Earnings Call: Q1 2020

May 5, 2020

Earnings release

Good morning. My name is Elena, and I will be your conference operator today. At this time, I would like to welcome everyone to C. T. REIT's Q1 2020 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. The speakers on the call today are Ken Silver, Chief Executive Officer of CT REIT Leslie Gibson, Chief Financial Officer of CT REIT and Kevin Salzberg, Chief Operating Officer of CT REIT. Today's discussion may include forward looking statements. Such statements are based on management's assumptions and beliefs. These forward looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. Please see CTREIT's public filings for a discussion of these risk which are included in their 2019 MD and A and AIF, which can be found on C. T. REIT's website and on SEDAR. I will now turn the call over to Ken Silvert, Chief Executive Officer of C. T. REIT. Ken? Thank you, operator, and good morning, everyone. We're very pleased to welcome you to C. T. REIT's Q1 2020 investor conference call. This is also our first virtual conference call as Leslie, Kevin and I are observing social distancing by calling in from separate locations. We hope this goes well and also hope that you and your families are all healthy and staying safe. Yesterday, we released our 20 2Q1 results and Leslie and Kevin will touch on highlights of what was another strong quarter. Probably more importantly, given the unique circumstances we're all living through, they will share some actions we've taken that will have implications for the current and future quarters. For my part, I'd like to focus on some higher level themes that are relevant to where we are today and where we're going. From the REIT's inception in 2013, we have consistently described ourselves as reliable, durable and growing. At first, beginning with our IPO roadshow, I would have described these words as aspirational. But over the past six and a half years, our focus has remained on them as our strategic foundation and guideposts. A measure of our success over that time is reflected in an unbroken track record of annual distribution increases. So where does that leave us today when the world is facing previously unimaginable challenges? In the simplest terms, the strategic objectives we have pursued from day 1 put us in a strong position to weather the storm and plan for a post COVID future. Our reliability is grounded in the large portfolio of primarily single tenant assets leased to Canadian Tire Corporation for terms that average almost 10 years, amongst the longest in the sector and provide predictable annual rental growth. Our core competitive advantage is our privileged relationship with Canadian Tire, our majority unitholder and most significant tenant. The Canadian Tire brand, nearly 100 years old, has succeeded through the Great Depression, the Second World War and every economic cycle and business disruption since then, continuing to grow along with Canada, meeting the needs of Canadians from coast to coast and always with a truly local approach that resonates with its customers. I have no doubt that Canadian Tire will emerge stronger than ever from this pandemic with a clear understanding as to how to leverage its unparalleled store network and supply chain, its digital properties including its website, apps and Triangle Rewards loyalty program and consumer credit offering to compete successfully and grow market share. We will continue to benefit from our relationship with Canadian Tire, which provides such a firm foundation to our enterprise. Our durability is grounded in the strength of our balance sheet and our ample liquidity. From the time of our IPO, we have worked to make our balance sheet and financial metrics stronger, reducing leverage, reducing our payout ratio and driving more conservative debt coverage ratios to the point that our financial position coming into the crisis was amongst the best in the Canadian REIT sector. Leslie and Kevin will provide further details on what we have done to bolster our already strong financial position and reduce risk with the primary goals of navigating the current economic disruption and emerging well positioned for the future. Over our history, we have delivered attractive growth in adjusted funds from operations per unit and net asset value per unit, both driven by solid organic growth in additions to our portfolio. There's no question that delivering growth in this environment, however long it lasts, will be a significant challenge. Nevertheless, with over 95% of our revenues derived from investment grade tenants and with the contractual growth built into our leases, we are well insulated. Our rent collections through the crisis so far are amongst the highest of any REIT in the sector across all asset classes. At the same time, we are committed to working with those of our tenants who are truly wrestling with survival. And as we do in all things, we are taking a long term and conservative approach to improve the chances of these tenants emerging from the downturn. We genuinely believe in retention as the landlord's best and are working with our tenants to improve their odds of staying in business. To this point in our history, our deliberate and conservative management of The REIT has succeeded in delivering attractive financial results. It has also positioned us well coming into this unprecedented crisis. Never did we imagine such a deep and global interruption in economic activity. Yet in consistently steering away from acquisitions or developments that were priced to perfection or large relative to the size of our balance sheet, combined with our focus on quality net lease assets leased to investment grade tenants, we have built in resiliency. We have been opportunistic at the margin and have selectively invested in particularly attractive value add opportunities, whether a redevelopment project where we have leveraged tenancies with Canadian Tire and other banners or the Canada Square property at Yonge and Eglinton in Toronto, which we believe to be one of the best located redevelopment sites in the country. Several years ago, as some in the REIT sector turned to significant programs of mixed use and high rise development, we decided to remain on our own path, a path that provides visibility to predictable results in a business model less challenging and risky to execute. We viewed CTE with its high quality assets and investment grade tenants as Canada's premier net lease REIT, a unique positioning and business model within our sector. CTE REIT's core attributes have never been more relevant. For our investors, this means continued focus on leveraging our key competitive advantage, our relationship with Canadian Tire to deliver over time the reliable, durable and growing results that have always been our core purpose. With that, I'll turn things over to Kevin. Thanks, Ken. Good morning, and I hope you're all keeping well. As disclosed in our press release yesterday, in the Q1, CTE completed the development of a Mark store in Bradford, Ontario and the development of 3rd party pad buildings at 2 existing REIT properties. We also completed the acquisition of a further onesix interest in the Canada Square complex located at the corner of Yonge and Eglinton in Toronto, Ontario, thereby bringing our ownership interest in the property to 50%. We are very pleased to have increased our ownership level in this premier redevelopment site as we continue to advance design development for the property. In total, CTREIT invested approximately $42,600,000 in these previously announced projects, which added nearly 155,000 square feet of incremental GLA in the quarter. In line with the REIT's focus on preserving liquidity as we navigate our way through the COVID-nineteen pandemic, we have opted to cancel, delay or defer all non committed and non essential capital expenditures at this time. All projects that are currently under construction will continue and will be completed once construction can restart in any provinces currently impacted by a shutdown. At the end of the Q1, CTE REIT had 19 properties that were at various stages of development. These projects represent a total committed investment of approximately $222,000,000 upon completion, dollars 76,000,000 of which has already been spent and a total incremental gross leasable area of just over 1,000,000 square feet, nearly 95% of which have been pre leased. Over the next 12 months, the REIT anticipates spending roughly $80,000,000 on furthering and completing these development projects. As at March 31, 2020, CTE REIT's occupancy rate was 99.4%, which was slightly above the occupancy level as at Q1 2019 year end, primarily due to the temporary lease up of a portion of the 11 Dufferin Place Southeast property in Calgary, Alberta. With respect to the impact that the current crisis has had on property operations, there have been many measures put in place by various governmental and public health authorities across the country that have limited the ability of some of our tenants to conduct their businesses. As a result of these actions, tenants representing approximately 96.5 percent of annual base minimum rent fulfill their financial obligations to the REIT on May 1 compared to 97.2 percent on April 1. Tenants comprising approximately 6.2% of the REIT's annual base minimum rent are not open remain closed until further notice. And tenants representing another 33.4% of the REIT's annual base minimum rent are now operating on a limited basis. This includes 132 Canadian Tire Retail Stores in the province of Ontario that are owned by The REIT and that are servicing customers only through curbside pickup, e commerce home delivery as well as through their auto service centers. We remain focused on preserving occupancy levels within our portfolio and doing our part to help our tenants through this difficult time. The impact that this pandemic is having on our tenants is dependent on the nature of their businesses. As such, we have attempted to remain flexible in determining the optimal strategy to fairly and equitably support each of them through this crisis, including assessing the availability and potential benefits of government sponsored rent relief measures on a case by case basis. With that, I will turn it over to Leslie for a review of our financial results. Thanks, Kevin, and good morning, everyone. I will also provide an update on the impact of the COVID-nineteen pandemic following my Q1 results remarks. We are again pleased with the Q1 2020 results that C. T. REIT has delivered. In the quarter, we reported diluted AFFO per unit of $0.254 an increase of 3.7 percent compared to $0.245 per unit in Q1 of 2019. Diluted FFO per unit increased 1.7 percent to $0.293 versus $0.28 8 in Q1 of 2019. Reported net operating income increased 6% in the quarter compared to the prior year. The primary contributor of the 6% NOI growth was the acquisition of income producing properties and properties under development completed in 2020 2019. Same store NOI increased by $2,200,000 or 2.4 percent in Q1 2020 compared to the prior year. Same property NOI increased by $2,900,000 or 3.2 percent compared to Q1 2019 and was driven by several factors, primarily from the contractual annual rent escalations of 1.5% on average contained within the Canadian Tire store leases, which contributed nearly $1,100,000 to NOI growth, as well as from the intensifications completed in 2020 2019, which contributed roughly $720,000 And lastly, the recovery of capital expenditures and interest earned on the unrecovered balance added $420,000 to NOI growth. Though the interest component of the recovery is less than in prior quarters due to the decrease in the prime rate of interest on which the interest portion of the recovery is based. With our continued lien management structure, G and A expenses amounted to 2.4% of property revenue versus 3.9% for Q1 2019. This decline was primarily due to the decrease in personnel compensation trustee fees due to the fair value adjustment on the unit based awards and the decrease in the service agreement costs as a result of the new ERP system implemented in Q2 2019. The interest covered ratio increased to 3.43 times as of Q1 twenty twenty compared to 3.35 times for the same period in 2019. Turning to our balance sheet. We continue to be focused on maintaining liquidity. Our balance sheet remains strong, and we are in a stable financial position as of March 31, 2020. We have $294,000,000 available on our bank credit facility as well as $20,000,000 in cash. During the quarter, we completed the refinancing of the mortgage secured by Canada Square, which now matures in 2023. Subsequent to quarter end, we also reset the rate on 5 series of Class C LP units totaling 252,000,000 for a 5 year term at 2.37 percent commencing May 31, 2020. These Class C LP units are held by Canadian Tire Corporation and the interest rate was determined in accordance with the terms of the limited partnership agreement and set at 200 basis points above the spread above the benchmark Government of Canada bond yield rate. With these transactions completed, the REIT has no further debt maturities until the Q2 of 2021. CTE REIT's indebtedness ratio was 42.7% with no change from year end. The indebtedness to EBITDA FE ratio was a solid 6.85 times at quarter end, lower than the point nine four times reported at year end 2019. In addition, as of March 31, 2020, the book value per unit was $14.60 remaining quite consistent with the year end value of $14.61 Despite the fact that net income during the quarter included a $24,000,000 negative fair value adjustment on investment property, primarily driven by the COVID-nineteen pandemic. Before I turn the call back to Ken, I'd like to add a few remarks to address the impact of the COVID-nineteen pandemic and how we think about our financial flexibility. I would emphasize that while C. T. REIT's objectives remain intact, the priority at this time is preserving liquidity. We have provided a combination of rent deferrals and abatements for the months of April May to a portion of the 3.5 percent of tenants who did not fulfill their financial obligations on May 1. We're also reviewing the various government relief programs to evaluate how we can find the best outcome and maximize the benefit for our tenants. As Kevin mentioned earlier, we have canceled, delayed or deferred all non committed and non essential capital projects. And the 80,000,000 dollars of capital we anticipate spending in the next 12 months can largely be funded by a retained cash of $55,000,000 to $60,000,000 per year and the $20,000,000 of cash we currently have on hand before any need to use our bank credit facility. We also took advantage of certain property tax deferral programs to further preserve our cash position and assist our tenants. The REIT continues to have some of the strongest financial metrics in the Canadian REIT sector. As of Q1 2020, the REIT's portfolio was 99.4 percent occupied with a conservative 77.6 percent payout ratio with over 97% unencumbered asset base on a $6,000,000,000 IFRS value. And lastly, the REIT's debt to gross book value was approximately 43%, and there's a total of roughly $315,000,000 in liquidity between our undrawn credit facilities and cash on hand. This positions the REIT well to manage through these unprecedented times. And with that, I hope everyone is staying safe and healthy, and I will turn things back to you, Ken. Thank you, Leslie. With that, I'll turn the call back to the operator for any questions from our listeners. The first question is from Himanshu Gupta with Scotiabank. Please go ahead. Thank you and good morning. Good morning. For the May rent collections, almost 97% collected similar to the last month. Are there any specific segment or categories of tenants which did not pay like restaurants, etcetera? Thanks, Himanshu. I'm going to pass that question over to Kevin and let him speak to it. Sure. Thanks, Jonathan. Hi Himanshu. As you'd imagine, we help about 95% of our tenant base that consists of what we would describe as either essential services or Canadian Tire. So it's really the other almost 5% we're talking about here. And obviously, any retailer that their business has been closed as a result of the government requirements has been impacted and their ability to pay rent has been similarly impacted. So as you'd imagine, restaurants fit a portion of that segment. Retail apparel, cinema, gym would all be comparable from that perspective. Got it. And then on collection from these tenants, how do you plan to provide for, let's say, bad debt reserve in the financials based on your discussion with these tenants? And sounds about that you're offering around 2 months of rent defile. Will that be enough for some of these tenants? And do you expect them paying back after 60 days? Himanshu, maybe I'll just give you sort of a high level discussion, then I'll pass it back to Kevin. So, I mean, first of all, just recognize that, couple of implications for us. 1 is, 1st, obviously, the potential total impact of them on our results. But also given the relatively small base of ancillary tenants we have, it gives us an opportunity to truly engage with them on a case by case basis. So Kevin and his team have been speaking with our tenants. In some limited circumstances, we've gone straight to abatements to give these tenants some hope, frankly, and visibility to a path back from the crisis. I can tell you, I've heard from the team that we've had a couple of tenants who broke down in tears when they got that news. And it's just a reflection of the fragility that some tenants are experiencing. And we think it's important to allow the tenants, as I said, some hope that they hang in there and try to reopen. At the end of the day, the numbers aren't huge for us. And but at the same time, we don't have absolute clarity at the moment to how it all shake out, how long this will last, how much help these tenants will need, what the implications of any emergency rental support programs might have for us for our tenants. With that, I'll ask Kevin or Leslie to chime in and see if they had anything else they wanted to add. Kevin? Yes. The only thing I'd add to that, Ken, is we've been taking a pretty pragmatic lens to the situation from the outset. And really, as we mentioned in our comments, I believe in retention as the best strategy. So I think from a retail landlord perspective, the leasing market coming out of the crisis is not going to be strong. We're not sure obviously where market rents are going to trend. So the extent to which we can offer terms to our tenants in terms of either repayment or as Ken mentioned, select abatements, we felt it was incumbent upon us to help them weather the storm and get through this crisis so that they can be there to pay us rent on the other side of it. Sure. Thank you guys. Really appreciate your perspective there. And maybe last question on the IFRS cap rates, almost no moment on a quarter on quarter basis. Can you provide any color there, the capital change for any subcategories, let's say, for 3rd party tenant portfolio or industrial portfolio? And given that what we are seeing in the market, like the collection numbers for multi tenant portfolios for market in general, do you think that will have some kind of capital impact for the retail properties post COVID? Himanshu, it's Ken. And with respect to the second question, it's a little bit premature to fully understand the implications of the crisis. Given that the core of our portfolio are single tenant assets, we think that's the category of asset that will hold up best and are most optimistic about those from a valuation perspective. With respect to the first question, I'm going to actually ask Leslie to comment on what we did in the quarter. Sure. Thanks, Ken. Himanshu, regarding some of the subcategories, and you mentioned sort of multi tenant properties, we do have a sort of a handful of what we say is sort of enclosed regional shopping centers. And we did make some changes and did take some write downs on those assets through a combination of cap rate changes and increases to sort of vacancy in those models. And so we did take into the factor that those tenants we feel will have the toughest time and there's some potentially sort of missing cash flows and there'll be no strain in that area. Whereas in the remainder of our portfolio, we have significant portfolio of sort of single tenant Canadian Tire stores. We really felt that the underlying businesses were still performing and that at this point in time, it was premature to take any sort of significant change in value for those assets. But obviously, we'll continue to monitor things during the Q2 and as we get more information leading into Q2. Sure. Thank you. Thank you so much and really appreciate and I'll turn it back. Thank you. Thank you. Thank you. The next question is from Sumayya Syed with CIBC. Please go ahead. Thanks. Good morning, everyone. Good morning. Good morning. Just to follow-up on, I guess, rent deferred versus abatements agreed to today. Do you have just a rough split of how much went towards deferment versus abatements? Sumayya, I'm going to ask Leslie just to speak to that one. Sumayya, I mean, right now, we're really it's a really small position of our whole portfolio. I mean, it's a subset of 3.5%. Whether it's a 0.5% here and there, it's really not going to make any difference. So we're really going to stick to higher level on that. At the end of the day, whether we've abated the rent or whether we deferred the rent and have to consider some bad debt expense against that potentially, we kind of end up potentially in a not too wide range. So really it's just a subset of those sort of 3%, 3.5% of people haven't paid, and it's really small for us. Okay. That's fair enough. Thanks. And what is the payback period for the rent that's been deferred to so far? Kevin, do you want to speak to that one? Sure. Typically, it's a 2 month deferral with a 6 month repayment. The timing of when those 6 months begins differs slightly by tenant by tenant though. Okay. And just lastly for me, I have just the discussions around, I guess, Canadian Tire's interest in the REIT and their intention changed at all since the shutdowns went into effect? Hi, Sumayya, it's Ken. I really couldn't speak to Canadian Tire's intentions with respect to their ownership position at this point. I'm not aware of any changes one way or the other. The next question is from Tal Woolley with National Bank Financial. Please go ahead. Hi, good morning. Good morning, Tal. Good morning. I just wanted to ask about some of the operational questions in terms of how things will restart, so to speak. In terms of your dialogue with public health, like is that dialogue primarily with the landlords or is it with the retailers about how to operate going forward? Like who sort of bears the public health responsibility on this? Tal, it's a great question. Clearly, every jurisdiction is taking different approaches to reopening and setting different rules and whatnot with respect to that. We certainly have been keeping in touch with Realpac, the industry organization that's kind of representing the various asset classes. And we'll certainly be following whatever guidance we get either from the public jurisdictions or industries or peers, as well as working with our tenants, to understand how best to reopen safely. Okay. And have you had much dialogue with I know you've only got a very small mall portfolio and split up, but have you had much dialogue with the tenants there just about what they would need in order to get opening back up? I'm just thinking about like if there's extra security needs or supply, things like that. And then how are you sort of handling all of like those types of requests? Are these recoverable? Are they non recoverable? Like can you just give any focus on or give any color on that? Leslie, do you want to speak to some of the property management aspects in the mall portfolio? Sure. Thanks, Ken. Hi, Tal. Yes, I mean, right now, the initial dialogue with the the customers is really, as Kevin mentioned, talking about the rent and what's going to happen to them. I think more in the background as we get more clarity on reopening, particularly in Ontario where most of them are closed, we will look to things like security and supplies and what they need. Really the lease will dictate what is actually recoverable from those tenants. We may be able to provide assistance in procuring things directly sort of on a direct chargeback basis to them. But typically things like security of things that happen in the common area sections of the mall is recovered through the common area maintenance part. So that would form part of that. But if people needed individual supplies and other things to assist them in getting going, then we'll be able work through our other channels to help those tenants open as quickly as they can in a safe manner. Okay. And then do you have a sight line on when the Canadian Tire dealers in Ontario will be able to reopen? Are you hearing any are you able to provide any clarity on that? Tal, I couldn't provide you with any clarity on that beyond what the province of Ontario has been saying in terms of their daily press conferences and whatnot. So I guess we'll see how that unfolds. Okay. And then just lastly, when you started the REITs, I think it's been, what, 7 years now, you had created this portfolio of leases with an weighted average rent increase across the portfolio. 7 years out now, when you look at where the rents are for the individual stores, how many do you feel are at market, above market and below market? Like, do you feel confident that everything across the board is in the sort of at market or, like granted it's hard to establish what market is right now, but I'm just wondering like 7 years out, like how do you feel about where rents are among those individual leases? Tal, certainly coming into the crisis, I would have said that certainly the rents were at or below market. We'll have to see how things unfold in the fullness of time. And I can look to Canadian Tire's same store sales track record, which has on average exceeded the annual rental growth, to feel reasonably comfortable that the rents remain kind of in line. But we'll have to see how things unfold and we'll continue to do further analysis. Okay. Thanks very much. Thank you. Thank you. The next question is from Nikki Hsieh with RBC Capital Markets. Please go ahead. Hi, good morning. I was just wondering if you could please comment a bit on the discussions you've had with Canadian Tire regarding rent payments going forward for stores that are both open and closed and how do rents on the new leases with Canadian Tire compare with the existing rates? Well, we haven't had any discussions with Canadian Tire with respect to rents going forward. So my assumption is they'll fulfill their commitments in the leases. Okay, great. Thank you. And you've previously discussed potential acquisition opportunities sort of thing. Would you be able to provide an update on your outlook there and the trends that you're seeing in the market on that front? Well, generally, right now the outlook is a little bit cloudy, but overall I would say we're given the strength of our balance sheet and we are optimistic about the universe of potential opportunities. I don't know when we'll have better visibility into values and transactions to tell you exactly we would pick up our investment pace again. But it's certainly something that we're thinking about not only how do we get through the crisis and manage through the crisis and work with our tenants, but what does recovery and growth look like afterwards. The next question is from Jenny Ma with BMO Capital Markets. Please go ahead. Thanks. Good morning, everyone. Good morning, Jenny. Can you comment about the business level of Canadian Tire in Ontario post the reclassification of non essential versus what kind of business Canadian Tires outside of Ontario are doing? I'm not sure if you have insight into that. Jenny, I couldn't comment on that. Canadian Tire is reporting on May 7, Thursday. So, we definitely look to their disclosures. Okay, sounds good. Also on some of the development projects, it looks like there were a handful that were pushed out about a year. So I don't think that falls in the category of the development projects that you're that haven't started and you're pulling yet. So I'm just wondering, what was behind the delay in those timeframes? Is there anything outside of what we'd expect given the current environment? No. Basically, when the crisis hit, we worked with Canadian Tire in terms of the development schedule and I think both entities were looking to manage liquidity. So we work cooperatively on the time frames for some of those projects. Kevin, anything that you would add to that? No, those are I think the ones you're referring to are all store expansion projects, which typically have a shorter construction timeframe. So likely those would actually be ones that haven't started construction yet. They were ones that were in the predevelopment stage in terms of entitlements and approvals. And obviously, there's impacts in terms of when those store expansions would come on stream in terms of seasonal openings as well. So like Ken said, just working closely with Canadian Tire to re slot those into a later date at this point. Okay, great. And then my last question is in relation to the DRIP. You're one of the very few REITs left with 1. And just given where the unit price is, have you had any discussion internally about what to do with that or are you happy keeping it in place? Jenny, we didn't think about it. I'll ask Leslie to answer that one. Thanks, Jenny. I think, Jenny, first of all, the DRIP for us is a relatively small piece. Canadians hired in their unit ownership don't participate in the DRIP. And obviously with the pare back in unit prices, we've also seen their DRIP participation greatly tail off in the last month. So a lot of people have opted out of the DRIP given where things are priced. But I think for us, the rest of our non Canadian Tire unitholders, we have a large still share of retail unitholders, and this is fundamental and a key part of their investment strategy that they continue to reinvest the money in the DRIP just as they look at the dividend. So I think at this point in time, any kind of changes to the DRIP are really, really small for us. And turning it off is just not something that we think it's prudent to do at the moment. Okay. So is it fair to assume that the DRIP participation will go down in Q2 then? Because I actually would have thought maybe the opposite happened. No. But approximately in liquidity. Yes. And that's it. It's really I think driving liquidity. So we've seen it actually drop considerably at least in the month of April. I can't say for the May or June participation, but April is decreased over our historic participation. And I think really it is all liquidity driven. So we'll see where that goes. Okay. Well, I guess that's the partial offset to some of the dilutive impact. Yes. Okay, great. That's all for me. Thank you. Thanks. Thank you. The next question Just for modeling purposes, could you tell us what the incremental, either in a dollar figure or percentage basis spend that the proper expenses or G and A would be for extra cleaning or staffing costs, anything COVID related? John, maybe I'll ask Leslie to answer that one. I'm not sure it's a huge number, but I'll let her know. Yes, I figured it would be small, but Yes, Yohan, at the vast majority of our centers where they have a stand on Canadian Tire, it's the actual tenant Canadian Tire, the actual dealer that actually bears all those costs. So they will pay for all those directly. The only cost that we would see really go into potentially a camp pool or something else is perhaps at a few of our multi tenant centers or some of our enclosed shopping centers. And quite honestly, it's really too hard to predict really how long and to the extent of what they may need right now. There's possibly obviously offsets because some of our occupancy costs have gone down as some of the centers have been closed. So if they come up again in the next couple of months when they're reopening, they could easily offset during the year too. So it's just too hard to predict the sort of the net incremental that that could be. Okay. Okay. Thanks. I'll turn it back. Thank you. Thank you. As there are no further questions at this time, I will turn the call over to Ken Silver, CEO, for any closing remarks. Thank you, operator, and thank you all for joining us today. We welcome you to join us later this morning for our first virtual Annual General Meeting to be held at 10 am Eastern Time. We also look forward to sharing with you our Q2 results expected the 1st week of August. Let's hope by then we have all returned to some semblance of normal life. In the meantime, please stay healthy and safe.