Good day and welcome to the Xenia Hotels & Resorts, Inc. Second Quarter 2019 Earnings Conference Call and Webcast. [Operator Instructions] Please note, this event is being recorded.I would now like to turn the conference over to Ms. Lisa Ramey, Vice President of Finance. Ms. Ramey, please go ahead..

Thank you, Anita. Good afternoon, everyone, and welcome to the second quarter 2019 earnings call and webcast for Xenia Hotels & Resorts. I'm here with Marcel Verbaas, our Chairman and Chief Executive Officer; Barry Bloom, our President and Chief Operating Officer; and Atish Shah, our Chief Financial Officer.

Marcel will begin with an overview of the lodging industry as well as a discussion of our second quarter performance. Barry will follow with additional details on our results and operational highlights as well as a discussion of our capital expenditure projects.

And Atish will conclude our remarks with a discussion of our revised 2019 outlook and our current balance sheet. We will then open the call for Q&A.Before we get started, let me remind everyone that certain statements made on this call are not historical facts and are considered forward-looking statements.

These statements are subject to numerous risks and uncertainties as described in our annual report on Form 10-K and other SEC filings, which could cause our actual results to differ materially from those expressed in or implied by our comments.Forward-looking statements in the earnings release that we issued earlier this morning, along with the comments on this call, are made only as of today, August 1, 2019, and we undertake no obligation to publicly update any of these forward-looking statements as actual events unfold.You can find a reconciliation of non-GAAP financial measures to net income and the definitions of certain items referred to in our remarks in this morning's earnings release.

An archive of this call will be available on our website for 90 days.With that, I'll turn it over to Marcel to get started..

Thanks, Lisa. Good afternoon, everyone, and thank you for taking the time to join our call this quarter.The U.S.

lodging industry experienced moderate growth during the second quarter of 2019 as RevPAR increased by 1.1% on 1.2% rate growth and occupancy decline of 10 basis points as supply increases, an uncertain economic climate and Easter shifting into the middle of April tempered overall growth rates.However, it should also be noticed that industry RevPAR increased by 4% during the second quarter of 2018, providing a difficult comparison this year.

Despite a challenging operating environment, we were pleased with our overall performance as our RevPAR growth modestly exceeded our expectations, and we continue to reap the benefits of our asset management teams and operators' focus on expense controls throughout the portfolio.For the second quarter, we had net income attributable to common stockholders of $12.8 million or $0.11 per share.

Our adjusted EBITDAre was $89.5 million and our adjusted FFO was $71.5 million.Our adjusted FFO per diluted share was $0.63, a decline of 4.5%, reflecting a 0.6% decline in adjusted FFO and a higher weighted average share and partnership unit count as compared to the second quarter last year.As outlined in our earnings release, our adjusted EBITDAre and adjusted FFO for the second quarter includes $800,000 of business interruption insurance proceeds compared to $2.6 million received in the second quarter last year.We have now settled all our outstanding business interruption insurance claims related to the 2017 hurricanes and wildfires and anticipate no additional proceeds for the remainder of the year as it relates to these natural disasters.Our 1.3% same-property RevPAR growth modestly exceeded our internal expectations.

While several of our large group hotels were challenged in April as a result of Easter shifting to the middle of the month, RevPAR was only down 0.4% for the month.

May was the strongest month of the quarter, with RevPAR up 3.8%, while June RevPAR increased by 0.4%.Our focus on market diversification and a multitude of demand generators continues to serve us well.

We saw strong demand in the quarter in a number of our larger markets, including Houston, San Diego, Napa, San Francisco and Dallas, which helped offset a weaker quarter in Orlando and some of our smaller markets that underperformed compared to the remainder of the portfolio.As was the case for the overall lodging industry, our current same-property portfolio faced a difficult comparison during the second quarter as RevPAR increased by 3.4% during the same period last year.With this backdrop and the fact that the luxury and upper upscale segments experienced second quarter RevPAR increases of just 1.1% and 0.5%, respectively, we were pleased with the top line performance of our portfolio.We continue to be thrilled with our operators' ability to control operating expenses in this low RevPAR growth environment as these efforts resulted in essentially flat same-property hotel EBITDA margin for the quarter.Our asset management department has remained highly focused on expense controls in all aspects of our hotels' operations, enabling us to offset significant increases in real estate taxes and insurance by finding efficiencies in the rooms and food and beverage departments particularly.

As a result, our year-to-date same-property hotel EBITDA margin has increased by 61 basis points on 2.7% RevPAR growth.Thus far, 2019 has been quiet for the company as it relates to transactions.

On the acquisition front, we continue to search for additions to the portfolio that represent a strong strategic fit and meet our return requirements.However, the pipeline of actionable, quality opportunities remains relatively thin, and we continue to maintain our disciplined underwriting approach.

We are focused on maintaining a strong balance sheet that enables us to have the liquidity and flexibility to take advantage of strategic opportunities should they arise.Additionally, we are continuing to evaluate our existing portfolio for potential dispositions as we continue to process upgrading and fine-tuning our portfolio, consistent with our long-term strategy and with the goal of enhancing the company's future earnings growth profile.

We are hopeful that the second half of the year will provide us with opportunities to do just that.We believe our transactional expertise remains a distinguishing factor in the lodging REIT space, and we believe this expertise is an important factor in driving bottom line growth and increasing shareholder value over the long term.

The eight outstanding assets we added to our portfolio in 2017 and 2018 continue to provide opportunities for growth, particularly in contrast to the 10 hotels we sold during the same period.While we are only in the early stages of driving operational enhancements through our asset management practices and property optimization process initiatives at some of our newly acquired assets, we are encouraged by the early results and look forward to fully capturing the upside we identified during our underwriting.Our project management team also continues to be a valuable component of our company as this team has done an outstanding job executing on the many renovation and value-enhancement projects we have undertaken over the past several years.The team has done a terrific job controlling costs and maintaining schedules and is continuing to do so on our current projects, including the new ballroom at Hyatt Regency Grand Cypress and the transformational renovation at Park Hyatt Aviara.We remain excited about the impact that we expect these capital projects to have on the competitive positioning of both of these important assets.

Barry will provide updates on both projects as well as a number of smaller yet still significant projects within the portfolio shortly.As we start looking ahead to 2020, we have not yet seen a material shift in the group booking environment compared to our outlook for 2019 at the same time last year.

Since the overall booking window remain shorter than we have historically witnessed and timing of definite bookings has a meaningful impact on comparisons, it is a bit too early to draw noteworthy conclusions regarding the strength of the group base we expect to have going into 2020.However, it should be noted that a number of our more significant markets are expecting to have improved convention and citywide calendars in 2020, which should benefit our assets in those markets, both directly and indirectly.Due to the uncertainty regarding the overall economic climate and the resulting corporate and leisure demand, we remain cautious in our outlook and highly focused on expense controls and driving efficiencies throughout the portfolio.

We believe our track record in maintaining and growing margins in this low RevPAR growth environment has been second to none, and we will continue to strive for operational gains throughout our portfolio on both the top and the bottom line.We believe that our strategic focus on having a multitude of demand generators to drive portfolio performance as well as a balanced mix between group, corporate transient and leisure demand will continue to serve us well during various parts of the lodging cycle.Additionally, our affiliations with some of the strongest brands in the industry should prove to be very beneficial, should economic growth and subsequently lodging demand slow down.

We remain excited about the long-term outlook for our high-quality portfolio and believe that our recently acquired and renovated assets will be a particular bright spot in the years ahead.With that, I'll turn the call over to Barry..

renovation of the casitas and suites at Hyatt Regency Scottsdale; renovation of the Alvadora Spa at Royal Palms; the renovation of Hemingway's Restaurant at Hyatt Regency Grand Cypress; completion of the final phase of meeting space renovation at Marriott Woodlands and the continuation of our substantial renovation of the lobby level at Hyatt Regency Santa Clara with the new Regency club and restaurant coming online this month and the main lobby and lobby bar work being conducted in phases during Q3 and Q4.Our largest capital project that will be completed this year, the construction of the new 25,000 square-foot ballroom along with pre-function and ancillary space at Hyatt Regency Grand Cypress, continues to be on track and is really starting to take shape.

The drywall installation of the pre-function space is underway. We're making progress in the ballroom drywall and electrical.We continue to be extremely excited about this project and the benefits of having this additional meeting space at this resort.

Response from the meeting planner community has been outstanding thus far as demonstrated by our group revenue pace of the property currently being up over 25% for 2020 as we successfully implement our strategy of booking ballroom space with overlapping groups, which will also ultimately increase transient compression.

We are excited with our progress and look forward to our fourth quarter 2019 completion.The planning, budgeting and design for Park Hyatt Aviara continues to be refined with construction scheduled to begin during the fourth quarter.

As a reminder, we anticipate spending between $50 million and $60 million on a transformational renovation of the hotel and the property grounds, including guest rooms, public spaces, food and beverage outlets, spa, pool areas, landscaping and the golf course.We expect the guest room and the meeting space renovation will begin in November, and the lobby renovation and exterior and pool work will commence in early 2020 with golf course work to be the final phase of the renovation.We are extremely pleased with the efforts of our in-house project management team and our outside consultants, which we're confident will create a complete transformed resort that will appeal to a wide variety of group and leisure guests.And now I will turn the call over to Atish..

We expect lower interest expense resulting from lower rates on our variable rate debt; and secondly, we also expect lower income tax expense due to a fine-tuning of our full year estimate.

There's been no change to our forecast for G&A expense since we last provided guidance.Before moving to my second topic, I'd like to discuss the impairment expense that we recognized during the second quarter. We wrote down the carrying value of our 113-room Marriott Chicago at Medical District/UIC by $14.8 million.

We expect the hotel's profits to further erode due to higher operating expenses and property taxes.In addition, the negative impact of new supply, including Marriott-branded supply in the marketplace is expected to continue.

It is unlikely that this full-service Marriott's profitability recovers to prior levels despite the renovation we completed last year. The current estimated fair value of this hotel is $10 million.Moving to our balance sheet. Our financial profile continues to be strong, with no material changes during the quarter.

Our current net debt to adjusted EBITDA ratio is 3.5x. We have approximately $110 million in an unrestricted cash.In addition to cash on hand, we have an undrawn $500 million credit facility. We have one small loan maturity next summer, but otherwise, no debt maturities until early 2021.

We remain well positioned to take advantage of opportunities as they arise.Some additional color on our leverage. Our debt has a weighted average term to maturity of 4.5 years and a weighted average interest rate of approximately 3.9%. Our variable rate debt represents about 1/5 of total debt.

Half of our debt is unsecured, and currently we have 31 hotels or resorts that are unencumbered of property level debt.These 31 properties generated approximately 70% of our same-property 2018 hotel EBITDA. As always, we will remain prudent with our capital allocation and will utilize this liquidity to enhance the long-term value of the company.

That concludes our prepared remarks.At this time, we will now open the call for our Q&A session. Operator, we could take our first question now..

[Operator Instructions] First question today comes from David Katz with Jefferies. Mr. Katz, please go ahead..

I wanted to just walk through how we get - given there's some moving parts from '19 into '20. And I know - recognize you're not guiding for '20, but if we can make an assumption about organic growth and then go through the other sort of puts and takes, I think that would be a little helpful, if you don't mind..

Yes, sure. I'll give you some high-level kind of puts and takes. I think some of these items we talked about in the past, but just to go through. I think on the positive side, you've got citywide pace that are stronger in several markets as you look to next year, including Denver, Boston, D.C., Dallas.

The citywide pace as of now in those markets is up greater than 15%.

You've got other markets as well that have better pace.I think one of the projects that Barry spoke about, the ballroom that we're building at Grand Cypress here in Orlando, will be completed as we go into next year, so that's obviously a positive.And then we certainly continue to see positive results from the hotels that we've acquired over the last couple of years, whether it's Scottsdale, Denver, certainly some of the lift that we're seeing because of our asset management practices or in certain cases, applying capital.

That's a multiyear story, and we expect that to continue as we go into next year.

So those are certainly some of the high-level positives.I think on the headwinds side, we have disruption that we'll experience due to the renovation of the Park Hyatt Aviara, so that certainly will be more disruptive to us particularly given the size of the asset.And then we continue to see new supply in some markets that we talked about in the past, Portland, Denver, Savannah.

So we'll be dealing with that, as will other owners of hotels in the market. So I think that covers the list for now..

Yes. No. That was pretty much our list also. And then my follow-up on that is really with respect to Aviara, there is seemingly a change in views around what the fundamental environment's going to be like.

Does that alter your assumptions around the Aviara timing or magnitude of what you're going to do with it in any way?.

No. David, it's our - we're very far along in our planning of this project, and we are very firm believers in what we're doing to the asset and how transformational this renovation will be.

And as I'm sure we've spoken about before with you and others, when we've underwritten deals like this, we've really kind of baked in the fact that we think it's a relatively muted overall RevPAR growth environment but that there is some very specific levers that we can pull with some of these newer acquisitions that we've made.And Aviara is a very striking example of that where we believe that the property has just underperformed from where it naturally should be performing.

And by doing the type of renovation that we're doing, we're really putting it in position to be very competitive again in its - within its set and in the great area there.So we feel very strongly about we're doing the right thing.

As Barry pointed out in his remarks, we're very pleased with how everything is progressing, both from our project management team and our outside consultants. And it's really starting to take shape, and we're very excited about tackling that project here starting in the fourth quarter..

The next question comes from Austin Wurschmidt with KeyBanc Capital Markets. Please go ahead..

So appreciate the detail and comments you provided on July RevPAR trends, which really is in stark contrast to more of the cautious commentary we've heard around demand trends from others in the industry. And so just curious if you could share some of what you're seeing and as it relates to transient pace.

I know you provided some color on group over the next several months in your markets. And then if there's anything concerning that you're starting to see on the demand side..

I'll start off and then turn it over to Barry to give you a little bit more feedback. But what I would say overall is that what we've seen the last couple of months has been pretty much in keeping with what our expectation was last quarter.

We always knew that in the quarter, that April was going to be a little bit more difficult on the group side just because of the timing of April. May was a pretty solid month all around. June was a tough month that we saw coming because of the fact, for example, that you were dealing with five Sundays in June that you didn't have last year.

Last year was just four Sundays, and that's impactful. As silly as it sounds, that 1 day does make a difference.So we knew that it was going to be a little bit more difficult. July, frankly, came in a little bit stronger than what we anticipated a few months ago.

So we're pleased with that performance.Maybe a little bit differently from some of our peers, we never looked at the second half of the year as a kind of uptick period or a period that was going to be stronger for us.

We always knew we had some holes on the group side, and Atish pointed out that the pace has actually improved a little bit for the second half of the year, but it's still slightly negative.So we always knew that the second half was going to be a little bit more difficult for us. So maybe that's just a little different expectation that we had.

But so far, what we're seeing on the ground is really not too different from what our forecast really showed us a few months ago..

I'd just add to that, Austin.

For July, and obviously very preliminary numbers, but group and transient were pretty evenly balanced right around that RevPAR growth of about 3.5%, which is - which to us is a good sign for our portfolio that each of group and transient grew at about the same pace.And sitting here today through Q3, which is really as far as we look out on transient pace, we feel pretty good about transient pace in the portfolio, which again is a little bit different than I think we're hearing from some of the peers.

But we're certainly seeing that week in, week out, we're performing well in both our corporate transient and our leisure transient segments..

No. That's helpful detail. And maybe, Atish, for you, we're halfway through the year. You guys have achieved margin increases versus your expectation - margin increases through the first half of the year versus I think your expectation was flat overall.

You continue to work through your POP initiatives across 7 hotels.And so I was wondering if there's anything specific on either the renovation side or otherwise that could drive margin declines in the back half of the year.

Or is it just general cautiousness given some of the wage pressures and other upward pressure on expenses?.

I think your question is a really good one, and we have been very focused on margins and, frankly, that's been an area of outperformance for us. We started the year saying that margins were going to be flat for the full year. I think on the May call, I said it would be up 10 bps.Now we expect to do a little bit better than that.

That obviously implies a tougher second half. It's not sort of one or two areas in particular.

It's just we expect the comparisons are a little bit tougher, and we're seeing the same pressure that others are.I will say though that we have been surprised by and benefited from some of the things that our managers have been able to achieve and particularly coming out of the POP processes at several of these properties.

So we're optimistic about margin performance continuing to have a positive and good impact to our overall results..

Next question comes from Michael Bellisario with Baird. Please go ahead..

Just want to go back to your comments on the group side.

Are you guys seeing any difference in booking trends for maybe the SMERF and association segment versus the corporate business customer today?.

Nothing particularly notable. When we look through - and obviously, part of our review is not just pace as a number but pace hotel-by-hotel and what the sources of business are.

We can - it continues to be fairly well balanced between corporate group, which certainly continues to book well.But we have also - I mean I think when we talk about as we have for a while now about grouping up, and the grouping up piece is both in corporate, but it's also really making sure our properties are focused on those softer periods and the natural holes, so around the holidays, around softer periods.

And that business, we've been successful in identifying and trying to plug in more association and SMERF-type business..

And then switching gears just on the disposition front, kind of looking for your high-level thoughts here on the topic.

But are you seeing any more buyer interest or changes in buyers' pricing expectations or appetite for putting capital to work today given the weaker fundamental outlook, at least with what you and your peers are underwriting or expecting right now?.

Well, we - as you know, we haven't completed any dispositions this year, so can't really speak to specific transactions and what the appetite necessarily was in those situations. We will continue to evaluate that. And as I mentioned in my remarks, we'll always look to upgrade and fine-tune the portfolio over time.

So certainly, we wouldn't rule out that we may complete some dispositions on the relatively near term.But as it relates to interest in transactions just from the ones you see taking place in the markets, I think there is still good, robust interest in high-quality assets, and those - you've seen some pretty big trades happening recently and being reported, where clearly, there has been very strong interest in those type of assets.

So I wouldn't say that at least from kind of our overall market knowledge, that we're seeing any fundamental shift there at this time..

And then just last one for me on Buckhead. You mentioned some weakness there.

Was that expected? And has your near-term outlook for that asset ramped up - changed at all?.

Yes, it was expected. And I may or may not have said that in my remarks.

But for sure, we're working deeply with Hilton Waldorf on really remixing the property from what it was before to what it's going to be going forward and in that - and we're very much in line with what we thought the hotel would be, both for the first half as well as where we think we're going to be for full year..

Next question comes from Bryan Maher with B. Riley FBR. Please go ahead..

Most of my questions have been asked and answered. But a question on margins, which - it's been impressive how you've been able to hold margins in the face of cost increases.

And sorry if I missed this, but what were labor cost increases in the second quarter?.

Total labor and benefits were up 2.5%, approximately..

And then what was the kind of biggest offset to that, that you've been able to control on the cost side to keep your margins roughly flattish?.

I would say - and some of it shows up in the other revenue.

So when we go into the, in particular, the acquisition properties and properties that are new to us, we're really, as we've talked about before, through the POP process and through what our asset managers are doing, we're often identifying very high margin - or very low margin in terms of cost opportunity.So we look at every revenue item in the hotel, whether that's departure fees, charges for rollaway beds, charges for refrigerators, things like that, that are in some cases pure profit when we're able to implement those.

And we have hotels that hadn't previously implemented charges like that. So that's been a huge plus as it relates to overall margin.In terms of expenses themselves, it's every day looking at in our hotels what are they doing? How can we improve it.

So we're still implementing green systems into a number of our hotels in terms of optional housekeeping services.We're introducing bulk amenities in a number of the hotels. We're asking our managers to constantly take a look at food cost and menu pricing, which obviously have a - both of which can be incredibly helpful.

So it's literally been, through the portfolio, 1,000 little things replicated in all of our 40 hotels hopefully 365 days a year..

And then shifting gears and kind of following up a little bit on Mike Bellisario's question on dispositions.

As it relates to that Chicago Marriott where you took the impairment, can you drill down a little bit deeper as to what happened there? And especially after a recent renovation and why you wouldn't, and maybe you are, just consider disposing of it at this point..

Yes. I mean I'll start with this one. So I mean first of all, keep in mind, it's a very small hotel for us, and we own one other hotel in Chicago. It's 1% of our company EBITDA.

It's not a much higher percentage of our book value, so it's just not a very significant market for us, and it never was.I think as it relates to this asset in specific, if you look back from '14 to '18, GOP declined about 25% during that time period. Property taxes, which I cited, were up over 100% over that 4 years.

EBITDA is down about 60% over that 4-year period.And I think as we look forward, we just don't see the property returning or recovering to those prior earnings levels.

And that really informed our decision to take the impairment on the hotel just taking a look at what the outlook is for this property.And I cited some of the reasons beyond the ones that I just mentioned right now during my prepared remarks. So that's really how - what's evolved at this property.

And I think as to the future, I mean, certainly we're open to a variety of options, including potentially disposing of the assets. So I think that's how we're thinking about this hotel overall..

So you bring up a good point with the property tax, and I know it's only a modest component of your overall tax - expenses in a particular property.

But it begs the question, with it up 100% in 4 years, why own anything in Illinois? And for that matter, where it's located in the Northeast, why own anything in some of these marketplaces where property taxes continue to go to the moon? I mean is that a consideration you look at when making acquisitions or deciding upon dispositions because it's becoming such a large number?.

Well, what is an overall consideration for us is just an overall cost structure that exist in certain places. So as you know, I mean, there are places that are very interesting from a potential demand perspective where we're not necessarily located right now.

And in some of those cases that is purely because we're concerned about overall cost pressures and real estate taxes are absolutely a component of that.So I would say that that's a consideration why we're not overly exposed in markets like Chicago, and why we haven't found anything that works for us in markets like Seattle, for example, where you have some pretty onerous overall just cost structures in hotels in many cases.

So it's one component. It certainly is not the one thing that we say it absolutely would drive us off, but it's certainly something that comes into consideration..

The next question comes from Brian Dobson with Nomura Instinet. Please go ahead..

Most of my questions have been asked, but you gave some very good color on group pace, which is very helpful.

I know it's a smaller component, but as you're talking to your corporate clients, what do you think is driving their behavior here regarding committing to future group business?.

I mean as I'm sure you know, we are not in direct conversation with our group customers. Our management companies and sales leaders of those hotels are doing that. Obviously, we're tied in closely to that process and get regular updates on that.

So what I'll - my answer is more secondhand rather than firsthand in nature.But as it relates to group, in particular, we continue to see companies want to have group functions. They want to get their people together.

I think in some cases, at least in our hotels, that the companies feel a real need to get their people together for annual events, particularly where they have people that are working in more remote geographies, more people who work from home, more people who spend less time physically in the office.And we're certainly seeing that, and that's part of what's led us, as we've talked about before, led the catering teams in our hotels to put together a really good program for them when they're on-site and really have some interesting events and quality food and beverage and things like that.

But the feedback we're getting is that people want - they want to meet, they want to meet in hotels, they want to bring their people together..

The next question comes from Bill Crow with Raymond James. Please go ahead..

Atish, just on the housekeeping front, can you remind us why your share count and guidance is a couple million shares higher than where it is today?.

Yes, sure. That count change reflects both shares and units. So I think that's maybe one of the reasons. I think the other piece is we did issue equity last year, so that might not be in your - those are the two big drivers of the share count change. But it hasn't changed from last quarter to this quarter, that 114.4 million.

It's just that if you look at our shares outstanding versus the total count we're giving..

Appreciate all the color on the demand side.

On the supply side, as you think about your big markets, where are the big changes next year? Which markets have more? Which markets have less?.

In terms of supply growth..

Yes..

What we're looking at in terms of next year, some of the similar markets where we've had supply pressure, like Savannah, certainly Portland. You've got a little bit of new supply coming in, in downtown Orlando.

So some markets are similar to what where we've seen higher levels of supply growth, and there's a couple of other markets which are new.But I would say overall, if you look at the supply numbers for next year, they're roughly the same as - at least at this stage as they are for this year, up in the 2.75% range.

And as we've seen over the last few years, the supply growth numbers tend to come down as things get pushed out, so that could also happen as we look - as we get closer to next year..

Marcel, I think in your prepared remarks, you talked about the pipeline kind of being disappointing from an acquisition perspective. I've heard some brokers say they think the second half of this year is going to be much better.

And I'm just curious whether there's a sense that owners, would-be sellers might be getting a little bit nervous based on some of the economic and fundamental data that we're seeing and might indeed be a better opportunity in the second half of the year.

Any thoughts there?.

Could be. We - when we're thinking about the overall potential acquisition climate, brokers are always going to be optimistic about what's coming on. I'll start off with that, I guess. Every time you talk to a broker, they think there's a lot more stuff going.

What we've seen in the past, I think, is that - I've mentioned this before in my comments, is that - and you referred to this as well.The potential sellers haven't felt a lot of pressure to need to sell assets unless they really feel like they're getting the absolute top price that they're looking for, because they're perfectly comfortable with the current environment and with the fact that they are able to refinance out in many cases, their equity.So that - I think that's held back the overall pipeline a little bit.

And whether that will change, if there is a little bit more softness, it certainly could. But it's a little bit too early to say that..

This concludes our question-and-answer session. I would now like to turn the conference back over to Marcel Verbaas for any closing remarks..

Thanks, Anita. Thank you all for joining us today. We continue to be excited about the prospects of - within our portfolio and particularly with some of the bigger projects that we'll be embarking on and that we have been embarking on. So we look forward to updating you again next quarter. And again, thank you for joining us today..

This conference has now concluded. Thank you for attending today's presentation. You may now disconnect..