STAG - NYSE

Greetings. Welcome to the STAG Industrial, Inc. Second Quarter 2024 Earnings Conference Call. [Operator Instructions]. Please note, this conference is being recorded. I’ll now turn conference over to your host, Steve Xiarhos. you may begin.

Thank you. Welcome to STAG Industrial's conference call covering the second quarter 2024 results. In addition to the press release distributed yesterday, we have posted an unaudited quarterly supplemental information presentation on the company's website at www.stagindustrial.com, under the Investor Relations section. On today's call, the company's prepared remarks and answers to your questions will contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today. Examples of forward-looking statements include forecast of core FFO, same-store NOI, G&A, acquisition disposition volumes, retention rates and other guidance, leasing prospects, rent collections, industry and economic trends and other matters. We encourage all listeners to review the more detailed discussion related to these forward-looking statements contained in the company's filings with the SEC and the definitions and reconciliations of non-GAAP measures contained in the supplemental information package available on the company's website. As a reminder, forward-looking statements represent management's estimates as of today. STAG Industrial assumes no obligation to update any forward-looking statements. On today's call, you'll hear from Bill Crooker, our Chief Executive Officer; and Matts Pinard, our Chief Financial Officer. Also here with us today is Mike Chase, our Chief Investment Officer; and Steve Kimball, EVP of Real Estate Operations were available to answer questions specific to the areas of focus. I will now turn the call over to Bill.

Thank you, Steve. Good morning, everybody. Welcome to the second quarter earnings call for STAG Industrial. We are pleased to have you join us and look forward to telling you about the second quarter 2024 results. After another quarter of strong operating results, our view on the business remains largely consistent with our last earnings call. While demand remains subdued in many markets, it is improving with absorption accelerating in Q2. Availability and vacancy had one of the smallest quarter-over-quarter increases since the vacancy expansion began. Additionally, the construction pipeline continues to shrink. We expect market rent growth this year to be between 4% and 5% for our portfolio. Nearshoring and onshoring trends continue to make headlines and remain confident these trends will drive future industrial demand. In addition to a handful of success stories related to nearshoring within our portfolio, we are happy to point to our first concrete case of volunteering benefiting our portfolio. A foreign-based wood flooring company announced plans for $150 million expansion to its campus near the Atlanta market after years of steady growth. Following this announcement we signed a lease with this company for a 300,000 square foot warehouse resulting in a 72.5% cash releasing spread. This transaction exceeded budgeted rent downtime and leasing costs and highlights the favorable backdrop for manufacturing in this market. Deal volume in Q2 remained consistent with Q1 but is still well below the levels seen over the past few years. The number of buyers competing for acquisition opportunities increased during the quarter. If macro conditions continue to improve and interest rates fall, the expectation is that deal flow will accelerate into the fourth quarter. We continue to maintain our pricing discipline on acquisitions. We are focused on quality opportunities that are accretive and provide prospects for future growth. Our acquisition volume for the second quarter totaled $225.6 million. This consisted of 10 buildings with cash and straight-line cap rates of 6.7% and 7% respectively. Included in this acquisition volume was a five building portfolio totaling 947,000 square feet. We acquired this portfolio for $87.6 million at a reported cap rate of 7.1%. This portfolio offers convenient access to the Greater Chicago area and labor force. It is an established business park with an immediate proximity to interstate I-90. The portfolio is 98.8% leased 13 tenants with a weighted average lease term of 4.1 years. In terms of dispositions this quarter, we sold seven buildings for aggregate proceeds of $78.2 million. Five of the buildings were non-core assets. The other two buildings were in Allentown, Pennsylvania, and southern New Jersey, resulting in proceeds of $37.7 million. On the development front, we have over 1.7 million square feet of activity across five projects in the U.S. In the second quarter, we commenced a new development that was identified within our existing portfolio by our operations team. This 297,000 square foot project is located just east of Nashville in Lebanon, Tennessee. The project has an estimated delivery date of Q2 2025 with stabilization projected to occur in Q2 2026. The building will demise to suites of 150,000 square feet or less in a market with healthy fundamentals. In June, we closed on a permanent vacant land parcel of $8.2 million, located in Portland, Oregon. We have started development for a 200,000 square foot, build-a-suit project on this site for a 3PL user to service a contract with Intel. The project has an estimated delivery date of Q2 2025. Our two -building, 715 ,000 square foot development project in Greer, South Carolina, was completed in Q1 2024. Stabilization is projected to occur in Q3 2025. Our 233,000 square foot development in Spartanburg, South Carolina, was completed in Q2 2024. Stabilization for this project is projected to occur in Q3 2025. Lastly, our two building, 300,000 square foot project in Tampa, Florida, has a Q4 2024 estimated delivery date with stabilization expected in the second half of 2025. With that, I will turn it over to Matts, who will cover our remaining results and updates to guidance.

Thank you, Bill, and good morning, everyone. Core FFO per share was $0.61 for the quarter, an increase of 8.9% as compared to last year. Included in Core FFO are two one-time items that contributed $1.00 to Core FFO. Cash available for distribution for the second quarter totaled $95.1 million. We have retained approximately $55.8 million of cash flow after dividend paid through June 30 of this year. These dollars are available for incremental investment opportunities, debt repayment, and other general corporate purposes. The leverage remains low with net debt to annualized run rate adjusted EBITDA 4x to 5x. Equities stood at $975 million at quarter end, inclusive of available floor ATM proceeds. During the quarter, we commenced 26 leases totaling 3.5 million square feet, which generate cash and straight-line leasing spreads at 36.8% and 51.8%, respectively. Retention was 79.9% for the quarter. We achieved same-store cash NOI growth at 6.1% for the quarter and 6.5% year-to-date. One of the primary drivers of our same-store growth in the first half of the year relates to two large leases signed in the back half of 2023. Those two leases were located in Burlington, New Jersey and featured large rental increases. These leases contribute approximately 90 basis points to our year-to-date same-store growth. This favorable comparison is not a tailwind in the second half of the year. Moving to capital markets activity, on May 28, the company funded $450 million of fixed-rate senior unsecured notes from a private place and offering completed in March of this year. The notes consist of 5, 7, and 10-year tenors with a weighted average fixed interest rate of 6.17%. The proceeds were used to pay down the outstanding revolver balance. As of today, we have approximately $72 million forward equity proceeds available to fund at our discretion. The equity will be used to pay down the revolver and match fund our acquisition development pipeline. Moving to guidance, we made the following updates. Our expected average same-store portfolio occupancy loss has been moderated to 25 basis points as compared to our initial guidance of 50 basis points. We have updated our cash leasing spread guidance to a range of 27.5% to 30% and our retention guidance increased to 75% based on lease assigned to date. As a result of these operational guidance improvements, we have increased our cash same-store guidance to a range of 5% to 5.5% for the year or 25 basis point increase at the midpoint. Expected acquisition volume remains the same while we increased our expected cash capitalization rate to a range of 6.25% to 6.5%. Finally, we increased our expected disposition volume to a range of $100 million to $150 million. I will now turn it back over to Bill.

Thank you, Matts. STAG is well positioned for sustained growth through our operating and acquisition platform. I want to thank our team for their continued hard work and achievement towards our 2024 goals. We'll now turn it back to the operator for questions.

[Operator Instructions] Our first question comes from the line of Craig Mailman with Citi.

Hey, good morning. Just on the guidance front, Matts, you guys had a beat here in the quarter. I know there's some puts and takes around maybe one-time items, but it seems like you guys are a little bit ahead of pace on acquisitions. Could you just kind of run through maybe what, in more detail, what some of the puts and takes are that kept guidance the same despite what seemed like better performance in the quarter?

Yes, absolutely. Good morning, everyone. Good morning, Craig. Thank you for the question. Starting with the internal growth, as you noticed, we have increased our same-store guidance by 25 basis points at the midpoint, but the portfolio is operating at a high level, higher than we initially guided, which drove that same sort of guidance increase. To your question, the primary reasons for not increasing the corporate flow guidance is related to acquisition and disposition activity. In terms of acquisition volume, yes, we're slightly ahead on the volume side, but the in-place cash cap rate on what we've acquired to date is 5.4%, and that's due to the $32 million vacant acquisition we made in El Paso this quarter. We do not have that building contributing to earnings in our budgets for this year. We have downtime of roughly nine months associated with that building. Look, we're really comfortable with the increased same-store guidance, and we're very comfortable with the midpoint of the acquisition range at this point. At the other end, we noticed the disposition side. Of the $78 million dispositions that we've had this year, the cash cap rate on these dispositions are approximately 8%. The majority of these sales are non-core. Look, this is modestly diluted to core for this year, but the sales do improve the long-term growth profile of the portfolio, and also it allowed us to exit some markets we don't want to operate in anymore. If you look at the list, you can see Belvidere, Illinois, which we're trying to -- we're in the process of exiting. [inaudible] Kentucky, Massachusetts, which is really western Massachusetts as an example.

Okay, and that's helpful, and just a couple follow-ups on that. Can you run through what drove the higher other income in the quarter, and also, did the sales -- was the same-store increase all fundamentally driven, or was any of that a benefit of getting some of these non-core assets off the books?

Yes, why don't we take that in reverse? In terms of the increase to same-store, look, the primary driver is the fact that we're, I would say we're outperforming initial guidance weight to the cash leasing spreads. We've done 95% of our leasing at approximately 29%, and then also on the occupancy side. As I said in my prepared remarks, we've modified our view on occupancy loss this quarter. We've revised that to 25-basis point occupancy losses as opposed to 50-basis points, and then credit loss, we've maintained a 50-basis point. So really, the primary driver here is the occupancy and slide-out performance on the cash leasing spreads. And then to the one-time items here, there really were two items that I'm going to point out. A, equated to approximately one $1.00 or $2.1 million of the other income. There are two settlements. The first was a settlement with a third-party consultant, and the second was a settlement with a former tenant-related building work that was not completed. We've been in the process of negotiating these settlements for a while, and they were included in guidance.

And just to add on one thing there, Craig, on the occupancy in the same-store pool, you can see that we increased our retention guidance. We're at the high end of that range. That was a helpful driver to average occupancy increasing or not increasing.

So it wasn't just selling some vacant assets. It was actually [inaudible] in this --

Part of the reason why we didn't increase the core FFO guidance was because we did sell this income at a higher cap rate is really what was one of the bigger drivers. That, and as Matts said, buying the one vacant asset in El Paso that will have some drag this year but will be a portfolio quality improvement as well as some drives from future growth in the future.

Our next question comes from the line of Michael Carroll with RBC Capital Markets.

Yes, thanks. Bill, I wanted to touch on the health of the investment markets if you kind of highlighted in your prepared remarks. I mean are sellers, our lease sellers of quality product, are they holding back on putting assets in the market yet? Are they just waiting for the capital markets to stabilize? I guess what's the catalyst are we waiting for to kind of drive some more activity within the space?

Yes, so it's been an interesting year, Mike. I mean the first quarter seller expectations were aligned with buyer expectations and you saw what was trending to a very healthy transaction market. We had that spike in interest rates I think in April and we had the pause really in Q2 and now what you're seeing in the back half of Q2 and into Q3, you're seeing a fair amount of product come online. Pricing guidance the bid-ask spreads are narrowing so to the extent interest rates pan out the way they're baked into the street right now with a cut in September, we feel like the transaction market will pick back up. There are a lot of sellers in the market. The pipeline is healthy as you see it's about $3.7 billion a slight increase over the last quarter, so if this continues, we expect the transaction market to pick up and we're hopeful that means more acquisitions for us but as we've seen over the past several years the interest rate market environment has been volatile, and if that continues then we could have another start stop. So I think we're cautiously optimistic at this point as we look into the back half of the year.

Okay, that's helpful. And how should we think about the pricing of these assets and I don't know if that still remains to be seen. I know on the stabilized cap rates that you achieved in the second quarter or in the high 6s which is a pretty good rate. I mean is that what we should think about or is it going to be trending back down to the mid-6s to low-6s kind of what you did in the first quarter?

Yes, I mean the guidance that we put out increased our cash cap rate guidance for the year but as you noted a lot of that's been a fair amount of that's been baked in the first half. We constantly reset our cost of capital as we evaluate transactions and make sure that those transactions are not only accretive day one but also have some growth baked into them going forward whether that be low market leases or market rent growth that we're anticipating in the future in those markets so with where, debt rates are now and our cost of capital, you could see probably in the lower six range for the remainder of the year, but that all depends on where cost of capital is as we move throughout the year and price these transactions.

Our next question comes from the line of William Crow with Raymond James.

Hey, good morning, Bill and Matts. It seems as time passes that you're going to be doing more acquisitions of properties where the leases were signed in kind of the peak period of ‘22 and into ‘23 and with kind of 3% to 4% annual bumps. I'm wondering how you're thinking about the possibility that five or six years down the road from when those leases are signed as they expire, you're going to have to start recording negative cash spreads on renewals. Is that something that goes into your thought process and your underwriting process?

Yes, I would say it's a different way. Market rent growth is factored into all of our acquisitions and depending on where the acquisition is, if we buy an acquisition in the leases at market, we forecast future market rent growth and then that tenant, when that lease expires, that rolls to whatever market rent growth is at the time. I would say in the past, we have been very conservative with our market rent growth expectations that go into our underwriting. We use two third-party advisors for our initial market rent growth expectations and then we make adjustments with our regional managers and our market teams here. And those adjustments are generally a little bit more conservative. That has treated us well in the past and that's the way we're continuing to underwrite. We certainly have not, in the past, underwritten the market rent growth that we've achieved in our markets. And as we've mentioned, and it's in our investor presentation, I think there's some really positive tailwinds to the industrial sector, and a lot of these are not baked into market rent growth forecasts. One of them is the nearshoring, onshoring dynamic. I mentioned we had our first real example of this in Q2, where we leased a warehouse to an effectively onshoring tenant. And then you've got the continued build-up of e-commerce and supply change in the U.S., which we still think has a lot of room to go, especially as you compare that to what's happening across the pond. So overall, good fundamentals in the sector, and with respect to five or six years, it's all baked into our underwriting.

Our next question comes from the line of Nicholas Thillman with Baird.

Hey, good morning, guys. Maybe talking on just what's commencing in the second half based on what you've signed to date, it kind of shows that spreads kind of de-selling to the lower 20s. I guess maybe you can talk about the mix of that or any specific markets dragging that number down or specific leases in particular.

I mean it's a pretty wide range of markets. I think we've estimated 12 to 13 million square feet and we had pretty good visibility and we put out our original guidance this year. So I would say nothing to call out. It was just the cadence in which some of those leases rolled this year.

That's helpful and then an additional color on kind of lease up expectations and development pipeline. But has there been any progress thus far on just leases signed on that pipeline to date?

Not on leases signed. Certainly activity, a lot of RFPs, a lot of tours. Some of the stuff, for example, the Tampa Development, that is historically not a pre-leasing market. Even with that said, we're starting to get some initial inquiries there. So we feel like our lease up expectations for development are prudent. Hopefully, we outperform them but where nothing has been signed to date.

Our next question comes from the line of Vince Tibone with Green Street.

Hi. Good morning. Could you provide the economics of the new development starts in the quarter? Specifically, what is the expected yield and how does that compare to your view of stabilized cap rates once leased?

Sure. I mean we're certainly forecasting these to be leased up in the future, as I noted in the prepared remarks, but the Nashville transaction that we're projecting in the mid-7s for a stabilized yield there, that's probably 100 basis points higher than maybe market, maybe a little bit more. Part of that was just the lower land basis that we had for that transaction. And then the Portland Oregon, it's mid to high 6s, call up between 6.5 and 6.75 for that transaction. And that's build-to -suit transaction.

Got it. That's helpful. And then how do you view your cost of capital today? Are you considering any equity issuances to fund external growth? And can you just remind me what's incorporated in FFO guidance in terms of funding sources for the acquisitions and development spent?

Absolutely. Good morning, Vince. In terms of cost of capital, if we were to go out and raise long-term debt to be in the private placement market, looking back to the transaction that we did in March that closed in May, if we were to use the same tenors, we would likely be able to raise, that $450 million in the high 5% to the 6% area. So there has been some, I'd say, decrease in costs on the long-term debt side. In terms of the equity in guidance, we have no incremental equity issuance included in our guidance. And I do want to remind you, we have $72 million of proceeds on the floor that are currently available and unfunded. And then in terms of capital allocation, we're retaining approximately $100 million of cash after dividends paid. We did increase our disposition guidance and those sale proceeds can be available to us for corporate purposes. We talked about the equity. And then again, the balance sheet is at the low end of our guidance range. We're five times levered. Our public guidance range is 5 to 5.5. So we're incredibly well positioned from a capital side, levered side, and liquidity side.

Our next question comes from the line of Eric Borden with BMO Capital Markets.

Hey, good morning, guys. Appreciate the color on maintaining the credit loss assumption of minus 50 bps for the year. I was just curious if you could provide an update on, what has been captured year-to-date and is there any known tenant issues for the back half of the year? Thanks.

Good morning, Eric. So in terms of our walks list is similar to what it was 90 days ago. We've experienced approximately a $1 million dollars of credit loss year- to-date, which equates to 17 basis points, our guidance is 50 basis points for the year, which we maintain. Then implies we're going to incur more credit loss in the second half of the year as compared to the first. But again, that guidance is maintained not increased. I also want to note that this level of credit loss is in line with the historical average, and we're not seeing anything thematic across our portfolio that we can really extrapolate from.

Okay, that's helpful. And then, just with essentially all the ‘24 lease expirations already addressed, I was just wondering if you could provide some color on the ‘25, as it relates to any potential known moveouts that we should have on our radar.

Yes, we don't have any large known moveouts for 25 at this point. Now, certainly not going to give ‘25 guidance this early into the ‘24. So as we move through this year, and if there's anything that does come up, we'll certainly let you and our investors know.

Our next question comes from the line of Samir Khanal with Evercore ISI.

Thank you. Hey, Bill. When I look at your same-store occupancy at the end of the quarter, I guess it was a bit lower than the average occupancy for the quarter. Can you provide a bit more color? I just want to make sure I didn't miss anything.

Hold on.

Hey, Samir, I can take this one. Yes. So what I want to point you back to is our guidance. So the way that we guide occupancy is in the same-store pool, and it's on average occupancy. We improved, or I guess, kind of upgraded our view from the 50 basis points occupancy loss to 25 basis points occupancy loss on an average basis, year-to-date with 30 basis points down. So we generally expect to end in the same area, about a high of 97% on an occupancy basis.

Okay. So there's nothing in July, I mean that --.

No, put it differently. You're not missing it. No, we're at 30 basis points average occupancy loss to year-to-date. Our guidance is 25 basis points occupancy loss for the year.

Okay. And how is sort of July playing out versus expectations here from a demand perspective for you all?

I mean, we're seeing healthy demand across our markets, and I think about, healthy markets. It's similar to what I called out, last quarter, which was Midwest is generally healthy. Those markets, Milwaukee, Detroit, Minneapolis, Chicago, El Paso is really strong, Sacramento, Nashville, Tampa, those are all strong markets. Seeing some weakness in the Columbus, Indi, we don't have any real near-term exposure to those markets. Philly, South Jersey, but again, same thing, limited exposure in those markets for us. So with that backdrop and the increase in our same-store guidance July has been trending as budgeted if not maybe a little bit better.

Got it and sorry this is one last one if I can. This market rent growth did you provide sort of your review for the year? I know in the past you said mid-single digit to, is that still same?

Yes, because we're a little more halfway through the year we got a little bit more specific on that, was 4% to 5% we're expecting.

Our next question comes from the line of Jason Belcher with Wells Fargo.

Yes, thanks guys. I guess first sorry if I missed this but can you give us some color on what the $5 million impairment was in the quarter, what that was related to?

Yes, hey, sure. This is Matts. The impairment relates to an asset in Utah, it's our only asset in that market and it's just not going to be a long-term hold for us.

Okay, thank you. And then secondly, can you just talk a little bit about what you all are seeing in terms of any trends across your different tenant industries? Are there any particular sectors picking up noticeably or conversely any that seem to be pulling back?

Nothing to call out. I mean, Matts's kind of touched on this a little bit with credit loss in that we're not seeing anything that we would extrapolate across industries. But really nothing to call out. I mean, we've seen healthy demand from a number of industries this year, including 3PLs. We're seeing moving away from industries, but we're seeing big box leasing pick up, small box leasing is still pretty strong. So really nothing specific to call out with respect to industries or big box, small box leasing.

Our next question comes from the line of Rich Anderson with Wedbush.

Good morning. Thanks for having me. So I'm back to the same-store sort of cadence. You mentioned 90 basis point impact in the first half from two large leases back half of ‘23. But to get to your guidance, just simple math, 6.5% year-to-date, same-store NOI growth would require 4% and 4.5% to get to your range. So what it's that's more than 90 basis points. So what's going on there that's causing that incremental headwind over and above the 90 basis points that you mentioned?

Yes, good morning, Rich. Number one, I just want to remind, everyone, we did increase our cash same-store guidance by 25 basis points at the midpoint and really goes back to credit loss, Rich. We have 50 basis points of credit loss in our guidance. We've incurred 17 basis points so there will be more credit loss in the back half of the year.

Okay, thank you for that. And then on the example in Atlanta of onshoring, you've taken on a manufacturing entity. Assuming this onshoring movement is real and not political, could you see yourself being more open to manufacturing tenants going forward?

Yes, so just to clarify there, and sorry if it wasn't clear in the prepared remarks, it's a warehouse that was serving regional distribution prior and this and now it's a supplier building for the manufacturer.

I see. Okay.

So really, it's just a warehouse that could be used for regional distribution or supplier building. And I think that's where we view the demand coming for onshoring. In the U.S., the manufacturing facilities, that's not what we do, but we own the warehouses that are approximate to that, and those onshoring manufacturing sites will create incremental demand for the warehouses that are already mostly leased.

Okay. Apologize for that. I didn't catch that nuance. Thanks very much.

Our next question comes from the line of Michael Mueller with JPMorgan.

Yes. Hi. Two questions. One, can you provide any high level color, and I'm not asking for specific ‘25 guidance, but any high level color on how you think 2025 rent spread trends could pencil out compared to what you're guiding toward in 2024? And then a second question on the asset sales. Based on the comment about bid and ask spreads seemingly improving at the margin and expectation that volumes could pick up in the back half of the year, why -- what caused you to pull the trigger on, pull of eight-cap asset sales rather than sitting on them for a few more months?

Yes. I mean, those were -- so I'll take the second question first. Those were agreed to a couple months ago, right. It just takes the time to sell those. And those were non-core assets, and frankly, we're very happy, with the pricing we got with a couple of those. Belvedere, as Matts's mentioned, is a market we've exited -- we're exiting. We only have a couple assets left there. And that market, while we're exiting, there's really only one demand driver, and that's the auto plant that's there. When you look at the majority of our portfolio, there's multiple demand drivers for our buildings. So when we see a market that only has one demand driver, that's a market that, over the long term, we try to exit. So it wasn't necessarily trying to hold on and just generate the best pricing. We're happy with the pricing we achieved there. And then subsequently, there was more indication in the markets priced in, higher probability of rate cuts in the back half of the year. And that's not something that we're trying to time with those asset sales. And on 2025, I'll just wait to move through this year and get more visibility into next year with respect to leasing spreads.

And our next question comes from the line of Camille Vonnell of Bank of America.

Hi, good morning. This is Andrew Berger on for Camille. Appreciate the color around your market rent growth outlook. Just curious how much of that 4% to 5% has already been achieved in the first two quarters or even through July, if you have that number. Thank you.

It's almost half. So it's been growing at a pretty consistent rate as we move through the year.

Got it. Appreciate that. And then on the leasing side, I think last quarter you said tenants were still taking a bit longer to make decisions. Just curious if that's improved at all over the past 90 days. I know the second quarter was pretty active. And also, you've mentioned the C-suite was pretty involved in leasing decisions in the past. Just curious if that has toned down a bit at all.

We haven't seen it really toned down that much. I'd say the one takeaway is bigger boxes, bigger commitments, bigger leases are just taking longer than smaller which is natural especially in a volatile rate environment that we have. So that dynamic is similar to what it was last quarter.

Got it. And if I could maybe just sneak in one more on the acquisition, since that's obviously been a big theme. It looks like this quarter was sort of all over the map. Just curious if there's any particular geographies that you're focused on in the second half.

The strategy is CBRE Tier 1 market. So we've built up the team and really enhanced our processes so we can be pretty efficient in evaluating opportunities across those markets. I think that's a differentiator in our strategy. So this is -- you saw six different markets here in the second quarter acquisitions. In other quarters, you might see the same six, seven, sometimes you'll see a couple assets in one market. But our ability to evaluate transactions across all the CBRE Tier 1 markets is certainly a differentiator for us. So we really don't focus on one or two or three particular markets.

Thank you and we have reached the end of the question and answer session. And I'll turn the call back over to the Bill Crooker for closing remarks.

Thank you everybody for joining the call. And thank you to the analysts for the thoughtful questions as always. We look forward to seeing you all soon. Thank you.