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Monthly Archives: February 2020


Grocers, Gyms, Discount Apparel Keeping Philly Retail Space Market Afloat

Store closures reached a record-high nationally in 2019, and the Philadelphia commercial real estate market was not spared from the fallout.

Sears and Kmart alone shuttered eight stores in the Philly retail space market, resulting in 1 million square feet of new retail vacancy. Market-wide net absorption, the difference between move-ins and move-outs, ended the year slightly in the red.

This CoStar Realty Information Inc. report involving Philadelphia commercial properties is being made available through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

The latest Philadelphia retail market video update from Adrian Ponsen at CoStar Analytics examines these trends in more detail to help investors understand the challenging and fast changing retail market they face in 2020. Please click here to view the video.

Market trends in the Philly retail space market, however, would have been far worse if not for the range of tenants that faced less pressure from Amazon and continued to expand.

More than 12 new grocery store locations opened in the Philadelphia area last year, along with several new fitness centers. In addition, discount clothing retailers, such as Burlington, Marshalls, TJ Maxx and Old Navy, also continue to grow their store counts in the Philly retail space market. Despite competition from online clothing sellers, many budget-conscious shoppers still find that it’s simply quicker and more cost effective to visit brick-and-mortar locations and try clothes on, rather than ordering online and risk having to make returns.

For more information about Philly retail space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly retail space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly retail space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly retail space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need – a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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Bankruptcy Provisions in Commercial Leases

Bankruptcy Provisions in Commercial LeasesLet’s examine what you need to know about bankruptcy provisions in commercial leases. Each property is unique and every relationship has its own contours that will drive the path of commercial lease negotiations. While a lease cannot account for or predict every potential scenario in the course of a commercial landlord-tenant relationship, landlords can put themselves in a better position to weather a tenant bankruptcy by understanding the bankruptcy landscape, including which provisions will be enforced and which provisions will be ignored by bankruptcy courts.

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Most landlords know that commercial bankruptcy cases generally take one of two forms: chapter 7 or chapter 11. In both types of cases, the automatic stay applies. In both types of cases, the commercial lease can be assumed, assigned or rejected within a finite period of time. A chapter 7 case is a liquidating case, while chapter 11 cases are typically reorganizations.

A tenant filing bankruptcy under chapter 7 will cease doing business. There, the court appoints a chapter 7 trustee to gather and liquidate assets and to distribute the proceeds to creditors. While the debtor tenant in a chapter 7 case is unlikely to continue the lease, the trustee may sell/assign a valuable lease to a third party. Negotiations in a chapter 7 case take place with the chapter 7 trustee, rather than with the debtor tenant.

On the other hand, a tenant filing a chapter 11 bankruptcy generally continues operations as a “debtor-in-possession.” The chapter 11 case typically culminates in a plan of reorganization, through which the debtor will outline its plans to fund payments to creditors, restructure debt and continue operations as the entity emerges from bankruptcy. Often, chapter 11 debtors seek to shed debt by rejecting above-market leases or leveraging the right to assume and reject leases by extracting rent concessions from landlords as a condition to lease assumption. Absent unusual circumstances, the court will not appoint a trustee, thus negotiations take place with the debtor tenant.

While a tenant bankruptcy filing shifts the balance of power to the tenant, defensively drafted leases may allow the landlord to retain some control and negotiating advantage after the filing of a bankruptcy.

7 Bankruptcy Provisions in Commercial Leases

(1) Tenant bankruptcy triggering lease termination
Bankruptcy provisions in commercial leases that would terminate a lease or modify other rights of a bankrupt party upon the filing of a bankruptcy petition are known as ipso facto clauses and are unenforceable under the Bankruptcy Code. Bottom line: Don’t waste your leverage trying to incorporate or keep an ipso facto provision in the lease.

(2) Waiver of the automatic stay.
The filing of a bankruptcy petition automatically triggers a stay of all activities to collect a debt, including efforts to obtain possession of property. To avoid the delay associated with the  imposition of the stay, consider including a provision requiring the tenant to waive the protection of the automatic stay or a waiver of the right to contest a motion by the landlord for relief from the stay. The remedy, if enforced by a court, allows a landlord to obtain relief much sooner than it would otherwise be entitled, particularly because courts are reluctant to grant stay relief in the early days of a bankruptcy case. Bottom line: Whether this provision is worth fighting for depends on your jurisdiction. Not all courts will enforce a pre-petition waiver of the stay, and even if they will, the waiver will generally not be “self-executing”. The blessing of the court is needed. Therefore, to avoid the imposition of sanctions that accompany a violation of the stay (or the voiding of stay-violating activities), landlords with waivers in a lease should consult with counsel on filing the appropriate motion with the bankruptcy court before pursuing eviction or collection activities.

(3) Adequate Assurance Definition.
Under the Bankruptcy Code, in order for a bankrupt tenant to assume a lease, it must provide the landlord adequate assurance that it will meet its future lease obligations. The Bankruptcy Code does not define “adequate assurance”, but the parties can define the concept in the lease to narrow the issues in bankruptcy court litigation. Adequate assurance provisions often require the tenant provide assurances as to (i) the source of future rent, including that any assignee is similarly situated, financially, to the tenant at the time the lease was signed, (ii) the stability of the percentage rent, if applicable; and (iii) non-disruption to the tenant mix in the center or complex. Bottom line: A lease containing specific understandings of ambiguous bankruptcy concepts will carry greater weight with a court interpreting a tenant’s post-petition obligations to its landlord.

(4) Shopping Center Provisions.
While bankruptcy courts do not favor limitations or conditions on the assignability of a lease, shopping center leases receive special treatment and, as a result, shopping center landlords have greater leverage in post-petition assignment negotiations. Therefore, if a property can reasonably be considered a shopping center, including a provision indicating that the property is a shopping center may afford a landlord with additional leverage and protections. Any shopping center lease should require that any assignee of the lease in a bankruptcy adhere to exclusive use (or other use restrictions), co-tenancy and tenant mix requirements. Bottom line: Ensure that any
shopping center lease contains provisions that protect the future viability and maintain the integrity of the shopping center if a tenant lease is assumed and assigned in bankruptcy.

(5) Security.
Cash may be king, but, generally, security deposits become property of the debtor’s estate once a bankruptcy petition is filed, limiting the setoff rights of a landlord and requiring motion practice in the bankruptcy court. A letter of credit, coupled with a lease provision allowing the landlord to draw upon it after default and without notice to the tenant, generally falls outside of “property of the estate” and therefore provides more ready access to cash to a landlord whose tenant has filed for bankruptcy. Bottom line: Securing the tenant’s obligations under the lease by collateral that falls outside the umbrella of “property of the estate” puts the landlord in a better position to recover costs when dealing with a tenant in bankruptcy.

(6) Guarantors.
A corporate parent or affiliate guaranty provides additional security for the tenant’s lease. Frequently, however, that guarantor often files bankruptcy at the same time as the tenant, and the landlord’s claim against the guarantor becomes one of many unsecured claims that will receive cents-on-the-dollar recovery. Personal guaranties from tenant equity holders may provide more protection because of the “skin in the game” and a reluctance of many individuals to file personal bankruptcy. Bottom line: The newer the business or the more limited financial history of your tenant, the more compelling a case for obtaining personal guaranties.

(7) Forecasting Trouble.
Bankruptcy provisions in commercial leases that require the submission periodic financial statements, balance sheets and cash flow statements from a tenant and any guarantors will allow a landlord to monitor the performance of its tenant. Leases containing financial covenants provide a mechanism for a landlord to call a default if financial performance declines. Having a heads-up to financial distress can allow the landlord to exercise remedies quickly and potentially in advance of any bankruptcy filing. The automatic stay does not apply to leases terminated pre-petition, so moving quickly to terminate in a distressed situation may give the landlord a valuable edge in regaining possession of the property outside of the bankruptcy court. Bottom line: The more you know about your tenant’s finances, the better you can react to a deteriorating situation, whether by exercising remedies or bolstering the security for the tenant’s obligations under the lease.

The contents of this article are for informational purposes only and none of these materials is offered, nor should be construed, as legal advice or a legal opinion based on any specific facts or circumstances.

Have questions about about bankruptcy provisions in commercial leases?

 

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WCRE Foundation 3rd Annual Celebrity Charity Golf Tournament

WCRE Celebrity Charity Golf TournamentWhen?

  • September 17th 2020
  • Registration Begins @ 12:00 pm
  • Shotgun Start: 1:00 pm

Costs?

  • Golf, Lunch & Dinner: $125
  • Dinner Only: $35

Where?
Ramblewood Country Club
200 Country Club Parkway
Mount Laurel, NJ 08054

Sponsorship Deadlines

  • Tangible Item Sponsorship: 8/15/2020
  • Player Registration: 9/1/2020
  • Corporate Sponsorship: 9/1/2020
  • Dinner Tickets: 9/16/2020

REGISTER ONLINE NOW

for more information contact:

Tammi Coppinger at (856) 857-6303

tammi.coppinger@wolfcre.com

 

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WCRE Celebrates 8 Years in Business!

This week the WCRE team marks our eighth anniversary. Our success is the result of the trust and support we receive from our clients, colleagues, and community.

The growing team at WCRE had an exceptional year in 2019!

2020 is off to a very fast start, and we wanted to pause just long enough to reflect upon our anniversary and share some of the highlights since last year.

The year started with a bang as we opened our Philadelphia office at 3 Logan Square, fully establishing WCRE’s Philadelphia presence and positioning us for continued growth in a major urban market. We are now fully staffed to service the Southern New Jersey, the Greater Philadelphia region, Southeastern Pennsylvania, Northeastern Pennsylvania and the Lehigh Valley.

As we mark eight years in business, we are currently entrusted with over 215 properties for sale and lease, comprising approximately 5.0 million square feet of office, retail, medical, industrial space, educational and investment properties in Southern New Jersey, the Lehigh Valley, and the greater Philadelphia region.
Our core business grew this year, we continued to expand our Pennsylvania operations, and developed new media and proprietary software to support our pioneering digital marketing and social media strategies as we meet the evolving needs of the commercial real estate business.

Our entire WCRE team grew their production in 2019, as compared with 2018, both in the number of completed transactions as well as the size of the deals. Our dynamic, diverse and growing professionals have proven their capability to execute real estate transactions on behalf of clients in the office, medical/healthcare, education, non-profits, retail, industrial, investments and multi-family sectors.

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Team

It was a strong year for recruitment, as we added five new members to the sales team to service our growing presence in Pennsylvania & New Jersey; We added Mike Scanzano, Sean Kelly, Victor DeJesus, Chris Jerjian and Phil Costa to our brokerage ranks (we love Phil even though he played for the Dallas Cowboys).

Below is a brief background of each of our newest WCRE colleagues. Our new team members contribute high-level business skills and community-oriented values that align very well with WCRE’s mission and goals.

Mike Scanzano joined WCRE as a sales associate focusing on the Southern New Jersey commercial real estate market. Mike will help WCRE continue to build successful relationships in the South Jersey region and will specialize in sales and leasing, tenant and landlord representation, investment sales, and multi-family dwellings.
Mike graduated from the University of Pittsburgh where he was an All Big East baseball player. After college, Mike played 6 years of professional baseball, ending his career in 2010 with the Camden Riversharks. After baseball, Mike took a sales position with the Southern Illinois Miners. In 2015 Mike opened up Scanzano Sports in Cherry Hill, New Jersey where they specialize in baseball training.


Victor DeJesus joined WCRE as a Senior Associate and specializes in sales and leasing, tenant and landlord representation for office, investment sales, and industrial properties in Central New Jersey. He has developed a wide network of business relationships and will focus to help landlords, investors, tenants and users develop strategies to achieve their goals.


Sean Kelly joined WCRE as sales associate. He will focus on the Pennsylvania and New Jersey market. Sean specializes in sales and leasing, tenant and landlord representation for office, investment sales, and industrial properties.

Previously, Sean sold medical devices for 18 months at Stryker Orthopaedics where he was responsible for growing their trauma orthopedic business in the South Jersey area. Working with all major health systems in the area, he was responsible for driving growth, customer engagement, account management, and operational efficiency.

Sean was also a member of the Rutgers University, New Brunswick baseball team between 2014 and 2016. He pitched for the Scarlet Knights during his tenure there. While there, Sean contributed four years of volunteer services to St. Peters Childhood Cancer programs. 


Chris Jerjian joined WCRE as a Business Advisor & Consultant. Chris specializes in office and other commercial properties in Southern and Central New Jersey, and the Philadelphia Region. He has developed a wide network of business relationships over the past 30 years in his capacity as a CRE landlord and investor. His focus is to help landlords, investors and users develop strategies to achieve their goals. He brings these skills and his experience to the entire team at Wolf Commercial Real Estate. https://wolfcre.com/team/chris-jerjian/
Phil Costa joined WCRE as a sales associate in Pennsylvania and New Jersey. He specializes in sales and leasing, tenant and landlord representation for office and industrial properties. Additionally, Phil brings experience as a multifamily real estate investor, property manager and landlord across the two states.


Phil Costa joined WCRE as a sales associate in Pennsylvania and New Jersey. He specializes in sales and leasing, tenant and landlord representation for office and industrial properties. Additionally, Phil brings experience as a multifamily real estate investor, property manager and landlord across the two states.

Phil is a former NFL player for the Dallas Cowboys and a graduate of Columbia Business School with an MBA. He earned his undergraduate from the University of Maryland, where he was a two-time ACC honor roll member and Team Captain in football his senior year.

Phil is active in the local community and serves on the Board of Directors for The AthLife Foundation, which provides opportunities for deserving kids from our nation’s most promising communities by combining academics and sports. 


Our team has grown to 25 incredible and committed experts along with an incredibly talented supporting cast of third-party vendors that all help to make us shine. To each of these people, we are all incredibly grateful and thank you for your support and services.

Most importantly, and what we are most proud of with our team is watching everyone grow together and lead! Over the past several years, we have created many internal leadership roles which allow for company leadership and growth.

This year, 2 of our firm’s key staff members who have been an integral part of our success were also promoted. Without our incredible support team, our WCRE service providers would be unable to succeed at a high level.

Our very own Tammi Coppinger continues to raise the bar for client services and has been instrumental in helping WCRE to grow our property management business. Tammi is a member of BOMA and brings a highly detail oriented and proactive approach to her property management clients. This is an area of the company that WCRE will continue to grow in 2020.

Tammi Coppinger joined WCRE over 5 years ago and has rapidly grown from our administrative assistant to Director of Operations and Executive Property Manager. Tammi not only just gets it, but she keeps our entire firm in check and handles almost every operational issue at WCRE with complete focus, dedication and care.
Mitch Russell was also promoted from Associate to Senior Associate. In less than 2 years, Mitch has shown his ability to learn, be a team player, create ideas, take chances, get community involved and strategize with the entire team. Mitch has helped to grow not only his business, but others as well. Mitch is always willing to learn and has become a great influencer for the younger guys at WCRE. Mitch eats and sleeps his work and it shows by the results.

It’s the people that makes a company successful and our firm will ALWAYS be about its people. We believe in a culture that promotes success, encourages community engagement and most importantly having the “Work Hard, Play Hard” mentality.

Achievements/Accomplishments

In September 2019, WCRE participated as the host city for the annual CORFAC International Fall Conference in Philadelphia, where we networked and collaborated with commercial real estate experts from around the globe. 

Ty Martin, MBA worked closely with the leadership team to launch the Broad Street Brokers podcast (www.TheBroadStreetBrokers.com). This podcast focuses on business themes throughout the greater Philadelphia region and guests have included; Alan Domb, Rick Forman, Matt Pestronk, Brad Molotsky, Dave Meltzer, Mike Mumola, Brent Celek, Michele Schina, Nick Bayer and Wayne Kimmel amongst other highly accomplished business and community leaders.

Another huge WIN was the addition of Andrew Beauchemin, who heads up WCRE Capital Advisors (www.WCRECapitalAdvisors.com). This gives WCRE the in-house capability to provide the full scope commercial mortgage services, both debt and equity.

Philanthropy

Our team at WCRE was humbled and honored to be recognized at the 40th Annual Ruby Gala by Samaritan Healthcare & Hospice as the 2020 “40th Anniversary Distinguished Honoree”.

Innovations

While our highly skilled team is the foundation of our company, we also constantly seek forward- thinking approaches and value-added solutions to identify and fulfill our clients’ business needs.

During the past year, we:

• Expanded our network of specialty commercial real estate blog web sites to highlight our corporate services and investment practices. WCRE now maintains 80 plus distinct SEO driven blog websites that present content tightly targeted to audiences seeking specific information about types of properties and locations. This ensures that prospective investors, tenants, and landlords can always find services and listings that closely match their needs.

• Adopted industry-leading software to generate and distribute marketing materials, allowing brokers to more quickly and creatively feature clients’ properties.

• Grew our Social Media network of followers to over 16,000 contacts. This is a 33% increase year over year!!

WCRE is now on Facebook, LinkedIn, Twitter, Instagram and YouTube. Feel free to click any of the below links to Follow Us.

Charitable Commitment

A passionate commitment to the health, well-being, and success of our neighbors is one of the core values on which WCRE was founded. That is why we dedicate a portion of our transaction proceeds to a local charity, and we encourage our staff to volunteer and support charitable causes. Our clients may choose the designated charity from our preferred list, or they may direct the charitable portion of their transaction to a charity of their choice.

In 2019, The WCRE Foundation raised more than $115,000 for local charities through our Fourth Annual WCRE Celebrity Charity Hockey Game and our Second Annual WCRE Charity Golf Outing, featuring Philadelphia Flyers alumni and leaders from the local business community. The hockey tournament and golf outing are now our signature annual events. In the past 4 years, The WCRE Foundation has raised approximately $315,000 to support so many great organizations within our communities.

See 2019 WCRE hockey event video link here:

We also donated, sponsored and supported over 30 other events and causes throughout the region, providing support for healthcare, youth sports, religious institutions, education, medical research, and assistance for the less fortunate.

This past year, WCRE also supported Attitudes in Reverse, at their annual Taste of Hope event in support of preventing teen suicide and completed our 6th Annual WCRE Thanksgiving Food Drive to support JFCS of Southern New Jersey. Over 100 bags of food and $1,525 in donations and gift cards were collected to support their food pantry.

Additional information on our Community Commitment can be found at https://wolfcre.com/community-commitment/.

By retaining WCRE, you have taken part in this transformative charitable activity, and we thank you for supporting it. We are proud to make these charitable contributions with your help.

Whatever market conditions may come, our entire team at WCRE is here to help service your commercial real estate needs. WCRE is genuinely grateful to our clients, prospects, and industry colleagues for helping us to reach this point. Big things are ahead in 2020 and we look forward to having you be a part of that story.

Our focus always remains on providing first-class commercial real estate brokerage, advisory and management services to our clients.

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Retail Pop-Ups Evolve as Landlords Seek Fresh Appeal

The bright neon sign declares “You are magic!” as a room fills with a rainbow of lights activated by a couple, Jaime Martinez and Cristina Cave, clasping hands while touching sensors.

The two wriggle their bodies and twist their arms up, activating more lights, all while a camera behind them discreetly snaps photos of their colorful dance. Within minutes, the camera creates an Instagram-ready graphic that is emailed to their inbox for social media sharing.

Cave and Martinez are among hundreds of people who visited Color Factory, an interactive pop-up art exhibit in a former 20,000-square-foot furniture store in Houston on a recent winter afternoon. Families, couples, and children crowded the sold-out exhibit that day, jumping into the NASA-themed plastic ball pit, drawing on walls with three-foot long blue pens, munching on macarons and mochi ice cream, and sniffing works of art that have been infused with scents of freshly cut grass and butter popcorn.

Color Factory represents an increasingly important new breed of retail tenant that could provide one answer to the struggle retail property owners in national and Philadelphia commercial real estate markets have as they search for ways to lure in customers as online shopping grows. So-called pop-up shops, defined because they have temporary leases, have been around for years mostly as seasonal retail strategies around Halloween or Christmas.

This excerpt from a CoStar Realty Information Inc. report by Marissa Luck involving U.S. and Philadelphia commercial properties is being made through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

This new wave of pop-up stores in the U.S. commercial real estate market – including Philly retail space – is a radical departure from the traditional seasonal model, and they are breaking into hybrids, according to a recent report. Many of the concepts like Color Factory don’t even bank on selling visitors goods and instead rely on admission costs and social media attention for their bottom line.

Pop-up retail is estimated to be a $50-billion-and-growing industry in the U.S. commercial real estate market – including Philly retail space – and, according to industry sources, the number of pop-ups in New York City doubled in 2019 and is now right around 200.

The pace of the pop-up boom among national and Philadelphia commercial real estate properties is expected to continue in 2020. Experts expect pop-up leases to further entrench themselves in major metropolitan cities and expand out across the country into more medium-sized cities. Though temporary in nature, the pop-up lease could become a permanent piece of commercial real estate, though the form is changing.

The rise in pop-ups is a response to the retail apocalypse as a record number of storefronts close amid changing consumer habits and the rise of online shopping, leaving millions of square feet of retail space vacant across the country. While pop-ups aren’t expected to be the solution to the rising tide of retail vacancies, they do represent an increasingly innovative way for landlords to generate income and create foot traffic at a property. – By Marissa Luck, CoStar Realty Information Inc.

For more information about Philly retail space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a Philadelphia commercial real estate broker that specializes in Philly retail space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

A Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, Wolf Commercial Real Estate provides unparalleled expertise in matching companies and individuals seeking new Philly retail space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly retail space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need – a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.

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