Kimco Realty Corporation (KIM) Earnings Call Transcript & Summary

Welcome to the 08:35 session at Citi's 2023 Global Property CEO Conference. I'm Craig Mailman with Citi Research, and we are pleased to have with us Kimco Realty and CEO, Conor Flynn. This session is for Citi clients only. If media or other individuals are on the line, please disconnect now. Disclosures are available on the webcast and at the AV desk. For those in the room or the webcast, you can sign in live on liveqa.com and enter code Citi2023 to submit any questions if you do not want to raise your hand during the session. Conor we'll turn it over to you to introduce your company and members of management that are with you today, provide any opening remarks, and then we'll get into Q&A.

Appreciate it. Thanks for having us. With me today are Ross Cooper, President and Chief Investment Officer; Glenn Cohen, our CFO; and Dave Bujnicki, our Head of Investor Relations and Strategy. We're pleased to be here today. I think I'll probably start just kicking it off with the high-level supply and demand dynamic that we're experiencing today in our sector and then talk about the special ingredients we have at Kimco that we believe will lead to outperformance. From a high level, supply and demand right now is very balanced. We feel like we're in the sweet spot of retail. When you look at the supply for the last decade, there's been virtually no new supply coming online, which is a nice backdrop to the surge in demand that we've seen recently. Post pandemic continues to be a very strong demand dynamic. I think one of the best indicators that I can point to is the first 6 stores of Bed Bath & Beyond that we have been notified that we're recapturing. There's 6 different tenants lined up to take those entire box with a solid spread of 15% to 20% from prior rent. So when you look at the dynamic today in the shopping-center space with virtually no new supply, and the demand side continuing to grow, mainly because of -- some of the main takeaway is the pandemic. And that's really -- the retailer has really understood how to plug the store into their e-commerce platform. The store has changed dramatically today. It's one that I think is no longer an afterthought. If you remember not long ago, it was all about how fast can you grow e-commerce sales, what were the comp store sales, physical brick-and-mortar was almost an afterthought. And now what's really, I think, resonating with the consumer is having the optionality to shop conveniently, to look for value proposition. And I think when you look at the grocery-anchored shopping center that Kimco has in the first-ring suburb of the major metro markets, it's resonating with the consumer today. And it's enhanced by the Kimco Curbside Pickup program that takes the e-commerce platform and gives them even more optionality of how to shop. So when you look at the portfolio today, we've done a massive transformation. We sit with a tightly concentrated and clustered portfolio in the best markets in the country. We see a lot of pricing power on the landlord side because of that lack of supply and continue to look at the highest and best use of our real estate. I think Kimco is a long-term value creation story that is just getting started. Our entitlement program is one that's continued to ramp up quite dramatically, looking at the highest and best use of our real estate. Just 4 or 5 years ago, we didn't have any entitlements. And now we've built over 2,000 apartment units. We have another 1,000 under construction. We have another 5,000 entitled and we're shooting to get to 12,000 units entitled by the end of 2025. It just showcases if you have the right real estate in the right location, the highest and best use, there's a lot of value to unlock over the long term. And with retail in the sweet spot right now of the grocery-anchor side, with the combination of that value proposition longer term, we feel like Kimco is again in the great spot from a supply and demand side. And then now I'll have Glenn comment a little bit about the balance sheet side because we've done a tremendous job of pushing out debt maturities, having ample amounts of liquidity and with our Albertsons investment stake that we can, again, continue to monetize, we feel like we have a unique set of situation to take advantage of any dislocation that may occur this year.

Yes. I mean the balance sheet is really in terrific shape. I mean we're sitting today with about $200 million of cash. We just renewed our revolving credit facility with 20 banks. We have a new $2 billion revolver that's set at a pricing of LIBOR -- I'm sorry, adjusted SOFR plus 77.5% with a toggle up and down of 4 basis points depending on our greenhouse gas emission achievements that we have. We have no maturities this year at all. We do have 2 bonds that mature in the early part of '24. And which are going to generate cash flow after CapEx, TIs and leasing commissions of about $150 million this year. In addition to that, our Albertsons investment, which originally had a lockup to the end of May with an event that occurred last week with one of the investors in Albertsons, the lockup now has expired. So that is another opportunity for us to be able to monetize further. And our capital plan would be to raise somewhere between $250 million and $300 million this year. So we're pretty uniquely positioned from a liquidity standpoint and a cash standpoint to be able to both use the capital towards our redevelopment program, our structured investment program as well as to be able to continue some of the further delevering that we've done. So we are very well positioned in a unique position from a cash standpoint.

That's a good transition maybe for Ross to talk a little bit about the investment pillars we have. And obviously, the organic growth is quite healthy today, but with the cash position we have and the Albertsons investment we have, we are looking to amplify that with a lot of external growth as well.

Yes, I think to Glenn's point, the liquidity position puts us in a very privileged, unique situation where we can look for partnership buyouts, when we're having conversations with some of our joint venture partners that are looking for liquidity, as Glenn mentioned, our structured investment program, which consists of primarily preferred equity and mezzanine financing in unique situations where there are owners or borrowers that need a capital infusion that we can be helpful as well as looking at some potential core acquisition opportunities as the bid-ask spread starts to narrow over time if we start to see a little bit of dislocation in the market. So it's these unique circumstances and times where oftentimes, we're able to do our best transaction. So we're excited about the position that we're in.

Great. Well, I think you guys covered everything. We can just head home now. But just our opening question for the conference is what are the top 3 reasons investors should buy your stock today? If you could just kind of succinctly list those off for us.

Sure, happy to. So Kimco is a special place. It starts with our culture. It starts with our people. Milton Cooper is our founder. If you don't know, Milton, he is still an incredible entrepreneur. And the spirit of Kimco, I think, is one of the, I think, unique attributes of our company that continues to burn bright today. It's up and down the organization. So it starts with your people, it ends with your people. And I think that's really #1 for me. I think our discount and valuation has to be probably #2. It's -- if you're looking for an opportune time, it seems like this is a time to take advantage. Kimco is well positioned, as we talked about earlier. We have the lowest debt levels we've ever had as a company. the highest cash position we've ever had as a company, the best portfolio we've ever had as a company. And I think in some ways, a dislocation may net benefit Kimco more than others because of that positioning, because of the preparedness that we have today. I think the balance sheet is another real testament to the Kimco strength. When you look at the liquidity position and the debt maturity profile of almost 10 years, our access to capital, typically, people get in trouble when they don't have access to capital or when there's a maturity wall coming, we don't see that any time near for Kimco, and we see that, that is a real opportunity to take advantage of. I think when you look at the Albertsons stake that we have, that's unique to Kimco itself. There's -- we've had to learn a lot about taxes and managing $1 billion of capital gain, which is unique to a REIT. So we are monetizing that over a 3-year period, and this is year 2. We did just receive a special dividend and are actively looking to source unique investment opportunities. And then finally, the entitlements that I mentioned before. I think it's rare to see a transformation of unlocked value right in front of your eyes. And that's what I look at when I see the Kimco portfolio. In essence, our strategy is focused on that first-ring suburb, where the highest and best of the real estate is not necessarily in its current form. And when you look at a shopping center when 80% of it is close to just parking that's not generating any revenue, that's what gets me really excited about our future as we really have a lot of different levers to pull for growth.

That's helpful. And you touched on it in your opening remarks about demand still being good. You guys have a larger portfolio, a large footprint, so a good purview to kind of see things. We had the opportunity to tour Dania yesterday, which is an example of your mixed use, but you also have your traditional grocery anchored. Could you just talk a little bit about maybe differences or similarities between the lease-up profile of more traditional center versus some of the more high-profile mixed-use where a lot of retailers want to be to get that traffic and kind of try to bridge those for us?

Yes. So the grocery-anchored portfolio is really your everyday goods and services, right? So you're thinking of whether -- we're in Florida, so let's talk about Publix because they are the belle of the ball. When you have a Publix-anchored shopping center, the trip frequency is quite high. And so what you try and do is merchandise around that anchor and create stickiness points in the day that you're going to have a longer-tenured shopper at your at you shopping center. So you're trying to increase the dwell time. And so what you do is you look at really what are the uses that are missing in an area. We do void analysis to look at if there's an issue where there might not be a certain use category that's missing in a trade area and then look to try and bring in shoppers throughout the day, whether it's your coffee, bagel, doughnut in the morning, whether it's your quick service restaurant, what's interesting in Florida because we've been touring obviously, our assets the last few days, is, I think there's a higher concentration of health, wellness and beauty here. And I think that is part of some of the demographic shifts that are going on as well as the demand drivers for retail that we've seen really ramp up post pandemic is health, wellness and beauty. And I think that is a sticky category that is going to continue to grow. And it's -- when you look at the quick service restaurants that we have, when you look at the services that we provide, the hair salons, the nail salons, these are things that even during the pandemic, people were still getting their hair done and getting their nails done and going to quick service restaurants for takeout and things like that. So we try and strive on the grocery side to put together a suite of offerings that resonates with the loyal consumer that lives close by. And then on the mixed-use side, it is more of a wider draw, catchment area. So when you look at the radius that you're pulling from, you really have to understand your consumer as best as possible. And so on the mixed-use side, it's a wider draw, but there's also built-in consumers with the apartments that are on site. And when we talk about mixed-use, we've obviously been very focused on just the apartment side of it. We have only entitled office once and we sold off the entitlement rights. And so a little different than others, but we are very focused on the combination of the retail and the apartments because we see them feeding off each other and creating a wonderful flywheel where the retail actually generates higher-than-market rents on the apartments and the apartments generate higher-than-market rents on the retail. And a lot of it is amenity driven. If you think about an apartment building, what's the best amenity package they can offer. Maybe they have a pool, maybe they have a fitness center. Do they have a grocery store? Do they have a Starbucks? Do they have a quick service restaurant? Do they have a salad offering? Do they have a physical fitness area? We typically already have that in spades. So when we add an apartment tower to our product, we have the best amenity package by far in the trade area. And so that's what's allowing us to push rents on the apartment side above market. And that creates a really nice flywheel for us to merchandise around the mixed-use product where we can bring in unique brands that we may have in certain geographic areas that are not necessarily in other geographic areas and create a nice portfolio of assets where they can see the quality, they can see what Kimco is doing and get excited about getting in one of those projects earlier.

And to go back to your commentary on the resi side, you guys ultimately want to get to about 12,000, your -- I think you said entitlements for about 5,500 so far. How do you mitigate the risk, right, with maybe some -- an uptick in resi development that's going on now from your own ground lease versus actually own the apartments, how you guys think about that decision and as you broadly think about risk within the portfolio.

Yes, it's a good question. So again, looking at supply and demand is critical. When we look at the opportunity set for Kimco, we try and make sure we do a CapEx-light activation of these entitlements giving us the ability to control it longer term. So there's a few different ways we've done it, and we've learned, obviously, over the past 4 years that the ground lease is an option for us, where we structure it with a long-term leasehold where they put in the capital, they develop, they construct, they manage, and we have a long-term lease with that best-in-class apartment developer. And we have a right of first refusal. So if they were to sell that leasehold, we would be buying from a fee position. So you would think there would be a spread between our position and what the market would generate. So that could be creating some nice upside for Kimco go long term to consolidate it and bring it back in-house. The other way we've done it is in a joint venture with a best-in-class multifamily developer, where we get a marked up valuation on the entitled land on our asset and put that into the joint venture as our capital and then have the best-in-class apartment developer take the project, soup to nuts and manage it. And again, we have the right of first refusal to bring it back in-house. So the way that I think the benefit of REITs in some ways, there's also some negatives to REITs in some ways, where the structure of a REIT, you're not really benefiting tremendously from a lot of development where a lot of capital goes out and there's no return on that capital until it's stabilized, where we're trying to activate projects without having a lot of capital going out with very limited return, but giving us another bite at the apple once the asset is stabilized, I think bodes well for the future.

And if you have to look out in 5 years, what percent of NAV, NOI, however you want to measure it, will resi be of the company?

The way that we've looked at it is it's more of a holistic mixed-use approach where we're up to close to 13% now of mixed use coming from the portfolio. And that is obviously heavily weighted towards the retail side of it because of the CapEx-light approach we've taken on the apartment side. But I think when we look at the portfolio where we're potentially getting to 85% to 90% grocery-anchored and then having a combination of mixed-use involved in the grocery side of it, I think that's the sweet spot for us because you do see higher growth profile coming out of the apartment side in good times, obviously, in bad times, it can reset quite rapidly. And the resi -- the retail side of it is a steady Eddie for us. It continues to produce some nice growth as well. So that's the combination that we think for the long term is going to benefit Kimco's and its shareholders.

And on the development side, overall, there's obviously been upward pressure on construction costs. Your cost of capital is changing as are all of your peers. Kind of how are you guys underwriting today, incremental starts from a return perspective, how much of a cushion do you need to buffer in? And where do you ultimately think returns will kind of shake out here longer term?

So we don't have any active developments right now. So we're not really looking to put shovels in the ground right now. When you look at the profile of the portfolio and the smaller redevelopments that we can activate, which in a lot of ways, is creating an outparcel in a parking lot that's underutilized or expanding an existing shopping center, those are still returning single -- high single, low double-digit returns, just cash on cash. And so that is a nice use of our underutilized real estate in this period of time where, as you mentioned, costs are elevated, cost of capital has changed significantly. We are sitting with a lot of cash. We are sitting with another stake of Albertsons that we plan to monetize this year. So we do need to put that to work. The smaller redevelopments seem to be the best use of the capital right now as they're blending to around a 10% return. When you look at the residential mixed-use activations, that's again more of a CapEx-light strategy. So when you do a ground lease or a structure, you typically have very minimal costs involved in that. It's more like [ pad ] prep. But overall, I think when you look at the investment opportunities we have, clearly, leasing is still #1 for us. There's a lot of leasing opportunities. We're still not back to pre-pandemic all-time high occupancies. We've ramped quite rapidly back and still have a lot of opportunity, I think, on that side. And then it's followed by the redevelopment, the smaller redevelopments and then the structured finance and as well as some of the unique acquisition opportunities that Ross has been finding.

And I'm getting a lot of questions about bad debt. Obviously, that's been a topic. It goes with your leasing. We've mentioned leasing costs as a use of that free cash flow. So I guess I will ask you all at once all these questions. But just from a -- just to let everyone know here, could you kind of run through again what bad debt expense expectations are in the 2023 guidance, maybe and split that out between some of the known bankruptcies or likely bankruptcies versus just that general cushion for maybe some of your shop-type tenants?

Yes. So we built into our guidance, 75 to 125 basis points of bad debt expense, which is more of a normalized level. Like if you go back pre-pandemic, we were always running somewhere between around 75 to 85 basis points of bad debt expense in our guidance, and that has been at historic level. Obviously, through the pandemic and even through last year, you had these wide swings of large amounts of credit loss then reversals of credit loss. We're back to something of a more normalized level. Now when we started and looked at the year with initial guidance, we were obviously very concerned about where Bed Bath & Beyond would be. Bed Bath & Beyond is baked into our guidance. So that's one specific. But the balance of it is more just the business itself coming back to a more historic level and look of what expectations are towards bad debt expense. And that's really where we are today. So it's in this $15 million, $18 million range relative to last year, where we had $6 billion of income. So you have this $0.04 swing in the guidance number.

And from a CapEx run rate standpoint, I mean, retention has generally been good for everyone. If you get some of these givebacks kind of layered in there? How should we think about that headwind to AFFO that could offset a little bit of this rent growth that you've seen?

Yes. I mean I would say, look, as it relates to the CapEx component of when we think about AFFO, right, we are expecting to generate around $150 million of the free cash flow, again, after CapEx, TIs and leasing commissions to the extent that the retention levels are better, that will help us lead towards the upper end of our guidance range and obviously improve the amount of CapEx that is required to keep those -- fill the boxes.

Yes, I think the nice tidbit of information thus far is that the demand for those boxes is usually one for one. So the CapEx load is quite lower than if you have to split a box and start to do it for multi-tenant. So for the first few that we've seen, that we have visibility on recapturing. We've seen a dynamic of multiple retailers wanting the box and taking the whole box and being flexible on footprint. I think that's the benefit of the supply-and-demand dynamic that we're in right now, where retailers understand that there's nothing new coming out of the ground. They have significant store growth plans that they've announced and promised to the Street and they need to fulfill those. And so in order to fulfill those, they're being more lenient on prototype size. So if it's a little bit larger or a little bit smaller, but it's the right location, they're going to make it work. And I think that's what we're benefiting from right now.

And you've mentioned on the 6 Bed Baths, I think that you've gotten notification you're getting back. It's like a 12% mark-to-market, maybe 15% and 20% overall. As we think about that, when you layer in CapEx, should we think about those net effectives being materially different than your typical box you maybe have to lease up or what have you? Is there any distress in that I'm getting at or deferred maintenance that Bed Baths had in there that would shift that away from what we would expect kind of the flow-through to [ net ] earnings.

So net effective rent has been a Kimco calling card, I think for the past -- since we started. And that's why we have a lower average base rent than some of our peers is because we make the retailer put more capital in than others. We are very, very focused on net effective rent and making sure that we, as Milton taught us, not to do credit deals, do real estate deals. And so if you start to inflate the rent or if you start to put in too much capital, that's typically when you can get in trouble in times of dislocation. So we focus on making sure that the tenant itself has a lot of skin in the game, and it creates a lower average base rent, but the net effective rent is what it's all about, and we focus on that and continue to see strong demand from the retailers that allows us to push the retailer to put more skin in the game and yet still generate those positive leasing spreads.

And early discussions on -- with tenants so far. I know we're only 2/3 of the way through the first quarter here. But any indications of a shift in sentiment among your tenants or sales or anything that would make you feel like what you have baked in is not sufficient. I know conservative was probably the most overused word as it came to guidance in the REIT space in the first quarter. But just generally, how you guys feel about that cushion you've laid in with the early feedback of where tenants are?

Yes. And to your point, it is early. But we've -- so far, what we've seen is traffic is up year-over-year. So -- and we're coming from a very high point last year, which is above prepandemic level. So the consumer continues to resonate toward our product. We continue to see strong leasing demand. As I mentioned earlier, the supply-and-demand dynamic continues to benefit the landlord that has the high-quality and irreplaceable locations. I think it all depends on the consumer and what happens in the next 6 to 12 months. I think we're in this interesting time period where the lower-end demographic is obviously strained from the inflationary environment. They're doing more grocery shopping than they are doing -- sort of going out to eat. The higher demographic has yet to be impacted or change habits because the employment market is so rock hard. So like it's one of those situations where so far so good. The leasing demand is strong. The fallout has been less. The retention rates are still quite high. The Bed Bath & Beyond situation is still a fluid situation. There's a lot of demand for those boxes. So we're continuing to monitor all the puts and takes. But again, as you said, it's early, and we have to see how things play out.

And your success on pushing through contractual bumps. I know there's the anchor side and then the shop side. Could you just walk through whether that's changed at all in negotiations, kind of what type of bumps you're getting? And just remind us maybe how those -- the bumps that you're getting currently compare to maybe the in-place blended for the whole portfolio?

Sure. So traditionally, back, I would say probably a decade ago, you would be looking for a 2% to 3% bump in your small shops. And then on the anchor side, you'd get about 10% to 12% every 5 years and that was the prototypical lease that you would strive for. We've been successful in pushing that annual increase on the small shop side, north of 3%. So typically, somewhere between 3% and 4%, sometimes even 5%. On the anchor side, it's been tougher. It's typically still in that 10% to 12% range. And again, a little bit is supply and demand, a little bit is who has the negotiating power on each and every location because that determines obviously how many -- how much impact you can push. But that's typically what we've seen, and it's been pretty steady. The small shop side is really what's rebounded quite rapidly to allow us to push those annual increases, which again improves the growth profile of the grocery-anchored centers that we have.

And just generally, rent spreads have been a tailwind for you guys and your peers here. As you're looking at the landscape today, we've talked about demand being good, Citi's expectation is sort of a mild recession in the back half of '23 with, I guess, we characterize as a less-hard landing scenario today, given what's going on. I mean what is your kind of expectation of what you guys have dialed in or telling your folks on the ground from a -- how hard to push rents? What your expectations are on different spaces, kind of what you think your mark-to-market of the portfolio is today generally and what the expectation is for your leasing folks to get as close or exceed that as possible?

If you look at our occupancy recovery from the pandemic, it's pretty remarkable to see that I think our all-time high was 96.4%, and we're just below 96% today. And so when you look at, call it, relatively stabilized in terms of occupancy, we're pretty much there. And when you get to that point, you can really push. And that's where I think we're at. We're at a point where we can really push rents. We can really push bumps. We're selective on who we can bring into the shopping center to add to the merchandising mix. If you think about traffic drivers, which is really what it's all about. The anchor definition today has -- is very, very different than it was 5, 10, 15 years ago. It used to be you had to have the right grocer or the right big box. Today, it could be a Chick-fil-A. It could be one of those situations where there's a lot of different sizes and shapes that drive a lot of traffic. And we're fortunate where I think our real estate sits, it's become apparent that consumers really gravitate to where it's convenient and to where they can find value. And I think when you look at the proposition that we have at Kimco is the merchandising mix changeover that's occurring. We're taking out the worst credit tenants and replacing them with the best credit tenants at market rents. And we're seeing, I think, 20% to 30% mark-to-market on our anchor boxes, which continue to create some nice tailwinds for the long term.

And we have a question here, cost of capital. Clearly, equity has moved, debt has moved as well. If you guys had to do a debt deal today, Glenn, where do you think at 10-year bond prices?

We'd probably be somewhere around [ 180 ] over today, I would think. So you'd still be sub-6%. That's pretty much -- but the market has been moving around a whole lot. I mean rates have obviously been moving around spreads. Spreads have widened, spreads have narrowed. So -- right now, today, I mean, the market is clearly open, which is great. You can clearly access it. And we've always tried to be very opportunistic and pick our spots, when to go. And we'll continue to go down that path and monitor the markets very closely and be opportunistic where we can be.

That's helpful. Then -- we talked a little bit about rent growth, but I have a question here specifically about occupancy cost ratios, kind of where they've gone, at what point do you see tenants push back. And then I'll add on too for some of the shop or other tenants that are doing more in the box today than they've done historically from either buy online, pick up at store or mobile ordering, right? How do you get to the true cost of occupancy that you really think they're at versus what they try to tell you they're at and kind of that negotiation?

That is a great question because it's a fluid answer because today, you don't have perfect information. And we know that the retailers are benefiting from the e-commerce halo that occurs at the store, trying to monetize that or get it embedded in the occupancy cost is one of the hardest hurdles we have today. We -- and you're seeing it show up as retailers continue to push rents where the occupancy cost is above probably typical normal, but they obviously have a different calculus of what the e-commerce halo is going to bring to that store and the sales projections for that store. And that's why you're seeing those outsized new leasing spreads where we don't -- we can hit 4-wall sales. The issue that we're finding is that the e-commerce sales that are now being attributed to that store is typically in that geographic area and you're seeing a lot of correlation when stores open. The e-commerce sales pop in that trade area, and the exact same happens when they close a store, the e-commerce sales fall off a cliff. And that's -- it's interesting. You're seeing now different strategies come out of retailers where the closures are changing, where they recognize it's not just the 4-wall sales anymore. So if they're going to close a store, they typically have another store, whether it's rightsized or whether it's a better location in that same trade area because they know they can't lose those e-commerce sales. And so that's the dynamic that's going on right now that's really top of mind. We're doing a lot on data analytics to try and help us understand. And you can make an informed decision on how much of a benefit e-commerce brings depending on the use that's in the box but we're still in the very early stages, but we believe that that's a real net benefit for the long term for our business that will really help generate some significant growth in market rent power.

That is helpful. We're going to move to some shorter answer questions here. But I want -- before we go to rapid fire, I want to ask, for 2023, what's your #1 ESG kind of goal?

We've targeted sustainability as our #1 like the greenhouse gas emission targets that actually help us on the debt side as well. So if we hit our greenhouse gas emissions target, our revolver actually gets cheaper. So that's one for us that we can control and focus on and execute on. Number 2 would be diversity for us, but those are to be the top 2.

Perfect. We'll move to rapid fire. So what will see store NOI growth be for retail, not necessarily Kimco in 2024?

In 2024, 2% to 3%.

And what's the rest -- the best real estate decision today for you guys, buy, sell, build, redevelop or hold?

So today, I would say it hold equals leasing, I would say, hold because leasing is definitely the best return that we're seeing today followed by those smaller redevelopments that I mentioned that are clipping around high single, low-double digits. After that, it would probably be some of the structured finance, the mezzanine or the preferred equity investments, again, that we do with the right of first refusal so we can get a foot in the door on a potential acquisition there then probably followed by a mix of the redevelopments and the core acquisitions.

Perfect. And then will you -- will the retail sector have fewer or the same number of public companies a year from now?

Probably the same. I think we saw -- I think this is a question you've asked for a number of years in a row, and I think we had 2 IPOs and 2 mergers. So that's [ you're answer ]. So I think that's the default answer.

Perfect. So with 6 seconds left. Thank you guys so much. It was a pleasure.

Thank you very much. Appreciate it.