Vornado Realty Trust (VNO) Earnings Call Transcript & Summary

My name is Camille Bonnel, and I am the office and industrial REIT analyst on the U.S. research team for Bank of America. And I'm also joined by Jeff Spector sitting to my left, who has the team as well as Dan Byun and Andrew Berger, who worked closely with me. Our next roundtable session is with Vornado. And we have a full team representing the company. In the middle, we have Mike Franco, President and Chief Financial Officer. To my right is Tom Sanelli, EVP Finance and Chief Administrative Officer, to next to Mike is Glen Weiss, EVP of Leasing; and next to him, finally, Gary Hansen, IR. So we ask if the company can just provide a brief overview of your business before we dive into Q&A.

Sure. Good afternoon, everybody. Hopefully, nobody ate too much cheesecake that's sitting outside and about to have a food coma. So welcome to the afternoon session. Nice to be here. I think most of you know Vornado, but I'll make a few comments, and then we'll get into it in Q&A, and I'm sure he'll add high points. I think with respect to Vornado. I think the important points are, we have a best-in-class office and street retail portfolio in the most important market in the country, which is New York City. We also own the franchise asset in San Francisco and the premier asset in Chicago. The world, as we've talked about for 2 or 3 years running now is separating into haves and have nots. It's a portfolio that is filled with haves, right? It is a modernized amenitized, trans-oriented well-maintained portfolio and the leasing reflects over the last few years and continues to reflect in our pipeline. And I think if you look at the leasing that's been done, we have a track record of doing the biggest, most important leases in the city. Whether it's Meta, at the height of the pandemic, Citadel more recently and a bunch of Glen can talk about. We've leased over 6 million feet in the last 3 years. again, I think reflective of that trend at starting average rents of $90 per foot, which are market-leading, industry-leading mark-to-market numbers. So despite all the headwinds, our portfolio continues to perform in an environment where sponsorship is becoming more critical, the orientation of your assets, where they'll locate the quality. All of our assets are in Midtown, Midtown West, Midtown South. Those are the right submarkets to be in we're benefiting from that. Not too far from here, sits the PENN District, the heart of the city. It's a 10 million square foot campus that we are in the process of transforming. I don't think it's hyperbole what we say it's the most exciting and transformed development, certainly in the office sector and 1 of those in REITland. And what we've done, if you haven't seen it yet between Farley, which has done PENN 1, which has done PENN 2, which is on the brink of being done is truly going to transform that district. The early returns are quite good, and the best is yet to come. Last couple of things I would say is that we have a strong balance sheet. We have always run our business carrying more cash probably than almost any other company. I think that served us well in these sort of times. So we've got significant liquidity. We've got well laddered maturities. We refinanced several billion dollars a couple of years ago, knowing that the markets were attractive and taking advantage of them, and we did. And so we're in good shape from a balance sheet perspective. And so we're focused on continuing for that to be the case and you're seeing us sell assets and take other decisions to maintain strong liquidity. Last thing I'll say is you've got a management team that has been at the company for a while. We're battle tested. We've been through cycles we grind through them. And ultimately, we've got a track record of creating value. We've all got significant skin in the game. We're aligned with shareholders. And so while the stock is off the mat, bid. In our view, we have a long way to go, and we're going to realize on that. And then lastly -- sorry, one last thing that -- and it's hard for you guys to see this on the outside, will talk about what not. But I think we are unquestioned leader when it comes to sustainability and technology. And I think between Glenn, Tom and the team does on technology front. If you're actually in our buildings and what we do with our app, with some of our systems. I don't think any of the other landlord has a better system for interacting with tenants, and that creates a virtuous circle there, and that relates to sustainability well. So come with that, I'm going to pause, unless you guys want to add anything and we'll get into it in Q&A. But I think that gives you a quick overview of our company as we sit today.

So sentiment around office has been very negative yet. So far, the office round tables, we've been have been essentially fall, as you can see in this room. As you sit here today, what gives you the most optimism?

I'll start and I'll let Glen -- when everybody is super negative, that's the timing when you want to buy. And this notion that people are never going to work in the office again was ridiculous. We had the same dynamic of no one's ever going to shop in stores again 4 and 5 years ago, that was ridiculous. The retail sector is back. Obviously, Class A mall is doing very well. Street retail, which we'll talk about in New York is clearly rebounding. So there's this quick movement to always rush to judgment. It sells more newspapers, more magazines but you have to get into what reality is. We've dealt with some extrenuous circumstances. But the reality is, is that certainly in respect to New York, and I think it's going to be everywhere. People are going to largely work in the office. Companies recognize that. They recognize the importance of creating maintaining culture, attracting talent, developing that talent and they want to be in the best spaces. And so the leasing we've done, the leasing that we're in the process of doing, I think, gives us that comfort, I'll let Glen tack on to that, but that's my sort of two cents.

Sure. Hi, everybody. So I mean you don't have to really read the statistics to understand what's happening, just walk the buildings they're humming, including Mondays all of a sudden, by the way, too. So I think we're quickly settling upon, I'll say, a Ford day in the office work week. That's happening. CEOs are requiring, not optioning to come back to the office. And with that, we're seeing a tremendous uptick in leasing activity, tour volume proposals incoming, et cetera. For example, I shouldn't even be here right now, Jeff. I have 4 deals -- I have 4 leases in negotiation right now. One is for 240,000 feet with a financial company. Another is for 175,000 feet with a law firm. Another is for 133,000 feet with a fashion company and another big 1 for 175,000 feet. So that's just 4 deals, right? So I know everyone is reading the newspapers and the negative narrative, but we're seeing it very differently. And we've been building up to this. I think quarter-to-quarter, you've been hearing us on our earnings calls we've been echoing this, and I think it's now here, and it's only going to get better as we go. And as Michael said in the outset, tenants want the best, and we think we have the best pound for pound. Just look at our portfolio, walk the buildings. So -- and if you look outside here, when we walked in here, I mean, the streets in New York are crazy, right? I mean the restaurants are full. You can't walk the sidewalks. Everyone wants to be in New York. Every company wants to have some type of space in New York. New York is clearly leading the charge nationally, clearly. So we feel really good about everything. And we have projects that are going on like nobody else, right? We finished Farley, PENN 1 is off the charts, off the charts. PENN 2 is coming next. It's going to outperform PENN 1. We just note down the hotel. PENN, it's the best site in the country and 350 parks on deck with Citadel and Ken Griffin. So -- in the last 3 years has been tough. It's been tiring, it's been exhausting, but we grind, we keep going. We keep our heads down. We're making deals. We're building projects, and here we are standing and we're proud of it, and we're going to keep going. And that's what's going on.

When you're talking to these tenants and you're right on. I mean we're in 4 days, been in 4 days for the past years. Well, the tenants -- are we seeing any signs of stabilization in terms of needs on the 4 days, let's say, 4 days is the new norm. What does that mean in terms of leasing? Because we keep getting asked is that a reduction in space? Is that equal space?

Look, I think, Jeff, net-net, there will be some type of reduction net-net but it's completely situational. There's no one-size-fits-all category to the question. But if you think about it, if it doesn't, it will settle on 4 days a week, no question. Everyone is going to need space. Then the question is how much space. And the bigger question is where should the space be? We feel great about the last question as it relates to us. And that's exactly what we're seeing in our activity. So whether they're downsizing, upsizing, staying neutral, you're seeing definitely a demand for moving refreshing, revitalizing, rebranding. So people are moving more than ever. And that's okay. But -- so there's not 1 answer to it. It really is so dependent on the company, the industry, the situation. But net-net, it's a negative net-net. I'd say in total leasing in terms of your question, you're going up, down or sideways.

And I guess for these 4 examples that you mentioned, these tenants looking for equal, slightly less or slightly more and less bringing pricing, right? Maybe at the day they're taking less, but they're willing to pay more.

So of the 3 deals for the 4 deals I mentioned, 3 are expansions. One is a downsize. And look, the rents are holding very, very well. It's the concessions that are still too high, but the rents are holding very well. People will pay for quality, no doubt.

I think if you look on the rental side, I think if you look at where we are achieving what rents we're achieving where we have vacancy and we're doing leases today versus where we thought they would be I guess, at the beginning of the year, right? And I'm talking about the Park Avenues, the Sixth Avenues, the place where we have space that's coming up for lease. Generally, those are double-digit percentage higher than we thought they would be. okay? And Glen and I went through 1 asset yesterday again. And as we sort of look out and said, no, you know what, we can push the rents even more there, right? Because there's just not a lot of availability. When you get into -- We, again, define, let's say, 6 Avenue Park Avenue, let's just take those 2 submarkets, true Class A space we talk Park Ave, we're talking about Park Avenue above through the JPMorgan's headquarters, North through 357th Street. You're talking about sub-10% vacancy there, right? So you're basically the equilibrium from a landlord tenant standpoint, which is a fair fight. And of any size blocks, those are becoming fewer and far between. So that gives the landlord pricing power. As Glen said the concessions remain high. But it's one thing when the concessions are high and rents are turning flat. That's not a good game for a landlord, right? When you can start to push the rents, at least that becomes economic, right? And that's what we're seeing certainly with respect to those 2 submarkets. Obviously, PENN a different example because we're totally sort of step changing that submarket and that we've walked through the math there previously. But again, for the -- we call them the halves, right? For the halves in the right submarkets, you're starting to see rents move. And the other overlay, again, notwithstanding we're going through circumstances none of us have ever seen before. To some extent, we're in a traditional dynamic where the cost of money is high. There's going to be very little, maybe none new construction, right? And so the Class A buildings are going to have this in a period where they're going to have a very good runway because there's going to be nothing of quality build. So all the new construction is basically a lease, maybe there's a block here or there. But the tenants are now looking to that next wave of top-tier buildings, and they're going to benefit because the rents are $50, $100 less in some cases. And so $10, $15, $20, that's okay from a tenant perspective.

So how much do you think on a net effective basis, rents have moved maybe from year ago versus 2019?

I mean from a year ago, probably not much has changed from 2019 if I said 10% to 15% net effective down some part of that range is what the statistics will tell you, mainly based on concessions, not as much on the front-end rent.

That's interesting. We heard from another meeting earlier today about rent on Midtown Manhattan have bottomed and sounds like it's similar. You haven't seen any changes there in the concessionaires?

If anything, as Michael said, we're looking to raise rents in some spots right now. So not only has it bottomed? We're seeing some opportunity to raise.

I know it's a hard question to answer, but the have nots are weighing on the office sector on the stock. So can you share any thoughts on the have nots and how that plays out over the next 1 or 2 years or again, anything say the example of covering malls, it took so long to really figure out that those dominant malls, as you said, are doing really well and then smart investors that can figure out something to do with they're doing it, but how does this play out?

I mean I don't know that it's that complicated, Jeff. I mean you can pretty easily identify at least the top 100 million square feet in the submarket in this market, right? That's going to do fine, right? Now then you start beyond that, is it [ 125 million square feet ] one, what's the break point, right? And then there's the bottom -- again, I'm just going to throw a it's bottom [ 150 million square feet ], right? And that's just done. It's not coming back, right? That's not -- office it's not as high as best use. And then whatever is in the middle, which direction does that go? Can that be repurposed? Does it have to be torn down, does it have to be reinvested in? And for a lot of those have nots, it is not going to get resolved in 2 years. It could take 10 years. Okay? I mean you're talking about buildings that, in some cases, maybe they're 50%, 60%, 70% lease makes no sense for the landlord to invest new capital in that building. They've got debt. It's ultimately the lender's decision about what to do. Lenders not going to want to put money in that, right? So the assets either going to deteriorate the lender in a lot of cases, the lenders, they just dump the asset, right? Selling somebody is going to do something better with it, whether it's tear it down, converted to residential. I mean at some point in the next 24 months, hopefully, much sooner than that, there's going to be regulations implemented that are going to facilitate the conversion of a lot of these older buildings. By the way, when we say older, it could be pretty 1990s not that much old, right, depending on where the proposal is in 1991. But I don't know where it will ultimately get settled. So the 4 tenants that Glen mentioned, it's not -- there's not a price that we're still going to look at the bottom 250 million feet in the market, right? That's not going to ever be competitive again, right? They're going to locate in a certain submarket, they want a certain type of space. It's all about like we're at a 3.5% unemployment, right? Talent retention, talent recruitment is critical for every company, being in some off-center location or low quality that's not a way to get your employees excited about coming in or continuing to come to your company, right? So that bifurcation is real, and it's just going to be a different track in terms of recovery and that have not bucket, it's going to take years to resolve. I can't tell you if it's 2, 5, 10 it, but it's going to take a long time.

How are the tech to...

By the way, the public guy is, by and large, a public guys, by and large, own the best portfolios across the country, right? So your guys' job is to figure out and recognize that and recognize, okay, who's going to benefit the most, right? Most public companies by and large, don't own the majority they have not. So...

Can we do what I make this interact if there's any questions, go get to raise your hand. How are the tech firms doing on return to office and maybe bring San Francisco into the conversation?

Yes. tech firms, we have all of them, fortunately. Apple, Google, Amazon, Facebook, relatively speaking, they're all back in our buildings in New York. Go to Apple at PENN 11 buzzing, Facebook at Farley in 770 buzzing Google at 85 Tenth. So we think they're all in the office, more than they have been ever during this period. . So I think that's improving. I don't think there's expansion right now by any of them, but that's okay. That will come back. That will come back because they want to be in New York, they have to be in New York. But they're in the office. They are in the office.

I'd I think that is a -- I know if that's the case for some of those companies around the country, right? I think in New York, they are more in the office than what we're hearing certainly in the West...

Particularly in San Francisco.

Maybe Apple is the exception there. But in New York, the comments Glen told you earlier, a number of days in the week gets consistent across the tech companies.

And like, do you get a sense that those tech companies are employing a 4-day work mandate as well?

Yes.

Ok. So when we think -- like we continue to hear that San Francisco is quite dire. But your assets still remain well leased. I guess how do you think about your exposure over the long term? Because it seems like there's still a lot of pressure and [indiscernible] that the market needs to work out.

I talked to 1 of our tenants in 555 today -- today has talked to, I guess, yesterday. No, Friday, sorry. And the person told me that last week, there was a material increase not just at 555 but streets of San Francisco, right? And there's people back in the city. So I think that's generally the case. Post Labor Day, I think this employer insistence on return to work, I think, is actually having an effect in fact more broadly. So like we don't want to be notwithstanding we think we have the best building and best around role in San Francisco. We need the market to be healthy, right? And Glen and his team did a tremendous job on renewing many of our tenants in the height of COVID, and so we're well positioned there. But we're believers in San Francisco. And I think the -- as bad as it got, as bad as it still is, I think it's off the bottom as well. I think you've seen a couple of announcements on a couple of AI firms that have taken a couple of hundred thousand feet each. And the interesting is -- San Francisco is always the most volatile big city market, right? Notwithstanding it's Cosmopolitan City. It's not that big a market, right? And so it can get moved up or down very quickly either way. It's gotten crushed on the way down, mostly because the employers lost control of their employees can't get them back in effectively. And now it's starting to come back. But cheap rents also induce people too. You're still near some of the greatest universities for technology innovation in the world, if not the greatest. And so start-up activity is still going to occur in the greatest proportion out there. The city started benefit because, again, a lot of those young people want to be in urban environments close to each other, they're working their assets up. And if they can lease space cheap for a couple of do that, right? So you're starting to see the early days of a bottom form out there. How long is it going to take? We can't predict, but I wouldn't write San Francisco go off.

We've been talking about the importance of safety. PENN districts is so important to you. Can you talk about some of the initiatives that you as a company implement in that district? I guess with the hope maybe the politicians fix things a bit, but what does the company do to ensure the field of safety in that area?

We do everything. We've been doing everything for 20 years, not just during the last 3. So first and foremost, we run our own security operation, mainly focused in PENN. In-house run led by a very senior person in our company, number one. Number two, we work hand-in-hand with the NYPD hourly. We work with the business improvement district hourly. We work with the MTA hourly, all the police districts, the LAR and New Jersey transit, the whole thing. So it's a big operation, number one. Number two, Jeff, if you go down there today versus 2 years ago, it's unbelievably better. I'm not saying perfect, but unbelievably better. And you can see that in the leasing. I mean you think about the tenants coming to PENN 1 if they're worried about the district, they would not become a PENN 1. So we've got work to do. There's always work to do with the transportation hub, right? But number one, by virtue of the physical transformational improvements it's going to make it better and drive those who we don't not want on the streets out of it. And number two, I think just by all of our activities, things are improving. So we're always on top of it. Believe me, I walk around every day almost down there, making sure. So it's a [ tour ] and it's on our minds, and it's 1 of the first questions. that comes up in every major tour. But I think we're progressing, we're improving, but it's never a done days work.

Is this an example do you think that this really needs to be done across each district, like companies need to get more involved, let's say, Times Square or whatever it is, like...

Maybe. Yes. I mean, look, what's helped us is we have formed really what I'd call a coalition with Madison Square Garden, Macy's related, Brookfield, Empire State, AMC, all of our major tenants and fellow landlords, we've created a real good group to figure it out, and it's worked. It has worked. So maybe that should be done more in other neighborhoods. Yes.

Could we get your latest thoughts on the transaction market and investment opportunities. We did hear earlier this morning the best investment may be paying down the next loan or as a better place to put your capital. So I guess, how are you thinking about this today?

Well, I think you asked 2 questions there, I think. I think you asked about the transaction market asked about our own investment approach. So look, on our own investment approach, capital is scarce. It's always scarce. It's particularly scarce right now, right? You have to be extremely disciplined with how you deploy capital. . And our #1 goal is we've got a strong balance sheet and have the capital to continue to survive and thrive, right? So we want to keep our leverage levels appropriate. We've dealt with all our maturities, but as we look out 1, 2 years out, we're starting to deal with some of those things. And so we'll proactive and being disciplined about how we utilize that capital some of those loans. So our first and foremost, we talked about it. We paused the dividend. We'll reevaluate that at year-end. And we've done some buybacks. Obviously, the stocks moved quite a bit since then, and they got to be stupid cheap where it was, and still cheap in our view. But we did some of that. We're going to continue to delever the company. Not to say that there may not be opportunities externally. I think there will be, although I think it's still somewhat early we're going to seek higher returns and if we deploy that capital relative to our own stock or it delevered. And I think that's the order, right? Our own stock, our own balance sheet because we know our assets and we know how they're valued we can't buy assets are quality that cheap out there, right? So I think the important thing is look at our development pipeline that we're finishing in PENN. That was all fully funded from cash, right? I mean I think it's just -- I can't think of another situation where you've seen 3 developments at the scale of Farley, PENN 1, PENN 2 done entirely out of cash, no debt, right? That's a great position to be in, right? We sleep well at night. There's no gun to our head on a take a lease that because we've got some interest expense chewing us up. We can think with an appropriate medium to long-term outlook on the right thing to do for the assets. So that's that. On the transaction market, like the financing markets remain very challenged, right? The banks are out of the market, very selectively to end on a small basis. You got to cobble 2 or 3 together. It's a challenging to do the CMBS market is open some extent, not a wide extent. I mean we all know the best longest term leases highest credit, things like that can get done, more multi-tenant, et cetera, that's more challenged unless it's very little leverage. So -- the financing markets are challenged. Base rates are high. That's going to affect capital flows. And frankly, until we have a well-functioning financing market, I think you can expect the transaction market to remain pretty challenged. And so we're not in an environment where pricing is real. There is capital that's looking in the New York again. It has noticeably picked up in the last quarter. Capital is definitely focused on. It's definitely focused on the retail sector. And I would say people kicking the tires again on the office sector. And it's -- and you've got users looking as well because they view this as maybe an opportunistic time. So I think you'll see that pick up. But again, I think until you see a financing market that has some rhythm to it, you're not going to see a normalized transaction market. And so, in general, unless it's a situation where it's either a small asset. You've seen us sell a few small assets good pricing or there's a specific user or buyer as a strategic reason to buy something. And I think the pricing it's not going to be great right now.

And when you say you see capital coming back into New York City. Is this more sophisticated investors that you're seeing these trends? Or is it more the smaller mom-and-pop who are looking?

No, I mean, look, it's hard to be mom-and-pop given the deal sizes, right? So I think what you're seeing initially is a lot of high net worth capital, whether it's individuals, family offices, some just foreign institutional capital that has less exposure here that views this as an interesting entry point. You're seeing a number of capital. There have been a lot of pools of capital formed that have more of a credit orientation to them. So if there's term on leases, they're willing to deploy and invest capital and sort of get a safer return and give away more of the upside. So a little bit of flavors. I wouldn't say it's a robust institutional return of capital yet, right? I don't think you're seeing any U.S. sources by and large, come back, maybe some U.S. high net worth but not U.S. institutions. I feel on the institutional side, sovereign side, more some of the foreigners kicking the tires a bit.

From a funding standpoint, how -- where you stand? You talked about a number of projects you're working on some in the future, have self-funded several, I guess, from a funding standpoint, how should we think about that?

I mean, everything that's on our plate, Jeff, we have the capital on balance sheet to deal, right? PENN we're going to finish out 350 Park. If and when that comes up, our land contribution is basically all the equity we need maybe it's a little bit more depending on financing markets. We just announced Pier 94. Again, our land contribution is a meaningful chunk of our equity there. There's a modest additional amount of capital. So -- and that's really it for the development side right now. Beyond that, we'll -- there's some time before other situations are right. But again, we need the financing markets to return there. It's not an environment where it's easy or frankly, economic to build things of scale given just the lack of depth in the financing market, but that will change next couple of years. So really, as we look out, everything we did from a capital standpoint to fund our business, we have on hand today. And that's a good place to be.

On Pier 94, given that recent announcement, can you talk to the opportunity and returns you're seeing from this? And is there a plan to further expand this partnership?

We -- so the history of Pier 94 is we've controlled that Pier for I don't know Glen 14 years?

15 Years.

It was originally operated for trade shows and art shows and so on. But ultimately, that wasn't the long-term plan of how to drive value. And as we saw -- as we evaluated different options over the last few years, we thought with the growth in production content that -- content production that maybe they would be for additional studios in New York, there's nothing really in Manhattan. It was purpose-built. And so we reached out to HPP originally 3 years ago, just so happened they wanted to expand in New York. And we knew each other well from just history and we went about putting it together. So we had to change the use with the city, which we were successful at doing ultimately got that through recently and as you saw, closed and announced it. So look, we're I think collectively very excited about it. It's going to be the first purpose-built facility in Manhattan. Great location, Midtown, 6 new stages with support space, production space. And it's really 1 of these things where, like we put out, I think HPP put out returns. And so they're comparable for us other than the fact that out of half of our equity kind from the land contribution. So for us, in terms of incremental return on cost, it will be double-digit incremental returns on cost to us. And that's sort of baseline what the expectation is. The reality is nothing like this in Manhattan, right? So none of us really know what the pricing is going to be. We're optimistic. If anything, I think the worry is if we based on interest, we undershoot and say, we should have waited a little bit longer, right? I think it's 1 of you saying with patience, we're going to do better because the announcement and incomings since then have been quite interesting. So we're excited. If you look at the studios in Manhattan, they all generally make shift. This is literally purpose-built design for this industry today. You can accommodate a variety of uses. So I don't know that we know the upper limit, and that's our goal, right? We've got to go out and achieve it. And I think time is our friend here. So we're optimistic about it. There's an opportunity to expand it possibly. I think any time you start a partnership with a group and we've had some discussions on doing other things, you see where it leads to. And whether it's our own portfolio or other de novo things, maybe there's an opportunity. So there's nothing on the drawing board today, but you know we'll see where it leads.

So we're almost out of time, but we can't end the meeting without asking, what are some of the key thresholds or factors that the Board is considering to reinstate the dividend? And then we have some final rapid-fire questions.

I mean, look, the dividend, if you go back to what we said, we said we're going to pause the dividend until the end of the year and see what taxable income is. And that's really what we're going to do, right? We're going to see tax income is -- so the dividend is going to be whatever taxable income at the end of the year, take that relative to what we've already paid this year, right, that's what we'll pay out, right? So it's as simple as that, and that's the mindset going forward. And when we made that decision, which we thought was the right decision. I think it's been sort of validated based on the feedback we've gotten -- we're in a fluid world. There's a lot of moving pieces, good, bad, whatever. Let's just see where we are at the end of the year, right? So the dividend reinstatement is solely based on where taxable income ends up at the end of December.

Okay. And for rapid fire questions, the first 1 is on the Fed. Do you believe the Fed is done hiking? Yes or no?

Pretty much.

Should we put you a yes for that?

Yes. Okay.

And do you expect the Fed to cut rates in 2024? Yes or no?

Yes.

Second, do you believe real estate transactions will meaningfully pick up by A, the fourth quarter of '23, B, first half of '24 or C, second half of '24. .

C .

And third, are you using AI run your business? Yes or no?

If I tell you that I'll kill you.

Touch...

Are you going to ramp it up? Yes or no?

The answer is, I think if you're any company in the world that's not assessing how AI improve your business, then you're not doing your job, right? So our job is to study it, fair it out, continue to study it, how can we utilize this to improve our business.

Thank you.

Thank everyone.