CBL & Associates Properties, Inc. (CBL) 2010 Q3 法說會逐字稿

Ladies and gentlemen, thank you very much for standing by. And welcome to CBL & Associates Properties, Incorporated's, third quarter earnings conference call. (OperatorInstructions.)It's now my pleasure to turn the conference over to Stephen Lebovitz, President and Chief Executive Officer at CBL & Associates Properties, Incorporated. Please go ahead, sir.

Thank you and good morning. We appreciate your participation in the CBL & Associates Properties, Inc. conference call to discuss third quarter results. Joining me today is John Foy, CBL's Chief Financial Officer and Katie Reinsmidt, Vice President Corporate Communications and Investor Relations who will begin by reading our Safe Harbor disclosure.

This conference call contains forward-looking statements within the meaning of the federal Securities laws. Such statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not be even be anticipated. Future events and actual results, financial and otherwise, may differ materially from the events and results discussed in the forward-looking statements. We direct you to the Company's various filings with the Securities and Exchange Commission, including without limitation, the Company's annual report on Form 10-K and management's discussion and analysis of financial condition and results of operations included therein for a discussion of such risks and uncertainties. During our discussion today references made to per share amounts are based on a fully diluted converted share basis. A transcript of today's comments, the earnings release, and additional supplemental schedules will be furnished to the SEC on Form-8 K and will be available on our website.

This call will also be made available for replay on the internet through a link on our website at www.cblproperties.com. This conference call is the property of CBL & Associates Properties, Inc. Any redistribution, retransmission or any rebroadcast of this call without the express written consent of CBL is strictly prohibited. During this conference call the Company may discuss non-GAAP financial measures as defined by SEC Regulation G. A description of each non-GAAP measure and a reconciliation of each non-GAAP measure to the comparable GAAP financial measure will be included in the earnings release that is furnished on Form 8-K.

Thank you, Katie. And so we have discussed in our last few calls, a key focus of ours throughout this year has been to stabilize and grow the NOI at our existing Centers. We are pleased that our results for this quarter show significant progress in this area. Same center NOI for the portfolio returned to positive territory, posting an increase of 60 basis points.

We have worked hard to accomplish this by generating new revenues at our Centers from various sources while at the same time continuing to focus on reducing expenses. John will discuss details surrounding our guidance a little later, but we have been encouraged by the outperformance of our portfolio versus our original projections. Our improved results have been primarily driven by substantial gains in occupancy, both in the mall portfolio and overall, increases in specialty retail and branding income, as well as sustained low property operating expenses.

We are also benefiting from the positive mindset and pickup in expansion plans by a number of retailers including several new concepts opening in our Centers. Examples include Foot Locker's two new concepts, CCS and House of Hoops, Gymboree's Crazy 8 division, Best Buy Mobile, Cotton On and PS by Aeropostale.

Another highlight of the quarter was the opening of our first American Girl store in Oak Park Mall in Kansas City. Junior anchor retailers are also expanding into mall locations both for their full sized stores and for new smaller concepts. We are working closely with Dick's Sporting Goods, Bed Bath and Beyond, Jo-Ann Fabrics, Ulta, Shoe Department's Encore Shoes and others.

For the year-to-date we have opened 18 new big box stores totaling roughly 500,000 square feet. The recovery in retail is encouraging and has resulted in significant increases in occupancy throughout the year. During the third quarter portfolio occupancy increased 180 basis points to 91% compared with the prior-year period. In the malls we recorded a 140 basis point increase to a 91.3% occupancy rate.

Third quarter continued the favorable sales trends that we have seen earlier in the year for our portfolio. Back-to-school season was healthy. And shoppers have been coming out for our many promotions and events, including those held in conjunction with the tax holidays in several states.

Year-to-date we have posted a 2.7% increase in sales per square foot over the prior-year period. We are anticipating a solid holiday sales season with increases predicted in the 2% to 4% range. Even though retailers are still watching inventory levels closely and are highly promotional.

We are also pleased with the significant improvement this quarter in our lease spreads. On a same space basis rental rates in the third quarter were signed at an average decrease of 4.8% from the prior gross rent per square foot. We are working hard to get lease spreads into positive territory. In general, retailers have shown a greater willingness to commit to longer lease terms and lock in more favorable rental rates. For leases longer than three years, the average lease spread increase was nearly 10%. This quarter about 51% of the leases signed had terms longer than three years, which is an improvement compared with 2009.

In total during the third quarter we signed over 1 million square feet of leases, the majority of which were in our operating portfolio. This included 317,000 square feet of new leases and 706,000 square feet of renewals. We have recently taken advantage of a number of attractive external growth opportunities including acquiring our partner's interest in Parkway Place Mall in Huntsville, Alabama. We purchased Colonial's 50% interest in the property for $38.8 million of which roughly $18 million was in cash. The purchase price represented an attractive high single-digit cap rate. Huntsville is one of the few cities in the country to have already demonstrated significant job growth and economic improvements, in part due to the BRAC program creating direct and ancillary employment.

Parkway Place is well positioned to begin enjoying the benefits from this growth. This year the Center has generated sales increases just under 10% and is maintaining a high occupancy rate. We expect these trends will continue.

We also recently announced a new partnership with Horizon Group to develop The Outlet Shoppes at Oklahoma City. This is our first outlet center project and provides us an entry into the outlet center sector which we have been attracted to for some time and that is enjoying much success as consumers continue to seek value in their purchases. This project also allows us to begin building relationships with outlet center retailers who will begin looking to expand into non outlet projects as well. We also expect that this project will lead to other outlet center development or acquisition opportunities at attractive returns.

Construction on this project is well under way. And executed leases exceed 80% with a great list of retailers. We structured a 75% - 25% joint venture that offers an attractive 10% initial unleveraged return including fees and reserves. Once open, the Center will be the only outlet center for 145 miles and the only outlet center in the state of Oklahoma. The opening date is planned for late summer 2011.

We are also just completing construction on the first phase of the Forum at Grandview, our 110,000 square foot community center project in Madison, Mississippi. Next week we will celebrate the openings of Dick's Sporting Goods, Best Buy and Stein Mart. I will now turn it over to John for the financial review.

Thank you, Stephen. We complete the $109 million follow on preferred stock offering just a few weeks ago. The preferred was issued at an 8% coupon which is great evidence of the improving capital markets and the financial strength of our Company. The offering received a very strong demand and demonstrates our ability to access multiple forms of capital and our commitment to continue to deleverage.

It is really an amazing statistic that we have been successful in reducing our outstanding debt balances by nearly $650 million since the end of 2008. We are pleased with the current favorable credit markets and are looking at opportunities to take advantage of the attractive rates through our refinancings. One opportunity that we are exploring is to place property-specific loans on several of the properties covered by our $560 million facility.

We would pay down the recourse secured facility with the proceeds from the new permanent fixed rate non-recourse mortgages. This would allow us to essentially swap out floating rate debt into long-term fixed rate loans at the current attractive interest rates. And would provide us with further availability on the facility to pay off future maturities.

During the quarter we retired the loan secured by Strouds Mall in Stroudsburg, Pennsylvania, York Galleria in York, Pennsylvania, and the Parkdale Mall and Crossing in Beaumont, Texas. The properties were contributed to the collateral pool securing the $560 million credit facility.

As of September 30, 2010, we had more than $438 million available on our lines of credit. Our financial covenants remain sound with a debt to GAV ratio of 54.5% and an interest coverage ratio of 2.3 times for the rolling 12 months.

We reported FFO of $0.47 per share for the third quarter. Major variances compared with the prior-year period include $0.01 lower in out parcel sales and $0.01 lower of straight line rents.

Total portfolio same center NOI in the third quarter, excluding lease termination fees, increased 60 basis points from the prior-year period. As Stephen discussed earlier, this is a function of our ongoing efforts to increase rental income through occupancy gains and aggressive leasing and to control expenses. Other major variances in this quarter results in G&A as a percentage of the revenues was 3.9% compared with 3.3% in the prior-year period. The variance in G&A was related to increases in payroll, insurance travel and legal expenses.

Bad debt expenses during the quarter increased $400,000 to $1.2 million as compared with the third quarter 2009. Our cost recovery ratio for the third quarter was 102.4% compared with 99.2% in the prior-year period.

Variable rate debt was 20% of total market capitalization as of September 30, 2010, versus 16% as of the end of the prior-year period. As of September 30, 2010, variable rate debt represented 30% of our share of consolidated and unconsolidated debt compared to 22% at the close of the prior year quarter. Our variable rate debt has increased over the prior year as a result of the expiration of $400 million of interest rate swaps at the end of 2009 as well as borrowings under our $560 million line of credit to pay off certain CMBS mortgages.

We are providing higher 2010 FFO guidance in the range of $1.93 to $1.99 per share, which represents an increase of $0.06 on the low end and $0.04 on the higher end from the guidance provided in the second quarter earnings release.

We've also positively adjusted our same center NOI growth guidance to a range of a negative 1% to a negative 2.5%. The increase in guidance is a result of continued favorable interest rates positively impacting FFO as well as better than anticipated occupancy gains.

We are now projecting a 200 basis point increase in overall year end occupancy in the range of 92%. One assumption in guidance that we spoke about last quarter was Ocala Mall. We had discussed the estimated gain on extinguishment of debt that we anticipated recording later this year related to the sale of the property and the resulting forgiveness of debt. Unfortunately, the proposed purchaser did not perform under the contract but we are still working with the bank to either sell to another buyer or to convey the property back to the bank.

We have included the estimated gain of $27 million in our guidance and are hopeful that this will be completed before year end. If the transaction is not accomplished this year, we will anticipate a conclusion in early 2011.

Third quarter results were encouraging and we are optimistic that these positive trends will continue. We are focused on capturing the growth potential in our portfolio, continuing to improve occupancy and taking advantage of opportunities to gain traction in our lease negotiations in order to stabilize and grow same center NOI.

We will also selectively pursue external growth opportunities that meet our strict financial hurdles and while we have nothing definitive to report today, we are making progress in our effort to sell the packages of supermarket centers we are marketing as well as discussions on joint ventures. Our balance sheet has consistently improved throughout the year and we have demonstrated ready access to capital. The economic and retail environment is slowly improving and we are well positioned to translate this positive momentum into growth in our portfolio.

Thank you for joining us today and we appreciate your continued support. We are now happy to answer any questions you may have.

Thank you, sir. (Operator Instructions.) Our first question comes from the line of Jay Habermann from Goldman Sachs. Please proceed with your question.

Good morning.

Good morning.

Hi Jay.

Hey Stephen. Question maybe for Stephen on sort of occupancy versus rate growth. Obviously you have seen a nice increase in occupancy this year and it sounds like you're forecasting 92% for the full year, so some continuation of that trend, but can you give us a sense of when you start to think about pushing rate perhaps a bit more now that occupancy is getting back to a stabilized level?

We haven't not been thinking about that and pushing it. It's just a question of -- there's a lag factor and as the sales decreased in 2008 and 2009, now some of those are -- the decreases show up in the renewals as we have the negotiations and we think that we're getting through it that now we're starting to see some improvement and the lease spreads were definitely better this quarter than they have been earlier in the year and we expect to see continued progress and we're pushing it with retailers, a lot of the negotiating is based on that health ratio of occupancy cost to sales. And where some retailers had pretty major sales decreases in 2008 and 2009 we're still negotiating on that.

Now, the good news is that retailers have done a great job of improving their profits and their margins so we're trying to get the discussions away from totally focused on sales in those cases because a lot of retailers are making money at locations that they might not have been doing so well at before, so they've turned around. And also now retailers are focused more on the top line so they're looking for opportunities.

They don't want to give up profitable stores or anything like that, so I think that the dynamic is getting better. There was just an ICSC event in Chicago last week and our leasing people came back and said that the mood was noticeably better than it has been at any time in the past couple years and someone made the comment that it's almost getting to be fun again. So that was a good comment and good to hear.

And I guess on John's comments it sounded like bad debt remained roughly flat so it's still stays at a fairly high level. Can you give us some sense of what are you seeing in terms of risks of, I guess, store closings as we head into year end and perhaps Q1 of next year?

It's down somewhat, Jay and we think the quality of the tenants' financials are improving as well. Needless to say, as margins increase and they make more money the balance sheet is going to increase significantly. So there will still be bankruptcies. It's just part the business. But I think we're seeing trends that are basically showing that it's getting better and the availability of capital, not just for us but for other retailer, et cetera is improving dramatically and if you look at the stock prices and what's happened with regard to retailer stock prices, that is also a significant sign that financials are getting better as well. So I think that we'll continue to have them, but I think that we're trending down.

Okay. And just last question on the capital position. I know you've got about $300 million of debt rolling in 2011 and you mentioned liquidity of roughly $430 million today, but as you think about sources of capital for next year and beyond, can you talk about again asset sales and joint ventures, and I guess what should we expect to see in the near term and I guess just capital position overall, again balancing that debt coming due versus your current liquidity. I mean should we look to see some activity to enhance that position?

Yes. I think the indication was with -- the preferred that we just offered was one indication of it. Likewise, we have sold off two of our lowest performing centers in Del Rio, Texas, which was the first project we ever built and it was $169 a square foot in sales and then we just completed in the fourth quarter the sale of Pemberton, which is our lowest performing mall, which was $129 a square foot. So I think what we will continue to see from us is that ability to sell those assets off to other people who see potential with them.

Also, I think that we'll see some other opportunities to, hopefully, sell some of the other lower performing assets which we're focused on as well. So I think -- yes, I think we're going to continue in that mode. We don't have to do anything fairly significantly. We are also, as I alluded to in the comments, is we're taking our $560 million credit facility that we had to take care of all of our CMBS loans, and we are refinancing those now so that we basically have that availability for next year and for 2012 going forward to take care of those maturities as they go. So our financial flexibility has really improved dramatically and we think that over the next couple of months it will continue to improve.

The relationships that we've had with the financial institutions just continues to flourish, and we have really enjoyed a great relationship with them and I think that's an indication of the -- that goes really back to when we did the -- what everybody else said could not be done was when we extended all those credit facilities in probably the most downturned economy and we kept the full amount of those. So that relationship was great then and it's only getting better.

Great. Thank you, guys.

Thank you for your question, sir. Our next question comes from the line of Todd Thomas from KeyBanc Capital Markets. Please proceed with your question.

Hey, Todd.

Good morning.

Hi. Good morning. I'm on with Jordan Sadler. Hey, John, just sticking with your plans to refinance some of the debt that's on properties that are pledged against the line, what kind of underwriting assumptions are you seeing today that the lenders are using? What are your expectations there?

Yes. I think what we're seeing is that they're really focused on debt yields and if you look at our portfolio and the numbers we're running we are really in a good, good position on those. What we're also seeing is that appraisers are now feeling more comfortable with regard to retail properties so that their appraisals are becoming more realistic. So I think that the way we're underwriting, we're underwriting in our capital plans on a conservative basis but we're seeing a benefit of more than what we thought we would see at this time.

So I think we're -- the underwriting that we experienced when we did the $180 million to $190 million with Goldman Sachs, that underwriting continues to prevail today and the competition's probably getting even more fierce with regard to the ability to place those loans. So I think that as well as coupled with the conservative approach we're taking puts us in an excellent position financially and with what's going on with our properties we're feeling very good about the outlook.

Okay. So right now the $560 million line, it's at about 3.1%. I mean would you think that there would be about a 200 basis point negative spread there on some of those refinancings? Is that reasonable?

Yes. Yes. I think it's a reasonable. Todd, I think also what it does is it really -- what we have talked about a lot with you guys is the fact that this is non-recourse debt that we're going to put on these assets whereas the $560 million credit facility is recourse and in our opinion there's a big tremendous difference between recourse and non-recourse debt and we think that when you do that you look at return on equity which is really, really important. So we're focused on that and think that it's a great tool for us versus basically risking the capital of the Company on every project that's done.

Okay. And then switching gears and regarding your entrance into the outlet space, how much room for growth do you think is out there for CBL? And as you sort of think about your involvement do you think it will be more on the development side or are you also looking at acquisitions?

Yes. This -- like I said, during the conference call during my comments earlier, this is really an entry for us and we have a great partner. The project makes a lot of sense financially because the returns are attractive, the pre-leasing is over 80% with all the right retailers. So this is the kind of project that we felt is a great way to get into the business and we don't have dollar amounts that we've allocated to spend on outlet projects going forward or firm plans, but we want to continue to be opportunistic and we've already gotten phone calls from people who have presented opportunities for us for both development and acquisitions that we're going to look at.

We have the relationship with Horizon and we're hoping that we can build on that and there is a lot of opportunity also to work with the retailers like I said in our existing properties. We've seen some of that in a couple of properties in the past year as the outlet retailers have re-branded stores. They don't call them outlet, they sell value merchandise which is basically the same thing that they're selling in outlet centers but they're selling them in conventional malls, and so strengthening those relationships and giving us new retailers to talk to. One example is Tommy Hilfiger who we have here in Hamilton Place, and this is a -- Hamilton Place doesn't have a Macy's and they have said that they will look at malls that don't have a Macy's because they don't have the same overlap and so they have a store here that's doing really well. And there's other names as well. So I think it really opens a lot of doors for us and we're really excited about the prospects for the Business.

Okay. And at Oklahoma City, how much of the fees that are baked into the 10.3% initial yield? I was wondering what the stabilized yield would look like excluding those fees.

Yes. Todd, it's basically the fee structure is very typical of what we did in our own projects. We put in a management fee and we back -- we put in a development fee that basically a portion of it is capitalized but a portion of it's not and then our partner shares in that fee as well. So it does carry the normal typical fees that we carry in our mall pro formas and possibly maybe a little more because we do have a partner where we're sharing the fee with.

Okay. All right. Thank you.

Thank you for your question, sir. Continuing on our next question comes from the line of Christy McElroy from UBS. Please proceed with your question.

Hi. Good morning.

Hi Christy.

We've been hearing from some specialty apparel retailers, especially sort of in the teen category, that having recognized that they over expanded their traditional concepts, they plan to continue to close underperforming stores and focus on newer concepts and locations that have historically been more successful for them. I'm wondering if you're seeing that as well and in some of your locations that have below average sales productivity, if you're worried about the continued lost of national tenants.

Christy, we've heard that talk, too, but when it comes to the actual discussions we really haven't seen it materialize. When we get down to specific locations, then given how the retailers have improved their margins so much and cut their costs that they're making money and they just haven't had the interest in closing stores where they're making money and like we've said for a long time, one of the advantages of CBL is our low cost of occupancy, especially compared to a lot of the peers so the retailers, even they don't do as much sales per square foot, they're still making money and it's about profitability and so we just haven't had the experience like you're talking about.

Are you finding that when they do come to the table and they're willing to stay in the location, are they fighting tooth and nail on the rent?

Yes, they always do. I think every retailer does, and they're no different from that perspective and I think that what they have to realize, and what they do realize is that we've got the distribution network in markets where they can't penetrate. If you go to Atlanta, we use this example often times, where one retailer has said to us they felt that they had to be in every mall in Atlanta but now they've come to recognize that they are a brand, and they could probably be in three or four malls and cover the Atlanta market area, but to be in Chattanooga or Huntsville, they've got to be in a CBL mall. So the distribution network for these guys is very, very important to them as well.

With regard to your re-leasing spreads I'm wondering if you could give a sense for what the spreads were on a net basis or at least some sense for what kind of CAM is being underwritten in the new leases versus the prior leases. Trying to compare the rents on your new leases to in place or expiring rents is difficult because you disclose those on a net basis.

I mean we don't disclose it but it shouldn't make a material difference in the trend and whatever the comparables should be, whether it's last year or last quarter, should be similar net versus gross because the CAM and tax reimbursements haven't really changed that much.

So the percentage change in the -- so the re-leasing spread would still be the same on a percentage basis if you stripped out the CAM?

I mean we calculate it on a gross basis. We stopped doing on the net basis a few years ago trying to be similar to our peers and there's really -- there's still no consistency in lease spreads. We include every deal on a comparable basis. We don't take out centers that are under re-development or anything like that and we don't take out centers that have sales below a certain amount of square feet. We don't limit the term on deals. We include every deal and there's not consistency, so the real value I think from your point of view is seeing the trends. And the numbers are relative so the improvement we've shown this quarter is what we're focused on and like I said, we're pushing hard to get this into positive territory and we're pleased with the direction that we've gotten this quarter.

Okay. And then just lastly how many malls are you currently classifying as non-stabilized and can you sort of put those in the different buckets of what would you eventually like to sell, are there any malls remaining that you would like to hand the keys back and are there -- what else remains in terms of where you can potentially get the occupancy back up?

Yes. There's two malls in the non-stabilized, and they come off as the -- as a period of time elapses over that and they meet certain criteria. So that's where we are. As far as a target list of what we're selling off, et cetera, I think it's -- we look at it on a one off basis and we look at opportunities to meet demands that people have basically shown to us. So we don't really have a list of specific centers that we're doing and we basically look at opportunities to basically see that and I think that that's what happened with regard to the other two assets that we sold. I mean we didn't actively pursue those but we were able to really get good pricing on those two assets even at those sales per square foot numbers so we're unique from the standpoint that a lot of our properties are in market areas that serve just a unique population and a unique investment community.

Thank you.

And thank you for your question. Continuing on our next question comes from the line of Nathan Isbee from Stifel Nicolaus. Please proceed with your question.

Hi, Nate.

Hi, Nate. Good morning. Just focusing on the occupancy, can you just disclose how much of the sequential occupancy gain, and it was a pretty nice gain, was in long-term leases versus shorter term?

No. We don't have that number so no, I can't -- we just don't have it right now.

Okay. And then just focusing on the shopping centers that are for sale, it seems like it's taking a little longer than expected. Is it that you just haven't reached bids that you think is appropriate value? What is holding up the process there?

I think some of the negotiations have been a little longer than what we would like them to be. I think that people are taking a period of time to do their due diligence. I think their financing -- I think often times we're seeing them holding off as long as they can to go out for an application on a loan because interest rates have continued to go in the right direction for them. So I think that's what has happened, but it's not a fast process. It's a slow process, but I think we're making headway and we're not giving these assets away. We're realizing good value for those assets as well.

Okay. And who are you dealing with? Are you typically talking to other public or private REITs or more of private buyers?

I would say it runs the gamut from the standpoint of certain assets are going to go to some funds that have a lot of money and are looking for returns. As we pointed out, there's different types of joint ventures also. There's joint ventures of people who are looking for driving yields with high leverages and then there's other people who are looking at lower debt numbers but with less yield but maybe more upside and I think the same applies with regard to possible buyers. And probably institutions aren't going to buy a Del Rio or a Pemberton but specific people who have that niche in that market area and who have had great success those are the guys that are coming out of the -- coming at us to buy those assets. The buyer on Pemberton has expressed a lot of interest in some other assets so it's creating that relationship with those people and working with them to do it and also cooperating with them so that they can make the best deal they can on financing and, therefore, we get the best deal for us as far as pricing.

All right. Thank you.

Thank you for your question. And our next question comes from the line of Jim Sullivan from Cowen Group. Please proceed with your question.

Good morning. Two questions. First of all on the same store NOI, year-to-date same store NOI that you reported was negative 1.5% and your full year guidance has a mid point of 1.75% and I just wonder if you could address the trend as we move from Q3 to Q4 and on the face of it that would suggest that the same store NOI might recede in the fourth quarter and am I reading it wrong or not?

Yes. I think where we are is we're being somewhat conservative with regard to that, Jim, and I think what's happening is that it's a wait and see type of situation where we originally did these estimates of NOI growth where we were using the higher spreads. We have been pleasantly surprised by the economy and what we're seeing and, therefore, in the fourth quarter we're still using somewhat of what we've done up to the third quarter, but we have adjusted it somewhat as a result of that and I think as we see things occur we feel more comfortable and confident, but I think the fourth quarter -- everybody says that the holiday sales should be good this year. It's a wait and see type of situation. Our specialty and sponsorship guys are getting some traction but it's a wait and see and we hope that the fourth quarter is going to be strong, but that's why we basically held -- we've adjusted it somewhat but not significantly.

So it's not that you have any concerns about any significant increase in bad debt in the fourth quarter or anything like that?

No. I don't think so. I think that as we mentioned earlier, the retailers are starting to see -- are enjoying much better margins and their financials are getting better and even the local and the regional guys are feeling more comfortable and confident so no, I don't think we feel that there's going to be a significant increase in bad debt or a significant amount of bankruptcies.

It's crazy. I mean years and years ago as a result of being in this business so long, is that you never saw anybody go out in the fourth quarter but with the new bankruptcy rules and everything everybody basically has become more transparent and you're seeing the results. But we don't think that we're going to see much in the fourth quarter and the trends so far in the month of October have been pretty good.

Okay. Good. Let me -- if I could switch over to the factory outlet center initiative. John, and Stephen, the size of the center that you indicated in this supplement here is 325,000 square feet and I think it's a 65 acre site. Typically you can get much more coverage on a parcel that big, I think, and I'm just curious whether there is incremental phases that could be built onto this initial 325,000 or whether there's a lot of out lots or something else about the topography here that limits you to that size.

Yes, Jim. That's a good question. The site is flat so there's nothing with the topography. We do have some out parcels for some development for restaurants and a hotel that are part of the overall project and we also have some expansion possibility there that's not in the initial square footage. So the site definitely has potential for additional development.

So when you forecast the initial yield here of just over 10% and your share of the cost is $60 million, is that 10% on the full $60 million or are you -- or is it on a somewhat smaller number that's allocated to the center alone?

No. It's on the full cost of the land and the site work so any expansions would be accretive on top of that and would help that yield. It does include conservative assumptions on selling off some of the out parcel land, though.

Oh, okay. So you do get some of the benefit of that in that yield?

Correct.

Okay. Okay. Great. Thanks.

Thank you.

Thank you for your question, sir. Continuing on our next question comes from the line of Michael Mueller from JPMorgan. Please proceed with your question.

Yes. Hi. Good morning.

Hi.

Hey, Michael.

Hey. I've got a few things. First of all I just wanted to clarify. John, did you say earlier that on your 2011 mortgage refinancings on, just thinking of your pro rata share of everything, that you expected a negative 200 point basis spread? Did I hear that correctly?

No, what we were talking about was on the -- what's in the $560 million line today is basically where we will refinance those. Those basically -- that $560 million line has a floor in it and it floats over LIBOR so the difference is probably a little less than 200 basis points depending upon what happens in the swap market or treasuries for this quarter. So it should be pretty good in that respect. I don't think it's going to be a full 200 basis points.

Okay. Okay. Got it. And then touching on the outlets one more time. I mean on a go-forward basis should we expect more activity either on the acquisition side or the development side on your own or in conjunction with partners over say the next few years?

I can't really say at this point. I mean we'll -- it will really just depend on the project. I mean we don't have, today, the experience or the track record so I would guess that initially it will be with partners, but it also just depends on the type of project and there's a lot of consultants out there, a lot of brokers and other services that we can take advantage of and we have the capital.

We were able to get financing on this project with the construction loan, which is committed, and we are really pleased with that. That was an important part of the project because we felt like it really gave it the credibility in the markets that it wasn't just something we were using our equity on. And another goal is for us to build direct relationships with the retailers. So, we'll look at really whatever makes the most sense as those opportunities come along.

Okay. Great. And then just going back to the asset sales for a second, I just want to make sure I'm thinking about this the right way. It sounds like there are three buckets of things that are on the table where they could be used to help you delever some. One, starting at JV, seating in JV; two, selling I think you said the community center or package of community centers; and three, just non-core malls. Are those the right buckets to think of what you're considering?

I think that's a great analysis and a very simplified way of looking at it. I think that that is exactly what we're doing. As you will recall our history is basically we did develop community centers and power centers in the past to sell those off to generate equity. So it's back to the basics.

Okay. Can you help us either frame, either by bucket or just overall, just roughly to give us some sort of sense as to how much is potentially on the table from sales, either from the non-core or what you're thinking about on the JV side or a rough number of what the community center could be either again in the whole thing together or by segment?

Yes. Well, what we do is we don't budget for any sales in our projections, et cetera, so --

Sure.

It's almost impossible for us to give you a number because we don't have that number in our own mind. But we just see as these opportunities develop that we can take advantage of those opportunities. And so people have approached us with regard to community centers of a specific type, the people on Pemberton who bought that mall basically have said this is the type of mall and this type of market area, give us a chance to look at some of the others. So what we've done, Michael, is we haven't really budgeted for that and just as we see those opportunities coming around and available what we do look at is, is that that is a means of de-leveraging but also we look at our financial statements and look at the recourse versus the non-recourse debt and what we can do to grow the company in that respect so we don't have a number in our own minds so I couldn't give you one. Sorry.

Okay. Okay. That's fair. Thank you.

Thank you. And our next question comes from the line of Jeffrey Donnelly from Wells Fargo. Please proceed with your question.

Hey Jeff.

Good morning, Jeff.

Good morning folks. John, you referenced earlier that retailers' stocks are doing much better as their sales have come back. But I'm curious if you can differentiate between what you're seeing for the national, I guess I will call it small shopper in line chains, versus the more local stores. I'm curious if that recovery is translating to their stores and even their propensity to open new stores. Are there any discernible trends you can talk about between the national and local shop tenants?

Yes. I think about six months to a year ago we were seeing a lot more activity out of the locals, basically because they saw that the rental rates, et cetera, were now in a position where they really could step in and take advantage of those situations. I think that same thing is continuing to occur although I think now a lot of national retailers, what Stephen alluded to with new concepts and new ideas are stepping up and basically saying we want to take a lot of this space well. I think we're getting some traction.

I think we hope that the pricing power continues to come in our direction and as we fill up and our occupancy levels increase we basically will see some opportunities to do that as well. And then when you see some big spaces in these malls you are seeing some of these retailers like the pet store operators are basically downsizing their boxes so they can come into the malls and see that as a traffic generator. Add to that like a Jo-Ann Fabrics who basically sells crafts and fabrics, it's a great opportunity for them also to come into the mall. So I think that pricing power is starting to swing in our direction and the leasing trends, although they're not where we want them to be, they are definitely coming in the right direction.

And how are the retailers I guess getting these stores financed to open? I mean are they coming to you with the cash to handle some of the build-outs? Is that something that you guys have been having to increasingly fund, and I guess to the extent you guys do your own credit checks, I mean I guess what does some of their own working capital look like in getting stores open?

Yes, Jeff, it's Stephen. A lot of the spaces are already built out so it doesn't demand a lot of investment for -- especially for a local to start up a new store other than the inventory and the fixtures and there've been good opportunities for them to pick up that stuff at discounts as well. So we're not seeing big allowances or anything like that and we are continuing to see some really good demand from strong locals and regionals and we've challenged our leasing staff to continue to push that because we think it adds an element to the malls that is important for the customers. So that's just as important today as it has been over the past couple of years.

I think one of the things also that you're seeing is that cash flows of these retailers, even the local guys, are so much better because what happened is that a lot of these vendors were extending out where it used to be net 30 they're now extending that out to net 60, 90 and 120 days, so the cash flows of even these local retailers is getting to be so significant that that's a growth vehicle for them. So they are -- everybody is managing things much better and everybody is managing their cash flows better.

Maybe you can help me out on tenant allowances and maybe correct my logic because there might be some timing differences, but if I do look at your tenant allowance expenditures that you have in the quarter versus just the total leasing you do in that quarter, it's a figure that's been steadily increasing, I guess, on a per square foot basis over the course of this year and it's even up year-over-year. I guess I'm trying to figure out if that's a -- is there a true trend there, is there a timing difference? Because it seems like at the very least it just seems that TI allowances just remain high, if you will. I guess any comment on what you're seeing in concession trends?

Sure. Well, part of it is the boxes which we've put in and like I said we've opened 18 boxes in the malls this year so there's some build-out work and some allowances that typically go with that in converting the space and the chunks are bigger just because the spaces are bigger. So that's probably the biggest factor behind that. The other thing to keep in mind is that with our occupancy going up we're just doing more leasing. I mean that's a good thing and we're -- and that -- but as there's more leasing there's going to be more allowances so that's a big part of it. From a timing point of view the allowances get paid when the spaces are open and paying rent.

So it doesn't really track the leases that go into the lease spreads so it's hard to have a direct correlation. There's definitely a lag there. And we're looking also really closely at tenant financials when we're doing allowances and so that's a factor that we're careful about. And I guess one other thing that I forgot is restaurants, and we've added a lot of restaurants to our properties, just 17 alone this year and restaurants do involve more of a tenant allowance because of the build-out. Again, we look very carefully at the financials and are cautious before we make those investments but that's a factor in what you picked up on.

And just a final question. I'm just curious you have 74 JCPenneys in your portfolio. Have you ever had any discussion with them about, just given that they've been getting some more interest, if you will, from Pershing Square and Vornados, any kind of feedback you're hearing from them and what their thinking is there?

We've talked to them. We were just out there actually right before the Pershing Square Vornados investment was announced and then we've talked to them since then and from an operational point of view, they haven't announced any changes. They're still looking to add new stores, like they said, and add $1 billion of new sales to the company in five years. We have a great relationship with JCPenney because we have so many stores with them and we've worked closely for a lot of years. They are interested in remodeling a number of stores, as everyone has read. They're adding Sephora, continue to add Sephora departments and Mango departments, and doing a lot of innovative things with their stores. So we think their management is doing a great job and we value that relationship a lot.

That's helpful. Thank you.

Thank you, sir. And our next question comes from the line of Craig Schmidt from Bank of America Merrill Lynch. Please proceed with your question.

Thank you.

Hey Craig.

Hi, guys. Between 2006 and 2008 your deferred maintenance and TIs were running about 14% of NOI and then in 2009 and year-to-date 2010 those same measures are running about 7.4%. And while I would understand why you would want to conserve on cash during the credit squeeze, can we look forward to maybe some catch-up on the deferred maintenance in the quarters ahead?

Most of that money -- the change is, we've done very little renovations and remodelings. We've really kept up with our deferred maintenance, so that our properties are up to date and we're not seeing a significant problem with any of the deferred maintenance. We're spending money as need be on the deferred maintenance and we would envision that as the economy steps up and improves and as we see these leading spreads increase we're going to start doing some renovations and some remodelings of these projects as well. And what we're counting on in a lot of instances is some assistance with the cities and the governmental people that we're working with in these municipalities because it's important to keep in mind that we are the golden goose that lays the sales tax dollars for them and so they want to see our properties up to date, et cetera. So I think the biggest thing that you saw there was the renovations and the remodelings. We toned that down significantly.

Okay. And then in the same vein, I guess September 11, St. Louis Galleria adds its Nordstrom and they will have a new Apple store. Is there anything you're doing to try to minimize an impact to West County Center like a renovation or face lift or do you not think that's a serious competitive threat?

Yes. I mean we feel like we got ahead with the renovation. I mean the mall is in great shape. We redeveloped the Lord and Taylor building into Barnes and Noble, and the three restaurants in North Face that opened last year. West County is really strong, it's taking market share away. The trade area is growing. A lot of the financial -- a lot of the population growth is happening out bound of West County and so people aren't going to drive by to go to Galleria. We added an XXI store, Forever 21, that's doing really, really well in the Center and we've added a lot of new stores as well. So we feel really comfortable in that center's position in the market even though what you're saying about St. Louis Galleria will definitely be a factor.

Okay. Thank you for that.

Thank you.

Thanks, Craig.

Thank you. And our next question is from Quentin Velleley from Citi. Please proceed with your question.

Hey, Quentin.

Hey, Quentin.

Hi there. Just a quick one. I just want to clarify something on the leasing spreads and with the renewals which are sort of still down about 10%. I think you said earlier in the prepared remarks that about 50% were on the short term renewals and if you excluded those the leasing spreads would have been positive 10%. I'm not sure if I heard that right because if that was the case it would be about a 30% decline for the short term renewals. Is that right? I just wanted to clarify that.

Well, the part about the 10% for the leases three years and longer is correct. I'm not sure the math on the short term is exactly right, but you are right with the longer term leases are getting better spreads and we're also seeing the retailers more willing to sign -- to commit to longer terms. And what we've been doing with the short-term leases is consistent with what we've been doing the past year where we're giving ourselves more time to replace those stores or to work out a longer term renewal and get the kind of increases that we need.

All right. And I know that the amount of short-term leasing has come down, but I guess what sort of needs to happen going forward for that short-term leasing on much weaker rents? What needs to happen for that to sort of go away from the numbers?

Well, it's really I think sales picking up and that's what we're starting to see and that's a real favorable trend from our point of view and like I said earlier there's a lag factor with some of the stores that they might have had sales decreases in 2008 and 2009 and the renewals are just coming up now. So that's really the biggest contributor to the continued decreases but as sales start to recover and the sales recovery for some stores that had been down has been really encouraging so we're optimistic that it's going to continue to move in our favor. And also just with occupancy picking up and more retailers looking to expand, there's better demand and we'll go back to Econ 101 with supply and demand that will help work in our favor.

Okay and Manny [Coachman's] here and he's got a question for you.

Hi, guys. Good morning. Can you just give us some details on what's going on with equity and earnings of unconsolidated affiliates? Typically it's run kind of stable and positive, and in this quarter it's been a big negative.

Yes. We had a joint venture with a partnership in a couple of projects that we've changed the capital structure that resulted in some changes. We can -- Katie can give you more definitive details on that if you want but it is just basically a change in some partnership capitalization things that we did with a partner.

And then one more. What do you expect your expense recovery rate to look like going forward? I know you're at 102% in 3Q. What can we expect for 4Q and then maybe into 2011 if you have some details?

I would say it's probably going to be 100% in Q4 and I think the trends probably will not be any exceptional things in 2011 going forward.

Thanks, John.

Thank you.

And thank you for your question. Our next question comes from the line of Cedric Lachance from Green Street Advisors. Please proceed with your question.

Thank you. Just going back to the JVs a little bit. John, could you specify for us what you're trying to do with the JVs at this point? Is it, A, you're trying to contribute properties into a JV and so that you can feed an expansion, so that would include a number of acquisitions as well? Or are you just trying to sell a stake in some of your properties and, therefore, move them off balance sheet with a different partner but without trying to acquire more assets?

Yes. I think what we're attempting to do with regard to our joint ventures is to fill the need and to get the best pricing and the best opportunities for us. And so what we look at is, is what does our partner want out of those ventures and so if he wants highly leveraged properties and he wants current yield then we can fulfill that obligation so long as it's in line with our expectations. If on the other hand they want quality, et cetera, that's not to say that these with high leverage are not quality properties, but it's a different perspective from the investor standpoint.

So I think the great thing about it is that we're able to fulfill the needs of any partner based upon their demands. So we're fortunate in that respect and whether they want to go into regional malls, power centers or grocery anchored centers, we can do that as well, but I think what we probably will do with grocery anchored ,enters or power ,enters would be probably sales because that probably makes the most sense. So I think that we want to build a relationship with the partner, whether he's sensitive to yield or whether he is sensitive to basically a long-term perspective. And I think we can fulfill that -- the desires of those folks in any respect.

Okay. And have you made progress with any partners at this point in one direction or another?

Yes. I think we continue to make progress with them. I think that depending upon the partner, the institutional guys move much, much slower than the other guys and we continue to have discussions, we continue to explore different perspective on that as far as those who are highly leveraged and desirous of yield or IRR driven. Those -- from our perspective we're in a much better position because timing is on our side.

We don't have to do it and I think that a lot of these guys have a lot of capital that they need to get out so, hopefully they will come to the realization that the retail market is changing dramatically and that what their expectations were 12 months ago have definitely changed significantly. So I think what we're doing is we're not playing hard to get but we're not playing easy rollover guys either.

Okay. And earlier you made a comment on recourse versus non-recourse debt and you suggested that non-recourse had a beneficial impact on return on equity. Can you help me understand that a little bit?

Yes. I can give you a specific example. We built a center in Southhaven, Mississippi, which is just across the state line from Memphis. The project was a big success. We were able to put non-recourse debt on the project and finance out 100% on a non-recourse basis and actually took out some excess financing proceeds and still have a significant cash flow on that asset.

So if you basically said that I should run my Company totally based upon debt related situations, then you probably -- maybe you wouldn't have done that transaction. But if you basically look at return on equity, the return on equity on that project is infinite, and our risk with regard to that project is zero. So that's why we think to a certain extent that debt is not always equal. Non-recourse debt is definitely much, much better for us in our program than recourse debt. And, therefore, what is that actual return on equity going to be and what are the risk factors involved in it and I think all of that goes into consideration.

How does the pricing differ right now between recourse and non-recourse?

Basically zero. There's basically no difference. I think that the people who are in this business today underwrite the properties in a good, cautious way and I think they're comfortable with it. I think that it depends upon the market area and the management team and what you've done with these lenders in the past. So we have not experienced any differential between recourse and non-recourse debt.

Okay. And in terms of debt yields earlier you mentioned that no lenders are underwriting on debt yields. What kind of debt yields are they trying to achieve at this point?

It was, when we did the Goldman Sachs deal that yield -- the debt yield was higher. Now it's basically coming down and like in the 10% range.

Okay. And in regards to target from a leverage or debt to EBITDA perspective, where would you like to be from a debt to EBITDA standpoint?

Well, I think it depends upon the circumstances. I think it depends upon whether you take recourse or non-recourse debt into that. So I mean we look at it and we basically view it from the standpoint of what makes the most sense for us and for our shareholders and the risk reward ratios. And so we're continuing to pull the leverage down and we'll continue to do so, but we also are very cognizant of the risks involved in doing so when you go out and take and do crazy deals just to pull down that leverage when you don't necessarily have to do so. So I think we're very, very cautious with regard to that and we want to maintain the value for our shareholders and our properties are maintaining their values as well. And I think the sale of -- if you look at Del Rio and Pemberton Plaza, two of our lower producing assets, and the cap rates and the sales prices on those were very, very good so I think it just is more productive.

Okay. Thank you.

Thank you for your question. Continuing on our next question comes from the line of Rich Moore from RBC Capital Markets. Please proceed with your question.

Hey Rich. Good morning.

Hello guys, good morning. A couple things for you. First, on the outlet center side of things, I'm trying to figure out, is this going to be sort of a passive kind of venture that you're -- not the one in particular but the whole outlet center business if you would -- is that going to be passive or are you going to set up a department inside the Company to look at outlet centers to score the country for additional sites, that kind of thing, and be more active, would you say?

Rich, we're -- I think by nature we're more active than passive about everything that we do so we're not looking to add a ton of overhead and we've got some good people internally that can look at opportunities in conjunction with other things that they're looking at. We've maintained a right level of staffing in our development division but we've got capacity there to go out and work on projects and similar with our development leasing folks, we have people there. So I don't think you should expect us to be passive in any way.

Okay. So how about the scouring the country sort of thing, Stephen? Is that kind of what you guys are doing? Are you out looking for sites actively for outlet centers?

Yes. We've never been the "scour the country" type either. We've always relied on the relationships with the retailers and opportunities have come to us and I think that will be the same with this. We've had people call us, we have a good building relationship with Horizon and so I think that's been a better way to generate opportunities. When you kind of go out there and scour the country then you're not quite sure you're going to end up with something that's going to make sense and when it comes from the retailers, you've got a big leg up in starting the projects.

Okay. Good. Thank you. And then the associated centers seem to have the strongest same store NOI growth. Actually it seemed unusually strong. Is there anything going on in the associated centers in particular?

Yes. It's really, Rich, the pickup in the occupancy there and we had some of the newer projects that have come online that are in the associated centers that have picked up in occupancy and also some of the boxes, so that's really the biggest factor there.

Okay. All right. Good. Thank you. And then the last thing I had was, when did Pemberton close and how much was that disposition?

Rich shall we didn't disclose the amount because the buyer did not want us to do so and it closed in the fourth quarter. Just closed I think right around the first of October. Mid October.

Okay. So for modeling purposes, John, should I kind take a guess and put something in there for --

Yes. It wasn't a significant if you look at the cap rate it wasn't a huge loss of FFO, and the sales price was not a huge number either, so it was basically immaterial, but I think if you looked at the cap rates, it was material from the standpoint of it was pretty good.

Okay. Got you. Good. Very good. Thank you, guys.

Thanks, Rich.

Thanks.

Thank you and our next question comes from the line of Christy McElroy from UBS. Please proceed with your question.

Hey Chris. Hey guys. It's Ross here with Christy. I've got a couple follow-ups. The first was going to be on Pemberton, but it sounds like you don't want to disclose there. But just in terms of the cap rate, if there wasn't much FFO contribution that would -- was there debt on the property?

No. There was no debt on the property.

Okay. So there really then wasn't a heck of a lot of NOI, which would mean the cap rate becomes a little less relevant?

Well, I think it's not the most relevant thing, but in [turn] is the ability to see that there is growth potential and that there is a market for that type of approach.

On the community centers, because I think you've talked about those as a potential disposition, how much do you really think you can pull out at the end of the day in terms of net cash proceeds? If we're talking about a 2.5 million square foot portfolio that has a 100ish million of debt against it, it wouldn't seem to move the needle all that much.

Yes. Yes. Ross, I think what -- we don't really do anything as far as our budgeting process or anything. I think what we do is that we look at those opportunities when we see somebody wants something. It depends upon the asset, it depends upon the timing, it depends upon a lot of circumstances, so I couldn't give you a number on that. So I think there is good potential there. We managed to create this Company in 1978 and did a lot of that type of opportunity to basically sell off those community centers and do that type of approach but as far as a dollar amount and so on, it's -- we just don't have one budgeted or have one in mind.

Okay. On Parkway Place, I think Colonial disclosed that it was a 9.1% cap rate. Is that an a number that you'd agree with or is that any difference between what the seller and the buyer would characterize it at.

It's in the ballpark.

The ballpark. Do you think -- I mean when I look at that mall, obviously we all struggle in the mall industry for data points on valuation. It was clearly a partial interest in a property. The property does do below average sales relative to your portfolio. How do you think that valuation stacks up against what you would think about for the rest of your portfolio? How should we all be thinking about that data point?

I think we would buy at that cap rate and not sell at that cap rate. I think there were a lot of extenuating circumstances. The fact is that we were buying a partnership interest, there was debt in place on that asset. I think that that asset -- we made a good deal and I think Colonial from their perspective made a good deal.

So I think both partners were happy with regard to it and we think that there is great upside with regard to leasing. They were doing a leasing on the project, we're taking over the leasing on the project and as you know they're moving out of the retail sector of the business. They don't have a big retail operating platform and so that was an opportunity for us. And I think if you talk to Tom and Reynolds I think that they were happy the pricing and we think it was a good deal for us, but we don't think that the cap rate that is in the ballpark is definitely not indicative of what's going on in the market today and that's what we're seeing from people who are talking to us about joint ventures and other things.

As a follow-up to Cedric's question on the debt to EBITDA, it would seem to me to get that number back down to where some more of the peers are heading we've got to be talking about at least one turn lower on the debt to EBITDA which would imply a good $800 million-ish of de-levering. I mean is that -- I think we're all sort of sitting here trying to bogie how much is left to really get to where you want to be?

Well, I think in our perspective there is tremendous capacity to get where we want to be and take into consideration all the risk factors, et cetera. So I think, I couldn't -- I can't substantiate your number or whatever, but I think we're looking at that and we continue to do -- to de-lever and we're comfortable with what we're doing. We don't feel any pressure to do it, we don't have to do any stupid or crazy deals and we're watching out to make certain that our shareholders are protected. I mean we still have -- management has probably has one of the biggest ownerships of anybody in the REIT industry in this Company so we're not going to anything foolish, but we're also going to do what we think is proper for all of our shareholders.

And does the upward movement in the stock of late shift your thinking in terms of how to accomplish that? I mean obviously the valuation has moved to a level that's far more attractive than it was three or six months ago.

Well I think that the market is coming to realize that our relationships and what we've done in the past is indicative of what we can produce to our shareholders and I think a lot of our shareholders are from Missouri. We just got to show them that they can continue to do what we are doing and we can grow this Company. I think with we've done it in the hardest of times and we'll continue to do it. So we're appreciative of where the stock is but we still, needless to say, we till think it's tremendously under valued.

Thank you.

Thanks, Ross.

Thank you. Our final question comes from the line of RJ Milligan from Raymond James and Associates. Please proceed with your question.

Hey, RJ.

Good afternoon, guys. John, just a quick question for you. For the CMBS loans paid off this quarter with the line, in your discussions to put permanent financing back on those properties, I guess would there be any sort of pay down equivalent?

I think it would be roughly equal. And where we're penciling it out it's probably going to be pretty close to equal to the dollar amounts that we can get in the CMBS market versus where we -- where those loans are in the line of credit. So I don't see any significant use of our capital to do that and we basically are -- I think what we often times over look is how important in our view the recourse versus the non-recourse is. So I think that that's great and I think if you look at the spread that is basically going to occur, we're going to take a little hit this year but next year those lines of credit on that $560 million line goes up somewhat so that spread is a little less if you look at it. And that happens in August. It makes a lot of sense for us to do this and it gives us tremendous, tremendous flexibility financially to take care of any demands that occur in 2011 and 2012 if the markets change dramatically. So we're excited about it and we think it's great for our shareholders, RJ.

Thanks a lot, John. That's it for me.

Thanks, RJ.

And thank you for your question, Mr. Milligan. And, Mr. Lebovitz, I'll turn it back to you for your concluding remarks. Thank you.

Sure. Thank you. We would just like to thank everyone for their questions and their attention this morning. We're looking forward to seeing you at NAREIT in a couple of weeks and thank you for your continued support of CBL.

Thank you, sir. Ladies and gentlemen, that does concludes the conference call for today. We thank you all for your participation and ask that you please disconnect. Thank you once again. Have a great day.