Kite Realty Group Trust (KRG) 2014 Q1 法說會逐字稿

Good day, ladies and gentlemen, and will come to the Q1 2014 Kite Realty Group Trust earnings conference call. My name is Marc and I will be your operator for today. (Operator Instructions)

As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Adam Basch. Please proceed.

Thank you and good afternoon, everyone. Welcome to Kite Realty Group's first-quarter 2014 earnings call. 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 actual results of the Company to differ materially from 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.

As you know, on February 9 we signed a definitive merger agreement with Inland Diversified Real Estate Trust. This call is our regular quarterly earnings call and we will be talking about our first-quarter results of operations and related matters. In light of filings that we have made and will be making with the Securities and Exchange Commission relating to the merger transaction, we are limited in this call with respect to discussions about the merger transaction.

We request that you refrain from asking questions about the merger transaction on this call and refer any questions regarding the merger transaction to the proxy statement and prospectus we have filed with the SEC. We appreciate in advance your adherence to this request.

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

Thanks, Adam. Good afternoon and welcome to our first-quarter earnings call. Before we get started discussing our first-quarter results, I will provide a brief update on the pending merger transaction with Inland Diversified.

The transaction continues to proceed as expected. As you are probably aware, we filed an amendment to our proxy statement and prospectus with the SEC earlier this week. In that amendment we noted that we currently expect KRG and Inland Diversified to hold our respective shareholder meetings seeking approval for the merger on June 24. Based on the scheduled June 24 date the 10-day trading period to set the exchange ratio will begin on Friday, June 6 and end at the market close on Thursday, June 19. Assuming we have received the necessary approvals we expect the closing to occur shortly thereafter.

Okay, moving on to the operating results for the quarter. We are off to a very strong start in 2014, the first-quarter FFO per share at $0.13 as adjusted for Inland merger cost. Revenue from property operations increased 55% year over year as we were able to continue delivering our development and redevelopment properties such as Rangeline Crossing, Four Corner Square and Delray Marketplace into our operating portfolio as well as completing the successful integration of our $304 million portfolio acquisition last November.

These internal and external growth initiatives have significantly increased our free cash flow, enhanced the overall quality of our portfolio and continue to improve our balance sheet. Our same property net operating income increased 4.7% in the first quarter, reflecting our team's continued focus on increasing occupancy and generating positive re-leasing spreads.

We also received overage rent during the quarter as a result of strong tenant sales, which demonstrates the strength and productivity of our real estate.

As a result of the strong same-store performance in the first quarter, we are increasing our same-store guidance for the year to 3.5% to 4% from our original estimate of 3% to 4%.

We announced during the first quarter that five new anchor tenants totaling 239,000 owned square feet recently opened. These anchors were Sprouts Farmers Market at Sunland Town Center in El Paso, Walgreens at Rangeline Crossing in Indianapolis, LA Fitness at Bolton Plaza in Jacksonville, Fresh Market at Lithia Crossing in Tampa and a non-owned Target at Parkside Town Commons in Raleigh.

These high-quality anchors will not only add value to our portfolio but will also increase traffic for our tenants, leading to stronger rental leverage down the road.

During the first quarter our team executed 44 new and renewal leases for 260,000 square feet with an aggregate rent spread of approximately 27%. Renewals were up 3.2%, while new leases were up 51%. The spread on new leases was impacted by the re-leasing of the former Walmart box at Gainesville Plaza in Florida.

Moving on to our development and redevelopment projects, we transitioned Delray Marketplace to our operating portfolio during the quarter. The property is 87% leased and tenant sales have been strong. The recent regulatory approval for additional parking at the property speaks to the significant demand, quality retail mix and superior location of the real estate.

We also continue to make progress on our 380,000 square-foot Parkside Town Commons project in Raleigh, North Carolina. The first phase is 87% pre-leased and we are pleased to announce Target opened their 135,000 square foot store during the quarter. Harris Teeter plans to open in June of this year which, along with Target, will begin generating significant traffic to the Center, driving leasing and higher occupancy throughout the balance of the year.

The second phase at Parkside is now 64% pre-leased or committed with vertical construction well underway. We anticipate Field & Stream, Golf Galaxy and Frank Theatre opening later this year or early next year and expect their openings to generate significant demand from complementary regional and local small shop tenants.

We also made significant progress on Holly Springs Town Center Phase II during the quarter, executing anchor tenant leases with DSW and Bed Bath & Beyond. We will soon commence construction on Phase II with a planned opening in the second half of 2015.

On the redevelopment side we are nearing the completion of Kings Lake Square in Naples, Florida. The re-development consists of a new and expanded Publix grocery store, which opened in the first week of April, as well as an upgrade of the facade for the entire center. The re-development resulted in a new 20-year lease with Publix and a 60% increase in rent. These changes significantly improved the overall quality of the asset and we anticipate positive rental growth from the additional capital invested.

We also opened the LA Fitness at Bolton Plaza in Jacksonville, Florida during the quarter, another redevelopment project undertaken to significantly enhance the quality of the existing asset. The Center is now 85% occupied including co-anchors Academy Sports and Outdoors. During the quarter we executed anchor leases with Burlington Coat Factory and Ross Dress For Less at Gainesville Plaza in Gainesville, Florida, to replace the former Walmart. The project has commenced construction and is currently 87% leased.

Once completed, these development and redevelopment projects will add another 900,000 square feet of owned GLA to our operating portfolio. The redevelopments we have completed or initiated recently reflect our focus on improving and modernizing our portfolio. We continue to focus on situations where well-located real estate may need capital invested with yields ranging from 8% to 10%.

We are always looking for opportunities to upgrade and enhance our existing portfolio. We currently have another $50 million to $100 million of potential development and redevelopment projects we are analyzing.

We also had a productive quarter recycling three non-core assets which we sold for $35.2 million. The properties we sold were Ridge Plaza, a 115,000 square foot A&P-anchored center in Oak Ridge, New Jersey; Red Bank Commons, a 34,000 square foot non-anchored center in Evansville, Indiana; and 50th and 12th, a single-tenant 12,000 square foot Walgreens located in Seattle, Washington.

All the properties we sold can be characterized as nonstrategic, either because of the location, lack of an anchor tenant or low growth profile of the asset. We will continue to systematically evaluate our portfolio for other nonstrategic properties to sell and reinvest into more desirable and productive assets.

During the quarter, our Board evaluated our increased cash flow and portfolio execution and decided to increase our common dividend by 8% to $0.26 on an annual basis up from $0.24. The $0.26 annual dividend represents a 4.2% return on our current stock price.

I want to briefly discuss the tax efficiency of our dividend. Over the last five years, we have averaged an 86% return of capital allocation for our common dividend, thus assuming a 40% tax rate this would be equivalent to a fully taxable return of approximately 6.6%.

We will continue to analyze our free cash flow and growth initiatives in order to facilitate strong return for our shareholders.

We are reaffirming our full-year 2014 FFO guidance of $0.48 to $0.52 per diluted common share. Our guidance range and the underlying assumptions exclude the effects of the pending Inland Diversified merger and merger-related costs.

In closing, we look forward to the remainder of 2014 as we continue to operate our portfolio at a very high level, attain our leasing and balance sheet objectives, and close seamlessly -- and close and seamlessly integrate the Inland portfolio.

I'm very proud of how our team managed the smooth integration of the $300 million property portfolio we acquired in November and I expect a similar result with the pending merger. We are excited to move forward to the closing of the merger and the many positive attributes for the combined Company, which include the quality and strength of the real estate, the significant balance sheet improvements, increased cash flow, operational synergies including G&A benefits and, importantly, a larger, stronger platform that will enhance our tenant relationships spurring future growth and opportunities.

Operator, thank you. This concludes our remarks and we are open for questions.

(Operator Instructions) Todd Thomas, KeyBanc Capital Markets.

First question -- at Delray, so you transitioned into the operating portfolio in the quarter and spoke about the traffic at the site and the need for more parking. Still about 87% leased. I was just wondering what it will take to get that leased up to 95% or so and how long you think it might take at this point?

Again, we are very pleased with where Delray is. Obviously we would like to be over 90% but are not totally surprised where we are right now, based on the cycle. I think -- we certainly think that this year the project will fully stabilize and it will be over 90%. At this point small lease up moves the needle pretty significantly, so it doesn't take very many deals to get over 90%.

And frankly we are happy that we are in a position right now to be leasing up the balance while we are adding the additional parking. The Center has been received extremely well by the community. And so we see this as a really strong upside. As you can see, the rents that we are getting are pretty high. relative to the average rents in the portfolio. So we think we've got a lot of upside here.

Okay. And then, as you think about the leasing environment just more broadly, small shop leasing does seem to be coming along. But it appears that there's a little bit more demand for big-box at this point in the cycle. So I was just wondering if you're seeing signs that there is a more meaningful pickup in small shop leasing on the horizon or does it seem like slow, steady, gradual improvement?

Right now I think we are approximately 86% leased in the shops. When you look back over the last 10 years, that's very close to the top for us on average. So I'd say, small shop leasing has been strong and we have an internal goal to keep pushing that percentage up, and I think it's very reachable to assume we can gain another couple hundred basis points there.

So the environment right now is very strong because you have not only the national retailers expanding on the small shop side, you have the regional players and the mom and pop shops who are expanding too. Tom, is there anything else --?

Yes. I would say on Parkside Phase I is probably a great example where we basically have every space spoken for. And at this point we are working towards trying to get deals done, so you have a Target/Harris Teeter-anchored center.

There's just not that many new opportunities in markets like this. So we have strong anchors, new product coming in, new redevelopment. We actually see quite a bit of strength on the small shop side.

Okay, that's helpful. And then regarding the overage rent that you saw in the quarter, definitely a nice uptick year over year. Is that broad based throughout the portfolio, or was it more specific to just a handful of properties? And, Dan, this shows up in other income of the consolidated income statement, is that right?

Yes, that's correct. And then we break it out in more detail on page 12 of the supplemental, where we get a separate overage rent line item.

And to answer the question relative to -- it is actually very broad-based across the portfolio. We have got percentage rents coming from El Paso, got percentage rent coming from Rivers Edge, we've got percentage rent coming from Delray Beach. You are talking about multiple centers where we are generating pretty decent percentage rent -- Cobblestone in Fort Lauderdale, a couple properties in Atlanta.

So it's pretty well diversified and, again, I think it just shows in an environment where you see people talking about retailer sales and concern around it, it's quite the opposite in our portfolio right now. They are strong.

Okay, great. And just one last quick question on the disposition -- so you mentioned in the last quarter that the average cap rate you expect it on the sales for the year would be around 6.5%. Is that consistent with the three properties that you sold in the quarter? And then what else is teed up here? Is there still a little bit more to do to meet that $40 million to $50 million of guidance?

In terms of the cap rate it's dead on consistent with where we thought it would be in that mid-6 range. So we are very excited about being able to sell assets in a mid-6 cap that we deem as not strategic to us. So obviously we generated $35 million, I guess, approximately, of the $40 million to $50 million.

So we have a couple other properties that we are looking at. We have another Walgreens net leased property that makes some sense to sell. So I think we are very comfortable in reaching the guidance.

Okay, great, thank you.

Christy McElroy from Citi.

This is Katie McConnell on for Christy. Can you tell us what the new and blended re-leasing spreads would have been, excluding the impact of the Walmart retenanting?

Sure. The new leasing spread without the Walmart retenanting would have been about 14%. And the aggregate would have been about 8%.

Okay, great. Thanks. That's it for me.

I would now like to turn the call over to John Kite for closing remarks.

Okay. Well, again, thank you. everyone, for joining. As I mentioned early on, we are performing really well.

Actually, operator, I think we have someone that wants to ask another question. So you might want to check that.

Nathan Isbee from Stifel.

Just focusing back on Delray, it seems like it's getting some decent momentum there. Can you talk about how the Publix supermarket is performing, relative to your expectations and relative to Publix's expectations?

Relative to our expectations it's excellent because they are paying rent on time. But as it relates to their expectations, I think it's within their plan is our understanding. And I think they are happy.

Obviously, we are still finishing out the center. But our understanding is they are within their plan. Based on just anecdotally what we see, it looks pretty good. And as far as what the impact of the Center that we thought it'd have, it's exactly what we thought it would have bringing in the daily traffic. So we are very happy with it.

We just had a portfolio review of the entire Publix team. And this was a strategic position for them and those growth numbers will continue to pick up. But it's a solid store and they made a very good move there.

And then just moving to the small shop side, the 87% leased, has there been any first-generation kickouts so far that are still flowing through that occupancy number?

No. I think the only thing between the leased and the occupied numbers that we have now are primarily anchors. We have some, a couple anchors that are dark but paying rent. But as far as small shops are concerned I don't think there's anything material that, quarter over quarter, looking into the second quarter that would be impacting that percentage negatively.

Okay, thank you.

(Operator Instructions) Stephen Bush from Crown Health.

The question I had was, could you recap the meetings? You said something about June 6, June 19, June 24?

Yes. I'm sorry; could you ask that one more time? We couldn't hear real clearly.

Just recap, if you will -- you said something about Friday, June 6, and another event taking place June 9, and then one June 24?

Oh, no, okay. Yes, what we had said is that the actual shareholder meetings for approval for both companies are said to be held on June 24. And then what we said is that the -- based on that June 24 date, there's a 10-day trading period where the exchange ratio is set. And that's an average of the volume weighted average price during that 10-day trading period. And that 10-day period is between Friday, June 6 and Thursday, June 19. Obviously it doesn't include the weekends. So it's 10 business days.

Okay. I thought you said June 9. That's fine. Thank you.

Craig Schmidt from Bank of America.

Yes, I was wondering -- we are heading into ICSC. And is there any leasing that can be done there that would impact or get open by the end of 2014? I know people say it's more [relationalship] than actually deal doing. But I was just curious what might have happened at the ICSC this year.

From our perspective, we're there to do deals. So we do think that certainly on the small shop side we can still have deals where we are discussions with tenants that we could push into a lease and actually still get open this year. On the big-box side it's a little tougher. You have to be going into an existing space that didn't require a lot of buildout.

But as you know, we've always said the way we prepare for Vegas is it's all business. We are there to get deals done. We have a very detailed process we go through where we force our dealmakers to justify even being there. So we take it very seriously and we believe that our guys should come out of there with deals.

Okay. And I don't know if you have a sense of this, but are you getting more requests for meetings from retailers this year than last year? Or is it operating pretty much on par?

Definitely we are getting more. I think, quite frankly, the announcement of the Inland Diversified merger -- within a week or so of that we clearly saw the impact relative to retailers' interest in discussing deals with us. So I think as it relates to us on a micro basis there's no question we have a lot more activity. We are kind of -- I will let Tom speak to this a little bit, but we are essentially co-discussing the assets with Inland in certain situations.

But I think two things. One, just our micro that we have this deal going; and, two, the environment is strong and anybody that has product, there are plenty of users interested in it. Tom, do you want to expand?

Yes. I'll just give you one quick example. We have been really pushing portfolio reviews. We are going to their office and coming prepared to not only talk about our existing assets but new opportunities.

And in the past, when you have that meeting, you may be able to steer one or two people inside that organization. And the most recent one, we had the head of real estate, the president of the company popped in and all seven real estate managers.

So it shows you the power of the scale, it shows you that things are improving. But the bottom line is, with the scale and the enhanced assets in terms of both quality and the numbers of them, we're going to get a lot more looks, a lot more attention, which will prove to be extremely beneficial to the portfolio.

Okay, thanks. I appreciate it.

Chris Lucas from Capital One Markets.

Just following up on that last comment, do you anticipate being able to start or have discussions on either land that you currently have that's held for development that might generate a project, or even looking at beyond that different development opportunities that you might be having conversations with this year? Are we getting to the point in this environment and this cycle where that is becoming a possibility?

Yes. I think, for sure, we are at a point where tenants are approaching us for opportunities and are interested in situations where we have land held for development that could obviously become centers.

And we have one deal in particular that we've mentioned in Naples, Florida, that we refer to as 951 and 41, where we are very actively engaged in discussions with tenants. And so, we will certainly be doing that at -- in Vegas this year on that particular project.

And then in addition to that, we have some projects that people have approached us on that we are analyzing whether or not we would be interested in reviewing. And those are also deals that tenants would be interested in hearing about. So I don't think the issue is at all tenants' interest in these deals, it's whether or not they are willing to pay the rents that would open up our desire to do the project. So it really comes down to the returns, not interest. So we are getting much closer to those things coming in line.

But I think there's still a gap and tenants, obviously, are going to realize that with no new construction for the last 6-7 years there's only so long they are going to be able to hold out for that.

So, John, would you be able to characterize what that gap is right now?

It's just -- from us, from our perspective, it's the yield. We would like to see, depending on the risk parameter of the project and a larger scale power center we would like to see a 10% return on cost.

Historically, over the last couple years the things we have looked at, the way we underwrite it -- now, that's not the way everybody else might, but the way we underwrite it and discount things for risk have been coming in closer to 7% to 8%. So -- which is why we have been pursuing redevelopment because it's a lot lower risk profile.

But again, that gap on a per square foot basis for rents could be a couple bucks a foot. Most likely, if the box tenants were planning a couple bucks more, then that would probably move the needle.

Yes, it's that sensitive.

Okay. And then just shifting a little bit, you guys have had the Och-Ziff portfolio now for five months, I guess, roughly. Is there anything that's coming out of there in terms of redevelopment opportunities that you either are ready to act on or is incremental to what your underwriting was at the outset?

There are. But I think there's a couple things going on there. First of all, we have already actively taken over in terms of how we lease space. And just quarter over quarter, our small shop lease percentage in that portfolio is up 60 basis points and the total is up 20.

So it's not just the redevelopment process that I am going to have Tom talk about here in a second, but it just shows you that when you buy a portfolio that is passively managed and you bring it in and you do what we do, you can immediately see those results. So, I mean, that's why we are excited about the next deal we're doing.

But also, Tom, do you what you talk about the redevelopment opportunities?

Yes. We have absolutely tried to make a big physical presence on site. One of the ways we do that is the simple fact of you see pylon signs out, you see parking lot lights out, trash not being removed properly -- we made an immediate, immediate change to these assets. And that has been recognized by the tenants.

And that's just simply bringing together a platform that both leases and manages these assets and takes the time to do that. So, we are doing extremely well from an operational standpoint.

As it relates to the redevelopment, if you take a look at the nine assets, we have two or three redevelopment projects that we are deeply engaged in. And these are exciting projects like Portofino in Houston, Texas and Lakewood in Jacksonville, where we are really deep into the engineering concepts. And then we have quite a few opportunities to simply re-leasing, upgrading the tendencies of existing boxes and reformatting some of the shop configurations.

So the Och-Ziff portfolio is a very, very active portfolio, as it relates to where we can build value.

Can I just follow up with that on -- as it relates to that portfolio it looks like there's two assets that are below stabilization, Lakewood and Burnt Store. Is there -- do you have a sense as to the timeframe it will take you to get to a more mid-90s, more consistent mid-90s occupancy? Is there decent traffic for potential lease-up within those two centers?

I think there are two different properties. So in terms of -- I wouldn't put in the same bucket. Lakewood, as Tom just mentioned, is one of the redevelopment properties. So that's probably going to be a longer process where we intentionally hold back on leasing until we are clear on what exactly we are going to do on the redevelopment side.

So that one's probably a little longer situation because we think we are going to undertake a fairly significant redevelopment there and that's the infill spot in Jacksonville.

The other deal, Burnt Store, is a small grocery-anchored center in Punta Gorda. And that's really more a matter of us stepping in and leasing and just being actively engaged in the leasing process. So that should come over time, but it's a very different scenario.

Great. Thanks a lot, guys. Appreciate your taking my questions.

(Operator Instructions) Tammi Fique from Wells Fargo Securities.

I just had a couple of quick questions. The first one is, with the larger base of assets after combining with Inland, and your strategy to focus on assets with better growth prospects, can you discuss the volume of assets that you may look to recycle over time as you look to fund additional development and redevelopment brands?

Yes. I don't know that we can -- as we've said, I've got to be cautious relative to where we are with filing of our S-4, Tammi. So it's difficult to stray from what we've disclosed publicly about what we intend to do on Inland.

That said, if you just look at what we just talked about relative to the Och-Ziff portfolio, where we are developing two, three centers out of nine, I think there's two things that are going to happen. There's going to be redevelopment opportunities and there's going to be pruning of the combined portfolio, not just specifically their assets but our combined portfolio, which will be approximately 130 properties. It's not going to be unusual to see us look to prune 10% of that over time.

So, I think it will be geographically driven, it will be driven off of growth. It will be driven off of the nonstrategic kind of components.

So, I think there's no question it gives us a better opportunity to do it on a bigger scale. And to, as we said, to take whatever money that we are able to generate there and positively reinvest it. So I don't want to get real super specific because I will get in trouble for that. But in general, there's opportunity there.

And we should think about asset sales as the primary source of funding for any additional development-redevelopment that you do?

Yes. It's a recycling process. As you know, we've said that we believe that the combined entity's balance sheet will be extremely strong and that we are going to generate two times the cash flow that we are currently generating or more.

So it won't only be dispositions, it will be free cash flow. We are talking about -- I think we've said this fairly publicly -- that you are talking about significant free cash flow after the combined dividend of the -- in the $65 million to $70 million range.

So there's a lot of things we can do with that cash flow. There's also the asset sales to reinvest in redevelopment. And again, that's one of the things that we love about the deal is that this truly is a scenario where I don't think either company going on independently, without the other, would be able to be in that position to have that flexibility and the strength of that balance sheet while yet still growing earnings and cash flow. So we feel very good about that.

Okay, and maybe just one more question, on the Kite Portfolio. Specifically -- and you guys have obviously had some good growth here in the last couple of years on an NOI basis. I guess as you look out to 2015, and I don't want to pin you to guidance for 2015, but do you have some visibility as to whether or not same-store growth will revert back to the longer term mean, or is there some additional upside that you can see that gets you on this 3% to 4% growth for maybe the next couple of years?

Well, again, let's talk macro because I have to be careful with the micro relative to the deal itself. Save on a macro level my personal belief is the entire shopping center space eventually reverts back. I don't know that the mean is the right way to look at it, but if you just look at our same-store NOI growth this quarter, at 4.7% comping against that 5% previous growth rate, we had a 140 basis point increase in occupancy in the same-store pool. That's probably more than some people's increase in same-store occupancy but it's not a crazy number.

So you are not only getting this growth out of that occupancy compression, you are also getting it out of rental increases, you are getting it out of, in our case, percentage rent, which was probably 50 bips of that number. So, I think we are in a scenario where, over the next few years as the occupancy to leased percentage shrinks, that number is not going to be 4.7% for us.

That said, when I look at 2007, which I refer back to as the peak of the previous cycle, our same-store NOI growth was under 2%. So a big reason for what's happening with us, particularly, is how we have actively engaged in the operating portfolio. And that's one of the things I've said that people misunderstand about us is our ability to actively add value in the operating process, not just the external process.

So that's a long way of me saying, after working on this deal for the last few months, we feel very good about the combined growth prospects of the portfolio. And we do not see it materially hurting us at all. We see it helping us.

But I think, overall, as our lease percentage versus occupancy stabilizes, that growth profile obviously comes down. But right now we are far exceeding most. So, we probably just come down to where the other people are, which is more normal.

Okay, great, thank you.

Nathan Isbee from Stifel.

So after the false alarm, this call is not ending?

Yes. I was going to say, thanks to you.

John, I don't want you to get in trouble so maybe I'll move it over to Tom.

That's fine.

But if one of you could just discuss there has been a passage of time since this deal was announced, if you had any more thoughts not on the leasing side maybe on the asset management side, operating efficiencies and geographic diversity, etc., and if -- your updated thoughts on all those things and how you might approach this portfolio once it's yours.

We will both comment on it, Nate. First of all, again, I just said after working on this for a few months every surprise we've had has been positive. So we feel very good that we underwrote the deal and a conservative way and that we definitely see upside in our ability to step in and very actively manage the portfolio. And with all due respect to the way the portfolio has been managed currently, it's just a different way of going about it where we are much more actively engaged in what we can do to take the asset to the next level versus managing it for its current yield. So that's just a different business approach.

Now, we will obviously invest capital where needed and get good returns on that capital. But if anything, over the last few months we have felt very good about the portfolio. I would tell you that the people at Inland Diversified have been great to work with and are very excited, quite frankly, about the merger and about the prospects of the Company going forward.

This is not a deal where we do this deal and it's over. This is definitely a deal where both sides feel like there is a lot more here than what's here today. So that has not changed and it hasn't changed from a geography perspective. As I mentioned, we will -- as a bigger company we will have more opportunity to recycle assets. That's exciting because we will reinvest the money at higher yields.

But as it relates to anything that we've seen differently, it really is -- I know this sounds like it's just talking our book, but there's a lot of opportunity here. And when you get right down to it and you look at the G&A synergies, you look at our ability to bring the redevelopment skill to these assets and you just look at our performance -- look at our performance in the Company today. You look at our -- just looking at same-store NOI growth, looking at cash flow growth, looking at revenue growth, we are doing that with the portfolio we own. And it's not a bicoastal portfolio that we acquired at 4 and 5 caps.

This is a portfolio that we actively manage, it's a portfolio that's strong. And we are getting great results. So I think it ought to be a bit of an eye-opener in terms of the type of assets that everyone owns and what you can do with them.

Yes. And as it ties back to the actual merger, and it ties back to the transition, I really think it's been a model. And we did a great job on Och-Ziff but with Inland's help, I think this has even gotten better. We spent an all-day session at their office, all this [win]. We met peer to peer with each division had. And since that time there has been weekly meetings whether it be asset management, leasing, whatever that is, marketing -- we continue to stay in touch, we continue to build. And they have been great in terms of helping us find opportunities.

There's a slap rent component that we found the other day in Florida. How do we solve that? So it has been a very cooperative, productive process and we will be ready because we have been hitting it hard since February and we are very much up to speed on these assets. And we do give credit to Inland for all their help in that ongoing process.

So we do feel good. We feel like there's upside. We are already identifying it and moving well.

All right, thanks. Is there more business to be done with the Inland group as a whole?

We hope so. So far it has been great. Obviously, they are a large organization. They've got a lot of different pools of assets. So I'm sure both of us feel like we've got a job to do right now and get this deal done and make it perform. But normally, when you are able to do that other opportunities arise. So we will just keep our head down and we will grind away and get this thing done. We will start to grow it and we will see what happens.

All right, thanks so much.

I would now like to turn the call over to John Kite for closing remarks.

Okay. Now we are actually done, so we appreciate everyone's time coming on. Just to summarize, we got a great start to the year. We anticipate that continuing. We look forward to our next call. Thank you.

Thank you very much. This concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.