EastGroup Properties, Inc. (EGP) Q1 2013 Earnings Report, Transcript and Summary

Good morning, and welcome to EastGroup Properties First Quarter 2013 Earnings Conference Call. At this time, all participants are in a listen-only-mode. Later, you will have the opportunity to ask questions during the Q&A session. Please note this call is being recorded. Now, it’s my pleasure to introduce David Hoster, President and CEO.

Good morning and thanks for calling in for our first quarter 2013 conference call. We appreciate your interest in EastGroup. As usual Keith McKey, our CFO will be participating in the call. Since we will be making forward-looking statements today, we ask that you listen to the following disclaimer covering these statements.

The discussion today involves forward-looking statements. Please refer to the Safe Harbor language included in the Company's news release announcing results for this quarter that describes certain risk factors and uncertainties that may impact the Company's future results and may cause the actual results to differ materially from those projected. Also, the content of this conference call contains time-sensitive information that is subject to the Safe Harbor statement included in the News Release is accurate only as of the date of this call.

Thank you. Funds from operations per share for the first quarter met the mid-point of our guidance at $0.76 per share. The decrease slightly is compared to the first quarter of last year. The positives for the quarter were increased property operating income from new developments and acquisitions, while the negative FFO per share were our reduced leverage actually a positive for company, higher overhead and gain on the sale in the first quarter of 2012. Same property operations were basically flat. Keith will give you more detail on all this later in the call. Our development program continues its positive momentum with the started construction of five projects during the first quarter and we have increased our expectation for construction starts through the balance of the year. At March 31st, we were 93.6% occupied and 94.4% leased. These figures represent a decrease from our yearend levels but are ahead of our internal projections. They reflect the improving but not yet strong leasing markets over the past several quarters, overall good activity, but not much debt yet. We expect to be back over 94% occupied in the fourth quarter. As might be expected, our Texas markets were the best at 97.4% leased, followed by our California markets at 96.7% leased. Houston, our largest market with 5.3 million square feet with 98.9% leased, and 98% occupied. Jacksonville, which experienced several large move-outs, was our only large core market below 90% leased. The good leasing activity of the fourth quarter has so far carried over into 2013. Improving industrial fundamentals in every one of our major markets has net rents moving well off the recession level lows, but prospects in most market still have too many available space opportunities for landlords to have real pricing power yet. Houston is becoming an exception…

Good morning, FFO per share for the quarter was $0.76, compared to $0.77 for the first quarter last year, a decrease of 1.3%. FFO per share met the midpoint of guidance. Lease termination fee income was $427,000 for the quarter, compared a $170,000 with the first quarter of 2012. Net debt expense was 47,000 for the quarter, compared to 223,000 in the same quarter of last year. Termination fee income net of bad debt expense was a positive to FFO of $433,000. David mentioned the diluted effects of reducing leverage, higher G&A and gain or sale last year that made up the risk for the differences. Debt to total market capitalization was 31.9% at March 31, 2013. For the quarter the interest in fixed charge coverage ratios with 3.6 times and debt to EBITDA ratio was 6.5. All of these debt metrics are improvements over the first quarter of 2012. Our bank debt was 92 million at March 31st and with bank lines of 250 million, we had a 158 million of borrowing capacity at quarter end. During the first quarter the company entered into an agreement in principle with an insurance company under which the company plans to issue $100 million of senior unsecured notes at a fixed interest rate up 3.8%. The notes would require semi-annual interest payments with principle payments of $30 million on August 30, 2020 as 7 years, $50 million on August 30, 2023, 10 years and $20 million on August 30, 2025, 12 years. These maturity dates compliment the company’s existing debt maturity schedule. The transaction is expected to close on August 30, 2013 and the issuance of the notes in this private placement is subject to due diligence and completion of final documentation. We originally planned to borrow less than $100 million but…

Leasing velocity is good and real pricing power should come soon as a result. Our development program continues to grow and we are seeing more acquisition opportunities. Our balance sheet is the strongest it has ever been and we believe is well structured to take advantage of future opportunities. Keith and I will now take your questions. Thank you.

(Operator Instructions). We will take our first question from Michael Bilerman with Citi. Your line is open.

Great good morning Kevin Varin is on the phone with me as well. Maybe I do not know Keith or David, just want to come back to sort of the stock issuance and I completely recognize the balance sheet is in great shape and I quickly recognized the fact that rates are low and time to take as much debt as you can but I’m wondering how you are offsetting about the stock, the stock above $60, all-time high is also an attractive source and so I’m curious why not load up when you can, when the market is hot both on the debt and equity side to effectively take as much capital as you can?

You are right on both instances and we don’t rule out issuing more stock during the year, and particularly if we see an increase over what we've projected for development and acquisitions and our goal is to achieve that. It's very tempting and as Keith pointed out, it changes your earnings and your projections on that. So we're tiptoeing through it just a little bit on that basis. We think that without issuing any equity, as Keith said our debt to total market cap should be well below 35% and our other metrics, our other ratios all are at the most attractive levels even without any equity that we’ve ever had. So given that thinking, we decided to take that out of the guidance and maybe we give too much information.

I'm just wondering, what's the trigger point now for effectively issuing equity, right. So you always had done the option, I guess you could have left it in guidance and just not capped it. So I guess now you've made a conscious decision to say, you know what, we're going to hold off, we're going to take the foot off the gas a little bit and not issue off RTM. So now what is going to be, I guess the trigger that we have to think about for you to issue equity?

Announcement of acquisitions in excess of the $30 million that we have in the guidance, roughly and additional development and we're working on all that and our goal is to do more than that. So I guess I'd personally be disappointed if we didn't issue more equity by the end of the year because we need to. It didn't seem to make sense to issue more if we didn't need to, given all the other assumptions that are in the guidance. So as we go forward in the year, if you see us with announcements on increased development above what we've increased it to already and increased acquisitions, we're going to assume there would some additional equity issuance at some point, whether it's in the next couple quarters or by the end of the year, but that's really how we're judging it.

Just one last question, this is Kevin with Michael. We wanted to get more color on the housing related tenants. Maybe what percentage of the portfolio is exposed to residential and how is that compared to peak and the maybe go through markets in such times that you are seeing activity.

Good question. Somebody figured what’s going to be assets (ph) where I brought it up in my prepared remarks. I am not comfortable with the statistics we have, what our exposure is today because there are so many different types of construction and that’s how we quote it but I can guarantee you that it is well below where we were at the peak and we can go on in more detail on that here or we can talk offline later on that, but we are very encouraged as I mentioned by both the leases that we have signed, eight new leases on vacant space of tenants we didn’t have before, plus an expansion and four renewals and our people field report that there is significant increase in prospects of people related to construction, residential and otherwise out in the marketplace today. So we would hope and expect that our share, that would increase as time goes on because most of those fit very well as they did in the past, our business distribution buildings. When we look at where the leases have been signed, it’s where you might expect (inaudible) three and half months of the year Tampa, Jacksonville, Orlando, Houston, Dallas, San Antonio and actually small expansion in Oklahoma City, Phoenix and even Fresno. So it’s very much across the board. I must say we are really encouraged by that. Now it’s everything from equipment rental to flooring to swimming pool installation and supplies. So it includes a lot of different uses. Houston, our key development add on I10, we are really trying to target leasing to residential housing suppliers there because that’s where a big part of the housing boom in Houston is. So we think that is going to be a fit and Houston’s just broken off so it’s records in terms of growth in housing starts and sales. So, hopefully that answers but if that didn’t, give me a call later.

Thank you, we will take our next question from the side of Vance Edelson with Morgan Stanley. Your line is open.

Let me just ask the housing question a slightly different way, just to try to get a feel for how important you think you might be over the next year or two. How much of the development and acquisition activity that you are eying right now, are you pursuing because you think that housing could be a big driver after so many slow years, or is that just one of many factors that’s driving your decisions to expand.

It’s just one of many and we build, develop based on what we see actually happening today in a market, what the prospects are rather than what might happen with improvement going forward. So, in San Antonio, our third building in Thousand Oaks, we have a couple of prospects there that are related to housing. But that wasn’t the reason that we started that buildings, it was just fact that the overall market was better. We don’t do a lot of that on the come.

Okay, makes sense.

It’s just really icing on the cake for us and it was so strong for us before, it was a big factor in our drop in occupancy in the recession down to roughly 86% and we have gotten back up to 93%-94% really without it. So we see that it’s going to be a nice positive going forward, but it wasn’t needed to get back to where we are today.

Okay, that’s very helpful. And then speaking of the drop in occupancy but the more recent one which was partially caused by the move-outs in Jacksonville and Tampa, can you provide an update on how quickly you might be able to re-lease that space?

We’ve been pleasantly surprised with the activity in Jacksonville. We haven’t signed any leases on those vacancies yet, but a lot more activity say than we anticipated in Tampa, the activity is picking up a bit but it’s slower.

Thank you. We move now to the side of Brendan Maiorana with Wells Fargo. Your line is open.

So David, just I wanted to pick up on the move-outs. Because in Tampa, I think you still have Black & Decker that I thought was sort of a summer move-out?

They are.

Yes, so that one is not reflected in the occupancy stats yet, and then I think you’ve got one or two larger ones in Houston too. So I was just trying to reconcile, in your comments in the prepared remarks about getting above 94 by the end of the year, when it looks like you’ve probably got maybe 100 basis points of known kind of move outs during the years. So do you feel like just there is the amount of tenant activity to pick back that delta which is about 150 bps as I’m kind of looking at it or do you have stuff that’s already kind of baked in that you know is going to backfill some of that space?

Just a simple answer is yes, we think we can backfill it and the activity that we’ve had since the first of the year has encouraged us in being able to do that.

Okay and then so I think I heard you right in your prepared remarks. You you’re your development pipeline is now 48 versus 43, which you reported last night. So it sounds like you got a 50,000 square foot lease. Can you share?

Now, we signed two leases, we received two signed leases in Houston one late yesterday and actually one first thing this morning and we also just received as I mentioned 77,000 square foot lease on a proposed one of two buildings in Charlotte. So some of our deadlines for these conference calls are somewhat artificial but they tend to work. It gets people to push to get things done by a specific time. We just cut a little closer this quarter.

Yes just think if you guys had reported on Monday, ahead of your (inaudible). And then two ones for Keith. One is the lease term fee that you guys had detailed last quarter, was that in your same-store guidance or it sort of effectively boosted that same-store number a little bit?

Correct, yes.

Okay, so was that expected I guess if I strip that number out I think you guys are maybe negative 60 or 65 basis points of same-store on a cash basis. Was that kind of in line with the expectations because I know the overall number was sort of plus 100 or 150 basis points for the year?

I think you’re correct.

Yes I think like I said in our last call we’ve been criticized for letting people ask too many questions and cutting off people at the end. So if we’re missing any questions with you or anybody, else please just call Keith or me after the call.

Thank you, we’ll take our next question from the side of Alex Goldfarb with Sandler O'Neill. Your line is open.

Just Keith, on the balance sheet side, just two questions on the mortgage and on the new delayed draw unsecured loan. First, just given the increased appetite and your access to the unsecured market especially if you’re going after the life companies, do you see refinancing more mortgages with private placement unsecured debt?

Yes.

So, on a go forward basis are the life companies sort of agnostic whether they lend to sponsor on a mortgage basis or unsecured ,they view it as two different loans or they just say, hey we want this much exposure to a sponsor, we don’t care how it’s broken down.

In some cases there is even two different departments. Some insurance companies use the same - you’d have the same person that does the mortgage and the product replacement unsecured. And as far as New York, they had a different department and different needs and we did not want it as soon as we got it but we got a great rate and able funding for 5.5 months and we thought it was just too good a deal to turn down but we plan to continue to go directly to insurance companies and we’ll also looked at other means too within unsecured debt.

Okay. And then just second question. Can you give some more color, the 3.8% is the all in, but how does that breakup on the 7, 10 and 12?

It’s 3.8% across the Board and it’s about a 9.5 average and so is 3.8% on everything.

So, each tranche is 3.8%?

Correct.

Thank you. We’ll go now to the line of Craig Mailman with KeyBanc Capital Markets. Your line is open.

David just drilling down to your comments on acquisitions, it sounds likes there is defiantly more product out there but just curious, is it more portfolios you guys are looking at or one offs and then maybe your expectations on pricing, especially given your falling cost of capital here.

It’s both and if it’s a portfolio in one city, we work on that if it’s a portfolio with multiple cities, that generally doesn’t fit us and if we like what’s in one of our cities, we will go ahead and just bid on that city and sometimes that works and sometimes it doesn’t. So, it’s a mix. We there are more of A quality properties coming to market this year maybe than the last year although there is still a mix. But they tend not to mix in a portfolio, which makes it easier to be selective. As to cap rates, I think they are still coming down and probably in all of our markets and that’s just something that we look at on an individual bid basis and awful lot of what a cap rate is obviously your opinions of what is going to happen in the future in terms of the location and potential rent and NOI growth but I think overall though it’s safe to say the cap rates are coming down.

Are you getting more aggressive on what you are willing to pay just as a function of your cost of capital coming down or your outlook on industrial fundamentals and potential growth or are you guys sort of drawing a line in the sand and staying firm on what you are willing to pay?

Yes to the first two. We look at upside and where our cost to capital is and where we think it’s going to be and where our property is going to be operating over the next few years and is it a property that we are going to be proud to own five years from now or 10 years from now and determine in our mind its value today based on that. We don’t draw lines in the sand unless we think that something is way out of whack.

Okay and then just one quick follow-up, what markets are you seeing the best of the availability versus what markets you want to get bigger?

It’s a little early to tell you on that. Right now we are seeing more properties being offered in Texas than in Florida. Arizona Phoenix has had a good many offerings. The offerings are where the institutional investors have been and want to be and that’s where the most activity is. And then also I think in markets that have had certain amount of recovery so that the seller can be comfortable, that they are getting a good price and they are not selling too soon or too late.

(Operator Instructions). We will go now to the site of Erin Aslakson with Stifel. Your line is open.

I just wanted to ask about in which markets you're seeing the strongest rental rate growth or concessions declining the quickest currently.

All right, Texas, Houston, San Antonio, Dallas I guess in that order we’ve even seeing some good activity in El Paso, because of the pickup in manufacturing in Mexico. So, as I mentioned in my remarks, when you look at statistics going forward, I need to focus on what's happening in just one quarter, because that never really is a trend but we will see the better statistics out of Texas and then I think Northern and Southern California probably well notions out, excuse me, Charlotte is showing some really good strength and that's allowing us to develop there and Florida and Phoenix, but particularly Florida are trailing.

And those were areas in Texas, Huston, San Antonio, Dallas, that’s we’re actually seeing rapidly growth or just quickly (inaudible).

How do you define growth? Is it grows of the bottom and what the market is or growth compared to what's in our leases, those markets all certainly have run rate growth from the market standpoint.

When do think your leases overall probably going to turn positive mark-to-market was?

Well, I think you know on a GAAP basis they're turning positive, they're positive right now, overall. I gave some examples I think on our last call of, we give the statistics on both renewals and leasing vacant space and I'm not sure anybody else actually does it that way or even defines it the way we do. And so I've been tempted but nobody will let me stop giving the statistics on rates on vacant space because I think they're somewhat misleading. To give an extreme example, let's say all our vacant space has been vacant for three years and the rent's 20% higher on what the previous tenants were and what we get today. We lease all that we're going to show a 20% decline in rent adjustment, when in fact the bottom line's going to see a 110% of the rent that's being paid. So those numbers can be a little bit deceptive. One I think important statistic and need analysis exactly but I was all prepared to give and so I will answer to your question. If you look, and this is in our portfolio, if you look at the peak years and I will define that is, and this is I am extending as a bit, 05, 06, 07, 08; and look at what leases are going to be turning next year that were signed in those four years. It represents about 14% of the portfolio that scheduled return in 14, so little over 600,000 square feet. So you say okay when you are going to start really reporting the rent growth and it says to me that 14 and of course I have been saying it’s going to be a couple of years every year. But I am sure a whole lot more conference is going to happen in 14, just in our portfolio given how few of the existing tenants signed leases in those four peak years.

And then just turning to Houston, obviously you guys have a lot of development going on there, would you really discuss a little bit your competitors’ development, the total supply coming online?

I should have but I don’t have the figure of other industrial space, actually under construction but in terms of the overall market, it’s not very big yet. And a majority of it may be two-thirds to three-quarters, is not competitive to our front-park, rear-load buildings. A number of our peers are building cost stocks above over 200,000 square feet that are looking for much larger tenants than we are seeking in our three different development locations. So, although development is picked up it’s certainly not at a point yet where there is an extensive over-building and it’s not in any way slowed down our leasing progress, it’s shown by the two leases that we have gotten in the last 24 hours.

We will go next to the side of John Stewart with Green Street Advisors. Your line is open.

David, looking, at least judging from the numbers on the supplemental Florida looks soft across the board and I know we had the known move-outs in Jacksonville and Tampa and perhaps by your conservative methodology is influencing some of the minus signs in front of the re-leasing spreads; but specifically can you kind of help us understand both the decision to go ahead with the new scrapped project in Orlando and kind of reconcile your comments on the housing market with this statistics that we are seeing here or reported here?

First one, it’s easier to answer is on the development. We started, two years ago, now Southridge IX, and immediately leased, it’s roughly three quarters of it to a pharmaceutical company, that we assume in the next couple of months is going to take the balance of it although it’s not full today. That gave us the confidence to build Southridge XI. We have signed already, although it’s just been completed couple of months ago. Two customers in that building, it took us to over 80% occupancy and when we go over 80% we move it into the portfolio and we have a good prospect as I mentioned to take it to 100%. So, given the success we had in those two buildings, we built the building in between, Southridge X. It has a pretty picture of it on our supplemental data. We just finished (inaudible) the walls there. And we have several good prospects. It’s been effective of the leasing Southridge. It’s the best located multitenant complex in central Florida. It’s the most attractive and as we have lost customers in the existing buildings, we have managed to backfill those pretty successfully, many times at lower rent than what the previous tenant was paying. But we have been signing leases anywhere at a dollar and a half to two dollars a square foot or above, what people would consider I think market rent because of the quality. It stays full, or close to it, because of a fly to quality. I think it’s still somewhat going on in Orlando. As to the housing, there is a pickup. The problem is when you look at the market vacancies in the various forward cities other than Jacksonville right now, they trail existing occupancies and so until they catch up a bit and there is less A space available, landlords are not going to have pricing power and so that’s why we continue to have the negative or above average negative spreads on both renewals and leasing vacant space, did that answer your question?

It does sort of another way through just digging out of a much deeper hole.

Right and we got a head of the markets which was great and because of the flight, the quality in terms of occupancy in those markets that were hard hit but just because we’re 93%, 94%, 95% occupied that doesn’t give us pricing power except maybe in a Southridge. The rest of the market has to at least get to single-digit vacancy and maybe the 7% or 8% vacancy before the market has real pricing power although the rents have all bounced off the bottom as I’ve said.

Got it okay and on the projects that you started in the first quarter the cost is 75 bucks a foot looks higher relative to where you have historically been building. Is that a function of any of those specific projects or a comment on construction cost more broadly speaking?

It’s both. Our Southridge buildings tend to have a higher office finish by the nature of the park Trendwest crossing two which is a $5 million building is a service center, we’ve already leased a little over half of that and they just tilted the walls but it’s a service center, so it will have probably anywhere from a 40% to 100% office build out. And in Phoenix the land tends to be more expensive than in some other markets. So and those are front part buildings which again make some a little more expensive than a front load building, or cross dock like some of the recent ones we’ve built in Houston. As to construction costs, they’re going up and almost to a surprising level and talking to both our construction people in Houston and in Orlando we have seen over the last six to nine months about 0.5% a month increase in construction costs. That’s both materials, concretes, steel, fuel surcharges on delivering things and as particularly in Houston, the GCs and the subs who have been doing work just because they were in dire need of it at little or no profit and a small reimbursement for overhead and now able to get back to their old profit margins and overhead margins because there is a backlog and they are doing it cause they can. And I’d like to think that half a percent of month increase is not going to continue for too long but it’s there now and it could affect some of our yields a little bit and hopefully it will affect our competitors.

Last one for me. I wanted to come back to the releasing spreads. I was surprised to hear you say that 14% of next year’s role is leases that were signed from ’05 to ’08 especially when you consider that I guess the average time the leases you are signed today are three and half years the deals that are rolling next year got to be at least 6 year terms on average. So, my question is beyond that 14% of next year’s roll, how much do we have left of that ’05 to ’08 vantage.

I think when we use to look at that 14%, a good bid of that is probably development leases, I don’t have that identified in front of me and our average development property lease and on new development is well over 5 years. The three and half year average is when leases roll and they tend not to extend for the amount time as the original lease. So, I think that’s the reason that we’re still looking at some leases that they say would five through eight.

That makes sense but then still the question remains, how much of that ’05 to ’08 vantage do we have left.

If you’re look 2005, let me see, probably little over a million square feet, maybe million and a half. I’m counting on rents going up and after that’s not going to hit it as much when they come up and some of those don’t come up for quite a while.

Thank you. We’ll take our next question from Jamie Feldman with Bank of America Merrill Lynch. Your line is open.

So, I’m hoping you can talk. I may have missed it on the call because I had a bad connection but did you guys talk about what you think your occupancy debt will be in the second quarter to get to your guidance. I know when you initially gave ’13 guidance you talked about losing occupancy in the first half and then gaining it back.

Yes, I did not give specifics because these always seem to change to much right that we are looking at a little further depth to about 93% give or take at the end of June and the September would be a little higher than that and then moving over 94% at the end of the year.

Okay thanks. And then…

Tomorrow the number would probably be a little different but that’s where it is right now.

Right and then I guess back to the supply question I know you talked about Houston are there other markets where you are getting more concerned about supply coming online both for your product and maybe more from big bolt distribution and maybe already starting to put some pressure on rents?

The pressure rents, no, that I am aware of we are the only developer doing any in spec in San Antonio at this point, and I do not think anybody else has even talked about it that I have heard. In Orlando, there is a local developer with Money Partner who is doing a build-to-suite and has announced a small building that would be competitive to us but that’s been started. In Phoenix, all the development that’s been announced is out on the west side the bigger boxes our building is in Chandler which is really high-tech part of Phoenix and nobody else is building there at this point. And Houston, all the REITs are building DCT dup per lodges let’s say most of what that is will not compete with us either a lot of it is for bigger tenants and some of it is not in the location that will go up against anything that we have been building. Several private groups have started building there that will be competitive, but we did real well when there was competition seven or eight years ago, so you’d rather not have any competition but we think we have better located product and build a little bit higher quality building so, so far it’s worried us and it’s too early to see if there is any pressure on rents. One of our private competitors has an asking rent for stuff under construction, it's a good bit our pro forma rent so, so far it’s not been an issue, ask us again in a quarter or two.

And then there's a lot of talk about same and next day delivery and tenant building under infrastructure for that. How should we think about how your product takes specifically fits into that, versus the big book?

We do not have very many customers related to e-commerce, just some smaller ones, we're never going to be dealing with an Amazon or a Best Buy or one of those, the thing that I think maybe is helping us already is FedEx, seems to have really picked up their business or you can read that their air business is down because of the cost and their various ground delivery businesses are up and we seem to see a pickup and activity with them in a number of markets, and I don't know if it's directly related to the same day delivery or not but I think it certainly has to help. I mean if you can deliver same day, it would be very difficult to send something from Atlanta to Orlando or Tampa, you're going to need facilities in those cities to be able to do that.

(Operator Instructions) We'll go now to the site of Bill Crowe with Raymond James and Associates, your line is open.

Two questions, first of all, are you seeing a different type of buyer out there competing in the positions, more private equities, more private money. Second question is the ramp up in new supplies that you've discussed that we've all discussed here, is that prompting you to get more aggressive with your respect building program and maybe try and front run it a little bit more than you would otherwise.

To answer your second question first, no I don't think so, we just look at the market and what's happening in most of these cases, they're in a part that's existing and we think there's the demand for another building, either through our existing tenants, with the prospects that we’re turning away because we don't have enough space for them. Once we start construction we push very hard to try to get ahead of people (inaudible) come online at about the same time. And you certainly don’t want to come online later and lose the prospects because they needed the space sooner and went to your competition, so at a stronger market like Houston or Orlando or St. Antonio, we try to stay ahead of it and not wish we started a building six months earlier but I don’t think that’s really because of competition. What’s the first part of your question?

The first part was is there any change in the competitive landscape on acquisitions.

No, not from last year, except that there is more money I think in the marketplace and everything I have read says that it’s some of the institutions and their funds seem to be rotating some out of multifamily to office and industrial. And our biggest competitors tend not to be the other reach because most of our competitors don’t target our type of multitenant business distribution buildings. The competitors are either the private (inaudible) or funds, some of them are pension fund advised that have all names that you recognize all the time that point at different markets and submarkets and so we tend to be bidding against the same people in many cases losing to the same people in various major markets. So it’s more money coming to industrial but it’s pretty much the same type buyer. As to private equity, sometime it’s hard to tell where some of these funds, and impossible to tell where their money comes from but I don’t hear about us losing out to somebody that’s clearly been identified as a private equity buyer. Industrial can be a little bit boring for those types and looking may be for a higher yield.

Thank you and we have no further questions at this time.

Thank you everybody for your interest in Eastgroup and as always Keith and I will be around for a while to answer any questions that come up that we didn’t cover enough or catch you of on, so please give us a call.

This does conclude today's conference. You may disconnect at any time. Thank you, and have a great day.