Kite Realty Group Trust (KRG) 2013 Q3 法說會逐字稿

Good day, ladies and gentlemen. Welcome to the third-quarter 2013 Kite Realty Group Trust earnings conference call. My name is Derek, and I will be your operator for today.

(Operator Instructions)

I would now like to turn the conference over to Mr. Adam Basch, Investor Relations. Please proceed.

Thank you, Derek.

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. For historical results or 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; Chief Operating Officer, Tom McGowan; and Chief Financial Officer, Dan Sink.

Now, at like to turn the call over to John Kite.

Thanks, Adam.

Good afternoon everyone and welcome to our third-quarter earnings call. We are extremely pleased with our top-tier performance during the quarter, as we continued to execute on our strategic plan through focused balance sheet and operational management. We were able to gain significant flexibility through the expansion of our unsecured term loan, which allowed us to stagger our debt maturities and reduce our borrowing costs.

In addition, we posted another quarter of strong same property NOI performance, at 4.9%, and raised our same-store guidance 75 basis points at the midpoint. For the third quarter, we generated FFO of $0.13 per share, after reduction for certain items, which exceeded the consensus estimate. These results represent an 18% per-share increase over the prior year.

Our total retail lease percentage increased 50 basis points to 95.9%, and our shop lease percentage increased 220 basis points to 86.7% over the prior quarter. The small shop increase was a result of our teams' concentrated effort over the last several quarters. We were able to lease approximately 33,000 square feet to various regional and national tenants. This was the highest shop leasing percentage since our IPO in 2004.

We continue to have a 330 basis point variance between the leased and occupied percentages, which will yield strong furniture NOI growth. Our aggregate cash rent spreads increased 3.2% consisting of 3.6% for new and 2.8% for renewal leases. Our 16th consecutive quarter with positive leasing spreads. Of particular note, we backfilled the leased, but unoccupied, former Best Buy space with Gander Mountain at Bayport Commons. This transaction had an adverse effect on our lease spreads, but will help enhance traffic to the shopping center. Gander Mountain plans to open in the fourth quarter of 2013.

As I previously mentioned, our same property NOI growth was 4.9% over a solid prior quarter, marking our tenth consecutive quarter of same property NOI growth. These consecutive quarter numbers are significant because they show continuing and sustainable positive momentum within our portfolio. It's also a testament to the strength of our real estate and our systematic approach of maximizing value. As a result of our consistent positive same property results, we were able to increase our 2013 same property NOI guidance to a range of 4% to 4.5%.

We are also nearing the completion of some of our larger development and redevelopment projects. Our development center construction represents 845,000 owned square feet and are 79.2% pre-leased or committed, up from 76.6% at the end of the second quarter. Our redevelopment projects under construction represent 350,000 square feet and are 89.3% pre-leased or committed, up from 88% during the previous quarter.

We anticipate Holly Springs Phase I in Raleigh North Carolina, Four Corner Square in Seattle Washington, and Delray Marketplace in Delray Beach, Florida to be fully delivered to operations over the next two quarters. Our project cost for these three projects total approximately $182 million, with an aggregate yield of approximately 6.5% on a fully-loaded basis. The GAAP NOI contribution was 56% in September, and we anticipate the fourth quarter of 2013 and the first quarter of 2014 to be 61% and 75% respectively on an annualized basis.

We also continue to make progress on our 380,000 square foot Parkside Town Commons project in Raleigh, North Carolina. The first phase is 82% pre-leased and well under way, with Target is planning their opening in March of 2014, and Harris Teeter in June of 2014. The second phase is 60% pre-leased and site work has commenced. Anchor pad deliveries are scheduled in the first quarter of 2014. We anticipate closing on an $85 million construction loan for both phases prior to the end of the year.

On the redevelopment side, we began the redevelopment of Kings Lake Square in Naples, Florida. Redevelopment consists of new and expanded Publix grocery store, as well is upgrading the facade and parking pool for the entire center. This will result in a square footage gain for Publix of approximately 15% and a new 20-year lease for us. These changes will significantly improve the overall quality and sustainability of this asset, as we anticipate the positive rental growth as a result of the additional invested capital. We will continue to use our development expertise to upgrade and enhance our existing portfolio. Now, that we've made significant progress pushing through our land inventory, we will be looking for portfolio enhancing opportunities within.

The development and redevelopment projects under construction will add another 1.2 million square feet of owned GLA to our operating portfolio of top-quality projects in major MSAs throughout the country. These legacy development projects, which were once deemed a significant risk for the company, are now tremendous assets with outstanding tenants in high-growth markets.

On the balance sheet side, we successfully expanded our $125 million term loan to $230 million and reduced the rate to LIBOR plus 145 to 245 basis points, a decrease of between 45 to 65 basis points across the leverage grid. The term loan was upsized from the original plan as the bank syndicate was $55 million oversubscribed. The proceeds were primarily used to pay down the line of credit and pay off our existing loan at Ridge Plaza in New Jersey. We will continue to increase the size and quality of our unencumbered pool, as well as analyze opportunities to reduce our floating rate debt exposure, primarily relating to our construction loans.

On to our investment activity. We acquired Toringdon Market for $15.9 million, our first acquisition in Charlotte, North Carolina market. The property benefits from a five-mile population of 170,000 people and average household incomes of $107,000. We acquired the Earth Fare anchored center debt free, at an attractive 7% going-in yield.

This acquisition continues the path we've pursued over the last 24 months of acquiring high quality assets in our target markets. We also sold Cedar Hill Village in Cedar Hill, Texas for $8 million, continuing our initiative to sell lower growth assets and improve the overall quality of our portfolio. This 44,000 square-foot center was anchored by a 24-Hour Fitness and a non-owned JCPenney.

Turning to guidance, we've raised guidance as a result of our strong operating performance. Our as-adjusted 2013 FFO guidance is now within the range of $0.47 to $0.48 per diluted common share from our previous guidance of $0.45 to $0.48 per diluted common share. This guidance excludes from FFO the debt-extinguishment gain mentioned earlier and the accelerated write-offs of preferred financing costs.

In closing, we will continue to fortify our balance sheet over the coming quarters, while simultaneously enhancing our portfolio quality through active management and leasing, as well as target acquisitions and sale activity. The third quarter, highlighted by the expansion of our term loan and continued velocity on the leasing front, marks another step forward for our Company, in terms of achieving the 2013 objectives we laid out at the beginning of the year: consistently improving operating portfolio performance, pushing forward the completion of our development and redevelopment projects, acquiring high quality shopping centers, and continuing to delever and improve the balance sheet. With a number of our development and redevelopment projects nearing completion, and the corresponding NOI coming online, along with growth from select acquisitions, we look forward to significant cash flow growth and are confident that we're well-positioned for a solid 2014.

This concludes the remarks and we are ready for questions, operator.

(Operator Instructions)

Todd Thomas, KeyBanc Capital.

Jordan Sadler is here with me, as well. First question, just the 370 basis point delta between the lease rate and economic occupancy in the same-store. What's a more appropriate gap in the portfolio? What's the timeframe to capture that embedded rental income? Maybe you could just walk through some of the big leases, some of the bigger chunks that will come online over the next two to three quarters?

Todd, it's John. I think Dan and I will both comment. In terms of the appropriate level, a lot of it has to do with the fact that we have had so much positive leasing activity and it takes time, obviously, to go from a signed lease to a paying tenant. The spread, at that level, is pretty reflective of what it's been for a while. I would say, as we continue to lease out the portfolio, maybe 200 basis points is a more normal rate than 300. It's just a testament to the activity that we've had. I think the point we are trying to make is that we still have significant NOI growth ahead over the next two years, so we just want to make sure people understand that we are really in the early innings of delivering the NOI from the lease up and the portfolio and from the development redevelopment pipeline. Dan, you want to --?

More specifics, Todd, on the 330. If you look at that 330 basis points, it's about 200,000 square feet. Of that 200,000 square feet, roughly 175,000 square feet relates to tenants that are going to be opening for business. Anchor tenants such as Fresh Market at Lithia, LA Fitness at Stoney Creek Commons, Total Wine at International Speedway Square. There's a lot of those -- Sprouts in El Paso as well. If you look at a lot of these, solid tenants are going to be opening up, and that's what John mentioned. It's about $2 million of NOI. A lot of these tenants, the walls are up. They are soon to be open. I would say most of them will be opened by mid 2014, probably, is a reasonable estimate.

Todd, as Dan just said, the great thing about that is several of those examples are at existing operating properties, where we came back in and added GLA via tenant enhancement. It's not just the development deals, it's really a lot of that is enhancing existing assets. As we said in the prepared remarks, that is going to be a big focus of ours over the next couple of years due to the supply environment that we're in.

That's helpful. If I could just shift over to the acquisition environment? Just curious, as we close to the end of the is year, if you could talk about some of the new deals that you've seen come to market? Just wondering how the pipeline looks today versus, say, three months ago on last quarter's call?

Well, we are always looking at activity. The deal we mentioned in Charlotte is the type of deal we like doing. There is definitely opportunities out there. We are always looking at various opportunities, but we also have an underwriting methodology that we like to stick to, in terms of our target markets and going-in yields and upside potential. There's definitely a lot out there for us to look at, but in the end of the day, we have a very specific underwriting that we're looking at that's going to keep us in that type of shopping center activity.

Based on what you are seeing today, do you think it's reasonable to expect a similar pace of deals in 2014?

Yes. I think based on what we're seeing today, we're just going to keep doing what we've been doing. Yes, I think the market is favorable. We'll keep trying to find those opportunities, as I said, in the markets that we are pursuing. I think if your question revolves around cap rates, I think it's clear that cap rates are continuing to be where they've been. That hasn't really changed anything in terms of what we are looking at.

Okay. Then, just last question for Dan. Just wondering what the current plan and expectation around the $20 million CMBS maturity that's backed by the headquarters' office tower at 30 South, as it comes up early next year?

It is not really a tower, we've got to clear about that. (laughter) It's a tower, maybe in Indianapolis, but --

Subsequent to the end of the quarter we paid off that particular mortgage with the line of credit. We hope to finalize a new loan secured by the building before the end of the year. We are going to do it on the bank balance sheet, and we should have that closed, hopefully, before December 31.

Okay. That's helpful. Thank you.

Josh Paquin, BMO.

John, I was curious about your comments about this wave of development that you are about to get past being a transformative event for the Company. As you look forward, about $150 million in new development pipeline today on an asset base about $1.5 billion, enterprise at least. What's a comfortable level moving forward? How do you feel about new development deals you're looking at today?

As we've talked a lot about, Josh, is that we've been working to bring the development, the CIP, in line with what we think is a comfortable level. Right now, our CIP is below 10%, around 8%, I think, as a percentage of total assets. That's way down from, obviously, a few years ago when we were north of 20% where it was too big. I think that the comfort level we have is that 5% to 10% range of CIP to total assets, which is just one way of measuring it. That's a pretty simple way of measuring it, and we are comfortable with that. The point we were trying to make is, we can stay very busy on the development front vis-a-vis the existing pipeline that we have, because we have a couple Phase II projects, obviously, coming up.

Then, also in terms of the redevelopment activity that we are doing, which could also be part of CIP. At these levels, that means we are going to develop between $75 million and $150 million a year. It's probably going to, right now, obviously going to be on the lower end. As we start finishing these out, then we'll be looking to find new opportunities as long as the returns are warranted.

Digging a bit more into the returns and how you are underwriting growth, you have an 8.1% yield preferred security outstanding. Within that context, how does that stand up against higher underwriting development versus acquisition? Perhaps on an IRR basis?

I'm not sure we've looked at it from the context of the pricing on the preferred to the yields that we are getting, because we wouldn't really think of marrying that capital together that way. The preferred is that 8.25% right now, and, frankly, that's high. We look at that as an opportunity in 2015. Our view is -- hard to look out that far, but when we see what's going on in the world today, it's hard for us to imagine significant interest rate increases over the next 24 months. We look at it more from the perspective of IRRs than kind of unleveraged returns than we do anything else. The bottom line is that's one of the reasons that you don't see a lot of development today is that the returns that you can generate on a ground-up development are basically below double digits. That doesn't appear to us to be very warranted from a risk perspective. That's why you see what you see and we get higher returns in the redevelopment. We're definitely staying very busy and we are definitely looking at significant NOI growth despite that environment.

Okay. Lastly, on your market exposures. You've been building up some assets in markets outside of Indiana. It that a focus? Are you trying to diversify away from that geography? Or, is that more just deal specific?

We've been saying for the last couple of years that the exposure at Indiana was at a level that we didn't think it needed to be any more than. Frankly, we bought it down over the last couple of years. That's part of it. It's not fully driving it. We've been pretty clear that, currently, we like the markets in the Midwest, the Southeast and Texas. There's a reason for that. We see significant opportunity in those markets. We see limited supply. We see good rent growth. We see that the manufacturing base in the country is coming back a bit. So, the markets that we were in make sense. The recent acquisitions that you've seen us do, in the Southeast we've gotten great properties at great prices with good upside. It's really driven more on that, Josh, than specifically saying we're looking to do something less in Indiana. It's just more of where we see better growth opportunities.

Okay. Thanks, guys.

Craig Schmidt, Bank of America.

I was wondering, on the three development projects under construction, what are the NOI contribution in the third quarter? What you might think it would be in the fourth quarter?

Craig, on a percentage basis, we kind of touched on that in the script. When you look at Delray, Holly and Four Corner, those specific assets were the ones that we wanted to touch on specifically in the script. That's about $182 million 6.5% yield. The GAAP NOI was 56% in September and we anticipate being 61% in December and 75% in March of next year. That's kind of the breakdown on those three assets. We also will have -- we wanted to be particular in those three assets, but we'll also start getting contributions from Bolton Plaza as LA Fitness opens there. As well as, as we mentioned from Parkside, that's going to be coming on late first quarter, early second. That will be Harris Teeter shops. Of course, Target is not owned, but that will be open as well to drive traffic. That's kind of the breakdown. As we mentioned, not only do we have those three assets, we also have the anchor tenants in our operating centers that we anticipate those coming on as well between now and second quarter next year.

Great. What is the rent differential between Best Buy and Gander Mountain?

It's a pretty big spread. I think it was somewhere around -- first of all, Craig, Best Buy was paying probably 60% above our box average, like in $1,650 range. I think the Gander deal was around $1,100, $1,150, so significant spread. Even the Gander deal was at a premium to our average box rent. The bottom line on that deal, is that the Best Buy was just a very high rent that really wasn't logical.

I'm assuming you'll get an occupancy lift with Gander Mountain once they finally open?

No, well, I mean we'll get it occupied. It will shrink the spread between occupied and leased, but the space was leased.

That's one of the tenants that's causing the gap on the 330 basis point spread.

Very small, relative to the 330.

Okay. Thank you.

Carol Kemple, Hilliard Lyons.

Do you all have any acquisitions or dispositions under contract now that you think will close by the end of the year?

Acquisition or disposition under contract now? I don't think so.

Where did the $1.4 million lease termination fee come from?

That came from the Best Buy lease termination as we were saying. Then we replaced -- Gander Mountain replaced them.

Okay. Thanks.

Tammi Fique, Wells Fargo Securities.

I was just wondering what your lease spreads would've been without the impact of the Best Buy lease in the quarter? Also, if there was an impact on the third quarter NOI growth?

Tammi, the lease spread would definitely have been double digits without it. Kind of more in line with where we've been last couple of quarters. What was the second part of the question?

I was just wondering if there was an impact on third quarter NOI growth?

Impact on third quarter NOI growth?

Yes. From that coming off of line.

Yes, it was a small number. Best Buy came out, as you know, probably middle of the quarter, so their rent impacted it. Obviously, none of the lease-term fee was run through the same-store calculation. There was a small impact from Best Buy moving out, but nothing that -- obviously had that not happened the 4.9% would have been greater. We did not include, just to reiterate, any lease-term fees in our same-store NOI.

Tammi, we're trying not to run away from the group too much. We figured 4.9% was good enough. (laughter)

That was very good. Are there any other above market leases like the Best Buy lease that you see on the horizon that you may lose that tenant?

That's the point I was making. $1,650 is a big number. We have a handful of box leases that are low teens. I can't think of anything that we are aware of right now, where there is a tenant struggling that's paying that kind of rent off the top of the head. Obviously, we have over 90 box tenants, so they are out there. We have them. I think the litmus test is to say, if our average box tenant is paying $1,030, this thing was pretty far out there.

Got you. Then, just turning to the loan at South Meridian. I think you may have touched on this, so forgive me if I missed it. You said that you were going to be getting a new loan on that for the fourth quarter. Is that correct?

Yes, that's correct.

Just curious what you think the terms will be on that?

On the bank balance sheet, it's going to probably be seven years with extensions. The rate is, probably an all in rate, in the mid 4%s, would be my projection on that. Typically on the bank balance sheet, we will do a seven-year deal, sometimes five plus two. I think under this scenario, we're going to do a full seven-year deal in the mid 4%s.

Will that be $20.1 million as well? Or, is it going to be higher or lower than that?

It's going to be in that range. Right now, we are working through finalizing the appraisal and all that kind of thing. My guess is it will be somewhere between $17 million and $20 million once we get it all underwritten.

Okay. I think that's all for me.

Ben Yang, Evercore.

Was that $1.4 million lease-term fee fully in your FFO guidance? Or was that somewhat of a surprise for you guys?

We typically at the beginning of the year, Ben, we put together a other property related revenue where we have various transactions that will go through there. Since we've been public, we've always had out-lot sales, lease termination fees and various other items that will occur during the year. Because being a developer, we have the opportunity to make cash flow and have the benefit of those kind of things, where building developments and getting inventory of out lots, or six or seven out lots per development, which is a great opportunity to turn cash flow and recycle at low cap rates. Like we did on a cap rate in the first quarter this year, selling it at a 5% cap on an out lot in Cobblestone Plaza. When you look at it, we have a bucket of other property related revenue. Was this item anticipated at the beginning of the year? I wouldn't say it was anticipated in and of itself, being a lease-term fee at this location. We try to, when we put guidance together, be very clear on there's opportunities out there. On this one we were able to capitalize on them.

Ben, that's why you see the range that you see with us. It's because it's stuff like this that would -- it gets us to the top or even above the top. We don't know that that's going to happen nine months out, but we know that stuff is going to happen and it happens all the time. That's part of the business.

Yes, I understand that. It's just that it was somewhat large for the quarter, so I just wondering if it was a surprise. It might've been part of the reason that you were able to beat consensus because obviously we don't have that type of visibility.

Right.

Then, just a clarification. Obviously, lease-term fees are not in your same-store number. Some of this other stuff, when you sell the residential at Eddy Street Commons, when you get that in entrenched recovery, is that in your same-store number? Or do you take that out, as well?

That is not in the same-store number. Residential sales -- Eddy Street Commons was a mixed-use development we've been benefiting from and have being able to sell these residential lots. Right now, of the built inventory, we don't have any remaining, but about 40 to 50 of additional residential units that will be coming on as demand is presented. Those definitely aren't. Right now, it's a cash same-store number that we try to be very clear on what we're including and excluding on a comparative basis.

Great. Got it. Thank you.

(Operator Instructions)

RJ Milligan, Raymond James and Associates.

John, I wanted to jump more into the small shop occupancy gain for the quarter, or I guess, year over year, pretty significant. I just wanted to maybe get a few examples as to who's taking space? If there's any geographies that are doing particularly well? Maybe the mix between the local mom and pops and some of the national and regional retailers?

RJ, look, we've had a lot of success in small shop leasing. I was trying to say in the remarks that I think you remember probably last year, we started talking about focusing on small shops, because we've been so successful in our box leasing. We've had a big focus on it. I would tell you that in the end of the day, there has been a real strong increase, really across-the-board in demand, both from national tenants -- good example is Starbucks as an example. Who, 18 months ago, people would say they're done. They're closing stores. They've got too many stores. Starbucks is opening lots of stores. They're opening stores that they closed. Everybody over reacted, in terms of closures, probably in 2010. A lot of that, you see a lot these national guys, who are really scrambling to find space. That's happening.

The national franchise players have done a great job of developing franchisees. I think I said two years ago, that one of the results of the great recession were that a lot of people that took early retirement started new businesses. A lot of those were franchises. I don't -- that's anecdotal, but we know it because we deal with them. You've seen a lot of that. You've seen some mom and pops also start businesses in a similar way, where they had an early retirement or pay out at a 401(k), et cetera. There was a lot of capital flowing into the entrepreneurial side of the world. We benefited from that.

Just sort of anecdotally, can you break out, say, year-to-date small-shop leasing between the more national, regional franchisees versus the true mom and pops?

I think that the breakout is similar to what it's always been. It's probably two-thirds national and franchise-type players and one-third mom and pops. That is generally what we see. Frankly, it's because we have better real estate and that's what they are attracted to. I think that's probably continuing.

Okay. Thanks. That color is very helpful. I was just wondering about -- looking forward, is there a plans -- we've been hearing from a lot of the other shopping centers -- other plans to -- and you guys don't have a ton of vacancies -- but demolish any of the smaller size boxes and put in -- open them up to more of a junior box type retailer?

A lot of this, it's a great question about a bigger topic. The bottom line is, RJ, when you look at what's going on in the space, between 2006 and 2009, there were 600 million square feet of shopping center supply delivered, between 2009 and 2012, 64 million square feet. What does that mean? That's what's going on in our business. It's the whole story. The reason you see those things happening, is we're in the driver's seat as it relates to high-quality product. We are going through our portfolio, everyday, saying where do we have upside? Where do we have tenants that are paying below market rent or below our property --? By the way, our rents exceeds the market, so below our property rents. That's what we are doing.

In fact, we have two or three cases right now. Tom was showing me one yesterday, that we are approved next week, fairly significant redevelopment of a recent acquisition where we're going to move people around and increase rents. That's why we bought the property. We are going to continue to do that. Yes, that's happening, but it's really happening because there is no new supply. If you look out over the next five years, you will continue to see that. Guys like us that have the skill set will execute. If you don't have the skill set and you're really just a manager of assets, you can't do that. That's another thing we look at when we're looking at acquisitions. Can we buy stuff from guys that aren't in the business? They are really just financial players, or they're just kind of shepherds of assets. That's a great thing for us to do. So, sorry for the long answer, but your question is really about what's going on in the business.

That's helpful. Thanks, guys.

Tammi Fique, Wells Fargo Securities.

Just wanted to ask about -- you did net acquisitions this year so far of about $100 million and that in combination with $75 million to $100 million of development spend. Are those levels, we should be expect going forward?

I think those levels are generally comfortable and it's always specific to opportunities. Those are more generalizations. Really, Tammi, it's what opportunities are presented to us, what we find. We still have some dispositions to do. Unlike some of the other players, we're delivering very top-tier operating results right now. It's not like we have a portfolio that needs to be significantly culled. Our portfolio is operating a very high level. All we are trying to do is make it better, because we never quit and we just don't stop. Yes, we'll continue to do that kind of range. If we find something that we think we can add value to, we will be all over it.

With regard to funding that, you did mention dispositions. Is that how we should be thinking about the equity portion of the funding for those? Or, should we expect that you could potentially come back to the equity markets?

As we always say, we are always analyzing the most efficient and best priced capital against what we are doing and against that we are investing in. If we can dispose something and turnaround and reinvest like we just did, where we bought a center for $16 million and $8 million of it essentially came from the sale of a lower growth asset, that's a great way for us to do that. Those are good for one-offs. Then, if you find opportunities that are a bit bigger, you may look to pair that with the appropriate equity as long as it was a strong deal. It's really dependent on the deal itself.

Okay. Just one last question related to Dominick's. Just curious what your discussions with Safeway has been on the one Dominick's that you have in your portfolio?

Fortunately, it's the latter part of your question. We have one. Right now, our conversations with them through the leasing group is that not much. Their marketing their entire huge portfolio. I think they've got a bidding process going on for their leases. We are hopeful that we would get someone in the that's going to put a little more effort into it. We will see. Right now, it's early.

Okay. Great. Thank you very much.

Chris Lucas, Capital One Securities.

Just a follow up to the balance sheet topic. What level of credit facility balance outstanding are you guys comfortable at? How much dry powder on that are you wanting to keep in place? Got some debt maturities coming up, just trying to understand how we should be thinking about the credit facility?

Obviously, we were pretty excited to get the credit facility paid down pretty far, where we had only about $35 million, I think, drawn on the $200 million facility. The bottom line is we want the credit facility in place for more opportunistic, interim financing activities, not for medium-term or longer financing activities. That kind of room that we have on it right now is great. It will ebb and flow, especially with someone as active as we are in value creation. It will ebb and flow. I'd say the level we're at is a good level. As Dan has mentioned before, the more unencumbered assets that we continue to add to our pool, the bigger that will get. For a company our size, $1.4 billion in assets, to have north of $100 million of liquidity at all times is a comfortable level. We obviously don't have any maturity issues. We are in a pretty good place, and we just keep trying to stagger out the maturities schedule. It's really more about staggering it than the overall length of it, I think is what we are trying to say.

Okay. Great. Thank you.

At this time I'm showing no further questions in queue. I would like to turn the conference back over to Mr. John Kite for any closing remarks.

Thank you, everyone, for joining us. As we said, we are extremely pleased with the performance that our Company has delivered and that our team that we have together has put forth. We think we're really moving in the right direction, in fact well into it and really looking into 2014. We have significant NOI growth ahead of us, and we have significant value-creation opportunities ahead of us. As we've said, I think the biggest thing we want to make sure everyone is aware of, the market is strong. Our Company is stronger today than it's ever been. We're really looking forward to the next call and the rest of the year. Thanks a lot. Bye-bye.

Ladies and gentlemen, that concludes today's conference. We thank you for your participation. You may now disconnect. Have a great weekend.