Granite Real Estate Investment Trust

TSX:GRT.UN

Earnings Call Transcript 2018-Q4

[Operator]

Good morning, ladies and gentlemen, and welcome to the conference call of Granite REIT. Speaking to you on the call this morning is Kevan Gorrie, President and Chief Executive Officer; and Ilias Konstantopoulos, Chief Financial Officer. Before we begin today's call, I will like to remind you that the statements and information made in today's discussion may constitute forward-looking statements and forward-looking information and that actual results could differ materially from any conclusion, forecast or projection. These statements and information are based on certain material facts or assumptions, reflect management's current expectations are subject to known and unknown risks and uncertainties. These risks and uncertainties are discussed in Granite's material filed with Canadian Securities Administrator and the U.S. Securities and Exchange Commission from time to time, including the Risk Factors section of its Annual Information Form for 2018 filed on March 6, 2019. Readers are cautioned not to place undue reliance on any of these forward-looking statements and forward-looking information. Granite undertake no intention or obligation to update or revise any of these forward-looking statements or forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.In addition, the remarks this morning may include financial terms and measures that do not have a standardized meaning under International Financial Reporting Standards. Please refer to the audited combined financial results and management's discussion and analysis for the year ended December 31, 2018, for Granite Real Estate Investment Trust and Granite REIT Inc, and other materials filed with Canadian Securities Administrators and U.S. Securities and Exchange Commission from time to time for additional relevant information. Now I would like to turn the conference over to Kevan Gorrie. Please go ahead, sir.

[Kevan S. Gorrie, President, CEO & Director]

Thank you, operator. And good morning, everyone, and welcome to our Q4 2018 call. Ilias and I are joined by this morning by Lorne Kumer and Michael Ramparas, our EVP and VP of global real estate. Ilias will begin our discussion this morning with a review of financial highlights. I will then follow with comments on acquisitions, operations and strategies. And we'll open up the call to any questions that you may have. So Ilias, over to you.

[Ilias Konstantopoulos, Chief Financial Officer]

Thanks, Kevan, and good morning to all. 2018 was a transformational year for Granite on many levels. Financial and operating highlights for the 3-month period and year ended December 31, 2018, including events subsequent to the quarter were as follows. Net operating income prepared in accordance with the IFRS was $52.4 million in the fourth quarter compared to $54.5 million in the prior year period; same property NOI prepared on a cash basis, a non-IFRS measure, increased by 1.9% for the 3-month period ended December 31, 2018 and excluding the impact of foreign exchange.For the year 2018, NOI was to $216.6 million compared to $213.3 million in the prior year. Same property NOI on the cash basis increased by 0.3% for the year 2018, excluding the impact of foreign exchange. Shifting to FFO for the quarter, it was $0.90 a unit compared to $0.89 a unit in the fourth quarter of last year. On a full year basis, FFO was $3.68 per unit compared to $3.50 in 2017. There are some notable items that create a bit of noise in those numbers, so I will provide you some clarity, excluding some of these onetime items or unusual items. Including in the number $3.68, there's some lease termination and closeout fees of $1 million and a net FX gain on the remeasurement of U.S. dollar cash proceeds from sales we made earlier in the year in the order of $8.5 million, excluding these 2 items our $3.68 would be $3.47 per unit for 2018. Similarly by eliminating the proxy contest expenses of $5.9 million and the lease termination and closeout fees of $1.6 million in the prior year, FFO would have been $3.34 per unit. Shifting now to AFFO. For the quarter, it was $0.87 per unit compared with $0.69 per unit in the fourth quarter of 2017. For the full year, AFFO was $3.01 per unit compared to $3.09 in the prior year. Once again, making adjustments for the lease termination and closeout fee, the foreign exchange gain that I mentioned, and the payments of tenant incentive allowance that we made in connection with the 2014 lease expansion at our Eurostar facility of $9.1 million, AFFO would have netted out to $2.99 per unit in the year 2018 as compared with the prior year, which making the similar adjustments, I mentioned, would have been $3.18. Shifting gears now to the disposition activity during the year and subsequent to it. For the year 2018, we sold a total of 16 properties for $730 million, which together with 6 properties, that we held for sale and ultimately sold, subsequent to the year-end for $44 million, we lost roughly $51 million of annualized revenue. Most of these properties that were sold were Magna tenanted. Making up for some of those losses were acquisitions during the year, which amounted to 8 income-producing properties comprising roughly 6.2 million square feet and 13 acres of Belmont land for total proceeds of $544 million at a 5.8% in-going yield. That represents roughly $31.6 million of incremental stabilized NOI. In terms of commitments to acquire, construct and develop properties, so in addition to the acquisitions I just mentioned, we have made payments for and have further contractual commitments related to acquisitions, construction and development projects amounting to $690 million at an in-going stabilized yield of 5.6%. Once completed and stabilized that would represent roughly $38.6 million of additional NOI.The significant recycling that we underwent during the year reduced our Magna concentration to 54% and 47% on a revenue and GLA basis, respectively, during the fourth quarter. This compares to 71% and 61% at Q4 of last year. We expect that our Magna concentration will drop to below 50% by revenue by the end of 2019. In terms of our investment properties, these had an IFRS value of $3.425 billion at year-end and benefited from favorable exchange rates in both a euro and U.S. dollar to the tune of $148 million. The overall cap rate for our income-producing properties was 6.65% at year-end versus 7.6% in the prior year, which reflects the change in our property mix to a greater portion of Northern logistics and distribution properties as well as compression in overall cap rates, terminal cap rates, discount rates and higher market rents in several of our markets. The above together with the sale prices realized on the disposition of 22 properties, including the 6 that were held for sale, resulted in net fair value gains of $355 million approximately, which is roughly $7.75 per unit in 2018.As you know, we completed 2 term loan financing in December, both of which were fully drawn and amounted to an aggregate of $550 million. The first was a $300 million senior unsecured facility that we swapped into euro denominated payments at a fixed rate of interest of 2.20%. The second was a USD185 million four-year facility -- term facility that we swapped as well into euro denominated payments at a 1.225% fixed-rate of interest.Our balance sheet at December 31, 2018, stood at a leverage -- net leverage ratio pro forma of the sale of 6 assets of 18% giving us in excess of $1.25 billion of additional debt capacity at a 40% net leverage ratio. We've said our target net leverage ratio to be in the order of 35% to 40%. At a 35% net leverage ratio, the additional debt capacity would amount to just over $900 million. Our liquidity at year-end was $1.2 billion, pro forma of the sale of the 6 assets. We expect to tap this liquidity and debt capacity, for among other things, the $628 million worth of future contractual commitments discussed earlier and as more detailed in our MD&A. I want to shift for a second to maintenance capital expenditures and leasing costs. We, as you know, report maintenance CapEx and leasing cost, for purposes of driving the FFO, and we do so on an actual basis. The inherent nature of these items or that they can be lumpy, so the purpose of -- what I'm going to discuss is to give you a sense for what is hopefully a sustainable level. So the maintenance and improvement CapEx and leasing cost paid by quarter and for the years ended December 31, 2018, and 2017, are summarized and detailed in our MD&A. So the 2 items I'd like to highlight our as follows. The first relates to our Novi, Michigan flex office building, this 307,000 square-foot facility is one of the very few office properties in our portfolio. Commencing with the third quarter of 2017, we undertook to redevelop our Novi property, which was vacated by Magna in March 2017. We invested a total of $22.7 million in capital during '17 and '18 to reposition and lease our Novi flex office property. You might recall, we leased 71% of this space to hand insistence for a minimum lease term of 15 years commencing in January 2018. We are currently actively marketing the remaining 90,000 square feet available space and anticipating incurring additional cash outflows totaling approximately $6.6 million in CapEx and leasing costs during '19 to complete the Novi facility and lease it up -- and lease up the remaining available space. The second item involves a $9.1 million payment we made in the first quarter of '18 related to a tenant incentive allowance for 2014 lease expansion at our 1.1 million square-foot Eurostar facility in Graz, Austria. Review these 2 particular items as unique and do not believe they reflect a level of ongoing spending required to sustain our industrial portfolio. Excluding these 2 items, our actual spent on CapEx and leasing cost would have amounted to $0.14 a foot and $0.32 a foot for 2017 and '18 respectively. We believe that a more represented level of CapEx and leasing cost spend require to sustain our industrial portfolio would be within this range, in the order of $0.20 to $0.25 a foot. Lastly, distributions. As you're aware, we increased our 2019 targeted annual monthly distribution by 2.9% to $2.80 per staple unit, which amounts to $0.233 per month, commencing with a monthly distribution we paid in January of 2019. This is Granite's seventh consecutive annual increase to its distribution and represents a cumulative increase of 40%. And lastly, as a result of the increase in taxable income generated primarily by the sale transactions in 2018, we declared a special distribution in December of '18 of $1.20 per staple unit, which included $0.30 per unit payable in cash, ultimately paid in January. With that, I'll turn the call back over to Kevan.

[Kevan S. Gorrie, President, CEO & Director]

Thank you, Ilias. As you can tell, 2018 was another active and successful year for Granite, underpinned by strong financial results, approval of the new strategic plan in November and significant progress against our corporate objectives. Our focus on effective capital allocation portfolio enhancement and active management provided strong results for the year and positioned us for future growth and performance in 2019. As mentioned, we acquired over $540 million in modern e-commerce and distribution assets in the U.S. and Germany at a going in yield of 5.8%, which when combined with the gains generated from the sale of noncore assets, significantly increased net asset value and improved the quality and tenant diversification of our portfolio, 2 main principles of our -- or priorities of our company. Dispositions totaled $703 million at an average cap rate of 6.7%. And I will point out the location of the assets, included Bowling Green, Kentucky; St. Thomas and Tillsonburg, Ontario; Beaumont, South Carolina; and Quentin, Tennessee, which too was, validates the liquidity and demand for assets with the Magna covenant. And despite the loss of $48 million in annualized revenue from these dispositions in 2018, we were able to increase FFO per unit over 2017 while maintaining overall debt levels and liquidity with which to fund future acquisitions and development. As a result of these transactions, as mentioned, we've reduced our Magna concentration to 47% of GLA and 54% of revenue. As an example of effective capital allocation, as Ilias mentioned, but I think it's worth highlighting again. In December, we raised $550 million in unsecured financing at an average fixed rate of 1.76% for an average term of almost 6 years. Our credit rating and European asset base enabled us to enter into a euro currency swap to secure extremely competitive capital with which to pursue growth opportunities. Operationally, we renewed over $3 million feet of expiring space, primarily Magna tenanted in 2018, for an average increase in base rents of roughly 4.5% at an average lease term of over 7 years. And ended the year at a very respectable 99% occupancy rate.So far in 2019, we have closed the 2 acquisitions totaling roughly $170 million in Dallas, Texas and sold 4 Magna tenanted assets in Iowa and one small property in Richmond Hill Ontario. We also completed the 300,000 square foot expansion of our eighth hardware property in Columbus, Ohio. For the remainder of 2019, I think has been disclosed, we will focus on the following priorities: increasing our scale in target markets; continuing to dispose off select noncore assets and exit noncore markets; driving NAV, FFO and AFFO per unit growth in 2019; execute on our development projects in Plainfield, Indianapolis and Altbach, Germany; reduce our Magna concentration to below 50% as a percentage of revenue; and enhance our platform capabilities in both Europe and the U.S. With respect to platform enhancement, I am pleased to welcome [ Richard Schafer ] to our team as our new Head of Europe. Richard joins us with over 15 years of experience and investments of real estate, including logistics, most recently with [ CPPI ] in London, and we'll be working with our existing team in Vienna to execute on our strategy in Europe. As we deliver on these initiatives in 2019, we will continue to adhere to our core principle of delivering maximum long-term value for unit -- Granite unitholders. Accordingly, we will continue to prioritize net asset value, portfolio quality, platform capability and maintaining a conservative capital structure.Looking forward, all of us at Granite are truly excited about meeting the challenges and fulfilling our potential in 2019, and I believe that we are well will position to do so. On that, I will now open up the floor to any questions.

[Operator]

[Operator Instructions] And we'll get to our first question on the line. It's from the line of Sam Damiani with TD Securities.

[Sam Damiani, Analyst]

Just wanted to touch, just based on the acquisition side. The acquisition of the leasehold properties Mississauga, I wonder if you could provide a little bit color on the tenancy, the lease term, the square footage and the terms of the ground lease? And I have a follow-up question as well.

[Kevan S. Gorrie, President, CEO & Director]

Sam, we're still operating under a PSA for that acquisitions. We are limited in what we can discuss. We do expect to close in on that acquisition, probably within the next 30 days, then we'll have more details to announce then.

[Sam Damiani, Analyst]

Okay, may be just bigger picture. Given the yield on that one and what else you're looking at in the GTA. Is this indicative of cap rates but you're looking at -- for what you want to buy in the GTA?

[Kevan S. Gorrie, President, CEO & Director]

Well, I mean, certainly. As we disclosed in our strategy, we will pursue core acquisitions, if we feel the right fit. This one represents to us one of the best locations in the country, period. The other thing too is due to a combination of expansion potential, contractual rent growth and where the rents are vis-à-vis the market today, we feel that the growth prospects are superior for this. So it may be a low 4.5% yield going in. But we feel the prospects of generating higher yield in the short term are very good.

[Sam Damiani, Analyst]

Okay. And I look forward to learning more there. May be just a quick one, Ilias, on the tax side. Don't want to make a big deal of this. But there was a little bit of an adjustment I guess in Q4, related to Austria. I wonder if you could shed some light on that, if it's material for Granite's plans going forward.

[Ilias Konstantopoulos, Chief Financial Officer]

Right. It relates, Sam, to an item that we had provided for many, many years ago. Dating back to the MEC, once upon a time, which you're probably familiar with. And so it went [indiscernible] effectively we reversed the provision we had and therefore, benefited from that onetime $0.5 million or so. And so what we expect to be helpful to your question, what we expect is, our current income taxes to be in the order of $8 million and for the year, if you will, give or take, and so that item we view as a [indiscernible].

[Operator]

We'll get to our next question on the line from Mike Markidis with Desjardins.

[Michael Markidis, Real Estate Analyst]

I was just curious, if you give us a sense for how larger disposition program might be this year?

[Kevan S. Gorrie, President, CEO & Director]

We've identified -- I would say most of the assets that, obviously Magna tenanted, Mike, that we've identified are in the smaller range. So I think we'll be, in terms of disposition, somewhere between $100 million and $200 million.

[Michael Markidis, Real Estate Analyst]

Okay. And would that be incremental to what you've already done subsequent to the quarter or including the stuff it's subsequent to the quarter?

[Ilias Konstantopoulos, Chief Financial Officer]

Incremental.

[Michael Markidis, Real Estate Analyst]

Okay, great. And then just obviously, appreciate the PSA that you got on the Mississauga assets that you're buying, before you get in the details there. But just curious if you could shed some light on how you view your existing GTA footprint? And how over the next, let's call it 5 years in conjunction with your strategic plan, you might see that evolving?

[Kevan S. Gorrie, President, CEO & Director]

Well, I mean, I've stated before, I would like us to be more relevant in Canada, and the GTA is obviously Canadian's largest industrial market and a market we want to be active in. And we have the expertise and then the connections to be successful doing that in. This acquisition, we feel, fits in very well to our strategy, modern e-commerce location in this market. So it is a perfect fit for our strategy. The remaining portfolio is largely Magna. And number of the assets, I wouldn't consider would meet that criteria of modern distribution logistics but the value of the land on which they sit, including the ones in Milton are very good. So we're very happy with that cash flow in this market. So overall, Mike, I would say, our footprints in the GTA will be larger. How much larger, how many opportunities we see, that make sense, both strategically and financially, it's hard to say. But I would say -- I would guess that our footprint in the GTA will be larger, couple of years from now than it is today.

[Michael Markidis, Real Estate Analyst]

Okay. And last one for me before I turn it back. Just appreciate the disclosure on the same-property statistics, just thinking on a constant-currency basis. Based on what you guys know today, what we should be thinking about for 2019?

[Kevan S. Gorrie, President, CEO & Director]

It's a good question. I think 2019, we expect to be similar to 2018. And based on what we know today, I think we've had some good tailwinds in 2018 on the leasing side. 2019, we progressed well on the renewal site there but the growth is not nearly as strong as it is in 2018. So we expect it to be similar. I would point out, because of the nature of a few of the larger Magna assets, the rent increases are rather lumpy. They're not necessarily annual bumps. So we expect 2019 to be very similar to 2018. But there will be those years where we could get a rather attractive bump in same-property NOI as a result of the Magna assets.

[Operator]

We'll get to our next question on the line -- it's on the line from Howard Leung from Veritas Investment Research.

[Howard Leung, Investment Analyst]

I want to ask about the -- follow up on the question about dispositions. I guess Kevan, given, you mentioned there's only another $100 million to $200 million, it's probably we won't be seeing a special distribution this year then?

[Kevan S. Gorrie, President, CEO & Director]

That's too early to say. Among other things, you're right, Howard, that dispositions would be one of the items that would be impacted. But it would be too early to say. There certainly isn't an expectation at this point, there are many variables. So we'd rather not speculate at this point.

[Howard Leung, Investment Analyst]

Okay. No, that's fair. And then the -- we have a question that had to be with this lease step ups. I am currently -- I just kind of taking a quick calculation of contractual adjustments divided by the base rent. Seems like it's around 1.2%. Is that where we'd think about the contractual adjustments? And I know this year you mentioned Magna tenants, there's going to be a bit of a step up there. So it shouldn't be a little higher this year than that?

[Kevan S. Gorrie, President, CEO & Director]

I don't know an answer for 2019 specifically. But I will say, a number of these assets, even the larger ones are tied to CPI. But they're not necessarily annual. So I would say 1% to 1.2% would be on the low end.

[Howard Leung, Investment Analyst]

Okay, okay. That make sense. And then, just the last one, the magna diversification, a goal that you mentioned is to get below 50%. You're pretty close to that now and I think even after completing the developments, especially, the large ones in Texas and Indiana, you should be below that. Is there a lower number, maybe 40% or 30% that you would eventually target? Or is that -- as long as Magna is below 50%, you're comfortable?

[Kevan S. Gorrie, President, CEO & Director]

No. I don't think we're done at below 50%. I think as we've stated earlier, it's really important that we're making the right real estate decision for investors. So we'll continue on the disposition program. But where we feel there is an opportunity to extend the lease and increase the value of the asset or drive the value of the asset for say a potential disposition, we would do that. So we're going about the disposition program as thoughtfully as we can and trying to maximize the value.

[Howard Leung, Investment Analyst]

Great. Yes. And you guys do a good renewals, seems like 4.5% over a 7-year term. So that's pretty solid.

[Operator]

We'll get to our next question on the line from Pammi Bir with Scotia Capital.

[Pammi Bir, Analyst]

Just, with respect to I guess a potential U.S. platform, or plans for U.S. platform, would you consider acquiring one? And how will you describe the opportunities that you are seeing there at the moment?

[Kevan S. Gorrie, President, CEO & Director]

It's a good question. The short answer is, yes, we would and have. But what we have seen is on the pricing size on M&A in the U.S, it's quite expensive. So we have not seen a platform acquisition opportunity that has made any real sense to us. But we continue to consider that as one viable option, if you want.

[Pammi Bir, Analyst]

Okay. And in terms of those opportunities that you have looked at, what would sort of the geographic mix of those portfolios look like?

[Kevan S. Gorrie, President, CEO & Director]

I think that has been one of the challenges. Any acquisition opportunities like that, that have been shown to us or we have seen have involved one or more markets that are outside of our target areas. So that has been for us one of the factors that has prevented us from making any transaction like that.

[Pammi Bir, Analyst]

Okay. And would your target areas include I guess, some other coastal markets?

[Kevan S. Gorrie, President, CEO & Director]

No. I think as you can see in our strategy, we've kind of laid out what markets are -- we're focusing on in the U.S. It would not include LA or Seattle, for example or even Miami. Those markets are very expensive, they're dominant -- dominated by a number of the large players. So it's hard to see how we can have any real relevance or competitive edge in those markets.

[Pammi Bir, Analyst]

Got it. Just last one, and I apologize if you've mentioned this already. But on the Altbach development in Germany, can you just describe what you're envisioning there? And the expected cost and I guess target return?

[Kevan S. Gorrie, President, CEO & Director]

It's a good question. We are targeting a return of -- in the mid-6s on an unlevered yield. And it's just outside of Stuttgart in the Southeast. And I would say, we're very excited about it. The level of interest in this site, if you know the Stuttgart market, I don't think there's a level, it's a valley, I don't think there is a level piece of land. I think we happen to sit on one of the only remaining level pieces of land there. So there has been a lot of interest really on what's important to us as we develop, whether we go to head on speculative basis or we do a pre-lease deal, which could happen for sure, it's to build an asset that fits our criteria. Yes, and I will tell you, we've had prospects from multiple sectors for it. And right now, everybody would be happy to get that scale in that location. So we're quite confident in this -- in our prospects for this site.

[Pammi Bir, Analyst]

And sorry, this would be then a 2020 completion?

[Kevan S. Gorrie, President, CEO & Director]

Yes.

[Pammi Bir, Analyst]

And roughly the total investment?

[Kevan S. Gorrie, President, CEO & Director]

EUR 25 million to EUR 27 million.

[Operator]

And we will get to our next question on the line from Sairam Srinivas from BMO.

[Sairam Srinivas, Associate]

My question was timely around the development and that too around the recent acquisition in Texas. So I was hoping you could -- if you could kind of share some color around the demand you are seeing in that market as well as the plans you have for excess land around the property?

[Kevan S. Gorrie, President, CEO & Director]

Are you referring to the 2 acquisitions in Dallas that we just did?

[Sairam Srinivas, Associate]

Yes. That's right. Yes.

[Kevan S. Gorrie, President, CEO & Director]

Well, one of them is a very large site, which we purchased only 200,000 square feet on the, I think 170 acres. So really a covered land play and a market in the southeast that we feel continues to be a really important distribution node for the Dallas market and its proximity to Houston and the UP intermodal, we are there. So we feel it's a strategic site, particularly with proximity to the intermodal. It's a 12-year lease, so we certainly have stable cash flow and time to think about what we do with the land. But if you look at that note in the southeast of Dallas, it continues to grow an important size distribution in the e-commerce node. And we feel that site will be very strategically positioned in the next 10 years.

[Sairam Srinivas, Associate]

And broadly around 2019, do you guys have a broader developmental target?

[Kevan S. Gorrie, President, CEO & Director]

Not necessarily, development target. We have the development project in Indianapolis, which we're moving forward. We have the development in OPAC which we will see how 2019 works out. We have some development opportunities we are looking at strongly in pursuing. So -- but we don't have any definitive target for 2019. We have said, we want to do more development, and we hope to do that in 2019. We just don't have a specific target.

[Operator]

[Operator Instructions] And we do have another follow-up question from the line of Sam Damiani with TD Securities.

[Sam Damiani, Analyst]

I just wanted to follow up on the dispositions. The sort of 4, 5 properties that have been sold in Q4 and Q1. To-date they're all very small markets where it looked like that Granite building basically -- how is the major employer of the town. Hence the cap rate on those. I'm just wondering when the disposition going forward this year for the $100 million to $200 million? Are we going to see sort of similar profile assets in that mix or should we expect the disposition cap rates to be a little bit different?

[Kevan S. Gorrie, President, CEO & Director]

Well, I'm kind of looking around the room, I would say the assets that we've sold. And [indiscernible] probably the most rural isolated assets that we have in our portfolio. So I would not. But we're looking at selling and some of it's in Europe, I certainly would anticipate much lower cap rates, probably closer to what we achieved in 2018.

[Sam Damiani, Analyst]

Very helpful. And just one last one on the portfolio occupancy, took a nice jump in the fourth quarter. Just wondering was all of that, recycling of capital portfolio changes? Or was there some actual absorption in some of the properties of the portfolio?

[Kevan S. Gorrie, President, CEO & Director]

No, no. It was leasing, including Bolick in the Netherlands, which was 300,000-plus lease field that was done. And the remaining vacancy that we have now totaling just under 300,000 feet, we have some very good prospects on that space, and we're making good progress there. So it was due to re-leasing within the portfolio.

[Sam Damiani, Analyst]

I was wondering about the Netherlands. When does that rent kick in?

[Kevan S. Gorrie, President, CEO & Director]

December 1 was a commencement.

[Ilias Konstantopoulos, Chief Financial Officer]

I believe May 1 is the end of rent-free period. So Sam, don't quote me April or May. So I think it was a 5 month rent free, that was it.

[Operator]

And Mr. Gorrie, we have no further questions on the line. I'll now turn it back to you.

[Kevan S. Gorrie, President, CEO & Director]

Okay, well, thank you, operator. And thank you for joining us on the call. On behalf of the trustees and management here at Granite, we thank you for your continued trust and support. And look forward to speaking you on the Q1 call in May.

[Operator]

Thank you very much, and thank you, everyone, ladies and gentlemen. That does conclude the conference call for today. We thank you for your participation, and ask you to disconnect your lines. Have a Good day, everyone.