, it's quite a simplistic story. It's just a lot of hard work. In this situation, we followed SunEdison and its affiliates for many years as we've participated in the same markets and in many cases competed for the same assets. In 2015, SunEdison encountered serious financial issues. We assessed the situation and considered participating in the organization by buying debt and eventually converting it to equity. But based on our knowledge of the asset values and the trading values of the debt, we didn't think it was prudent at that time. We continued to follow the bankruptcy and eventually when SunEdison filed, TerraForm Power and TerraForm Global, their 2 yieldcos traded down substantially. And we knew they had great assets. And after the filing of SunEdison, the shares came into a range where we finally saw value. At that point, we decided to buy common shares, eventually making proposals to the board of both companies and their creditors, and ultimately, we were chosen to sponsor a recapitalization. All of this led us to recently conclude the purchase of 51 percent of TerraForm Power and will act as its new sponsor, and we expect to shortly close the acquisition of 100 percent of TerraForm Global, which in aggregate, the 2 transactions will expand our renewable operations by 3,600 Megawatts with an investment on our part of about $1,400,000,000 In summary, why did this happen? First, we had $1,400,000,000 to invest. Not too many have that amount of capital in a concentrated investment. 2nd, we understood the business very well as we own the same type of assets that they owned. Not many others have that. 3rd, we have flexible capital to lock up toehold positions. Many don't have the flexibility in their fund or their capital to do that. 4th, we could be flexible as to buying 100% of a company or 50%. That was very important here and maybe was one of the most important things in the transaction. Most can't do that. 5th, we have the people to run the business from an operations perspective, if you have that. And last, we negotiated for 2 years with counterparties to complete this transaction. Not too many can afford that patience. Bottom line, our strength in competing for transactions is usually one or all of scale, capital, time, scope, patience or operating skills. In this case, it was virtually all 6 of them. So with that, operator, I conclude my remarks and I'll turn it over to you, and we'll take questions if there are any. Thank you. We will now begin the analyst question and answer session. The first question is from Cherilyn Radbourne with TD Securities. Please go ahead. Thanks very much and good morning. I wanted to start by asking about the acquisition of CenterCoast Capital, which I appreciate is not an overly large deal. But can you just talk about why you decided to buy versus build in that case and whether the retail distribution capability that they bring can enhance the retail distribution of your private funds? So just for everyone's benefit, the question relates to the acquisition of a master limited partnership manager that largely buys oil and gas master limited partnerships and other master limited partnerships in the United States, which we acquired in the quarter and it was acquired by our public securities group. So we've managed real estate securities and infrastructure securities, both long only and in a hedge fund format for a number of years. We've never really had we've had we do in the context of our infrastructure management, we do MLPs, but we've never had a specific fund for master limited partnerships. And we just felt we found a team that we were really excited about and they wanted to join us. And so we've brought them into the group and we think it's going to be a win win because our platform will be able to help them a lot and they're bringing those skills to us to manage master limited partnerships. So I think it's a from that perspective, it's a win win. The second part of your question relates to, their retail distribution, which we also acquired. And so we think it's important for their business. We think it's important for our public securities business. But more broadly, we think longer term, it could be much it could be important for our overall business as we continue to broaden out the retail clients in different types of distribution that we use across the franchise. So, it's I'd say the first decisions were made just off the business of the expanded disclosure around carry in the supplemental this quarter, we've obviously seen a big jump year over year in your LTM generated carried interest. And I just wondered if you could talk about roughly how much of that represents compounding through the passage of time as your funds mature versus specific transactions over the period? Yes. Thanks, Cherilyn. It's Brian. So that reflects a couple of things. So first of all, as you've noted, it did step up a fair bit this quarter. And to some degree, that's as I think you may have been alluding to the passage of time, meaning that when the funds are in the early stage, that investment period, putting the money to work, and the fund isn't fully invested until you get through that. And sometimes that will take you a couple of years, at which point in time to get into the whole value creation side of things. And that's when you'll see the actual value start to accrete in the fund and hence the associated performance and therefore the carry. That's I guess essentially the J curve effect. And then it increases throughout the life of the fund and then tapers off a bit as you distribute things. So I think a lot of it is simply the passage of time, getting the funds, put the work, getting into that hole, getting to work on the assets, creating the value. And then as I noted in the remarks, there have been a couple of things in particular where you can then capture and sometimes even enhance that value when you go through the monetization phase. And so in particular with the industrial portfolio in Europe would have been a particular instance of that, where the specific transaction will establish a higher level of carry as well. The next question is from Anne Dey with KBW. Please go ahead. Thanks. Good morning and thanks for taking my question. My first one is for Bruce. You briefly referenced capitalizing on changes in the retail space in the U. S. In your prepared remarks. So I guess I was just wondering if you could kind of refresh our memories on what you think the market might currently be under appreciating about your current retail investments and their relative positioning? And then also, I guess I'm wondering if you were to be looking to invest further into the space, whether you'd be more likely to look inside of the GGP franchise and stick to what you know or maybe also look at 3rd party brands? So, I would just say there's our view is that the retail industry is undergoing 3 general changes. The first one is that we came off very strong retail sales over the past 8 years since the recession in 2,008. Retail sales grew exponentially and that can't go on forever. So eventually retail sales levelize out to a normalized amount. And that's the first thing. 2nd, there's no doubt the Internet is affecting some amount of retail sales and there's a debate on whether it will go to X or Y percentage of retail sales in America. But there's some form of numbers going in there. And 3rd, there's no doubt there is an overcapacity in the United States for retail. And our view is that there is great retail, which will continue to be great retail longer term and there is retail that needs to be, repurposed and redeveloped. And there aren't that many great malls available to be purchased. But what we have been taking advantage of both in GGP and both in our opportunity funds where we have other retail strategies, We've been buying retail centers, which are really just forms of real estate being repurposed and these take very long periods of time, but they can be extremely lucrative if you can repurpose apartments, multifamily, hotels, etcetera, office buildings on those parcels of land, because usually what these are, are very large pieces of urban land, which can be repurposed because we're in the middle of big cities in the United States. And especially on coast, some of those pieces of land are very valuable, but it takes a lot of skills, money, capital and vision to be able to do it. So everyone isn't capable of doing that. I appreciate the color. I guess as my follow-up, I'd just like to take the discussion of distribution a bit broader. So I know this is still work in progress, but can you talk a little bit about the investments that you've made or making into growing the distribution footprint across your platform, not just in public markets? And do you have any updated numbers around how your client base has grown as you've expanded distribution and your product set and capabilities? Sure. It's Brian, Ann. Thanks for that. So I think as we referred to at our Investor Day as well, is a push to expand our distribution more into the high net worth channels. And in particular looking at there's a couple of ways that we've been doing it. One is we have worked with some of the major financial institutions in introducing our funds to into their clients and into their high net worth distribution systems. And so that's one element of it. And we've been making some good progress in that regard. And of the past series of closes, there's been a modest amount of capital that was placed in that regard, and we're looking to step that up with the next series of funds. And then the other part is working with specific channels to distribute more broadly into their high network distributions and we've got a couple of fund strategies that we're working on there. So we don't have any concrete numbers for you today in terms of the quantum of capital that's been placed in that regard because with the most recent ones, it's still in process. Having said that, I think we've indicated that getting up around the 10% level would be a near term target in that regard and we seem to be heading in that direction. Thanks very much. The next question is from Bill Katz with Citigroup. Please go ahead. Okay. Thanks so much and I appreciate the color on the international accounting. Just on that vein, just sort of going back to your Investor Day, I remember one of the surveys you took was what would investors like to see more. And so it felt like there might be a little bit more discussion around the concept of E and I or economic net income, very much like some of your U. S. Counterparts present their information. Where are you in your thinking in terms of your sort of presentation of your financials beyond the fund from operations construct? Yes. So thanks, Bill. It's Brian. So yes, absolutely, we're trying to get our disclosures aligned in a way that we can be make it easier for folks to benchmark our performance or understand our performance relative to the other alt managers. And so in that regard, what we have done in the quarter is while we haven't gone out and explicitly called it economic net income or I'll come back to that point. But we've essentially captured that for our asset management activities by presenting fee related earnings and generated carry together, which would be essentially what most of the other in our view, what most of the other alt managers are doing. Now the one difference in particular with us is because we do have a substantial amount of our capital, dollars 30 some odd 1,000,000,000 invested alongside our clients in our various funds. And so in some cases, an alt manager, they would have their concept of E and I would also include all of the investment earnings and mark to markets and things like that with respect to their investment capital, their investment portfolios as well, which as I mentioned is in our case that's a much larger number. And so our thinking in that regard is to essentially give people what is E and I for our asset management activities and then separately give everybody also the performance of our invested capital. And so you can understand the one relative to the alts and then the invested capital is just what the investment capital is and you add the 2 together and setting aside overall franchise value, which we'd never want to underestimate, that should give you a good sense of the performance of Brookfield. So we're trying to move along that road, but it's we're not entirely comparable in that regard. Okay. That is helpful. And then just sorry to hit the same topic one more time, but I'm sort of intrigued with the sort of the focus on the U. S. Retail, not so much in real estate, but just in terms of from a distribution perspective and obviously this transaction sort of moves along a little bit, the CCC deal. When you sort of think about getting retail to about 10% of your business, was that just a construct of incremental distribution? Or was that more a function of AUM? And if it's more of the latter or fee bearing capital, I'm still wondering how you're thinking about the interplay between incremental volume versus economics specifically in terms of maybe margins for the business looking ahead? Well, just to be specific, it there is a balance between how much it costs to get incremental retail distribution and to maintain it and to administer it versus bringing in institutional money. On the other hand, large institutional clients sometimes drive different economics on funds. So there's a fine balance. Our long term view is retail high net worth, we're probably never going to do retail retail. That's what our listed securities are. But retail high net worth is probably an important balance for our broad distribution that we have within the company. And we think it's important and it introduces us to a lot of different groups and people across the world. And actually sometimes even just like on the institutional side, it brings us transactions because you get to know people. And so I'd say it just helps broaden out our franchise to a greater group of people and that is helpful. Okay. Thank you. The next question is from Andrew Kuske with Credit Suisse. Please go ahead. Thank you. Good morning. Given the fact that BSREP II is at 80% invested or committed at this stage and you're going out and really ascertaining interest from clients at this stage on the next fund. What's the dynamic between really fundraising on a pool basis as you've done in the past versus say direct investments on assets and what's really the appetite from the client base right now? So I'd say it's similar to what it's been in the last 5 years. It's not really that much different. And our investors and probably all institutional managers, investors break out into the categories of there's a few that do direct investing on their own. There's some that invest in our funds and like us to bring them co investments. And then there's some that just don't have the capabilities and they like us to do the investments for them. And there's different groups and we deal with all of them. And the good news about our business is that we generate large transactions. They often come with co investments and we have our listed vehicles, which do direct investments and often there's things that don't fit the specific funds or either the type of investments, the country it's in, the concentration limit allows us to bring our clients other types of investments and we do those with many people that come into our funds. So as a first priority and that often makes sure that we cement the relationship with them. So I'd say it's generally that's how it breaks out and it's not much different than it's been over the last number of years. And then maybe just an extension on that. Is there any evolution from either the co investors morphing into like a perpetual kind of construct that you've proposed in the past in specific asset classes? So our view is that if interest rates stay low, more and more fixed income allocations are going to flow into these type of products and what the ideal investments are long term hold relatively modest yield investments going to set them up in all our businesses and manage those type of assets for investors and really what they are is long term fixed income alternatives to help balance their portfolios with moderate risk. Okay, that's helpful. And if I may just sneak one more in on CenterCoast. How would you compare CenterCoast to, say, the past deals you had in the history of Hyperion and KG Redding? Like how is it similar? How is it different? Yes. Each one of these has never been relevant to the overall franchise. But what they brought us was a special capability or people to be able to grow in an area of the business. And therefore, I think over the longer term, they're all highly additive. And each one of them has been great in their own way over the past. Although we're not we've never been big on buying managers and there are modest amounts of money that we've done it with. Okay, that's great. Thank you. The next question is from Dean Wilkinson with CIBC. Bruce, kind of just a bigger picture question for me. Given the amount of capital you've got to invest, a doubling of that potentially over the next 5 years, as you look out the next year or so, where do you think the sort of single best looking you had a preference, what would you sort of be looking towards? So I would say more broadly, if you look at our business, it's about the franchise tracks, finds, locates. Every fund is filled with 50% of investments, which just come because of the businesses we're in, the people we have, the franchise we have, the relationships we have, and they're just singles and doubles and we're just tucking them in. And they're normally in the businesses that we already operate. They're something down the street or something in another city or something just like the one we have. And so I would say no matter what environment we're in, that occurs and that's just a ready, stable and I'll just call it 50% of all the funds. The other 50% generally changes from time to time based on capital flows around the world and where we've set up. We set up our people to be able to take advantage of those and we're never actually sure where that's going to be. Over the past 24 months that was in South America and most specifically in Brazil, That's still in existence, but less so than it was 18 months ago because the markets bottomed and recovering. India, we've seen and we've done a number of things and I think we'll continue to see it because there's an under financed corporate sector. And therefore, there's a lot of opportunities coming out of that as banks try to take loans to the sectors off their books. But we always surprise ourselves where the opportunities come from. But those, I guess, would be the 2 ones that where there's the least capital in the world today at the current time. So fair to say that the view is perhaps a little less domestic than it may have been historically? I would like our if you look if we went through the real estate fund, the last real estate or the current real estate fund we're investing in just closing off despite the environment that we've been in, which has been very good and we've been sellers of a lot of assets in Europe and in the United States. I think I'm just going to guess here. I think 50% of the portfolio that we advantages we have of size, capital availability, scope, geography, etcetera, we were able to find 50% domestic investment. So we always find things, but on balance, 2,009 reflecting back to 2,009, we hadn't thought United States would be where all our money would go and it just so happened why would you go anywhere else if you can buy 50% of replacement cost in the United States. So it just all depends on what capital flows. Okay, great. That's it for me. Thanks guys. I'll hand it back. The next question is from Neal Downey with RBC Capital Markets. Please go ahead. Thank you. On the subject of, I'll call it, accrued versus realized carry, We do see a list of your private funds in your supplemental information package. Can you help us think about which funds in particular over the next, let's call it, 2 years are really moving through that monetization stage. Obviously, we've seen the deal to sell Gaisley in Europe and that's closing, I believe, in the Q4. And you generated a sizable carry accrual on that. But which funds are going to continue to go in through that monetization stage? Hi, Neil, it's Brian. So I'd say the fund that you pointed to there, which would be our 1st Global Real Estate Opportunity Fund, BSREP 1, is definitely into that mode. We've got a couple of the private equity funds that are a little bit further along in terms of their vintage. And they're a bit smaller, but they have stepped into that phase as well. And I'd say, it's a general observation. You tend to get us slightly shorter investment duration within the private equity and the real estate opportunity funds than, for example, in the infrastructure fund. Those tend to be a little bit longer dated. So I'd say those ones will take a little bit longer in terms of getting into the actual distribution phase and hence locking in the carry. Having said that, the infrastructure funds, as we've noted, the last one is already 40% investment, that's pretty big fund. So there's a fair bit of capital that's at work and has been invested and hence is accreting in value and therefore generating carry even if it's not getting through the clawback period and brought into FFO. Okay. Thank you. Thank you. The next question is from Mario Saric with Scotiabank. Please go ahead. Hi, good morning. Just looking at the percentage of your respective flagship funds that's committed, real estate infrastructure, private equity, 45% 70% respectively. When you launch these funds, how does the commitment kind of pace or capital deployment compare to your original expectation on the various funds? I would say they're generally pretty much in line. And part of the reason why I'd say that, Mario, is by the time you're getting towards the end of raising the funds, you've already you're always looking around for those investment opportunities and you're always processing them through. So you've got some pretty good visibility. And in some cases, you can have a fund that is going to be pretty well spoken for within the 1st year. I mean, the investment period is 3 years for a reason to give you that time to go through it. But I guess just given the comments Bruce made earlier in our ability to have visibility on a number of things, either, I'll say, generate tangential to our existing businesses and operations and then the things that we find more opportunistically is such that we find we can put the capital work at a measured pace, but one that's generally shorter than the investment period. Got it. Okay. And my second question is I appreciated the color on the singles and doubles in the letters to shareholders, especially on the back of a pretty exciting World series that we've seen. But as you get bigger over time, presumably, you've indicated scale is very important in your ability to source transactions and arguably deploy capital. As the funds get bigger and Brookfield gets bigger, how should we think about the proportion of singles and doubles versus home run that others may not necessarily be able to compete on? Yes. I would say that our if you look back and I see no reason it wouldn't be the same going forward. The just the general investments we make that are straight down the middle based on our franchise that can earn us an easy 15% or 20% return depending on the type of investment we're making, which fund, probably or half of the fund. And that just gives us a good base of investments we're taking, not a lot of risk and they we can find them easily. And the other half is, allocating capital to the most interesting jurisdictions. And we kind of try to balance it out to make sure that we have a balance of both in each different or different type of fund. Okay. And then maybe just on real estate in particular, have you seen any change in kind of client attitudes towards opportunistic versus core plus versus core on the margin? Yes. For real estate, I would say, opportunistic is highly sought after. People want returns in their funds and we see no abating of allocations to opportunistic real estate globally. Some institutions are always and have been for years worried about interest rates and therefore worried about buying core real estate, but there's an enormous amount of other people behind them that have been buying core real estate. So I think there's still lots of investors for all of those products. Okay. Thank you. This concludes the question and answer session. I will now hand the call back over to Ms. Suzanne Fleming for closing remarks. Thank you, operator. And with that, we will end today's call. So thank you everyone for participating. This concludes today's conference call. Thank you for participating and have a pleasant day.