Willis Sheridan - IR Wellington Denahan - CEO Kevin Keyes - President Glenn Votek - CFO Bob Restrick - Head, Commercial Portfolio David Finkelstein - Head, Agency Portfolio.

Jason Weaver - Sterne, Agree Brock Vandervliet - Nomura Securities Joel Houck - Wells Fargo Securities Steve Delaney - JMP Securities Arren Cyganovich - Evercore Partners.

Good morning and welcome to the Annaly Capital Management Incorporated Third Quarter 2014 Earnings Call. All participants will be in a listen-only mode. (Operator Instructions) After today’s presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Willis Sheridan. Please go ahead..

Good morning and welcome to the third quarter 2014 earnings call for Annaly Capital Management. Any forward-looking statements made during today’s call are subject to risks and uncertainties, which are outlined in the Risk Factors section in our most recent annual and quarterly SEC filings.

Actual events and results may differ materially from these forward-looking statements. We encourage you to read the forward-looking statements disclaimer in our earnings release, in addition to our quarterly and annual filing.

Additionally, the content of this conference call may contain time-sensitive information that is accurate only as of the date of the earnings call. We do not undertake and specifically disclaim any obligation to update or revise this information.

Participants on this morning’s call include Wellington Denahan, Chairman and Chief Executive Officer; Kevin Keyes, President; Glenn Votek, Chief Financial Officer; David Finkelstein, Head of Agency Trading and Bob Restrick, Head of Commercial Investments. I will now turn the conference over to Wellington Denahan..

Thank you, Willis. We have a few prepared remarks and then we will open the call for questions. As I have said many times, we would welcome the day that market participates collectively determine the pricing of risk assets, instead of the central bankers. Based on the latest moves out of the Bank of Japan we may be waiting a bit longer.

However, we’re encouraged by our own central bank’s more balanced guidance with respect to inflation, the economy and the end of QE-3. Although it’s important to note, that as U.S. monitory policy makers reduce their market presence regulatory reforms will start to exert greater influence on market functioning going forward.

In order to put these expected influences in perspective, it is worth recapping some of the more notable impact on markets and behaviors from past efforts to improve the regulatory framework and oversight. 13 years ago the SEC assured in the era of decimalization of prices in stock markets.

Their admirable objective was two-fold; reduce transaction costs and better liquidity for the smaller investor.

Michael Lewis the famous storyteller can thank this subtle change for the success of his latest book Flash Boys which sensationalized the much maligned business of high frequency trading that owes part of its success to decimalization of prices and still maybe the only valid explanation for the 2010 flash crash in equity market.

It is a fact generally acknowledged that well-meaning post-crisis regulation does little to prevent the next crisis.

In the aftermath of the dotcom boom which was partially fueled by the over-exuberant analyst reports and commentary from the likes of Henry Blodget and Jack Grubman, revised regulation of sell side analysts and investment banks resulted in new and various forms of Chinese walls coupled with required pages of disclosures and disclaimers within each report that are often longer than the actual reports themselves.

Moreover, with the comfort of new regulation in place, we quickly moved on to the next crisis.

We can thank the accounting scandals of both Enron and WorldCom in the early 2000s for the Sarbox Act and avalanche of audit and control assessments designed to hold top management and boards to an attestation that they know which activities they’re involved in, but did nothing to ensure they understood those activities.

Even with the rigors of Sarbox in place Fannie and Freddie still managed to grab headlines with their own accounting missteps several years later. Again these regulatory safeguards did little to alert investors, regulators or even the very corporate management adhering to Sarbox to the dangers of the impending financial crisis.

We now have the bigamist Dodd-Frank legislation and the Basel Committee engaged in a tremendous effort to reform the financial system. All this well-meaning regulation is a natural outcrop of crisis, but can actually have a hand in creating the next unintended market event.

New regulations that target bank and broker-dealer liquidity, as well as new disclosure requirements are predictably drying up liquidity in favor of the noble pursuit of reducing system-wide leverage. I hear that this lower leverage could be a mirage.

A few weeks ago, we got a glimpse of the impacts on the changing liquidity landscape when on a seemingly uneventful day-to-day we experienced exaggerated moves in both equities and fixed income. Could it be that regulatory reforms have addressed the sources of the last crisis, only to give rise to new issues.

As the fed moves away from the fixed income markets and regulatory reforms change the incentives for the remaining participants, we feel it warrants the healthy dose of concern. There is no question that the volumes of regulation and reform will flow the pace of economic growth and often times give rise to unintended and unwanted outcomes.

Since 1997, we have operated through many challenging up-market environments and are respectful of the lessons learned and the opportunities they have presented. We have paid out $12 billion in cash dividends since then, delivering a total return to investors, three times that of the S&P 500 during the same period.

We continue to position the company to be responsive to the unforeseen, while taking advantage of our liquidity and flexibility to capitalize on any market volatility going forward.

We remain hopeful that the cumulative effects of all this change will ultimately lead to a sounder financial system and marketplace, but we’re paid to carry a healthy position and skepticism. I will now turn the call over to Kevin Keyes to discuss the economy..

Good morning. Before we address the positioning of the portfolio and our quarterly performance, I’d probably take a few minutes and expand upon Wellington’s theme of increased regulation and specifically its impact on economic growth by framing some of our own broader macroeconomic views now that QE-3 has ended.

Ironically after all the money printing in recent years QE ends with the market now focusing on the prospect of deflation rather than inflation and slowing growth versus a global economic expansion. Although the tone of the committee’s statements sounded a bit hawkish the language was simply meant to substantiate the end of QE3.

Having said that, following three purchase programs that have brought the fed’s balance sheet to $4.5 trillion, there are numerous red lights flashing in the global markets including the 10 year U.S. treasury yields that are flat to four years ago.

European yields at the lowest they’ve been in hundreds of years, oil prices at a three year low, Chinese GDP growth just enough this past weekend at a five year low and even the latest U.S. quarterly GDP number which on the face exceeded expectations can easily be dissected as evidence of an underperforming business sector.

Taking a closer look at last week’s GDP number even though the initial trend showed growth at a 3.5 percentage rate compared to an expected 3%.

The source of the increase was primarily the net result of two temporary growth drivers that tend to stick out in challenging times, net exports and government spending combined to add two-thirds of the total growth in GDP. Obviously an increase in exports is not expected to continue given the strength of U.S.

dollar and the relatively weak global economies.

In fact this week’s trade deficit number just released to scale back exports dramatically and as a result GDP growth is now reduced to no more than 3% and likewise the government share of GDP was way above normal with defense spending in the level not seen since the second quarter of 2009, the teeth of the last recession.

The three other main components of GDP when you break it apart business investment, residential investment and consumption, all performing well below historical averages and slowed considerably from the second quarter, when you compare the relative growth quarter-over-quarter all three categories declined by an average of 30% to 80% with residential investment performing the worst.

So, our view continues to be that global growth will be slow at best, rates will be lower for longer and fed policy measured overtime.

Continuing to look beyond the headlines of the latest economic data as the market transitions from the unprecedented era of QE, we’ve seen numerous structural challenges to sustain growth and indicators for little or no inflation.

Increased debt levels reduced corporate and residential investment, demographic realities weighing on the housing sector and the broad effects of increased regulation that Wellington mentioned. All contribute to a market backdrop which is favorable for our type of investment strategies.

Our yield generating profile in a yield starved world combined with our portfolio of dollar denominated liquid assets, typically outperformed during times of muted economic growth and heightened market risk and volatility. Now I’ll turn it over to David who will summarize our agency portfolio performance..

Thank you, Kevin and good morning. Regarding agency MBS specifically while we did have an active third quarter we were not inclined to add to our agency portfolio. We felt that MBS faced some headwinds following the strong performance in Q2.

In addition we have a technical landscape looked somewhat less favorable with the continuing wind down of QE3, as well as an increase in MBS supply over the summer.

As the quarter unfolded, MBS did in fact underperform as we saw some normalization of spreads and supply and demand imbalances that characterized the first half of the year moderated somewhat as well.

In terms of specific trading activity in the quarter, we purchased 7.5 billion in securities and sold 4.2 billion with the difference primarily reflecting the investment of portfolio run off.

While the subject of today’s call is on the third quarter, more recent concerns over the global economic climate and other factors that have led to a meaningful increase in volatility since the end of third quarter certainly merit discussion today as well.

As the interest rates rallied substantially in early October, fixed income volatility measures spiked and nominal MBS spreads widened. While the market did retrace some of the rate rally and spread widening, investors were certainly left with the sense that MBS may be somewhat vulnerable in a lower rate environment.

Directionality of rates aside, this higher volatility environment translates to less predictability of MBS cash flows as negative convexity has crept back into the mortgage market.

One point to note regarding recent agency MBS performance is, that higher quality specified pools have exhibited very strong relative performance as investors have priced in a renewed demand for prepayment protection and cash flow stability in the event that recent volatility proves persistent.

And while call protected pool pay ups have appreciated all year given the trend down in rates and the fact that they started 2014 at very depressed levels the specified sector still looks quite fair particularly when you consider the possibility that lower rates may persist for some time as Kevin alluded to.

Nonetheless, careful security selection is increasing important at these valuations. With respect to our outlook on the agency MBS sector going forward, in spite of recent market turbulence valuations still look reasonable.

We do this that volatility will remain elevated over the near-term as the market continues to deliberate over whether cyclical recovery in the U.S. will be derailed by global economic weakness but our view is that MBS spreads provide sufficient compensation in this environment.

With respect to prepayments with rates at current levels we do expect a modest pickup in prepayment speeds, but a meaningful further rally would be required to experience prepays consistent with that what we saw in 2012 and early 2013.

Regarding our portfolio, we have taken a conservative but opportunistic approach to both leverage and asset selection in 2014 and this has served us well and puts us in a good position going forward.

Again spreads currently look fair but if they do widen in a fashion that we do feel is justified by the fundamentals, we will look to add to our holdings. With that said, I will now hand it over to Glenn Votek to discuss the financials..

Thanks David and good morning everyone. I’m going to provide a very brief overview of the key financial highlights for the quarter before we then open the call up for questions.

So to begin our core earnings which excludes realized and unrealized gains and losses on derivatives, asset sales and other non-recurring items was up about 3% sequentially to approximately $309 million.

Core earnings per share available to common was $0.31 which compares to $0.30 in the prior quarter and our annualized core ROE was 9.3% up versus 9.2% for the prior quarter. From a GAAP standpoint, we reported earnings of approximately $355 million versus a loss in the prior quarter of 336 million.

The prior quarter loss being driven by the termination of certain interest rate swaps that we had previously discussed with you on last quarter’s call. We generally had two offsetting factors that contributed to the current quarter results. To begin, our interest income declined due to $48 million increase in premium amortization as CPRs increased.

This resulted in our asset yields declining to just under 3% and conversely we experienced about a 15% reduction in economic interest expense. The interest expense benefit being driven by about $52 million decline in swaps expense following the prior quarter’s lines that I just alluded to.

Our net interest margin which represents the economic net interest income earned relative to our interest earning assets and I believe to be a more meaningful performance measure relative to net spread was 161 basis points, which was up from 157 basis points to prior quarter. Net interest spread was also up for the quarter.

And turning to our balance sheet, our asset portfolio was relatively flat as David alluded to a moment ago and likewise our repo balances were also relatively flat. Our book value in the quarter declined to 12.87 per share which compares against 13.23 in the prior quarter which was largely driven by unrealized losses on agency securities.

And finally our capital position remained solid with leverage at 5.4 times relatively flat from the prior quarter and our capital ratio at 15%. So with that, operator, we’re ready to open it up for questions..

Question:.

and:.

We will now begin the question-and-answer session. (Operator Instructions) We have a question from Jason Weaver from Sterne, Agree. Please go ahead..

I wonder if you could briefly discuss this FHFA proposal for another change to the Raytheon warranty relief efforts and what effects that may have both on terms of available spreads of supply and pre-payment activity within your current portfolio?.

I wonder if you could briefly discuss this FHFA proposal for another change to the Raytheon warranty relief efforts and what effects that may have both on terms of available spreads of supply and pre-payment activity within your current portfolio?.

Yes, Jason this is David. I got to tell you it’s a little bit early to really understand what the impact would be in terms of the actual supply available in the market. Our hope, however is that we do get a meaningful increase in net supply, so we do have more product particularly in an environment when the fed does own a third of the securities.

So we’re not concerned about an abundance of supply in the market and we anticipate initiatives like this on the part FHFA to try and support housing to continue and this is just simply one example of that..

Would you characterize the change is more of a marginal impact in…?.

Would you characterize the change is more of a marginal impact in…?.

Marginal, yes correct..

Second, last quarter you reduced the size of the hedge portfolio quite substantially as you mentioned I was just looking, what are your thoughts today about hedging and the amount of curve and duration risk you are comfortable with?.

Second, last quarter you reduced the size of the hedge portfolio quite substantially as you mentioned I was just looking, what are your thoughts today about hedging and the amount of curve and duration risk you are comfortable with?.

That’s a good question Jason. In terms of hedging we take a view that we have two broad types of risk, one is obviously mortgage basis risk as well as interest rate risk and when it comes to the trade-off between the two we look at the relative value between them.

In terms of hedging, we’re not concerned about the move in rates necessary today it’s relative to what’s priced into the forwards.

So when we think that the rate moved is priced into the forward market is too aggressive, we will hedge less and when we think it’s not pricing upward rate move will hedge more and that tends to factor in to our discussion.

In the current environment obviously we have rallied quite a bit this year and we rallied pretty substantially in early October and after since we are tracing a lot of that move. We are comfortable with the current level of race, we do think there are a lot of concerns with respect to the global economy which are going to impact the U.S.

economy and then when we think about the longer term headwinds that Kevin spoke about with respect to our own economy we think that longer term rates are not likely to increase very dramatically so we’re relatively comfortable with the rate environment although we do expect the fed to increase rates, selective the rest of the market in the latter part of next year..

And our next question is from Brock Vandervliet from Nomura, please go ahead..

Just two follow-up on Jason’s question regarding the swaps position and how are you thinking about the world so the major recovering you did was obviously last quarter in the 0 to 3 year category or bucket.

I saw you added back some of those positions you’re pretty calm about the rate outlook in terms of the probability of actual rate moves if that outlook changed I’m assuming you would bulk up in that area again or no?.

Just two follow-up on Jason’s question regarding the swaps position and how are you thinking about the world so the major recovering you did was obviously last quarter in the 0 to 3 year category or bucket.

I saw you added back some of those positions you’re pretty calm about the rate outlook in terms of the probability of actual rate moves if that outlook changed I’m assuming you would bulk up in that area again or no?.

That’s absolutely correct but just to go over the swaps from Q3, what you saw in terms of those front buckets changing was actually roll down from longer dated swaps as they simply roll down the curve so we didn’t add to the shorter duration swaps bucket, we did add some small amount of swaps out the curve but to your question, to the extent our view changes we’ll absolutely reflect that in our hedge portfolio..

And a question for Wellington I guess you spoke about regulation, it would seem like, if you look at the mortgage market now versus pre-crisis the government is stepping back the mortgage REITs as an industry or one of the few buyers that are poised to potentially grow even further, it would seem like it would be a right environment for a collective knock on the door of the industry by regulators, do you sense any shifts in the wind there of any kind?.

And a question for Wellington I guess you spoke about regulation, it would seem like, if you look at the mortgage market now versus pre-crisis the government is stepping back the mortgage REITs as an industry or one of the few buyers that are poised to potentially grow even further, it would seem like it would be a right environment for a collective knock on the door of the industry by regulators, do you sense any shifts in the wind there of any kind?.

No, I think a lot of the dialog with respect to concern over the industry as a whole really took place when they saw an incredible amount of equity growth and asset growth along with it. I think regulators were keen to keep an eye on how the industry performed in the 2013 period where you had a fairly substantial sell up in the market.

I think the industry as a whole has done a good job of maintaining a constructive dialog with regulators and policymakers to help them better understand the risks that we all take.

And I don’t get a sense that there is any impending increase in regulation above and beyond what has happened in the counter parties that we’re all plugged into and so by default we are also a lot of that regulation reaches beyond those balance sheets and financials into people like us that are dependent on them for our business operations so, we do have that knock on effect and I think it’s pretty well understood by the regulatory community..

Brock, it’s Kevin.

I’d just add, we spent a lot of time in DC and I think at the end of day the last couple of years the educational curve and appreciation for our sector has appreciated and the need for private capital to your question is a definite realization than our sector can not only participate, but be a big component of the redistribution of ownership.

So, I think we feel when you see the latest risk sharing deals that are getting done or starting to getting done we or starting to get done we just think that’s going to grow and it’s our ability to participate in that I think there is a big opportunity for that for us in our industry..

And our next question is from Joel Houck from Wells Fargo. Please go ahead..

So, my question has to do with kind of mid October and massive rallying in rates I mean October spiking valve was fairly short lived.

Maybe talk about what in terms of portfolio management without giving away the secret sauce and what exactly does a large firm like Annaly do in that type of environment? Are you showing duration or what are you doing with hedges? I mean give us some sense of how you’re both protecting value, as well as maybe taking advantage of what is an outsize move in rates?.

So, my question has to do with kind of mid October and massive rallying in rates I mean October spiking valve was fairly short lived.

Maybe talk about what in terms of portfolio management without giving away the secret sauce and what exactly does a large firm like Annaly do in that type of environment? Are you showing duration or what are you doing with hedges? I mean give us some sense of how you’re both protecting value, as well as maybe taking advantage of what is an outsize move in rates?.

So certainly in light of where we are in the policy cycle my first reaction obviously and I kid with the desk is sell everything at 187. But that’s not always the right response given the bigger broader picture. But I’ll let David expand on how you react to situations like that..

Sure. Thanks Wellington and hello Joel, talking about that example specifically in the beginning of October. As you might have heard over the recent past, MBS have exhibited very directional performance as the market sells off there is yield buyers that come in and they tend outperform very well and also prepayment risk reduces.

As the market rallies there is not a lot of demand, prepayments are expected to increase some mortgages underperform. So when you have the move like we saw in early October with that level of volatility, MBS obviously suffered quite a bit in that rally.

We do have a positive duration gap and a lot of the reason why we carry a positive duration gap is because of this performance profile in this current environment.

For a rate rally you actually do have to have positive duration to be able to keep up with the market effectively and then you have some protection even though you’re along the market and to sell off given the fact that mortgages tend to outperform in that environment.

So with respect to specifically what we did as Wellington pointed out we would have loved to sell the entire portfolio at 187, but that’s not possible. We don’t chase the market. We did not delta hedge as our duration gap did shorten.

We certainly weren’t buying the market in fact we did take advantage of those higher dollar prices to actually sell assets. But certainly not in the magnitude that you would like after the fact but nonetheless we do take those opportunities to reduce exposure. And then with the anticipation of adding it back in more favorable local rate environments.

Does that answer your question?.

Yes and maybe David you could comment on what if anything you’re doing on the hedge side?.

Yes and maybe David you could comment on what if anything you’re doing on the hedge side?.

We actually did a couple of things and these are all local trades. We did one trade where we sold a fair amount of pools in lower coupon MBS which had been the best performers as higher coupons were a little bit stuck.

But that being said in high coupons we actually bought higher coupons given how cheap the basis did get and used futures contracts to actually hedge those. So we do a lot of things when markets become dislocated. But in terms of the overall hedge I would say we have reduced assets as opposed to added hedges..

And our next question is from Steve Delaney from JMP Securities. Please go ahead..

I noticed in the third quarter that there was minimal activity in the CRE portfolio. And certainly understanding sort of the macro position you’re taking as far as waiting to see how markets evolve, understand that totally with respect to agency.

But maybe, and maybe naively on my part, but a little surprised that you’re not being more proactive in the CRE area. So I am wondering does this also reflect a macro view and a concern that credit spreads may blow out in some sort of a market disruption or more closer to the actual loan and equity products that you’d be investing in.

Are you seeing sloppy underwriting or irrational pricing? So if you could kind of comment on where you are?.

I noticed in the third quarter that there was minimal activity in the CRE portfolio. And certainly understanding sort of the macro position you’re taking as far as waiting to see how markets evolve, understand that totally with respect to agency.

But maybe, and maybe naively on my part, but a little surprised that you’re not being more proactive in the CRE area. So I am wondering does this also reflect a macro view and a concern that credit spreads may blow out in some sort of a market disruption or more closer to the actual loan and equity products that you’d be investing in.

Are you seeing sloppy underwriting or irrational pricing? So if you could kind of comment on where you are?.

Before Bob answers your question with more detail, I would -- just one thing I want to emphasize is the commercial team here has a tremendous amount of flexibility in that. They do not have a gun to their head that they just have to be in the business constantly irrespective of the fundamentals or the pricing.

And so these guys have a tremendous amount of opportunity with the kind of portfolio, the kind of balance sheet they are part of. But I will let Bob really expand on the change in the composition of the portfolio and the size of the portfolio from quarter-to-quarter..

Hi Steve its Bob Restrick. I think it’s important to put in perspective and as Welli said that if you look at our change quarter-over-quarter it’s relatively flat but it kind of hides the fact that since the beginning of the year we’ve had $240 million in deals payoff and 13 transactions in the meantime we have put out 295 million against that.

So there is activity going on constantly it just doesn’t show up necessarily, so we’ve maintained sort of the level of the portfolio.

And then also I would say third quarter historically is always kind of the lightest and the fourth quarter is generally the highest and we’re seeing that too in our forward pipeline and sort of bigger picture to your comments about why aren’t we increasing at a faster pace? I do think that valuations across the board are at or above peak levels and on top that you have more investors in every component of the commercial real estate pack whether it’s a first mortgage or whether it’s equities and I’ve ever seen before.

So you really need to pick your spots and we have that flexibility. And so we’ve been just much more selective..

And the 11% equity allocation currently, is there, I think I’ve heard you all say in the past that that could go as high as 15%, am I correct there?.

And the 11% equity allocation currently, is there, I think I’ve heard you all say in the past that that could go as high as 15%, am I correct there?.

Sure, yes, absolutely it could. Technically it could go to a highest 25%. As per our perspectives obviously it could go a lot more but we have committed to keep it relative to our equity base of about 25%.

I think we are in, yes, we’re in a fantastic position to start to have the market experience a world without such direct impact from policy and I don’t think there is any rush to get involved when the fed has only just begun stopping to add the amount of liquidity that it was.

So I think there will be periods where you get a change in the composition of the risk profile of the market and the demand and influences that will be on pricing and spreads and things like that I think there will be opportunities..

Totally understand and I do appreciate your comment that with this team and this portfolio embedded in the large Annaly complex there is less quarter-to-quarter pressure to put capital to work. So thank you for the comments..

Totally understand and I do appreciate your comment that with this team and this portfolio embedded in the large Annaly complex there is less quarter-to-quarter pressure to put capital to work. So thank you for the comments..

And our next question is from Arren Cyganovich from Evercore. Please go ahead..

And getting your crystal ball out, do you think there will be any GSE reform into the next congress and what do you think the odds are of that happening?.

And getting your crystal ball out, do you think there will be any GSE reform into the next congress and what do you think the odds are of that happening?.

If they want to do something, housing is probably something that they can get done. There will be compromises now that the republicans control both the house and the senate. I think a big wildcard out there is whether either of the agencies would require some kind of capital injection that would force the issue much further.

Right now I don’t think there is an incredible amount of urgency to it and I think there is a lot that the FHFA itself is doing to set up for the ultimate resolution of the GSE. So I don’t put it as the high priority but if they want to have something that they have can point to that they have gotten done I think there is a possibility.

But there would be comprises that need to take place from the bridge between PATH Act and Johnson-Crapo..

Yes a descent size bridge I think..

Yes a descent size bridge I think..

Yes..

Anyways, on the other side of that have you looked at much of the credit risk sharing deals that the GSE’s have been doing I think they’re looking to increase those fairly substantially and what are your thoughts about participating in some of those transactions?.

Anyways, on the other side of that have you looked at much of the credit risk sharing deals that the GSE’s have been doing I think they’re looking to increase those fairly substantially and what are your thoughts about participating in some of those transactions?.

Sure, and this is David. Historically those assets we’ve not considered those good read assets because the cash flows are not derived directly from the real estate asset that being said a very recent initiative to make this program read eligible effectively has been undertaken and in fact last week the first of such deals was done.

So, now it’s on the radar.

We certainly would view it as something that could be attractive, it offers diversification benefits away from the core agency strategy or it does require a different look at the securities we had evaluated in context of across the credit spectrum but also in terms of liquidity, agency liquidity is obviously very good, credit risk, the generic credit risk structures have the liquidity has improved somewhat but these unique one-off structures that are created for REITs we will have to see how that liquidity develops but it’s certainly something we will consider as that market develops..

One thing I will say, it was nice to see that all of the dialogs that not only ourselves but other in the space have been having with the GSEs about making these assets more REIT-friendly is starting to take hold..

And ladies and gentlemen, this will conclude our question-and-answer session. I would like to turn the conference back over to management for any closing remarks..

I just want to thank everybody for participating in our call today. I want to thank my management team for doing a tremendous job navigating through these markets and we look forward to speaking to you for the fourth quarter call..

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect your lines..