Earnings Call: Q2 2019

Jul 31, 2019

Greetings, and welcome to STAG Industrial Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Matt Pinner, Senior Vice President of Investor Relations. Please go ahead. Thank you. Welcome to STAG Industrial's conference call covering the Q2 2019 results. In addition to the press release distributed yesterday, we posted an unaudited quarterly supplemental informational presentation on the company's website at stagindustrial.com under the Investor Relations section. On today's call, the company's prepared remarks and answers to your questions will contain forward looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today. Examples of forward looking statements include statements relating to earnings trends, G and A amounts, acquisition and disposition volumes, retention rates, debt capacity, dividend rates, industry and economic trends and other matters. We encourage all of our listeners to review the more detailed discussion related to these forward looking statements contained in the company's filings with the SEC and the definitions and reconciliations of non GAAP measures contained in the supplemental informational package available on the company's website. As a reminder, forward looking statements represent management's estimates as of today. STAG Industrial assumes no obligation to update any forward looking statements. On today's call, you will hear from Ben Butcher, our Chief Executive Officer and Bill Crooker, our Chief Financial Officer. I will now turn the call over to Ben. Thank you, Mats. Good morning, everybody, and welcome to the Q2 earnings call for SAG Industrial. We are pleased to have you join us and look forward to telling you about our Q2 results. Presenting today in addition to myself will be Bill Crooker, our Chief Financial Officer, who will discuss the bulk of the financial and operational data. Also with me today are Steve Mecke, our Chief Operating Officer and Dave King, our Director of Real Estate Operations. They will be available to answer questions specific to their areas of focus. The industrial sector remains healthy with tenant demand outpacing new supply in virtually every market in which we operate. Given these conditions, rental rates have continued to grow across these markets. Our 2nd quarter and year to date operating metrics bear this out. STAG's portfolio continues to perform very well. The geographic diversity of STAG's portfolio reflects our vast opportunity set and will provide superior insulation from any market specific dislocations if and when they should occur. Year to date, our portfolio has produced double digit cash re leasing spreads, retention of 80% and cash same store NOI growth at the upper end of our public guidance. We continue to see an abundance of investment opportunity across the markets we prospect in. This was demonstrated in Q2, the 2nd largest acquisition quarter in our company's history. We have built and continue to refine a platform that has demonstrated an ability to evaluate and close accretive granular industrial transactions in volume. Our investments over the past several years to enhance our internal processes, to train our dedicated employees and to promote the use of data analytics across the organization are all bearing fruit. This will be reflected in Bill's remarks with regards to our annual acquisition guidance. Included in our 2nd quarter acquisition volume is an 857,000 square foot Amazon fulfillment distribution facility located in West Jefferson, Ohio. This recently completed building is an integral part of Amazon's growing package distribution and delivery service effort for the region. As of quarter end, Amazon is now our 2nd largest tenant representing 1.7% of ABR. In our last quarter, we announced our first speculative development project, a 250,000 square foot warehouse distribution facility at exit 6A of the New Jersey Turnpike in Burlington, New Jersey. You may recall that this project is on a piece of excess land associated with an acquisition made years ago. We are happy to announce the project is on schedule for completion by year end. We will continue to update you on the progress of our development and at this point expect to meet or exceed our initial pro form a. With that, I will turn it over to Bill, who will discuss our operational results. Thank you, Dan, and good morning, everyone. Core FFO was $0.45 for the quarter, equal to the Q2 of 2018. Leverage remains low with net debt to run rate adjusted EBITDA of 4.6 times. Acquisition volume for the 2nd quarter totaled $260,000,000 with a stabilized cap rate of 6.1%. We did not acquire any value add assets or sell any buildings this quarter. The portfolio operating metrics continue to demonstrate the health of our portfolio. Retention for the quarter was 79.5 percent with new and renewal cash leasing spreads of 22.8% and 5.8% respectively. Straight line releasing spreads for the quarter were also strong with new and renewal straight line releasing spreads of 34.2% and 15.4% respectively. Included in our leasing activity this quarter and as an example of the strength in tenant demand we are seeing across our markets, we backfilled the building in Savannah, Georgia with 0 downtime, while achieving re leasing spreads well in excess of 20%. Same store cash NOI grew by 1% for the quarter, which was positively impacted by our retention and cash releasing spreads and partially offset by a decline in occupancy with the same store pool in the 2nd quarter. Year to date, same store cash NOI has grown 2.2% driven by a retention rate of 80.2% and cash re leasing spreads of 11.7% through the first half of the year. Moving to the capital market activity, we executed the previously discussed equity offering, which resulted in net proceeds of approximately $215,000,000 During June, we raised an additional $22,000,000 of net proceeds through our ATM program. At quarter end, net debt to run rate adjusted EBITDA was 4.6 times and our fixed charge coverage ratio equaled 5.3 times. Subsequent to quarter end, on July 12, we closed on a $200,000,000 5.5 year delayed draw term loan. The term loan is fully swapped with an all in fixed rate of 3.11 percent. On July 25, we funded our $175,000,000 Term Loan E, which was originated last year with the proceeds used to retire revolver balances. This term loan is fully swapped with an all in fixed rate of 3.92%. Including these debt transactions, our available liquidity is $745,000,000 Given our performance to date, we now expect stabilized acquisition volume to be between $700,000,000 $800,000,000 Including our expected value add acquisition activity, the guidance for the aggregate acquisition volume is increased to a range of $750,000,000 to $900,000,000 The stabilized cash cap rate guidance has also been updated to a range of 6.25 percent to 6.75%. Additionally, we have updated our granular disposition guidance to a range of $75,000,000 to $150,000,000 All of our 2019 guidance can be found on our supplemental posted to our website in the Investor Relations section. I will now turn it back over to Ben. Thanks, Bill. The company is operating at high levels across all functional areas of the organization. We have an extraordinarily talented team that is engaged and dedicated to what we are trying to accomplish, maximizing long term per share cash flow returns to our shareholders. This is an exciting time for STAG as we continue to pursue the opportunity in front of us. We thank you for your continued support of our company. Our first question today is from Sheila McGrath of Evercore. Please go ahead. Yes, good morning. Many of your acquisitions during the quarter had longer lease term, which typically isn't your sweet spot on pricing. Just wondering if that's driving cap rates a little lower and are you bumping into more competition from the long term net lease buyers on those purchases? Good morning, Sheila. Certainly, the longer lease term, which produces projects to have longer uninterrupted cash flows will produce lower cap rates and that certainly is evidenced in some of the mix of acquisitions for the month, excuse me, for the quarter. It's not a by design, we're not seeking longer lease terms. We're maintaining our long term cash flow thresholds on a per share and IRR basis. It just is this quarter, we're successful in acquiring some longer lease term deals. Certainly, as we do that, we will run up against people that are looking at those kinds of transactions. But again, we've been able to identify transactions that produce those kind of long term returns in those longer list terms. And on the acquisition in Columbus, the larger acquisition, can you talk about competition on that particular asset acquisition? We saw probably let me turn it over to Steve. Actually, that was lightly marketed. We were actually approached by the broker directly. They went to a few groups to acquire it. So the competition wasn't as broad based as you'd expect. But as Ben was mentioning, we do run up against some long term players and the typical in our regular acquisitions, the typical fund managers, etcetera. So but in that particular, it was a limited pool. Okay. And one last one for me. On the development in New Jersey, your prepared remarks, you seem confident that you'll meet or exceed your pro form a. Can you discuss in more detail how tenant discussions are going on that project? And what is your target yield on cost for that project? We're just about the I'll let Dave take this up. We're just about the poor slab, so the building is becoming reality for potential tenants. So we have a list of tenants that are quite interested in the building. But the reality quotient, if you will, is going up because slab is about to be poised. So we are just getting into the point where it becomes a reality for people visiting the site. I think we talked about it in our prior call that we expected returns to be at or around 8% development returns. Okay. Great. Thank you. The next question is from Brendan Finn of Wells Fargo. Please go ahead. Hey guys, good morning. So you talked about this a little bit in your prepared remarks, but rent spreads have been pretty strong so far this year, I think 11.7 on a cash basis. So previously you guys have talked about on a full year basis you'd be end up in the mid single digit range. Is there an update to that or is it likely that you will exceed that range? Yes. I think our guidance for that is still it's mid to high single digits, Brendan. We are still comfortable with that guidance for the year. Sounds good. And then I guess like what has been the driver of the stronger retention this year versus your initial expectations? Is that a few leases that have renewed where you initially thought they weren't Or is it just stronger retention across the board? That's right. At the beginning of the year, we have assumptions on our assets that are rolling and there are some that were on the fence that we projected to not retain and some that we did retain. I did mention that one asset this quarter that we released with 0 downtime. If we had retained that tenant, that would have resulted in 100% retention this quarter. Got you. That's helpful. Thanks guys. You're welcome. The next question is from Dave Rodgers of Baird. Please go ahead. Hey, Ben. Going back to the acquisitions and I guess specifically thinking about the second half of the year and what you closed in the second quarter. I mean given the longer average lease term, it sounds like you're buying much newer buildings. Are you just seeing a much greater amount of merchant building out there and kind of quick flips themselves? What are you seeing on the construction side? And do you expect that to continue in your acquisition pipeline going forward? I think there's no question that merchant builders are taking advantage of the market and putting their assets out for sale relatively quickly. I think that will continue as long as pricing is as strong as it is today. We are still seeing lots of opportunity in existing buildings in the 5, 10, 15 years old, not brand new buildings, seeing plenty of opportunity there. And as we talked about in our prepared remarks, we are more capable in seeing more transaction. Our pipeline is as big as probable deals or deals that we would acquire. The pipeline is as big as it's ever been. And we are have a bigger presence and a more in-depth inquiry of the markets that we are prospecting in. So we continue to see lots of opportunity, including these build to suits. These build to suits that you are acquiring and like you did in the Q2, what's the average rent bump in those leases or the annual escalators relative to of the 5 or 10 year old buildings that you're buying? So they run 2% to 3%, 2% at the low end, probably 3% at the high end. You might occasionally see above 3%, but in that 2% to 3% range. Yes. Generally, Dave, the longer the lease, the lower the bump. So, the longer term ones, the 15 year plus is generally around 2%. But what that results in is you get a higher straight line cap rates. So our straight line cap rates this quarter was 6.8 percent and that's a 70 basis point difference between the cash cap rate. Generally, that has averaged around 50 basis points. So you see a little wider spread there with the longer term leases. Great. Maybe another one, tenant rollover looking over the next 12 to 18 months, anything we should be paying attention to there? Nothing in particular. I mean, it's all factored into our guidance there, Dave. And then lastly on the dispos, you took disposition guidance down, but acquisition guidance up. I realize equity is a component of that. But what kind of made you not want to sell as many assets into the strong market that we have today? So, our mantra has been from the get go is that we will sell assets when people will pay more than we think they are worth to us in our portfolio. And so we continue to do that, but we have and we at the beginning of the year, we had an expectation a certain amount would occur that we've tempered that expectation through the year. We still will sell assets if again, if people think they're willing to pay more than we think they are worth. And so we have been consistent in doing that. Just a certain amount of that occurs every year and it's not always clear at the beginning of the year what that number will be. All right. Thanks guys. The next question is from Michael Carroll of RBC Capital Markets. Please go ahead. Yes, thanks. Ben, can you talk a little bit about the competitive environment? I guess I understand the reason why the cap rates are lower is due to the remaining lease term and maybe the newer properties. But how has competition been? Has that pushed private market valuations higher? Is it just that you're being going after a different subset of properties? Well, I think one of the things that we continue to take advantage of is that there's not consistent competition across all the places we look. So as we evaluate the competition in some of the competing for some of the assets we acquired, there's basically there are almost no names that come up more than once in those kind of assays of competition. So we're not seeing, I think, any particularly new competition or increased competition for assets. It's just there's competition out there with debt rates where they are and obviously industrial being a very favorite asset class. There continues to be competition everywhere, but we're out there in 60 plus markets looking broadly across those markets and still only with our pricing discipline still in acquiring say about 15% of the ones that we underwrite. So it's more the fact that there's competition out there, but we have a very broad level of inquiry and we're able to find assets in increasing levels in terms of volume of acquisition. Okay. And then when you're looking at your, I guess, your pipeline of assets you're looking at right now, I guess, what's the breakout between the remaining lease term on some of those assets? Is it longer like we've seen in the Q2? Or is it more normal like we have seen over the past few years? Steve is going to give you a snapshot of the pipeline as he looks at it right now. My suspicion is that the average remaining lease term is probably not that much different than it's been over the last couple of years. Yes. That's exactly true. It's basically running very similar to what we had in the last couple of years. It all depends on the mix. I mean, this quarter was just a different mix than previous quarters. So the 11 plus years is probably less indicative over the normalized lease terms. Skewed up by a couple of longer particularly longer lease terms. I think that we've been able to extend the lease term of the portfolio a little bit over the last couple of quarters and last year. But we're looking to buy opportunity where we find it. And if the opportunity is in short lease terms to provide better cash flow over time to our shareholders, that's where we'll go. But we're agnostic at the lease term as we are to most things. We're just looking for the best long term returns for our shareholders. Okay. And then going forward, we're looking at acquisition cap rates. I guess, is that fair to assume that those deals are going to be completed in the high 6% range, kind of in line with the initial guidance range that was provided? Well, we reduced our guidance range for the year this quarter to $625,000,000 to $675,000,000 So we feel pretty really comfortable it will be within that range. But that was due to the 2Q activity. I guess if you are looking at the second half activity, it's going to be back to what was previously expected and the reduction this quarter was mainly due to the low cap rates completed this quarter? So Mike, for the year, we're still in that our for the year, our cash cap rates are still stabilized cap rates are still in the range of 6.25 percent to 6.7 percent. This Q2 was below, but for the year, we're still in that range. So we're not expecting material change from sort of where we've been running on cap rates. The next question is from Mitch Germain of JMP Securities. Please go ahead. Just one more cap rate question. I mean, how do we consider the cap rate on Columbus versus what a more traditional cap rate from what I would characterize to be a standard acquisition that you guys make? How should I think about the differential there? Well, I think as we have said a few times, the cap rate is just a point in time measure. That asset has a nearly 15 year lease with brand new buildings, so very low CapEx. As rent bumps and as Bill mentioned, the cash excuse me, the GAAP cap rates are much straight line cap rates are much higher, 70 basis points higher across all of our acquisitions for the quarter. So it's really going to have a lower cap rate because it has a very strong credit and a long term lease with bumps and no CapEx. So you can develop or you will develop the type of kind of accretive cash flow, long term cash flow we're looking for out of a lower cap rate. So yes, it will be a lower cap rate and demonstrably lower cap rate because of all those factors. Got you. And then, you might have talked about this last quarter and I apologize if you went into a detail. How many other development type opportunities that you're doing in New Jersey? How much of that exists in the portfolio today? Well, I mean, there is excess land on a lot of the assets we own in varying degrees because the best way to or the most common way to lose a tenant is the building is not big enough. So the ability to expand the building is something that we look forward certainly on build to suit transactions, people build in generally expansion capability on the site. Having said that, most of the available land or excess land is uncovered by the existing lease and or either directly in the lease or an understanding with the tenant or belief on our part that we want to maintain that there is excess land that would allow development immediately. So you are pursuing entitlements. Is that the way to consider evaluating or That might be a little strong. Got you. Thank you. We investigate the market for viability and then, if we determine that it's a path we want to go down, we will work on marketing and entitlement. And those are a handful of instances. Appreciate it. The next question is from Bill Crow of Raymond James. Please go ahead. Hey, good morning. Ben, would you okay, I guess, if your pipeline really started to skew toward that sub-six percent cap rate as long as it's either a newer building, longer lease or better bumps. Is that the right takeaway here? Yes. I think, again, reiterating the cap rate disappointed in time measure, we are really focused in our return analysis on longer term measures. And so big rental bumps, longer leases, clean CapEx, someone's just replaced the roof on a building, even in a marginally older building where the roof is brand new can project to have lower and perhaps HVAC equipment has replaced parking lots and redone can project to have lower CapEx. So all those things can mitigate towards lower cap rates. But I don't think that necessarily we're going to be trending down towards those lower cap rates. The other thing to keep in mind is our debt costs are low, our equity costs are our cost of equity, if you will, is pretty favorable right now. I think it should be more favorable. I guess every CEO does. But so we're in a place where the cost of capital also has mitigated to making lower cap rates still accretive. Across all the acquisitions we've done this year, we're looking for FFO accretion marginal FFO accretion in 15% to 20% relative to where we are today. So we are still finding immediately accretive transactions to undertake. Okay. And my second question is that we have been seeing weakening manufacturing data over the last few months. Can you just kind of take us inside the mind of your tenants and whether that's the auto or other manufacturing sectors? What are you hearing? I'm going to turn it over to Dave. I could voice my opinion, but he is a little closer to the tenants. Yes. I mean, our customers still are exhibiting a high degree of confidence. Lease terms have held up on new activity. And they might be a little more cautious, a little more aware, but their actions haven't really changed over time. Okay. That's it for me. Thank you. Thanks, Bill. The next question is from John Massocca of Ladenburg Thalmann. Please go ahead. Good morning. Good morning, John. Good morning. So maybe to probe on kind of the Amazon cap rate a little bit more, how much did that kind of impact the overall cap rates in the quarter? I mean, would you have been more in line with what the new kind of midpoint of guidances without that transaction? Obviously, that because of the features we've talked about and the cash flows to be derived from owning that asset, clearly, it was at a lower cap rate than the average cap rate for the quarter. So yes, it would have raised the average cap rate for the quarter had we not acquired that. Are not going to get into individual cap rate on acquisitions, but clearly, that's a transaction. We had another transaction that had an 18 year lease in it that obviously also would have mitigated the cap rates lower. Okay. And then on Amazon again, I mean, what got you comfortable with that particular asset, given sometimes Amazon properties can maybe be characterized as being kind of overbuilt or over specified? Just any details on the actual property itself? Well, this is a generic, if you will, a generic Amazon state of the art fulfillment set of 855,000, 857,000. This is what they are building today. Amazon, as we have a shell there, Amazon has put a bunch of money in on top of that shell cost. The 15 years from now, we can't foresee exactly what Amazon is going to be looking for or what other tenants are going to be looking for. But this is a good functional e commerce fulfillment building, state of the art as of today. Okay. And then can you maybe provide some color on what, if any, portion of 2Q 'nineteen acquisition activity was value add? We did not do any value add acquisition activity in the quarter. Okay. And then month to month leases came down pretty significantly. I know it's fairly variable quarter over quarter, but it was a pretty significant drop from 1Q to 2Q. Can you maybe provide some color around what drove that? There is no outstanding issue I can point to. That number, as you mentioned, is going to be quite volatile. So it could very well tick up for next quarter. We don't really spend a lot of time trying to predict that number. But month to month tenancy tends to either go away or get long term, right? They tend to move away from the middle or from that to the boundaries, either vacancy or longer term lease. Okay. And just given your retention rate, it kind of felt like it went to a longer term lease. I mean is that kind of a trend you are seeing? Could that run lower going forward? Look, I think, as Dave said, there is no real trend to that number. Every quarter, it's a different number. So yes, some of those obviously went to longer term leases with the renewals, but it changes every quarter. Okay. That's it for me. Thank you very much. The next question is from Sarah Pan of JPMorgan. Please go ahead. Hi, good morning. So I saw you guys get down your distribution page, but how are you guys thinking about portfolio sales? So we looked at portfolio sales historically for capital raising. So at times, we didn't like our common equity price or didn't feel it was it was pooped us to raise common equity. We've done portfolio sales again to raise capital. That is not a driver at this point for us to do portfolio sales. We have positive operating leverage. And so when we buy assets, we get to take advantage of that. When we sell assets, obviously, we do not take advantage of that. We do believe that we could do a portfolio sale on an accretive basis, but we think it is better for us and for our shareholders at this point to issue common equity and grow the size of the portfolio. Got it. Thank you. Our next question is from Chris Lucas of Capital One Securities. Please go ahead. Just a couple of quick ones, I think. On the balance sheet, you guys continue to bring the run rate on the leverage down based on sort of an over acquisition of the acquisitions during the quarter. Is this something that we should continue to see as the stock price continues to perform or is this something that should balance out and gravitate more towards within the range that you guys have provided? Yes. For the year, Chris, the range is $475,000,000 to $6,000,000 But as we previously say, we are going to operate at the lower end of that range. So we are a little bit below the low end of the range today, but that should moderate as the year progresses. So no, I guess maybe a way to think about it is, any sense as to whether or not you would be willing to take that range down as the equity markets continue to support your strategy? Yes. It's something we always consider is our leverage range. Right now, we are comfortable with the 475 to 6 and operating at the low end of that. Okay. Thanks. And then, I guess, Ben, on the leasing side, a lot of success, high retention rate over the last couple of years now. How much of your leasing is done in house versus through 3rd parties at this point? And where are you as it relates to sort of rolling out a regional program versus maintaining sort of centralized leasing program? So we use 3rd party brokers on all leasing, both renewal and new leasing to take advantage of the obviously the market knowledge, etcetera, and also to maintain good broker relations because we buy a lot of things for those brokers also. We will look at rolling out regional asset managers, but we do not intend to move our vertical integration past asset management. So we do not have a desire to be involved in property management. Our discussions on this in the past have focused on it's a difficult business to make money in. We'll take advantage of somebody else having developed property management expertise and use the best in class property managers in the individual markets in which we operate. So it's highly likely that we will maintain our vertical integration limit at the asset management level. It's also highly likely that we will have asset managers in the field at some point. But if they to date, they're all still in Boston. Okay. And then the last question for me. I want to say like a year ago, we saw some large very large transactions occur in the marketplace. And I think it was a headwind somewhat to second half transactional opportunities for you guys. I know the pipeline is very large right now, but given some other recent large industrial transactions in the marketplace, any sense as to whether or not the sort of your bread and butter one off market will be impacted this year like it Well, yes, I think that the one off market will not be impacted. We've talked about in the past the fragmentation of ownership of the industrial market where the top 20 owners own somewhere between well, it's changing. There's a little more concentration going on. But probably at this point, maybe 15% of all the fungible industrial assets in the U. S. Are owned the top 20 owners. So the other 85% of the assets are owned by small sellers. That's who we are mostly buying from. And their reasons for selling are usually relatively unrelated to or uncorrelated, if you will. So there's a pretty much a steady supply. Our increasing pipeline size, I think, is more a factor of our presence in the market, more outward facing acquisition people, better support for those outward facing acquisition people. And to some extent, the use of data and that will increase its impact in identifying assets that make sense for us to pursue. The large transactions, the GLP, the IPT transactions, etcetera, actually will probably end up being a source of transactions for people like us as the those portfolios are winnowed down post acquisition. We're not likely to be a competitor for it's been rumored that Blackstone may sell as much as $5,000,000,000 out of the GLP transaction. We would not be a competitor or indeed likely competitive for a large subset of that $1,000,000,000 plus portfolio, even probably $500,000,000 plus portfolio. But there will be individual assets that will fall out of all that, and we will be ready to analyze and pick those up at good accretive prices for us. Great. Thank you. Appreciate it this morning. The next question is from Alexander Pernodarcz of Bank of America Merrill Lynch. Please go ahead. Hey, good morning. I was just wondering if you could talk about the tenant demand and rent growth you're seeing in specific markets and maybe which ones stand out the most and then which markets are you seeing the most opportunity for acquisition? So we start off, we are a ground up prospector and investor. So we're really not making decisions based on particular markets. There can be a great transaction in Ontario, California or in Dayton, Ohio, and there can be a really bad transaction in Ontario, California or in Dayton, Ohio. So we're very much focused on the individual asset and the opportunity that's presented by that particular acquisition. And indeed, we evaluate every acquisition based on the market background and the submarket background of the building and that specific building with specific parameters operates in. So it's really not a top down, we like this market, we don't like this market analysis. We're looking broadly across 60 plus markets to find the right opportunities to provide that good long term cash flow and growing cash flow to our shareholders. Okay, cool. And then, what are your thoughts on your appetite for more spec development? And are you taking kind of the wait and see approach? Or you seem pretty optimistic about how this one is going so far. I was just wondering if I could get a little bit more color on that? Yes. So we view speculative development as a marginal not a marginal incremental add our overall business that we're not out acquiring land to do speculative development. We happen to own land as part of other acquisitions, as part of building and cash flow acquisitions that we will purpose to spec of development as appropriate and or build to suit development as appropriate. But it is not a part of our business where we are going out to develop a land bank. But we certainly evaluate transactions that have additional land for the value inherent in that potential for additional development. Okay. Great. Thank you. There are no additional questions at this time. I would like to turn the call back to Ben Butcher for closing remarks. Well, thank you everybody for joining us this morning. As I said in the prepared remarks, things are running extremely well here at STAG. The opportunity set in front of us is extremely large and we expect to have a really good second half of the year and going forward into 2020 continued success. So we appreciate your time this morning and hope you have a good rest of the summer.