Earnings Transcript for RHE - Q1 Fiscal Year 2017

Executives: Brett Mass - Hayden IR Allan Rimland - President, CEO & CFO Clinton Cain - SVP and CAO

Analysts: Artem Fokin - Caro-Kann Capital Chris Doucet - Doucet Asset Management

Operator: Good day and welcome to the AdCare Health Systems Incorporated First Quarter 2017 Earnings Call. Today's call is being recorded, and at this time, I would like to turn the conference over to Brett Mass of Hayden IR. Please go ahead.

Brett Mass: Thank you and good morning. Joining me on the call today is Allan Rimland, AdCare’s President and Chief Executive Officer and Chief Financial Officer; and Clinton Cain, AdCare’s Senior Vice President and Chief Accounting Officer. I would also like to mention this call is being simulcast on the Company’s website at www.adcarehealth.com. I'm now going to read the forward-looking statements. Any forward-looking statements made today are based on management’s current expectations, assumptions and beliefs about AdCare’s business and the environment in which the Company operates. These statements are subject to risks and uncertainties that could cause actual results to materially differ from those expressed or implied on this call. Listeners should not place undue reliance on forward-looking statements and are encouraged to review AdCare’s SEC filings for a more complete discussion of factors that could impact AdCare’s results. Except as required by Federal Securities Laws, AdCare does not undertake to publicly update or revise any forward-looking statements, which where changes arise as a result of new information, future events, changing circumstances or for any other reason. After management concludes their remarks, they will respond to questions except for those related to litigation matters. Now, I like to turn the call over to Alan.

Allan Rimland: Thanks, Brett. Good morning and thanks to everyone for joining us today. I'm pleased to join you today in my new capacity as Chief Executive Officer of AdCare. I have worked closely with the Board and senior management over the last two plus years as President and CFO in connection with the transition of the Company from an owner and operator of senior housing facilities to a property holding and leasing company. I'm eager to lead the Company through its next phase. That being said and as outlined previously, our near-term strategy remains the same. The Board and senior management are focused on deploying net cash from the Skyline sale, improving the balance sheet, resolving legacy professional liability matters and reducing overhead. It is going to relatively short time since our last update several weeks ago yet much has happened since that time. Earlier this month, we completed the purchase of an assisted living and memory care community with 106 operational beds located in Alabama for $5.5 million or approximately $50,000 per bed and separately executed a long-term lease agreement to rent the facility to an affiliated C-Ross Management. C-Ross and its affiliates operate 23 facilities in Georgia and Alabama, including eight AdCare facilities. The new facility, Meadowood Retirement Village is located adjacent to our Coosa Valley skilled nursing facility, which is also operated by C-Ross. We expect owning these two properties in such close proximity to one another and leasing into a single operator group will provide operational benefits and increase property values overtime. The acquisition was financed with conventional mortgage debt of approximately $4.1 million at an interest rate of 4.5% per annum, and cash on hand of approximately $1.1 million. The lease agreement from Meadowood includes a 13-year term coterminous with the Coosa Valley lease, with an initial annual cash rent of 450,000 in the first year and a 2% annual rent escalator in the initial term. We expect to recognize revenue for this property beginning in May of this year, with the first full quarter of revenue recognized in the third quarter of this year. Meadowood provides a good case study of the returns on cash we are seeking and the theme of positive spread investing healthcare property companies for REITs enjoy. For Meadowood, we view the initial cash lends plus initial cash interest expense as the initial net cash flow to the Company. This initial net cash flow divided by the cash portion of the consideration for the transaction equates to a return on cash of approximately 19.8%. Most of the skilled nursing facility transactions we're currently evaluating of higher returns on cash due to primarily to higher initial lease cap rates. We are continuing to build our pipeline of potential acquisitions with the primary focus on the skilled nursing sector. Our full potential targets include properties operated by distinct and new operators with cap rates in the 9% to 10% range based on initial cash rent. We are looking to leverage our existing geographic presence in core market and in the same time interested in establishing new operator relationships in new states as well. We are mindful of the benefits with portfolio diversification. As a reminder, our communications practice with the investment community as it relates to acquisition is to make the public announcement once the definitive agreement has been executed. Switching gears, operationally our tenants have made great strides in improving their portfolio operating metrics, which speaks to our selection while we've made additional progress in managing G&A expenses and further reducing earn interest expense. For the three months ending March 31st, our portfolio occupancy rate was approximately 82.6% consistent with prior two quarters and the quality mix was 26.6%, a significant increase compared to the last two quarter of 2016. Most importantly, rents coverage increased to 1.69 times before management fee and 1.28 times after management fee in the first quarter of 2017 compared to 1.53 and 1.12 in the fourth quarter of 2016. This increase was due in large part to better cost controls and the higher quality mix. These metrics exclude the three facility and our three managed facilities for both periods. We anticipate continue improvement in rent coverage ratios as a result of continuing operation improvements to the tenant level and that overtime this will lead to increase shareholder value. Recall to last year, one of our tenants, New Beginnings declared bankruptcy. And the close of the bankruptcy allowed two of our facilities Jefferson and Oceanside with each certified by CMS. Since that time, we've installed a new tenant Peach Health Group who will successfully manage the recertification of the two properties. Jefferson began paying 50% of full cash rent in April and Oceanside is scheduled to begin paying 50% of full cash rent in June with both properties at full cash rents payment in the fourth quarter of this year. Both facilities are filling up nicely with Jefferson currently at 38% occupancy and Ocean at 51% of occupancy. Peach also recently secured a $2.5 million credit facility to fund its working capital needs, and we receive the partial pay down on our note in Peach. Our quarterly G&A continues to trend downward as a result of headcount reductions and lower non-compensation expenses albeit we were flat in the first quarter of 2017 as compared to the fourth quarter of 2016 due to seasonal order related fees. We remain comfortable with our quarterly cash G&A target including G&A related to our facility management business of approximately $1 million to quarter. We continue to take proactive steps to strengthen our financial positions by extending debt maturity and lowering our cost to debt. We continue to evaluate our portfolio of mortgage debt for potential refinancing to lower interest costs, expand maturity and provide cash out refinancing for general corporate purposes including acquisitions. Improving underlying performance of our property portfolio, as I discussed previously is a great marker for potential future refinancing. A few weeks ago, we announced the appointment of a new Independent Director, Brian Szames. Brian has been an officer in Treasurer of three separate public company including 17 years with Macy, one of the nation's premier retailers, serving as group Vice President and Treasurer until his retirement last year. He managed multibillion dollar debt and investment portfolios and was responsible for making corporate finance activities, capital structure and business plan development, pension and savings plans, financial risk management and cash management. I have no doubt Brian will provide a wealth of advice and direction particularly as relates to our deployment of capital and grow through acquisition story. And finally, our reference to resolve the Company's legacy operations issue involving professional liability losses ongoing although we have no further updates at this time, rest assure that the Board and management are keenly focused on these notes. As you may recall, the number of pending professional liability matters is 44 of which 28 have been filed in the State of Arkansas by the same plaintiff attorney, we settled 24 cases with in December 2015, we refer to as the Cleveland matter. These actions generally speak on specified compensatory and punitive damages of former patients for the Company's facility. The statute of limitation for medical malpractice typically the key issue in these lawsuits is two years. And since eight of our 10 Arkansas facilities transferred operations on May 1, 2015, the statute of limitation has now lapsed for a majority of them. In February 2017, we formed a wholly-owned subsidiary of the company and filed a registration statement to begin the process of reorganizing our corporate structure. We filed an amended registration statement yesterday. The reorganization is approved by the shareholders, ensures the effective adoption of certain charter provisions restricting the ownership and transfer of our common stock to allow the Company to meet the continued listing requirements in the New York Stock Exchange and in better position the Company for a potential re-tax selection sometime in the future. The reorganization also allows us the opportunity to continue our business under a new name, Regional Health Properties, which better reflects our business model as a healthcare property holding and leasing company, and our alignment with regional operators that have the operational, clinical and financial expertise. We anticipate holding a special meeting of the shareholders in the July of 2017 in Atlanta for the purposes of voting on the proposed merger. With that, I will now turn the call over to Clinton Cain, our Chief Accounting Officer.

Clinton Cain: Thank you, Allan, and good morning everyone. Revenues for the Company in the first quarter of 2017 were $6.1 million as compared with $7.1 million in the year ago quarter. Revenues were lower in the current quarter due to the sales of the nine Arkansas facilities on October 2016. We recognized our revenues in the quarter with GAAP which for most leases is recognized on the straight-line rent accrual basis. We begin recognizing straight-line rent revenues from our 10% deal on Oceanside facilities beginning in January and March of 2017 respectively which is following the recertification by CMS at each faculty. Both of these facilities are expected to be paid full cash rent payment for the full fourth quarter of this year. General and administrative expenses were $1.6 million for the first quarter of 2017 inclusive of $234,000 of stock-based compensation as compared to $2.5 million for the first quarter of 2016 inclusive of $480,000 of stock-based compensation. As a reminder, G&A includes overhead expenses related to our facility management services business of approximately $150,000 per quarter. G&A declined 36.2% compared to the first quarter of 2016. G&A expenses continue to trend downward on a sequential basis each quarter when adjusted for annual audit fee that are primarily recognized in the first quarter of each year. We continue to expect further reductions in G&A going into future quarters. Other operating expenses was approximately $555,000 for the first quarter which consisted mostly of non-recurring increases and allowances attributable to the note receivable. Interest expense declined in the first quarter of 2017 to $1.0 million due primarily to repayment of $36 million of debt in connection with our Arkansas properties and the sale to Skyline Healthcare in October 2016 as well as a $6.7 million principle repayment of our 2015 10% convertible notes since January 2017. Our loss from discontinued operations, net of tax was $413,000 for the current quarter as compared to $528,000 for the prior year period. The loss in the current quarter was primarily due to legal and collection related to legacy operations. Net loss attributable to AdCare common stockholders for the first quarter of 2017 was $2.8 million compared to $2.7 million for the first quarter of 2016 for a loss of $0.14 and $0.19 per basic and diluted share respectfully. Turning to review of our balance sheet, cash and cash equivalents at March 31, 2017 totaled $4.2 million compared to $14.0 million at December 31, 2016. Restricted cash and investment at March 31, 2017 totaled $3.8 million compared to $5.5 million at December 31, 2016. Total debt outstanding at March 31, 2017 was $71.8 million compared to $80.0 million at December 31, 2016. Net of 2.1 million and 2.2 million as the current financial cost at March 31, 2017 and December 31, 2015 respectively, the reduction of debt in the first quarter of 2017 compared to that of December 31, 2016 is due to pay off of 6.7 million convertible debt since January with the cash on hand as well as the release of restricted cash used in the a one-time principal repayment against the debt of two of our Alabama facilities sold in approximately $1.5 million. Turning to debt maturities inclusive of current portion of the convertible debt totaled approximately $6.9 million at March 31, 2017 with 1 million of these current maturities having already been repaid subsequent at quarter end. We are fast approaching the time when current maturities will consist only of the normal amortization for the months of debt service. This marks a significant decrease in the total balance of current maturities from cash credit and demonstrates significant progress in improving our balance sheet. At March 31, 2017, we have over $5 million of assets including the Skyline seller note, the note of Peach Health Group and other assets that when repaid will be redeployed in acquisitions to unlock greater earnings potential. Cash and debt balances at March 31, 2017 are not adjusted for $1.0 million of convertible debt that was repaid subsequent to quarter using cash on hand, nor reflects changes to cash and debt associated with the Meadowood transaction, which also referred subsequent to quarter end. I'll now turn the call back over to Alan.

Allan Rimland: Thank you, Clinton. We are making great strides in our previously identified strategic initiatives in order to further improve our financial results and increase shareholders returns. We look forward to bringing you additional updates in the coming quarters. With that, we'd like to have the operator open up the call for questions. Operator?

Operator: [Operator Instructions] And will take the first question today from Demetrio Hamilton who is the private investor. Please go ahead.

Unidentified Analyst : I've a couple of questions when I look at two things, the current cash on hand and the amount of money the preferred shares are taking from the bottom line. I don’t see about a room for acquisition money and also we have to get referring revenue rental rate when we pay the preferred shares and dividend, we actually have some income distribution that could be possibly should go to shareholders. So, do you see possibly the convertible note coming into the future for acquisition money? And or paying off the preferred and would that lead to something know profitability for customers I mean for investors to get payout?

Allan Rimland: Sure, Demetrio. Thanks for the question. I know it's been on the minds for a lot of investors. One of the things that we’ve talked about the early post to Skyline is the rent really kind of cash flow toward the cash and we’ve been deploying the capital. And if you look at what's been happening with the Company over the last several months, we view a large portion of capital to say $7.7 million of convertible debt. So, possibility, the Company is enjoying for the period of time, the use of that capital which we refinanced with cash. So, I think it's reasonable to assume at some point that we would raise capital to replace that convertible debt structure that we’ve talked about. The other comment that you talked about is essentially the cover, the preferred and all the preferred dividend. We found the preferred stock to be very helpful, use of all the protected capital in terms of the small acquisitions such as Meadowood or rather general corporate purposes. As we think about acquisitions, especially larger acquisitions. we need to think about how to source that capital using equity, equity link or some type of convertible or subordinate that structure. The comment that I raised earlier was the theme of positive spread investing that rates our healthcare property holding company to think about. We think that through effective acquisition activity that we can enter 20% plus return on cash for our investors. So, the real question to that is, how we source that cash to internally generate funds, through some of the would lease to track asset that Clinton talked about, the $5 million between the Peach note, the Skyline seller notes and some other non-cash -- other non-core assets as well as cash out refinancing that are inherent in our current portfolio impart due to improve performance of the operators. And one of that areas that we are most focused on as we sort of walk through the queue and some of the other issues the Company has faced is to aggressively look at our portfolio for refinancing opportunity which we believe there are.

Unidentified Analyst : One last question, when we look at properties that you leased versus the ones that you owned. Obviously, the ones that you owned contain a rent escalator to where year-over-year you're going to get more money hit in the bottom line. The properties that you leased also have rent escalators going both ways, the ones from our tenant, the ones releasing from -- we always think that will effectively net zero in terms of money hit in the bottom line year-over-year?

Allan Rimland: That’s a good question, Demetrio. You could look at it as a spread business, it turns out when you look at the underlying leases, the average escalator that we enjoy on those 11 leases of facility that we leased is actually slightly higher than the leases of the 11 building. So that spread between the lease payments that we make to our landlords and we lease out to our tenant increases overtime.

Unidentified Analyst : When we look at the roadmap for the Company's profitability, can you comment on current pipeline opportunities because as I go back to my first comment, it's going to be through acquisition that we get our revenue up, should be able to cover the preferred dividends and actually get a bottom line net income to possibly give distribution maybe sometimes later on next year. So, can you comment on the current pipeline? And do I have my roadmap right in terms of how we build and get in that revenue to eventually sometime next year to be able to pay a dividend?

Allan Rimland: Demetrio, your roadmap is correct, and as I said positive spread investing is really part of this business. What we really undergone in the last six months with the Skyline sales is the phenomena kind of I call it as negative spread divesting. So, unwinding the leverage of the balance sheet and not putting that capital to work. We are seeing a well of acquisition activity in the marketplace right now for a whole host of business. Obviously, there is some large scale merger activity in the space we think that has kind of helped us. We are also targeting transactions anywhere from the single assets to uppers of 5 or 10 assets. So, the trick is not just doing deals but doing good deals and there are a lot of deals we turned away. We are looking for a solid credit quality, so coverage ratios that arguably accretive to our overall coverage ratios, we are looking for some tenant and geographic diversification. And again from the returns on capital that I've talked about, we see plenty of opportunities and they 9% to 10% initial lease CapEx rate were looking with our typical 2% plus market escalators. So, we think garner that 20 plus percent return on caps.

Operator: [Operator Instructions] And will now take a question from Artem Fokin with Caro-Kann Capital. Please go ahead.

Artem Fokin: Congratulations on the activation metrics, so turns out nicely for your tenants. I wish to understand it's a joint asset or not? Your tenants play a big part of that. Could you maybe share a little bit color on how those metrics were achieved? And whether you see potential for them to improve further as next few quarters of this year play out?

Allan Rimland: Well, I think Artem as you've said and we would like to take all the credit as a management team on the improved operating statistics. I think it does speak towards tenant selection and the ability for operators to make the right operational, clinical and financial moves. There are some underlying good things happening in a number of our states, specifically Ohio and Georgia, two of our largest states in terms of positive reimbursement effort. We speak with all of our operators in terms of things like CMS quality rating and continued profitability or so. Q4 tends to be a little slow in the industry for whole host of regions. People generally don’t like to go to nursing homes in Q1. So, we see continued efforts to improve operating performance. We're also happy with performance of the Peach facilities as they'd be likely dropped into our overall coverage statistics. So, we see improved performance overtime. I'd also point out that as some of the facilities are now in your second year of our operations with us, Clinton, that our coverage ratio reflects the higher rent on a cash front basis. And what if you've seen a phenomena in the industry, years ago is that, lease we're up putting in these leases, was very high escalators and overtime they just can’t keep you -- operators can't keep up. So, we see improved statistics and the portfolio of 27 facilities obviously you have some stars, you have average facilities and weak facilities and we’re focusing on all of them, but I don’t know if there is any specifics. It looked like it was a very good cost control quarter, which typically moves, but all these operators are focused on some of the challenged facilities. I would want to give a shot out to C-Ross, our largest operator. Their performance in the quarter Q1 over Q4 has been exceptional and that I think says good things for about our largest operator.

Artem Fokin: Got it. Understand. I appreciate this verification. And my second question point was this. I want to congratulate management team for I think they did a very impressive job of lowering overall cost of debt over the last past several quarters. And when I look at your balance sheet, one think which turns out is obviously preferred shares which is, I understand that they can be tactical factor, but if you look long charm they're very expensive source of capital. At some point, they will become callable for their recall. Do you see yourself doing something to reduce your overall cost of debt -- or your overall combined cost of debt plus equity?

Allan Rimland: I guess we are - we do on a couple of things on that. We have done a couple of things and that would actually transaction is it reasonable cost to debt. And as I said, we’re looking at an entire portfolio to reduce the cost of debt. The preferred instrument is callable in December 1, 2017 and -- I have it on my while board, but that's the date we start thinking about what we can do with that instrument. Right now any kind of capital reviews in tap to our ATM program, as I think in a terrific way of my mind renting equity. That's starting to chip away on that preferred stock, using other forms of capital, we think is in the best instrument of the Company. It's an expensive preferred, obviously that preferred we’re trading above par and it will give you more sense that it could be refinance currently given where trades are probably is an opportunity to do that. But, if you view to start chipping away at the preferred to lower our cost to capital is on our list of to do things. Unfortunately, there is not much I can do before the December of 2017.

Operator: And we’ll now go back to Demetrio Hamilton. Please go ahead.

Unidentified Analyst : Yes, I noticed you didn't add much money to the lawsuit kind of fee bank. Do you feel comfortable where we are with amount of money based on the lawsuit?

Allan Rimland: Demetrio, we continue to evaluate the reserve and I would ask you to reflect onto the methodology therein both our 10-K and our 10-Q. The reality is we feel good about it, it's something that and the auditors look on a regular basis. Actually, during the quarter the reserve went down and the reserve went down for a couple of things. One, we have entered into certain settlement agreements and we’ve also paid out some claims and some legal. We continue to feel good about it as cases further developed as we potentially moved toward bona fide settlement offers we would adjust that.

Unidentified Analyst : Got you. And my last question probably we got lot of this. Any changes in recent Medicare and Medicaid laws, would they prohibit our clients, patients from being able to repay? Or do you see any headwinds from any current changes?

Allan Rimland: No, this industry is always I would say on the operator side, always focused on headwinds. Most of the activity that you hear out of Washington apart from just the normal activity in Washington tends to be more focused on Medicare as opposed to Medicaid. Because most our homes little bit more Medicaid focus, it becomes less of an issue. But some of the big operators those focusing on high acuity with the lot of therapy are seeing potentially different transaction activity or perspectives. As we talk to all our operators on a regular basis basically non-plus by the activities are going on the Washington. If you look at overall the industry and the public capital formation the long-term care industry, it's a little negative for that reason. With more I'd say little or less high acuity facilities obviously as we are figuring much better shape. And also the price points that we are looking at we average per bed values also speaks toward, we think better value. Where a lot of REITs gotten in trouble is buying facilities that may have worked on a coverage basis, but as unseasonably very high margins due to high ancillaries and high acuity focus.

Operator: We have a question from Brian Durant who is also -- from private advisors. Please go ahead.

Unidentified Analyst : I just have a follow-up question on the legal accrual. So, let's think you spend roughly a $1 million in the quarter in legal and settlement. Can you break that out between ongoing legal cost and settlement for us?

Clinton Cain: I just wanted to address something real quick. We've said it just a spin of $4 million on that, some of that and that a $0.5 million of that amount came out of the reserve and move into the account payables because it’s pending payment and was either subsequently paid subsequent quarter and/or is being paid right now.

Allan Rimland: I guess the question is in terms of that movement roughly in the quarter how much that we spent on settlement as opposed to legal?

Clinton Cain: We've spent about a couple of 100,000 in settlement and then couple of 100,000 in lease. So, roughly 0.5, it is only about a 0.5 million of the cash that actually went out of the -- it's actually kept for return.

Unidentified Analyst : So what is the right number to think about going forward on a quarterly basis the anticipate spending?

Clinton Cain: I think that depends entirely on the developments of litigation and settlement and litigation of various things. There is not really a number we can put on the quarterly basis.

Allan Rimland: I guess maybe you're thinking about it. When we look at our case and we look at in two grouping. One is the 28 cases with the same plaintiff attorney that we settled the Cleveland action with. And a lot of those cases are fairly quite from the day-to-day legal perspective because we're trying to figure out way to globally settle those cases. The other cases depending upon their status, usually they get filed. There is some activity over the first couple of months in terms of legal activity that really understand the case. And whether it depends on early settlement value, if not, they really go into phases for a while as you get closer and closer to quarter or arbitration either one.

Operator: And at this time, I’d like to turn the call back over to management for any additional or closing remarks.

Allan Rimland: Sure. [Vicky], we’ll just wait another couple of seconds to see if anyone jumps back into the queue.

Operator: Of course, [Operator Instructions] and we’ll go to Chris Doucet with Doucet Asset Management. Please go ahead.

Chris Doucet: Could you give us an update on the two new beginnings properties that Jeffersonville property and the other property?

Allan Rimland: Sure. Just to update and I don’t know when you join the call, but we’ve been very, very pleased with Peach in terms of their operations. As I mentioned, they got a shot of liquidity couple of weeks ago, $2.5 million of line credit which allowed us to have our Peach line of credit reduced. The two facilities obviously have both restarted the Jefferson facility is it 38% occupancy. The Oceanside facility is at 51% occupancy. I’d also note that Jeffersonville may appear a little lower, but we’ve also seen a better payer mix out of Jeffersonville. They've done a little reprogramming that facility really emphasized a little bit more of a high acuity patient. Both them are on track for fill up. And from a rent perspective, I think as Clint and I articulated we’ve been recognized -- we started recognizing Jeffersonville rent as of January 1st. They have three months free rent January, February and March and then they go to five months of period 50% rent. So they will start playing rent and I believe it's in October. Oceanside restarted in February. They have three months for free, so it would be March, April and May. They start paying 50% in June and then full rent in the fourth quarter. And again the relationship, they talked about other transaction as well and it’s a theme that we’ve been very, very happy with dealing with. Obviously they are focusing on those buildings. They operate a little bit 50 and or so buildings. So, it’s a good size, overall operation, generally just in Georgia but they have interested in growing in other states.

Operator: And we’ll go to Demetrio Hamilton.

Demetrio Hamilton: The new facility that's our -- how does that work in terms of occupancy and when you get the full rent and that new facility?

Allan Rimland: Thank you for the question. Well, first of all, Meadowood is a full facility, number one. Number two, our leases are big speed with big escalators where the occupancy in Meadowood is 70%, 80% or 90%, we get our same rent. So, it's not as if we own an apartment building, we’re the individual tenants. We get the same fee. Obviously, improved occupancy and improved coverage speaks toward the underlying credit quality of the building. I wish when we looked at Meadowood and even though it's assisted living, which is not our area of focus because of it was next Coosa because they work with C-Ross and we feel very good about operations. But most importantly, the facility was very stable as we did our credit underwriting given your pro forma adjustments it's just take nine little facility to generate cash flow and I think as the stability of the overall portfolio. So, that the overall portfolio stats that we see in our press release, it went up by 3%, down by 2%. We get our same rent on an accrual basis and on the cash basis, but it does speak to our underlying credit quality and as I alluded to earlier give us more ability potentially to do refinancing.

Unidentified Analyst : And that's a traditional conventional mortgage right, not interest only, you are paying principal down and interest as well?

Allan Rimland: It depends on the instruments generally, Clinton, correct me if I'm wrong, most of the mortgage we have are anywhere from 21 to 30 year principally amortization, so it looks exactly like your home mortgage.

Operator: [Operator Instructions]

Allan Rimland: Vicky, I'm not seeing anyone in the queue, so I we will finish it up. Thanks to all for joining us today and we look forward to updating you during our next conference call. Thank you very much.

Operator: And thank you, that does conclude our conference for today. I'd like to thank everyone for your participation.