NNN REIT, Inc. (NNN) Q4 2012 Earnings Report, Transcript and Summary

Greetings, and welcome to the National Retail Properties Fourth Quarter and Year-end 2012 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Craig MacNab, Chairman and CEO of National Retail Properties. Thank you. Sir, you may begin.

Christine, thank you. Good morning, and welcome to our 2002 (sic) [2012] Year-end Earnings Release Call. On this call with me this morning is Jay Whitehurst, our President; and Kevin Habicht, our Chief Financial Officer, who will review details of our fourth quarter as well as our year-end financial results, following my opening comments. 2012 was an excellent year for National Retail Properties as we maintained a very high level of occupancy, continued to do more deals with our relationship tenants and expanded our already fully diversified portfolio. Similar to last year, we had a very active fourth quarter on the acquisition front, which exceeded our earlier expectations. And even though this activity has little impact on last year, it positions us very well for 2013. In terms of acquisitions, as I indicated earlier, the fourth quarter of last year was productive for NNN as we invested $255 million acquiring 108 properties at an average initial cash cap rate of just over 8%. We were pleasantly surprised that, in the fourth quarter, we identified a number of sellers who wanted us to close on their properties prior to the onset of the new higher capital gains tax rates. As a result, our team was really busy right through the holidays closing acquisitions. However, these year-end deals were from new tenants, including a couple of large, experienced fast food operators. One more data point is that about 60% of our fourth quarter activity was with relationship tenants. As our press release indicated, in calendar 2012, we acquired 232 different properties this past year, investing $707 million at an average initial cash cap rate of approximately 8.3%. As a reminder, this attractive yield gets better over time as the rent bumps kick in over the duration of our very long leases. We're delighted to have strengthened and further diversified our portfolio with these acquisitions this past year. Many of these acquisitions were noncompetitive off-market transactions where we were able to acquire excellent real estate while achieving very strong yields. We continue to like the granularity of our business. And with an average purchase price per property of approximately $3 million last year, with land, in many cases, representing in the range of 35% to 40% of the total purchase price, these are clearly attractive opportunities. One of the reasons that we obtained higher yields than those realized by other REITs who compete in different real estate sectors is that the net lease retail category is less competitive than many other property types and this is influenced by the small dollar size of the properties that we purchase. As some of my colleagues remind me, it is a lot of work to acquire almost one individually underwritten property every day of the year, which is what we accomplished in 2012. Our portfolio continues to be in excellent shape, and at the end of the year, we were 97.9% leased. By the way, this is the ninth consecutive year that we've been at least 96% leased, which speaks to the modest risk of our portfolio. In 2013, we have very modest lease rollover, with only 1.7% of our leases coming up for renewal. And some of these tenants have already extended their leases, which of course is good news. Many of our tenants had very positive activity this past year. For example, 2 of our restaurant tenants went public. In addition and perhaps more significantly, our fourth largest tenant was acquired by 7-Eleven and we are delighted to now have their excellent credit on those leases. As of the end of the year, we owned 1,622 properties which are leased to over 300 different national or regional tenants located in 47 states. On average, these tenants are contractually obligated to pay us rent for approximately 12 years. Last year, we continued our multiyear track record of capital recycling, selling 34 properties for just over $81 million, generating handsome gains that are not included in our FFO. Given that we sold some weaker-performing properties in our capital recycling activities, we upgraded our portfolio as well as generating capital to reinvest. In conclusion, NNN is currently operating in a great environment. Our portfolio is in excellent shape, and very importantly, as you'll hear from Kevin, our balance sheet is fortress-like, which will allow us to take advantage of the carefully underwritten acquisitions that we expect to make this year. As you heard earlier, my colleagues continue to find off-market transactions that we are closing on at very wide spreads over our cost of capital. Finally, we're always delighted to raise guidance, as we did in this morning's press release. And although it is early to be making predictions, we are cautiously optimistic that 2013 will mark Our 24th consecutive dividend increase. Kevin?

Thank you, Craig. And let me start with the customary precautionary statement that we will make certain statements that may be considered to be forward-looking statements under Federal Security laws. The company's actual future results may differ significantly from the matters discussed in those forward-looking statements, and we may not release revisions to those forward-looking statements to reflect changes after the statements were made. The factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the company's filings with the SEC and in this morning's press release. With that, this morning, we reported fourth quarter FFO of $0.46 per share as well as recurring FFO of $0.46 per share and AFFO of $0.48 per share. For the year 2012, we reported recurring FFO of $1.74 per share, and that represents a 10.8% increase over 2011's $1.57 per share. Notably, 2012's per share results growth was on top of an 8% increase in 2011 and resulting in a 2-year total growth of 20%. And we are now guiding 2013 towards a 5% growth at the midpoint of our guidance range, which I'll discuss in a moment. These strong results have allowed us to perpetuate our 23 consecutive years of increases in our annual dividend paid to shareholders, as well as reduce our payout ratio. As usual, the strong results were a combination of maintaining high occupancy and making accretive investments while keeping our balance sheet strong. Occupancy, as Craig mentioned, was 97.9% at year end and flat with the prior quarter and up 50 basis points from a year ago. We completed $255 million of accretive acquisitions in the fourth quarter. And if you look back over the last 2 years, we've acquired nearly $1.5 billion of acquisitions while moving our balance sheet leverage modestly lower. First, just a few details on the fourth quarter results. Compared to 2011's fourth quarter, rental revenue increased $15.2 million or 21.6%, and that's primarily due to the acquisitions we made in 2011 and 2012. Notably, in-place annual base rent as of December 31, 2012, was $354.8 million on an annual run rate on December 31. Property expenses in the fourth quarter, net of tenant reimbursements, totaled $1.2 million, and that number has been ticking down throughout 2012. G&A expense increased to $8.9 million for the fourth quarter, and that's up from $8.6 million in the fourth quarter of 2011. But the big picture bottom line on this quarter's results are that the core fundamentals, the occupancy, rental revenue, expenses, are all performing well with no material surprises or variances. As I mentioned, this morning we also increased -- announced an increase in our 2013 FFO guidance to a range of $1.81 to $1.85 per share. That's up $0.04 from the $1.77, $1.81 share prior guidance, both the bottom and top end of the range. This new FFO guidance translates into a AFFO range of $1.89 to $1.93 per share. The increase in guidance is largely driven by the continued strong pace of the acquisitions in the fourth quarter of 2012, which obviously has more impactful -- is more impactful in 2013 results than in 2012. We've not changed any of our other material functions in our 2013 guidance, including the $200 million of acquisitions in 2013 and relatively flat occupancy. Hitting the midpoint of our new 2013 guidance will represent 5% growth over 2012's recurring FFO per share results. $0.08 of noncash adjustments bring estimated 2013 AFFO results to $1.89 to $1.93 per share, with the primary AFFO adjustments being the noncash interest expense on our convertible debt and the noncash stock-based compensation expense. Turning to the balance sheet quickly and capital markets activity. As we mentioned on our last quarter call, most of our 3.95% convertible noteholders had elected to convert their notes, which we elected to pay off in cash rather than stocks. We also called the remaining notes for redemption, which effectively forced the remaining noteholders to convert. And so we had a total of $138.7 million of these notes outstanding. And as of year end, $123.2 million had been paid off and the remaining $15.5 million were paid off in January of this year, 2013. And lastly, on the capital front, I'll mention we've raised approximately $60 million of common equity during the fourth quarter via our DRIP and ATM programs. At year end, total debt to gross booked assets was 39.0%. Debt-to-EBITDA was 5.1x for the fourth quarter. Interest coverage for the fourth quarter was 3.8x and for the year was 3.7x. The fixed charge coverage was 3.1x for the fourth quarter and 3.0x for the year 2012. Only 6 of our 1,622 properties, well less than 1% of our properties, are encumbered by mortgages. And again, despite over $1.5 billion of acquisitions over the past 2 years, our balance sheet remains in very good shape. And I also want to note, you may have seen, in January, NNN's debt rating was upgraded to BBB+ by Fitch Ratings and Moody's revised our rating outlook to positive. So we're pleased with how 2012 turned out and are optimistic about how 2013's looking based on what we think are very achievable assumptions and continuing our moderate leverage capital structure. We believe we're well positioned to continue to deliver the consistency of results, dividend growth and balance sheet quality that's supported attractive, absolute and relative total returns -- shareholder returns for many years. And with that, Christine, I think we'll open up with any questions.

[Operator Instructions] Our first question comes from the line of Craig Schmidt with Bank of America.

Wondering in terms of acquisitions for 2013, do you think you'll be acquiring closer to the pace of the first half of the year 2012, or the latter? I know that you had mentioned there was a push to close due to higher capital gains tax and I just wondered if there might be a little slower pace starting in the first quarter off.

That's what's baked into our guidance, is that the 2013 acquisitions will be skewed a little bit more to the second half rather than in the first half.

Craig, just to supplement that: You're absolutely correct. At right there at the end of 2012, we did have a lot of activity. And the way I sort of thought about that is that some of the early 2013 activity closed in 2012. However, as you know, we've worked very hard to build up a large group of relationship tenants who continue to open new stores and expand their business and we're doing a nice amount of business with them. So we've got some pretty good visibility for 2013, but the volume at this point in time, with 11 months to go, is nowhere close to what we were looking at last year.

Great. And I thought you did a very good job of working down your concentration of convenience store tenants at -- to 19.8%. Do you have a target where you'd like to take that number?

Craig, this is Jay Whitehurst. As with all these concentrations, over time, they just kind of ebb and flow. We are very comfortable with where the convenience store concentration is now. That's built to the number that it got to based on deal flow out there in the market. There is less deal flow now. And so it may still move up and down kind of around that number just depending on what else is out there in the market, but we're very comfortable with the convenience store business.

Craig, just to supplement that: you -- I did mention in my prepared remarks that our fourth biggest tenant got acquired by 7-Eleven, so yes could be. I mean those are excellent convenience store properties in Texas, most of them were originally Exxon's. But the fact of the matter is, 7-Eleven properties to date closed at a fixed gap, so we're just really, really happy with what's going on in our convenience store portfolio. Our single biggest tenant is Susser. And for those of you that own National Retail Properties stock, I hope you took a look at Susser because, my goodness, their stock has been a -- on a tear. So they're executing well and they're just a great company.

Our next question comes from the line of Emmanuel Korchman with Citi.

Jay, I think, in the past, you've kind of provided us with an idea of what the pipeline is, going into the following year. Maybe off of Craig's comment earlier that the pipeline is smaller now than it was last year, maybe you can give us some details on how much volume you're really seeing out there.

Sure, Manny, yes -- and I -- the way Craig put it, I think, is exactly the right way to look at it, that there were a number of deals that would be in this year's pipeline -- that we closed this year that got accelerated earlier. We closed 18 separate transactions from December 14 through the end of the year, and so all of those would have most likely fallen into 2013 otherwise. But kind of across all the lines of trade, the pipeline still looks good having accelerated those deals into last year. We're not talking about lowering our guidance, our acquisition guidance for this year. The -- our focus on relationships gives us a good line of sight to a fair amount of business through this entire year. And so we feel very comfortable that we can meet and hopefully exceed the guidance that we've put out. And it's -- on acquisitions, it'll look just like everything else that's in our portfolio: triple net leased retail.

And then we've read some news reports that, and I guess Craig has alluded to this earlier in his comments, the fast food deal that you had done. I believe that was Wendy's he was referring to. And you guys -- it looks like you've split that with Cole. Just suppose, I'm wondering why you would take a small portfolio like that and split it out rather than just taking it totally for yourselves.

Manny, that's a fair question. And the news reports up there picked up part of the properties that we acquired from that particular tenant, not all of them, so it actually was a larger transaction. And so it was a decent-sized deal, it wasn't just aged properties in Las Vegas.

Our next question comes from the line of Joshua Barber with Stifel, Nicolaus. Joshua A. Barber - Stifel, Nicolaus & Co., Inc., Research Division: It looks like one of the acquisitions you guys also made in the fourth quarter was increasing your size of Mister Car Wash. Can you guys, I guess, talk about the credit profile there and what you're seeing going on fundamentally in that business these days?

Yes.

Yes, Josh, it's Jay Whitehurst. The Mister Car Wash is a -- it is the #1 car wash company in America. It's an extremely well-capitalized company. It is very well managed. They -- we've spent a lot of time getting to know them and think very highly of that organization. As Craig talked about, whenever we talk about our acquisitions, every deal we do is individually underwritten. So we spend a lot of time getting comfortable with the real estate as well as that operator. Kevin, do you want to talk a little bit about their corporate...

Yes, there's a huge factor in that business, big player in that industry. Rent coverage in our buyer accounts comes in north of 2 5, around a 2 7. And more importantly, at least from my perspective, fixed charge coverage is north of 2 as well. And so in fixed charge, we mean rent plus interest so it's not a widely leveraged operator.

And so Josh, if you just step back, think about what this is. This is a very fragmented industry with really 2 large national players. And Mister Car Wash is the one that's executing the best and we're just pleased as Punch to have them as a relationship tenant. Joshua A. Barber - Stifel, Nicolaus & Co., Inc., Research Division: Okay. Jay, you also mentioned the real estate part of that. How do you guys think about the real estate in that, I guess, given that it's more of a special-purpose building and wouldn't, I guess, be comparable to a lot of the other tenant categories that you guys have?

But -- it -- the building may be somewhat special purpose, but remember, a large part of our investment is in the land, on these deals. The -- look, Mister Car Wash selects excellent locations. And so these are good retail locations. We're on busy streets, at good corners; yes, a typical great real estate location. And so we think that that's enduring -- that will be the enduring value on these properties. Joshua A. Barber - Stifel, Nicolaus & Co., Inc., Research Division: Okay, great. Two more quick questions, if you could. I don't know if you mentioned your total outlook for acquisitions in 2013, what that would be in, what the average going-in cap rate would be. And the second half of that would be, Barnes & Noble, given that they are talking about additional store closures and stuff, how would that impact your portfolio?

Thanks, Josh. Yes, I mean, we did -- we're staying with our original guidance as it relates to 2013 acquisitions of around $200 million of new acquisitions. We mentioned earlier, the -- we think a little bit second half loaded. I think the cap rate is probably in the high 7s rather than the low 8s, as it has been. Historically, at least, that's what we've penciled in for now. So that's how as it relates to the acquisitions. As it relates to Barnes & Noble, we have 9 stores, so we don't have a lot of those, but they're very, again, good locations. We don't have any notice of closures. I think that announcement that they made was, over a long period of time, they intended to close those stores. And so we don't foresee that having any real impact on 2013 or, frankly, 2014 results in any material way, so...

Our next question comes from the line of Todd Stender with Wells Fargo.

And Craig, your comment about the 7-Eleven cap rates is very helpful. Can you just kind of walk through what we can expect, if any, if there are any changes that happens when an operator is acquired, when 7-Eleven acquirer C.L. Thomas? And maybe is there any risk to the leases being changed at all?

Todd, it's Jay. No changes, no risk, is the short answer to that. In this instance, as in most of these instances, it's a -- it's structured as a merger transaction. And in this case, the parent company, the U.S. parent company for 7-Eleven, became our tenant, in place of C.L. Thomas.

Okay. And what were the lease terms on those existing leases? How long were they?

At the time we did it, it was somewhere between 15 and 20 years. And today, we have more than 15 years outstanding.

Correct.

And Kevin, I think I...

Todd, just to supplement that. One of the things that's attracted us to the convenience store category earlier, and this gets to Craig's earlier question, is it was a highly fragmented industry. It still is unbelievably fragmented and there's a lot of opportunity for growth. And so what you're seeing, even with this acquisition by 7-Eleven of C.L. Thomas, C.L. Thomas is an extremely well-managed company, very profitable, excellent real estate. However, the buying power and the marketing dollars and the brand of 7-Eleven are better than C.L. Thomas'. So what we see, at our level, we just see a company that makes more money at each location, and we get the credit upgrade. So for us, it's the best of both worlds, Todd.

And Kevin, I think I have my math wrong with how much equity you raised through the DRIP and ATM in Q4. I heard that you had raised about $65 million as of the third quarter and then you were up around $183 million for the full year.

Yes, it was about $65 million for the fourth quarter and $183 million for the year. And for the fourth quarter, most of that came via the ATM versus the DRIP. For the year, the $183 million was about 2/3 ATM, 1/3 DRIP, in round numbers.

Okay. And do you have a price that you're buying it at in the fourth quarter?

We were just a little bit over $30 a share. Call it $30.40, somewhere in that on average.

Issuing? I'm sorry.

Correct, issuing.

Our next question comes from the line of Rich Moore with RBC Capital Markets.

Do you, Craig, look at any of these things or any of these private REITs, like Cole and RT and -- those 2 in particular, I guess. But then also, there's others out there. I mean, these will become very popular on the private side or on the public non traded side, and I'm curious if you review these in any depth?

Yes, Rich, it's a fair question. And one of the beauties of our industry, which is -- has a smaller number of big players than most other property types, one of the advantages of that is we know all of these companies well, we track what they're doing, in many cases we sell them quite a lot of properties. So the 2 companies you mentioned, we sold both of them properties in calendar 2012. And in one case, they resold them to another net lease company. We take a look at all of these transactions, but I think one of the things that I'd encourage you to think about in -- when you consider National Retail Properties is that, for the last couple of years, we've been very disciplined and stuck to our approach of doing it one property at a time. And if you think about the power of an 8% initial yield, plus bumps, which means that, over a 15-year lease, we're getting better than 9% average yield. That contrasts with a sub-7% and, in one case, sub-6% straight-line yield, which some of these assets are traded for. Straight line, doesn't get any better. So we looked at all of those deals. Our valuation of the -- for the assets was a couple of standard deviations lower.

Okay. And I assume you'll look at the other ones that are floating around out there as well?

You can count on that.

Okay, yes, I figured I could. Now I want to go over to the fast food category for a second. The Wendy's, remind me, are those all company-owned-stores Wendy's?

Rich, no. It's Jay Whitehurst. These are -- a very large franchisee, one of the top franchisees in the country.

Okay. And then do you have the Wendy's credit when you do that? Or they -- do they back those in any way?

It's -- no. There -- you do not. We've got the price of a large franchise's credit. You always have an implied desire by the franchise order to keep the properties up and running if the franchisee has trouble, but you don't have anything formal.

Okay. And when you generally look, Jay, at the fast food industry, are you -- does it matter to you if it's company-owned or a franchisee? I guess that's it for me.

Rich, what matters a lot more to us is market -- is real estate fundamentals, market rent and the store level performance. And that gets back to that individual, "one at a time" underwriting that we do. And in that -- in the case of this portfolio and everything we did in the fourth quarter, we were very happy with how -- with the property level metrics, as well as being happy with the credit of the operator. The credit is always fleeting, so what we try to get ourselves very happy with is the real estate, and we did.

And then, Kevin, on the line, it's -- I mean, it's not as higher. Obviously, you've got plenty of capacity, but with $174 million on the line, I mean, should we expect that you'll do something to clear that shortly?

Yes, I mean, we don't have a lot of pressure to do that as our acquisition guidance is fairly modest, moderate, I guess, I'd say. So but yes, in due course, we'll do our normal paydown of the line via long-term debt and/or some equity which -- we, as I mentioned, we put out about $65 million in the fourth quarter. But yes, a long-term debt, given where rates are, would probably make some sense too, so...

Okay, but no need to do that. At $174 million, you can wait a bit.

Yes, well, no. No, we don't have any immediate pressure to do anything. But we -- historically, when we get materially above $200 million, we start to think long and hard about what's the best next piece of capital to layer in. Fortunately, we have lots of good choices.

[Operator Instructions] Our next question comes from the line of Paula Poskon with Robert W. Baird. Paula J. Poskon - Robert W. Baird & Co. Incorporated, Research Division: Everyone, apologies if I missed this housekeeping question: What was acquisition expense in the fourth quarter?

Are you talking about real estate transaction costs? Paula J. Poskon - Robert W. Baird & Co. Incorporated, Research Division: Yes.

Yes, very little, $30,000 in the fourth quarter, $375,000 for the year. As a reminder, those little numbers are a result of us doing the vast majority, more than 90% of our acquisitions, directly with retailers. So we're not buying properties that already have an investor, who already have the lease in place that was written by somebody else. And so because of that, we don't have a lot of transaction costs of -- flowing through the P&L. Paula J. Poskon - Robert W. Baird & Co. Incorporated, Research Division: And then just a big picture question, coming back to the M&A dialogue. Given all the M&A activity recently in the sector, how do you feel, if at all, your competitive positioning has changed?

Paula, that's a good question. And we have a fully diversified portfolio, number one, so we don't feel that there's any need to increase our scale. With a fully diversified portfolio and the size we are, we -- as Kevin just mentioned a moment ago, we have access to all types of capital and we're very fortunate the rating agencies are pleased with the way we're executing, and are giving us some additional stripes on our shoulders. So additional size, we don't think, is really going to help us lower our cost of capital because it's already very good. In terms of competition, years ago, we've decided to try to go off to less competitive, off-market transactions, and it's taken us a lot of work to get to this point. And by the way, the work continues. In fact, Jay Whitehurst, who is sitting on my left, is off out of town Monday, Tuesday, visiting a tenant that we're hoping to do more business. By the same token, I'm doing the same thing, going to a different tenant. Many of our competitors, especially the private REITs, they specialize in buying properties directly from brokers. So you have an in-place lease, which you have to accept, you can't negotiate that, and the only way you'll get to buy it is by paying more than everybody else. And it's a lot obvious to us that, that builds shareholder value over the long term. So our competitive position is very good and we're going to continue doing it the old-fashioned way, one property at a time.

Our next question comes from the line of Tom Truxillo with Bank of America Merrill Lynch.

I appreciate all the color on your capital, use of capital here. But Craig, you just mentioned that you don't think your cost of capital gets any better with size. Obviously, the delevering you guys have done and the work on the balance sheet that you've done have brought that cost of capital down. But it could go further down. You've got the upgrade from Fitch, positive outlook from all the other agencies. And it seems to me that scale is -- would add -- would put you in that BBB range and -- in that high BBB range and reduce your cost of capital more. So listening to your comments, it sounds like maybe that it's -- that incremental cost of capital savings isn't worth pursuing to larger deals at lower cap rates. Is that pretty much what you're saying?

Tom, you're a student of this game and your comments are very well taken. And by the way, we've appreciated your support and advice over the years. But we underwrite each and every property. We take a look at a lot of them. And what our internal approach is we want to create something that looks like a funnel. We wanted a lot of properties coming in the top end, and then we have a narrower spigot that comes out. And if we continue to remain disciplined, we think good things happen. What does disciplined mean? Disciplined means you've got to be a responsible allocator of capital. That's we do. Number two, take a look at how our occupancy has stood the test of time. So if we continue to do that, we think that investors, and that includes bond investors as well as equity investors, will enjoy the benefit.

Yes, I think, I mean, just to remind everybody that we have acquired $1.5 billion of properties over 1.5 years, so I do think we're building scale. I think we go about it in a different way. We think it's a better way, a more profitable way. So we have appreciation for what scale does, but -- and we understand equity and fixed income investors like more liquidity, and we're -- we understand that and we think that will happen over time. And frankly, we're still hopeful that we have more rating agency upside, if you will, in the future. And so we hear what you're saying, but at the end of the day, we're trying to drive per share result growth, which we think is good for equity and fixed income investors alike.

Okay. And Kevin, on the back of the comments about potential issuance, given the lower-paced acquisitions, in terms out of the $250 million kind of index-eligible deal, to take down the current line and new borrowings to finance the acquisitions you have in planned, that would probably result in slightly higher leverage. But I'm assuming that would just be for a short time period and so you'll continue to pursue other acquisitions and then you would issue equity to get that back in line with where you've been heading.

Yes, I mean, I guess, conceivably, it makes them to be. We did that a little bit, I guess, in 2012 when we issued debt in August and carried a fair amount of cash, $141 million as of September 30. And so yes, we're willing to look through a quarter or 2, if need be, to capture attractive pricing on capital. And we're more than committed to index-eligible debt offerings, just to be clear. And by "more than," I would suggest that hitting the $250 million minimum is not our objective. We obviously are looking to do more than that. So...

[Operator Instructions] Our next question comes from the line of Daniel Donlan with Ladenburg Thalmann.

Just one for me. Craig, one of the things we are hearing is that cap rates on shorter-duration net leases are very, very attractive versus a longer-duration net leased properties, quite a wide delta. Given that you guys have about 12 years, I think, in terms of average lease length, is this something that you guys are going to potentially pursue? Or are you on -- or got a little further on the risk curve to take on some of that near-term term risk? Or how do you think about that?

Dan, this is Jay Whitehurst. And we are looking at those that, in the situations where you can find those shorter-leased life properties and get comfortable with the real estate, get comfortable with what happens at the end of the lease, those are acquisitions that we have pursued. In the end, often, those are kind of one-off deals where you get -- can get yourself happy with the real estate. But it is something that we're looking for.

Ladies and gentlemen, we have reached the end of the question-and-answer session in today's teleconference. We thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.