Participants

Scott Schaeffer; Chairman of the Board, Chief Executive Officer; Independence Realty Trust Inc

Presentation

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Independence Realty Trust. First quarter 2025 earnings conference call.
(Operator Instructions) As a reminder, today's call is being recorded. I will now hand today's call over to Stephanie Cruz and Kelly. Please go ahead.

Good morning and thank you for joining us to review Independence Realty Trust first quarter 2025 financial results. On the call with me today are Scott Schaeffer, Chief Executive Officer, Jim Sebra, President and CFO, and Janice Richards, Executive Vice President of operations.
Today's call is being Webcast in the investors section of our website irtliving.com, and a replay will be available via Webcast and telephonically beginning at approximately 12 noon today Eastern time.
Before I turn the call over to Scott, I'd like to remind everyone that there may be forward-looking statements made on this call. These forward-looking statements reflect IRT's current views with respect to future events and financial performance. Actual results could differ substantially and materially from what IRT has projected.
Such statements are made in good faith pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1,995. Please refer to IRT's press release, supplemental information, and filings with the FEC for factors that could affect the accuracy of our expectations or cause. Our future results to differ materially from those expectations. Participants may discuss non-gap financial measures during this call. A copy of IRT's earnings press release and supplemental information containing financial information.
Other statistical information and reconciliations of non-GAAP financial measures to the most direct comparable GAAP of financial measures is attached to IRT's current report on the Form 8k available in the SEC filings section of IRT's investors website. IRT does not undertake to update forward-looking statements on this call or with respect to matters described herein, except as may be required by law. With that, it's my pleasure to turn the call over to Scott Shafer.

Scott Schaeffer

Thanks, Stephanie, and thank you all for joining us this morning. I'm happy to report that 2025 is unfolding largely as we anticipated, despite the macroeconomic uncertainties that have emerged since our last call. We are on track to achieve both our full year same store NOI and core FFO per share guidance.
Our communities are well located in areas with strong population and employment growth and will continue to outperform even during periods of economic uncertainty.
First quarter results were solid. We delivered 2.7% same store NOI growth driven by a 100 basis point increase in average occupancy year over year, as well as an increase in our average effective rent since the first quarter of last year.
Value add renovations also contributed to our same sort results. During the quarter, we completed 275 units and achieved a weighted average return on investment of 16.2%. We now have 28 communities with over 4,600 units in our ongoing value add program and expect to complete between 2,500 and 3,000 units this year at our targeted RLIs.
We continued to execute on our long-term investment strategy. During the quarter, we sold our final asset in Birmingham, Alabama for over $111 million which completed our exit from that market, and we expanded scale in Indianapolis by purchasing a 280 unit community for $59.5 million at a 5.6% economic cap rate. We also entered into a new joint venture investment that will develop 324 units in Charleston, South Carolina.
We are under contract on two additional communities with a combined purchase price of approximately $155 million. One asset located in Orlando was developed in 2019, is adjacent to an existing IRT owned community and will provide many operating synergies. The second property is a newly developed community in Colorado Springs that is in Lisa.
These investments will provide an economic cap rate in the high fives during year one. Beyond these pending transactions, our acquisition pipeline remains strong. As Jim will discuss, we have ample liquidity to deploy into these and other accretive investments.
Regarding our markets, apartment fundamentals will improve across the portfolio during this year as prior deliveries are absorbed and new supply deliveries decrease sharply from recent peak levels.
In 2024, approximately 79,000 new apartment units were delivered across our submarkets, representing 6.1% of existing supply. We expect 32,000 new deliveries in 2025 and only 24,000 units in 2026, representing 2% and 1.5% of existing supply respectively.
These deliveries equate to annual decrease of 60% in 2025 and an additional 24% in 2026. We expect our Sun Belt markets will benefit the most from expected declines in new apartment deliveries this year.
Demand for our portfolio of high quality, largely Class B communities has proven to be resilient over the years, even during challenging economic times, as demonstrated by our stable occupancy rates and positive blended rent growth.
During 2024, nationwide new deliveries of multi-family units exceeded absorption, resulting in a negative net absorption of 21%. In 2025, while the national apartment market is expected to see positive net absorption of 1.5%, our submarkets are forecasted to rebound strongly and enjoy positive net absorption of 8.5% as increases in population outpace new supply.
Longer term, IRT submarkets are forecasted to see population growth of 7 people for every 1 newly delivered apartment over the next 3 years.
Additionally, homeownership affordability factors that include elevated mortgage rates and home prices continue to favor renting. Across our TOP10 markets. A home ownership costs are 94% higher than IRT's monthly rent. Importantly, IRT's average resident rent to income ratio is stable at approximately 21%, indicating our residents are on solid financial footing.
As I mentioned earlier, we are sensitive to the macroeconomic uncertainties that have emerged since our last call. However, we believe supply and demand fundamentals in our markets will continue to be the dominant influence on our operations.
Based on our outlook for continued strong demand and significant declines in new supply, our 2025 plan continues to assume ongoing rental rate gains without sacrificing occupancy first quarter results have demonstrated this to date, and we expect this dynamic to accelerate as we advance into 2026.
Before handing the call over to Jim, I want to thank the IRT team for their continued hard work and dedication to delivering exceptional service to our residents. I'll now turn the call over to Jim.

Thanks, Scott, and good morning everyone. Core FFO per share of $0.27 in the first quarter of 2025 was flat as compared to the prior year period, reflecting the impact of the final stages of our portfolio optimization and delivery strategy that was completed last year.
Saveto NOI grew 2.7% in the quarter, comprised of a 2.3% increase in Sato revenue, and a 1.6% increase in operating expenses over the prior year.
As we forecast, the same sort of revenue growth was driven by a 100 basis point increase in average occupancy, a 90 basis point increase in average effective monthly rents, and 50 basis points of lower debt compared to the prior year.
Safes or operating expense growth in the quarter reflected a 2.9% increase in controllable expenses driven by higher contract services and advertising.
These increases were partially offset by a 30 basis point decrease in non-controllable expenses. Overall, lower repair maintenance costs, turn costs, and property insurance costs kept total expense growth below inflation levels during Q1 of 2025.
Regarding recent leasing trends, the year is unfolding as expected, broadly speaking for our like term leases during Q1, our blended rental rate growth was up 10 basis points, with new lease rates down 4.6% and renewal rents up 4.8%.
Please keep in mind that during Q1 2025, only 12% of our leases expired. For Q1 2025, our resident retention rate was 59.5%. And our rate of resident renewals was 68.6%. Regarding investment activity during the first quarter, we sold a property in Birmingham, Alabama for $111 million representing a 5.6% economic cap rate, and we recognize that $55 million tax gain.
As Scott mentioned, we acquired a community in Indianapolis for $59.5 million which was a 5.6% economic cap rate, and the property is a candidate for our value add program. We also entered into a new joint venture to develop a 324 unit community in Charleston, South Carolina, which is targeted for delivery in the second quarter of 2027 at an anticipated yield on cost of 6.8%. Our balance sheet is strong with low risk.
We ended the quarter with a net debt to adjust the bidder ratio of 6.3 times, which is higher than our fourth quarter 2024 ratio due to seasonally lower Q1 EBITDA associated with seasonally higher operating expenses.
We remain on track to achieve a mid-5 net debt to adjusted bidder ratio by year-end 2025. Including principal amortization, only 17% of our total debt matures between now and year end 2027, which is one of the lowest among public multi-family peers. In March, we entered into a new 1 year, $100 million sofer swap, resulting in 100% of our debt being fixed and or hedged.
Lastly, we have nearly $750 million of liquidity to fund accretive investments. With respect to our financial outlook for 2025, we are certainly aware of the potential for an economic slowdown. However, in our submarkets, we see pricing power in front of us and accordingly are not making any changes to our guidance. Scott, back to you.

Scott Schaeffer

Thanks, Jim. We are off to a solid start to the year and continue to believe that we are at the beginning of a multi-year period of improving fundamentals and growth because of our portfolio's market concentrations, waning supply pressures, and strong balance sheet, we expect our portfolio and platform will continue to outperform in 2025 and enter 2026 with solid earnings momentum and growth opportunities.
We thank you for joining us today and look forward to seeing many of you at the Wells Fargo conference next week and the Mare conference in June. Operator, you can now look the call for questions.

Question and Answer Session

Operator

(Operator Instructions) Your first question is from the line of Brad Heffren with RBC.

Hey, good morning everyone. Thanks. Can you walk through the leasing spreads for the first quarter, obviously below guidance. Why was that and does it change your view at all on the original spread guidance for the full year?

Sure, thanks, Brad. I'll obviously give you some commentary, Janice or Scott, obviously jump in. Leasing spreads, new leases were down 4.6% in the first quarter, renewals are up 4.8%. obviously in terms of the trajectory throughout the year as well as the four year guide, obviously there's a lot of facets to the question.
I think when you compare that trajectory from Q4 to Q1 for us, you compare with our peers. I just want to remind everybody that we have predominantly a B class portfolio and as a result, didn't really experience the same level of decline in rental rates as some of our peers did because they're mainly a class A portfolio and compete more with the new supply. That was delivered.
Secondly, the trends that we're seeing month to month so far this year continue to be very positive. We continue to see, January was better, February is better than January. That continues all the way through April.
So we're quite excited about that kind of development of the waning pressure from the supply that we kind of highlighted earlier this year and really kind of seeing that, improving rental rate growth in the back half of the year.

Okay, got it and then on the tenant level, have you seen any evidence yet of stress from the tariff macro uncertainty, etc.

Good morning. Overall, we've not felt any effects from the tariffs and or from deportations. I think it's a little early, but we are watching it extremely closely and we have Great faith in our team that we will be able to offset and continue to outperform as we've done in the past.

Just to add on that, in the first quarter of this year our bad debt was roughly down 50 basis points versus Q1 of last year. So a lot of the initiatives we took in place to kind of deal with fraud have working, and we haven't seen a related kind of uptick because of hardships or anything else we're seeing the good progression that we anticipated.

Operator

Your next question is from the line of Austin Worschmidt with Keate Capital Markets.

Great, thanks. Good morning, everybody. Jim, you mentioned month to month improvement in market rents this year.
Is that starting to lead to acceleration and leasing spreads as we get into the second quarter, or if you compare kind of the trade outs for like term leases?

Yeah, the comments was more directed at the improvement in the tradeouts that we're seeing. The tradeouts in February were better than January, March were better than February, and April's better than March.
Obviously we're getting away from talking about specific numbers, month to month, but just, kind of general trajectory. Is that it is improving at the pace that we anticipated and as we mentioned earlier, we really do see the pressure from new supply waning in the back half of the year and that's really going to help accelerate further more more more accelerating the back half of the year.

That's helpful. And then can you just speak to maybe how trends are playing out on the ground from a traffic and conversion perspective versus prior years and just give us a sense of when growth, might turn positive. Just wondering if there's kind of any change in that expectation.

Yeah, from the standpoint of the leasing traffic on the ground, here in May and so far for kind of April as well as March, the demand versus the same time period. Year, so the demand is increasing, and I would generally say that, the conversion is still kind of relatively the same as last year.
So we're beginning to see kind of upward trajectory to obviously that lease rate growth and then obviously occupancy. I don't know any comments.

I think seasonality is playing out as anticipated and we're seeing some great demands in the markets that we're ready to capitalize on.

Operator

Your next question is from the line of John Kim with BMO Capital Markets.

I just wanted.

To, clarify on what you're seeing in April and May you discussed, Jim, that price and power is in front of you, and I just want to make sure that. Commentary was based on what you're seeing on new lease rates and renewals on what you're finding in April and May so far.

Yeah, the commentary on obviously blended rental rates, and yes, we obviously both that trajectory is developing positively for both new leases and the overall blended rates.

Do you anticipate starting or sourcing more development opportunities this year? You mentioned the one in Charleston will be developed at 6.8% yield. It seems like there couldn't be some more opportunities that attractive yield spreads to acquisitions, but I'm wondering what you're seeing on the ground and if you anticipate putting more capital in developments.

Scott Schaeffer

Hey John, this is Scott. We're seeing a lot of opportunities, we're very cognizant of our cost of capital, and, we have over, since we started that program, limited our exposure to the development, just as a management of the balance sheet risk or the risk of the balance sheet.
But we are seeing opportunities. The one in Charleston was particularly attractive to us because we have some, a couple of assets in Charleston and have been looking to grow there, but they have found it difficult to buyretably. So this was a way to, invest in an asset, giving us the option to buy it when it's completed, hopefully at a good return.

Operator

Your next question is from a line of Eric Wolf with Citigroup.

Hey, thanks. Can you just talk about the decision to raise capital on the ATM and sort of how you're thinking about the spread between your cost of capital and where you can acquire assets today and what that opportunity looks like?

Sure, yeah, at the, obviously when we did the September equity raise last year and ATM raised in the 4th quarter and then some additional ATM in the first quarter, the break even call it economic cap rate for the deal for the for it to be created from an earnings standpoint is in the kind of 5.4% range and as we've been able to demonstrate, we're able to, purchase assets with a year one, economic cap rate of five.
North, so the deals we're doing are created from an earnings standpoint. So for us, to continue to raise capital when the market's kind of giving us a goal makes a lot of sense, especially when we believe we can put it to work.
The two deals and you kind of heard us talk about it in our prepared remarks, the two deals that are under contract, the one in Orlando and the new build in Colorado Springs, that blended economic caps of, high fives are roughly 5.8%. The one.

That's helpful. And then let me just follow up on the blended spreads. It looks like the sort of all in brand new threads are a bit lower than your like term spreads, and I think you mentioned before that the reason is you're trying to move away from short term leases and extend duration on those leases. Can you just talk about sort of when you began that process and why you began that process and sort of how long you think that will impact your sort of overall rent growth.

Yeah, so we started that process in the mid part of last year and as you can imagine, it takes, almost a year for it to fully kind of go through the process. So we would expect that that transition from less short-term leases and more long-term leases to be almost done by the middle part of this year.
Obviously it's always market driven, when a prospect comes in they have the option to choose, at whatever the rates are for a three month lease up to a 12 or 13 month lease and that is a little bit out of our control, but we certainly kind of look at, setting the premiums to go from a longer term lease to a shorter term lease to, kind of influence the expiration curve so that the explorations are happening in the period of time where you have the highest leasing traffic.

Operator

Your next question is from a line of Amy Probe with UBS.

Hi, thanks. So you're passing the E comp, the last of the E comps on occupancy and the occupancy comps are then normalized starting in the next quarter.
So I'm just wondering how we should be thinking about the cadence of Saar revenue from here and if there are any other cases outside of the rent spreads themselves that could be leading to some lumpiness in Samsar revenue through the year.

Yeah, obviously you're absolutely right, occupancy was a big lift here in the 1st quarter relative to the 1st quarter of last year. The second quarter, third quarter and fourth quarter, the revenue growth is really kind of got to come from both the rental rate growth as well as the reduction in bad debt that we forecast throughout the year.
I would say generally speaking, the reduction in Bad debt throughout the year we'll continue to kind of pace. I think our original forecast kind of had us getting a call 1.4%, 1.5%, 1.4% to 1.5% of revenue this year, and we we're right about 1.8% today and it'll kind of move down to call 1.2% to 1.3% average out to that 1.4% and then obviously the rent growth trajectory is really going to benefit us in the second half of the year.

Got it. And then as we move past supply, how are you thinking about the relative performance between the bees and the A's or the renovated bees?

In terms of relative performance of just rent growth or.

Occupancy, yeah, rent growth, yeah, mainly rent growth, but if you could touch on, some of the demand trends that you might see as well.

Yeah, we continue to see we're predominantly Class B, property or a portfolio. We continue to see really good demands for obviously the Class B product, the value added units or the units when they do go into the renovation program are pretty much always pre-leased.
We really don't have, kind of excess inventory on the value add communities. The Class A deals that we do have, they did compete a little more with some of the new supply that was delivered. But we still see, demand trends picking up there, but the bee continues to see just nice stable demand.

Operator

Your next question is from a line of Jamie Feldman with Wells Fargo.

Great, thanks and good morning. Can you talk about costs in your redevelopment program and the potential impacts from tariffs? How early do you lock in costs ahead of projects and how sustainable are your mid single digit returns on investment if we see cost move 10% higher or more?

Yeah, it's a great question, for the vast majority of our costs in the veneration program, obviously there's a good chunk of it that is labor to, obviously do the actual turn.
Some of the more, product heavy costs are in the value add and the actual vinyl flooring that we'll put in or in the appliances. A good chunk of the appliances come from, manufacturers inside of America, so we don't necessarily have a huge tariff issue there unless obviously they have tariff issues sourcing raw materials from, non-US countries.
The vast majority of the vinyl flooring will either come from Vietnam or South Korea, and we've already locked in pricing for the next year for 2025 for a full year. So we're at this point we're really not expecting any kind of really significant pressure on the value add, but that's where if there are issues in the tariff and trade world, that's where we at IRT will expect to see it. But as you can imagine, it's still very early to tell.

Okay, thanks for that. And then just thinking more about the blend, it looks like your new and renewals are in line is slightly better than your March update. But more new leases took the blend down. Can you talk about, did you take back any more delinquent units that would have changed the blend and occupancy? As you did your leasing and focused on your, you focused on your leasing?

Overall we've seen our delinquent units maintained. We did see a decrease of 50 basis points in our bad debt from year over year and so we're anticipating that to continue to decrease to achieve guidance of 1.2%. so we did have early terms that contributed to that mix, but it was relatively normal for the season.

Operator

Your next question is from the line of Linda Tsai with Jeffreys. Linda, your line is open. There's no response from that.

Yeah, we can move to that.

Operator

Your next question comes from a line of John Pawlowski with Green Street.

Yeah, thanks for the time. A few questions about the thought process and the assumptions underpinning the full year revenue guide. I know it sounds like you're assuming supply comes down pretty substantially this year. Can you help frame your job growth assumptions for 2025, how that kind of compares to the job growth you saw across your footprint in 2024?

Yeah, I don't have, I apologize. I don't have the job growth assumptions right in front of me. I would say that, some of the data points that we've talked about in the past where you have both obviously population and job growth per unit of the supply over the last three years that ratio of kind of population growth, the supply growth in our in our submarkets was. I think 3.8 people for every new supply in the next three years, so 2025, 2026, 2027, that ratio is going to be roughly 7 times.
I do know that, obviously when you look at the supply trends, we delivered or in 2024, the deliveries were about 6% of existing stock in our submarkets, and in 2025 that's going to drop to about 2% so the job growth and the population growth we think is just generally relatively steady with historical trends. It's just the supply is really dropping off.

Scott Schaeffer

And I would add to that, as we stated in the prepared remarks that according to CoStar, there was a negative absorption in 2024 of 21%. And while nationwide 2025 is expected to have a 1.5% positive absorption, and while our submarkets specifically will be 8.5% positive absorption. So according to CoStar, that indicates continued job growth and far less new supply, which is what we're seeing as we move through 2025.

Okay, and on that point, it'd be helpful just to maybe hear you talk through a few of the most heavily supplied markets right now, the Denver or the raleighs, the Atlanta's, and just any statistics that you can point to say, hey, this inflection points happening right now, rent spreads are about to like higher, the exact numbers any given quarter I'm less concerned about it just, it doesn't feel like the light is turning on and some of these heavily supplied markets, so.
Any data points that give you confidence for this big re-acceleration that seems to be underpinning the revenue guidance would be helpful to hear.

Sure, we see, Charlotte and Colorado are going to continue to have some supply pressures throughout 24, and so, I'm sorry, 25, so we will be, looking to outperform and maintain not only occupancy but maximize revenue where we can, Atlanta and Raleigh, we've seen a positive, new lease rent growth.
Since January and sorry, not positive new lease rent growth, but less negative new lease growth with a trajectory where it's becoming. Less and less every month, and I think that is starting to be a data point that shows the trajectory of the supply, with the demand and the absorption rates increasing.
So I think we'll continue to see that through the rest of 25 in Atlanta and Raleigh, Charlotte and Colorado will still be, having pressures through Route 25.

Just as a little aside, with some specific numbers in terms of supply growth, when you look at this pickup market like a lamb, which is the largest market, in 2024, the new delivery that occurred was about 6% of existing stock in our submarkets, not even just the overall, just in our submarkets. For 2025, CoStar estimates that to be 90 basis points, a significant fall-off.

Operator

Your next question is from the line of Jamie Feldman with Wells Fargo.

Great, thanks for taking the follow-up question. I just wanted to follow up on. The expense side, you have two insurance renewals coming here in May and June.
Thus far we've seen declines in insurance premiums year-to-date from some of your peers. They're curious how you're thinking about the renewal in terms of your expectations and what's in your guidance. And then any other OpEx client items we should be thinking about where you could see some benefits here.

Sure, good question. We have two renewed ex insurance renewals. Our property and casualty will renew on May 15th, and our liability will renew on July 1st, not June. So still a little bit early on the property casualty, and I don't want to obviously, talk about, too much specifics.
Our guidance at this point assumed a 10% increase for the for the year, but we will, we are expecting to generate a decrease in the premium once the renewal is signed. So it's a little bit early, but I don't want to get kind of too much, direction in terms of the quantification of it yet until. Really, firm.
The liability premium or a liability policy that we renew in early July, we are expecting an increase, but overall between both policies it is expected to be a net decrease.

Scott Schaeffer

The liability expenses is far smaller insurance premium expenses far smaller than the property and casualty.

Okay, so just to make sure I heard it right, you're assuming a 10% increase, but you think it'll be meaningfully lower, maybe even a decrease? Yes. Okay. That's nice. And then any other OpEx line items we should be thinking about that, you think you're either trending in line with guidance or things might be changing, better or worse?

Yeah, I would say one of the items as I mentioned in the prepared remarks that trended in the Q1 better than guidance was repairs and maintenance and turnover costs. We just had better retention than we would originally assumed in guidance.
That's obviously sticky rather than a timing thing, and that obviously will move in shape throughout the year as retention changes and I would say the rest of the categories continue to kind of be aligned with guidance.
The big boy of real estate taxes, that is a TBD that will, we won't get the vast majority of our assessments in until call at the end of June, early mid-July, so we'll have a lot more commentary for obviously you in the market, in our July earnings call.

Operator

Your next question is from a line of Linda Tsai with Jeffrey.

Hi.

Sorry about.

That.

Earlier and I might have missed this. So you exited Birmingham. Are there any other markets you would expect to exit by your end?

Yeah, at this point, no, our dispositions, guidance is currently, complete. We're obviously always reviewing the portfolio, but there's no expected, change at this very moment, and once there is an update, we'll be happy to give it.

And then in terms of June and July being your highest expiration month, kind of any initial color you could give there.

In terms of Leasing velocity. I mean, yeah, you're right, June and July are our highest expiration month. Obviously, Janice and the team are working expeditiously to TRY to, drive leasing ahead of those expiration months as I mentioned, here in the month of May, the net demand is 25% better this year than it was last year at this point. So we're excited about kind of where we are heading into the leasing season.
And we're trying to continue to keep retention as high as we can to really offset any kind of negative new lease pressure or least pressure in the back half of the year so we can really take advantage of that waning supply.

Operator

(Operator Instructions) Your next question is from the line of Mason Hall with beard.

Thanks. Good morning, everyone. Could you talk about the blend difference between your Midwest morning? Could you talk about the blend difference between your Midwest and Sun Belt markets in general and then kind of how you expect that to trend throughout the year?

We're seeing, as anticipated blends in the Midwest, where, anywhere between 2 to 3% based on seasonality, and then in our sun belt we're starting to see positive directory on our blended, from January through April and we'll continue to see that through the rest of the year.

Thanks for that. And then on your acquisitions, I mean you guys expect to acquire one and lease up and one stabilized, I guess going forward, do you have a preference for one or the other, or do you kind of see it as more opportunistic?

Scott Schaeffer

It's more opportunistic. There's certain markets where we're looking to add exposure, but as I said before, we're always focused on doing or acquiring assets that will be accred at the earnings in year one. I will add that everything in our pipeline today is, the values would be below replacement cost. So, we think any acquisition, will fare well, over the next few years.

Operator

You have a follow-up question from the line of Linda toy with Jeffrey.

Hi, thanks. I just want to ask, I know Class B is holding up a bit better, and that's the majority of your portfolio. Any sort of color around the delta between the performance of Class A versus B?

I apologize, you broke up at the beginning of the question. Would you mind just starting over again?

Sure, Class B is holding up better within your portfolio, which I understand is the majority. I was just wondering what the delta is in performance between Class A and Class B.

Yeah, I don't have the NOI kind of differences right now between the A's and the B's. I would say that the rental rate growth is certainly better than the bees. The blends in the first quarter on the B portfolio was about positive. Call it, 40 basis points and the blends on the Class A, which is only 17 properties, was about minus 80 basis points.

Thank you.

Operator

This concludes today's call. We thank you for joining. You may now disconnect your lines.