Mack-Cali Realty Corp

F:WY4

Earnings Call Transcript 2022-Q2

[Operator]

Good day, everyone, and welcome to Veris Residential Second Quarter 2022 Earnings Conference Call. Today's call is being recorded. I would like to remind everyone that certain information on this call may constitute forward-looking statements within the meaning of the federal securities laws, although we believe the estimates reflected in these statements are based on reasonable assumptions, we cannot give assurance that the anticipated results will be achieved. We refer you to the company's press release, annual and quarterly reports filed in the SEC for risk factors that impact the company.

With that, I would like to hand you over to Mahbod Nia, Veris Residential's Chief Executive Officer. Please go ahead.

[Mahbod Nia, Chief Executive Officer]

Good morning and welcome to our second quarter 2022 earnings call. I'm joined by our CFO, Amanda Lombard. We are pleased to announce another solid quarter during which our multifamily portfolio again posted sector-leading rental and NOI growth while maintaining occupancy at around 97%. These results reflect the significant steps we have taken over the past 18 months to notably transform the company, repositioning the portfolio and enhancing our operational platform.

Today, NOI contribution from multifamily sits at 83% on a pro forma basis, up from 39% as of the end of the first quarter of 2021 and approximately 1,900 multifamily units have been added to our portfolio representing growth of over 30% during this time. The significant increase in NOI across our stabilized assets, driven by strong demand across our properties is evidenced by continued leasing velocity at Haus25, which is now 66% leased and nearly 50% occupied.

We also made progress on our strategic transformation, closing our acquisition of The James and signing definitive agreements for the sale of the Hyatt Hotel and 23 Main Street, our last remaining suburban office assets. The operating fundamentals across our 6,691 unit multifamily portfolio remained strong during the quarter, with occupancy at 97.1%, and a blended net rental growth rate of 21%, a figure that was up from 16% in the first quarter and that we continue to maintain at around 20% through July.

Loss to lease was approximately 5% across the portfolio, down from 6% in the first quarter despite rising headline rents. I would like to thank our team for their continued dedication and hard work, including a tremendous effort to these nearly 500 units in Haus25 in just four months. Our 5,825 unit same-store operating portfolio also maintained strong occupancy at 96.8%, while continuing to increase rents in line with market trends. Same-store year-over-year NOI grew by 28%, the third consecutive quarter of sector-leading NOI growth reflecting higher occupancy relative to last year and lower concessions and increasing rents during the quarter.

As has been well documented, we are in an environment that is ripe for the economic uncertainty with the two greatest risks at the forefront of investors' minds being inflation and a potential recession. While not immune, we continue to believe that the multifamily asset class and in particular, Class A properties possesses unique characteristics that make it well positioned to outperform in either of these scenarios. The shorter-term nature of our leases provides a natural hedge against inflation with the ability to continue capturing rental growth, particularly as supply remains subdued and homeownership and expensive alternatives. And rising construction costs and replacement values should provide support to capital values of standing stock.

The defensive characteristics of multifamily, namely that it is a critical nondiscretionary expenditure item, should provide a degree of downside protection in a recession scenario. The proximity of our New Jersey portfolio to New York with our rents being approximately half of those in Manhattan further supports this thesis. Looking ahead, we see our portfolio continuing to benefit from favorable market dynamics, including a strong tenant base, reduced affordability of housing alternatives and limited supply across our key markets. On July 21, we closed the acquisition of the James, a newly built 96.7% leased Class A 240-unit apartment building located in Park Ridge for $129.6 million. The transaction is anticipated to contribute approximately $0.05 to $0.06 to core FFO per share in the first year on an annualized basis.

Turning to asset sales. As previously announced, during the quarter, we completed the disposal of Urby land parcel in Jersey City and the land parcels in Port Imperial for a total of $100 million. We also signed definitive agreements to sell the Hyatt Hotel and 23 Main Street, our last remaining suburban office asset for a total of $132 million. Together, these sales are expected to release approximately $20 million of net proceeds to the company. As we look to our office portfolio, as of the end of the second quarter, the waterfront assets were 70.6% leased. We leased 24,200 square feet, reflecting approximately 48% of the total leasing volume in the broader New Jersey waterfront market in the three-month period.

We also continue to make meaningful progress in efforts to become a more responsible, sustainable and inclusive company. In May, we released our 2021 ESG report in which we committed to reducing our Scope 1 and 2 emissions by 50% by 2030, a target we have validated by the Science-Based Targets Initiative and that we are well on the way to achieving. As a result of our enhanced ESG efforts, today, approximately 40% of our wholly-owned multifamily portfolio is Green certified, LEED or equivalent. Additionally, our introduction of new, more sustainability-focused policies at the corporate and property levels as well as our enriched environmental and sustainability disclosures have been accredited by two independent third parties, both of whom take a data-driven scoring approach to measuring corporate, environmental and social disclosures.

As of this past June, Veris Residential earned the QualityScore rating of one, the highest score from ISS for both environmental and social disclosures, up from ratings of nine and eight, respectively, received in October 2020. And as of July, we saw a 26% increase in our Arabesque S-Ray score from ESG book, a partner of Glass Lewis as compared to the prior year, putting us above the 90th percentile in the broader finance sector. These sector-leading ESG scores reflect our continued commitment towards our properties, people and the planet while seeking to create value for our shareholders.

With that, I'm going to hand it over to Amanda, who will update you on our financial performance during the quarter.

[Amanda Lombard, Chief Financial Officer]

Thanks, Mahbod. For the second quarter of 2022, net income available to common shareholders was $0.25 per fully diluted share versus a loss of $0.13 per fully diluted share in the prior quarter. Net income available to common shareholders was up quarter-over-quarter due to a large gain of approximately $55 million on the sale of land parcels, the proceeds of which were used for the acquisition of The James. Core FFO for the quarter was $0.15 per fully diluted share, as compared to $0.09 per fully diluted share last quarter. This increase was driven primarily by further sequential improvement in residential performance of $0.03 per share and hotel performance of $0.03 per share. Core G&A improved by $0.01 per share this quarter due to lower professional fees in the second quarter.

The Urby tax credit contributed $0.025 per share to core FFO, which, as a reminder, is recorded in the equity and earnings of our unconsolidated joint ventures. Note that while we receive this tax credit annually, it's timing varies and thus, we have historically excluded it from our same-store numbers and continue to do so now. All of this is offset by a $0.03 per share increase in interest expense due to a reduction in capitalized interest as a result of Haus25 opening. As Mahbod mentioned, year-over-year and quarter-over-quarter same-store NOI was up 28% and 8%, respectively. The year-over-year increase is driven by net rental growth of 17% and a modest increase in expenses of 2.6%, well below the current rate of inflation. The three lease-up properties that stabilized in the fourth quarter of 2021 contributed $3.9 million of NOI during the quarter, up 4.1% from last quarter.

Looking ahead, our last significant COVID concessions will burn off in the third quarter, and we are expecting an increase in real estate taxes in Jersey City. While not final, we project a $3 million annualized tax increase, of which $2 million will be incurred in the third quarter. We remain well positioned to continue mitigating the impact of inflation on our controllable expenses as evidenced by our efforts to streamline operations, implement ESG-related measures and increase the utilization of technology, which, coupled with recent investments in our teams, will allow us to more quickly identify and respond to problematic trends in a timely fashion. This is exemplified through our same-store margins, excluding property management fees improving from 54.9% in Q4 2020 to 64.4% as of this quarter.

In the fourth quarter, we expect to close the sales of the two assets that have recently gone under contract, subject to customary closing conditions. However, for 23 Main, we will lease back the site through the remainder of the tenant's lease term at the same rate, resulting in no impact to core FFO through lease expiration. This quarter also marks the first period in which Haus25 began to contribute to earnings ahead of our expectation, and we anticipate this contribution will grow significantly as the property reaches its stabilized occupancy.

Finally, turning to our balance sheet. We refinanced the construction loan on RiverHouse 9 subsequent to quarter end. We also drew down $28 million on our credit facility to fund the acquisition of The James, which we anticipate repaying with the proceeds from the sale of land parcels under binding contract. Our net debt to adjusted EBITDA, which is quite sensitive earnings, fell this quarter to 14.1x versus 18.8x in the first quarter due to the same factors which drove higher relative core FFO this quarter. As some of these factors, such as the Urby tax will not recur next quarter, we expect net debt to adjusted EBITDA to fluctuate as we continue to work through the balance of the transition.

By contrast, our debt to undepreciated assets ratio and our interest coverage ratio remained relatively constant at around 45% and 2x, respectively. We believe our company is well positioned in a rising interest rate environment, with 76% of our total debt portfolio fixed and/or hedged at a weighted average interest rate of 3.69% with a weighted average maturity of five years. Our multifamily debt is 100% senior secured, primarily nonrecourse and none of it is cross collateralized.

With that, I think we are ready for questions. Operator?

[Operator]

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Brian Spahn with Evercore. Please go ahead.

[Brian Spahn, Evercore]

Thank you and good morning. Mahbod, I was wondering if you could just provide an update on the transaction market. How has this changed over the last three to six months? And to the extent there are any bids out there today, where are you seeing bid-ask spreads for office product?

[Mahbod Nia, Chief Executive Officer]

Good morning, Brian. Thank you for the question. It's a very relevant one. Well, certainly, I'd say, in the last three to six months, given the rising rates environment and Fed action and the implications that's had on the financing market, it has been a challenging transactional market for sure. And I think it's primarily driven by actually the credit markets and availability and cost of debt. Having said that, we continue to make progress this quarter as you saw and are somewhat accustomed to operating in challenging environments and continuing to make progress as we have been over the course of the past 18 months or so. So we're still optimistic that there's a path forward and we can continue the transformation, but it's a challenging transaction market out there.

[Brian Spahn, Evercore]

So are you seeing any interest from levered buyers today? Or are they just pretty much sitting on the sidelines at this point?

[Mahbod Nia, Chief Executive Officer]

For office or multifamily?

[Brian Spahn, Evercore]

Office?

[Mahbod Nia, Chief Executive Officer]

No, you are – I think depends on the product and the risk and return profile. But certainly, there's a lot of capital that's been raised sitting on the sidelines looking for value-add type opportunities. And this is certainly the sort of environment and the asset class indeed, that they will be looking to deploy and to have an opportunity at delivering sort of returns that they've undertaken to.

[Brian Spahn, Evercore]

Okay. Thanks. I guess just lastly, on the Waterfront leasing, obviously, leasing has been slow. And I'm just curious what, in your mind, needs to happen to get some meaningful traction just on the leasing front there?

[Mahbod Nia, Chief Executive Officer]

Well, I think, if you look at – whether you look at last year or the first quarter or even the second quarter, we've certainly outperformed in terms of the percentage of overall leasing volume that we've attracted to Harborside. So in the first quarter, the MUFG lease was a significant portion of what was a very good quarter in the market, around 500,000 square feet. And then this quarter, the 24,200 square feet that we signed was half or slightly over 50% of the total leasing volume transacted in the market. The challenge is that it is an unpredictable and lumpy market as far as leasing flow is concerned. And so it's really about positioning ourselves to be able to capture those leases as and when opportunities arise in the way that we did in the first quarter and now in the second quarter, but you really need that leasing volume to pick up, and then we'll be well positioned to capture that.

[Brian Spahn, Evercore]

Yes, okay. Thanks for the color.

[Mahbod Nia, Chief Executive Officer]

Thank you, Brian.

[Operator]

Our next question comes from Nicholas Joseph with Citi. Please go ahead.

[Michael Bilerman, Citi]

Thank you. It's Michael Bilerman here with Nick. Mahbod, I guess, good afternoon there. We're lucky here. Good morning here.

[Mahbod Nia, Chief Executive Officer]

Good morning.

[Michael Bilerman, Citi]

I had a question. Just in your opening comments, you sort of painted the picture of the macro in terms of where people's concerns are over inflation, recession, rising interest rates. And it sounded like you painted a relatively optimistic tone for Veris's portfolio, really focusing on the multifamily in terms of its age, it's rent muscles relative to Manhattan, the fact that you can lease it annually. And I guess how do you contrast that relative to the corporation being still Amanda talked about how high the leverage is quarter of the debt floating rate. The office portfolio, you had negative net absorption again, and it's 30% vacant and you talked about the challenges on the transaction side. The development as a percentage of the total is very high for Veris relative to other REITs. You still have the Rockpoint interest in terms of complexity. I'm just trying to contrast where it seems that there's still a lot of things and I'm not undermining all the efforts that you've been able to do in this transition. But in the event of a recession, there are a number of risks with the company. And I'm wondering if you can sort of address some of that because it just seems that there could be a little bit more difficulty in terms of raising capital and being able to finally execute on the full transition.

[Mahbod Nia, Chief Executive Officer]

Right. There's quite a lot there, Michael. So I'm going to try my best to dissect it, but I'm going to go back to – we are very well positioned to continue capturing upside, as I said, in the inflation environment or to weather any storms that may lie ahead in the form of a recession. If you look at where we were a year ago with the corporate unsecured bonds, the recourse bonds that we had outstanding that were due to mature this year and next, that would have been a challenge to try to refinance those at this point. Those are now gone. We've sold well over $1 billion of real estate during the course of the past 12, 18 months, used predominantly the proceeds to repay debt, deleverage, focused the company. A year ago, we were at 39% multifamily, pro forma, now we're 83% multifamily. So the engine room now is multifamily, not office, and that's performing extremely well.

The leverage that you mentioned, well, that's all senior secured mortgage debt that sits on the multifamily side. It doesn't give us any cause of concern on a loan to undepreciated assets basis, it's around 45% loan-to-value I'd argue it's lower than that. So nothing that keeps us up at night. We've been making – in terms of capital allocation, you mentioned the development business being disproportionately large relative to the operating, I agree with that. And we've been chipping away at that and making strides to reallocate that capital and making progress in that sense despite the challenging market.

But do we still have more land than we probably ought to have? Yes, I think we do. And as we rebalance, continue the portfolio rebalancing and reallocate that equity to a higher and better use, then I think we'll continue to see the metrics improve. But today, there's nothing that gives us a cause of concern. Our one construction project is Haus25, which is complete and leasing at a very rapid pace and will also continue to contribute to those earnings. So I stand by what I said, I think the company is very well positioned much better than we were a year ago and very well positioned for anything that lies ahead, nothing that keeps me up at night.

[Nicholas Joseph, Citi]

Thanks. And this is Nick with Michael. Maybe just on the multifamily side. You talked about, obviously, the strength that you've seen and the strong net effective rents. Is there anything as you look either on current leasing or 30 or 60 days out, where you're either seeing more normal seasonality or any slowdown in demand from the leases that you're signing today?

[Mahbod Nia, Chief Executive Officer]

Good morning, Nick. Not yet. As you saw the 21% blended net rental growth in the quarter, we continue to see through July. I figure that was very close to that 20%. And as it stands, the momentum is still strong and the rent – those levels are being sustained. Do I think that's a sustainable level longer term going forward? I do not. I think that we will see across the industry, and we won't be moving from that. We've had very strong rental growth over the last year or so, and I think we'll see that normalize at a lower level.

[Nicholas Joseph, Citi]

Thank you.

[Mahbod Nia, Chief Executive Officer]

Thank you.

[Operator]

Our next question comes from Tom Catherwood with BTIG. Please go ahead.

[Tom Catherwood, BTIG]

Thanks and good morning everybody. On Haus25, a couple of questions. First, how has your July leasing progress continued? And does that kind of stayed on the trend that you saw in 2Q? And then second, with two thirds of the building now leased in, Mahbod you mentioned approaching 50% occupancy, how much of rents moved versus pro forma? And does that give you kind of confidence in boosting your yield expectations on the project overall?

[Mahbod Nia, Chief Executive Officer]

Good morning, Tom. Yes, the velocity of leasing there has been phenomenal, particularly when you consider – and I really do want to credit that to the team that have been carrying out that leasing product for us. It's – and even more so given that we started pretty much out of the gate within a week or so setting the bar higher and higher in terms of net effective rents, putting back concessions and pushing rents. So where – in terms of relative to expectations or internal budget double-digit figures above where we started just over 10%, around 12%, north of where we started in terms of rent. And in terms of how that velocity continues today, we're still seeing great demand. It is unique, but I'm going to say a unique product in terms of the offering that it has 27,000 square foot of amenity space and everything else that comes with it, the state-the-art building. And it is very sought after, and we're seeing continued strong demand for the property.

[Tom Catherwood, BTIG]

Got it. Appreciate that. And this is tough question, given the comments you said before about the balance sheet and about the land positions and all. But given the performance of multifamily overall and Haus25 specifically, does it give you any consideration of starting an additional development? Or given the strength in the market, do you think about well maybe sell the land to others to build into that strength? And then along with that, do changes in inclusionary zoning in Jersey City impact your land bank there?

[Mahbod Nia, Chief Executive Officer]

Yes. both actually great questions. Thanks, Tom. So the first one, it has to be on the table as a potential use of capital, but it cannot be a priority given our focus on cash flow and leverage reduction that we've referred to. So it would be, we believe, highly NAV accretive and ultimately, earnings accretive to develop. But when you consider, it would take three to four years to develop and stabilize an asset. And during that time frame, the capital requirement and maybe you can say we could joint venture with someone and contribute the land, and there is no further capital requirement, but then we're still contributing capital in the form of the land that we own and the equity that's tied up within it. And that won't yield anything for some time.

And so there are challenges given where we are, as the company, doing that. And then if you develop, you're also adding more concentration risk in the market that is performing extremely well for us. But just from a prudent perspective, we should probably be thoughtful about adding more exposure. You could manage that by selling properties and developing. But on the whole, I would say, it's something that makes a lot of sense, but just given where we are, probably is not a priority at this time.

And in terms of the IVO, yes, it is certainly – it has an impact in general on the market and anything that has not yet received pipeline approval. As far as our portfolio is concerned, there are one or two sites that would be impacted. But to put it into context, Harborside 8, Harborside 4 would not be impacted. And so in terms of value of remaining land bank in this area, I think we're in a good position, and the majority is not impacted by the IVOs.

[Tom Catherwood, BTIG]

Got it. Appreciate that. And then last one for me. I think last quarter, you mentioned as far as the expectations and the closing of 101 Hudson, it had been sometime in the third quarter. What have your conversations been with the buyer? Do you have updated expectations? And is there a real risk that this deal doesn't get to the finish line?

[Mahbod Nia, Chief Executive Officer]

Yes, a very valid question, and clearly, that's taken longer to get over the line than we hoped or expected. My expectation today is still that we get that transaction closed and over the line. And the delays have been largely related to the funding structure that the buyer has adopted and including taking over the securitization that was in place as opposed to repaying it and refinancing that. So there have been some procedural things along the way that just take a little bit of time, and we're largely over those and expectation is that we close. Having said that, in this transaction environment, my general view on life is nothing has done until it's done, so there's always risk.

[Tom Catherwood, BTIG]

That makes a lot of sense. We'll keep a look out for it. That's it for me. Thanks everyone.

[Mahbod Nia, Chief Executive Officer]

Thank you.

[Operator]

Our next question comes from John Pawlowski with Green Street Advisors. Please go ahead.

[John Pawlowski, Green Street Advisors]

Thanks very much for the time. I appreciate the color on property taxes over the coming quarters. Just hoping you can give us a sense for total same-store expenses for the multifamily portfolio in the second half of this year.

[Mahbod Nia, Chief Executive Officer]

Well, we're not in a position to give any guidance on that. But to be honest, I would say we've done a very good job, better job than most in terms of controlling our controllable expenses over the course of the last year and keeping them contained. You saw up by around 2.6% year-over-year. And we'll continue to do that in the second half. What is out of our control, the noncontrollable expenses that we do expect as we – as Amanda said in his scripted remarks, an increase primarily in taxes. But on the whole, we feel that we're in a good place in terms of being able to identify and manage controllable expenses.

[John Pawlowski, Green Street Advisors]

Okay. But outside taxes, you're not expecting any unusual pressure or unusual moderation in some of the major expense line items for the balance of the year?

[Mahbod Nia, Chief Executive Officer]

No. I mean potentially insurance is another one where we might see a bit of an increase, and we've seen that happen across the industry, but the substantial one that we expect would be the taxes.

[John Pawlowski, Green Street Advisors]

Okay. A question on concessions in the stabilized multifamily portfolio. Could you remind me at what point in 2021 concessions were basically over? And any comments on how the retention of customers that were given one or two months for a year or two years ago has trended recently?

[Mahbod Nia, Chief Executive Officer]

Yes, sure. So for the most part, we scale back concessions relatively early on towards the second or third quarter of last year. We did have one or two properties where we had a corporate move out and then leasing that up at pace we did offer concessions later into the year. So those are still in the numbers and will burn off through the remainder of this year. But today, on the stabilized portfolio, the concessions are in absolute minimal level. And we're seeing occupancy rates that also retention rates sort of trended up from mid-40s to high 50s now.

[John Pawlowski, Green Street Advisors]

Got it. Great. Last one for me. Amanda, you mentioned debt to EBITDA is going to fluctuate. Could you give me a rough sense on where you expect debt to EBITDA to land by the end of the year?

[Mahbod Nia, Chief Executive Officer]

No, it's very difficult to – I'm sure I appreciate that just given the various moving pieces in the company, we are a company that's in transformation, and I did say, and I know this is challenging for you and the others out there that are looking to model this, but even just the timing of some of these movements can materially impact that number. And so I say at the beginning of the year, I think this year, you should really measure us based on progress. The numbers are going to fluctuate. And one quarter, be above expectations and another quarter potentially below. So difficult to give you that guidance at this point, I'm afraid.

[John Pawlowski, Green Street Advisors]

Okay, no problem. Take care.

[Operator]

Our next question comes from Nicholas Joseph with Citi. Please go ahead.

[Michael Bilerman, Citi]

Hi, Mahbod. It's Bilerman again. Just had a question as you think about strategic alternatives and we can go back to right before the pandemic in 2020. And then the company obviously was engaged with BofA where you had a highly reputable potential bidder, which you referred to as Party A, obviously, the special committee and the management and the BofA with all involved.

And given what was coming down the pike with COVID, even though they expressed an interest in a potential strategic transaction with the company given the state of the market and also wouldn't have been feasible at that time. But that party in your proxy had indicated as the market should stabilize, they would revisit the possibility of making a proposal to acquire the company and you guys encourage them to do so. Can you just give us an update on where your relationship stands with this highly reputable potential bidder Party A and whether that has the potential of coming back? Or is it – or is it just done at this point?

[Mahbod Nia, Chief Executive Officer]

I think, Michael, you're referring to events that occurred prior to my joining the Board in the summer of 2020 with the rest of the Board that are in place today. So you're going to have to tell me who Party A is, I'm afraid, I'm not sure. But what I would tell you is the Board I believe...

[Michael Bilerman, Citi]

Sorry, Mahbod. I'm pretty sure...

[Mahbod Nia, Chief Executive Officer]

Okay, Michael, you may, but you asked me a question, and if you'll do the courtesy of letting me answer it. So since we joined, myself and the rest of the board members joined the Board and there is a Strategic Review Committee that's also in place, I can tell you that everyone is highly focused and understand their fiduciary obligation to create and maximize value for shareholders and has and will evaluate any opportunity to do that.

We, as a management team, our job is to create value for shareholders at the entity level, and that's primarily through the operations. And I believe we've done that. I think the company is in a more secure place seen via balance sheet relative to where it was last year. And I think the operations, we're seeing three quarters now sector-leading same-store NOI and rental growth in the operations on the multifamily side, which now constitute 83% of the business, primarily in multifamily business, which pivoted in the year, 18 months. reflect that. So that's what we'll continue focusing on. And anything that the Board and the SRC evaluates on a strategic level is independent of that and not mutually exclusive from our efforts.

[Michael Bilerman, Citi]

Right. But you're a member of the Board as well now, and it's just – I'm just trying to close the loop on this, which had been obviously an important thing for when this new board...

[Mahbod Nia, Chief Executive Officer]

Michael – Michael to the extent, I don't know who that party is, and I'm not going to comment on that because it was before my time. To the extent that there are any strategic proposals relevant to the company and those are presented to the Board or the SRC, they will be evaluated and considered. That is it.

[Michael Bilerman, Citi]

Okay. On the residential NOI growth, I think part of the excess is obviously back in 2020, the portfolio had a much more severe decline relative to national and coastal and sunbelt portfolios. And so the more recent growth in 2021 and 2022, is it partially reflective of that. And obviously, your portfolio is quite unique in terms of geographic concentration and locations. So just I think having some of the history on that slide going back to pre-pandemic levels, and I recognize the whole portfolio is not there, but it's a little bit comparing apples and oranges.

[Mahbod Nia, Chief Executive Officer]

Well, I think it's not. I think it's just looking at how we performed over the course of the last year, and I'm looking at the same way that our peers are looking at it, but thank you for your comments.

[Michael Bilerman, Citi]

Thank you.

[Operator]

This concludes our question-and-answer session. I would like to turn the conference back over to Mahbod Nia for any closing remarks. Please go ahead, sir.

[Mahbod Nia, Chief Executive Officer]

Thank you, everyone, for joining us today. It's been another terrific quarter. I'd really like to thank the team for their tremendous efforts in working with us to generate these results, and we look forward to updating you all in coming quarters.

[Operator]

The conference has now concluded. Thanks for attending today's presentation. You may now disconnect.