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Good morning. My name is Ali, and I will be your conference operator today. At this time, I would like to welcome everyone to Terrafina's First Quarter Earnings Conference Call. [Operator Instructions]
Thank you for your attention. I will now turn the call over to Francisco Martinez, Terrafina's Investor Relations Officer. Please go ahead.
Thank you, Ali, and good morning, everyone. Welcome to our first quarter 2024 conference call. We are pleased to have with us today from Terrafina, Mr. Alberto Chretin, Chief Executive Officer; and Mr. Carlos Gomez, Chief Financial Officer. Mr. Chretin will take us through the company's overview and operations, and Mr. Gomez will discuss our financials.
So before we begin, we would like to refer you to the note on forward-looking statements in the quarterly report. Any information expressed or implied during the call may include forward-looking statements, which could involve certain risks and uncertainties. Terms such as estimate, project, plan, believe, expect, anticipate, intend and similar expressions may identify such statements. Listeners are cautioned that forward-looking statements made during this call or by the company's management may change based on various important factors out of the company's control.
These comments represent the company's judgment at the time of this call, and the company has no intent or obligation to update these forward-looking statements.
Thank you again for your attention. And at this point, I will turn the call over to Mr. Alberto Chretin for his remarks. Alberto, please go ahead.
Thank you, Paco, and good morning, everyone, and thanks for joining us today. I am very pleased to say that we had a good start to the year, delivering a strong performance with solid operational financial results in the first quarter of 2024.
The scenario in the industrial real estate sector continues to be very promising. We are aware with the multiple elections that will take place around the world in 2024, including the different elections happening in Mexico. We believe that whatever the outcome is, the story behind the manufacturing productivity in our country will continue to be strong, supported by near shoring.
As we have seen over the past couple of months, the challenge today is to keep up with an increased demand. Supply continues to be limited in most core markets, and we still believe this is a great opportunity for Terrafina's future development potential.
Coming back to our results. Terrafina had a 90% renewal rate this quarter. This helped us reach a 97.1% occupancy rate by the end of the quarter. Our team signed 2.1 million square feet of leases, out of which 1.4 million square feet were renewals, 375,000 square feet early renewals and 240,000 square feet new leases.
The Northern region, once again, was the most dynamic, representing approximately 57% of our leasing activity. Chihuahua, Ciudad Juarez and Tijuana were the most active markets, reaching an average occupancy rate of 99% and an average rental rate of $7 per square foot per year. The electronics, aerospace and industrial tenants were the most active signing new leases.
The Bajio continues to perform according to our renewal expectations for the region. This quarter, it represented 33% of our consolidated leasing activity. Guadalajara, Silao and Querétaro were the best performing market within this region with an average occupancy of 94% and an average rental rate of $5.55 per square foot. The logistics sector was the most active within these regions.
Finally, the Central region accounting for 10% of our leasing activity led by the Toluca market. Most of the leasing activity was within tenants in the logistics and automotive sector. The average occupancy rate was 100%, and the average rental rate was $6.40 per square foot.
Considering all this leasing activity, our effective leasing spread was 22.7%. New leases were signed at an average rental rate of $6.55 per square foot per year.
It is worth noting that we also sold some properties during this quarter. We sold 800,000 square feet, including a distribution center in Tabasco with 650,000 square feet, 47,000 square feet In San Luis Potosi and 100,000 square feet in Chihuahua. These sales are aligned with our efforts to improve our portfolio quality, consolidated our operations in core markets and reducing our exposure in some secondary markets.
Based on these strong operating fundamentals, our FFO per certificate for the first quarter in dollars, saw a 7.2% year-on-year increase. Our distributions per certificate grew 6% year-on-year, having distributed a total of $20.5 million or USD 2.65 per certificate. It is also worth noting that our net asset value per certificate also increased 10.7% year-on-year as the appraised value of our existing portfolio continue to reflect positive demand-supply dynamics in the sector.
Moving on to discussing the future of Terrafina. I want to provide further details on both the proposal to internalize advisory functions as well as the process we are undergoing after receiving 6 unsolicited bids for our assets.
As we have previously mentioned, Terrafina's Technical Committee has done an extensive analysis to understand what is the best governance structure for our stakeholders going forward. It strongly believes that the internalization represents an option that is in line with both global best practices and standards. It will better align the organization with investors' interest and as such, deliver more value over time. Terrafina's management team is prepared to absorb all the external advisory functions if approved.
As you all know, the internalization process was caught in the middle of 6 different offers received in the past few months. Because of it, we decided to postpone the vote to internalize structure, allowing the different bidders to complete their due diligence processes and present their alternatives to our investors, too. We have called for an informative assembly on April 30.
Indeed, Terrafina will present more details on each internalization plan. We intend to present the new investment thesis of an internalized Terrafina including details of our potential organizational structure as we have fully identified the key positions that will need to be created and the best candidates to fill these positions.
We estimate the internalization could generate savings that lower our G&A expenses by an estimated $7 million to $8 million per year. This will be a crucial factor to increase our distributions.
Also, with the combined effects of a better corporate structure and cost savings, we believe this change could unlock value in our certificates. This will help improve Terrafina's growth outlook, improving its access to capital markets.
We also plan to increase the number of independent members in our Technical Committee to further diversify the areas of expertise and maintain a best-class stakeholder protection. We are quite confident that the internalization represents a new path for Terrafina to excel as a pure-play industrial REIT with world-class standards and an assertive growth strategy. We want to offer the best investment alternative in the industrial real estate sector in Mexico.
Investors will also have the opportunity to hear more about the 6 other strategic alternatives. We will share what bidders have decided to make public in the informational meeting, as we continue to act diligently in the best interest of all of our stakeholders.
As the different bidders have made progress on their due diligence processes, we are providing the space for them to disclose their names and more details about what they are bidding for. It is important to mention that the material subject to discussion in the meeting will be based only on publicly-disclosed facts shared by each party. Management will not provide opinions on each strategic alternative.
Finally, it is important to reiterate that we will keep you appropriately informed on the evolution of the different alternatives. We will continue to share what we are allowed to and continue to work in the best interest of our investors.
Thank you for your time. Now I will pass the call to Carlos. Please go ahead with the financial highlights.
Thank you, Alberto. And thanks to all the participants for joining us on today's conference call. Please note that all figures discussed in this call are in U.S. dollars, but Mexican peso figures can be found in the earnings report.
Additionally, NOI, EBITDA and FFO figures exclude noncash items as well as nonrecurring and transaction-related expenses, the latter of which are only included in the AFFO.
To start, our quarterly rental revenues reached $56.3 million, which implies an 8.5% year-on-year increase. NOI was $53 million, a 10.2% year-on-year increase that implies a 93.2% NOI margin.
EBITDA totaled $46.2 million after a 9% year-on-year increase on an 81.2% EBITDA margin.
Our FFO reached a total of $32.8 million and a 57.7% FFO margin. This implies a 7.2% year-on-year increase. FFO per certificate was $0.045, a 4.4% increase compared to the first quarter of 2023.
Finally, AFFO reached a total of $29.9 million, an 11.7% year-on-year increase.
Our distributions for the first quarter were $20.5 million or USD 0.0265 per certificate.
Moving on to our balance sheet. We closed the quarter with $45.5 million in cash. Our investment properties closed the year at $3.1 billion, a 13.4% year-on-year increase as the appraisal value continues to be supported by solid market trends.
Our total debt at the end of March 31, 2024, was $1,072.1 million, with an average cost of debt of 5.64% and an average weighted maturity of 3.6 years.
Finally, our LTV reached 32.6%, in line with our guidance of 35%.
Thank you for your time and attention. I will now ask the operator to open the line for questions.
[Operator Instructions] Our first question is coming from Pablo Monsivais with Barclays.
It's a question perhaps more for Alberto. Alberto, provided that investors vote for your internalization, what do you think is the low-hanging fruit from an operational standpoint besides just the savings on the fees to your external adviser. Besides those savings, what do you think you will be more focused on, the new management team will be focused on, either increasing rents or what should investors expect day 1 if this proposal gets approved?
Well, thank you very much for your question, Pablo. Indeed, we intend to immediately have a different approach to management of the portfolio, with more focus on taking care of our tenants and make sure that we continue to renew the expirations at the best rate possible. And at the same time, explore opportunities with them to continue to grow with the current portfolio.
We think that there is a substantial opportunity to maintain the rent growth in our portfolio if we continue and we even enhance the relationship with our tenants. That will be the first one.
In addition to that, I think that we have put together a very ambitious and very robust developing plan. We think that now is the opportunity for us to display the talent of the current management as well as the one that we're going to bring in order to capture more developing opportunities. As you know, Pablo, we have been doing development for many, many years. And we think that now this is a very fertile ground now to continue to perform development activities.
So we came in knowing that the developing yields are essentially better than the cap rate for acquisition. As you know that in the past, we drew mostly through acquisitions, but we have intentions to be much more active on development to really take advantage of the percentage that we can do it in -- growth in development into FIBRA, take advantage of full -- having said that, take a full advantage of the opportunities that we have to develop as FIBRA. So that will be the first one. So that will be the first one. There's an underlying piece that we are expected to do, but that will be the first to -- the low-hanging fruit as you mentioned, on that activity that we will do right away.
Our next question is coming from Francisco Suarez with Scotiabank.
Actually, a follow-up question to Pablo's. I noticed the material and specifically the questions about the property management capabilities if assuming that you -- that investors choose to have you full internalize, that none of the bids are -- will be successful. Will you be interested in developing an internal property management platform? Is that something that you might be considering?
And last question, at some point of time, you might be expressing your views or your -- or any opinion in any on the 6 bids for Terrafina?
Thank you, Paco. Thank you for your question. Well, the first answer to your question, we will continue to work with the current platform of property managers. I think that, that is one of the strengths that we have in the current structure. And we will continue to take advantage of the fact that we hired splendid property managers that are doing a very good job in the regions in which they operate.
I think that the performance that they have had in terms of the renewals of the expirations and the rent growth has been very good. We will enhance the support for them, and we will continue to work for them. So it's not in the horizon for us to have an internal property management. We think that, the way it is now, that portion is working very well.
In terms of our view of the opinions, the short answer is no, Paco. But what I can tell you is that if it was a binary situation, we probably would have a different approach. But at this point, since we have 6 different offers, our job right now is to present to our investors all the information in a very transparent, in a very simple, and as much as possible, in a very -- in the best way possible to our investors for them to make a decision, of course, on a one-on-one basis with our investors. And once they say what their intention, we can help them to make the best decision, but providing or answer questions that they may have in terms of the nature or the opportunities of the different views. But at this time, we will not make an opinion, especially at the informative assembly that we will be holding next week. It will be just presenting the information that they have.
Our next question is coming from Alejandra Obregon with Morgan Stanley.
My question is really about the deal and perhaps a follow-up to the previous one. It is my understanding that you need 50% plus 1 to approve any transaction. So I mean, given all the various bids that you have on the table and the different timetables that you have for all of them, I was wondering if you can help us go through the process.
I mean, the first question is will you wait for all the bidders to launch a formal tender. Do you have to wait for all of them getting the Antitrust and CNBB approvals? That's the first part of the question. And then how will the voting process be carried out? If you need 50% plus 1, that's so many bids. I mean how is that going to be held? And if you can walk us through how the process will look like from here? That would be very helpful.
Sure, Alejandra. Thank you very much for the question. Well, as you've probably seen, we have a different nature of offers. On the offers to have any change of certificates, the process is that the -- well, let me get one step before that, we approve all of the bidders to purchase over 10% of the certificates according to our trust contract. And by doing that, we approve that with the condition that the offer that they make it for 100% of the certificates. And if they do not reach 50%, they can withdraw their offer. But if they reach 50% plus 1, they must continue with their offer.
Now they do have a period of time to execute the tender offer of 20 days. And when we approve the bidders to exceed the 10%, we gave them a time frame of 4 months. And that was sufficient for all of them to get the approval that they need from the CNBB and the Antitrust Commission.
So to answer your question, we have to find, very specifically, the time frame in which they will need to launch their tender offers. We do have one offer that is not a tender offer. It's a restructuring of the management, that offer will need only 50% of the shareholders' vote to materialize that offer. So for the ones that are going to be doing an exchange of certificates, they can launch that anytime that they have -- once they have their approvals, and they will have to do it on a time frame of 4 months.
And for the other one, we will have to make a call for the shareholder assembly, and the assembly will need to both yes or no on that deal. And if they reach the 50% plus 1, then they will have the deal.
I don't know if I answered your question. I know it's going to be a little complex issue because it would be one after the other one, then the timetable will be increased. But in general, that will be the process that I just described.
Right. That's a little bit more clear. But if I can follow up, how will you -- does that mean, number one, that investors can participate in more than one tender and then how will that end up becoming just one bid? And then how will you determine whether either the bids that are exchanges versus that, that is just a shareholder structure change. How will you manage the process so that -- I mean, you end up choosing one over the other during different timetables. So how do you reconcile those 2 things and those 2 processes?
I know it's a struggle. Let me try to explain. Okay, let's say that the first offer is launched, the first tender offer is launched on day 1. And then on day 5, the second tender offer is launched, then the time has to be extended by another 10 days. And the investors that -- they already placed their participation on the first and if the second one is launched, they can withdraw their tender from the first one and go to a second one. And that consequently, that's the way it will be.
And then the tender that reaches 50% plus 1 is the one that will end up with the company. But as I mentioned, if one is tendered and then a few days a second one is tendered, then the process is extended for 5 days. And then if a third one is extended, then the period's extended again.
But again, to answer your question about the options that the investors have, if one place their investment in the first one, they can withdraw from the first one and go to the second one or to the third one. So investors do have an opportunity to change according to different tenders that are being offered.
And then on the other alternative, the one that requires 50% plus 1 of the shareholders' assembly, that is different because that needs to be presented on the shareholders' assembly and then has to be submitted to a vote and then the investors can say yes or no to that other strategic alternatives.
Got you. That's more clear. And then just a final follow-up. I would imagine that you will have to call for a shareholders' meeting once anyone tenders for Terrafina. So at what point Terrafina will decide that it's the appropriate moment to call for the shareholders meeting, will you wait? Or is it the exact same moment that you receive the first tender? Will you wait to have more, all the bids together? Like at what point in time does Terrafina call for a shareholders' meeting for the voting process?
Well, that is something that we're still analyzing. What will be the right time to do it because as I mentioned before, we want to be fair to everyone, and we want to give the investors the opportunity to have visibility on all of them. But again, we don't -- we're not going to be waiting if there's no signs from bidders to launch their tender offer, and then we have the offer from the change in the structure, then we will close to the media at that time.
So that's been -- deciding when what is the best time to do that in order to give the best opportunity to shareholders to have full visibility of the process. I know it's not a very clear answer, but that's how we are analyzing, and in conjunction with our advisers, we're thinking about how we can present all these options with a lot of visibility and the opportunity to all, to the investors to review all the options they have before them.
Got you. And finally, in terms of the timetable, if you were to kind of just like ballpark, where do you see this happening, maybe June, July? Like is this something before the elections? Like where do you think you draw the line and say this is the deadline?
Well, I think, as I mentioned before, we gave -- when we approve all of the bidders to -- basically when we remove the poison pill, then we put away this within 4 months. And that is going to expire at the end of June. So we expect that within May, next month, we'll hear a lot of activity on the launching of the tender offers. And also within that time frame, also the hold for the shareholders' assembly to review the other option.
Our next question is coming from Francisco Chávez with BBVA.
Just regarding the divestments that you made in the quarter. If you can give us an idea on the valuation or implied cap rates or those acquisitions were made above NAV. Any indication will be helpful.
Certainly, Paco. Thank you for your question. Yes, as I mentioned on the call, I think that the recycling of capital activity has to do with our intention to enhance the quality of our portfolio by means of divesting on some properties that are in markets that are not performing as we expect or that are in secondary markets. And so that's why we sold this property in Tabasco, and we sold one property in San Luis Potosi and one in Chihuahua. All of these were sold above fair market value.
The intention for us to sell these properties is not to make a profit at this point, but to enhance the quality of our portfolio. But again, all these sale, all these divestments that we did were made with the conviction that we want to enhance the quality of the portfolio. But again, we sell all these properties above the fair market value.
Great. And just another question on the upcoming assembly. You mentioned that there are 2 other potential bidders but we don't know the name or the details of their bids. Will you include that information for the assembly or you have to call for another assembly in order to inform about them?
Yes, we will let you know about the names and the nature of the offers from the other 2 strategic authorities once they raise confidentiality. We will not discuss those in the informative shareholders' assembly that we'll have on the next Tuesday because they have not allowed us to do that. But I don't think we're going to have to call another informative shareholders' meeting. We basically -- we'll have you informed that as things happen.
Our next question is coming from Rodolfo Ramos with Bradesco BBI.
A follow-up on the process. And just to confirm, so the timeline that we're looking at, it's 4 months from beginning to end? Or at some point, if you get a tender towards the end of the 4-month period that could potentially extend it for another 4 months? Or just to have that clear as to how long this process can extend to?
Yes. Thank you, Rodolfo. Yes. No, the 4 months is the period of time that we allow the bidders to launch their offer. Once one of the tender offer is launched, they have 20 days to execute that launch, to execute that, their tender offer, they have 20 days.
If in that process, another one, another tender offer is launched, then that process extends for another 10 days to give opportunity to the investors that place their investment on the first one to withdraw that and go to the second one or to stay there. But the 4 months, that is the time frame in which the offers have to launch their bid.
So to answer your question, let's say that at the end of the 4 months, there's a last one that is going to be launching the tender offer, they had 20 days for that to end. So I think it's practical to say that perhaps the most it will be, it will be at the end of June plus 20 days for all of them to be launched.
Okay. Very clear. And just -- I mean, I understand that this might be sensitive. But I just wanted to understand how you -- I mean you personally, you see the attractiveness of bids that might be let's say, contingent upon whether it's a listing, an IPO, a spin-off, a given asset trading at a certain cap rate, I mean, does this mean that this contingency bear at all in your mind when you look at these offers, just more conceptually speaking?
Well, I think that we have answered your question, but I need to remind you that the initial activity that the management began was the internalization. And I think that all of these offers are unsolicited offers. All of these, as I mentioned before, also these are unsolicited offers. They were nonbinding and confidential.
So what we are trying to do now is to provide an environment for the investors to receive and to analyze all these different efforts and for them to make the best decision. We do continue to run the business as usual. We do continue to work with our external adviser, with PGIM Real Estate, because we do have a lot of activity in terms of renewals, new business opportunities, managing of our joint ventures.
So we -- the way we are conducting our business today is the same way that we did before, before the bidders. Of course, we are preparing the company and the portfolio and everything to be more prepared to address any of these different options the way they develop. But as far as any special activities in terms of sale of properties or new joint ventures, or if it's because of the process, we're not doing any of that.
And just a technical one and a follow-up, if I may. Last one here, I promise.
No, it's okay, Rodolfo.
Is the JV sidecar being considered as part of this process?
Yes. Yes, of course. The sidecar has been very successful. It's working very well. Let me remind you that, that is a joint venture between a U.S. pension fund and Terrafina. And PGIM Real Estate is the manager of that joint venture, the same way that they manage the older sidecars. So the joint venture can coexist very well within internalized Terrafina. And that although PGIM Real Estate will not be performing any services to Terrafina anymore, they can continue to manage the joint venture between Terrafina and the U.S. pension fund.
Now going forward, if the company is to be sold to another company, then the other company may want to reach out to the current pension fund to see if they want to continue, they want to expand or they want to terminate that joint venture. But that is the way it is. And to answer your question, yes, it is included there.
Our next question is coming from Felipe Barragan with BTG.
I have a couple of follow-ups to Pablo's first question. One is on -- if you were to terminate all contracts today and renew them with market rates, what would be the spread from the rates you have today to the new rates you have on market for your particular portfolio? That's my first question. And my second question...
Okay. Can you repeat the first question, please, Felipe?
Yes.
Can you repeat the first question, Felipe, please?
Yes. Yes. I'm sorry. So assuming you guys terminate all contracts today and you guys renew them with market rates today, what would be the spread on the implied rents? That would be my first question.
If we canceled the contracts?
Yes. I mean I'm just saying like a hypothetical scenario, like I'm not saying that's going to happen, but what's the leasing spread from the implied rent, today, what would be the average asking rate?
It will be very difficult because we're not going to cancel any contract. I think that the only time that we negotiate a new rent is at the expiration. The expiration is there because we do have this positive lease spread at the time of renewals because we already have the experience and the good positive experience with the lease contract and then at time of renewal, then the tenant acknowledges that the market rents have changed. And then that's how we renew at a higher rent. And at that time, we may be able to deploy some CapEx and something to improve the possibilities of stay for a longer period of time. But that's how we will do it.
So we expect the positive lease spread at renewal time to continue to be double digits, at least in -- around the 20% range.
Got it. So 20%, you would say from your current rate to market, right?
Yes.
Okay. My other question is on the 20 days of the period, is that 20 business days or just 20 days?
It's 20 business days.
Okay. And my last question is -- so you touched on it at the start, again, with Pablo's question that you guys had a proposal to sort of do more developments. What sort of mix are you guys targeting if you guys do become internally managed?
You mean development?
Yes.
We do intend to be more rapid on development. We have identified markets in which we can deploy opportunities for development in markets like Tijuana, like Ciudad Juarez, around Monterrey and certainly around Mexico City. We do have identified some opportunities on tracts of land that we can acquire. Certainly, we do have some land that we will try to develop, but that -- we will not limit to the land that we already have because it may not be in the best location for us to do that. So those are the markets that we will have privilege to on the new development activity once internalized.
Got it. And is there -- just a quick one. Is there any percentage or sort of mix that you can guide us on? Or is it to be seen still?
Well, I think that we're going to increase the percentage of development for sure. I think that it's because we also see opportunities on acquisitions. As you know, there are a lot of developers that are -- that have -- that their business model implies that they need to close the value creation circle by disposing of the properties, and we are a natural dealer to buy some of those properties.
And we're very pleased to see that there are self-promotion developers that are being very successful at buying land, putting infrastructure, building the facilities and leasing them with good contracts to good companies, but they are in the need also to sell those properties as well as the sidecars that are maturing, I think it's a good pipeline for us to make acquisitions.
So we will explore all opportunities for growth once we're able to tap to the market, we have the market to deploy our growth plan or the Terrafina internalized, we'll review all the options. But the point I'm trying to make is that we'll be more active in development. And this is something that we know how to do, how to do it. We have done it in the past successfully, and the yields are substantially better than the coverage for acquisitions. But to answer your question, it will be a mix, again, of both of them.
Our next question is coming from [ Andres Agoya ] with GBM.
Just a quick follow-up regarding the property sales. I was wondering if you could provide the price per square feet in each market. It would be really helpful.
Price per square foot, or what again, please?
In each market from the property sales.
Okay. Well, I think it depends. The price for each market, it depends very much on the quality of the portfolios, the quality on the size of the portfolio. But I will say that in markets like Mexico City, like Tijuana, the coverage continue to be in the low 7s, sometimes even below 7%. Markets like Chihuahua, like [ Saltillo ] markets or Monterrey. And even in Bajio, they could be in the 7.5% to 8%, again, depending on the quality of the building. But that's overall, from 30,000 feet, what the prices for different markets will be.
Our final question today will be coming from [ Edson Morguya ] with [ Suma Cap ].
The first is one is just trying to figure out the strategy behind those 6 bidders that we couldn't know. So my question for Terrafina is, do you have any specific appealing for someone or it's related to creating shareholder value? And my second question is a follow-up on developing. What do you think about the risk associated with water and electricity, specifically in the northern border of Mexico?
Well, yes, thanks for the question. Well, in terms of the said bidders, as I mentioned before also, at this point, management is not going to make an opinion on any one of them. And we are working very hard trying to provide the investors with all the information they need to make a decision on which way they want to go.
At this point, as I mentioned, we're not -- we're facilitating all of them. Of course, we're not blocking any of them, and we're not privileging any of those options.
On the second question, yes, there continues to be a risk of electricity, and there continues to be an issue every time we talk about water rights and which regions are more -- have more issues -- we try to develop a tract of land and then the authorities are more reluctant to provide permits. If there's no, at least, water solutions part of the development.
But all of those risks, we know about them, they can be assessed and that although there are some headwinds on development because of these 2 issues that you just mentioned, but there's always a way around them. And we're confident that given the region and give you the nature of the investments, we can see work, perhaps not at the speed that we would like to do it. But it's something that we are looking forward to address and believe that can be successful at launching the development, including those risks that we just mentioned.
Thank you. As we have no further questions in the queue, I will hand the call back to Mr. Chretin for any closing comments.
Thank you very much. Well, thank you all for attending today's call. I would like to thank you for your trust in Terrafina. We are very excited of our new phase and our convinced evolution will lead to value creation for all of our stakeholders. We look forward to sharing this with you. Have a great day.
Thank you. This does conclude today's call. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation.