Brookfield Property Partners L.P.
Q2 2018 Earnings Call Transcript

Published: 1 Aug 2018

[Operator:]

Good day, ladies and gentlemen, and welcome to the Brookfield Property Partners Second Quarter of 2018 Financial Results Conference Call. At this time all participants are in a listen only mode. Later we will conduct a question and answer session and instructions will follow at that time. [Operator Instructions] And also today's call is being recorded. It is now my pleasure to turn the call over to Mr. Matt Cherry, Senior Vice President of Investor Relations and Communications. Please go ahead, sir.

[Matt Cherry:]

Thank you, Sandra, and good morning. Before we begin our presentation, let me caution you that our discussion will include forward-looking statements. These statements that relate to future results and events are based on our current expectations. Our actual results in future periods may differ materially from those currently expected because of a number of risks, uncertainties and assumptions. The risks, uncertainties and assumptions that we believe are material are outlined in our press release issued this morning. With that, I'll turn the call over to Chief Executive Officer, Brian Kingston.

[Brian Kingston:]

Thank you, Matt, and good morning, everyone, and thank you for joining our call this morning. With me on the call are Ric Clark, Chairman of BPY; and Bryan Davis, our CFO. In my prepared remarks, I'll recap our operating performance as well as provide an update on our various strategic initiatives and accomplishments from the second quarter. Bryan will then go through the details of our quarterly financial results. And then following those comments, we'd be happy to take any questions from our analysts on the call today. So as you would have seen in our disclosure this morning, we recorded another strong quarter of earnings growth with company FFO, on a comparable basis, up 13% over the last year. Bryan will provide further detail on what drove those positive results in his remarks. We remain very active in recycling our capital out of stable and mature assets and then using those proceeds to fund new investments and fortify that flexibility to our balance sheet. Following the end of the quarter, we saw the 28% interest in our premier Manhattan office and multifamily portfolio to a newly launched Brookfield sponsored core real estate venture. We plan to syndicate up to a further 7% interest in this portfolio over the balance of this year, with total projected proceeds of $1.8 billion to BPY. Within BPY's opportunity funds, we've recently entered into a contract to sell 112 self storage assets for more than $1.3 billion. This transaction represented a 46% gross IRR and 2.6x our initial invested capital. The transaction represented a compelling opportunity for us to walk in a meaningful gain on the stabilized portfolio and several of our secondary operating markets. Net proceeds to BPY upon closing of this transaction in September are expected to be about $130 million. Proceeds from these asset sales will be redeployed into higher yielding investment opportunities, including unit buybacks as well as to reduce corporate leverage. In total, our capital recycling initiatives have returned $2.2 billion of capital to BPY year-to-date. And we anticipate receiving further proceeds of another $1.7 billion by the end of 2018. The realized gains from Brookfield's fund investments, specifically the funds switch over the last decade of average gross returns of more than 25% and 2x times our capital, are not reflected in our FFO, but these are an important part of our distribution coverage. Turning to our operational results. In our two primary office businesses, starting with operating core office. We leased about 1.4 million square feet during the quarter. And occupancy now stands at 92.7%, which is a 10-basis-point increase over the prior quarter, and is up 80 basis points over this time last year. Importantly, we continue to capture mark-to-market upside with new leases signed during the quarter at average rents that were approximately 10% higher than leases that expired during the period. We consistently achieved double digit mark-to-market rental growth to the key component of our strong same store results, up 7% in the business this quarter, largely driven by leasing activity in Downtown New York City and Toronto. Moving onto core retail. Occupancy in this portfolio dipped slightly just 10 basis points to 94.2% compared to the first quarter of 2018, and is down by 40 basis points year-to-date. That’s said demand remain strong. We executed or approved leases about 9.4 million square feet of space, which represents over 93% of our 2018 leasing goal. With average suite-to-suite rental spread to 20% on leases that have commenced in the last 12 months, during the time which NOI weighted tenant sales per square foot increased 4.2% over the prior year. Net new demand continues to come from online retailers opening bricks and mortar locations, for example, [indiscernible] opened four new stores within our portfolio so far this year. Now I’ll turn the call over to Bryan for a detailed financial results in new sectors as well as BPY.

[Bryan Davis:]

Thank you, Brian. During the second quarter of 2018 BPY earned company FFO of $246 million compared with $258 million for the same period in 2017. On a per unit basis, company FFO for the quarter was $0.35 per unit compared with $0.37 per unit in the prior year. Included in the prior year was income related to two legal settlements both in London that amounted to $40 million or $0.06 per unit. The first was a $32 million favorable settlement related to a dispute over a break fee on the redemption of debt in 2014, and the second related to a historical lease dispute that was settled in Q1 of 2017, but had a follow-on settlement of $8 million that was received in the second quarter. Excluding these benefits, comparable company FFO for the quarter, was up 13% on a per unit basis. BPY recorded net income attributable to unitholders for the quarter of $534 million or $0.76 per unit compared with net income of $239 million or $0.34 per unit in the prior year. In our core office business, we earned $149 million of company FFO compared with $122 million in the prior year before considering the legal settlements, I previously referred to. Contributing to the $27 million increase was strong same property net operating income growth of 4.7% on a natural currency basis and 6.6% when considering the relative strength of foreign currencies compared to the U.S. dollar this quarter. We had a 130-basis-point increase in our office same property occupancy to 93%. More specifically, our same property growth was most pronounced in the markets of Sydney, where growth was 17% as a result of rent commencement at 10 Shelley Street, and occupancy was up 110 basis points to 97.8%. In Toronto, where growth was 13% due to new leases at Brookfield Place and the Adelaide Center, contributing to an increase in same property occupancy in that market by 210 basis points to 98.6%, and in core, where we had 10% property growth as a result of lease commencements at our second tower at Brookfield Place. Occupancy in this market increased 390 basis points to 94.7%. In addition the strength of the pound and the euro relative to the U.S. dollar led to an 8% same store growth in our markets of London and Berlin. Of the 1.4 million square feet of office leasing that was executed in the quarter, a little over half of that represented like-for-like space and was executed at initial rent spreads of 7% and average rent spreads of 12%, which will continue to support further net operating income growth. Another driver of earnings for our core office business comes from developments that completed, and are progressing towards stabilization over the last 12 months. In the quarter, we benefited from incremental NOI of $18 million and FFO of almost $11 million, from these developments, including Brookfield Place, Calgary East, our 1.4 million square-foot development in Calgary, which is currently 82% leased, the Eugene our 844 unit for rent multifamily property in New York, which is 80% leased, and London Wall, our 0.5 million square-foot complex office -- complex in London, which is 79% leased. Net income from our core office business for the quarter was $37 million and included net property fair value losses of approximately $20 million as a result of declines in our stabilized properties due to timing of cash flows, which was partially offset by valuation gains from some of our active developments as their construction years completion and their risk profile changes. Secondly, in our core retail business, we earned $119 million of company FFO, which was consistent with the prior year. Same store results from this business were up 3.4% on a year-over-year basis, and reflect the benefit of $7 million of termination income in the current quarter. Overall occupancy remains high. New leases continue to be executed at higher initial rents with spreads of 12%, which was consistent with the first quarter and which will support further earnings growth. And we continue to see favorable operating metrics and have not had any significant retailer bankruptcies through the first half of this year. The same store increase in the current quarter was offset by lower interest in other income as the prior year included recognition of income on the sale of residential condominiums of approximately $900. Net income from our core retail business for the quarter was $187 million and included fair value gains of just over $70 million. These gains were due to higher cash flows as a result of advancing the valuation models forward by one quarter. Lastly, our opportunistic investments earned $99 million of company FFO compared with $96 million in the prior year. Even with a significant amount of capital returned to us late last year on the successful sale of our European logistics business, our investment in the first real estate opportunity fund earned $23 million of company FFO consistent with the same period last year as a result of higher earnings from our office properties in India and from our U.S. hospitality assets, mainly the Diplomat Hotel in Hollywood, Florida. Our investment in the second real estate opportunity fund generated company FFO of $58 million or $16 million higher than the same period in the prior year. Much of this increase comes from additional investments made through this fund, which we highlight on Page 7 of the supplemental. But in addition to that we benefited from strong operating performance as Center Parcs, our office complex in sole and our U.S. manufactured housing and self storage businesses. Almost 80% of the capital we have invested in our opportunistic business is invested in Brookfield first and second real estate opportunity funds. These funds are currently tracking at a 22% IRR and a 2.3x multiple of capital, which means that the original $3.6 billion committed we expect to have over $7 billion returned to us as fund investments are realized. Net income from our opportunistic business for the quarter was $440 million and included fair value gains of $429 million. These gains were due to the extinguishment of debt related to the sale of the Hard Rock Casino in the prior quarter and due to higher valuations on our North American industrial assets and our India office assets. In comparing our results to the first quarter of 2018, company FFO decreased by $22 million from $268 million earned in that period. This decrease in company FFO was primarily attributable to income from a multifamily merchant build sale on California of $17 million that was earned in the prior period. We continue to make progress building out our core development pipeline with the majority of our incremental capital now being funded through our construction facilities. In addition, we've added a portfolio of storage assets to held-for-sale this quarter as the fund net invested in this portfolio is looking to realize some of the value that has been created. This transaction is expected to close in the third quarter and will generate proceeds to BPY of over $130 million and a realized gain of almost $80 million, representing a 2.6x multiple of capital. In addition, two office properties in Canada, Jean Edmonds Towers in Ottawa and a key terminal in Toronto were also added to assets held-for-sale. We expect these transactions to close in September of this year as well as mentioned previously, we are in the process of selling up to a 35% interest in our New York office in multifamily portfolio. We expect this transaction to generate up to $1.8 billion to BPY in the third and fourth quarter of this year. These transactions are all part of our continued efforts to recycle capital otherwise stabilized office properties with the proceeds being recycled into funding any additional capital requirements and being used to repay corporate level debt. So with that, being the end of my prepared remarks, I'll turn the call back over to you Brian.

[Brian Kingston:]

Thanks Bryan. So turning toward new investments we have made during and subsequent to the second quarter, as most of you on the call would know, last week on July 26, we received shareholder approval for the merge with GGP, and anticipate that that transaction should close by the end of August. The closing will also be launching Brookfield Property REIT, BPR, our new REIT security, as an investment option for public equity investors. The cash component of the transaction will be funded through mixture of acquisition financing and about $4.2 billion of equity that will be provided by our institutional investment partners. The acquisition financing, which has a five-year term associated with it will be repaid over the next 18 to 24 months, through a combination of asset level financings as well as further asset sales. In addition, as announced yesterday, Brookfield's flagship private real estate fund entered into an agreement with Forest City Realty Trust, a diversified U.S. REIT to acquire all the shares of that company for $25.35 a share and then all cash transaction. The Forest City portfolio is comprised of a number of iconic assets across major gateway cities in the U.S. with high barriers to entry containing significant overlap with our existing real estate investment and operating platforms. Of its 100 year history, Forest City has created a high quality portfolio of operating and development assets. And given our scale in multi-sector approach in our expertise, we see a tremendous opportunity here to create further value within these assets to the benefit of BPY and BPR shareholders as well as Brookfield's other institutional investors in that front. During the second quarter, this fund also acquired a European student housing developer and operator with over 4,000 existing beds, primarily in Germany and the Netherlands, as well as the development pipeline in excess of 10,000 additional beds. So in closing, this is an exciting and important time in the evolution of Brookfield property partners following our lunch five years ago. Over that time we've worked hard to consolidate our ownership in various operating businesses, completing the privatization of five listed companies, which provides us with tremendous operating flexibility, and access to free cash flow which we can redeploy into our other investment activities. The integration GGP's premier U.S. small business is the final step in this evolution. And with our substantial enhanced capabilities and expertise across the property sectors, we feel we will be able to execute reconfiguration of the GGP's retail properties into alternator mixed-used assets in a more rapid pace and better financial returns that would've been possible on a standalone basis for GGP. So we look forward to updating you on this transaction later on this month. So with those as our prepared remarks, we will now turn the call over to any questions that our analysts may have. Sandra?

[Operator:]

[Operator Instructions] And our first question comes from the line of Sheila McGrath with Evercore. Your line is now open.

[Sheila McGrath:]

With GGP Forest City, potentially 666 Fifth Avenue, there has been a lot of activity for Brookfield. If you could just give us some insight of how much dry powder Brookfield has in its real estate opportunity funds? And then, also strategically GGP is on balance sheet, Forest City is in fund, if you could just explain to us the different thought process there and how you are prioritizing the fund versus balance sheet?

[Unidentified Company Representative:]

Yes. I think first of all Sheila, it's all on balance sheet. It's really just how we've arranged the partner capital to invest alongside of us. So in the case of Forest City, as I mentioned, its being dump through the real estate opportunity fund, but BPY is a significant investor in that fund. And so we really think of it as a significant amount of investment is going to be on our balance sheet. And as I said, BPY will benefit from what we are driving there. And by putting it in fund, that was really just way for us to partner with these institutional investors through that organized capital. GGP is a little different because we already own the third of it on our balance sheet. The return profile is a little different on that transaction. And as is the whole period frankly, and so rather than having -- it was not really an appropriate investment for that fund. And so as a result, we solicited interest from our institutional investment partners to invest on that one on a direct basis rather than through one of the funds. With respect to capital and availability, because our -- the latest opportunity fund is currently fundraising. You can't really spell out too much detail about that at this point. Probably by next quarter, we should be able to do that because it will be -- and a place where we can talk about it in detail, but suffice to say we have plenty of capital for all of these transactions.

[Sheila McGrath:]

And then just if you could give us more detail on the portfolio of Manhattan office and multifamily. Is that everything you own in Manhattan that’s in this fund? And just if you could explain like how will this flow through a bunch of assets from the core office, will move out into the opportunistic or just explain this new fund strategy?

[Unidentified Company Representative:]

Yes, so let me answer the last part of that question first and I’ll let Ric talk about the portfolio itself and our plans. But opportunistic is really meant to be the healthy investments that we have in these funds that Brookfield is sponsoring in the new investments in. This is really -- this is not a fund per say. This is more a key to what we did in Washington DC a couple of years ago where we were bringing in institutional investors to partner with us. And then rather to bringing in the main one building at a time, it's really bringing in the mid across the entire portfolio or at least a large subset of the portfolio all at once. Now, I’ll let, maybe Ric to touch a little bit on the portfolio composition.

[Ric Clark:]

Sure. Quickly -- effectively, it's all of our core holdings in Manhattan in addition to One Manhattan West, and the first of our residential towers in Greenpoint will be added as well. So it's basically our core holding.

[Sheila McGrath:]

Okay. And then on, …sorry, Ric, go ahead.

[Ric Clark:]

So just the things that are to be developed that are in the portfolio, and also 300 Madison, because it has a self amortizing mortgage on it. So I think everything else effectively is in turn.

[Sheila McGrath:]

And then how did you -- good term in pricing the new investors just come up with it? And what did that mean for Brookfield in terms of returns?

[Ric Clark:]

Yes, so it's like any other partnership structure where we bring in investors into our existing assets. There is a bit of negotiation but to sort of anticipate the next question it's roughly in line with our IFRS pricing of all of these assets.

[Operator:]

[Operator Instructions] And our next question comes from the line of Mark Rothschild with Canaccord. Your line is now open.

[Mark Rothschild:]

In regard to this New York joint venture, would we see management fees that would go to BPY or is this a BAM managed fund?

[Unidentified Company Representative:]

It’s a BAM managed fund. There will be things like property management and leasing fees and that sort of things that all stay with BPY. But to the extent that investors are paying at investment management fee that’s a BAM fee.

[Mark Rothschild:]

And clearly a quite a few properties that you are selling and portfolios that you are selling, and you will -- if I need that I assume for the Forest City transaction, to what extent should we expect leverage to decline or maybe rise over the next year? I think it was in the letter or the press release where you talked about your existing leverage. And just want to know if that’s something that is likely to happen anytime soon with the Forest City transaction?

[Brian Kingston:]

Yes, Mark, this is Brian. We have set out that we do have a target to reduce our leverage, specifically focused on two metrics debt-to-cap to 150% range and debt-to-EBIT down to sort of below 11x. There are few near term objectives that I sort of give 18 to 20 month timeframe that we’re focused on, some near than that, which related to asset sales and using the proceeds of those asset sales to repay some of our corporate debt. As we talked about related to the GGP transaction, there’s a second round of asset sales that we look to execute over the next 18 to 24 months that’s going to repay some of that acquisition level debt. And then I think more or longer term, there’s a few other objectives that we’re keenly focused on. The first off is completing our active development pipeline. Part of that impacts favorably debt-to-cap because it allows us to recognize the full IFRS value related to a brand new stabilized office property in high demand markets. But more importantly, it starts to deliver significant amounts of EBITDA to our results benefit us from a debt-to-EBITDA perspective. And I’d say another longer-term objective as well is the redemption of certain of our capital securities as it relates to the ones that were issued alongside the privatization of Canary Wharf, some of which rating agencies included as debt. Those all get converted into equity over the next five years as well. So I think the combination of those get us towards our target. And I can say it is one of the major objectives that we have set up for ourselves.

[Mark Rothschild:]

And maybe just one more question, when you privatize rails some of the comments you made with that, it’s difficult for a public company when you take properties offline and it would really impact FFO on a big way. And now that you’re doing similar to GGP and talking about undergoing major projects and possible redevelopment some of them out there, to what extent would this impact the FFO you earn from retail in any material way over the next year or two? And also if you have a budget for the size of investment that you see this being over next couple of years, undergo some of these projects?

[Unidentified Company Representative:]

Yes. So it’s little early to be too definitive around the budget and the plans. But what I can tell you is as a general comment is on a standalone basis GGP was investing between $600 million and $700 million a year on these types of redevelopment properties or projects, and that was largely funded out of free cash flow, excess cash flow that they had. They were not picking on any additional leverage that's therein. So that’s really how that the balance of that, like I said, as opposed to looking at what was the opportunity set within the portfolio and how much could you do in that. I’d say from our preliminary planning, that number could be more like $1 billion a year if you’re actually looking what the opportunity set is. So that's probably gives you a better sense for scale of having it within BPY going forward. And obviously we will have the same impact taking these malls offline may have some increase and lumpiness within that core retail portfolio that wasn't otherwise there. But we -- as you know, we’re focused on long-term investment returns. And in the context of a $90 billion asset base, the impact could be on a larger GGP mall as far less than it would be on a standalone basis anyway.

[Operator:]

Thank you. And our next question comes from the line of Mario Saric with Scotia Bank. Your line is now open.

[Mario Saric:]

Maybe just coming back to the balance sheet, to Mark's question, in terms of the target there, some people may calculate leverage metrics a bit differently than they are. So where do we stand on debt-to-cap and debt-to-EBITDA today as you calculated in reference to kind of those targets [indiscernible] metrics?

[Unidentified Company Representative:]

We are in the mid to high 50% depending on whether net cash or whether you include our capital securities as part of that capitalization. And I’d say on that debt-to-EBITDA, we are close to 14x. So these are elevated numbers and on pro forma in the GGP transaction. But their elevated numbers with what we think is clear strategy to bring them back down to what our more normalized numbers for the type of financing that we approach when we invest in real estate.

[Mario Saric:]

And then shifting to the New York City fund, can you highlight the impact going in cap rate on the disposition?

[Unidentified Company Representative:]

It's just below 5%, 4.9% call it.

[Mario Saric:]

Okay. And again to clarify, so this portfolio would include the Eugene, for example?

[Unidentified Company Representative:]

Yes. Eugene is part of it.

[Mario Saric:]

And are you able to quantify the potential quantum of the fee income that would be coming to BPY in terms of first property management leasing to our proceeds?

[Unidentified Company Representative:]

It’s a little and that was property management fees, leasing fees, development construction management fees those kinds of things. So they are little lumpy I’d say. So feel little hard to quantify.

[Unidentified Company Representative:]

Yes.

[Mario Saric:]

And then maybe a higher level question back really to the One Manhattan West project sold back in 2015. You sold the stake -- the 44% stake to QIA. Then they got time eight quarters to stabilize or expected to stabilize the value by 2020 or 2021 about $8.6 billion. Roughly where would that numbers stood today?

[Unidentified Company Representative:]

No specific answer to that one at this stage. But today the Eugene would be close to stabilized value because we are in the process of stabilizing occupancy at 80%. One Manhattan West is at construction cost was a little bit of fair value gains associated with that as we have taken out risk associated with pricing construction contracts and as we have taken out risks associated with the preleasing work that we have done to date. But I'd say there's still a significant amount of value that needs to be -- that will be recognized through that entire complex as we build out -- as we finish off the first tower and build out the second tower. The last comment I would say is 5 Manhattan West, now that we have repositioned that. We have recognized the total value associated with increasing earnings at that property. So a long-winded way of not giving you an answer, but there is still a fair bit to come with respect to specific construction on the first and second tower.

[Mario Saric:]

Got it. Okay. I guess, yes, the genesis of the question was just trying to understand how much of the upside is reflected in IFRI to versus how much may come from it. Okay. And then the -- just in terms of the last question of New York City potential fund, maybe too early to answer, but in terms of additional future asset sales into the fund with Forest City, New York-based assets to qualify for the mandate of the fund?

[Unidentified Company Representative:]

To be clear, the New York City venture is not a fund. So not in the same sense as our opportunity fund, which is out with uncalled capital and making future investments like. This is truly just incentive selling down a 35% interest in one office building at a time. We are doing it in a broader portfolio, so in a number of investors who are interested in a more diversified investment in New York City and a couple of asset classes. So this is not a fund with the future investment mandate.

[Mario Saric:]

Got. So this is not one of the -- some of the core perpetual funds that they’re out in the market?

[Unidentified Company Representative:]

Correct.

[Mario Saric:]

My last question on Forest City for some of us that hasn't followed the story as close as others. The development upside are we as a key driver of the investment, at your last Investor Day, you kind of highlighted for the BPY portfolio FFO upside of $150 million to $175 million through 2021. Can you maybe just talk about kind of the upside from the development standpoint, which again in this portfolio just to provided a context in terms of how public [indiscernible]

[Unidentified Company Representative:]

Yes, so I don’t know that we’re at a) because we don’t even have a transaction in place yet. It would be premature to really give you too much around future expectations on the numbers. And b) I’d say we haven’t really traced it through to what it means on BPY per share number. This is to be clear this is an investment and the opportunity fund, and BPY is an investor in that fund. And so we make business a fairly large one, obviously, but we make investments like this pretty regularly. So we’ll probably have more to say in future quarters, but, again, just a preliminary rate now to say specifically for one transaction in the fund, the impact that's going to have on our per share earnings.

[Operator:]

Thank you. And we do have a follow-up question from the line of Sheila McGrath with Evercore. Your line is now open.

[Sheila McGrath:]

Yes. The shares -- your shares still traded a meaningful discount to your IFRS value. I just wondered if you could give us your thoughts on buyback. And also now that once you close GGP BAM own, I forgot, pro forma, but much lower interest in BPY. Do you think that would mean that BAM would consider buying more BPY shares or what all buyback be at BPY?

[Brian Kingston:]

Well, so on the question about BAM, I think there’s no -- there’s nothing that would prevent them from acquiring shares that they thought they were good value. I am not sure the fact that their ownership has gone down to 52% mix, a difference one way or the other, but it is probably a better question for their conference call, which next week, as what their plans would be. But there’s nothing that would prevent them from doing other reason. It has to be done at the BPY level. Clearly, with the transaction being in the market over the last six months and pretty together the capital et cetera that to close the transaction, a lot of the focus has been around that now that we’ve got that behind us, and I’d say there’s a number of initiatives we have underway to sell assets and surface to more capital. It clearly frees us up to think more about buyback. And as you know, in the past, one of the key challenges has really been around liquidity and our ability to buyback in any sort of meaningful scale, obviously, with the issuance of shares whether it would be BPY or BPR shares. As a result of the GGP transaction, that should help with that somewhat. So I’d say for a lot of reasons, the second half of the year, it really creates an opportunity for us to think more about those buybacks and maybe we have year-to-date.

[Sheila McGrath:]

And then on BPR, I know that and this either mostly black box, you never know, but is it your sense that the existing real estate indices would key BPR as the surviving security for GGP? Or do you have insights on how that will play out?

[Brian Kingston:]

Yes, I’ll be careful not to speak for them but see Russell did put out a press release about a week and half ago that indicated that was their anticipated treatment of it. MSCI is the other big one to think about. We don’t know they haven't put it in press release like that, but it would be reasonable to assume that that would be the case.

[Sheila McGrath:]

And then on the timing of the New York's fund, what percent will be BPY own of these assets? And what is the timing of the close of that transaction, roughly?

[Brian Kingston:]

Yes, so we have sold a 28% interest in the asset. Now within some of those assets we already add partners, so that’s not a 28% interest at the asset level that's 28% interest in our ownership that you would see on the balance sheet at June 30. And we may sale a further 7% interest, so longer-term we would hold 65% of effectively of the ownership that we had at June.

[Sheila McGrath:]

And Brian, when do you think it will close?

[Brian Kingston:]

So 28% has closed and the other…

[Sheila McGrath:]

Oh, it's already closed, sorry.

[Brian Kingston:]

Yes, it closed subsequent to quarter end, but it is closed as of today. And expect the other 7%, hopefully, by the end of the year, but it maybe a little bit into next year.

[Operator:]

And that does conclude today's Q&A session. And I’d like to return the call to Mr. Brian Kingston for any closing remarks.

[Brian Kingston:]

Okay. Thanks everyone for joining us again this quarter. And we look forward to giving you an update next quarter on our call.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. This has concluded the program and you may all disconnect. Everyone have a great day.