Acadia Realty Trust (AKR) 2011 Q3 法說會逐字稿

Good day ladies and gentlemen and welcome to the third-quarter 2011 Acadia Realty Trust earnings conference call. My name is Jasmine and I will be your coordinator for today. At this time all participants are in a listen-only mode. We will facilitate the question-and-answer session towards the end of the conference. (Operator Instructions)

Please be aware that statements during the call that are not historical may be deemed forward-looking statements within the meaning of the securities and exchange act of 1934. Actual results may differ materially from those indicated by such forward-looking statements. Due to the variety of risks and uncertainties which are disclosed in the Company's most recent Form 10-K and other periodic filings with the SEC, forward-looking statements speak only at of the date of this call and the Company undertakes no duty to update them. During this call, management may refer to certain non-GAAP financial measures, including funds from operations and net operating income. Please see Acadia's earnings press release posted on its website for reconciliation of these non-GAAP financial measures with the most directly comparable GAAP financial measures.

Participating in today's call will be Kenneth Bernstein, President and Chief Executive Officer; Michael Nelson, Chief Financial Officer; and Jon Grisham, Chief Accounting Officer. Following management's discussions there will be an opportunity for participants to ask questions.

At this time I would like to turn the call over to Mr. Bernstein. Please proceed.

Thank you. Good afternoon. Today I'll begin by reviewing our progress on our key initiatives, and then Jon will conclude with a more detailed review of our third-quarter earnings and operating metrics.

As we previously discussed Acadia is focused on driving growth and creating values through the 2 key components of our business. First, through our core portfolio where we continue to execute on accretive re-anchoring and lease-up projects at our existing shopping centers, along with acquiring high-quality assets as part of our asset recycling and growth initiatives. And the second component is our investment management platform where we continue to develop, lease up, stabilize and monetize our existing investments, as well as execute on new opportunistic and value-added acquisitions. So with this framework in mind, I will begin today's discussions with our core portfolio activity followed by an update on our fund activity.

As a general overview with respect to our core portfolio operating fundamentals, notwithstanding a lot of macroeconomic concerns and market volatility, our operating metrics to date have remained solid whether in terms of collections, default rates or leasing activity, and when we look at our third quarter results and stripped out the impact of our 3-year re-anchoring projects, both same-store NOI and occupancy increased by about 50 basis points for the third quarter which is consistent with our expectations.

In terms of our re-anchoring activity, as you know, our focus over the past the quarters has been on the completion of our 3 previously announced re-anchoring projects; first, Bloomfield Hills and then 2 properties associated with AMP leases, being Smithtown, Long Island, and our Crossroads property in Westchester. These 3 projects represent 380 basis point of occupancy for us.

To date, we have already executed leases for approximately half of this space, and we're very close to another lease that will take us to approximately 75% pre-leased. These tenants are scheduled to open beginning the second half of next year and we are confident that the balance will be leased within the next 3 to 6 months. As these tenants open over the next 12 to 24 months they should contribute incremental NOI of somewhere between $3.5 million and $4 million, or a 7% to 9% increase over our in-place annual NOI.

Rents under the new leases should represent a 50% increase over the prior rents for those spaces. Additionally, with respect to our portfolios, 3 remaining A&P locations, 2 are in our core portfolio, 1 is in our fund III. During the third quarter A&P notified us that they will assume the leases at all 3 locations. We anticipate that these stores will be part of A&P's operating platform as the company emerges from bankruptcy.

Along with the growth contributions from these profitable re-anchorings, the second component of our core growth is from our asset recycling and growth initiatives. As we have stated on previous calls, our goal is to add at least $100 million of high-quality assets annually, net of any dispositions. And this should contribute about 3% to 4% to earnings annually and increase our portfolio stability and diversification. But even more importantly, our focus is to use these additions to continue to elevate our portfolios quality and optimize its product mix and to ensure that our properties remain relevant to our tenants and our shoppers not only today but even more so 3 years, 5 years, 10 years from now.

So to that end, and as previously discussed on our last earnings call, this year we sold our final remaining enclosed mall for $37 million and aggregated a $137 million pipeline of urban and street retail acquisitions in downtown Chicago, Georgetown, Washington DC and New York. Then during the third quarter, we entered into a contract to purchase an additional core property located in Washington DC for approximately $21 million. So to date, of the now $158 million of our core acquisition pipeline, we've already closed just under half of the acquisitions having completed the acquisitions in Georgetown, DC, and New York, and closing on 7 of the 20 Chicago assets. We are currently awaiting lender approval for the assignment of the debt for the balance of the Chicago assets and our most recent DC contract, and we anticipate those closings somewhere around year end.

These properties, whether M Street in Georgetown, Soho in New York or Lincoln Park, Chicago, are high-quality, stabilized properties located in dense, high barrier to entry, high traffic retail corridors with tenants ranging from Trader Joe's to Coach, and they will nicely complement our existing portfolio. When we look at our portfolio composition at the completion of these acquisitions, urban or street retail should represent about 40% of our portfolio including our pro-rata share of opportunity fund investments. And then the balance of our portfolio is fairly evenly split between supermarket anchored or the value and discounter anchored centers. And perhaps another way to appreciate the impact of these core acquisitions is, assuming a going in yield of between 6.5 and 7%, they will comprise approximately 20% of our combined core NOI next year.

Turning now to our fund platform. In the third quarter through our Fund III, we entered into 3 contracts totaling approximately $65 million. This is in addition to the $150 million of Fund III closings over the past 12 months. The new investments are located within our existing geographic footprint and are consistent with our 2 most recent investment themes being; first, our value add investments in high-quality urban or street retail properties with re-tenating or re-positioning opportunities, and that's similar to our Lincoln Road project that we announced earlier this year; and then secondly, our opportunistic acquisitions of well-located real estate that is anchored by distressed retailers, similar to our successful supermarket re-anchoring in Silver Spring, Maryland, which we discussed in the last quarter.

These 3 transactions are anticipated to close around year end at which time we will provide additional details. After taking into account these transactions, we have approximately $150 million of Fund III equity remaining to deploy, and based or what we're seeing in the marketplace, we believe that we'll be able to find interesting opportunities for its investment over the next few quarters.

With respect to existing fund investments, details on all of our urban and street retail redevelopment projects can be found on pages 28 and 29 of our supplement, and while our team continues to make progress with respect to the overall portfolio, of particular note, we made significant leasing progress at our Fordham Road property where, since our last call, we executed leases which will increase the office components lease percentage from 32% up to 79%, and we are finalizing a lease for the balance of the office space. Then at our City Point project we continue to make progress on both the construction and leasing of phase 1 as well as the design of phase 2, and as of the third quarter, our self storage portfolio occupancy increased to 87.2%, up from 85.6% in the second quarter, and up from 74% a year ago.

Finally, with respect to our RCP venture investments during the third quarter, Fund II received a $4.5 million distribution from its Albertsons investment which, inception to date, has returned $83.3 million on an equity investment of $23.1 million, or a 3.6 equity multiple.

So in conclusion, we are pleased with the progress that we've made during the third quarter on our key growth initiatives. Within our core portfolio, the strong growth of from our re-anchoring projects combined with the new acquisition should create a stable and well-balanced portfolio. And combining this portfolio with our opportunistic and value-add investment platform, positions us to take advantage of a wide array of opportunities as they arise.

I'd like to thank the team for their hard work, and now I will turn the call over to Jon who will review our third quarter performance.

Good afternoon. I would like to briefly review earnings and guidance and then add a couple of comments to Ken's discussion about the core portfolio.

First as to earnings, our third quarter was relatively straightforward from a earnings perspective. A few more notable items were -- you'll note that in our reporting supplement we've added an additional line item to the operating statement entitled pre acquisition costs, which for the quarter totaled about $600,000. Given the level of our acquisition activity this year, this has now become a more meaningful number and so we have detailed it separately in our disclosure.

Also G&A was up slightly for the quarter due to a combination of mostly nonrecurring items, and as such, we are still comfortable with our full-year guidance of $22.5 to $23 million. On the positive side, as Ken mentioned, we received distribution from Albertsons of $4.5 million at the fund the level, which taking AKR's pro-rata share of taxes (inaudible audio problem) about $0.5 million. So following our third quarter results we are reaffirming our previous guidance of $0.94 to $1.00, and for the fourth quarter, along with the continued accretion from our recent acquisitions we could also see some additional income in our RCP promote and other income bucket.

Turning to the core portfolio, as Ken discussed, we are making significant progress in terms of the re-anchorings. A few other items to note as it relates to some of our reported metrics, when we look at our 50 basis point increase in portfolio occupancy for the quarter, much of that is driven by increases in our shop occupancy. We had about 100 basis points of uptick in the second quarter in shop occupancy. This quarter we had another 180 basis points of occupancy increase, going from 80.3% up to 82.1%, and along with that an increase in average shop rents of $25.60 to $26.80. Along with this positive trend we also continue to experience relatively low bad debt expense, which is running consistent with our long-term experience of less than 1% of rents.

Year-to-date, bad debt expense represents about 75 basis points of total rents, which is further indication that our shop tenants continue to hold up relatively well despite the challenging economic environment. As it relates to same-store net operating income, we mentioned in our press release, and Ken mentioned, that excluding the impact of the re-anchorings, same-store NOI was positive 50 basis points for the balance of the portfolio. Although this is clearly a movement in the right direction, it is not indicative of our long-term growth expectation for the core portfolio, but again, a positive movement and we are pleased to see it.

Lastly, turning to the balance sheet, at September 30, our financial position continues to remain very solid. We have line availability of $63 million, and looking at our acquisition activity to date, both closed and currently under contract, we continue to deploy our excess cash. At September 30, we had $63 million of cash in the core compared with $128 million as of the end of last quarter. Our debt to EBITDA in the core was 5.5 times, fixed-charge coverage is 2.5 times, debt to total market cap is in the mid-30s. We think all these leverage metrics are appropriate and expect to maintain similar levels of leverage in the future in order to keep the balance sheet strong.

With that we'll now be happy to answer any questions. Operator please open up the line for Q&A.

(Operator Instructions) Todd Thomas with KeyBanc Capital Markets.

Good afternoon, I am on with Jordan Sadler as well. Ken, with regard to acquisitions, it sounds like the volume of deals in the pipeline is increase relative to last quarter. I was wondering what are you seeing out there that is causing there to be an increase in activity and would you continue to expect most of this going forward to be in Fund III or is there more to do for the core portfolio on balance sheet.

I think you're going to see it on both ends. What we said is our goal is to acquire about $100 million a year of core assets, and that, we have obviously exceeded that goal. But if you broke it down into $25 million a quarter, if we can find the right assets that achieve the goals that we stated and I think we've been pretty clear of where our focuses is, we will do those. If it exceeds $25 million and we can afford to do it and the economics makes sense, great.

On the Fund side we are still seeing what I would consider to be a steady flow of deals, but we have not seen anything akin to the flood gates opening. Whether or not the financial disruptions globally create more compelling opportunistic investments or not, it may still be a little too early to tell. So, what we are focusing on and what you are saying as work on is less direct distress deals although we are seeing some over-levered deals coming to market that seemed pretty compelling, and maybe we'll execute on some of those, but more 1 degree removed. Where sellers are feeling the fatigue either associated with losing their anchor or with too much debt for them to resolve themselves. We're finding that the re-acquisition of high-quality assets or the redevelopment of them is pretty compelling. You need to have the capital, which we do, you need to have the expertise which we do. So, it provides enough activity for a Company of our size, but I wouldn't view this as a [C-change] in the marketplace.

I know that you are looking at a lot of different kinds of deals and you mentioned some of those where the anchor is in distress or something like Silver Spring, Maryland deal. Have you seen any change in the pricing for some of the stabilized properties that you would look to do in the core at all and the last couple of months?

Core pricing has remained more solid, more steady than not on absolute cap rates. So, the question to some degree is when we saw the 10-year rally, did we see a huge drop in cap rates and the answer is no. But similarly when we saw distress in the marketplace, did we see cap rates shoot up significantly associated with that distress, and the answer is no. For good to great asset in gateway city markets, you need to be prepared to move fast, move deliberately, and pricing can be very competitive for a well marketed portfolio. I would expect that to remain the case.

And then, switching gears over to the Storage portfolio which continues to perform very well. First I was wondering if Acadia or Storage Post had taken a look at the Storage Deluxe properties?

We will limit your question to that piece and I wouldn't be surprised if there will be other pieces onto Storage, but I do want to give other people an opportunity. On that very specific question we know the Storage Deluxe people very well. We have some similar partners, similar investors. We think very highly of that team and have compared notes with them on and off throughout the years and will probably continue to do so, as they now execute on new developments and other things. I apologize for cutting you off but I do want to make sure we get to some other people. We'll take the next question.

Craig Schmidt with Bank of America Merrill Lynch.

What type of interest are you seeing at the 2 A&P anchors, and whatever details you could share on the Dick's that's coming to Bloomfield Town Square, I'd appreciate as well?

First, on the A&P side, the good news is we are seeing very strong tenant interest at attractive spreads and I think I've been mentioning, we expect this to come in at about a 50% positive lease spread. So, we like the way that is playing out. Picking the right tenants, making sure that we have the right mix for the properties and getting through the necessary approvals and other issues, takes some time. So, the reason that you won't -- we didn't discuss and disclose specifically who these tenants are, is we want to make sure we get that right, but the initial thesis of let's take back these 2 spaces because we can make money will play out nicely. As it relates to Dick's, Jon, you want to --

We've talked previously about the fact it's a 50,000 square foot lease, and it comprises about 50,000 out of the total 70,000 square feet that we recaptured in our re-anchoring. We are in the process of installing that tenant and they should be open middle of next year.

And Dick's came in -- we replaced a dark but paying Marshals. We already had TJ Maxx in the center and our feeling is as well as TJ's was 1 use was going to be better than 2. But to replace a dark Marshals and an underperforming pet store with now a new thriving Dick's that blends in nicely with T.J, Home Goods, we have Costco there. 100% or 98% leased center and it's going to be a very strong one.

I mean it's interesting to see that Dick's would be opening a store in -- north of Detroit, just given the troubles that we have heard there. It's a very good sign. Thanks.

Rich Moore with RBC Capital Markets.

When did you say, Ken, or did you hint at all, exactly with the rest of the street retail portfolio might close? What you were thinking there?

What I said was around year end. It's subject to the approval of the assignment of debt, there's existing debt in place, so we only have just so much control over that assignment approval process. We don't see any problems associated with it and we have done dozens and dozens of these, but it is just an administrative process that takes months. So, if you were trying to figure out December versus January, I don't know, but that is the general timeframe.

Then back to the Storage Deluxe stuff for a minute. Does that make you think differently about your Storage portfolio in any way, the fact that the transaction occurred? And your strategy for your portfolio?

I think a few things. It helps validate a bunch of our different thesis. In fact, some of the most intriguing aspects of the deal, and the statement that the deal makes, have much to do with self-storage specifically and probably more to our overall focus in terms of urban and high barrier to entry markets. Specifically with respect to Storage, it is an interesting and positive data points from our perspective to a few things. One, is our portfolios are fairly to very similar in terms of quality location -- and everyone thinks that their own children are above average, but in this case when you look at the 2 portfolios whether based on square footage, occupancies, rent achieved, all very similar. Then we think about these portfolios relative to the rest of the country, very similar.

So, we like the fact that smart players are recognizing the importance of and the difficulty to aggregate assets in urban markets, especially New York. Then when we look at our portfolio, our basis we're in right now, our cost and we published this in our sup, we're in for just about $200 a foot and we certainly like seeing an announcement at $350.

Thanks, the last thing I had is, it sounds like you are going to or you are thinking you might be able to use at the equity in Fund III in the next couple quarters or so, and then what do we do? Are we working on Fund IV at this point or where do you think that stands?

Good question. We like the fund business and we have found that while investors in general found themselves, a year or 2 ago perhaps, over allocated to real estate or with too many managers. How things are settling out now is our investors are telling us for those managers that they have conviction for, for those managers that have performed well, that while they will cut out some non-performing managers, that they're very committed to re-upping with new managers. The response back thus has been very positive and affirming.

Given that the fund business blends in very nicely with how we do business -- and we like having access to the public markets but also the ability to have discretionary funds -- our ability to do a Fund IV feels strong, if not easy to raise funds for anyone. But given our track record we feel pretty good about it, given our feedback from our existing LPs plus potential new LPs, it's there if we want it. If we wanted to make some shift to strategy or other things we have plenty of time to think about that. It's still a little early, Rich, to say this is how we want to do it, but our business model works, we like it, we have support from the capital markets. So, all things equal, I think you'd expect to see it continue.

Can you comment on what caused the tax credit for the C-business?

Yes. The tax credit actually relates to our 2010 tax provision. Like good citizens we filed our tax returns this quarter, and trued up the accrual from year-end as a result of the actual tax return numbers coming in.

Paul Adornato with BMO Capital markets.

I'm wondering if you could talk more about the small shop tenants. The increase in activity that you see on that end. Is that coming from a national retailers like a Starbucks or a Verizon, or is that more of the true local mom and pop tenant.

It is a mix, and part of it is also due to the fact that we are making these acquisitions. So, we are adding some solid national names in the street retail arena. So, the short answer is, it's both.

And switching to New York City which has been very good to you in terms of investment activity, I was wondering if the pipeline is still full in New York or if, with a focus on different gateway cities that, we might see more new activity in other markets?

It is very deal-by-deal specific, Paul. What I would say is we have seen so far an interesting arbitrage in Chicago, for instance. So, you're seen us fairly active there because our tenants are telling us that they very much want these locations, that their rent to sales ratios are such that they can afford to pay the rents. The capital markets are differentiating pretty meaningfully between downtown Chicago retail and New York retail. So, when we see an arbitrage like that, and if we can take advantage of it, great.

That being said, New York is very unique and -- again, not to harp on the CubeSmart deal but, I think it is just one more affirmation that for those companies that are capable of identifying acquisitions, re-developments, or developments that can go through the brain-damaged of doing it here in New York. That over time an assemblage, a relatively small assemblage even. In our case in New York where are to be up to close to 2 million square feet of urban and mixed-use, there's probably going to be a pretty good reward some day for groups capable of doing that. Thus, I would expect us to continue to pursue those as long as they make logical sense. If it is not New York next quarter, and it's another deal in Lincoln Road, or another deal in Washington DC, or another deal in Chicago, or deal in Boston. We like all of those gateway cities, and our tenants are telling us that they're very enthusiastic about all of them. There is no doubt in my mind that the capital markets are enthusiastic about them, so we are happy to pursue them elsewhere, but we also recognize that New York has been very good to us.

Your next question comes from Sheila McGrath with KBW.

Yes Ken, when I look at the recent Storage trade pricing it does look like prospects for the promoted interest for Fund III are improving. I was just wondering if you could give us your thoughts on the promote opportunity for the various funds and your outlook for realizations of these fees.

Very good question and you know my stock answer of we don't count our chickens before they hatch.

Well I can predict the outcome for Fund I. (laughter)

We'll let Jon talk about Fund I in a second, Sheila. Obviously, when you see trades like that it does make us feel much better about our basis. Fund III, we invested about 25% of the portfolio before the crash, the self-storage was the biggest part of that in Fund III. So, to the extent that this is positive affirmation for that,then we feel very good about the balance of the deals. I will let all of you pencil it out. Hopefully we provide enough data out there, so that it shouldn't be too hard to figure when this happens. How it happens, I really don't want to predict.

As it relates to Fund II the RCP component, we've already gone north of 2X on that equity, which is a very nice benefit, but the balance, the largest piece is centered around our New York developments. We feel very good about it. It is still too early for us to declare and monetize victory in that because while we are making progress -- I talked about it before, getting Fordham's office component fully leased, Canarsie is almost fully leased, Pelham, everything else is heading in a right direction. City Point's still a big piece of this, we think it's going to be an exciting a profitable development, but I'm not going to go on the record until you which quarter these profits hit.

Jon, why don't you make your firm prediction as to Fund I now.

I predict there will be probably about another $5 million plus of promoting come from Fund I that will monetize over the next 12 months, give or take. So, that's my bold prediction as it relates to promote income.

You've been buying a lot more assets in the core. Just wondering if you can discuss if this continues to be the strategy which it sounds like, how much more buying power do you think you have before you would have to tap additional capital sources?

It's worth thinking about. We have never been huge fans of high leverage. So, I don't think I would step up and meaningfully extend our core portfolio on a debt only basis. We have the ability, in terms of line and all of that, but there are a lot of good reasons to buy, at this point in the cycle, high-quality assets using leverage levels that we stand at right now. So, we would probably maintain it at that level if the deals made sense. If the cost of debt made sense, I think it does right now, but you need to be very careful about that and not fall in love with short-term rates. This is really when we look at the assets we'd acquired we're talking about long-term debt. Then, the equity markets have been so volatile, that it wouldn't make sense when the markets are trading in a choppy basis. Our expectation would be that we would keep our balance sheet healthy as we grow our core portfolio, or we hold off. Which is fine too. We've are exceeded our goal for this year, so it doesn't make sense, then we hold off.

Cedric LaChance with Green Street Advisors.

In regards to TI packages, they appear to remain elevated over the last year in your portfolio. When you think you will be able to be reduced the TI packages on new leases? Or is it something that you believe could remain sticky for some time?

In large part what is contributing to some of the TI amounts that you see are the leases associated with the Bloomfield Hills redevelopment. So, once we get past those, I would expect that you see that number revert back to a more normal-looking level. So, I think those are somewhat specific to what is going on at Bloomfield Hills.

And to add to that, we choose to take a fairly conservative point of view on what a redevelopment is, and I think we are right about that. So, for instance these 3 deals, Bloomfield Hills and the other re-anchorings are showing up as TI costs but in many instances it is much closer to tearing down a building and building a new one. When you look at TIs between $50 a foot and $100 a foot, your immediate reaction should be either, they must be tearing something down and building it, or they're spending a lot of money on tenet contributions. My guess is if we split those out, most of this, as Jon just talked about, was really about doing pretty significant capital improvements to be buildings as opposed to more typical TIs.

That's exactly right.

So, if you look at the cases where you would have just the TIs in terms of interior improvements rather than rebuilding the box, where do those run out at this point?

Less than half of where we are --

Say $25 a foot --

At the high end.

Right. Again, it's fact and situation specific but that's an estimate.

Andrew DiZio with Janney Capital.

One more question with respect to Storage Post. I know you guys own the operating entity as well, and I think that entity only runs a few facilities outside of the New York area. So, I'm just wondering if that would affect your decision to monetize the urban portion on its own down the road?

No. A few different things are at works here. First of all, all of our Storages in our fund investments, all of our fund investment at the right time get monetized. I think our track record speaks for itself, but more often than not, we have been pretty opportunistic sellers and we would continue to do that. The Storage Post, the fact that it has an [opt-go] the fact there's a very talented team there and that I suspect they're going to do interesting things, probably just broadens our different potential choices. But we hold the controls and will make the right decision at the asset level at the right time.

The good to great news is the team has been harvesting a bunch of low-hanging fruit. So, while you see our occupancy increases which have been important and while we are heading towards a stabilization year-over-year our same store NOI, for instance, on a stabilized portion has been mid to high teens growth. Now, that's not going to continue forever, but while we are harvesting some of this low-hanging fruit we have a lot of choices as to -- do we want to hold on to get some more of that. We don't have to feel as though we have pulled out every last dollar from a cash flow perspective. When we see interest that you just saw in terms of the CubeSmart deal though, it certainly opens our eyes to that.

One more interesting piece to it, is from New York self-storage perspective, my guess is we are in the very early innings. Meaning that, if I read the announcement correctly, this deal with Storage Deluxe for CubeSmart, makes CubeSmart one of the dominant, if not the largest, in the New York area on still what I consider to be a relatively small platform. So, there is real room in the New York market for other groups to become real consolidators in a very strong high demand market, and we find that intriguing. Now, again, we, Acadia Realty Trust are not to be the consolidator. Storage Post can play as dominant a role as they choose to, and they are capable to, and we'll be supportive of that. But I would also expect to see other players step up in a meaningful way and take leadership roles in a very, very exciting market with self-storage. I think it is early as we see how this all plays out and I think it is very encouraging.

On City Point, it looks like you increased the, within the supplement amount of leased square footage and potential future development costs in there. Just wondering, if that is expanding the potential size of phase 2 and 3, or if it's pulling forward different parts from different phases, or just where that came from.

It's probably expanding somewhat from what we had forecasted a year, year and a half ago. We are pleased with the level of anchor interest. We are juggling and playing through a few different scenarios that we think could be pretty exciting, and with that comes the possibility that the square footage could increase from what we had more conservatively forecasted, so we thought it made sense to at least put that possibility out there. The devil is in the details, so just expanding square footage is not in and of itself, a determining factor for us. We want to make sure we get the right anchor mix here, the right tenants, the right to co-tenants. What is going on in Brooklyn overall and downtown Brooklyn is very exciting. The transition that we see Brooklyn going through is affording us a lot of opportunity to be thoughtful about the right anchors, right product mix, right size. This development, because we have a fairly clean slate, gives us that opportunity to shift it. I wouldn't be surprised you'll see some more shifts as we go on quarter-to-quarter.

At this time we have no further questions. I would like to turn the call back to Mr. Kenneth Bernstein for closing remarks.

Great. I'd like to thank everyone for taking the time. We look forward to speaking to all of you again soon.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a wonderful day.