Vornado Realty Trust (VNO) Earnings Call Transcript & Summary

Welcome to the 11:15 a.m. session on Day One of Citi's 2022 Global Property CEO Conference. I'm Michael Bilerman, I'm here with Manny Korchman. We're extraordinarily pleased to have with us Chairman and CEO, Steve Roth of Vornado Realty. This session is for Citi clients only. If media or other individuals are on the line, please disconnect now. Disclosures are up here and available on the webcast. For those joining us here in person to ask questions, you can simply step up to the mic. But if you don't want to step to the mic, you can use the QR code to go to live QA and enter those questions there, and they're going to come up on the screen for Manny and me. Those on the webcast can do the same thing. Steve, I don't know, am I turning it over to you for introductory remarks or is it going to Franco?

This is the opposite of an intimate room. Is it a happy room?

Yes, we used to be around the table where we all can be together, but COVID planning changed that for this year.

Okay. Michael.

Mike, I'll turn it over to you, introduce Vornado, the rest of the management team that's sitting up there with you, and then we'll go through some Q&A.

Sure. So just on the dais here, Michael Franco, President and CFO; Steven Roth, CEO -- Chairman and CEO on my left; Glen Weiss, Co-Head of Real Estate and Head of Leasing for us; and then Tom Sanelli, who is our Chief Administrative Officer, EVP Finance. Michael, I think on Vornado, we should just get into Q&A. I think everybody knows who we are and what we are, and so let's just open it up.

Great. We've been starting each of these sessions asking each management team for 3 reasons why an investor should buy your stock over any other publicly-traded REIT? What is it about Vornado? What are the 3 reasons why investors should step in and buy your stock? Cheap, cheap, cheap, I know that was an answer a few years ago. So that's still going to be #1.

It's still #1.

What was that?

Cheap, cheap, cheap. We are cheap, Michael, right? We're cheap, I think by any measure.

I think the phrase is stupid cheap.

Right, cheap by NAV, cheap by -- I mean, 5% dividend yield. And I think our earnings growth over the next 2, 3 years is going to be one of the strongest certainly in our sector and maybe any sector. We expect that to be, as we said, double digits. I think 2 is, if you look at the portfolio we've assembled, and it's not by accident, we've got a very high-quality portfolio. And if you think about all the trends that are occurring and the flight to quality and so forth, our portfolio is, and I think will continue to benefit. And I think that segment of the market is going to see disproportionate growth, right? So I think that hasn't played out yet, it's going to start playing out. And then third is, and I know you happened to walk by the Penn District the other day and actually walked in the PENN 1, the lobby and saw what we're doing. But the opportunity that we have in the Penn District is, I think, the most unique development opportunity in the country, maybe in the world, but certainly in the country where one landlord owns 10 million feet, can expand that to 15 million, 18 million feet over time, can take rents that are in place in the mid-$60s and take those up into the $100 neighborhood. And if you look at what we've done, where it's now online, Farley is online in terms of the project being done. The PENN 1 amenities are done, and that's now being opened up to tenants. PENN 2 is in the works. I think the market underappreciates how dynamic that is and the impact that's going to have both on those specific assets and everything we own around. Anything you want to add to that?

Well, I think that everything that we're involved in New York City, office buildings, retail, et cetera, has bottomed -- significantly bottomed. And I think that we are excited about the next 2 years, maybe 3 years. We will have enormous growth for our company. I think as we pencil it out, I think our growth will be industry-leading. So we foreshadowed that in an outstanding quarter that we announced our last quarter, and there's more to come, more to come, more come. So we're extremely excited about the future.

Steve, how do you get confidence of effectively bottoming in New York? What are you hearing from your corporate tenants about them trying to bring their employees back from the sense of -- I know as an office company and Vornado's had an in-office policy, and there's a lot of benefits to being together. But there seems to be this tension between the employees and the employers. Like I can imagine like in 2019, if I told my team, hey, you guys can come in 3 days a week instead of 5, they would have been jumping for joy. Now when I tell them, you have to come in 3 days a week, they're like, why, I can do my job at home. And it just feels like a lot of companies have gone down to the manager level in terms of driving things versus the CEO level. Do you think that's going to change? And are you starting to see that changing at all?

We're seeing the change right now. So we're talking to all of our tenants, I mean all of our tenants daily, particularly the big tenant CEOs, and the winds are changing as we sit in this conference this week. Everyone is marking and the [ market's ] beginning to be able to come back, #1. And I think the tone of the notice to the employees has changed. I think it's changed from, if you like to come back, call your boss versus when you come back, the bagels will be ready for you to eat. So I think the tone is changing. I will tell you, I think we are really energized by the prospect of growth by these companies in New York. We're hearing it over and over and over, particularly by the tech companies and by the financial service companies, #1; #2, we're seeing new entrants coming into New York, into our buildings. So I think the winds are changing right now. We're feeling much better as we go month-to-month. And as expected, it's taking time to [ thaw ] out from where we came almost 2 years ago. But in terms of tenant psychology, leasing of space, locking into long-term large lease commitments, it is happening. And if you look at our leasing statistics, during all of '21, the length of term was almost 13 years, we leased 2.2 million feet to big important tenants taking a big stake in the buildings, growing, expanding, building new space and looking forward, I think, very confidently at this point.

So there's no reason for these folks to be making these huge commitments for space in New York and around the country, unless they really expect that they were going to need it. But I look at it differently, okay? I'm just a brick layer, okay? So you all are the investors. So each of us has our own thinking about whether the buildings are going to fill up, whether the office is going to win or whether the Hollywood Squares is going to win, you get it, or whether the kitchen table is going to win, okay? So if you want to be successful and you have a view, the stocks are now priced as if the buildings are going to remain basically half empty. When the buildings start to fill up again, the stocks will make their move. So it depends upon -- each of you have to make your own decision. And it's not going to take that long. You wait another 6 months or 9 months or a year, it will all become very evident. And by that time, it will be too late.

Are you finding that the tenants that are signing leases, how much of it is just pure forecasting their employee growth, so they're going to have to house some amount of people in office versus -- relative to the old requirements of person per square foot?

There is growth. There's also an appetite to relocate into better buildings with the strongest landlords. So that's a big theme we're seeing that we can deliver the goods, deliver the product. We have the balance sheet to serve the buildings, build the buildings, create the amenities, et cetera. So we're seeing growth. It's not just the renewal game. It's not just the short-term lease game. I think you're seeing the commitments and a lot of it is expansion new to New York and a lot of relocations to the highest quality buildings with the best owners.

Michael, we have an advantage over you, okay? You're speculating as to what's going to happen, which is valid. We think we know. We talk to our tenants. We have 1,300, 1,500 tenants. We talk to every one of them weekly, monthly, whatever. We think we know what the management teams of these big companies want to do, need to do and will do, okay? So we are fairly confident that these buildings are going to fill up. And you're going to know pretty soon.

You talk about the Penn district going from 10 million up to 15 million to 18 million. How are you thinking about overall funding of that pipeline, the inflationary costs on construction costs and ensuring that the rents are commensurate to ensure that you're getting the value creation and the yields that you're looking for?

Michael, look, I think in terms of the development over time, that's -- a lot of that's not knowable today, right? I don't know what inflation is going to be 2 and 5 and 8 years and so on. This is not an overnight project. It is going to take a series of years to execute. What we do know is that we're finishing PENN1, PENN 2 right now and when those are done, along with Farley, we're going to have assets -- 3 assets, in particular, that have significant income, right, being generated that are not today, right? So that -- and by the way, all 3 of those assets are unlevered, right? So I don't know of another developer that's actually built...

What does unlevered mean?

Unlevered means no debt. I don't know of a real estate at all that has built basically 5.5 million feet with no debt. So just from that, right, if you just think about rolling those -- that capital into a PENN 15, for example, okay, then you build that building, right? Then we'll see what comes next. By the way Penn -- when we talk about the district, it's not necessarily all office buildings, right? There's likely to be a residential building or 2. So we've got diversified product type, and we'll see, Michael. We can't predict what inflation is going to be and so forth. And so if the costs don't work, they don't work. At the same time, historically, as inflation occurs, rents benefit as well. And I think what we're doing in the area is going to benefit. So we'll have to take it year by year. But right now, we're executing what we have already started. PENN 15 is being taken down. And when that comes down by the second half of 2023, we'll evaluate, whereas the market, right, we're already getting incomings just by the fact we've announced we're taking it down, right? We're in the game. We were in the game really before. Now we're really in the game. Glen's getting some incomings from even 1 million square foot financial tenants that are looking at the building. We're going to build, we think, the most unique building in the city, and we'll evaluate when we get closer to that point.

And by the way, the PENN 15 site also has no debt on it.

Right. As you think about the amenity side, obviously, at PENN 1 and combining it into a large campus with PENN 2, a lot of that investment is benefiting the entire area. How should investors think about that capital spend in relation to the return that it's generating? Is it effectively that taking that -- those rents from $60 to $100 and allocating all of that amenity and infrastructure work across that increased rental stream?

I think so. I mean I think Glen would tell you even PENN 11, for example, right, we have tenants that are already seeing what we're doing at PENN 1 and coming over and using it. So I think it's going to have a, obviously, a direct effect on those 2 buildings, right, because the amenities are housed there. But I think the tenants in the area by the fact that they have access to that, I think you're going to start to see lift on those rents as well.

Let's do some math, okay? Let's just do some math. So PENN 1 is a 2.5 million, 2.6 million square foot building. When we started our capital plan, which, by the way, I'm going to quiz you with your reaction to it in a second. So when we started the plan, when we announced the plan, we said we were going to spend $400 million, which is accurate. It's almost done now. And that $400 million and other things would raise the market rents from, pick a number of $55, $60 to $90, $95, okay? The last lease that we put out at PENN 1 was at $100 a foot. So let's say, $60 to $100 is how much?

$40.

Thank you. Times 2.5 million feet, how much?

So we're $90 million.

$100 million, okay? So take a little bit off for expenses and how does $100 million compare to a $400 million spend.

25%.

Not bad, okay? And there's going to be a ground lease kick up, which will pay for that. So anyway, so the numbers are -- we're very happy with the numbers, okay? We think that they're -- I hate this phrase, but they're industry-leading, okay, people say that anyway. So the math works. And the way I look at it, it's actually a pretty simple thing, okay? We're in an amenity rich world. We're in the hospitality world. We treat our tenants like they were staying at a hotel, and we treat them well. And that's why we have the franchise that we have. Now from an amenity point of view, and there's an arms race in amenities, which we think we're winning by a lot. So from an amenity point of view, let's say that you could afford to put 4% of the building into amenity. So by the way, most of our amenities pay for themselves. They're revenue generating. The gym generates revenue, the coworking space generates revenue. The conference center generates revenue, the restaurants generate revenue. So now let's say you have a bogey of 4%. So you have 1 million foot building and 4% of amenities, that's 40,000 square feet. How much do we have in PENN 1?

160,000 square feet.

So we have 160,000 square feet in that one building, which -- so if you have 5 million feet and you can put 4% in amenities, that's 200,000 square feet. So it's mind boggling. So our strategy is that the competitive advantage of a single building anywhere is X. The competitive advantage of 10 million, 12 million feet in one ownership connected underground and aboveground on top of the most important train station in North America is a whole different kettle of fish, okay? So it's the clustering of buildings, it's the campus. So think about it this way. If you're a 300,000 foot or 400,000 foot tenant, you go into a 1 million foot building and you need to expand, you probably have to go down the block around the corner somewhere else. If you're a 300,000 square foot or 400,000 square foot tenant and you're with us, Glen can always find you another 100,000 square feet to 200,000 square feet in that complex, okay? So this is going to be, we think, the innovation and a change in the way people think about office. We believe that what we're doing when we get done with it, we'll command premium rents, okay? So think about it, if we have, pick a number, 10 million feet and the market rents go up $10 a foot, how much is that?

If the rents go up, so you have 5 million square feet, so another $550 million.

No. Let's say, 10 million square feet, $10 a foot that's $100 million, okay? That $100 million is probably largely incremental, okay, because the taxes are being already paid, et cetera. So what would the value of that $100 million be?

A lot. I mean at current cap rates...

A lot, yes, give me a number.

You're talking about like almost probably $2 billion of value.

How much?

$2 billion of value.

Okay. That's something. Okay, $2 billion of value is $10 a share. How much of share is it?

The shares are trading at $45 a share.

No, no, how much...

How many shares? You have 300 million shares. This is like an exam. I didn't know I was going to get tested.

Hang on, hang on, I'm not done yet. So you wrote me an e-mail recently because you came out of your cave and you walked the Penn District for the first time...

Out of my cave, you think I sit at home every day? I'm in the office every day.

I'm going to get David Simon to take care of you. So you did your job and what did you see? What did you think?

I mean for those that haven't toured the entire Penn District, I mean it's unbelievable what is taking place, even though the density of the workers are not there. So if you're sitting in PENN 1 up on the stairs, there was all these people working, they were on Zoom calls, they were having team meetings. There's people in the gym. There's people in the medical center. There's people in the restaurant on the second floor. There was a lot of activity. And I walked all the way through the train station, all the way to Brookfield. I mean it was at the nucleus, and then you think about you've already ripped off the Western half of PENN 1, the building looks completely different. It's gone from a 1980s look to a modern look, you being able to bring out the view lines because you put the windows at the back, you're getting square footage.

The steel for the bustle, which is going to be 432 blocks long and it's going to be an enormous piece of architecture on 3 blocks of [indiscernible] avenue when the steel starts to go up, that will be another revelation and that's going to start happening over the next -- in a month and take 6 months to complete. So the punchline to it is, we think what we're doing is transformational, entrepreneurial and revolutionary. And we've been on it for a long time, and everybody has Penn fatigue, I understand that, but here we go.

Right. It's really happening. And your -- that Penn District is...

But the point -- like I think we're spending a whole lot of time talking about a single asset. And I think that investors are far more worried about what happens with these markets more generally. And I think that the conversations that I have with a lot of investors focus on the increasing GAAP or value or however you want to describe it between the As and super As and the Bs and Cs and the stuff that doesn't survive this. And I think the concern is that right now, you've got all these tenants leasing, and that's awesome and they're looking for the new buildings. But as we go through this and whether it's a year from now or 5 years from now or whatever number of days it is from now, as we look around and say, hey, some of these users that have been in those crappy buildings, maybe they're the ones that got more work from home, maybe those buildings -- maybe they do upgrade to the better buildings, but you're going to have supply, and you're already there with 17% or 18% vacancies across New York. How do we get comfortable owning the best house in what seems like not the best neighborhood? And maybe I'm wrong there, but that's the question I get. No one is doubting, I think, the successes of some of these really good buildings, but I think people do have a lot of frustration or caution or whatever you want to call it, to be buying in these cities in general. And so where is that wrong?

Manny, it's Glen. So you talk about the entire city; #1 for us, specifically, we think we very proactively transformed the entire portfolio over the last 10 years forgetting Penn for a moment. So we think our core portfolio in Midtown and then the 770s, the 8510s, the meatpacking projects, we think we got the best of a lot by far, #1. So we're seeing a lot of leasing action throughout the portfolio, not just in Penn, I know we've talked a lot about Penn. Number 2, as it relates to what you said about what's going to happen with the 18%, 19% vacancy, in our day-to-day billings, I don't even pay attention to that because that's not what we're about. We have the buildings where the tenants want to come. We make the matches with the best tenants. I mean think about Penn, I mean we've hardly started. We got Facebook and Apple planted in those buildings for 1.2 million feet. We haven't done nothing yet. So if you think about everything Steve has spoken about this morning, we're getting ready to just keep growing and growing and growing that tenant base. So it's all about having the right buildings, knowing what to do with the buildings, knowing how to service these tenants going forward. So while there is a lot of space around town, our leasing team has their heads down focused on our portfolio with the brokers, and I'll tell you the brokers will tell you what I'm telling you in terms of our portfolio. And that's our singular laser focus every day is the quality and the way we do things in the market compared to the competition.

Steve, how do you think about the portfolio and the company overall in the sense of -- obviously, we've been talking a lot about the Penn District, which is obviously the highest growth opportunity that the entity has. And you've talked -- obviously, we put forth this tracker idea and now it's on pause. Are there other things in terms of what you want Vornado to be in the sense of, is there an opportunity to recycle maybe some of the more core assets at attractive cap rates that may not have the same redevelopment or development upside as the Penn and effectively fund your growth like that and in 5 years' time, Vornado becomes basically the Westside, and that's what the company becomes?

In a word, sure.

But I guess is that on -- I don't know, you haven't shelved the tracker idea, I don't believe. But the stock reacted well.

The tracker is not shelved. There will be a tracker. It's just on pause. I thought it was kind of stupid to launch something that I think should be and will be very successfully received by the investing public when the buildings are only occupied 30%. That's not the right time to do it. So it's just a timing thing.

But is tracker the best solution to highlight that value, given the complexity that normally is with trackers in terms of governments and ownership and things like that? I think a lot of the feedback, Steve, and just the way your stock reacted from putting it on pause, would indicate that perhaps investors want to see more rigorous value creation. And you've done an immense job at simplifying the organization, financing your assets, activating the development, reducing the mall exposure, reducing the street retail exposure. Like there's a lot of value-creating things that the market just hasn't recognized. And I'm just wondering if there's just one step further rather than putting a security or a tracker into the mix.

I think the tracker is the best solution. It may not be the eventual solution, but it's the best solution in the short term to accomplish what I think our objectives are and to give investors a perfect and wonderful choice to invest in the Penn District, our pretty wonderful class A core business or both. I've said that multiple times, and the tracker is still high on the agenda. It's just the timing is not perfect, and it will come. By the way, I don't see complexity, okay? Complexity is a very interesting excuse for I don't know what. But while our company might have been complex 10 years ago, I think it's anything but that now. I mean it's in basically one major city and basically one major asset class, and that's about as simple as you can get. And we're doing things which are totally unique in terms of the entrepreneurship of how we treat our buildings, how we operate our buildings, how we transform our buildings. And so we're -- we think we're delivering the goods.

But I think the idea is Vornado is a lot simpler today. When you look at the breakdown of gross asset value, you exactly say, you can identify the mark, you can identify 555, you can isolate street retail, you can isolate Penn Plaza and then you can isolate the core assets. And it almost seems like maybe there's opportunities to divest or to harvest some of those other pieces so that the Penn District becomes a larger percentage of the core and you've already had that capital, it's effectively investors are buying that growth versus trying to play it within a sub entity underneath the parent.

I said before, sure.

It's not mutually exclusive, Michael.

But the other thing is we have spent years working for our shareholders trying to create value, and we'll continue to do that.

And that's where I wanted to go to next, where on corporate governance, you added Bill Helman to Board in 2019 and I remember the terminology was to challenge us and to break glass. So can you take us a little bit into the boardroom? You obviously have a number of long-serving Directors. What has changed in the boardroom over the last couple of years with Bill being part of that mandate that you set of challenging you and challenge and breaking glass?

I don't think it's appropriate for me to get into a conversation about what happens in our wonderful boardroom. I can only tell you that Bill Helman is a piece of work.

Am I ever not going to be -- am I going to be invited back again? Was that my... he has a very active Board, and Steve was very nice to invite me a number of years ago to present to his Board and they take it very seriously. And so that's why I was just trying to understand a little bit more about the intensity that he may have been brought or looking at different alternatives.

I can only tell you that our Board, as you said, is very active, I think very smart, very knowledgeable, and we consider only -- we consider multiple alternatives for creating value at every meeting.

Manny, I'll turn it over to you.

Sure. I don't think we've covered in this meeting yet. What's the #1 ESG priority for Vornado in 2022?

Number one ESG priority. Yes, Manny, look, we are, I think by all accounts, one of the leaders in sustainability. So we're going to continue to make progress there on our Vision 2030 plan. I think we've made a lot of social improvements over the last year, and I think you're likely to see some Board refreshment this year. So I would say that's probably our #1 priority.

By the way, just as an aside, we have an enormously active HR department and the number of programs that we have initiated for the well-being, the enjoyment, the happiness, the training of our staff is actually pretty extraordinary. And maybe at some point, we should disclose that.

Yes. I think we're going to do it in this year's ESG report.

How much should investors be worried about inflation and that comes from either the cleaning business, maybe the labor involved in the Mart business, the CapEx needs, the development projects, all those things?

On the development projects that are underway, that's bought out, right? So I don't think there's a lot of risk on that front. When you get on subsequent projects, as I said earlier, we'll have to see where the market is relative to when we want to start. So I can't predict that today. Obviously, when costs go up, right, rents are going to have to go up commensurately to make those make sense, and we'll evaluate at the time. Labor front...

This inflation is a double-edged sword. So one statistic that's very interesting is if you graph replacement cost, which is the cost of new buildings that has been rising at a very interesting rate and it's accelerating right now, so as replacement cost rises and maybe, I don't know, I'll pick a number of $1,500 a foot to build a Class A building on a mediocre piece of land, by the way, if it's a great piece of land, it could be $2,000 a foot. So as that goes up, and we're sitting here with a wonderful portfolio that's priced in our stock at what?

I don't know, $600 a foot.

Okay. So replacement cost, which is, to some degree, caused by either inflation or scarcity of land or whatever, that sort of sucks up everything else. And so we're in a very interesting position and we want to be sucked up as the -- if you could live with that expression.

I think translating a little bit more what Steve said, right, rents on the existing buildings, right, the high-quality buildings should start to see increases, right? Supply is moderate. On the expense side, Manny, the tenants are reimbursing the bulk of that activity, right? Obviously, when there's turnover, you may lose some of that. But tenants reimburse the expenses. So there's rises on the expense side, that's covered generally.

Steve, how should investors think about succession? You've done a great job at lifting up the next generation at Vornado. Glen is an example of that, Tom, Barry. How should investors think about when the right time is for a new CEO as you would continue as Chairman, I would assume, in that scenario? But what needs to get done for you to feel comfortable making that transition?

So I'm going to get fired before. You know what they say about a dictator? They very rarely die a natural death, okay? So I'm going to try to die a natural death. And so I'm going to get fired pretty soon.

You're going to get fired pretty soon?

Sure.

What is that supposed to mean?

Next question.

Should I put in my resume now for that?

By the way, if you keep this up, you're not a candidate. You're not going to get the big job if you keep this up.

Yes. It's part of my job, right? Another question came here through the live Q&A. Maybe you can talk a little bit about the political and regulatory environment in New York and how it impacts the business. Obviously, you have a new mayor, you have the governor changing. And so how is that evolving and your ability to execute the plans that you have?

Do you want to take a shot at that? Then I'll counterpunch?

Sure, sure. Look, I think that we have a new mayor, we have a new governor, obviously, who's going to run, be up for reelection next November. And I think in general, I think the political backdrop today, Michael, from where it was under the prior administration, I think, is much more positive, right? So you have a mayor in Adams who I think absolutely has his priorities in the right place, right? He's focused on quality of life, right, safety, cleanliness, trying to eradicate the homelessness issue. And so -- and it couldn't be any more serious than that, right? I think he knows what's important to make sure he's focused on getting people back and obviously, you listen to him every day, right, the drumbeat of what he is saying, I think, is important, right. And he's working with people to make that happen, right? Hochul, the same thing. I think what you have fundamentally is, I think, a pro-business administration both at the state and the city level. You have a -- and what that means is we're welcoming business, we're done with taxing business, right? So we're not going to try to scare business off and administrations are focused on quality of life. So I think we're in a much better place than we were a year ago. The fiscal situation, obviously, is a lot better, not just because of the stimulus package, but because, frankly, business in New York, the companies that are here have generally done very well led by the financial service industry. So I think we're in a good spot. It doesn't mean there's not issues, it doesn't mean the progressive wing is not going to continue to be challenged on certain fronts, but I think we're in a much better place than we were a year ago.

Michael, we are, to some degree, a regulated industry. And what we really seek is access for political leaders to listen to our industry's opinions and a level playing field, okay? Now that level playing field not only is for all the companies that we compete with in Manhattan, but across the country. So what we find is that the politics in New York are very similar to the politics in Washington, not the federal government, but the city government, this region, Chicago, the other northern cities, San Francisco as well. So these things sort of go in waves. We think in New York that we may be in a -- of course, in a better political position because our 2 new leaders are really pretty business-friendly and pretty savvy. And so we are very enthusiastic about the political future of New York.

I had a rapid fire, but I don't think you're going to answer the same-store NOI growth for office next year.

Say it again?

Same-store NOI growth for the office sector overall?

We know that number. It's probably a mid-single-digit.

10-year treasury a year from now?

Mid-single-digit-plus, by the way. What was our same-store last quarter?

6.5, Manny?

What was our same store last quarter?

8.5 times.

By the way you'll have to admit we had a rocking quarter last quarter.

I agree. 10-year treasury a year from now? Some 1.8%-ish?

Most of the smart people that I talk to think it's -- it tops out at 2%, believe it or not.

All right. Will the office sector have more or fewer companies a year from now?

More.

More? Attractive.

The merger, which would combine companies, the urge to merge seems to be very tepid.

Yes, all right. Well, thank you very much for your time.