Good day, and welcome to the Q1 2018 Kilroy Realty Corporation Earnings Conference Call. [Operator Instructions] And please note that today's event is being recorded. I would now like to turn the conference over to Tyler Rose, Executive Vice President and Chief Financial Officer. Please go ahead.

Good morning, everyone. Thank you for joining us. On the call with me today are John Kilroy, Jeff Hawken, David Simon, Steve Rosetta, Heidi Roth, Tracy Murphy, Rob Paratte, Elliott Trencher and Michelle Ngo. At the outset, I need to say that some of the information we will be discussing is forward-looking in nature. Please refer to our supplemental package for a statement regarding the forward-looking information in this call and in the supplemental. This call is being telecast live on our website and will be available for replay for the next eight days both by phone and over the Internet. Our earnings release and supplemental package have been filed on a Form 8-K with the SEC, and both are also available on our website. John will start the call with a review of the first quarter, Jeff will discuss conditions in our key markets, and I'll finish up with financial highlights and review of our updated 2018 earnings guidance that was published yesterday in our earnings release. Then we will be happy to take your questions. John?

Thank you, Tyler. We are off to a great start this year and are particularly encouraged by the strength we continue to see across our West Coast markets. We reported solid first quarter financial results with both FFO per share and same-store results exceeding our expectations. Across our stabilized portfolio, we've signed new or renewing leases on approximately 300,000 square feet of space that were up 26% on a GAAP basis and 15% on a cash basis. We continue to backfill our four material 2018 expirations ahead of schedule. We re-leased approximately 70% of the expiring space in Bellevue and are making excellent progress in the two San Diego explorations. And as we reported in our last call, we commenced construction on phase 1 of The Academy on Vine, our mixed use development project in the Hollywood sub market and acquired three lab building in South San Francisco's major biotechnology hub of Oyster Point. Now let me provide some more color. Market conditions are showing remarkable strength across the West Coast region. Generally, we are seeing decline in vacancy rates, higher leasing volume, increased rents, limited supply and increased demand across our markets. The fundamentals are almost as strong as we've seen in the cycle so far with big tech and big content creators continuing to grow, and the fire category following. Seattle remains one of the best performing markets in the country, area of fundamentals continues to improve both on the office in life science products, and new supply remains limited. Los Angeles continues to be the recipient of growth from many industries including entertainment and content creation. In San Diego we are seeing the leasing velocity increased over the past six months coming from a broad cross section of industries including, defense, technology, life science in the fire…

Thanks John. Hello everyone. Let's begin in San Francisco where the city's high tech job growth has increased nearly 40% over the past two years, where robust demand and shrinking supply continue to characterize one of the strongest real estate markets in the nation. It was evident in the city's first quarter numbers with total leasing activity of more than 2.1 million square feet and solid net absorption. Supply has meaningfully decreased with the last remaining near term delivery believed to be in discussions with the perspective tenant. Given these dynamics, brokers expect rents to further increase. Class A direct vacancy rates in San Francisco, SOMA, South Financial in Mission Bay Districts were 5.5%, 8% and 2.5% respectively. Vacancy in South San Francisco was 2% and Silicon Valley Class A direct vacancy was 7.9%. We are currently 97.9% leased in the Bay Area and our in-place rents for the region are approximate 26% below market. It's much the same-store in Seattle. Last fall, PWC and the Urban Land Institute predicted greater Seattle would be 28 teams top performing real estate market in the nation and is proven to be true. With a young educated workforce and twice the U.S. average for science, tech, engineering and math jobs, Seattle continues to experience rising demand for modern work space, our new supply is very limited. Similar to the real estate dynamics of San Francisco, Seattle rental rates are poised to grow even further given a lack of available space and growing demand. Class A direct vacancy In South Lake Union and Bellevue are currently 3.7%. Our Seattle portfolio is currently 94.7% leased, reflecting the Bellevue move out in February. Our in-place rents were approximately 8% below market. In San Diego, the market continues to strengthen. Job growth is positive and VC funding…

Thanks Jeff. FFO was $0.94 per share in the first quarter. We were ahead of our internal expectations, primarily driven by lower bad debt expense, lower operating expenses, and $0.02 of timing differences related to expenses in G&A. same-store NOI increased on both the GAAP and cash basis in the quarter driven largely by higher rental rates. GAAP NOI was up 5.4% and cash NOI increased 4.8%. Occupancies at the end of the first quarter were 94.3%, reflecting the move out in Bellevue that John and Jeff discussed earlier. In January we use proceeds from our term loan to fund the acquisition of Oyster Point Tech Center. Earlier this month, we launched a $250 million, eight year debt private placement that includes three and six month delay draw option. We expect this transaction to close in May and fund in July and October. We currently have $625 million available on our credit facility which is expandable by $600 million under an accordion feature. Our debt to market cap is approximately 26%, and our debt to EBITDA accordion was approximately 5.7 times. Before moving to guidance, I'd like to comment on the new lease accounting change will become effective next year. Under the new rules, all internal leasing costs and third party legal fees associated releases will be required to be spent. The board will only be allowed to capitalize continued leasing costs such as third party broker commissions. While this is a non-economic change, it will both negatively impact future earnings and positively impact our yields. We are working to quantify the impact on our 2019 projected earnings and we'll have more color to provide next quarter. Now let's discuss in more detail our updated 2018 guidance provided in yesterday's earnings release. To begin, let me remind you that we…

Thank you. We'll now begin the question-and-answer session. [Operator Instructions] And the first questioner today will be Craig Mailman with Keybanc Capital Markets. Please go ahead.

Everyone, this is Laura Dickson here with Craig. Congratulations on the quarter. A quick question on the timing differences that you mentioned for other expenses in G&A. How much can you quantify that and how much is going to – and when those will occur instead?

Yeah, roughly $0.02 and it's related to professional service fees primarily and we expect to see that in the third quarter and the fourth quarter.

Okay, and then just curious about the PDR space at 100 Hooper. Can you elaborate on what that is and the tenants, and how do the rents there compare to traditional office space?

Sure. This is Rob Paratte, Laura. So, PDR stands for Production Distribution Repair, and it's – San Francisco attempt to keep makers and workers in the city and Kilroy is a big supporter of that. We're going to have some at the Flower Mart. We have it at Hooper. And the two leases that we've signed, one is a publicly traded reprographics and printing company and it's a relocation and expansion. And the other tenant is actually a really great amenity for the project. Adobe, is going to be excited about it and it's a boutique, distillery, a food purveyor, so without getting into more detail, but it's going to add life and amenity which we you know said we would do at the project, but it will also be additive to the neighborhood. So, we're excited about both of those, and then with the space we have remaining, we're seeing activity from smaller technology companies that manufacture and create things. So, we're really pleased with what we've accomplished so far.

On the rent side, this is John speaking. On the rent side, it's not as high as office space. It's not as highly improved, so it can range depending upon the type of PDR anywhere from the low 20s to multiples of that on a per square foot per annum basis. Ours is higher quality stuff, so we think we're going to do pretty well on it. I maybe have said in my comments that we're with less – with approximately 55% of the PDR to be leased. We're already at 93% of our pro-forma income for the property, that's because the office space does rent at a higher space. But as part of that deal, we actually made possible at 50,000 square foot facility that's not in our 400,000 square foot calculation that we were required to do as part of the entitlement that we help develop and sold at cost to a NGO that provides space at a subsidized basis to crafts people. So, everything it's in the Central SOMA area that has – that displaces any kind of PDR space. We'll have to reproduce it onsite as part of their development. That's now you know official policy and you know rules of city.

Great. Appreciate the color.

And our next questioner today will be Blaine Heck with Wells Fargo. Please go ahead.

So, great job taking care of some of these move-outs. Now that you've guys have backfilled the Delta Dental space and it sounds like a good part of the balance space. Can you give us any sense of when we should expect those leases to commence? And is there any contribution in 2018?

This is Tyler. I can take a first crack at that. For the Delta Dental space, Okta is moving in later in the year. So, there would be very little contribution in 2018, probably a December timing time frame. And Rob maybe, you can comment on the Valve space?

Sure. The Valve space should be you know in large part, so we – we have the – we just signed 55,000 feet between two tenants which will be late in the quarter fourth quarter in terms of their commencement. And then the remaining space we have about 34,000 feet, I expect we should have those signed – probably by June, July, something like that. We've got a lot of activity. Bellevue is seeing a real uptick in activity over the last six weeks or so.

Great. And then just continuing on that vein, can you give any more color on the leasing progress of the Fish & Richardson space in Del Mar? I think that was a long-term lease that's expiring. So, is there any work that needs to be done at that space?

Yeah, on the one building deal that we're working on, there is – that is a long-term lease, you're correct, Blaine. And there is work that's being done. You will recall also we're doing a little bit of a refresh on the project regardless of that in terms of – lobbies and landscaping and that sort of thing. But for the tenant itself, there will be some rework. But they are putting money into the space also. And so that's about 144,000 feet. We have

That's – you are talking about the…

The single building.

Well, you are talking, he asked about Fish & Richardson.

Oh, I'm sorry. I was talking about… Yeah, I'm sorry. And then switching to Fish & Richardson, we have about 54,000 feet of leases that are being negotiated right now. So, expect those to be signed fairly shortly.

Okay, got it. And then John or David, we've seen a couple of big deal trade hands in the LA recently and there is I think more on the market. Can you just talk about your interest in those deals and in expanding in that market in general outside of – obviously the development you are doing at The Academy?

Well, yeah, we have a number of things we're looking at. We'd like to expand. We think the pricing and the quality issues in some of the deals that have recently traded. We weren't interested. We know those assets adamantly well. They just – we didn't – we've looked at the number. We understand the numbers. We understand what's going on. We understand things and other saw things in there that we didn't. So, we didn't have any interest, zero.

Okay. That's better. Last one from me, John on the Flower Mart first of all, what's the latest on entitlement there? And then can you give any update on the interest or activity you are seeing around that project?

Yeah well. Let's start with schedule. So, the Central SOMA approval states our timeline is and all that has to be done through the Board of supervisor here. It's before the Planning Commission they are scheduled to vote on the Central SOMA plan for adoption on 5/10 of this year, May 10. And the Board of supervisors are currently scheduled to then, a vote for hopefully for approval in mid-July. And assuming that happens, we are expecting entitlements later this year, early next year. In terms of the Central Subway which is part of that whole thing, as you know it's been under construction. It was originally scheduled for – the official date is completion late 2019, well before we'd have a far more complete. I think realistically it's probably mid to late 2020, but that's not official. In terms of interest, I'm not going to get into specific companies and all that of course, but we have a lot of interest from the investment community from the investment in real-estate. They want to co-invest with us and we valuate everything with regard to tenants. I can tell you that I think we're teed up beautifully for some major tenants. And as I've said for the last couple of years, I think it will be a handful of tenants or maybe one, and obviously we're going to do some pretty serious pre-leasing before starting. The phasing of that project we think is the – first phase will be roughly 1.7 million square feet of office, the 125,000 square feet of Flower Mart and roughly a 100,000 square feet market hall retail restaurants et cetera and then the second Phase will come later, which is about 300,000 square feet of office.

Got it. Thanks for the color.

You are welcome.

And our next questioner today will be Manny Korchman with Citi. Please go ahead.

Hey everyone. John, maybe sticking to the transaction environment, there's been suppressed reports of you looking to expand San Francisco as well as specifically at 345 Brannan as well as the Ferry Building. Maybe you could share your thoughts on both of those assets?

Ferry Building is a great building, love to own it, though we are not proposing on it. That's a misread and in terms of whoever published it, I don't know if it [broke] or whatever, we've evaluated in detail. We just don't think there is money making proposition there for us. With regard to the other building you mentioned, I'm not going to comment on you know prospective deals. It might be in play or not until they're done.

Okay and Tyler, one for you. Let say you go down the path on the building that's on just – as in mentioned. You've got Oyster Point which is a big project. You've got the Flower Mart which is a big project. Understanding that you some dispositions teed up, how do you think about funding over the next couple of years as the two of those big projects start to come to fruition?

Yeah. Well, one of the reasons we did the private placement a little ahead of schedule is we – we want to go walk in some funding for some of these future opportunities. So, you know, I think we've talked about our disposition strategy of $500 million. We did the $250 million private placement of debt. And you know we'll continue that same strategy going forward. Some of the projects you talked about in that list, you know won't need money for several years. But you know we're going to continue the same strategy and ventures or option as well as additional debt. And then we've raised equity when it made sense, we've – we'll do that. We'll obviously evaluate that as that comes up as well.

Thanks guys.

And the next questioner today will be Jamie Feldman with Bank of America Merrill Lynch. Please go ahead.

So you guys have been very positive on market conditions and leasing demand from tenants. I assume especially for new assets. Is there a chance we could see you do one-off developments that aren't right now on the future development pipeline. I mean is there – are there conversations going on for tenants that just need now and want to get started and don't want to wait.

Well, San Francisco is pretty tough, because it's an entitlement game, right. And with Prop M, there is just so many things that you can develop. There is a couple of projects that have Prop M that have not started that we've looked at but we are not players. Elsewhere, you know we have a lot of discussions going on regularly and we also do with some of the big tenants and we've been asked to go into other markets and so forth and nothing is signaled there. So, we have a lot of discussion Jamie, nothing is permanent.

Okay. And then can you talk about just generally the like rent growth in the markets. I mean what do you think we could see this year across the major markets?

Hey Jamie, it's Rob. You know again, just given the strength of the markets and this is kind of up and down the West Coast. Clearly, the West Coast is a technology gateway now and more and more tech is moving here. It's the world renowned leader in tech and attracting that kind of talent. So, with the limited space availability from Seattle down to San Diego, generally, we think there is you know opportunities for significant rent growth particularly San Francisco. So, San Francisco, even brokers now are saying, you know upwards of 8%. Seattle, I think would be in the same ballpark in terms of percentage increase in rents. Los Angeles, a little bit more moderate, but I think it depends on the submarket you are in whether it's Santa Monica in the West side where conditions are very tight. Hollywood is also poised for I think improved rent growth probably in the 5% range and San Diego probably in the 4% to 5% range. Again very dependent on the submarket you are talking about.

Jamie, one – this is John again, one thing I'd say is that, Rob's talking about sort of the market, the general likelihood of rent increases sort of on average product and obviously the modern users very discerning of the type of product they want and they are going to pay a lot more for city art stuff than they are for generic officer space. So, you know that could be many multiples of those rental increases. So, we've always been conservative with regard to projection and we always like to be surprised by higher rental increases that you know that happened, a lot to be seen. I think it's teed up when you – it's classic economic 101, right. Lot of demand, very little supply, seems to be a pretty good time to be a landlord.

Okay. And then finally, just more color on leasing at 333 Dexter and The Academy?

Sure, I'll start with Dexter up at South Lake Union. Again Seattle has a lot of the same market dynamics that the Bay Area has, that John and Jeff mentioned in their commentary. You know we have a significant group of tenants that were prospects that were talking too all of which are over 100,000 feet and in fact we're able to sort of selectively prioritize those that we're really focusing on and others that are sort of you know will continue to talk to. But there are some just based on the type of tenants, type of business that we're moving forward. On the project itself, it's now just getting above grade. So, it's going to start coming up on the skyline here over the summer and we're really pleased with that activity. On Academy, I'd say in a similar vein we have you know four to five different prospects, some could take the entire project, some could take components of it. And it's just – it's situated in a perfect location in that Hollywood submarket adjacent to Columbia Square. So, a lot of good interest considering we just started in January.

Okay. And the markets where you tend not to see the pre-leasing and so the buildings almost done?

Yeah, they go always, you know they go – pre-leasing in a lot of markets is a tough sell, but in these markets and you know I don't want to predict when we're going to be announcing things, but the activity that we have on both these developments is strong. I've seen it.

Jamie, let me put it in context, the completion of the Shell & Core, .333 Dexter is scheduled for the end of the third quarter of next year. And revenue recognition, we forecasted is the fourth quarter of 2020. The Academy Shell & Core completion is scheduled to some-time in the first quarter of 2020. It's revenue recognition in late 21. So, you know what I like is that we're building great product and markets with very little demand with very little new supply with big credit worthy tenants out needing space and rising rentals. It's a – and that's quite a bit of time, so we're going to try to be thoughtful with regard to how fill these particular buildings.

Okay. Alright. Thank you.

And our next questioner today will be John Kim with BMO Capital Markets. Please go ahead.

Just sticking with Dexter, given the strength and upward pressure on rents in Seattle, can you just comment on where rents and yields are versus your original underwriting for that asset?

On rents, rents had historically not been, you know they've been sort of in the low to mid $30 triple net plus parking. And rents now have jumped to $40 per square foot per annum, plus parking. I personally think, if you look at San Francisco, where rents today are on a triple net basis are – for some of the product is sort of in the mid $60 a square foot plus parking. I think Seattle rent growth is poised to grow pretty tremendously over time. With regard to underwriting, obviously we've said that we expect to be in the high 7s, low 8s, you know sort of that area and I think we'll achieve that.

Okay. And then just given your maintaining your same store NOI guidance, I realized there is a lot of moving parts you may have. But just given your current occupancy levels and what you achieved in first quarter? What are the components that would cause same-store NOI decline and be negative for the remainder of the year?

Yeah. It's really the expirations to move out as it relates to the expirations in our portfolio. So we have Valve moved out in the first quarter. We've got Fish & Richardson and Bridgepoint moving out in the summer and the fall. And as someone else noted, Delta Dental moving out and – or has moved out, and we are not going to backfill that until very end of the year with occupant. So, it's really that profile of expirations.

Which total roughly 725,000 feet.

And what would be your guidance range if the Bridgepoint asset was taken offline?

So it was about a point higher. So if we hadn't decided to make this change on Bridgepoint assuming we do this deal, we would have raised our number by about a point.

Got it. Okay. Thank you.

Our next questioner today will be Dave Rodgers with Baird. Please go ahead.

Yeah. Good morning out there. On the lab acquisition that you did in the first quarter going in yield and stabilize yield on something like that. And is that really a just kind of a lease up stabilized asset or is that part of the bigger plan with what you've got adjacent to that?

Hey David. It's Tracy Murphy. So, our going in was just over a three, we've got 20% vacancy at the project 30,000 feet in shell condition which we've got really healthy activity on so. I think our year two stabilized rate is 6.3 or 6.4 or something like that, and Tyler can correct me if I am wrong. But yes, your observation is correct.

Yeah. The bigger play is that it's next door to the property that go have an option on, and alternately we have a plan that those two assets working together will be very synergistic and more to come, come to our Investor Day, you'll know about it.

And I realized you have the confidentiality on it, so I don't know if you can answer this. Is that confidentiality with the developer or landowners or is that an actual potential tenant?

Yeah. I am not going to comment. We just can't talk about it.

Yeah. No worries. And then lastly just on the San Diego, I think Bridgepoint and Fish & Richardson, you said 25% potential roll down in rent. The speed at which you re-leased is not kind of going through redevelopment. How does that change that map?

The map on the rent is roughly what we have projected, so the rents really haven't moved much. We are having lower – as I mentioned on the Bridgepoint tenant, that if we complete that deal, we'll have much lower CapEx, lower Tis, and then moving a lot earlier than we had projected, but the rent levels are roughly as same as we had originally talked about.

Okay. Thank you.

Okay. And the next questioner today will be Jed Reagan with Green Street Advisors. Please go ahead.

Good morning guys. Just back on the Flower Mart, it sounds like you've got closed to 2 million of square feet planned for phase one. Do you have contingency phasing plans for that project where in the scenario where entitlements are maybe spread more broadly, and you get say half of that amount or less that you could kind of accommodate that?

Jed, I'll try to be cool. I just don't want to go down that road.

Okay. Fair enough. There is been a pressure recently to put a repeal of Prop 13 for commercial properties on the ballot in California. I am just curious to get your thoughts on how do you think that might play out? And can you frame up how repeal could impact your financials over time potentially?

Yeah. Let me deal with the first point and Tyler can deal with financial impact. The last four to five attempts at this, all ended in failure with them pulling, the people are proponents of repealing Prop 13, pulling it off and never getting on our ballot, that's what happened this time. Does it come back in 2020? I am sure 2020 or 2022 somebody will bring it back. The politics was kind of a blood sport out here. As you know you live in California. You got the idiots run the whole place on both sides of the fence, sort of a microcosm of the bigger picture. And so, we are going to continue to see stuff like this and we all got to work to defeat. We've been successful in that as an industry time and time again, but [indiscernible].

Yeah. On the financial side, it is a difficult calculation because if it's 2020 or 2022, then it depends what you own at the time. What are the ages of those properties? What have we sold between now and then? How you value that? We have a lot of new product that doesn't have a reassessment, so a lot more to come on how that number will shake out down the road. If we were to have it today reassessment right now, it's roughly $0.03 to $0.04 a share. That number would grow over time. As leases roll, obviously it's just the triple net leases and nothing in the state of Washington. So, it's a complicated calculation, but it's so hard to predict what it could be out in 2021 and 2022 given the – our portfolio may be different.

Okay. I appreciate that. Maybe just one other one for me, so about 60% of your office NOI is now in the Bay Area and Seattle, I guess looking five years down the road, you feel like that proportions stays roughly steady or is there a top-down strategy that shifts that mix over time.

I've always said that I remember when we were all in Southern California – whenever we're in Southern California, used to get asked that question. As we started growing in Northern California and Seattle, what do you expect the next to be? And I said well, I don't know that I can say precisely because developing, dispositions, acquisitions all the rest effect everything. I used to say sort of 50% Southern California, 50% Northern and Seattle. Obviously, it's grown in Seattle and San Francisco. They are the two best markets in the country. And we sold off a lot down in San Diego and we'll be selling off some stuff that will mostly be Southern California based I'd say. And so that will change the numbers a little bit. And then of course, as we develop our venture, the numbers are going to bang around. I don't know that there is an ideal number, but we do look at it and we will continue to look at it and make sure that we are feeling comfortable about it.

Great. Appreciate that. Thank you guys.

And the next questioner today will be John Guinee with Stifel. Please go ahead.

Great. Hi, David Simon, the other David Simon. Academy in Vine looks like it's coming in at close to $800 bucks a foot to build. That seems to be a lot higher than my recollection of a couple years ago or Columbia Square did that. Is that correct? And what's happened to our hard cost and land cost in the last few years in your backyard there?

Before I answer that, the one thing to consider there is that the first phase includes all the parking for both phases, and that's all subterranean parking at about $50,000 a space.

Got you. That will make the difference. Okay. And then 333 Dexter still coming in at under 600 a foot, did you get that at a low land basis or is that land that market to come in at 600 a foot?

We bought the land at a pretty favorable basis compared to where things have gone today, plus we've seen a construction costs escalate and what not. And I think you are going to see, you know I used to say, you are going to see values go over $1,000 a square foot in San Francisco and that happen faster than I thought. And I think you are now going to see – I don't think that will be terribly long before you at $1,500 to $1,600 a foot in San Francisco. And I think you are seeing trades in Seattle now at mid to upwards of mid, $800 a foot, and all that stuff is going to be reflected. Yes, you have construction costs increase in diminishing supply of land and cities invariably imposes more exactions on properties and develop, but you are going to see costs continue to go up. So we got a very favorable cost structure there. They are very efficient buildings and that's all subterranean parking as well. So that's what's going on.

Alright. Thank you.

And our next questioner today will be Rob Simone with Evercore ISI. Please go ahead.

Hey guys, thanks for taking my question. John, just a quick follow-up on your commentary around 333 Dexter, did you say that you guys were budgeting revenue first quarter 2020 or fourth quarter 2020.

Michelle, help me out. I don't know whether I – I think I said late 2021 for revenue recognition on.

That was Academy, I believe.

And fourth quarter 2020 for 333.

Got it. Okay. So, on – my question then on 333 Dexter, are you guys because it's a spec project kind of budgeting a longer build out period at this point, because if you're delivering it in the third quarter of 2018, it feels like you know six to nine months to build out and maybe like 12 months free. You should be looking at booking revenue maybe like the first or second quarter of 2020. Am I thinking about that the wrong way, or is it just of?

No. No. When we are in a right spec stuff, we assume that it's going to take a lot longer to lease up. And if we do a pre-lease or a significant lease during construction, we just underwrite it more conservatively, which I think is prudent thing to do.

Got it. Okay, makes sense. And then Tyler, just a quick follow-up, on the Bridgepoint impact, just want to understand why if you're re-leasing, up to 50% of that space versus you know taking it fully out of service, there would be penny drag on FFO.

Look, there's two buildings there. So, we're – we would be getting the ramp from the building that would be leased. But the other building which we had originally, we're talking out of service that we'd have the interest on, now would be staying in-service empty until we re-lease that. So, it's that other building that would be the drag. Got it. Okay. Thanks a lot, appreciate it.

And this will conclude our question and answer session. I would like to turn the conference back over to Tyler Rose for any closing remarks.

Thank you for joining us today. We hope you can join us for our investor day on June 4 in New York City. Good bye.