Rithm Property Trust Inc (RPT) 2004 Q4 法說會逐字稿

Good morning.

My name is Natasha.

I'll be your conference facilitator.

I'll welcome everyone to the Ramco-Gershenson properties trust fourth quarter year end 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.

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

If you would like to withdraw your question, press star then the number two on your telephone key pad.

Thank you.

I would like to turn the call over to Ms. Dawn Hendershot, Investor Relations Manager.

Good morning.

Thank you for joining us to the Ramco-Gershenson properties trust fourth quarter conference call.

I'm hopeful that everyone received our press re lease and supplemental 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 maybe 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 it's expectations will obtained.

Factors and risk that could 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.

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 of transmission of the call may be done only with the consent of Ramco-Gershenson Properties Trust.

Having said that, I would 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.

We're pleased you could join us for our fourth quarter and year-end conference call.

FFO for the quarter was 61 cents; slightly exceeding first call estimates.

FFO for the year was $2.08.

Excluding the one time charge from Fountain Walk, funds from operations would have been $2.31.

Which was in line with original analyst estimates.

2004 was a year for numerous announcements.

In each of our profit centers.

Acquisitions, development, and asset management.

On the acquisition front, we placed under contract 14 shopping centers with an aggregate value of over $465 million encompassing over 3 million square feet of grossly supple area.

Of the 14 assets, five centers were acquired on balance sheet with a total value of over $200 million, reflecting an average capitalization rate of 7.94 percent.

Each center is anchored by the dominant supermarket in that community.

And all are located in densely populated trade areas.

In addition to the centers we acquired on balance sheet, we secured the right to purchase nine shopping centers, seven in Florida, and two in Michigan, in anticipation of our forming a relationship with an institutional partner.

Thus, we were especially pleased to announce the signing of a joint venture agreement with ING Clarion's Lion Fund.

Our partnership is the largest single real estate undertaking to date by the Lion fund at $450 million.

We are also proud of the fact that instead of seeding the venture with several assets from our core portfolio, as almost all of these new relationships have been started, our partnership with the Clarion Lion Fund will not only have over 60 percent of the total venture identified and closed in the first 120 days of its existence, but all the ventures assets will be purchased from third parties.

These acquisitions including three which we closed in 2004, three more which closed this month, and the balance which will be closed by the end of the first quarter, will produce acquisition and financing fees as well as a steady stream of property management income.

We reasonably believe that we can acquire additional shopping centers to fill the balance of the $450 million venture in 2005.

Although we have 24 months to accomplish this goal.

Thus, we see the joint venture producing a consistent source of fees for Ramco-Gershenson well into the next three to five years.

We believe that third party acquisition and management fee income will be a component of Ramco's FFO growth.

However, we will not emphasize this form of income as a primary driver of future earnings.

Instead, we look for balanced earnings growth, maintaining our emphasis on core assets as the major component of our future income.

Our relationship with the Clarion Lion Fund allows us to pursue value-added opportunities on balance sheets, while we simultaneously acquire class A stable centers as part of our joint venture.

Our ability to source approximately $465 million in shopping center assets in 2004 demonstrates that Ramco-Gershenson can find acquisition opportunities even in a very competitive environment.

On the development front in 2004, Ramco-Gershenson was also more aggressive than in the past.

Having under construction three centers, two in Michigan and one in Florida.

Last year we commenced construction on over 1 million square feet of new retail space.

Our anchor line-up includes Target and Home Depot as well as Wal-Mart and Meyer Superstores.

Total construction costs, including our Jacksonville projects first phase approximates $89 million.

Each shopping center is being developed as part of an off balance sheet joint venture.

Thus, we anticipate that we will generate construction and leasing fees in 2005 for these developments that approximate the fees produced in 2004.

Also, we presently investigating a number of additional development opportunities, both in Michigan and in Florida.

And anticipate being able to announce at least one more project this year.

Our asset management group has been busy as well.

During the year, we announced six redevelopments, which involve the expansion or the addition of a major retailer at each shopping center.

At Northwest Crossing in Knoxville, Tennessee, we redeveloped a 260 square foot center anchored by 139,000 square foot Wal-Mart, and a 43,000 square foot Ingles supermarket into a 304,000 square foot shopping center.

We engineered the expansion of the Wal-Mart to a 208,000 square foot Superstore and replaced the Engle supermarket with a 31,000 square foot Ross Dress-For-Less and a 13,000 square foot Dollar Tree.

We also added a number of new retail concepts to the tenant mix and completely redesigned and re-landscaped the center.

At our Cox Creek Center in Florence, Alabama, we added Home Depot for our center by selling them a parcel of land.

They joined Goody's, Toys-R-Us, and Old Navy as anchors in this 100 percent leased shopping center.

At our New Towne Plaza in metropolitan Detroit, we're in the process of expanding the center for the fourth time since we originally built the shopping center in the mid 1970s by enlarging the Jo-Ann Fabrics store from 16,000 to 35,000 square feet.

One center expansion that we were especially pleased to announce with the enlarging of the Kroger supermarket at the Livonia Plaza until metropolitan Detroit from 54,000 to 68,000 square feet.

This center is an excellent example of our ability to buy a quality asset, identify an opportunity to add value, and then execute on that opportunity.

The Kroger expansion commenced less than 12 months after we purchased the center in 2003.

We have also leased several additional spaces during the first year.

Adding the Kroger expansion and the new leases, we increased our return on this asset by 220 basis points in one year.

On the leasing front, occupancy increased from year end 2003 of 89.7 percent, to 92.9 percent at the end of 2004.

For leases renewed at expiration, we achieved almost a 10 percent increase above prior rental rates.

You will note in our supplement that the rental averages for new leases signed for both anchor and non-anchor tenants for the quarter and the year are below portfolio average.

What these summary numbers do not show is it the number of non-anchored tenants premises exceed 10,000 square feet.

And the character of the anchor tenant rentals, both of which have a significant impact on the averages.

First, relating to the non-anchor tenants, in the fourth quarter over 41,000 square feet of the approximate 74,000 square feet , or 56 percent of the square footage leased in the quarter, was for individual premises that exceeded 13,000 square feet.

For additionally, these larger spaces command lower rental rates than the much smaller locations that tend to boost the average.

The same holds true for the year , where approximately 100,000 square feet of the 272,000 square feet of new leases, or 39 percent of the new space leased, consists of retailers whose individual premises were over 10,000 square feet.

Thus, we're pleased rather than disappointed by the overall average of $12.47.

Although the summary shows us falling short of the non-anchor portfolio average.

In the anchor tenant category, there is an explanation for the apparent drop in 2004.

One major anchor who occupies over 200,000 of the 611,000 square feet leased last year, has its rental rate based only on the value of the land.

In other words, we executed a land lease with this retailer.

Because their rent number is based only on the cost of the land and does not include site work, nor vertical construction, this retailer's lower rental rate significantly impacts the 2004 average as compared to anchors who leased their buildings from us.

A more telling statistic for the success of our leasing program is the overall average portfolio rental rate, which increased to $8.83 number 2004 from $8.17 in 2003.

As to the state of tenant leasing in general, we are seeing an acceleration of leasing activity at our centers.

The rentals, we are achieving our at or above market.

We expect our leasing activity and rental rates to be above average in 2005.

In the latter half of 2004, and the first month and a half of 2005, we had the opportunity to meet with some of our current shareholders as well as a number of investors who have shown an interest in the Company.

We appreciate what you, the investor, and those who cover our sector, consider important elements of a successful business plan.

Thus, we remained focus on constantly increasing the net asset value of our portfolio, we are committed to continue to improve those financial markers, which define the Company's ability to grow.

And we are sensitive to insuring that the components of our FFO and its growth are of high quality and are sustainable.

We thank you for your interest and your investment.

I would now like to turn this call over to Rich Smith, who will illuminate the various elements of our financial statement.

Thank you, Dennis.

Good morning, everyone.

For the fourth quarter, our diluted FFO per share was 61 cents, which exceeded first call estimates by 1 cent.

This represented a 13 percent increase from the 54 cents reported in 2003.

On a gross basis, our diluted FFO increased $1,746,000.

We went from $10,441,000 in 2003 to $12,187,000 in 2004.

The $1,746,000 increase was made up a $3,030,000 contribution from property acquisitions, and $1,155,000 increase in gains on property sales, and an $859,000 increase in core assets.

These increases were offset by a $1,071,000 increase in our convertible preferred dividends, an $840,000 increase in G&A., a $388,000 increase in interest expense, a $646,000 loss of FFO related to asset dispositions, and a $353,000 decrease in lease termination fee income.

For the 12 months ended December 31 our diluted FFO increased 2.5 percent or 5 cents.

We went from $2.03 in 2003 to $2.08 in 2004; exceeding first call estimates by 2 cents.

Without the $4.8 million impairment charge taken on our equity investment in Fountain Walk and the $3 million straight line rent receivable written off in 2003, our FFO increase would have been 11 cents or 5 percent.

In total, our diluted FFO increased $6,795,000, or 19.6 percent.

We went from $34,654,000 in 2003 to $41,449,000 in 2004.

The $6,795,000 increase was the result of a $10,379,000 positive contribution from property acquisitions.

A $1,670,000 gain on sale of residual properties, a $2,988,000 writeoff of the K-Mart straight run receivable in 2003, and a $1,672,000 increase in core assets.

Again, these increases were offset by the $4,775,000 impairment charge we took in 2004.

A $2,439,000 increase on our convertible preferred dividends, and a $2.7 million increase in G&A related to Michigan single business tax, salaries and fringe benefits, and our audit fees related to Sarbanes-Oxley.

Our operating statistics for the fourth quarter included an increase in occupancy of 3.2 percent.

We went from 89.7 percent in 2003 to 92.9 percent in 2004.

These increases related to the Tel-Twelve and Lakeland properties coming back online and the lease-up of several big box spaces including Gander Mountain at West Oaks, Big Lots at Clinton Valley, as well as Bells at South Bay.

For the quarter, our same center NOI decreased 1%.

The decrease was a result of $350,000 decrease in lease termination income, and a $694,000 decrease in gains on sales.

Looking at more of an operating statistic, excluding these two losses, our same center NOI would have increased 5 percent.

For the three months ended December 31, our FFO payout ratio went from 77.8 percent in 2003 down to 68.9 percent in 2004.

On an FAD basis, the Company's pay out ratio went from 87.2 percent in 2003 down to 81.9 percent in 2004.

Excluding the effects of the writeoff of the K-Mart straight line receivable in 2003, for the 12 months ended or same center NOI increased 3 percent.

On or FAD payout ratio went from 76.4% in 2003 down to 72.4 percent in 2004.

Our FAD payout ratio for the 12 months remain constant at 84.6 percent.

Again, this year for the most part the result of the relocation of our office space.

Our leasing for the quarter include the renewal of 13 non-anchor leases at an average run of $12.09 a foot.

Which was a 7.6 percent increase over the previous rental rates.

We also renewed three anchor stores at an average run of $5.69 a foot., which was an 11 percent increase over previous rental rates.

For the 12 months ended, we renewed 98 non-anchor leases, at an average rent of $12.09 a foot, which was a 9.7 percent increase over the previous rental rates.

We also renewed nine new anchor stores at an average run of $5.82 a foot, which is a 1.2 percent increase over the previous rental rates.

Additionally, we added 12 new anchors at an average run of $5.70 a foot, and 77 non-anchor tenants with an average rental of $12.47 a foot.

Our debt at quarter end was $633.4 million, with an average rate of 6.2 percent.

And a average term remaining of about four years.

Only 10.1 percent of our debt was floating with an average rate of 4.2 percent. 89.9 percent was fixed with an average rate of 6.4 percent.

Excluding the $40 million accordion feature at year end, we had availability under our credit facilities of approximately $67 million.

Excluding the effects of the K-Mart straight line rent receivable, and our impairment charge taken in 2004, our EBITDA interest increased for the 12 months we went from 2.3 times in 2003 up to 2.5 times in 2004.

Our fixed charge coverage increased from 1.8 times in 2003 to 1.9 times in 2004.

At year end, our debt-to-market cap was 46.5 percent, compared to 43.7 percent in 2003.

The 46.5 percent is well within the range, or our target range of between 40 to 50 percent.

During the quarter, the Company acquired three shopping centers in our newly formed venture with Clarion Lion Properties Fund.

The three centers are all located in Florida.

They contain a total of approximately 358,000 square feet. and have an aggregate purchase price of about $48 million.

We also acquired five additional shopping centers on balance sheet for a combined purchase price of approximately $200 million, adding an additional 1.3 million square feet to our portfolio.

Our capital expenditures for the quarter totalled $40.6 million.

We spent $24.3 million on development, $7.5 million on redevelopment and renovation projects, $6.4 million on equity contributions to joint ventures, $1.4 million on non-recoverable CapEx, and about $1 million on cam.

For the 12 months ended December 31, 2004, our capital expenditures totaled $271.8 million, we spent $201.5 million on acquisitions, $33 million on development, $24.4 million on redevelopment and renovation projects, $6.4 million on equity contributions to joint ventures, $4 million on non-recoverable CapEx, $2.5 million on recoverable cam.

As Dennis previously discussed, during the quarter, we formed a joint venture with Clarion Lion Properties Fund to acquire $450 million of shopping centers located in Michigan, Florida, Georgia, North and South Carolina.

Ramco's ownership will be 30 percent.

The expected leverage on the joint venture is about 60%. and the term of the Venture is 10 years.

Ramco will earn market fees for acquisitions, property management fees, leasing, financing, construction management, and disposition fees.

When the joint venture is fully funded, Ramco is expected to earn $1.5 million in recurring property management fees and should receive acquisition fees of approximately $2.8 million.

We're also expecting our annual share of FFO from the venture to be approximately $4 million.

We're expecting to fund our future growth by retaining cash from operations, by continuing to sell noncore assets and selected assets with limited upside potential by refinancing assets which have been expanded or renovated in prior periods, by issuing equity when we have an accretive use, and by drawing on our credit facilities.

Lastly, we remain comfortable with our 2005 FFO per share estimate of between $2.39 and $2.44.

Operator, I would like to open up the call for questions.

At this time, I would like to remind everyone if you would like to ask a question, press star then the number one on your telephone key pad.

Your first question comes from David Ronko.

Good morning.

How are you, guys?

Good, David.

I wanted to ask you about the cap rates on the JV acquisitions.

You talked a little about the core acquisitions.

But, I don't know if you mentioned a number for those.

We did not.

The average cap rate for -- if you add all nine centers together , is slightly somewhere between a 7.5 and 7.7 percent.

7.5 and 7.7.

Did you say 7.9 for the core?

Yes. 7.94.

Okay.

You know, I just kind of wonder, you talked about this a little on your last call.

Just your motivation for doing the JV.

Is it pricing related, is it economies of scale in terms of minimizing expenses?

Is it earnings growth or a little bit of everything?

Well, it's number one, a little bit of everything.

As you can see from the cap rates we've been referencing here, and especially if you're talking about acquiring assets of the caliber that we have discussed, and we would be thrilled for you 20 come and take a tour with us to see these nine shopping centers, they're high-quality centers.

As a matter of fact, there is some value-added opportunities in those that as we toured with the ING Clarion representatives, we pointed those out to them.

With cap rates in the mid sevens, it becomes very difficult to make those purchases as accretive as you can when you do an off balance sheet structure, where we can achieve returns on our equity with a two in front of it.

That's pretty compelling.

As I said, it will only be a portion of our growth and we're thrilled about our ability -- with ING to buy the more stable assets.

Leaving for us the opportunities where, you know, there is a significantly more value-added opportunities as I hope you heard when I talked about the Livonia Plaza.

Okay.

Then a final question just in terms of guidance.

You guys maintaining guidance.

I can't remember, was this JV contemplated in your previous guidance?

Because I was a little surprised you were maintaining.

When we talked -- if you go back and listen to the last conference call, we had talked about trying to do something like this.

And we were well in the works of doing this.

It was in our guidance.

Okay.

Thanks, guys.

Good quarter.

Thanks.

Your next question comes from Jay Leupp.

Good morning.

Here with David with just a few follow-ups.

Back on the subject of the joint venture, can you, Dennis, give us some idea, given the leverage in this joint venture, where the breakeven cap rate is?

How low can can you go in going in cap rates, before the joint venture is not accretive to Ramco's overall results, and what will be your target cap rates this year given the fact that there's so much capital entering the market place competing for those prime acquisitions?

Well, first of all, hi, Jay.

You know, our target cap rate on the high end for the Venture is 8.5.

I hesitate to name what it is on the low end.

Suffice is to say, we can buy something into the very low sevens and still have accretive for the Venture.

As far as Ramco is concerned on that basis, we obviously could go as low as seven, probably even into the sixes, and we would still achieve returns on our equity into the mid to high teens.

You know, a Venture of this structure is significantly accretive to the Company.

Okay.

Then, Rich, you talked about the 300 basis point jump in occupancy growth.

There was more related to bringing back the Tel-Twelve and the other center that you were working on --

And, Jay, I think some big boxes back on line to be honest with you.

And I think we've talked about that in previous quarters as well.

That was a nice jump.

Part of that was bringing back redevelopment property that is you took out of the mature portfolio earlier.

What is your outlook organic occupancy growth this year, that's currently vacant, that you're looking to lease up?

And also related to that, what's your outlook to rent spreads on expiring leases in 2005?

Historically, jay, we've been in the same space rental increases in the mid to five, six, seven percent of growth all rent to new rent.

I think that, when stabilized, we'd probably look at more in tune with our core portfolio, 95, 96 percent occupied would be a goal we'd have anyway.

Just last question, Rich.

Can you talk some about your strategy for asset sales in 2005?

What kind of cap rates could do you think that you will achieve on assets that you decide to prune from the portfolio?

Jay, it's Dennis.

We continue to look at potential asset sales.

I think that the assets that we would be more favorably disposed to selling are the assets in the secondary and the tertiary markets.

There are one or two we we have mentioned in this phone call or in our supplement that have now achieved 100 percent occupancy.

Those probably are the primary candidates.

We're always pleasantly surprised that the assets that are in the smaller markets, just based upon cap rates that you're seeing for the most valuable assets, also have come down.

We're probably looking in the 8.5 percent to 9.5 percent range.

Great.

Thanks, guys.

Your next question comes from Andrew Rosivach.

Good morning, guys.

Hi, Andrew.

I just noticed in your release that you actually have leveraged just in terms of debt-to-market cap is higher than it was a year ago.

Are you comfortable with the run rate that you have or do you think you might de-lever a little bit?

I wanted to ask you in the calculation, since this is going to become more important, does that include prorata off balance sheet dat?

We're comfortable -- this is what we've said for probably the last few years, is probably the 40 to 50 percent range.

I think we can pay that down; obviously through some asset sales, or if we have a good use for the funds, maybe raise a little bit of equity.

I think our number did not include the off balance sheet debt.

But the off balance sheet debt that we have at least in the big trends, in the ING transaction, is about 60 percent debt-to-market -- loan to value not debt-to-market cap.

The development projects, again, looking at their construction financing at call it 80 percent of costs, again, I think by the time we're done, we'll probably stabilize those out at probably 60 percent of loan to value.

You know, we do have some debt coming due this really next year.

It's prepayable this year.

Our Lincoln pool I think can be prepaid in the September, October timeframe.

We'll look at maybe doing something with that mid-year.

How big is that?

That's -- I can find that.

That's one of the big remex that you've got on the--

It's really in terms -- about $100 million.

Got it.

Okay.

And then last, this is a pretty major tenant for you guys.

It's been the stock du jour.

Circuit City, there is the takeout.

Then they announced closing some stores.

When you impacted by any of the store closings?

We have one, Andrew, that is closing.

We have a total of five Circuit Cities.

The one that is closing is at our Tel-Twelve shopping center.

I know your familiar with Tel-Twelve.

It's one of the star centers for us.

It sits in such a strategic location.

Circuit City's lease runs in April of 2007.

So we will -- number one, we'll experience no loss in income there.

We'll have more than enough time to work out a deal with them so that we can transition in a new tenant and move them out.

100 percent lease center, Andrew, at this point.

I know, I have seen it.

All right.

Great.

Thanks, guys.

You bet.

I would like to remind everyone, if you would like to ask a question, press star and then the number one on your telephone key pad.

Your next comes from Phillip Martin.

Good morning, Dennis, Rich and Dawn.

How are you?

Good.

Welcome.

A couple of questions here.

On the development, can you talk a little bit about how the timing is for that?

What percent pre-leased you are?

Some of the returns?

You know, if they're still in the range you want like to see them, et cetera?

I assume you're talking about Jacksonville?

Yes.

Jacksonville we -- simultaneously with buying that property, we sold to Wal-Mart, I think the lease up is going very well.

There's a number of the mid boxes that have expressed a lot of interest in various forms of lease negotiation or LOI negotiations on that.

We have a feeder that I think leases out form and should be signed any day now, is my understanding.

There is tremendous interest in that property.

In that supplement, we really divided that property into two pieces.

One being the core center itself.

We have excluded from the core center in a taxable subsidiary the anchors, which we think are more likely to buy than not.

We have included a number of the outlying, across the road poriferal properties or out-parcels, again, there is a lot of interest in it.

We're trying to delay is a lot of interest in.

We're trying to delay the closings on those.

Again, they're a taxable resubsidiary.

They're likely to be sold than not.

Uh-huh.

I think we'll have some land sales in the future.

But the trick with the land sales is not being too early to the game on those or you give up some of your value.

Quickly, Phillip to add to that relative to the other two.

Gaines is over 90 percent leased, although, we're only about 75 to 80 percent constructed on that site.

Beacon Square is probably 85 to 95 percent leased.

Okay.

Again, to answer your returns, I think the returns just a cash on cost return for the portion of Jacksonville that doesn't include the out-lots, for example, or the anchors, we expect it to be in the 10 to 11 percent range with fees, obviously, we take that off balance sheet.

It would be higher.

I think that Gaines and Beacon Square are probably in the same range, maybe a little bit higher.

Okay.

Okay.

Still good returns there.

Then I know -- Dennis, you mentioned that you expect leasing activity to still be robust in 2005.

You've got 9.4 percent of the portfolio up for -- you know, experiencing lease expirations in 2005.

Do you have a sense at this point -- that's 9.4 percent of revenues or rent.

Do you have any sense of how much of that is committed to staying, et cetera?

Can you shed any light on that?

Generally, when you look at leases, a lot of leases expire at the beginning of the year.

Yes.

Historically, most of the leasing is done the previous year.

Just venturing a guess, I'd probably say roughly half of it is leased or committed space at this point.

Okay.

Historically, Rich.

Given the historic leases for average.

Historically, we've retained 70 percent of our tenants.

Uh-huh.

In terms of the attitude among retailers, I know there is some concern that the retail consumer may not be there as much as they have been in the past, given we're not going to be seeing any tax cuts this year.

Are you seeing anything in your discussions with the retailers where there is some concern there?

Let me say this.

One of the centers that should be completely back online in 2005 is our Lakeland project.

Uh-huh.

There we started, oh, about mid-year leasing about 70,000 square feet of small space.

Okay.

All the way from national tenants such as Radio Shack, and some of the women's ready-to-wear like KATO, and Fashion Bug and Dots, et cetera.

We have one to two spaces left in the strip center before we're 100 percent leased at Lakeland.

We're achieving significant rents there.

We're seeing that across any of our centers where the anchors are the type of retailers that the smaller tenants want to cozy up to.

If you have got a center that is somewhat more problematic, you'll have leasing issues.

We're experiencing significant interest from national, regional, and local tenants who want to be a part of those developments where we have the horses such as the Targets, the Wal-Marts, the Kohl's, et cetera.

Okay.

Perfect.

I really appreciate it.

You're next question comes from Rich Moore.

Good morning, guys.

Hi, Rich.

Hi, Rich.

A couple of questions here on guidance.

Land sales is that in your guidance at all?

Have you put anything for land sales in there?

Rich, there is a little bit in land sales.

Okay.

Okay.

So just basically not much?

You know, again, land sales are tough to predict.

Again, I think there is not a huge number in there.

Probably -- I'm not sure I want to venture a guess.

There is land sales in our numbers.

Keep in mind that in most them to be at Jacksonville, for example.

And keep in mind we have sold one anchor.

There is room for two more.

So, if you look -- if the anchor -- if that happens, I think the number could be big.

We haven't picked -- haven't put a huge number in our guidance going forward.

I think that, Rich, on an annual basis, land sales will be an ongoing part of our business plan.

You know, whether that's the sale of out-lots, this isn't necessarily fortunate, more fortunate than you unfortunate, the majority of the big hitters, the Wal-Marts, the Targets, the Kohl's, the Home Depots, the Lowes, all insist, if you're going to do with a deal with them, that they own their property.

Even in centers that exist, if some of them want to come in, they're going to insisted on a land sale.

Whether out-lots, poriferal land for anchors, we see sales for the foreseeable future being a part of our annual business plan.

Okay, Dennis, thank you.

Would you say that you have some those, I guess, in the 239 to 244.

Would it all be gravy if you get these kind of sales?

There is some in this there.

Okay, that's fair enough.

Thank you, guys.

But if we had a big sales year, then it would be in excess of that.

Now, as I look at -- if you close three more properties on the JV and you flesh out the other 200 some odd million.

About $200 million in the JV.

That's going to take you well above you're 50 percent debt-to-market cap threshold.

Have you -- given that that's your goal have you modeled any kind of equity issuance or any kind of significant asset sale into that 239 to 244 guidance?

Let me jump back.

Dennis is certainly pushing acquisitions very hard to fill this.

I think our model is showing we have two years to cover this.

We're showing closing on what we have committed and plus half of the rest.

Okay in 2005.

Another half in 2006.

Some, again, we'll spread that over a longer period of time.

That is our goal.

Let me put it that way.

Our goal isn't necessarily modeled.

Have we factored into our model equity?

I think we have certainly looked at equity alternatives.

When we looked at that, I'm still comfortable with the guidance we have.

Even if you were to do an equity issuance or have some asset sales, that shouldn't be a surprise to you us and bring the numbers below 239.

Is that what you're saying, Rich?

At this point, yes.

If we're on our business plan Again, we may have to modify our business plan more.

I think, we've looked at scenarios in which we're within the parameters that we have raising equity.

On the JV.

How do you guys, I mean Federal obviously has something very, very, similar with the same-- How do you divide those up, I mean how does Clarion pick between the two of you for a particular property?

Different states.

We're Michigan, Florida, Georgia and the Carolinas.

In fact, I'm not sure what states they are.

But I know they are different states.

Geographically--

On the West coast.

And quite frankly, Rich, I don't know the other ones.

I know the West coast.

They definitely have approached it on a geographic basis.

And then looking at a couple numbers.

I noticed that G&A was down on fairly substantially at the same time that operating expenses were up.

Rich, was there some short of shift between G&A and operating expenses that caused that?

Not that I'm aware of.

Okay, so, Rich, that --

When I listed that quarter-to-quarter and year-to-year, I thought our G&A was up a little bit.

I think we had some not surprises, I mean, probably the biggest difference, dollar difference if you look at our G&A increases, is in previous years with Brownfield credits and such on single business acts.

We received credits.

Those credits burned off this year.

Sol now instead of having credits, I think that we're net payers there.

Yeah, I think our salaries and benefits were up.

I think we had additional audit fees as it pertains to Sarbanes.

And the office relocation was a little bit as well.

Anything special in operating expenses that would see a trend that's higher?

You have to think inflationary costs.

Maybe also bit higher.

Okay.

As we buy more centers, I don't think we're adding a lot of cheaps.

You maybe adding some Indians to help out with some of the work.

Okay.

Where you really guys at for the quarter- end occupancy?

What do you think there?

Hold on for a second.

Where are we at for first quarter?

Yeah, I think we're projecting somewhere about 91 percent, 92 percent.

Somewhere in that range.

You're going down? 92-point --

92.9?

Okay.

Let me just say this.

We see -- there is typically a rush with our leasing people to get occupancy in the fourth quarter as well as for retailers.

So, although we do see a modest increase in the first quarter, we don't see anything of consequence by -- as far as an increase is concerned in the first quarter of this year.

Okay.

Dennis, at a broader question, what do do do you think about bankruptcies in general.

How would you characterize the environment for you versus say last year and the year before?

Well, I think as we've expanded our portfolio base, we obviously have, on a consistent basis, reduced our exposure for any individual tenant.

You know, as Milt Cooper would say, there are always surprises as far as bankruptcy is concerned.

We think we're well diversified in our tenant mix.

And although I guarantee that there is a surprise or two out there, I think we're in pretty good shape.

Okay.

Thank you.

Last thing for me is on the fee income, you were saying for the development fees, you said it was roughly the same as last year for '05?

Yes.

How should we spread that out for the year ?

Sort of ratably, is that reasonable?

I think there is a slight emphasis on the second, third, and fourth quarters compared to the first quarter.

Okay.

Very good.

Thank you, guys.

Thank you.

Your next question comes from Lou Taylor.

One of the -- wouldn't the fees be skewed toward the first quarter with the acquisition fees falling then?

I thought he was specifically talking about the development fees.

I would agree with you as far as the acquisition fees are concerned, yes.

In total throughout the year, you think the fees are going to be more back end or second, third and fourth quarter because the development fees are going to be more significant?

If we take Jacksonville off balance sheet, you'll end up with back end.

You're going to have our development fees, and you're going to have leasing fees on ton of that as well.

For lease up of that center.

Okay.

I think that's why Dennis is say maybe skewed back toward the back end.

The bottom line is acquisition fees will be skewed toward the first quarter and then the development fees, you know, accelerating in the second, third and first quarter.

Okay.

Thank you.

At this time, there are no further questions.

Are there any closing remarks?

Well, once again we would like to thank you all for your interest and participating in the call.

I know the analysts have a busy few days or a couple of weeks.

So we wish you all well.

Thank you, again, for attending.

This concludes today's Ramco-Gershenson's Properties Trust fourth quarter year end conference call.

You may now disconnect.