Good morning, ladies and gentlemen. Welcome to the third quarter 2020 results conference call. I would now like to turn the meeting over to Phillip Burns. Please go ahead, Mr. Burns.
Thank you, operator, and good morning, everyone. Before we begin, let me remind everyone that during our conference call this morning, we may include forward-looking statements about our future financial and operating results. I direct your attention to slide two and our other regulatory filings. Joining me today is our CFO, Scott Cryer, and VP of Finance, Stephen Co. After I provide an update on our operational progress during the quarter, Scott will give an overview of our financial results and position.
ERES was formed 1.5 years ago on March 29th, 2019. Yet in such a short time, it already is experiencing an unprecedented disruption of global markets, from a strong and stable economy to the challenging downturn onset by the COVID-19 pandemic. ERES has been tested, but it is pleased to report another solid quarter of performance amidst this global uncertainty.
As can be seen on slide four, despite temporarily pausing our pursuit of growth by acquisition, a precautionary measure taken for liquidity conservation in facing the pandemic, ERES now has recommenced accretive expansion. Our suite count has increased by 12% in the 12 months since the quarter three of 2019 to 5,752 suites at September 30, 2020, which includes our latest acquisition on September 1 of 120 residential suites.
This growth has been enhanced by fair value appreciation of our property portfolio, which we have been able to recognize each quarter to date, increasing our asset value by an even greater 22% versus the comparative period. These improvements do not include our acquisition of an additional portfolio which closed post period on October 1, comprised of 113 residential units, bringing our pro forma suite count to 5,865 units.
Our market capitalization and public float also have increased compared to September 30th, 2019, by 6% and 37% respectively. The positive trend in our market cap that can be seen in 2019, which reflects the external validation of the ERES platform, has been negatively impacted in 2020 by the stock market's overriding response to the unpredictability of the COVID-19 pandemic, which has inflicted volatility on stock prices as global economies entered into recessionary territory. ERES's units continue to trade influenced by this market-wide sentiment and remain disconnected from its operational performance and underlying fundamentals. Nevertheless, on July 7th, it marked a significant milestone for the REIT as we graduated from the TSX Venture Exchange to the Toronto Stock Exchange, which should further increase ERES's liquidity and open a wider and deeper investor base in Canada and beyond.
Slide five outlines a few highlights from the quarter and how we are achieving our stated objectives. For the three and nine months ended September 30th, 2020, our property portfolio increased in value by EUR 26.8 million and EUR 52.2 million, respectively, to EUR 1.4 billion as at period end. Not only reflecting the counter-cyclical and defensive characteristics of the Dutch multi-residential market, but also the high quality of ERES's portfolio.
As I mentioned previously, we are pleased to announce the closing of a successful acquisition during the period of a 120-suite multi-residential portfolio in the province of Gelderland in the Netherlands for a purchase price of EUR 20.15 million, excluding transaction costs. This was followed shortly by a subsequent acquisition on October 1st of another multi-residential portfolio in the Netherlands, comprised of 113 suites and purchased for EUR 26.25 million.
We hope and expect to continue this recent trend in accretively adding to our multi-residential portfolio by prudently capitalizing on the abundance of near-term attractive opportunities currently present in the Dutch market. I will let Scott speak more specifically to the details of our liquidity measures, but to briefly touch upon our financing activities at a high level, we ended the quarter on September 30th, reporting EUR 120 million in immediately available liquidity.
Which included a draw on our revolving credit facility of EUR 20 million to finance the post-period and acquisition of the Kairos Portfolio closing on the 1st of October. Subsequently and currently, we have EUR 90 million available in remaining liquidity, including EUR 80 million in undrawn capacity on our revolving credit facility, as well as cash on hand. We continue to present solid operating results for another quarter with FFO of EUR 0.034 per unit and EUR 0.03 per unit respectively.
While benefiting from accretive acquisitions since the prior period, both FFO and AFFO have been negatively impacted by the lower return which we earned on excess cash as we conserved our liquidity amidst the uncertainty surrounding the COVID-19 pandemic, ultimately resulting in stable metrics. That brings us to slide six, which outlines that extensive measures have been put in place by the Dutch government in order to mitigate the adverse impacts of COVID-19 and protect the welfare of its people and their incomes. In general, the focus has been to maintain as much as possible people's incomes by measures which include employer wage contributions, small business loan extensions, and government support for international trade, to name a few.
Such measures have assisted tenants during these challenging times to maintain their rental payments, even if they have experienced job disruption. The efficacy of such measures had initially enabled the Dutch government to accelerate their roadmap for reopening the economy. However, as the pandemic enters its second stage with the recent rise in new cases, certain restrictions have been reinstated, and there can be no certainty that additional restrictive measures will not be imposed.
To highlight some key aspects of our portfolio, on slide seven, you can see that our suites continue to be nearly evenly divided between regulated and liberalized, providing balanced growth potential in rents, as well as the opportunity to liberalize more suites. Importantly, over 40% of our current properties are located in the high-growth urban conurbation of the Randstad, with approximately 25% directly located in the cities of Amsterdam, Rotterdam, The Hague, and Utrecht.
The rest of the portfolio is situated in smaller urban areas throughout the country. Slide eight provides more detail on our current residential portfolio. Average occupied monthly rents were EUR 852 at the end of September, with a high and stable occupancy of 98.4%. Our turnover was 10.8% for the first nine months of 2020, which is slightly high on an annualized basis compared to 13.2% turnover achieved in 2019.
This, however, is partly a result of higher vacancy going into 2020 due to portfolios acquired toward the end of 2019. The ERES portfolio is well diversified by number of bedrooms, ensuring we meet the demand for smaller units as well as for families. You can also see that approximately half of the current portfolio was constructed since 1980, providing an average age of under 40 years, resulting in lower ongoing repair and maintenance costs and driving higher asset values.
With that, I will now turn the call over to Scott.
Thank you, Phillip. As you can see on slide 10, our solid operating performance this quarter has been driven by rapid acquisition growth, coupled with strong rental growth, with operating revenues up 50% since the prior year period, an especially impressive metric in the context of this pandemic. The increase is attributed to contribution from acquisitions as well as higher monthly rents and higher occupancy on stabilized properties.
Net operating income has followed suit, increasing by 49%, however, was impacted by some higher property operating costs this year, mainly due to heightened repair and maintenance costs as well as increased advertising costs associated with turnover and vacancy reduction. In aggregate, this has resulted in a slight decrease in our NOI margin, which nonetheless remains strong at 75.6%, in line with our long-term expected average. FFO and AFFO increased by 43% and 47% respectively compared to the third quarter of 2019.
FFO per unit remained stable compared with the prior period at EUR 0.034 per unit, while AFFO per unit increased by 3% to EUR 0.030 per unit. This exhibits the positive impact of accretive acquisitions since the prior year period, offset by higher current income tax and general administrative expenses, as well as lower return earned from above-average cash maintained on hand this year as a result of the REIT's precautionary liquidity conservation. FFO and AFFO per unit were also impacted by a greater weighted average number of units outstanding during 2020, up 43% from the comparative period, primarily from the REIT's equity offer in December of 2019. As detailed on slide 11, our operating metrics have persevered against the backdrop of unprecedented challenges to conventional operating conditions.
Our suite count increased by 12%, and to reiterate, our pro forma suite count further increased post period end to 5,865 suites with the closing of our acquisition on October 1st. Residential occupancy increased to 98.4% compared to the same period last year, in part evidencing the effectiveness of our property management through a focused minimization of inherited vacancy. Occupied average monthly rents on our stabilized portfolio increased by 3.9%, a result of contractual indexation, turnover, and the conversion of regulated suites to liberalized suites.
Stabilized portfolio NOI also increased significantly by 8% for the three months ended September 30th, 2020, driven primarily by higher operating revenues from increased average monthly rents. Our weighted average interest rate continues to decrease, down 7 basis points compared to the same time last year, substantiating the strong spreads we continue to achieve between cap rates and interest costs.
Although we have now returned to prudently but actively pursuing accretive expansion, we do so while maintaining an unwavering focus on preserving our conservative financial profile, as you can see on slide 12. This has been especially important given the continued economic uncertainty with the Netherlands, like many other countries, experiencing a second wave of the pandemic. Despite the unpredictability, and in combination with the rapid and significant increase in the size of our asset base, we are seeing conservative leverage, which we expect to keep between 45% and 50% as we continue to grow down the line, lower interest costs as a result of having secured financing to date by capitalizing on the persistently low rates in the European Union and a conservative 4.7-year term to maturity for our mortgage portfolio.
After funding the acquisition of the Kairos Portfolio on October 1st, ERES currently has EUR 90 million in immediately available liquidity, inclusive of EUR 80 million in undrawn lines of credit, with the remainder in available cash. Using an assumed 60% loan-to-value ratio on long-term mortgage financing, we have immediate capacity to acquire up to EUR 225 million in assets. Slide 13 provides more detail on our well-staggered mortgage portfolio, with the nearest debt maturity not occurring until December 2022. The majority of our mortgages are non-amortizing. As we continue to grow, we will ensure we maintain our smooth maturity profile in order to reduce renewal risk. Thank you for your time this morning. I'll now turn things back to Phillip to wrap up. Phillip?
Thanks, Scott. In summary, ERES has remained steadfast in turbulent times. These extraordinary economic circumstances have allowed for the REIT to quickly establish a track record of resilience and adaptability underpinned by the high quality of our portfolio, the robustness of our operating platform, and the capabilities of our teams in both Europe and Canada. We are positioned well to continue safely and accretively growing even in adverse market conditions. In this regard, we believe that ERES offers a compelling investment opportunity. The REIT provides a unique opportunity to invest in the fast-growing and attractive European multi-residential real estate market. Our partnership with CAPREIT brings significant benefits to our unitholders. We are growing our portfolio at very attractive yield spreads with strong and highly accretive organic and external growth opportunities.
We have established a strong foothold in the Netherlands multi-residential market, and we are building size and scale to drive value going forward. Our conservative balance sheet and financial position provides the flexibility and resources to drive further growth, and we have in place an experienced management team and a seasoned board of directors. Thank you for your time this morning, and we will now be pleased to take any questions you may have. Operator, please open the lines for questions.
Thank you, Mr. Burns. Please press star one at this time if you have a question. There will be a brief pause while the participants register for questions. Thank you for your patience. The first question is from Mr. Brad Sturges from Raymond James. The line is open. Please go ahead.
Hi there.
Morning, Brad.
Morning. Wanted to touch on the acquisition environment and strategy at the moment. As you've noted, a couple of tuck-in acquisitions completed over the last couple of months. How is the pipeline for that opportunity looking right now? Could we see a few more of those type of transactions in the short term?
Thanks, Brad. Yeah, honestly, I think 2020 will probably, notwithstanding there was a slower period around the first wave of the pandemic, I think 2020 could very well break a record in terms of volume of residential transactions in the Netherlands. The second half of the year, there's been a lot of product come to the market, and even more so, it continues to be. Just in Q4 alone, we've reviewed over EUR 700 million worth of product and about 3,000 units.
The opportunity to grow is absolutely there, continues to be there, and I see that continuing unabated going forward. I think looking at how our portfolio, and I assume others have performed, it just demonstrates to people that this is a great defensive asset class, as well as an asset class that even in trying times has the top-line growth associated with it.
We will remain in acquisition mode. I do like the tuck-in acquisitions. Given that we have a big, well-diversified portfolio, it gives us more flexibility to do some of those tuck-in acquisitions. I believe you get slightly better pricing there. The pricing we've had on the two so far has been attractive, particularly when you look at how we're going to finance them. We're well above 200 basis point spread, and in some cases, closer to 300 basis points. I think there is the possibility that we will do a few more of those in the short term. I think going into next year, again, capital markets dependent, I think we'll also be in the mode to do bigger acquisitions if they're sensible and the metrics line up with the portfolio.
Okay. Short term could see leverage tick up towards the higher end of your target range right now? Is that a fair assumption?
Yeah. Speaking candidly, I don't see us issuing equity right now. We do have capacity, as Scott explained. In connection with that, if our leverage were to go up to the higher end of our range, we've always said we want to be in the 45%-50% range. I certainly think that's the right decision to maintain our external growth.
Is there a minimum baseline liquidity position that you'd like to see the REIT maintain on the balance sheet?
There isn't a minimum number where we've drawn the line in the sand. Again, we put our pens down on acquisitions in Q2, and we had EUR 140 million worth of liquidity in terms of cash and credit facilities. We have spent some of that, and I feel very comfortable having done that. We don't have a baseline number that we won't go below.
We just have to always have a look at how the portfolio is performing, where the pandemic is, what the new measures are. Again, in the Netherlands, the government has been very supportive, providing backstops for people, and that's why you've seen that our top-line collections have remained very consistent with historical performance. From a cash generative capacity, the business is doing well. Again, we wouldn't go down to zero, but we haven't defined an exact number of how low we would go.
Okay. Just last question. Just in terms of the acquisition environment that you just highlighted, has there been any evidence with the transactions you're seeing in terms of change in valuation, slightly lower cap rate or change on a price per door basis?
Yeah. I think cap rates are tightening. I think you're going to see that probably globally for the most defensive assets, multi-residential and I guess industrial. We're seeing that in the Netherlands as well, that there has been some tightening on the cap rates. You're also seeing the interest rates move almost in lockstep. Right now, the team regularly updates themselves on where the interest rates are, and between four and seven years, you're sub 120 basis points right now for all-i n interest rates. We can still maintain that loose rule of thumb that we want to be in the 200+ basis points yield spread when we're looking at doing acquisitions. There definitely has been some objective compression of cap rates as the asset class has performed so well.
Great. I'll turn it back. Thanks a lot.
Thank you. The next question is from Kyle Stanley from Desjardins Capital Markets. Your line is open. Please go ahead.
Thanks. Good morning, guys.
Good morning.
Good morning, Kyle.
Good morning.
Would you be able to just provide a bit more color on the same property OpEx inflation we saw during the quarter and just maybe kind of how you're thinking about the NOI margin going forward?
Just in terms of the OpEx, again, it's just a bit of a timing. There was a bit slightly higher R&M costs. Some of that also has to do with advertising costs in connection with the reduction in vacancy. Just in terms of margins, we're kind of projecting 75%, 76% going forward, and that's kind of what we're looking at on a long-term basis.
Okay, great. Thanks for that. I was just looking, so 54 suites vacant for renovation at quarter end. Would all of these qualify for conversion to liberalized? Maybe, what would the timeline for that conversion or renovation to be completed be?
Those are not all conversions. There might be just a turnover investment, even if it's regulated and going to stay regulated, or if it's already liberalized and going to stay liberalized. We might be doing other investments to either maintain its lettability at a good rate or to substantially reposition it at a higher AMR. They're not all regulated to liberalized conversions. The timing associated with that depends upon the magnitude of the works that we're doing. To do a full conversion, that's probably going to be offline for three to four months.
Okay. Great. Thanks for that. Just wondering, are you seeing any changes in the profile of your potential tenants, maybe just from an income perspective? Are you seeing any specific attributes within your portfolio attract new tenants at this point?
I wouldn't say that we've seen a dramatic change, really, in the profile. You hear things about Airbnb flats coming online, and that tends to be in the more central Amsterdam, maybe Utrecht area, which are the higher price point product. If you keep in mind that our average AMR is sub EUR 900, that puts us very much on average in the mid-market space. Those are guys, girls, people making average incomes. They're less likely to be the expatriates. They're less likely to be the students. People that have just ordinary jobs. We're seeing a high level of consistency. If you look at our turnover rates, they're on-line with ignoring Q1, which Stephen addressed, was due to higher vacancy at the end of year-end.
We are seeing a little bit higher uplifts on turnover across all of the buckets, regulated to liberalized. I don't identify that with a change in demographic of our target tenants. I just think it's attracting the same tenant base, but we're just able to demand higher rents because we're either doing works or because our product is well located and there's the continuing shortage of supply.
Okay. That makes sense. That's it for me. I'll turn it back. Thanks, guys.
Thank you. The next question is from Lorne Kalmar from TD Securities. Please go ahead. Your line is open.
Thanks very much. Good morning, everyone.
Morning.
Quick question, in Canada, we're hearing a lot about this de-urbanization in the U.S. Are you guys seeing any of that in the Netherlands? If so, is that a concern about, or would that kind of augment sort of your choice of product in terms of Randstad versus non-Randstad?
Well, you have to remember that the Netherlands is already the most densely populated country in Europe, and if you exclude city-states, I think it's in the top five globally. De-urbanization is much more challenging in the Netherlands than it would be in a geographically expansive place such as Canada. We have not been experiencing anything that validates that. I won't opine on whether it's happening generally or not, or whether the pandemic is accelerating that. I still think from our portfolio mix, it's broadly defined Randstad area, 40% or just slightly above, and in the core cities, 25%. I like that dynamic. We wouldn't be afraid, and we'd be happy to buy more in the Randstad for the right price.
For us, it's always managing or triangulating between probably a lower cap rate in the Randstad versus the growth profile versus a higher cap rate and maybe slightly less growth profile outside the Randstad. There's some very strong locations in the north and in the south, whether it be Groningen, that's in the north, Eindhoven in the south, where we have units that we're very happy there as well. The de-urbanization is not currently influencing our appetite to take on more Randstad assets at the right price of course.
Okay. Then kind of flipping back maybe to acquisitions, we heard that there may be a proposal to increase the tax on acquisitions from 2% to 8% or something along those lines. Could you maybe give a little more color on that and sort of how you expect that to influence the acquisition activity going forward?
Yeah. At the time of the global financial crisis, real estate transfer tax on residential portfolios was 8%, and post-crisis, they lowered it to 2%. It's been on the legislative agenda to eventually readdress that. It has now been readdressed. It's in the budget for next year. I don't think they've signed the law yet, but it's reasonably certain that the real estate transfer tax will be going from 2% to 8% going forward, starting in 2021. For our existing portfolio, it has limited impact. Again, we're a holder for perpetuity, so we wouldn't envision having tax liabilities on our balance sheet or anything like that. For the acquisitions, it is an increased cost that will be reflected in our underwriting. Whether or not the buyer absorbs it all or the seller absorbs some of it's difficult really to know. We will underwrite it.
It will be reflected in our cash flows and our anticipated yields, and we'll price accordingly. It is a near certainty that that tax change will be coming to pass as of January.
Do you expect any impact on cap rates?
There wasn't a noticeable impact on cap rates when they lowered it. Quite frankly, I don't see a meaningful push out of cap rates because of the incremental tax.
Okay. That makes sense. Maybe just lastly from me, maybe just a little bit more details on the Kairos Portfolio in terms of location and cap rate, if you can.
Yeah. It's six buildings. It's a seller that we know well, that we've bought from previously, so they're all in good condition. We think there's some real value add opportunities that we can do within that portfolio to drive the existing AMR on turnover. The going-in cap rate on that was around 3.9%, just under 3.9%.
Okay. Was this marketed or was this off-market?
It was a little bit of both. It was part of a broader portfolio, and then this sub-portfolio was taken out, and then we bought the sub-portfolio. I would say it was marketed.
Okay, great. Thank you guys very much. I'll turn it back.
Thank you. The next question is from Himanshu Gupta from Scotiabank. Your line is open. Please go ahead.
Thank you and good morning, everyone.
Morning, Himanshu.
Just staying on the Kairos portfolio. 87% of the suites are liberalized. What kind of rent growths are you underwriting on this property? In general, has the rent growth expectations for liberalized properties changed due to COVID?
If you look at our turnover numbers for, I guess if you wanted to look at Q3, the turnover that we're getting on the liberalized suites, the turnover uplift has still been quite positive, pretty much in line with last year. Again, we are not seeing any negative impact in our ability to take suites that are turning over, either on the regulated side or the liberalized side, to take them to market. We're doing even better on the regulated suites as well. The Kairos portfolio, we do believe that there is embedded growth there. We think that it would be overall accretive to the growth of the portfolio that we've been seeing so far.
Got it. Okay. Overall portfolio occupancy, it was slightly down on a sequential basis. What led to the change? I noticed there were more suites under renovation than the last quarter. Is that the main reason there? In general, what has been the COVID impact on the leasing demand?
Yeah, honestly, I think last quarter was 98.2%, and this time it's 98.8%, now it's 98.4%. Again, to me, that's not a meaningful movement. Again, it could be at any point in time where we had a little bit more turnover. We've taken something offline. Again, I think 60% of the vacancy right now currently is attributed to stuff offline for CapEx. Again, we've not seen a material impact yet on our collections or on our occupancy different from COVID. Again, I don't want to sound too confident because COVID is still here. Year to date, and certainly, post Q1, our collections have been very consistent. Our occupancy has been very consistent, less than 2%. Of course, there's going to be some movement there. Turnover is not a straight line scale.
Again, taking things offline for CapEx measures as well, which, again, we would have taken fewer things offline when we were in phase I of COVID because we weren't able to address them immediately. Now, even though they've re-implemented some of the measures, construction and CapEx works and those things can still progress under the current restrictions.
Absolutely. In terms of leasing trends, is there any indication in the Netherlands for residents to prefer single-family over multi-family apartments because of COVID? Just curious, what % of your portfolio is townhouses or single-family versus the traditional multi-family product?
Just under 25% is single-family houses. You've seen them in Montreal. They're not necessarily standalone single-family houses that you would see in Canada or the U.S., but they are single-family houses, single parcels. Oftentimes they're connected, row houses or terrace houses. We also have some very much standalone houses as well. About 25% of our portfolio is what we call single-family houses versus multi-family units. Again, we've not seen a noticeable movement toward that dynamic versus our multi-family units. Again, when we're running at vacancy rates of less than 2%, there's not a lot of choice to be made there. It's demonstrating that all of our product is still holding up and being very defensive of both asset subclasses.
Sure. Thank you for the color. Maybe just on the IFRS valuation, I think there were some fair value gains recorded this quarter. Was it only cap rate adjustments, or did you change your overall NOI growth assumptions as well on the portfolio?
Yeah.
Yeah.
Oh, sorry, go ahead.
Go ahead. No, go ahead, Stephen. Go ahead.
Okay. Yeah. The investment properties did increase, and the majority of it has to do with some assumptions in terms of the increases in stabilized residential NOI. We did see a bit of cap rate compression, but otherwise, it was mainly driven by the assumptions at NOI.
Got you. Maybe just the last question from me. Phillip, you mentioned in terms of pipeline, you have looked at, I think if I got it correct, EUR 700 million of products, almost 3,000 units. Just wondering, who are these seller groups now, and have you seen any distressed sellers or any motivated sellers because of COVID, or is it nothing much has changed in terms of the demand and supply dynamics?
Sure. Just going back to the valuation question and what Stephen was saying about NOI. Even in the context of COVID, we still see and expect going into next year to get very meaningful top-line growth coming through and maintaining, as Stephen said, what we anticipate to be our solid NOI margin. We definitely see NOI growth, and we see that translating into earnings or FFO growth probably in the high single digits. Again, it is challenging times, but the portfolio is holding up, and we're still optimistic about the way it's going to perform going into next year.
Sure
coming back to your question, there is not distressed selling. There is a high amount of volume. I think a lot of that volume is perhaps some of the processes were slowed or delayed due to COVID. I think there's probably also some people that are trying to sell some product too before the tax change comes in, I think it was Kyle mentioned. There's not distressed pricing out there. I think if anything, this asset class is proving exactly what people anticipated, that it's very defensive, but yet still offers objective and subjective attractive top-line growth. There are buyers out there, including ourselves. There's a high volume, there's other competitors, but we certainly are confident that we will get our fair share of that pipeline applying our underwriting rigor.
Sure. Maybe just the, sorry, the last ones from me. How should we model income taxes for the next year? When do you plan to put permanent financing on the Kairos Portfolio, and what kind of interest rates are you expecting?
Maybe I'll just address the income tax side. Just in terms of we do expect probably higher income taxes compared to the current year, just because the tax depreciation deduction that we arrive at taxable income is a function of the municipal tax value. A lot of the properties have increased quite a bit since we acquired it. A lot of the tax depreciation that we would've been able to utilize in the past, we'll likely not be able to do that in the future.
We do see tax line income going up. However, in terms of when we look at effective tax rate, it's still very low compared to the rate that we pay in the Netherlands. We are looking at ways to reduce income tax expense.
What do you expect the effective tax rate to be approximately, Stephen? What's the range?
Yeah, I think it's around 5%-8%, is what we expect.
Sure. Thank you. Anything on the permanent financing on Kairos?
Scott?
Yeah, that's going to be a source of financing in the very near term, I would say. Like Phillip mentioned, we can do debt close to 1%, depending on duration. We're kind of targeting the four-year term, just given our maturity profile. We are actively talking to lenders right now, and the pricing is very strong.
Awesome. Thank you.
That would include the Doorwerth asset and the Kairos asset, Himanshu .
Okay. Sure. Thank you for all the color. I'll turn it back.
Thank you. Once again, please press star one on your device keypad if you have a question. There are no further question registered at this time. I would now like to turn the meeting back over to Mr. Burns.
Again, thank you all for joining us this morning. If you have any further questions, please do not hesitate to contact any of us at any time. Thank you again, and goodbye.
Thank you. The conference has now ended. Please disconnect your lines at this time. Thank you for your participation.