Pennsylvania Real Estate Investment Trust (PEI) 2015 Q4 法說會逐字稿

Good morning and welcome to the PREIT fourth-quarter 2015 earnings conference call.

(Operator Instructions)

Please note this event is being recorded. I would now like to turn the conference over to Heather Crowell, VP of Investor Relations and Corporate Communications. Please go ahead.

Good morning and thank you all for joining us for PREIT's fourth-quarter and full-year 2015 earnings call. During this call we 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 fact and subject to risks and uncertainties that might affect future events roar results. Descriptions of these risks are set forth in the SEC filings.

Statements that PREIT makes today might be accurate only as of today, February 24, 2016, and PREIT makes no undertaking to update any such statements. Also, certain non-GAAP measures will be discussed. PREIT has included reconciliations of such measures to the comparable gap members in it's earnings release and other documents filed with the SEC.

Members of management on the call today are Joe Coradino, PREIT's CEO; and Bob McCadden, our CFO. It is now my pleasure to turn the call over to Joe Coradino.

Thank you, Heather, and good morning everyone. We are excited to share with you our 2015 results and 2016 outlook, highlighting our success in bringing this Company and our portfolio into a new era of productivity.

We've put in place the foundation of a quality Company with a powerful portfolio and reliable long-term earnings growth. We have made dramatic improvements to our portfolio by actively disposing of assets and attracting high performance retailers to our properties while improving the strength of our balance sheet. In so doing, we have created a sustainable, stable platform with a flexible balance sheet and a realizable redevelopment and organic NOI growth opportunities.

The results we have achieved, including our sector leading sales growth and asset disposition programs, are the result of the measured and laser focused execution of a strategic plan that will continue to create shareholder value. We recently hosted an Investor Day and outlined a vision to become a $500 per square foot company that generates a majority of our NOI from top ten MSAs growing at over 3% annually with leverage in the mid 40%s and a balanced department store mix.

Our strong 2015 performance and outlook for 2016 demonstrate our ability to achieve this mission. Despite tenant bankruptcy headwinds, same store NOI growth of 2.6% at the high end of our guidance range accompanied by 10% growth in sales with $435 per square you foot, 6% renewal spreads along with another non-core asset sold are a testament to the efforts we have put forth and an indicator of what you can expect from us in the future.

There are many perspective on the condition of the macro-economy. Let me share ours with you. We believe that we collectively shout the word recession enough times, the market will respond. But we see economic indicators that are healthy.

Unemployment is as low as it's been since 2008, gas prices are a bargain, consumer confidence improved in January, and people are spending money. All of the work we've done over the past few years was specifically intended to strengthen and de-risk our portfolio. We have achieved unprecedented sales growth, attractive an influx of new tenants, have a strong presence in two of the top ten markets in the US, and are operating in an environment of constrained supply. We feel good about the fact that we have strong property with strong retailers that will withstand bps in the economy and thrive during economic expansion.

During our Investor Day we laid out the framework by which we intend to achieve our vision, we are continuing to optimize our portfolio to a completion of our disposition program and executing on opportunities for strategic retaining. We are also committed to delivering results in line with the new portfolio we have created reflecting improved attractiveness to retailers, driving renewal spreads, improving occupancy, and expanding operating margins, and by executing strategic redevelopment initiatives that will create value and drive earnings, all while maintaining our capital allocation priorities and further strengthen our balance sheet and decrease our leverage.

Let me walk you through some of the highlights from 2015 and the progress we have made since laying out this vision. Continuing our industry-leading lower productive mall disposition program, during 2015 we sold two malls and one power center and placed a three-mall package under agreement of sale.

At our Investor Day a month ago we introduced we received a non-refundable deposit on the three-mall package at Palmer Park Mall. In the past several weeks our determination has resulted in noteworthy progress. The completed sale of Palmer Park Mall and executed agreement and sale with a substantial non-refundable deposit on Lycoming Mall, an executed agreement and sale along with a multi-million dollar non-refundable deposit on two Philadelphia street retail properties. We expect that these three properties will close before the end of the first half of the year and are excited about our progress.

When completed, these sales will bring total dispositions to over $640 million since we initiated the program at the end of 2012. The success of our disposition program is powering our leasing effort by creating a portfolio that is more compelling to retailers.

Our portfolio renewal packages have greatly improved and you can see the acceleration in our renewal spread results over the course of the year, climbing to nearly 8% on a cash basis and 13.5% on an average rent basis for the fourth quarter and above 6% per year. We expect to continue to drive results in excess of 6% in 2016.

In 2015, we executed new leases for 646,000 square feet and generated 13% increases in comparable same-suite deals. We continue our effort to bring new tenants in the portfolio to our new business development effort.

We currently have 30,000 square feet of first portfolio transactions that we expect to come to fruition and another 40,000 square feet of hot new prospects following behind. To date, we have approximately 70% of our 2016 planned new deal activity committed.

We have found much success in strategically re-tenanting our properties to take advantage of our new platform. Our remerchandising efforts are underway in earnest at four projects that on average are expected to deliver 18% NOI growth over the next two years.

We are seeing results of the projects we recently completed. At Viewmont Mall a 20% increase NOI and a 24% increase in sales it a new high of $445 per square foot. These efforts have led to organic sales growth across our portfolio of 4.5% in the past year, and our work towards systematically reducing over-exposure to underperforming anchor tenants is accelerating.

We are pleased have recently completed transactions with four new anchors occupying the lower level of the former JCPenney box at Exton Square, Round 1, an entertainment concept from Japan with its expanding rapidly within the includes bowling, arcade games, billiards and represents a unique family entertainment offering that will bring new customers to the property. This tenant is expected to open in time for this year's holiday season.

In addition, Whole Foods, also at Exton Square, is expected to open if the third quarter of next year. Dick's Sporting Good at Cumberland Mall which is replacing an underperforming JCPenney store that closed last year is underway scheduled for a Q4 opening this year.

A new Dick's Field and Stream combo has been executed to replace a low productivity department store at one of our core growth properties that we cannot disclose at this time because the department store has not yet informed their employees. Legoland Discovery Center at Plymouth Meeting Mall which will serve as a catalyst to create additional value in the enclosed portion of that property drawing customers from up to two hours away for extended duration visits. The project remains on track with a planned early opening next year. We have also executed 2 more H&M leases at Patrick Henry and Morristown malls in addition to the 5 we completed earlier in 2015 bringing our total to 13 H&M stores.

Replacing underperforming tenants and driving quality occupancy also continues to be a top priority for us and was a particular focus in 2015. This year we expect fewer bankruptcies and, as such, can replace underperforming tenants in a proactive, discretionary manner. We expect 2016 occupancy to be up 80 to 100 basis points.

We started 2015 with 266,000 square feet of tenants that had filed for bankruptcy. To date, we have replacements for approximately 75% of the space with many of these leases taking effect in 2016. By way of example, we have seven H&M leases with coverage store sizes of 20,000 square feet under construction for 2016 openings.

We currently have $7.5 million of annual gross rent in leases that are signed but not yet opened, which $5 million representing over 250,000 square feet scheduled for 2016. And also let's recall that the tenants replacing two-thirds of our average portfolio rent and generated sales of only $168 a foot. We are focused on the quality of replacements while driving overall same-store NOI.

At Springfield Town Center we are well on our way to stabilization. Sales at the property are strong at $507 per square foot and we have commitments for approximately 93% of the total space. The recently opened Dave and Busters is posting chain leading sales performance and endorsement for the continued sales growth at this property.

At the Fashion Outlets of Philadelphia in January we officially closed a significant portion of the property to begin demolition, which is currently underway for a planned 2018 opening. We along with our partner continue to be extremely active in moving transactions through the leasing continuum.

The project cost is expect today to range from $320 million to $380 million with a net investment of $275 million to $335 million. The yield is expected to be in the mid-8% range consistent with our articulated expectations.

Our balance sheet and capital allocation continue to be a priority. We're making strides in our capital plan, driving towards our stated median term objective of leverage in the mid 40%s, reduce debt to EBITDA and ample liquidity. We're balancing these critical goals with the needs of our business and the opportunity to enhance the value of our assets.

We are focused on our balance sheet and as with our portfolio reshaping efforts are in a much improved lower risk position than we were three years ago. We believe that if we execute with continuity in all of these fronts our multiple will continue to drive towards that of our higher productivity peers, more reflective of our portfolio.

Now I'll turn the call over to Bob McCadden.

Thanks, Joe. We ended 2015 with a strong performance during the fourth quarter. Same store NOI excluding lease terminations increased by 3.2% over the prior year's quarter. Factors contributing to the improved performance included an increase in base rents from new store openings, a 13% increase in percentage rents, and higher can and utility margins.

For the full year, we delivered same-store NOI growth of 2.6% driven by a $4.9 million increase in revenues resulting from the strong renewal rent increases we have generated, new store openings, and a 15.5% increase in percentage rent driven by our solid organic sales growth. 70% of our same-store NOI increase was driven by increased revenue.

Store closings from bankruptcies reduced revenues from our permanent tenants by $1.5 million for the quarter and $5.8 million for the year when compared to the prior periods. Non-same store NOI was favorably impacted by the addition of Springfield Town Center to the portfolio in March and the opening Gloucester Premium Outlets in August.

Offsetting these favorable contributions where the loss of NOI from properties sold and lower NOI from the year from Fashion Outlets of Philadelphia related to deleasing efforts in preparation for the redevelopment. FFO is adjusted per share for the full year was $1.89 compared to $1.96 in 2014, and FFO was $1.97 per share compared to $1.82 last year.

The FFO adjustments acquisition-costs related to Springfield Town Center which are expensed for GAAP purposes, employee separation costs and costs related to the early repayment of debt. Excluding the impact of The Gallery, its 2014 and 2015 property sales were approximately $0.03 per share diluted for the quarter and $0.09 per share diluted for the full year.

Let me turn to our capital plan for the upcoming year. Our capital allocation strategy has been to sell lower quality assets and recycle the proceeds from asset sales and it reducing our leverage or to make investments in properties with significant value creation opportunities such as Fashion Outlets and the projects mentioned earlier.

We believe we have ample liquidity to fund our planned capital expenditures by recycling proceeds from asset sales supplemented by credit facility borrowings. At the end of December $338 million of immediate liquidity, including cash and amounts is available under our credit facilities. At the end of 2015, our bank leverage ratio was 49.3%, a 90 basis point decline from September 30.

As mentioned previously, our bank leverage ratio will increase by approximately 300 basis points at the end of the first quarter due to the formula used it to calculate gross asset value at our bank facilities. During the first year after acquisition, we received value equal to the purchase price per property. Thereafter, bank gross asset value is determined by capitalizing rolling 12 months NOI at a 6.5% or 7.5% capitalization rate.

This increase in leverage will moderate as Springfield Town Center moves towards stabilization. It's important to note, however, our net debt to EBITDA ratio, which is approximately 8 times at the end of December, will not be impacted by this change.

Our effective interest rate at the end of the year was 4.33%, a 69 basis point reduction from a year ago, and our debt maturities are well laddered with two mortgage loans coming due this year. At the end of December, only 7% of our debt carried floating interest rates or was not hedged, leaving us well positioned to mitigate impact of any increases in short-term interest rates.

In light of our current discount to NAV and intermediate capital needs we are exploring the sell of our partnership interest in three joint venture power centers and exploring bringing in a partner to JV Malls in our core growth category to raise additional capital if necessary to provide incremental liquidity to reduce leverage further.

Now let's review our outlook for 2016. We are targeting same store NOI growth of 2.8% to 3.2% this year driven by occupancy growth, replacing underperforming tenants, realizing the ongoing benefit of our fixed [cam] initiatives and growing revenue, in the [common] area among other factors. We see occupancy growing at our same-store malls by 80 to 100 basis points this year.

I want to again clarify a point raised this quarter and last where three large format tenant leases included in our leasing activity report in the supplemental disclosure were reflected with rents that don't seem to offset the capital investment, these are leases structured as percent rent transactions of the floor to provide us with downside protection. For disclosure purposes we only include the floor rent based on our sales protections for these tenants and how they perform elsewhere in the portfolio the pay back on the transactions will be substantially shorter.

For purpose of updating our guidance range, we're still assuming mid-year sales of the five remaining malls and street retail properties. Optimistically if we are able to close enough properties under the contract near the end of the first quarter we would experience an additional $0.02 per share dilution which is not currently reflected in our guidance. The early closing of the sale on Palmer Park Mall will be about $0.01 per share diluted for the guidance we provided in January.

Our capital spending is expected to be $165 million to $185 million this year including recurring capital expenditures and normal tenant allowances. We expect NOI from the 23 malls currently in our portfolio that we expect to own through the end of 2016, excluding Springfield Town Center and Fashion Outlets to be in the $231 million to $233 million range.

The NOI from properties being marketed for sale is estimated to be $20 million to $21 million. This includes a full year of income from the three power centers, income from Palmer park for two month, plus a half year of NOI from the five malls being marketed along with the two street retail properties.

We expect the NOI contribution from Springfield Town Center and our 25% in Gloucester Premium Outlets to be approximately $22 million to $24 million. Our share of income from Fashion Outlets contributed by the office tenants in Century 21 is expected to be approximately $4 million. To summarize, our guidance assumes total NOI of $277 million to $282 million.

In terms of sequencing in light of our strong performance in the first quarter of 2015, with expect to see a relatively flat first quarter ramping up for the year to deliver the targeted 3% same store NOI growth. Interest expense is fairly predictable, given our emphasis on fixed rate financings and is estimated to be $84 million to $85 million based on the disposition assumptions described earlier.

Our G&A expenses are estimated to be about $34 million, a $700,000 decrease from 2015's amount. Given all these assumptions, we anticipate FFO to be in the range of $1.83 to $1.91 per diluted share in [Munich] with net income share of $0.03 to $0.06.

With that, I'll ask Chad to open up the lines for questions.

Thank you, sir. We will now begin the question-and-answer session.

(Operator Instructions)

Our first question comes from Ki Bin Kim with SunTrust. Please go ahead.

Thank you. Good morning.

Could you talk about the 80 to 100 basis points expected gain in occupancy in 2016? How much of that is already locked in from the leasing you have done so far?

I think in the comments we remarked that we have about 75% of the new deal activity committed as of this point.

So 75% of the 100 -- of the 90 basis points at midpoint is already locked in, right?

That's correct.

Okay. And what kind of lease spread should we expect from that 75% of leasing?

I think we expect on renewal spreads to be consistent with what we have seen in the second half of this year, and for new deals we would expect to see rates comparable to this year, which was mid-teens.

Okay. And you made a comment about -- thank you for the comment about leasing that appears where the CapEx is pretty high for new leases versus the rent you're getting.

Just curious. What type of retailer is that actually tied to? Is it tied to retailers like the entertainment concept moving into Exton, where maybe it's non-traditional perhaps a little bit riskier?

No, these are large format power retailers.

Okay. Got it. Thanks.

Just one last question. How does the empasse in the government Philly or in that area where you're still expecting to get the RACP funds or the EB5 loan, if that does not come through, how does that impact the yield or cost for The Gallery at Market East?

Ki Bin, hi. This is Joe.

I think generally we remain optimistic. We have had meetings as recently as last week with respect to the remaining funding request. So, that's number one.

The second answer is we would -- the project is underway, right? We're actually looking at videos of the status of it before the call today. And we have had a half a dozen tenants through the project this week alone. The Mack team is in our office.

We'll just scale the project back. We don't have any certainty as to how we're going do that, but at this point we have possibilities. But we haven't resolved anything in terms of what we're going to do, because we remain optimistic that we will secure the funding.

Okay. So is the $30 million of RACP funds that are in flux right now, are you, in your $275 to $335 net cost, is that -- if you don't get that, does that $275 at the low end increase by $30 million? Or is that not in the number?

Well, first off, I would rather not get into conversation about the $30 million, because there is no question that the newspapers are on this call. So I'd rather just leave it at we're optimistic and we believe that we can create a project that will be, again, slightly scaled back, but will be highly successful with or without the money.

It won't be as dramatic, certainly, as it would be with those dollars. We continue to be optimistic.

Okay. Thanks.

The next question is from Christy McElroy with Citi. Please go ahead.

Good morning. This is Katy McConnell on for Christy.

For the projects listed on the new rate development disclosure, as we think about the impact of deliveries, what are you expecting for the delta between the initial yields upon completion relative to the stabilized yields listed there?

In most cases, we talk about other -- other than the Fashion Outlets projects, which will obviously have a ramp up, the other redevelopments -- we would expect them to open at a stabilized level. You are talking about a Whole Foods opening, so we'll get rent upon opening, as well as Round 1 at Exton.

At Plymouth Meeting we'll have LEGO Discovery Center paying rent immediately. Likewise for Dick's Sporting Goods at Cumberland Mall. They will open at effectively close to stabilized returns.

Okay. Great. Thanks.

Our next question is from Michael Mueller with JPMorgan. Please go ahead.

Yes. Hi. I was wondering, you talk a little bit about if we look at the same store occupancy comps in the third quarter, you were year-over-year in the fourth quarter, it was down. It sounds like some of that is tied to the remerchandising. I was just wondering, first, can you give us a little more color on that?

Yes. As Joe mentioned in his remarks, I think we talked in the past, with the bankruptcy that's really given us the opportunity to remerchandise the properties. So we have, as mentioned previously, we have seven new H&M stores under construction.

One will open in the first quarter of this year. The balance in the second half. So towards the end of the year -- we had to move a bunch of tenants around to aggregate the space, in order to accommodate those tenants.

Got it.

Reiterating, I think that's all baked into our expectation of occupancy increases of 80 to 100 basis points in 2016.

Yep. Okay. And then, Bob, can you just recap, I think I missed some of this, what part of the dilution is not in the range? I think you were talking about some kind of specific assets?

If we were to close -- we are still assuming mid-year on the assets under contract. But we were working like hell to close these early. We get them closed by the end of the first quarter, it would be about $0.02 dilutive.

Okay. And then which assets specifically?

That would be the three mall portfolio, Lycoming Mall, and the two street level retail properties.

Got it. So all of that by the end of the first quarter. Okay. That was it. Thank you.

No. Mike, just to be clear, that's -- we're working that way. I don't know that we can commit to -- we are committing to June 30.

We have always said -- this is Joe. We have always said that the non-core malls are an adventurous process. And as much as we'd like to predict a date certain, sometimes they slip.

Again, on these particular -- on this particular group of properties we have what I would call meaningful or significant, whatever word is the appropriate one, hard deposits on them. But it's just a question of timing.

Got it. So the takeaway is, basically if you stick to the plan and guidance, it's what the range is. If somehow everything would get accelerated to the end of the first quarter, it's a $0.02 delta. That's the message, right?

That's correct.

Okay. Thank you.

(Operator Instructions)

The next question comes from Floris van Dijkum with Boenning. Please go ahead.

Hello. Question for you on your expense recovery ratio of the properties that are now for sale. The five assets for sale versus the remaining portfolio. Is there a big difference in that? And should we expect, or can we expect the expense recovery going forward to be higher as a result of these sales?

The answer is yes. I can't give you specifics at the moment, but I think we demonstrated that even in Investor Day.

You can look at the chart that we had in the presentation, which showed the impact of recoveries from selling the assets that we have closed on. So you would expect not as dramatic, but still a meaningful improvement in recovery rates.

Great.

And would you also consider -- I know that you've talked about deleveraging and reinvesting, but as these sale proceeds potentially come in quicker, maybe, than the market has expected, including ourselves, would you consider putting some of those proceeds to the side for a potential share buyback with your stock trading where it is today?

Well, it's certainly something we continue to consider, Floris. But I think at this point our primary focus is paying down debt and utilization for enhancing some of the redevelopments that we're committed to. But again it's something we continue to consider.

Clearly, we are not happy with our share price, and we've done significant due diligence on share buybacks and continue to look at the real impact on a medium- to long-term basis in terms of increased share price, and having found, at least at this point, significant evidence of that. But having said that, it continues to be on the table for us. We are not pleased with our share price.

The goal of our strategy that we've outlined at Investor Day and we communicated on this call is to drive our multiple and close the NAV gap. Again, that's something that we are considering.

Great. One more question for me. You have actually been relatively successful selling your C malls. Maybe an you give us a little bit of perspective for the market for C malls right now? And particularly on the financing side.

How is that right now? Because we are hearing some actually interesting tidbits saying that potentially C mall financing might be easier than B mall financing.

We certainly haven't heard that. But if you do hear that, can you give us the financing sources?

But look, most of these sales occur with high net worth individuals or groups with access to high net worth individuals. Significant equity contribution tend to be traditional bank financing and, in many cases, banks that are certainly unknown to us, obscure. They tend to be relationship banks with the buyers.

But generally the buyer pool for C malls continues to be thin. I couldn't be more pleased with the progress our team is making and continues to make. We think we are a better Company as we continue to dispose of those non-core.

But make no mistake about it. There has not been, at least from our perspective, a change in the financing climate for C malls. If anything, from our perspective, it's gotten a bit more difficult.

Okay. Thanks.

The next question is from DJ Busch with Green Street Advisors. Please go ahead.

Thank you.

Bob, I don't know if you touched on it when you were addressing Ki Bin's question earlier in the call, but the floor that you are referring to in the three deal sign in the fourth quarter of the big box, does that -- is that consistent with the small shop or the space under 10,000 square feet, as well? That's a floor, and that 15% that the TIs look like they are representing, that could be much smaller as the percentage spreads come in?

Yes. The TA is nothing more than the amount divided by the number of months and years. The TA will always be the same number on a per square foot basis. But the relative percentage will decrease as we layer in the percentage rents, which could be equal to as much as the base rent itself. So we would expect --

But is the trigger for the under 10,000 less dramatic than for the big box, just given the --

Absolutely. Yes.

Okay. And then, Joe, you look at the GLA and how it's evolved over time, it looks like big box or big format makes up about 17% of occupied GLA and small shops about 24%, I would imagine. The disclosure has been enhanced, but I would imagine that has been a pretty dramatic increase in big box format.

How do you see that continuing going forward? Is the demand going to continue to come from big box and where do you see a good mix between small shop and big box within your malls?

I think first off, we are to a certain extent, a lot of big box, as you call it, or large format retailers have been deployed in core and opportunistic assets, right? It's -- they are less prevalent in our premiere group, and even the top of our core group, if you will.

And I think the -- so I think you're going to see a higher proportion as you move down the quality spectrum -- the asset quality spectrum. But generally I think we're seeing demand -- there to be more demand from the smaller in-line retailer. When you talk about large format, are you including H&M in that group?

Well, I guess. I would include anything that qualifies within the non-anchor tenants that are greater than 10,000 square feet. So that would be H&M as well, right?

Right. So I guess in that respect, between the H&M, the ZARAs, The Forever 21, you are seeing that group begin to increase. I was responding to a certain extent to more of the Ultas and some of the other boxes that have deployed more in the B mall space.

So, yes. I mean, I think the proportion will probably begin to grow, right. I think you're going to see Primark I mean, we are in the sweet spot of Primark in terms of their continued deployment of stores.

They are talking about essentially a Boston to Washington initial deployment. And given our presence in those markets, we will see Primark stores begin to populate our centers, which minimum size is about 65,000 feet.

Very difficult store to incorporate in a mall. I think ZARA is another tenant that we are beginning to make some inroads with. Again, larger format. I think you'll see that number begin to increase.

Okay. And how does that affect the way you look at your -- the net effective rent. As that's grown, have you seen your net effective rents actually decline?

I know, you know, the sales -- the percentage rents that aren't included in the disclosure make it difficult to get to that net effective rent number. But have you seen net effective rents decline on average because of the shift to big box versus small shop?

No. And the reasons for it primarily are driven by location in malls. If you -- one of the good things about H&M, and they are tough deals, by the way, I don't think you will get any of our peers to deny that, one of the good things about H&M and even Primark, et cetera, is they are typically not populating the quality space in a mall, right. They are typically going into spaces that are closer to end zones.

So, in essence, what you are doing -- in essence what you're doing is you're getting space that was formerly occupied by what I would consider to be marginal tenants where you have not necessarily good credit. You are beginning to populate those less desirable spaces with quality tenants and essentially serve as anchors in the property. And you've got a good credit basis. And rents that are, I think, generally accretive to that location in the mall.

But it also provides an opportunity -- you know, we sit here today with our occupancy cost sitting around [12.7], right? So we think generally, as leases roll, given the way our sales are growing, that we have opportunities to continue to drive rents.

And I think all that the H&Ms and the Primarks and the ZARAs do for us is continue to enhance that opportunity by populating less desirable space and driving traffic to our centers. If you look at our last group of H&M deals, there are seven H&M deals, they are all going into core growth assets.

Look at a property like Logan Valley, where it will be the only H&M for 30 or 40 miles. Drive traffic. Give us the ability to increase rents in the center.

Okay. Great, thank you.

Sorry for the long-winded answer.

It was very helpful.

(Operator Instructions)

Are there any other questions?

We have no further questions, so this concludes our question and answer session. I would like to turn the conference back over to Joe Coradino for closing remarks.

Thank you, Chad.

Let me is summarize -- to close, let me summarize our goals for the next several years. They are obviously cleared off, so that they are clear to everyone.

First off, to drive our operating results to new heights delivering same store NOI growth in excess of 3% on a consistent basis. To craft an ideal mix of tenants in our portfolio, to drive traffic, sales, and rents.

To opportunistically execute on redevelopment opportunities that also drive value. And to proactively replace underperforming anchor tenants, which we had great success with and plan to continue to. To remain focused on creating a defensive, strong balance sheet.

Our goals are clear. We are laser-focused on them and we look forward to continuing a dialogue with you. So thank you all very much, and I'm sure we will be seeing you over the next few days and weeks. Thank you.

Thank you, sir. The conference is now concluded. Thank you for attending. You may now disconnect.