Regency Centers Corp (REG) 2004 Q3 法說會逐字稿

Good morning, my name is Paula Kines, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Regency Center Corporation third quarter 2004 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. (OPERATOR INSTRUCTIONS.)

I would now like to turn the conference over to Lisa Palmer, SVP, capital markets. Please go ahead, ma'am.

Thank you, Paula, and good morning, everyone. On the call this morning are Hap Stein, Chairman and CEO; Mary Lou Fiala, President and COO; Bruce Johnson, CFO, Chris Levitt, SVP and Treasurer; and Jamie Shelton, VP Real Estate Accounting.

As always, before we start I'd like to read the safe harbor statement. In addition to historical information, this conference call contains forward-looking statements under the federal securities law. These statements are based on current expectations, estimates and projections about the industry and markets in which Regency operates, and on management's belief and assumptions.

Forward-looking statements are not guarantees of future performance, and involve certain known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed by such statements.

During the quarter, Regency's corporate representatives may reiterate these forward-looking statements during private meetings with investors, investment analysts, the media and others. At the same time, Regency will keep this information publicly available on its website, www.regencycenters.com.

During this call, management may refer to certain non-GAAP financial matters which we believe to be meaningful when discussing results in the REIT industry. Please see our supplemental information package on our website for reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP.

I will now turn the call over to Bruce.

Thank you, Lisa. Good morning, and go Red Sox.

Thank you for joining Regency's third quarter earnings call. Regency delivered another quarter of solid results. We've built an operating portfolio that continues to benefit from Dominick's grocers, best-in-class shop tenants and superior real estate with attractive demographics. As a result, we continue to sustain growth at the same property net operating income. In addition, attractive returns on capital are being generated from development and joint ventures. These three key ingredients of Regency's business model have positioned us to enhance our FFO per share growth rate.

For the quarter, FFO per share was 82 cents. FFO for the year to date was $2.25 per share, which represents a 9.2 percent growth over 2003.

Key components of year-to-date growth were $3.3 million from same-store NOI growth, $2 million from new investment NLI, net of dispositions, $8 million from lower interest and preferred costs, $1.6 million from increased fee income and development profits, and a $2.8 million positive impact from higher RET leveling, and not having impairment reserves in 2004 as opposed to 2003.

These sources of growth were offset by a $3.9 million increase in G&A, and obviously a higher number of outstanding shares. G&A expenses for the year are expected to be approximately $4.5 million higher than 2003. This represents an increase of $500,000 over our previously stated guidance, and is largely attributable to the cost of implement Sarbanes-Oxley 404.

During the third quarter, Regency strengthened the balance sheet and reduced our cost of capital. In July, FITCH (ph) affirmed their BBB- plus debt rating and revised their outlook from negative to s table.

In August, Regency sold 1.5 million shares of common stock at a net price of $45.07. The net proceeds of $68 million were used to reduce the balance of the revolving credit facility and fund acquisitions.

Later in August, Regency issued $125 million of preferred stock 7.25 percent. The proceeds were used to redeem two preferred units, totally $125 million, with an average rate of 8.8 percent. Regency recorded a charge of $3.24 million for the original issuance cost associated with these redemptions. We are in the process of finalizing a reduced rate on $50 million of preferred units that were callable September 29.

We are comfortable that FFO per share will be in the range of 91 cents to 95 cents for the fourth quarter, and $3.16, which is $3.20 for the year. You'll note we've raised the lower end of our guidance.

We are also establishing a range of $3.38 to $3.47 for 2005. This represents 7 to 8 percent growth on the range of guidance that we provided for 2004.

Now I will turn the call over to Mary Lou to discuss our operating results for the quarter.

Thank you, Bruce, and good morning. Same-store growth was 2.4 percent year to date. As a result of our confidence in the continuing stable performance of our portfolio, we've raised our guidance for the year to 2.3 percent to 2.6 percent. I anticipate that Regency's 2004 will be Regency's sixth annual consecutive year of growth in excess of 2.5 percent, and we're very proud of that result.

Our operating properties were 95.5 percent leased at quarter end, and our year-to-date renewal rate is nearly 83 percent, compared to 74 percent at this time last year. Accounts receivable over 90 days continues to decline, and is once again at an all-time low at 0.7 percent of revenue. Rent growth on a cash basis was 10 percent for the quarter, and 9.2 percent year to date. We've raised our rent growth guidance as well from 8 to 10 percent for the year. Nearly 713,000 square feet of new leases and renewals were signed during this quarter, bringing year-to-date leasing transactions to 972 deals representing 2.8 million square feet. The high volume of tenants renewing leases, strong rent growth, high occupancy and healthy same-store NOI attest to the exceptional quality of our portfolio.

We're especially proud that these results were achieved in spite of the impact from three hurricanes that hit Florida. The net cost to Regency from the damage to 42 centers that were affected was $850,000. The majority of the damage was rather minor, landscaping and signage. Our operations team were promptly on the scene, assessing the damage and securing the properties. Many tenants were extremely appreciative of the quick response of our operations team.

The hurricanes also gave us the opportunity to test our disaster recovery system on a real-time basis. The disaster recovery team performed superbly by proactively securing our information system, enabling our people to continue executing all critical transactions around the country. Most importantly, all employees, their families and their homes are safe and sound.

Regency's PCI program continues to thrive. The goal of the program is to leverage our relationships with national retailers with a proactive approach of offering them an outlet for expanding their presence nationally, either through our development program or through acquisitions, such as our Branch in Chicago portfolios. Twenty-two of the 24 Branch properties were closed earlier this month. Our venture with Maquarie Countrywide has closed 21 of the assets, the bulk of which are located in Atlanta. While our partnership with Oregon purchased the largest center, Cameron Village in Raleigh, North Carolina, Cameron Village is a 630,000 square-foot-plus center occupying six city blocks, and is in the heart and soul of Raleigh retailing. This exceptional center benefits from two grocery anchors, Harris Teeter and Fresh Market, and national retailers like Talbot's, Chico's, Quiznos and the UPS Store, as well as an absolutely outstanding mix of local merchants and restaurants. There is substantial growth upside in growth for us at Cameron Village.

The Chicago acquisition, which includes six Dominick's-anchored centers, were purchased by our joint venture with Oregon. These properties are 98 percent leased, and located in markets with household incomes in excess of $90,000. The grocery store sales at the centers average $23 million. The portfolio substantially increases Regency presence in Chicago, which is a key market for us.

We expect these two portfolios to be extremely attractive to our PCI customers. And to let you know how this works, soon after we announced both our Branch and our Chicago acquisitions, we received calls from PCI operators, such as Panda Express, Great Clips and Starbucks, just to name a few, requesting information so they could look at how they could expand their presence in those markets with Regency.

I will now turn the call over to Hap for a closer look at how the Branch and the Chicago portfolios and other acquisitions have benefited Regency's joint ventures and expanded our presence in key markets. Hap will also give you an update on development and capital recycle. Hap?

Thank you, Mary Lou, and good morning. Making sound investments in a market that is awash with an unprecedented amount of capital that is willing to accept historically low returns is a real challenge. Regency continues to diligently endeavor to achieve satisfactory risk-adjusted returns on our capital without compromising the quality of the portfolio through joint ventures, through development.

As Mary Lou indicated, the Branch and Chicago portfolios not only represent quality real estate in key target markets of Atlanta, Chicago and Raleigh, but they also result in a major expansion of Regency's joint venture program. The effect of these acquisitions has been to substantially increase Regency's ventures with Oregon and Macquarie Countrywide, which together now exceed $1.2 billion. I want to also point out that our goal is a double our joint venture program during the next three years.

The asset management and incentive fees, when added to the stable and growing returns from the centers make the joint venture vehicle a profitable way to grow our portfolio.

Development is the other key driver that is enabling Regency to continue to generate compelling returns on invested capital. At quarter end we had 31 developments in process in 11 states, containing 3.7 million square feet and an estimated $431 million of net development cost at completion. These developments are 65 percent funded, and 87 percent leased committed, with an excepted NOI yield on net development costs of 10.6 percent. When completed, the value created from these developments should be well in excess of $100 million.

Another lucrative development, French Valley, was started during the quarter. The center is located in Riverside, California, and will be anchored by Stater Brothers, the number one grocery in the Riverside MSA. The estimated yield is 10.3 percent on our $20.7 of projected net invested capital.

For the year we believe that development starts should be in the range of $300 million. The primary reason for our confidence is that our $1 billion-plus pipeline includes over $250 million of developments that are either under contract or closed, and where we expect to finalize the anchor leases and entitlements before the end of the year. And nearly $62 million of land for future developments has already closed, and is expected to be converted to starts in the near term.

In any event, the issue is one of timing, not the depth of the pipeline, and we are extremely confident that development starts will continue to average $300 million annually.

Another strategically important acquisition occurred this month when we purchased Gateway Shopping Center. The 220,000 square foot center is located in one of the wealthiest and fastest-growing suburbs in Philadelphia, and is anchored by Trader Joe's, TJ Maxx and Staples. This A-plus shopping center is truly irreplacable in fill real estate. And most important of all, we expect that Gateway will have the same positive impact on Regency's development program in the Philadelphia market as the Woodlands did for us in Houston.

Substantial progress continues to be made on Regency's capital recycling program. Year to date we have closed over $189 million in property sales through contributions to joint ventures and sales of third parties of operating properties, developments and land.

In summary, Regency continues to successfully implement the three key components of our strategy. First, the high quality operating portfolio is producing stable NOI growth. And, as Mary Lou indicated, 2004 will be the sixth straight year of NOI growth in excess of 2.5 percent. Developments are continuing to generate 10-plus percent returns and creating extraordinary value for our shareholders. Joint ventures are enabling Regency to profitably expand our portfolio, especially in markets targeted for future development. And while we are executing the strategy, we are strengthening the balance sheet and lowering our cost of capital. As a result, as Bruce indicated, we believe that Regency is extremely well positioned to achieve 7 to 8 percent FFO per share growth on a sustainable and reliable basis.

We now welcome your questions.

Thank you, Mr. Stein. (OPERATOR INSTRUCTIONS.)

Michael Bilerman, Smith Barney.

I was wondering -- Hap, you mentioned that you want to double the size of the joint venture platform over the next three years. How much do you think is going to come from existing assets in the core? How much will come from development? How much do you think will just be going out and buying assets?

Michael, I think that approximately two thirds to three quarters will come from buying third-party acquisitions, and the remainder or more of the remainder, will come from developments.

The development starts I think you mentioned $250 million in the third quarter. A lot of that you said is already under contract or has closed. Can you share with us a little bit about what's in that pipeline that you're going to start and how quickly that will come, you know, when those properties may come and hit the pipeline?

Yeah, we expect, as I indicated, we got $250 million of developments that are -- that we either have under contract or closed on the land. And what we are expecting to do is to finalize the lease with the anchor tenants and/or complete entitlements. And these are where we are very, very close to completing those things, where the lease is under active negotiations and expect to have this finalized. Or where we just have one more hurdle from a timing stand. These include, for example, a really exciting opportunity that we're working on in Santa Barbara, California, where we already own the property, we've closed on it and are working on completing a Whole Foods expansion, a real exciting expansion of the property. It includes a planned unit development in the San Diego market, where we are in the process of finalizing our lease with Ralls (ph). The lease has already gone and been approved by the real estate committee in Cincinnati at Kroger. So there could be -- we don't expect it to happen, but there could be some slippage from a timing standpoint. But I think the key thing to notice is a couple things. As I indicated, the pipeline, in spite of the fact that the development business continues to be extremely challenging, is in excess of a billion dollars. And secondly that as we have -- I think it's now for the last five years -- have averaged over $300 million in development starts every year. Now one year it may slip below $300 million, but we would expect to make that up in the following year.

Okay. There's about $44 million of assets held for sale on the balance sheet. What does that comprise, and when do you think you're going to sell that and at what yield?

It represents four properties, two of those we've already closed on, two development assets we sold to third parties, average cap rate yields were less than 7.5 percent; and two operating properties that were under contract to sell by mid-November.

And the cap rate on those?

I believe it approximates --

I don't know, but we're still forecasting a 9 percent cap rate on our disposition of operating profits for the year.

Yeah, those cap rates can range of 8 to 11 percent. We are going to sell those properties that we think make sense to sell. We are very, very committed to continuing to implement our capital recycling program. It's something that we have been doing successfully for the last three years, and I think we have made tremendous progress as far as upgrading the quality of our overall portfolio through that. And I think, as I said, it will continue to be a critical component of our strategy.

Okay, and the last question from me was just on the hurricane $850,000. When would that be taken?

We reserved it for this quarter, so we've already taken the hit.

Chris Capolongo, Deutsche Bank.

Just a quick question, a theoretical question. Since pricing is so lofty right now, do you have any interest in maybe pursuing some more value creation type investments with your joint venture partners, or is that not really on the table?

You know, we believe that the best use of Regency's capital for our shareholders is in developments and redevelopments. So as long as we have enough capital on our balance sheet or have access to capital, we think that's an excellent use of capital, and have worked with our -- and have not, even though we have contributed to joint ventures, upon completion we do not think that's a strategy that makes sense. We do think it makes sense to contribute properties to the joint ventures and to buy properties that have stable, reliable future growth prospects and that are going to give good returns to our partners, and then obviously from our perspective those returns will be enhanced through our fee and incentive fee structure.

So some of the retailers that are marketing properties right now, that's not something you're interested in or actively looking at?

Chris, the opportunities to in effect take advantage of the distressed retailer on a large-scale basis, like Kimco does, that's a core competency that they have. And although we have several opportunities where we're taking advantage of those on an individual and specific property standpoint, we're not planning to get into that on the same basis that Kimco has to a large extent, and DDR to a certain extent.

Okay, and then just on Cameron Village -- I actually saw the ad. It looks great. And I just was wondering if you could go through some of the improvements or changes you're going to make there.

Well, there's -- if you know, there's six blocks. And if you look at what we call block 2, right now there's a parking deck over it, and it's the one area that hasn't been completed. So starting next year our intent is to take down that parking deck and to put a new facade on it consistent with the rest of the center and be able to -- there are some great retailers already in there -- there are some temporary retailers -- and be able to upgrade that mix of tenants and complement the rest of the center. And then there's a few other big boxes in there that we're working with some retailers. And as I mentioned in the call, you know, it's amazing how as soon as we announced our Branch and our Chicago portfolios how many of our relationship tenants have called us, and we've sent packages out to look at Cameron as well as the rest of the portfolio. So some of this is going to be upgrades of retailers, some of it is going to relocation. But the big fuss right now is going to be block 2. And then there's a couple of out-parcel opportunities that we're studying to figure out what we'll do with in those cases. So it's going to have good upside.

Andrew Rosivach, Credit Suisse First Boston.

Just one question. I don't want to -- I'm sure you're going to flesh out the '05 guidance in the future, but I just wanted to check in terms of general brush strokes what the trend would be from '04 to '05 in terms of transaction profits, and what the trend would be in third-party fees and commissions.

We would expect transaction profits on a broad-based basis to be in the same range it's been this year, which is down from 2003. And then in our expectations there would be a modest increase in 2006 from there. And I will also say you should know that we feel -- we've always felt very good about our ability to continue to sustain the level of transaction profits, but we never felt better about that than we do today. And we do expect as our joint ventures continue to grow that our third-party fee or third-party income will grow. I think that our third-party fees in 2003 were in the $6 million range, and the guidance that we're providing, at least for 2004 --

It's $8.5 million to $9.5 million.

It's $9.5 million. So you're seeing a substantial increase. And I think you'll see a very nice increase again in 2004-2005.

Craig Schmidt, Merrill Lynch

Most of my question has been touched on, but for clarity the disposition cap rate has ranged from a wide area. It sounds like you're sticking to 9 percent for this year. But what about '05? Where do you think you would be in this business and cap rates there?

I think that the key is going to depend on which properties that we're in effect putting on the market. And I think that for right now I'd assume something in the 9 percent range until we give you further guidance, Craig.

Okay. And on the supermarket front, has their appetite for store openings stabled or is this continuing to decline?

For the most part their appetite for new store openings has continued to decline. We're seeing a slowdown in decisions. And you know we're just picking up the slack to a certain and large extent through working with other grocers like HEB, getting more than our fair share from the traditional grocers that we've been working with.

And finally we're doing a good amount of work with both Target and Wal-Mart.

Matthew Ostrower, Morgan Stanley.

Could you just refresh my memory about why the acquisitions are ramping up so much now? It seems like you guys had this structure with Macquarie long before most of your peers had JV structures, but it really didn't ramp up. And it's only n ow, when it seems like a lot of other companies are trying to do the same thing that you guys are that we're seeing you set your goals much higher in terms of volumes.

Well, you know, it's interesting. I think that our objective for the year was $150 million, and the guidance that we gave for the year for 2004, when we provided the guidance, like in January of this year. I think what's happened is a couple of things. Number one, the Australian market has continued to perform exceptionally well as a result of the superannuation that's going on there. There continues to be more of an appetite. As we continue to perform for Macquarie, their appetite to invest in the U.S. with us has continued to grow. And then I think we've had some very interesting opportunities that we were in a position to act on, properties that for instance did go to market. The Chicago portfolio was a negotiated transaction, although it was done with Oregon and not with Macquarie. The Branch opportunity we think was a very unique opportunity, and both Oregon and Macquarie Countrywide have gotten in there and proactively responded to take advantage of those opportunities with us.

Could you just comment on -- I mean, just trying to think forward on pricing on acquisitions. It seems like, and I know this isn't without exception, but it seems like the last couple of years many of the shopping center REITs in terms of buying assets for their core portfolio, they were quite a bit more quiet, and the prices were really going up and people couldn't make a lot of deals work. And now it seems like, you know, everyone sort of ramped up these JV programs, even companies like Federal which would theoretically be competing in the same kind of quality spectrum as you. To what degree are you concerned about your ability to achieve even these lower hurdle rates because of the JV structure? To what degree are you concerned about achieving those, as it seems like activity there is only going to -- the competition is only going to ramp up from here?

Well, Matt, even if there wasn't a REIT competing in the marketplace, the markets for acquisitions is -- as I said, it is awash in capital with a capital A and a capital C. There's an unprecedented amount of capital that you can look in real estate in general and shopping centers in particular. So it's going to be extremely competitive out there, and we've just got to continue to look in areas and find opportunities where in effect we've got some type of a leg up and we're not competing with the world out there. And the returns are historically low. Now, interest rates are low, and we and our partners and other competitors are getting the benefit of that. But I think that it's very, very competitive, and the question is, is will we be able to continue to produce $150 to $200 million of acquisitions? And that's a very real challenge. But we I think we'll achieve -- what's the guidance for this, for the year?

$700 million.

$700 million when we expect it to close on $150 million.

Okay, great. I guess I'll just have to hear about why or how Bruce Johnson ended up rooting for the Boston Sox some other time.

I couldn't believe he said that with you know probably 70 percent of the people in the call from New York.

I flip-flop.

It's a blue state there, Bruce.

Jeff Donnelly, Wachovia Securities.

Well, Boston here appreciates Bruce's comments.

Actually, Lisa, I guess maybe the first question is for you. I was trying to understand what risk I guess exists either to Regency's ability to recharge or expand your JV capital capacity. Can you speak to that? And I guess if you'll indulge me, I guess review the gross assets and perhaps remaining capacity or lives in each of the major acquisition and development JVs?

Sure. Oregon initially committed $200 million of equity, with combined with our equity and then leveraged got us to slightly more than $400 million of assets. We actually fully invested that with the Chicago portfolio. Since that time -- I think it happened in April -- they committed an additional $100 million of equity, again levered with our capital, gave us an additional $200 million-plus of assets. We bought Cameron. So that leaves us about another $100 million to invest with Oregon.

And then Macquarie there is no stated amount. As Hap said, really that depends on their capital markets, and they continue to be very strong. And dollars over there for superannuation funds continue to look for investments outside of Australia. And that's really our two major joint venture partners.

Okay. And then I guess moving on. I'll rotate through each of you. Mary Lou, Regency acquired six Dominick's-anchored centers in Chicago. And we had heard that Randall Onstead, who is considered by some to be I guess the captain needed to turn around that ship recently left the helm there. Did that give you guys a source of concern for the direction of Dominick's, or is it still to be determined?

You know, I think our strategy has been consistent with looking at above-average household incomes in that market. The centers that we did were over $90,000 in household income, as well as above average grocery sales. And again it's over $23 million. So in the case of -- you know, I believe Dominick's they say their plan is to stay there. But you never know. So you really have to look at the real estate and the demographics, and is it a strong grocer market. And something did occur, what would you do with it? And that's how we looked at the portfolio -- not so much as what's happening with Dominick's today, although that was a factor clearly. But is it a good portfolio? Is it something that we can release? And is there a stronger grocer market? And the answer is yes. So that's how we looked at it.

Okay. And then for Hap, there's two parts. One, how do you expected development yields on your current pipeline compare to perhaps what you saw on projects delivered in 2003 and 2004? And, similarly, what's happened to the margins on the after-tax development profits that you've posted?

The expected yields -- knock on wood, Jeff -- we've ben able to continue to maintain 10 percent-plus yields on both which is in process -- what's been completed, what's in process and what is in the pipeline. So knock on wood the experience to date has been that. I think we will see a continued pressure in that regard. I think there's very high probability that that will continue. And, as I said, the business has never been more challenging as far as getting anchors to make decisions, getting entitlements, the amount of investment upfront that we have to make is significant. So in some sense those yields are justified.

The margins, as you can imagine in an environment where class A centers are selling in the 6 to 7.5 percent range are pretty nice.

That's true. And just one last question. I guess there for our fair-weather Red Sox fan. Bruce, since you mentioned it, just can you tell us what you estimate to be the total cost of compliance with Sarbanes-Oxley?

Well, it will probably be close to a million dollars. It's just the incremental cost this year. That won't be an annualized number. I think that number would probably be close to 500, 350 to 500, probably in '05. But the ramping up is what's giving everybody the problems. As you may or may not know, there have been a number of what I call not missteps, but we have had to go back -- companies have had to go back as a result of some changes in the accounting area to do things a little bit tighter than what most of us have been going down the road on. That happened in August, and there could be something else that comes down in the near term. But we don't think that will happen.

So when you think ahead I guess about Sarbanes-Oxley, do you think that incremented may be a one-time cost, but --

Well, the incremental difference will be -- you know, if we're a million for '04 and 350 next year, the incremental cost is 700 grand or whatever, you know, so in terms of one-time expense. Because you know we've got several outside consultants which we may or may not have next year.

Rather than staffing up internally for that we may hire an outside consultant to help us do some testing.

So what do you think about going forward a few years that we should assume sort of an ongoing or recurring target?

Accounting charges in general are going to increase.

(OPERATOR INSTRUCTIONS.)

Josh Betterman, J.P. Morgan.

Just wondering if you can quickly go over your criteria for joint venture acquisitions versus acquisition in the core. It sounds like you guys are thinking of doing about 250 to 300 million a year in the JV. You've done about 75 to 100 in the last couple of years in the core. So how do you delineate between what goes where? How does that process work?

You know, it is interesting. We really don't. It is the same criteria. We think that's important for a couple of reasons. Number one, I think it's important that our joint venture partners know that we're prepared to go forward, whether or not they're on board or not. We obviously communicate with them very clearly and carefully to find that out. And, secondly, the market has got to know, to have credibility in the marketplace that we are going to close, whether or not we close with a joint venture partner. You will note that of the $700 million that I think in the guidance for this year, approximately 90 percent of that will be in the joint ventures. The two primary ones that were not are where the seller insisted upon taking units. And we thought both of those properties were replaceable real estate. One was in Denver and the other was the one I talked about in Philadelphia that really is irreplaceable real estate, and we think it's going to, as I said, have the same impact as far as helping us to jump-start our development program in Philadelphia that the Woodlands acquisition did in Houston.

So do you essentially reserve -- almost put the joint venture ahead of yourselves, and then whenever there's a special situation that requires units that's when Regency steps in? I mean, is that how it works?

Yes. And that's what we basically offer the acquisition to our joint venture partners on a rotating basis, and then if for some reason they don't close or aren't prepared to move quickly enough, which is sometimes the issue there, then we'll close it ourselves. And if there's a units transaction, obviously that would have to be pretty darn compelling, which I think Belleview and Gateway were, then we'll do those.

Okay, and then just one last little thing. It looks like there's a little bit more of acquisitions here targeted for the fourth quarter in the joint venture on top of Branch deal? Can you talk about what the pipeline looks like now?

I think we've got -- we've closed to date, including Branch, about $600 million, and we have another $100 million under contract, and I think we expect all those to be -- to go into joint ventures.

Greg Andrews, Green Street Advisors.

My question has been answered. Thanks.

And we do have a follow-up from Matthew Ostrower with Morgan Stanley.

Sorry, I just forgot to ask. There was a gain included in FFO from your joint ventures, and I was wondering what generated that -- it appeared to be included in FFO anyway.

A gain that was included in our FFO that came originally from the joint ventures?

Yeah. It appeared that way from your disclosure, although I might be misinterpreting it.

There was a sale with gain, but we wouldn't have included it. That gain would have been related to the sale that we had in the first quarter when we liquidated the OCR (ph) ventures?

That wasn't included in that.

That would not have been included in FFO.

Okay, I'll catch up with you offline, thanks.

And there are no further questions in the queue at this time. Mr. Stein, I'd like to turn the conference back to you for any additional or closing remarks.

Once again, we thank you very much for taking the time to participate in the call, and we wish everybody to have a great day and a great week. Thank you very much.

And that concludes today's conference. We do thank you for your participation. You may now disconnect.