Equity Residential Properties Trust (EQR) — Q2 2015 Transcript

Thank you. Good morning. Thank you for joining us to discuss Equity Residential's second quarter 2015 results. Our featured speakers today are David Neithercut, our President and CEO, David Santee, our Chief Operating Officer, and Mark Parrell, our CFO. Please be advised that certain matters discussed during this conference call may constitute forward-looking statements within the meaning of the Federal Securities Law. These forward-looking statements are subject to certain economic risks and uncertainties. The Company assumes no obligation to update or supplement these statements that become untrue because of subsequent events. And now I'll turn the call over to David Neithercut.

Thank you, Marty. Good morning, everybody. Thanks for joining us for our call today. As reported in last night's earnings release, our teams across the country continue to do a great job, achieving 4.9% growth in same-store revenue in the second quarter, and 5% same-store revenue growth for the first half of the year. This strong performance was driven primarily by increases in rental rates and the continuation of increased occupancy levels first experienced toward the end of last year. There's no doubt that we continue to enjoy very strong apartment demand across our core markets, despite elevated levels of new supply. This demand is being driven by the powerful combination of favorable demographics, an improving economy, and good job growth, which create new households and millennials who have a high propensity to rent housing and wish to do so in 24/7 cities across the country that have very high costs of single-family home ownership. So in a nutshell, business remains very, very good. We're pleased with how our primary leasing season unfolded. We are pleased with our results year-to-date, and our outlook for the year. We're pleased with what we're seeing in the markets in which we operate, and with the assets we own in those markets. And we're extremely confident that fundamentals will continue to deliver above-trend performance for many years to come. So to discuss a bit more about our markets, I'll turn the call over to our Chief Operating Officer, David Santee.

Thank you, David, and good morning, everyone. As we discussed during our Q1 call in April, the jobs-driven surge in apartment demand that materialized last summer continues to fuel superior operating results, in spite of elevated deliveries across most of our markets. As expected, the 100 basis points of occupancy gain we enjoyed in Q1 across our core portfolio continued throughout Q2, setting the stage for results that were better than expected and providing an operational springboard as we moved into peak leasing season. On our most recent call, we said that the strength we saw in Q4 gave us the confidence to extend renewal increase offers for Q1 that resulted in renewal growth rates not seen since Q1 of 2012. Today, we are pleased to say that this trend continues throughout Q2, and we achieved a portfolio renewal growth rate of 7.2%, the highest growth rate since implementing our new platform in early 2008. I am pleased to say that this trend continues, with July on the books at 7.1% and August already at 7%, which will continue to grow throughout the month. Additionally, the percentage of residents who chose to renew with us was virtually unchanged from the previous two years at 53%, which also contributed to our combined Q2 renewal and new lease rate growth of 5.8%. New lease space rents continue to average 5% year-over-year for the quarter and improved to 5.5% for much of July. Turnover increased to 14.5% from 14.1% quarter-over-quarter, primarily driven by affordability. However, factoring in residents transferring to another apartment within the same community, year-to-date annualized turnover is down 30 basis points from 2014. Home buying at 12.5% of move-outs remains in check across many of our markets, increasing from 776 units in Q2 a year ago to 1,914 this quarter, with the incremental increase being driven by Denver and Seattle. As high-velocity rent growth continues to drive many of the West Coast markets, we experienced a 180 basis point increase in the percentage of move-outs due to rent being too expensive. However, the line at the door remains long, as demand measured by our online e-leads increased 17% in Q2 versus Q2 of 2014. The resulting applicants that chose to rent from this pool of inquiries also had the highest percentage of 720-plus FICO scores out of the last eight quarters, with 90% of all applicants being auto-approved. Now, touching briefly on the health of our markets and our three buckets of revenue growth, San Francisco, Denver, Seattle, Los Angeles, Orange County, and South Florida all make up the plus 5% revenue growth bucket listed in order of year-to-date revenue growth. San Diego, New York, and Boston remain in a 3% to 5% range, with Boston teetering, and DC in a bucket by itself, at a positive 40 to 80 basis points. The color remains the same, and the picture is bright across all of our markets. We're halfway through a year of elevated deliveries across most of our markets. People of all ages and companies of all types continue to move to the city, as the generational shift in lifestyle preferences continues to take root, not just in our core markets, but in cities all across the nation. Broad-based job growth is driving increased absorption and record lease-ups, and for all these reasons, we are confident in delivering on our increased revenue guidance.

Thanks, David. On the transaction side, we were able to acquire one asset in the second quarter, which remains the only asset acquired in the first half of the year, and remains so year-to-date. We briefly mentioned this acquisition in the first quarter call, which was a 202-unit apartment property in Boston that we acquired for $131 million at a low 4 cap rate. I've mentioned on several of our recent calls just how difficult it is for us to acquire assets today, given the very strong bid for multifamily assets from many different segments of the investment community. As a result, we've reduced our expectations for acquisitions this year to $350 million. Obviously, with only $131 million of acquisitions in the first half of the year, this means we will have to find another $220 million of deals before the year is up, and I'll have to admit that they're not on our radar at the present time. So we've got our work cut out for us for the balance of the year to achieve that goal. On the disposition side, we did sell three residential assets in the second quarter, along with the medical office building in Boston. The three multifamily assets were all in Orlando and represented our last remaining assets there, so we have now totally exited that marketplace. These assets averaged 14 years of age and were sold at a weighted average cap rate of 6% and an unleveraged weighted average IRR of 8.7%, inclusive of indirect management costs. We calculate the weighted average buyer cap rate at about 5.4% on those purchases. As discussed also on our most recent call, in the second quarter, we sold a 41-year-old, 193,000 square foot medical office building in Boston for $123.5 million, or $639 per square foot and a mid-4% cap rate. Located next to Mass General, this asset was acquired as part of our Charles River Park investment 16 years ago. And with the current demand for healthcare assets, we saw great opportunity to dispose of it and trade into the recently completed multifamily property in Boston, with far more upside in both earnings and NAV growth going forward. Disposition guidance for the year has been reduced modestly to $450 million, and so there's no misunderstanding, the medical office building sale is included in this number. This means that we expect to sell less than $100 million over the remainder of the year. We're currently under contract to hit this number, and our disposition guidance will likely change only if we can find more opportunity to reinvest disposition proceeds, which as I noted previously will be a tough task given the competition for assets today.

Thank you, David. I want to take a few minutes this morning to talk about the revisions we made to our guidance for the full year, as well as discuss our recent debt offerings. In yesterday's release, we revised our guidance for our same-store metrics, as well as for our normalized FFO per share for the year. I want to take a minute now to give you some color. As David Santee discussed, we continue to enjoy very strong demand for our properties. As a result, we have raised our expectations for our same-store revenues to 4.75% to 5%. Our new midpoint of 4.9% is a 40 basis point improvement from the midpoint we guided you to in our first quarter release, and an 80 basis point improvement from the guidance midpoint we gave you to start the year back in February. We have also raised our expectation for occupancy for the full year to 96%, which is up slightly from the guidance we gave you last quarter. As we have discussed before, we are getting a benefit from both rental rates and running our portfolio at a higher occupancy level than we have traditionally. On the expense side, we have narrowed our range to 3% to 3.25%. David Santee talked about the drivers of that activity. Expense growth will be higher in the second half of the year than the first half of the year, due to the more challenging comparable periods. I'd ask you to remember that we posted quarterly expense growth of 0.6% in the third quarter and 2.2% in the fourth quarter of 2014. So overall, we anticipate annual expense growth for 2015 to be about where we expected at the beginning of the year. We are proud of our strong expense control record, and have posted a five-year compound average growth rate for annual expenses of only plus 1.7%. We now expect NOI for the full year to be between 5.5% and 6%, and we have reset our range for normalized FFO per share for the year to $3.39 to $3.45 per share. At a new midpoint of $3.42 per share, this is a $0.01 per share improvement from our April 2015 guidance. So I want to break out these details a little bit further for you.

Our improved outlook for same-store operating performance should result in an increase of approximately $0.02 per share in normalized FFO. Additionally, we now anticipate that interest expenses will be around $4 million, or $0.01 per share, lower than our previous expectations. This adjustment is due to a reduction in the amount of debt we will issue in 2015, with plans to issue only the $750 million announced in May, rather than the previously guided $950 million. With anticipated dispositions surpassing acquisitions by $100 million, the excess cash will be used to reduce debt, thus eliminating the need for additional debt sourcing in 2015. We also expect to capitalize on higher capitalized interest than previously guided, due to a quicker pace of development spending. Furthermore, we are benefiting from lower floating rates associated with our successful new commercial paper program. However, on the downside, we expect an additional $0.02 per share in transaction dilution primarily because of our reduced expectations for acquisitions. As mentioned in our release and highlighted by David Neithercut, we have lowered our acquisition expectations to $350 million for the year, down from $500 million, and we now assume any acquisitions will occur very late in the year.

To sum it up, the improvement of approximately $0.02 per share from our better than previously expected NOI, and a pickup of about $0.01 per share from lower total interest expense will be offset by about $0.02 per share in increased dilution from slower and less acquisition activity. And that will leave us at the end of the day, with a $0.01 net improvement to our annual normalized FFO guidance at the midpoint. So now onto the balance sheet for a moment. In May, we were pleased to successfully execute on two simultaneous debt offerings. We issued $300 million of 30-year unsecured bonds at an all-in effective rate of about 4.55%, and this was our second 30-year debt issuance in the last year. We also issued $450 million of 10-year paper, and that was at an all-in effective rate of 3.81%. Both these issuances were very well-received in the market. We saw tremendous demand, especially from large money market funds, desiring to invest in bonds from a high-quality borrower like Equity Residential that issues larger and more liquid tranches. Over the last two years, we have aggressively taken advantage of historically low long-term debt rates, and now have about 10% of our debt maturing in about 30 years. The weighted average maturity of our debt at about 8.3 years is among the longest in the sector, and matches up well with the long hold periods we expect for our new better quality assets. Our credit metrics are strong, and the balance sheet is in excellent shape. At the end of 2015, we expect to have about $460 million of outstanding commercial paper or revolver borrowings, and have availability under our revolver of slightly less than $2 billion.

Thanks. You highlighted the strong operating fundamentals and we've seen the strong growth. But recently, we've seen suburban sub markets outperform urban. So I'm wondering if you think that trend will continue, and what we need to see before urban starts to outperform suburban again?

I'm intrigued by the investment community's interest, Nick, in the developments over the past 90 days. We remain confident that, as history has shown, over longer periods, higher density urban markets tend to outperform suburban ones. When we refer to performance, we're talking about overall total return. It's possible that different assets or sub markets may excel in rental growth at times, but I believe that over an extended period, higher density assets will yield better total returns. History has made that quite clear.

Thanks. Then just in terms of the development pipeline, it looks like you decided to add air conditioning to three of the developments which increased the total cost by about 6% in aggregate. Can you talk about that decision, and then what the impact is on the projected yields for those projects?

When those deals were conceived in San Francisco and Seattle, air conditioning was not really considered to be necessary for that type of product. But as more product has been brought to market there, and the expectations of luxury products have changed modestly, we came to the decision that we should add air conditioning. And it was better to do so now under construction than wait until these assets were completed. We think we'll get enhanced rents for having done so, but at the end of the day we think that they will modestly decrease the sort of stabilized returns, but believe over the long term hold, and over an extended total return on these investments that we'll at least break even on that incremental investment or do better on it. Because we think it's the right thing to do in those marketplaces today, and that those residents of those markets have an expectation of that air conditioning, and that was something for us to do. So we believe we'll get increased rent. It'll be modestly, just a few basis points dilutive on a stabilized basis, but we think it will be long-term accretive for the asset.

Thanks. Can you remind me what the targeted stabilized yield is for those assets?

Well, generally those deals are in the 5s and 6s. So it would just be a few basis points off of those levels.

Good morning. David, obviously some very positive trends and comments about the foreseeable future, and I know, of course, you're not providing 2016 guidance. But anything we can read into on your thoughts for 2016 on rent growth at this point?

Well, I guess, you can read into them what you care to read into them. I think in my quote in the press release, my comments today, and David's comments, we all feel very bullish, continue to be very bullish on the overall demand for housing, particularly in the high-density 24/7 urban markets in which we've been focused. The demographic picture is very powerful. The job picture very good. We expect supply to be down in 2016 over 2015. So you can read into that, and we think 2016 should be a very good year.

Can you provide more details about the Boston unit acquisition at a low 4% cap rate, especially in comparison to other opportunities that you're less comfortable pursuing?

We believe that the asset in Boston could become one of our best. The seller's lease-up process did not go as well as it could have, which gave us a chance to make improvements. We also viewed this as a trade, swapping the medical office building in Boston. By exchanging one at a mid-4% cap rate for another at a low 4%, we felt this was a strong trade and a smart capital allocation. Currently, assets are being traded at low 4% and even 3% rates in many markets. We are noticing that other buyers are being much more aggressive in acquiring these assets. Every day that passes, we feel that others are highlighting the value of our portfolio and the true net asset value of our company. And that's acceptable to us.

Thank you. Lastly, regarding the development yields, you mentioned that DC is around the mid-5% range, and the rest are also in the mid-5% to mid-6% range. Clearly, you are comfortable with those yields despite the possibility of higher rates in the next year or two. Are you simply not willing to go below those levels? Are you still okay with the 5% yields? At this stage, it’s crucial for you to execute. What is your perspective on those yields?

Well, we think that we're building at 5%s and 6%s in markets that trade in the 3%s and 4%s. So we're fine with that. I think what you're seeing in our actions today, is unwillingness to continue to buy new land sites at prices today, in which we believe development yields are in the 4%s. So we're comfortable in the 5%s and 6%s, again for the high density sort of urban locations that we've been focused on. So you'll see us continue to work through our existing land inventory, but you will see us not likely adding a lot of new land at this pricing.

Thanks. I was hoping you could talk a little bit more about the supply picture. I think you said 2016, you see deliveries easing up a bit in your markets. Yet the June starts number for multifamily from the Census Bureau was higher than recently. So could you just talk about the supply picture as you see it today?

Sure. Projects that began in 2015 won't lead to deliveries in 2016. When we evaluate 2016, we notice, and to clarify, we are concentrating on our specific markets, tracking projects of 100 units or more, or even smaller ones close to our existing assets. Many of you have visited our properties over the years and met the professional teams monitoring these for us. We are currently keeping an eye on more than 1,700 units across all our markets. As we assess what is expected to be delivered in 2016 in our targeted markets, we anticipate a significant decline in new deliveries that could compete with our own offerings. Looking at construction for 2017 and potential starts for that year, we expect levels similar to 2016 or a slight increase, but still far below 2015 figures. Beyond that, it's uncertain. We are aware of the reported statistics on permits and are skeptical about how many will lead to actual starts. For instance, in Brooklyn, there was a spike in permits, but it involved numerous projects with an average of about 50 units per property spread throughout the borough. We're not entirely sure how this will affect our properties. We are monitoring the situation and will approach 2017 and 2018 with caution, but for 2016, we are observing a notable decrease across our markets, along with continued strong demand.

That's helpful. Thanks, David. One other question, you mentioned that acquisitions are becoming more challenging, similar to how they've been. It seems like you may begin to focus less on development next year. Does this lead to a scenario where the Board considers that if there are fewer capital needs, there could be opportunities for even higher dividend growth, with a larger portion of your earnings allocated for dividends?

I think the Board thinks about all these things. I think we've been very good stewards of capital, and very good capital allocators, and we'll be discussing all those things. And again, a reduction in acquisition activity by us, or a reduction in land take-downs and development is not an indication in any way of our belief that fundamentals aren't going to remain very strong for years to come. It's just pricing has got very expensive and yields very low. We're happy with what we own and don't believe we need to buy assets at these prices. And to your point, we'll consider lots of different options for capital allocation, given those dynamics.

Good morning. David Santee mentioned in his prepared remarks, the generational shift you're seeing in urban demand, and not just in your markets, but across the nation. Are any of these cities becoming more interesting for you to enter at this point?

I would say no. We have done extensive research on markets where we currently do not operate, and we have found that they do not meet our key criteria. One of the most significant concerns is the cost of single-family homes relative to income. Some cities like Chicago and Minneapolis are vibrant with millennial growth, but when we analyze home prices in relation to income, it becomes difficult to view these as solid long-term investment opportunities. While there is potential to make money in these markets, it would require a trading approach rather than a long-term strategy. Therefore, we are focused on our current investments and do not plan to change our strategy at this time.

Okay. And then a question on development yields. AvalonBay mentioned on their call yesterday that they're seeing higher achieved yields than originally projected. I am wondering if you're seeing a similar dynamic in your projects, excluding the ones you reconfigured?

Absolutely. Anything that was priced a few years ago, land priced a few years ago, construction costs locked in a few years ago, are outperforming one's original expectation. I think that sort of almost goes without saying, but it just becomes more and more difficult, as pricing gets more costly. So certainly, anything being delivered today is at least achieving your expectations. Certainly, it's exceeding your expectations on market rents, at the time in which you underwrote it and commenced construction. So we're very pleased with what we've got in the pipeline. I think we made a lot of money on that pipeline. The question is for us, is at what price or what cost you continue to probably reload that pipeline, and we've decided to take our foot off the gas. Well, by definition, yields are declining. This means costs are rising faster than rental rates. The product we began delivering as we came out of the recession is achieving yields of 8% to 9%. A few years later, we saw yields of 7% and 6%, and now we're at 5% and 6%. I believe the new projects we would consider starting today, based on current market pricing, would yield in the 4% range. We've made significant profits from the products we've already started and will soon deliver. However, we've chosen not to initiate construction on new projects that we believe would yield at today's rent levels in the 4% range. We're not focused on maintaining market share; that's something for the automobile industry. We have a fantastic land site in LA that we could potentially begin developing in 2016. We really appreciate downtown, as it is one of the strongest performing markets. While there is new supply coming in, it adds density and enhances the area with more restaurants and activities. This creates a self-reinforcing cycle. We are excited about the project on the land site we already own in downtown LA, which could see construction start soon.

Good morning, David. I have a question for you. You were vocal at NAREIT and on this call about the challenges of acquiring both existing properties and land sites. However, this apartment cycle seems to be lasting longer than many expected, and it has gained a second wind this year. How do you reconcile the longer cycle and the increased opportunity for returns on current investments with the fact that yields are declining, especially as you've mentioned, in the 4% range for development projects? Does this imply that EQR will remain cautious as long as yields remain low, or do you anticipate a change in the investment landscape that could make pricing more appealing while the cycle still continues to grow?

Well, I guess, you marry it, Alex, by just being happy that you're long, right? This pricing may be difficult for us to rationalize new investments, but it just validates everything we've been doing over the last 10 years. So when you're already long, this is a high-class problem, right? Is it possible that with these elevated new deliveries, there will be opportunities to buy assets at prices that make sense relative to taking construction risk? Perhaps. We don't have to buy. We don't have to develop in order to kind of create value. I think the single biggest value-creating tool we've got is David Santee, and his teams across the country. They have delivered unbelievable bottom line results for us and have created enormous value out of the existing portfolio. So we admit that we continue to have assets that we rather sell, we'd like to sell if we could. But it's only if we can find the reinvestment opportunity for those assets. Absent those opportunities, we're happy to sort of sit tight, and operate what we have. We acknowledge that doing so is modestly more dilutive this year than what we had originally forecasted. But we're quite content to allocate capital in the best way we see fit, the opportunities present themselves. And with George and his team, they turn over every bush and rock, looking for product, and remain optimistic that we will find stuff we can buy this year at a little better yield, by maybe taking on some risk that we can uniquely manage, and we'll be comfortable managing. We'll see. Not the first time in our history. It's probably the sixth time or so in our 20 some odd-year history, in which we've had relatively little transaction activity. And I guess, I'll tell you, that at the end of those lulls, we've always come back strong, and have created a lot of value in doing so. So we don't worry about marrying these things. It is what it is, and we're quite comfortable with our plan, and think that there will be opportunities down the road, and we'll patiently wait for them. Basically move-outs, the increase amounted to 600 for the quarter, and it's really broken down by three categories, half of the 600 were due to affordability, 150 were home buying, and the other 150 were transfers. So that's across the entire portfolio. We don't focus on occupancy; instead, we aim for an acceptable level of inventory. As we previously mentioned, we worked extensively on adjusting many of the Archstone lease expirations that were misaligned. On average, we shifted approximately 32% of our leases from January through May to June, July, and August, where rents are higher. With around 300 affordability move-outs across 400 properties over three months, I don't have major concerns. Most of this is in San Francisco, where renewals are still experiencing double-digit increases. However, there is a substantial demand to fill those vacancies, so as long as that continues, we are not worried.

Sure. We've got a fair amount of debt maturing in those years. We don't now have any guidance, any thought of prefunding that. We will think about that. We will think about hedges as well, which we've done in the past. So right now, I would tell you that we're sort of waiting to see the rate climate, and feeling our way through it. But I think we've been pretty proactive in dealing with those maturities. It's about I think a 5.3% rate next year that we get to re-fi to, so I think it will be a pretty accretive refinancing opportunity, and so we will be all over that. But right now, the guidance has no prefunding activities in it at all.

I apologize, I didn't fully understand the question. Are you asking about the valuations of the properties we intend to sell? Given that we have already sold many of our non-core assets, will our future assets be of higher quality and perhaps have lower cap rates than those we've sold so far? Yes, I believe we will start selling lower quality products in our main markets, which we expect will attract a better cap rate than what we have seen in the exit markets. As we navigate through the exit markets, we will also sell lesser quality, non-core assets in our main markets, similar to what we did with the office building in Boston. This is another approach we are using to manage the difference between the disposition cap rate and the acquisition cap rate. Let's take Boston as an example. Many of the deliveries occur within a one-mile radius of the financial district, where we have six properties that contribute 40% of our total portfolio revenue. This concentration in a small area results in some pricing pressure. Similarly, in Seattle, many deliveries are taking place in Belltown and the downtown area. Looking at our portfolio in Bellevue and further north towards Bothell and Snohomish, those properties are significantly outperforming the central business districts due to their delivery scale. However, the Seattle portfolio is still showing very strong results. It's just a matter of time before we address the high number of deliveries concentrated in certain markets. This is akin to Washington, D.C., where 20% of our revenue comes from the RBC corridor, which is currently experiencing the most challenges. Over the next year to 18 months, as job growth improves and new deliveries begin to decrease and shift back to suburban areas, we expect to see a return to relative strength in these markets. Manhattan is fine. I think you just look at our portfolio, and you look at Brooklyn, which is really dragging the portfolio down. We still have assets in the far outer burbs, down near Philadelphia, Fairfield, those are far underperforming. So I think when you break down a portfolio like New York, when you look at core Manhattan assets, those are performing better than expected and above historical trend.

Hey, guys. First question. Given that we have been seeing pretty strong job growth for the last several quarters, and just recently we've seen an uptick in household formation, what are your thoughts on as we move forward into 2016, given less supply this year? And given that we probably had a breakdown from that 5 to 1 jobs to apartment ratio has probably decreased, that we actually continue to see accelerated or higher levels of rent growth than we have this quarter, which kind of probably took a lot of people by surprise?

We won't provide specific numbers, but we've consistently stated that the elevated levels of new supply we've seen in recent years would not destabilize the markets. We're confident that demand is strong enough to absorb this new supply without causing instability. We expect less supply in 2016, alongside continued job growth and inevitable income growth that comes with it. This demographic is keen on living in high-density urban areas, either for the flexibility that rental housing offers or because they cannot afford single-family homes due to significant price multiples compared to their incomes. Thus, we believe we will see above-trend fundamentals for many years ahead. We see the situation as you described and remain very optimistic about the multifamily sector in the near future.

If I could just add onto that. Given your comments on development being expensive, sorry, would you look to do things more internally, maybe ramp up redevelopment? Maybe do deeper turns or deeper type of redevelopment, or are there other kind of efficiencies that you could work on to improve organic growth, I guess for David Santee?

Well, yes, it's David Neithercut. I want to make sure I just define what we mean by our rehabs, which is really not redevelopment. There are others in our space who talk about redevelopment as spending $40,000, $60,000, $80,000 a door. What we have done, and what we have accelerated is our rehab business, which I'll have Mark Parrell explain.

Right. We give you a little disclosure on that on page 22. We spend right now about $9,000 per unit. These are usually kitchen and bath freshenings. We generally get a yield in the mid-teens on that, and those have proven to be for us excellent investments. I do think you'll see that ramp up. We didn't increase our guidance there, because we're still sort of in the formative stages of that. But I would expect we might spend closer to $65 million there, and do a few more of those rehabs. The cost is trending up for us, not because cost items are increasing, but the scope of these rehabs are going up. And the places we're doing them, these high-rise units that we now own, just demand a higher level of finish. So you might see us have that number go up a little from $9,000 per unit to $10,000 or $11,000. And I think you'll see more volume there and more spend, because it's a great investment in these very well-located assets that we intend to hold long-term.

Thank you all for your time and interest today. I hope you all enjoy summer, and look forward to seeing many of you in the fall. Have a great day.