Boardwalk Real Estate Investment Trust (BEIUN) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Boardwalk Real Estate Investment Trust Third Quarter 2022 Earnings Conference Call. [Operator Instructions] This call is being recorded on November 9, 2022. Now I'd like to turn the conference over to Eric Bowers, VP of Investor Relations. Please go ahead, sir.

Thank you, David, and welcome to the Boardwalk REIT 2022 Third Quarter Results Conference Call. With me here today are Sam Kolias, Chief Executive Officer; James Ha, President; Lisa Smandych, Chief Financial Officer; and Jeff Klaus, Vice President of Asset Management and Development. Please note that this call is being broadly disseminated by way of webcast. If you have not already done so, please visit bwalk.com/investors where you will find a link to today's presentation as well as PDF files of the Trust's financial statements, MD&A as well as supplemental information package. Starting on Slide 2, we would like to remind our listeners that certain statements in this call and presentation may be considered forward-looking statements. Although the expectations set forth in such statements are based on reasonable assumptions, Boardwalk's future operation and its actual performance may differ materially from those in any forward-looking statements. Additional information that could cause actual results to differ materially from these statements are detailed in Boardwalk's publicly filed documents. I would like to now turn the call over to Sam Kolias.

Thank you, Eric, and welcome, everyone, to our Q3 2022 conference call. Starting on Slide 4. Our performance with our GAAP and non-GAAP measures of FFO per unit, net asset value and unit holder equity and fair value of investment properties, all seen an increase from the prior quarter last year with the exception of profit as a result of noncash accounting adjustments for fair value relative to the prior quarter last year. Slide 5. Our Q3 2022 FFO per unit growth is at 7.6% from the same quarter last year, reflecting stronger apartment rental fundamentals in our core markets. Slide 6, our strategy to create value for our stakeholders begins with our people. We are so grateful for our extraordinary team who continues to innovate and deliver our places, homes for our resident members. In turn, this leads to leading earnings performance, which we believe will continue to result in strong total returns for our stakeholders. Our strategic focuses are significant organic growth from utilizing our proven platform that focuses on operational excellence to optimize NOI growth. When we pair this with the current improvement in apartment rental market fundamentals on a solid foundation of some of the most affordable rents in Canada, we are well positioned to continue to accelerate on our organic growth trend. Accretive capital recycling focuses on opportunistic investment into acquisitions, development and investment into our own high-quality existing portfolio with a tactical unit buyback. These opportunistic investments, combined with our operational optimization have positioned Boardwalk for increasing asset values within Boardwalk's diversified and high-quality multifamily portfolio. Our solid financial foundation provides flexibility on our balance sheet with our growing free cash flow and with CMHC insurance on 95% of our financing, which provides access to low-cost mortgage capital with reduced renewal risk. Slide 7. We are delivering solid growth. Boardwalk's existing exposure to strong rental demand, non-price-controlled markets with increased immigration, significant organic growth at Alberta and Saskatchewan have some of the most affordable rental rates in the country with limited new supply versus demand in both international and interprovincial migration. Rising interest rates making homeownership more expensive and rising construction costs are all widening the gap between our replacement cost of our assets and our current evaluation. Construction levels remain low relative to historical levels supported by a stronger demand for housing. Our largest market, Edmonton, has seen significant occupancy gains contributing to our solid performance. Apartment rental fundamentals continue to improve with lower vacancy and new incentives almost disappearing along with the continued drop in the existing incentives. All of our other markets have high occupancy and strong apartment rental fundamentals. Slide 8. Alberta continues to have a significant amount of job vacancies in several sectors. Housing affordability continues to attract companies and contributes to significant positive in-migration. Headlines continue to reflect a diversifying economy that some economists predict will avoid recession. Slide 9 shows our large presence in affordable and non-price controlled markets with Alberta and Saskatchewan representing 62.5% and 10.4% of our portfolio. Boardwalk's current mark-to-market, which includes the reduction of incentives, averages $143 per suite and equates to a significant $55.6 million revenue opportunity. Slide 10. Occupied rents in Alberta adjusted for inflation are at the same levels as March 2016. There remains a significant gap between occupied rents and the change over consumer price index over the last 8 years. Slide 11 shows our high affordability in our core Edmonton and Calgary markets are rent below 30% of medium rental household income. This slide also shows how balanced our supply is with higher demand of in-migration in our core markets. Slide 12 shows our improving occupancy as a result of improving apartment rental fundamentals in all our key markets. Move-outs versus last year are also dropping as our retention increases. Slide 13 shows our key operational metrics with higher occupancy, lower incentives, higher occupied rents resulting in higher revenues for the quarter. Slide 14 shows continual improvement in net new and renewal rental rates. Year-over-year, we have seen a significant improvement. Slide 15 shows the 2.3% sequential quarterly revenue gain, up from 2.2% last quarter, reflecting strong apartment rental fundamentals for all our markets. We would like to now pass the call on to Lisa Smandych, who will provide us with an overview of our portfolio performance, balance sheet and repositioning results. Lisa?

Thank you, Sam. Moving to Slide 16. For Q3 2022, same property net operating income increased by 5.2% as compared to Q3 2021. An increase in operating expenses of 4.3% primarily the result of increased wages and salaries and property taxes was more than offset by revenue growth of 4.9%. In particular, with the increased rental demand in Edmonton during the summer leasing season, the Trust incurred higher operating expenses to meet demand, which has positioned our Edmonton portfolio with higher occupancy heading into the fall and winter. In addition, property taxes were higher in Edmonton as a result of the timing of the municipalities assessments and payments. Overall, portfolio-wide, we expect a year-over-year increase of approximately 3% for property taxes. Lastly, for the 3 months ended September 30, 2022, rental expenses were down 0.8% in Ontario, largely due to a utility refund in the quarter of approximately $0.2 million, which was the result of semiannual balancing at the Central Distribution Gas Hub. For the 9 months ended September 30, 2022, same property net operating income increased by 3.2% as compared to the same period in the prior year. Positive revenue growth in all provinces was offset by an increase in operating expenses, largely the result of inflationary increases in cost. For the province of Quebec, year-to-date NOI is flat, which is a considerable improvement from the 4% decline in Q2 2022. The majority of this even year-over-year performance as a result of increased expenses driven by increased utility costs and property taxes. The increase in property taxes is due to both an increase in property tax assessments as well as a positive tax appeal in 2021, which did not reoccur in 2022. Slide 17 illustrates Boardwalk's mortgage maturity schedule. Our mortgages are well staggered, with approximately 95% of our mortgage balance carrying NHA insurance through the Canada Mortgage and Housing Corporation. This insurance remains in effect for the full amortization of the mortgage, and in addition to carrying the government of Canada's backing, provides access to financing at rates lower than conventional mortgages with the current estimated 5-year and 10-year CMHC rates of 4.5% and 4.3%, respectively. Though current interest rates are above the trust maturing rates, the trust maturity curve remains staggered, reducing the renewal amount in any particular year. Despite increases in interest rates, mortgage financing continues to be a low cost of capital available to the trust. Lastly, the trust has an interest coverage of 2.98% in the current quarter. Slide 18 summarizes our 2022 mortgage maturities. To date, we have renewed or forward locked approximately 92% of our 2022 mortgage maturities as well as secured $245.8 million in new financing. Current underwriting criteria in our most recent submissions to CMHC and our lenders has remained in line with our historically conservative estimates. Moving to the right of the slide, we provide a summary of Boardwalk's available liquidity. The trust is well positioned with approximately $33 million in cash and subsequently funded financings as well as an undrawn $196 million operating line. This approximate $229 million in liquidity provides the trust with a flexible financial position. Slide 19 illustrates the Trust estimated fair value of its investment properties. Excluding adjustments for IFRS 16, which totaled $6.8 billion as at September 30, 2022, as compared to $6.4 billion as at December 31, 2021. When excluding acquisitions of $0.2 billion and capital investment of $0.1 billion, the remaining slight increase in overall fair value is a result of increases in market rents at select sites and communities as market fundamentals improve. Current estimated fair value of approximately $199,000 per apartment door remains well below replacement cost. Moving to Slide 20. In consultation with our external appraisers, the capitalization rates or cap rates used in determining Q3 2022 fair value were unchanged from both Q2 2022 and Q4 2021. As it does every quarter, the trust will continue to review completed asset sales transactions and market reports to determine if adjustments to cap rates are necessary. Recently published cap rate reports for both CBRE and Altus suggests that the cap rates being utilized by the Trust for calculating fair value are within their estimated ranges. In addition, the trust cap rates used in estimating fair value remain at a positive spread to interest rates. Slide 21 provides a summary of the recycling of cash flow towards value-add improvements. To date, we have completed approximately 31% of total suite improvements, while aiming to complete 51% of our total portfolio, common areas and amenity spaces by the end of fiscal 2022. Our focus is to continue to deliver the best product, optimizing our capital allocation for our value-add program to our targeted resident memory demographic so we can continue to provide the most exceptional, elevated experience at an affordable price. The result is increased market demand, exceptional value and appealing returns with sustainable market rent adjustments. Slide 22 illustrates our stabilized renovation return for Lake View apartments located in Calgary, Alberta, with a return of 20%, which exceeded our internal hurdle rate of 8%. Our renovations continued to garner positive resident member testimonials, driving referrals and higher occupancy. I would now like to turn the call to Jeff Klaus to highlight our recently completed development. Jeff?

Thank you, Lisa, and thank you for the opportunity to highlight our successful delivery of the first tower of our landmark development in Brampton, Ontario on behalf of our team. On Slide 23, we are pleased to highlight that the first of our 2 tower development at 45 Railroad in Brampton, Ontario has been delivered on time and on budget. We cannot thank our partners, Redwood Properties and our development operations, design and entire team enough for their dedication and discipline in delivering this project on time and on budget through the challenges that COVID, supply chain, and construction strike presented throughout the construction period. 45 Railroad located steps from Brampton Downtown GO Station. The first tower features 176 units and received occupancy permit during the month of October. As of today, we have leased 55 units or over 30% of the units at rental rights slightly above our original expectations. Our development teams continue to progress on construction of the second tower and are expected to deliver Tower 2 in the fourth quarter of 2023. Slide 24 provides an update to our development pipeline with the latest on Aspire, our first development in Victoria. Excavation is currently underway at the site of 234 units located adjacent to our Aurora community, which remains fully occupied with strong rental demand for any units that become available. I would now like to pass the call over to James.

Thank you, Jeff and team for all the great work in delivering the first tower at 45 Railroad. Starting on Slide 25. We have successfully closed and integrated our previously announced acquisition of a recently built community known as The Level in Calgary during this third quarter. The 158 suite property is well located near the South Calgary Health campus and in close proximity to our existing Auburn Landing community, providing strong operating efficiencies. As part of the acquisition, the trust assumed existing and attractive medium-term financing, and as the newest asset in the Boardwalk portfolio, provides solid and accretive cash flow. Slide 26 provides our stakeholders with our current and relative view on sources and uses of capital. For sources of capital, we believe that our growing internally generated cash flow and minimum distribution policy continues to represent the most attractive source of capital. And though property mortgage financing has increased in cost from the beginning of the year, it continues to represent an attractive source on a relative basis. Each of these capital sources can be utilized to fund opportunities such as our value-add capital improvement program and investment in our own high-quality portfolio through a normal course issuer bid, strategic and accretive acquisitions, and new development in undersupplied housing markets. In the third quarter, Boardwalk purchased and canceled over 62,000 trust units at an average price of $44.62. Since the reintroduction of our NCIB in November of 2021, Boardwalk has invested $45.7 million in buybacks and continue to view this investment as an attractive use of proceeds from non-core asset sales. It is our intention to renew our NCIB later this month. Our team will continue to update our view of capital sources and uses on a relative and regular basis. Slide 27 highlights the exceptional value that Boardwalk's Trust units represent with our current trading price implying a value of approximately $166,000 per apartment door. This compares favorably to the fewer but substantive transactions that have occurred in the past year in the external market. Our NAV of $71 per trust unit equates to $199,000 per apartment door and represents an exceptional opportunity relative to market pricing and remains well below the increasing cost of replacement. On Slide 28, Boardwalk's current trading price equates to an attractive 5.2% cap rate on trailing NOI and provides a significant spread to the current cost of available mortgage capital and estimated cap rates in private markets. With our strong leasing trends and NOI growth in our portfolio, this cap rate represents an attractive option for the trust to continue to invest in our own high-quality portfolio. Slide 29 provides a review and update of our 2022 expectations and guidance. As we move towards the end of the year, we are well positioned with high occupancy, strong leasing momentum with significantly fewer incentives. Our strong performance in the third quarter has aligned with the higher end of our initial expectations for the year. And with the completion of over 90% of our mortgage renewals to date, the trust is providing an update to our guidance estimates for the year, with an increase to the bottom end of both our FFO and NOI performance for the year. Same-property NOI and FFO per unit are now anticipated to range between 3% to 5% and $3.08 to $3.15 per trust unit, respectively. Our Boardwalk team is committed to leading in transparency and we'll continue to update our stakeholders in the event of any change in conditions that may materially impact our forecast. Our 2023 guidance and forecast will be shared with our fourth quarter results in February. On Slide 30, our Board of Trustees has confirmed our monthly cash distribution of $1.08 per trust unit on an annualized basis, which is an 8% increase from the same period a year ago, and has been declared for the next 4 months as shown on this slide. The trust continues to have an industry low payout ratio, providing significant cash flow reinvestment and positioning Boardwalk with ample capital for growth. As we continue to grow our free cash flow, our distributions will also continue to grow alongside. Lastly, on Slide 31, our third annual ESG report released earlier this year highlights and celebrates our team, residents, and community contributions to our collective environmental, social and governance goals. We are proud to highlight our top [ AU ] rating for public disclosure and share our improved 2022 GRESB score of 70. Our ESG report along with all our financial reports can be found on our website. This concludes the formal portion of our presentation. I would now like to open up the phone line for questions. David?

[Operator Instructions] We'll take our first question from Jonathan Kelcher with TD Securities.

First question, just on occupancy. You guys are starting Q4 at a pretty good level. What's kind of your expectation over the winter period?

Jonathan, it's Sam Kolias, and welcome. Thank you for joining us. We're at today, 98%. And so the first of the month is tricky for move-ins because some of the apartments as turnover reduces and vacancy reduces can't be turned in 24 hours. So it takes a few days. And as we progress into more of the middle of the month, our occupancy naturally rises. Most, if not all, of our vacancy is still in Edmonton. It's about 3% and dropping as well. The last couple of months, we've ended up availability in Edmonton between 1% and 1.5%. And so that's a leading indicator of what vacancy physically will be going forward. So we're continuing to see higher occupancy trends over the winter months. This is what we've seen with strong apartment rental fundamentals back in 2013, 2012. Very similar apartment rental fundamentals during that period.

I'll just add, Jonathan -- it's James -- to Sam's comments there. We are seeing lower turnover as well. This month, if we look at turnover so far, we're down about 40% versus this time last year for the month of November. And our team is doing an amazing job with the rentals that we're getting already. I mean we're only 9 days into the month, and we're halfway covered, our turnover that we have for this month. And so we are anticipating continued strength from an occupancy standpoint. We've already seen that to Sam's point. I noticed on the slide, our occupancy slide, there that the month of October had dipped slightly. We've already recovered that. We're back over 98% occupancy across our portfolio here today.

Okay. That's helpful. And then I guess just sticking with Edmonton, a couple of things on it. Like the occupancy has grown significantly year-over-year, but the year-over-year rental growth was still in the 3s. Do you see that now with the growth that Edmonton's kind of, I guess, trailing Calgary by a few quarters here? Do we expect strong growth year-over-year going forward?

Yes. Jonathan, I think we're seeing that in Slide 14 on our presentation. It really highlights that where we are seeing increasing and improving leasing spreads across our portfolio, but especially in Alberta. As we've shared on prior calls, the cadence on Calgary renewals and new leasing has been quite high as we've reduced incentives. We are seeing our peers and competitors start to increase market rents as well in Calgary, ourselves included. And that's coming off of an exceptional base of affordability. Edmonton is starting to see that similar trend as well where we are seeing stronger incentive reductions, renewal and new leasing spreads are growing as you can see on Slide 14.

The public internet listing site that is one of the only remaining public listing sites that provide public information rentals.ca show for the first time in many, many months, a positive asking rent increase in Edmonton. It's pretty modest, around 5% or 6%, depending whether it's 1 or 2 bedroom. And so we're starting to see market-wide an improvement in occupancy, and we're leading it. And as we usually do, lead the occupancy and the rest of the market follows through. So what we're seeing overall Edmonton apartment market increase in occupancy. We have a great, amazing, very competitive, friendly competitive team in Edmonton. And Edmonton wants to be #1, not just in [ floor ], but in occupancy and NOI performance as well.

And then just lastly, I guess, on Edmonton. The operating costs were up 8% in the quarter, and you guys talked about both property taxes being higher and the operating costs involved in getting these vacancy up, which I guess are more onetime in nature. How should we think about the split between those 2 for the majority of the…

Jonathan, it's Lisa. The majority would have come from the property tax side. It was a sort of a healthier increase compared to Q2 2022. And you'll see a similar property tax number as we go into Q4. As I did say, overall property taxes, we're expecting it to be about 3% overall. We will see some vis-a-vis Q2 specifically, you will see wages and salaries for Edmonton go down as you saw in Q3 and moving into Q4.

[Operator Instructions] Next we'll go to Mike Markidis with BMO Capital Markets.

Thanks for turning it over, operator. Good afternoon, everyone, at least in Ontario. Lisa, could you just clarify that that 3% overall increase that you're talking about on the property tax side, is that an annual amount? Is it for Edmonton only, or is it for the entire portfolio?

Annual amount for the whole portfolio.

Okay. On an absolute basis.

That's correct.

Okay. Got you. Just looking at Slide 14, which shows the great progress you guys are making on the increase in net effective rents. Just curious, you seem to have on the renewal side kind of plateaued out at around 5%. I'm wondering how much of that is self-imposed versus market and where you're targeting that with higher occupancy as you head into 2023.

Mike, it's James. Welcome back, and congratulations on the new role. Certainly, on the renewal side, Mike, look, as we've always been, we want and will continue to be flexible with our resident members always. So that average of 5% has a wide distribution dependent on community, dependent on resident circumstance. I think certainly, there's opportunity for us to continue to optimize that. As you've seen, you've seen steady growth with that renewal spread, certainly not quite the same cadence as new leasing. However, we would anticipate both renewals and new leasing spreads to continue to move -- pardon me -- trend upwards, especially with our Edmonton portfolio, as Sam was talking about earlier, now getting into that position where incentives are rapidly declining, right? We're seeing incentives decline, I mean, year-over-year by 20%, as you saw on Slide 13, I believe it was. And so both renewal and new leasing spreads, we do anticipate specifically for our non-price controlled markets to continue to trend upwards.

Michael, it's Sam. Michael, congratulations again. In our markets in Calgary, we've got 99% occupancy. We're seeing higher renewal and reductions in incentives, almost no renewals and incentives. So our numbers are closer to the high single digit as we're seeing the same thing in Saskatchewan. So we'd expect the same as Edmonton's overall apartment market moves to a similar high occupancy that we'll see this continued upward movement in renewal spreads as well, which will increase the whole spread.

So net-net, maybe in line to slightly better in those other markets you mentioned and then catching up in Edmonton.

Correct. And given Edmonton's approximately 33% of our portfolio, it does weigh the renewal rate down at the moment. And picking up -- as our team in Edmonton is a super, super aware and great team, we are picking and continuing to pick up steam in reducing incentives and discounts everywhere.

Fantastic. And last one before I turn it back. Just on Aspire, it may be in the MD&A, and I haven't had a chance to get there, but can you remind us when the construction and completion of that asset is slated for?

Hi, Mike, it's Jeff. We're looking at Q4 '24 at this time.

Next, we'll go to Mario Saric with Scotiabank.

Just maybe a couple of questions for me as well. Sticking to Edmonton. Firstly, in terms of the occupancy, you mentioned it's sort of about 97%. What's your best guess in terms of where broader market occupancy is today? Sam, I think you mentioned you're leading the market in terms of occupancy gains. So where would the broader market be about to where you are?

It's usually a point or 2 behind. So broader, let's say, 96% -- it's improving quickly through the winter months, which is very different than what we've seen in the last 5, 6 years. So the characteristics of the apartment rental market in Edmonton are very similar to 2012, '13, '14.

Got it. And then coming back to maybe Jonathan's question in terms of the desire and ability to increase the rental growth or rental rate growth in Edmonton. Is it a function of the broader market, which is 100 to 200 basis points below you going back to 97%, 98%, Or is it a function of a Boardwalk going to 98% when we start seeing that increase by growth?

It's both. And the broader market is a big factor overall market. And the good news in Alberta and Saskatchewan and Edmonton is there's no price control on rent. So there continues to be construction and will be. So the good news for our renters is competition is our renters' best brand and all of our best brands to continue to ensure affordability and competitiveness. And so we will continue to see healthy gains because the apartment rental rates are far below the rates required for new construction at around $1,240-some average occupied rents. That's a level that's far below and very affordable given our household income, renter household incomes are approximately between 20% and 25% of our renter's income. And so there's high affordability in place. And again, the key word is flexibility. And we're seeing higher single-digit growth rates that we believe are more sustainable and win-win for the community providers to offset the inflationary expenses and interest expenses that we're seeing and still provide great affordability given we're approximately 25% below the consumer price index back to March as our slide reflects 2016. So there's super high affordability. There's something for everyone here, and that's why we believe Alberta and Saskatchewan are the best apartment rental places to be for both renters and housing providers.

Just as a follow-up, Sam, you mentioned kind of Edmonton feels like back in 2012, 2013. So good times. But what hurt the broader market in the subsequent years was new supply coming on board. How confident do you feel that won't be an issue again this time around acknowledging the wide gap between in-place rents and required rental new construction? What's the visibility like there? And are you holding back a little bit on the potential rent growth because of what happened in 2012, 2013 in terms of new supply coming onboard?

The biggest difference this time around is the absence of condominiums that were planned, proposed and many foundations were dug and poured. And so back in 2013-14, there was a much bigger build of condominiums under construction, which converted to purpose-built rentals when the condominium market corrected. And so we're not seeing that inventory and that construction right now. We are seeing some cranes and some developers that are always developing. There's some developers that continue to develop. They're in really prime locations. They're very nimble. They're very targeted. And so we continue to see new construction because there's always demand for brand new nice, well-located, multifamily affordable rental product. And compared to rents in other cities, major cities, these brand newly built apartment communities are very affordable as well. And so it's a much more balanced market is what we're seeing right now.

We are seeing strength on the demand side as well, Mario, as we look at -- we all have heard about the increase to migration policies. We are seeing the growth in interprovincial migration. And for all reasons that we've talked about on past calls, I mean just turn on the radio if you're in Ontario and you'll hear about that. And I think we're certainly continuing to see that flight to affordability, that flight to lifestyle that we're seeing in Alberta. We have a number of residents, new residents within our portfolio in Alberta who've moved here from Ontario, moved here from BC. And that's a trend that our team continues to see carry forward here as we move through the winter and into 2023.

A great Google search will be, Mario, Alberta economic dashboard. And zeroing in on the in-migration and the migration statistics on our Alberta government published dashboard, we have never seen in decades, the amount of in-migration into Alberta ever. It's record high in migration. And it's great news because there's affordable housing. The sunniest and windiest place in Canada is Alberta. We produce the most solar and wind. It truly is a great place to live. This is not a commercial, Mario, but it really is a great place to live, and more and more are finding out about it.

While I'm an Indian music fan, and I hear the advertising twice a day on Indie88.1 in Toronto. So it's -- the message is getting out there in Ontario for sure. My last question just on the incentives in Edmonton. It looks they put an average of 108 a suite. Now that could be 0 in a lot of places and more than 108 in others. Can you give us a sense of what percentage of the buildings today have incentives in Edmonton and how that's changed in the past 9 months?

Mario, it's James. I think the best indication is -- and you can see it in the consolidated figure in terms of quarterly incentives year-over-year, right? So we've seen incentives decline about 20% versus the same period last year. An estimate in terms of how many of our residents in Edmonton continue to have an incentive, likely -- a rough number somewhere between half to 65%. We are seeing those incentives decline on our renewals. We're not having to use incentives in very many of our new leases here today. And so we are seeing that decline quite rapidly.

Mario, we get weekly updates from all our leaders. And on the updates for new rentals, it's really hard to find an update and a community of ours that gives a new incentive today in Edmonton. And we high 5 everybody every week as the reports come in weekly, and we see it every day as well. Or twice weekly, we get dashboards on our new rental statistics. And so it's really rare to see incentives being used today in Edmonton.

And that concludes today's question-and-answer session. I'll now turn the call back over to Sam Kolias for any additional or closing remarks.

Thank you so much, David. As always, if there are any further questions or comments, please do not hesitate to contact us. This week, we remember and honor the huge sacrifice of our veterans, lest we never forget. With gratitude, we would like to thank our extraordinary team, loyal residents, CMHC, our lenders, our unit holders and all our stakeholders. It really is all about our people, whose huge shoulders we stand. And as leaders, we continue to do everything we can to support continued growth in extraordinary. We really can't thank our extraordinary team and great leaders enough. We are pleased with our improving results on a foundation of exceptional value we continue to provide our resident members, our investors and all our stakeholders. Our home is much more than a place or a location. Our future is family where love always lives. What can be more important when choosing where to call home? Thank you, again, everyone, for joining us this morning. God bless us and grant us all peace.

Ladies and gentlemen, that concludes the conference call for today. We thank you for your participation. You may now disconnect.