Mack-Cali Realty Corporation
Q4 2014 Earnings Call Transcript

Published: 19 Feb 2015

[Operator:]

Good day, everyone and welcome to the Mack-Cali Realty Corporation Fourth Quarter 2014 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to President and Chief Executive Officer, Mr. Mitchell Hersh. Please go ahead, sir.

[Mitchell Hersh:]

Good morning. And thank you for joining Mack-Cali’s fourth quarter 2014 earnings conference call. With me today is Tony Krug, CFO and from our Roseland subsidiary Gabe Shiff, Roseland's Executive Vice President of Finance. On a legal note, I must remind everyone that certain information discussed on this call may constitute forward-looking statements within the meaning of the Federal Securities law. Although we believe the estimates reflected in these statements are based on reasonable assumptions, we cannot give assurance that the anticipated results will be achieved. We refer you to our press release and annual and quarterly reports filed with the SEC for risk factors that could impact the company. First I'd like to review some of our results and activities for the fourth quarter and generally what we are seeing in our markets. Then Tony will review our financial results and Gabe will review our multi-family subsidiary results. FFO for the fourth quarter of 2014 was $0.34 per diluted share and for the year ending December 31, 2014 it was $1.62 per share net of $0.24 in severance charges for executives during the year. During the quarter, we signed a total of 923,000 square feet of lease transactions, including approximately 268,000 square feet of new leases. Our tenant retention rate was 77.3% of outgoing space. We ended the quarter at 84.2% leased, slightly up from last quarters 83.7% leased. For the full year, we signed 450 leases, totaling over $3 million square feet which included approximately 1.1 million square feet of new leases. Our full year tenant retention rate was 53.5% of outgoing space. Rent on office and office flex renewals rolled down in the quarter by 3.6% on a cash basis, compared to last quarters 4.8% cash rolled down. For the year 2014, we had our rent roll down of approximately 4.7%. Office and office flex as well as industrial and standalone retail properties, lease roll-overs for the year 2015 are approximately 10.1% of base rent or approximately $50 million and again that excludes any of the residential components. Our office and office flex leasing cost for the quarter were $3.087 per square foot per year up slightly from last quarters $3.044. For the year 2014 our leasing cost were $3.044 per square foot per year. Despite the challenging office leasing environment, our portfolio continues to outperform in the majority of the markets in which we operate. With our leased rates exceeding market averages in Central New Jersey, Westchester County, Manhattan and Washington DC. We continue to remain focused on growing our occupancy within the office portfolio. At the same time we remain committed to continual reinvestment in our office properties in order to further solidify our position as the preferred provider of office space in our markets. During the quarter, we also continued to make good progress on the execution of our multi-family residential strategy. We increased our presence in multi-family with the opening of a new luxury multi-family community, Portside at East Pier in East Boston Massachusetts. And Gabe will take more about all of that in a few moments. Now I’ll provide some additional color regarding our recent activity and the acquisitions we made during the fourth quarter. Each of these areas highlight the important progress we're making executing our strategic priorities and optimizing our portfolio. In the multi-family arena, as I just mentioned during the quarter we celebrated the opening of 176 unit luxury multi-family community known as Portside at East Pier in East Boston. The opening of Portside marked a major step in creating a dynamic thriving Waterfront neighborhood that captures the character and the heritage of East Boston. The property is the first to open as part of Roseland's larger master planned mixed use Waterfront development which when completed will consist of three buildings and a total of 550 luxury apartments in East Boston Jeffries point. Other multi-family development includes our URL Harborside which we expect to open for occupancy at the end of next year. URL Harborside will feature 763 units overlooking the Manhattan skyline providing innovating housing that maximizes space, reduces energy consumption, and offers close easy access to public transportation. We're excited to get this project underway, it's well along in construction and will be a great amenity to the entire Harborside complex and the region. Turning to our forth quarter acquisitions. I'm proud to announce that during the forth quarter we successfully completed the acquisition of developable land in Conshohocken Pennsylvania for approximately $15.3 million. We look forward to beginning our development of this 310 apartment property in the third quarter of this year. As far as the office sector is concerned, as you k now we are currently in the midst of a $15 million renovation to reimagine the industrial routes at our Harborside, public space and common areas and in our Harborside complex in Jersey City. These renovations are part of a larger effort to re-brand the property in order to adapt to and capitalize on the changing demographics in the region. While we are staying true to the historic roots of the area, we're transforming the property to appeal to the tastes and demands of today's tenants in particular, their millennium work force. We continue to make very good progress on the initiative and we’ll update you further in the months ahead. We also recently announced at Harborside an exciting new transaction with New Jersey City University of approximately 68,000 square feet where they will house their successful business programs. In completing this lease, we're adding a tremendous amenity to the Jersey City Waterfront which will help our office tenants to attract and retain the brightest work force. In addition, between our tenants and future residence of URL, the university has established a built-in base for enrolment. While I already touched on some of the positive leasing developments at Harborside, properties in Northern Central and Southern New Jersey, Westchester, New York and Connecticut all signed significant leases during the quarter. And now I'll turn the call over to Tony who will review our financial results for the quarter. Tony?

[Tony Krug:]

Thanks Mitchell. Funds from operation for the forth quarter 2014 was $0.34 per diluted share and net loss available to common shareholders was $0.10. For the full year 2014, funds from operations was $1.63 per share and net income available common shareholders was $0.32 per share. Included in FFO and net income for the forth quarter was $0.13 per share of executive severance costs. In the forth quarter same-store net operating income decreased by 5% on a GAAP basis and 3.6% on the cash basis. For full year 2014, same-store net operating income decreased by 9% on a GAAP basis and 7.8% on a cash basis. Our same-store portfolio for full year 2014 consisted of 25.1 million square feet of commercial space. Our unencumbered portfolio at year end totaled 206 properties and represents 72.3% of our portfolio on an NOI basis. At year end, Mack-Cali's total undepreciated book assets equaled $5.6 billion and our debt-to-undepreciated assets ratio was 37.25%. In the fourth quarter, the company had interest coverage of 2.2x and fixed charge coverage of 1.9x. Excluding executive severance costs, interest coverage was 2.7x and fixed charge coverage was 2.2x. We ended the quarter with approximately $2.1 billion of debt with a weighted average interest rate of 5.64%. In December, the company retired $150 million of 5% and 8% unsecured bonds which was scheduled to mature on January 15, 2015. Currently we have $33 million drawn on our $600 million unsecured revolving credit facility. We are maintaining the same 2015 FFO guidance mid point of $1.72 per diluted share but have narrowed the range to $1.66 to $1.78 per share. At the mid point, our 2015 guidance assumes percentage lease declining from current 84.2% to about 81% by mid year and up to 82% by the end of the year. Leasing starts of $1.9 million square feet for the year versus scheduled lease expirations of $2.3 million square feet for the year. Same-store net operating income year-over-year 2015 versus 2014 is expected to decrease by about 8.6% on a cash basis and 7.4% on a GAAP basis. We assume no asset sales or operating acquisitions for 2015. Please note that under SEC regulation G concerning non-GAAP financial measures such as FFO, we're required to provide an explanation of why we believe such financial measures are relevant and reconcile them to net income. Available on our website at www.mack-cali.com are our supplemental package and earnings release, which include the information required by Reg G, as well as our 10-K. Mitchell?

[Mitchell Hersh:]

Thank you Tony and now I’ll turn the call over to Gabe for insights into the multi-family platform.

[Gabe Shiff:]

Thank you, Mitch. Roseland's the residential division of Mack-Cali is proud to reflect continued cash flow and value creation growth throughout its platform. I've highlighted in section 5 of the supplemental, the section dedicated to residential activity, we reflect continuous progression of our portfolio to superior asset classifications. In the fourth quarter, there lease up communities representing 1,042 apartment homes achieved stabilization. In the fourth quarter, three in construction communities representing 544 apartment homes commenced leasing activities. In the fourth quarter, construction commenced on a 786 space commuter parking garage at Port Imperial, paving the way for future residential developments at the site. Looking forward, in 2015 the company targets construction starts of approximately 1200 apartment homes representing five communities - already owns or controls with similar projections for 2016. Additionally, in 2015 we anticipate initial starts from successful repurposing of select Mack-Cali office holdings to residential development. On an operating basis, the fourth quarter reflected strong occupancies and revenues across Roseland's approximately 4,940 apartment homes stabilized portfolio which includes the 1,042 apartment homes that achieved stabilization in the fourth quarter. These recently stabilized properties include the 316 home RiverTrace at the Port Imperial Master Plan community, 370 home Chase at the Overlook Ridge Master Plan community and the 355 home Estuary on the Weehawken Waterfront. In total, our operating property portfolio had a leasing percentage at quarter end of 97.3% excluding 30 homes offline for gut renovation. On a same-store year-over-year basis - cash basis, revenues on our operating portfolio increased by 4.75% and NOI increased by approximately 7%. Furthermore, we envision continued growth of our stabilized portfolio in the fourth quarter as in the fourth quarter, three communities representing 544 homes commenced leasing activities, all with projected stabilization dates in 2015. They include RiverParc in Harrison, New Jersey, Portside at Pier One as Mitch recently discussed on East Boston Waterfront and Estuary Phase II on the Weehawken Waterfront. At quarter end, Roseland's in construction portfolio included 1839 apartment homes across five communities and a commuter garage at Port Imperial. This active construction portfolio is projected to generate $51 million of stabilized NOI within unlevered yields of approximately 6.25%. This portfolio represents approximately $825 million in total development activity. Mack-Cali's remaining capital obligation to this portfolio is approximately $102 million. From this construction activity, the company anticipates initial leasing operations in the first quarter of 2015 from the 377 apartment homes station townhouses in Washington DC and 280 apartment home RiverPark in Port Imperial. In 2015, we project six construction starts comprising approximately 1200 apartment homes across five communities and a 364 key hotel in the heart of Port Imperial. This 2015 construction activity all from sites owned or controlled by the company is projected to generating an average unleverd yield inclusive of the hotel of approximately 8%. The company is actively capitalizing this 2015 construction starts. They have an estimated total development cost of approximately $450 million. Utilizing a combination of wholly-owned developments and head's up participatory joint ventures, we currently estimate the company's capital obligation for these six starts to be $75 million of which 56 million is the projected 2015 capital expenditure. Importantly however, the same portfolio of starts is expected to generated approximately $27 million of land received inflows. As such, projected net capital requirements to the company for these starts are approximately $49 million or $29 million in 2015. The company projects initial average ownership of our 2015 target starts to be approximately 40%. So as head's joint ventures will likely contain promoted interest, average ownership potential can exceed 50%. Importantly, our 2015 construction start portfolio like most of our in construction portfolio will not utilize subordinated joint venture structures. In addition to the aforementioned target start activity, we have made material progress on repurposing select Mack-Cali Holdings for residential developments, is synergistic components of the Roseland Mack-Cali combination. More specifically, we're finalizing approvals at two municipalities in New Jersey and one town in the Greater Philadelphia region while pursuing other repurposing possibilities. We look forward to announcing our achievements in the near future and forecast an initial start from the companies repurposing still under in 2015. Acquisition activities for the residential platform as previously discussed has focused on new development opportunities. To that end, in the fourth quarter as Mitch referenced we closed on a shovel-ready side in Conshohocken, Pennsylvania for the developments of 310 apartment homes for approximately $15 million. The project has a 2015 target start. Further, we are under contract for an approved site on Western Massachusetts for the development of 370 apartment homes and for a site in New Jersey for the development of 400 apartment homes. We are targeting 2015 closings for both sites. This morning, we highlighted the continuous transition of the Company’s residential portfolio to more valuable asset classifications within the development cycle. In 2015, we're hopeful to continue this trend with the stabilization of our new lease communities, the commencement of leasing activities from our in-construction portfolio, replacements of new residential communities into construction and the strategic addition of acquired and repurposed communities into our development portfolio. Importantly, as the company accelerates these advancements through the development cycle, the residential platform continues to generate fee income from its construction, developments and management businesses. In closing, we are hopeful for continued progress along Roseland's multiple growth and value creation initiatives. Mitchell?

[Mitchell Hersh:]

Thank you very much Gabe for that insight into our strategy and vision for the multifamily side of our business. Before we open the call for questions, I want to briefly speak to our leadership transition plan. As previously announced back in early November, following the company's annual meeting this coming May 11, I will be stepping down from my positions as President and CEO and as a Director on the Board of Mack-Cali. I'm proud of the significant accomplishments the company has achieved over the past 20 years since our IPO, and the more than 17 years as Mack-Cali. Mack-Cali continues to make great progress. On the execution of our plan to transform and optimize our portfolio to generate long term shareholder value. Although this is my last year as Mack-Cali CEO, I'm confident the company is poised for even greater success in the years ahead. In terms of my replacement, the Board has formed the search committee which is running the search process. The committee has retained Fergusson Partners, a leading executive search firm to assist and identifying my replacement. I'm confident that the Board will identify the right leader to continue building on our momentum, executing on our strategic initiatives, and strengthening the company's already impressive platform. We look forward to providing an update when there is news to report. Until that time, we appreciate your understanding and cooperation. Of course I cannot speculate who my successor may be, the background, or areas of focus or what strategies they might or might not pursue. The focus of our call today has been to report on our financial and operational performance and so I would ask that you limit your questions to those topics. Operator, we can now open the call for your questions.

[Operator:]

Thank you. [Operator Instructions] And we'll now take our first question from Michael Bilerman from Citi.

[Unidentified Analyst:]

Hi, it's [indiscernible] here with Michael. Tony, may be you could just help us to understand what's driving you to tighten your guidance range. It doesn't sound like any of the underlying drivers are changing, so what gives you sort of confidence to tighten it?

[Tony Krug:]

I would say - the simple answer is, you know we are three months further down the road and have a better view of what we expect to happen through the rest of the year. So we’re fairly comfortable and just tightening in a bit.

[Unidentified Analyst:]

And then just question on development, it looks like your cost increase to station town houses but the expecting NOI did not, why would there be that disconnect?

[Tony Krug:]

I guess I would say that, the reality is that the - the really wasn't any change. The 193 that we present in itself is really what our whole investment was based on. The difference is the, the stepped up land basis that we bought into and we thought that 194 presentation in itself was the better presentation of what we entered.

[Unidentified Analyst:]

And last one from me, similar question on the maintenance development. It looks like that also went up, does that have to do with basis increase or is that -

[Mitchell Hersh:]

Yes, it is, we are delaying slightly what we expect the start date of that to be. So there is additional carry cost and so we think the current number better reflects what the ultimate cost will be for that development.

[Unidentified Analyst:]

Thank you.

[Operator:]

And we’ll take our next question from Craig Mailman from KeyBanc.

[Jordan Sadler:]

It's Jordan Sadler here with Craig leading off. Mitch, I just want to say best of luck, I mean it sounds like we may hear your voice on the next conference call but let’s just want acknowledge. Did you give us a sense of timing, it sounds like we don’t know much and I’m not going to spend a lot of time on it but is there an anticipated time frame for the search?

[Mitchell Hersh:]

Search is underway and I've tried to be as clear on to think about it as I can, I really have nothing further that I can offer at this point, search is underway.

[Jordan Sadler:]

That's fair. And then I guess on the multi-family side for Gabe, I guess the incremental disclosure in the section that's been cordoned off in the sub, has been helpful in some level and trying to understand this business to a greater degree. Any thoughts around incremental disclosure on the operating front through an operating statistics front, forgive me, I haven't thoroughly made my way through the sub this quarter but from my initial glance, I didn't see a tremendous amount.

[Gabe Shiff:]

Sure, they are fair question. It is our intention overtime to evaluate the section and we're appropriate to add additional disclosures. I would just highlight that our portfolio is relatively young and it grows rapidly but the lease ups and the stabilizations and new construction activity. So same-store analysis the denominator changes by a fairly high percentage, so we just determining what is the right way to disclose that but overtime we will look to incorporate additional data.

[Jordan Sadler:]

These are stabilized properties at this point right, several of them; right I mean outside of the reposition properties or the development properties, they’re collection of stabilized properties and then the portfolio. And if you want to continue to tell the story, why not just offer some kind of standard measure of operating statistics that the street is accustomed to seeing across, the ten plus public apartment companies that are out there and I'm not saying full supplemental, I'm just saying a handful of statistics, we can relate to?

[Tony Krug:]

This is Tony, just to reiterate what Gabe said, we plan to enhance the disclosure as in essence to multi-family portfolio matures. As you mentioned, we do have a sizable number of stabilized operating communities to both of which Mack-Cali has a fairly small interest in. And the more meaningful results from our multi-family will come in the years. For instance, if we look at Gabe mentioned same-store, if you wanted to compare '14 to '13, we'd have no assets that we owned for both full year period – wholly-owned assets that is. So, I’m just trying to tell you that we will provide more as the portfolio becomes more meaningful to Mack-Cali.

[Craig Mailman:]

This is Craig here with Jordan. Tony just quickly your thoughts on strategies for the almost 160 million of mortgage debt that comes to this year. Do you refinance that with secured debt or actually you have a whole in 2020 may be for unsecured kind of what's the thinking?

[Tony Krug:]

We’re still evaluating that. We will take for the most part everything on the line as we look to see how we are going to kind of roll-out the financing as the year end falls.

[Craig Mailman:]

Great. What do you guys think you would price on unsecured to that?

[Mitchell Hersh:]

This is Mitch. We are as you know investment grade related by three credit rating agencies, so the short answer we would price consistent with the market and both unsecured and secured that's been done in the market with similar ratings.

[Craig Mailman:]

Great. Thank you, guys.

[Operator:]

We'll now take our next question from Jamie Feldman from Bank of America-Merrill Lynch.

[Jamie Feldman:]

Thank you. I guess sticking with that topic, if I read correctly your fixed service coverage and debt service coverage ratios appear to be rating agency typical levels on an annual basis and through them on an incremental basis. Where you see them on a perspective basis and can you tell me about any discussions you’re having with the agencies?

[Mitchell Hersh:]

Well, I can tell you that we have been affirmed in connection with our current rating by all three agencies and you have seen the press releases indicating their outlooks. We don't expect to have any near term further discussion. I would expect that in the spring, we'll begin the process of our annual reviews with the agencies.

[Jamie Feldman:]

Okay. And can you give a little bit more color on the debt of the leasing pipeline in both the suburbs and on the waterfront?

[Mitchell Hersh:]

I would say that, clearly as I indicated in my remarks the suburban markets remain particularly throughout New Jersey and into Westchester but certainly New Jersey remain more challenged than the Waterfront. We have a number of active discussions for very significant amounts of square footage in the Waterfront in both 101 Hudson and Harborside. So, that remains a robust active market and as we reposition Harborside two and three, with the investment that we are doing now in the common areas, I would expect that to increase. Suburban markets remain somewhat flat and very competitive at this point with limited incremental new demand in the markets, generally speaking.

[Jamie Feldman:]

Okay. And how would you frame the magnitude of the leasing pipeline at the Waterfront?

[Mitchell Hersh:]

As I said, there are significant transactional reviews going on now by large corporations, given the economic opportunity act in New Jersey and the [indiscernible] incentives which are quite meaningful. We have what I would consider to be an active pipeline and I’m hopeful that some of that active pipeline translates into signed leases. And that is again a significant amount of activity in terms of corporate consolidations in a number of sectors particularly the financial sector, as well as an incremental increase in demand from the TAMI sector given the rather full occupancy in New York City and some of the outer boroughs. So I think the Waterfront remains very competitive and is being looked at very carefully and very closely by quite a large number of potential users at this point.

[Jamie Feldman:]

Okay. So can you tell us like what's the total square footage under discussion?

[Mitchell Hersh:]

Well we have requirements - and again I can't tell you if and when or when and if they become leased transactions, but as large as 450,000 square feet. So I would say that the pipeline under discussion now is certainly well over a million square feet, and we will obviously be aggressive and responsive as we have been. We are well represented down there with very professional team and an agent. So, we are seeing every transaction we believe that's in the market. We have made some recent successes such as New Jersey City University and expect to have more successes in the future.

[Jamie Feldman:]

Okay. And then I guess for Tony, can you just remind us the CapEx budget for building improvements where it stands today and then just thinking about sources and uses over the next year or two years?

[Tony Krug:]

It’s similar to what we talked about last quarter. I'm projecting about $107 million for building improvements, tenant improvements or leasing commissions in 2015. Relative to funding, it obviously, it will be - the normal cash generated from the business and borrowings under the credit facility where needed.

[Jamie Feldman:]

Okay. Thank you. And good luck down the road, Mitch.

[Mitchell Hersh:]

Thank you very much Jamie.

[Operator:]

And we'll now take our next question from [Scott Frost] [ph] from Bank of American-Merrill Lynch.

[Unidentified Analyst:]

This is just a follow up from some of the debt side. You talked about the rating agencies and what you expect here? I just want to make sure I understand, you would think that it would be a surprise to see some sort of adverse reaction to this particular report is what I’m taking away, but also do you - first of all is that correct? Second of all -

[Mitchell Hersh:]

I'm not sure I understand what that means. What I said specifically was that, we have been recently reaffirmed by the agencies and they have all put out press releases in connection with their outlooks on the company. Traditionally in the month of April, we undergo annual reviews with those agencies and we will present - I don’t think it is related to today's report, I think it is related to that annual review projections on metrics such as net debt to EBITDA and a variety and host of other metrics that we discuss and report on in our annual review.

[Unidentified Analyst:]

Okay. Then let me, I guess, put it another way. On a perspective basis, can you give us an indication of where you would be on debt service and fixed charge coverage? Given the agencies markers with respect to rating's trajectory?

[Tony Krug:]

I think there would be no change based on coverage ratios from where we are today with the agencies.

[Unidentified Analyst:]

Thank you very much.

[Tony Krug:]

You're welcome.

[Operator:]

And we'll take our next question from John Bajani from Green Street Advisors.

[John Bajani:]

Good morning guys. I just wanted to touch on office fundamentals a bit more. So Mitchell, you highlighted the nice retention rate that you guys have this quarter, but your comments to follow suggests that demand is still pretty flattish in a lot of your markets is, was the retention rate this quarter a function of the specific tenants that were expiring or fundamentals picking up to an extent?

[Mitchell Hersh:]

No, I think it was more of a response - an achievement based on the expiration schedule. I mean clearly in our modeling for 2015, we have clearly no move-outs. I guess most notably in the next quarter Prentice-Hall, but among others in 70,000 to 80,000 foot range and demand incremental new activity and demand remains somewhat quiet in the suburban markets in particular. So, we have modeled in about a 2% reduction in occupancy through the year 2015 based on our best estimate of what's happening in the markets.

[John Bajani:]

I guess related to the tax incentive plan to attract new tenants from other state or keep tenants in state. Has that been - in your observation has that been as effective as you’d expected or what’s it going to take to really start spurring demand in the suburbs again?

[Mitchell Hersh:]

Well I think that the economic opportunity act that New Jersey passed has been effective. It is clearly very real economic benefit to tenants. It does have a target areas that are more targeted to urban areas such as the Waterfront and some of the cities that have long, had economic down drafts throughout the state. And so those are more of the target areas that qualify for the higher benefits. The suburban markets, although there are clearly benefits for new companies, their demand has just been, somewhat soft and companies have consolidated in a number of cases, such as, the Prentice-Hall situation. Some of the pharmaceutical companies although showing some signs of life at this point have been the victim if you will of huge consolidation in the large pharmas, which have reduced space needs and put more effective inventory in the market from some of the previously occupied and owned facilities of some of these pharmaceutical companies. So, the response to what it's going to take is continued a positive momentum in the economy, certainly in New Jerseys case where New Jersey continue it’s economic incentive programs. And hopefully we will begin to see some improvement in the fundamentals in some of these suburban markets. As we all noted in our remarks have continued to reinvest in the asset base significantly to keep our assets pristine and at the highest quality within the markets and our financial flexibility gives us the advantage of being able to do that as well as being very competitive with the tenant base.

[John Bajani:]

Thanks Mitchell. I guess just one last follow-up to that is to the best of your knowledge do you think we’re more or less done with the pharma consolidation ways and I guess the same for telecom or do you think there's more going down that path.

[Mitchell Hersh:]

No, as I indicated I think that we’re beginning to see some life in the pharma arena. Certainly we have now a constituency of both foreign and domestic pharma companies that in essence we’re seeing some growth and some expansion in that. So, I believe the bottom has been reached and the point of inflection has well been reached. In terms of telecommunications I don’t see much change, some of the mergers and consolidation haven't been successful, because of variety of issues, which have actually benefited the leasing markets, because we haven’t seen the redundancies that could have resulted from some of the consolidation. So that's been actually a positive areas that we see expanding, clearly technology at healthcare is in expanding industry within the region. So hopefully some of those industries will begin to provide some traction for more positive momentum in fundamental improvement in our markets.

[John Bajani:]

Thanks for the color Mitchell, that's it from me.

[Mitchell Hersh:]

You're welcome.

[Operator:]

And we'll now take a follow-up question from Michael Bilerman from Citi.

[Michael Bilerman:]

Good morning Mitch. I have a question and I know you don’t want to sort of comment any more on process to see search process. But perhaps just as a suggestion to your fellow Board members that if an announcement is not made between now and the next public appearance next conference call in late April, that you are joined by Board member so that they can at least inform the street in terms of the process, the timing and things like that because I don’t think from a market perspective and uncertainty perspective, if you are turning over the keys on May 11, then successor is not named by then, it just creates a lot of uncertainty. And I would think that the Board of Directors and you as an key shareholder would want to have that information to public domain?

[Mitchell Hersh:]

Duly noted we'll take it under advisement. Thank you.

[Michael Bilerman:]

Thank you.

[Operator:]

And with no further questions, I will now turn the call back over to Mitchell Hersh for any closing comments.

[Mitchell Hersh:]

Great, I appreciate all of you joining today's call. We look forward to updating you in the near term. Thanks very much. Have a good day.

[Operator:]

This does conclude today's conference. Thank you for your participation.