Good morning, and welcome to the H&R Real Estate Investment Trust 2019 first quarter earnings conference call. Before beginning the call, H&R would like to remind listeners that certain statements, which may include predictions, conclusions, forecasts, or projections in the remarks that follow may contain forward-looking information, which reflect the current expectations of management regarding future events and performance, and speak only as of today's date. Forward-looking information requires management to make assumptions or rely on certain material factors and is subject to inherent risks and uncertainties, and actual results could differ materially from the statements in these forward-looking information.
In discussing H&R's financial and operating performance, and in responding to your questions, we may reference certain financial measures which do not have any meaning recognized or standardized under the IFRS or Canadian generally accepted accounting principles and are therefore unlikely to be comparable or similar measures presented by other reporting issuers. Non-GAAP measures should not be considered as alternatives to net income or comparable metrics determined in according with IFRS as indicators of H&R's performance, liquidity, cash flows, and profitability. H&R's management uses these measures to aid in assessing the REIT's underlying performance and provides these additional measures so that investors can do the same.
Additional information about the material factors, assumptions, risks, and uncertainties that could cause actual results to differ materially from the statements in these forward-looking information and the material factors or assumptions that may have been applied in making such statements, together with details on H&R's use of Non-GAAP financial measures, are described in more detail in H&R's public filings which can be found on our website at www.SEDAR.com. I would like to introduce Mr. Hofstedter, Chief Executive Officer of H&R REIT. Please go ahead, Mr. Hofstedter.
Thank you for joining us here today. Good morning, everybody. I'm Tom Hofstedter, CEO of the REIT, and I'd like to welcome everyone. Larry will give you a high-level summary of the quarter results as customary, followed by Pat, who will give you an update on Primaris, and then it's over to Philippe, who will give you an update on the Lantower portfolio. Here are the highlights for the first quarter. Firstly, we completed significant lease extensions in our core office portfolio, including the tenure extensions with our second-largest tenant, Bell Canada. We are quite pleased that these extensions incorporated rents that are now at market, annual contractual rental increases, and three, a significant commitment to these properties extending the average remaining lease term to over 16 years. We also extended our leases with AltaLink in Calgary to 20 years and with use of contractual rent steps every three years.
Following these extensions, the average remaining lease term for our Calgary office portfolio is now 17.7 years. This portfolio is now 100% leased to 3 investment-grade tenants with the next lease maturity not until 2031. A little color on why we did the lease extensions. As we know, it's customary in the Canadian marketplace, the contractual rental increases occur every five years and are really a reflection of what's going on in inflation in the world at that point in time. Going back to the Bell deals were written around 17 years ago. At that point in time, inflation was significantly higher. Our bumps equated to around 20%-25%, resulting in the Bell rents being above market.
To remove risk with the tenant, not necessarily not renewing the space, but not renewing all of the space and bringing the rents down to market, and more importantly, being able to finance these assets. We actually always do lease extensions early on in time to bring down the rents, give the tenant some relief in that regard, and get surety of tenancy term through the lease extensions. This obviously increases the NAV, decreases the NOI, and decreases the cap rate. The net effect on NAV is usually not material. It gives us the security of tenancy, and it also gives us the ability to go ahead and do long-term financing and allows us to sell assets at any point in time in the near future, as there is sufficient lease term. This is customary in our portfolio.
In almost all markets, we find that the contractual rental increases over time increases the actual net effect of rental rates achieved, and therefore, we always go for long-term leases. We've been doing that for over 20 years, and that's been our style, and that has proven in the results. Right now, Toronto is going through a boom. Beforehand, Calgary went through a boom. Obviously, there's cycles. At this point in time, the rental rates in Canada exceed the market rates for, that we are rolling the assets on other than suburbans. With suburbans, it's reversed. If you look at any portfolio over a long period of time, you'll notice that there always will be, by definition, above-market rents and below-market rents. Our Two Gotham office building leased in New York City Department of Health is right now below market. Our Hess is above market.
Our Sony building in Culver City, California, is below market. You have to look at the weighted average of the lease terms and the weighted average of the rental rates to arrive at the, which is what we actually report on our numbers to actually arrive at what the proper average rental rate should be. By definition, it's impossible that all rental rates will be below or above market at any point in time as in the long-term lease. Moving on to developments. This quarter, we transferred our flagship Jackson Park development in Long Island City to operations with the project now at 75% leased. This development is on track to deliver a 6.2% yield on cost, significant NAV accretion, and what we expect will be attractive growth over time.
Our next large-scale development is River Landing in Miami, which was recently topped off, with occupancy to commence this time next year. The retail component of River Landing is over 60% pre-leased, with strong demand for the remaining 132,000 square feet. With the ICSC Las Vegas Convention coming this weekend, it should be a very busy weekend. We have advanced discussions underway on the remaining 136,000 square feet of office and are confident in the lease-up prior to construction completion. Finally, within our development portfolio, we are proceeding with the development of 526,000 square feet of new industrial space in the Caledon sub-market of the GTA, with construction starting next month. Ultimately, to be followed by an additional 2.2 million square feet on the remaining portion of these lands.
We expect to achieve net rental rates for the first five years of the term of approximately CAD 8 a square foot, the project should be providing us with very attractive yields based upon our historical land costs. Last Thursday, we announced the sale of The Atrium, taking advantage of tremendous demand for office property at a sale price of over CAD 600 per square foot. This is approximately 80% above the price we acquired for it eight years ago. The sale reflects a number of factors. One, strong demand for Toronto office assets, significant near-term capital requirements of The Atrium, medium-term tenant turnover and repositioning costs, more attractive returns on our other development projects, and our commitments to our industry-leading balance sheet. Last quarter, we outlined our plans for 2019 in a letter to unitholders, including exploring opportunities within our portfolio to service value through redevelopment and intensifications.
We've made progress on advancing our understanding of several of these opportunities, including a number within the 1.7 million square foot downtown Toronto office portfolio we continue to own, as well as Dufferin Mall, among others. We look forward to sharing more details on these opportunities as we advance these projects. In conclusion, I'd like to reiterate our commitment to streamlining and simplifying our portfolio, raising the internal growth profile of our portfolio, and enhancing the profile of H&R to its unitholders. We're highly focused on maximizing FFO and NAV per unit for H&R unitholders and are working towards continuing on the progress H&R has achieved in this regard in 2019 and beyond. I'll now hand it over to Pat.
Not me.
Okay, I want to hand it over to Pat.
Thanks so much, Tom. Good morning, everyone. I will give a really brief overview of our Q1 results. FFO on a fully diluted basis was CAD 0.46 per unit, compared to CAD 0.44 in Q1 of 2018. CAD 5.2 million of lease termination fees and adjustments to straight lining of rent were included in 2019 results, compared to CAD 800,000 included in Q1 2018. Excluding these items, normalized FFO would've been CAD 0.44 per unit in both periods. During the 15 months ended March 31st, 2019, we sold CAD 1.1 billion worth of property, compared to CAD 460 million of acquisitions. Considering these net asset dispositions, having no slippage in FFO per unit is quite an achievement. Part of our proceeds from the asset dispositions have been used to fund our development pipeline, which will be a source of significant growth in profit operating income and FFO in the next few years.
On a same-asset cash basis, Q1 2019 property operating income from Canada was up 4.3% over Q1 2018. On a same-asset cash basis, Q1 property operating income, 2019, in the U.S. and local currency was up 2.8% over Q1 2018. These increases in same-asset property operating income are a testament to our capital recycling program to sell assets with low growth potential and replace them with assets that have higher growth potential. Same-property operating income, cash basis in our office segment increased by 7.2%. Excluding the lease termination, this increase would've been 1%. The lease termination fee received of CAD 6 million was from an office tenant who will continue to occupy and pay rent until February 2021. Same-asset property operating income on a cash basis from our industrial division increased by 3.3%, primarily due to higher rents in the Canadian portfolio.
I'll now turn the call over to Pat to give an update on our retail division.
Thank you. Good morning. Same-property NOI for the retail segment increased 3.5% during the first quarter. 4.5% excluding lease termination fees. Grocery-anchored properties within the portfolio, which accounts for approximately 29% of the retail portfolio, as measured by same-asset property income, generated 15.3% growth in the first quarter. Enclosed malls, which account for 54% of the retail portfolio, post a modest decline in NOI during the first quarter. A gain of 1.5%, excluding lease termination fees. Subsequent to the end of the first quarter, we completed a transaction to sell a small retail plaza in Calgary, anchored by Staples. We will continue to prune the retail portfolio through disposition of retail assets that provide limited rental growth potential. Our overall occupancy rate in the retail portfolio for the first quarter was 88.8%, which is lower than the 91.2% recorded in the first quarter of 2018.
Occupancy was negatively impacted by the enclosed mall portfolio due to Target redevelopment at Sunridge, where the premises had been occupied by a temporary tenant for the past two years, as well as the redevelopment of the former Safeway at Sherwood Park Mall. Including tenants committed but not yet open, occupancy rises to 92%. Redevelopment of former Target locations is essentially completed. Seven tenants operating from an area exceeding 100,000 square feet are due to open at Sunridge this fall. This will drive incremental revenue growth throughout 2020. With respect to Sears, at the end of the first quarter, we had committed and conditional transactions in place representing approximately CAD 3.6 million in annual base rent at H&R share. Just over 50% of our anticipated total rents upon completion. Sears had paid annual base rent of CAD 2.3 million at H&R share.
We are being selective with replacement tenants, focusing on those tenants that are prepared to pay market rents and enhance our merchandise mix.
Several of our redevelopment plans include partial demolition of Sears and the addition of outparcel developments. We expect rental income from these redevelopment projects to start in Q4 2019, with substantial completion of all projects in late 2021. At Dufferin Mall, we have held several public consultation meetings regarding our preliminary plans to add approximately 1,000 residential units to the property. We expect to make our formal application to the city this summer. Sales productivity in the portfolio was down 1.6% on a same-store basis. 1.7% on an all-store basis. Approximately 70% of the decline in all store sales is tied to significant sales declines posted by one travel agent at Dufferin Mall and two travel agencies at Place D'Orleans, as well as the closure of a local electronics store at Dufferin Mall and four tenants expanding from a small-sized CRU and being reclassified as large non-majors.
By way of example, Shoppers Drug Mart, who have been contributing significant sales at a higher productivity level than the mall sales at Park Place Shopping Center, expanded to a size greater than 15,000 square feet. As such, they are no longer reflected in same and all-store productivity figures. On a same-store basis, softness in the electronics and jewelry category, combined with the loss in contribution from the electronic store at Dufferin and declining sales from travel agency previously noted, were the primary drivers behind the decline. Nevertheless, portfolio same-store sales remained strong at CAD 561 per square foot, and we continue to realize strong tenant demand for space within our properties. Thank you, and I'll now turn it over to Philippe.
Good morning, everyone. Pleased to be on this call today to share the latest news from Lantower Residential. As mentioned last quarter, we closed on Lantower Waverly in Charlotte, North Carolina, marking our first acquisition in the Charlotte market. Built in 2016, Lantower Waverly is a 375-unit Class A development in one of the most affluent submarkets in Charlotte, characterized by high-income households and A-rated public schools. Lantower Waverly is located within the Waverly mixed-use development with walkability to a Whole Foods Market. On the portfolio front, Lantower Residential's portfolio consists of 7,271 apartments across 22 properties when excluding Jackson Park. To include Jackson Park, our portfolio consists of 8,207 units across 23 properties.
As we continue to actively monitor our portfolio, we are paying specific attention to our assets of older vintage that may have matured in a respective investment life cycle to strategically determine which properties should be sold while reinvesting the proceeds into newer and better assets. This portfolio reallocation should enable, one, the outperformance of our projected financial returns, and second, the replacement of older assets with increasing CapEx requirements into more recently constructed properties, thus successfully further improving one of the newest portfolios within our sector. As mentioned in previous quarters, our reported Q1 occupancy is artificially lower due to the inclusion of the lease-ups of Ambrosio and Edgewater in Austin and Bullhouse and Western Corners in Raleigh, Durham. Excluding the impact of these lease-ups, our portfolio's occupancy was over 93% at the end of the first quarter.
In 2019 and the first half of 2020, many of Lantower's target markets will experience peak apartment deliveries. In anticipation of these deliveries, Lantower constructed a program at the end of 2018 to reduce further tenant turnover and maintain high occupancy throughout the peak delivery seasons by incentivizing our leasing staff and prospective residents to enter into 18-month and two-year leases. We are delighted with the results thus far, as we have secured over 650 long-term leases year to date across Lantower portfolio. Despite a nominal upfront cost in the tenant concessions and leasing incentives, we believe the program will yield higher and more stable property NOI over the next 18 to 24 months through a reduction of future concessions and locator expense, in addition to lower turnover repairs and maintenance and vacancy costs.
We have always managed to NOI, and we believe that this initiative will lead to NOI outperformance in 2020 in comparison to our peer set. As such, this strategic program will be tested in the first two quarters of 2019, and we will closely monitor its efficacy. Following the management takeover of our Raleigh, Durham portfolio, Lantower's property management division, Lantower Luxury Living, now manages over 95% of our portfolio and will manage the entire portfolio by the end of the second quarter. The expansion of the luxury platform has enabled us to recruit the very best on-site personnel, increase recruiting reach, and consequently, we believe that this will manifest itself through higher operational efficiencies and higher NOI growth. An update on Long Island City. Construction at Jackson Park has been progressing as scheduled, and the project is substantially complete, with all units turned over to the leasing staff.
Leasing velocity was very strong over the first quarter, bringing total occupancy across the three towers to over 75%. All amenity spaces, including the 1.6-acre park, are now open to residents. Stabilized occupancy is still expected in the third quarter 2019. With that, I will pass along the conversation back to Tom.
Thanks, Philippe. We will open up the lines for questions.
At this time, if you would like to ask a question, please press star followed by the number one on your telephone keypad. Your first question comes from the line of Sam Damiani with TD Securities. Your line is open.
Thanks. Good morning. Just on the Caledon development, Tom, do you have any pre-leasing traction on those first three buildings so far? I was wondering also about the cost you've disclosed. Does that include a land allocation or not?
The answer is it does include land allocation. We are in discussions right now with one tenant for the largest building.
We're very confident on the pre-lease. Obviously the stats for industrial development charts are great right now. We think we'll be able to achieve an 8% overlay.
Sorry, did you say it did include a land cost allocation?
Yes.
Okay.
Yes.
Thank you. Just over to leverage. The sale of Atrium clearly is a significant transaction for the REIT in many respects. I think last quarter you may have mentioned a sort of longer-term, mid-40s leverage target. Is that still what you're thinking today, over the next couple of years?
The answer, I think, is yes. We haven't changed our opinion on leverage for many years right now. A sale like this is obviously going to bring it down again. Depending on our stock price, we'll raise equity amounts. Mid-40s, we're very comfortable at.
Okay. Finally, just over to Philippe on the new strategy of executing these longer-term leases. I think you said 650 leases executed to date. That seems like a pretty strong take-up in about the six months that you've been doing this. What sort of rent concession have you been giving up to achieve those longer-term leases, and are you pleased with the results so far?
Yeah, no, we're more than pleased with the results. I look forward to obviously seeing the positive impact in 2020 as these leases were supposed to turn over, and obviously they won't, so we benefit from the longer term.
Right.
I think that, candidly, 650 units is slightly less than 9% of our total leases, we still have 91% of our rent roll that's not under this long-term plan. That's still subject to any rental growth that we'll experience in our respective markets. As it relates to your specific question as to what the costs were, candidly, they were quite negligible. If we're offering a concession, we're probably adding CAD 200 on top of it. We spent a little bit more money in training and incentivizing the staff. I don't have the stats in front of me, but if I were to guess, my guess is there was a great deal of money that was spent on training our leasing agents to essentially offer 18- to 24-month leases.
If there was any recall from the tenant, to cycle back to 12 months. We were surprised to see how little opposition there was on behalf of the tenants to accept a 24-month lease, almost at the same conditions and same advantage. For us, obviously, there's a tremendous advantage of obviously keeping a tenant for 24 months rather than losing them after 12 months. To the extent that we kept those costs low, knock on wood, but ultimately, we're very happy with the results and very optimistic as to what it means to our NOI in the future.
Right. Does the same-store NOI growth within Lantower likely improve over the course of 2019? It was fairly flat, I think, in Q1.
Yeah, I think one of the main reasons it was lower is because of the impairment due to the strategy, right? We took all of these costs quite upfront, whether it's an increase in our labor costs through training our staff or giving them some sort of incentive or increasing on the upfront concessions that we're giving to tenants. I would strongly suspect that maybe Q2 we get into a little bit better in that we decided to expand this program in Q1 and Q2 of 2019. Maybe your question is Q3, Q4, I would expect some healthy quarter-over-quarter growth. Absolutely.
Okay.
Obviously.
Sorry.
Sorry, go ahead.
No, go ahead.
No, I was going to say, and then obviously that holds true for the first and second quarter of next year as we see the benefit of what we're trying to do now.
Right. Are you implementing this across all your markets outside Long Island City?
I'm sorry, what was the question?
Are you implementing this strategy in all your markets outside Long Island City?
Yeah, no, we implement it across the board, but I would tell you that there were some markets that. At the end of the day, this is a defensive play versus supply, temporary supply. I would say that the bulk of this program was spent probably in Texas.
Thank you.
Again, to ask a question, that is star one on your telephone keypad. Your next question comes from the line of Mario Saric with Scotiabank. Your line is open.
Hi. Thank you. Good morning. Just maybe sticking to Lantower and the strategic initiative to extend the leases. Of the 650 leases that were done to date, can you give us a sense in terms of what the success rate has been?
Mario, can you please speak up? We're having a hard time hearing you.
Okay. I want to focus on Lantower and specifically the strategic initiatives. Of the 650 leases that have been done to date in terms of the longer lease term, what kind of success rate is that? Is it 50% of the tenants that are signing on, 75%?
That's a good question. I think I know the number, candidly, I'd rather double-check and then send you it offline. If I were to guess, I'd probably say maybe a quarter, roughly around 30%.
Okay. Can you give us a sense of what the turnover rate in the portfolio is today versus what you would expect it to be with this initiative once stabilized?
I think a good rule of thumb for turnover in multifamily is somewhere between, let's say, 40% and 50%. I think, not to seem anecdotal, if you're talking about Dallas or Austin or a market that's submerged with a ton of supply, obviously that number's going to uptick. Candidly, if we can stay well below 50% in those respective markets, obviously the strategy will have been quite successful.
Yeah. Okay. Just maybe shifting gears to capital recycling
As mentioned earlier, you were getting a lot of net proceeds from the Atrium, about CAD 385 million. You referenced kind of a lower leverage performance sale an attractive CAD 1.6 billion development pipeline. How would you rank the priorities of the redeployment of that CAD 385 million over the next 12 months?
Well, initially Morning, Mario. Initially, it will be used as a way to pay back our bank loans. As we proceed with the developments, we'll be funding our developments.
Yeah, don't forget, we have half of it in a VTB, right?
It's due on January the 2nd. We'll use the first tranche to pay off debentures and debt. January 2nd, we'll have more debt rolling, and our development pipeline.
Okay. Can you give us a rough sense of how much capital was put into the Atrium post your 2011 acquisition?
Sorry, I don't have that number on hand.
It's not significant, though. Don't tell that to the tenants.
Okay. That's it for me. Thank you.
Your next question comes from the line of Michael Markidis with Desjardins. Your line is open.
Hi. Good morning, everybody. Philippe, just on the Lantower, I just want to make sure I understand. The upfront costs were training, so that's understandable. I'm just trying to get a sense of, you're also offering concessions to the tenants, and I would assume that hits your revenue line, and you've got 9% of your rent roll sort of under the long-term lease structure today. Given that you're going to be trying to convert more and more and you got higher incentives coming in in the middle of this year, how does the healthy growth return?
Okay. I guess there's several questions baked into that. Initially, at the end of the day, what we think is we ultimately manage NOI, right? We book some of these expenses, some are expenses, some of them are booked to revenue. No two groups book it the same. Some groups will book concessions to expenses and will show higher revenue growth but a lower NOI number. What we find simpler is just to stick to NOI, and that's our management philosophy is we want to see NOI growth. As it relates to where we stand, we're taking a small hit on NOI, as evidenced by our muted growth for this quarter on a quarter-over-quarter basis.
Candidly, going forward, the costs, like I said, the turnover cost, the R&M of just having the turnover cost, the vacancy cost, the having to pay another locator in a system locator market, having to pay a tenant concession in addition to a leasing staff, a leasing bonus. If all that goes away in the first quarter of 2020 and the second quarter of 2020, you're going to see very significant NOI growth on a quarter-over-quarter basis. I suspect that if we fast-forward 12 months and we look back today, my guess is many people will have elected to take muted Q1 2019 growth for outperformance in the first quarter of 2020.
Got you. Okay. The 2020, I get. I was just really more thinking about just what the rest of 2019 looks like as you continue to implement the program.
Yeah. I think that candidly, there may be a little bit of confusion that people tend to focus too much on revenue growth from quarter-over-quarter. Candidly, what's revenue growth if you're giving everything away in an expense and it dings your NOI?
Okay. If you were to think about your same property pool for 2019 and 2020, ballpark-ish, what kind of growth rate should we be thinking about on a same property basis?
To be honest, that's a good question. I'd have to go back to my estimates. We would probably have thought that this program probably dinged or impaired our NOI by 200 basis points, roughly. Had we not gone through the strategy and not been strategic as to how we see future supply hitting our markets, we'd probably have been in excess of 2%. That's just ballpark. My guess is probably higher than that, but definitely not lower. As such, that's what I would expect probably in the third and fourth quarter as we peel off of this long-term program.
Got you. Okay. Just going back, Larry, on the CAD 6 million lease termination payment that you had there, and I guess it carries the lease now terminates in 2021. Are you able to tell us what building that relates to?
I think so. 649 North Service Road, Burlington.
Okay.
Single 10 office building occupied by WESCAM. They're building a new building in Hamilton for their use.
Okay. Thank you. Sorry, not Larry. Tom, certainly appreciate your commentary on the leases being above market, some leases being below market across the portfolio at any given time. You don't publish it, some of your peers do, but would you have a sense of where your in-place versus market rents for your office portfolio would be today?
I could not tell you. It'd be impossible for me to give you that number off the top of my head.
Okay. That's it for me. I'll turn it back. Thank you.
Your next question comes from the line of Matt Kornack with National Bank Financial. Your line is open.
Good morning, guys. Philippe, with regards to the other assets that make up, I think it said CAD 36.5 million of residential income. Obviously, a portion of that is Jackson Park, but I think there's around $9.5 million in other assets. Are you rolling out your strategy in the lease-up assets as well? How should we think about that income coming online?
I think that candidly, we'd love to roll it out to a new lease-up. However, on the lease-ups, we're not offering any concessions.
Right.
Sorry. I should say not any more concessions than we'd already be offering on a lease-up. If a tenant comes in and says, "I'd rather have an 18-month lease or 24-month lease," and it's in a market where we believe supply is coming, absolutely, we'll do it. We would not be offering anything above and beyond that, apart in very small exceptions. To be candid, we're really excited about this. We thought that, candidly, we didn't know what the appetite for this would be. We thought that if we landed with 2% or 3% of a rent roll, it would be too insignificant to have a material impact in 2020. We were really optimistic and very happy once we saw that there was a 9% bite.
I think there's probably an element to this that is lost on some is, the impact on the on-site team of having higher occupancy and lower turnover allows them to spend more time, either from a leasing perspective, nurturing their tenants, improving the social media platform, the social media reputation, its positioning in the market. From the maintenance staff, who's now running around trying to deal with so many make-readies and vacant units, they can spend time doing things that just keep getting pushed down to their to-do list and taking care of the assets, whereas they may not have the time to get to it in a normalized rental situation.
I truly believe, for a variety of reasons, that candidly, we absolutely are delighted by the fact that we're taking a hit in this quarter, next quarter, for all the benefit that we're going to see in 2020.
With regards to lease-up at assets undergoing lease-up, are those tracking in line with expectation given new supply in some sub-markets?
Yeah. We're either tracking or exceeding. Our property in North Carolina, Western Corners, is doing spectacular. Our lease-ups in Austin are doing phenomenal. We've been doing great. We're very happy. Candidly, a lot of the credit goes to our team in Dallas. We have an incredible portfolio management team. We've got an incredible on-site management team. They get it, and that's why we're outperforming our peers in our lease-ups.
Okay. Larry Froom, can you let us know how to think about FFO contribution from River Landing and from the industrial development in Caledon in 2020? I know with Jackson Park, there's a period of downtime before you get the upside. Should we think of it as a net neutral to 2020 at this point? Or no additional FFO?
The construction only completes in 2020, then there's still the residential lease-up that has to occur after that. It'll be a time of lease-up for residential.
In 2020, there'll be minimal, Matt. 2021.
Okay. 2021.
Yeah.
No, that's fair. I don't think we have anything in our numbers at this point.
As we get closer to that time, we'll be putting out guidance for you.
Okay, perfect. Thanks, guys.
There are no further questions in queue at this time. I turn the conference back over to our presenters.
Thank you, everybody, and we'll speak again next quarter. Have a nice summer. Bye.
This concludes today's conference call. You may now disconnect.