Greetings, and welcome to the National Retail Properties first quarter 2018 operating results. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jay Whitehurst, Chief Executive Officer for National Retail Properties. Thank you, Mr. Whitehurst. You may begin.
Thanks, Doug. Good morning and welcome to the National Retail Properties first quarter 2018 earnings call. Joining me on this call is our Chief Financial Officer, Kevin Habicht. After some brief opening remarks, I'll turn the call over to Kevin to discuss our financial results in more detail. I'm pleased to report that National Retail Properties posted impressive results for the first quarter of 2018 in every aspect of our business. Based on this strong start to the year, we're increasing our guidance for 2018 Core FFO per share by $0.02 per share to $2.62-$2.66. At the midpoint, this equates to almost a 5% increase over actual 2017 Core FFO per share results.
As we've said many times, our business model is designed and executed to produce consistent mid-single digits per share growth on a multi-year basis, and we believe we're on track to continue that outstanding record in 2018. Perhaps the most notable highlight of our first quarter is the sale of a single property for almost $40 million at roughly a 2% cap rate. This is the disposition that we alluded to in last quarter's call, and it exemplifies our focus on acquiring good real estate, then actively managing our portfolio to maximize the value of each property. I want to acknowledge the efforts of our dispositions, asset management, and legal teams for their hard work and dedication in the execution of this important transaction, including particularly Paul Bayer, our Chief Investment Officer, and Eric Nelson, our Director of Dispositions.
This transaction, plus our other property sales in the first quarter, altogether totaling $72 million at a weighted average cap rate of 4%, validates our business plan to utilize dispositions as a source of capital when the equity markets are choppy. Combining capital from dispositions with our retained earnings and the ample dry powder provided by our low-leverage balance sheet, National Retail Properties is well-positioned to maintain our anticipated acquisition pace and otherwise address any opportunities or challenges we may encounter. During the first quarter of 2018, our broadly diversified portfolio of 2,800 single-tenant retail properties remained healthy with an occupancy rate above 99%. The primary lines of trade in our portfolio focus on customer services, customer experiences, and e-commerce-resistant consumer necessities with little exposure to apparel or other more mall-based concepts that are struggling and getting negative headlines.
Moreover, our top tenants continue to perform well in their respective businesses and grow their store count. During the quarter, 7-Eleven completed its acquisition of Sunoco's retail units, and 7-Eleven is now our top tenant with 152 properties spread across five states and comprising 6.2% of our total annual base rent. I want to point out that our 7-Eleven stores were initially leased to high-quality regional operators with which we did recurring sale-leaseback business. Our original tenants grew through expansion and consolidation, and our stores were ultimately acquired by 7-Eleven. Thus, we've ended up with leases to an investment-grade tenant, 7-Eleven, on terms materially better than would've been possible in a direct transaction with such a creditworthy company.
On the acquisition front, in the first quarter, we invested $177 million in 52 single-tenant retail properties at an initial cash cap rate of 6.7%, and with an average lease duration of just under 20 years. As usual, our primary strategic focus was on doing direct, recurring off-market business with relationship tenants, and that relationship business accounted for over 75% of our dollars invested in the first quarter. With a strong balance sheet and access to well-priced capital, a healthy portfolio, and a solid acquisition pipeline, National Retail Properties remains well-positioned to continue producing consistent mid-single-digits Core FFO per share growth on a multi-year basis. Let me now turn the call over to Kevin for his additional comments on our results.
Thanks, Jay. I'll start off as usual with the cautionary statement that we will make certain statements that may be considered to be forward-looking statements under federal securities law. The company's actual future results may differ significantly from the matters discussed in these forward-looking statements, and we may not release revisions to these forward-looking statements to reflect changes after the statements were made. Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the company's filings with the SEC and in this morning's press release. Headlines from this morning's press release report record quarterly results of $0.67 per share for the first quarter of 2018, which represents an 11.7% increase over prior year results, and a 6.3% increase over the immediately preceding fourth quarter of 2017.
A solid start to the year, which positions us to increase our Core FFO guidance by $0.02 per share to $2.62-$2.66 per share for 2018, which is a 5% increase over 2017 results. We're optimistic 2018 will be a continuation of our mid-single-digit per share multi-year growth goal, while maintaining a strong and liquid balance sheet and not relying on large amounts of short-term and/or floating rate debt. Our AFFO dividend payout ratio was 70.9% for the first quarter. Occupancy ticked up 10 basis points to 99.2% at March 31st. I will note as the leases on 20 SunTrust properties expire April 1, the occupancy is expected to tick down a bit in the second quarter, but that's all fully baked into our guidance.
We continue to drive additional operating efficiencies with G&A expense decreasing to 5.7% of revenues for the first quarter of 2018, that's compared to 6.3% a year ago and compared with 5.8% in the immediately preceding fourth quarter. For purposes of modeling 2018's results, the annual base rent in place for all leases as of March 31, 2018, was $594 million. This allows you to take some of the guesswork or estimation out of the timing of Q1 acquisitions and dispositions as you think about 2018 projections. As I mentioned, we did increase our 2018 Core FFO guidance by $0.02 per share, implying 5% growth in annual results. The only change in the guidance assumptions on page six of our press release was the $20 million increase in disposition volume to $100 million-$140 million for the year.
During the first quarter of 2018, we did not issue any common equity via our ATM equity program. However, the combination of our retained AFFO of $30.1 million, that's after all dividend payments, plus the $71.6 million of disposition proceeds, provided 58% of the $177 million invested in new acquisitions, allowing us to maintain a leverage-neutral posture while still growing first quarter results versus fourth quarter 2017 results. We ended the first quarter with only $176 million outstanding on our bank line, leaving $724 million of availability. We've not been big users of that short-term variable rate part of our capital stack for many years. We remain very well-positioned from a liquidity perspective and a leverage position. With the exception of our bank line, all of our outstanding debt is fixed rate.
Our balance sheet remains in good position to fund future acquisitions and weather potential economic and capital market turmoil. Looking at the quarter-end leverage metrics, debt to gross book assets was 35.5%, nearly unchanged from 12/31/2017 numbers. As you know, we've never managed our balance sheet around market cap-based leverage metrics. More relevant, we believe, is debt to EBITDA was 4.9 times at March 31st, and that compares with 4.9 times for the fourth quarter of 2017 as well. Interest coverage was 5.1 times for the first quarter of 2018, and fixed charge coverage was 3.8 times for the first quarter. Only five of our 2,800 properties are encumbered by mortgages totaling only $13 million. In closing, I'll note that 2017 7% increase in Core FFO per share results follows 2016 6% growth, and we believe 2018 will be another year of solid growth in operating results.
When sourcing capital and making capital allocation investment decisions, driving per share results on a multi-year basis is at the forefront of our minds, not volume nor size. With that, we will open it up for any questions, Doug.
Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. If you'd like to ask a question, you may press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Nick Joseph with Citi. Please proceed with your question.
Thanks. What's the latest update on your plans for the SunTrust properties?
Nick, hey, good morning. If you're talking about the now vacant SunTrust properties, as Kevin mentioned, we've disposed, resolved 11 of them. We've got another 10 that are pending. We don't want to count all those chickens yet, but we are just working our way through those vacant SunTrust properties in a timely fashion. Perhaps your question, Nick, was about the SunTrusts that have renewed, and those
80 SunTrust properties that we own, where the leases have been renewed for 12 years, remain excellent disposition fodder for future capital recycling. They didn't make up, I don't think, any of this first quarter's dispositions, but some of those properties we're marketing, and they're very good fodder to very accretively sell those properties and redeploy the capital into new acquisitions.
Thanks. What's the timing of potential resolution for the 10?
Our typical vacancies are in the nine to 12-month range. We've had time with these SunTrust, the vacant SunTrusts, to do a lot of marketing already. Job one is always to try to re-lease the properties. If we just don't feel like there's a good fit there, we will sell the properties. It's hard to say what the timing will be on these last units. It's really not very material. It's immaterial to our numbers at this point. Probably, I would expect that by the end of 2018, almost all of them will be resolved.
Thanks. Just, given the rise in interest rates, curious to hear your thoughts on the transaction market and any changes that you've seen over the last, call it six to nine months there.
Nick, cap rates have not moved upward at all for the types of properties that we are pursuing. It's still what we think of as a low cap rate environment out there for large regional and national non-investment grade operators, with good business and good real estate. That said, the low cap rate environment is also working on the positive side for us with our dispositions. It allows us to sell into that low cap rate market and redeploy the assets into our acquisitions, which are primarily driven from our relationships as opposed to being the highest bidder, lowest cap rate bidder, in a competitive marketed environment.
Thanks. Appreciate the color.
Thanks, Nick.
Our next question comes from the line of Brian Hawthorne with RBC Capital Markets. Please proceed with your question.
Hi. When you guys are selling a property, have you seen any change in the number of potential buyers?
Brian, no is the short answer to that question. Our properties are, on average, $2 million-$3 million. We had that one very big sale. Typically, we're selling $2 million, $3 million, $4 million, $5 million properties. The universe of buyers for those small single-tenant retail properties is huge and very aggressive. Right now, we think that one-off market is still very hot.
Okay. Are there any specific lines of trade that you're trying to, or you would like to buy more into?
We've got a broadly diversified portfolio right now, and our primary focus on our acquisitions is through building these recurring relationships with growing retailers. Our focus is less on line of trade and more on good real estate, regardless of the line of trade that's being operated on it, and then a good operator in that business. If you take the other end of your question, the convenience store industry is a very good, strong industry. We've got great relationships with good operators in that business, and we think that real estate is some of the best and safest in our portfolio. It's very fungible, and it's well-located at a good price. We like the real estate that underlies convenience stores. We like the industry, we build relationships with good operators.
That's kind of the way we focus on our acquisitions as opposed to kind of redlining any particular line of trade.
Okay. Thank you.
Our next question comes from the line of RJ Milligan with Robert W. Baird. Please proceed with your question.
Hey, good morning, guys. Jay, can you give a little bit more color on that $40 million disposition? What was the industry type and sort of the background behind that?
Sure. I can give some amount of color. We had a property that was leased to one of our tenants that had adjacent land as part of the overall lease, and that adjacent land was encumbered with a variety of restrictions. So the money that we spent in the previous quarter that we talked about on the last quarter's call, was to get that property, the adjacent vacant property, unencumbered. Then we sold the entire parcel, the leased property and the vacant property, to one buyer. There are a bunch of confidentiality agreements involving all that, RJ, so I can't go into a whole lot more detail than that. We got this vacant property cleaned up and then sold the whole piece to one buyer.
That's helpful. With that $40 million disposition, you guys were able to sell assets at a lower cap rate than where you were buying. Do you think that that's still a possibility going forward, even removing that one-off opportunity?
Yes, very much so. There's hundreds, if not thousands, of properties in our portfolio that would trade for cap rates lower than our average acquisition yields. The two particular tenants and property types to talk about in that vein are our SunTrust Bank branches that have been renewed. We have around 80 SunTrust branches that were renewed for 12-year terms not too long ago with SunTrust, and those trade in the fives and call it around a 6% cap rate in the one-off market. They are great fodder for recycling capital. Also, in my opening comments, we talked about 7-Eleven acquiring the Sunoco properties and becoming a bigger tenant for us. 7-Eleven convenience store properties also trade for very low cap rates, we've got opportunities there as well.
Beyond those two, we've got a lot of other opportunities in the portfolio to sell properties at lower cap rates and recycle into the business that we're doing with our relationship retailers and other properties that we find to buy out in the market.
That's helpful. I guess my last question, Jay, is a more general question on net lease. We've been hearing some tenants in the net lease space are looking to sign shorter lease duration leases, and I don't know if that's anything that you've noticed out there. Obviously, your acquisition average lease term this quarter was significantly longer, 20 years. Just curious if in sale-leaseback negotiations, if you're seeing a push for shorter lease durations.
RJ, I would say we're not seeing a significantly greater push than we always have. It is important to us when we are negotiating with our relationship retailers to try to get as long a lease term as we can, and we will trade some other things to get a longer term. A longer lease term is important to have. It is why we like the relationship business. It allows us to have that kind of broad range discussion with the retailer when you're negotiating the overall lease. I think what you're hearing in the market is not inconsistent with what I think a lot of other people are seeing, which is that more tenants are trying to keep their leases limited to 10 years or so when possible.
That's helpful. Thanks, guys.
Okay.
Our next question comes from the line of Collin Mings from Raymond James. Please proceed with your question.
Hey, good morning, guys.
Morning.
Just going back to RJ's question, just as far as dispositions. Just curious, are there any other hidden opportunities kind of embedded in the portfolio or things that you think about similar to kind of the unique one you executed on in 1Q?
Well, Collin, good morning. Not to be too facetious, but with 2,800 properties, I'm sure we've got some other hidden opportunities. I just think they're hidden. That improves our odds of having good things like this happen occasionally.
Okay, fair enough. Nothing else kind of in the pipeline currently, again, as you think about your strategy, you think it will lend itself to have other opportunities like this as you look at dispositions in the future? Is that fair?
You should definitely expect us to continue to be marketing and selling some of our lower cap rate properties to recycle back into acquisitions.
Okay. Then just recognizing your comments again about how broadly you look at acquisition opportunities, but again, looking at automotive service as an example here, that's something that's up sequentially and year-over-year as far as the exposure there. Can you just maybe talk a little bit more about the opportunities you've been sourcing there and just maybe the competition in that bucket, just given that category is just generally viewed as being less exposed to e-commerce?
Correct. There's competition in all the lines of trade where we're trying to grow our business, and we're just trying to build relationships with good operators in some of those more e-commerce resistant lines of trade. In this case, a lot of the auto service uptick has been with tire stores, and we've built some good relationships in those areas that have generated good risk-adjusted returns for us.
Okay.
Go ahead.
Just as it relates to the acquisition strategy, just curious, recognizing, again, a lot of relationship-based deals, but just certainty of close. How important is that as you, whether it be relationships or potentially new sources of acquisitions, is that in the current environment? While you haven't seen a change in cap rates in terms of the acquisition environment, have you seen kind of the sellers being drawn more to the certainty of close you guys offer?
Well, I can't say that we've seen the sellers be more drawn to it, but it is part of certainly the value proposition for dealing with National Retail Properties is that we have this great line of credit that allows us to close on things at any given time, and we don't have financing contingencies in our term sheets.
We don't have any partners in our ownership of the property. All of those components do often resonate well with some operators. Those are the folks that we end up forming long-term relationships with. Certainty of close. In choppy markets, certainty of being able to close is very valuable to the retailer, absolutely.
Okay. I appreciate the color. Thanks.
Our next question comes from the line of Vikram Malhotra with Morgan Stanley. Please proceed with your question. Vikram, your line is live. You have us on mute.
Yes.
Our next question comes from the line of Joshua Dennerlein with Bank of America Merrill Lynch. Please proceed with your question.
Hey, good morning, guys. Looking at your line of credit, any thoughts on terming that out yet? At what level would you start to think about that?
Hey, Josh, it's Kevin. That's definitely on our radar, and we've signaled that to some degree in our disclosures in the last quarter's 10-K, or the fourth quarter of 2017, where we noted that we had put in place two forward-starting swaps in connection with a potential issuance of long-term debt later in 2018. That's definitely on our radar. We've prided ourselves over a lack of usage of that line and still are using less than 20% of our line, compared to others who I think have been more reliant on that as a form of somewhat permanent capital. My benchmark is when the first digit starts with a two in the bank line balance, Kevin starts to get a little nervous. I don't think that will change much in 2018.
Most importantly, our goal is to continue to drive per share results on a leverage-neutral basis. We're working dispositions, et cetera, to make that happen. At some point, we'll pay down the bank line. For the last six consecutive years, we've operated with a weighted average bank line balance of under $100 million. Just to underline my point that we've not been big users of that credit facility to drive results, despite the fact it's available and very cheap.
Got it. Maybe on the opposite end of the spectrum on equity, how do you think about potentially reactivating the ATM and using that as a source of funds?
Yeah, it's a great program. We've used it for many years. We don't give guidance as it relates to specific capital market activity, I don't have a lot to tell you there. I will say last year, when we issued equity on the ATM, it was at an average price of $42 a share. We did not issue any in the first quarter of 2018. We understand we could issue equity at this price and still be accretive. Our issue has, over the years, and we've had many discussions with many of you on this call and investors, is that we just think our capital decisions need to be sufficiently accretive, not just accretive, but sufficiently accretive to make sense to do that.
The good news is we were able to make dispositions in the fourth quarter at about a 4% cap rate, which if you pencil through the math, creates an equivalent of selling stock at $70 a share in round numbers. We've attacked it at a slightly different angle in this environment, and we think we'll be able to continue to do that for a period of time.
Got it. Thank you.
Our next question comes from the line of John Massocca from Ladenburg Thalmann. Please proceed with your question.
Good morning, gentlemen.
Good morning, John.
If you look at your Sunoco plus your 7-Eleven exposure at the end of last quarter, it was 201 properties. That 7-Eleven exposure is now 152 properties. What happened to the balance, and how many of them ended up in that commission agent structure that Sunoco ended up forming in West Texas?
The balance of the properties remained Sunoco's. We've got 49, give or take, Sunoco stores that are about a little under 2% of our rent, 1.9% or something like that, of our rent. I think, John, it's around a dozen of our stores out in West Texas became part of that commission marketer acquisition of a bunch of stores from Sunoco.
The rest remain Sunoco-operated stores.
Okay.
John, let me just say also, we're really agnostic as to how all that comes out. They're both good operators, they're good credit, we own those properties at what we think are good prices and reasonable rents. We feel good about it no matter how it came out.
With those dozen or so that are in that commission agent structure, is Sunoco still the last, I guess, line of credit there, or is that transferred to whoever ended up taking over those properties?
No, Sunoco remained on the lease liability for all of those.
Okay. Makes sense. Then, you had a decline quarter-over-quarter in the amount of Camping World you had. It went from 46 to 40. What drove that?
We just sold a small portfolio of existing Camping World stores. We thought perhaps someone might ask about that. We did not sell any of the Gander Outdoors stores that Camping World has taken over from our former Gander Mountain locations. Those stores are still kind of getting ramped up. We had the opportunity to just sell a small portfolio of our existing Camping Worlds.
Okay. Then maybe, kind of the other side of the coin, you guys completed about 30% of the top end of your acquisition volume guidance in 1Q18. Understanding there's always kind of limited visibility in your business once you get more than a couple of quarters out, is there some reason you would expect the next three quarters to be less robust in terms of acquisitions versus what you did this quarter?
Well, John, just like Kevin said, he always worries when the line of credit starts with a two. We're always concerned that the acquisition volume in the unforeseeable future might dry up. There's nothing in particular in the environment that would kind of raise that concern for us. You just can't see very far ahead on your acquisition volume. Notwithstanding the high level of acquisitions that we do with our relationship tenants, even there, we still don't have a great feel for what their volume will be in any particular year.
There was nothing specific to this quarter in terms of a portfolio closing or something like that would've made this a particularly robust quarter?
No, nothing particular. It's just timing.
Okay. That's it for me. Thank you guys very much.
Thanks, John.
Our next question comes from the line of Todd Stender with Wells Fargo. Please proceed with your question.
Thanks. Just a quick one for Kevin. You spoke about the retained cash flow and disposition proceeds from Q1. Do you have a free cash flow estimate for the full year? Just as we model out potential for maybe no equity to be raised from the ATM, just looking at your free cash flow.
Yeah, it'll be around $110 million-$120 million for the year, is our estimate. That's an important source and plus dispositions.
Then from the dispositions, are there any mortgages on those assets that you potentially could sell? That's really-
No
everything free and clear
Yeah, no, everything's free and clear. We really barely have any mortgages at all. Only five properties in our 2,800 portfolio have mortgages on them. No. It's all pure proceeds, whatever we sell.
Okay. Thank you.
Thanks, Todd.
Our next question comes from the line of Michael Knott with Green Street Advisors. Please proceed with your question.
Hey, guys. Just wanted to ask you about how you're thinking about your cost of capital. It looks like you trade in kind of the mid 6% type implied cap rate range. Just curious how you're thinking about allocating the degree of capital that's in your guidance today, and how you're looking at that for the rest of the year.
Yeah. Thanks, Michael. It's an important question, we think. Our thought process in deploying capital hasn't changed materially because we really, despite the fact where our share price might be trading in, I think you said the mid 6s or low 6s, for equity, we tend to want to burden our cost of equity at a higher cost than that, regardless of that 6% kind of implied cap rate today. So we tend to think of our cost of equity as really costing us something closer to 8%+ and making those decisions. Then, we layer in the cost of long-term debt, as well as our preferred that's in our capital stack, and we end up getting to a weighted average cost of capital for purposes of making investment decisions in kind of the low 6% range.
You've not seen us do any transaction sub 6%. Frankly, I'm not sure we've done much below 6.5%. We view that as an important part of our philosophy and getting back to what I alluded to earlier, is driving sufficient accretion in capital that we deploy. We could make sub 6 cap
Acquisitions and still be accretive. I understand how the math works, we just don't think it's sufficiently accretive, and we think shareholders are expecting more than that. So are we. I think in terms of how we view our cost of capital today, we think of it as being in kind of the low 6% range for a weighted average cost of capital, including debt and preferred.
Right. Thanks. Certainly always appreciate the way you guys think about that. It sounds like you're still seeing a sufficient spread over your cost of capital to make value-accretive investments today.
Correct. Absolutely.
Kevin, can you just comment maybe a little bit more specifically on what caused you to increase the guidance for FFO a little bit? Was it the low cap rate sale? Was it something else? It looked like the depreciation per share was going up and the net income contribution was going down. Just curious on sort of what drove that.
Yeah. The disposition, the low cap rate dispositions in the first quarter. $72 million out of 4 cap, clearly was a piece of the puzzle for increasing the guidance, as well as just a little more visibility into 2018, three months more visibility, versus where we were a quarter ago. Really nothing notable in terms of the assumption changes to drive that, but just felt better about the assumptions behind all that. Felt comfortable, a fairly modest increase in the guidance.
Right. Okay, thanks. Last one for me would just be, just a little bit more color on the answer you gave earlier to the lease duration question. Does that have to do with sort of the pending accounting changes on the lease accounting side that I think are taking effect next year? What are you seeing there? Maybe a little bit more color.
Yeah, we don't think so. It's interesting. In our conversations and in our execution of transactions, that topic, despite the fact that you think it would be on the minds of a number of lessees, would come up, and it really does not. We have not seen the pending accounting change next year for leases change any conversation or change any behavior of our customers at this point. To be honest, I doubt it will. Most of the retailers in the U.S., including all the ones we do business with, lease many properties and lease many assets beyond real estate. They're going to have to deal with this accounting change, and it will make notable differences to their balance sheet.
Even if they all decided to change their behavior, the balance sheet change is already baked in. I think it's unlikely you're going to see them change their structure of leases going forward, I don't think. The rules, I don't think, are going to allow a material loophole to allow them to do that, to escape some of the accounting changes. At the moment, we don't see any change from that lease accounting change.
Okay. Thank you.
As a reminder, ladies and gentlemen, it is star one to ask a question. Our next question comes from the line of Chris Lucas with Capital One Securities. Please proceed with your question.
Good morning, guys. Most of the questions have been asked already. I did want to follow up on the Gander Mountain dispositions with you, Jay. Just kind of curious as to what characteristics were present in those particular assets that made you think about selling those. Are there others in that pool that you'd look to sort of look to sell over the next year?
Sure. Chris, good morning. Just to clarify, what we sold were some Camping World-
Oh, I'm sorry. Yeah
RV dealerships. We did not sell any of the Gander Outdoors properties. I apologize if I-
No, my mistake
confused you on that. In that instance, it was just an opportunity to sell this small portfolio that felt like the right thing for us to do. Nothing really strategic or trend-worthy to talk about in that disposition.
Okay, thanks. Hey, Kevin, as you think about potentially issuing long-term debt later this year, any thoughts about what to do with the 2021 debt? It's out there as it relates to sort of the only, what I would call, interest savings opportunity on your debt stack. I know the costs are there related to make-whole, but just kind of curious as to how you think about that.
To date, we've seen a number of companies write very large checks for those make-wholes. I understand that you're in essence just paying the interest early effectively and kind of pulling forward that expense. To date, we've opted not to do anything on the 2021s. It is a bit of an expensive make-whole. We've been on the sidelines in that regard. I think as the year unfolds, we continue to think about that. To date, we just felt like it's a little too expensive to pull the trigger on that.
Great. Thank you. That's all I had this morning.
Yeah. Thanks, Chris.
There are no further questions in queue. I'd like to hand the call back to management for closing comments.
We thank you for joining us this morning, and we look forward to seeing many of you at the upcoming conferences this summer. Have a good day.
Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.