Pennsylvania Real Estate Investment Trust (PEI) 2011 Q4 法說會逐字稿

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Pennsylvania Real Estate Investment Trust fourth quarter 2011 earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following their presentation, the conference will be open for questions. (Operator Instructions) This conference is being recorded today, Thursday, February 23rd of 2012.

I will now like to turn the conference over to our host, Mr. Shawn Southard. Please go ahead, sir.

Thank you. Good morning. During this call, PREIT will make certain forward-looking statements within the meaning of the federal securities laws. These statements relate to expectations, beliefs, projections, trends, and other matters that are not historical facts and are subject to risks and uncertainties that might affect future events or results. Descriptions of these risks are set forth in the company's SEC filings. Statements that PREIT makes today might be accurate only as of today, February 23rd, 2012, and PREIT makes no undertaking to update any such statement.

Also, certain non-GAAP measures will be discussed. PREIT has included the reconciliations of such measures to their comparable GAAP measures in the earnings release and other documents filed with the SEC.

It is now my pleasure to turn the call over to Ron Rubin, PREIT's Chairman and CEO.

Thank you very much, Shawn. Welcome to the Pennsylvania Real Estate Investment Trust 2011 year-end conference call. Joining me on the call today are Ed Glickman, President, Bob McCadden, CFO, and Joe Coradino, President of our Management Company and Head of our Retail Operations. Also in the room today are Vice Chairman George Rubin and General Counsel Bruce Goldman.

Today we will discuss our fourth quarter and 2011 results, the status of our current projects, and our expectations for 2012. After we conclude our remarks, the call will be open for your questions.

As noted in our press release, the company is expecting NOI and FFO growth in 2012, as portfolio fundamentals continue to improve. We are pleased that our portfolio has experienced its eighth consecutive quarter of same-store sales growth, reaching a new high with improvement at 31 of our malls. This growth, during a period of economic instability is reflective of solid demographics and investments made to improve the quality of our assets.

Particularly noteworthy is that almost two-thirds of the company's NOI now comes from properties with sales of greater than $350 per square foot, many of which were redeveloped, up from 52.3% in 2010, and 44.6% in 2009.

As you will hear during this call, the company's efforts are being recognized by our shoppers and our tenants. People are shopping and new and exciting tenants are joining our properties.

We're moving ahead optimistically, but cautiously, maintaining a disciplined approach. As a real estate company, we understand the importance of location, and our properties have premier locations in their respective markets. We will continue to be innovative to please our consumers, to attract tenants, and to benefit our shareholders.

As we work to execute our game plan, we will continue to improve our balance sheet, place our tenants in service, increase our NOI, all as part of our strategy to create greater value for our shareholders.

And with that, I'll turn the call over to Ed Glickman.

Thanks, Ron. And thank you all for participating in our call. We're happy to report that the company had an excellent fourth quarter and ended the year on a positive note. All of the company's major metrics were positive, and many well beyond our original expectations. FFO is up, comp store sales are up, same-store NOI was up, occupancy was up, coverage was up, and leverage was down.

The breadth of these positive results proves that our performance is more than anecdotal. We believe that we are beginning to realize on our investments in a way that confirms our original strategy, that we could reposition well-located but under-utilized retail assets to create special places that are central to the many dimensions of our customers' lives, and in doing so to create meaningful value.

To say that executing this strategy in the face of the recent economic crisis has been difficult would be a gross understatement, but we are beginning to see the light.

On the operating side in 2011, we believe that there has been a palpable positive change in the direction of our leasing momentum. We chose to take the risk of shortening lease terms in place of locking in low rents on long-term leases, hoping that sales performance would improve, and this has definitely been the right call. Comp sales are now higher than our peak in 2007, and our occupancy cost has dropped by 40 basis points to 12.4%. Rising comp sales against declining occupancy costs are positive indicators for future performance.

As an example of the positive shift in direction that we have experienced, we renewed a record amount of square footage last year, over 1.4 million. Facing a higher-than-usual expiration schedule and significant back draft Borders store closings. Nevertheless, we moved from a minus 3.6% spread to a positive 1.9% spread. In fact, after all was said and done, we ended the year with a slight increase in occupancy.

In addition to the quantity of leasing that was accomplished in 2011, we're also proud of a number of landmark transactions that are positioning high-potential properties for a new round of growth. With these creative transactions, such as the newly announced Mercy Health transaction at Plymouth Meeting, we are realizing our vision for the mall of the future - a central location at which our customers can fulfill their important needs.

We believe that even as the economy recovers, complimentary synergistic uses that lever the many retail and entertainment amenities of our properties will be an important part of our future growth strategy. As we have stated previously, we intend to focus on our organic growth and be very cautious in our capital expenditures. In total, during 2011, we were able to reduce debt while making progress on our business plan.

Regardless of our intent to de-lever, we remain an active participant in the mortgage market and have been able to improve the financing on a number of our assets which have maturing loans. In 2011, and to date in 2012, we were able to refinance a number of properties with excellent results. Most recently, we refinanced Capital City Mall for $65 million at 5.296%. This CMBS transaction on a $350-per-square-foot asset resulted in $17 million of additional proceeds and a rate reduction of over 200 basis points. At present, we have $220 million of availability on our lien of credit.

In 2012, we will have a heavier capital expenditure program as we begin to move forward with our previously announced plans for Willow Grove, 801 Market Street, and Moorestown Mall. We will also be redeeming our outstanding $137 million convertible bonds and refinancing the $230 million mortgage on Cherry Hill Mall. Our current plan is to pay off the convert using our line of credit, and then to refresh our capacity on the line of credit using excess proceeds from the refinancing of the Cherry Hill mortgage. We anticipate that we will have ample liquidity in place to cover our existing capital requirements and to operate our business.

On the asset side, we continue to consider the sale of part or all of a number of our properties. Our goal for these transactions, if they occur, would be to further reduce leverage. The reduction of leverage continues to be one of our key long-term goals, and the highest non-operational priority for excess cash flow.

Lastly, there has been a lot of news lately regarding department stores. PREIT prides itself on its longstanding and profitable relationship with our anchor tenants. Over the last three years, we have successfully renewed all 45 of the anchors whose leases have expired. Among our 108 anchor stores, 29 are Sears, 23 of which are leased with base rents representing 1.7% of total annualized minimum rents. We have a good relationship with Sears and have no reason to believe that that won't continue. Of the 29 stores in our portfolio, none have been designated to close.

We thank you for your continued interest in PREIT. And with that, I give you Bob McCadden.

Thank you, Ed. Funds from operations was $36 million or $0.63 per diluted share, compared to $32.2 million or $0.56 per diluted share in last year's quarter. Same-store NOI for the quarter was $80.7 million, an increase of $1.8 million, or 2.2%, compared to the $78.9 million generated last year.

The increase in real estate revenues and NOI in the quarter was driven by strong holiday sales, resulting in a $0.7 million, or a 21% increase in percentage sales revenues, and higher promotional revenues at many of our properties. We also benefited from lower CAM expenses and continued improvement in our provisions for bad debts.

Lease termination revenue was $1 million in the quarter, compared to $0.5 million last year. Excluding lease termination revenues, same-store NOI increased by 1.6% for the quarter, and 1% for the full year.

Our G&A expenses were $300,000 lower than last year's quarter and flat for the entire year. Other expenses also included about $400,000 of cost associated with the successful Moorestown referendum.

Interest expense was $2.1 million, or 5.6% lower than last year's quarter, reflecting the impact of lower average balances and lower interest rates on refinanced mortgages and the credit facility. Outstanding debt at the end of the year, including our partnership debt, was $2.367 billion, a decrease of $35 million from last year.

The effective interest rate on borrowings, including amortization of deferred financing costs, debt premiums and discounts at December 31st, 2011, fell to 5.87%, a decrease of 27 basis points from December 31st of 2010. At the end of the year, 95.2% of our debt was either fixed or swapped to fixed. Our bank leverage ratio was 66.91%, slightly lower than the ratio at the end of last year.

PREIT's net loss for the quarter was $0.6 million, or $0.01 per share. Last year we recorded a loss of $8 million, or $0.15 per diluted share.

Regarding our outlook for 2012, we expect that GAAP earnings per diluted share will be a net loss between $0.67 and $0.75. We expect FFO per diluted share to be in the range of $1.85 to $1.93 per share.

Let me bridge the gap from 2011's operating results. Same-store NOI net of lease terminations was $280.3 million in 2011. We expect same-store NOI growth of up to 1.5%, excluding lease termination fees. In 2011, we recorded lease termination fees at $1.9 million. Our guidance range assumes termination fees of $1.5 million on the lower end to $2.5 million on the higher end.

Interest expense will be impacted by a full year of lower rates on our credit facility and property mortgages that were refinanced in 2011 and 2012, and lower non-cash interest adjustments as a result of the redemption of our exchangeable notes and lower debt premium amortization. G&A expenses are expected to be 2% to 3% lower in 2012, as compared to 2011.

Other income in 2011, included $1.5 million from the Centaur bankruptcy settlement, and $600,000 of development and consulting fees that are not expected to recur in 2012.

Recurring capital expenditures and tenant allowances are estimated to be in a range from $35 million to $45 million, reflecting an expected increase in leasing activity. Our guidance does not contemplate any acquisitions, property sales, or capital market transactions, other than the repayment of our exchangeable notes and mortgage loan refinancings in the ordinary course of business.

With that, I'll turn the call over to Joe.

Thanks, Bob. We are pleased with the progress we've made in the execution of our goals for 2011. We've seen an improvement in our operating metrics with comp sales, renewal spreads, and occupancy all moving in the right direction. We also concluded a significant number of major transactions during the recent months, which will positively impact our performance in the latter part of 2012, and 2013.

This marks a historic high for sales productivity in our portfolio, and the eighth consecutive quarter of sequential growth in comp store sales, with 31 of our 38 malls having sales increases over last year. The number of malls in our portfolio reporting sales over $400 grew to six during 2011, three registered sales of over $500 a square foot, with Cherry Hill Mall leading the pack at $599 a square foot.

Of note, three of our secondary market assets, Crossroads, Dartmouth, and Valley Malls recorded comp sales increases ranging from 13% to 16%. These centers are benefiting from increased consumer traffic driven by our recent tenant upgrades.

Total occupancy at the end of the year was 93%, an increase of 50 basis points as compared to the 92.5% reported for the fourth quarter of 2010. [Inline] occupancy ended the year at 90.2%, up 240 basis points from the third quarter, and 20 basis points higher than the fourth quarter of 2010.

During the quarter, our renewal transactions with terms of five years or more were extraordinary, registering positive spreads of 16.7%. Overall renewals were solid, generating rent increases of 4.5%. New leases with terms of five years or more that were signed for previously leased space, were positive, registering renewal spread of 8.1%. Overall for spaces previously leased, deals were signed at rents that were 4.4% lower than what the previous tenant was paying.

We are well positioned for occupancy growth in the latter part of 2012, and into 2013, as we have executed a number of impact transactions over the past several months. In the aggregate, we have 455,000 square feet of space to open as a result of these large format transactions.

In December, we signed a lease with Philadelphia Media Network, owner and publisher of the Philadelphia Inquirer, Daily News, and Philly.com, for occupancy of 125,000 square feet of space at 801 Market. The building anchors the Gallery at Market East. PMN with its 600 employees will move into the new headquarters prior to July 15th of 2012. We also secured $8 million in public financing as part of the funding for this project.

PMN's move to 801 Market marks the latest development in the renaissance of Market East, a vital component of Center City Philadelphia. The transformation of Market East will incorporate large format digital advertising on the exterior facade, designed to reach thousands of people daily, and also represent a new area of ancillary income.

Our initiative to add healthcare facilities as an alternative use in the mall environment continues to gain momentum. Earlier this month we signed an agreement to introduce Mercy Health System into Plymouth Meeting Mall. The 23,500 square-foot, two-level outpatient ambulatory healthcare facility is scheduled to open in 2012.

In the fourth quarter of 2011, we signed new leases for 40,000 square feet at Plymouth Meeting Mall, including Charming Charlie and the previously mentioned Mercy Health. In addition, we opened 21,000 square feet during the quarter, including Strawberry's and the expansion of Dave and Buster's.

We also announced the commencement of a multifaceted repositioning of the 1.1 million square-foot Moorestown Mall in southern New Jersey, paving the way for the transformation of the traditional mall into a vibrant dining, entertainment, and retail destination.

We also executed a lease with Regal Entertainment Group, the country's largest theater operator, to build a 12-screen Regal Premium Experience. The 56,000 theater will open at Moorestown Mall located in southern New Jersey in time for the 2013 summer movie season.

On January 31st, we announced an agreement with J.C. Penney to relocate and expand its anchor store in North Hanover Mall in Hanover, Pennsylvania. The new 83,000 square-foot space will be 30,000 square feet larger than J.C. Penney's current location. In conjunction with the relocation, the mall's interior will be renovated to include new flooring, updated mall entrances, and energy-efficient lighting. The renovation and relocation is expected to be completed in anticipation of the J.C. Penney grand reopening in October of this year.

At Willow Grove Park, a 7,500 square-foot bistro restaurant opened in November, and Forever 21 opened their 18,000 square-foot store in December. Construction continues on the new J.C. Penny and Nordstrom Rack, who will open in the former Strawbridge's [box]. Nordstrom Rack will open in May of this year, and J.C. Penney's will open in September.

We're particularly pleased to add two new J.C. Penny department stores to our portfolio, given the recent announcement of the exciting changes at J.C. Penney. We expect Willow Grove and North Hanover will be among the first stores in the country to incorporate this new prototype.

And finally, at our flagship asset, Cherry Hill Mall, construction continues on the Grand Lux Cafe, for a second quarter 2012 opening. We opened Michael Kors, True Religion, and Bobby's Burger Palace during the fourth quarter, and we signed a lease with Pottery Barn and have several additional signature transactions in the pipeline, which will continue the positive trajectory that has increased sales by $153 a square foot, or 34% since the completion of its redevelopment in '09.

With that, we're ready for questions.

Thank you, sir. Ladies and gentlemen, at this time, we will now be conducting a question-and-answer session. (Operator Instructions) Quentin Velleley with Citi. Please go ahead.

Just a couple of questions maybe for Bob. In terms of the G&A savings which you've factored into guidance, I think you said that was 2% to 3%, where are they sort of coming from? Are they long-term sort of savings that you're making or was there something in the 2011 number which was maybe a [one-off] that was keeping 2011 high?

No. It's actually, we've had, if you look at the area where most of our G&A expenses are incurred, it's really on the payroll side. So we've had some attrition in the company that we don't expect to replace going forward.

Okay. And then also on guidance, in terms of some of your refinancing assumptions, it sounds like the exchangeables, again, which are maturing in March, I think, and then you're gong to re-fi Cherry Hill, I think in October. So basically that $130 million of the exchangeables, is that going to sit on the line of credit until October or are you trying to refinance Cherry Hill sooner to get some excess proceeds? And then maybe if you can just talk a little bit about Cherry Hill in terms of, I think the current interest rate's sort of in the mid-fives, are you going to do better than that? And what sort of excess proceeds you're hoping to get.

Well, let me take that in a couple different pieces. The exchangeable notes actually mature on June 1st of 2012. The Cherry Hill Mall mortgage doesn't mature until October. But there is an earlier period that we could actually pre-pay it. So it's likely that we'll try to move up the refinancing of Cherry Hill Mall, although that's subject to a number of factors, including the quality of the capital markets at that time.

So, I guess [the view] today would be we'd use the credit facility to warehouse the payment of the exchangeable notes, and then we would replenish the line of credit, as Ed mentioned, from any refinancing proceeds from Cherry Hill Mall. But at this point, we have $230 million outstanding at maturity. It's probably premature to talk about what the level of proceeds are, because that's going to be a function of what level of leverage [we] want to put in the property. And so we'll try to find that efficient point of financing that takes place. But we would expect it to be somewhat lower than the 5.5% on the current mortgage loan.

Okay. And then maybe just lastly, if you were to look at the high productivity assets, those assets that are about $400 a foot versus your lower productivity assets, around a $300-a-foot mark, could you maybe just provide some comments on that same-store NOI guidance that you're looking at for 2012? What kind of differential would there be between those two, I guess pools of assets?

Well, let me maybe [explain] it a different way. Earlier in 2011, and back in 2009, we had taken impairment charges at a couple of properties, Orlando Fashion Square in '09, North Hanover and Phillipsburg this year, or in 2011. And given what Joe talked about in terms of Moorestown when we talk about taking a number of spaces offline to do the redevelopment of that property, if we were to take those four properties out and exclude them from our same-store pool, you'd actually see our same-store NOI growth probably 120 basis points higher than what we have in our guidance.

So it's not necessarily a sales productivity issue, but clearly been impacted by a handful of properties that really drag the overall performance of the company down from where it otherwise would be.

Okay. Thank you.

Thank you. Nathan Isbee with Stifel Nicolaus. Please go ahead.

Good morning. Just staying on the same-store NOI guidance, what is the low end of your guidance range there?

Probably about 0.5%.

Okay. And then on the Moorestown, Plymouth Meeting, and the Willow Grove, can you just give a little bit of color on what you plan to spend over the next year on those assets in order to -- as well as the Market Street asset, in order to get those tenants in?

Yes. I don't have the specifics for each property that I can provide to you. But roughly, we'll spend somewhere in the $45 million to $60 million, on those assets in the next 12 to 18 months in total, not only those, but all of our capital spending, [other than] recurring CapEx and tenant allowances.

Okay. And then, Ed, you mentioned asset sales in passing. Could you give a little bit more color in terms of what you might be looking to sell and if you think you have any possibility in the lower end of the portfolio, especially given some of the cross collateralization that exists there?

Sure. We have one asset that's been actively marketed and is out on the market at the moment. And we're preparing to market an additional number of the lower end properties. So we're hopeful that sometime this spring we should have some motion on one of those properties.

And you think you have enough flexibility there in terms of the balance sheet with the cross collateralization?

Sure. We think we have enough. We think that we have enough liquidity to cover whatever we have to do to remove those assets from the line of credit in order to facilitate selling them.

Okay. Thank you.

Ben Yang with KBW. Please go ahead.

Good morning. You guys were very active cutting property expense [this past] year. It's obviously helped to boost the same-store NOI a bit. So just curious if you can talk about maybe further cost savings at this point and maybe how much of your 2012 same-store NOI guidance relies on further cost savings? And on the same topic, if you think there's any risk that you've been under spending on maintenance CapEx at this point?

No. I think some of the cost savings have been more on the discretionary spending side. We clearly have, as I mentioned with respect to the corporate G&A, to the extent we've been able to consolidate staff positions in the field, we've been doing that through attrition. We generally try to reallocate work among the folks who have remained. We're still expecting in our CAM and [tax] lines, we expect increases of probably 2% to 2.5%, in operating costs next year over 2011. I don't think that we've actually reduced any spending on required maintenance on our properties.

Yes. I don't think if you visit our properties or if you shopped our properties that you would find any indication of any sort of deferred maintenance. It's just an approach that we're being very frugal as we look through the year, and any place that we can save dollars, we save them.

Okay.

Just to add some color, Ben. I think [the] areas that we've been focused on in the last couple of years have been energy procurement as well as being very aggressive in trying to appeal any real estate tax increases that we've seen in our assets. So those are areas where we've actually probably been able to benefit, but those are areas that I think could be -- continue to be sustained in the future as well.

Okay. So you've kind of hit the bare bones of property expenses. It sounds like they're actually going to creep up a bit in 2012. So is it fair to assume that your guidance for this year is really driven by maybe top-line rent growth at this point?

Yes, we expect significant increase in our revenues this year.

Okay. Great. And then just switching gears. Question about the Mercy Health deal you did at Plymouth Meeting. [How do lease economics work] for medical office? I mean, how long are the leases? How do the rents compare versus retail? I mean, what does the [TIs] look like? CAM, (inaudible), just anything that might be relevant.

Given that it's a [one] transaction, I don't want to get into specific details. But I can tell you that the rent compares favorably. The transaction compares favorably to retail transactions at the property. And the tenant allowance was consistent with the office market in this region.

Okay. And are you having discussions to do more deals with Mercy Health in your portfolio? And how many malls do you think you own that could accommodate medical office at this point?

Well, I think there are a number of discussions going on with healthcare providers for our properties in this region and in others. And I think there's an opportunity to include them certainly across a significant number of properties, whether that's 10, 12, 15, 20, remains to be seen. But we do believe in the synergy between healthcare and retail.

Okay. So just final question. You said upwards of 10 to 12 of your malls can have medical office. Fair to assume that that's kind of at the lower tier of your portfolio?

I mean, clearly we are focusing our efforts on incorporating alternative uses where we have vacancies, and that tends to be in the lower tier of the portfolio, yes.

Okay. Thank you.

Cedrik Lachance with Green Street Advisors. Please go ahead.

Thank you. In regards to the two mortgages or the two most recent mortgages that you've put in place, so Capital City as well as New River Valley, can you give us the source of those? Are those CMBS? Are those regional banks?

Well, one of each. We have had a -- we re-did a mortgage that we had in place on New River, and the custody was a CMBS transaction.

And in terms of the LTV on those, are you able to share what was underwritten by the lenders?

We don't put out any of the estimates on the properties. But the amounts of the mortgages are public information.

Okay. And in terms of Sears, one of your competitors announced today that it had repurchased some leases and some [boxes] from the company. Is it something that you've explored with Sears [as] something that you'd like to do?

We've not explored acquiring Sears stores. We have had discussions with them regarding reutilization of some of their excess space in their stores where we could bring other tenants, other uses to the property. And we continue to have an ongoing dialogue with Sears on a number of levels, but not specifically acquiring stores at this point.

Thank you.

Jeff Lau with Sidoti and Company. Please go ahead.

To expand on Ben's question on, I guess in regards to the health centers, as you continue to add new retailers and tenants to certain properties, are there any discussions of adding additional grocers or necessity-based retailers to any of the properties? And are those properties able to, say house like another Whole Foods like Plymouth Meeting?

Your question is can we incorporate other uses beyond just healthcare in the properties?

Yes.

Yes. I mean, that's a -- I mean, look, we have launched a healthcare initiative. But we also are looking at a number of other uses in properties. We put a junior college into our mall at New River Valley, a Social Security office into our property. And we're clearly looking at the grocery segment as an area that we think there's an opportunity to incorporate that into the mall environment.

I mean, if you look at the Whole Foods at Plymouth, it's really done wonders for that property. It's one of their best performing stores in the region. It's not the best performing store in the region. And we think there's some synergies that could be gained from that.

Are there like any discussions that you can touch on that are, I guess in the works or not?

I would say that we're speaking with some of the smaller format grocery stores on a regular basis and looking at opportunities throughout our portfolio.

Okay. And could you remind me, what's the limit on the credit facility?

Seventy percent leverage.

Leverage. Okay. Thanks.

Michael Mueller with JP Morgan. Please go ahead.

Kind of two questions into one here. But if we're going back to fourth quarter and just thinking about the upside versus the top end of the implied fourth quarter guidance. [I mean] percentage rents came in about a penny better than they were last year. So can you break the rest up between, I think you talked about CAM recoveries and then bad debts. I mean, was it one more than the other? And then if (inaudible) the recovery ratio in 2012, where do you see that trending compared to '11?

I think the fourth quarter was due to a lot of [those] issues in addition to just the percentage rents. Obviously, we had favorable impact from we didn't have a lot of snow in many of our markets compared to a year ago when we had much heavier snowfall. We continue to see savings on the electric and energy procurement side.

Again, we've seen downward trends in our bad debts to the point where our bad debt expense for the year was probably more inline with our historical norms as opposed to probably twice the historical norm just going back to 2009, and the early part of 2010.

With respect to next year, some of those favorable forces will continue to impact our results, and that's embedded into our earnings guidance.

Okay. Do you think the recovery ratio's better than it was in '11, just focusing on that?

No. I think as we add some more non-traditional uses to our properties, many of those take the form of either a gross lease or maybe an office type of lease where we have a base year with escalations. We actually still expect to see some modest erosion in our recovery rates next year. The rate of decline is probably going to be -- it'll probably be much lower than it has been more recently.

Okay. Great. Thank you.

Thank you. (Operator Instructions) David Wigginton with Discern Securities, Inc. Please go ahead.

Bob, just when you were talking about 2012 and interest expense, I kind of didn't follow, I guess what you were saying with respect to deferred financing costs or amortization of the deferred financing costs and whatnot. So when we look out at 2012, with respect to your interest expense, is the fourth quarter number a good starting point, and then just backing in or accounting for any refinancing that you do?

Yes, if you take the fourth quarter, the supplemental page and the five seven four -- the five ninety-four rate that I talked about -- sorry -- five seven four, that should be a good rate for 2012. The difference is that we now have the mortgage on Capital City that Ed talked about, and then obviously factoring in the redemption or the maturity of the exchangeable notes and the refinancing of Cherry Hill Mall. But they're the only significant financing events that are really going to impact our interest expense in 2012.

Okay. And then just with respect to the asset sales again, have you observed, I guess demand for the types of assets you're looking to sell? Are you guys just kind of going to put them on the market and see what type of interest is garnered?

No. There's actually been some inquiry on those properties. It's really just a question of price. And it's been to date a question of the buyers finding financing. But as we talked about in our own portfolio, we're getting a lot of calls regarding the availability of mortgage debt. And we think that that could lead to some more progress in being able to sell property.

What types of, I guess buyers are [these]? I mean, individuals? Are they institutions or world-wide?

Well, we have received lots of interest from opportunistic buyers of all sorts related to our properties. And obviously, those are the first folks who come into the market. As more traditional financing becomes available to that segment, there should be more buyers enter the market.

And what type of, I guess, just based on what they've kind of inquired about and your expectation, what type of bid-ask spread is there right now?

It's too premature to give out that information.

Okay. Can you give us a sense of maybe the size of the pool of assets you may be looking to put on the market?

I think that will depend on how the market reacts to those properties that we've put on. But there are a number of properties that we have talked about bringing to the marketplace. And again, we'll see what kind of reception, what kind of pricing we can achieve, and that'll be the deciding factor for how far we go with this.

Okay. Thank you.

Thank you. Ladies and gentlemen, that concludes today's conference call. At this time, I'd like to turn the call over -- back to Mr. Ron Rubin for any closing comments.

Thank you all for joining us today and for your continued interest in Pennsylvania Real Estate Investment Trust. We look forward to sharing our first quarter 2012 results on our next conference call in April. Thank you again, and have a good day.

Thank you. Ladies and gentlemen, that does conclude today's conference call. Thank you for your participation. You may now disconnect.