Barry Gosin - Chief Executive Officer Michael Rispoli - Chief Financial Officer Jeff Day - Chief Strategy Officer Luis Alvarado - Chief Revenue Officer Jason McGruder - Interim, Head of Investor Relations.

Welcome to Newmark’s Second Quarter 2021 Financial Results Conference Call. At this time all participants will be in a listen-only mode. After the speaker presentation there will be a question-and-answer session. Please be advised that today’s conference is being recorded.

I would now like to turn the conference over to Jason McGruder, Interim, Head of Investor Relations. Thank you, and please go ahead. .

Thank you and good morning. Newmark issued its second quarter 2021 financial results press release and a presentation summarizing these results this morning. The results provided on today's call compare only to the second quarter of 2021 with the year earlier period, unless otherwise stated.

Any figures with respect to cash flow from operations discussed on today's call refer to net cash provided by operating activities, excluding loan originations and sales. We will be referring to our results on this call only on a non-GAAP basis.

These non-GAAP terms include adjusted earnings and adjusted EBITDA, as well as those terms excluding the impact of NASDAQ and the 2021 equity events. Please see today's press release for information on the impact of NASDAQ and the 2021 equity events, as well as the results under Generally Accepted Accounting Principles or GAAP.

Please also see the section in today’s press release for the complete and updated definition of any non-GAAP terms, reconciliations of these items to the corresponding GAAP results and how, when and why management uses them.

Additional information with respect for our GAAP and non-GAAP results mentioned on today's call are available on our website and in supplemental tables and quarterly financial results presentation. Any outlook discussed on today's call assumes no material acquisitions, share purchases or meaningful changes in the company's stock price.

These expectations are subject to change based on various macro-economic, social, political, and other factors including the COVID-19 pandemic.

I also remind you that information on this call regarding our business that are not historical facts are forward looking statements within the meaning of section 27A of the Securities Act of 1933 as amended and section 21E of the Securities Exchange Act of 1934 as amended. Such statements involve risks and uncertainties.

These include statements about the effects of the COVID-19 pandemic on the company's business results, financial position, liquidity and outlook, which may constitute forward looking statements and are subject to the risks that the actual impact may differ, possibly materially from what is currently expected.

Except as are required by law, Newmark undertakes no obligation to update any forward looking statements.

For a discussion of additional risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see Newmark’s Securities and Exchange Commission filings, including but not limited to the risk factors set forth in our most recent form 10-Q, 10-K or form 8K filings.

I'm now happy to turn the call over to our host, Barry Gosin, Chief Executive Officer of Newmark Group, Inc..

Thank you, Jason. Good morning and thank you for joining us for Newmark’s second quarter 2021 conference call. Joining me on the call today are Newmark’s, Chief Financial Officer, Michael Rispoli; our Chief Strategy Officer, Jeff Day; and our Chief Revenue Officer, Luis Alvarado.

Following the record first quarter, Newmark’s revenues increased by 64% to $630 million, our best ever top line for our second quarter. As the economy continues to recover and vaccination rates rise, our clients are making plans to return to the workplace.

Companies have increased utilization of existing lease space and are making new long term commitments across all sectors. We benefited from a rapidly recovering economy at Newmark’s continued market share gains. Revenues reflected greatly increased demand across all major property types.

Our growth was led by a nearly 250% increase in revenues from capital markets, driven by the incredible talent and platform we have assembled. Newmark’s volume across investment sales, mortgage brokerage and multifamily originations together increased by 225%, outperforming the industry. By comparison, overall U.S.

Investment sales and debt volumes decreased by approximately 47%. Newmark has record debt volume of over $11 billion, which was an increase of nearly 200% led by multifamily. We leveraged our diverse relationships with non-agency lenders to help clients navigate lower GSE loan activity.

While GSE volumes were down in the first half of the year, 57% of their 2021 capture remain. As a result, we expect increased GSE lending activity in the second half of the year. Our leasing and other commissions were up by 54%, which included growth from both tenants and landlords, and improved activity level across office, industrial and retail.

We also saw improved activity across alternative and specialty property types like land, mix use and life science. Newmark’s total revenues from management services, servicing fees and other sources increased by 55%. We continue to benefit from our focus on growing these recurring revenue businesses.

In addition to our robust operating results, Newmark received approximately $928 million in NASDAQ stock. We expect this accelerated windfall to allow us to buy shares, reduce our debt, invest in growth and maintain our strong liquidity.

As Mike will explain in more detail, we have already used a portion of the proceeds to significantly reduce our fully diluted share count. We have enormous white space to grow our business.

We aim to expand our presence in business lines and geographies where we have already invested in our infrastructure and there is an opportunity to accelerate growth and increase our market share. With our strong foundation, we expect to outperform the market over time as industry volumes continue their recovery.

With that, I'm happy to turn the call over to Mike. .

Thank you, Barry and good morning. At the end of June we received 6,223,340 shares of NASDAQ worth $1 billion, $1.94 billion. We used 944,329 shares valued at $166 million to repay the remaining liability on our NASDAQ forward transaction. As a reminder, the NASDAQ forwards raised capital for our 2017 acquisition of Berkeley point.

The marched remaining NASDAQ shares were worth $927.9 million. The receipt of the $1.94 billion is included in other income and is ordinary income for tax purposes.

In order to offset a significant portion of this taxable income, we accelerated $428.6 million of tax deductible, GAAP compensation charges, related to previously issued units, and realized $101 million of deferred tax assets.

These actions which we refer to as the 2021 equity event also reduced our fully diluted share count by $16.1 million at the end of the quarter. Our press release shows adjusted earnings and adjusted EBITDA, both including NASDAQ and the compensation charges related to the 2021 equity event and excluding them.

Beginning with the third quarter of 2021, we will only report our non-GAAP earnings measures excluding these items. To be consistent, the recast of all historical periods is included in our earnings supplement, which is available on the Investor Relations section of the website. Adjusted EBITDA was $973.9 million and earnings per share was $2.89.

Now, I'll present our quarterly earnings as if the receipt of NASDAQ did not occur. Newmark generated record second quarter revenues of $629.9 million, up 64.1%. Expenses increased $193 million. This includes variable compensation related to 91.1% growth in commission based revenues and $54.4 million of higher pass through expenses.

The remaining increase relates to support and operational expenses, resulting from accelerated business activity and our acquisition of Knotel. Our adjusted EBITDA was $120.6 million, up 161.8% compared to $46.1 million. Our EPS was up 210% to $0.31 as compared to $0.10. These were record second quarter earnings even without NASDAQ.

Turning to our balance sheet; Newmark had $1.260 billion of liquidity as of June 30, which included $1.94 billion of NASDAQ. As previously described, on July 2 we settled the NASDAQ forward with RBC for $166 million.

We used approximately $201 million to reduce our fully diluted share count by $16.1 million and we used approximately $327 million primarily through taxes related to NASDAQ in the 2021 equity event. As a result, based on yesterday’s NASDAQ closing price, we expect to retain approximately $457 million.

In July we also repaid the $140 million outstanding on our revolving credit facility and currently have $465 million available on our revolver. We anticipate using our strong balance sheet and cash flows from operations to invest in growing business at attractive returns, repurchase additional Newmark shares and repay debt.

With respect to our full diluted share count, in addition to the $16.1 million share count reduction from the 2021 equity event, we repurchased 3.8 million shares in units during the quarter. In total, we lowered our soft fully diluted share count by $19.8 million.

This will benefit our fully diluted weighted average share count in the second half of 2021. Moving to guidance for the remainder of the year, we are increasing our outlook for 2021 to reflect improving business conditions and our continued market share gains. All of our guidance excludes NASDAQ and the related 2021 equity event.

We anticipate third quarter revenues between $610 million and $655 million, up 40% to 50% and adjusted EBITDA of $110 million to $128 million, up 105% to 130%. We expect annual revenues between $2.4 billion and $2.5 billion, up 26% to 31%. The anticipated adjusted EBITDA of $415 million to $465 million, up 64% to 84%.

Going forward, we expect our tax rate to be approximately 18%. Our guidance continues to include the Knotel acquisition, which will be $0.03 to $0.05 diluted in 2021. With that, I'll turn the call back to Barry..

Thanks Mike. Steady consolidation has driven growth among commercial real estate intermediaries for nearly 20 years. Newmark is in a unique position to grow at a faster rate than our peers as a result of the investments we have made, the brand we have built, the talent we have assembled and the market share we have captured.

With the injection of $1 billion onto our balance sheet and the momentum we have created, we expect to outperform the industry. Global corporate services property management debt origination, mortgage brokerage and real estate investment banking are all areas we have enormous white space to grow. We are excited by our unique position and prospects.

Operator, we’d like to open for questions..

[Operator Instructions] And our first question will come from Alexander Goldfarb of Sandler O'Neill. Please go ahead. .

Hey you guys, good morning. And I have to say, great job on the earnings. It’s not something I’d say generally, but it's great to see such a strong blow out quarter and rebound of capital markets and leasing, etc.

So along those lines, first Mike, on the go forward accounting, the way that you guys are going to present the earnings with its numbers going forward, it's sort of on a like-for-like basis.

How much does that impact the growth rate that we think about Newmark? So historically I think your revenue, your top line grew at like double-digit, your bottom line was growing sort of mid-single digits and you guys were trying to advance that by you know getting better on stock issuance, etc.

So you know the net effect of the changes that you're doing, does this mean that we should think about what does this bottom line mean for earnings growth other than on the new formatted basis?.

Sure, and you'll see that in the supplement that's on the website, we do show all the historical earnings both with and without NASDAQ, so you can see those growth rates.

You know we expect to grow the bottom line of the company as fast if not faster than the top line, you know as we continue to focus on becoming better operationally and taking the costs out of the business that (a) we’d already taken out the $60 million plus the additional $15 million we expect to take out before the end of the year.

So we take our growth rates are going to continue to be better than the industry and we think its both top line and bottom line. .

Okay, just to be clear, you expect that the bottom line will now grow commensurate with the top line or perhaps even better there?.

That's correct. .

Okay, second question. On the buyback that you did, you know the sort of $20 million year-to-date, I think you did about 19% or so in the quarter. Is that a number – it sounds like that's not a number that we should expect to be recurring. It sounds like the ongoing buyback, it may be something closer to that 3 million or 4 million shares, not the 19.

Is that correct because of the one-time way that you handled this NASDAQ with the tax treatment, etc. I just want to make sure I understood that correctly. .

You know I think the NASDAQ transaction gave us an opportunity to really accelerate the buybacks. You can see we reduced the share count by $16.1 million as a result of lowering our set attach rate and so I think that's a fair assessment.

We’ll look to continue to buy back our stock, but it certainly wouldn't be at a higher rate as it was in the second quarter. .

Okay, and then just a final question, I appreciate your time. On the tax rate, if my memory serves, I thought originally you guys were like a 13% tax rate and then now you're talking 18%, maybe I’m mistaken. But could you just go over any changes to the tax rate you know either as a result of cashback or what have you. .

Sure. In the first part of this year and even in the last year we were around 16% to 16.5% on a tax rate. So as a result of accelerating a lot of the unit redemptions we've now used a lot of our future tax deductions, so we do expect that to go up about 1 point to 1.5 point to around 18%. .

Is this going to go up again next year or 18% is the new level?.

We think 18% is the new level..

Okay, thank you. .

Great, thanks Alex. .

The next question comes from Jade Rahmani of KBW. Please go ahead..

Thank you very much. Great to see Newmark continuing to gain market share in the league tables. I was wondering if you could comment on mix of transactions by property type.

I know you mentioned being strong in the alternatives, but are there any numbers that could qualify perhaps on the leasing and the capital market side, how much is coming from office, how much is coming from multi-family, how much is coming from those other alternative sectors?.

We don't publish those general data, but what I can tell you is that you know as you've seen, obviously the office market is lagged a little bit. The significant amount of activity has come from both the life science side, as well as the industrial side, which were both areas that we invested significantly in prior to the pandemic.

Those paid great dividends for us and we expect those to continue to be strong, at least through the foreseeable future here as office starts to recover.

I can tell you that in capital markets we've seen a significant uptick in people as now we have a better vision for the return to the office, of people preparing to take access to the market later half of this year, which we anticipate will continue to drive our growth in capital markets. .

Okay, thank you. And on the multi-family side, I'm starting to hear for the first time you know some debt funds that correspond with mortgage REITs, as well as investors in the space that you know valuations seem stretched in the multi-family space.

Do you anticipate any diminishing in multi-family volumes or is that just select cases that I'm hearing?.

Well, your multi-family business and the real estate business is a relative value business and with interest rates the way they are and with the dry powder available and allocated to multi-family, we believe that there are strong tailwinds and expect there to continue to be very good activity certainly through the end of the year. .

And on the GSE side, could you characterize what your view resulted in their lagging lending activities in the first half of the year and your confidence level and growth in the second half?.

Sure. Last year the GSEs were really the dominant multi-family lender and most other lenders pulled back in the face of COVID and the uncertainty around the lack of ability to manage evictions and lack of understanding about what the impact of the – on the economy would be.

So there was a lot of dry powder and non-GSE lenders coming into the beginning of the year.

Also the GSEs had a reduction in caps and so they needed to make sure that they managed that appropriately, given that 57% of the cap space is left remaining and we have a new acting director of FHFA who is very knowledgeable about the GSEs and is supportive of the GSE’s. We would expect the GSE business to normalize through the end of the year. .

And overall in terms of deference you we were seeing in capital markets, do you believe it's a short term phenomenon and growth will moderate next year or do you believe that it's more of a long term trend. .

I don’t understand the question Jade. .

Well, we’re seeing patterns in growth rates – sorry, go ahead. .

Just in multi or are you talking about generally?.

Generally, the amount of real-estate volumes and capital markets have surged and all of the series brokers have beat estimates by north of 50% to 100% on the revenue growth projections.

Do you think that is a trend that's going to weigh in as we go into next year or it's sustainable?.

We've come out of an uncertain time. We just had a pandemic, so the bar was set relative low. There was an enormous amount of liquidity in the market. Interest rates will likely remain low for a long period of time. I think there's still lots of room and the metrics look good in many like categories that investment for a continuous period going forward.

.

Thanks for taking the questions. .

[Operator Instructions]. And our next question will come from Patrick O'Shaughnessy from Raymond James. Please go ahead. .

Hey, good morning. Curious if you can give an update on your deal pipeline.

Like what sort of things are you looking at right now, and what about valuations look like?.

As far as you’re talking about capital markets, lease or anything….

So potential acquisition for Newmark, I apologize. .

Yeah. I mean the market is still pretty fragmented. There's lots of companies out there and that are good candidates to consolidate with and buy. So, we have a pretty robust pipeline of acquisitions and hires for going forward. .

And would you see that the receipt of these NASDAQ shares as a catalyst for an acceleration of some of that activity?.

Well, look, we not only have, we not only are in a good liquidity position, we have really good cash flow, we have lots of dry powder to go out and acquire and we did prior to NASDAQ and post NASDAQ. So, I mean we have a plan to continue to grow and fill in the white space that will make us a better company and we'll continue that.

I mean it does, certainly does give us more liquidity to do more of it, but we are pretty much viewing the market and growth the same way we did prior to the NASDAQ equity event. .

Got it, it makes sense. Your servicing portfolio, I think it's at $69 billion at the end of June. That's down slightly quarter-over-quarter.

Can you speak to account dynamics going on in that portfolio?.

Sure. Obviously, we have the preponderance of the servicing book is the GSE business, and so with GSE production being down and having roll-off in the book, you're going to see a different kind of growth rate than we expect to see going forward.

We also have a fairly decent amount of CMBS and life-company servicing, and we had some run-off in the CMBS through the COVID period and into the first quarter of this year, which is reflected in the June numbers, but we think this is temporary and we expect the growth to go back to a positive rate consistent with the past..

Got it, thank you.

How much of the NASDAQ shares have you guys liquidated up to this point versus how much remains on the balance sheet?.

Sure. I think the way to think about that is, we are liquidating up to pay off the 2021 equity event for now, so that's fully funded. And then we'll look at what we need going forward and decide what we want to do with the remaining shares. NASDAQ has been a great asset for the company. We're not in a rush to sell off the remaining shares.

Its I think up $10-plus since the end of the quarter, and we think it'll continue to be a great asset for us, so that's where we currently stand. .

Okay, got it. And then Michael, a question about taxes.

There's language in the press release today, let me just read it for you “Newmark believes that the 2021 equity event will result in the total amount of cash paid with respect to both withholding taxes and corporate taxes to be less than a total amount of such taxes that would been paid had the 2021 equity even not occurred”.

Sorry I feel like McGruder reading a long script here. But just kind of curious, it seems like there's negative tax rate arbitrage where you're paying withholding taxes at something approximating 50% to avoid corporate taxes at 18% or maybe mid-20s.

So how does the net cash outflow for Newmark actually lower under that arrangement?.

Sure. I think this is when you can really see the benefit of our corporate structure. If we didn't have that structure, we would have paid, call it $360 million of corporate taxes on $1.1 billion of income.

What we are able to do is accelerate the unit redemptions, which generate compensation and related payroll taxes that otherwise would have been paid over time. So basically the way to think about it is, we paid or we accelerated the payment of the withholding and payroll taxes now and we won't have to pay that significant amount of corporate tax.

So most of the taxes that are in that line item, are really related to just payroll taxes and they would have paid – been paid over a number of years, and we just pulled them into the current period.

Net-net, it's a significantly less amount of taxes than otherwise, because we would have otherwise paid the corporate taxes now and the payroll taxes over time. It also allowed us to significantly reduce the share count as we discussed.

I think the only small negative to the way we handled this is the tax rate going forward goes up about 1 point to 1.5 point like you said to about 18%. .

Okay, got it. Thank you very much. .

The next question comes from Henry Coffey of Wedbush. Please go ahead. .

Yes. Good morning and thanks for taking my question. First, more of a technical question. With the NASDAQ proceeds, you accelerated realizations on the stock and then “reduced your diluted shares.” Was that – can you talk through that? Was that – you bought shares, you bought back shares in the open marketplace.

Can you kind of walk through that transaction or that series of transactions with us?.

Sure. Hi Henry, it’s Mike. So, there's really two things in the quarter. We did buy back shares on the open market, about 3.8 million and then specific to the NASDAQ….

$3.8 million of shares?.

3.8 million shares on the open market..

Right, right that’s what I thought. .

And then another 16.1 million shares or units related to the equity event. What that really entailed was redeeming units for both shares and cash and as a result of doing that, we were able to significantly reduce the share count. .

[Audio Gap] $40 million or so. You then redeemed units for stock and cash, as of say August 15th or say whatever date you want to choose.

What is specific amount of shares outstanding and what is the diluted share count that we should be using for the rest of the third quarter and the rest of the year?.

Sure. If you look in the press release, we give you the spot share count at the end of the quarter and that number is 251.9 million fully we diluted shares. That number that will be plus whatever we buyback – sorry, less wherever we buyback, plus whatever shares normally come into the share count for compensation.

But that's the number that goes more into Q3 and Q4 and you get about half of the buyback. So half of the $19.8 million that we bought back in the quarter will impact the fully diluted weighted average share count for the year, but in Q3 and Q4, it will be the 251.9 plus or minus those other things I discussed. .

Why doesn’t that reduction come out?.

Well it’s just weighted average. It came – comes out on June 30. So you get about 10 million to benefit the full year in 2021, and the rest will benefit 2023. .

So in 2022 we could take the 251 and basically reduce it by $20 million. .

Well, the 251 is the current spot. .

Okay. That’s shares outstanding today or fully diluted shares today. .

Fully diluted shares outstanding today. .

Okay. And then, we should reduce that by anything or is that – if you don't buyback back any more stock, we’re at 251.9 diluted shares for the rest of the year, August forward.

Correct?.

Correct. Plus, whatever normal activity for compensation. .

Right, exactly! Good, thank you. On NASDAQ remaining shares, have all the taxes has been paid or accrued.

Paid is probably not as relevant as accrued?.

Yes, everything's accrued at the end of June. So, the payments for the most part happen in early July and corporate taxes, whatever small amount of corporate taxes would be probably towards the end of the year. .

So, you have $900 million of essentially cash if you so choose to convert this post securities to cash?.

Yes. I think there's a table in the press release Henry which kind of walks through the $928 million we received and what we've used the capital for and related to the $928 million after all the taxes and the share buybacks, we net about $457 million. .

Okay. And I know you had mentioned that, so we're now at $450 million and you haven’t really indicated where that's going to go in terms of paying down secured debt, I mean term debt, paying down senior notes, paying down buying back stock, investing in new teams.

Can you sort of give us some sort of sense of how that remaining cash would be put to work?.

Remember. So, you take the money, the $457 million net that we received from NASDAQ. We still had $165 million cash on the balance sheet. We used some of that to pay down the remainder on a revolver, so we paid down $140 million in July. So what you are left with is about $0.5 billion, $480 million or so.

We generated a significant amount of cash flow through the back half of the year. I think you could see that in our EBITDA guidance. And we haven't specifically said how much we're going to use for acquisitions and how much we are going to use for buybacks and how much for debt, but we will use that capital for all of the above. .

What is the current status of your buyback authorization? How big is it, how much is left to go?.

Sure the Board authorized $400 million, so that's what's left on our share buyback program. .

Alright! Obviously, a big revenue quarter as well, mainly in the capital markets area, is that more property sales or debt placements or both?.

I think both. Certainly property sales were up compared to the quarter last year and a lot of drive in the office, alternative uses, conversions of buildings to life science or they are like properties that have opportunities for that as well as the industrial site and then same thing, debt volumes were up significantly. .

That’s what I was going to ask next. It seems like if I asked someone about the real estate market, they go multifamily industrial, multifamily industrial and I can say what else is going on and they'll any multifamily and industrial, so it really was a continuation of that trend. .

I think that's true, but I think that we've seen the resurgence in the other food groups as well. So no diminishment in the level of interest in multifamily and industrial, but we've seen a lot of activity in retail office, life sciences we said, seniors and healthcare, etc. .

I think what you've seen - what you saw on the quarter for us Henry was, we had a record volume for any quarter in the history of the company in terms of debt placement at $11 billion.

So as we continue to grow our capital markets business, it's both the investment sales side and the capital placement on the debt business and they are both growing really rapidly for us. .

Great! Thank you. .

The next question comes from Michael Funk of Bank of America. Please go ahead. .

Yes, thank you for the questions this is morning, a few if I could. So just in the return of capital, I think last quarter you said at least $100 million in share repurchases. You know I understand equity event is separate from that.

So is that still the target for 2021? I think earlier someone asked about $3 million in share in the quarter, which would seem to tie relatively well with that.

So is that $100 million plus, is that still the target for you?.

I don't know that we have a target Michael. I think that when we said $100 million, that was really minimum amount through the balance of the year when we said that back in May. We've certainly exceeded that by repurchasing close to $250 million in the second quarter.

The equity event and the NASDAQ we see gave us an opportunity to do that and takes some shares out pretty rapidly, which was really good for everybody at the company including the shareholders.

We don't have a target for the back half of the year, but we certainly continue to believe that at these prices the stock is undervalued and we’ll continue to buy it back. .

Understood! And then should we anticipate future equity events similar to this quarter? Is that seen as the best use of the cash or will there be more allocation towards buying back common stock? What is your thought there?.

Well, certainly the equity event we did in the quarter was specific to the – excuse me, specific to the receipt of the NASDAQ shares. It's sort of a one tuck-in opportunity. Could that happen again in the future? We hope we could generate another $1 billion in some transaction that would be great.

But other than that, it would just be typical share buybacks on the open market. .

Understood! And I think at least one of your peers commented that the leasing funnel is going very well and it’s looking strong relative to the last 12 months.

Are you seeing a similar trend with your own leasing funnel?.

Yes. I mean, look across all our markets, activities weight up as companies are getting closer to making the decisions on the return, they are making their plans. And so decisions are being made, longer term commitments are being made and activity in general just is across particularly in office, which was down the most.

I mean, we're not 100% back to what were the pre-pandemic rates, but certainly the activities there and we anticipate that to continue to go stronger as we get further down in this year. .

Understood! And I guess that comment implies that the leases that are being contemplated would be more back to a normal term versus some of the shorter term renewals we've been seeing recently.

Is that correct?.

Yes. I mean, look, you're seeing a combination of both, right? You have some companies that are understanding they have to be back. They still don't – uncomfortable as to what that future office space needs to be, so they are making some short term commitments.

And then you have others who have already determined what their plan is and are making the longer term commitment, because they're also taking advantage of a good net of market right now where they can make those long term plans. .

Understood! And the one last one, it’s an accounting question, I think I understand it, but I want to make sure. So, with the partnership unit reduction in the quarter, should we think as proportionate reduction in future period partnership distribution, is that how it's working or is it something else in the math there.

How do you think about as I the model through that?.

I think that's fair. If you look at the ownership for the partnership, it went down from 33% to about 20% or 21%, So therefore the allocation to the partnership would go down over time. .

Understood. Okay, thank you guys very much, I appreciate it. .

Thank you. .

As there are no more questions, this concludes our question-and-answer session. I would like to turn the conference back over to Mr. Gosin for any closing remarks. .

Thank you all for joining in this call, and I look forward to speaking everybody in the next quarter. .

The conference is now concluded. Thank you for attending today's presentation and you may now disconnect..