Pennsylvania Real Estate Investment Trust (PEI) 2005 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen. And welcome to the Pennsylvania REIT second quarter earnings conference call. [OPERATOR INSTRUCTIONS]. It is now my pleasure to turn the call over to your host Jeffrey Goldberger. Sir, the floor is yours.

Before we begin I'd like to remind everyone that this conference call will contain certain forward-looking statements within the meaning of section 21E of the Securities Exchange Act of 1934 and the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and other matters that are not historical facts.

These forward-looking statements reflect PREIT's current views about certain events and subject to risks, uncertainties, assumptions, and certain circumstances that may cause future events, achievements or results to differ materially from those expressed by forward-looking statements. Additionally, there can be no assurance that PREIT's actual results will not differ from the forecasts and estimates set forth in the call.

PREIT's business is subject to uncertainties regarding the revenues, operating expenses, leasing activities, occupancy rates and other competitive factors relating to PREIT's portfolio and changes in local market conditions as well as general economic financial and political conditions including the possibility of outbreak or escalation of war or terrorist attacks, any of which may cause future events, achievements, or results to differ materially from those expressed by the forward-looking statements.

In particular, the successful redevelopment of any property is subject to a number of risk,s including among others that PREIT's redevelopment plan might change, that redevelopment activities might be delayed, anticipated project costs may increase and the company might not enter into one or more of the leases described on this call.

Unanticipated expenses or delays could adversely affect PREIT's investment returns on the project. In addition PREIT might not enter into agreements for or consummate either of the mall financings for which it has received commitment letters. PREIT does not intend to, or disclaims any duty or obligation to update or revise any forward-looking statements or industry information set forth in this conference call to reflect new information, future events or otherwise.

Investors are also directed to consider the risks and uncertainties discussed in the documents PREIT has filed with the SEC and in other -- and in particular, PREIT's annual report on Form 10-K for the year ended December 31, 2004. With that said I'd like to turn the call over to Ron Rubin, Chairman and Chief Executive Officer of PREIT. Ron, it's all yours.

Thank you very much and good afternoon, ladies and gentlemen and thank you for joining us as we discus our results for the second quarter and our plans for the future.

Joining me on the call today are Ed Glickman, President, Bob McCadden, our CFO, Joe Coradino, the head of our retail division, and also in the room are Jon Weller and George Rubin, Vice Chairmen of the Company, Dave Bryant and Bruce Goldman our General Counsel. After the remarks have concluded the call will then be open for any questions that you might have.

During the second quarter, our previously announced redevelopment and repositioning activities began to accelerate at a good pace. We are pleased with this progress and continue to expect to realize significant benefits from these efforts.

Today we announced the addition of Whole Foods to Plymouth Meeting Mall in Plymouth Meeting, Pennsylvania showing one of the creative strategies we are employing to enhance the value of our retail assets. We are also adding retailers such as Barnes & Noble, Borders, Dick's Sporting Goods, Best Buy, and exciting restaurants throughout our portfolio. By adding new tenants and creating momentum and excitement at our properties, we intend to give shoppers more reasons to come to our malls, to stay at them longer, and to buy more from our merchants.

With that I'll now turn the call over to Ed Glickman.

Thanks, Ron.

As noted by Ron, we have made some very exciting progress with our redevelopment initiatives. In addition, while the Company's total FFO and NOI increased quarter to quarter, our same store NOI declined by 2.4% and our total FFO was diluted on a per share basis by additional share issuance.

Much of this decline can be attributed to the dislocation caused by the concurrent redevelopment activities taking place at 11 of the Company's properties. The balance of declines results from lower than expected occupancy rates at a number of properties now currently under renovation. Our response to the situation has been to intensify our management of our assets and to initiate redevelopment programs to strengthen our properties. Specifically we have been stepping up the pace of asset redevelopment. Acquiring land in proximity to our properties to maintain the market dominance of our retail locations. To date, we have done this at Magnolia Mall, Plymouth Meeting Mall and as set forth in today's announcement, with respect to New River Valley Mall.

Enhancing the physical environment in our centers, hiring additional leasing representatives to intensify leasing efforts, increasing our focus on specially leasing in our redevelopment properties to create replacement NOI prior to lease-up and enhancing of our business processes to speed up the leasing cycle time. In pursuing our redevelopment opportunities our strategy is focused on weeding out weak tenants and aggregating underutilized space into which we can locate junior anchors such as Borders, Barnes & Noble, and Dick's Sporting Goods to create the platform or other life style tenants. Around these new merchants, we perform a renovation to further enhance the shopping experience.

To facilitate these projects we have reached out and engaged the talents of world class architects. During previous redevelopment projects completed by the company -- we experience some interim falloff in occupancy in NOI. As expected, we are experiencing the same in our current project. This results from the aggregation in warehousing of space to facilitate relocations and the build out of the new junior anchors. The larger the number of concurrent projects the greater the impact on occupancy and NOI.

In a perfect world we would space these projects out so that the impact would be less noticeable against the backdrop of the portfolio as a whole. Given the large number of assets acquired by the Company simultaneously, and a need for repositioning at a number of these assets we have compressed our time frames for initiating these projects. Today we have disclosed information on ten active projects. We are in an earlier stage of planning on an additional number of initiatives. We realize that a major redevelopment program like ours will have a short term negative impact on occupancy. However, we believe it's absolutely necessary for the long-term benefits that it will bring to the Company that we add the type of tenants that will permit us to be the dominant retail property in our markets.

While redevelopment is a critical lever enhancing mall performance we have also focused on efforts in intensifying the management of our assets. We understand that shoppers have an ever widening choice of shopping venues and that we need to earn their business every day. We have focused on making going to the mall fun and efficient.

To do this, we have implemented a set of universal quality standards for the day to day operation of our properties. These standards, known as our Creating Outstanding Retail Experience With Our Core Program will be implemented by our site managers with the help of new outsourcing partnership with Service Management Systems.

We believe this partnership will not only improve the quality of the physical environment we present so our shoppers but will provide a new source of revenues to the company. The SMS partnership is just one instance of the ways in which we have created values for our increased scale and focus.

We have recently implemented a C-card system with US Bank to improve the purchasing efficiency of the company. We have implemented a gift card program with American Express that we hope will become very attractive to our shoppers. We have implemented a program with the Pennsylvania lottery to sell and redeem lotto at our service counters. In all of these cases, we have a win-win proposition for our customers and and our shareholders.

To be successful, we need to win the customer. We intend to apply all of our creative energies to this task. We're optimistic about the outcome of our work. We encourage you to visit our properties. Our properties look better now than they did 18 months ago when we took them over. They show the signs of our intensive management focus. They will look even better as our redevelopments proceed and renovations are completed. Junior anchors have seen the value of our locations and have demonstrated a willingness to work with us to reposition our property. The acid test will be the shopper. If our task work is any indication we believe the shoppers will respond well to our new offering.

Joe Coradino will now discuss with you the success of our redevelopment initiatives to date and Bob McCadden will follow with the implementation of our capital plan. Joe?

Thanks, Ed. The information in our press release and supplemental disclosure I'd like to highlight the following anchor leasing activity. At the beginning of 2005, we had 16 anchor leases which expired at the end of the year, while at the beginning of the year, we had notice from six anchors that they intended to renew their existing leases. We now have documentation that all anchor leases slated to expire now during 2005 have exercised renewal options.

Looking forward to 2006 we have 12 anchor leases expiring. By the end of the second quarter we had received notice of 7 renewals. The consolidation of Federated in May will strengthen their advantage in the retail arena and provide PREIT with the platform to enhance existing centers and expand our redevelopment programs. We currently have 29 May and Federated stores. Of these five are Federated and 24 are May.

23 of the locations are owned, while 6 are leased from us. It is worth noting that we have a limited overlap with only three centers. We have been notified that the Strawbridges at Willow Grove Park, Cherry Hill and Lehigh Valley Malls, which each have inline sales in excess of $400 per square foot are slated for closure. We believe these three stores are an opportunity to drive value by introducing new fashion anchors or life style retailers to these high performance assets.

Similarly, the rebranding of Filene's, Kauffman's, Strawbridges, and Hecht stores to make people generate leasing momentum that will allow us to bolster the fashion categories in our secondary and tertiary market assets. In ongoing effort to enhance the merchandise mix at our operating properties, we executed key deals with prominent national retailers: Elizabeth, J. Jill, Ann Taylor Lofts, Sephora, New York and Company. Demo, Express, Victoria's Secret, Hollister, Starbucks Children's Place, Hot Topic, Finish Line, and Hibbett Sporting Goods.

We continue to identify assets in our portfolio that have untapped potential that can be unlocked through the investment of capital in a redevelopment or repositioning program. Currently we have 11 properties in redevelopment and 8 in pre-development. Today we announced exciting new development plans for three of our Pennsylvania properties. Plymouth Meeting, Lycoming, and South Malls.

Plymouth Meeting Mall is an 813,000 square foot asset located in an affluent suburb of Philadelphia. The property is currently anchored by Strawbridges and Boscov's, and as comping sales volumes at 243 per square foot. The redevelopment plan calls for a dramatic transformation with the introduction of Whole Foods' hypermarket concept and the expansion of the entertainment and restaurant component. What is now an enclosed mall that draws from h affluent neighborhood in close proximity will recognize an expansion of its market penetration and allow the property to fully capitalize on its superior location at the intersections of Pennsylvania turnpike, the northeast extension and I-476, Philadelphia's ring road. We're also evaluating opportunity to introduce a mixed use aspect to this asset which could include a multifamily and office component

In Lycoming Mall in Pennsdale, Pennsylvania, we have an asset that's established as a dominant retail property in the Williamsport, Pennsylvania market. The property is anchored by Bon-Ton, JC Penney, Kaufmann's, Sears, and Value City, and generates comp sales of 258 per square foot. Relatively large for the market, 783,000 square feet, the property has historically struggled to maintain inline occupancy in the high 70% range. We embarked on a strategy to embark on large format retailers to the inline space with entrances on to the mall common area. To solidify the mall's position as the retail hub in the marketplace while at the same time increasing occupancy and customer appeal, with the introduction of Best Buy, Dick's Sporting Goods and Borders to the property we expect to significantly increase occupancy from 78.9% to over 95%.

We've also identified an opportunity to create value at South Mall, a unique asset in Allentown, Pennsylvania, market that is a hybrid containing both an enclosed shopping area and strip center component. The property is anchored by Stein Mart, Steve & Barry's, and Bon-Ton, and currently produces comp store sales of $270 per square foot. The plan for this property calls for the relocation of Gold's Gym, absorption of vacancy and expansion of the building envelope to create the space to incorporate a 30,000 square foot Ross Dress For Less. With the opening of Ross, we expect to improve occupancy to over 95% at the end of '06 as compared to 86.7% at the end of the second quarter.

The balance of our redevelopments continue to move forward. We are underway with construction and on schedule at Capital City Mall, Patrick Henry, Cumberland Mall where the pad has been delivered to Best Buy, which will open during the first quarter of '06. At Cherry Hill Mall today we opened a 18,000 square foot Old Navy, and have engaged engineers to formulate our submission to the township for the approval of Bistro Row. We anticipate commencing construction on the New River Valley addition at Regal Cinemas and Red Robin in the fall of this year and will commence work on Barnes & Noble at Valley View and Francis Scott Key malls in November of this year.

We also have eight assets in various stages of predevelopment, comprising 5.4 million square feet. The projects that we are considering include the incorporation of large format retailers in the mall inline space. Adding multiline sporting goods retailers and discounters as anchor positions, the creation of food courts, and the renovation of assets to maintain their dominance in the face of newly introduced competition. We'll continue to keep you informed of our progress as these transactions come to fruition.

Now I'd like to turn it over to Bob McCadden. Bob?

Thanks, Joe. We have made significant progress against our capital plan since the end of the first quarter.

I'm going to update you on the more significant financing activities but before I do that I wanted to briefly outline the primary objectives of our capital plan. One, refinance above market debt when it is economically feasible to do so. To accomplish this we will enter into a forward rate lock commitments and utilize hedging instruments when appropriate. Two, concentrate mortgage debt on our larger more stable assets. Three, increase the percentage of our properties that are unencumbered with particular emphasis on those properties that would be candidates for redevelopment. And four, lengthen and ladder our debt maturities.

In mid-July, we completed a $66 million early refinancing of the mortgage loan at Magnolia Mall in Florence, South Carolina. A portion of the loan proceeds which used to repay the existing $19.3 million mortgage and the balance of the net proceeds, 47 million was used to pay down a portion of the amount outstanding on to our credit facility. The Magnolia loan has an interest rate of 5.33%, which is a reduction of 287 basis points from the previous loan. We did incur a prepayment penalty of approximately $800,000 related to this financing, which will be included as a reduction of our earnings for the third quarter.

In early July we entered into forward starting interest rate swaps with an notional amount aggregating $370 million to hedge the interest payments associated with a portion of our forecasted issuance of long-term debt over the next few years. In 2007 and 2008 we have some known obligations that are likely to require financing including the early redemption of our outstanding 11% preferred shares in 2007 and the refinancing of the company's 15 properties' $400 million REMIC that matures in 2008. With these swap agreements in place we have mitigated a significant portion of the interest rate risks associated with these anticipated financings.

We locked in a blended ten year swap rate on an notional amount of 120 million starting in 2007 of 4.69% and a blended ten year swap rate on a notional amount of 215 million, starting at 2008 of 4.80%. These swap agreements have been designated for accounting and tax purposes as hedges and will not impact our earnings prior to their settlement, provided that we complete the future financing transactions in the amounts and at the time that is currently contemplated.

We discussed the Cherry Hill and Willow Grove financings on the last earnings call. Since that time, we have secured a commitment for the Willow Grove financing, which is being funded by Prudential and Teachers. We continue to work through lender's due diligence processes and expect to close the Cherry Hill financing around the end of the third quarter and the Willow Grove financing in early December 2005. We anticipate that these financing transactions will generate approximately $182 million of net proceeds, which will be used to repay borrowings under our credit that silty.

At the end of the second quarter, debt was approximately 45% of our total market capitalization, and 75% of our debt was fixed. Our exposure to floating rate debt has increased since the end of 2004, as we have relied on our credit facility to fund acquisitions and interim financings. Absent any other capital events, we expect our flooding rate debt to be in the mid to high tones at the end of 2005 after we complete the Cherry Hill and Willow Grove financings.

At the end of June borrowings under our line of credit was $411 million -- $431 million. We have since repaid 51 million from the Magnolia Mall financing proceeds and available cash balances and currently have 102 million of availability under the credit facility. Our balance sheet was in good shape as we started the second half of 2005. We currently have ample liquidity to fund our development and redevelopment plans and we have taken steps to protect our earnings from increased interest rates through our hedging and early refinancing initiatives.

Our liquidity position is expected to improve further once we complete the Cherry Hill and Willow Grove transactions later this year. In our third quarter earnings release, we have updated guidance for the third quarter and full year. We expect to report earnings of $0.80 to $0.83 per share in the third quarter, and $3.72 to $384 for the full year, reaffirming our earlier guidance for the entire year. With that we'll open it up for questions.

Thank you. [OPERATOR INSTRUCTIONS]. Your first question is coming from David Fick of Legg Mason. Please go ahead.

Good afternoon.

Hey, David.

Ed, I was wondering if you could elaborate a bit more on your expense side, particularly the G&A costs which are up a bit and perhaps give us a run rate there.

Yes. David, this is Bob. We expect, as we said in the first quarter earnings call that our run rate for the year will probably be around 10 million a quarter on average. 40 million for the year.

As we think also talked about in the first quarter we had some favorable timing variances in the first quarter, which we expected to in effect turn around later in the year which we did see in the second quarter. We had the cost of the ICSC convention this quarter about a $0.5 million or a little over a cent.

We also had a number of Company functions in the second quarter, meetings with Company officers, all the employees at the home office, et cetera, we also had an accrual adjustments for net profit taxes in the City of Philadelphia and what we'll likely do in the future, is this is a tax based on net income generated from assets that we have in Philadelphia and like other companies we'll probably do is strike that as a separate line item on our income statement and separate it from general and administrative expenses but it's somewhat perhaps misleading if you're trying to track G&A when you have that tax caught in that line. It just hasn't been significant enough to date to do that but I think we're getting to the point now, where with the acquisition of additional property in Philadelphia a year ago that it makes sense for us to do that.

Okay. Can you elaborate on the Echelon Wal-Mart situation and what else you might do there if you continue to be blocked?

Well, we continue -- we continue to pursue the -- approval of the Wal-Mart transaction in Echelon. We are looking at other alternatives at this time, but nothing that we can elaborate on.

Okay. Is there any update on gaming and progress on your western Pennsylvania development?

No, at the present time the -- the licensing process has been delayed so there is no -- at the present -- yes, as we -- as we sit here today, there is no firm indication that a license is going to be granted on that property although we're still hopeful and I think the operators are still hopeful. But the -- the process is taking a lot longer than anyone expected.

As it relates to that, one of the projects that you -- you are listing right now is a redevelopment project that clearly has challenged this Gallery in downtown. Can can you talk about any plans you might have for that project?

That project is in the early stages of redevelopment at this point. We have retained an architect and we're in discussions with a number of tenants. One of the -- one of the things that -- that could turn out to be a very exciting event is the possibility of a Macy's store and the -- in the Strawbridge's building at the Gallery and obviously with their announcement of the rebranding of that, that's an exciting possibility -- I underline possibility because we're not sure if that's the final word from Federated.

That would be huge. Ed, you spent some time talking about your initiatives to generate additional revenues at the mall level. What do you think about the potential there? What do you think you can do with with your portfolio sort of on a per mall basis based on rent revenues, sponsorship, advertising, so forth?

Our expectation for the SMS relationship is a 1.5 million to $2 million. That -- yeah. We're also looking at about $0.5 million or upwards from the gift card program, we have some -- there is a 5% commission on lottery sales. We haven't had enough experience with that to estimate what that will bring in to us. We are also having discussions about -- we also have discussion about a corporate wide ATM contract. We have about a $1.5 million budgeted for marketing efforts, joint marketing ventures, so we have put in to place a -- a number of different programs and you know, we intend to do whatever we can to utilize the platform to raise ancillary income.

How about on the advertising side? Some of your peers are talking about the mall as a platform for billboarding more and more --

We call that partnership marketing and that was the 1.5 million that we talked about. That's our estimate out of the box for what we would call partnership marketing.

Thanks a lot.

Thank you, your next question is coming from Alexander Goldfarb of Lehman Brothers please go ahead.

Good afternoon. On the three Federated that you have, it looks like it's all owned by Federated, the ones that are closing. What is the process in terms of negotiating to get those back? Is there a cost that you would estimate and time line?

We Alexander, we don't have the answer to that question as we sit here today. We -- we -- we will be meeting very shortly with the Federated people and we -- we expect that they -- the -- the situation will -- will start to -- to clear itself up. And we can determine exactly what those stores will become, both for the company and what fed rated's asking prices for the stores they're closing down, but we don't have that information as we sit here today.

I would just add to that that the quality of those assets are such that we already have unsolicited interest from tenants, so it's a -- it's -- again, an opportunity we think that sits in front of us.

Yeah. And obviously, it's our intention to control how those -- how those stores are utilized in the future, so it's our expectation that we will probably be looking to acquire them.

And the tenant interest you mentioned, is that traditional department store like -- or is that more of a big box type?

Well, it varies with the -- with the property, but at the present time, we're talking to a lot of people, but we don't have anything really specific to report.

Okay. Going to the -- the Vorhees project Echelon. How much has been spent on that and if you have to go back to the drawing board, per se, is that initial spend sort of sunk money or is that money useful going forward?

We have about 1.8 million spent to date. I think a large part, the effort -- or the -- the effort that we have into the project essentially all that can be reused if we have to go to another alternative use. I'll -- and included in that 1.8 million is a purchase of a liquor license that the Company made as part of its redevelopment plan so we believe that spend has been significant value either alternative use of that property or as a stand alone asset.

Okay. And what are the next things that -- that you guys are looking for in terms of the Wal-Mart decision? Is there a town meeting coming up or is there something definitive or is this something that's --

We have requested an extension on -- on the -- the approval process through the end of the year. That process is to be decided -- that decision is to be made by township sometime later this month, and you know, we continue to be in active discussions with the township regarding the -- regarding the development and we're optimistic about possibilities.

Okay. And the mayor is still enthusiastic about it?

I couldn't speak for the mayor but we continue to have positive discussions with the township.

Okay. Next is this -- if I understand correctly, the 17 million, DOT in Delaware bought the Christiana Phase II for 17 million.

Correct.

How is that going to be booked? Is that sort of an insurance type proceed type thing or is that a buy and sell so it won't hit the P and L?

No, it actually -- there is some excess value over the basis that we have in the asset so it will be treated akin to a landfill if you will.

So how much -- how much of that will hit in the third quarter?

At this point our guidance does not contemplate amount taken out of the third quarter only because the addition of proceeds is a negotiation between us and our partners because this is really outside the structure of our contemplated partnership agreement. It's an extraordinary type event. So at this point we don't really know the amount we would would receive or the timing of it but we're hopeful that we would receive or share the settlement and in fact we actually have -- we have the cash sitting in the bank coffers of the partnership but we hope it will be resolved before the end of the year but it's not in our third quarter numbers.

And it's not in your full year numbers

We do have an estimate in our full year numbers.

Can you share with us that number?

At this point because of negotiations it would be harmful to us if we were to disclose what that estimate is.

And the final thing and this sort of goes back to the Federated, at the Lehigh Valley Mall, I know there's been much discussion of a life style component over there. Obviously you have a Strawbridge that's closing there. It doesn't seem like that much progress has been made on the construction of the lifestyle. Is there a concern that this asset sort of suffers, you know, if the -- if the Strawbridge closes and the lifestyle component , doesn't take hold soon?

Alexander, as you know, the Simon organization has been working really leading -- I'll say taking the point on the -- on the lifestyle addition and they have been also in discussions with -- with Federated obviously independently. We're -- we're confident that is a mall that -- that does in excess of $400 a square foot. It's a very successful property.

There is a lot of -- a great deal of tenant interest. We think that we -- we really think that these changes that are taking place are all positive and we feel that the -- the availability of the straw bridge building will enhance our opportunity to add the life style component to Lehigh Valley and we have a lot of confidence in Simon leading the effort.

So you don't have timing, do you?

No, we don't, because obviously, we just learned within the last couple weeks that the Strawbridge store was going to be available.

Okay. Okay. Thank you.

Okay. Thank you. [OPERATOR INSTRUCTIONS]. Your next question is coming from Michael Muller of JP Morgan. Please go ahead.

Thanks. Hi, guys. Can you comment on the range of returns on the redevelopments and are they all kind of in the 10 to 12 range, something higher, lower, just a little more color on that?

Mike, they're generally in the range of 9 to 11%. In the press releases that we issued today along with the earnings release, we had specific return information expected return information on virtually all of the projects and it's also in the supplemental disclosure.

And for the returns in terms of getting to a stabilized after initial occupancy, about how long does that take once the occupancy takes hold?

It depends on the project but typically 18 months to two years.

Okay. Okay. In terms -- I know your current guidance doesn't have anything for acquisitions in there. Has that guidance changed at all over the past few months?

No, the annual guidance is the same as we originally provided in the end of last year.

Okay. And the -- when in '07, the preferred that you can redeem, when specifically in '07 is that?

It's July of '07.

Okay. And you gave us the cost on the projects under active development. Do you have a ballpark cost of the projects in free development just to get a magnitude?

Not at this time we don't.

Okay. And that will be it. Thanks.

Mike, just a point of clarification, if it wasn't explicit, the -- the hedging activity -- or the $120 million hedge that we put this place for 2007 settlement date is really intended to, you know, to mitigate the rest that would occur upon the financing unit to take out the preferred stock.

I -- I think that came across, yeah. And that's 11% on the preferred. Correct?

Correct.

And what was the rate on the REMIC?

The REMIC is at 8 -- at 7.42.

Okay.

7.43. I'm sorry.

Okay. Great. Thank you.

Okay.

Thank you. Your next question is coming from Greg Andrews of Green Street Advisors. Please go ahead.

Good afternoon. I'm looking at the redevelopments and at Cherry Hill, looks like you're intending to spend about 40 million and have actually even started work. I'm trying to figure out how much square footage you're actually adding to that mall?

It would be about 150,000 square feet of addition in Phase 1. Phase 2 is as yet undetermined.

And is that -- is that the restaurant row that's being added kind of out on the front side there?

That's correct.

Okay. I guess some of this money is also belling being spent on the interior of the mall like where the JC -- I mean like where the Old Navy store is going.

Old Navy opened today as a matter of fact.

And in Phase two, what is contemplated for that part of the project?

Well, Well, Greg, as you know, we just learned about the availability of the Strawbridge store. We had been talking with the potential tenants for Cherry Hill. We're -- we're excited about the prospects of a major -- of a major redevelopment in Cherry Hill in addition to the Bistro row.

But now that the Strawbridge store appears to be available it changes some of our thinking with regard to some of the people that we're talking with. So it's very hard for us as -- as we sit here today to really pin down an answer to your question. But I -- I will say from an overall standpoint, the options at Cherry Hill are very exciting for the company.

Okay. Great. Thanks very much.

Thank you.

Your next question is a followup question coming from Alexander Goldfarb of Lehman Brothers.

I just want to go back to Plymouth Meeting. I think I heard that you said there might be a residential component there?

I alluded to the fact that that's something we're looking at right now, yes.

Okay. So of the mixed used portion that you're contemplating do you have an idea of like range or breakout or the different mixed use components?

No not at this time we don't. That's a Phase 2 -- that's for Phase 2 and we're focusing at this -- first and foremost on creating this very exciting lifestyle addition anchored by Whole Foods, and we have other tenants that we're working with right now that we think will really transform this asset.

But would it be separate on its own separate pad or would it be built on top of --

Again, that question is difficult to answer right now because we're -- you know, we're currently in the -- in the early stages in terms of the architectural design.

Okay. Thank you.

Thank you. At this time there are no further questions. I'd like to turn the floor back over to the presenters for any closing remarks.

Okay. We want to thank you as always for your participation in this call. We continue to be optimistic about the assets that this company has. We -- we have always known from the very beginning that redevelopment was going to be a major part of our growth and as you've heard today, we're -- we're now right in the thick of redevelopment and of the number of our assets and we'll continue to report to you as -- as these changes in tenancy take place and obviously we're -- we're very much interested in the resolution with Federated which is -- is very important to the company. And we'll certainly keep you advised of -- of that situation. So again, thank you for your participation, and we'll speak to you again soon.

Thank you. That does conclude today's teleconference. You may disconnect your lines at this time and have a wonderful day.