W. P. Carey Inc. (WPC) Earnings Call Transcript & Summary

All right. Welcome to Citi's 2024 Global Property CEO Conference. I'm Smedes Rose at Citi's Research. We're pleased to have with us W. P. Carey, Jason Fox, CEO. This session is for Citi clients only. If media or other individuals are on the line, please disconnect now. Disclosures are available on the webcast and at the AV desk. For those of you in the room or on the webcast, you can go to liveqa.com, enter code GPC24 to submit any questions. If you don't want to raise your hand or if you're here in the room, you're obviously welcome to use one of the many mics that we have available. Jason, a minute, turn it over to you to give -- introduce us to who's with you from the company. Give us a few opening remarks on W.P. Carey. And then what I'd like you to do is segue into kind of your top 2 or 3 reasons why you think investors should be buying the stock today, and then we'll go into some Q&A. Thank you for being here.

Thank you for hosting us, and thank you all for joining. With me today is Jeremiah Gregory, who heads Capital Markets with us. We've also included Brooks Gordon today, who's our Global Head of Asset Management. Again, thanks for having us. So quickly on W.P. Carey. We are a global net lease REIT, been around since 1973 with a total enterprise value in the low $20 billion range. And we primarily focus on sale-leasebacks. The portfolio is comprised of about 60% industrial assets with the bulk of the balance being in retail, predominantly in Europe, but also in the U.S. In terms of the reasons to invest in us, I think there's really 2 primary reasons right now. I think number one, we had an overreaction to a recent earnings call. So we think there's a really good entry point into the pricing right now. Number two, we have extremely favorable liquidity position. We're sitting on about $1 billion of cash to invest with visibility to generating another $0.5 billion of cash through free cash flow and other dispositions associated with our office sale program. We also have a credit facility that's largely undrawn, a $2 billion credit facility and additional capital sources to the extent we see good opportunities in investment market. We are diversified We think the opportunity set for sale leasebacks right now is very strong given the continued dislocation in the credit markets. And we've seen some particularly strengthening fundamentals in the transaction markets in Europe which have largely been frozen over the last 12 to 24 months. So we think there's a good growth story going forward and certainly a good entry price currently right now.

Okay. So just maybe to recap your key kind of bullets, if I can just try to summarize. So first, you think attractive valuation given the fourth quarter call, that was kind of bumpy, and I think stocks pulled back on that, favorable balance sheet with investment capacity and diversification across geographies and tenants. Fair?

Yes, that's fair.

Okay. So I do have fourth quarter questions, but I thought maybe we could just start with a couple of just kind of bigger picture. If you could just talk about your 2024 sort of outlook without additional capital, remind us what are the sources for acquisitions here and kind of just a few moving pieces on the sales front. So just help us think about how you're positioned without having to raise additional equity at this point?

So it's sources of capital to fund the acquisitions? Was that the main part of the question?

Yes.

Sure. So I mentioned that we are capitalized with about $1 billion of cash right now that are primarily generated through the Office separation transaction that we announced last fall. It includes meaningful proceeds generated from our Office sale program, which totals about $800 million, about 3/4 of which are the lower 80% actually is completed at this point in time. We also settled some forward equity in the fourth quarter that have added to our dry powder. And then more recently, in the first quarter of this year, we completed the tenant purchase option back to U-Haul, which is just under $500 million. So as I mentioned, that's $1 billion of cash we're currently sitting on our balance sheet. Another $500 million of sources can be attributed to further -- or the final piece of the asset sale program in addition to some other expected dispositions this year. We've also lowered our payout ratio in the fourth quarter to generate more free cash flow that should add about $250 million. So $1.5 billion of visibility into cash generation for this year. And what that means is that we can fund our -- the midpoint of our acquisitions guidance without having to issue any equity this year. In fact, we probably don't need to be in the capital markets at all. You can afford to be opportunistic, even on the debt side given our cash position and the fact that our credit facility is largely undrawn.

Okay. And just on the dispositions activity. Just remind us where you are on Office. I know you've completed the bulk of it with the sale in Spain of that portfolio. But what -- what about $200 million left to go on acquisition -- or dispositions on that front?

Yes, let me turn it over to Brooks. He can dig in some of those details.

Sure. Yes. So when we discussed the program in September, we estimated around USD 800 million in total proceeds from the on-balance Office dispositions. We're about 82% through that. So what remains is about 6 buildings, we're in various stages of processes with those targeting the first half to complete those. So making good progress. But as you mentioned, the kind of the bulk of that has already closed. The biggest piece was the Spanish government portfolio, which we have closed. So making good progress on it. I'm confident we'll get that done.

Is that like first half or?

Yes. Hard to pin down the precise closing data. That's what we're targeting first half and all of those 6 buildings are in various stages of process.

And Jason, do you think just being kind of a newcomer to the story, I mean, were investors happy to see you spin and create the NLOP? Office and kind of reduce your exposure there? It seems like the stock hasn't performed as well as maybe you would have thought it was. What's your -- what are your thoughts?

What has performed as well as you thought it was?

It seems like the shares of WPC didn't really rally on the spin of the NLOP -- of the Office segment, NLOP, sorry. And I'm just kind of curious how you think investors interpreted it and maybe how you think they should have interpreted it and kind of just your thoughts on that spin.

Yes. Maybe you're referring to the initial reaction of the announcement in September. Like any public company, we make a strategic announcement, it's going to surprise some people. And I think that what we did was our choice was to rip the bandage off. I think that it's probably hard to argue that the portfolio without Office is going to be less attractive in the same portfolio with Office. So by and large, there's been very broad support of the composition of our portfolio right now. There's a clear understanding that we eliminated a lot of the headwinds to growth going forward that we think we were going to experience with office re-leasing. I think the expectations around office, as we all know, the fundamentals will continue to get worse is our expectation. So that cleaned up the composition of our portfolio, and we think removed of an overhang. And that's been the response. I think if you look at the several months after the announcement, we performed quite strongly. In fact, we picked up about 2 turns of multiple from pre-announcement to mid-January during that time period relative to our net lease peer set. So meaningful outperformance perhaps what we expected to pick up, I think we realized within the market.

Okay. And I think your full year acquisition outlook sits around $1.5 billion to $2 billion year-to-date or at least as of your call, I think you've done around $227 million, it's committed or completed. Maybe just kind of just speak to the visibility of the pipeline that's been a big theme on the fourth quarter calls, the tenor of your conversations. And then maybe I have a couple of follow-up questions. Maybe we'll start with that.

Yes, sure. Yes. We did about $200 million of deals through the earnings release earlier in the month. We also talked about, about $100 million of build-to-suits or expansions or other capital funding projects that are currently underway. Those will complete this year. And effectively, we have full visibility into their addition to our deal volume for the year. So at that time, we were about 5 weeks into the year with about $300 million of visibility. We also talked about a building pipeline of assets at varying stages. I would characterize them as a number of medium-sized kind of the $50 million to $150 million deals that we're in the process of bidding on. We've seen transaction activity increase. I would say, beginning in the fourth quarter and through the first quarter. This is particularly the case in Europe. Just to give you some context, Europe saw a much more severe increase in rates. And the context is the peak of the credit markets, we borrowed in Europe, 8-year euro bonds at under 1% compared to quotes we got in Q3 of last year, they were in and around the 7% range. Clearly, we weren't an issuer that are needed to issue, but just to give some context of the magnitude of the changes in the credit markets in Europe. And it wasn't just the real estate transaction market that froze, it's really across the credit spectrum. If we fast forward to where we are at now, we see visibility into bond pricing in the mid-4s, a direct euro issuance. And if we were to issue bonds in dollars and swap to euros, we could probably pick a little bit more yield at the same time. So we're not back to where we were in 2021, but we're certainly a meaningful way from the trough of the cycle in the fall. And that's translated into a pickup in transaction activity. I think the seller pent-up supply, it's been on the sidelines for the better part of a year to 1.5 years, is starting to come back to the market. Our ability to fund deals is a big component of that, and we've talked about our liquidity position and how that gives us confidence. And so I think Europe has loosened up, again, different in perspective, last year, about 10% of our deal volume was in Europe. If we just had a modest or a typical European deal or European year for us, our deal volume would have been closer to our target of $2 billion last year. But instead, Europe was pretty much nonexistent. We've seen that come back around for us. The fourth quarter, we did some deals in Europe. I think the majority of the deals we've announced year-to-date have been European, and I would characterize our pipeline as probably being 50-50 split between the U.S. and Europe. So I think that's a good dynamic that we're seeing. Cap rates are, I would say, roughly in line with where they are in the U.S., call it, in the 7s of what we're targeting. Yet our borrowing costs in euros are starting to return to the historical relationship that we've seen with the cost to borrow in the U.S., it's probably about 100 to 150 basis points of spread between the cost of the 2, which allows us to start generating wider spreads in Europe, which is why we're a little bit more bullish. I still would expect us to be a meaningful buyer in the U.S. for this year. But the context is that we're seeing good opportunities in Europe. And I would expect that as the year continues, we'll see more of that. In the U.S., I think with the expectation in the second half of the year, we'll begin to see interest rate cuts. I think we're also going to see a lot of the sellers that have been on the sidelines come back into the market, in particular, with sale leasebacks, where there is a use of proceeds that drives transactions, those sellers are a little less market timing and more looking for the best alternative. We still think sale-leasebacks are priced very attractively relative to the alternative capital sources that company can raise. I think, in particular, if you look at a sub-investment-grade company, high-yield debt spreads are still are so wide, which allows us to be quite competitive on the sale-leaseback front.

So just you've said, maybe probably 50-50 split between U.S. and Europe, what's the focus of investment in Europe? Is it more retail or industrial?

It's going to be a split between the 2. I would say the expectation without having visibility into what the year is going to bring, of course, we'd likely still be more heavily weighted towards industrial. Historically, it's been, call it, 2/3, 1/3 in Europe and now expect that we'd have some overweight in there as well.

And is the market in Europe so deep that you don't come up against other kind of U.S. or European companies? Or is the net lease market a triple -- or sale-leaseback market there like sort of behind the U.S.? Or is it well understood and very sophisticated? Kind of just give us some context around your investment activity in Europe?

Yes. I mean there's 2 parts to that question. In terms of the investment opportunity set, there is a higher percentage of owner-occupied real estate in Europe. So I think that the opportunity set is as large or larger than the U.S. I think I've seen varying numbers and it's hard to put an exact number on it, but it's in the order of magnitude of, call it, $6 trillion to $8 trillion of owner-occupied real estate. So it's a vast opportunity set. In terms of the competitive landscape, it is less developed. There are no public REITs that have historically focused on pan-European sale-leasebacks. I think that we've tend to compete against pension funds and other private buyers on a country-by-country basis, but it's not that often that we see a pan-European buyer. And that's a big competitive advantage for us. I would say a large percentage maybe as of recent, the majority of our deals in Europe over the last 3 to 5 years have involved multi-country transactions, which really puts us in a strong position when pricing and negotiating those deals. There are very few U.S. buyers that compete in Europe against us. Realty Income clearly is one that has moved to Europe over the last couple of years. I think that's been a benefit to us. I think that they've always had a big following of U.S. investors, and I think it's shined a brighter spotlight on the benefits and value creation opportunities of being in Europe that we've realized and enjoyed for quite some time now. But it's a big market. We don't run up against them as often as one might expect. But we're both well-capitalized companies, and I would expect to see them from time to time. Maybe more going forward, but I think that we're certainly well positioned to compete given our track record of executing in Europe, and again, the liquidity position that we're in currently.

I mean one of the things that's come up around Europe, and I'm just curious as to you agree with this, is that when you're working on these cross-border deals. Well, I guess it's not any currency issues, but cross-border deals that they can take longer and be more complex, and therefore take longer to close and that sometimes the cap rates can move away from you as your cost rates going up and they become maybe less accretive versus just doing a simpler shorter-term deal. I'm just curious if you have any thoughts on that? Do you think that's true? Or is there any merit to that observation?

Yes. No, I think that's a fair observation. I think generally, sale-leasebacks are a little bit more complex in the front end, could be tax and accounting matters to consider certainly, there are lease negotiations that take place in these larger sale leasebacks, there's broader due diligence that occurs as well. But I think that complexity is really a competitive advantage for us. It's going to eliminate a big part of the universe of potential buyers. Very few investors, especially those of our scale, have the track record of execution in Europe. So I think that -- what that means is we tend to get better pricing upfront, stronger structures, longer lease terms, better bumps, the ability to select specific portfolios and cherry pick the right assets. I think as a reminder, we tend to focus on critical operating assets and we do put them on master leases, which provides downside protection. In terms of how the volatility in the REIT market and how that could impact the attractiveness of a deal. I mean, we keep flexibility. We're tending not to commit to a deal until it's ready to close. That's the nature of a sale-leaseback when you have as many moving parts as there are. So we can certainly absorb some movement in rates, but we can also choose to reprice deals if we think it's warranted and rates have moved enough. And by and large, the transaction partners we work with, they understand that, that these transactions can take some time. And these aren't re-trades necessarily. These are repricings that are warranted based on where borrowing costs or other funding costs have moved.

You mentioned you think it's an attractive entry point, given some of the pullback following fourth quarter results. There were again, newest story to me, there are kind of 3 things that stood out to me that felt like they were surprised, and I thought maybe we could touch on them, and you could add if anyone else in the room wants to ask. The first I wanted to ask about was the, how would restructuring where you'll receive -- or they received $7.5 million of rent abatement and about a $4 million decline in rents annually thereafter. I think it's about a 13% total overall decline for year 1. And I guess the first question is, what gives you confidence that that's enough when you've had restructurings, I'm sure you've had others in the past. Like is it -- is round 1 enough to kind of reset those rents? Or how are you thinking about that credit going forward?

Yes, sure. Let me let Brooks dig in to the details. He is the primary coverage person for this.

Yes. No, it's a good question. I think what gives us some comfort there is that we worked closely with not only the company, but the rest of their key stakeholders and the restructuring of their leases from broadly their major landlords, some additional equity from their ownership family, as well as additional liquidity from their lenders and their advisers. This was the package that, that they sought and got all of the stakeholders comfortable that this puts them in a much better position. That said, we're going to keep them on our credit watch list and they will need to operate through this slower period of time, but we do think the actions that we and the other stakeholders have taken have put them on a much firmer footing to execute through this.

And how long did you know kind of internally before you announced it publicly that this was going to be an issue?

Yes. So when we got their Q3 financials, which tend to come on a lag -- by a 60-day lag, so towards the end of our Q4, that's when we saw a visibility into what was a very sharp decline in their operations in Q3, a few different contributing factors there from our perspective. One, really the outperformance of COVID, the slowdown for them was quite sharp versus some of the other COVID darling retailers, which we've seen a little bit more of a steadier decline. Theirs was a bit sharper. And I think that has a lot to do with the German consumer really hitting quite a slow patch towards the back half of the year. So when we sat down with them late in Q4, most importantly, understanding forward-looking, understanding where they were today was crucially important, but then understanding, okay, what is the actual cash flow forecast look like in liquidity picture. And so that's when we began negotiations around with the other stakeholders and the company to understand what would it take to put the company on a better footing. And that took some time to execute. When we had our earnings call, we had enough visibility into the structure of that transaction, which hadn't yet closed at the time, it has now that we were comfortable disclosing the specifics of that, and that has closed identical to what we discussed on the earnings call.

Okay. I think the second thing that kind of came as a surprise is the lease expiration of a large warehouse, $6.2 million of annual rents and you -- in your guidance, you assume that it remains vacant for the year. I guess what's your confidence in getting it leased for 2025? And how do you balance kind of receiving rents versus occupancy or as we say in hotel world, heads and beds, just get it full and raise rents later kind of what's -- maybe what's the status of that?

Right. So that is an excellent property, large building. We are very confident in leasing that property up. I can't comment on a specific transaction until it's actually closed, but we're in active negotiations on that building.

But do you think it will be -- I mean -- so in a year from now, would you have fairly high confidence that it can be leased? Or is it something that could go on for years before you can lease it back up?

No, no, I'm quite confident we'll have at least imminently. And what we've included in our guidance was to accommodate the move-in period and free rent associated with the new lease. So we want to make sure that the guidance doesn't include any rent for this calendar year, but we fully expect that to come online in '25.

All right. And where is that warehouse, sorry?

In Chicago -- just in Chicago.

Chicago, okay. And then I guess the third thing that was a little bit surprised the bankruptcy of a tenant with 4 cold storage facilities is about $5 million and change of rents. Leases, I think you said were supposed to come back to you in February. Did that take place? And what are your thoughts on re-leasing that space?

Yes. So a couple of things. So that is a portfolio of food processing and cold storage in the Central Valley, and it serves a large high-quality farm operation there. What happened with that tenant, that is one that had been on our watch for some time and had been operating in bankruptcy. Really, the change there was that their creditors changed course and decided to sell the underlying farmland versus restructure and operate as a going concern. What remains true is that our physical real estate is quite important for the underlying farmland. So they are in process of selling the land to competing farmers in the area. Obviously, it's a very desirable farmland. And as you might imagine, we're an active part of that as those potential bidders look for, how they plan to service that farmland. In terms of timing and guidance, we expect the lease will be rejected end of this month, end of March. It hasn't yet happened, but that's our expectation. And from a conservativity perspective, our guidance, again, doesn't include any recoveries for the remainder of this year, but it's something that we're actively working on.

Okay. So relative to guidance, I guess, if these things are resolved sooner relative to expectations or to your guidance, then that's maybe some upside there in the guidance outlook.

Right.

I mean just in terms of communication with investors, I mean, it felt like there were sort of like boom, boom, boom, like there were a lot of surprises on the call and what has typically been a fairly straightforward kind of sector. I mean, do you think it would be better to kind of let the -- as soon as you know about them to communicate that to investors? Or is it just your policy to kind of wait for the fourth quarter and kind of bring it all out at once? Or how do you think about that? And what was sort of the reaction from investors when you -- when they followed up with you post your call?

Yes. I mean with respect to how they -- Brooks will talk about the timeline some. And the acuteness of the change happened intra-quarter. We began the restructuring with them early December. They were current on rent. It was at that point in time, we began the restructuring, and we did put them on our watch list, but they were current on rent in December. I think there's a reasonable expectation that they could have stayed that way for some point in time. I think Brooks talked about either why it was important to be proactive and get more of a global restructure in place to make sure the company had the right liquidity going forward. But we didn't have anything to disclose intra-quarter. This is something that we didn't have visibility into what the final outcome would be. We were hopeful it would happen. They would be in place close enough to the earnings call where we could talk about it, and we did do that in that point in time. But there are sensitivities around what we can say with private companies, especially retailers. And again, the fact of the matter is we didn't have anything concrete to disclose until that we were [Indiscernible] for long and could do so during the earnings call. But we understand the surprise nature of it. I mean, we've through the years have performed quite well through lots of credit cycles. I would certainly characterize this as a unique situation, an isolated event. We did provide meaningful disclosure last week to try to help investors understand, maybe a deeper look into our portfolio. We expanded our top tenant list from 10 tenants to 25 tenants. We -- I think covers about 40% of our total ABR. We expanded the information that we included in our top 10 show the size of companies. I think one thing you should notice is that most of our companies are very large companies, which means that to the extent there are any credit events, they tend to restructure. And when we own critical operating real estate, we tend to be [Indiscernible] during that process. I think the other things that we disclosed was a chart on company ownership for the majority of our companies, either public or family-owned. A minority is private equity backed. That was a question we had received. And then we also did a deeper dive into the do-it-yourself European market to address questions we've had about that sector, given Hellweg's experience. And we can dig into that, but the kind of the punchline there is that the rest of our or do-it-yourself retailers in Europe are in a very strong footing. The industry has slowed as it has in the U.S. I think we've even seen Home Depot have a number of sales decreases over the last number of quarters, but the rest of our companies are very well capitalized, market leaders, strong operators and no real concerns on -- from our perspective on the credit side.

Okay. Well, maybe just on the sort of a question that people ask in every meeting and every call. Could you just speak to kind of what you're seeing on the tenant watch list and kind of your credit loss expectations. I don't know if you've said what you've embedded into guidance, but maybe just thoughts around that?

Yes. Brooks, do you want to take that?

Sure. Yes. So we talked about this on our earnings call, and we want to be really clear about that. So I'll just reiterate it. So we have the 2 situations we just discussed, in Germany and in California. And then on top of that, our guidance includes 70 basis points, which is in addition to those impacts for broader credit loss estimation. And that's conservative relative to our long-term credit loss history, which is more around 50 basis points in any given year.

Okay. And then tenant watch list? I mean, is it growing? Are you putting more tenant on watch list?

Hellweg is a larger rent payer. So that does expand -- so it's around 4.5% by ABR. In terms of tenant count, it's not a long list. I believe the number is a dozen tenants or thereabouts. So Hellweg certainly is the larger of the bunch. I think important to note that the credit watch list infrastructure is really a dynamic management tool. It's one where we're using it, among other -- many other tools that kind of monitor companies and put them -- bubble them up to the top of the list. It's equally likely that tenants will come off the credit watch list as they will go on, and that happens on a recurring basis. I think one example of that is we tend to have companies that when we invest in them, they may be smaller or they may be targets of M&A, many of the companies that we've invested in over the years have actually improved up the credit spectrum as well. So for example, within our investment-grade bucket, which is not typically our target market from a new investment perspective, over half of those tenants on investment-grade list -- we're formally sub-investment-grade tenants that have migrated up to credit spectrum as well. So that migration is dynamic. This is the time of year when we tend to receive all the audits, those come out around 90 days after year-end. So we spent a lot of time with management teams, and so we'll be digging in on those in the coming months.

Okay. I wanted to touch to just you have a number of operating assets that you've talked about, I think, mostly in self-storage and then hand in the hotel space. And I think -- am I correct you have 89 self-storage facilities that are kind of on an operating basis, and you've talked about kind of flat year-over-year NOI out of that portfolio? The -- all the public self-storage companies are all guiding to down same-store NOI year-over-year? And kind of what gives you confidence that you can sort of outperform on a relative basis relative to the folks that really do nothing, but self-storage?

Yes. I mean that was our view as of our earnings. It's based on budgets in working with the major operators and their views within our portfolio, what to expect. So it's hard to predict exactly what the year will bring forward. But I think that flat is where we are right now. Could that change up or down slightly? Sure, throughout the year. But it's mainly informed by the large public REITs that our operators are providing our budgets for the year.

So within their outlook there, it sounds like your assets must be kind of better than the overall sort of average of the portfolio if they think it can do 0, but they're guiding down to like 2 or so, say, for their overall performance.

Yes. It's very market specific, of course. I think our concentrations are in, I believe, Florida and California. So that's going to drive some of the performance there.

Okay. Okay. So it's fair enough. And then I mean, over time, do those -- I mean, do you plan to keep those as operating assets? Or would you look to sell them or get them into some sort of net lease or...

Yes. I mean, I think all of the above is probably the answer. I think that we have lots of options to consider with our operating self-storage. We've been in this space for a long time. We first got into self-storage in 2004 through the large U-Haul sale-leaseback that we did through the funds that we used to manage. We did acquire a substantial number of self-storage operating assets, which are the ones that we now own on our balance sheet through the mergers with the CPA programs. We have historically converted some of the assets to net lease, in particular with Extra Space. We like that dynamic. I think that there are opportunities potentially to do some more of that going forward. But look, storage, while the growth has slowed down, it still trades, I would say, historically almost entirely over the last number of years, well inside of where net lease trades. And when we look at opportunities to fund deals going forward. We certainly have a lot of cash on hand. We have a very well-capitalized balance sheet. We have other pockets of capital like our Lineage Logistics investment and some construction loans that we refinanced, but certainly storage is an option. I think that we can probably pick up 100 to 200 basis points of spread selling out of storage and into net lease. But I think in the short term, we're very well capitalized. And we think that looking forward to probably '25 and '26, we could see more growth in storage and probably better fundamentals in the space as well.

To save the firepower for later maybe.

Yes. I think it's optionality that's good to have in this environment.

I know we're coming into the last 1.5 minutes here, but I did want to just ask you very quickly. I think you said on your call and also on your company's blog, you are expecting an increase in corporate M&A which you think will drive an uptick in sales-leaseback activity, which would be a positive for you. Is that mostly in the U.S. that you're expecting an uptick in corporate M&A or...

Yes. I mean, it's mainly based on the dry powder that a lot of the private equity firms have raised. I think if the REIT markets settle. I think that will also be a catalyst to more corporate M&A activity. I think we can expect to see in both continents, but perhaps maybe more focused on the U.S.

Okay. Last 40 seconds. So as we think about this net lease industry in 2025, what do you think kind of same store/organic growth can be?

I think for the net lease -- look, it's hard to term. I don't think many people disclose a comprehensive same-store. We do, of course, I would say, somewhere between 0% and 1%.

Okay. Do you think there'll be more fewer or the same number of public companies in the space a year from now?

Fewer.

And for WPC, buy, sell, build, redevelop or repurchase stock? What's the best decision for you now?

Yes, given our liquidity position, buy.

Buy. All right. Thank you so much for your time. I appreciate it.

Thank you. Thanks, everyone.

Thank you.