Dave:
Hey everybody. Welcome to the BiggerPockets Actual Property Present and this episode of Larger Information. I’m going to be your host at the moment, Dave Meyer. And at the moment we’re going to be speaking to Natalie Ambrosio Preudhomme, who’s a industrial actual property skilled at Moody’s Analytics and she or he’s an Affiliate Director of Analysis there and she or he focuses particularly on local weather. And we wished to carry on Natalie at the moment to this present as a result of local weather has been impacting actual property buyers without end, however notably over the past couple of years. I don’t know if you happen to all have heard, however I’ve been speaking to pals in California and in Florida and insurance coverage prices are going by means of the roof. Some insurance coverage firms are simply leaving these states altogether. I’ve personally been coping with this quite a bit in Colorado the place there are wildfires. It’s been actually troublesome to even get insurance coverage. So we’re going to carry on Natalie at the moment to share some knowledge and data with us all that may allow you to make extra knowledgeable choices as an investor.
And I discussed earlier that Natalie is an skilled in industrial actual property, and I feel that’s essential to notice as a result of this sort of knowledge about which locations may see floods or which locations are going to see insurance coverage premiums improve essentially the most are issues that the large institutional buyers like BlackRock and a few huge industrial REITs, they’re all this knowledge. And so I feel for us as smaller, I’m simply generalizing, the general public hearken to this present are residential buyers. And I feel the individuals who hearken to the present, irrespective of how huge or small you might be as an investor, you have to be this knowledge that will help you make choices. One about the associated fee profit evaluation of any danger mitigation methods you may wish to implement. Or two, allow you to resolve the place you wish to be investing. So with that stated, let’s carry on Natalie Ambrosio Preudhomme from Moody’s Analytics. Natalie, welcome to the present. Thanks for being right here.

Natalie:
Thanks a lot for having me.

Dave:
May you begin by telling us slightly bit about what you do at Moody’s Analytics?

Natalie:
So I’m on our economics and thought management crew inside our industrial actual property a part of the enterprise. And so I focus particularly on local weather change. And so I do analysis and market outreach, actually connecting the dots on local weather danger and conventional industrial actual property metrics that our institutional buyers and lenders care about.

Dave:
And why do industrial actual property buyers care about local weather and local weather danger?

Natalie:
So there’s a number of methods that is actually beginning to unfold that I can dive into, however on the basis, there’s each bodily local weather dangers and transition dangers, that are each beginning to have monetary implications. And so simply actually rapidly, I’ll outline each of these after which we are able to dive in. However bodily dangers are issues like acute, extreme climate occasions like wildfires, floods, particular person warmth waves. After which there’s additionally power stresses which can be unfolding over an extended timeframe reminiscent of sea stage rise or water stress and drought. So these are our bodily local weather dangers which can be threatening actual property property. After which this transition dangers, that is the bucket of dangers that we face from the transition to a low carbon economic system. And so this will take a number of totally different shapes. It contains laws round emissions reductions in addition to shifting know-how after which additionally shifting client preferences and calls for.

Dave:
Okay. Nice. In order that’s actually useful in understanding these two various things that you simply research. And are you saying that each these bodily and transitionary dangers have monetary implications for industrial actual property buyers?

Natalie:
Sure, precisely. And so there’s totally different ways in which that is made manifest, however beginning on the bodily danger facet, there’s the apparent impacts of if an asset itself is hit by a flood or a wildfire, then there’s in fact misplaced income in the course of the enterprise disruption. There’s rising working prices because of the restore and upkeep and all of that. After which there’s additionally some much less apparent rippling oblique impacts. So even when the asset itself isn’t hit, however there’s a hurricane or storm within the area, so transit infrastructure is down or flooded, workers can’t get to work or provide chains are disrupted. And there’s situations of this occurring the place a producing facility itself wasn’t broken, however the workers couldn’t get to work after a storm. So it had halt its operations for a few days, which in fact results in disrupted income. And in order that’s a number of of the ways in which bodily dangers have an effect on actual property.
There’s additionally these broader methods reminiscent of by means of rising insurance coverage prices, which actually has broader implications at a market stage in addition to for asset worth. After which simply briefly on the transition danger facet, we’re seeing a rolling out of what’s referred to as Constructing Efficiency Requirements. They take totally different shapes, however they’re sometimes on the metropolis or state stage they usually put restrictions on the quantity of emissions from a constructing or the vitality use of buildings. And there’s fines related to going over these emissions. And so, once more, that is altering the calculus the place it’s not, “Yeah, it’d possibly be good to have a inexperienced constructing.” However now it’s like, “Oh, we’re going to get fined if we have now emissions over a sure stage.” So that is actually a monetary dialog.

Dave:
I feel there’s quite a bit to unpack right here. However earlier than we soar into it, I simply wish to ask who’s this knowledge at the moment? As a result of we’re speaking about industrial actual property and that’s your specialty, however are the teachings and insights that you simply uncover in your work additionally relevant to residential buyers and a number of the smaller kinds of buyers that make up most of our viewers?

Natalie:
Yeah, completely. And I feel a number of the examples we’ll focus on at the moment, it’s fairly straightforward to see that they’re widespread throughout a bodily asset actual property. And I’ve previously finished analysis on the local weather impacts throughout totally different asset courses. So all that to say that sure, if anybody is invested in a bodily asset on the bottom someplace, then that’s in danger from a number of this stuff we’re speaking about.

Dave:
Okay, nice. So I simply need everybody listening to know that regardless that a number of the examples we would speak about are about industrial actual property and maybe bigger property, that a number of what we’re speaking about could also be relevant to even smaller property or the issues that you simply spend money on. Now, let’s discuss slightly bit in regards to the bodily danger. As an actual property investor, there’s at all times bodily danger, so there’s at all times been danger of fireside, of flooding. Are you able to inform us what has modified just lately and the dimensions of that change?

Natalie:
Yeah. So there’s a number of various things to unpack right here. I’ll put a pin in insurance coverage as a result of that’s an enormous factor to unpack. However taking a step again, such as you stated, there’s at all times been, for millennium individuals have considered floods occurring subsequent to rivers and we’ve at all times been growing with this in thoughts. The massive shift in our mindset now could be that it’s actually evident that the previous is not an correct illustration of what the longer term goes to carry. So it’s not a dependable indicator to say, “Properly, this asset flooded as soon as within the final 100 years, so we ought to be fairly secure with that in thoughts going ahead.” The rise in world atmospheric temperatures is having a rippling impact there on native situations and it’s doing that in a means that’s actually altering the frequency and severity of those occasions like storms and floods and excessive temperature occasions.

Dave:
And is that occuring universally throughout the nation or is it positioned extra in sure areas?

Natalie:
It’s a world phenomenon, this local weather change pattern, nevertheless, the way in which that it impacts situations varies regionally. And so we do work at Moody’s, we at Moody’s acquired RMS, the disaster modeling agency and another local weather danger suppliers. And so we actually leverage an array of information units together with a worldwide local weather fashions and extra native hydrological fashions and issues like that that actually attempt to assist wrap our heads round and talk to the market round what the altering situations are like at a really particular location.

Dave:
And so sure areas could have a serious improve in danger and others could also be much less so, appropriate?

Natalie:
I at all times get the query, “Okay, you research this, the place ought to I transfer?” And I sometimes say that sure, there are some areas that are typically much less uncovered, a minimum of to the hazards that we have now a visceral response to love hurricanes or wildfires. There are areas, so the Higher Midwest or the Pacific Northwest. There’s some wildfires within the Pacific Northwest, however these areas are typically much less uncovered to those visceral hazards. Nonetheless, my first reply is often, it’s extra about selecting your local weather hazard as a result of it could be very arduous to discover a place that’s not uncovered to any of those altering situations. So yeah, you is perhaps buying and selling extra intense precipitation for wildfires or issues like that. So it’s actually a matter of selecting which one you wish to put together to take care of and construct resilience to, if that is smart.

Dave:
It does. So would it not be truthful to say as an investor, your strategy ought to be simply to attempt to perceive the dangers as greatest as potential as a result of then you’ll be able to mitigate them?

Natalie:
Precisely. Yeah. Step one is actually fascinated with forward-looking, leveraging forward-looking knowledge that reveals you ways your property are going to be uncovered to those altering situations. After which precisely determining what to do about that danger.

Dave:
So now that we perceive why this local weather knowledge issues for buyers, we’re going to get into firstly, how one can entry this info and boil it all the way down to numbers that apply to your actual property choices. We’ll additionally speak about a few of Natalie’s steerage on methods to navigate the more and more difficult insurance coverage panorama. And we’ll speak about what sensible buyers can do to remain resilient after the break.
Welcome again everybody. I’m right here with Natalie Ambrosio Preudhomme, an Affiliate Director of Analysis at Moody’s Analytics. And proper now she’s strolling us by means of her newest analysis on local weather and the way it impacts investing choices. So how may a small or medium-sized actual property investor begin to perceive a few of this knowledge and the way it may influence their portfolio?

Natalie:
Now we have instruments and there’s different instruments on the market the place, and simply utilizing ours for example, you’ll be able to put in an deal with or add a portfolio of dozens or 1000’s of addresses and obtain again info on that publicity. And there’s two parts to that in our knowledge. There’s the publicity layer which reveals you based mostly on its location and the broader space, how an asset is uncovered to those altering situations we’ve been speaking about. After which there’s an influence layer which reveals the estimated common annual injury that that asset will face from a selected hazard.
So yeah, they’ll leverage instruments and actually wrap their head round, okay, what’s my asset uncovered to? After which additionally what’s the monetary implication of that? And actually having that greenback estimate can then inform very strategic choices on the investing in resilience or asset stage danger mitigation. As a result of one can take a look at how a lot the chance mitigation prices and take into consideration the estimated common annual injury and multiply that out over both the maintain interval of the asset or the life expectancy of no matter danger mitigation you’re speaking about and do some calculations to determine the most effective steps.

Dave:
Wow, very cool. So are you able to assist us possibly contextualize this with an instance? So possibly in case you have one other instance, go forward. However I’ve a property I personal. It’s within the mountains in Colorado, wildfire territory. So how may I exploit your device or the information that’s on the market to raised place my property as an funding?

Natalie:
You can begin by, precisely, utilizing some kind of knowledge to grasp the altering situations at that property. And so wildfire, there’s plenty of totally different parts that contribute to wildfire danger at an asset. There’s altering moisture deficit or altering precipitation patterns in addition to long-term drought patterns. After which that mixes together with your burnable vegetation that’s within the surrounding space. And so understanding these metrics. And once more, there’s knowledge units that mix all of that right into a quantity that reveals you your relative danger based mostly on these metrics. After which actually understanding your property too. And so if there’s defensible area round that property, in order that’s when there’s room between the constructing itself and any vegetation. Or if there’s outbuildings or various things on the property, ensuring these are unfold aside. In order that’s step one is simply understanding the scenario across the publicity to those bodily phenomenon after which additionally what’s occurring at your asset.
After which the second step is pondering by means of, okay, so if I’m in a spot that actually is uncovered to this phenomenon that’s going to make wildfires, how can I implement danger mitigation measures? And that’s why it’s simply essential to grasp, like we began with, to grasp which danger your asset is uncovered to as a result of it may be overwhelming pondering, I want to arrange for every little thing local weather change has in retailer. However with the ability to prioritize based mostly on what you’re uncovered to then actually helps slender into, okay, what danger mitigation measures are there? And I can transfer ahead with these.

Dave:
That is tremendous essential as a result of as buyers, a lot of our choice making comes all the way down to primarily a price profit evaluation. And once I hear about local weather dangers, and let’s simply use this instance of my property, it may be arduous to know the way a lot cash to spend on mitigation and the way a lot danger you’re at. As a result of my HOA within the space does an awesome job, they provide these defensible area, which if you happen to don’t know, it’s mainly eradicating vegetation close to the home in order that there’s no bushes actually near the home which may catch after which gentle the home on hearth. However clearly that prices cash. And so it’s arduous to know, is it price it? Am I actually in danger? So it seems like whether or not it’s wildfires, floods or some other local weather danger, there may be now rising quantities of information that may assist us as buyers resolve what mitigation strategy is price it and goes to be a constructive choice for me over the lifetime of me proudly owning a selected asset.

Natalie:
Precisely. Yeah. Having this knowledge that reveals the financials in danger, the price of this potential injury actually helps drive that resilience dialog in a means that’s been a bit difficult previously.

Dave:
And do you’ve got any sense of, that is most likely too broad of a query, however I’ll see in case you have any guidelines of thumb. However is there any knowledge you’ve seen that reveals how way more capital expenditures that folks must put into their properties so as to correctly mitigate in opposition to a few of these dangers?

Natalie:
So I feel that could be very context particular. And one other essential half and a difficult a part of this resilience dialog is that it’s very location particular. Once more, all the way down to not simply the traits of your constructing, but in addition who’s utilizing the constructing? What are the actions occurring inside that constructing? All of that influences issues like vitality demand or provide chain issues, and people are key ways in which the prices of local weather change translate into monetary prices. And so I don’t have a quantity like that off the highest of my head as a result of it’s very particular based mostly on all of those native elements.

Dave:
Yeah, that is smart. All proper. Properly, I feel hopefully as a few of these knowledge units get constructed out much more, you can begin to a minimum of comp some properties and see what prices what. Now, you talked about a very essential subject for actual property buyers, which is the price of insurance coverage. Are you able to simply discuss typically about insurance coverage firms, are they trying on the identical knowledge? Is that this what they’re ? And is that this partially fueling why we’re seeing premiums go up a lot?

Natalie:
Yeah. So we’ve been doing a number of work to wrap our heads across the insurance coverage panorama. We, much like you I’m certain, are actually seeing this have a tangible influence on CRE transactions. The place lenders are discovering that their debtors are struggling to realize the required insurance coverage necessities with out having premiums that really current a cashflow danger. So insurers have been pulling out of excessive danger areas. A few of those who have pulled out of California or stopped writing new insurance policies did in actual fact cite rising hazards as one of many causes. And so sure, to reply your query, we’re seeing that that is behind the altering situations. We’ve been doing a little analysis on this that I can dive into if that’s of curiosity?

Dave:
Yeah, I’m tremendous as a result of it makes me actually surprise about the way forward for insurance coverage for householders or buyers in these markets. In California, we’re simply seeing fewer suppliers. Similar factor is happening in Florida. I do know in Colorado there’s sure areas the place it’s very troublesome to get a coverage, even when it’s for only a single household dwelling, only a place to dwell. And so it’s complicated about how this may actually influence the long-term housing market and probably, to not be overly dramatic, however I suppose if there’s no insurance coverage, it may actually influence the place individuals select to dwell.

Natalie:
Oh yeah, completely. And I feel that’s occurring to a point now. Undoubtedly not being dramatic. It’s being very reasonable about what’s happening. So yeah, there’s a number of items to dive in right here. And so simply to maintain setting the scene, I suppose, a tiny bit round what we’re seeing. So final summer time or early fall, we did some analysis on simply attempting to grasp the panorama of accelerating insurance coverage premiums. And so we appeared on the insurance coverage line merchandise and working price knowledge that we had on CMBS properties, industrial mortgage-backed securities. And we did this throughout our 5 key property kinds of multifamily, retail, industrial workplace and lodge. And we discovered that there wasn’t a transparent geographic pattern by way of markets that noticed rising insurance coverage premiums. They have been actually scattered throughout the nation. However we noticed that almost all of properties throughout the nation have been seeing compound common annual development charges of over 5% for insurance coverage. And there have been a big share that have been over 10% of these CAGRs within the final 5 years. And that was the timeframe we checked out.
And so all that to say that it is a substantial challenge that’s actually scattered throughout the nation. And in order that’s simply laying the scene a tiny bit. And then you definately have been asking round what’s going to occur and what the insurers are by way of knowledge and their reactions. And so it’s actually a multifaceted problem and query as a result of the insurance coverage trade can also be, A, fragmented throughout the totally different states. And so the markets perform pretty in a different way relying on the state that you simply’re speaking about. And so they’re additionally, in fact, extremely regulated. And so relying on the state and the hazard that you simply’re speaking about, there’s even been challenges in making it potential for insurers to leverage forward-looking knowledge to set their premiums. So in California, insurers weren’t traditionally allowed to make use of forward-looking fashions to find out their wildfire premiums.

Dave:
Actually?

Natalie:
And in order that presents vital challenges. And so there’s a number of dialog, dialogue, occurring proper now between policymakers and the insurance coverage trade and householders or debtors and scientists even. Actually attempting to determine subsequent steps for this and pondering round altering a few of these laws and simply fascinated with other ways to essentially fight this query of, “Properly, some areas are simply going to maintain getting hit and so are we going to maintain growing there?” One thing wants to present. I feel the trade has reached some extent the place it’s clear that one thing wants to present and now we’re working to establish the way in which ahead.

Dave:
Bought it. Thanks. Yeah, I feel for everybody listening, that is one thing actually essential to observe as a result of it actually does have an effect. I’ve a pal who’s an enormous actual property investor in Florida and advised me he’s planning to promote most of his properties as a result of regardless that he had good money flowing offers, the rise in insurance coverage premiums has actually broken his enterprise and there’s no finish in sight essentially. Hopefully issues begin to decelerate. However he advised me on a sure property, it greater than doubled, he had one that just about tripled in a single 12 months. And so it makes it actually troublesome to foretell, simply very troublesome to know one of many main bills in what you are promoting. Now thus far, this has principally been the large excessive profile ones, simply so everybody is aware of, have been in California and in Florida.
However I think about in Colorado, I do know there’s wildfire danger. Numerous the west, there’s wildfire danger. So I’m curious to see if this continues. So one thing that we’ll should control over the following couple of years. All proper. So now we’re actually within the thick of it and we’re about to take one other fast break, however once we come again, Natalie’s going to inform us about what she expects to see by way of new constructing requirements and the way this matches into the larger image of housing provide and affordability. So stick round.
Welcome again. Natalie Ambrosio Preudhomme and I are speaking about traits in main climate occasions and what the most recent analysis means for buyers. Let’s choose up the place we left off. Now, Natalie, I wish to swap to one thing you talked about earlier, which is about constructing and constructing requirements. So that you stated Constructing Efficiency Requirements are altering. And I’ve a number of questions on that. However are you able to simply give us slightly background context on that and the way constructing requirements are altering?

Natalie:
The Constructing Efficiency Normal particularly is referring to buildings’ local weather operations or emissions. So particularly these are associated to emissions reductions at buildings or lowering vitality use at buildings. They take totally different types whether or not they’re really assessing the emissions or the vitality use, however the finish purpose actually is to scale back the emissions of buildings.

Dave:
Are these at a federal stage, state stage or how are they applied?

Natalie:
So within the US, they’re rolling out in a reasonably fragmented means. When it comes to how they’re rolling out to this point, there may be what’s referred to as the Nationwide Constructing Efficiency Requirements Coalition and that’s a gaggle of state and native governments which have dedicated to publishing Constructing Efficiency Requirements by Earth Day this 12 months, so in April of this 12 months. After which there’s a second cohort who’ve dedicated to it by 2026. And this isn’t to say that there aren’t any printed already, there are a handful of cities across the nation and some states who do have already got Constructing Efficiency Requirements. And so all that to say it’s rolling out in a really fragmented means, however we do count on to see an acceleration of this rollout within the subsequent couple of years.

Dave:
And what’s the goal of most of those packages?

Natalie:
The foundation goal is to scale back emissions from the constructing inventory. Buildings’ emissions are accountable for a big share of cities’ emissions. And so these are feeding into their broader local weather commitments that many cities have made. However yeah, it’s actually targeted on the constructing itself and lowering emissions.

Dave:
From the little I learn about setting up giant tasks, I’m a extra small-time investor right here, once I hear about these constructing requirements, it strikes me that adhering by them is perhaps a dearer type of building. If it’s simply even a extra vitality environment friendly equipment, it often is dearer.

Natalie:
Sure.

Dave:
Or I don’t know, energy-efficient home windows are dearer or HVAC programs.

Natalie:
Completely.

Dave:
So my query is, is the whole building price going to be larger for some of these buildings?

Natalie:
Completely. And we’re pondering of it quite a bit as a result of a number of these apply to current buildings. There’s a number of dialog across the retrofit prices to then adjust to these legal guidelines to keep away from the fines. And that’s one thing that we’re carefully and that’s what our shoppers are asking. “Is it higher to only pay the wonderful or to really retrofit?” And so we have been speaking about price profit evaluation on the bodily danger facet, and that is price profit evaluation on the transition danger facet. I’ll say there’s a number of alternative on this area to have a look at all of those numbers after which transfer ahead strategically. And so issues like changing your varied home equipment on the finish of their helpful life. And simply when it’s time to switch them, changing them with energy-efficient variations.
And that’s only one instance, however there’s methods to essentially plan this out in a strategic means that makes the most effective use of the prices and the advantages. One different factor I’ll say on this by way of building additionally. There was simply an instance that I used to be writing about in Boston. They did embrace numbers that confirmed how way more costly it tends to be to develop this sort of very extremely energy-efficient constructing, however then additionally the truth that it makes use of a lot much less vitality that these prices will definitely be recouped within the lifespan or earlier than the lifespan of that constructing. So the financial savings have been vital even in gentle of the elevated price of building.

Dave:
Attention-grabbing. Yeah, as a result of I feel one factor that I take into consideration quite a bit is that there’s a scarcity of housing in the USA and there may be in fact this effort to scale back emissions or enhance the resilience of buildings. But when that makes it much more costly, it’s already very costly to construct, if it makes it much more costly, is that going to dissuade individuals, builders from growing and simply additional exacerbate the housing affordability issues that we have now proper now?

Natalie:
Two issues I’ll point out there. One, and this will get again a bit to resilience, the place it’s an funding up entrance, however that the financial savings are substantial. And the interfacing of each the sustainability or transition danger facet and the resilience facet. Issues like lowering vitality demand and issues like that. Sure, they scale back emissions, they’re sustainable, however in addition they put together for rising heatwaves and surging prices we’ve seen in vitality demand by means of the summer time. And issues like inexpensive housing or simply any housing, it’s notably essential to make sure that the asset is resilient and that those that are utilizing the asset will probably be secure and be capable of perform throughout these excessive occasions. Like energy outages. Sure, they create a considerable industrial disruption, however in addition they are a human well being and security concern.

Dave:
I agree and see the long-term worth of creating extra resilient, extra vitality environment friendly buildings. I feel what hangs me up typically is simply the small print of how the trade works. The place what may occur is the builders who tackle essentially the most danger will face elevated building prices whereas the eventual homeowners and operators of the constructing or the tenants of the constructing are those to benefit from the profit. And in order that’s what worries me is that there’s not an incentive for builders to construct if it’s simply dearer for them solely to save lots of different individuals cash. Does that make sense?

Natalie:
Yeah. So a number of issues on that. We’re seeing with this rising demand, so tenants are rising their demand for greener, extra resilient buildings. Once more, giant firms are making local weather commitments and the necessity to have their workplaces or their amenities in buildings that permit them to conform and meet their commitments. And so with this rising demand, there may be already some analysis that reveals the greenium or the truth that of us are keen to pay extra for these inexperienced buildings. And we count on extra analysis to be popping out on that as an increasing number of of us actually concentrate on this challenge. In order that’s one, only a comparatively easy incontrovertible fact that more and more they may be capable of promote or a minimum of the greener buildings for larger costs. And once more, this has already proven to be the case.
The opposite factor I’ll point out too is that this inexperienced financing. And so there are a selection of incentives from the Inflation Discount Act. There’s additionally varied rebates and utility incentives. After which there’s additionally issues like PACE, Property Assessed Clear Power, which is one other factor that’s rolled out on the state stage. And so it’s solely approved in sure states. However that’s a selected financing mechanism for inexperienced properties that enables for the financing to be obtained upfront with none fee. After which it’s tacked on to the property taxes of the property, primarily. And that’s the way it’s repaid. And so there’s a selection, it’s a fraction in area that must be slightly bit higher understood frankly and fleshed out, with the assets, attending to the suitable individuals. However inexperienced financing for buildings is an area that may assist with this as nicely.

Dave:
Properly, Natalie, thanks a lot for sharing your analysis and information with us. Earlier than we go, is there the rest that you simply assume our viewers ought to know out of your latest work?

Natalie:
Yeah. Thanks a lot for the dialog. I’ll simply actually underscore that we’re working arduous to attach this publicity to local weather hazards with the monetary implications. Actually doing work that demonstrates the influence on issues like emptiness charge, asking rents, working prices after which web working earnings. And so I’d say it is a actually thrilling and essential area to maintain watching and being attentive to, and it’s solely going to develop into extra essential within the coming years. So yeah, thanks a lot for having the dialog with me.

Dave:
Completely. And if you wish to be taught extra about Natalie and her crew’s work, be sure that to take a look at our present notes, which yow will discover beneath, which we’ll hyperlink to all of the analysis and report and nice work that she’s doing. Natalie, thanks once more for becoming a member of us.

Natalie:
Thanks.