CBL & Associates Properties, Inc. (CBL) 2013 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the CBL and Associates Properties third quarter 2013 conference call.

(Operator Instructions)

As a reminder, this conference is being recorded, Wednesday, November 6, 2013. I would now like to turn the conference over to Stephen Lebovitz, President and CEO. Please, go ahead Sir.

Thank you, and good morning. We appreciate your participation in the CBL and Associates Properties Inc conference call to discuss third quarter results. Joining me today are Farzana Mitchell, Executive Vice President and Chief Financial Officer, and Katie Reinsmidt, Senior Vice President Investor Relations and Corporate Investments 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. 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 most recent annual report on form 10K. During our discussion today references made to per share amounts are based on a fully diluted converted share basis. During this call, the company may discuss Non-GAAP financial measures as defined by SEC Regulation G.

A reconciliation of these Non-GAAP financial measure to the comparable GAAP financial measure will be included in today's earnings release that is furnished on a form 8K along with the transcript of today's comments and additional supplemental schedules. This call will also be available for replay on the Internet through a link on our website at cblproperties.com.

Thank you, Katie. At the start of this year, we set forth a number of strategic priorities and goals. Foremost among these was to upgrade the quality of our portfolio, improve the operating performance of our properties, and simplify and strengthen our balance sheet.

We made meaningful progress during the third quarter and year-to-date in each of these areas. This quarter, we completed the sale of three lower productivity mall's and their related associated centers at attractive pricing both upgrading the remaining portfolio and raising $176 million, a significant amount of equity.

We also have a number of major improvements at our existing centers underway including expansions and re-developments at three of our most productive centers, Cross Creek Mall, CoolSprings Galleria, and Fayette Mall. Once complete, these additions will contribute significantly to stronger future growth rates.

While the transformation and upgrade of our portfolio will take time, we have made material progress. Since 2011 we have reduced the number of malls in our core portfolio with sales under $250 per square foot from 12 to 3 and are committed to continuing this strategy. The end result will be a stronger, more resilient, and better performing portfolio of market dominant regional malls.

During the third quarter, we generated additional improvements in our occupancy and leasing metrics. Double digit growth in lease spreads has been a major focus of ours this year. We are experiencing healthy rent growth from the new leases we are signing and improvement in rollover spreads as well as occupancy growth and expect that momentum to build over time.

Increases in topline revenue contributed to same center NOI growth for the quarter offset by timing related adjustments and non-cash items. Another major accomplishment this quarter was the redemption of the Westfield preferred units on a leverage neutral basis using proceeds raised earlier this year from our ATM program and asset sales. This removes a major cloud from our balance sheet.

We have also made significant progress in our goal of accessing the unsecured debt markets as a result of our two investment grade ratings by Moody's and Fitch. Portfolio occupancy increased 80 basis points to 93.8% at quarter end.

Looking back, we have made tremendous progress in growing occupancy over the past few years with a 280 basis point increase from the 91% occupancy we reported in the third quarter 2010. Stabilized mall occupancy increased 40 basis points from the prior year and 80 basis points from the second quarter to 93.4%. We have been encouraged by the ongoing demand by retailers for space in our properties despite the recent slowing in sales.

With limited new supply coming online and our consistently high occupancy rate our leasing metrics have accelerated. During the third quarter, leases for stabilized malls were signed at a 12.8% increase over the average prior gross rent per square foot. New leases were signed at a 26.1% increase over prior rents and renewal rents were signed at a 9.5% increase.

Short term leases as a percent of the total remain roughly in line with last quarter. Retail sales growth has moderated throughout the year including the back to school sales season. We saw weakness from children's retailers, juniors, and family shoes with cosmetics, eye wear, and jewelry posting better results.

Year-to-date sales in our stabilized mall portfolio are down 60 basis points with the rolling 12 month sales up 90 basis points to $358 per square foot. We are hopeful that sales over the holiday season will rebound. However, the government shut down in October and a shortened holiday shopping season made for a difficult start. Retailers are definitely positioning to be highly promotional.

Before I turn the call over to Katie, with all the buzz and rumor circulating around JCPenney recently, we felt that it was important on this call to clarify the risk and exposure we have to this retailer. The level of concern that the market is pricing into our stock surrounding JCPenney is far greater than the level of risk that is actually associated with our exposure.

Our 71 JCPenney stores represent approximately $19.5 million, or 1.5%, of total annual revenues and comprise 8.2 million square feet. The average store size is 115,000 square feet. 38 of the stores are owned by JCPenney and 33 of the stores are leased.

The average occupancy cost of the leased JCPenney stores is less than 5%, allowing the vast majority to be profitable on a four wall basis. We have an equally weighted maturity schedule for the lease locations with four leases on average maturing annually over the next several years.

We have either completed or are in the process of executing extensions for the four 2014 maturities. We have approached JCPenney on a number of occasions about buying back certain stores and they have not been willing to pursue these sales primarily because the stores are profitable.

While we are expecting a positive outcome, we believe that it is prudent to plan for the worst by having contingency plans for all of their locations. We have evaluated our store base and identified a replacement prospect or strategy. Looking back to the end of 2009, following the multiple anchor and large space user bankruptcies, we reported 35 vacant anchor locations in our 10K.

Today, other than stores that are currently under redevelopment, we have no vacant acres in our core portfolio. The replacement opportunities have varied from other anchors, traditional or nontraditional, to splitting into boxes and restaurants, to adding additional shop space, to creating out parcels.

On redeployments, we have consistently achieved a solid standalone unleveraged return, generally 7% to 9% in addition to the ancillary enhancement to the mall overall. Anchor closures have always been an opportunity for us to create value in our malls, increasing income, and upgrading the tenant mix and we would view any closures by JCPenney in that same light.

Co-tenancy provisions are not uncommon in national leases. However, for traditional regional malls the triggers are very limited. The vast majority of these provisions would not be activated by one anchor store closing or even two anchors closing. Also, these provisions often provide a time to cure before any alternative rent option becomes valid and the retailer immediately returns to full rent if the vacancy is cured.

For example, at Hamilton Place Mall in Chattanooga only one lease would have a co-tenancy triggered if JCPenney closed their store. If both JCPenney and Sears close approximately 8% of the leases would have a relevant co-tenancy. We have been encouraged by the recent news from JCPenney reporting a moderation in the sales declines and rising customer conversions. We believe that a turnaround is achievable.

The stores have been upgraded and our malls are reporting improvements in traffic. JCPenney's capital raising activity has allowed them to create sufficient liquidity to fund their operations going forward. While we understand the ongoing concerns in the market, and we are keeping a close eye on their performance, we believe our risk is more than manageable. I will now turn it over to Katie for her comments.

Thank you, Stephen. We are pleased to announce our company's largest disposition transaction with the sale of three malls and their related associated centers for $176 million. Panama City Mall and the Shops at Panama City, Rivergate Mall, and the Village at Rivergate in Nashville, and Georgia Square and Georgia Square Plaza in Athens Georgia were sold to a foreign buyer in an all cash transaction.

Proceeds from the sale were used to reduce outstanding balances on our lines of credit effectively prefunding 50% of the Westfield preferred redemption. The average sales of the three malls were approximately $265 per square foot and they were sold at a cap rate in the low 9% range.

We have an active asset recycling program that uses funds raised from the disposition of lower sales per square foot properties to invest in higher growth assets as well as reduce debt. We would anticipate having one to three mall properties on the market at any given time to gauge pricing and interest levels and will execute when and if we achieve attractive pricing.

It is important to keep in mind that these transactions are very sensitive with a number of variables that can impact the certainty of closing. Often times our perspective buyers are listening to our calls. We understand the importance of transparency with our disclosures and make it a priority provide the market with color and updates as they are available and will continue to balance this consideration with the sensitivity of the sales process.

While we do not include any unannounced dispositions in our projections, for modeling purposes we would expect a reasonable estimate of our annual sales to range from $100 million to $200 million. Actual results will ultimately depend on the market and the opportunity set.

If you're in the Atlanta market we encourage you to visit our newest outlet center the Outlet Shoppes at Atlanta in Woodstock, Georgia. This center opened in mid-July 97% leased or committed with 99 stores including Saks Fifth Avenue Off 5th, Nike, Coach, ASICS, Columbia Sportswear, and Juicy Couture. Since the grand opening the project has seen tremendous results and is currently trending towards $400 per square foot for its first year of sales.

Our next outlet development, the Outlet Shoppes at Louisville, between Louisville and Lexington, is experiencing excellent retailer demand. The center is already 92% leased or committed with a first class lineup including Coach, Banana Republic, Brooks Brothers, Chico's, Nike, Saks Fifth Avenue Off 5th, and more. This center is set to open next summer.

Construction of our new development, Fremaux Town Center in Slidell, Louisiana, is on schedule for an opening of phase 1 next spring. The project is over 95% leased with anchors including TJ Maxx, Michael's, Kohl's, and Dick's. We are also pre-leasing the more fashion focused phase 2 which will be anchored by Dillard's. Construction is expected to start next spring on the second phase.

Other redevelopment projects include a new 50,000 square foot Dick's Sporting Goods store at our South County Center in St. Louis. This freestanding building will be located on a pad site inside the ring road and is celebrating its grand opening today. Construction is continuing on the redevelopment of a former Dillard's store at Randolph Mall in Asheboro, North Carolina, into a new Dunham's Sporting Goods store. The store is expected to have its grand opening this month just ahead of the holiday sales season.

Our plans for the Sears redevelopment projects in Fayette Mall and CoolSprings Galleria are coming together. We anticipate an early 2014 start of construction and will announce additional details in the near future. These projects will be significant projects elevating each mall's future growth rates.

We are pursuing other opportunities to redevelop existing anchor locations and believe this will continue to be one of our best uses of capital going forward. I will now turn the call over to Farzana to provide an update on financing as well as a review of second quarter financial -- third quarter financial performance.

Thank you, Katie. A year ago we made the decision to position our company to access the public debt market. We made this bold decision to expand our borrowing options and to reduce our exposure to the volatility of the CMBS market.

In addition, unencumbering properties greatly improves our flexibility to expand, redevelop, add major tenants, or sell without lender involvement or approval. This allows us to be more nimble and provides us with significant cost savings.

In the past 12 months we have retired $376 million of secured debt, substantially growing our unencumbered pool. With two investment grade ratings we are poised to access unsecured capital sources at the best time. We are excited about this transformation and believe that having a more balanced structure of secured and unsecured debt will provide us with maximum flexibility to effectively finance our new growth opportunities and lower our overall cost of capital.

While in the short term we are exposed to a higher level of floating rate debt our expectation is to quickly reduce this risk. We are working towards executing eight $250 million to $400 million bond offering later this year or in early 2014 assuming favorable market conditions.

While the government shut down and related political turmoil made September and October market conditions volatile and unfavorable to complete a transaction, we did take the opportunity to meet many of the fixed income investors in non-dealer road shows. We will continue to pursue these relationships to support success of a future bond offering.

One of our goals as we execute our financing strategy has been to continue to improve our credit metrics. While the metrics related to percentage of secured debt and unencumbered NOI will naturally improve as we pay off maturing loans over the next few years with unsecured debt, we are also focused on growing our existing asset base utilizing our retained cash flow.

This allows us to grow EBITDA without adding new debt. Today, our debt to EBITDA ratio is right around 7 times. Over time, this will improve as we invest our free cash flow. For example, this year we have invested over $300 million and expanded our portfolio while our debt balance has increased by only $143 million. The $157 million difference was funded primarily through retained cash flow.

This quarter, we simplified our balance sheet and capital structure with the redemption of the Westfield preferred units. We set out our intentions earlier this year to selectively raise equity through our ATM program and continue disposition activity to minimize dilution and complete the transaction on a leverage neutral basis. We are pleased to have effectively executed these plans.

In July, we closed on a $400 million unsecured term loan at a favorable rate of 150 basis points over LIBOR. Proceeds were used to pay down outstanding balances on our lines of credit and provide us with flexibility to continue to pay off maturing loans.

In December we anticipated -- we anticipate taking advantage of the open to par window and paying off the $32.9 million loan secured by North Park Mall due in March 2014. In October, we closed on an $80 million nonrecourse loan secured by the Outlet Shoppes at Atlanta, our 75%/25% joint venture with Horizon Group Properties. The loan is for a term of 10 years at a 4.9% fixed interest rates.

We retired the related construction loan of $53.2 million. And, after deduction of remaining construction and tenant related costs our share of the net proceeds of approximately $12 million was used to reduce of the lines of credit. With the retirement of the construction loan the guarantee was eliminated.

In 2014 we have a $113.4 million loan maturing secured by one of our most productive properties, Mall del Norte in Laredo, Texas, that we intend to retire with unsecured borrowings. In addition, we expect to refinance the loan for our joint venture property, Coastal Grand in Myrtle Beach, South Carolina, on a secured basis. Our 50% share of this maturing loan is approximately $38.8 million.

We ended the quarter with more than $710 million available on our lines of credit including cash. Our financial covenants remain very sound with a fixed charge coverage ratio of 2.15 times as of September 30, 2013, compared with 2.09 times last year. Our debt to market -- our debt to total market capitalization was 55.7% compared with 54% as of the same period last year. The increase is primarily due to our lower stock price.

As we mentioned last quarter, we have been working with a special services for the loan secured by Citadel Mall and Columbia Place. We expect a foreclosure sale for Citadel Mall to occur before year end. The loan balance on this property is $68.2 million.

The servicer for the loan secured by Columbia Place Mall is also proceeding with a foreclosure. We anticipate this process will take at least until the first quarter of next year. The loan amount secured by Columbia Place is approximately $27.3 million.

FFO in the third quarter, as adjusted, was $0.52 per share. The adjustment was made to exclude an $8.2 million partial litigation settlement we received in the quarter. The partial litigation settlement is related to a lawsuit filed by a subsidiary of the company seeking recovery for alleged property and related damages occurring at The Promenade in D'Iberville, Mississippi.

The settlement was recorded in interest and other income during the third quarter. The litigation for this case is ongoing and as such the information we can share is limited. New properties, rent growth, and occupancy improvements as well as interest expense, savings contributed to adjusted FFO in the quarter.

The growth was offset by to one time items. FFO in the quarter was negatively impacted by the write off of straight line rent related to the property sold and was also impacted by the timing adjustments to real estate tax reimbursements. Together, these one time items reduced FFO by approximately $0.02 per share in the quarter which, coupled with the dilution from the property sale, account for the reduction in the top end of FFO guidance.

G&A, as a percentage of total revenue, was 4% for the quarter compared with 4.1% in the prior year period. Our cost recovery ratio for the third quarter was 94.9% compared with 99.3% in the prior year period. The decline was primarily the result of lower real estate tax reimbursements of $1.2 million in the quarter which were one time adjustments.

Our cost recovery ratio for the year is expected to be approximately 99%. Same center NOI in the portfolio increased 80 basis points with a 60 basis point decline in malls. Year-to-date we remain within our guidance range with portfolio NOI increasing 1.3% and mall NOI increasing 50 basis points.

Excluding a prior year one time bankruptcy settlement of $1.2 million, year-to-date portfolio NOI increased 1.6% and malls grew 70 basis points. Occupancy improvements and positive leasing spreads fueled rent growth in the quarter and expenses generally remained in line.

However, there were several negative variances that impacted same center NOI during the quarter. I'll spend a few minutes walking through these items which aggregate to $2.5 million or roughly 150 basis points of NOI. With the decline in sales experienced during the third quarter, percentage rents in the same center pool decreased approximately $300,000 compared with the prior year period.

Real estate tax reimbursements were down $1.2 million compared with the prior year. The decline in real estate tax reimbursements were primarily driven by a few properties in which we recorded unfavorable adjustment to reflect current recovery estimates and actual billings. These are generally one time entries to adjust accruals for the actual real estate tax billings.

While these adjustments occur regularly and usually balance out as a normal part of the balancing process, this quarter's NOI results were disproportionately impacted as a higher percentage of billings adjustments were completed. Finally, as the same center NOI numbers are currently recorded based on GAAP, the impact of straight line rent and net above and below market lease adjustments can impact quarterly results.

This quarter, these items declined $1 million as compared with the prior year period. Straight line rents can fluctuate as we complete a high level of new leasing and replace and relocate existing retailers. We are currently evaluating whether we will adjust our NOI reporting to exclude certain non-cash items going forward and would expect to implement any change at the start of the year.

Excluding the non-cash items and the $1.2 million real estate tax reimbursement adjustment, same center NOI in the mall portfolio would have increased 1% and same center portfolio NOI would have increased approximately 2%. We are providing FFO guidance for 2013 in the range of $2.18 to $2.22 which incorporates the dilution and related straight line rent write off from the sale of the three malls and the associated centers during the quarter.

FFO guidance excludes the impact of the partial litigation the settlement included in third quarter results. We are guiding towards midpoint of the NOI growth range of 1% to 3%. While we are optimistic for our holiday sales season, we are now projecting a decline in percentage rents for the fourth quarter to reflect the current trend in sales. Now, I will turn the call back to Stephen for closing remarks.

Thank you, Farzana. As some of you know, we have just completed a perception study with investors and analysts to help identify strengths and weaknesses in our communication efforts. We appreciate the candid feedback of those that were asked to participate and we will be evaluating the results to identify ways we can better communicate our financing and operating strategy going forward.

We are always looking to find ways to do things better and communicate more clearly and you can expect to see improvements in these areas. Despite the slowing sales environment, the expansion and redevelopment activity, re-tenanting, and dispositions we successfully executed this quarter are positioning CBL for solid growth going forward. We have many exciting initiatives happening across our portfolio.

We are pleased with the progress achieved this quarter towards our debut unsecured bond offering and are positioned to execute when market conditions are favorable. While a transition of this significance takes time, we are confident that the flexibility and efficiencies created through our access to the public debt markets will contribute to our future success. Thank you for your participation in today's call. We look forward to visiting with many of you at NAREIT next week. We will now be happy to answer any questions you may have.

Thank you.

(Operator Instructions)

Christy McElroy, Citi.

Farzana, I was hoping to get a little bit more color on the tax reimbursement issue. Was this an issue with the accounting for these revenues? You mentioned that it was a timing issue but that is also impacted full year guidance and full year same store NOI growth. Is this something that will be made up in 2014 or was this a one time impact? Can you just help me understand what happened a little bit better?

Sure, Christy. These are -- as the real estate taxes -- tax bills come in you have to chew them up. This reduction in the quarter was coupled with higher tax billings we had last year because we didn't have the real estate tax bill. When the tax bills come in we have billed the tenants on a higher tax bill and then you come back and adjust.

This quarter, some of it had to do with an over billing we had last year so therefore it's one time adjustment. Generally, it washes out over -- year-over-year. But, this quarter it had an impact -- a disproportionate impact because last year, a quarter ago is we had a higher real estate tax reimbursement and this quarter it is lower so you see a negative variance.

Got you. So, the recoveries were artificially higher in the first two quarters of the year and it was made up? Okay.

Yes. And, the [fourth] of last year, also.

Okay. You also mentioned that you expect a decline in percentage rents in Q4. With regard to what is in guidance, can you say how much of a decline you are expecting? And, did that -- how much the that impact your guidance as far as the reduction in the high end of guidance?

The reduction of the high end of the guidance was primarily the result of the sold properties. That is really where it is, in the straight line rent. But, not so much -- but, when we guided you to the same center NOI to the mid to lower end that is really the impact of percentage rents that we are guiding you on the same center NOI.

We really haven't changed our top end of guidance because of the percentage rents. We're just saying the FFO ranges to $2.18 to $2.22 now. Just taking off the top and for the sales and the straight line rent.

Okay, got you. Lastly, following up on your asset sales in the quarter and comments that you made, Stephen, regarding continuing the strategy of upgrading the quality of the portfolio. I know that you still have the remaining three malls under $250 per square foot in sales.

Are you actively marketing those assets today or are you done selling for now? With that maybe fall into, Katie, I think you talked about a $100 million to $200 million sales bucket going forward, maybe that falls into that bucket for 2014?

We are actively marketing one of them and are hoping to have a contract on it shortly. One of those three hopefully will come out, I do not know if it will close this year but hopefully in the first quarter. The other two fall under that bucket as far as the ones that we will look for, for next year.

Also, our intent is once we take care of the $250 and under to move up to the $275 and even in some cases $300 and under. When we see that they do not have necessarily as high a growth rate in NOI as we would like, then we can sell them and reinvest in the properties or redevelopments or new developments where we can generate a higher growth rate.

It is something that -- it is an evolution and it does not happen overnight. But, we have made a commitment to make that strategy happened and be more proactive in making it happen than we have been in the past. Think it makes a lot of sense. And, over time, it will result in us having a better growth rate in our NOI and our FFO.

Andrew Rosivach, Goldman Sachs.

There has been a lot of focus in the market on your sales per foot. Can you give a sense of where sales per foot would have been if you excluded low sales property with nonrecourse debt? I will just give you a few and maybe give us some color. Chesterfield, $299 a foot, $140 million in nonrecourse. Cary Towne Center, $275 a foot, $55 million. Alamance, $230 a foot, $50 million of nonrecourse debt.

I think I understand your point. We do not have that number at our disposal right now. We can certainly calculate it and look at it. The low sales and the debt, it's not a direct relationship that you could necessarily say.

In some cases, a mall that has sales below $300 a foot might have some upside because of a redevelopment that we are in the middle of. In other cases, it might not. It is just hard to generalize on that front. Like I said earlier, we are looking at the malls with sales below $275 and $300 a foot to evaluate whether they make sense for disposition and the timing of that.

It will provide us with funds to reinvest in higher growth opportunities. The nonrecourse debt in those situations gives us optionality depending on where the property stands. Although, the properties that we have identified are the ones that we are in discussions with the lenders. The others that we have really are positive cash flow and we see those going forward as situations that will continue to be viable.

Maybe as a follow up you could talk about some of the malls that are not in the year-over-year numbers. I'm not sure Kirkwood is in the year-over-year numbers. The color that you gave on the letter that I feel like I'm the only one who read a month ago about what was going on in Atlanta, how are those properties trending?

You are absolutely right, Kirkwood is not in year-over-year because we just closed on it. It had not been a full year or full two-year cycle, so that is not part of it. Atlanta is not part of it because that just opened. And, those properties are going to help us next year because of the higher NOI growth that we are going to see there.

Both Kirkwood and Minot when we bought those, those had occupancy cost of roughly 9%. We are experiencing good NOI improvement there, good lease spreads, so those are going to help us. Atlanta, we had almost a 12% unlevered return on cost on that project.

We executed a very favorable financing on that project. Basically took all of our cost out of it, all the equity, so the return on equity is virtually infinite. And, we still have the growth going forward. That is a tremendous deal for us and for our shareholders.

The outlet centers, in general, have worked out very well for us. And, we have phase 2s that we are working on or phase 3 at Oklahoma City. An additional phase at El Paso which has had really strong sales growth. We have got a lot of, like I said in my comments, we have a lot of real strong initiatives, exciting initiatives going forward with the company.

The Sears redevelopment was something we talked about a little bit last quarter in terms of purchasing those stores from Sears. But, these things are -- they did not show up this quarter but they position us for good growth going forward. They help the properties, they help the overall portfolio and they're definitely going to help our numbers in the future.

So, are neither Kirkwood nor Minot in the same store NOI numbers now?

That is correct, Andrew.

Michael Mueller, JPMorgan.

First, thanks for the color on JCPenney. Couple questions there. You were talking about the idea of replacing boxes, replacing anchor tenants, and then also redeveloping some.

I was wondering if you look at those 70 stores, what do think the split would be between the situations where you have talked to people and you have a tenant potentially, theoretically, lined up versus something where it would be a little bit more drawn out? You would either scrape the box and start from scratch or do something else?

Yes, it is a little hard to answer that, Michael, because it is hard to have definitive conversations with retailers until you know have something to work with. They are hesitant to make commitments or really move things into their planning cycle until they know there is some reality. We've made these plans on a contingency basis. We've come up with alternative strategies.

I would say, and this is really more of an estimate, but two-thirds of those stores would be readily redevelopable through the different strategies that I've talked about, whether you are replacing with boxes, shops, outparcels, carving them up. Then, the other one-third will take more time. And, again, it depends on the pace, if we have a manageable pace of two or three at a time then that certainly gives us the ability to work through them.

That is really from a planning point of view. Like I said, and we talk to JCPenney all the time. They're not in a mode of closing stores. They've renewed leases, their numbers are getting better, their sales are stabilizing. We are making these plans on a worst-case basis and we feel like that is the right thing to do.

But, we really do not see them closing stores, they haven't given any indication that they're going to. Maybe that sounds like I am being naive because of what some of their results have been. But, we talk to them a lot, our peers have said similar things. And, we are making our plans if we need to. But, we see them continuing as an ongoing, viable, and getting stronger anchor of our properties.

Shifting gears here for a second, going to Columbia Mall and Citadel which sounds like you may hand the keys back on those. What is the aggregate NOI associated with those properties? And, did you say they could theoretically both go away in Q4 or Q1? Was that the timing?

Yes, The Columbia Place Mall and Citadel Mall, we do not even include any of their numbers in our NOI because it is a cash flow negative. Basically a breakeven proposition because they sweep all the cash flow, they get all the cash flow.

So, the lender really has the economic benefit of the two malls. The aggregate loan balance combined is some $99 million, $90 million plus that will go away from our balance sheet once they foreclose. Really, we have no basis in the property in terms of the NOI.

So, on the income statement there is no NOI on your -- associated with these properties in Q3 and there's no interest expense associated with it?

Definitely no interest expense. We have NOI and expense that zero each other out.

Jeff Donnelly, Wells Fargo.

Maybe, Farzana, just building on that last question, do you have any more assets that might fall into a similar, if you will, bucket as Columbia and Citadel that are either approaching foreclosure or might be in foreclosure right now? I'm asking mainly because I'm thinking from an NAV standpoint just to be sure we're thinking about it correctly.

The two that we just mentioned, they are the ones that are in the process of foreclosure. We, as you know, evaluate every quarter and look at our properties consistently and constantly to see where the cash flows might be negative. You recall we are in discussions on Gulf Coast with the lender, servicer, so we are in ongoing discussions there and we do not have a resolution yet.

We are working with the servicer. Not any other than that, that we know of today. But, we obviously are evaluating every quarter. We look at the trends, we look at what is coming up, we look at what tenant improvement allowances we have to put in. We evaluate so many different variables. So, at the moment, these are the only three.

Maybe it is the same answer, but I guess if I ask it differently do you think there are many assets that if you applied a cap rate to the NOI that they produce it might imply that there is low equity in them?

Depending on the cap rate, I guess, you put on the NOI. It is always that possibility. But, I think the valuation is more cash flow base. If the cash flow is positive, we are servicing the debt, that is one thing. If it is a negative debt service that is totally different.

And then, we, of course, evaluate whether we want to invest money in those properties. If we believe the future is not that bright and we're not going to get our return on our investment then obviously that is when we make the decision as to what is the best thing to do with this property.

I apologize, I might have missed your remarks on this, but I think in prior calls you guys have discussed doing a larger unsecured offering this year. And, I think, in [Europe marks] you were talking about doing something smaller next year.

Could you just maybe clarify for me was it market conditions that drove that shift or was it something specific to CBL? And, maybe just tell us what the fixed income investors were giving you guys as advice.

Sure. We have been saying our unsecured bond offering at [visa] debut will be somewhere in the $250 million to $400 million range and that is what we expect to do. As I mentioned in my script a little bit ago, later this year -- we have just a couple of months left, or part of two months left, and we hope if market conditions are correct we will be issuing a debut bond.

Later next year, with the market conditions and the needs for capital in terms of reducing our exposure to the floating rate loans, we would consider, again, next year. We want to be a frequent issuer. That is how we expect for the trading to take place and to have a market for the issue of unsecured bonds.

Thanks. Just maybe a last question on leasing, maybe two parts. One, can you talk about what happened in the quarter with your non- mall assets that so significantly boosted same store NOI? And then, maybe just a question on page 15 of the supplemental, just about the total leasing activity, not same store, of $1.7 million square feet that was leased out in the quarter. How much of that is small shop space?

Okay, sure. On the non-mall assets, since it is not that big of a portfolio then when we lease out a couple of boxes it can make a big difference in those numbers. That is really what happened and that was the factor that accounted for the increase in community centers. We had a 500 basis point occupancy increase.

But, again, that is just leasing up a few boxes that came online. And, that is still a small percentage of our overall portfolio. So, it doesn't move the overall needle that significantly. On your first question, that is what I would say. On the second question, the vast majority is in the same center pool of small shops. And, what's not included is larger boxes or anchors. What you are seeing is primarily small shops there.

Nate Isbee, Stifel.

Just going back to the same store NOI numbers, even excluding those one timers was about 1%. Leasing trends are positive. I guess two parts, would you say that is below your expectations? And, given the positive leasing trends that have been happening quarter over quarter, why is that not showing up in terms of better same store growth?

We did see a solid positive base trend growth this quarter. And, as I mentioned, it was offset by these one time items. Majority of these leases, other than renewals, renewals have been at a lower spread increase, but the new leases take time and there is a lag.

You'll see more and more of this rent growth showing up in the ensuing periods and ensuing quarters. That is really where -- why you are not seeing a big pop as you would have liked to have seen.

I know. But, you have occupancy growth, you have some built-in bumps, you have some leasing spreads, renewals have been positive generally for the last three quarters. Was there anything else in the numbers that was laying it?

I do not think so. I think the lease spreads will show up when the tenants open and the new tenants take time to open as opposed to their renewals. Renewals have been, as you know, in the single digits but the double digits are coming in from the new leasing and that takes time. It is anywhere from 6 to 12 months.

We have quite a few new leasing -- new leases that will open next year and some that will open in the following year in '15 and '16. So, it takes time, some of these larger tenants that we are bringing in do take time to open. We do expect an impact as we go forward it is just there is a lag.

What is the current spread between leased and physical occupancy?

I cannot give you that number, Nate, I do not have that exactly the difference between leased -- the physical occupancy versus the executed lease occupancy.

But, there is Nate, there is a little over 200,000 square feet of leases that we reported in our lease spreads that haven't opened yet. And, that is new leasing and that really backs up what Farzana was saying.

So, that is close to $8 million in rent that will kick in. About 50% of it through the fourth quarter and 50% of it going into '14. That is really -- as that kicks in, there is the lag but that will help our numbers going forward.

All right. Steve, you have spoken in the past, I'm sorry if I missed this, about the temp leasing and how that has been trending.

Yes, it is really the same, virtually the same, this quarter as it was last. So, in the high 20% low 30% range. That has really stabilized and come down to more normal levels. That is something, like I have talked about in other calls this year, we have made lease spreads a priority.

It has probably hurt our numbers short term in terms of having more downtime, taking more time for some of the better leasing to kick in. But, again, we are looking ahead and we feel like these results will help us down the road. We are getting better retailers, more productive retailers, about replacing some of the lower productivity stores. And, we do suffer the downtime. But, it is the right thing to do for the properties we feel.

Given the better leasing environment, we are seeing better demand from retailers. We haven't experienced any type of slackening off on demand. Even though sales have gotten softer we're still seeing good demand in terms of leasing interest from retailers which that is encouraging.

All right, thanks. There's a lot of moving pieces in the bottom end of your portfolio between possible sales, talking to lenders, etcetera. As you look out maybe two, three years down the road, how many malls would you expect to own in total?

I do not see our total portfolio being that different. Because I think as we sell malls, we have the new developments, we have a project like Slidell, it is not an enclosed mall but it has got a fashion anchor, it's got boxes, it's going to have specialty retail, it is going to be dominant in its market, it will replace an existing mall that we do not own.

We have got that property, we have Louisville coming online next year. I do not see our total portfolio size of diminishing. What our goal is is just to have higher quality, higher sales per square foot, and higher growth.

Asked differently, I mean, your existing portfolio, how much of it would you expect to own in two, three years?

We have got roughly 25 malls that are under 300 a foot. Those are the ones that we are looking at. Ideally, we would sell, probably, a lot of those and reinvest in other properties.

Okay, thanks. Final question, you briefly touched on the two Sears boxes, when can we expect to see a definitive plan for those two boxes?

We should have for one of the two definitely at the next call in February. And, for the second one, possibly then but if not the call after.

Ross Nussbaum, UBS.

My questions are on the mall, same store NOI growth. If we strip out the straight line rent issue and the tax reimbursement issue this quarter we are talking about a 1% cash same store NOI growth. While that is certainly better than the headline number, certainly not where I think you would like it to be and certainly not where you're investors would like it to be.

As we look ahead over the next year, how should we be thinking about that number improving? Because it think the stumbling block for a lot of people is your occupancy was up year-over-year, you're releasing spreads were good, you have got contractual rent growth. So, all of those components are working for you yet the number was still not what I think everybody would have hoped for. Can you help us understand how do we get that number up to be closer to 2.5%, 3%?

I would say first of all, we definitely agree with your statements. We are not happy at 1% when you take out the adjustments. That is clearly something that we feel strongly about and we are focused on doing what we need to do to improve those numbers. We have got -- really, it's a combination of factors. I wish there was just one magic potion that we could spread that would all of a sudden push us up to that level but it is really the combination of factors that is going to lead to it.

It is the dispositions, the lower sales per square foot malls, it's the redevelopments and expansions which contribute to better growth, it is the lease spreads, the focus on lease spreads and getting higher lease spreads on renewals. Yet renewals is an area where this quarter we've had the best renewal spreads since, I think [May] put it in his notes since 2005. That is a long time but we have made that a priority.

And, earlier this year, our initial renewal lease spreads have been low single digits. It is not really helping us a grow as much as now being in the high single digits is going to help us. That is a big factor. And, I think it all comes together as a package to push us into that 2% to 4% range instead of 1% to 3%.

And, also, liked we talked about, back to school sales were lousy. We have a lot of juniors, a lot of children's and family stores in our malls because of their middle market. And, those were the stores that suffered the most lackluster sales during the quarter -- I mean during the back-to-school season. So, that hurt our same center NOI for this quarter.

In the fourth quarter we will see, hopefully things will be better. October, actually we have heard is better than we would expect it to be. Maybe, with that in mind, we will do better in the fourth quarter and sales will be better and percentage rent will be better.

It was definitely a weight this quarter because sales were down and we went backwards on percentage rent. But then, when you compare it to where we were last quarter this time, it is even a more significant swing. All of those things come into play and I can assure you we are completely focused on this metric, the NOI and making it improve.

I appreciate that. One suggestion as you think about modifying your cash same store NOI disclosure for next year. If possible, you could break out some of the components between rental revenues, reimbursement expenses, I think that might give all of us a little more insight into just how those pieces are coming together in that calculation. Thanks.

That's great, we appreciate that. And, like we said, it is hard to do in the middle of the year but once we start the new year, we can try to get all this stuff reported more like our peers do and also provide better clarity. So, that is a great suggestion, thanks.

Daniel Busch, Green Street Advisors.

We've talked a lot about the disposition strategy of lower quality or lower productivity malls. Where do community centers or associated centers fall into that strategy? Where do you see that investment? Is it going to be shrinking over time?

The associated centers really go with the malls. So, we sold the three malls, each of them had an associated center so we sold them together. Depending on the malls, the associated centers will go down. We're not investing in new associated centers so I would expect that category to decrease. And, there is a good pricing in those assets.

Depending on the situation, we can look at them on a standalone basis. The community centers and the office buildings, again, it is primarily related to timing. Most of those assets came online in '07, '08, '09 so we are leasing them up, we are making progress.

We definitely want to take advantage of the value created -- creation opportunity that is still there because the markets are improving. We also have JV partners for a couple of those. So, we are working with them to establish the best timing. But, those that we view as non-core and over time our strategy will be to sell those and generate equity and provide us with a source without having to go out and sell more stock.

Stephen, just to be clear, did you see that you would be -- there would be an opportunity to separate the associate centers from the mall if the pricing was right? Is that what you said at the beginning?

I said we would look at it. It is probably not the most likely thing because we get so much -- there are so many synergies leasing those with the malls that there is value to keeping them together.

But, if we got a great offer for an associated center that was just to sell it separate from the mall then it is definitely something we would entertain. We will look at that. We are not looking at the portfolio, though, which I think is what you were getting too.

Right, no, that makes sense. One on the associated centers as well, has there been -- have you seen within your portfolio retailers from the associated centers become more interested in moving across the street into the mall?

We have seen a little of both. We have seen some retailers want to move from associated centers into the mall probably Ulta is the biggest one where we have them in some malls and we have them in some associated centers. Dick's is another one that is very happy to be an anchor for a mall today but is in certain associated centers.

We have looked at that. In Monroeville Mall in -- outside of Pittsburgh, we're moving Dick's from the associated center into the lower level of the former Boscov's and we just opened the Cinemark theater there which is doing really well.

JCPenney relocated a year ago into a smaller store and a lot more productive store. And, now we'll, once Dick's opens next year, then we will backfill their existing space in the associated center. It is something we talk to with the retailers all the time and in certain cases it is happening.

One question, can you remind us what type of occupancy cost ratio you're able to sign your new leases at, at the outlet centers and how does that compare to the mall average? Your portfolio mall average?

For a new outlet center it is hard to say because it is new. But, in general the outlet center occupancy is 9% to 10%. So, it is a lower cost of occupancy for the retailers, the malls were roughly 12.5%. When we're signing the new leases it is higher just because the rent is going to grow over time and the sales will grow over time.

In the outlet centers it is definitely 200 to 300 basis points lower from the retailers point of view. That plays into the retailers strategy of being more promotional in their pricing in the outlet centers and in general running a lower cost operation.

Just to be clear, the 12.5% that is what the average is. What are you able to sign new deals at when new lease is up? What is the goal, is it 14%, 15%?

It depends on the category. I would say it is closer to 15%, the 14% to 15% range. Certain categories it is going to be higher because jewelry can support a higher cost of occupancy. Certain categories it is going to be lower. Yes, that range, 14% to 15% is a good one to use.

Carol Kemple, Hilliard Lyons.

If you all were to do a bond offering tonight what kind of rate do you -- would you think it would be at?

In the low 5% range. And, of course it depends on where the treasury is trading. So, treasury is 2.65% today. We think in the lower 5% of course that also includes the fact that we have a debut bond so there is a small pricing premium on the debut bond.

I know on the call we've talked a lot about dispositions. Are there any -- how is the acquisition market? Is there anything you are interested in and if you think you will not be a player in that for a while?

Carol, we look at everything out there. This year we have about anything, we haven't seen anything that is attractive from our point of view. I would say that the just given our cost of equity and where our stock price is and our goal to be leverage neutral and as part of our unsecured debt strategy, any acquisition we would do would be with the JV partner. And, would be very mindful of our debt ratios and our overall leverage ratios because we have made so much progress in that area.

Our debt to EBITDA is now down to roughly 7% -- I mean 7 times, excuse me. We have transitioned over the past couple of years to one of the higher leveraged mall operators to one of the lower ones. Improving our balance sheet is a big goal of ours. And, acquisitions, we just need to make sure we keep that in mind as part of anything we would do.

Rich Moore, RBC capital markets.

Just a couple of quick items. Farzana, did you say that straight line rents go back to where they were before the third quarter, is that right?

No, straight line rents are somewhat on a decline because it all depends on all these retenanting we are doing, straight line rent write offs, and then the new leases that are coming in, depending upon the rent bonds they have, they offset what straight line rents may be tapering off because they do have a conversion.

You start off on the high and then they start converting to the -- at the term and lease term ends than the straight line rent starts declining. Typically, one will offset the other so we have seen a decline other than the write offs. I think next quarter if you compare year-over-year we will probably either be flat or down a little bit.

Okay, good, thanks. The last thing is, do you plan, I guess, to always leave something on the line of credit, is that the idea? Obviously, you have more on the line of credit currently than your proposed, or your planned, size of your bond offering. So, will you leave something there or maybe those get taken up by asset sales or how do you think about that?

Our goal is to really have availability on our lines of credit, have balances, lower the balances. The way we are going to accomplish that is to reduce our exposure, also to the short term interest rate, replace it with the bond offering. That will cut into the fixed rate and give us more availability on our lines of credit as well as sales that we conclude and the plan we have to sell more assets, that will also give us more availability on our lines of credit.

The goal is to have as large availability as possible. Today it is a little bit higher and we use these lines of credit to pay off the secured debt. That is one of the ways we have been recycling it. We will recycle from the lines of credit into the unsecured bonds and it will give us more availability, it's just a mechanism we are using.

So, a zero balance, or something close to that, on the line is a reasonable thought?

A zero balance on the lines of credit you said?

Yes.

I do not think we'll have a zero balance on the lines of credit. I always expect us to use that because it is a great source for us to fund our development equity if we need it. The retained cash flow from our properties also is a -- it fluctuates because quarter-over-quarter depending on percentage rents and depending on many needs we have, we use the retained cash flow.

The thing we do do is we use our retained cash flow to pay down our lines of credit so that we have lots of availability all of the time and then if we need to draw it, we draw it back up to fund our equity. That is how we recycle and that is how we maximize this lines of credit that we have.

RJ Milligan, Raymond James.

Just want to follow up on Rich's question on the facility balance. You guys are at $660 million now, pretty clear that you want to take out North Park and del Norte. Probably about $800 million after we get through that. Even if you -- if the unsecured market becomes favorable and you can get a deal done and you do it somewhere in the range of $250 million to $400 million you're still going to have a large outstanding balance on the facility.

And, I was wondering if in your discussions with the credit rating agencies if that is something that they are comfortable with? Or if in fact you're going to have to take -- issue some sort of equity or do asset sales to maintain that investment grade rating?

The Mall del Norte loan does not come due until later next year. We have ample time. The only loan that is really short term coming due that we will pay off is the $32 million loan on North Park Mall. With the bond issuance, we should be able to increase our capacity on our lines of credit.

And, as I mentioned earlier, our expectation is to be in the market with the bond issuance again next year, latter part of next year depending on how the availability looks. So, we will use the unsecured bond issuance to also retire the Mall del Norte loan which is $113 million which is our highest productivity mall and has a tremendous growth asset value sitting at 20%, 30% leverage right now.

I am just curious if the conditions for the unsecured market don't improve and you decide to not go with an unsecured offering in the fourth quarter, if the rating agencies, in discussions with them, they would be concerned about having such a large balance on the facilities?

I do not think they are concerned with the large balance. I think they want to see that we are issuing the bonds and we are, of course, we have the plans for asset sales. We have the ability to do term loans or even go into the private placement market. But, because we are poised to access the bond market with two ratings, I think that is the right course for us to take and we should be successful. We believe we will be successful.

Okay, that's helpful, thank you. My second question is, this is a follow up, I guess, on what Nate was asking and Ross as well, is it -- with occupancy going up and the spreads being pretty positive over the past eight quarters, is the explanation of the slower same store NOI growth, does that fall within the 60% of the leases being signed that are not considered same store?

Can you provide us any color to what those rents look like? I noticed it's tough to give spreads since it is not same store, but are you seeing -- are rents going down there or any color you could give us on the pool?

Hi, RJ, it's Katie. I will handle this question. The vast majority of the additional leasing that we view, it is not in the same center pool or shows up on our leasing spreads, is going to be anchors that are renewing.

So, you will have 60,000, 100,000, 200,000 square feet that comes in and most of the anchor renewals are done at similar rents that were there before, modest increases. The rest of that, it's not really a driver of our NOI growth going forward.

The other thing that I was going to add is that we do report leases signed in the quarter as opposed to many of our peers who report leases commenced. It takes a little bit of time for all of those improvements that you're seeing to hit our portfolio.

Aside from the anchors -- so there is anchor leases that are going into the non-same store?

In the leasing spreads. We only report leasing spreads of under 10,000 square feet.

Right.

But, those (multiple speakers) leasing spreads.

So, the majority of that is going to be anchor space?

Yes. The vast majority. We also have junior anchors and then you can have a 20,000 square foot box, that sort of thing. We are getting good spreads on the junior anchors, we're seeing nice improvements there. But, those take a little bit -- if you have 10,000 square feet or 15,000 square feet it doesn't make as big of a hit in that number.

So, the bulk of that pool you are seeing either modest increases because it is anchors or slightly positive increases in the junior anchors?

Yes, that's correct, yes.

Ben Yang, Evercore.

I have a question on the same store NOI as well. When you look at what you guys did year-to-date last quarter, what you guys reported for the third quarter, I would've expected that number to fall and not increase which is what you are showing in the current year-to-date number.

And so, is that solely attributable to changing portfolio mix? The fact that you sold the three malls and Citadel also went to foreclosure? Or was there anything else that might explain the motive and unexpected year-to-date number?

The majority of it had to do with the properties we sold. All three of the malls had negative NOI as well as Citadel, as you mentioned, that is really where the bulk of it came from.

Can you quantify what that negative NOI was for those malls? Just to get an idea of how maybe C-malls are performing in this part of the cycle?

I do not have the number precisely for you on that. But, we can get that for you. If you can call Katie back she will have that number for you. We should be able to point it to you where exactly how it has become positive because we have sold the properties that had a negative trend on the NOI. And, that has been one of the reasons why we sold some of these properties and will continue to focus on those asset sales.

Okay. So, there was really nothing else other than just that, right?

That is correct.

Okay, great. Maybe switching gears, some of your peers had recently commented how the slowdown in sales doesn't necessarily mean that NOI growth has to slow down as well given, maybe, the opportunity to replace underperforming retailers.

And, I was wondering if you could maybe comment on how that dynamic plays out for you guys? Or maybe what your expectations are given, arguably, you guys are still protecting occupancy to some extent. So, do you guys feel like you can continue to grow your NOI maybe at a slower pace than your peer but still keep it positive even if sales were to slow down or stay flat over the next few quarters?

Yes, some of the decreases in sales by retailers are self-inflicted. Their material costs have come down so they have been more promotional and they are lowering their price points but they have also been able to hold margins. I think that is what our peers were referring to in terms of the continued demand by retailers for new stores. Also, our occupancy at the level it is at and even our peers, everyone has really had strong gains in occupancy.

So, there is hardly anything new being built. That supply dynamic allows us, going forward, to continue to have strong demand from retailers and we expect to see continued growth of NOI and our goal is to get that number up more to our peers level. Like I said earlier, right now we are below it but we are focused on increasing that.

Maybe just final question, why did you guys put such long term financing on Outlet Shops at Atlanta given the fact that it is still stabilizing? Was there any reason you did not want to wait a little longer or was there any compelling reason to do that deal now?

When we put the loan on Atlanta Outlets -- The Shop at Atlanta, the underwriting includes a fully stabilized NOI because it's 97% leased, they include all executed leases, any out for signature leases that nearly being executed, we get credit for that. The underwriting for that mall was fully underwritten, stabilized, even though it shows up, maybe, in the non-stabilized category in our metrics. However, the loan proceeds, we believe -- we also want to stay within a certain leverage ratio.

So, we did get the full value as well as we came in at the leverage level that we would like to remain and be profitable cash flow. And, also have a very good spread because it is all contingent on the LTE, the spread, the debt yield, we did not want to over leverage it and want to make sure that our spread is within the range of what we like the all in coupon to be. We were really very glad to have closed it at the time when the swaps were down.

Christy McElroy, Citi.

Hi, it's Michael Bilerman, I appreciate you guys sticking around. I guess it's part of this investor communication, answering everyone's questions. On same store NOI, Stephen, I think you mentioned the drag just from the lower productivity assets.

If you looked at the mall portfolio and you were to put them into quartiles, what would that spread be between your highest productivity assets to your bottom tier assets? So, if it averages one in the quarter on a cash basis, are the top quartile doing 3% plus but the bottom quartile is negative 5% or something, what is that spread within the portfolio?

We don't disclose that for our portfolio. So, it is a little tricky for me to answer that question. I think it is safe to say that for the malls that are over $350 a foot or over $300 a foot even we would be in a more of a two 2% to 4% range versus a 1% to 3% range.

So, the ones under $300 are flat for the most part. A few down, not down 5%, but maybe down in the 1% to 2% range. That is more of a general description and a specific description. But, hopefully gives you a sense as how the portfolio breaks down.

If you went above $400, because you do have a number of assets that are doing that productivity, would that be even further in excess of 2% to 4%? Is there really a strong correlation that you are finding between same store NOI and sales productivity? And, I just say that because your portfolio, even though you have assets that are, let's say, have a lower productivity, they are in markets where they are the only game in town. I'm just trying to reconcile that versus the overall (multiple speakers).

Yes, you really don't see that. It is not a direct straight-line correlation like that. Some of the best NOI growth is coming from malls that are lower sales per square foot. But, because of market specific factors, redevelopments, retenanting, it can really drive the NOI in the right direction. And, it might be going against the better comparable also.

I wouldn't say that $400 above is markedly outperforming $350 to $400 and $350 to $400 is doing that much better than the $300 to $350. But, the $300 line does seem to be the one where we have drawn as far as where we feel like the property is below that are the ones that should -- that are more opportunities for dispositions and above that the ones where we want to invest our money and we see the growth going forward.

Last question, you have talked about the stock valuation, a number of times on this call, you talked about it in the letter in September, being depressed. I'm just curious, a number of the mall companies are trading at more depressed valuations then they had in the past. How do you see yourself differently than the broader mall set and what actions are you willing to take if the valuation doesn't correct itself?

Look, I am sure everyone in our position is frustrated with their stock price given what's happened since May and the broader market decreases. When we look at our multiple compared to our peers and the cap rate of our assets on a NAV basis we see a disproportionate discount being applied to both of those factors.

We acknowledge that especially this year our growth is slower on an NOI basis than our peers. But, it feels like the discount is unjustifiably greater than it should be. That is really what I think our biggest frustration is that we are not going to argue that a mall doing $350 a foot is worth the same cap rate as a mall doing $600 a foot. And, that definitely plays into our valuation.

But, we are focused, like I said earlier, on generating better growth in NOI across the portfolio and we have got the redevelopments and the other growth initiatives to drive our FFO as well. I think in terms of are we prepared to do whatever it takes, I'm not exactly sure what that means, but we are definitely being more proactive on the disposition front. And, that should allow us to have a stronger portfolio going forward.

Do you have a sense that based on all the leasing that you have completed because, you already have a far away as aways done for '14, what same store is shaping up to be assuming you do not have any one time type events? I would assume it should be greater just based on all the leasing that you have done that you show in the supplemental.

It's a little hard to say. We are just finishing up the first cut budgets for next year. But, like I said, we have got over 200,000 square feet of leases that are going to kick in the fourth quarter and going into next year which is almost $8 million in rent, so that will help us. We have got these factors that are moving in our favor.

Mr. Lebovitz, there are no further questions at this time. I will turn the call back over to you.

All right. For everyone who hung in there, thank you. We appreciate your time. And, we look forward to visiting with you at NAREIT and answering any further questions that you have. And, as always, we appreciate your time and your support. Thank you.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.