Ladies, and gentlemen, greetings, welcome to the Veris Residential, Inc Second Quarter 2023 Earnings Conference Call. 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, Taryn Fielder, General Counsel at Veris Residential. Please go ahead.
Good morning, everyone, and welcome to Veris Residential's Second Quarter 2023 E arnings Conference Call. I would like to remind everyone that certain information discussed on this call may constitute forward-looking statements within the meaning of the Federal Securities Law. Although we believe the estimates reflected in these statements are based on reasonable assumptions, we cannot give assurance that the anticipated results will be achieved. We refer you to the company's press release and annual and quarterly reports filed with the SEC for risk factors that impact the company. With that, I would like to hand the call over to Mahbod Nia, Veris Residential's Chief Executive Officer, who is joined by Amanda Lombard, Chief Financial Officer. Mahbod?
Thank you, Taryn. Good morning, everyone. The advancements made during this past quarter cement our strategic transformation to a pure-play multifamily REIT. We continue to build on our tremendous momentum, achieving a number of significant milestones, including the sale of five additional non-strategic assets, despite an extremely challenging transaction market, a negotiated early redemption of Rockpoint's preferred interest in Veris Residential Trust, the reinstatement of our dividend, and continued operational outperformance, achieving 12% blended net rental growth and 22% same-store NOI growth, despite the broader softening of rents across the sector. $360 million of proceeds released from the sale of Harborside 1, 2, and 3 in April provide us with substantial liquidity, allowing us to call Rockpoint's preferred interest, which they subsequently deferred for 12 months.
Since then, we have signed binding agreements for the sale of four additional non-strategic land plots: 107 Morgan Street, Harborside 4, and 2 and 3 Campus for $142 million, as well as Harborside 6 for $46 million, alongside 23 Main Street, which also remains under contract for $17 million. Together, these transactions enable us to fund an early negotiated redemption of Rockpoint's preferred interest for $520 million, which we closed on earlier this week, utilizing a new revolving credit facility and term loan as a bridge, which Amanda will discuss in greater detail. The early negotiated redemption of Rockpoint removes the uncertainty associated with the redemption process under the joint venture agreement, substantially simplifies the company's overall structure, while maximizing our strategic and operational flexibility moving forward.
It is also accretive, including a saving of $24 million in annual interest, while paving the way for additional expense optimization in 2024. With these latest accomplishments, the Board of Directors has made the decision to reinstate the payment of an ordinary quarterly dividend beginning in the third quarter on a limited basis of $0.05 per common share, with potential to raise the AFFO payout ratio over time. Looking more closely at multifamily operations, our highly amenitized Class A portfolio continues to perform exceptionally well, reflecting the strength of our platform, the enhancements we have introduced over the last two years, and the dedication of our team.
Despite national Class A net effective rent growth turning negative across the sector for the first time since the end of 2020, rental growth in our properties increased by 12%, up from 11% in the first quarter, while same-store occupancy remained stable at 95.6%. We remain cautious, however, having recently seen some evidence of a cooldown in rental rates as we lap high growth months from last year and enter the typically slower leasing season. Our Class A portfolio continues to command the highest rents in the sector, achieving a 50% premium to our peers, a gap that we've seen widen by approximately 10% since mid-2022. Our average revenue per home increased to $3,734 this quarter, up nearly 17% as compared to the same period last year.
Despite this increase in rents, our rent-to-income ratio remained around 15%, based on average per unit income, which is above $300,000 per household. The Jersey City and Port Imperial submarkets, which benefit from their proximity to New York City, continue to outperform as demand significantly outpaced supply. Indeed, rents in these markets remain over 30% below those in Manhattan and over 20% below those in downtown Brooklyn, while offering more space and a wider range of amenities. This sustained revenue growth, coupled with our continued focus on expense management, contributed to a 22% growth in same-store NOI compared to the second quarter of 2022. We have raised our NOI guidance for the year to 10%-12%.
We recently published our 2022 ESG report, detailing the meaningful steps we've taken to fulfill our commitment to creating communities with purpose. In fact, a recent survey in which 1,300 residents responded, 20% indicated that our ESG credentials were a significant factor in their decision to lease with Veris Residential. We've reduced our energy consumption by 24% over three years and have exceeded our SBTi-validated goal, well ahead of the 2030 target date. Additionally, Haus 25 recently achieved its anticipated LEED Silver certification, increasing the percentage of our portfolio that is green certified to nearly 70%. During the quarter, we also advanced a number of social initiatives, recently announcing that Veris Residential has become the first company globally to achieve the WELL Equity Rating portfolio-wide. This rating provides a framework for us to act on our diversity, equity, and inclusion, and accessibility goals....
as well as improve company culture and employee health, all while continuing to create long-term shareholder value. Since the reconstitution of our board three years ago, we've executed over $2 billion of non-strategic asset sales, despite extremely challenging market conditions. These included 31 office properties, three hotels, and 11 land parcels, while completing four new developments and adding nearly 2,000 units to our multifamily portfolio, resulting in 30% unit growth. We also successfully rebranded Veris Residential and enhanced our operational capabilities, as reflected in our continued sector-leading performance. These achievements are a testament to the hard work and dedication of our incredible team, who I would like to thank for their tireless efforts.
Looking ahead, we'll focus our efforts on closing the assets under contract, repaying the term loan, and continuing to enhance operational platform, while working closely with the Board of Directors to identify further opportunities to maximize value for our shareholders. With that, I'm going to hand it over to Amanda, who will provide an update on our financial performance during the quarter.
Thanks, Mahbod. For the second quarter of 2023, net loss available to common shareholders was $0.30 per fully diluted share, versus net income of $0.29 per fully diluted share in the second quarter of last year. Exercising our right to call Rockpoint's preferred interest in Veris Residential Trust has resulted in a reclassification of Rockpoint's interest from the mezzanine equity section of the balance sheet, a section between liabilities and stockholders' equity, to liabilities as mandatorily redeemable non-controlling interest. In addition, changes in the value of Rockpoint's interest, plus the current portion of their 6% preferred interest, are now included on the income statement as interest costs of mandatorily redeemable non-controlling interest. I also wanted to call out that to remain consistent with the prior presentation, we are excluding the change in value of the Rockpoint interest from Core FFO, AFFO, and EBITDA.
Core FFO per share was $0.16 for the second quarter, an increase of $0.01 per share compared to the first quarter, while Core AFFO per share was $0.19, as compared to $0.15 last quarter. Core FFO of $0.16 per share this quarter includes one-time adjustments of $0.02 per share related to real estate taxes and almost $0.03 per share related to the annual IRB tax credit. Same Store NOI was up almost 22% quarter-over-quarter and almost 19% year-over-year due to increased in-place rents across the portfolio, as well as the successful resolution of two ongoing tax appeals in our Jersey City multifamily portfolio. Sequential Same Store NOI increased by 13%, driven by higher rents and lower real estate taxes.
I'd also like to remind everyone that we have excluded the IRB tax credit distribution of $2.6 million from our same store metrics as we have done in prior years. Our controllable expenses were up 2.6% year-to-date as compared to the same period in the prior year, broadly in line with our expectations. On the non-controllable side, real estate taxes once again resulted in significant, albeit favorable, variances in the quarter. When adjusting Same Store NOI for the run rate impact of the successful resolution of these appeals, plus the 2022 real estate tax increases, Same Store NOI is still up by 18% quarter-over-quarter. We have added additional disclosure in our supplemental to support these figures.
As for our general and administrative costs, after adjustments for one-time severance payments, core G&A was $8.8 million for the quarter, which is below the first quarter, despite additional costs related to our newly executed office lease for our corporate headquarters in Harborside 3. With the wind-up of the Rockpoint joint venture, we anticipate cost savings from professional fees and administrative expenses to be largely realized throughout 2024 as we work to fully integrate the joint venture. On to our balance sheet. During the quarter, we invested $350 million of the proceeds from Harborside 1, 2, and 3, and earned approximately $4 million in interest.
We used these proceeds, along with cash on hand and the proceeds from our transitional term loan and credit facility, to complete the negotiated redemption of Rockpoint's preferred interest in Veris Residential Trust for $520 million on July 25th. The new transitional loan is comprised of a $150 million term loan and $60 million revolving credit facility, of which we drew the full amount on the term loan and $25 million of the credit facility. The facility has a term of up to 18 months and an initial interest rate of 360 basis points over SOFR.
I'd like to emphasize the transitional nature of this facility, which enabled us to redeem Rockpoint's interest as we seek to close the approximately $205 million of non-strategic assets under binding contracts and use the proceeds to repay the outstanding balance of these facilities. Looking ahead at our upcoming maturities, our one outstanding maturity this year, a $59 million mortgage on one of our stabilized Boston properties, is underway and expected to be completed in the near term. As of June 30th, our debt portfolio remains well-positioned, with 99% of our total debt fixed and/or hedged, with a weighted average maturity of 3.6 years and a weighted average interest rate of 4.4%. In addition, our debt-to-undepreciated assets ratio remained stable during the quarter at 43.2%.
Turning to our outlook, we have determined it prudent to raise our Same Store NOI guidance range to 10%-12% from 4%-6%. This is largely driven by higher than expected market rent growth, which we expect to be in the range of 8%-10%. We are keeping expenses flat, given our insurance and real estate taxes are reset in the latter half of the year and believe that they are still in the appropriate range. We will continue to monitor our portfolio and consider revising guidance should we believe it is warranted. In closing, the progress we have made this quarter cements our transformation to a pure-play multifamily REIT, as we delivered another quarter of stellar operational performance from our Class A multifamily portfolio. With that, we are ready to open the line for questions.
Thank you. Ladies, and gentlemen, at this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two 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 key. Ladies, and gentlemen, we will wait for a moment while we poll for questions. Our first question comes from the line of Jay Poskitt with Evercore ISI. Please go ahead.
Good morning. I was wondering if you could just talk about the timing for closing of those non-strategic assets and kind of what the buyer pool is like, and just any worries about the buyers getting financing?
Good morning. Thank you for the question. Varied group. Those are individual transactions that we've announced. It's a pretty varied group, but I would say all reputable parties that are recognized by us. In terms of timing, our expectation would be to close those, I suspect, this year, potentially next year. As we've done in the past, now over two years, we've been transacting in very challenging transaction markets, and the team's been doing a phenomenal job getting transactions over the line. Consistent with past practice, we've taken all the steps that we are able to mitigate the transaction risk by making contract binding and taking hard deposits.
Great. That's helpful. Thank you. Then just one other one. You know, clearly very strong rent growth in the first half of the year, and you mentioned just that you're starting to see some weakness. Just curious if you could talk about how you're thinking about rent growth the next couple of quarters and where you're seeing that weakness specifically?
It was really more of a, obviously, across the apartment sector, we've seen considerable weakening. Our portfolio has held up given the markets we're in, the quality of the assets and the incredible team we have that's extracting maximum value from them. The comment that we see it moderating at a lower level than the 12% really reflects the fact that we are now entering what is a typically slower leasing season in the apartment sector, and we're lapping a period of extremely strong rental growth. This is now growth over and above that growth, and so our expectation, we see that somewhat moderate.
Great. Thanks. That's all for me.
Thank you.
Thank you. Our next question is from Eric Wolfe with Citi. Please go ahead.
Hi, good morning. Thanks for taking my questions. For the Rockpoint redemption, can you just talk about how the two sides came up with the value there at $520 million, and sort of what it implies for the underlying value of the portfolio?
Sure. Good morning. Well, look, as you've seen over the last two years, you've got a board and a management team who are pretty proactive in the way we've approached this transformation. This is really just the latest step that reflects that. I saw a couple of the notes and the commentary around the valuation. Quite simply, that piece was preferred interest piece was marked at $487 million as of 6/30. You've got to take into consideration, though, that by terminating at least 1 year earlier than we otherwise would have been able to, and I just remind everyone that there was...
The redemption process comes with some uncertainty or came with some uncertainty on the partnership agreement, both in terms of value, timing, and so you're taking that all off the table. Even if you assumed a redemption 12 months from now, that's $24 million of interest on top of that $487, which puts you at $511 million. You could PB back that interest. Won't make a meaningful difference to where we ended up. We've paid a minor premium of less than 2% in nominal terms over what we would otherwise owe Rockpoint based on the latest redemption value as of 6/30.
In doing so, obviously, as I mentioned in the commentary, freed the company up to both operationally and strategically to operate without the restrictions and encumbrances that came with that partnership agreement.
Understood. I guess if we just sort of subtract off the saved interest expense, because I get your point there, you know, call it a value of sort of $490 million. I guess, is there just anything you can say about, sort of how you valued the portfolio, if there's a cap rate that was applied to it, just an appraisal that was applied to the overall portfolio. Just trying to understand sort of, you know, if you, when you back into that, that $490 million, what it implies for the rest of the portfolio.
Well, the $487, the reality is this was really just a negotiated agreement, the basis, the $487, is what the redemption value would have been based on our best joint estimate of value today. Notwithstanding, it's difficult to fully gauge where value is, given limited transaction volumes in the market. That, that is our best estimate of where value would have what the redemption value would have been based on valuation today. Then, as I said, you've got the interest component that we would have owed over the next 12 months, assuming it would have been a 12-month redemption process and wouldn't run on longer. I also remind you, there are other directions this could have taken. Rockpoint had the ability to equitize their position.
Assuming a redemption in 12 months, that have been $24 million, and then the balance is really just a negotiated sum to de-risk this whole, to take all the uncertainty off the table and associated with the redemption process and do a transaction today.
Understood. Just last question. If I think about your revised Same Store, NOI guidance for the year, just trying to understand what implies for how multifamily and ROI will trend for the rest of the year in third quarter, fourth quarter. Effectively, what I'm trying to figure out is if, you know, this quarter represents sort of the peak in terms of NOI for multifamily, or if we would expect to see that kind of grow sequentially in the third and fourth quarter as well.
It's difficult to tell, which is really why, you know, that's a full year number. We decided to this quarter, because we're now six months in, last quarter of the way into the year, came out the gates very strong in terms of performance, but our expectations were really that we would see rents moderate across the sector, given the economic uncertainty. On the expense side, of course, there's still continued uncertainty with inflation. On the non-controllable expenses, those typically come in in the second half of the year, and they caused us a surprise last year. Now that we're in, the reality is growth across the sector have largely materialized. You have seen rents slow down considerably and even turn negative.
In our portfolio, they've held up remarkably well and continue to hold up well. We do see that slowing down into the second half of the year. We do still have associated with particularly the non-controllable side of part of that, the NOI equation. What we've achieved in the last six months, our best estimate of where we'll land in terms of revenue over the next month, but it's difficult to say where we'll be, you know, next quarter or the final quarter. It is a slower leasing period for the whole sector, as I mentioned, so should assume some moderation of the rental side. Our best guess at where we'll land up on expenses.
Thank you very much.
10%-12% NOI guidance for the full year.
Understood. Thank you.
Thank you.
Our next question comes from the line of Josh Dennerlein with Bank of America. Please go ahead.
Hey, guys. Maybe just wanted to step back and ask kind of a big picture question. You got the Rockpoint JV pretty much behind you. What are you thinking going forward as far as your main strategic interests? Like, where are you gonna really focus your time and energy on?
Well, our job as a management team, near term, is to focus on closing the assets under binding contract, repaying the term loan and the revolving credit facility, continuing to make progress with remaining non-strategic assets, the largest one being Harborside 5. Really now, with the greater operational flexibility that we have, as a company without, let's say, the encumbrances and restrictions, that came with our joint venture, continuing to focus on the operational side, to really fully extract value from the portfolio. That is a multipronged approach with various initiatives that seek to organically, let's say, extract value within the portfolio.
Some of that may be some further equity reallocation, could be value-add opportunities, within the portfolio, but all things that we're looking at now, and look forward to updating you on in due course.
Awesome. Then what's the current interest level in Harborside 5 and the remaining non-strategic land?
Well, nothing really to, to provide in terms of an update. We're continuing to look at our options with regard to the state of Harborside 5, and potentially further land, but really nothing further to, to comment. It's not a. As you'll know, it's not an easy transaction market for office and it's not an easy transaction market for office in Jersey City, but it also hasn't been for the last three years. It's challenging, and the team's done a phenomenal job of navigating difficult transaction markets over the past two, three years to exit 31 office properties and $2 billion of non-strategic assets. We're working on it, but nothing to update today.
Thanks for the time.
Thank you.
Thank you. Our next question comes from the line of Tom Catherwood with BTIG. Please go ahead.
Thank you. Good morning, everyone. First off, well done on the Rockpoint redemption. Mahbod, the board has been really transparent in its commitment to a strategic review. The press release that it put out and you put out back in January, it really spoke to that, and it talked about doing a strategic review in due course. Obviously, a big part of that was the Rockpoint redemption. As we move forward from here, are there any other gating events that would kind of trigger or, you know, accelerate the start of that strategic review? What are the thoughts, kind of expectations as far as when that could start?
Good morning, Tom, and thank you for the question. Look, what the board said in the, I believe it was January 18th press release, was that, as we conclude the transformation and subject to other relevant factors, including market conditions, the board will evaluate a potentially a strategic process. The reality is, your question is really one for the board and the Strategic Review Committee. What I want to say is we have an independent board that are highly focused on their fiduciary obligations and have and will continue to evaluate all options in their pursuit of maximizing long-term shareholder value on behalf of our shareholders. I don't have any update to provide you on that today.
Understood. Thank you for that. On the land sales, you guys had adjusted your land values down a couple of quarters ago, at some point in time, either last year or the year before. It looks like these sales came in kind of well ahead of maybe what you had internally, or at least what it all summed up to. You know, A, is that correct? Were you, you know, pleasantly surprised with the land values there? What does that mean for the remainder? You know, I see you're carrying about $210 million of value for the resi land still. Have you adjusted that based on these recent sales, or is that still based on the prior methodology?
Good questions. In relation to the land parcels on the contract, all we've done is mark them to actual sales price versus the value that we were assuming for those parcels prior to signing those contracts. That uplift is just it just reflects where we ended up in those transactions. We have not used that as a basis to raise the value of the remaining land parcels, or expected, quote, "carrying value," but our internal value of the remaining land parcels, we have not done that. As for what our intention is with the remaining land parcels, remains to be seen. I think this has been another tremendous quarter of progress and really transformational for the company.
With the state of the assets under binding contract, when we repay, once we repay the term loan and RCF, there should be something of a surplus there. There's also, as you say, equity still tied up in land, in Harborside 5. We'll be having discussions with the board around strategy and the highest and best use to reallocate equity that's tied up that we may look to release. With Harborside 5, that's clear that at some point there'll be an exit there. We haven't made a decision with regard to the land.
Appreciate it, Mahbod. Thank you for that. Last one for me, maybe Amanda. You mentioned the tax appeals, and that seemed to carry through your property tax expenses this quarter. For the 2Q numbers, did that include a reimbursement, or is that a good run rate going forward? If it's not a good run rate, you know, what would that delta look like, you know, after it burns off?
Yeah. I think the way to look at it, we put a reconciliation in the supplemental that shows you. We had about $0.03 worth of reduction in tax expense this quarter related to the real estate tax appeal. Approximately $0.02 worth of that is related to prior periods. I, I would think about it as like $0.01 lower. Is the actual.
Per quarter?
impact. Yeah.
Got it. Really helpful. Thanks, everyone.
Thank you, Tom.
Thank you. Our next question comes from the line of John Pawlowski with Green Street. Please go ahead.
Good morning. Thanks for the time. Bobby,
Good morning.
Just a few follow-up questions to your prior comments. I'm just curious how are you reviewing the relative attractiveness in terms of use of the capital at this point between paying down more debt, acquisitions, and future dividend increases?
Well, John, at this point, the priority really is to close on the assets on the binding contract and ultimately repay the term loan and the RCF. That is the priority. It is repayment of those facilities. Beyond that, that's a decision to be made at the appropriate time when we have access to that capital as those transactions close, based on the opportunities that are available to us and ultimately, what the board and we, working together, determine to be the highest and best use at that point in time.
Okay. At this point, do you anticipate any type of external growth for the balance of this year, either through acquisitions or new development starts?
We've got, you know, six months of this year left, I'm not going to commit to one through another. No decision has been made. As I said, the near-term priority is closing these sales. $205 million of assets on contract, $140 million or so of transitional debt to repay. That's the priority. Beyond that, it's a question of when we release equity, and how much, and what the highest and best use is determined for that equity at that point in time.
Okay. Last one for me. Could you give us a sense what type of renewal rate increases you're sending out today, and what type of new lease growth you expect in the second half of this year as you lapse the really difficult comps?
Yeah, it's a good question. I, for both, I would say on a blended basis, you're landing in the mid to high single digits, relative to the 12% that we posted last quarter.
All right. Thanks for the time.
Thank you.
Thank you. Our next question comes from the line of Michael Lewis with Truist Securities. Please go ahead.
Great. Thank you. You were asked and answered most of my questions about Rockpoint, but I just have one more. You know, could you have just waited to redeem the Rockpoint interest after some of these sales had closed? It might not be a big risk that the deals will close, but you're taking some risk with a relatively expensive bridge loan. I don't see any specific reason to kind of rush it or accelerate it. You know, why the decision to take a loan and do it, rather than just close the assets and do it then?
We could have done that. The reality is, as I said, there is value, significant value in the operational strategic flexibility that this brings us. The loan, on the face of it, is expensive, and that's reflective of where rates are today. In terms of margin, I don't think it is expensive for a transitional facility. You have to bear in mind that it's repaying what was 6% current preferred debt or preferred preferred equity, but actually could have been up to 11%. Depending on where value would have ended up a year from now, and who knows?
Actually, I would argue that the, the rate, the all-in rate for the financing could be below what the all-in rate for the preferred interest on the Rockpoint pref could have been anyway. We think this is a great deal for the company. We think that ultimately, having this operational flexibility allows us to be able to explore opportunities within the portfolio to continue enhancing entity value, and that's another huge consideration. On the whole, this is a very accretive and positive transaction for the company.
Okay, thanks. On the same-store revenue guide, you know, your guidance for the full year almost doubled. Could you just talk a little bit more about why that was so unpredictable? I guess, you know, I don't know if there's a one-time in there, if you were a little bit conservative on the original guidance, or if the market is just that much stronger than you originally expected.
Yeah, as I mentioned earlier, our expectations for the apartment sector and we are familiar with our markets and expect it to outperform, but our expectations for the apartment sector on the whole were that it would be challenging this year. The reality is that we've seen that actually materialize and be the case, with rents even turning negative. I don't think anybody, notwithstanding the strength of the markets we're in, particularly Jersey City and Boston, Period. I don't think anybody expected at the beginning of the year, the level of outperformance on the rental side that we've seen relative to other markets. We've come out the gate very strong in Q1, and the reality is, we felt that Q1 was a little too early to revise guidance, given we still had three quarters of the year remaining, considerable economic uncertainty.
I mentioned, you know, views on the broader... sector and how we anticipated rents may play out through the rest of the year and of course, the expense side of it. With nine months of expense uncertainty and revenue uncertainty, it felt too soon, but now we're six months in, and the reality is the portfolio, particularly on the revenue side, has significantly outperformed and continues to be strong relative to the overall sector. Then if you're looking at it on the NOI side, we've also had this tax adjustment from the appeals that helps on the NOI side of things. That is the reason for the raised guidance, and it reflects really six months of actual performance and our best estimate for the remainder of the year.
Okay, got it. Then, lastly, for me, anything more to say on the decision to bring the dividend back, at $0.05 a quarter? You know, we knew eventually it would come back. I think the amount is pretty similar to what we thought it would come back at. You know, is there a signal there from the board that you're kind of moving on, or anything else you could say about the decision to do it this quarter? Maybe that has to do with your taxable income as well. I don't know where it stands relative to that.
No, it's not about taxable income. I, I think I would see it as a positive signal, really reflects the progress made in the transformation, you know, largely that we're on the other side of the transformation. That is the level that the board has determined appropriate at this time, given we still have some wood to chop in closing the assets under contract and repaying the term loan or revolving credit facility. There are restrictions in our ability to pay dividend under that facility, under the term loan facility, which also a consideration.
Clearly, given the AFFO performance so far year to date, one would expect that subject to board approval, there should be time to normalize to a more normal, if you like, or more market-level AFFO payout ratio over time.
Great. Thank you.
Thank you.
Thank you. As there are no further questions, I would now hand the conference over to the management for closing comments.
Thank you for joining us today, everyone. I'd like to thank the team here at Veris as well, everyone who has had a part to play in the tremendous progress that we've made in this quarter, which really represents a milestone for the company. We look forward to updating you again next quarter.