Rithm Property Trust Inc (RPT) 2004 Q3 法說會逐字稿

Good morning.

My name is Bonnie, and I will be your conference facilitator today.

At this time, I would like to welcome everyone to the Ramco-Gershenson Third Quarter Conference Call.

All lines have been placed on mute to prevent any background noise.

After the speaker's remarks, there will be a question and answer period.

If you would like to ask a question during this time, simply press star, then the number 1 on your telephone keypad.

If you would like to withdraw your question, press star, then the number 2 on your telephone keypad.

Thank you.

Ms. Hendershott [ph], you may begin your conference.

Good morning, and thank you for joining us for Ramco-Gershenson Property Trust's Third Quarter Conference Call.

I am hopeful that everyone received our press release and supplemental financial package, which are available on our website at www.rgpt.com.

At this time, management would like me to inform you that certain statements made during this conference call, which are not historical, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Although Ramco-Gershenson believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be obtained.

Factors and risks that could cause actual results to differ from expectations are detailed in the press release and from time-to-time in the company's filings with the SEC.

Additionally, we want to let everyone know that the information and statements made during the call are made as of the date of this call.

Listeners to any replay should understand that the passage of time by itself will diminish the quality of the statements made.

Also, the contents of the call are the property of the company, and any replay or transmission of the call may be done only with the consent of Ramco-Gershenson Properties Trust.

Having said that, I would now like to introduce Dennis Gershenson, President and Chief Executive Officer, and Richard Smith, Chief Financial Officer, and at this time, would like to turn the call over to Dennis for his opening remarks.

Thank you, Dawn.

Good morning.

As late as two weeks ago, I was preparing to report that we had met and slightly exceeded first call estimates.

It was just in the last week that we have chosen to take the most conservative approach toward the sale of our minority partnership interest in the Fountain Walk Shopping Center Development, a project in Novi, Michigan, immediately behind our West Oaks Shopping Center.

Fountain Walk was a joint venture formed in 1999, and unlike every other joint venture in which we have participated, we were not the managing agent.

Therefore, we were not consulted on the daily or strategic planning for the project.

During the third quarter, we were informed by the general partner that they were pursuing a tactic that did not square with how we would conduct ourselves, how we would approach a construction lender, nor how we would treat the banks with whom we deal.

Unfortunately, because we were a minority partner, we had no influence over the decision to pursue this course of action.

Thus, in assessing our position, we determined that an immediate sale of our interest was necessary.

Our actions resulted in a loss on sale that could be interpreted as causing the asset to be classified as impaired for the several weeks that we held the interest between the time we learned of our partner's action and the actual sale, even though both events occurred within a 30-day period during the quarter.

For informational purposes, we did not project any contribution from Fountain Walk in our 2005 numbers.

Although this announcement is the elephant in the room, I do not want it to overshadow the fact that our 2004 business plan is on track and that we are making very positive strives in moving the company forward in all three of our disciplines.

Our acquisition team has been busy during the last 90 days completing the purchase of four supermarket-anchored shopping centers; two in metropolitan Atlanta, Georgia, and two in Palm Beach County, Florida.

The combined size of the four assets approximates one million square feet.

All four centers are located in densely populated trade areas with significant barriers to entry.

Three of the centers are anchored by Publix Supermarkets.

We utilized the proceeds from our preferred stock offering to complete these purchases.

To date in 2004, the company has acquired shopping centers with a total value of over $200 million, at an average capitalization rate of approximately eight percent.

On the development front, both our Beacon Square project in Grand Haven, Michigan, anchored by Home Depot and Staples, as well as our newly announced Gaines Marketplace in Grand Rapids, Michigan, which is anchored by Target in 124,000 square feet, and Meyer [ph] in 208,00 square feet, are under construction and on-schedule.

We also expect to officially announce the commencement of a third shopping center development in Florida in the fourth quarter.

In the area of asset management, we recently completed a number of shopping center redevelopments, on time, and on budget, including the expansion of our Wal-Mart to a 208,000 square foot superstore, and the addition of a 31,000 square foot Ross Dress For Less at Northwest Crossing in Knoxville, Tennessee.

We have also completed the installation of a Staples store, replacing F&M Drug at the Southfield Plaza in Southfield, Michigan.

We still have four significant redevelopments underway, including the Wal-Mart expansion to a superstore at Taylor Square in Greenville, South Carolina, the complete re-tenanting of our Shops of Lakeland in Lakeland, Florida, now anchored by Target, the expansion of the Kroger supermarket at Highland Square in Crossville, Tennessee, and lastly, the expansion of Jo-Ann Fabrics at our Newtown Center Shopping Center in Canton Township, Michigan, where they will grow from their traditional format of 16,000 square feet to Jo-Ann's superstore of 35,000 square feet.

We are announcing the Jo-Ann redevelopment as part of this earnings release.

An interesting side note, for those of you who have toured this asset with us, is that the Jo-Ann expansion will be the fifth positive value-added change to this strip center since we constructed the asset in the mid-1970s.

All of these activities and acquisitions, development and asset management strengthen our shopping center base, diversifies our anchor mix, improves the credit quality of our tenants, and reinforces our company's ability to produce positive results in each of our three core competencies.

Our ability to meet expectations, grow the size of our company, and achieve our stated business goals must be viewed, however, in light of a sobering fact.

That is that we rank in the lowest quartile among our peer group for total shareholder return year-to-date 2004.

I could attribute this status to our strong stock price at the end of 2003, which was close to our all-time high.

However, I believe that other factors are at work.

First, no matter how successful we've been in improve core assets through redevelopment, acquiring shopping centers with value-added opportunities in major markets, and developing well-anchored projects, our FFO for 2002 and 2003 has hovered at the $2.03 level, while those we compare ourselves to have shown consistent FFO growth.

And the second reason is that while we have chosen to reinvest all our cash flow back into the company, many of our peers have consistently raised their dividends anywhere from an average of two percent to over five percent per year since 1999.

Although we feel that our dividend decisions to-date have been prudent, a consistently increasing dividend is an indication of a company that is confident in its ability to grow income while maintaining appropriate coverage ratios.

Thus, while we have worked diligently over the past several years and succeeded in reducing our debt ratios from over 65 percent to under 50 percent, and by dramatically reducing our exposure to any single tenants, and also broadening our shareholder base, many investors who are not intimate with our story do not find our standings impressive in those markers that are used to compare the companies in our sector.

Therefore, we will recommit ourselves to effectively communicate our successful track record and proven results with our shareholders, the market in general, and the analysts.

These efforts will bear little fruit, however, without demonstrating an ability to again consistently grow funds from operations at a respectable six to seven percent pace.

The important and reoccurring elements of our ongoing FFO growth, in addition to healthy advances in core asset income, will be fees generated from off balance sheet ventures.

In 2004, we already have two such relationships with our Michigan development projects, and we plan to create a third venture with our Florida development.

Further, appreciating the aggressive cap rate acquisition environment and the time that's required to execute our value-added opportunities, we are exploring a return to acquisition off-balance sheet ventures that will enable us to add to our asset base while significantly improving our return on invested capital.

Also, as more and more of the retailers who anchor our shopping center developments, and users of our out lots, insist on owning their own parcels, proceeds from the sale of land will be an ongoing component of our FFO growth.

Thus, our goal for the balance of 2004 and beyond is to demonstrate to you our ability to consistently grow FFO, that we do so in part through superior, same-center growth as a result of our value-added redevelopment efforts, and at the same time diversify our income sources on a sustainable basis.

We plan to do this while maintaining appropriate debt and coverage ratios.

The attainment of these goals are well within management's expertise.

The last few years have demonstrated that we are company that has made solid real estate decisions that will inure to the benefit of our shareholders through the creation of long-term net asset value.

It is more than unfortunate that the charges that we have taken that have impacted FFO in 2003, and now in 2004, are not true reflections of our numerous successes, nor our ability to grow the company.

We will have to work harder to get our story out, and it is more than time to get behind us any issues that would obscure the healthy growth that is part of our future.

I'd now like to turn this conversation over to Rich Smith, who will discuss our financial details.

Thank you, Dennis.

And good morning everyone.

As Dennis noted, in the third quarter we sold our minority interest in the Fountain Walk Joint Venture for a $4.775 million loss.

Since the charge was classified as an impairment loss, and accordingly not added back to our FFO calculation, our FFO per share was negatively impacted by 24 cents.

Including the charge, our third quarter FFO available to common shareholders was 34 cents per share.

This represented a 40 percent decrease from the 57 cents reported in 2003.

Without the impairment charge, our third quarter FFO per share would have been 58 cents, representing a 1.8 percent increase from the 57 cents reported in 2003, and would have exceed first call estimates.

On a gross basis, our diluted FFO decreased $3,166 million.

We went from $10.030 million in 2003, to $6.864 million in 2004.

The decrease was made up of a $4.775 million impairment charge, a $590,000 net change in interest expense and convertible preferred dividends, a $279,000 loss on FFO related to asset dispositions, which included the sales of our Ferndale Shopping Center, the Meyer parcel at Auburn Mile, and portion of our Cox Creek Shopping Center to Home Depot, and a $143,000 decrease in income from core assets and operations, which included a decrease in lease termination fee income of $451,000, and a $341,000 increase in single business tax expense.

These decreases were offset by a $2.401 million contribution from property acquisitions, and a $220,000 increase in gains on property sales over last year.

For the nine months ended September 30th, our FFO to common shareholders decreased 1.3 percent, or 2 cents.

We went from $1.49 in 2003 to $1.47 in 2004.

Again, without the impairment charge, our nine-month FFO per share would have been $1.71, representing a 14.8 percent increase from the $1.49 reported in 2003.

In total for the nine months, our FFO increased $5.050 million.

We went from $24.213 million in 2003 to $29.263 million in 2004.

The increase in FFO was the result of a $6.814 million positive contribution from property acquisitions, a $2.988 million K-Mart straight-line rent receivable write-off in 2003, and a $1.308 million in gain on property sales over last year.

These increases were offset by the $4.775 million impairment charge, a 677,000 reduction in income pertaining to asset dispositions, and a $618,000 reduction in core assets and operations, again resulting in part from a $727,000 decrease in lease termination fee income, and an increase in single business tax of $966,000.

Our operating statistics for the third quarter include an increase in occupancy, which went from 89.4 percent in 2003 to 92.9 percent in 2004.

The increase related to bringing Tel-Twelve and Lakeland back on line, and the lease-up of several big box spaces, including Big Lots at Clinton Valley, Gaynor [ph] Mountain at West Oaks, and Bells [ph] at South Bay.

Our same center [inaudible] increased 4.3 percent, and excluding the impairment charge, our FFO payout ratio went from 73.7 percent in 2003 down to 72.4 percent in 2004.

And our FAD payout ratio increased from 80.8 percent in 2003 to 86.7 percent in 2004.

The increase was for the most part the result of cap-ex related to our new corporate offices.

For the nine months ended September 30th, excluding the effects of the write-up of the K-Mart straight-line rent receivable and our impairment charge, our same center end of line [?] increased 4.5 percent, and our FFO payout ratio increased from 75.3 percent in 2003 to 73.7 percent in 2004, while our FAD payout ratio for the nine months remained constant at about 84 percent.

Our leasing for the quarter included the renewal of 11 non-anchor leases at an average rental rate of $11.89 per foot, which was an eight percent increase over the previous rental rates.

We also renewed one anchor tenant at a 21.4 percent increase over its previous rental rate.

For the nine months, we renewed 85 non-anchor leases at a 10 percent increase over prior rents, and we added eight new anchor tenants at a 15.6 percent increase over our portfolio average.

As Dennis noted, during the quarter we acquired four grocery-anchored community shopping centers totaling 986,000 square feet, at an aggregate purchase price of $168.1 million.

The centers are located in Georgia and Florida, and as part of the acquisition, we assumed $104.1 million of combined debt with these centers with an average rate of 5.5 percent.

The proceeds of the company's convertible preferred offering earlier this year were utilized to fund these acquisitions.

Our debt at quarter end was $608.6 million, with an average rate of 6.3 percent, at an average term remaining of about 4.3 years, 93.9 percent of our debt was fixed at an average rate of 6.4 percent, and only 6.1 percent of our debt was flowing, with an average rate of 3.8 percent.

At quarter end, we had funds available of approximately $58.7 million, which included $18.7 million on our secured revolver, and $40 million on our unsecured revolver.

And excluding our impairment charge, our EBITDA interest coverage improved for the nine months from 2.1 times in 2003 to 2.5 times in 2004.

And for the quarter, our debt-to-market cap increased slightly from 43.7 percent in 2003 to 49.6 percent at the end of the quarter 2004.

The increase was the result of a decrease in our stock price, which went from $28.40 [?] down to $27.08 at quarter end, and additional debt assumed on property acquisitions.

However, as Dennis noted, what's most important to us is the success we've had at decreasing our debt-to-market cap, which is currently at about 49.6 percent, down from about 64 percent at the end of 2001.

Our capital expenditures for the quarter totaled $174.4 million. $164 million was spent on acquisitions, $5 million on expansion and renovation projects, $3.5 million on development, $400,000 on recoverable cam [?], and $1.5 on non-recoverable cap-ex, the majority of which was associated with our corporate move.

For the nine months ended September 30th, our capital expenditures totaled $231.2 million.

We spent $201.5 million on acquisitions, $16.9 million on expansion and renovation projects, $8.7 million on development projects, $2.6 million on non-recoverable cap-ex, and again, about $1.5 million on recoverable cam [?].

We expect to fund future growth by retaining cash from operations, by continuing to sell non-core assets and selected assets with limited upside potential, and by refinancing assets which have been expanded or renovated in prior periods.

During the quarter-- I'm sorry, and drawing on our credit facilities.

In conclusion, we are adjusting our 2004 per share guidance to be between $2.06 and $2.09, based on the third quarter impairment charge.

I'd like to turn the call back over to Dennis for some additional comments.

Thank you, Rich.

Before we turn this call over to the question and answer phase, I would like to make a couple of comments.

In the last several months, I have sought the counsel of a number of individuals who have followed Ramco-Gershenson for some time.

I asked for their input on how to move our company to a higher level of visibility in the marketplace.

To a man, their advice has been to chart and FFO course for the year, tell the world our intentions, and then achieve that goal.

This is the first reporting period following that input, and therefore it makes the delivery of our FFO disappointment that much more difficult.

We are prepared to spend the time necessary explaining the circumstances of why we picked a partner five years ago for the Fountain Walk project who is willing to invest a considerable amount of money, and had the expertise in lifestyle centers, causing us to take a subordinate role in the venture.

This was the first and only time we relinquished management of the day-to-day decision-making process.

Whether it was the decisions made by our partner or circumstances that conspired against the project, we are here today to accept the consequences of our choices.

We were wrong.

This is also the second quarter this year that we are explaining why FFO will not be as we originally represented.

I can assure you that no one feels worse about delivering this news than this messenger, because the buck stops with me.

I take responsibility for the decisions made, and the consequences of the disappointments.

I stand here, however, to tell you that this is an outstanding company, staffed with professionals who have worked hard to ensure the quality of our assets and the continued improvement of shareholder value.

I do not want our disappointment-- our disappointing FFO to obscure the very significant progress Ramco-Gershenson has made this year and this quarter in the areas of expanding and improving core assets, acquiring quality shopping centers, and undertaking a number of new developments.

On balance, the hard choices made were the right choices.

Timing, on occasion, however, could have been better.

But we have and we are moving the company forward.

It would sound hollow to say at this point that these types of surprises are behind us.

I understand that credibility can only be reestablished by performance, not promises.

Because of the strength and tenacity of the entire management team at Ramco-Gershenson, we will move past this setback and demonstrate our ability to exceed expectations.

We now invite your questions.

At this time, I would like to remind everyone, in order to ask a question, please press star then the number 1 on your telephone keypad.

We'll pause for just a moment to compile the Q&A roster.

Your first question comes from Chris Capolongo of Deutsche Bank.

Good morning, guys.

How are you doing?

Good morning.

I've just got a couple quick questions.

Could we just go back to some of the numbers real quick?

Now, in terms of fees and management income and other income, what was in that, that total again, for the quarter?

For the quarter, David [sic] or for the nine months?

For the quarter, because it's a pretty significant increase in fees.

I just wasn't quite sure what it was.

For the quarter, basically the main difference we had in fees, David [sic], were development and leasing fees that we've earned on both our Beacon Square and our Gaines development projects.

That pretty much was for the quarter.

And, you know, looking at those, you had [inaudible] significant amount of total fees of about, you know, including management fees, leasing fees, acquisition or development fees, and for the most, that's probably about, you know, pretty close to $1.5 million.

Okay.

Let me add, David [sic] that--

It's Chris.

-- we see these numbers continuing, you know, very significant development fees, not only in the fourth quarter but throughout 2005.

And as we'll bring more projects on, you know, in 2005 or 2006, we also expect the fees to continue there.

Okay.

And then on G&A, the increase this quarter was, I think you had told me it was going to be in the $2.5 million range last quarter?

Yes.

I think what we're seeing is really a couple of things in G&A, a couple of them I, in fact, at least one of them I talked about, one of the big changes is, you know, last year our single business tax, we received a credit for, for the Tel-Twelve [?], [inaudible] got a [inaudible] credit at Tel-Twelve, and this year, you know, we're a payor.

So, I think you're seeing the change between that.

And again, year-to-date, you're pretty close to a million dollar swing in that item in itself.

So, going forward it's going to be in the like $3 million range now?

You know, I would say that that's, I'd say in the $2.5 to $3 million range is where you're going to be.

Okay.

This is a broader question.

Are you seeing K-Mart looking to sell any locations?

Are they in the market, marketing some of their stores?

They are absolutely marketing some of their stores.

As a matter of fact, we are looking at one potential acquisition where K-Mart is winding down their operations because they have already sold their lease to Sears.

We have had a number of conversations with K-Mart concerning several of our locations.

We only had four left.

And to the extent that we find a prospective user, they are willing to talk to us, at least about several of them.

Okay.

Just turning to your Jacksonville development, why did you decide to do a JV with that?

Yeah, I think there's a lot of [inaudible] a big hunk of it was just the size of it.

I think the leasing interest is going very well for it, but I think that in both Gaines, and Beacon, and Crossroads before that, I think we found that structure worked really well for us, to be honest with you.

Okay.

And then, this is the last question, I guess it's really two parts, though.

Any sales in the works?

And I guess also, of the sales, how much are we going to see in land sales going forward, and that will be in FFO?

Well, we're-- as I said in my prepared remarks, I think that maybe not every quarter but on a number of occasions during the year there will indeed be sales, both to anchors, and you'll see at least one of those associated with the Jacksonville project prior to the end of the year.

And then going forward in 2005, you're also going to see sales of both out lots and pads to anchors in developments.

Relative to sales of core assets, we are contemplating the possibility of several sales.

We want to make sure that we have maximized the value of those assets before we put them on the market.

And based on our experience in the past, we want to make sure that we can time those sales so that we diminish or eliminate any dilutive aspect of it by timing it with acquisitions.

Okay.

Thanks very much.

Your next question comes from David Ronko [ph], Royal Bank of Canada.

Who were we talking to?

Good morning, guys.

That was actually Chris Capolongo.

Oh.

I apologize, Chris.

Anyway, hey guys, thanks for the disclosure and for taking the time to explain.

We certainly appreciate it.

I wanted to get to your comments, Dennis, on the joint venture acquisitions.

Really want to know how much work you've done there, if it's something you're just thinking about, or whether you've actually gone out, talked to institutional, potential institutional clients, given any consideration to what the structure of a joint venture fund might be in terms of total dollars, and return hurdles and so forth, and when we might see the first of such a joint venture acquisition?

Well, look, obviously I referred to that, and I wouldn't have done so unless we were seriously contemplating the possibility of exploring that.

Unfortunately, to say anything at this moment would be getting a little ahead of ourselves.

We have done off balance sheet joint ventures.

The latest one, obviously, was the InvestCorp [ph] transaction that worked out very nicely for InvestCorp and for ourselves.

So, are we considering it?

We're seriously considering it.

Do I think that we have some very pleasant news, you know, not too terribly far down the pike that we're going to be proud of?

I think the answer to that would be yes, but I'm hesitant to say anything concrete.

Okay.

I guess the second question, unrelated question, is with regard to your recent acquisitions, can you talk about the nature of those assets?

Are they stabilized assets or are they redevelopment assets?

Or are there major vacancies that you guys think you can drive increased returns through?

At least one of the centers, one of the Georgia properties, had a 19,000 square foot box that we didn't have in-- that we didn't have to pay for.

There was also some vacancies in that center.

In each one of the centers we acquired there was some vacancies.

We are in the process of exploring now with some of our anchor tenants not only an expansion of their supermarkets, but we are also talking to them about the possibility of us developing some out lots on land that really does not impact them but were obvious opportunities on the shopping center site.

So, we see at least two of those as potentially immediate value-added opportunities, and the other two will take some work with the anchors.

But all four of the assets were very well leased, outstanding tenant mix.

The two in Florida are A-type assets, with, you know, three out of the four shopping centers we're acquiring having Publix as an anchor, doing very nice sales.

Okay.

Great.

I can't help myself here.

One more question on potential JV acquisitions.

I'm assuming that if you guys went that route, you'd probably be looking at stabilized assets and not value-added assets, just giving the nature of having a partner.

In some conversations that we've had, we have found joint venture partners who are definitely interested in value-added opportunities.

They're not necessarily interested in buying a shopping center that might be, you know, 50 percent filled and a challenge.

But, in the assets that we've been looking at, there are obvious plays that for one reason or another the existing shopping center owner has not taken advantage of.

So, we see them as high-quality assets that may be acquired, high-quality assets in outstanding locations, in trade areas where we would already have a presence, and the four assets that we have recently acquired are all in areas where we have a significant presence, and yet still believe that based on our background and experience, we can add value to most centers that we purchase.

Okay.

Great.

Thanks.

Your next question comes from Andrew Rosivach of CSSB.

Hi guys.

I just wanted to check, I don't think I saw in this release that the '05 guidance that you gave last quarter is still in place.

Yes.

Okay.

And the first caller kind of touched on all these factors for the third quarter of '04, and Dennis, you mentioned, gave a little bit of commentary on it, but in that '05 guidance, can we get an idea of what G&A would be like, what C&S and management would be like, and what would be the contribution from land sales?

You know, let's hit G&A first.

I think in the, in our modeling for next year, we're seeing G&A going up into the maybe the $13 million range from the $12 million range.

I think as far as land sales, I think we've got in our model-- and again, some of it's timing, Andrew.

I think the one that [inaudible] I mean, the one, especially when you get into the development land sales, some of it could happen this year, some of it could happen next year.

You know, what I would anticipate is, and not really give you a number, is a number of out lot sales related to a development project that we have, that's for the most part, as well as possibly a center.

And how about the C&S and management?

Dennis, you mentioned that it's probably continuing.

Is the current quarter a good run rate?

Maybe a little bit let?

I'd say that we're-- what we have in total fees in management is maybe a little bit more than the current run rate.

That's the total for '05?

[Inaudible] we're about a million dollars this year, or this quarter, yet I'd say a bit slightly above that for quarter next.

Okay.

If I could just --

And again, some of that, Andrew, is, frankly, a big hunk of that is development fees.

I think pretty predictable.

Another hunk is leasing fees.

And I think you try to think it's predictable, but you're kind of at the mercy of the tenants, so it could, you could vary, you know, quarter-to-quarter, depending on leasing activity.

Okay.

Your fees and management income were 1.486 million this quarter, and you think it's going to be that number or a little higher?

I think that that maybe that may be-- I'd say that the fee, to answer you, roughly are going to be somewhere in the $5 million range.

Okay.

Okay.

Just to offer a suggestion, you know, I come up with more or less your quarterly number and I'm always way off in my model as to where the numbers actually come from.

And if you actually look at some of the supplements of other guys in your sector, they actually list this stuff out on a guidance page.

Okay.

And if that's something that-- I know your supplement is already getting big, but if that's something you could put in, I think it would really help the visibility of the company.

Maybe we can talk after the call and you can give me some recommendations to look at.

I'd be more than happy to.

Okay.

Thanks, guys.

Thanks.

Your next question comes from Rich Moore, Keybanc Capital Markets.

Hi.

Good morning, guys.

Good morning, Rich.

Did I understand you to say, Dennis, or to imply that you might be raising the dividend?

Is that what you guys are thinking?

Well, what I really attempted to convey was that to swim in the waters with those people that we want to consider our peers and to achieve the type of multiple that others have, et cetera, a consistent increase in dividend is part of the hallmark of those organizations.

I'm not prepared to make any commitments because that's a board decision.

I'm just letting you know that we are very aware that is one of the markers of a company that is very comfortable with its business plan and its growth prospects.

Okay.

Very good.

Thanks.

And you know, when you look at your core business, obviously it's doing very well based on the metrics that you've reported this quarter.

And I'd kind of like to explore a bit what you're seeing out there.

I mean, first of all, what do you see in terms of tenant interest, I mean, across your portfolio type?

Well, first of all, you know, just based upon the number of redevelopments that we have going and, you know, the example of the announcement of the Jo-Ann expansion, we also announced that Goodies [ph] has signed a lease at one of our shopping centers, we've made a number of Staples deals in the last couple of quarters, we're seeing very strong interest, especially in the mid-box category, for tenants joining our centers.

I could add Ross Dress For Less to that category.

We're also seeing the Home Depots and Loews still being aggressively interested in our assets.

An example is the Cox Creek Center where we're actually taking down a small part of the shopping center in order to accommodate Home Depot on some property behind us.

And, we're looking at a similar type of transaction, probably by the end of the first quarter of 2005 on another one of our shopping centers.

So, we continue to see both very strong anchor and mid-box interest, as well as small tenant interest.

We'll be very pleased to announce at the end of the fourth quarter that our Lakeland strip store that really started off at the beginning of this year because we emptied the mall out of about 40,000 square feet in Lakeland will be over 95 percent leased.

So, you know, the velocity of tenant interest continues to be strong.

Okay, so would you peg year end full occupancy?

Well, we had talked about it being somewhere in the 94 to 95 percent range, and I'd like to think that we could achieve that.

Okay.

And then how is '05 leasing coming?

Is that-- have you made good strides there as well?

'05 is proceeding at pace.

You know, a lot of the deals that we're making now are really '05 deals because a significant number of the tenants have closed their '04 program and they're only making '05 deals.

Well, should we expect increases over '04 in terms of year-end occupancy, you think?

Yes.

Okay.

Sounds great.

Now.

You have the, you know, the Florida development that you're getting to.

Are there any others besides that you'll be-- that you're working on or that you might be announcing next year?

There are several that we're working.

We, you know, we've always been conservative in talking about prospective developments, although, you know, the Florida asset that I've tried to avoid naming was named in a question here.

So, there are several other projects that we are diligently working on, that there is tenant interest in, that we're working with the landowners, the communities, doing our due diligence in the pre-development phase.

So, we would expect that sometime in '05 we'll begin to bring on at least one additional project.

But understand that the Jacksonville project is a very significant undertaking.

Okay.

And I would assume you'll do those in joint ventures as well?

Is that safe to assume?

It is our plan as of today.

Okay.

So we should see the management fee income line pick up some?

Yes.

Okay.

And then when you look at the acquisition pipeline, what do you think that looks like?

How are you feeling about that?

Well, we are working on a number of acquisitions at this moment.

We are under contract and in due diligence on a number of centers.

The actual structure of that ownership we're still working on, but I think we've got some very pleasant news coming down the pike.

Okay.

Very good.

Thank you, guys.

Thanks, Rich.

Your next question comes from Philip Martin, [inaudible] Nicholas.

Good morning, gentlemen.

Good morning.

I wanted to-- a lot of my questions have actually been answered here, but with your acquisitions that you made in the third quarter, can you talk, I know you touched on it briefly here, but could you talk a little bit about the future growth potential there and the timing?

I know you mentioned in the press release there's some out lots that you have, but again, you know, what type of growth potential do you have in terms of occupancy, the timing, and what other growth potential might there be with these assets?

Well, with the majority of-- with three out of the four assets, they're extremely well leased, albeit that almost all of the leases in these shopping centers have specific rent bumps in them.

You know, the ability to develop an out lot or to add something to the shopping center, you know, it does take a little while.

You know, you're probably talking 12 to 18 months for us to really roll something out there.

I think that the one center that has the 19,000 square foot vacancy is really the biggest, most immediate potential for some income growth.

Okay.

And are you in talks with, you know, that 19,000 feet, talk a little bit about why you-- what that's vacant or why you feel it's vacant, and how quickly it could be re-leased, or plans for that?

Well, the two shopping-- this is one of the two shopping centers in Georgia.

The two shopping centers in Georgia were owned by an individual whose primary business had not been the, you know, the owning, developing, and leasing of shopping centers.

And they had a management agent that I'm sure put, you know, a sign in the window, and if somebody would have come by and demonstrated an interest in that space, it would have been leased.

We, obviously, will be much more aggressive in bringing users to that center, to understand the potential for the location.

The anchor at that shopping center is Publix, and as you may know, Publix is one of the two most dominant supermarkets in the Georgia, and specifically the Atlanta area.

Are you in talks with any potential tenants?

If so, how close are you?

Well, we are talking to one, but, you know, there's always a significant gulf between conversation and lease execution.

That's right.

That's right.

Okay.

How about, you know, again, these were some acquisitions that were a little bit under the radar screen that you were able to capitalize on that, exploit them, et cetera.

Your pipeline, well, fourth quarter, what do you see in terms of potential acquisitions?

And what does the overall pipeline for these types of kind of onesie-twosie [ph] deals look like for you?

Well, again, I'm somewhat hesitant to say anything, but I'll merely say that what we're working on isn't one onesie-twosies.

How's that?

Okay.

Well, okay.

Okay.

And I heard you say "pleasant news," you know, going forward, so that was good.

Rich, again, management fees, 2005, in the $5 million range?

I just wanted to make sure.

Yes.

Okay.

Also, tenants, you know, we've heard a lot recently about, you know, retail sales maybe dipping here on a go-forward basis.

Some retailers are under-performing a bit, and, you know, possibly a slow Christmas season.

Are there any tenants that you're kind of looking at, watching pretty closely out there that might have some trouble this Christmas season?

And that's my last question.

Well, I'm not necessarily prepared to speculate who might be having problems this Christmas season, but you know, obviously, the Toys-R-Us situation is something that everybody has watched very closely.

But, you know, as far as any other specific tenancies are concerned, what we have worked very hard on is to make sure that we have a, you know, no real concentration with any one specific retailer, so that if somebody begins to have problems, it will not have a significant impact on our rent roll.

Okay.

Okay.

Fair enough.

Thank you again.

At this time, there are no further questions.

All right.

Well, thank you all for your attention.

We are cognizant of where we are and where we're going, and we look forward to some very positive announcements in the fourth quarter, and being with you again at the end of the quarter with much more constructive and positive information.

Thank you for your interest and your attention.

Have a good day.

This concludes today's Ramco-Gershenson Third Quarter Conference Call.

You may now disconnect.