Kite Realty Group Trust (KRG) 2011 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the fourth-quarter 2011 Kite Realty Group Trust earnings conference call. My name is Kathy and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session.

(Operator Instructions)

As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today's call, to Mr. Dan Sink, Chief Financial Officer. Please proceed.

Thank you, Kathy.

If you've not received a copy of the earnings press release, please call Kim Holland at 317-578-5151, and she will send a copy to you. Our fourth-quarter supplemental financial package was made available yesterday on the Company's website at www.KiteRealty.com. The filing has also been made with the SEC in the Company's most recent Form 8-K.

The Company's remarks today will include certain forward-looking statements that are not historical facts and may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results of the Company to differ materially from the historical results, or from any results expressed or implied by such forward-looking statements. The Company refers you to the documents filed by the Company from time-to-time with the SEC, which discusses these and other factors that could adversely affect the Company's results.

On the call with me today from the Company are Chief Executive Officer John Kite, and Chief Operating Officer Tom McGowan. I now would like to turn the call over to John Kite.

Thanks, Dan. Good afternoon and welcome to our fourth-quarter earnings call.

As we closed out 2011, we were very pleased with the performance of our portfolio, the continued success on our leasing initiatives, and the completion of several significant development projects. FFO for the quarter was $0.12 per diluted share, which was $0.01 ahead of consensus estimates. The full-year figure of $0.44 was at the top end of our guidance range, and in line with consensus. Our retail portfolio was 93.3% leased, which was 110 basis point increase over last year.

We achieved another quarter of positive NOI growth in the portfolio. Our same-property NOI was up 5.7% over the prior year, and increased 3.7% for the full year. This is the fourth consecutive quarter of strong NOI growth. In addition, for the ninth consecutive quarter, we generated positive cash rent spreads, with an aggregate spread for the fourth quarter of 6.6%.

On a year-to-date basis, we have aggregate positive cash rent spreads of 6.4%, reflecting new and renewal spreads of 8.6% and 2.9%, respectively. We had a significant increase in our overall retail portfolio rent of 3.3% over the third quarter, as we delivered two high-quality projects. The rental rate growth and our continued leasing success helped revenue from property operations grow by approximately 14%. This positive NOI growth trend should continue over the next 12 to 18 months as our in-process developments begin to open.

On the development side of the business, Cobblestone Plaza, our Whole Foods-anchored center in the Fort Lauderdale area, is 92% leased, and was transitioned to the operating portfolio in the fourth quarter. We are in lease negotiations with a small shop tenant that will increase the center to 95% leased. Whole Foods is currently fixturing their store and plans to open later this quarter.

Our fully-redeveloped Rivers Edge shopping center in Indianapolis is 100% leased, and was transitioned to the operating portfolio during the quarter. We're currently completing a new BGI Fitness building, and plan to open the Arhaus Furniture space in the third quarter of 2012. These two premier assets will continue to strengthen and increase the value of our overall portfolio. They also demonstrate our ability to create value through both development and redevelopment. In today's competitive acquisition market, these assets would command very low cap rates. The properties have taken time to stabilize, given the economic volatility over the last several years. However, our perseverance and determination on these projects and other recently-completed developments will enhance our portfolio for many years to come.

At this point I'd like to summarize the significant accomplishments in development over the past 12 months, in which we delivered $140 million of projects. Eddy Street Commons in South Bend was delivered in December of 2010 at 88% leased, and is now 97% leased. Coral Springs Plaza was delivered in December of 2010, and is 100% leased. South Elgin Phase 2 in Chicago was delivered in September of 2011 and is 100% leased. Cobblestone Plaza in the Fort Lauderdale area was delivered this quarter, and is 92% leased; and Rivers Edge in Indianapolis also delivered this quarter at 100% leased. We also broke ground on Delray Marketplace in Delray Beach, Florida, in December, and the project is now 71% pre-leased or committed. We closed on a $62 million construction loan on this project in the quarter. Site work is in process, and we expect to begin vertical construction in March, with a planned opening in November of 2012.

In addition, we continue to make significant progress on several other projects that are transitioned into our in-process development pipeline. Four Corner Square, located in Maple Valley, Washington, a Seattle suburb, is 81% pre-leased and site work will commence shortly. We have executed leases with three anchor tenants totalling 68,000 square feet, and are focused on the small-shop leasing to quickly stabilize the project after opening in Q4 of this year. The project is projected to produce a return on incremental costs of approximately 10.5%.

Phase 1 of New Hill Place in Holly Springs, North Carolina, a suburb of Raleigh, is 65% pre-leased and is experiencing accelerating leasing momentum. The project will be anchored by Target, and we have executed leases with Dick's Sporting goods, Marshall's, Michael's and Petco, totaling approximately 100,000 square feet. Preliminary site construction is under way and vertical construction will commence upon the closing of our construction loan in mid-2012. We plan to deliver 205,000 square feet of owned space in the first phase of New Hill in the spring of 2013, with a projected return on incremental costs of 9.3%. In addition, we added Phase 2 of New Hill to the future development tables, as the pre-leasing is very active and we strive to gain construction efficiencies by delivering both parcels in sequence.

Finally, we executed a lease and started construction on a Walgreen's in Zionsville, Indiana, a suburb of Indianapolis. We closed on a project loan during the quarter that will fund the majority of the cost, and we anticipate on opening in the later part of this year. Considering our substantial progress on several of our large-scale projects, I think it's readily apparent that our focus and drive to complete these projects is now taking shape. Our team will stay on task to push these projects to the operating portfolio, well-leased, on schedule, and within the projected overall cost estimates.

In the operating portfolio, we were able to attract two national retailers to the Plaza at Cedar Hill in Dallas. DSW and Home Goods will join Ross, Michael's, Sprouts Farmers Market, and Toys R Us/Babies R Us at the center. We have significantly upgraded this asset from a tenancy and credit perspective since the departure of Linens 'N Things to bankruptcy and Barnes & Noble to a relocation.

Turning to the balance sheet, our finance team is focused on several important near-term objectives. We closed on the Delray construction loan and refinanced Eastgate Pavilion in Cincinnati in the fourth quarter at very favorable terms. Delray's rate was 200 basis points over LIBOR, and the five-year loan on Eastgate had an all-in rate of 3.6%. Last month, we paid off the Plaza at Cedar Hill $24 million secured loan, which had a rate of 7.38%. It was set to expire this month, and we paid it off with a temporary draw on the line of credit. We anticipate securing five- to seven-year fixed financing on this asset in the first half of 2012. We also are working to finalize the construction loans on two new in-process developments in Seattle and Holly Springs.

The short term goal over the next 12 to 18 months is to reduce our debt-to-EBITDA metric to a level of between 7.5 and 8. We plan to achieve this objective in the following ways. First, completing and stabilizing Delray Marketplace, New Hill Phase 1, Oleander Point, and Four Corner Square in Maple Valley. Continue to focus on our small shop leasing goals of 85% to 87% in the overall portfolio, opportunistic acquisitions funded with equity, and targeted asset sales. Our continued leasing success and focus on generating positive cash flow from our developments will accelerate our ability to achieve this goal.

In terms of 2012 earnings guidance, we presented a full-year range from $0.42 to $0.46 a share. This guidance range has some key assumptions, the most significant of which is our plan to dispose of several properties to generate an additional $20 million of liquidity, and reduce the balance on a line of credit. The disposition of these properties will be targeted in markets in which we don't have expansion plans, or the assets have a low growth profile. Depending on the timing of the sales, we've assumed an FFO reduction of $0.03 to $0.04 per share. In addition, we will continue to stagger our maturities with long term debt on recently completed projects.

Our 2012 guidance assumptions include terming out approximately $80 million of debt for five to seven years at a fixed rate of 5%, which would reduce FFO by approximately $0.01. Refinancing of the Plaza at Cedar Hill is projected to generate an additional $7 million of liquidity from refinanced proceeds over the existing debt at maturity. The sale of assets and the terming out of debt will reduce our floating rate debt to an estimated range of 20% to 25% by mid-2012. The assumptions in our 2012 plan will continue to strengthen the balance sheet and focus our portfolio in targeted markets. The sale of our Seattle asset is important, as we begin to reduce our Pacific Northwest presence. We are under contract on this asset, and we anticipate closing prior to the end of the month. We also anticipate recycling other non-core assets and increasing our concentration in our primary markets.

Finally, I'm very proud of our 2011 results and the focus we have maintained to complete our objectives. We've been tenacious in our pursuit of opportunities to strengthen the Company. Our team is well-positioned to continue to add value to our portfolio, as we approach 2012 with enthusiasm.

Operator, this concludes our remarks, and we'd like to open the line for questions.

And our first question comes from the line of Todd Thomas with KeyBanc. Please proceed.

Hi. Good afternoon. I'm on with Jordan Sadler as well. John, you mentioned the long term goal of getting the small shop leasing to 85% to 87%. Look like it declined a bit again this quarter and I know last quarter there was some space mix changes that impacted that figure. I was just wondering if you could comment on this quarter and maybe talk about demand for small shop leasing more broadly?

Sure. As it relates to the decline again we're dealing with a fairly small pool of 1.5 million square feet of small shops approximately. I think the decrease this quarter was real specific. It was specific to one tenant, which was a Dollar General and again, to remind everyone anything lower than 10,000 square feet is in our small shop pool, and I think that was a 6,000 square-foot tenant. So that was generally why we had the decline against a reasonably static everything else.

And then the environment is still pretty good for us. I think you're always going to have tenants moving in and tenants moving out, but we're certainly not seeing any deceleration in the shop. If anything, we're seeing more and more opportunities where I think the small shop -- the local small shop seems to be picking up. We've obviously had strong demand from kind of regional and national, particularly the franchisees. You've already heard a lot about the quick service restaurant areas expanding pretty rapidly. So all-in-all, I think it's a matter of us, as over the last couple years, we've been very focused on leasing up boxes. We achieved that very well, and now we're focused on leasing shops. So I feel pretty good about it.

Okay. What size space is in most demand in your core markets in Indianapolis and maybe in Florida when you think about the small shop spacing? Is it the 1,500 to 2,000 square foot retail or is it more of the 5,000 to 7,000 square foot retailer?

I think for the mom and pops you're going to probably see smaller. That's going to be the 1,500 to 2,500 square foot user. The regional and national guys are probably more like 2,500 to 6,000 on the restaurant side, I'd say. So I think that's not a big change. I think historically the 1,200 to 2,400 square foot spaces have been traditional mom and pops, but then, you have got a lot of national guys that also fit that niche. The one thing I think we've all seen change in the business is that people are much more flexible today as it relates to footprints than they were in the past and they're more flexible, as it relates to depth and width and some of the national guys have very specific requirements. But in general, we're able to make things work in terms of refitting spaces. And also on the shop side it's still much more cost effective than it is on the big box side.

Okay. And then in terms of your capital requirements and new -- thinking about the new development and what was added this quarter to the in-process pipeline, can you talk about your expected sources of capital to fund the development projects?

Sure. I mean if you look at the in-process and you can see that with Delray being the largest of the in-process projects, we obviously have a $62 million construction loan which will fund all the remaining costs. And frankly as it relates to New Hill and Four Corner Square, the other big ones, those we also expect to have construction loans in place to fund the remaining cost. And, in fact, in probably in the case of -- one of those cases you can get a return of some of our capital. So the construction lending market is absolutely open to guys like us that have a lot of experience and have equity in their projects. So it's actually pretty competitive. So I don't know if Dan wants to add anything to that.

I think, Todd, the key on this is on New Hill and Four Corner, Maple Valley, the two projects we just moved over to the in-process developments. Both of those projects right now are unencumbered. We purchased those basically with available funds, so they don't have bank debt on them. When we go to construction loans, we can use the land as equity when we put them in. So I think when you look at those two together, as John mentioned, one of them we anticipate getting some cash back, and the other one we might have to put a little in. Net-net, the construction loans will fund the majority of the project.

Okay, great. And then lastly with regard to the dispositions that you talked about, aside from Gateway is there any other in-place debt associated with any of the projects that you anticipate selling in 2012?

Yes. As we look on in-place debt there's another project, one of the development projects that we finished. We're starting to market that project and it's got in-place debt on it, but we're still -- the liquidity number that John mentioned comes from really a couple sources. First is the Gateway Marysville. Second is the project that we're going to be marketing. We don't get too many specifics as we have it out in the market, but that, and then we have some apartment ground we anticipate selling in the first quarter. And then from that point we're looking at some other smaller assets that are non-core assets kind of as we talked about in the prepared remarks that are unencumbered that will generate additional liquidity. So I think the near term goal of getting, after debt pay down, getting $20 million plus back in the Company is very achievable and that's definitely very high on our objective for this year

Okay, great. Thank you

Thanks.

Our next question comes from the line of Rich Moore of RBC Capital Markets. Please proceed.

Would you consider as part of the asset sales some of the commercial assets? You didn't really talk about those as being -- sounded more like the non-core retail might be what you're looking to sell. How about the commercial?

Yes, Rich, as you know, we've talked about that in the past. The commercial assets is kind of down to just a couple and we have a couple net leased properties with the state of Indiana that are kind of self-amortizing, and so that's not something that's real marketable. And then we have obviously our bigger asset is our headquarters building that we're in, which is about a 300,000 square foot building with an associated structured parking garage. So we have -- right now we're in the process there of finalizing a couple of renewal leases to stabilize the building and we would also consider that asset as non-core. So to the extent that it presented an opportunity, we certainly wouldn't say it's not on the table. I think we would consider anything that we didn't see as core into the daily operations as being on the table, but that's not ready today. And I think as demonstrated by our sale of the limited-service hotel in the quarter that generates significant cash. So we're certainly looking at everything as it relates to the most cost-effective capital that we can bring in

Okay. All right, good, thanks, John. And then on New Hill, is it my imagination or it seems to have grown in size and to have another component to it now as well. Was that there before or is that new?

Go ahead, Tom.

Actually New Hill has pretty much been developed in the same way we had started. The part that we brought over was Phase 1 and that was brought over with total GLA of about 375,000, and then what we did is we moved into the future development pipeline in the second phase of the project, which is about 170,000. So all-in-all, it's basically the original size that we had started. It's just evolved as we have grown our tenancy interests.

Also, Rich, we added a couple boxes to the equation, so we maybe had a little more small shop component before. So since we've been so successful on the big box leasing front, that's changed a bit.

Okay.

Rich, one last item with the onslaught of Target committing to the project and then the four junior boxes that John mentioned before, that's obviously driven demand probably a little bit more than we even expected.

Okay. So is that sort of the whole project there, the 170,000 square feet in Phase 2 and then the 374,000 in Phase 1?

Yes. For the most part, we have broken it down to two phases as you described, that's correct.

We also have some residual ground, Rich, that would be apartment ground that we'll be selling.

Okay, okay, great. Does this give you any more confidence just down in Raleigh about Parkside and what might happen there?

Sure. Raleigh is an important market to us, and these are kind of different projects in the sense that Holly Springs is a very traditional large big box power center and Parkside is a little more unique of a site plan, but clearly the more activity we have in one single market, the more we have to show to retailers, the better. So I think that's why we're also starting to make significant progress in Parkside and Tom can kind of elaborate on that.

I think, like most projects, getting the anchor tenant lined up is very critical and it we're making great strides in that regard. We're also picking up a component that will include a community center, kind of a grocery-anchored small shop side of the project. So as we look to finalize those two deals, that will really push us forward and propel us to success on the northern portion of the parcel at Parkside. So a lot of great activity there, and it's interesting, like John said. I mean, it's a site that has tremendous dynamics. It's very unique, and I think you're going to hear more and more about that project as we move forward

Okay. I assume that's something that you guys could move in, in phases as well if you chose into the construction pipeline?

Yes.

Okay. All right. And then on the line of credit balance, John, you guys gave some ways that you might bring that down. And I'm wondering, would you consider either some common equity or some preferred equity? Have you looked into the preferred market as all as a possibility, either of those for lowering that balance on the credit line?

Yes, Rich. I mean I think as I kind of alluded to, we are always looking at what are the most cost-effective ways to bring capital in where needed and we've been obviously self-generating some capital as well over the last couple of years, which is always our cheapest form of capital. But to the extent that, as we laid out the plans, and we have a capital plan that's always a live organic thing that we look at that runs for 24 months that we're always looking to tweak and improve. So we are studying everything and we are well aware of what's happening in the preferred market, in the common market, but again, right now, as we're sitting here today, based on these asset sales, and based on the $20 million of liquidity that we think we'll generate from that, and the fact that we'll have good cushion from there on the credit line and things are going pretty well in terms of the construction lending market, that's kind of where we're at. But to the extent that something presents itself that's attractive, we always have to be ready for that.

Okay. Very good. Thanks, guys.

Our next question comes from the line of Jeffrey Donnelly of Wells Fargo. Please proceed.

Good afternoon, guys, and tenacious, I like that word, John.

I've heard that before.

You have? I wish Welker had a more tenacious grip on the ball last Sunday.

I'm not going there.

I'm curious. You already answered a lot of my questions. A few questions, though, first on the market itself for transactions. What you're seeing out there, how do you think about the gap in cap rates between A, B and C assets? We hear from a lot of people that the As continue to seek impression, but you get fewer data points on B and the C. Just curious what you're observing out there.

Well probably don't hear much -- I don't know that people are running around saying they're buying B and C assets. That might be part of it, but I think the bottom line is that everyone's definition is kind of in the eye of the beholder. The assets that we see that are high-quality assets, really driven by a combination of the real estate and the tenancy, they just are few and far between. So it's really a supply and demand thing that is driving cap rate compression in my opinion. I think that's equally part of the equation as to where interest rates are and maybe probably a bigger part of it frankly because if you look at where cap rates were kind of in 2006 and you look at where they are today, they're very similar, but if you look at the 10 year treasury, they're very different, right?

So I think that the B and C -- I don't even want to talk about C because I don't really know what that is, but the B is stuff that we think of that is good real estate, but functionally got problems. That's attractive to us. So if we can find something that someone might think of as a B that we can turn into an A, like Rivers Edge is a great example of that, that's really right up our wheelhouse because you might pick it up for a 75 to 100 basis point differential. That's a huge number and I think that to us is more interesting than going out and paying $500 a square foot for something that people say is an A. So I think you have to be cautious in what you're doing there.

Yes. Nobody seems to buy B assets, but everyone seems to sell B assets, though.

Right.

I'm curious just because maybe pricing on those Bs haven't moved as much. What do you any is holding people at bay? Is it just a lack of financing still out there or do you think it has more to do with just the fundamentals in the market? Just curious what you think.

I think there's less people that know what to do with them. You need to have people like ourselves that know how to create value versus guys that are the highest bidder that want to kind of shepherd an asset. So there's probably less people capable of buying Bs at the end of the day than there are buying As, because the A market is not only guys like ourselves are in that market, but it's also all the financial sponsors, and it's just a whole lot more people chasing a small amount of product. And so I think on the B side you've got to really be a professional at the business to know what you're doing, and I think there's a lack of credit available to kind of the smaller entrepreneurial real estate developer, probably hinders that. And to the extent that probably gets better, which I think it will over the next two years, Bs will probably close some of the gap, but right now, that's probably where the opportunity really is.

I think a good example of a B, since we're on that topic was Oleander Point in Wilmington, North Carolina. That was a project that clearly needed elbow grease to make strides forward and that's where, as John said we can add value and use our skills to be successful.

And I'm curious, on your NOI growth guidance for 2012, I think you put it at 1% to 2%, which is a deceleration from what you guys saw this year, is there something driving that? Is it kind of a tough comp or something in your rollover schedule?

No, Jeff. It's really simply that in the last 2 years, we have leased almost 2 million square feet. So we've leased a lot in the last 2 years. The majority of that leasing was in big box leasing. Now we're down to 99% occupancy in the boxes. So you're really more on the shop side, and so it's really just a matter of less to lease with big spreads, and I think it's a more -- we're just being reasonably conservative against the historical backdrop of what a community shopping center guy is going to deliver. So that's really it. I mean it's not a deceleration of rents as much as it is of a deceleration of stuff to lease

That's kind of what I figured. Just one last question. I don't know if you have it offhand, but for the new and renewal leasing that you guys did in the fourth quarter and just 2011 are you able to break out for us what that was for new leases versus renewal and how much of all that leasing was instead of a one category versus the other?

You mean in terms of the total square footage leased?

Yes.

Yes. We don't have that right in front of us, but I would say when you look at it, the majority of it is, as I said, small shop leasing. If I look at it in terms of number of deals, I think we did 37 deals and I would say over 20 of them were renewals. So that gives you a sense that those are mostly going to be shops, Jeff. As I said, we did two boxes which were DSW and Home Goods both in the same shopping center, and that's about 40,000 square feet in those two. So looking at it from a numbers perspective, the majority are renewals and the majority are shops.

Okay. Thanks, guys.

Sure.

Our next question comes from the line of Carol Kemple of Hilliard Lyons. Please proceed.

What was the small shop leased rate in the quarter? I didn't see that anywhere, I might have overlooked it.

The small shop leased percentage? It's on the last page of the supplemental, it's at 79.5%.

Okay. And then I noticed the recovery rate increased a lot in the quarter. Is there something one time in that or is that a good run rate going forward?

I would say there's some one time items in that. I think we were -- one thing we benefited from as most people saw in the Super Bowl was that we haven't had -- we've had a very mild winter to date, and some of the year-over-year, the snowplow and everything else has definitely come down from the snow removal perspective. So I think if you look at like real estate taxes and those type of things, I think you're more on a run rate for this quarter and going forward. The $3.4 million to $3.5 million is probably a good number on a run rate basis, but when you look at that, sometimes in the fourth quarter as you look back, we've had -- when we do some true-ups and those kinds of things and we've got some moving parts with development and more tenants taking possession of spaces, it's -- I would say the run rate is a little high for this quarter, but we still are definitely pushing that number to some of the highest numbers that we've had in the past. So we're looking at it's definitely on a positive trajectory, but I would say this quarter might be a little high

So would you go 74% for 2012, would you think, or what would be your kind of estimate?

I think that's reasonable. 74% is a good estimate. I think in the first couple quarters again depending on the weather, the first quarter the recovery ratio may be slightly less than 74%, but as you go throughout the year it's going to continue to get a little better.

Okay. And then it looks like your lease percentage for the portfolio was 93.3%. What was actually occupied?

Well, the occupied we had it like, for instance, on Cobblestone and some of the others when they came rolling into the portfolio, we have some of those tenants still under construction. So we were hoping to really close that gap to the end of the year where the occupied versus leased was almost on top of each other. We still got about a 300 basis point difference, primarily because, as John mentioned we signed DSW and Home Goods at Plaza at Cedar Hill and we migrated Cobblestone Plaza over to the operations, which Whole Foods is planning on opening this quarter, but as of the end of the year it's still leased but not occupied when it migrated over. Those are some pretty big numbers.

Okay. Would you have any kind of thoughts on where it will be at the end of 2012, the spread?

As we look out, a lot of these tenants, the ones I mentioned will be occupied. I think the difference will be as some of these developments are migrated from development to operations, it kind of depends on where those stand. We're planning on delivering Delray in November of this year, some of the other projects will be opening. So I think as long as those projects don't come in and we have a little bit of a gap while tenants are doing their tenant build out, I think it should be closed more within that 100 to 150 basis points versus where we are today in excess of 300.

Okay, great. Thank you.

Our next question comes from the line of Quentin Velleley of Citi. Please proceed.

Just in terms of I think you made the comment in your prepared remarks, and I know you've spoken about it before in terms of rising equity and 100% equity funding some acquisitions. Can you just talk a little bit more about that? And I'm assuming that you would be looking at sort of the B-type assets where there's some small re-tenanting opportunities or maybe I'm wrong, and you're looking at semi-quality assets where the cap rates are going to be lower. And then sort of how should we think about the size of it? Is it sort of it might be $50 million to $75 million or could be it something that's larger?

Well, I'll try to cover all those, Quentin. I think you had three questions in there, so I got to like stop and think for a second.

I'm saving energy.

Look, I think we are first of all, we're actively pursuing opportunities in the market right now. You'll recall that at the end of the year we hired a new head of -- a Vice President of acquisitions, and that role had not been filled for 6 months at least. So we're much more engaged in seeing opportunities both off market and on market. As relates to the type of product, I mean I think our goal is always to find, we're always looking for the diamonds in the rough. That's obviously hard to do, and takes a lot of effort, but we think we're very capable at figuring that out.

By the same token, it's not always as obvious that you're buying something that's beaten up. It might be a tenancy issue. We might be buying something that has a particular tenant that others would view as weak that we think is a re-tenanting opportunity. So I think that we're going to look at the types of stuff that we currently own. We're not going to go, we're not looking to drop down on the quality scale. So I don't want anybody to think that. We're looking to buy high-quality assets but just assets that we think we can add value to.

So -- and in terms of size of what we're pursuing, we have a pretty robust pipeline that we're looking at right now and again, it's going to be more opportunistic-driven than us setting a goal of saying we're going to buy X. We're going to opportunistically look for the right assets for us and the right markets for us. And I think we'll clearly be more active there in 2012 than we were in 2011, as an example. So in terms of, I can't really put an exact dollar figure on it for that reason.

No. That's great. Thank you.

Our next question comes from the line of RJ Milligan from Raymond James. Please proceed.

Just to follow up on Jeff's question in terms of the same-store NOI guidance for this year, with all of the I guess the boxes that are now paying rent, wouldn't you -- or could you give a little detail as to what you think the sequential or quarterly same-store NOIs would look like? Because I would think that with the tenants now paying rent, that you would see a greater boost in same-store NOI just from them.

Well, I think it's kind of the instead of saying back-end loaded, it's back-end de-loaded. We're going to continue through most likely this quarter and maybe even a little bit into the next quarter, but this quarter will probably be where it plateaus and it likely comes down from there due to the fact that everything is in and occupied. So it's probably going to go in that direction, RJ.

Okay. But even if we saw say 3% or 4% over the next few quarters, that would imply sort of zero or negative same-store NOI in the back half of the year. Is that in the realm of possibility?

I don't know the negative is very likely at all. It's possible that you might have one of those quarters be flat, but again it's hard for us to say right now because we're also doing shop leasing. So as I think about that, maybe if we can do -- if we have a big quarter there in the same-store pool, that could be impactful, but most of the activity is going to happen outside of the same-store pool. You have got to remember that there's a lot going on outside of the same-store pool. So those don't benefit the same-store pool and they will later, a year from now, but I'd say we're kind of in between

RJ, one thing to look at there as well is I think what's important is we got a lot of internal growth coming from the NOI we're going to be generating from these in-process developments and I know we're doing a lot of leasing. Our leasing guys are focused on getting these developments up and into operations and I think the key point there is we're going to be able to get a lot of internal growth. I know the same-store pool will come down to a more normalized level than it has been the last several quarters. We're still pushing to get that -- obviously that 2% range that we've got out there in our guidance, but I think the important thing is when you look at the amount of NOI that's going to be coming as John mentioned in the script from a New Hill Phase 1, from a Delray, from a Maple Valley, Four Corner, those are some strong projects from an NOI growth perspective

Okay. Thanks, guys.

Our next question comes from the line of Mark Lutenski of BMO Capital Markets. Please proceed.

John, you made the comment earlier that construction lending was a bit more readily available right now. I was wondering if you could expand on that a bit and also talk about the competitive environment for developments?

As far as the construction lending goes I mean basically the way we were looking as it, we got -- as we say, we got a couple deals out in the marketplace right now and there are obviously more people interested in them than will ultimately have lending. So I'm kind of looking at the supply-demand situation. There just aren't a lot of good projects out in the marketplace for construction lenders to loan against. So -- which is why when we did Delray, at a time where people were saying that you couldn't get construction loans, we got a very attractive construction loan, $62 million, obviously is a sizable construction loan.

So as it relates to the Maple Valley and the New Hill loans that we have in the market, we have -- I don't know -- four or five different very capable lenders interested. We're going to have to kind of cut it down to a couple that we think that we like doing repeat business with and see who's the most competitive and who we have the best relationship with from a global picture as well. So -- and as it relates to the competitive environment on the development front, in the development business, I've said this 2 years ago. I mean there's going to be two-thirds less people doing what we used to do 3 years ago than there are today. There just aren't as many people that are in this business, which again is definitely to our benefit.

And it's probably going to take another 4 or 5 years before you get really, really a lot of guys back into the private development market. So we need to take advantage of that over the next few years and be opportunistic where we can and look for deals that people have fallen down on that we might come in and fix. So there could be a lot of opportunity for us there because the landscape is really just not -- doesn't have a heck of a lot of people in it.

I appreciate the color. Thanks.

(Operator Instructions) Our next question comes from the line of Andrew DiZio from Janney Capital Markets. Please proceed.

Most of my questions have been answered but just one for you. Curious if you're looking at any kind of one time benefits from the first quarter in the Super Bowl in Indianapolis whether it's -- it looked like ESPN was on your Pan Am Plaza or anything related to that?

Yes. I think Tom's got some free tickets to a lot of upcoming events, but no. In all honesty, we did generate revenue from all those activities, mostly through -- probably will show up through kind of parking revenue from our parking garage, and so I think we'll probably have some other income that will be higher. I don't know that it's going to be enough to move the needle, but we did get some definite push in the few hundred thousand dollar range.

It also showed the quality of the real estate we have with Pan Am Plaza being right in the heart of all the action with the Super Bowl. So it was a productive week for us.

Okay. Also, I mean just on Pan Am Plaza for just a second, curious what your longer term thoughts are with that piece of property.

Well we talked about it before. It's really the last in our view it's the last primary large parcel in downtown Indianapolis. It is one of these situations where I think the land is worth a great deal more than what we paid for it, and we're going to be patient and see how things evolve. It's most likely to be sort of a mixed-use project. I think it could be of significant size, but right now, as I said, we're going to be patient, kind of let the best project come to us and go from there. And, Tom, you want to add anything?

Yes. I think the most important part was prior to the Super Bowl we were able to finalize a development agreement that really allows us to move forward with not only a project, but a large scale project, if that ends up being the best route for us. So at this point we have all the ducks in a row. The project is set in terms of entitlements, its ability to be developed, ownership-wise, et cetera. So now we can be patient. We've got a city block which is awfully difficult to assemble in a central business district. So we're in good shape, and we're excited about starting to look at it.

All right. That's all for me. Thanks, guys.

With no further questions in the queue at this time, I would now like to turn the call over to Mr. John Kite for closing remarks. Please proceed.

I just want to thank everybody for taking the time to join us, and look forward to talking to you next quarter. Thanks a lot.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect and have a great day.