Kite Realty Group Trust (KRG) 2014 Q3 法說會逐字稿

Ladies and gentlemen, good morning. Thanks for joining the third-quarter 2014 Kite Realty Group Trust earnings conference call. My name is Ryan. I will be the operator on the event.

At this time all participants are in listen-only mode. Later, however, we will be opening the lines to facilitate questions and answers. (Operator Instructions) As a reminder, we are recording the event for replay.

Now I will turn the call over to Ms. Maggie Kofkoff with Investor Relations.

Thank you, and good morning, everyone. Welcome to Kite Realty Group's third-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 documents filed by the Company from time to time with the SEC which discuss 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. And now I would like to turn the call over to John.

Thanks, Maggie; and welcome, everyone who has joined us today for our third-quarter earnings call. We are very excited to be reporting our first full quarter reflecting our merger with Inland Diversified.

2014 has been a productive and transformative year for Kite. We are energized and excited about the next stages in the Company's evolution. In the near term we are focused on maximizing opportunities in our existing portfolio, continuing progress on our development and redevelopment projects, and further improving our balance sheet.

Before we walk through the quarter's results, I feel it's important to look back over the last 12 months and recap two substantial transactions which were both disciplined and extremely well executed. In November of last year we acquired a $304 million, nine-property portfolio in an off-market transaction funded with approximately 80% common equity and the proceeds of select asset sales.

In February of this year, our team underwrote and agreed to the terms for a transformational $2.1 billion merger with Inland Diversified. The deal was structured to continue our strategic goals of delevering the balance sheet and enhancing our asset quality.

While completing these two transactions, we were able to grow FFO per share as adjusted over the last two years by approximately 17% and delevered the balance sheet nearly 2 times, to bring our net debt to EBITDA to approximately 6.5 times. For the third quarter we started by closing the merger on July 1 and, as discussed in our last call, we executed on a number of actions we had previously announced.

First, we sold all of the single-tenant assets, two of the three apartment assets, and the securities portfolio. Second, we used the merger as an opportunity to upgrade some of our existing internal systems, such as ARGUS Enterprise, Oracle, MRI, and salesforce, which will improve our efficiency throughout the combined Company.

Third, we hired a group of talented employees to help manage the larger portfolio and fully integrated the leasing and accounting data into our systems. As part of this process, we are pleased to welcome Scott Murray to our senior executive team as the Company's General Counsel and Corporate Secretary. Our six regional offices are fully operational, and our teams have been spending considerable time reviewing all the centers in their regions and focusing on NOI growth within each asset manager's respective areas.

Finally, the merger is fully integrated, and our combined portfolio is performing very well. From an operational standpoint, the third quarter marks another strong reporting season for Kite, as our results are consistent with our guidance at the time of the merger. Operating expense synergies from the merger played out as expected at $17 million.

Going forward, we will continue to focus on leveraging the scale of our combined portfolio to create cost efficiencies and further enhance our operational performance. Merger costs matched our year-to-date estimates of approximately $27 million. As expected, the Inland Diversified portfolio contributed approximately $34 million to cash NOI for the quarter.

We have increased our average base rent per square foot, excluding ground leases, over 11% in a single quarter -- from $13.48 to $14.98 per square foot. And we will continue to increase our average base rent with the announced 15-asset disposition, which we will cover shortly.

Our leasing team aggressively renegotiated terms to ensure each lease agreement that was executed since the merger meets our standards. Lastly, we delivered on our balance sheet strategic plan to bring our metrics in line; and we are proud to announce that both Moody's and S&P assigned us investment-grade credit ratings.

So we are pleased to report a third-quarter FFO as adjusted for merger cost at $0.51 per share -- again, in line with the guidance we gave in February. Our same-store net operating income grew another 4.7% for the quarter, marking two consecutive years of growth in excess of 4%.

Given this robust growth, we are increasing our same-property guidance for the full year to 3.5% to 4% from 4.4% to 4.6% for the year. The growth in same-property NOI includes occupancy gains from high-quality tenants opening in 2014, such as Sprouts, Fresh Market, Total Wine and Gander Mountain.

During the third quarter our team executed 64 new and renewal leases for approximately 425,000 square feet. On a comparable basis for 51 leases, cash rent spreads were 14.4%, with renewals up 6.3% and new leases up 43.9%.

On the development front, we have had four new anchor tenant openings since the end of last quarter for a total of 162,500 square feet and another three national anchor tenants with internally approved deals under negotiations. Each of the openings are integral to the success of our development and redevelopment projects, with the three of the four at Parkside Town Commons, namely Field & Stream and Golf Galaxy at Parkside Phase 2 and Petco at Parkside Phase 1.

We recently commenced construction on Phase 2 of Holly Springs Towne Center in Raleigh, North Carolina, which will encompass over 150,000 total square feet, with a planned opening in the second half of next year. Phase 2 is approximately 78% pre-leased and will be anchored by Bed Bath & Beyond, DSW, and Carmike Cinemas.

We're also making significant progress on Tamiami Crossing, the 25-acre parcel at the Southwest corner of Highway 951 and 41 in Naples, Florida, which is currently in land held for development. We anticipate this project will contain approximately 120,000 square feet, and we should commence construction in April of next year. The anchor leasing momentum started with Stein Mart executing a lease in the third quarter, and we are currently in late-stage negotiations with five additional box tenants.

On the redevelopment side we substantially completed our project at Bolton Plaza in Jacksonville, Florida, which included a repositioning of the existing space and consists of over 155,000 square feet. With the majority of the work completed and at 85.5% pre-leased, we transitioned the property into our operating portfolio.

In addition to Bolton Plaza, we continue to make strong progress at our other redevelopment project in Florida: Gainesville Plaza in Gainesville, Florida. This tract may be completed by the middle of next year. The redevelopment consists of approximately 165,000 square feet, is about 82% pre-leased, and is anchored by Burlington and Ross. Burlington opened in September, and Ross is currently under construction, expected to open next spring.

Both of these redevelopment projects have an average incremental return of approximately 9.25%. Looking forward, we have identified over $100 million of repositioning projects to begin between now and the end of 2016 in which we target incremental returns between 8% to 10%.

Turning to dispositions, we completed an extensive review of the combined portfolio in the third quarter as we continue to look for opportunities to enhance the quality of the overall portfolio. As mentioned on our last call, we are executing on a multi-asset disposition that we deem non-core to the portfolio.

In September we announced that we had entered into a definitive agreement to sell 15 retail properties for approximately $318 million. The 15 assets under contract have an average base rent of $14.41 per square foot. This is approximately $0.57 below our current portfolio average.

The remaining 45 assets retained from the merger have an average base rent of $16.98 per square foot. We remain focused on assets with high growth and choose to retain assets consistent with our overall strategy.

Looking at the markets where we have a presence and scale, it's evident that the 15 disposition assets are not core to the overall strategy. If you look at our top five states post-disposition and compare the states' household income to our portfolios, we outperform the median by over 26%. So while we always strive to be in the right markets, we put great importance on being in the right submarkets, as evidenced by the improvement the sale makes to our average base rent, putting overall portfolio north of $15 per square foot upon closing.

We will initially look to pay down debt and then redeploy sales proceeds back into high-quality assets, where we think we continue to grow our overall NOI. With the transaction market environment being as competitive as it is today, we structured the transaction to close in two tranches, targeting December of this year and March of 2015. The staggering dates will provide us enough time to properly and carefully identify the correct opportunities which meet our geographic and economic objectives.

This transaction is a meaningful economic benefit to the Company, as the 15 non-core assets are being sold at the same effective cap rate as the entire Inland Diversified portfolio purchase. The portfolio is roughly 50% levered, and our intent is to redeploy the majority of the proceeds in unencumbered assets to further improve our balance sheet flexibility.

Additionally, we sold a Walgreens in Zionsville, Indiana, in the third quarter for $7.35 million. The asset sale is consistent with our strategy to reduce single-tenant properties as we continue to focus on larger, growth-oriented assets that are accretive to our same property portfolio growth.

We are confident the actions taken to date greatly enhance the quality of our portfolio. As an example, our top 10 properties, representing approximately 25% of our average base rent in the total portfolio -- these properties have a strong demographic profile highlighted by population and household incomes, which are approximately $83,000 and $88,000, respectively, in a three-mile radius.

We will continue to evaluate our existing assets for any enhancement opportunities and assess each property's contribution to the growth of our overall portfolio. We'll also plan to continue to recycle a portion of the portfolio on an annual basis to improve the overall quality of the portfolio, both demographically and growth profile.

Turning to the balance sheet, we are pleased to report that our efforts to improve our financial stability have been rewarded by both Moody's and S&P. The agencies assigned Kite with an investment-grade level writing of Baa3 and BBB-, respectively. The ability to be a corporate borrower also enables us to even be more nimble in an evolving economic environment and to prepare to act appropriately for any future external opportunities.

This marks another very important milestone for us as we continue to execute on our balance sheet and funding initiatives. We are committed to enhancing our financial flexibility, and we continue to improve our corporate-level metrics and our ability to efficiently manage capital. Consistent with our guidance for February, the merger was able to bring our net debt to EBITDA down to approximately 6.5 times.

We continue to target this metric at approximately 6 times in the near-term. Our cash and liquidity position was also greatly increased as a result of the merger and third-quarter operations, which now stands at approximately $410 million, with another $65 million available if we elect to increase the size of our line of credit.

We are also projecting our net free cash flow post-dividend to be over $60 million in 2015. The merger and subsequent activities brought our weighted average interest rate to 3.96% and extended our portfolio to nearly a five-year average year to maturity. We will continue to take a balanced approach to improving our financial flexibility while preserving enough capital to be opportunistic throughout our business.

We are updating our full-year 2014 FFO guidance to a range of $2.00 to $2.04 per diluted common share. Our guidance range and the underlying assumptions include the operations of the combined Company for the second half of the year but exclude costs related to the merger.

In summary, we are extremely pleased with the third-quarter results, the completion of the integration, and the continued progress that our portfolio has achieved. Our team has worked incredibly hard and continues to execute on our strategic initiatives and deliver on performance.

We are very optimistic about the future of Kite and thank you for your time today. Operator, we would like to open the call for questions.

(Operator Instructions) Todd Thomas with KeyBanc Capital Markets.

Just first question -- you mentioned the Naples development project that might commence next year. I'm just curious, now that you have a larger combined portfolio, what your thoughts are about development from here, given the Company's background. And then on Naples, I was just wondering what conditions are necessary before you break ground in terms of pre-leasing, and what kind of yield you might be targeting for that project?

Todd, taking the first part of the question in terms of overall -- I mean, obviously, we have been pretty clear that we want to manage the development pipeline in terms of the size of the Company. And we've also worked hard over the last couple years into significantly bring CIP down as a percentage of total assets.

I think we are obviously well below 10% at this point and have said that we would target approximately 5% CIP to total assets. So I think, again, when we are in that $4 billion range of assets, for us to say that we are going to look to do approximately $200 million of value-add through development/redevelopment is appropriate as a goal right now.

In terms of that particular project, that's land that we have owned for quite some time. And we have been actively engaged in designing and pre-leasing it for quite some time.

In terms of the leasing, as we said, we have one lease executed; and we have several in negotiation. Assuming that the leases we have in negotiation come to fruition, our pre-leasing percentage will be very high, because this is more of a big box development -- not a lot of small shops associated with this deal. Some outparcels.

So I think once we get through that process, we will be absolutely ready to start, which is why we said we would start next spring. And in terms of yields, we continue to see strong incremental returns on these type of deals. We have continued to target those returns in incremental yields of, as we said, between 8% to 10% yields on incremental costs.

That said, each one of these deals is different. And we look at each deal based on its risk profile. This one happens to have a very low risk profile once the leasing is completed. So that should cover that.

Okay, that's helpful. And then as you look ahead, John, you mentioned that you added personnel and used the merger and integration process as an opportunity to upgrade the Company's systems and infrastructure.

And I think last quarter -- correct me if I'm wrong -- but the updated G&A guidance was for $3.5 million to $4 million for the back half of the year. That implied the low end of the expected range for G&A synergies. Do you still feel good about that in the fourth quarter? And heading into 2015, is that still the expectation?

Yes, I think overall you're right in terms of going into the fourth quarter, where we expect to see G&A. As Dan said, I think, on the last call, that we estimated that for 2015 it would be around $4.5 million per quarter.

So that still is where we are in terms of our estimate. And I think I also said on the last call that we are going to monitor that every quarter based on the efficiency that we are seeing. That's something we're looking at quite a bit is our technology, and we have invested in that. So that actually helps us control the costs.

So I think it's fair to say that that is reasonable for next year. But again, when we give guidance for 2015, we will update that. But that's a reasonable number.

Okay. And then just a question for Dan -- regarding the investment-grade ratings, congrats on attaining those. That's a great achievement. What's the thought process around an inaugural bond issue?

Thanks, Todd, for that comment, by the way. The thoughts around it -- as we look at the debt that we are -- on the sale of the 15 assets, there's about $140 million of secured debt that has an weighted average rate, but book loan and the hedge is about 4.61%. So we're looking at -- as we talk to the agencies, that's an opportunity for us to continue to reduce the amount of secured debt we have on the balance sheet.

So I think when you blend in the $146 million of maturities in 2015 as well as the ability to replace secured debt with unsecured debt on some of these asset sales in the potential acquisitions, it lines itself up well. I think we are looking at it now and monitoring the markets for the opportunity.

So we do have, in the near-term, a use of proceeds for $250 million raise. And right now it's just a matter of the timing and lining it up with the market.

Okay, great. Thank you.

Christy McElroy with Citi.

I'm not sure if you have this data point, but relative to the spreads you have reported, I'm wondering -- what's been the average re-leasing spread on just the Inland assets since you started becoming involved in the leasing? I know that you started contributing to the process well before you closed on the merger; I'm just wondering if you have a sense for what those spreads have been relative to your overall portfolio.

Yes, we do. I think it's encouraging for us as we look at both the Inland assets and the OZ/CLP assets. We are looking at both of those, because obviously neither of those are currently in the same-store pool.

But I would tell you, just in this quarter -- I'm kind of focusing on the renewal side, because that's probably the most important metric right now -- on the Inland portfolio during the quarter we had OXF side, we had about eight renewals, just over 5%.

So when you compare that to what we are doing on our side, that is very close, which would indicate to us that we are already stepping in and making a difference in both of those portfolios. And it is a positive as we look forward for same-store NOI growth, because, really, when we look at new lease spreads, they can obviously be pushed around by one or two deals. But when we look at the renewals, they generally are more consistent. So we feel very good about that.

Just following up on that, can you provide some sense for what you are expecting in 2015 in terms of same-store NOI growth -- maybe how that growth rate will change as the Inland assets are added to the pool? And did that happen with Q3 2015 results?

In terms of 2015 we are not prepared to say what same-store NOI is going to be for 2015 today. But I do think that, based on what I just said, we are encouraged that we will continue to be able to drive our same-store NOI growth overall. And I think, looking forward, what we are doing internally -- both operationally and system management -- is helping us track that faster. So I think we feel very good about where we are going.

Look, we've -- as I mentioned in my prepared remarks, for two years we have averaged over 4% same-store NOI growth. That's exceptional, and it's with a -- it doesn't happen just by getting up and coming into the office. It happens by grinding it out every day.

So I think we're going to continue to do that. We feel very good. The market is absorbing and there's less and less space available. So as your overall pool becomes more leased, it's more difficult to generate really strong numbers. However, that said, we're outperforming the group pretty substantially. So I believe that we will continue to perform at the top half, for sure, if not the top 5%.

Okay. And just lastly, on the 2015 asset sale, what will be your net debt to EBITDA pro forma for the sale? And did you say what your total portfolio ABR will be, pro forma to the sale?

I think in terms of the ABR, what we said is after the sale that our overall portfolio was around approximately $15 a square foot, and that we wanted to point out -- that it was important to point out the remaining assets that we acquired in the merger are at $17 a square foot, which just highlights the really, really good deal we got here in the sense of the quality of the real estate being that strong and what we were able to negotiate. So I think we said that.

As John mentioned, one of the items relative to the net debt to EBITDA after the transaction -- it's going to depend on the acquisition opportunities we see in the redeployment of that capital. I think as we look at the overall metrics on the balance sheet, the opportunity to reduce secured debt as well as increase the percentage of our unencumbered NOI to total NOI is a really good opportunity as we look out with this asset sale.

But pro formaing it out, as we talked a little bit, and our first blush at this would be we would be able to retain about $60 million of cash to pay down debt. But it's all going to depend, as John mentioned. We're going to pay down debt initially and then look to redeploy as there's opportunity.

So it's tough to say pro forma. I think over time we would like to continue to drive from 6.5 to 6 times. Is this the transaction that that will occur? I think we want to make progress in that regard, but giving you a set number is going to be difficult as we work through the potential acquisitions that line up with the dispositions.

Okay, thank you, guys.

(Operator Instructions) R.J. Milligan with Raymond James.

I just want to follow up on Christy's question with regards to the OXF portfolio as well as the Inland portfolio -- if you can give some indication as to what the same-store NOI growth was for this quarter?

We didn't break it down that way, R.J. What we said is that the spreads were very similar to our spreads. In particular, the renewal spreads were right on top of ours.

So basically, when you really look at it over the long-term, the way that you generate same-store NOI growth is to generate strong renewal spreads over the long-term. So that's what we are indicating. We are not breaking down individual portfolio same-store NOI. But you can feel pretty good that we have given color around the fact that the spreads are almost identical to what we are getting in the stand-alone KRG portfolio.

And R.J., real quick, just to point out as well, it's difficult for us to compare our current quarter of -- you know, the third quarter of 2014 back to the third quarter of 2013, because as we talked about, we had a lot of synergies related to Inland's portfolio coming to us with regard to, as we talked about, the management fee that they charged was about 4.5%. We're doing these at about 1.5%.

So, obviously, when you look at those properties coming over and just the synergies, there's going to be a net plus in that regard. But I think the one thing we wanted to point out is, as we talked about the $34 million that John mentioned in the quarter for the Inland portfolio -- you know, is performing at or better than we expected from a cash perspective.

Thanks, guys. That's all I have.

Craig Schmidt with Bank of America.

The same-store NOI -- is that with or without redevelopment?

Without redevelopment. Craig, what we will do is -- we disclose in detail the properties that we pull out for redevelopment, such as -- you'll look at Gainesville, Bolton, etc. were pulled out for redevelopment.

Now, when we replaced tenants, as John mentioned, there was a Sprouts, two Fresh Markets, and a Total Wine that were replacement tenants. So when those boxes were vacant, we were taking hit on same-store NOI's. So now, when they are rolled back in, obviously get some pickup from occupancy gains. But as far as overall redevelopment, whether it's Kings Lake, Bolton, Gainesville -- those are taken out and then left out of the same-store pool from a year from when they are put back into the operations.

Great. And of the $100 million of potential repositioning projects, how many are from Kite legacy, and how many are from Inland Diversified?

I think it's a pretty good balance, Craig. We've got probably -- based on the fact that we have a fairly equal number of properties per portfolio, it's pretty equally balanced.

Okay, thank you.

Tammi Fique with Wells Fargo Securities.

I was just curious what you are seeing in terms of acquisitions in the market today that would maybe interest you. And if you could just comment on the pricing you're seeing in the market today?

Sure. The market is obviously competitive, and we are pretty focused right now on continuing to significantly improve the overall quality, as we have been. So that requires us to dig pretty hard to find unique opportunities. But I think we are finding good opportunities, Tammi.

I think, in particular, we are finding deals where we see upside. So maybe the going-in yield is lower than we've seen historically. But we have some repositioning, or redevelopment, or re-tenanting opportunities that less aggressive owners have tried to pursue. So we see some of that.

But the bottom line is you see a trade about to happen in our space at a very low cap rate, which should indicate to everyone that everyone needs to look at all the cap rates. I mean, the cap rates are well below what I think the public market is reflecting.

So assets of our quality, of our combined portfolio post this disposition -- these are very, very hard to get. And to get a 6 in front of it is very hard to do, quite frankly.

So it's competitive, but it reflects the fact that there's a very low supply of very, very high-quality stuff. And that's what we own. So I think the market has been slow to respond to that.

Okay. And then on the guidance side for occupancy. Does that include the Inland portfolio? Or is that just the Kite legacy properties?

Could you ask that one more time? For what portion?

Sorry, the guidance for occupancy of 95% to 96%.

Originally, when we gave that guidance, that included just Kite. But as we go forward, I mean, we are 94.9%. So I think we're going to -- our objectives are going to sneak into that 95% for the combined portfolio as you look at year-end. So I think on a combined basis, their leasing percentage was very similar to ours. So we did not adjust that number.

Okay. And then, maybe just looking at occupancy, it looks like year-over-year the number for your overall portfolio dropped 100 basis points. I guess I'm just curious -- what particularly is driving that? Is that something going on in the Inland portfolio? Or if you could just provide some color on that.

One of the things, Tammi, that when you look at -- when we provided the supplemental information on the last supplemental, we included -- we have never included ground leases in our numbers. And Inland had included ground leases.

So when we brought that information into our systems, we felt it was more appropriate to leave the ground leases out. So when you look at the percentage leased, that 94.9% excludes all ground leases, where before we had pro formaed that it would be a 95.5% leased percentage, which included the ground leases.

So I guess to summarize, we treat non-owned square footage, which is also square footage that's ground leased to tenants, as not in our numbers. Now, when you look at it as John was talking about, it's very important -- that's over $18 million of ABR. So as you look at how that's allocated from a NAV perspective, and the cap rate that's put on that, and what that would trade for in the markets, that's one item. But we also did not think it was -- we thought it was cleaner to leave the ground leases out of the leased square footage.

Okay, great, that's helpful. And then maybe just one more on same-store property operating expenses. They were down year-over-year in the third quarter. Can you just talk a little bit about what was driving that, and if that was something that you are expecting in the quarter?

I think we were looking into that number as well and trying to see if there was one particular item. I think when you look at that, there was a number of things going up and down. I think as we get this larger portfolio, it's an opportunity for us to really generate efficiencies.

I think the key point, when you look at the combined portfolio, the recovery ratio in totality for the retail portion was 89%, which I think is very positive on a go-forward basis -- that we are going to be able to continue to squeeze synergies out of the portfolio. But nothing, Tammi, that's anything that I would say is a run rate or some issue relative to expenses that we can look at as a positive or a negative.

Okay, great, thank you.

(Operator Instructions) Chris Lucas, Capital One Securities.

I apologize in advance if you guys have already talked about these items. But, John, maybe if you could just give us a sense as to -- now, with the new portfolio, how much of the key tenant portfolio reviews you guys have done at this point? And what's the plan to -- in terms of time to get through them all?

Sure. Yes, we have made a -- both Tom McGowan and myself have made a priority of making sure that -- you know, one of the first things we did even prior to closing was engage in conversations with our top tenants. And when you look at the combined top tenant list, it is extremely strong.

So I'd say we are well through our total portfolio review. But that's something that you do really on a quarterly basis, where we are constantly updating the top tenants.

But I'd say in general, our top customers understand the combined portfolio. They understand where the opportunities lie. For example, in the Office Depot, OfficeMax portfolio that we have -- we have been through that portfolio with every major box tenant that we think it applies, and there's a lot of interest there.

So I would say from my perspective, we are well through that, but we are really only scratching the surface in our ability to leverage opportunities, because the overall kind of supply-demand characteristics continue to move in our favor. So I would say every quarter that there's not material square footage deliveries in high, high-quality retail. That just gets stronger. Tom, you want to add to that?

As John mentioned, it's a continual process. And we were out last week on the road meeting with a head of real estate of a great company on the grocery side of the business. We are going to continue to push that as aggressively as possible. The great part about getting out in front of them is we continue to learn about their business, learn about their sales, and look for ways to make them a more integral part of the business.

Okay, great. And then, Dan, couple of very detailed questions -- again, for modeling purposes, really. The G&A for the quarter: did it include the cash bonuses for executives that were earned as part of the closing of the transaction? Or was that in a separate area?

Yes, that was not in the G&A line item. The majority of the cash bonuses were in the merger cost line item.

Okay. And just curious about -- the tenant improvements for the quarter was down sequentially. You know, you have got a larger portfolio; it's basically a little over what it was a year ago. Just curious as to why that number wasn't just bigger.

Well, I think -- we had one particular -- tenant improvement-wise, we had an anchor box at Lithia Crossing that spent about $0.5 million on. I think when you look at -- I think it's all timing, Chris, about how these are going to come into play.

Some of them, for instance -- some of the larger tenants that we are spending TI dollars on, whether it's the tenants that are in Gainesville; or Bolton Plaza; or, as John mentioned, several tenants that we are signing at Tamiami Crossing -- those are obviously not going to go through that line, because they are first-generation space and development projects.

So I think sequentially we have had a lot of tenants opening in 2014 or 2013, as John mentioned, we have got some occupancy gains from Sunland Fresh Market, et cetera. So we've had some fairly large spend relative to anchor boxes. We just didn't have that spend this quarter.

But it's all timing about when an anchor box is going to come in. We've had a couple others that have been signed, so you will see that move around. And we will make sure that we will footnote-disclose as that number goes up and down relative to anchor tenants.

And how do you feel about the number relative to forward periods? Is this a reasonable number? Is it light? I'm just trying to think about it in the terms of the context of our modeling.

That's tough. Again, it's all timing. When you look at reoccurring CapEx, and we look at the portfolio as a whole, Inland had a fairly new portfolio. So I think when you look at that number, you are probably looking in the neighborhood of $0.12 a foot or something around there would be a reasonable run rate.

TIs -- this quarter, if you look at renewals, for instance, we spent like $0.41 a foot; whereas we typically -- that number is fairly light when it goes to a renewal basis. So it's tough to give you a specific run rate. We will look to do that as we give 2015 guidance; we will look to do that with what we see as being renewed and out in our projections.

And then the last question for me -- again, more of a modeling question. How should we think about the split in the NOI between the pool that will transact on December 15 and the one that will transact on March 15 or by March 15?

When you look at that split from a disposition perspective, the NOI, assuming a 6.6 cap rate on $318 million, about 54% of it will be in December, we are projecting, and the remainder in March. So the revenue in the NOI split is very similar from a cash perspective between those two periods.

Great. Thanks a lot, Dan. I appreciate it.

We have no further questions. So John, I will pass it back to you for any closing comments.

Okay. Thank you, everyone, for joining us today. As we mentioned, extremely excited about the progress we have made. And clearly, we've met and exceeded our expectations relative to the integration. And we look forward to continuing to push that number forward.

So thanks, everyone. Have a great day.