Modiv Inc. (NYSE:MDV) Q2 2023 Earnings Call Transcript

Modiv Inc. (NYSE:MDV) Q2 2023 Earnings Call Transcript August 14, 2023

Modiv Inc. beats earnings expectations. Reported EPS is $0.35, expectations were $0.33.

Operator: Good day and welcome to Modiv Industrial Second Quarter 2023 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions]. On today’s call, management will provide prepared remarks and then we will open the call up for your questions. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Margaret Boyce, Investor Relations for Modiv Industrial. Please go ahead.

Margaret Boyce: Thank you, Melissa, and thank you all for joining us for Modiv Industrial’s second quarter earnings call. We issued our earnings release and our 10-Q before market opened this morning. These documents are available in the Investor Relations section of our web site at motive.com. Our quarterly supplement will be published later this week. I’m here today with Aaron Halfacre, Chief Executive Officer; and Ray Pacini, Chief Financial Officer. On today’s call, management will provide prepared remarks, and then we will open up the call for your questions. Before we begin, I would like to remind you that, today’s comments will include forward-looking statements under the federal securities laws. Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate, and other comparable words and phrases.

Statements that are not historical facts, such as statements about our expected acquisitions or dispositions, are also forward-looking statements. Our actual financial condition and results of operations may vary materially from those contemplated by such forward-looking statements. Discussion of the factors that could cause our results to differ materially from these forward-looking statements are contained in our SEC filings, including our reports on Form 10-K and 10-Q. With that, I would now like to turn the call over to Aaron. Aaron, please go ahead.

Aaron Halfacre: Thank you, Margaret. Hello everybody and thank you for joining our conference call today. Over the last 90 days, we have continued our no-nonsense execution. Let me rattle off a few facts about the work we have done. On August 10th, we completed the $42 million sale of our non-core assets at a 7.55 cap rate, and we did this only 90 days after we told you of our plan. In July, we acquired another $29 million of industrial asset, at greater than an 8% cap rate, which was on top of the $100 million of assets we have acquired earlier this year. In the past 18 months, we have acquired nearly $300 million of assets which means nearly 50% of our total AUM was acquired at exceedingly attractive cap rates, while others watched their vintage, low cap rate portfolio shrinking value with every Fed rate increase.

We did all this without raising dilutive equity. Instead, we chose to issue nearly $38 million of accretive OP units at an average price, 80% greater than our current share price, while at the same time recycling over $100 million of capital from our portfolio repositioning. Through our continuous disciplined efforts, we have now created an industrial portfolio with an impressive 14.7 weighted average lease term, with an equally impressive 2.45% average annual rent from profile. However, what I’m most proud of is that we accomplished all of this was just a 12-person team, despite an unprecedented market environment and when few thought we could. I share these facts not to ring a bell, but to offer a proof statement. We have been saying this since day one.

Our team knows how to execute, and is not afraid of the heavy lifting required of us, as we crank out results. Modiv has only just begun to scratch the surface of our opportunity. We needed to work hard to produce these proof statements, because rightly so, no one was just going to take our word for it. As the saying goes, build it and they will come. So, we are focused intensely on execution to make it happen. Modiv has a strong vision of our future. We want and know we need to achieve greater scale. We want and know we need to increase our liquidity. We want to, and we know we can, become the best pure-play net lease industrial manufacturing REIT in our industry. I personally believe that the next 18 months will be even more transformational than the last 18.

Next, you will begin to see our efforts to raise industrial awareness of Modiv Industrial and our compelling investment thesis. When Modiv listed last year, in arguably the noisiest risk off-market environment since 2008, we chose to be patient as we knew that our investment story would evolve. However, now that the majority of our repositioning is behind us, you will see us relentlessly pursue telling our story, highlighting our upside potential, and sharing our vision with as many retail and institutional investors as we can. I believe that investors will like what they hear. Alright. Enough of me standing on the soapbox. I will now turn the call over to Ray Pacini, our CFO, to review the financial results. Ray?

Ray Pacini: Thank you, Aaron. I will begin with an overview of second quarter operating results. Second quarter adjusted funds from operations or AFFO was $3.3 million or $0.31 per diluted share, compared with $3.6 million or $0.35 per diluted share in the year-ago quarter. The decrease in AFFO was primarily due to a $600,000 increase in the adjustment for straight-line rents, related to the 10 industrial manufacturing properties acquired during the first half of 2023, and the lease signed with the State of California in January 2023. Revenue for the second quarter increased 16.7% to $11.8 million compared with $10.1 million in the prior year period, reflecting the benefit of the 16 industrial manufacturing acquisitions we completed since June 30th, 2022.

Net income attributable to common stockholders improved $1.8 million for the second quarter coming in at $3.1 million or $0.41 per basic and $0.35 per diluted share. This compares to net income attributable to common stockholders of $1.3 million or $0.17 per basic and $0.14 per diluted share in the prior year period. The increase in net income reflects the revenue increase I just described along with unrealized gains on interest rate swap derivatives. While we experienced a $1.7 million loss on valuation, of interest rate swap derivatives in the first quarter of this year, we had a $3.7 million unrealized gains on valuation of interest rate swap derivatives in the second quarter, representing an increased gain of $3.1 million year-over-year.

This unrealized gain on swap valuations, along with cash derivative settlements of $1.4 million, offset interest expense paid to our lenders, resulting in negative interest expense of a $180,000 for the quarter. We have captured this somewhat unusual phenomenon of negative interest expense for the quarter, with a new caption in our statement of operations, which we have termed interest expense net of derivative settlements and unrealized gain on interest rate swaps. As I explained during our first quarter call, the first swap did not qualify for hedge accounting treatment because it has a built-in one-time cancellation option available on December 31st, 2024. We structured this cancellation option, when we entered into the swap in May 2022, because it reduced the swap rate by approximately 50 basis points.

As a result, depending on fluctuations and the foreign SOFR curve between now December 2024, we may continue to experience volatility in net interest expense from gains or losses on the valuation of our swaps. We will continue to benefit from our interest rate hedges with our $250 million term loan outstanding today at a weighted average interest rate of 4.53%, based on our leverage ratio of 47% as of June 30th, 2023. We also had interest income of $217,000 which reflects interest earned on cash proceeds from April 2023 draws in our term loan prior to utilizing such cash to acquire industrial manufacturing properties in May 2023. Now turning to our portfolio. We have continued to focus on acquiring industrial manufacturing properties. Year-to-date through August 14th, we acquired a $129.8 million across 12 industrial manufacturing properties at an attractive blended initial cap rate of 7.8% and a weighted average cap rate of 10.3%.

During the second quarter, we acquired $89 million of industrial manufacturing properties. And in July, we acquired an additional $29 million of industrial manufacturing properties. On July 3rd, we acquired an industrial manufacturing property located in Piqua, Ohio leased to Vistech Manufacturing Solutions for $13.5 million. Vistech has a 20-year operating history and is a leading provider of niche automotive parts in the noise vibration and hardest category. On July 11th, we acquired another industrial manufacturing property located in Andrews, South Carolina, leased to SixAxis for its $15.5 million. SixAxis has over a 20-year operating history and is a designer and manufacturer of highly engineered, patented, and modular solutions in the workplace safety market.

On August 10th, we sold our non-core portfolio of 13 legacy retail and office assets to generation income properties for $42 million at an exit cap rate of 7.55%. Transaction consideration included 3 million in cash and 12 million of GIPR preferred stock, which will pay monthly dividends at an annual rate of 9.5%. With the sale of these 13-legacy retail and office assets and our additional 29 million of industrial acquisitions, we have achieved our goal of having a super-majority of industrial manufacturing exposure. As Aaron mentioned for the remainder of the year, we are focused on the disposition of our non-industrial assets. Following the sale of non-industrial assets to GIPR our industrial portfolio exposure includes 40 of our 45 properties, representing 76% of proforma NOI as of June 30th, 2023 with a wall of 14.7 years and a weighted average annual rental increases of 2.45%.

Our three tactical non-core properties now represent 20% of the portfolio with a 14.9-year wall and 2.3% annual rent bumps. And the two remaining other non-core legacy office properties represent only 4% of the portfolio. Annualized base rent for our 45 properties totals $41 million on a proforma basis as of June 30th, 2023 reflecting in recent acquisitions and dispositions. We are currently marketing our natural Tennessee office property lease to Cummins and plan to begin marketing our San Diego office property current lease to Solar Turbines later this year. We categorize tactical non-core assets as those assets that offer compelling value add or opportunistic investment characteristics when measured over a near-term or interim holding period.

These three assets include our KIA auto dealership property located in a prime location in Los Angeles County acquired in January, 2022, which was structured as an upbeat transaction resulting in a favorable equity issuance of $32.8 million in class C OP units at a cost basis of $25 per share. Our 12-year lease to the state of California’s Office of Emergency Services executed in January, 2023 for one of our existing assets in Sacramento, California that includes an attractive purchase option by the tenant, which we believe is a favorable probability of being executed upon in the next 24 months. And our third tactical non-core asset is a property lease to Costco located Issaquah, Washington, which offers compelling redevelopment opportunities when Costco’s lease expires in July, 2025.

Given its higher density infill location and the fact that the land is zoned for additional uses to include flex R&D and multifamily. Following the GIPR transaction Modiv’s Industrial’s 45 property portfolio has an attractive weighted average lease term of 14.3 years and approximately 34% of our tenants or their parent companies have an investment grade credit rating from a recognized credit rating agency of BBB minus or better. Now turning to our balance sheet of liquidity. As of June, 2023, total cash and cashable with $9.9 million and we had $294 million of debt outstanding consisting of $44 million of mortgages and 250 million of outstanding borrowings on our $400 million credit facility. Based on interest rate swap agreements we entered into during 2022, a hundred percent of our indebtedness as of June 30th, 2023, held a fixed interest rate with a weighted average interest rate of 4.52%, based on our leverage ratio of 47% at quarter end.

We borrowed $21 million on our revolver during July 2023 to fund the industrial acquisitions, I discussed earlier, and we will repay the revolver with proceeds from the recent sale of the 139 non-industrial assets this month. As previously announced, our Board of Directors declared a cash dividend for common shares of approximately $0.95 for the months of July, August, and September 2023, representing an annualized dividend rate of $1.15 per share of common stock. This represents a yield of over 9% based on the recent share price of our common stock. I’ll now turn the call back over to Aaron.

Aaron Halfacre: Thanks, Ray. Having shared my $0.02 earlier in the call and not wanting to bore you with more prepared remarks. I know you are going to have questions about the GIPR transaction of noncore assets and what lies ahead. I figured it’d be best to answer your questions directly. So, to that end, let’s begin the Q&A. Operator.

Q&A Session

Operator: Thank you. [Operator Instructions]. Our first question comes from the line of Bryan Maher with B. Riley Securities. Please proceed with your question.

Ray Pacini: Hi, Bryan.

Bryan Maher: [Technical Difficulty] They are noncore nontaxable, whatever you want to call them. Nashville is in the market now, and San Diego sometime in second-half of this year, is that correct?

Ray Pacini: Yeah. The reason San Diego isn’t up already is it is actually one of our we have two properties in the same subdivision. And so, we they had one common parcel, even though they are not located in each other. So, we are in the of splitting the parcels so that we can comfortably peel off a solar turbine. So, we anticipate taking that out either late third or early fourth to the market.

Bryan Maher: Okay. And then the three new tactical ones, the Kia, the Costco, and the California lease, those are just going to hold for some period of time. Is that correct?

Ray Pacini: Correct. Unless something opportunistic comes about, I think the first two that would move would be OES in Costco. I think Kia, you should be expected to be in the portfolio for a bit, the way we structured the OP Unit transaction. It’s also 25-year lease term initially. So, it’s we like where it’s at. But I think there is a chance that, Costco and OES will self-liquidate favorably over the next, call it, 24 months.

Bryan Maher: And then can you give us any idea what you are thinking about in the way of cap rates for Nashville and San Diego?

Ray Pacini: No. We call for offers, is this week, for the broker who is running Nashville. So, we don’t know what to expect. We are — I will say that that one’s being positioned as an industrial flex conversion. So, it’s a super tight market. We do our analysis. We think the highest and best use is an industrial flex conversion. We don’t want to do it ourselves. We think — we have already taken the impairment charge in the first quarter. And we are just looking to create get that off the balance sheet and create some liquidity. I don’t know the cap rate on that one. That said, on the San Diego, we have actually, in the past, received a couple of months listed, bids that would be gains to our NAV, which clearly, we are trading well blower NAV. So that’s a favorable submarket for sure. But we haven’t started the BOV process on that one yet.

Bryan Maher: Okay. Just last for me on the expenses. They seem to be pretty well under control. But I did noticed on Page 16 of the queue, kind of the commentary there around I guess it was some property tax and maybe reallocating how that’s done. Is there anything funky that we should be aware of as we model out expenses, or is that better to discuss offline?

Aaron Halfacre: Ray, you want to take that?

Ray Pacini: I mean, there is nothing funky. I mean, we can talk about it further offline. But, I think you can expect expenses to be fairly inline with where we are today.

Aaron Halfacre: I would say, we manage them pretty tightly. Great. Thanks.

Bryan Maher: No. When you are renting U [ph] halls and moving your office space yourself, that’s indicative of what we would expect for expenses. So, good for you guys.

Aaron Halfacre: Thank you.

Operator: Our next question comes from the line of Rob Stevenson with Janney Montgomery Scott. Please proceed with your question.

Rob Stevenson: Good morning there guys. Is there a lockup on the generation preferred shares? And is that a long-term hold and what’s your plan there?

Aaron Halfacre: So, the preferred has a feature that allows them to redeem in shares or cash. And the mechanism is, is that they have up until March 15th. We have actually created a collar range that would be determined the share price that. They could if they were to issue those shares, they could give us the shares. So, I would say how we look at the preferred is, and underwriting some probability that they may issue equity and give us shares. In the event that they do give us shares and what we did net of anything we haven’t sold in advance, because we are allowed to sell the preferred off if we want to. We would then look to distribute any common shares out to our shareholders as a distribution. So as not to have any consolidation risk of their operations.

So, we don’t have any formal restriction on time trading. If we find a private party that’s interested in some of our preferred, we will talk to them in best interest. And then net of any sales that we haven’t done in advance, assuming that we get common from them, which I think is their objective. Then we would look to distribute that out to our shareholders.

Rob Stevenson: And you said that that timing is March?

Aaron Halfacre: They have — so the timing to them, they have to have notified us that they wish to redeem with shares prior to March 15th. There is certain in the article supplementary of their documents, it details the mechanics. But basically, there’s a mechanism of which can determine how many shares they would issue us, and its collar bound, until March 15th. After March 15th, we are open to accepting cash or shares, but after that date, it’s a de novo negotiation of how many shares.

Rob Stevenson: Okay. And in the interim rate, that will just appear as whatever $285,000 a quarter in interest income or is that going to be somewhere else?

Aaron Halfacre: It will be in other income.

Rob Stevenson: Okay. and then the EMC lease included a nine-month purchase option. Are they likely to buy? Is that why it’s a shorter-term option, or is that — if you are some sort of design there?

Aaron Halfacre: This is the tenant that — we had to tell for sale. This property was locked up under contract. It’s an older user. They attained SBA financing to close it, but they actually asked to wait. They thought they would better have payroll, I think, and financing rates as they went on a little bit. They wanted to — they were willing to sign a 10-year lease, but they wanted to be able to purchase it sometime at the same price that they had negotiated. And so, we said, that’s fine. We will do that, but we will give you a finite window to do that. And so, we signed the 10-year lease. And if — they decide that, they like the financing and what we understand is they, they probably will execute that sooner than the nine months.

But if they don’t, we have an occupied tenant. So, we didn’t want to keep it tied up on the market. If they wanted to wait then we figured and we would collect rent. And so that turned out to be sort of a win, win for both of them. They could better time their debt exposure, and we got a lease.

Rob Stevenson: Okay. And then, given that you could wind up having proceeds from there, you have got the proceeds from the big sale. How deep is the pipeline today and what’s your sort of time frame or in expectations in terms of redeploying that capital into industrial assets?

Ray Pacini: So, I think how we think about near-term. So, we have $250 million term loan. We are paying off the revolver with the proceeds that we got from GIPR. The next asset that would the mortgage debt will pay off is the OES, that’s coming due in March of next year. I think we are going to make a partial payment, here real soon. And so, proceeds from Cummins, proceeds from Solar, proceeds from EMC, any proceeds from sale of the preferred of GIPR will pay off that mortgage debt because that’s coming due. And that just increases the equity profile. And then after that, we would look to do acquisitions. In terms of pipeline, we are really, really — we spent a lot of time sourcing and identifying out there. So, pipeline is not my issue.

It’s clearly — it’s equity is my issue, right? I mean, if you looked at it right now, I think we have traded 2800 [ph] our shares. So, I mean, it’s something like $30,000 worth of shares of traded, and we have, like, almost 8,000,000 shares outstanding. Our investors, which are legacy, they just don’t sell, right? So, we don’t have much liquidity and we’ve been disciplined about issuing. I could buy $700 million of properties tomorrow at an attractive cap rate. So, we are constantly looking. I don’t think pipelines an issue. We have gotten very selective, now that we have kind of repositioned as much as we can in the near-term, we’re not looking to chase anything down. If we find something that’s super compelling, we’ll act on it. We are not afraid to.

We clearly have the revolver. And I think, my focus now which is here to four has been lots of traveling, lots of structuring, lots of doing things like this and cleaning up. And I think now you will see me, calling upon the shops that covers shares included to do NDRs. We will start going out and talking to investors. If you think about that 2800 shares traded at $30. If I’m starting to talk, I mean, like, hitting the road really talking to IRAs and FAAs and institutions, it’s not hard to create some volume. And I think that’s our next focus. And I think that’s our next focus for really the balance of the year. We will always be looking for something that achieves scale, and I want to try to find something that’s scalable, that when you guys tune in for every quarter, you have to pay attention because I’m not going to I’m not gonna lead you prior to the quarter.

Do something that’s transformational. That’s my hope. But my main focus in the near-term is to start to get more attention to the name, because I think we have a really compelling story. I think we’ve executed really well, And it’s, for proverbs, a tree fourth in a forest. Clearly not today, but they will.

Rob Stevenson: Okay. That’s helpful. And then last one for me. What’s the current timing expectation for the Kalera bankruptcy resolution and do I have it correct? If the lease is rejected, you get the asset back and the mechanic’s lien comes to you. But if the buyer affirms it’s their lease obligation.

Aaron Halfacre: So, you are correct in the mechanic that if they rejected the lease, we’re stuck holding a bag. We’ve known this for a while. We’re well on that. We are still in discussions with Kalera. So, I couldn’t probability await the likelihood of rejection. Our property’s a little bit unique than some of the other ones, and they’ve already rejected some assets. If you’ll follow the proceeds, they have, they’ve extended it I think until October, but they, as the bankruptcy, as I understand, the bankruptcy proceeds go, they have the right to continue to punt on the assumption of their sale cause they work through all this with all of their landlords. And so, we’ve underwritten it, we’ve looked at it, we’re, you know, we’re pretty eyes out open about what we may need to do.

We’ve already also looked at alternatives in the event that they, if it doesn’t work out with them. Interesting enough, earlier this year, Minnesota passed marijuana. We are one of the only industrial properties in the Urban center that has its own aquifer. It is designed for vertical growing. So, we’ve had some interest from that already. Some other vertical growers. So, we’ve been looking at the market. I think even if we have, can’t, let’s be, grown up here, if we have to pay the liens, we’ll work to try to reduce the face value of those liens. But we think the property and the opportunity for a lease is still in excess of that lien value and our purchase price.

Rob Stevenson: Okay. And I guess one question that comes up from that is, if it winds up being the highest and best use for this, is something like cannabis, is that something that you hold, or given the legality and the restructure, that’s something that you sell either to the user or to somebody else to own, from that standpoint?

Aaron Halfacre: Great question. I think it depends on the 10. So, we, — we have food production. This is, I wouldn’t call it food, but it’s similar design. We have two — so we already have food production as a category in our thing that we’re not opposed to owning. Do I want to be, I don’t want to infringe on New Lake or, the other fine cannabis REITs out there? If they want to take it off, great. I don’t know. I think it depends on the tenant, depends on the lease, depends on what we have. I would say that would be sort of a byproduct of what’s happened to Kalera. would not be seeking cannabis facilities on a go forward basis at all. But if it happens to be one, we’ll see. But maybe it becomes a tactical non-core. I don’t know. We’ll see.

Rob Stevenson: Okay. That’s helpful. Thanks. And have a good day.

Operator: [Operator Instructions]. Our next question comes from the line of Barry Oxford with Colliers. Please proceed with your question.

Barry Oxford: Great. Thanks, guys. Aaron, when you talk about transformational, what might that look like? Would it come in the form of a decently sized joint venture partner? What if you could wrap some color behind those comments?

Aaron Halfacre: Sure. If I was going to make, write a letter to Santa Claus, I think it would, it’d be the ideal world is I take down a larger portfolio of industrial manufacturing or predominantly industrial manufacturing assets. And I do that in conjunction with a strategic meaning that, maybe they come in with some of the cap stack and gives them some optionality. Could it be structured as a JV? Sure. Could it be structured as a direct investment? Sure. I think it’s, it’s really about figuring out a solution that creates a win-win for all the parties. I think that’s the ideal for me. And I will be candid. There are portfolios out there that fit that criteria. That doesn’t mean we are going to do one. That doesn’t mean we are even talking about it.

But I know where they are at. And I know that I have done a lot of homework and I don’t like them. So, a lot of it, like, it comes down to, as Rob asked, where we are going to buy, buying is a really going to be a malfunction of equity. At some point in the future, we will need to raise more equity. I’ve waited this long because I don’t want to be dilutive, and I think I have done a good job of being patient. So, we are patient in that regard. And now telling the story, if I can double my trading volume, that’s probably gonna increase the share price materially, on an average basis, and that makes all this other stuff more feasible.

Barry Oxford: Got it. No. That makes sense. When you look about, when you think about using OP units going forward, are there other buyers out there that would conceivably do it at a higher price without you offering a higher price?

Ray Pacini: So, the two we have done are $25 and $18, so both accretive. I would say that, is how I look at OP units. I take them very seriously because they become a partner. I mean, they are making an equity investment. And we are pretty straight down the road in terms of structuring. We don’t, if someone wants a lot of crazy thousand whistles, then go somewhere else. I’m not going to give it to you. We treat that as being pair of pursuits with the Class C common. But that said, there are a little slightly different stats because we don’t have that many Class C OP holders now. So, I like, if it happens, I’m always open to it, but it’s never my first tool. I mean, all things being equal, I’d rather have a float in that equity, right? So, Class C OP and it’s don’t create any float. It’s a great way to acquire. But it doesn’t solve my liquidity issue.

Barry Oxford: Now, I got it. That makes sense. And then I guess just one question for, Ray, on the straight lining, is that a good runway run rate right now, looking at the 2Q number, or should we be thinking about straight line differently?

Ray Pacini: It really depends on what we do going forward in terms of acquisitions. We are signing 20-year leases plus, and that increases the amount of straight-line rent. So, if things didn’t change, if we didn’t acquire anything, that would probably be a reasonable run rate, but assuming we buy more property, that number will increase. But the flip side of it is revenues going up. So, in terms of AFFO, they kind of watch it out. Your revenue has gone up and then you are deducting the straight-line rent.

Barry Oxford: Right. Right. Right. Okay. Appreciate the color guys. Thanks for the time.

Ray Pacini: Thank you.

Operator: Ladies and gentlemen, that concludes our question-and-answer session. I’ll turn the floor back to Mr. Halfacre for any final comments.

Aaron Halfacre: I wish to thank everyone for joining the call. I want to thank David Sobelman and GIPR team. It was — what we did there was, a unique transaction. It was you could have easily just sold it off for cash. I think our goal was to do something that helped the community by being a tiny REIT and working with another tiny REIT, that’s what we are. And to speak to see candid, we are small. And most people aren’t paying attention to creating a structure that was a win. I think is unique in our space. And we did it ourselves, which shows that we have the skills. I mean, so they have now more than doubled their asset size in terms of property counts. And, they’ve now achieved a hundred million in gross assets. They bought what they, and what we sold fits their profile perfectly.

And so, you know, they were good quality assets that we didn’t want because we had already signaled we were going to move on. So, we’ve given it to them. And so, we’re pleased that we were able to do that. It wasn’t the easiest transaction to do, but we got it done. And I think, you know, I think shows that we can do those types of transactions on an even bigger scale. And they’ve done there. Our team has the capability to do that in-house, which means we save tons of money when it comes to those types of expenses. So, I’m excited about what that shows that we did and what we can do. I hope most people, you know, pay attention to us because, you know, optionality is in the name we trade well below our, you know, GAAP book value. Any acquisition that we do can add materially to the top line because of our size.

We’re really interesting from both a growth and value perspective for those who invest in small-cap REITs. Liquidity’s the issue. If there are investors out there who, you know, big investors who have blocks, who want to, you know, have interest, and let us know. Let our banks know. But this is the next phase and I’m excited to see what it brings. And I look forward to talking to you at the next quarter call. Bye.

Operator: Thank you. This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.