Q1 2024 TPG RE Finance Trust Inc Earnings Call

Participants

Doug Bouquard; Chief Executive Officer, Director; TPG RE Finance Trust Inc

Bob Foley; CFO; TPG RE Finance Trust Inc

Stephen Laws; Analyst; Raymond James Financial, Inc.

Rick Shane; Analyst; JPMorgan Chase & Co

Eric Dray; Analyst; BofA Securities

Chris Muller; Analyst; JMP Securities

Presentation

Operator

Good morning, ladies and gentlemen, and thank you for standing by, and welcome to the TPG Real Estate Finance Trust First Quarter 2024 earnings conference call. (Operator Instructions) Please note, this conference is being recorded. It is now my pleasure to turn the call over to the company. Thank you. You may begin.

Good morning and welcome to TPG RE Finance Trust Conference Call for the First Quarter of 2024. We're joined today by Doug Bouquard, Chief Executive Officer; and Bob Foley, Chief Financial Officer. Doug and Bob will share some comments about the quarter and then we will open the floor for questions.
Yesterday evening, the company filed its Form 10-Q and issued a press release and earnings supplemental with a presentation of operating results, all of which are available on the company's website in the Investor Relations section.
As a reminder, today's call may include forward-looking statements which are uncertain and outside of the company's control. Actual results may differ materially. For a discussion of risks that could affect results, please see the Risk Factors section of the Company's Form 10-Q and Form 10-K. The Company does not undertake any duty to update these statements, and today's call participants will refer to certain non-GAAP measures. And for reconciliations, you should refer to the press release and the Form 10-Q.
At this time, I'll turn the call over to Doug Ricard, Chief Executive Officer. Doug?

Doug Bouquard

Thank you, Chris. Good morning and thank you for joining the call. Since the beginning of the year, the economy and labor markets continued to be remarkably resilient across the US. The market remains highly confident, a soft landing for the US economy and global demand for risk assets remains strong. More recently, however, inflation has proved challenging to tame and the interest rate market has adjusted its expectations for rate cuts in 2024 over the past few weeks. Further, the 10-year treasury yield has moved nearly 80 bps during the first four months of the year and is now approaching 4.7% within broad credit markets. Corporate credit spreads are at multiyear tights, while real estate credit spreads have rallied in certain areas but do continue to underperform on a relative basis. Once again, this combination of factors provides mixed signals to real estate investors on one hand, broad market demand for risk assets, a strong economy and low unemployment should provide tailwinds for real estate valuation, and we do see these trends flowing through in our portfolio. On the other hand, a volatile and elevated interest rate environment tends to reduce track transaction activity, pressure on values and increase the financial burden on borrowers. This uncertainty is compounded by the shifts we are seeing within the real estate credit landscape. From a lending perspective, banks continue to retreat from direct lending and pivot their attention to lower loan financing, which does benefit TRTX. by providing attractive funding sources for its loan portfolio and new originations. We continue to invest TRT. X's balance sheet with these competing forces in mind, and our quarterly results reflect our strategic positioning during the first quarter of the year. Our approach to capital deployment and risk management remain consistent with prior quarters. Given the market backdrop, we continue to focus on one, maintaining elevated levels of liquidity to proactively risk managing our investment portfolio and then three, continuing to balance to position our balance sheet to be able to take advantage of the dislocation in lending markets in 2024 and beyond over the past quarter, TRT. X's performance reflects both the dedicated focus of our asset management team and the benefits of TPG's broad global investment platform. Our loan portfolio is 100% performing. And both our CECL reserve and risk ratings reflect a very modest change over the past quarter. From a property type perspective, 50% of our loan portfolio is multifamily. Despite the pressures on values within the multifamily sector, we continue to see ample liquidity for both debt and equity transactions. While we acknowledge the Fed's synced spend signaling to slow rate cuts may put pressure on both near term values and borrowing costs. We remain confident in the long-term underlying fundamentals of the housing sector broadly. In terms of new investments. During the quarter, we originated three senior mortgage loans totaling $116 million, 100% of which these loans are secured by multifamily properties. We continue to prefer lending in the sector, given the downside protections available in today's market environment.
From a liquidity and leverage perspective, we ended the quarter with $370 million of liquidity across both cash and other available liquidity channels and a debt-to-equity ratio of 2.2 points. While the discount to book value at our current share price has compressed since we last spoke, we continue to believe that this discount is significant and that our shares offer a compelling value proposition at today's price. For that end, on April 25th, our Board of Directors approved a share repurchase plan of up to $25 million, demonstrating the Board and management's confidence in the value of TRTM. shares in summary, the past quarter represented an important turning point for TRTX. as we begin to deploy capital with a slightly more offense event. The resources and deep experience of TPG's real estate debt and equity investment platform creates us unique insights into valuation shifts and capital flows across the real estate landscape. While we acknowledge elevated borrowing costs may increase financial stress on our borrowers. We remain confident in our ability to navigate the ever evolving real estate credit landscape and are pleased with how our company is positioned to create long-term shareholder shareholder value.
With that, I will turn it over to Bob for a more detailed summary of this quarter's performance.

Bob Foley

Thanks, Doug. Good morning, everyone, and thank you for joining us for our first quarter results reflect the benefit of a 100% performing loan portfolio, a further reduction in interest expense due to continued optimization of our liability structure, including the reduction of interest expense quarter over quarter of $7.4 million, or $0.1 per share and nearly full deployment of approximately $247.2 million of reinvestment cash interest of five CRECL. For the quarter, GAAP net income attributable to common shareholders was $13.1 million as compared to $2.6 million for the preceding quarter. Net interest margin for our loan portfolio was $26.8 million versus $21.3 million in the prior quarter, an increase of $5.5 million or $0.07 per common share due to further optimization of our liability structure and the absence of higher cost financing for nonperforming loans, of which we have not our weighted average credit spread and borrowings declined quarter over quarter to 195 basis points from 204 basis points. Distributable earnings were $23.3 million or $0.3 per share coverage in the quarter for the quarter of our $0.24 dividend was 1.25 times distributable earnings before realized credit losses was $23.3 million or $0.3 per share versus $24.4 million were $0.31 per share in the prior quarter. Due to an improvement in net interest margin, offset by a reduction in noncash credit loss expense for CECL reserve increased slightly driven to $74.1 million from $69.8 million due primarily to worsening macroeconomic and generic loan default and loss data embedded in the database and model we use to forecast our general CECL loan loss reserve we had no five rated loans, no specifically identified loans, thus no specific CECL loan loss reserve. The quarter-end, our CECL reserve was 210 basis points versus 190 basis points on the prior quarter. Book value per share is $11.81 as compared to $11.86 last quarter, due primarily to the slight increase in our CECL reserve. Multifamily now represents 50% of our loan portfolio. Offices declined 68% over the past nine quarters to 20.4%. Life sciences is 11.4%. Hotel is 9.9% and no other property type comprises more than 3.3%.
Our portfolio. Regarding REO, we have five REO properties one multifamily property and floor office properties with a total carrying value of $192.4 million and a blended current annualized yield on cost of 6% ROI. Reo represents a mere 5% of our total assets using the substantial resources of TPG Real Estate. We made significant progress during the quarter in advancing value creation and realization strategies for each REO investment.
Regarding our multifamily property in suburban Chicago, we've already improved leased occupancy by more than 10 points to 93%. Refer to footnote four of our financial statements for a snapshot of our REO portfolio.
Regarding credit, our weighted average risk ratings were unchanged at 3.0. All of our loans were performing. We had a small number of changes in risk ratings during the first quarter refer to page 52 of our Form 10 Q for more detail regarding liabilities in our capital base, we remain focused on maintaining high levels of non-mark-to-market non-recourse term financing. At quarter end, such arrangements represented 77.1% of our borrowings as compared to 73.5% at December 31st, our total leverage declined further to 2.2 to 1 from 2.5 to 1 at December 31st. We had $4.7 billion of total financing capacity across 12 discrete financing arrangements. During the quarter, we extended the investment period under our existing secured credit facility with Goldman Sachs for two additional years through 2026 and tacked on a two year term out provision through 2028. Our only scheduled debt maturity in 2024 is $1.8 million under a credit facility we expect to extend or repaying and terminate during the second quarter. We were in compliance with all financial covenants at March 31st, 2024. At quarter end, we had $51 million of reinvestment capacity available, which we used in mid-April. We deploy into loans during the quarter roughly $196.2 million of reinvestment cash through reinvestment windows are now closed for all three of our extant CRE CLOs. Although we remain able to substitute an exchange loans under certain circumstances.
Regarding liquidity, we maintain high levels of immediate and near-term liquidity, roughly 9.7% of total assets. Cash and near-term liquidity was $370.7 million at quarter end, comprised of $188.1 million of cash in excess of our covenant requirements, $51 million of CLO reinvestment cash since deployed and $116.6 million of undrawn capacity under our secured credit agreements. As of last Friday, our cash position in excess of covenant requirements was actually higher for $235.5 million due to loan repayments and receipt of a $26 million servicer receivable in connection with the loan sale that closed during the fourth quarter of 2023.
During the quarter, we funded $10.7 million of commitments under existing loans. At quarter end, our deferred funding obligations under existing loan commitments totaled only $163.8 million a mere 4.6% of our total loan commitments.
In summary, a quarter characterized by strong operating performance, solid credit, further optimization of our liability structure in terms of cost, non-mark-to-market borrowings and extended tenor and significant liquidity through a balanced stance versus the market.
And with that, we'll open the floor to questions. Operator?

Question and Answer Session

Operator

(Operator Instructions) Stephen Laws, Raymond James.

Stephen Laws

Hi, good morning and congrats on a nice start to the year. Bob and Doug Nice to see have stability here over the last couple of quarters.
Wanted to touch on the CLO. I think it was around $50 million of replenishment capacity at quarter-end. Did that get filled with a loan that was funded on a bank line or were there some originations post quarter end? Can you can you talk to that and maybe more generally kind of your origination pipeline and how you think about moving leverage from the current two to over the course of this year?

Bob Foley

Good morning, Stephen, and thanks for joining us. On with respect to the $51 million of CLO cash that we deployed in April after quarter end, in that particular instance, we actually took an existing loan that had been financed with the bank and deposited it deposited it into CLO, which actually generated about 11 or $12 million of cash. We were you know, we had borrowed less from our bank counterparties with respect to that loan than there was cash in the CLO. So we ended up netting about $11 million or $12 million on our balance sheet cash as a consequence of that it redeployment and the cost of funds was clearly lower in the in the CLO than it was on the bank. And the coupon on the loan didn't change its resonance is now different CLO, not a bank financing arrangement. And I'm going to ask Doug to address your question about investment activity.

Doug Bouquard

Thanks, Stephen. On the investment side, look, we're excited about the fact that we're viewing activity more offense and have a very active pipeline currently, if you look at our originations in the first quarter, which were 100% multi-family. We do still favor that sector, particularly now being able to deploy capital at a lower LTV combined with normalcy values are lower than where they were in 2021, 22. So you still need for Talisman one. But you know, frankly, we're being selective.
And I had mentioned earlier in my remarks about the sort of mixed signals that we're getting from both steel, that sort of macro picture and then also locally within the real estate. So it will be a perspective of where we are with the market cycle, but we are definitely able to play offense and we continue to pursue new investment opportunities to help drive earnings growth.

Stephen Laws

Great. Appreciate the color on both of those topics, but wanted to touch base on the debt side, and you mentioned this in your prepared remarks about the Morgan Stanley facility that matures, I think at the end of this week and you really know everything drawn down on it.
So curious for thoughts on, you know, the pros and cons of extending it versus letting it expire you even without it, you still have excess of $1 billion of capacity on your bank clients. What are the commitment fees that you would have to pay if you extend it and then you know, larger picture debt covenants, coverage ratios. I know it reverted back to 1.4 at quarter end and you're in compliance with that. You maybe update us on where you stand with the ratio for churn shelters.

Bob Foley

With respect to our particular arrangement with Morgan Stanley, Morgan Stanley has been an important financing partner of ours. Since we went public in 2017, we've got a great relationship with them and they're with us. And I think we don't have much borrow with them right now for two reasons. One is we haven't recently found a commonality between our credit box and theirs and two. And our financing focus has for a number of years now shifted strongly in favor of non-mark-to-market matched term non-recourse financing, hence all of the note on note and CLO financings that we've done since 2018. Bank financing does remain an important part of our financing strategy because it is a very flexible and it's it moves quickly, but we have spent a considerable amount of time over the last several quarters of evaluating each of our counterparty relationships. And Doug, in determining where it makes sense to continue and where it may not make sense for us to continue. And then so that's that with respect to financial covenants, we were we did we were in compliance at quarter end as we have been in each of the previous quarters, we had, as you pointed out, obtained from all of our lenders because we have harmonized financial covenants across all of our borrowing arrangements on a a waiver arrangement that allowed our debt service coverage ratio to temporarily fall below 1.4 times. We're above that. We're very low levered at this point. And we would expect as we invest more and perhaps use more leverage from that since we don't use a ton of leverage the US, yes, interest coverage, even at the high benchmark rates that we experienced today will continue to be satisfied. So I hope that answers that question.
And with that, I'll ask Doug to comment about the financing markets more generally.

Doug Bouquard

And Steve, I think you do bring up a really important trend that we're seeing as I think about quota in the first quarter, the demand from the banks for loan on loan business is definitely strong as we've seen it, frankly, a couple of quarters. I think that's really driven by a few things.
One is new banks continue to pull back on direct lending. If they are going to be doing direct lending, they're generally pivoting more towards CMBS execution rather than actually a long-term balance sheet investments and then secondly, capital rules continue to kind of push banks towards providing back leverage to platforms like PRTX. So I think on the on the positive side, as we think about our pipeline through 2024 and beyond of that, that of that amount of demand, I think is a really positive tailwind for for our platform. That is a trend that we expect to continue over the book over the coming quarters.

Bob Foley

I think Doug's earlier comment about mixed signals in the market. I think we come sort of highlights this particular point, which is Tom demand by banks to provide financing is quite strong. And we have a ton of inbound inquiries from our existing counterparties about borrowing more from them of the nature of the financing that they're providing to the CRE world has clearly shifted, as Doug described. And obviously, spreads are coming in with respect to secured financing that can be obtained by lenders like us on the investment sales market for properties and the financing market for those transactions, that environment is a little more opaque and a little less clear right now, which is really the point that Doug was making earlier. So there's there's an interesting technical thing going on right now right now where financing costs are coming in from but loan spreads are kind of all over the place.

Stephen Laws

Great. Really interesting comments, and I appreciate getting both your thoughts on that.

Operator

Rick Shane, JPMorgan.

Rick Shane

Thanks for taking my questions. Steve actually covered a lot of the ground I was interested in and on the facilities and one thing I'm looking at the extension of the Goldman facilities are spread stays the same. I am curious if there are are there any changes to the terms that we should be aware of any sort of refinement of the credit box going forward now?

Bob Foley

No material changes. We will pay for financing on a pay-as-you-go basis. And Goldman has been another very important business partner of ours. They were actually our first credit counterparty when we were a private company. And I'm getting to your point about credit box from each each we've talked about this before we view our liability, our portfolio liability providers and the construction of that portfolio is being as important as constructing our investment portfolio and everybody's credit box a little bit different but when stitch together what we want and what we have is a mosaic that works for our business in the case of gold, and we're pretty simpatico. I wouldn't say that there's been a change in credit profile at all. And those decisions are made, honestly, on a on it deal-by-deal basis.

Rick Shane

Got it. Okay. That makes sense. And yes, obviously, given the history with Goldman, that that's a significant renewal. Look, the other question is you sort of change your footing and start to move back into making more loans. I'm curious on what you're finding in the market and is capital deployment going forward going to be idiosyncratic every quarter?
We're going to hear about some deployment and it's going to be very much a story, hey, we found this opportunity. This is why we love it or is it going to be thematic there? There is something in the market that you're going to be targeting whether it's geo or property type of work on, like I said, a thematic approach to reemerge in the market.

Doug Bouquard

Yes. I mean, I would take your roof for us at the top of the list, we do think about investing in the real estate space from a thematic lens, and that's really kind of corn cost for our debt and equity platform one of the as we think about seeds, we really, I would say, are very much trying to think of the ones that we've mentioned, our third place for housing and actually doing all of that. Again, multifamily values are down from the peak, but where we can make new loans today of 65 LTV, acknowledging that fee is now potentially 15% to 20% lower in particularly attractive entry points that really wants. And I would say two from a team perspective, we kind of get a little more granular. You're really out there looking at new investments, I think there's kind of two areas that I think are particularly attractive for us to really focus on what is your new acquisition activity is obviously going to be a big draw, I think where we see feel fresh capital coming in, but reflecting today's market values that's attractive. And I would say, secondly, if there was a part of the market. That's that's probably most interesting. And it really continues to be the trafficking within the area of where you have regional banks had been lending yet still is probably visit the store that's obviously out there very broadly about banks pulling back. But acknowledging that of all the outstanding commercial real estate debt held by banks, about 75% resides in regional banks. And those regional banks continue to generally, I would say, not pull up. And we've seen that in Q1 as we're out there competing on loans. So and generally viewed as a bias towards housing one, second, a bias towards new acquisitions. And then and then as we as we think about capital deployment going forward, we will position the balance sheet where we can you can navigate what I was trying to do some sort of mixed signals that we're getting from the market from an asset that's kind of how we think about liquidity and within that, the new investment so far, Doug, that's really helpful.

Rick Shane

I am curious, as you start to look at multi-family, if you would just give some sort of context where cap rates were previously where you see deals getting done today? And that's it for me. Thank you, guys.

Doug Bouquard

Sure. I mean, look, I think multifamily RCS is a very, very heavily debated sector. I noticed kind of given all the kind of right at the heart of the confluence of some of the macro trends with interest rates and inflation and I think that we're seeing new transactions get done. Generally speaking, have been in the sort of mid to high five cap rate range that it's been flat. It feels like from a liquidity perspective as multi-family cap rates get into the sixes, there is a lot of liquidity on the equity side. And I think as cap rates get up, call it inside of five and a quarter granted that liquidity dries up. So again, viewed as the sort of midpoint is to pick a number five and three quarters. And that's again what you, which allows us to be making loans from a risk perspective at stabilized debt yields in the 7.5% to 8.5% range, again, depending on the property type and the specifics to that to that of certain assets.

Rick Shane

Got it. Thank you very much.

Operator

Eric Dray, Bank of America.

Eric Dray

Hey, guys. Good morning, most of mine have been covered, but just wanted to on the I just wanted to ask about how have conversations with borrowers changed at all over the last month? Is kind of the rate outlook has changed a bit and kind of what you're hearing from your portfolio or borrowers?

Doug Bouquard

No, I think it's a great question. I think that broadly, the narrative was obviously the slowing of expected rate cuts combined with, I would say, the sort of what feels like working on over the past few weeks a little bit of a slowdown in transaction activity. And I think that's been kind of more of the dialogues we've been hearing about yield relative to our current portfolio has seen a very modest 1% deal performing. I think that we we generally kind of would characterize the borrower universe as still looking through long term. It's effectively where yield where long-term rates will settle and still kind of leaning positive in terms of their ability to kind of weather the storm with elevated over the near term?
That's I'd say that's the best way to characterize the mindset. So as that evolves, of course, your aggregate data, but that's kind of where the market is right now. And again, we're definitely at a deal creation point narrative wise just kind of what's going on within macro. And I would say that despite our intimate knowledge of what's going on the ground in the real estate sector, given our our sort of broad. So our lens through which we invest and keeping an eye, frankly on what the Fed is doing is saying, and it is really important and we're very attuned to that. Yes, our eyes are on 20.15 P.M. Eastern time today at that point about us.

Eric Dray

And then real quick, just I guess for modeling purposes, I mean, do you think that kind of the $0.3 DE that you posted this quarter, I mean, is that kind of like where you guys think the portfolio can kind of maintain your in the next few quarters or any like one-time things to call out.

Bob Foley

I know we never we never provide guidance, but I think that it passporting into that number and its composition I think it's pretty easy to see what's being generated by the loan book and what's being generated by our small and REO portfolio. And so now we've been pretty clear about our dividend policy and argue about sustainable levels of distributable earnings and so on. For Europe, we're comfortable with our current position, but can't provide any guidance.

Doug Bouquard

Yes, I think just to give perhaps a little bit more context, which is which is helpful.
As you think about the levers that we have to grow earnings, I would just kind of take the aggregate of what our balance sheet looks like. First and foremost, we have a substantial cash balance that combined with other available liquidity channels totals approximately $371 million currently built. Secondly, we are out there with a pipeline of potential investments that that we it could potentially pursue over the coming quarters from a new investment perspective that can drive earnings and then and then lastly, you know, again to the bond covenant, we have approximately 5% REO, frankly, as we as we navigate through those assets and maximize value that also can be recycled into newer loan investments, which will also grow earnings over time to kind of view that as the broader our qualitative pitch on that one.

Eric Dray

Okay, great. Thank you, guys

Operator

Chris Muller, JMP Securities.

Chris Muller

Guys, thanks for taking the questions and congrats on a great start to the year. And so following up on some of the prior questions. So now that you guys are back to lending and the portfolio is cleaned up, should we expect to see some portfolio growth in the back half of this year? Or will it be more of a flattish type portfolio? And I guess the root of the question is, how aggressively do you guys wanted to match our repayments with new loans over the coming quarters? Thanks.

Doug Bouquard

I mean, look, I think we're from a strategic perspective, we really have built the balance sheet, too. It kind of start with what I would describe as legacy fall weather outcome here. Again, acknowledging there's mixed signals of where we are kind of currently see today. I would say it's up to kind of lean more towards the offenses. So from a deposit perspective, yes, I would expect it as to be able to find new investments in the coming quarter. So as we think about kind of repayments, no repayments so far, definitely have slowed, and that will be one of the byproducts, frankly, of both elevated rates, but also more planned, probably elevated rate fall right now. But I would say generally speaking, as I mentioned earlier about the three levers that we have to grow earnings, I would describe our ability and appetite to generate new investments is ramping up at the top of the list to be able to grow from.

Chris Muller

Yes, that's helpful. And then the other one I have. So some of your CLO financing out of the reinvestment periods. Can you give your thoughts on if a new CLO is possible in 2024 and just how you guys are viewing that market today?

Doug Bouquard

Yes. Sure. I mean, I think there has, of course, been a handful of CRE CLOs done recently in the market is a very interesting dynamic right now where the available financing that we're being provided from this bank balance sheet continues to be more attractive than what we see in the CRE CLO market. Given that we're active really kind of both worlds, we're always looking on a daily basis, frankly, the sort of delta between and what kind of advance and spread in terms we can get from banks on their balance sheets versus what the bond market will you'll bear And simply put, we will continue to optimize that going forward. So I would say spot right now, again, to my commentary on banks just seem to have a lot of demand to put capital out there, restrained on pulling out direct lending capital. And they definitely have to have a lot of our demand to be to be providing loan or loan financing for us. So I think that that's really how we're looking at it. But yes, when we think about the CRE CLO market, surety was of course, ROE, important part of our capital structure, the they do provide it's a frankly, a lot of flexibility from a financing perspective and then do, of course, offer the benefits master non non-mark-to-market nonrecourse financing. So as we balance our advanced and spread, there also is the kind of structural side of things. But you'll get I think at this point, CRE CLO spreads have really kind of lagged and we're going to have an answer to what I had mentioned earlier about this removed corporate credit spreads, culture dictates, but you really haven't seen CRE CLO spreads move back to, frankly, where they were. You thinking about that the sites over the last three or four years and the triple A's were really excited about, let's call it approximately at that time, Libor plus 80. Now we're still seeing series triple A. spreads in the kind of mid to high one hundreds best case. So there's still a lot of pressure to happen. Obviously, we feel like.

Chris Muller

Very helpful. Thanks for taking the questions.

Operator

Rick Shane, JPMorgan.

Rick Shane

Thanks for taking my follow-up. Having asked so many questions over time about the about repurchases, and I think I'd be remiss not to address that though. It's nice to see you guys announce a repurchase. I'm curious how you will approach that $25 million our allocation. Do you expect to be pretty consistently in the market? Or is that something that will just be there very defensively if you see some some really bad days.

Doug Bouquard

And look, I think on the on the share repurchase side, first and foremost, it's it is a tool in our toolkit, which which we acknowledge and have shown over time, is a really powerful way for us to both generate earnings for the Company. And I also think is a real statement about, but that with the credit quality of our current book relative to book value buying shares at today's market price plus, those does look very attractive. And in terms of going forward, I'll have to take this point, Rick, is that it will continue to be a tool in our toolkit. And I said that over time we will continue to use this as a potential way to drive earnings for the Company.

Rick Shane

Great. Thank you for taking the question, guys.

Operator

Ladies and gentlemen, we have reached the end of the question-and-answer session. I would like to turn the call back to management for closing remarks.

Doug Bouquard

Just wanted to thank everyone for taking the time this morning on the call and look forward to speaking to all of you next quarter. Thank you very much.

Operator

This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time.