Oct 28, 2016
Operator
Good day, ladies and gentlemen, and welcome to the Q3 2016 Independence Realty Trust Earnings Conference Call. At this time, all participants are in a listen-only mode.
Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator instruction] As a reminder, this conference is being recorded.
I’d like to introduce your host for today’s conference Andres Viroslav. Sir, you may begin.
Andres Viroslav
Thank you, Glenda, and good morning to everyone. Thank you for joining us today to review Independence Realty Trust third quarter 2016 financial results.
On the call with me today are Scott Schaeffer, IRT’s Chief Executive Officer; Jim Sebra, IRT’s Chief Financial Officer; and Farrell Ender, President of Independence Realty Trust. This morning's call is being webcast on our website at www.irtreit.com.
There will be a replay of the call available via webcast on our website and telephonically beginning at approximately 12:00 PM Eastern Time today. The dial-in for the replay is 855-859-2056 with a confirmation code 96007206.
Before I turn the call over to Scott, I would like to remind everyone that there may be forward-looking statements made in this call. These forward-looking statements reflect IRT's current views with respect to future events and financial performance.
Actual results could differ substantially and materially from what IRT has projected. Such statements are made in good faith pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
Please refer to IRT's press release, supplemental information and filings with the SEC for factors that could affect the accuracy of our expectations or cause our future results to differ materially from those expectations. Participants may discuss non-GAAP financial measures in this call.
A copy of IRT's press release and supplemental information containing financial information, other statistical information, and a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measure is attached to IRT's most recent current report on Form 8-K available at IRT's website www.irtreit.com under Investor Relations. IRT's other SEC filings are also available through this link.
IRT does not undertake to update forward-looking statements in this call or with respect to matter described herein except as maybe required by law. Now, I would like to turn the call over to IRT's Chief Executive Officer, Scott Schaeffer.
Scott?
Scott Schaeffer
Thanks, Andres and thank you all for joining our call today. It was a busy quarter highlighted by our agreement with rate to terminate the external advisory contract by our significant equity offering and most importantly solid operating results.
Let's begin with the results. Our operating results this quarter further support our strategy of building a portfolio of apartment communities and primarily non-gateway markets which continue to enjoy a solid population and job growth while being relatively insulated from the effects of new construction.
We continue to see the potential for rent increases and NOI growth within our markets. Earnings for the third quarter were as expected at $0.21 per share of core FFO.
The portfolio continued to perform well with 6% year-over-year same-store NOI growth and stable occupancy, while the Trade Street assets continue to exceed your expectations delivering 10.6% year-over-year NOI growth. The Trade Street properties will become part of our same-store portfolio in the first quarter of 2017.
At the end of the quarter, we took a big step forward in the Company's evolution by entering into an agreement to internalize IRT’s management including the property management functions. This milestone transaction which will close before year-end provides management continuity as the existing management team will become full-time IRT employees.
Additionally, IRT will be afforded the related benefits of being an internalized multifamily equity REIT including cost savings and the elimination of any perceived conflicts that result from the external management structure. In order to facilitate a smooth transition away from the external management structure, we will enter into a shared services agreement with RAIT for a six-month period after the transaction closes.
Subsequent to announcing the internalization transaction, we launched a common stock offering to further fund the transaction, to reduce debt and to repurchase our shares held by RAIT. We have closed on the offering netting approximately $244 million in proceeds.
These proceeds plus cash on the balance sheet were used to reduce debt by $147 million to buy back the 7.3 million shares owned by RAIT for $62 million and to reserve the $43 million to pay for the internalization agreement. Taking into account the impact of the offering, debt reductions and expected cost savings from the internalization, our debt to gross assets will decline from 64% to approximately 53% and net debt-to-EBITDA will decline from a 11.6 times to approximately 9.3 times based on annualized third quarter results.
Looking forward IRT will be internally managed with approximately 400 employees and will be well positioned for future growth within our targeted markets. At this point, I’d like to turn the call over to Farrell to discuss IRT’s portfolio and then Jim to go through the financial results.
Farrell?
Farrell Ender
Thanks, Scott. We are pleased to announce another strong quarter of results for the portfolio.
Our same-store portfolios saw revenue increase of 4.1%, expense growth of 2.1% which generated NOI growth of 6%. Rental rates increased 3.4% from $838 last year to $867 in Q3 of 2016 and up from $856 sequentially or 1.3%.
NOI margin for the same-store portfolio increased from 50.8% last year to 51.7% in Q3 of this year and down sequentially from last quarter as we typically experienced higher turnover in payroll costs associated with the third quarter leasing season and higher utilities over the summer months. Occupancy dropped to 20 basis points and 93.2% as compared to Q3 2015, primarily due to lower occupancy at two of our Class C communities and 20 units that were damaged and being repaired, but are currently unrentable at one of our Atlanta communities.
The Trade Street same-store saw 4% increase in revenue, a 4.4% decrease in operating expenses attributed to lower insurance, personal and successful real estate tax appeals. This yielded in NOI growth of 10.6%.
The NOI of the combined portfolio grew by 8.2% year-over-year driven by a revenue increase of 4% and a 0.8% increase in expenses. Average daily occupancy for the quarter was 94.1%, 10 basis points higher than where we stood in Q3 of last year, NOI margin for the entire portfolio increased to 170 basis points year-over-year from 53.1% to 54.8%.
Our renewal rate for the third quarter was 53% and we experienced 4.3% rent growth for renewal leases as compared to 4.7% rent growth for new leases. Focusing on the markets where we have the most exposure, 50% of our portfolio based on NOI is contained in five markets.
Louisville representing 12% of the portfolios NOI experienced 4.3% revenue growth, a decline in expenses of 3.6% primarily due to successful real estate tax appeals and generated NOI growth year-over-year of 11%. Memphis at 10.5% produced 4.6% revenue growth, expenses remained flat and provided NOI growth of 9.1%.
Atlanta with 10.3% had revenue growth of 5.5%, expense savings of 2.8% generating NOI growth of 11%. Raleigh which contributes 9.6% had revenue growth of 5.2% and increase in expenses of 8.3% due to a tax reassessment of one of our communities which is being appealed, this netted NOI growth of 3%.
Oklahoma City, which provides 7.2% of our portfolios NOI, achieved 1% revenue growth and a decline in expenses of 3.8%. The expense decrease was attributable to savings across the several line items and a successful real estate tax appeal compared to Q3 2015.
We are able to achieve 1% revenue growth in our market this is struggled due to the impact of the energy sector. Fortunate the city is diversified though economy to mitigate the impact of the energy industry on the overall economy.
Job growth over the last 12 months was slightly positive and the unemployment rates stands at 4.4% as losses in the energy sector were offset by growth in other industries such as [Boeing and Aerospace] base in the state and local governments. Little Rock rebounded with year-over-year revenue of 3.5% and NOI growth of 5.1% in Q3 and addition to supply and the market have effectively stopped.
Areas that we've had the most difficulty increasing rents in the past quarter were Jackson, Huntsville and Orlando where new supply is directly impacting our millennium 700 community. Touching briefly on asset classes.
We currently classify 27% of our portfolio to be Class A communities, 63% Class B and 10% Class C. In Q3, we saw revenue growth of 3.2% among our Class A communities year-over-year, 5.1% in our Class B communities and 2.9% in our Class C communities.
We are evaluating our Class C portfolio and made cycle out of them in 2017 with proceeds used to fund acquisitions. And looking toward the fourth quarter, for the month of October, we’ve seen rent growth averaging 4% among new and renewal leases and are currently seeing increases of 4.9% and 3.3% for November and December respectively.
We are actively looking to expand the portfolio in markets that we have existing communities, but which fit into our geographic footprint and contain multiple demand drivers with solid fundamentals. We are currently looking at opportunities in Indianapolis, Cincinnati and Tampa St.
Pete and as of this call the aggregate total purchase price of the pipeline is $219 million. I will now hand the call over to Jim to discuss the financial results.
James Sebra
Thanks Farrell. GAAP earnings this quarter was $0.05 per share or $2.3 million.
Core FFO this quarter was $0.21 per share or $10.4 million, up 48% from $7 million in the same quarter of last year. Our acquisition of Trade Street in September of last year, the gains on the sales of properties this year and continued NOI growth of the same-store portfolio and the primary drivers of our positive changes in GAAP earnings and core FFO.
Our same-store portfolio as Farrell mentioned, continue to provide positive results within overall NOI increase of 6% this quarter as compared to prior year. This improvement was primarily driven by 4.1% increases in same-store revenue by keeping expenses in check at only 2.1% increase as compared to Q3 last year.
From a balance sheet point of view, we ended the quarter with $1.3 billion of gross assets representing 12,982 units, $29 million of cash and $888 million of debt. There were no property sales during the third quarter.
In conjunction with the previously announced Internalization Transaction, IRT completed a $25 million common share offering in early October getting proceeds of $211 million. Additionally, the underwriter exercised the allotment option on October 21.
This exercise provided IRT with $32 million of additional proceeds. The total proceeds plus balance sheet cash have been used to delever our balance sheet by $147 million, repurchased all of rates 7.3 million shares or $62 million, while reserving $43 million to complete the internalization in December.
On a pro forma basis, IRT’s balance sheet has approved with debt to gross assets declining from 64% historically to 53.4% and IRT’s net debt to EBITDA has improved from 11.6 times historically and 9.3 times including the anticipated $2 million to $2.5 million of cost savings plus internalization. On a pro forma basis as of 9/30 after expecting all the transactions to date, IRT’s that is 100% fixed rate with the well standard and maturity profile and average interest rate of 3.5%.
As a result of these transactions, our balance sheet cash and ability on our line of credit, we have liquidity of $130 million that can be used for acquisitions. Before handing the call back to Scott, let’s talk about our earnings guidance for the rest of 2016.
Previously, we guided that our core FFO would be between 84% and 88% per share, because of the recent stock offering and pending internalization, we are reducing our guidance to be between $0.77 and $0.79 per share. The reduction is due to the dilution and the drag between the time of the equity raise and the closing of the internalization in late Q4.
Additionally, as we disclose in the press release we are expecting to record the payment to internalize IRT as an expense. As a result our GAAP earnings guidance has been reduce and corresponding adjustment to our core FFO has been added to remove the effect of that one-time transaction.
The earnings release contains further vision on the additional assumption incurring that guidance. As it relates to 2017, we plan to give full-year 2017 guidance during our 2016 year-end earnings call in the first quarter of 2017.
Also one additional point perhaps on 2017, as we previously mentioned we are expecting cost savings as the result of the internalization. We estimate those cost saving continue between $2 and $2.5 million annually.
Scott?
Scott Schaeffer
Thanks Jim. Operator at this time, we should open the call for questions.
Operator
[Operator Instructions] And our first question comes from the line of Brian Hogan with William Blair. Your line is now open.
Brian Hogan
Good morning.
Scott Schaeffer
Good morning.
James Sebra
Hi, Brian.
Brian Hogan
Can you go over the pipeline again? I thought I heard 290 just to make sure I heard that correctly?
James Sebra
219, Brian.
Brian Hogan
219, okay. Helpful.
So in the Cincinnati and Tampa Bay/St. Pete, what is the timing of that?
Obviously, it appears based on my calculations that the dividend coverage is going to be awfully tight until you get some more properties on the portfolio, so just kind of curious on the timing?
Scott Schaeffer
In our first quarter closings.
Brian Hogan
First quarter closing and then is that all of it. Is that kind of contractual or is it what stages of the 219?
Scott Schaeffer
Now we’re in various stages, one we're negotiating contract the other two are negotiating prices and doing our due diligence.
Brian Hogan
But you'd expect all three properties to be closed in the first year?
Scott Schaeffer
Yes.
Brian Hogan
That’s nice. The property sales, the Class C portfolio, remind me how big that is for 2017 and which ones are they?
Scott Schaeffer
The two that we're looking at total $36 million. It's our property in Jackson, Mississippi and property in Indianapolis.
Brian Hogan
And the timing will be late 2017 I mean I just….
Scott Schaeffer
Early 2017, if we do it Brian and we're still evaluating I mean I touched on that briefly in the corners you know they are just two assets that are historical lower occupied and tend to take up a lot of our management teams time. So we feel like it could potentially be better to cycle out them on the opportunities that are seeing.
Brian Hogan
All right. Would probably that be focusing on reducing leverage what is your leverage targets over time?
Obviously with the recent equity rates you reduced it dramatically and down about 50% or so which is very nice numbers your growth REIT I understand that, so you're going to run above average - higher leverage than others but what is your thoughts on leverage over time?
Scott Schaeffer
We would like leverage to continue to come down, but to your point about being a growth we want to manage that process and do it efficiently. And I think that on a gross asset basis that we would like to see, we are down into the 40's and on EBITDA basis in 2017.
So we're there and with the continued growth of the portfolio or the continued growth of the existing portfolio rent growth and NOI growth that will be moving towards those numbers throughout 2017 and then as we explore acquisitions that should help as well.
Brian Hogan
Sure. And then last one.
How long do you think that the push rates or rent increases, I mean obviously it’s a very nice and you have a Trade Street portfolio being able to execute on that. In another couple years you really grow 3% to 5% or so, what’s your timeframe?
Scott Schaeffer
Yes. I mean I think it depends on, it's hard to project that far out.
I mean it’s contingent on - the economy continuing to just stabilize and rent and job growth continuing to stabilize, but yes, I mean we've seen - we’ve been pretty successful, our portfolio generally is pushing rents 3% to 6% and we've seen it through this pipeline of supply, 2017 will probably have similar pipeline of supply and then it will start to ease. So I think that as long as the economy maintains kind of where we are today we’ll be able to push rents at the same level.
Brian Hogan
Have you seen competitive pressures on…
Farrell Ender
Again, we have some exposure in the Trade Street portfolio to new supply which is what those communities are, but for the most part, we have a large portfolio of Class B assets that really insulated to supply issues that you're really seeing in a half a dozen markets.
Scott Schaeffer
The markets that we're in, we still see good job growth and to Farrell’s point, limited editions to supply and now as with some increase in wages, we expect to push rents throughout 2017 in the 4% range in the same-store portfolio.
Brian Hogan
All right. Thank you.
Scott Schaeffer
You are welcome. Thank you.
Operator
Thank you. And our next question comes from the line of Steve Shaw from Compass Point.
Your line is now open.
Steven Shaw
Hi, guys. Can you talk about the dividend and potential for coverage or if that will be maintained?
Scott Schaeffer
Our intention is to maintain the dividend. We recognize that coverage is tight at the moment.
We felt - and this was not a decision that was taken lightly throughout the strategy of the internalization and the equity raise of keeping the dividend where it is. It will be tight, but with the forward view of the portfolio and continued NOI growth that coverage will grow and we expected to be over a reasonable period of time to be at a more recent payout ratio level without cutting it of course, just to be clear.
Steven Shaw
And then any update on compensation management agreements and anything else governance related?
Scott Schaeffer
Everything is moving forward. We are ahead of schedule on the work that needs to be done to close the internalization transaction in late December or later December.
The management team has reached agreement with the compensation committee of the Board on contracts, so I think we are in a good place.
Steven Shaw
Okay. And then in terms of the fourth quarter with G&A and asset management fees, how should we be thinking about those management fees, they’re still going to be showing up in the fourth quarter?
James Sebra
Yes. I mean the contract obviously is in place until the internalization is completed.
So it all continued to kind of be calculated of course with the capital provision. So obviously other than just kind of prorating for whatever time that the internalization closes, everything else should be consistent.
Scott Schaeffer
Okay. It’s part of the reason in Jim's prepared remarks, he talked about the timing of the equity raise versus the closing of the transaction there being a drag on earnings and it's because that contract is still in place while the money sits there and the bank waiting to pay for it.
Steven Shaw
Okay. Thanks.
Scott Schaeffer
But it's a one-time event and we're looking forward to the cost savings in 2017 once the contract is terminated.
Operator
Thank you. And our next question comes from the line of [indiscernible].
Your line is now open.
Unidentified Analyst
Hi, good morning guys.
Scott Schaeffer
Good morning.
James Sebra
Good morning.
Unidentified Analyst
Could you just go through all of the pro forma adjustments one might do to give effect to the internalization just so we can understand what expenses are going away? What expenses are coming on and what the net effective that would be?
James Sebra
Sure, Brain. This is Jim.
IRT has been historically running at about kind of $2 million of total G&A plus about kind of $8 million of total annual kind of asset management fees. The $2 million of regular G&A that will certainly continue, but the $8 million of asset management fee will get effectively replaced with kind of anywhere between $5.5 million to call it $6 million of additional between compensation expense to some additional G&A expenses for rents, et cetera.
Unidentified Analyst
Okay. So that’s where that $2 million to $2.5 million of savings comes from?
James Sebra
That’s right.
Unidentified Analyst
Okay. And then, of course, obviously the interest expense is lower by the $40 million term loan you paid down and you paid down $107 million of the credit facility, is that right?
James Sebra
That's correct.
Unidentified Analyst
Okay. And that credit facility though you would be using to purchase these assets in Q1, is that right?
James Sebra
That’s Correct. And the one thing to just note on the credit facility is that with the leverage now and the low 50% range, we will see some additional savings on the spread on the credit facilities, we currently have 225 basis points over the LIBOR that will drop to about 185 basis points over the LIBOR in the first quarter as a result of all the [indiscernible].
Unidentified Analyst
If you draw down on that facility to make the acquisition will the spread go back up?
James Sebra
The spread will go back up and not until you are over at 55% leverage ratio.
Unidentified Analyst
Okay. And for the assets you're borrowing, what kind of cash flow you are picking up from those assets?
James Sebra
For buying anywhere between 585 and 620 cap rate.
Unidentified Analyst
Okay, great. Thank you.
Scott Schaeffer
Thanks, Brian.
James Sebra
Thank you.
Operator
Thank you. And our next question comes from the line of Craig Kucera from Wunderlich.
Your line is now open.
Craig Kucera
Hey, good morning guys. I appreciate the color on the G&A next year, but you mentioned that there would be a shared services agreement for the first six months, is that going to be all that material or should we expect a little bit higher G&A in the first half of the year I guess?
James Sebra
Yes. What you'll see is a little higher G&A in the first half of the year and that G&A will kind of come down in the second half of year and kind of offset by increased competition expense in the second half of the year as all the positions are filled.
And the shared services contract I think it’s in a process being finalized and it should be in kind of in the range about $100,000 to $120,000 a month. That will then go away starting with the end of that shared service period.
Craig Kucera
Got it. So when you're talking about sort of this $2 million to $2.5 million of savings that sort of net of that shared services correct that's sort of included in there?
James Sebra
That's all in this, right.
Craig Kucera
Okay. Got it.
In the past, you seem pretty confident about putting up, call it 4% RAIT in your same-store portfolio, but I was curious how you felt about Trade Street assets given that there putting up 8-ish kind of same-store NOI. Are you seeing any quick fact on RAIT with those assets or should we expect a similar kind of number next year?
Scott Schaeffer
The only push back, there's three communities there that over the past year have experienced a debt just again due to new supply getting their submarket. But they've all bounced back pretty nicely.
So we may see that. We may see that.
We may not, but for the most part again we've been able to push the - with the exception of those three properties in 3% to 7% range.
Craig Kucera
Got it. Great.
That's it for me. Thanks.
Scott Schaeffer
Thank you.
Operator
Thank you. And our next question comes from the line of Larry Raiman from LDR Capital Management.
Your line is now open.
Lawrence Raiman
Hi, good morning. Just a follow-up on the last question, better understanding the shared services and the prior question to that the pro forma adjustments for internalization.
I understand that the company is going to be on a run rate basis saving somewhere between $2 million to $2.5 million as you said on the call, the internalization cost is $42 million. That $2 million to $2.5 million that includes a six-month the debt for shared services and I’m just trying to understand what the pro forma run rate of savings is and then how do you relate that on a multiple being paid on the internalization transaction of $42 million?
Scott Schaeffer
Well, I'll take that second or the last part of your question first Larry. The contract that’s in place has the annual fee of 1.5% of equity in addition to a four times multiple at the end of the term regardless of whether it's terminated or just not renewed by either party.
So the way we looked at it was what the right price to exit that contract today is. It was four years to run.
And our view was that we felt that there was opportunity to continue to grow the business, grow the portfolio that should happen and if we were to continue growing the portfolio. The cost of that contract not only on an annual basis, but then the determination fee if you will we’re just going to get more expensive at each turn.
So that was part of the analysis and both companies IRT and RAIT hired they both formed special committees of independent members and each committee hired its own advisor to help them or in this exact negotiation. I stepped out of it because I was on both sides of the transaction as CEO of both companies.
And the special committees handled it. To me the pricing is fair for both sides because of the fact that if the contract were left to run, presumably it would be more expensive each year and then again at the end it would be more expensive to get out of it.
So from IRT's perspective it made good sense to cut that off now and to internalize. And in addition to the fact that we're saving anywhere from $2 million to $2.5 million, we believe will be saving for $2 million to $2.5 million per year going forward.
And of course that savings rose if you consider that the cost of the contract was going to be increasing in the future. So that's I’ll let Jim answer the first part of your question, but that's how the $43 million came about that.
James Sebra
Thanks Larry. So as I mentioned we’re saving about $2 million to $2.5 million a year in total and as I mentioned the G&A will be a little bit higher than first six months of the year and then that I'm going to get replaced by the higher compensation in the last six months of the year.
So kind of in the beginning part of the year we’ll be kind of running at that savings of about $2 million kind of annual year and by the end of the year we should be in that kind of $2.5 million of annual savings run annually.
Lawrence Raiman
Okay. Got it.
Thank you.
Scott Schaeffer
You're welcome.
Operator
Thank you. And our next question comes from the line of Daniel Donlan from Ladenburg Thalmann.
Your line is now open.
John Massocca
Hi, this is actually John Massocca on for Dan.
Scott Schaeffer
Hey, John. Good morning.
John Massocca
Just I am looking at your pipeline where do you think the focus is, is it everything more kind of in your Class B markets are you looking to may be expand a little bit on that Class A - with Class A type assets focused in secondary markets.
Scott Schaeffer
Yes. I would say our focus is you know the solid B plus, A minus 10-year, 15-year old product, the Trade Street situation was a good opportunity for us and it got us nice new Class A highly amenitized properties, but as we're seeing in a portfolio and just in general on the marketplace I think the opportunity footprints and maintain really solid occupancies in that Class B property.
John Massocca
Okay that makes sense. And then I think it's an early play in the same spaces as some of the more Class A focused peers, but there has been some kind of talk about pushback on the ability to raise rents there are you worried about that maybe trickling down particularly in some of your larger markets like Orlando and Raleigh beyond just supply.
Also maybe a little bit less demand for those types of assets?
Scott Schaeffer
We haven't seen it and again the only time that we've experienced any type of pushback is you know when new supply especially in Orlando where we got three deliveries at one time with concessions impacting the ability to push rents. But Raleigh we're seeing really strong across our A&B portfolio rent growth.
John Massocca
Okay. And then just kind of continuing with the TS.
Did you give the - what the Trade Street assets did in terms of expense growth?
Scott Schaeffer
Yes. They were 4.4% below where they were in primary drivers or insurance in R&M.
John Massocca
So giving or kind of lapping the one-year anniversary here if you guys - we've already lapped the one-year anniversary if you guys owning these assets. I mean how much longer do you think you can continue to see expense savings within the Trade Street portfolio?
Scott Schaeffer
Not going to be much longer - quarters, but I mean we've been in there for a year you can see on the entire portfolio. They become much more predictable as they're in the portfolio and in our operating process for two years.
So I think we might have a couple of more quarters that we really the insurance is what it is we're not going to you know we're going to renew it next year and it's going to be what it was last year so.
John Massocca
Okay. That makes sense.
And that’s it for me. Thank you very much.
Scott Schaeffer
Thank you.
Operator
Thank you. And our next question comes from the line of Steve Shaw of Compass Point.
Your line is now open.
Steven Shaw
Hi, guys getting back to those two assets that could be potentially sold. Can you talk about potential disposition cap rates on those and how they might compare to some recent decisions it sounds like they could be weaker assets and somewhat outliers.
Scott Schaeffer
Yes. It’s an interesting market we’re in because while we may not believe that certain people and they believe that these are value added deals.
So the people we're talking to you can see some pretty competitive cap rates on these properties because people think that they can go in there and spend 10,000 and 15,000 unit get more rent. We don't think so, but we'll see what the market does - you're looking potentially sub six cap rates on Class C product and really tertiary markets.
Steven Shaw
Thanks.
Operator
Thank you. And I am showing no further questions at this time.
I would like to turn the call back over to Scott Schaeffer for closing remarks.
Scott Schaeffer
Well, thanks everyone for joining the call today and we will speak with you after the fourth quarter. Thanks.
Operator
Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program.
You may all disconnect. Everyone have a great day.