Douglas Emmett, Inc. (DEI) Q3 2026 Earnings Call Transcript

Operator: Ladies and gentlemen, thank you for standing by. Welcome to Douglas Emmett's quarterly earnings call. Today's call is being recorded. At this time, all participants are in a listen-only mode. After management's prepared remarks, you will receive instructions for participating in the question-and-answer session. I will now turn the conference over to Stuart McElhinney, Vice President of Investor Relations for Douglas Emmett.

Stuart McElhinney: Thank you. Joining us today on the call are Jordan Kaplan, our Chairman and CEO, Kevin Crummy, our CIO, and Peter Seymour, our CFO. This call is being webcast live from our website and will be available for replay during the next 90 days. You can also find our earnings package at the Investor Relations section of our website. You can find reconciliations of non-GAAP financial measures discussed during today's call in the earnings package. During this call, we will make forward-looking statements. These forward-looking statements are based on the beliefs of, assumptions made by, and information currently available to us. Our actual results will be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control or ability to predict. Although we believe that our assumptions are reasonable, they are not guarantees of future performance, and some will prove to be incorrect. Therefore, our actual future results can be expected to differ from our expectations, and those differences may be material. For a more detailed description of some potential risks, please refer to our SEC filings, which can be found in the Investor Relations section of our website. When we reach the question-and-answer portion, in consideration of others, please limit yourself to one question and one follow-up. Thank you. I will now turn the call over to Jordan.

Jordan Kaplan: Good morning, and thank you for joining us. We've now had our fourth consecutive quarter of positive absorption, with almost 1 million square feet of office leasing. Our strong leasing this year is now translating into increased office occupancy. During the quarter, we grew occupancy by more than a full point, our largest quarterly gain since 2012. We still have a high occupancy backlog, as our leased-to-occupied spread is almost double our historic average. Our apartments continue to be a growth engine. Our portfolio remains fully leased, with same-property cash NOI over 4% higher than last year. Despite a challenging loan market, we have successfully refinanced $1.2 billion of loans over the last nine months. During our entire 40-year history, we have never had a debt default or short pay. This track record has been key to our continuing ability to access debt and equity capital on better terms than are typically available to the broader market. We are optimistic, even though the macroeconomic climate remains murky. Office occupancy has begun to recover, our leasing pipeline is quite healthy, and our NOI has essentially recovered to its 2019 level. Credit for that goes to our very strong operating team. Our biggest challenge is interest rates. With our average cost of debt increasing from 3%-5%, we now spend over $135 million more on interest than we did in 2019. This alone equates to nearly all of our FFO decline since our 2019 FFO high watermark, despite lower office occupancy. Even if interest rates don't eventually moderate, we believe that rising occupancy and our residential developments under construction can drive our FFO back to its 2019 level and beyond. That estimate does not include the accretive impact of our entitled residential land bank or accretive acquisitions using our private equity platform. During multiple downturns over the last 40 years, we have made generational acquisitions by having dry powder at times when other buyers and owners were capital-starved. We have already made two great acquisitions in the current market and believe additional similar opportunities will surface soon. As they do, we will be ready. With that, I will turn the call over to Kevin to discuss our refinancing and redevelopment activities.

Kevin Crummy: Thanks, Jordan, and good morning. In August, we refinanced a $366 million office loan. The new non-recourse loan has a four-year term with interest effectively fixed at 6.24% until September 2029. This brings the total debt we have successfully refinanced so far this year to over $1.2 billion. Our apartment redevelopment projects remain on track to add over 1,000 units over the next few years, including 712 units at the Landmark Residences in Brentwood and up to 323 units at 10900 Wilshire in Westwood. We also continue to evaluate other development opportunities within our existing portfolio. As Jordan said, and it is worth repeating, as more owners are forced to navigate this challenging capital-constrained environment, we expect to see more of these typically rare opportunities to buy high-quality buildings at very attractive values. With that, I will turn the call over to Stuart.

Stuart McElhinney: Thanks, Kevin. Good morning, everyone. Our strong leasing again produced positive absorption, increasing our leased rate to 80.4%, including Studio Plaza. During the third quarter, we signed 224 office leases totaling almost 1 million square feet. Including 142 renewal leases totaling over 724,000 sq ft and 82 new leases totaling almost 272,000 sq ft. Reflecting our leasing over the past year, our occupancy improved by more than a full percentage point during the quarter to 76.7%. As Jordan mentioned, our occupancy backlog remains unusually strong, with a 370 basis point spread between our leased and occupied rates at quarter end. The straight-line value of leases we executed in the quarter increased by 1.8% compared to the prior leases for the same space, with our typical 3%-5% annual fixed rent bumps more than offsetting the impact of lower beginning cash rents. Our lease transaction costs averaged $5.26/sq ft per year, well below the benchmark for other office REITs. Our residential portfolio continues to perform exceptionally well, with cash same property NOI up 4.4% and the portfolio over 99% leased, reflecting strong demand across our markets. With that, I'll turn the call over to Peter to discuss our financial results.

Peter Seymour: Thanks, Stuart. Good morning, everyone. Compared to the third quarter of 2025, revenue increased from $251 million-$261 million. FFO increased from $68.5 million-$69.6 million. AFFO decreased from $52 million-$47 million. And same property cash NOI decreased 3.1%. At approximately 4.6% of revenue, our G&A remains the lowest among our benchmark group. Turning to guidance, we still expect our 2026 net income per common share diluted to be between $-0.20 and $-0.16, and our fully diluted FFO per share to be between $1.39 and $1.43. For information on assumptions underlying our guidance, please refer to the schedule in the earnings package. As usual, our guidance does not assume the impact of future property acquisitions or dispositions, common stock sales or repurchases, financings, property damage insurance recoveries, impairment charges, or other possible capital markets activities. I will now turn the call over to the operator so we can take your questions.

Operator: Again, in consideration of other participants, please limit your queries to one question and one follow-up. Thank you. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. First question today comes from Alexander Goldfarb with Piper Sandler. Please go ahead.

Alexander Goldfarb: Hey, morning out there. Jordan, can you just talk about, you guys obviously have done a very good job growing the occupancy from second quarter to now, and 1 million square feet for the past four quarters. Can you give us a sense of how much signed but not yet commenced office leasing that you have? Just trying to get a sense for what the earnings ramp would be, how much leasing you've done that hasn't yet taken effect.

Jordan Kaplan: Well, I mean, the spread between leased and occupied is what—

Stuart McElhinney: 370 basis points.

Jordan Kaplan: 370 basis points. That is kind of high for us. I think Stuart said that in his section. I mean, like normal, maybe 100 basis points, 150 basis points. Low is below 100 basis points, which is a drag, right? Because it means either you're totally full, which is fine, or you're not doing a lot of new leasing, right? 350 basis points is a very good sign. You should always be happy with a big spread there because it means we're leasing kind of faster than where we're occupied and faster than with new deals. It represents new stuff. So, there's a good run on that, but I think even more interesting is that our pipeline is still very good. I mean, we feel very good about it, and we feel very good going forward. That's the best news. I mean, because we've been very direct with you guys as the pipeline has moved, because obviously we're a month or so into the quarter, and it still looks very good. When it's been bad, we've been saying it looks bad, but it looks very good.

Alexander Goldfarb: Then just following up on that, as we think about the cadence and how this leasing comes online, I mean, you guys are small tenants, so it's probably pretty quick within maybe two quarters or so, two, three quarters. But is there some pace, Stuart, that you would give us so that as we think about this strong leasing that you've been doing, what the ramp is? Because obviously there's normal portfolio churn. Just trying to get a sense for how quickly this will come in as we gauge earnings into next year.

Stuart McElhinney: Yeah, I think we're happy with that wide spread. I don't think we want to give kind of timing on what that means for how quickly it comes in. You're right to say that most of the leases are pretty small. So, of the leases that we've signed that are not commenced, I think basically all of them will commence over the next four quarters. So, that'll give you a good sense. There's not too much that's much longer out than that, and I think the next one or two quarters is the majority of it.

Alexander Goldfarb: Thank you.

Operator: The next question comes from Steve Sakwa with Evercore ISI. Please go ahead.

Steve Sakwa: Yeah, thanks. Maybe to follow up on Alex's line of questioning on leasing, the new leases is really kind of key to kind of building the occupancy at the company. I know it's kind of lumpy, but it has come down a bit, Jordan, from the first quarter to the second quarter to the third quarter. I know it can be a function of maybe a few larger-sized deals maybe slipping, but can you maybe just talk about the dynamics of some of the larger deals, and are you seeing more of them, and what would your outlook be kind of moving forward on those larger deals?

Jordan Kaplan: Well, we're definitely seeing more of them. Some of it's a function of the fact that Studio Plaza just gets larger deals. But throughout the whole portfolio, we're getting larger deals. And larger deals have some good impacts and some not as good, right? The good ones are you get big chunks of space leased, but on the other side, they're going to negotiate higher TIs, and they're also a little slower to move in. But I feel I can't tell you. We had one quarter with an enormous amount of new leasing, but I don't think what you're kind of alluding to of a downhill trend in terms of new leasing, I don't think we're feeling that. I think we're feeling a little bit of like too much quarter-to-quarter. I think we'll end the year with a very good average across the four quarters of new leasing and lease rate gain, I'll call it. Maybe I should just answer your question and stop there. I was going to keep answering with something else. Go ahead.

Steve Sakwa: Okay. Then maybe you mentioned like the apartments, you are obviously very full. You have got a couple of projects underway, the conversion as well as Barrington. How do you think about new apartment starts, and where would your return hurdle be, or have you changed your return hurdle to, say, start a new apartment development project today?

Jordan Kaplan: I think our return hurdles were always high enough that they were beyond anything that like most people were doing, and they are still not far off from what, if someone could get it, they would do today. We have told you we are doing a lot of this stuff at eight caps and better, and we are. Now, of course, we own the land, and buying the land, and especially for kind of developers who are trying to build and sell, you have the punitive transfer taxes and a bunch of other things that we are not really subject to, right? We already own the land. They have made the entitlement side cheaper. We are in a position to still, other than the cost of debt, to still be able to be very accretive new development. We have told you that and said we continue to look at new projects. Although I mentioned in my portion of the script that I think we will, with what we have going on now, we can recover our FFO. Even with these high interest rates, we can recover our FFO back to and beyond where we were in 2019. That does not even include taking on new resi development projects, which are very accretive, which you are about to see, for instance, with respect to Barrington and the partnership deal that we are in on Murdock. Of course, that also does not include new deals that we do with our equity partners that are of the ilk of like the Bedford deal. We just think we can get there simply out of completing the two projects we have going now that are very accretive, or two or three, I guess. Barrington, it is not called Murdock anymore.

Kevin Crummy: 10900.

Jordan Kaplan: Yeah, 10900, then finishing leasing up Studio Plaza. Remember, Studio Plaza and Barrington were a huge reduction in our FFO when both of them went offline. When you ask about new development, I mean, I put the stuff we are doing now to be super important and our first priority to get our FFO back to where we want it, but we still have that stuff too. I actually think even at this time, that stuff could still make sense for us. Too much of an answer, or did I answer your questions to you?

Steve Sakwa: No, man. It sounds like you can make the deals pencil, I guess. Are you more inclined to want to start another residential project right now, or do you feel like you have a lot on your plate getting Barrington to the finish line?

Jordan Kaplan: Oh, no. I mean, I feel like I'm not more inclined to start another residential project right now, but we are in full construction and the rest of it. But we are doing some preparatory work on two sites, just kind of planning style work and architectural work. But we're not going to start anything till we get a lot of the stuff that we're working on now completed.

Steve Sakwa: Great. That's it. Thank you.

Jordan Kaplan: All right.

Operator: The next question comes from Nicholas Yulico with Scotiabank. Please go ahead.

Nicholas Yulico: Thanks. Good morning. I guess first question is just on the balance sheet and thinking about, I guess, the maturity you have next year, the JV loan. You also have a swap maturity early next year. Plans for both of those and how we should think about kind of all-in rates, versus what you just did that $360 million at 6.25%? Thanks.

Jordan Kaplan: Well, in terms of all-in rate, I mean, you guys have You literally have the same amount of information we do. We have a great schedule that shows you all the loans and when swaps burn off and all the rest of it, and you guys can make determinations about where you think we'll end up. You know we've been refinancing at spreads between 1.70% and 2.25% over, and swapping out three to four years. That I'll leave you, and we'll obviously give guidance on it, next quarter. In terms of the loan that's coming up, as we've been able to do with all our debt, and it's kind of one of the last ones of this whole like roll-up, we'll refinance it, and obviously the rate will move up. There's no sort of debt jeopardy there. It'll just get refied. We're already in those discussions, and we'll get it done. We're actually kind of working on some things to even move a little farther out to buy out some years. But we're super comfortable about being able to refi the rest, anything that's coming up, and we're super unhappy about where interest rates are.

Nicholas Yulico: Okay. Yeah. Got it, Jordan. I guess second question is just on Landmark and 10900 Wilshire, the development portfolio there. How much is left to fund on those two projects, and are you still thinking that you could get some level of proceeds back from the insurance litigation? Thanks.

Jordan Kaplan: We're like right on target or a little better. I think we put the balance of the construction loan as of the end of last quarter in our schedule. We'll use the construction loan, and it will fund like finishing the buildings. Okay? We're in good shape there on funding. What was the second part of your question?

Nicholas Yulico: About the potential insurance litigation proceeds.

Jordan Kaplan: Yeah. I mean, of course I do. I wouldn't be continuing to pursue the litigation. But the number of times I've been wrong where I thought this was a slam dunk in front of the courts, you need more than one hand to count on. So, yeah, I don't understand how we lose that, but, whatever. That's going.

Operator: The next question comes from Blaine Heck with Wells Fargo. Please go ahead.

Blaine Heck: Great. Thanks. Jordan, might be a little early to ask, but I'm going to anyways. I guess in light of yesterday's elections, can you talk about whether anything changes materially for your business in L.A., particularly around residential conversion approvals or ground-up development or even rent regulation, and whether there are any specific outcomes that could move projects forward in your pipeline or even change the level of political spending that we should expect in G&A next year?

Jordan Kaplan: There might be some political spending in G&A next year because we still have transfer taxes to deal with statewide. We got very close, and I think we can win that one. I think there's a deal there to be made. The rest of the stuff with the state, at least in conversations I've had with now Governor Becerra, I think are probably going in an okay direction for us. I don't know what's going to happen locally, although locally depends a lot more on council and some other things. That's in terms of that stuff. Federally, I think that people are feeling now that some of the more inflationary things that the federal government's been pursuing are going to be forced into moderation. That's super big for us. I mean, I said in my notes, it's all about the cost of debt and interest rates and how much they've moved up on us. I think I'm kind of optimistic now. I thought we'd have to wait two years before someone really did something to get control over all that. I think now we're going to see something happen in the next couple years that will start a process that will be probably pretty good for the economy and get us into a less inflationary and less of an up arrow on interest rates. I'm very optimistic for that. We'll see if the House and the Senate are able to kind of push some stuff through or make deals that get that happening. It's the biggest thing for us. That's the biggest thing.

Blaine Heck: Great. That's helpful. We noticed the amount of space expiring in 2027 came down pretty significantly this quarter. Can you just talk about how much of that early renewal activity was driven by tenants coming to you versus an intentional push by you guys to address those a little bit early, and how you think the economics of those early renewals compare with what you might have been able to achieve if you waited closer to the natural expiration?

Jordan Kaplan: Well, to say we start a year early trying to renew people probably understates it. A lot of what happens at the buildings is, the day the guy moves in, we're thinking about the renewal and we're trying to give a level of service that makes him want to renew. By the way, it's reflected, right? We're like 70% renewal, year in and year out. Have we done more than that? I don't know that we've done more than that. In terms of the economics going forward. I don't think we spend a lot of time trying to determine if we wait or whatever, what the future economics would be on a lease. We want to be full. We want our buildings full. We'll make deals today that keep our buildings full, even if we're extremely confident that rents are going to be up next year. We want to lease up the portfolio. That is such an overwhelmingly dominant goal that I don't think anyone would even consider if a tenant was ready to go to say, "Let's stall it and hope that rates rise.

Blaine Heck: Thanks, Jordan.

Jordan Kaplan: Thanks.

Operator: The next question comes from Rich Anderson with Cantor Fitzgerald. Please go ahead.

Rich Anderson: Hey, thanks. Good morning. Jordan, you just mentioned, you nicely lead into my question, my first question, 70% tenant retention. How do you move that number up? Besides price, obviously, why are people leaving, and what can you do to turn that 70% into 80%? Or is it just frictional stuff that's unavoidable, and that's just the way the cookie crumbles in your world?

Jordan Kaplan: You know I run the company with a partner, Ken Panzer. The two of us run the company. You are on Ken's favorite subject. Ken wants to find a way to increase the renewal rate. It is enormously difficult because it's already at a high level. I'm not going to bet against him, but he really has thought about that and is thinking of ways to do that and is always trying things out. We want to increase that. But more important, the way we're moving up our lease rate is real aggression on large and small tenants and going after them, just going after them. I'm seeing it. I see Ken is doing leases again. He oversees a huge amount. He is down calling on leases right now. He wants leasing, and I see it happening. He's got that whole team. On Halloween, they had one team that did a song, and the repeating phrase was, "Leasing, leasing," which he's saying in every meeting. We're super focused on it right now and getting the lease rate up. That's the best I can tell you in terms of those two things.

Rich Anderson: Okay. All right. Second question, I got a couple, but I only have one more. If Barrington or whatever, what's it called now? Landmark.

Jordan Kaplan: Yeah, Landmark Residences.

Rich Anderson: Yeah. That's a kind of two or three-year process. How far inside that will Studio Plaza be done, do you think, in terms of it being fully leased up?

Jordan Kaplan: Well, I'm so bad at making those predictions, but I think we'll be in a very good position, certainly within the next four quarters and maybe within the next two. These are big leases. They have to move in and do the rest of it. So, for the income to roll in, might even take a little bit longer.

Rich Anderson: Okay. Fair enough. Thanks.

Operator: The next question comes from Jana Galan with Bank of America. Please go ahead.

Jana Galan: Hi. Thank you for taking my questions. Following up on the interest rate environment potentially causing investment opportunities, could you provide some parameters on what you're looking for? Would it be stabilized buildings, redevelopment opportunities, any new sub-markets?

Jordan Kaplan: Yeah. We're looking for super class A office at discounts we haven't seen in decades. But super class A. We'll pay for them. We'll be paying for them, but we'll be paying a lot less than we would have over the last 10 or 15 years or even more. I think that's just an incredible opportunity. We know the list of buildings we want. We're talking to them. We're chasing very large deals. Very large, super class A deals. [Office] Yeah, go ahead.

Jana Galan: I was going to ask any apartments, but thank you for clarifying.

Jordan Kaplan: No. No. No. We will not buy apartments. Apartments are still trading at higher cap rates than historically, but still not very high cap rates. Call it a five, maybe even high-fours. We just think we can build at much better, much more accretive cost than that.

Jana Galan: Thank you. Then maybe just kind of in terms of the capital that's looking to potentially partner with you, curious what that looks like in terms of capital raising.

Jordan Kaplan: That environment is excellent. We owe them more deals. That's where that's at. They know the stuff we're chasing, and they're more than ready. They want to come in and tour it. They're more than ready. We got to make the deals, though.

Jana Galan: Thank you.

Operator: The next question comes from Seth Bergey with Citi. Please go ahead.

Seth Bergey: Hey, thanks for taking my question. I guess just to kind of follow on that similar line of questioning, how are your IRR expectations, or how do you think about what returns you are trying to solve for when you look at those kind of Class A office opportunities that are out there?

Jordan Kaplan: Well, we are obviously going in with much higher yields than historically we would have been able to. In terms of long-term IRR, that has a lot to do about your optimism about office and office rates and what is going to happen in these markets. But I think we are looking at some pretty good all-cash and leveraged IRRs. As you guys know, we do not use very high leverage. Leverage at these rates, you got to be at a very good all-cash IRR for leverage to help it. I think we are feeling that those numbers also in that world are historically high.

Seth Bergey: Great. Then maybe just going back to kind of the leasing activity you've done and that 370 basis points, just given a lot of your deal sizes are smaller, how kind of quickly do you kind of anticipate that pipeline converting into occupancy?

Stuart McElhinney: Seth, yeah, I think of the leasing that's not yet occupied, most of it should move in over the next three quarters.

Seth Bergey: Great. Thank you.

Operator: The next question comes from John Kim with BMO Capital Markets. Please go ahead.

John Kim: Thank you. On the acquisitions, should we assume you are going to be funding that with a JV partner? How do you look at the earnings accretion versus share repurchase?

Kevin Crummy: Yeah, we have historically done things, especially larger transactions, with JV partners, and they are the best source of capital out there right now, and I do not know why we would change that.

John Kim: Yeah, I just want to make sure, because you talked about very attractive IRRs, so thanks for confirming. Looking at your cash spreads, I guess it is not a big surprise that they are negative given 3%-5% annual escalators or fixed rent increases. When do you expect market rents to exceed that 3%-5% level so that cash spread figure improves?

Stuart McElhinney: Yeah, I think at 80% leased, as Jordan has been emphasizing, we are very focused on leasing and occupancy at this point in the cycle. So, once that leased rate has a strong up arrow on it and we are moving up in the mid-80s, then rents will likely follow at that point, and you could see that turn around. But at this point in the cycle, you said it right, with our bumps, 3%-5% bumps, ending rent is 12%-16% higher than it started. It is very hard to have a positive cash spread with those built-in escalators. So, it is not unsurprising that they are still negative. We are very pleased that the overall straight-line values has remained positive, so the leases on average are still more valuable. But we are really focused on occupancy, and rate will follow once we have got a good trajectory there.

John Kim: Okay. Thank you.

Operator: The next question comes from Upal Rana with KeyBanc Capital Markets. Please go ahead.

Upal Rana: Great. Thanks for taking my question. Jordan, on the large Class A office assets that you're pursuing, are any of those in new markets, or are you sticking to L.A. for the time being?

Jordan Kaplan: Well, it's correct to say we're sticking to L.A. But within L.A., the markets in L.A., it's generally in even in markets, there's one deal that's in another market I've always wanted to be in, but that's in L.A., really should count as Westside. Other than that, yes, it's like Westside L.A.

Upal Rana: Okay, great. Then maybe on touching on tenant industries, maybe you can give us an update on which ones are currently driving the most demand and where you're seeing expansions versus downsizing.

Stuart McElhinney: Yeah, pleased to see that we're still seeing expansions easily outpacing contractions, and that's been true for several quarters. Demand remains very strong across our diverse group. That pie chart that we give you is still very instructive. It's legal, it's accounting, finance, entertainment, all very good and very active.

Operator: The next question comes from Dylan Burzinski with Green Street. Please go ahead.

Dylan Burzinski: Hey, guys. Appreciate your comments on sort of the demand backdrop, but I guess just maybe looking at it a little bit deeper. When you guys sort of look at your pipeline and specifically focusing on sort of new leases or vacant space leasing, of that demand, would you say most of it, or could you break it down by percentage on new-to-market tenants, expansionary versus sort of musical chairs within a market and you guys taking share? Then I guess as you sort of think about the near-term recovery, is it such that you guys need to see a continuation of just broader market-wide demand growth in order to sort of achieve some of your goals on that front?

Jordan Kaplan: Well, I mean, if you look at what the sort of the public kind of market lease rates are being published by the big brokerage firms, I do not think anyone is stealing from anywhere. I think it is like growth. Now, whether it is organic and people expanding or whether it is coming from the outside and new leases come in, I think both those are happening in our portfolio. I mean, we are also taking tenants from other buildings, but it is super hard to figure out, other than to compare our growth and what is going on in the submarkets that we are in to say they. I mean, I do not see. As we move up, they seem to be moving up. So, we are probably not robbing Peter to pay Paul. We are probably seeing a return of market strength. I think that is also reflected in the fact that even when we have a kind of very big, very, very big fly trap. I mean, almost everything that flies in, we can get a grab on. But we were not able to get large deals going until large tenants just started doing deals. Trust me, we would have been willing to take them out of other buildings. So, I think now we are seeing people kind of expand or come back in or whatever the case may be, or open a new office because they want everyone. I do not know what all the list of stuff is, but we are seeing a lot of deals that I do not think we are looking and going, "They came out of here to go here." But we are saying they came out of here to come to us too. I think they are both happening.

Dylan Burzinski: Great. Thanks, Jordan.

Jordan Kaplan: All right.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Jordan Kaplan for any closing remarks.

Jordan Kaplan: Well, all I will say is thank you all for joining us, and I look forward to speaking with you again in three months. Goodbye.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.