Rithm Property Trust Inc (RPT) 2006 Q4 法說會逐字稿

Good day, ladies and gentlemen and welcome to the fourth-quarter 2006 Ramco-Gershenson Properties Trust earnings conference call.

My name is Shaquana and I will be your coordinator for today.

At this time, all participants are in a listen-only mode.

We will facilitate a question-and-answer session towards the end of this conference. (OPERATOR INSTRUCTIONS).

I would now like to turn the presentation over to your host for today's call, Ms. Dawn Hendershot.

Please proceed, ma'am.

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

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

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 and welcome to our conference call.

We appreciate your interest and your attendance.

Our fourth quarter and full year 2006 were busy and productive periods.

We formed two joint ventures spanning the acquisition spectrum from core and core-plus to opportunistic.

Our largest development to date since going public opened to huge crowds in the fourth quarter.

We were extremely active in the area of value-added redevelopments and for the most part, we moved out of the non-core tertiary markets through the sale of seven shopping centers.

We produced double-digit rental increases for both new leases signed, as well as leases renewed.

Our stock price moved up smartly, increasing approximately 52% for the year and December 31, 2006 will be remembered as the date that the never-ending IRS tax case came to an end.

All in all, 2006 was a very good year.

It was also a year wherein the successes achieved in venture formation, acquisitions, the completion of several developments and our strides in asset management have laid the foundation for our growth for years to come.

My only major disappointment last year came when RioCan decided that Rio couldn't.

The bad news is that I was embarrassed to have announced a transaction only to be blindsided by a 180 degree reversal by their CEO from his enthusiastic endorsement just 30 days before.

I assure you that their rather surprising change of heart had nothing to do with any disagreements or the quality of our assets.

Instead, I believe that upon detailed investigation, RioCan discovered that the currency risk and their G&A of administering an American subsidiary relative to the transaction that they had negotiated with us was more costly than they had originally anticipated.

The good news is that we came to appreciate the impact such a venture would have on our balance sheet and thus, we are presently actively exploring several alternative transactions.

At this time, I would like to briefly review our accomplishments for the last quarter.

As announced, we formed two joint ventures.

The first with Heitman Value Partners is intended to produce above-average returns through the redevelopment of distressed centers.

Although this relationship will be limited in size, we have already acquired one asset, Collins Pointe, in Cartersville, Georgia, a suburb of Atlanta.

We are already well underway in negotiating an agreement with a credit national tenant to land lease a significant outparcel adding value to the site.

We have also acquired some adjacent land for the expansion of the center.

Thus, barely two months into our venture, Ramco has already identified a course of action and is underway in turning our first center around.

The other shopping center identified for this partnership is Paulding Pavilions in Hiram, Georgia, also in metropolitan Atlanta.

Here, we have just completed the execution of a Staples lease in 21,000 square feet, filling approximately half of the vacated supermarket.

We are in the process of securing community approvals for an expansion of the center and we reasonably expect to identify another anchor retailer for the balance of the vacant space by the end of the third quarter.

Our other joint venture announced in the fourth quarter is an investor advised by the Heitman organization.

It has similar characteristics in size and structure to our relationship with the Clarion Lion Fund.

This venture will be seated by three of our shopping centers.

Two have already been contributed;

Merchant's Square in Carmel, Indiana, an Indianapolis suburb, and Crofton Centre in Crofton, Maryland.

A third center will be contributed in the first quarter of 2007, so that the total value of the centers contributed by Ramco will equal approximately $125 million.

We have already identified an acquisition candidate for our new relationship and we are actively working to acquire additional centers in the mid-Atlantic and Midwest markets.

Our criteria for acquisitions includes the requirement that the purchases must be in metro markets.

On the development front, over the last couple of years, we have discussed with you our River City Marketplace.

In November, we opened the center with almost 700,000 square feet, including nine anchors.

Since then, we have signed three additional destination users, including Best Buy, Ashley Furniture and Gander Mountain.

These retailers round out our anchor lineup at 12.

At the end of the first quarter of 2007, we will have approximately seven ancillary tenant spaces to fill, amounting to approximately 28,000 square feet or less than 3% of the entire complex.

At the present time, we are actively working on two additional development projects of size that we hope to announce in the third quarter.

In 2005 and early 2006, we had five developments underway.

We reasonably expect that we will have at least three projects under construction in 2008 and are planning to duplicate that number going forward.

As I said at the outset, our asset management and value-added teams have been busy and productive.

Our value-added activities span the full spectrum of retail improvements, including the addition of a Target department store on the west side of the state of Michigan in Norton Shores, the addition of Office Depot to our West Allis Centre in Milwaukee, Wisconsin, Best Buy and PetSmart in metropolitan Detroit at our Tel-Twelve Center, as well as H.H.

Gregg in 35,000 square feet in Knoxville, Tennessee and Ashley Furniture in Toledo, Ohio.

Interestingly, with all the talk of the impact on the Michigan economic by the auto industry, last year, we added six new destination anchors of at least 20,000 square feet each to our Michigan assets.

Further, as we discussed in our last quarter, at our Hunter's Square Center in Farmington Hills, Michigan, we continue to average between $30 and $45 per square foot for new tenant leases up to 4500 square feet, a number we are not achieving in our Florida centers.

We are also pleased with our overall leasing success in 2006.

Both in the fourth quarter and for the year, we averaged approximately a 10% rental increase for those retailers who renewed with us at lease expiration and for new leases with tenants other than anchors, we achieved an increase over portfolio average of 35% for the fourth quarter and over 10% for the year.

You will note in our statements a slight drop in our occupancy rate.

The reason for this is our 2006 acquisitions, especially the latest, the Home Expo building in Troy, Michigan acquired as part of our Lion Fund joint venture.

We purchased this asset because it is immediately adjacent to our Troy Marketplace center anchored by Nordstrom, REI, Linens 'n Things and PetSmart.

We are pleasantly working with a 42,000 square foot use to fill almost half of the vacant 93,000 square foot Home Expo building.

Our plans for 2007 reflect a significantly more aggressive acquisition pace, the ripening of our two development deals, as well as the identification of a third and the announcement of a number of additional value-added redevelopments that are presently in the works.

With the tax case behind, us we are focused on a significant improvement in our balance sheet and the continuation of healthy growth in our funds from operations.

Ramco-Gershenson is first and foremost focused on maintaining and improving shareholder value.

We believe our stakeholders are best served by not only growing earnings, but also by maintaining and improving the assets that are foundation of those earnings.

The improvements of our centers through value-added redevelopments and the delivery of new products, such as our River City Marketplace in Jacksonville, Florida, will ensure both stability of our core portfolio and improving metrics for our financial statements.

Based on the quality of our assets and our current multiple compared to our peers, we are still a very good buy.

For those of you who have been with us for a while, thank you for your confidence.

For those of you who are new to Ramco-Gershenson, we encourage you to take a closer look.

I would now like to turn this call over to Rich Smith who will discuss the finer points of our financials.

Thank you, Dennis and good morning, everyone.

For the fourth quarter, our diluted FFO per share was $0.65, which met First Call estimates.

This represented an 8.3% increase from the $0.60 reported in 2005.

On a gross basis, our diluted FFO increased $2.2 million.

We went from $11.8 million in 2005 to $14 million in 2006.

Some significant changes quarter-to-quarter included increases in minimum rents, other income and gain on sale of real estate.

Additionally, we had decreases in other operating expense, G&A and preferred stock dividends, which were dilutive in 2006 and anti-dilutive in 2005.

These positive changes were offset by an increase in interest expense and decreases in our recovery margin and income from unconsolidated entities.

The $1.444 million increase in minimum rent was made up of an$859,000 contribution from acquisition properties and a $585,000 contribution from core assets.

The $406,000 increase in other income was a result of a $237,000 increase in lease termination income and a $187,000 increase in interest income.

The change in interest income related mostly to funds lent to our River City joint venture.

During the quarter, we sold outlots at our Jacksonville development, generating incremental net gains of approximately $841,000 over the same period last year.

The decrease in our other operating expense for the quarter was mostly the result of a charge taken in 2005 for receivables deemed to be uncollectible.

Since we expect to collect from our tenants the majority of our Michigan single business tax, we have reclassified the expense from G&A to real estate tax expense in 2006.

This explains the majority of the $654,000 decrease in G&A.

Our interest expense increased approximately $1.5 million over the same period last year. $1.470 million of the increase resulted from additional borrowings at a higher average interest rate. $244,000 related to loan defeasance costs and $112,000 to interest on capitalized ground lease.

The additional interest was offset by a $351,000 decrease in amortization of loan origination fees primarily due to our change to an unsecured credit facility and other miscellaneous items.

For the 12 months ended December 31, our FFO per share increased 5% or $0.12.

We went from $2.42 in 2005 to $2.54 in 2006.

On a gross basis, our diluted FFO increased $6.7 million.

We went from $47.9 million in 2005 to $54.6 million in 2006.

Some significant changes for the 12 months ended consisted of increases in minimum rents, gain on sale of assets and earnings from unconsolidated entities.

We also had decreases in G&A and preferred stock dividends.

These contributions to FFO were offset by decreases in our expense recovery margin and discontinued operations, as well as increases in other operating expenses and interest expense.

Our minimum rent increased $5.3 million that was made up of a $3.568 million contribution from acquisition properties and a $1.763 million contribution from core assets.

The contribution from core assets were negatively impacted by a $544,000 reduction in minimum rent, which related to anchors purchasing the stores at Auburn Mile and Crossroads.

During the 12 months ended, our land sales generated net gains of approximately $4.3 million compared to the $499,000 generated in 2005.

Our income from unconsolidated entities increased $602,000.

After adding back depreciation expense, these entities contributed $1.5 million to our change in FFO.

The majority of which came from our joint venture with ING, as well as the benefits of our Jacksonville projects starting to come online.

For the 12 months ended, we recovered 95.2% of our operating expense compared to 97.8% last year.

This resulted in a $1.2 million reduction in our recovery margin.

As discussed on previous calls, most of the variance was the result of adjusting prior years' estimated recoveries to actual based on true-up billings completed after the respective year-end.

These adjustments increased recoveries in 2005 and decreased them in 2006.

As previously discussed, a $509,000 decrease in G&A, general and administrative expense, was mostly the result of reclassifying our Michigan single business tax from G&A to real estate tax expense.

Since we only expect to recover approximately 75% of the expense, it had a slight drag on our recovery ratio.

For 2007, we expect our recovery ratio to be between 96% and 97% of expenses.

Again, as we discussed on previous calls, the decrease in income from discontinued operations resulted from the sale of seven tertiary market assets earlier in the year and our increase in other operating expense related to the costs associated with opening a regional office in Florida.

Our interest expense for the year increased almost $3 million. $4.160 million of the increase was due to additional borrowings at an average higher interest rate. $416,000 of the increase related to interest on a capitalized ground lease acquired in December 2005 and $244,000 to loan defeasance costs.

The increases were offset by a $601,000 increase in capitalized interest on development and redevelopment projects and by a $1.231 million decrease in amortization of loan origination fees.

Our debt at quarter-end was $676.2 million with an average rate of 6.3% and an average term remaining of 3.8 years. 73.9% of our debt was fixed at an average rate of 6.1% and 26.1% of our debt was floating with an average rate of 6.8%.

Availability at quarter-end under our credit facilities was $43 million.

Our EBITDA interest coverage for the year was 2.1 times and at the end of 2006, our debt to market cap improved to 44.5%, down from the 54.3% reported at year-end 2005.

During the quarter, we sold $84.7 million of assets, generating $12 million used to invest in our off-balance sheet joint ventures and $72.7 million to pay down debt.

For the year, we sold $145.7 million of assets, $12 million of which was used to invest in off-balance sheet joint ventures and the remaining $133.7 million was used to pay down debt and reinvest in our business plan.

Our capital expenditures for the quarter totaled $33.7 million. $12 million was invested in our joint ventures, $9.5 million on development projects, $5.9 million on acquisitions, $5 million on expansion and renovation projects, $670,000 on recoverable CAM and $608,000 on non-recoverable CapEx.

For the year, our CapEx totaled $110.2 million.

We spent $53.8 million on development projects, $20.5 million on acquisitions, $12 million on joint venture investments, $19.6 million on expansion and renovation projects, $2.7 million on non-recoverable CapEx and $1.6 million on recoverable CAM.

We expect to fund future growth by retaining cash from operations, by continuing to sell non-core assets and assets located in markets with limited growth opportunities, by refinancing assets which had been expanded and renovated in prior periods and by drawing on our credit facilities.

And lastly, we expect our 2007 diluted FFO per share to be between $2.61 and $2.69 with a slight weighting towards the second half of the year.

Shaquana, we would like to open the call for questions at this time.

(OPERATOR INSTRUCTIONS).

Philip Martin, Cantor Fitzgerald.

Just a couple of questions.

I guess to start, same-store operating margins were down year-over-year and I know, Rich, you touched on a little bit of that, but I wanted to see if you could give a little more detail on that.

I know -- is part of that related to the tax shift from G&A to operating expenses?

Some of it could be, Philip.

We also had if you look at same center income or operating income, you look at -- there are things -- kind of one-time things that happened in both quarters.

Obviously, we had changes in lease termination fees and obviously we had changes in bad debts as we talked about.

If you strip the one-timers out, you were flat for the three months and your same center growth was probably about 2.5%, 3% for the year.

Okay.

So there is nothing going on there fundamentally.

It is an issue more of one-time issues?

I think that that is correct.

Again, some of it -- a little bit of drag from SBT.

Again, a lot of our same center properties obviously are Michigan properties and the Michigan properties obviously pay the SBTs so it is allocated to them.

So a little bit of the slippage there is a result of that as well.

I know the operating expense ratio on the same-store went down and again a portion of that is related to the tax issue or --?

[Not] the tax issue, but Michigan single business tax.

The payment in 2006 was the first time since we have been a REIT we have been a payer of Michigan single business tax.

Now the assets sold into the joint venture, Merchant's Square and Crofton Centre.

Those assets, are they -- characterize those for me.

Are those value-add opportunities or incremental value-add opportunities or are those considered more fully stabilized with little in the way of incremental value-added growth?

It's Dennis.

For all intents and purposes, we would consider them stabilized assets.

And the third asset to go in will fall in that same category.

Our partner obviously is interested in achieving an FFO that would be more reflective of a mixed portfolio that would include some assets with opportunities to achieve higher returns.

These on an IRR basis on a reasonable whole period would probably come in in the 9% to 10% area and we are out looking for assets that probably would produce somewhere in the 10% to 11% so that we could achieve an overall 10%, 10.5% IRR for our partner.

These are -- the first three are relatively stable assets.

Okay.

Would some of the Detroit assets, the suburban Detroit assets be potential candidates for this joint venture to be sold into the joint venture?

We have a group of states that have been specifically identified and because this transaction was completed prior to the time of filling out our Lion Fund relationship, Michigan is part of the Lion Fund, so we specifically excluded that.

Okay.

The next question, the returns on the redevelopments in 2006 and the forecasted returns on 2007, could you go over what those were and may continue to be?

We averaged just over 11% on all of these redevelopments.

Some of them were in part defensive moves and that is why we would have achieved only something in the vicinity of 8% or 9%.

So on the low end, we achieved an 8% or 9% return and on the higher end, we were in the mid to high teens.

One of them at Taylors Square where we put in Home Depot and really didn't do any work of significance, we obviously got a very significant return in the 65% to 70% range.

And that 11% is still a pretty good number for 2007 as you look at the opportunities in front of you?

I like to think it could be higher.

Spoken like a true CEO.

Thank you very much.

The other thing here.

What was the next question I had?

The total aggregate value of the redevelopments brought online or completed in 2006 was what?

I would say to maybe just answer that backwards.

We spend probably about $20 million a year, so I would say that we --.

It is about -- it's $25 million -- $25.7 million.

Okay. $25.7 million. 2007, this is probably in the supplemental, but, again, in that same kind of $20 million, $25 million range?

Yes.

We have been ranging anywhere from $20 million to $30 million.

Per year?

Per year for the last 10 years and I think that is a good number.

Again, understand our philosophy is that where our anchor tenants can spend their own money, we prefer that.

It is also reflective maybe in a lower rental rate, but we'd rather have them put out their capital because they are really not going to pay us the kind of returns that we'd like to achieve that we can get on the ancillary tenants basis.

But $25 million is a relatively good number.

And the last question I have, in terms of finding another JV, I know the Heitman JV is a nice one as well.

Do you have a sense of the timing when another JV may be announced?

Well, let me put it this way.

If I have my druthers, it will be second quarter, but I would say second to third quarter.

Okay.

Thank you very much.

Christeen Kim, Deutsche Bank.

Dennis, you were talking about your occupancy dips this quarter and you spoke about the Home Expo acquisition having an impact on that.

But in terms of your same-store occupancy, it is down 200 basis points from the third quarter and I am assuming that Home Expo wouldn't be in that figure.

So I am just trying to reconcile where the occupancy drop came from.

We also had a situation -- there was a number of smaller impacts, but we terminated a lease with the Kohl's supermarkets in our West Allis project and we did that specifically so that we then could turn around and we've made a deal with Office Depot and Office Depot has just taken occupancy of that space.

So even though we had a dip with the Kohl's occupancy, they were probably paying $6 or $7 a square foot and Office Depot will be in the mid-teens and we have some additional space that we are reconfiguring.

So it will provide a significant pop for us going forward.

Other than that, I don't think there is anything of any consequence.

Part of this again is tenants leaving as we attempt to renew spaces for retailers who lets say moved on, but we are very confident that that small dip will be made up more likely than not in the first quarter.

So what are you assuming in terms of an occupancy ramp for 2007 in your guidance?

Right around 95%.

95%.

Great.

And I think I may have missed this, Rich, when you spoke about this before, but the reclassification of G&A into real estate taxes.

Could you just clarify what items went into real estate taxes?

The biggest thing is Michigan single business tax, which is really a gross receipts tax that we are able to pass along to our tenants.

Again, some leases exclude it, but most of our leases do.

So basically -- so your recovery ratio made sense.

What we did is we took this single business tax that we paid in 2006 and reclassified that up to the recoverable expenses.

I think in our leases, it is covered under real estate taxes so that is where we put it.

So you had a decrease in G&A and an increase in real estate taxes as a result of that.

But when you look at the income or the recovery for every dollar we moved up there, we expect to collect about $0.75 as opposed to for every normal dollar in CAM or taxes, historically we have collected call it 96%, 97%.

This is the first time that you have been able to recover these expenses?

I am confused as to why the reclassification.

For the first time we have been a Michigan single business tax payer.

We have had credits that have offset that historically, so we haven't been a payer.

So then is 2.3, 2.2 the appropriate quarterly run rate for '07 then for G&A?

I'm sorry, for what?

Is 2.2, 2.3 the appropriate quarterly run rate for G&A for 2007?

Again, I think that looking at G&A -- going out next year, it -- looking at the whole year -- looking at the year for this year, -- I think with some normal pops in there, I think is -- looking at the year as a whole, not necessarily the quarter, but looking at the year probably makes more sense than just looking at the (inaudible).

So G&A as a whole on an annual basis should be comparable in 2007 as it was in 2006?

Again, it'd be normal increases, but last year, we were $13 million.

It is expected to go up maybe 5%.

Great.

Thank you.

Nate Isbee, Stifel Nicolaus.

Rich, just trying to make a little sense of -- trying to understand the 2007 guidance.

How much land sales are you assuming in your guidance?

In the land sales, what we're expecting -- I think most of it again is from --.

River City?

From River City and if I remember right, that was about -- roughly about $1 million there.

So it is going to go down in '07?

No, no.

It is higher than that, Rich.

Hold on for a second.

I'm sorry.

You are right.

It is more than that.

It is roughly -- we had about -- roughly about $3 million.

I think we have got about $4 million left.

Most of it will happen next year.

Okay, great.

And what is your assumption for same-store NOI?

Same-center NOI, I would say 3%, somewhere around 3%.

3%.

Okay.

Just last question, how much NOI did River City generate in 4Q?

I don't have that number handy, but I will get that back to you.

As far as our share of earnings, are you looking at fees and everything all-in?

All-in.

Let me get back to you on that.

But if you look at the supplement, most of the development fees are River City, but I will give you our share of earnings as well.

Okay, great.

Thanks so much.

Rich Moore, RBC Capital Markets.

When you look, Dennis, at the next joint venture to come, is this a joint venture along the lines of the bigger Heitman and the Clarion venture in terms of size, etc.?

If I have my druthers, it will be larger than either one of those and again because we get a rejiggering of the balance sheet by contributing/selling some of our more stable assets into that, I think that seeding the venture will be an important element of where we go.

I think the one difference from the RioCan transaction, however, is that we -- to the extent that we are going to say at least in a discrete area that all acquisitions will be shown to this venture, I am not going to include developments in that and I want to do developments as they arise either with a partner or on balance sheet.

Something like a River City Marketplace will and has produced significant value and the more of those types of transactions I can capture for our shareholders the happier I will be.

So rather than just have a blanket development relationship with someone, we are going to do them on a one-off basis.

Okay, good.

Thank you.

So it sounds like this is going to be a pretty big venture, this new one coming.

Is that far down the road?

Have you made good progress or are you still kind of poking around?

Somewhere between poking around and a lot of progress.

I got you.

And then looking at the ING joint venture for a second, would you go higher with those guys in terms of capacity or do we stop at $450 million?

We have an outstanding relationship with the folks at ING.

We have worked extremely well together.

I think part of that will be impacted by the areas for this new joint venture and how that would or wouldn't impact the territories on working with ING.

But we have at least one additional asset we are working with ING on that will take us within a hairsbreadth of $450 million.

Very good.

So does all of this joint venture activity sort of eliminate the need in your minds to issue any common equity to do anything for the balance sheet?

Never say never.

Obviously my first preference would be to improve the balance sheet based upon our ability to sell stable assets into a new relationship.

We have got two forms of preferred out there and there may be an advantageous way to approach one or both of those through the issuance of equity as long as it is accretive.

Okay, very good.

And then when you look at developments, is the next -- the two that you have that you are working on seem to be fairly small.

No.

Why would you say fairly small?

Depending upon and you never can tell with some of the anchors that you ultimately deal with whether or not they insist upon buying.

Those two developments will run somewhere between $40 million and $75 million.

Okay.

And then you have another you were thinking of.

There's others you are looking at?

Yes.

And again that would fall approximately in the same category.

I got you, good.

And then when you look at the tenant environment real quick, what are you guys seeing in terms of demand from tenants and is there anybody out there, any bankruptcies or any tenants that concern you, not necessarily bankruptcies, but anybody that just concerns you?

No.

We continue to see very good deal flow.

I want to not say that I am incredibly pleased and just slightly surprised by how rapidly we have moved through once we really got going, the leasing in our Jacksonville center.

Truly we are coming up on the high 90% category and in our Michigan assets, our Georgia assets, we continue to see very, and the rest of Florida, very strong tenant interest, especially from national retailers.

Okay, very good.

And the last thing I forgot to ask you, this is on the joint ventures.

The run rate for fee income in '07 or maybe the assumption, Rich, for '07 fee income, how should we think about that?

The nature of the fee income is going to change.

I think that with the joint ventures we have, as Dennis pointed out, I think we are trying to step up our acquisition program.

Development, I think maybe if you get any toward the end of the year.

So hopefully acquisitions up, management income is up and leasing is up as well on that.

But I think that -- so looking at numbers, I would still say that roughly the same as this year because your developments are tapering off.

Hopefully we will replace that with acquisitions.

I got you.

Very good.

Thank you, guys.

Philip Martin, Cantor Fitzgerald.

Yes, I am back.

Philip, I think you used up all the questions you are allowed.

Well, just on the pipeline, on your investment pipeline in 2007, can you give us a sense of what that looks like and how much of that could wind up in joint ventures versus on your balance sheet?

I know it is somewhat difficult to say, but is there any thoughts on that?

Well, start with this, Philip.

Based upon the territories that we have with the Heitman venture and filling out the ING, more likely than not just about everything we will do we will do in the joint venture format and I would like to think that we are probably talking about somewhere between $400 million and $500 million or hopefully larger for 2007.

Okay.

Again, we have got some in the pipeline right now that have been approved by the partners and we are just waiting to close.

Okay.

And on the leasing front, I know leasing has been pretty strong over the last 12 months for you.

A lot of that is just the locations that you are in.

But when you look at the lease expirations in 2007, can you give us a sense of where you are at relative to market in terms of rents?

Again, probably the best judge of market is the same space we have been getting and that has been around 10%.

So I think that I would say that if we are able to turn all of our centers, that logically you would expect to get somewhere around 10% or maybe a little bit greater than 10% in some other markets.

Thanks again.

(OPERATOR INSTRUCTIONS).

At this time, we have no further questions.

Once again, I want to thank everyone for their attention.

We are very focused here on making 2007 a successful year and we look forward to talking to you at the end of the first quarter.

Thank you for your participation in today's conference.

This concludes the presentation.

You may now disconnect and have a good day.