Apple Hospitality REIT, Inc.
Q1 2017 Earnings Call Transcript

Published: 5 May 2017

[Operator:]

Greetings, and welcome to Apple Hospitality REIT First Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to turn the conference over to your host, Kelly Clarke, Vice President of Investor Relations. You may begin.

[Kelly Clarke:]

Thank you, and good morning. We welcome you to Apple Hospitality REIT's first quarter 2017 earnings call on this, 5 May, 2017. Today's call will be based on the first quarter 2017 earnings release, which was distributed yesterday afternoon. As a reminder, today’s call will contain forward-looking statements, as defined by federal securities laws, including statements regarding future operating results. These statements involve known and unknown risks and other factors, which may cause actual results, performance or achievements of Apple Hospitality to be materially different from future results, performance, or achievements expressed or implied by such forward-looking statements. Participants should carefully review our financial statements and the notes thereto, as well as the risk factors described in Apple Hospitality's 2016 Form 10-K and other filings with the SEC. Any forward-looking statements that Apple Hospitality makes speaks only as of today, and the Company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law. In addition, certain non-GAAP measures of performance such as EBITDA, adjusted EBITDA, FFO, and modified FFO, will be discussed during this call. We encourage participants to review reconciliations of those measures to GAAP measures as included in yesterday’s earnings release and other filings with the SEC. For a copy of the earnings release or additional information about the Company, please visit applehospitalityreit.com. This morning, Justin Knight, our President and Chief Executive Officer; Krissy Gathright, our Chief Operating Officer; and Bryan Peery, our Chief Financial Officer, will provide an overview of our results for the first quarter of 2017 and an outlook for the sector and for the Company. We will then open the call for Q&A. It is now my pleasure to turn the call over to Justin.

[Justin Knight:]

Thank you, Kelly. Good morning and welcome to Apple Hospitality REIT's first quarter 2017 earnings call. During the quarter, our broadly diversified portfolio of upscale hotels performed generally in line with our expectations. Despite difficult year-over-year comps in the LA market, comparable hotels RevPAR increased by 1.4% above the midpoint of our annual guidance. Pressure on labor costs combined with moderate topline growth in the quarter resulted in modest margin decreased to 36.2% of revenue. Statements regarding the broader economy which improved following the transition, Washington remain relatively strong despite continued political gridlock. Consistent with our comments during our year-end 2016 earnings call, we are yet to see meaningful improvement in many of our markets and do not anticipate any significant changes until late in the year or the earliest. That said our portfolio of hotels continues to perform well and with year-over-year comps for the LA market growing easier as we approach the end of the second quarter, we continue to have confidence in our full year guidance and are well-positioned should the economic environment strengthen in the back half of the year. Given the geographic mix of our portfolio, we feel we are uniquely positioned to benefit should the current administration succeeds and advancing all or part of its proposed agenda. In April, we completed the sale of our full service Hilton hotel in Dallas Texas for $56 million. While the property performed well for us, this disposition is consistent with our strategy to reduce our ownership of full service assets and redeployed proceeds into our core product where we believe we can generate stronger, more stable returns for our shareholders over time. Our remaining full service portfolio consistent of four hotels less than 2% of our total portfolio. We will continue to look for opportunities to sell these assets where we feel pricing is appropriate and proceeds can be redeployed into assets which benefit our long-term strategy. Within our core portfolio we continue to monitor the performance of our hotels and markets and look to selectively dispose of assets which are likely to be less relevant with consumers in the future as a result of their location, size, brand age or condition. As part of this process in April, we entered into contracts for the sale of our SpringHill Suites and TownePlace Suites in Columbus, Georgia. Proceeds from the sale of these assets will provide further availability under our revolver to fund acquisitions or buyback stock. As we mentioned on our last call, we acquired a new Courtyard by Marriott in the historic Stockyards area on February 2, the same day the hotel opened for business. We currently have outstanding contracts for the purchase of four additional hotels all of which are under construction for a total purchase price of approximately $103 million. The properties under contract included dual branded Homewood Suites and Hilton Garden Inn in Birmingham, Hampton Inn in Downtown Phoenix and Home2 Suites at the airport in Orlando Florida. We anticipate these properties will be completed and opened for business over the next six to 18 months. For our existing portfolio consistent reinvestment enable us to maintain the competitive positioning or relevance of our hotel and mitigate the impact of competing new supply within our individual markets. While we utilize our scale to drive down total renovation cost, the scope of each renovation is tailored to the specific needs of the asset and it’s competitive positioning within the market. During the first quarter the company invested approximately $13 million in carefully timed and effectively managed renovations and we plan to spend an additional $50 million to $60 million during the remainder of 2017. Although new supply is expanded beyond core urban and gateway markets, growth has been muted compared to earlier recovery periods and continues to be supported by positive demand trends. The supply outlook for our hotel is unchanged from what we reported for the fourth quarter with just over 60% of our hotels expecting one or more upper mid scale up scale or upper scale new construction projects within a five mile radius to be completed within the next 18 months. We have one of the strongest balance sheets in the industry which provides us with increased stability during times of economic uncertainty and the flexibility to pursue accretive opportunities in the marketplace. At the end of the quarter our debt to adjusted EBITDA was approximate three times. In addition the company has in place both in at the market common share offering and a share repurchase program to provide for opportunistic share issuances or share repurchases in open market transactions. The ATM provides the mechanism to efficiently issue shares when market conditions are appropriate and use proceeds to further enhance the strength of our balance sheet in anticipation of future opportunities such as individual asset transactions. The share repurchase program provides us optionality should share trade at the level that makes the purchase of our own shares significantly more attractive than asset opportunities. Although no shares were sold or purchased during the first quarter of this year. We are pleased to have these programs in place and the flexibility to benefit from dislocations in the trading of our shares should they occur. Scale ownership within the Marriott and Hilton brand families and among our third-party management companies as well as concentration in the upscale room focus sector in the logging industry provides ample hospitality with exceptional influence, purchasing economies, operational efficiencies and unparalleled access to performance data. Through the detailed analysis of hotel performance operational and market metrics we have established a data driven platforms that allows us to benchmark and share best practices across our portfolio to maximize property level profitability and drive strong operating margin. With that, it is now my pleasure to turn the call over to Krissy who will provide additional detail regarding performance across our markets and the industry overall.

[Krissy Gathright:]

Thank you, Justin. While our hotel results benefitted from the shift in the Easter holiday from March to April, as anticipated the loss of Porter Ranch business year-over-year suppressed some of our growth. Excluding the eight Porter Ranch affected hotels, our RevPAR grew 2.6% in the quarter, 120 basis points higher than the 1.4% growth for all comparable hotels. Approximately 60% of our hotels had RevPAR growth excluding hotels with renovation impact. 21% of our hotels achieved double-digit RevPAR increases while 11% of our hotels experienced double-digit RevPAR declines. Transient rooms sold were slightly down year-over-year as has been consistent with the trend we saw in the second half of 2016 when the softness and business transient became more pronounced in our portfolio. Group production continue to be strong as our group room night mix increased just over one point to approximately 15%. Rate growth was essentially flat with a decline of almost 80 basis points attributable to Porter Ranch. Due to a softer April with the change in Easter holiday timing, we do not expect RevPAR growth to pick up until the second half of the year even though the impact from the Porter Ranch despite businesses will be less in the second quarter. 60% of our hotel EBITDA in the quarter was derived from 20 star markets. We had three markets with hotel EBITDA contribution greater than 5%, Phoenix, Los Angeles and San Diego. Phoenix and San Diego continue to perform well with RevPAR growth of 5.5% and 13.1% respectively. RevPAR for our hotels in the Los Angeles market declined 16.3%. We are pleased to report that all eight of Porter Ranch affected hotels grew market share with an average premium of 8% over their competitive success. Other markets that performed included Seattle with increasing business from Amazon and various technology related fronts and Richmond with increased demand from corporate relocations and solid leisure business. Miami continues to be one of our weakest market. Turning to profitability, adjusted hotel EBITDA margin declined 130 basis points with 36.2% for the quarter. Excluding the Porter Ranch hotel, decline was 100 basis points. As Justin mentioned, payroll expenses outpacing revenue growth was the main driver of the margin decline primarily as a result of wage rate increases but also some impact from higher occupancy. We expect labor cost to be an ongoing challenge but we have identified some opportunity in labor efficiencies and have been piloting whole house labor efficiency software to address this opportunities. The pilot has being run with a few of our management companies and we are pleased with the results thus far. We are working with [indiscernible] for great management company feedback and a greater process efficiency and we will continue to rollout these programs for additional hotels as we move to the remainder of the year. We are also said this on reducing reliance on contract labors in several markets resulting from the increasingly tight labor environment. We have used our scale to negotiate favorable pricing on some comprehensive hiring solutions which we are also testing with a couple of management companies. For the many markets where demand is still outpacing supply, we continue to work with management teams to manage the mix to drive rates yielding higher margins. We expect margins to be challenged again in the second quarter with expected low RevPAR growth before improving in the second half of the year. I will now turn the call over to Bryan to provide additional detail on our financial results.

[Bryan Peery:]

Thanks Krissy, and good morning. I will quickly summarize a few of the numbers Justin and Krissy touched on. We finished the first quarter with revenue of $293 million, adjusted EBITDA of $99 million and corporate G&A expense of $6.8 million, all increasing from the same period in 2016 due primarily to the Apple Ten merger which added 56 hotels to our portfolio in September of 2016. Modified FFO per share was $0.39 down from $0.40 per share in the first quarter of 2016. We continue to reiterate our guidance for 2017 that we provided in February. Based on our operating performance today, our visibility in the business drivers for the remainder of the year, an announced transaction, we anticipate net income between $209 and $232 million. Comparable hotel RevPAR growth between 0% and 2%, comparable hotel adjusted EBITDA margin percent between 37.3 and 38.3, and adjusted EBITDA between $430 million and $450 million. At the end of March, the company had approximately 1.4 billion of outstanding debt with a current combined weighted-average interest rate of 3.3% for the remainder of 2017. Excluding debt issuance cost and fair value adjustment on acquired debt, our debt is comprised of $462 million in property level debt, and $942 million outstanding on our $1.1 billion of unsecured credit facility. As Justin mentioned, during April, we completed the sales of the Dallas Hilton for a total of $56 million and have entered into contracts for the sale of two hotels in Columbus, Georgia for $10 million. Net of debt assumed, we used the 29 million of sales proceeds from the Dallas hotel to further increase the availability under our credit facility, and plan to use the Columbus proceeds similarly should a closing occur. As a result of the Dallas Hilton sale, we recognized an approximate gain of $16 million in the second quarter of '17. During the first quarter, the company paid distributions of $0.30 per common share, and the annualized $1.20 per common share, represent an annual 6.3% yield based on our May 1 closing price, the $18.90. Finally, I wanted to highlight that our annual shareholder meeting is scheduled for May 18th, and we once again have a number or corporate governance proposals that we feel are beneficial to shareholders including desiring the terms of our Board of Directors and having annual elections for the entire board. These proposals were voted on, but not approved at our 2016 annual meeting due to lack of shares. We encourage each investor consider these proposals, and vote their shares accordingly. Thank you for joining us this morning. Despite a more moderate growth environment so far in 2017 and expected for the remainder of the year. We continue to execute on our core strategy, and believe that over the long term, we are well positioned to meaningfully increase shareholder value. We will now open the call up for the questions.

[Operator:]

[Operator Instructions] Our first question comes from Ryan Meliker with Canaccord Genuity. Please proceed with your question.

[Ryan Meliker:]

Good morning, everybody. I had a couple of things. First of all, congratulations. You put up some pretty solid RevPAR growth in spite of LA being down 16%, so kudos to you for that. I guess I'm wondering as we look forward with 1Q which seem to be one of the more challenging quarters given that LA comp, and you guys coming in the upper half of your outlook for RevPAR for the full-year, what are you seeing as we go in the 2Q, 3Q and 4Q that tempers those expectations that where you might see things come in towards the lower half or are you just being conservative and you just didn’t see - opportunity here to raise your guidance because it's so early in the year?

[Krissy Gathright:]

Good morning, Ryan. I’ll take that one. Yes, we were very pleased with our first quarter results and as I mentioned in my comments, we expect second quarter to be a mixed challenging quarter, and that’s really because we still have quarter ranch that continues into April and May. As well as April was soft for us because as you know, with our hotel rooms, the segment they were in, we’re relying on business travelers. So because of the change in timing of Easter, we were negatively impacted. And if you look at the industry, the market is really that led in April were markets that were more leisure based. So we are encouraged that we are seeing in our future booking takes for May and June, what we’d expect which would be a pick for May and June. But that we still have the softness in April. So the other thing if you remember from last year, in the first part of the year for our portfolio business transient was still very strong and it more broadly - the softness more broadly spread through our portfolio as we got to the second part of the year. So from a cost standpoint, we had a tough comp in Q2. We actually our comparable hotels grew 4.5% in RevPAR last year. And as we move throughout the year in Q3, it was 1.5% in Q4, it was 1.9%. So as we move into Q3 and Q4, we saw that business transient demand sort of stabilize in that, decelerate any further and we’re seeing that consistently into Q1, the changeover of Easter timing. So part of it are more favorable comp as you reach the second part of the year. But the April softness definitely impacts our second quarter numbers.

[Ryan Meliker:]

Okay, that’s really helpful. And then with regards to margins, obviously margins were soft in 1Q. Are there particular tailwinds or fewer headwinds on comparable RevPAR growth as we move through the year that give you guys some confidence that hit the bottom line EBITDA at these top line numbers?

[Krissy Gathright:]

We will still have headwinds - we had the headwinds of quarter ranch in Q1 because the loss in quarter ranch was primarily rate. We will have some of that continue into Q2. Because we’re reflecting lower RevPAR growth in Q2, as I mentioned in the comments, then we expect margins to be challenge in Q2. But as we pick up in Q3 and Q4, we’re expecting more of that growth to be primarily in rate driven and we expect to see improvement in margins in the second part of year.

[Ryan Meliker:]

Okay, that’s great. That’s good color. And then lastly, I just wanted to ask Justin, maybe you can give us some insight here. It looks like you guys announced you sold the two Columbus assets for $10 million with a write-down of 8 million. If I look at your K, it looks like you bought those assets in March of 2014. So in three years, you basically cut the investment from 18 million down to 10. I'm wondering what's going on with those assets or in that market that's driving that I guess value destruction. And I'm wondering if it’s unique to Columbus or something else that may be hitting other markets across your portfolio.

[Justin Knight:]

So bit of anomaly with those assets. But the valuations were the result of the merger. So aren’t necessarily reflected with the original purchase price of the assets. And I think what's going on in that market is a little bit distinct. I mentioned in my earlier comments that we continually look at our portfolio for opportunities. That particular market is more challenge than some of our others in terms of growth potential. And these particular assets are smaller than what we consider to be at optimal in terms of operational efficiencies which is why they were targeted for sales. I think it would be mistake to read through to the remainder of our portfolio anything really from that particular transaction which is under contract, has yet to close.

[Ryan Meliker:]

That’s great color. And just to make sure I understand correctly, the purchase price allocation that you guys have in your filings, isn't necessarily what you would’ve believe the market value of those individual assets were at the time of acquisition. That's correct?

[Justin Knight:]

Well, it’s a two far equation. We bought Apple Seven brought the assets back in '08. And when we did the merger in '14 of the three companies, we look at their market value at that time again and rerecorded them if you will because Apple Nine was the acquirer at that point. Looking back, they were actually close to the same number. The original purchase price in '08 was very similar to what we recorded the assets at in 2014.

[Ryan Meliker:]

Okay, that’s helpful. I guess that's it for me then. Thanks a lot. I appreciate the time.

[Operator:]

Our next question comes from Michael Bellisario with Robert W. Baird. Please proceed with your question.

[Michael Bellisario:]

Good morning, everyone. Just wanted to try and understand maybe why you haven't been more aggressive on the acquisition front. Can you give us a sense of what you're seeing out there that’s keeping you on a sidelines at least in the near-term?

[Justin Knight:]

We’re continuing in the market looking at an underwriting asset. I think many of our peers have commented and we’d concur that to date, there’s been a lack of product available, and a fairly significant bid spread. I think our primary reason for being less acquisitive is that. I mean, there are census given recent conversations that the market is likely to lose and up as we approach the back half of the year. And assuming we continue to be fairly stable from a stock price standpoint. I think you can anticipate we’ll be more aggressive in pursuing assets late in the year. But really I’ve been very careful to explain I think our acquisition strategy so that our actions are easily understood. We will pursue growth only to the extent the individual asset acquisition are accretive on a leverage neutral basis to us. Meaning that we can establish a significant or a meaningful spread between where we’re trading and where the market is for the individual assets because we've seen the two fairly close. I think we've been less active on that front. And I don’t think that’s unique to us and our position. I think public companies have been equally careful, and private market transactions have been at a lower volume as well. In my mind, I think that reflects continued optimism on the part of the owners, both public and private. In the future, performance of the individual assets which I think bodes well for our industry. But in the near-term, that has made it more challenging to grow our portfolio. That said, we benefit to date from significant economies of scale, and I think do see ourselves having a need to grow absent benefit on an individual transaction basis for our shareholders.

[Michael Bellisario:]

Got it, that’s helpful. It sounds like it’s more of a quality and quantity issue, and less a price or your willingness to get aggressive issue. Is that correct?

[Justin Knight:]

Yes, to a large extent. But again, our sense is, based on our conversation we’ve had recently with a number of people in the industry, should things remain stable through the end of year transaction volumes should begin to increase here in the near future.

[Michael Bellisario:]

Got it. And kind of on that same topic. As you’re doing your underwriting, does the tough expense environment that you’re experiencing with your portfolio, has that changed your underwriting or your thought process for how you’re looking at asset and how you evaluate certain market? And is that maybe leading to some conservatives before you?

[Justin Knight:]

In certain markets, I’d say it definitely is. As you’re aware, certain markets have experienced outside pressure on the labor front which results in higher labor expense. And we’re factoring that in as we’d in our acquisition equation. I don’t know that that’s causing us to be more conservative from the beginning. And every acquisition we’ve done and we’ve bought over 400 hotels over the past decade and a half, we looked at the future and looked to reasonably anticipate both topline growth and bottom line performance taking into consideration what we think are likely factors. We don’t see the risk being significantly different than it has been historically, but it varies by market and we take individual market conditions into considerations as we value assets.

[Michael Bellisario:]

And then just on the labor management and labor technology studies that you’ve talked about at your investor day, and then earlier on the call. Totally understand that it’s still early days, but how impactful do you think that these changes can be on bottom line profitability even when the technology is fully implemented across your portfolio. Just kind of figure out if it could be $1 million or $2 million in the bottom line, or do you think it could be something more on a run rate basis?

[Krissy Gathright:]

I think it is early days yet, and we are being very cautious in making sure we get the process correct, and the soft layer correct before we roll it out on a broad scale. And it also certain management companies depending on what system that they already have in place and the markets that they’re operating in are going to have more opportunities versus other. So I would say that the first half of the year you probably going to see very little impacts from it because it’s just on couple of management companies here or there. But as we roll it out to the second part of the year on the margin in terms of it wages our increasing between 3% and 4% and we have the opportunity to shave a couple minutes for occupied rooms. We haven’t calculated the exact number yet because it’s unclear in terms of the time when we’re going to rollout there is some opportunity on the margin to minimize if there is the negative impact on this wage increases, more to come as we continue to move through our process.

[Michael Bellisario:]

Thanks. That's helpful.

[Operator:]

[Operator Instructions] Our next question comes from Jeff Donnelly with Wells Fargo. Please proceed with your question.

[Jeff Donnelly:]

Good morning, folks. A few questions, actually just may be the first one about this trends you're seeing in supply the urban markets continue to be surprised people by seeing continuing construction starts to deliveries. I’m just curious what you're seeing in your markets and I guess see thing the ability for that to be sustained going forward?

[Justin Knight:]

Good morning. So you correctly highlight the fact that we continue to see significant supply growth in urban and gateway markets. While that has spread beyond those to higher end of urban markets it continues relative to kind of last cycle to be more muted and generally speaking to follow demand trends which is why the majority of our market continue to see growth in RevPAR year-over-year despite many of them seeing increase supply. I think anecdotally we continue to hear that’s increasingly difficult to secure construction financing but even more importantly this cycle has been different than past cycles. And that we've seen the cost of construction grow at a significantly more rapid pace than we’ve seen RevPAR increase. And a result, it’s more difficult to pencil construction deals than it was in past cycles when you combine that with the fact that lenders are requiring more equity in deals than they were in the past. It’s tampering supply growth in a way that really in the past decade and half to decades is a little bit unprecedented impact. Earlier this week we met in California with a large number of Marriott’s like service owners and having conversations with many who are significant developers in this space, the majority were beginning to pull back in terms of future land purchases for development largely because it was too difficult to pencil those. Which leads us to believe that while we would anticipate supply growth to increase this year potentially through the first part of next year, we would not be surprised at all to see it begin to taper off at that point potentially and again very different than last cycle before we see a drop off in RevPAR which would lead to very different end results than what we saw during the last downturn.

[Jeff Donnelly:]

When you're talking about higher construction costs is that the hard cost side of it I mean is line cost maybe it’s both but I wasn’t sure one struck in your mind?

[Justin Knight:]

No, I mean land cost is significantly larger because there are a lot of competing opportunities on the real estate side but construction costs are up because raw materials are up and labor is impacting construction in the same way it’s impacting us. And so year-over-year we’re seeing strong double-digit increases in the cost of new construction. When you combine that with at least in our space the upscale space the improved quality of the product that’s demanded by the brand themselves you see significant impact on construction cost for that type of product. I think as we get later in this cycle, you'll see acceleration probably in the economy and mid scale segments where the cost of construction is less than a little bit of movement away from the upscale factor largely because of this absence again a significant reacceleration on the RevPAR side which should make it easier to test for dealers but again we would benefit from that acceleration on our existing portfolio as well.

[Jeff Donnelly:]

And I am curious are there any major themes that I guess that were discussed that Marriott owner’s meeting that you kind of share with us and I guess maybe as a follow-up do you think some of the Starwood brands too many but of the select service or upscale category could be something that is an opportunity for you guys down the road I guess how are you thinking about that?

[Justin Knight:]

Sure. In terms of major themes, again the benefit in large part these large conferences that owners is on a networking side. And so as we interacted with managers, developers and some of our partners in this space, I think there continues to be a set of optimism related to the future specific to the Starwood Marriott transaction there was a tremendous amount of focus on efforts that are underway to maximize the potential of that merger by increasing appeals for the combined entity with consumers and that further development of the brand. Specific in select service space, we’re involved with conversations with Marriott about the future of lost in element and Marriott has proven over the years to be exceptional at modifying and developing product that can be efficiently built and has brought consumer appeal. And if you look at the development premerger of those two brands, it was on relative basis lackluster when compared to kind of the build out of Marriott like service brands. We would anticipate that Marriott's will make modifications to those two brands that over time will make them more attractive to us from an investment standpoint.

[Jeff Donnelly:]

Okay. And maybe one last question this might for Krissy, and I don't know if you’ll have this level of granularity but I was surprised to see at Marriott's Investor Day that there was actually very little overlap in the membership of the Starwood and Marriott loyalty programs, it was something like 10% or 11% overlap. Consider that Starwood really did not have what I would call robust select service offering. Do you have a sense if you've been a beneficiary like up pickup of guests from the Starwood system now that I know the programs are combined but now that those two firms are operating under one umbrella?

[Krissy Gathright:]

Yes. It was 11% yes, and so we’re excited about that opportunity but as of yet we have not seen that come true and again primarily because they haven’t been able to merger systems you can’t easily transfer the point but from what we understand it just a small percents of points that have actually been transferred up until this point and it’s going probably be at the earliest as you know late 2018 before that with their credit card and comp share arrangements, as well as - and that’s primarily versus more of the system opportunities before that they can actually get their systems merged. So once they get their systems merged, we are looking for to actually because there is not as much over last in the select service products, we do think that there is an opportunity to gain more business from the Starwood leads into our select service portfolio especially in markets where they might not have previously had a select service option. So we do see that as an opportunity down the road but we’re not seeing it yet.

[Jeff Donnelly:]

Okay. Thank you.

[Operator:]

We have reached the end of the Q&A session. And I’d like to turn the call back to Justin Knight for closing comments.

[Justin Knight:]

Thank you and thanks to everyone who joined us today. Our strategy was designed to reduce volatility and generate strong stable investor returns over time. We are uniquely positioned to benefit from a wide variety of market conditions and ways that will continue to enhance value for our shareholders. We continue to see opportunity within the industry and we look forward to another strong year for Apple Hospitality. We hope that as you travel, you’ll take opportunity to stay with us and happy to thing admire.

[Operator:]

This concludes today's teleconference. You may disconnect your lines at this time. And we thank you for your participation.