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

Good morning, everyone, and thanks for being with us today for the earnings call covering our 2026 third quarter. Before we get started, I want to remind all of you that certain statements on this call are not historic facts and may be considered forward-looking statements. The factors that could cause actual results to differ materially from W. P. Carey's expectations are set out in our SEC filings. A replay of this conference call will be available online in the Investor Relations section of our website at wpcarey.com, where it will be archived for roughly one year, and where copies of our investor presentations and other related materials can also be found. With that, I'll hand the call over to W. P. Carey's Chief Executive Officer, Jason Fox.

Good morning, everyone, and thank you for being with us. We have kept delivering robust results throughout 2026, which has allowed us to raise our guidance once more for AFFO per share growth—growth we expect to rank among the strongest in the net lease sector this year. The key point is that this growth stems from momentum spread broadly across the business. Investment activity to date has repeatedly surpassed our original expectations, which let us raise the low end of our full-year guidance range for investment volume, a range of $1.8 billion to $2.1 billion. With long-term interest rates having climbed sharply of late, fourth-quarter activity is harder to predict, yet we still think we can land in the upper half of that range. Rent increases remain a dependable driver of our AFFO growth, furnishing a meaningful earnings source that does not depend on transaction activity. Our portfolio is performing well, which brings down our forecast for rent loss over the remainder of 2026. Looking toward 2027, the early repricing signals we see are encouraging. Thanks to the considerable capital raised this year, we are positioned very strongly to keep investing if attractive opportunities remain available. Only one bond matures in 2027 and one more in 2028, so even if rates remain elevated, refinancing pressure appears manageable for us. This morning I will briefly recap where we stand so far this year and share our views on how the transaction market may develop in the fourth quarter and into 2027. Toni Sanzone, our CFO, will discuss results and guidance and cover some portfolio and balance sheet details. Brooks Gordon, who heads Asset Management, is also here for your questions. On investment activity: since the year began we have closed about $1.6 billion of investments, at a weighted-average initial cash cap rate of 7.5%. Cap rates have ticked up relative to the first half of the year. For deals closed in Q3 and those we expect to close in Q4, cap rates are averaging in the mid-to-high 7s. That translates to average yields well into the 9s, with some approaching double digits. We continue investing across a range of property types and cap rates, and warehouse and industrial properties have absorbed most of our year-to-date investment volume, consistent with recent years. Likewise, geographically, the US-versus-Europe split has remained broadly in line with our historical pattern. Our existing holdings still present a sizable pipeline of investment opportunities—through expansions, build-to-suits, or redevelopment work. Backed by our Carey Tenant Solutions program, these projects allow us to deepen tenant relationships while deploying capital at attractive returns. Right now we have 11 projects in progress, and across the coming 12 to 24 months those will contribute roughly $325 million in investment volume, with about $95 million of that slated to land in the fourth quarter; we keep seeing that such projects produce higher cap rates and longer lease terms than what we typically originate. Let me focus specifically on fourth-quarter investment activity. The broader transaction market is still absorbing higher rates, and that has brought some uncertainty around the timing of fourth-quarter deals—particularly the ones in our pipeline tied to larger corporate transactions, which may take longer to close in the current environment. If those transactions stay on their expected timelines, a path could open to the upper half of our investment volume guidance range. Without greater visibility, though, we are maintaining a measured view for the remainder of the year and lifting the low end only modestly, yielding an overall range of $1.8 billion to $2.1 billion. Now to sources of capital. Our balance sheet is in excellent shape, with ample liquidity—about $540 million of forward equity available for settlement—and leverage at the low end of our target ranges. Looking ahead to next year, we expect to generate roughly $300 million in annual retained cash flow from our real estate portfolio, which provides yet another meaningful source of equity capital; we also retain the flexibility to pursue accretive asset sales beyond ordinary-course dispositions. Depending on investment activity and relative pricing, we can rely more heavily on that capital source if the need arises. Beginning in the second half of 2027, our Lineage shares will provide one more source of liquidity. All told, those sources leave us well positioned to keep putting capital to work on an accretive basis through 2027, and we won't need to access the equity capital markets at all. Since our funding needs are thoroughly covered and our refinancing obligations are modest, we enter 2027 from a strong footing. That leaves two central questions: how quickly will sellers respond to the higher-rate backdrop, and what will that mean for investment activity? We've begun to observe cap rates rising on comparable deals, yet not all sellers will revise expectations immediately, which can create an interval in which bid-ask spreads grow wider and deal volume decelerates. Should long-term rates remain elevated, however, we'd anticipate continued upward pressure on cap rates in the coming year. Ultimately, that should create additional chances to do deals at going-in cap rates in the upper 7s and, for some, reaching the 8s. Meanwhile, we keep pursuing appealing opportunities as we push for yields and returns consistent with today's market, factoring in both our current cost of capital and the better pricing we secured on capital we've already raised. Since our strategy is diversified across both geographies and property types, we anticipate a wide range of cap rates and believe we're positioned well to uncover opportunities where pricing has moved to appropriate levels and spreads stay attractive. Keep in mind as well that sale-leasebacks make up most of what we invest in, and typically a company's need for capital is what drives those transactions. The proceeds frequently fund something particular — funding growth, pursuing M&A, or strengthening the balance sheet among the possibilities. As a result, many of these companies must secure capital within a fixed window of time, and we believe that should continue generating attractive investment opportunities in 2027. Our focus on sale-leasebacks also gives us greater leverage on price, and we anticipate pricing will move faster than in other areas of the net lease market — particularly the segments focused on smaller, investment-grade commodity retail. Beyond the growth we obtain from external sources, a substantial share of next year's earnings growth is already built into our portfolio. For 2027, we expect contractual same-store growth to land somewhat above the mid-2% range we're forecasting for this year. That mirrors current inflation forecasts and the fact that nearly half of our rent escalations are linked to CPI. Combine that with our comparatively high rent bumps, and the result is a profile that stands out among our net lease peers — one delivering a more predictable source of growth, offering a hedge against rising inflation, and making us less reliant overall on transaction market conditions to drive earnings growth. I'll leave it there and hand the call to Toni to walk through our results, guidance, and balance sheet in more detail.

Thank you, Jason, and good morning, everyone. Before I begin, I want to briefly mention our updated investor presentation. We have revised and expanded it so that it offers a fuller picture of our portfolio, our strategy, and the main factors behind our growth, and it is available in the Investor Relations section of our website. I'll start with earnings and guidance. AFFO per share came in at $1.33 for the third quarter, an increase of $0.08, or 6.4%, compared with a year earlier, reflecting continued momentum in our investment activity and rent growth, partly offset by the impact of settling forward equity. The $0.01 decline in AFFO per share versus the second quarter was primarily due to the timing of other lease-related income, which came in higher during the second quarter, as we had anticipated and incorporated into our initial guidance. For the full year, we have again raised and narrowed our 2026 AFFO per share outlook to a range of $5.23 to $5.29, lifting the midpoint by $0.03 and implying growth of 5.8% year-over-year. As Jason noted, we believe the AFFO per share growth we will achieve this year will rank among the strongest in the net lease sector. Although the fundamental drivers of our growth remain solid, our AFFO guidance points to a weaker fourth quarter, partly due to rent abatements tied to certain releasing activity, which I will discuss shortly. Our portfolio is still performing well, with strong tenant collections and no additional rent disruption from credit events. In the third quarter, we collected rent from Hellweg for the entire period and received its previously outstanding June rent payment, which contributed to rent collections exceeding expectations. Consequently, we are reducing our estimated potential rent loss from tenant credit events to a range of $3 million to $5 million, or 25 basis points of ABR at the midpoint, down from our earlier estimate of $7 million to $10 million. We have made solid progress in lowering our total Hellweg exposure this year, moving it out of our top 25 tenants by the close of the third quarter. That included signing new leases with stronger operators, recapturing nearly 100% of the prior rent, with rents set to begin between late 2026 and mid-2027, after Hellweg's remaining lease terminations at the end of November. We expect to finish sales of the remaining Hellweg stores over the rest of this year and into early 2027. Other lease-related income for the full year should total in the mid-$30 million range, including proceeds from the Hellweg bank guarantees, which we expect to draw on in the fourth quarter. Our third quarter results continue to reflect the strength of the internal growth embedded in the portfolio, with contractual same-store rent growth of 2.6% year-over-year, reflecting the effect of higher inflation on lease revenues, as well as certain multi-year rent escalations occurring this year. With about 50% of the rent we collect tied to CPI-linked leases, we expect inflation to remain a tailwind for contractual same-store rent growth—edging somewhat higher over the next few quarters and holding in the mid to high 2% range through next year—which supports what we believe will be the net lease sector's strongest embedded internal growth. Comprehensive same-store rent growth for the third quarter was 2.2%, aided by improved occupancy and a strong quarter of rent collections. As we've noted on prior calls, comprehensive same-store rent growth can fluctuate period to period owing to certain quarter-specific effects that are generally one-time in nature. Over the longer term, however, we continue to expect comprehensive same-store growth to trail contractual growth, in line with our historical average of about 100 basis points. Releasing posted another solid quarter, with approximately 105% of prior rents recaptured and about 9 years of incremental weighted-average lease term added on slightly under 1% of total ABR. Third-quarter releasing activity included a 10-year lease extension at a property leased to Nord Anglia, one of our top tenants, completed alongside an expansion project; that is a good illustration of how we work closely with tenants to support their growth while also enhancing the value of our real estate. The deal also carried a one-time rent abatement that will largely flow through the fourth quarter. Occupancy increased 10 basis points to 98.6% at the end of the third quarter, reflecting our third-quarter disposition activity, which consisted mainly of sales of vacant assets. During the quarter, we closed asset sales totaling $27 million, bringing dispositions for the first 9 months of the year to $273 million overall. Based on our current visibility, we have narrowed full-year expected dispositions to a range of $350 million to $450 million. Turning to expenses and non-operating income: property expenses were lower in the third quarter, reflecting the timing of demolition costs we had previously expected to be higher in the first half of the year. Additionally, in the third quarter we saw reduced property tax expenses because tenants paid amounts we had previously been accruing; for the full year, we have lowered our property expense expectation to a range of $54 million to $57 million; we have similarly reduced our full-year tax expense expectation to a total of between $40 million and $43 million, driven by international leasing activity, tax structuring optimization, and our current visibility into the mix of our investment activity. Full-year G&A expense is now projected at between $104 million and $106 million, a modest increase from our prior guidance. Non-operating income was $4.7 million in the third quarter, which is also a reasonable quarterly run rate for the fourth quarter; this line item includes the $2.8 million quarterly dividend on our equity stake in Lineage, interest income from cash deposits, and realized gains and losses on foreign currency hedges, as well as $0.95 per share. Just as a reminder, hedging effects generally get offset by foreign-currency-denominated revenue and expense movements, so AFFO isn't materially affected. Now on the balance sheet and capital markets activity: we remain well ahead of our capital needs, having raised substantial debt and equity in the first half of the year to prefund investment activity and to prepay the bond maturity coming due in October. That execution leaves us in a very strong position, particularly given today's capital market environment. Our debt's weighted-average interest rate was 3.3% in the third quarter, a slight increase from the second quarter as expected, reflecting bond refinancings we completed earlier this year. We expect interest expense to climb further in the fourth quarter and into next year as higher rates continue to flow through. Looking ahead, our bond refinancing needs remain quite manageable, with only one maturity apiece in 2027 and 2028, both denominated in euro. Consistent with past practice, we'd anticipate refinancing those maturities in the same currency, allowing us to keep enjoying cheaper debt costs in Europe. On the equity front, we settled 2.3 million shares under forward sale agreements during the third quarter for net proceeds of approximately $150 million, leaving roughly $540 million of forward equity available to settle, raised at a stock price of about $73. At the end of the third quarter, net debt to adjusted EBITDA was 5.5 times, excluding the impact of unsettled forward equity, which sits at the low end of our target range. With unsettled forward equity included, net debt to adjusted EBITDA came to 5.2 times. Liquidity is strong as well, ending the third quarter at $2.6 billion, including nearly full availability under our $2 billion credit facility. So we still have ample runway to fund investment activity for the remainder of the year and through 2027 without any need to raise additional equity capital. Last, on the dividend: in September we raised our quarterly dividend 4.4% year-over-year to 95 cents per share — $0.95 per share — or $3.80 annualized, while maintaining a healthy payout ratio of 71%. At our current stock price, that equates to an attractive dividend yield of roughly 6%. With that, I'll hand the call back to Jason.

Thanks, Toni. Even with the ambiguity surrounding interest rates and the way that will carry through into net lease investments and the wider REIT market, 2026 is looking like a very strong year for W. P. Carey; we anticipate one of the highest levels of earnings growth across the net lease sector, with AFFO growth nearing 6%, surpassing last year's already robust year-over-year results. We expect to keep deal volume healthy, underpinned by attractively priced capital we raised during the first half of 2026. Portfolio performance has stayed steady, and our rent loss figures have trended downward over the course of the year. Although it's too early to set specific expectations for 2027, we're encouraged by early indicators of repricing in the market, along with our capacity to push cap rates higher on transactions in our pipeline, especially on sale-leasebacks driven by sellers who have defined capital needs and timelines. Should that trend persist, we anticipate increasingly attractive opportunities next year to deploy the capital we've raised. We're confident that we can fund deals in 2027 without any need to raise new equity, drawing on a combination of our forward equity dry powder, retained cash flow, ordinary-course dispositions, and accretive reinvestment from our Lineage position. We also see a meaningful portion of next year's earnings growth already embedded in our portfolio through rent escalations that carry upside should inflation run higher. All told, we believe the building blocks remain firmly in place to keep delivering durable and competitive returns for our shareholders through a combination of our earnings growth and our attractive and well-covered dividend yield. That wraps up our prepared remarks, and I'll turn the call back to the operator for questions.

Hello everyone, and thank you for the question. Jason, perhaps picking up right where you left off regarding 2027 — after all those business transformations you described, with mid-single digit AFFO growth and a double-digit TSR, is there any reason we shouldn't anticipate that in the coming year, whether because the cost of capital has risen, cap rates perhaps failing to adjust, or anything else you can think of?

That's a fair question. Discussing specifics for 2027 feels a little premature, though several of the items you raised are indeed at play. Rates are higher, and that will act as a headwind for everybody. Costlier financing translates into greater interest expense, possibly tighter spreads as well, and likely adds some uncertainty to the transaction markets. That's a challenge the REIT industry will need to navigate in the year ahead. As I said earlier, we believe many factors leave us well positioned to still produce compelling and competitive growth next year. I mentioned the kinds of deals we pursue and our capacity to push cap rates upward — we've already demonstrated that. Toni walked through the specifics of the capital we've already raised at appealing pricing. That will keep enabling us to invest accretively. Then there are our bumps. Our portfolio carries high same-store contractual rent increases. A substantial share of those are tied to inflation, which could offer some offsets against greater interest expense. We do believe we'll be competitive on growth when measured against peers in the sector. Looking at dividend yield matters too, in my view, and by combining those two, we should be able to keep delivering compelling returns to our shareholders.

Thanks for that. Then you went through a few of the funding options for '27 without raising equity. You didn't mention the Vegas construction loan. I know it matures mid-'27. There are a couple of extensions on it as well. Would you expect to get that back and for it potentially to be a source of capital, or would you expect it to stay in place?

I'd say potentially the second half of the year. No real updates at the moment. We've said before that the refinancing decision is controlled by our development partner. There's a bit of leasing left to do, I think; it's probably 90% leased right now, and there's one unit that, once it gets leased — and there's a lease negotiation in place now — I think the developer could go to market. Obviously it's not a great time to be looking at the financing market. I think you know that the coupon on the loan we have is 6% right now, but it's worth noting that it ratchets up to 8% starting in January. There's potential upside for us in keeping that loan in place, and obviously, if it's refinanced, that'll provide some more liquidity.

Okay. Thank you.

Yep.

Thanks. You mentioned that pricing moves faster on sale-leasebacks. I'd like to know whether the same holds true for build-to-suit developments, and could you speak broadly about the investment spreads you anticipate, considering how your cost of capital has shifted and where you expect cap rates to go?

Absolutely, on sale-leasebacks, where specific proceeds are set aside for the seller; those deals are also more complicated, which tends to shrink the buyer pool somewhat, and we clearly distinguish ourselves when it comes to execution. I believe some of that extends to build-to-suits, where there's an extra layer of complexity. We're able to step in, buy the land, and finance construction right from the start. Build-to-suits also involve a forward element, and when interest rates are climbing, that tends to hand you a bit of pricing leverage as well. We haven't brought in many build-to-suits over recent quarters, I can't claim it's showing up in our pipeline or in our closed deals at this moment, but we expect that as more build-to-suits come along, there'll be some capacity to keep passing through higher rates. I think you had one more question there. What was that final question you asked?

So it's purely investment spreads—where are you seeing that?

Spreads—that's a somewhat nuanced thing to answer when we consider spreads. Cost of capital has definitely become more pricey, and across the REIT sector spreads have narrowed; as for us, the way we view it at present, with our liquidity position and our capacity to fund deals using pre-raised equity or free cash flow and dispositions if necessary, that lets us genuinely keep investing accretively next year without needing to tap the equity market. When we consider spreads, that capital is what counts; we don't attach new deals only to where our spot cost of capital sits. Clearly, that is something we take into account, and it forms part of our underwriting and pricing, yet the real accretion we'll produce rests on the pre-raised capital we deploy to fund new investments, and that is far cheaper than where we can raise capital today. Spreads are intriguing, particularly as we drive cap rates upward. We'll need to see where equilibrium lands once we observe a more settled point in rates too.

For my second question, I'd like to ask about the interest rate environment and how you view refinancing headwinds in 2027. I realize many of your swaps and maturities are weighted toward the back end next year, but could you comment at all on what sort of earnings impact you're seeing from that?

Toni, would you like to address that?

I believe we took care of all our '26 maturities earlier in the year, so to speak, and when we look ahead to 2027, there's a single euro bond — $500 million — coming due in April. If you will, that represents our largest refinancing risk, and as we've mentioned previously, we continue to believe euro bonds can be replaced with euro bonds, and those are trading at probably 100 to 150 basis points, perhaps at the lower end of that range right now, inside of where the US bonds are trading. We still anticipate seeing some spread to the coupon on the maturity that's in April, but we do think that's manageable. It certainly will add to some of the headwind next year, but we do agree that will be manageable for us.

Thank you.

Welcome.

Morning, everyone. On the Q4 acquisitions you're projecting — about another $330 million at this point — are those high 7% cap rates already showing up on those deals? With that kind of volume, maybe 500 for the quarter, whatever it ends up being, does that feel like a reasonable floor for quarterly acquisitions as cap rates keep adjusting, and are you seeing enough at that high 7%, 8% bogey?

We've succeeded in moving cap rates higher. During the first half of this year, our transactions were occurring in the low to mid-7s, and the deals we've completed since — a few in Q3 and early Q4 — have averaged in the mid to high 7s. We're observing some shifts; that reflects closed transactions, but it also mirrors the pricing currently sitting in our pipeline, so think mid to high 7s. Obviously, should the 10-year Treasury remain at 5% or above, we'd like to continue pressing cap rates upward. The pipeline looks compelling at present. I'd point to roughly $200 million to $300 million worth of deals that are actively in process. There are a few bigger deals still early in the pipeline that might come through, though a number of them sit inside wider corporate transactions, so the timing isn't clear and completion is somewhat harder to forecast; activity is showing up, and that activity carries the higher price point we mentioned before.

All right, thanks. Regarding the rent abatement on Nord, should we view it as roughly a quarter of free rent, or perhaps 4 months of free rent? How should we think about it in terms of the impact on Q4 and what we ought to be pulling out of the model?

Toni, would you like to take that one?

Correct — regarding that specific Nord deal, there are 4 months of free rent on that single property alone. That comes to roughly $3 million to $3.5 million. In return, we added 10 years to the lease term, achieved rent recapture above 100%, and all of it ties to an expansion carrying an appealing yield on freshly invested capital. As for that free rent, a small portion lands in the third quarter, most of it in the fourth quarter, and then it's genuinely built into our guidance. I noted that we're busy on the releasing side. There are potentially 1 or 2 transactions that would likewise carry rent abatement into the fourth quarter; altogether, that could mean a $0.02 to $0.03 impact in Q4, and it forms part of the dip you're seeing between Q3 and Q4. Again, it truly hinges on whether those transactions close as we anticipate, but that is what we've embedded in our guidance.

Toni, is there anything else worth noting in the Q4 assumptions that we should know about, something that's driving that range?

Nothing beyond the assumptions we gave you. I think when you look at some of the midpoints of the expense ranges, there's a bit of seasonality in there. And I think if you factor that in along with the rent abatements, it's probably reasonable not to treat Q4 as a run rate or a starting point for 2027 growth. I think if you look at Q3, that's probably a better jumping-off point from which to grow for 2027.

All right. Wonderful. Thanks very much.

Hello, and thanks. I suppose my question is really a follow-up about the rent abatements when you're looking ahead to '27. I mean, if a tenant renews their lease, is it pretty standard to hand them some amount of free rent, and could that factor in at all over the course of '27 for you?

Brooks, would you like to take that one?

Yes, this does happen, though it isn't something we do all that frequently. It's among several levers available to us when negotiating a lease—rental rate, possible rent abatement, TIs, and so on; it's simply one more tool in our toolbox, and in these specific deals it turned out to be the preferred option during the negotiation, but I wouldn't expect it to become a trend.

All right, so you said cap rates are adjusting, which is something we've been hearing about from other companies too. I was just curious: when you look across the potential investment opportunities out there, are there any places where cap rates might be shifting faster, perhaps outside of Europe, in the core food groups, so to speak, or anything along those lines you could share?

Sure. We talked about sale-leasebacks, particularly where we're targeting sub-investment grade industrial properties — that's where we've had the greatest pricing power at this point, for the reasons I mentioned earlier. Probably at the opposite end of the spectrum, it's going to be retail, especially investment-grade credits. There we can see adjustments or cap rate changes taking a bit longer. More capital is chasing those, and I think investment-grade retailers tend to have more capital options than, say, a company that's looking to do a sale-leaseback.

All right. Thanks.

Good morning, and thanks for asking. Pretty much each quarter this year, that rent loss assumption has turned out to be conservative. I was just wondering whether you could take us through the tenant credit watch list as it stands now, and whether any shift in tenant credit trends has shown up lately?

Brooks, do you want to handle that one?

Absolutely. On the whole, our credit risk position is better now. A number of businesses are no longer on the watch list. As Toni said, Hellweg will be fully removed in Q4. As you noted, we have steadily lowered the rent loss assumption throughout the year; we deliberately began from a cautious starting point. One tenant discussed before is Cornerstone, at roughly 60 basis points. Another recently added is Hertz, also around 60 basis points. All the rest on the credit watch list are considerably smaller; then perhaps briefly on Hertz, we hold three of their key airport-serving locations at SFO, Newark, and Logan. They may potentially look to restructure their balance sheet, but much like Cornerstone, we would not anticipate any effect on us or our leases. If either one does restructure, expect that credit will have been proven on the other side of it. Generally, credit watch has decreased, and it will decrease further once Hellweg leaves the list in Q4.

Okay, understood. Thank you.

Morning. Appreciate you taking my question; it looks as though you've already shifted from low to mid-7 cap rates during the first half over to mid to highs in the pipeline as it stands now. Right, you mentioned something about visibility, or the possibility of cap rates reaching the high 7s and perhaps even the 8s. So how fast do you figure that will unfold, and then, if cap rates do begin hitting 8%, well, does that return us to a sort of business-as-usual setting? Thanks.

Predicting timing is difficult. Perhaps to state what's obvious, much of this hinges on where and when interest rates settle, and clearly that's quite complicated, with many different factors shaping rates. My view is we need to see long-term yields stabilize first, and that isn't the case at present. As a hypothetical, if we get a month or two where rates hold steady, let's say near 5%, then I believe we could say the real estate market will probably settle around the correct pricing. For us, that likely translates to an average somewhere in the high 7s. When you consider where things stand today, we remain in a volatile stretch, so it's difficult to say precisely how fast that might occur. Perhaps it's worth mentioning once more, we believe the kinds of deals we pursue, especially sale-leasebacks, will see pricing adjust most rapidly there, while other segments of retail, for example, might take somewhat longer. Should things settle in the high 7s or near 8, I think you're correct, that's probably business as usual. Remember, we've already raised substantial capital at this point, and we'll feel comfortable and confident deploying it through 2027 with no requirement to raise fresh equity capital; we'll be selective and keep putting capital to work. The approach we take will be measured. In a sense, if rates are rising, we can view it as dollar-cost averaging into the market. We hold well-priced capital available to invest, and that, I believe, lets us keep growing next year.

Understood. So, as a follow-up question, what was it I meant to ask? To put it more precisely, among those transactions being done at an 8 cap, are you in active talks at roughly 8 at this moment, or is that really more your expectation regarding where things eventually land assuming rates stay where they are?