Welcome to Regency Centers' second quarter 2018 earnings call. At this time, all participants are on a listen-only mode. A 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. I would now like to turn the conference over to your host, Laura Clark, Vice President of Capital Markets. Thank you. You may begin.
Good morning, and welcome to Regency's second quarter 2018 earnings conference call. Joining me today are Hap Stein, our Chairman and CEO; Lisa Palmer, our President and CFO; Mac Chandler, EVP of Investments; Jim Thompson, EVP of Operations; Mike Mas, Managing Director of Finance; and Chris Leavitt, SVP and Treasurer. I would like to begin by stating that we may discuss forward-looking statements on this call. Such statements involve risk and uncertainty. Actual future performance, outcomes, and results may differ materially from those expressed in forward-looking statements. Please refer to our filings with the SEC, which identify important risk factors that could cause actual results to differ from those contained in forward-looking statements. On today's call, we will also reference certain non-GAAP financial measures.
We've provided a reconciliation of these measures with their comparable GAAP measures in our earnings release and financial supplement, which can be found on our investor relations website. Hap?
Thanks, Laura. Good morning, everyone. Fundamentals in the shopping center business continue to be healthy, demonstrated by another quarter of solid results from our preeminent national portfolio. That said, we remain keenly aware of the changes occurring across today's retail landscape. Retailers have always faced a constant need to remain relevant through experience, through merchandise, through service, and through value. The current environment is no different, and the best grocers and retailers are not standing still. They are focused on meeting the evolving needs of today's consumer by allowing customers to choose how, where, and when they will shop. A physical store presence remains a critically important channel where retailers connect and service their customers. Best-in-class operators are looking for stores and high-quality shopping centers that are located close to their customers.
Regency's top grocers and retailers, including Publix, Kroger, Whole Foods Market, TJX, Ulta Beauty, Panera Bread, and Orangetheory Fitness, to name a few, are addressing the evolving landscape through significant investments in technology, in experience, in price, and in many cases, significant store expansions. Regency's strategic advantages position the company to not only meet the changes occurring in today's retail environment, but will enable us to consistently grow shareholder value in the future. These unequaled advantages include a national portfolio that is distinguished in terms of its size, its breadth, and its quality. Well-merchandised and well-conceived shopping centers located in dense infill trade areas, in neighborhoods with substantial purchasing power that are must-have shopping centers for successful and expanding retailers. A best-in-class national platform with teams located in our target markets throughout the country, bringing market knowledge and expertise for value creation from asset management, development, and redevelopment.
A fortress balance sheet, a disciplined capital allocation strategy, and most important of all, a deep and talented team that is guided by Regency's special culture. This proven formula will allow us to sustain same-property NOI growth by 3% and earnings and dividend growth by an average of 5%-7%. These should generate sector-leading shareholder returns over the long term. Jim?
Thanks, Hap. Core fundamentals were gratifying, with second quarter same-property NOI growth of 4.2% and occupancy at 95.5%. It is important to note that base rent was the lion's share of this, contributing 3.5% growth for the quarter. Retailers continue to behave rationally and deliberately and are focused on leasing space in well-located centers. We think this constructive behavior is a positive for our business. While recognizing today's changing landscape, our teams continue to have success as we focus on merchandising with best-in-class tenants, maximizing net effective rent over time, and minimizing downtime. Our superior portfolio quality is evidenced in the recent outcomes of the Toys"R"Us bankruptcy. As you may recall, we had minimal exposure to Toys"R" Us with only five leased spaces.
To date, one of the centers has been sold, one box was assumed by another retailer at auction, where we experienced zero downtime, one has already been re-leased, and we are actively engaged in discussion with multiple tenants, including HomeGoods, Trader Joe's, and Publix, for the two boxes we acquired at auction. Overall, retail bankruptcies have been lower than anticipated to date, leading to solid performance and our raise in same-property NOI growth expectations for the year, which Lisa will discuss in more detail. Turning to operating performance, year-to-date rent spreads, while still healthy, are moderating a bit due to a couple of factors.
First, we have a robust redevelopment pipeline, which Mike will talk more about next, where we are proactively creating flexibility to execute on accretive investments to drive future NOI growth and value creation. This means that sometimes we will execute flat or negative growth renewal deals in return for shorter lease terms or termination and relocation rights, which give us the ability to control our real estate for development in the future. Second, renewing or replacing below-market anchor leases after expiration can often have a significant impact on lease spreads. In the first half of the year, we had a lack of legacy anchor leases come back to us, but as we look to the second half, we have several opportunities to bring these valuable spaces to market rents.
More importantly, we've had great success in including embedded annual rent increases in our leases, and over the last four years have averaged 2.5% contractual increases on nearly 90% of our shop deals we've executed. This effort is certainly reflected in our strong same-property NOI and cash flow growth over the last several years. Mac?
Thank you, Jim. The investment environment for institutional-grade shopping centers is stable, and there continues to be solid demand, particularly for the highest quality properties, where a diverse array of buyers continues to drive pricing. On the selling side, we've seen adequate buyer pool for our commodity centers. These buyers are seeking solid growth and have access to debt financing. To date, we have closed on $143 million of dispositions at an average cap rate of 7.9%. Pricing on these transactions has met expectations, and we have a visible pipeline to achieve our disposition plan of $275 million for 2018. Consistent with past years, we typically sell 1%-2% of our asset base annually. The proceeds, combined with free cash flow, are reinvested into value-add developments and redevelopments, premier acquisitions with superior growth prospects or our own stock when pricing is compelling and tax gains are manageable.
We believe this perpetual enhancement to our portfolio uniquely fortifies our NOI growth rate. Turning to development and redevelopment, we are making impressive progress with our in-process pipeline. Leasing velocity is strong, and rents are meeting or exceeding expectations. Case in point, we recently completed our Chimney Rock development located in the affluent Somerset County, New Jersey. This $71 million investment is anchored by Whole Foods, Nordstrom Rack, and Saks OFF 5TH. We are pleased to report that the center is 97% leased, with retail sales exceeding tenant expectations. As we've discussed previously, new ground-up development opportunities that meet our high standards and disciplined strategy remain challenging to source. Fortunately, Regency's preeminent portfolio is full of redevelopment opportunities that are being mined by our talented development team. The following is an update on just a few of our near-term prospects.
The Abbot, a true iconic property located in the heart of Harvard Square, should start by year-end. All approvals have been obtained to allow the transformation of our three historic buildings into one integrated retail office flagship. Next is the redevelopment of our mid-rise building at Market Common Clarendon in Arlington. We intend to modernize and expand this 1960s-era building into a new state-of-the-art 4-level structure with dynamic ground floor retail fronting Whole Foods. Pre-leasing interest has been strong, including the execution of a full-floor lease with a luxury fitness club, which will serve as another exciting draw for the entire project. Located in Bethesda, Westwood Shopping Center is another exciting infill redevelopment opportunity. The first phase will consist of approximately 150,000 sq ft of neighborhood retail, anchored by a top-performing Giant, 200 units of apartments, and 75 for-sale townhomes.
With strong interest in the residential component, where Regency plans to partner with best-in-class co-developers to create an integrated project that will draw from the surrounding trade area. These three redevelopments are all projected to start within the next 12 months with an aggregate cost of approximately $170 million and will generate an average incremental return of 8%. These are just a few examples of the kinds of compelling value-add opportunities which our portfolio and platform affords. Our experienced team is excited by the many opportunities in the pipeline, and we have visibility to exceed $1 billion of development and redevelopment starts and deliveries over the next five years. Lisa?
Thank you, Mac, and good morning, everyone. We had another impressive quarter of same-property NOI growth that was primarily driven by base rent. As Jim said, base rent growth contributed 3.5% for the quarter and 3.7% year-to-date. A reflection of the strength of the portfolio with healthy embedded rent steps, as well as the result of accretive asset management and redevelopments. This strong performance through the first half of the year, combined with less tenant fallout than we originally projected, allowed us to raise our expectations around same-property NOI growth. We have removed the potential for finishing in the bottom half of our previous range and now expect to finish the year at 2.75%-3.25%. As we communicated previously, we will experience a deceleration in the back half of the year with same-property growth in the low 2% range for both the third and fourth quarters.
Timing and the lumpiness of certain NOI line items are the primary factors, as our guidance range does include very healthy base rent growth of 3% plus through the remainder of the year. I think it would be helpful to take a minute and walk you through the primary drivers of this deceleration. First, we expect recovery rates to normalize through the back half of the year and end the year in line with 2017 levels. Second, as Jim mentioned, while we were making great progress on the Toys boxes that we acquired out of bankruptcy, we will experience downtime in the third and fourth quarters. Third, we're going up against tough comps as we completed the major redevelopment of Serramonte in the fourth quarter of last year. Finally, the timing of other income was front-end loaded this year versus last.
As we look through these timing impacts to growth in the second half of 2018, I'd like to reiterate that base rent growth is on track to remain above 3% in both the third and fourth quarters. Turning to earnings, we have modestly increased our NAREIT FFO and operating FFO guidance ranges, incorporating the better performance through the second quarter, driven by same-property NOI growth. As a reminder, operating FFO eliminates non-comparable one-time items as well as certain non-cash accounting items like straight-line rent and above/below market rent amortization. I also think it's important to remind you that these non-cash items are expected to total $54 million this year, which is $54 million at the midpoint, which is $0.32 per share.
Before turning the call over for questions, I would like to quickly touch on the new lease accounting rule that will go into effect in 2019. Many of you are aware that this accounting change will impact the way REITs will recognize certain internal leasing costs. Some of these costs have been capitalized with leasing activity, but after adopting the new standard next year, these internal costs will need to be expensed. We anticipate the impact to be in the range of $0.06-$0.07 per share on 2019 earnings. While this will impact reported earnings, it does not impact AFFO or cash flow, and we do not have any intention of allowing this accounting change, which doesn't have a true economic impact on the business, to influence our structure or compensation strategies. That concludes our prepared remarks, and we now welcome your questions.
Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press *1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press *2 if you'd 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 keys. One moment please while we poll for questions. Our first question is from Jeremy Metz with BMO Capital Markets. Please proceed with your question.
Hey, good morning. Question for Mac here, just in terms of what you've been selling and you've sold post the quarter. Are you seeing any shifts in pricing or bidding pools? Maybe a little color on the market. Then including the stuff you've sold out through the quarter, you're around $150 million of sales. This leaves you another $125 million-$130 million to go to reach your guidance. You still assume a mid seven and a half cap rate. You've sold at about an 8% here, so that implies this next slug will be closer to a 7% cap. Is that fair? Maybe you can just give some color on those assets and what's driving that better pricing. Maybe it's just simply better assets.
Sure thing, Jeremy. On the first half, I'd say the one change we have noticed is it does appear, within our personal assets that we're selling and in the marketplace, that once buyers and sellers are agreeing on price, transactions are closing. There's certainly a higher degree and a higher level of certainty that has improved really in the last 60-90 days. Seems like assets are clearing, and we found that to be the case. Your question on what remains to be sold, we feel confident that we'll meet our objectives for the year of $275. We've got about $60 million in contracts that we're negotiating. For the remainder of that, some properties are on the market and some we're preparing to take to market. We feel overall on that blended number is still in line with that ±7.5%.
What should be sold is a mix of some smaller properties and some bigger properties. In general, it meets that same strategy of typically non-strategic assets. Often those have lower growth profiles, but they're good assets, and we found a lot of activity there and probably more buyers who are putting forth credible offers than we've seen recently. We're confident in seeing that.
Great. Thanks. Hap, following on your remarks at the start of the call about the best grocers not standing still, can you talk a little bit about what you're seeing there in terms of grocers thinking more creatively about future space needs and formats in your discussion? Then you've obviously done a number of deals with Whole Foods. Are you seeing any sort of increased activity or interest from them to expand further or try new formats post the merger?
I'll start and then Mac will probably add. Whole Foods has been much more active since the closing with Amazon. Their store formats are very similar to what they've been in the past. From a size standpoint, we're still seeing a typical Publix store in the 50,000 sq ft range, Kroger in the 100,000 sq ft range. The Wegmans that we're opening up in Raleigh and in Washington, D.C., are 100,000+. We are seeing a number of the grocers, though, trying to fit into more dense infill locations. They'll show more flexibility, but as far as any major changes to the formats, we're not seeing that. Obviously, we've read a lot about some of the moves that we all have that Kroger's made as far as the partnership with Ocado, et cetera. There's a lot of investment in technology, investment in click and collect
I think they are attacking the business on all fronts. Once again, in many cases, that also involves adding new bricks and mortar stores. Mac, you want to add anything?
No, I think there's a premium placed on location as opposed to prototype. It appears that grocers are being slightly more flexible than before in terms of size, sort of plus or minus 5,000-10,000 feet. They really value that location that meets the customers. There are many opportunities that they're looking at, and we like what we see.
They want to make sure they have adequate space to provide experience, which I think they feel is a key differentiating factor.
Last one from me, just to spread it around here. Jim, you talked about some shorter-term deals or giving more to get more rights here. If I look at your renewals in the quarter, activity-wise, it was pretty consistent. If I look at the leasing spreads, it was a little lower. If you look at the TIs, those are almost double your more or less normal spend. Is this simply a reflection of what you are alluding to? Or maybe there's a few larger deals driving these metrics? Any color there?
Jeremy, I think as far as the capital spend goes, I think it's mostly a timing issue. I think if you look at a year-end annualized basis, we're going to be in the 10%-11% of total NOI on total CapEx spend, which is where we've been. I think as to growth, we've had a smaller pool of anchor opportunities. We think in the second half, we'll have more opportunity to recapture some of those legacy anchor deals and bring them to market. One example of that is we just executed a lease with a Publix down in Tampa to backfill a Walmart store, and that we took that rent from a $4 to a $16 per square foot deal. Again, I think at the end of the day, we think we'll be on the spread side in high single-digit, which is consistent with our strategic plan.
Yeah, our net effective rents are mid-double-digits, like 15%+. I'd also say, and I don't want to come across as being defensive here, but it is interesting to note that over the last five years, Regency's rent growth appears to be middle of sector. However, the last five years, our NOI growth is the top of the sector. It's things like embedded rent growth that's getting us there, and less exposure to some of the bankruptcies and tenant failures. You got to add it all together. It is hard comparing comparability both internally year-to-year on what spaces may come up, what we consider for rent growth, and what others in the sector may. We feel really good, as Jim said, about our increase in net effective rents.
As Lisa indicated, base rent should increase by over 3% in the second half of the year. We're on track to do that and continuing to achieve 3% NOI growth for the foreseeable future.
Hap said that so well. I hate adding something a little bit more detailed and granular, but Jeremy, if you're referring to page 19 disclosure in our Supp, where we have our TIs, just want to remind you, we had the new disclosure last quarter, and when we did disclose it, we told you it was at an abnormally low level. I believe for new leases, our total spend is in the $16 a foot range. And just wanted to even remind you then that was abnormal, and that wouldn't be the case going forward, and that we'd be more in the $30-$40 per square foot range, which is where we were this quarter.
Appreciate it.
Our next question comes from Christy McElroy with Citigroup. Please proceed with your question.
Good morning. This is Katy McConnell in for Christy. Since one of your recent dispositions had a former Toys box, can you talk about how buyers are underwriting box vacancies or even just at-risk tenant exposure when evaluating specific centers today?
Sure, I'd be happy to. For that particular asset, this was pretty unusual. What we did is we actually gave this buyer some time to actually find a replacement tenant. They did. It allowed us to maximize our price, allowed them to pay more for it, and they were actually able to get a tenant, get a real estate committee approval, get a lease in hand. We thought that was a win-win on both sides. They backfilled it with a Burlington, and in every case, it is different case by case as to how buyers are backfilling boxes. We thought that was a smart strategy, so it worked out well for us. That's how that happened there.
It is indicative, though, that the buyers today are more discerning. They're more risk averse, I think this is also indicative that even though we're selling based upon non-strategic, lower growth profile, these are still pretty decent assets that we're targeting for sale. They're not out of the middle or the top part of our portfolio.
Okay, great. Thank you.
Thank you.
Our next question comes from Craig Schmidt with Bank of America. Please proceed with your question.
Thanks. Good morning. Is the higher construction cost impacting future redevelopment yields, some of the things that you addressed happening going forward?
I would say that the current projects that we have and the imminent projects, we have priced in the construction increases that we're all seeing out there. This isn't a new phenomenon. This has been going on for the last couple of years. As you get further out two, three years, it is harder to project construction costs. Most in the industry think that these last two years are abnormally high, and construction costs are going to start to moderate at some point and go back to traditional levels of inflation. I would say that is a reason for our yields. It's a summation of income costs. It's everything. I think we've done a good job of managing that. You can tell by our in-process projects how they're coming in as underwritten. I think we do a lot of work in accurately forecasting our costs.
Great.
Costs are real, but the deals are still penciling out on a basis that make common sense.
Great. I believe in the presentation it says that nearly 20% of your tenant base is restaurants. Is that where you'd like to be, or would you like to take it higher, or possibly even lower?
20%. We've been kind of in that high 18%-20% for a long time. That feels like the right space to be. I think it is a bit self-governing between anchor requirements and parking reality and the ability to park the customer. We think that's kind of the sweet spot, and we like the place we are right there.
Perfect. Okay. Thank you.
Thanks, Craig.
Our next question comes from Rich Hill with Morgan Stanley. Please proceed with your question.
Good morning, guys. I wanted to come back to maybe some of your prepared remarks. Maybe talk about the slowdown that is being implied by your same-store NOI guide. You guys have generally done a pretty good job of being cautious. If you could just give me maybe a little bit more color on how you are thinking about that. Is there anything specifically driving that, or is it just you wanting to be a little bit more cautious and make sure that you are really seeing signs of inflection before moving these even higher?
Sure. I will go right back to my prepared remarks and reference those. First, I want to start with, because this was also in my prepared remarks, that we are seeing really solid base rent growth, which is the primary driver of our same property NOI growth. That for the year is at 3.7% year-to-date. We will see that come down slightly as a result of, again, in my prepared remarks, I mentioned the tougher comps from the completed redevelopments in the latter half of last year, but still north of 3% in both the third quarter and the fourth quarter. The fourth quarter, we are going to see even more of a slowdown because we had the major redevelopment of Serramonte coming online with rent commencement then.
We feel really good about the fact that we are going to have a full year with base rent growth north of 3%. The other items, there is some timing issues involved with those. A big one is recovery income. The timing for CAM recoveries is really related more to last year. This year was much more typical. Last year, we had a major merger that we were integrating, and the reconciliation timing was a little bit unusual for the year. We are seeing a little bit of a drag in the third quarter for that reason. In the fourth quarter of this year, we will see a drag from real estate tax recoveries, if you will, and assessments and the recovery to the income for that.
As we expected when we merged with Equity One, we knew that our properties, and specifically in certain states like California, would be reassessed, and those are coming in. They also go back to the date of the merger. It is a little bit of a double hit. In the fourth quarter, we are going to have a significant impact on same property NOI as a result of that. We recover a lot of it, but we cannot recover all of it. We had other income was more front-end loaded in 2018 versus 2017. They are the main drivers.
Scott, I think from a narrative standpoint and from an anecdotal, what's really happening with the underlying fundamentals, this does not reflect that we're seeing a moderation in fundamentals between the first half of the year and the second half of the year. It's just the items that Lisa articulated.
Got it. That's very helpful. Thank you. Maybe one follow-up question maybe expanding upon return on investment capital. Have you guys thought about, I'm sure you have done an analysis on the densification opportunities across the portfolio? Obviously, there's a lot of talk about this, particularly with autonomous cars over the next 5-10 years, but I'm curious if you think there is specific or even general densification opportunities that could help you drive growth even further.
I think that Mac articulated three major redevelopments that are underway, you can kind of summary review those again, where very exciting redevelopments, I think all three of them involve some sort of densification or they're in dense infill locations.
Yeah.
Plus a couple more that were back behind those.
Yeah. That's exactly right. We, as part of our day-to-day business, we're constantly evaluating our portfolio for densification opportunities. In many cases, we've seen cities actually will just prescribe to us additional entitlements, even unsolicited. They're doing that to encourage housing and as part of the general plan update. You can't access them all right away. Oftentimes, it takes the expiration of an anchor lease, we note when that happens, and we start to plan ahead for that. We've done that in quite a few cases. There'll be sort of a methodological approach to it, which will happen over time. We definitely think there are some opportunities, and our teams are keenly focused on that.
As we've stated in the past, we have hired a senior vice president of mixed use that works directly with Mac, who has extensive experience in the multifamily sector. I will say we've got great properties, some with great potential. These, especially vertical mixed-use projects, are complicated. They're challenging. They're easier to talk about than to make happen. They take years to create and bring to fruition. We try to right size and have a very practical approach. We're making good progress on a number of these, but to underestimate what's involved in making them successful, anybody doing that, it would be a mistake because they're not a
Understood. Thank you, guys. I appreciate all the additional color.
Thank you.
As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment please while we poll for questions. Our next question comes from Mike Mueller with J.P. Morgan. Please proceed with your question.
Oh, hi. Couple of questions here. First of all, on the extra lease accounting items for the expense, what's the geography of where that's going to show up in the income statement going forward in 2019?
It'll be in G&A.
All G&A. Okay. Then it was touched on before with the rent spreads, and I know there was a high single-digit number that was thrown out there. If you go through and you strip out the impact of the repositions that you were talking about and just look at the spreads minus that, would they be in that upper single digit, close to double-digit level?
I'm not sure we fully understand what you're asking, Mike.
Your rent spreads are mid-single digits.
Right.
There's a bunch of caveats as to why they moderated. If you would take the repositioning aspect of that out that was weighing on it, would that all of a sudden, if you had no rev in there, would your spreads be closer to that double-digit level?
Mike, this is Mike. I'll jump in here. In this particular quarter, it really is a mix issue. We are seeing some active leases that we're signing in anticipation of potential repositioning. Oftentimes, these are happening two to three, maybe four years in advance of when we start a redevelopment. That's how long it takes to position some properties for redevelopment. To answer your direct question, in the math of this particular quarter, not seeing a lot of material change in how you slice and dice that particular population. We are seeing an impact to the lease spreads metric when we make some of these decisions. On a trailing 12-month basis, what's important is we are posting a lease metric number that is in excess of what we did this quarter.
As Hap mentioned earlier, our net effective rent spreads are in the 15% range, which we feel really good about.
Got it. Okay. That was it. Thank you.
Thanks, Mike.
Bye.
Ladies and gentlemen Oh, oops, someone jumped into queue. Our next question comes from Chris Lucas with Capital One Securities. Please proceed with your question.
Good morning, everybody. Just a quick question on the follow-up on the same store NOI guidance for the back half of the year question. You mentioned a number of items that are contributing to sort of the expected deceleration. I guess, the question I have is really more about rent commencement timing. Do you have a pretty good handle on that? There's been a number of your peers who have talked about the permitting issues that they've experienced and the timing issues that are going into sort of the uncertainty they have with the back half of the year. What are you guys seeing?
We do have a pretty good handle, and trust me, because I ask the question pretty frequently, on what really the main drivers are of the anchor rent commitments that are expected to happen in the back half of the year. We feel really confident and good in our projections for when those will happen.
Okay. Just a quick follow-up on-
Not that there's some risk that it could slip, but we-
It's not taking a while to happen, but we feel pretty good about the timing that we're projecting.
Okay, thanks. Just a quick one. I missed the earliest or the beginning of the call, so I don't know if you touched on this, but a couple projects either delivered with slightly higher than previously sort of projected yields or are trending towards higher yields. Anything particular that's driving that other than just better rents?
In one case, it was actually a reduction in cost. We were able to give back some contingency that was unspent. The other piece, slightly better rents. There's a broad theme there. Those are specific, and we were glad to achieve those results.
That is an example where we were able to take money from contingency is where we are planning for the significant increases that are occurring in construction cost. If I may, no pressure on Mac or the rest of the team, we report to our board quarterly on the performance of our developments and have been for the entire time that I've been here. We've developed probably, I don't know, $2 billion plus worth of properties. Our actual returns on that $2 billion are pretty darn close to our underwritten returns, which is pretty exceptional. A lot is a testament to the team and how we underwrite and manage and actually execute on the build of those projects.
Great. Thank you. That's all I have.
Thanks, Chris.
There are no further questions. At this time, I'd like to turn the call back to Hap Stein for closing comments.
We appreciate your time. Have a good weekend. If you get to spend some time with your families over the rest of the summer, good luck and enjoy. Thank you so much for your time and interest in Regency.
This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.