Equity Residential (EQR) Earnings Call Transcript & Summary

Good afternoon, everyone. I'm Josh Dennerlein. I'm the senior analyst covering the residential [indiscernible] and I'm pleased to have with us Equity Residential team here. Next to me is President and CEO; Mark Parrell. I'll pass it on to Mark to introduce the rest of his team and also provide a quick opening remarks on Equity Residential themselves and then we'll do Q&A. And I would love for it to be as interactive as possible. So please jump in at any time and ask. And with that, I'll turn it over to Mark.

Thank you. Hello. Good afternoon, everyone. I'm Mark Parrell, and I have with me, Alex Brackenridge, EQR's Chief Investment Officer. Given all that's been going on in the investment world, I thought his presence would be particularly interesting for all of you. I'd like to thank the BofA team. So thank you, Josh, Jeff, for including us in this event. It's great to be all together in person again. So we issued 2 weeks ago a press release with just an update on operations. And this year is right on track to slightly better on same-store revenue, as we said. Everything feels really good. And the most important part of that really, as far as most investors are concerned, is the setup for next year. So let's talk for a minute about that. So as we look towards next year, we feel extraordinarily positive. And the reason we feel that way, notwithstanding just some of the recession signals, certainly today was a tough day in the market as we continue to be 96.5% occupied, we see no relenting of demand. Rents have started to decline, as we said in the press release. Our business is seasonal. Fewer people move, starting in September, so demand generally goes down. We have fewer leases we write. So again, we've seen that decline but it's very consistent with normal patterns. And so again, great demand, that still feels very good. The supply setup for us next year given the markets we're in is pretty good. So we feel good about that. Single-family, which is a meaningful competitor. Homes are still pretty expensive. They may be going down in price but the financing cost has certainly gone up a lot. So that's again another positive, and we continue to like our demographics. So longer term, what you look at in the conversation we've had with many of you over the years is this big millennial cohort, that cohort is aging out but they can't really afford to buy a house. And so I think they're going to stay with us a little bit longer than we would have expected. I also think this Gen Z, and we've done a lot of research on the Gen Z generation, I got a couple of those in my home, they're tired of me asking them and their friends questions at this point about housing preferences when they're only 22 but I'm fascinated by what they're thinking. And we think that group is a very large group and will also show a lot of affinity for that rental housing, the flexibility of the lifestyle. So again, we like our demographics, we like our supply picture. And because we have not been able to raise rents as quickly as we normally are able to, and there's both regulatory reasons for that. And just frankly, rents have recovered so sharply in some markets. Then when we need to give notice 60 or even 90 days ahead of when the lease expires, it's just harder for us to guess that we've got a pretty significant loss to lease. So approximately 88% of our leases, and they're widespread. It isn't one market. It's almost every market has around that number, on average, about 11.6% or so below current street rents. So street rental decline at 11.6% will become a smaller number because again, seasonal rents are declining, but we have really strong growth that is sort of built into the rent roll going into next year, certain of our competitors have given some matter of indication on that. We haven't. So we're not going to be very specific, but we've never had as good a set up going into another year. So I'll stop there, but Alec is certainly here for investment comments, too, but we'll let you ask your question. I won't use too much of the Q&A time.

Can I ask you a follow-up on that?

Of course.

[indiscernible] your competitors [indiscernible] period?

Well, I think we're more attractive than handsome and such. But I mean, listen, they run a great business. There's no REITs left in the apartment sector that are good at running their businesses, everyone is good at it. It just depends. I mean I think we're going to have a really good setup in numbers. 2 of our markets probably merit a little bit more conversation and are differential to our competition. We have a bigger exposure in downtown Seattle and downtown San Francisco than anybody else has. And that has actually hurt us the last 2 years. We are thinking that and hoping that will be a '23 story, and we can talk about that in a minute. Seattle is probably performing downtown a little worse than we had hoped, not materially so, but a little. San Francisco downtown a little better than we had hoped but not enough, and it's sort of embedded in our guidance update to you over 2 weeks ago. So as we look at those numbers, we sort of feel like the quality of life indicators in those 2 markets are improving. So we see the new political setup in San Francisco, a new district attorney, better attention to public safety, as helpful to our business. We also see similar things in Seattle with additional hiring of police there and just sort of balancing order and justice a little better. Those kind of things are what are going to bring our residents back. We are not tied to office occupancy, we're tied to quality of life. We're tied to our residents feeling safe and having things to do that they like to do. I mean occupancy in New York wasn't that high, yet our business fully recovered. So we're excited about what '23 will bring in those 2 markets. And so to answer the question, Josh, those might be, I hope those are things that we're talking about next year as differential outperformance. The city of San Francisco for us is still 13% below pre-pandemic rents. And it's the only place, downtown Seattle is down a little, but not to that order of magnitude. So those are places where rents now are getting close to suburban rents. So if you're a graduate at Stanford, maybe if downtown's fun, downtown San Francisco, and it's the same price as living in a boring summer, maybe the city is interesting. So we'll see. Never thought I'd say, we might have a price advantage in downtown San Francisco but we very well may have a differential price advantage as well as this improvement in quality of life.

Any question on those 2 markets? [indiscernible] Can you start there, walk through the update?

Sure. So what we're doing is executing the plan we laid out when we did the joint venture with Toll Brothers, which, again, is for us in specific markets to have an exclusive right to develop apartment properties with them that they show us first. And we provide 75% of the equity, they provide 25% and we leverage it up 50% to 60% depending on the environment at the time. And it's been really successful and we've started a few projects in Dallas that we're excited about. The costs got locked in pretty early and are in locations that we think will be great long-term contributors for us. We're continuing to work with Toll in other markets as well and target markets for us the Tolls focused on include Atlanta, Denver and Seattle and including the Dallas and Austin.

Any particular reason why Dallas was the first [indiscernible].

Well, it's a combination too. I mean it's where we wanted to grow, so we directed them. It's also where they have a good pipeline. So it is a combination of both.

And anything else kind of with that [indiscernible] How quickly, I guess, did this JV kind of ramp-up?

Well, our goal is to get it so that we're developing roughly $1 billion a year. So $2 billion kind of in the pipeline at any given time. Circumstances now are a little bit more challenging. The market is moving. Yields have to grow a little bit too. So we're looking at a lot of things with them but we're not exclusive with Toll either. We're also looking at joint ventures in other markets such as suburban Boston, where Toll is a potential partner for us but we found that there are other local developers who have product that's really interesting to us and had yields that make sense for us.

And [indiscernible] expand, I guess, how much expansion...

I don't know what happened today. It's a fluid environment right now. Our deal with them had been, if it was a 5.25% yield and it was within a buy box for us within our markets, if we didn't say yes, we said no to more than 2 in a row, then they didn't have to be exclusive with us for the next one. So that was kind of the guideline. That guideline might be a little antiquated depending on what's happening with rates as we speak.

Okay. Is that something you can update easily or [indiscernible].

Yes. Listen, I know this is 25% of their money, they don't want to do a bad deal either.

And maybe coming back to the Seattle [indiscernible] downtown than expected, anything particular being there driving that?

I'll start, and Alex may add, but a lot of supply. So downtown Seattle has had sort of a several year supply, including 1,000 unit building that took 6 years to deliver. So that kind of concentrated supply is very impactful to our business, and that's what we're seeing. So Seattle's had some really good tourism numbers, it's had some improvements in what we think of as core demand but also has a lot of supply. So there are concessions in that market. About 30% of our leases now have a couple of weeks or so of concession on them. So I would say Seattle is a victim more of supply downtown Seattle than job loss as far as we can see. But again, it's going to improve the number of people in the city. It's going to create more retail, more activation over time, but it's probably something that the team will have to manage through for the next couple of quarters.

And then for downtown San Francisco, it's [indiscernible] compared to office but it's more of the quality of life or do you think that return to office would then help?

We see the quality of life is improving in San Francisco, but it just continues to need to improve. Opening up businesses. Again, our resident wants the cultural amenities, the coffee shops, the entertainment venues, the restaurants open because why pay us that kind of rent unless you can have the lifestyle you really want to have. And I think they're seeing that happen, and we're seeing that traction. But it just isn't enough to move rents yet.

And maybe to kind of put the question inside down, are there any markets that are doing better than expected? [indiscernible].

I mean New York has been great. New York has been great. Southern California is doing very well. D.C. is a little ahead. And D.C., just to be fair, won't have a very high same-store revenue number, as we talked about on the earnings call. And by that, I mean because our numbers are so relatively high this year because they had a pretty good 2021 relatively. So they weren't hurt as bad as New York, as bad as Boston, as bad as San Francisco, but they're very well occupied. They get a ton of units but there's a ton of demand there. So I would say D.C.'s a little better than we thought. New York continues to be excellent. Southern California, we've seen an improvement in the payment performance of our residents. And this is something else that might be a differential thing because there's a lot of convergence among the apartment REITs. But our average household income of our renter is 170,000. They pay us about 19% of their income in rent. We view inflation as much less relevant to them, especially our urban dwellers. So places like New York, they probably don't own a car. I mean none of our Manhattan properties, it's just a couple of garages. So our sense is, we have some inflation protection in the portfolio as well. So I mean, again, we feel like the market, we're in a good spot.

But everyone's question, I think, getting apartments is obviously like the macro, it's going [indiscernible] I guess curious to get your thoughts on how you get to [indiscernible] and then [indiscernible] how late into 2023 and then just like your same-store revenue that?

So apartments are not a leading indicator, they're a lagging indicator of job loss and recession. I'm going to put aside technical definitions of recession. Let's say it means job loss, meaningful job loss, so I'll change your question to be meaningful job loss occurred at the end of the year. I still think the numbers would be above average unless the recession was very acute. And I say that because that loss to lease we just talked about is so large that it would eat into that, but you'd still have growth from that. I also think we're getting again better delinquency performance, as I sort of alluded to in my last answer. So our residents, particularly in Southern California, as the rules start to open up, as we're able to talk through processes with our residents who haven't paid in a while, I think we're in a position that we're going to have a little bit of a cushion if there is a recession. If the recession includes very sharp job loss, then the apartment industry will definitely feel it. I mean that's just the way the business works. But our thought is, there'll be a recession but it's not very significant or it doesn't affect our resident demographic as much. So even though we have plenty of people that are in technology sector working or living in our buildings, they're in high demand in other places like our company is hiring, we take plenty of IT people and we're not a technology company. So I would say I think these people are imminently employable. As one of your bank competitors laid some books off, to the extent any of those people are programmers, there's been a lot of articles about how quickly people are finding jobs. So what I'd say is, it sort of depends. Does job loss mean you're really out of work and does job loss mean you're just recirculating in the system from companies like Peloton and others that really were capitalized wrong and too much staff to companies that really need them? Or is there really the whole net economy shrinking materially? I think those are 2 different things.

[indiscernible] like same-store revenue [indiscernible].

I mean the pandemic was the worst for us for sure. So I don't know the number, Marty, I should know that just because it makes me so sad, but I think it was something like 6% or 8%, 6% or 8% on revenue because expenses go up, you're ending up with a negative double-digit NOI number. Just like this year, our midpoint of our guidance is around 15% on NOI because we're doing a great job controlling expenses at 3% and our midpoint of our NOI guidance is approaching 11%, revenue guidance, pardon me.

And maybe shifting over to [indiscernible] what you're kind of seeing or expecting in second half of this year?

On demand, was that the question?

Yes, demand trends for it to [indiscernible].

Yes. So far, we're seeing really good traffic, and we're seeing really well qualified traffic. So the income that the residents making it is going to enable them to stay within that 19% of rent that they're paying, rent as a percent of the income. So traffic is good, and there really isn't a market where it's dropping off, and so that obviously can change. And there's certainly seasonality but you'll see and that increases the further north you go, Boston and Seattle have more seasonality than other markets but we have that general trend. But most of the year is pretty well baked in. We're generally in a good spot, as Mark's alluded to, and occupancy at 96.5% is a good spot for us to be right now.

[indiscernible] you'll kind of push [indiscernible] I guess [indiscernible].

Well, we're balancing it out with seasonal traffic. I would expect that rents will taper off a little bit like they do every year. So this is not the time where we push rents but it's also not the time when we do most of our leasing. We do the majority of our leasing in Q2 and Q3, 60% there versus 40% in the other 2 quarters.

Stepping back, kind of [indiscernible] pricing in private [indiscernible] growth in general?

Well, you mean we use a pricing model. We use LRO as our pricing model but we also manage that a lot. We have regular pricing calls with property management and our pricing team, and that's been really, really effective to drive both renewal and new leases. On the renewal side, we centralized a lot of that process, which takes a lot of the emotion out of it when it was on site. There was a tendency, maybe you knew the person, you might treat them a little differently. If you didn't know if you do their personal story where it can be a little more clinical about it, I would say, and that's been very effective. And that's a good process as it's a more seamless process. Other than dealing with New Yorkers who have been very difficult for the centralized team to deal with as they're not from New York, so they don't understand the way New Yorkers like to interact.

That was charitable.

Is there anything kind of going on at [indiscernible] in this time of the year with like seasonality at play as to like adjust the model?

I'm not hearing that. I mean what we have as an advantage is 15 or 16 years’ worth of LRO data because we and Archstone were the people who created the first revenue model in the industry. So that model and all that data still resides with us. So we're comparing that like how are we performing in each market, how are we performing overall compared to normal seasonality. And it's just tracking, Josh, right on top of that. There just isn't anything blinking yellow, much less red. It's all blinking green normal as long as normals understood to mean the seasonal decline that normally occurs this time of year in both the number of leases and as Alex said, the rate.

Then [indiscernible] earlier in Seattle, but [indiscernible] thoughts on that [indiscernible] supply [indiscernible].

Yes. So supply generally is going up a little bit but what we really focus on is how close it is to our properties. Concentrated supply is what impacts our property operations. So we measure, for each property, how much is going to be delivered in a little broader radius and more suburban setting, but in close proximity to the property. And that number is actually going down overall for the portfolio. So we're a little less exposed. And it's largely because a lot of developers have kind of spent more time in the suburbs than they did in an urban setting. So we're benefiting a little bit from that. And the poster child for that is Manhattan where there's almost nothing being built. So although you see big numbers for Metro in New York, a lot of that's over Journal Square or other parts of the city, in Queens, where we just don't have a presence. And those renters don't really cross over.

Any market that you're a little nervous on, on [indiscernible] supply problem?

Yes. So the markets that are seeing a lot like Dallas has got a lot of supply. So we've been very intentional about where we're building and buying there. And certainly, if you just look at the raw numbers, I will say that what's most important though is demand. Denver is another market that has a lot of supply, and we're very intentional there about where we have a presence. But as long as the jobs keep coming, history has shown that the units get absorbed and rent growth is very achievable. And the correlation of rent growth is much stronger to job growth than it is to supply. But listen, as Mark said, if there's a recession and there means a lot of job loss, particularly for our renter, that's a challenge that you'll see in those markets that have more supply numbers.

Now that you're expanding in expansion markets like a Dallas or Atlanta that has been more supply like how are you thinking about the strategy for taking the locations [indiscernible].

Yes. So the locations that we really like are not in an open field, say, where you can build endless departments or in area that's easily redeveloped. So we bought a property in Denver, just north of Cherry Creek, which is a redevelopment of an old hospital that is in a neighborhood though. So it's a very hard, a single-family home. So there's not more supply coming versus some other locations that really are in the path of kind of endless new supply for the foreseeable future. So that's something we focus a lot on, but also where the jobs are. I mean, again, it does go back to where jobs are because that's really critical.

[indiscernible]

Sure. I mean, well, first of all, there's no distress, as you alluded to. So no one has to sell a property. And cap rates, to be fair, were significantly below 4. I mean, last year, they were mid-3s. Some deals were literally sub-3s and people were really buying off of what was dynamic rent growth but very aggressively. And what gave us pause and we didn't put anything under contract this year was the premium people were paying to replacement costs, what it would cost to build a comparable building in a comparable location. And that number got 25% to 30%, and we just stopped buying. It just seem too rich for us. And so now we're looking and seeing cap rates are certainly rising. They're not rising so far anyway as much as rates have because people are still optimistic about the business but we see more opportunity perhaps in things with a little hair on them that are a little harder still within our buy box, which for us is a well-located property that appeals to the same renter, affluent renter that we've been running to for a long time. But I might have to say, a renovation play, that's hard for someone to finance right now or might have a loan in place that's consumable that is not high enough leverage to work for a leverage buyer or as a lease-up requirement. So things like that, the cap rate is edging up. And there's not a whole lot of data points to point to but it did feel, at least up until this morning, that things were normalizing into a 4.5-ish cap world, but I'm not really sure where we're that ultimately in, but we're very focused on matching up our buys with ourselves. So our source of funds is what we can sell property for.

One other comment, we're not a bond. I mean we're not a fixed rate bond, so those interest rates is a competitor for dollars in our sector. But I'd tell you, I mean, we obviously hope our NOI continues to grow as it grown, and I think we made a good case for the next year too, for sure. So I worry about rates for sure, but I worry about the economy growing most of all. If that happens, rates will do what they do. If it causes people problems, they are likely to buy more and will build more, and we got a great balance sheet, and we'll go through it. So a little distress that that sort of distress is just fine with us. It's more like a sharp job loss, then you just would see things kind of stall out, I think, in apartments.

[indiscernible] kind of discuss any platform or innovative initiatives that [indiscernible] team is working on [indiscernible].

Sure. Well, I'll start. We'll split it kind of in half, Alec and I. And I'll talk a little bit about sales, the office staff, and Alec can speak a little bit about service. So we've been at this for a long time. We call it the innovation machine at Equity Residential. So our same-store payroll costs this year are going to be slightly negative. They've been slightly negative for 3 years or so. We're doing a great job there. So what we end up doing is we certainly meet the market and give raises to our hard-working employees. But on the flip side of that, in the sales side, we're leveraging things like remote leasing. We're combining properties. We call it podding properties together. Those all things we've been at for a while. Those combined with having a big centralization push. So if you're an on-site sales worker at our company 4 or 5 years ago, you were doing applications, you were doing renewals, you're doing new leases, you were doing tours, you were doing a lot of things. We want our people to be as these incredible customer service ambassadors, not sitting there filling out credit applications. So we have centralized teams that do that now. We have automated software. We've taken that off-site, so application processes, credit checking. We're working for some of the affordable units that we manage to do the same. And so what that means is the headcount on site has dropped like 15%. We're sort of in the middle innings of that. We're further along on sales than service that Alec will talk about. Service means maintenance at our company but those are important. So that's what the offset is. So we're certainly feeling pressure on medical insurance and payroll increases like everyone else is. But the offset that is we just have less staff, but we're more efficient. And our resident likes interacting using technology. We have an artificial intelligence tool that we and one of our competitors funded, a person out of MIT, and she built this thing for us. And if you call and you're a new resident potential prospect and you don't want to wait for an operator, you can go out and immediately start texting us. And it's a very lifelike text experience. In fact, Ella, which is what we call this solution, has a higher close ratio than a lot of our leasing people do. And she can answer questions from what size dog you can have at that property to how many 2-bedrooms are available and what the rent is. And if she needs to refer you or it needs to refer you to a living, breathing leasing person, it can do that pretty flawlessly. That kind of technology where the customer is happier, where our people aren't caught up on these conversations that don't always lead to sales, are like huge win-wins, Josh, huge.

And in general, the real estate industry has not exactly been on the forefront of technological innovation. So there's low-hanging fruit. I think that's why Mark is saying we're in the earlier innings on the service side and some things we're doing there include robotic vacuum cleaners. So being able to manage our payroll on that side of the business with technology is an important driver for us. Sensors are incredibly cheap now compared to where they used to be. And we can use those to direct leaks and get to a problem before it becomes a big problem, but also to see how well equipment is running and then fix it before it breaks and use technology like the smart rent applications we've done in all of our units to help make the units more accessible to people, which goes back to this podding concept. So a maintenance person can work at multiple properties and get controlled access to the unit and address the issues there. There were early things that made immediate impact on utility savings like LED light bulbs but that's continuing to be like their fans throughout buildings, they circulate air on the rooftops, and there's a new generation of fans that's dramatically more efficient than the old ones. So all these little things come together to make you run it better with fewer people and less intrusion on your residents.

Yes. And just another comment on just the approach. We're faster on software like that solution, which we call Ella I just mentioned, then we are on hardware like locks. There are competitors who rolled that out a little earlier than we did and we're certainly aware of that but we just wanted to make sure we knew how it worked right and that we could continue to get the product. I mean the locks break, you got to be able to get additional amounts of it. So we waited a little bit and we're happy to have made that decision because, again, the sensors got better, the locks got a little better. So speed to market is important and it is valuable. But I mean, you're going to see us probably be a little more deliberate intentionally on these big expensive hardware projects than you will on some of the software where the ROI is just the line of sight to the ROI is clear to us, and the amount of effort to get there is a little less and the risk probably from our perspective is a little bit less.

[indiscernible]

I mean the industry needs to be kind of ever vigilant on the regulatory side. So for us, that political risk, we call it isn't just rent control, which is probably what most people think of. It's making sure places like New York continue to invest in public transit and public safety and just in general, that these places are very livable for our residents. So it's sort of a combination of all those things. I would say things feel better to us than they have in a while. There aren't any particularly large ballot measures coming through in November. We've had a few of those, particularly in even-numbered years out in California that have been really challenging, and we don't have any of those at this point. So I mean, I think we have a good working relationship especially in New York and California with mayors and city council people and governors. And I think that's productive. The industry is much better organized. NMHC, which is our trade group, as well as some of the local trade groups, they do the lobbying for us. Revenue here in New York, and we support them. But everybody is much better at making the right argument, which is affordable housing is a problem in this country. There is definitely not enough of it. And if rent control worked, New York would have the cheapest housing in the United States, not the most expensive because they've had rent control since world war 2. So we need zoning reform, we need better vouchers. We need public private partnership. We did a whole bunch of things. In a bunch of jurisdictions, California led the way on some stuff. We hope to get a 421-asuccessor authorized in New York. So we know that we need to invest. We've invested $5 million in an affordable housing company. It's separate from us but it's a company that buys properties otherwise might be converted to a higher end use and keeps them affordable and uses tax credits and stuff like that. So we're trying to be focused on the fact the acknowledgment of a problem and then sort of pushing for effective solutions, not for things that sound great, but don't work. And again, we're getting better traction, I'd say, across the board with public policy makers.

And sharing information, as Mark mentioned, with these different agencies and just also when bad ideas are out there, they become clear pretty quickly. St. Paul imposed pretty stringent rent control and the development pipeline just shut down. Developers said, we just can't, there's no point in us building into that. And that obviously others took notice of that.

[indiscernible]

Yes. It's a great question. I was on this podcast recently, and we talked about that. It seems to me odd that every one of our residents seemingly wants a 1-year lease. I don't want to be in the hospitality business and those sort of really started 0 every morning kind of occupancy. But I do think flexibility, and we're working with a couple of new entrants into the market who have software and we'll work on that. We certainly have an arrangement with Airbnb as well, which is another way to play that. You have to be careful because our resident pays a pretty high price to live in a building that, to them, feels private and comfortable. And they have people with roller boards put in and out all day is not like the look they want. But the new Airbnb program has been working pretty well for us and we can control the number of people in it. Now we're working with a couple of new entrants who are out there. And what they do is you buy sort of like a Gold Passport or something. And you could be in any one of our buildings in Seattle, San Francisco or New York for some period of time. But this company who's posting a letter of credit with us, and so we can, therefore, be a little more comfortable with their credit, they're the ones that deal with all that. They furnished the unit. I'm not really excited about being in the furnished unit business. We were in that business before. It's a lower margin business. When you start buying like housewares and all that stuff, it's just all wears out faster than a building does. So I'd tell you, I love that idea, and we're going to push it because my guess is there is definitely a demand for 9 months or for folks that they can work in Microsoft in Seattle, then they zip down to San Francisco and why they need to tram, why can't I make that really easy for them and keep them longer as a resident in our system. So we're pushing that. I think it's a great innovation. We haven't figured it out, I'll admit, but I think it's an area of interest.

Our portfolio lends itself very well to that because people from L.A. end up in New York a lot and vice versa or San Francisco. So the cities we're in are natural outgrowth for us.

Got it. We're about out of time. We do have 3 rapid fire [indiscernible] everyone and then hopefully, you get them right.

This sounds like a CEO level vlog. Good luck.

I think true or false.

So the first one is, what are the following of the greatest factor challenge facing public REITs today, a, risk and buyer rates; b, risk of a recession; or c, they're either private equity, not REIT?

I'd say the recession risk.

Second question is, which of the following are the greatest specific risk, one; labor issues, two; supply or three; capital market?

I'll go with capital markets. I think the biggest issue in our sector is job loss to be honest. Capital markets, we can adjust to, freights are higher, but just don't have jobs that's a problem. I'll go with capital markets.

None of the above.

Are you seeing any sign post of weakening demand?

No.

[indiscernible]

All right. Thanks, Josh.

Thank you.

Thank you.