David Gladstone - Chairman & CEO Michael LiCalsi - General Counsel & Secretary; President of Gladstone Administrator Robert Cutlip - President Danielle Jones - CFO

John Roberts - Hilliard Lyons John Massocca - Ladenburg Rob Stevenson - Janney

Good day ladies and gentlemen, and welcome to Gladstone Commercial Corporation First Quarter Earnings Call. At this time all participants are in a listen-only mode. [Operator Instructions] Later we will conduct a question-and-answer session and instructions will be given at that time. As a reminder, today's conference maybe recorded. I'd now like to introduce your host for today's conference, Mr. David Gladstone. Sir, please go ahead.

Okay, thank you Liz. Nice introduction and thank you all for calling in. We always enjoy these times we have together on the phone and wish there are more opportunities to do so. If you are in the area -- the Washington D.C. area, we're located in the suburb called McLean Virginia and have an open invitation to stop by and see us if you're here. It's a great team at work there over 50 of us now at this shop. Now, we'll hear from Michael LiCalsi, he is our General Counsel and Secretary. Michael is also the President of Gladstone Administration, which serves as the administrator to all of the Gladstone Funds including this one. He will make a brief announcement regarding some legal and regulatory matters concerning this call and report.

Good morning, everyone. The report that you are about to hear may include forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, including statements with regard to the future performance of the company. These forward-looking statements involve certain risks and uncertainties that are based on our current plans, which we believe to be reasonable. There are many factors that may cause our actual results to be materially different from any future results expressed or implied by these forward-looking statements, including all of the risk factors included in our Forms 10-K and 10-Q that we filed with the SEC. And these can be found on our website www.gladstonecommercial.com and the SEC's website www.sec.gov. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. And in our report today, we also plan to talk about funds from operations, or FFO. FFO is a non-GAAP accounting term, defined as net income excluding the gains or losses from the sale of real estate and any impairment losses from the property plus depreciation and amortization of real estate assets. And the National Association of REITs otherwise known as NAREIT, has endorsed FFO as one of the non-accounting standards that we can use in discussing REITs. And please see our Form 10-Q, filed yesterday with the SEC, and our financial statements for a detailed description of FFO. And today we also plan to discuss core FFO, which is generally FFO adjusted for property acquisition costs and other non-recurring expenses. And we believe this is a better indication of the operating results of our portfolio and allows better comparability of period-over-period performance. And to stay up-to-date on our fund, as well as all of the other Gladstone publicly traded funds, you can sign up on our website to get e-mail updates on the latest news. And you can also follow us on Twitter, username, GladstoneComps; and on Facebook, the keyword, The Gladstone Companies. And finally you can visit our general website for more information at www.gladstone.com. Our shareholders meeting will be held next Thursday, May 5, at our offices here in McLean, Virginia, and we invite everyone to attend. We ask that you please vote your share so that we can ensure decorum at the meeting. And the presentation today is an overview and we ask that you read our Press Release issued yesterday, and our Form 10-Q for the quarter ended March 31, 2016. We also prepared a financial supplement this quarter to provide further detail on our portfolio and results of operation and that can be found on our website at www.gladstonecommercial.com. And now we will begin the presentation hearing from Gladstone Commercial's President, Bob Cutlip.

Thanks, Michael. Good morning everyone. During the first quarter we received repayment of $5.9 million development loan plus a 22% return on this investment, executed a lease with a new tenant for 14,000 square feet in our partially vacant Chicago property, refinance $21.2 million of a maturing debt on four properties with $18.5 million of new debt and expanded our common stock ATM program to $160 million and entered into it a preferred stock ATM program for $40 million. Subsequent to the end of the quarter we also negotiated the terms for another 13,000 square foot lease in our partially vacant office building in Minneapolis, refinanced $3.7 million of maturing mortgage debt, received an Energy Star Award for our 350,000 square foot office building in Austin, Texas, that's occupied by GM, and finalized the major upgrade to our website which we plan to rollout in May. We had another excellent quarter as we executed leases to increase the occupancy of our portfolio while also placing a non-core asset under contract for sale as part of our capital recycling program. We have slowed our acquisitions pace by design starting with our fourth quarter activity as a result of uncertain market conditions and a lower stock price. We continue to be pleased with our activity and have a healthy pipeline of acquisition candidates. Our acquisitions team has spent considerable time over the past six months connecting with our peers to determine the direction of the market. Interest rate volatility, global economic slowdown perceptions, and an energy glut raise our concerns. Our findings reflect that the largest net lease peers have noted that they may be reducing our acquisition volume this year or even parting, if you could believe that valuations appear to maybe be too high. These thoughts, as well as reduced investment volumes during the first quarter as reported by market research firms could be indicating that cap rates may rise in the months ahead. Our team will monitor market conditions while continue to actively investigate opportunities, and we'll acquire properties when the tenant credit, location and asset returns are accretive and promote our measured growth strategy. Now for some details. We successfully exited our $5.9 million development loan and achieved a 22% return on our invested capital during the whole period on exit. This was the first and a new program we created to participate with developers on builder suit projects nationwide. And this investment provided very good risk-adjusted returns to our shareholders. Our acquisitions team has been placing significant focus on acquiring properties in secondary growth markets. As I've noted in the past, the hallmark of our continuing high occupancy remains is going to continue to remain thorough tenant credit underwriting and a mission critical nature of the property. We believe that our ability to assess correctly a company's financial condition has in large part been responsible for our occupancy remaining at 96% or higher since our IPO in 2003. However, location is also important and closing transactions in growth markets we believe leads to properties that will increase in value overtime and hopefully, provide additional benefit for our shareholders. Over the past two years to promote this strategy, we've invested in Phoenix, Salt Lake City, Denver three times, Dallas four times, Austin, Atlanta twice, Indianapolis Columbus Ohio twice in Minneapolis. The last three acquisitions have been in Atlanta and Salt Lake City, two markets in which we wish to increase our concentration. And at this time we have a $17 million multi-story office building under contract in a Salt Lake City sub-market which will add to our presence there upon closing. Our asset management team continues to be busy leasing our available space and selling non-core assets. As noted, we increased our occupancy in our Chicago industrial property by leasing 14,000 square feet for a 7-year term during the first quarter. And we also have a 20,000 square foot prospect showing interest in the balance of the building. We've also negotiated the terms for another 13,000 square feet in our Minneapolis office property bringing the occupancy to about 80%. We only have two fully vacant properties remaining today. We have a purchase agreement in place for our Dayton, Ohio 60,000 square foot office property and anticipated sale to close next month. The second property in Eastern Massachusetts is an 86,000 square foot freezer cooler industrial property, and we have three full building prospects for that property at this time. We successfully extended all of our leases that were originally set to expire in 2016 with the exception of a 2,900 square foot office space in our multi-centered office property in Indianapolis. And our portfolio is currently 97.5% occupied. In total, for 2015 and 2016 we successfully concluded 15 of 18 lease expirations and in so doing in our opinion transitioned to a full service real estate operating company reflecting an ability to execute successfully in every phase of the lifecycle for a real estate property. And the better news is that only 4% of forecast rental income is expiring over the next four years through 2019. During a period that David and I anticipate, the industry is going to experience headwinds at some point. So our cash rents are going to be stable and growing, and our occupancy should remain high even if economic conditions deteriorate. This is an important fact for our shareholders as the majority of our peers have a minimum of 15% and as high as nearly 60% of their leases expiring during the same period. The majority of our capital availability is going to be used to pursue growth opportunities and not for vacant space operating expenses or tenant improvements and leasing commissions to retain tenants or to release vacant space. Danielle is going to expand upon our refinancing activities but it is important to note that our refinancing continue to lower our loan-to-value, lower our annual interest costs, and the amount of debt maturing reduces through 2017. So in summary, we successfully exited our first development loan leased vacant square footage, refinanced maturing mortgage debt at lower interest rates and implemented a new preferred ATM program and an expanded common ATM program to set us up for long-term growth. And organizationally, we completed the redesign of our website with an expected launch date in May. And the objective of this design or redesign really is to provide greater information for our investors, analysts, investment sales and leasing professionals. And our team continues to have a strong pipeline of acquisition candidates, and will adhere to our strategy of only acquiring in growth markets that are accretive to our operations. Now let's turn to Danielle Jones, our Chief Financial Officer for a report on the financial results.

Thanks, good morning to everybody. As Bob referenced, so we do not acquire any assets during the quarter, we were active in the capital market. We continue to focus on decreasing our leverage and have been refinancing debt at lower leverage levels and lower interest rates. We expect to continue the strategy over the next several years. We've reduced the amount outstanding under long-term mortgages in our line of credit, $523 million which is a 2% drop from the fourth quarter. In addition, we amended our common ATM program during the quarter to increase the program to $160 million and we also implemented a $40 million preferred ATM program for our two trenches of perpetual preferred stock. We access those programs during the quarter and raise an aggregate of $2.8 million under these programs. We use these funds for refinancing CapEx and tenant improvements at certain [ph]. We do not anticipate raising large amounts of common equity into the environment improves. We also have a $38.5 million term preferred equity that matures in January of 2017 and we are currently plan to refinance this equity over the next few months. We have currently today $54.6 million outstanding under both the line of credit term loan facility at a weighted average interest rate of approximately 2.9%. We continue to only use our line of credit to make acquisitions that we believe can be financed with longer term mortgage debt or that we believe are good additions to our unsecured property pool required under our line of credit. The market for long-term mortgages continues to be strong and the environment remains competitive but more credit driven. The CMBS market is less active than it was in 2015. Its underwriting terms have become more conservative and the spreads required have widened significantly. The commercial banks and life insurance companies have also taken their standards and widened their spread. With borrowers' decreased utilization of CMBS financing, the banks and life insurance companies can be more selective as to which deals they elect to pursue. Lenders have tightened their credit metrics, however, this has not limited our access to credit because we've been leveraging assets at loan to values less than 60% rather than seeking to maximize leverage. Interest rates continue to be volatile within the last twelve months; the yield on the 10-year treasury has ranged from a high of 2.5% to a low of 1.6%, about an 80 basis points swing. While the yield on the 10-year treasury has retreated from its highs last year, lenders have increased the margins at which they lend in response to the increased volatility. With regard to overall of our borrowing costs, this increase in margins has more than offset the decline in the 10-year treasury deals. However, interest rates still remain attractively low and we continue to actively try to match our acquisitions with cost effective mortgages. Depending on several factors including the tenant's credit rating, property type location, the terms of the lease, leverage and the mountain terms alone we are generally seeing fixed interest rates ranging from 4.6% to about 5%. To this end we repaid $21.2 million of maturing mortgage debt this quarter by refinancing $18.5 million with new variable rate mortgage debt with an interest rate cap and the remainder with borrowings under our line of credit and cash-on-hand. The weighted average interest rate on the maturing debt was 6.14% and the rate on the new mortgage debt is about 2.8% today which is a 3% decrease from the mortgage debt that was repaid. Last week we also refinanced $3.7 million in mortgage debt maturing number one property at an interest rate of 6.25% with $9.5 million of mortgage debt on this property and two other previously unsecured properties that were in our unsecured pool under the line of credit at a weighted average interest rate of approximately 3.2%. Over the past 15 months, we have refinanced $82.4 million of debt with $53.1 million at a new weighted average interest rate of 2.81%. Prior to the refinancing the mortgages had a weighted average interest rate of 5.68%. The combined refinancing will reduce our annual interest expense by approximately $3.2 million and that is straight to the bottom-line. Looking at our upcoming maturities, we have remaining balloon principal payments from four mortgages of $43.5 million payable throughout 2016. We anticipate being able to refinance these loans with a combination of new mortgage debt and equity. The weighted average interest rate on the 2016 debt is 5.48% and while interest rates are anticipated to increase from today's lows, we still expect to achieve at least a 100 basis point interest rate reduction when we refinance these loans in 2016. We expect to refinance some of this debt in the next few weeks. We also have $61.2 million of mortgage debt maturing in 2017. The weighted average interest rate on this set of 6.1%, so again we expect to be able to achieve a better rate that will go straight to the bottom-line. We are focused on our strategy of lowering our leverage by reducing our weighted average loan-to-value on both newly issued debt and refinance debt. We have decreased our loan-to-value from a high of 67% in 2009 to about 54% today. As of today our available liquidity is approximately $18.8 million, comprised of $3.9 million in cash and an available borrowing capacity of $14.9 million under our line of credit. With our current availability and access to our ATM programs, we have enough availability to fund our current operations, deals in our pipeline in any known upcoming improvements at our property. Before I review the results for the quarter, I wanted to refer you to the press release we filed yesterday. You may have noticed there was an adjustment to the calculation of our diluted FFO per share. Our diluted per share number reflects impact of our convertible senior common stock. In the past we had been correctly been diluting the number of common shares that would be upstanding if all these shares were converted in accordance with EPS guidance. However, we had not been adding back the dividends paid on these senior common shares which should have been done in accordance with EPS guidance. This adjustment would have resulted in diluted FFO per share of $1.54 in 2015 versus $1.50 that was reported. We will adjust our diluted FFO and diluted core FFO per share for prior periods as we report results throughout the year. All per share numbers I referenced are fully diluted weighted average common shares. Core FFO available to common stock holders was $9.1 million or $0.39 per share for the quarter which decreased slightly from the fourth quarter. Our results were impacted by slight decrease in operating revenues because of $150,000 one-time lease terminations fee we've received during Q4 and our general administrative expenses also increased during Q1 from the write-off of professional fees from the termination of our previous self-registration statement coupled with increase shareholder fees from the preparation of our annual report and proxy. This was partially offset by decrease in interest expense from lower interest rates and our refinancing. We encourage you to also review our quarterly financial supplement posted on our website under presentation which provides more detailed financial and portfolio information for the quarter. While 2016 brings us challenges as we work on debt maturity and the headwinds in the global macroeconomic conditions, we believe we have the right team and plan in place to reposition and continue our growth activity. We are confident the remainder of 2016 will be successful as we continue to increase our asset an equity base and decrease our leverage. We are focused on maintaining our high occupancy. And I'll turn the program back over to David.

Thank you, Danielle, that was a good report. And good report from Bob and Michael. So we're on the right road it seems like. Main news again is we were new to all the 2016 leases except for small office lease leaving about 4% of the forecasted grants to expire in 2019. Retained a 22% return on our $5.9 million development loan that we had and we refinance maturing loans at lower interest rates to tune of about $3.2 million and savings to the company and that goes right to the bottom-line. I think we've positioned ourselves for strong growth in the future. We've continue to add quality real estate to our portfolio and sure if existing properties continue to grow, there are market capitalization and we hope to see higher trading volumes in the stock and the corresponding uptick in the stock price because the distribution rate is very high today. As you all know, the company did not cut or miss its monthly cash distributions during the last recession. I think that was quite a success story, I keep saying it because it was so wonderful. We watched some very good companies cut their distributions and most of them have never recovered to bring their growth back to the original level. We are in a great position not to have a problem if the economy hits the skids again. Here is what we're doing today. We need to increase the common stock market capitalization in order to increase the trading volume and give institutional investors who want to buy the stock the ability to do so. These institutional buyers always want to know if there is a number of shares outstanding so that if they buy $10 million to $20 million of stock then they know they'll have enough liquidity and if they need to sell the shares. We still don't have enough shareholders -- shares outstanding to give them that confidence unless they are fairly small institution. However, we've consistently built our assets an equity base over the last four years, we've doubled in size. With that growth we hope to see more bias come to stop, and it should be hopeful of that help increase the price and lower our cost of capital. I want to expand on Bob's comments regarding our renewal and leasing efforts. We did slowdown our acquisition pace due to the market conditions which is a very high for properties right now and yields low but we continue to evaluate the opportunities. In addition, our acquisition team turned into a leasing team as well and helped deliver that great success of getting all those leases in place in 2016. And we continue to have promising list of potential quality properties that we are interested in acquiring. And because of that list of properties we expect to continue to grow the asset portfolio during the rest of 2016 and on into 2017. With the increase in the portfolio properties comes greater diversification and that we believe is for -- it gives us better earnings. However, please know that the price to buy good building with a good tenant is very high today and the yields are very low. And due to that price war that's going on out there in the market and we're not going to pay too much for buildings, that will only end up in a bad place for us all. We'd rather spend more time hunting for good loans, good deals, and making transactions that will be beneficial to shareholders for the long-term. We're focusing our efforts on finding good properties and long-term financing to match our long-term leases, being able to lock in that long-term financing would be good for the future between 2016 and 2019 we only have 4% of forecasted rents expiring and our debt maturities after 2016 will drop significantly also. In the future, interest rates may be much higher and we are positioned to perform very well over the next several years due to these conditions that we put ourselves in. We're much more optimistic that things are going our way and positive for us right now on, and I hope all of you share that same belief. Much of the industrial base, that is, businesses that we run our industrial and commercial properties, to remain steady and most of them of paying their rents. There is still some businesses that are having problems and the economy is still not great shaped, we expect good growth. While we're optimistic that our company will be fine in the future; Bob Cutlip and I will continue to be cautious in our acquisitions as we've done in past years. We made it through the last recession without cutting the dividend and having problems with our tenants and if another recession is lurking on the horizon, I think our portfolio will continue to do extremely well. In April 2016 the Board voted to maintain the monthly distribution of $0.125 per common share for April, May and June. So the annual rate is $1.50 per year, that's a very attractive rate for such a well-managed read like ours. Bob Cutlip and I discussed increasingly the distribution to shareholders, we do that every quarter. And I think eventually we'll get a time when we can increase the distributions. We now paid 135 consecutive common stock cash distributions and went through the recent recession without cutting any of our distributions. And that folks is more than 10 years of having a wonderful track record. Because the real estate can't be depreciated we're able to shelter the income or those shareholders that are at taxable position. The return of capital was 79% of the common stock for vivid in 2015. So that makes this a very tax-friendly stock. In my opinion a very good one for personal accounts that are seeking income. This return to capital is mainly due to depreciation of the real estate and other items and this caused earnings to remain low after depreciation. And that's why we talk about core FFO because that's adding back the real estate depreciation. Depreciation of building is a fiction. At the end of that depreciation period you still have the building standing. So if you own the stock, and it's a non-retirement account as opposed to having it say in an ire of retirement plan, then you don't pay any taxes on that part that's sheltered by the depreciation, and that 79% last year. And that considers a return of capital; however, of course, return a capital does reduce your cost basis which is a result of a larger capital gains when you sell the stock. Stocks trading at $17.40 a distribution means that the stock is yielding about $8.75. I think that's one of the highest yield of all the REITs out there. Our stock price has taken a hit as many other REITs did but it's coming back now after some holders will -- after all some of the holders will remember that it traded well above $20 a share. So we're hopeful that the stock price will continue to rebound, many of the REITs are trading at much lower yields and higher prices than we are. For example; the REIT universe is trading at 4.3% yield, and if we traded at that we would be at $34.88 and the net REITs like us are trading at 5.8% yield. And after the stock was trading at that, our stock would be trading at $25.80 per share, so there is lots of room for expansion of the stock-based on the yields of stocks that are out there today. I know some of the analysts always say which are externally managed but just remember, we cut our management fee with a new contract last year, and now have a contract that's almost exactly like one of the many REITs out there that are externally managed. And after all, the cost to operate this REIT is not higher than any of the other REITs, whether it's internally managed or externally. And if you've been watching, our leverage has been going down every quarter; we're now nearing 50% leverage based on market capitalization. So I think this company has come back to the point where analysts and shareholders should be really happy about owning it. We're only about $1 of stock outstanding for $1 of debt in the buildings that we own. And given the track record of steady income for the last ten years, that amount of leverage is very conservative. So Board voted in mid-July during our -- will vote at mid-July during our regular scheduled quarterly board meeting to declare the dividend for July, August and September. So I'll stop now, we'll have some questions. So Liz, if you'll come back on, we'll answer the questions from those folks who would like to ask us same questions.

[Operator Instructions] Our first question comes from the line of John Roberts with Hilliard Lyons. Your line is now open.

Good morning, David.

Good morning, John.

How much of the interesting come was from the -- in the first quarter was from the success fee?

I think we have one month of interest income. So it's probably about $300,000 was the actual success fee. We were accruing upto 19% throughout the terminal loan, so we just had the additional interest income was the difference between a 22% exit IR and the 19%.

Okay, very good and that line will go away going forward unless you get something else on that front?

That's correct.

Okay. On the leases -- are the leases you're signing on the vacant property, any guidance as to the amount that we're going to get there?

Bob, why don't you take that?

Are you talking about the actual amount of the dollars per square foot I guess.

Yes.

For the one that's in Chicago, of course that's an industrial building, 14,000 square feet, the rental rate was about $6 and that's on a net basis because they're paying the operating expenses.

All right, pretty good.

And then the one that we're doing in the one that we have negotiated terms with in Minneapolis, that is 13,000 square feet and it's about $11 to $11.50 a square foot.

All right, great. Good color. And then finally, the property which you have in the purchase agreement, any thoughts about cap rates size etcetera?

Well, I really can't say that. I can say is that it follows the strategy that David and I promote and that is, it will be accretive based on -- even our current stock price, so we're encouraged about it.

All right, great. And finally, on the ATM programs, you did what $2.5 million you said?

It's $2.8 million.

$2.8 million in Q1?

Yes.

Should we anticipate somewhat similar numbers going forward and you guys are going to target more of the preferred or the common and current prices?

Our common is actually up yesterday, so we might look to do a little bit more common in second quarter. We really only raised common equity I believe in January during the first quarter. We look at it on a daily basis and it's dependent upon our stock price and how we perceive it. David?

Whichever one gives us the lowest cost of capital is the one you should watch.

Super. All right, thanks guys.

Next question?

[Operator Instructions] Our next question comes to the line of John Massocca with Ladenburg. Your line is now open.

Good morning, everyone. So a quick question, given to the choppiness you were describing in the credit markets, are you seeing additional opportunities to kind of a construction mortgage note, similar to the Arizona transaction you guys just finished up?

We were investigating that very seriously right now based on the success that we had on this most recent one John. And the thing that a number of our peers are saying and we agree, the forward has compressed -- the forward on the yield, and so it's not as attractive as let's say it was maybe 18 to 24 months ago. But we think that we're going to be able to do a number of these going forward because they do make sense and they are really -- the ones that we're going to focus on are those developers that are not as let's say capital strong, and they need assistance. And since we've got a national platform, I think you'll see us do these in other regions of the country as well.

Okay, that makes sense. And then touching maybe on the balance sheet strategy, both of the -- the refinancing you did in the quarter and the one you did subsequent to quarter-end were floating rate with LIBOR caps. Is that something you guys are going to want to do more of in the future versus just straight up fixed rate debt or is this kind of just -- these are very attractive at the time?

Yes, I mean I think we're looking at it on a case by case basis. I mean it's very attractive at the time if we can get 2.8% rate today and cap it at 5% which is what we get in a fixed rate environment. We're saving ourselves money knowing interest rates will go up but any variable rate that we are putting on the book, we're always buying an interest rate cap to match it. So I think you might see some more of that but it really is a case by case basis.

Okay. And then how easy would it be to if you guys decided to simply swap it out. What would be the equivalent of fixed rate as opposed to a cap, is that something you can do with these two loans? And how kind of costly would that be from an interest rate perspective?

That's not something that I think that we -- I'm not positive that we can do that with these loans, and it's not something we've discussed internally and these loans are a little bit shorter term. So I think we're just planning to hold them on the books with various interest rate cap. But it's something we would maybe investigate down the road.

These wrong renewals that were renewals are typically five years. So it's really hard for you to go out and get a 10-year. So we've had to go five years on some of these. And I guess into 2020 timeframe and hopefully the world will be better by then but nonetheless, they are little bit shorter than we'd like to be.

That makes sense. That's it for me. Thank you very much.

Okay, next question, Liz.

Our next question comes from the line of Rob Stevenson with Janney.

Good morning. Danielle, how should I be thinking about the $61 million of debt in 2017, when does that become refinance without significant prepayment penalties?

Most of our debt that we put it -- that it is maturing in '17, we can't prepay it until at least three months prior. So there might -- I think there is some, there is a trance that's maturing in January that will probably look to refinance in October. I mean if you look at the maturities, it's usually we're doing it in a period two to three months before the maturity date.

Okay. And how much is the January of that $61 million?

About $20 million.

Okay. And then is the other $40 million spread fairly evenly throughout the year or is there another lump?

We've got $10 million in June and the other remainder is in December -- excuse me, $13 million as looking at 2016. We have about $13 million in March, $13 million in June, and $14 million in November.

Okay, all right. Perfect, thanks guys.

I'm showing no further questions in queue at this time. I'd like to turn the call back to Mr. David Gladstone for closing remarks.

Well, if we don't have any other questions you're going to have to until next quarter, so we'll move on. Thank you very much for calling in, and we appreciate it.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program and you may now disconnect. Everyone have a great day.