Kite Realty Group Trust (KRG) Earnings Call Transcript & Summary

Good afternoon, and welcome to Citi's 2021 Virtual Global Property CEO Conference. I'm Katy McConnell with Citi Research, and we're pleased to have with us today, Kite Realty. This session is for Citi investing clients only. If media or other individuals are on the line, please disconnect now. Disclosures are available on the webcast. For those of you joining us here today, if you'd like to ask management any questions, please type them into the question box, and we'll do our best to ask during the session. So to kick things off, I'll turn it over to you, John, to start with some opening remarks on the company.

Thanks, Katy, and thanks, everybody, for joining us today in our virtual session here. But Kite Realty Group is a community shopping center company. We own approximately 90 properties throughout the country, but predominantly located in the southern and near western regions with about 80% of our revenue coming from there. We are -- we have about 75% of our properties have a grocery component to them. So the combination of the property type and the geography that we're in has served us very well throughout COVID as we've had sector-leading rent collections and continue to do very well there. So all -- the quick synopsis is we are a community shopping center company. And we think very well-located parts of the country with an excellent tenant base, and looking forward to better times ahead. So that's the quick summary, Katy.

Okay. Great. So to start each session, we're asking every company, if an investor was buying one real estate stock coming out of the pandemic, what are 3 reasons that it should be yours?

Well, I kind of touched on that a little bit. But first of all, it's a strong portfolio. We believe that a lot of the things that we've done over the last couple of years have positioned us very well with the geography that we're in. As I mentioned, our primary biggest markets are Texas and Florida and then throughout the southeast. And as I said, parts of the near west, and I think that really is why we were able to lead the sector in collections throughout the whole process of COVID. So first and foremost, I think it's the strong portfolio. Then I think another very important aspect is our strong balance sheet. And I think we've worked very hard to get a balance sheet that's given us great flexibility, Katy. And as an example, at the end of the year, we were in a position to be able to act quickly and make an acquisition in one of our target markets in the Raleigh, North Carolina MSA and a lot of people probably couldn't do that at that point in time. And then also, I think we believe that we've been very diligent and pretty smart with capital allocation. I think that's also represented by, shortly after we made the acquisition, even though our balance sheet was in a position that we didn't have to do this, we took advantage of an arbitrage and sold a ground lease portfolio, which we took those proceeds to pay for a good chunk of that acquisition. So I think those 3 things, that combination of the portfolio, the way that we run the portfolio, the balance sheet that we have and how we allocate capital. I think those are 3 very important things. And we have room to run, so I'd say that, too.

All right. Great. Could you go into a little bit more detail on how you're benefiting from recent migration trends and whether this impacts your target market strategy going forward as you pursue future growth?

Yes, there's no question that the regions that we're operating in have been a beneficiary kind of twofold. There's pre COVID and post COVID. I would say pre COVID, there was already a move to get into these warmer, cheaper markets out of the more high-cost, higher-barriers-to-business places. That was slow and steady. COVID significantly accelerated it. And so we believe that there's been a large growth in the last year. But even with that, as that moderates, which it probably -- that push moderates, there's still this consistent move there. And when we have 80% of our revenue coming from, as I said, the Southern states and the near West states, there's no question we benefited from that.

And there's been a lot of disruption, obviously, in retail, both pre and post pandemic. What of those changes do you view as more temporary as we emerge from the pandemic versus which ones will have permanent impacts? And how do you think the retail landscape looks different 5 years from now?

Well, look, I think there's no question that the open-air sector -- we can talk macro for a second. The open-air sector has been a beneficiary of the unfortunate situation that unfolded with COVID. I think that the ease of getting in and out of these properties, the visibility of these properties, the mixture of tenancy that we have in these properties, which would be the daily needs and also even the restaurants, for example. You wouldn't think that, but right now, our restaurants are on fire. So there's this combination of retailers and access and visibility that has definitely [ benefited from ] this. And I think that's long term. I think we've talked about this before. Customers -- retailers follow customers. And the customers have found our properties in big numbers. And maybe a lot of them hadn't been there before. And because of their migration out of an urban market or whatever, now they're saying, wow, I can access this really quickly and easily. I can pick up what I want. It's 5 minutes from my house. Why would I order online? Why would I deal with all that? So I think that's permanent. I think that shift to this the way that our retailers and our properties are serving those customers permanent. Some of it, look, some of the stuff that we've benefited from could be temporary in terms of what's happened in the grocery business and some of the other retailers that got huge spikes during this period. I'm sure that will moderate to some degree. But again, to the extent that the customer has found this venue, that's long-term for us. That's a big deal. And I would be more focused on that.

And we saw e-commerce sales accelerate during the pandemic, but so did delivery costs and logistical pressure on deliveries. So can you talk about how your tenants are looking to better utilize the physical store footprint as a result of that?

Yes. I mean, it's a huge part of the business, and there's no question that buy online, pick up in store probably went up tenfold. And even more so, curbside pickup, the convenience of that. We are working with our retailers as most of our brethren are to make that simple and easy. So it has become one. I think this idea of online versus physical is going to fade over time. And this is one real venue for these guys because there are very, very few actual online-only retailers. And really, the only one that can pull it off is Amazon, and they're not really online-only anymore. So -- and that's just a scale thing. So with Walmart and Target, what they've done there, they've created a real competition, I think, for Amazon. And so now, when you look at our centers, the community centers, the majority of our tenants are utilizing this. Even the mom-and-pops have figured out how to get product to their customer the way the customer wants it. And the more and more technology we get, the easier that becomes. So again, another real big reason that I think open air outperforms for a while because it's all about the customer.

And to what extent have those initiatives or advancements been tenant funded up until this point? And how are you getting involved in making the entire shopping center work better in an omnichannel world?

Yes. I mean, I think it's early days on that, Katy. I mean, certainly, at this point, it's been -- the great majority of the spend has been the retailer. And a lot of that is technology, some of that is store design. From our perspective, we're facilitating. And we did things during the pandemic that we had never done before in terms of flexibility and letting retailers experiment and working with them to do that, and it created a better bond, actually. When I look back and I think we out-collected pretty much everybody in this business when we did and how we went about it, it wasn't like strong-arm. It was relationships, partnerships and that will carry forward. So as we talk with the retailers, we want to help them, but there's really not a lot of cost to the landlord to do this right now. Now who knows where it goes and how store design changes, we'll see. And again, we always want to partner with the retailers to create a better experience. But I'd say so far, it's more on their side in terms of CapEx.

So coming out of this period of disruption, as we get towards more of a recovery, what opportunities are you most excited about? And what do you think maybe The Street is overlooking or misunderstanding about your story?

Well, I think -- when you use the word, The Street, I think in general, people still are kind of a little short-term focus. So there's a lot of conversation about when will we get back to 2019 and things like that, that I think are short term. And I think the thing that I'd like to get people to focus on is the value of these assets, in my opinion, has appreciated significantly because of this reawakening of the consumer to our product. And I think that we're very focused on that. And we want to create environments and opportunities for consumers because that's what our customers and retailers want. So I'd be more macro, and I'd be thinking this narrative that I used to hear a lot about pre-COVID, that all retail is the same, and it's all going in the same direction, down, up is wrong. And I think -- so I'm kind of focused on that side. And also maybe the fact that when you look at our company, the stock has performed very well on a relative basis, but that's because it came from a place where it was very undervalued. And we have a lot of room to run. So I want to make sure the investor understands. We're at our low point in occupancy for multiple years as a result of the bankruptcies that got accelerated in COVID. That's a huge growth opportunity for Kite. Again, that's over the next 2, 3 years. And we're going to build on that. So we're excited about that. But we're also excited about our balance sheet and our management skill set that I think people are starting to figure out, so that we can take advantage of opportunities like we did with the acquisition at the end of the year. So I see a lot of good stuff ahead.

I think -- Katy, I think it's interesting. What's a little counterintuitive about our story is that we suffered one of the least amounts of degradation in our revenue. But we also suffered some of the most drop in our lease rate, right? So how is that possible? It's because the rents that we did lose were so low. So for example, we lost 490 basis points in leased rate, 230 basis points of that was attributable to Stein Mart at $8 rents, which represents a tremendous mark-to-market opportunity for us throughout the portfolio. And not only does that result in actually more NOI, but there's also a value proposition to that as well. So if you're taking your Stein Mart who was not really driving a lot of traffic, right? And you replace them with a grocer, with a Total Wine, you've not only increased your NOI with a nice spread, but you've also basically compressed the cap rate for the entire center. So when you think about our occupancy and all the gains we could have, don't just think about it in terms of the incremental NOI. It's the ability to really recycle out these tenants that weren't driving traffic, that weren't dynamic to the merchandising mix and really changing the character of the entire center. The Stein Marts were, I don't know, call them 30,000 square feet. Most of our centers, the average size is 140,000 square feet. So you're really talking about changing fundamental principle in these centers. And we're really, really excited about the demand we're seeing so far for these larger spaces.

Yes. And can you provide some more color on -- as you think about backfill opportunities, how significant that mark-to-market opportunity could be? I know you've talked about the Stein Marts in the past. Maybe touch on them and anything else you have visibility that you might be getting back over the next year or so.

Yes. I mean, I think it's kind of a Big Box Surge 2.0 for us, even though that's not what we're calling it. We've been here before, and we got -- and so we have the luxury of comparability to that. And I think we think we're in a very similar place to where we were in 2018. And we've got -- during that period, Katy, we essentially got double-digit rent spreads and double-digit -- double digit -- more importantly, double-digit IRRs in our returns on capital spent. So I think we're in the same place. I mean, actually, if we just get back to our average rents in both the small shop vacancy and the Big Box vacancy, that's teens IRRs and rent spreads. So we feel very good about that. And I would tell you that especially -- it's funny, last time we kind of went through this, it was really just the anchors, right? This time, we have some anchors and we have shops. And so on the shop side, I mean, we were sector-leading at 92.5% pre-COVID. Today, we're like at 88%. There's huge upside for us. And it was just this recycling of, unfortunately, people that just couldn't hang on during these forced lockdowns. Now we're back to -- we've got a fresh start. There's a lot of activity. And unlike last time, when you think about what happened last time in the GFC, that was a multiyear buildup of supply going into the GFC. This is the exact opposite. No supply literally since then, which is over 10 years. With this demand, it feels pretty strong. So that's good pricing power. So look, it's early, but that feels very good at this point.

Also, there's obviously a bifurcation in quality across strip centers as well. Obsolesce risk is something mainly talked about in malls, but to what extent do you think we could see some lower quality strip centers dying off during this period, too?

I think it's a very different analysis. I can't think of too many open-air centers that are just functionally obsolete, right, and they have no reason for being as an open-air shopping center. There might be some mixed use deals that are over mixed-use that maybe aren't able to lease-up the components that they thought they could, especially when you have retail on the first floor of a mixed-use property that doesn't have parking, that relies on parking decks. I mean, things like that can be challenging. But I can't think of a lot of open-air centers that are obsolete, right, that need to be knocked down completely. Now the beauty is it's easy to transition these properties, and it is easy to create opportunities where you knock down a section and do something different or even like we're doing at the Glendale redevelopment, where we had 10 acres of parking that we weren't using 5 acres. And now we're doing 270 multifamily units on parking that was generating no income and creating better water treatment and things like that. So a lot of actually opportunity there, but I don't think a lot of obsolescence that I've seen.

And to what extent are you seeing leasing demand coming from off-mall migration into shopping centers today?

Yes. I mean, I think it's -- certainly, it's a real thing as it relates to the weaker malls. I think the Class A malls, that is not something that we see a lot of. If anything, we would see in a Class A mall, a tenant willing to experiment off mall. Now in the weaker properties, no question that people are looking for exits to the extent the property is dying. And we have definitely seen traction there, particularly somewhere in the spaces that are like between 4,000 and 10,000 square feet. There's users that want to do that. There's users that are coming out that never had before. So there's real momentum there. So we're happy to engage.

So you have significantly more vacant box space now as a result of the pandemic. Can you just talk about the demand kind of by size formats? And it feels like before the pandemic, junior anchors and box categories were under a little bit more structural pressure, and it feels like that's kind of shifted after the pandemic. So any hints you can provide there?

Sure. Yes. I mean, again, we haven't been to this movie before. We're playing our playbook, and we're off to a very good start there. As you know, just from the bankruptcies, we addressed 2/3 initially, and now it was up to 80% -- over 80% of the bankruptcies have been addressed. But as it relates specifically to the boxes, as of the last quarter report, I think we had 19 or so. We're actively engaged on the majority. And our uniqueness to us, to Kite was the Stein Mart element that Heath touched on. That's big upside for us. And it's a size that's a good size. So if you go back to the last time we had this happen, again, the Big Box Surge, there was the delay in some of the bigger boxes like the sports authorities. You remember the conversations we had. Any time you got over 40,000 square feet, it was challenging to not split that box. The beauty of where we are right now is we don't really have anything at that level. So all these boxes are kind of between 20,000 and 32,000 feet, generally speaking. And that's a really good size. And there is just real demand there because retailers didn't know what was going to happen. So everything got pulled back in the beginning of COVID. But as they realized they were doing much better than anticipated, now there's going to be some catch up, right? So for those of us that have well-located, well-priced inventory. There's no reason we shouldn't be able to act on that pretty quickly.

It's interesting also, Katy, when we did the Big Box Surge, when we did those 22 boxes, we thought in advance that we were going to have to split a lot of them. And we only ended up splitting 3 or 4 of those boxes, which explains why our capital outlay was only $65 a foot in the first program. This time, we've got 19 boxes, 11 of them are already in play, and all of them are single-user tenants. So again, when we first looked at the inventories, we said, gosh, we're probably going to have to split a lot of these in order to get them fill, and it's just not panning out that way. So you'll see in our investor deck, we gave you a capital spend estimating something like $100 a square foot. I'm hopeful that based on the current lineup and to the extent we can get these deals over the line, that we can vastly outperform that capital outlay with single-tenant back users.

And to what extent do you think you'll be able to increase your overall grocery exposure as a result of this round of retenanting?

There's no question that we will increase it. As Heath just pointed out, I mean, of the deals that we're working on, I think 3 or 4 of those are grocery opportunities. So yes, that will continue to expand. But again, I mean, there's a lot of good tenants out there, and we're very focused on merchandising mix. An example like Total Wine would be a retailer that you wouldn't really think of, but they do basically grocery volumes. The pet guys are doing really well because they're grocery stores for pets, which has expanded dramatically. So we're focused on it. We're going to be doing a lot of things. But we're also focused on all the other customers that we have. We're not -- it's not one dimensional.

And in your new leasing demands -- or in your new leasing negotiations, are tenants looking for increased flexibility? And how does that come through? Is it in shorter lease terms on the rent bumps, free rent initially? What kind of demands are you seeing? And what are you more willing to grant to them?

Yes. We're -- from our perspective, we're not seeing a lot of change there. We're not in a position where we feel like we have to do anything outside of what we've always done. So nothing out of the ordinary. Free rent isn't really a topic in a material way. TIs are similar to what they've been historically. The difference is base building costs, depending on who the former tenant was. I haven't -- we haven't really experienced anything in terms of changing lease term or -- I mean, honestly, we're just not -- we feel like we're in a pretty strong position with the real estate that we own. And again, this is germane to Kite. It's not -- I can't speak for other players. But in our particular situation, we feel very good. We like our real estate, and this is an opportunity for a retailer to join a strong center. This isn't us begging someone to come.

Right. Maybe if you could just help frame the time frame a little bit of the lost commenced occupancy that you've seen since the end of 2019, I think, a little over 300 basis points. How much of that do you think you can recover by the end of this year from a commenced perspective?

Well, we haven't really given portfolio lease percentage guidance of any kind. Look, what I can tell you is that this is probably going to play out very similar to what happened the last time, certainly on the box side, which is we're very close to the same numbers, right? Let's say, we have approximately 20. We had 22 then. It was -- it's kind of an 18- to 24-month rent commencement period for the anchors. And then -- and the difference is this time, we got some shops back, and that's a much faster time line. And on the shop space, we generally think that's 6 to 12 months' time lines to create revenue. So we're not really -- and again, we're just not focused on those particular metrics, Katy. We're not really focused on that rent spread metric or the lease occupancy or the gap between lease and commence, I know it matters a lot for modeling and et cetera. But our focus is getting the right tenant at the right return, being smart with capital, putting it where it pays off to put it and getting this done as quickly as possible, and we're very confident that, that will play out.

Yes. More than modeling, I think it's just a question of when are -- when will the portfolio be back to a stabilized leasing point where you would be in a position to pivot more towards external growth or other [ properties ] aside from strictly leasing?

I think I like what John said, I think in 2 years from now, hopefully, we're back to the occupancy levels that we were before. And then we can really flip the lever and see what we can do externally. But listen, on a risk-adjusted basis, this is really the best allocation of our capital right now. I'd rather be filling boxes than putting office buildings or apartment complexes and parking lots, right? So again, give us a couple of years to get ourselves filled back up. But meanwhile, we're still going to be looking -- those in our balance sheet is certainly strong enough that they're -- it's not a mutually exclusive exercise. So we can go ahead and get everything leased up. We're going to be able to pay for the capital, and we estimated in our disclosures that -- through free cash flow. So nothing to say we won't do something like we just did now, which was buy another [ rescape ], if it's the right asset and love to perhaps match fund it in an accretive way with either -- we'll do some more ground leases or well maybe we'll sell some of our assets in locations, which we're looking to move away from. So we're always looking for external growth. And earlier said, number 1 on the agenda is let's get leased back up.

Yes. I mean, look, we still have the bulk of '21 in front of us. We're very focused on this lease-up right now, just like we were before. It's very, very high return. It's a high-return exercise that will create earnings, that will create cash flow. And as we get a little further into the year, we're going to have better visibility, Katy, on where things are going to be. But the beauty is, as Heath just said, all that work that we did in kind of 2018, 2019, not only put us in a place where we could just do exactly what we needed to do for our customers, but it also put us in a place that we could still be looking around and boom, we were able to do something really, really great, quickly at the end of the year, which we never would have been able to do that pre all the moves that we made. So we're always actively thinking about growth. But right now, this is lower-hanging fruit growth. We're going to go get it, we're going to do it. But at the same time, we certainly will be looking at opportunities. And we're probably one of the few guys that have that balance sheet to have that free cash flow, that have kind of been here before and can get this done.

Maybe we could talk a bit about the ground lease portfolio. You could just walk us through sort of the motivation behind the deal that you sold to Agree. And how much dislocation are you seeing today between pricing for net lease and high-quality shopping centers?

Well, look, I think it was a great deal for both parties in that situation. We have talked for several years about the fact that we had this portfolio of ground leases that represented approximately 10% of the NOI of the company at various levels. And we always knew that it was a very -- that it was an asset that we had kind of individually monetized over the years. And we just got to thinking that this is a pretty big discrepancy in value and I think that still exists today, even after this trade. And so look, it's -- we have -- we sold whatever 20 or 18 of them, 17, 18 of them. We probably have another 50 or 60 ground leases in that range. So it's -- as Heath just said, it's a form of capital. It doesn't grow at the same growth rate that we want to grow at. And as long as we're being smart about it, and it's the right ones in a particular shopping center, we don't lose control of the asset. And that happened to be a great counterparty who did everything they said they were going to do. And so that's a really good situation. So I think that exists. We like to keep it simple. We're not going to probably overcomplicate that. We're going to be straightforward about, we have the portfolio, it is a form of capital, if needed, and if we can deploy it into something that makes -- has higher growth and has similar characteristics from a credit perspective, right? We're not just going to toss it away for no reason.

So we took advantage of this arbitrage. We had a counterparty that had better cost of capital, could pay more for those ground leases than somebody else. So that was obviously the thesis of that particular trade. However, I think the interesting thing is going through COVID, it really brings into question whether or not that arbitrage between net lease and multi-tenant retail is really warranted. Why is there such a multiple differential? And you saw it in COVID, in collections. We were sitting in the fourth quarter at 95%, maybe some of the higher triple net guys were 98%. But certainly, that small differential of rent collection, when the tide pulls out, and we're all doing the same exact thing, we performed just as well as they did. In fact, we exceeded collections on many of the triple-net guys, but yet they still trade at a 4, 5, 6, 7x multiple to us. So one of our goals or one of our narratives that we hope to be able to achieve this year is that, that disconnect is too far. We understand that with a ground lease structure -- and by the way, most of these folks aren't necessarily ground leases. A lot of their portfolio is triple net, and they own the improvements. But again, our goal this year is to really highlight for people that the differences aren't as stark and that we think that we should be much closer, hopefully moving up, not taking them down in terms of the multiple between us and triple net.

Yes. I mean, the durability of our cash flows is definitely on display. So we've historically collected 99% of our rents in the worst possible circumstances that I've ever seen. We collected 95% as we got through it, and that's improving. So I do think it's a worthy kind of thought about -- and it's what I was getting at earlier, I think our space has been not understood. And I think it's much -- I think coming out of this, people are looking at it closer and are appreciating that durability of the cash flow, the credit -- kind of credit behind it, and then the growth that is imputed, that is on a risk-adjusted basis is pretty good, right? So I think a lot going on there, and that's actually -- that's kind of exciting.

So are you out there actively looking for other opportunities like Eastgate, where you can gain scale in a market especially knowing that in the back pocket, you do have more ground leases to potentially...

Sure.

Yes. I mean, we're always -- I think as Heath mentioned that, even though we're -- we've got this leasing right in front of us that we have to do and the leasing team knows that we talk about this every day, that said, we're absolutely looking at those opportunities, especially since we've kind of established ourselves in those markets. And we've proven that we can move quickly in the right circumstance. And we're not afraid. Again, I -- it sounds like a broken record. But because of our balance sheet, we can act first. We can find the opportunity, acquire it and then figure out how to monetize it after because there's great liquidity in that portfolio. And also, look, we're just in a better place than we were before. So -- and as Heath even mentioned, it may not just be ground leases. I mean, there's some strategic opportunities in our multi-tenant portfolio that we could monetize, that either don't fit a profile, whether that be geography, growth, what have you, and we could move there as well. And always with the eye on -- we're looking for these things to be accretive. And so yes, we are looking.

Great. Can you talk about how the pandemic has change your views on appropriate leverage levels? And where do you stand relative to a target level right now? And how you plan to...

Heath, why don't you get that?

Yes. Well, listen, we're obviously very -- feeling very fortunate that we've got all that hard work done in 2019. So we sat there at the end of the year with 5.9x leverage, at absolutely 0 liquidity issues during what I would describe as a black swan event. So I think it brings us back to our anchoring principle before, is that we can be in the mid- to high 5s. We think that's a very comfortable level. Listen, it's not only the net debt to EBITA, it's making sure that you're staggering your maturities properly, that you've got access to immediate liquidity should the capital markets seize. So long as you have those 3 legs of the stool firmly planted, you're fine. So again, we're very comfortable with that 5.5%. We think once you start to dial it below that, whether it's to 5 or 4.5, I'm really thinking you're seeing diminishing returns. And to the extent you have some investors that are looking for more of a levered IRR, you really start to almost hurt yourself. So again, mid- to high 5s.

All right. So before we do a rapid fire, can you quickly update us on where you stand with ESG today? And what are your top 3 priorities for improving your score next year?

Sure. I mean, first and foremost, it's very important to us and so much so that it's part of our -- it's part of the NEO executive compensation package, which is associated with our performance in ESG. And we kind of doubled that from the previous year. So we need to communicate better, Katy. We haven't communicated the things that we've been doing. As an example, last year, we planted over 5,000 trees as part of our -- a lease signing initiative where we would -- we had this joint venture, and that was great. And we just didn't communicate that enough. I think we want to expand on that. We want to expand on energy conservation. Ultimately, we have all these physical properties that have opportunity in terms of conservation. So we're going to expand on that. And then, look, I think from a social perspective, we can do a lot better in terms of our focus on diversity, our focus on inclusion, both from a Board level and a company level, really just communicating amongst our company, amongst each other and just being better people and corporate citizens in that regard. So we're actually very focused on it and energetic around what we can get done there.

Great. Thanks. We'll do a quick rapid fire here. So one is, when we're physically sitting together in Florida a year from today, what will be one thing that will surprise people the most about your business over the prior 12 months?

Boy, I think really just the speed of how things turned around. I mean, I think there's a real -- maybe people are still hesitant right now, and the lens is painted based on where you sit. We've seen places that have been more open than places that have not and that's fuel. We just need to be open, and that will happen quickly, and I think that will surprise people.

Okay. What do you think your corporate travel budget will be in 2022 as a rough percentage of what you spend in 2019?

Over 100%. We will spend more, mainly going out to see the customer. We got to get out to see the customer. We have to see our properties, which we've been doing, but we want to do more of it.

What will same-store NOI growth be for your property sector overall in 2022?

2022 over 2021?

Yes.

That's a big number. Over 5%.

Okay. And last one, what will the 10-year Treasury yield be one year from today?

1.65.

All right. Great. Well, thank you, everyone. Thanks for doing this. And looking forward to doing it in person next year.

Thanks, Katy. So are we. Thank you.

All right. Bye.