Rithm Property Trust Inc (RPT) 2005 Q3 法說會逐字稿

Good morning.

My name is Carlita and I will be your conference facilitator.

At this time, I would like to welcome everyone to the Ramco-Gershenson Properties third-quarter 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).

Thank you.

Ms. Hendershot, you may begin your conference.

Good morning and thank you for joining us for Ramco-Gershenson Properties Trust third-quarter conference call.

I'm hopeful that everyone received their press release and supplemental financial package, which are available on our Web site at 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, I'd like to turn the call over to Dennis for his opening remarks.

Thank you, Dawn.

Welcome, all.

I'm pleased to report that this has been a very productive 90 days.

We have for all intents and purposes finished the two Michigan developments, Beacon Square and Gaines Marketplace.

We've announced a new development, Rossford Pointe, which although modest in size, reinforces the validity of and draw for our existing Crossroads Centre in Toledo, Ohio.

At our Jacksonville Florida project, River City Marketplace, we have recently announced the signing of Ross Dress for Less in 30,000 square feet.

And although I had hoped to include a number of additional anchor signings at this time, we are within 30 to 45 days of announcing three to four national retailers of consequence, who will round out our tenant mix, allowing us to open the center next summer with over 500,000 square feet.

Still in the area of development, we are presently investigating a number of new opportunities, several of which we reasonably expect to start in the second half of 2006.

Our asset management team has been busy this last quarter with the announcement of the Home Depot store for our Taylor, Michigan location, the commencement of construction of the Petsmart superstore in our Spring Meadows Center in Toledo, Ohio, and the 30,000 square foot addition to Jackson Crossing in Jackson, Michigan.

Each of the value-added expansions improves the center's net asset value, broadens our customer draw, as well as tenant mix and increases net operating income.

In 2005, we have commenced, have underway, or have completed more value-added redevelopments than at any time during our history.

Several of these redevelopments, like many of the announcements we have made over the years, are the second, third, fourth, or more positive improvements and/or expansions to already successful shopping centers.

I am pleased to report that the number of already identified opportunities to add value to our core portfolio shopping centers stretches well into the next few years.

On the leasing front, you will note in this quarter a dip, both for our anchor and non-anchor averages.

Historically, we have not differentiated in the anchor category between land leases and building leases.

The land lease we signed in the third quarter, although at a healthy rent, falls short of our anchor average when divided by the square footage of the proposed building to be constructed thereon.

This should be obvious on its face, as a rental for land only will not compare to situations where the tenant's rental is based on a formula that includes the land, site work and building.

Going forward, we will attempt to provide statistics that break out our anchors between land leases and building rentals.

Relative to the smaller tenants, our average this quarter, excluding just three leases, would have approximated our portfolio average of $14.40.

Two of these three new tenancies were for large, difficult spaces to lease, thus generating below average rentals.

The third below-average rental rate was for a retailer who had to be moved in order to accommodate the TJ Maxx expansion in Jackson Crossing.

In reviewing the spaces leased this quarter, I am very satisfied with the progress we are making in filling existing vacancies, renewing expiring tenancies and the rentals we have achieved.

With the tenants who have opened this quarter, and the retailers with whom we have signed leases that have not yet opened, as well as those we are in the process of signing, we continue to move in on an occupancy rate of 95%.

Our current occupancy number should be viewed in light of two major vacancies we intentionally created in the last 90 days at our Tel-Twelve shopping center.

That is, Circuit City and now Media Play.

Together, they equal approximately 90,000 square feet.

As with the Circuit City termination, the fee paid by Media Play approximates two years of rent and variable charges.

However, we will be announcing replacement tenants for both of these newly created vacancies before year end.

During the quarter, we opened our regional office in Florida.

With the inclusion of River City Marketplace we have 23 centers in the state.

It was our conclusion that, based on the number of assets in the market, we can be more responsive, efficient and productive in serving our shopping centers locally.

Further, by creating a Florida asset management focus, we can better establish leasing and net income accountability.

Also during the quarter, we announced the signing of a brokerage agreement for the sale of at least seven of our shopping centers.

In this very frothy market, we believe this is an ideal time to offer for sale those assets which no longer fit in our long-range business plan.

The third quarter marks the first time frame since our joint venture was created wherein we have not made an acquisition for our Lion Fund partnership.

Cap rates for core and core plus centers have continued to decline, making it harder to find those acquisition targets which we believe provide the type of long-term values that justify current pricing.

We are, however, not sitting on the sidelines but are trying to be selective in our choices.

At the present time, we are reviewing a number of acquisition candidates and reasonably expect to make at least one more purchase before year end.

As I contemplated my remarks for this call, I reviewed our achievements year to date, the efforts of our management team and the substantial progress we've made in all three of our profit centers.

We have proven that we can acquire a significant number of assets at favorable pricing in a competitive marketplace.

We've shown that we can increase the pace of new developments as a higher return profit center went acquisition returns become more problematic.

And we have continued to demonstrate that we can produce value-added redevelopment opportunities, both in our acquisitions and our core portfolio consistently at very accretive returns.

Based on our current stock price, however, it is obvious that the market is not appreciating these successes.

You should know that I am not discouraged.

The backbone of our organization is a staff of veteran shopping center professionals who know how to maximize the value of our assets.

A number of these efforts are paying off in 2005 and many will ripen in 2006.

We remain confident that the tax issue with be resolved in our favor sooner than later, although I am hesitant to predict how to define the term sooner.

We are a team dedicated to ever increasing the value of our shopping centers.

These efforts will translate into increased shareholder value.

At our last conference call, I told you that I thought our stock price, in my eyes, represented a buying opportunity and I acted thereon.

Since that time, I am more confident than ever in our future and still, our stock price has declined.

As far as this being a buying opportunity, enough said.

I would now like to send you a very subliminal message as I turn this call over to Rich Smith, who will increase your understanding of our financials as you take stock of our numbers.

Rich?

Thank you, Dennis and good morning, everyone.

For the third quarter, our diluted FFO per share was $0.59, which met FirstCall estimates.

This represented a 68.6% increase from the $0.35 reported in 2004.

Excluding a $4.8 million non-cash impairment charge taken last year, we are flat for the quarter.

On a gross basis, our diluted FFO increased $4,661,000.

We went from $6,944,000 in 2004 to $11,605,000 in 2005.

The $4,661,000 increase was made up of a $1,456,000 net contribution from property acquisitions, a $475,000 increase related to the impairment charge taken last year, and a $1,226,000 increase in earnings from joint venture activities.

These increases were offset by a $1,244,000 increase in interest expense, a $583,000 decrease in gain on property sales, a $365,000 decrease in development fee income, and a $604,000 decrease in core assets and operations.

The majority of the decrease in core assets and operations related to a $540,000 write-off of straight line rent receivable related to tenants terminated in connection with renovation projects, and a $287,000 reduction in rent for anchor tenants that purchased their locations at both Auburn Mile and Crossroads.

These decreases were offset by a $392,000 increase in lease termination fees.

For the nine months ended September 30th, our diluted FFO per share increased 24.7% or $0.36.

We went from $1.46 in 2004 to $1.82 in 2005.

Excluding the impairment charge taken last year, our diluted FFO per share increased 7.1%.

In total, our diluted FFO increased $6,943,000.

We went from $29,130,000 in 2004 to $36,073,000 in 2005.

The $6,943,000 increase was the result of a $5,911,000 positive net contribution from property acquisitions, a $4,775,000 increase related to last year's impairment charge, a $2,826,000 increase in earnings from joint venture activities, and a $743,000 increase in income from core assets and operations.

Again, these increases were offset by a $3,748,000 increase in interest expense, a $1,841,000 increase in preferred stock dividends and a $1,723,000 decrease in FFO related to last year's gain on sale of properties.

We expect in 2005 our G&A to be between 14 and $14.5 million.

Included in these numbers are approximately $800,000 of nonrecurring legal fees, audit fees and stocks compliance costs related to the 2004 audit.

If adjusted, our 2005 G&A would be between 13.2 and $13.7 million or approximately $3.4 million per quarter if the expenses were evenly distributed.

For the third quarter, we were below our target figure due to approximately $500,000 of positive adjustments related to employee fringes and our long-term incentive plan, which should not be considered recurring.

As Dennis noted, during the quarter, the Company opened a regional office in Florida.

Since the primary responsibilities of the office will be leasing and asset management activities, we will include the associated costs in other operating costs.

For the quarter, these costs approximated $200,000.

Our operating statistics for the third quarter include a slight increase in occupancy which went from 92.9% in 2004 to 93.5% in 2005.

Our expense recovery ratio for the quarter was in line with our expectations at 97.8%, up from 93.6% reported last year.

For the same reasons previously discussed, our same center NOI decreased slightly by 0.9 of a percent.

Excluding last year's impairment charge, our FFO payout ratio remained constant at about 74.5% and our FAD payout ratio improved from 87.9% in 2004 to 86.2% in 2005.

For the nine months ended September 30th, our same center NOI increased 3.6%, our recovery ratio of 99.7% was higher than anticipated due to 2004 billing adjustments recorded in 2005.

Taking into account last year's impairment charge, our FFO payout ratio improved from 72.1% compared to 74.1% in 2004, and our FAD payout ratio for the nine months improved from 86.3% in 2004 down to 80.4% in 2005.

Our debt at quarter end was $674.4 million with an average rate of 5.7% and an average term remaining of three years. 68.8% of our debt was fixed at an average rate of 5.9%.

And due to the short-term bridge loan used to take out the Lincoln loans, 31.2% of our debt was floating, with an average rate of 5.3%.

By year end, we expect approximately 20% of our debt to be floating.

At quarter end, we had approximately $25 million of availability under our revolving credit facilities, and our EBIT interest coverage for the nine months was 2.3 times and our debt to market cap increased from 46.5% at the end of 2004 to 50.4% at the quarter end 2005.

The increase was the result of a decrease in our stock price, which went from $32.25 at year end down to $29.19 at quarter end, and the additional debt associated with equity required to fund acquisitions.

As Dennis noted, we repaid early approximately $100 million of debt priced at 8.3%, which was scheduled to mature next year.

The loans were repaid with a short-term bridge loan that is priced at LIBOR plus 1.40.

We expect to close on approximately $65 million of permanent debt priced at a blended rate of 5.2% and the proceeds will be used in part to pay off the bridge loan.

The new permanent debt will encumber three of ten assets previously used as collateral.

The other seven will provide additional capital for the Company in the future.

In addition to the obvious interest savings, the Company has eliminated approximately $3 million of future loan amortization payments.

Our capital expenditures for the quarter totaled $15.4 million.

We spent 6.8 million on development projects, $6.9 million on expansion renovation, $1.5 million on nonrecoverable CapEx, and $184,000 on recoverable CAM.

For the nine months ended September 30th, our capital expenditures totaled $79.5 million. 36.6 million was spent on JV contributions to fund acquisitions, 24.1 on development, $15.4 million on expansion renovation projects, 2.5 million on nonrecoverable CapEx, and about $636,000 on recoverable CAM.

We continue to expect to fund future growth by retaining cash from operations, by selling noncore assets and selected assets with limited upside potential and by refinancing assets which have been expanded or renovated in prior periods.

Lastly, we are comfortable maintaining our 2005 guidance at between $2.39 and $2.24 per diluted share and are introducing 2006 FFO guidance of between $2.53 and $2.58 per diluted share.

Carlita, I'd like to open the call to questions.

(Operator Instructions).

David Ronco.

First question is for you, Dennis, with regard to acquisitions.

It sounds like they are as difficult at this point in time as they've ever been and you do sound a bit frustrated.

Can you talk about whether the environment has changed that much over the last 90 days?

And given that it sounds so difficult, I'm just wondering what level of acquisitions your '06 guidance contemplates.

Well, let me make a couple of comments.

Number one, some of the things that we're seeing is that institutional buyers are now paying sub 6 for assets that really have no growth to them because they are primarily power centers.

And in some of those power centers, they aren't even stepped rents.

So it's becoming more problematic for us to conclude that some of those acquisitions make sense.

What we are seeing, however, is that if we step into some of the core plus type assets, which are still anchored by very good tenants, but we see an opportunity to add value to those centers, maybe a little more value than we had seen in the past, that's the direction we are going to head in.

We even have a couple of opportunities we're on the front end of exploring, where you've got centers that have a mediocre tenant mix.

However, there's land immediately adjacent and we've been working with some anchor tenants who would be interested in being in those areas, so we might be able to reinvigorate the entire shopping center by making both a shopping center and a land acquisition.

So I think you might see the character of some of our acquisitions changing, albeit that we are still looking at assets that are core and slightly core plus and we are still bidding on a number of those.

Okay.

Just quickly to answer the second half of that, as far as '06, our plans are basically still on target for around $300 million in acquisitions.

And, again, we may have a combination of types to fulfill the portfolio interest.

Okay.

And then that 300 million broken down between wholly-owned and JV, do you have that?

I would assume still the vast majority of that would be joint venture acquisitions.

But as a matter of fact, there is at least one and maybe two acquisitions we are viewing right now that we may acquire on balance sheet.

Okay.

Onto expansion opportunities, and you talked about a vast level of that and redevelopment opportunity within your portfolio.

I was wondering if you could quantify -- I know it's probably hard to nail down a specific number, but perhaps a range of opportunity exists in your current portfolio.

Well, whenever we've talked one-on-one, you know, we've always made it a point to say that more often than not, there is not a direct correlation between saying if we're going to spend 15 to $20 million a year on redevelopments, that that really dictates what our returns would be.

An example is with the land lease that we will have just completed, for all intents and purposes, we won't put any money into that so that our return as far as new land lease payments are concerned, are infinite.

The flip side of that is that we are doing a number of expansions, such as the TJ Maxx, etc., where indeed, we're going to have to take existing tenants out.

And historically, what we've been able to accomplish is anywhere from a 10 to 15% net return on new dollars invested.

Okay.

And can you give us any sense for what the level of investment might be for 2006?

Obviously, since you guys have guidance, I'm sure you've made some assumptions there.

Yes.

Again, we are looking in the 15 to $20 million category.

Again, that has been our history in the past.

Christeen Kim.

I had two questions for you.

The first is regarding G&A.

So what should we be using as a run rate I guess going into '06 then?

You had 800,000 extra in legal and auditing fees or whatnot and then a little 500,000 that you saved this quarter.

So what would be a safe run rate for next year?

I'd expect that to be up next quarter or next year.

I think for next quarter, like it's probably, just to get the math, we are probably somewhere in the 3.5 to $4 million range depending on where we end up for next year.

Again, because we are phasing in a long-term incentive plan, which I'd expect G&A probably would be up somewhere in this, in the 10 to 12% range.

Up 10 to 12% from '05?

Yes.

And again, a lot of it depends on what we are doing as far as development on balance sheet versus off balance sheet.

I know Lou was on the last call and we talked a little bit about what we can capitalize and when we can capitalize and when we can't.

So if we do development on balance sheet, for example, we'll be able to capitalize on that net G&A number, or we'll go down.

But --

Got you.

Also, just to clarify, so no acquisitions remain through the joint venture this quarter?

You mean in the third quarter?

In the third quarter.

I'm sorry.

Right.

There were no joint venture acquisitions in the third quarter.

Okay, great.

And also my last question would just be, you had mentioned in trying to get to that 95% occupancy level by the end of the year.

Is that still something that you are trying to attain?

Well we are certainly still shooting for it.

Again, one of the things that we do is if we signed a lease with a tenant but the tenant isn't in occupancy, then it doesn't count.

I indicated to you all that this 90,000 square feet, which is composed of the old Media Play space and the Circuit City space, we will have executed leases for.

But to the extent those tenants aren't in, then we will not count them as part of our occupancy.

But what I'll do is, we'll talk about both occupancy that we will have achieved as well as maybe imputed occupancy to give you a handle on basically where we are.

Philip Martin.

A couple of questions here.

In terms of number one, the replacement tenants here for Media Play and Circuit City, where are you on rents relative to what was lost there?

As far as Circuit City is concerned, we are approximately equal with the rental for the Circuit City space.

As far as the Media Play space is concerned, we may be dealing with a slightly different configuration.

But I think for all intents and purposes, our rental rate -- the overall rental will be higher, but we will be investing some dollars in order to get that.

Okay.

So on a net basis, that's flattish to maybe slightly down initially?

Well, wait a minute.

What I can tell you is this.

That both of the retailers who were coming in have significantly better credit than the retailers that were going out and both are national players.

Okay, okay.

In terms of the seven assets that you have for sale, what's the NOI associated with those seven?

If you really look at it, it is nine assets that we've actually marketed;

I think, that we could sell as few as seven.

But somewhere between seven and nine.

And then again, I think we expect proceeds somewhere in the 60 to $75 million depending on how much we sell.

And on the nine assets, we have NOI that is roughly, you call it about 7 million, 7.4 million, 7.5 million, somewhere in that range before debt service, right?

Before debt?

Yes.

Yes.

Okay.

Okay.

And do you know what the undepreciated book value is?

I don't, but to answer your other question, I guess is where you're going, you know, we have done impairment tests on all of them.

They're not impaired based on our testing, based on market studies on the assets, so I don't think you can expect a surprise there.

How long have you held these assets on average?

Some of them, it's been from '96.

The other -- yes, seven, eight years.

Yes, these are some of the -- okay, got you.

Some of the -- again, it's common knowledge what the assets are but some are the tertiary markets that we've bought in the portfolio back like in '97.

Okay, okay.

Now, in terms of your development and redevelopment portfolio, what is the pre-leased amount there?

I know, Dennis, you talked -- it sounds like you have had some pretty strong leasing here, and you mentioned some of that in your opening remarks.

What is the pre-leased percentage of the development and redevelopment portfolio?

If you can break it down, even, that would help.

I'm not sure I understand the question, Philip. (multiple speakers)

(multiple speakers) the expansions and the redevelopments that you are doing --

Well, on the expansions, the number is easy.

It's (multiple speakers)

It's 100 on that.

And we won't start that before we actually have the leases signed.

As far as development is concerned, at least historically, what we've done is that we have to have for all intents and purposes, those anchors that we believe are critical to the development executed before we will close on the land.

Several conference calls ago, we mentioned that we moved earlier than we normally would have on River City Marketplace because of Wal-Mart's desire to get their store opened in the spring of '06.

But you know, we are, again, I'd like to think by the end of the year, we will have in place all of those retailers that were necessary to be in a position to say, as I've mentioned, and you know I backed my number off to 500,000 because we believe that number is significantly higher than the 500,000 square feet.

So we will probably be 60 to 70% leased in what we call Phase I of the Jacksonville shopping center.

Okay, perfect.

Perfect.

And then in terms of -- again, your portfolio is approaching that 95% leased range.

When you look at 2006 in your renewals, and even 2007, is this mid-90s level in your opinion going to allow you to see some more negotiating leverage on the rental rate side?

Well, you might argue that.

Certainly, in those centers where we might have had a vacancy or in the situations where -- and let's use Jackson, Michigan as an example.

You know, we've added Beth Bath & Beyond and we are now adding TJ Maxx.

That certainly ups the ante as far as the caliber of that asset is concerned and therefore, we would expect to be able to achieve a rental rate of a buck or a couple of bucks higher, because we have those anchors in addition to the other anchors that we had, although we had a pretty strong lineup before.

So would I say that on the releasing -- and again, typically, portfolio wide, just with re-leasing, you should expect a 1 to 2% growth, but because of our redevelopments, we have consistently been able to produce anywhere from 3 to 5% growth.

So between the increase in occupancy, the caliber of the retailer, as well as our redevelopments, we still expect strong core center growth.

And from an overall demand standpoint at a lot of these centers, are you seeing multiple tenants trying to get into the space?

I mean like, characterize the demand for some of these centers, especially -- I mean are you having to turn away some tenants because your occupancy level was just to the point where there's nothing there anymore?

And it's a high-grade problem, but I guess that's what I'm trying to get at is, are you having to turn away some tenants here because you are to the point where you are fully leased?

Well let me put it this way.

We have been challenged on a consistent basis and when you've toured properties with us, we've shown you where you looked at a center and you thought it was impossible to add another mid-box retailer and we are seeing a significant interest from mid-box retailers in getting into our centers.

And our challenge has been not necessarily to turn them away, but to find creative ways that we can add them.

An example is, with the TJ Maxx at Jackson, with the Petsmart at Spring Meadows, in each of those instances, the spaces where we are putting them, we had small tenants in the way and we have worked it out so that we can either move those small tenancies to spaces where leases have been expiring and therefore opened up that frontage or attempted to terminate those leases because the economics and the tenant mix were compelling.

So we are consistently challenged by tenants who are interested in our portfolio in how to accommodate them.

So I'd like to think we'll never turn them away.

But it has become more problematic to find space for them.

Okay, okay.

And the very last question and I will turn over the floor is, Rich, how much is available under your line right now, did you say?

About 25 million.

About 25.

Okay.

Thank you very much.

Sorry for all the questions.

Jay Leupp.

I'm here with David Ronco at RBC with a follow-up on cap rates and asset sales.

Can you characterize how if any the market has changed this year for (technical difficulty) demand for your types of shopping centers by institutional investors? (technical difficulty) cap rates have moved since the first quarter to date, and where your expectations are for 2006?

If you had asked me in the first quarter of 2006, when I believed cap rates were somewhere between let's say 6.25 and 6.5 for A type of assets, could it drop below that, I would have said the same thing I said when they started to break 7.

We lost out on a bidding -- on a shopping center in Michigan and the center went for about a 5.7 cap rate.

The income basically in that asset was flat for the entire whole period that one would do an internal rate of return for.

So how people are justifying those type of cap rates I'm not exactly sure, but that's where it is.

And I would be hesitant to say, based upon being proven wrong, through 2005, that cap rates couldn't fall further.

It is interesting how people are being challenged in an increasing interest rate environment to make those acquisitions.

Again, what we're looking for are shopping centers where we believe, as we have consistently shown throughout our history, we just see something that the seller may not have seen that will allow us to take a 6 cap asset and turn it into a 7 or a 7.5 cap because we are able to expand it or make some significant changes as opposed to just leasing up some vacant space.

Okay.

And then in terms of expectations for the fourth quarter in 2006, can you talk a little bit about what your leasing spread expectations are?

Not so much for your big box and anchor tenants but really for the smaller tenants where you are getting the bulk of your rent growth?

About 5 to 6% is what I would expect.

Okay.

And then would that be consistent with what you are achieving so far this year?

Yes, I think maybe a little bit short, but as Dennis talked about, I think we've had some extraordinary deals that we did to make room for some expansion renovations

Okay.

And then just one last question --

You know, historically, Jay, I think we've been above that.

Okay.

And then just lastly, any significant re-leasing or redevelopment activity going on at the Tel-Twelve this quarter?

In which quarter?

In the fourth quarter?

In the fourth quarter.

Well again, in the fourth quarter, we will announce the two new tenants who will come into Tel-Twelve, both of significant size, and construction will start in the fourth quarter.

Okay, great.

Mel Cutler.

I have a couple of easy questions and then a few more complex.

Where was your office in Florida going to be opened?

When is it going to be opened?

Where?

It's in the Fort Lauderdale area.

Okay.

It's not part of any property you currently own?

It is not.

Okay.

Secondly, I missed the guidance for '05.

I have 2.53 or 2.58 for '06.

Could you just repeat '05, please?

That's 2.39 to 2.44.

A couple of other questions if I may. (multiple speakers)

(multiple speakers)

Can you make any comment as to what the negative impact might be.

I'm sorry.

I missed the first part of your question.

On a tax claim.

I think we thought worst case in our footnote, is somewhere around $22 million.

We don't think it will be anywhere near that, but we really don't think it will be anything.

If you follow it, I think that we've said on numerous occasions that we think the IRS is wrong on the facts and the law.

And the other thing for a good portion of that worst case I think that A, there is nothing.

We've got an indemnity for a good part of that case from Atlantic, like we did before.

Okay.

And a couple of other questions if I may.

Would you comment again on the maturities that you have coming due, the $275 million at year end?

The biggest part of that is our revolving lines.

We have the option to extend that for a year, but more likely than not, I think we will probably rework that and use some of the Lincoln pool to help subsidize that or provide coverage for that debt.

Okay.

And two fairly simple questions.

There's been more M&A activity, certainly, in the REITs.

If you could comment on that relative to RPT.

Well, we certainly view that there is -- number one, our stock price nowhere near reflects our net asset value.

Secondly is, there is -- as you've seen with this quarter with the announcements we'll make in the fourth quarter relative to centers like Tel-Twelve, the expansions at our Jackson Crossing, the significant progress we've made in Jacksonville, there is a tremendous amount of embedded value in our assets that we will continue to realize through the rest of this year and next year and beyond.

However, if somebody wants to walk in and offer us something with a 5 in front of it, we certainly would have to take a good, hard look at that.

That leaves my last question.

With your discussion on cap rates, would you consider being more aggressive in dispositions?

In reviewing your portfolio, this may be a once-in a-lifetime low cap rate for sellers.

Well first of all, because our stock price is significantly below what we believe net asset value is, to raise capital, certainly, sales of assets are a very strong source of new money.

After saying that, it only makes sense to sell when you have an opportunity to redeploy that money.

Otherwise, it's very dilutive to our shareholders.

Would you consider a stock buyback?

Well look, if our stock price continues to be at a number that is below and significantly below net asset value, certainly, that's one form of investment that would make some sense.

Okay.

Thank you very much.

(Operator Instructions).

Richard Moore.

The lease term income, is that only from the Media Play?

I think there was two, Media Play and Circuit City.

Okay.

And that was the total of the whole thing here, Rich?

Yes.

Okay.

And then is there more in the fourth quarter?

I don't expect any more, but again, I think our asset management people are pretty opportunistic, but right now there's nothing planned.

I think to get something done in the next quarter, I think you'd have to have it identified at this point in time.

Okay, okay.

And then I guess I'm not quite certain -- or I guess I didn't understand exactly on the portfolio sale, what is the status?

I mean you have something close on the seven?

Well, you know, the promotional material went out on that in September and usually, you take about a thirty-day timeframe in order for the initial bids to come in.

So we would expect to be reviewing offers let's say in early November.

Okay.

But there's nine in there, is that right, Dennis, or is there just seven?

No.

We've made available for sale up to nine and we've identified nine in the package.

But we are committed to sell at least seven.

Okay I've got you.

And then you guys have been working pretty hard to fill this Clarion Lion joint venture.

When do you think you actually get that done?

Is that -- number one.

And number two, do you end up expanding it, do you think, or is it just too hard to find acquisitions for it?

Well so far this year, we've been pretty successful.

We'd like to think that we will indeed fill it.

My original expectation had been by the end of this year.

We have indeed presented to the partnership more than enough assets to have equal that.

The problem has been that the bidding process at the end of the day had just gotten way too aggressive in what we call the best and final.

We had always been one of the last of the two or three, but invariably, somebody was willing to pay more than we thought we should pay for those assets.

Otherwise, we would have been done by the end of this year.

So my expectation is that this last oh, 30% -- less than 30, more closer to 25% -- will probably require up to the first six months of next year.

Okay.

Do they have interest now in expanding that, you think?

When we were proceeding at the pace that we were originally, I indeed had had conversations with those people who run the fund about how much we wanted to expand it.

So indeed, we are working well together.

We are slightly ahead of plan for '05, just in the income we had projected from these individual assets.

And so I think we have a very good relationship with the Lion Fund and I see absolutely no reason why that wouldn't be expanded.

Okay.

And then looking at the IRS issue for a second, can you give us an update of where you are in the process, I mean what's happening at this point?

Well, as of this moment, there has been an acknowledgment by the agents who had responsibility for this case that you know -- because we had told you our protest had been in.

There was a process called The Review, which is they bring in then legal counsel to take a look at both their case and our protest to make sure that everybody has stated their cases clearly.

That is done and the agents have now acknowledged it is up for review, it has been sent on to appellate.

We've had preliminary conversations with appellate, who have said, well they haven't seen it yet but they are expecting it any day.

Okay.

Then do they have a timeframe that's sort of spelled out for the period they get to look at it or is that just open-ended?

Unfortunately, it is not a specific statutory timeframe.

However, the people who were involved in the review last time, it is expected that they will be involved again.

We are geared up the moment that they get the case.

Okay.

Very good.

And then the last thing for me is, could you tell us a little bit about Toledo?

You know, why Toledo, what you are thinking there.

I mean you are in Detroit, we are in Cleveland and it's kind of in between, in the middle there.

What are you thinking about Toledo?

Are you talking specifically about Rossford Pointe?

Yes, and about the city and the submarket and just kind of why you are there, I guess.

Well, we have been in Toledo for a very long period of time.

As a matter of fact, the Spring Meadows shopping center that we are now expanding with the Petsmart, we had originally developed as a private company.

So we've known the Toledo market.

The Toledo market basically is a nice, stable market with an SMSA over a million people.

We had an opportunity with some of the retailers that we put in the Spring Meadows project, you know, the anchors who'd said that they wanted another development on the south end of town in the Rossford Perrysburg area, which is the more affluent area of the Toledo market.

And we were very pleased to go into that area and we really were pioneering to a certain extent because there really wasn't very much development at all.

Subsequent to our starting construction on that shopping center, there have been no less than four other centers that have been built in the very area where we built our Crossroads Centre.

And now based upon the desire of additional retailers -- and I didn't mention this when Philip asked this question about other retailers wanting into our centers.

But because we had the land adjacent to our Crossroads Centre, we were able to accommodate an expansion of our development by building something adjacent for Petsmart.

Okay.

Very good.

Thank you, guys.

David Ronco.

Sorry if I'm asking a repeat question here.

I got dropped for a sec.

On the refinancing activity, I know that you secured financing for three of the 10 assets.

Assuming you do the other seven, what is the expected timing of those and then a couple just related questions.

What sort of LTVs are you achieving.

And then the interest savings by my calculations here look like they will be at least $0.15 annually.

Am I thinking about that the right way?

I think you're thinking about that correctly.

What we are looking at, our line comes due this year.

We've got the option to extend it for another here.

I think we are looking at reworking that line and then, more likely than not, use some of those seven assets as not necessarily collateral but to give us adequate coverage in a reworked line.

So (multiple speakers)

Okay.

Okay?

Thanks a lot.

(Operator Instructions).

Nem Janovich (ph).

Just a quick follow-up on the gentleman that asked you about the share buyback question.

You have two pending on-balance sheet acquisitions.

I would imagine given what you were talking about cap rates in the market that they would be between what 6 and 7%?

Yet, your equity is trading at implied cap rates of over what, 8.25%?

What's the rationale for going --

Nem, I don't think -- again, we have no pending on-balance sheet acquisitions.

I think Dennis was talking about potentially looking at some if they made sense for us.

But anytime you have capital, you've got alternative uses for that capital, be it you know acquisitions on or off-balance sheet, or expansion renovation program or a development program.

Or how about a buyback program?

Or potentially buyback.

We have historically bought some stock back when we thought the pricing was right.

Is the pricing not right now?

I mean I can't replicate an 8.5 yield.

I mean our private side can't do it.

I think you're getting pretty close.

Okay.

Great.

Thank you.

At this time, there are no further questions.

Well then I would like to thank all of you for your interest and your attention and we'll look forward to talking with you again at the end of the fourth quarter.

Thank you very much.

Ladies and gentlemen, this concludes today's conference call.

You may now disconnect.