Rithm Property Trust Inc (RPT) 2009 Q2 法說會逐字稿

Greetings and welcome to the Ramco-Gershenson Properties Trust second-quarter 2009 earnings call.

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

A brief question-and-answer session will follow the formal presentation.

(Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Ms.

Dawn Hendershot, Director of Investor Relations.

Thank you, Ms.

Hendershot, you may begin.

Good morning and thank you for joining us for Ramco-Gershenson Properties Trust second-quarter 2009 conference call.

I'm 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 today 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.

I would now like to introduced Dennis Gershenson, Chairman, President, and Chief Executive Officer, and Richard Smith, Chief Financial Officer, both of whom will be presenting prepared remarks this morning.

Also with us are Thomas Litzler, Executive Vice President of Development; Michael Sullivan, Senior Vice President of Asset Management; and Catherine Clark, Senior Vice President of Acquisitions.

At this time I would like to turn the call over to Dennis for his opening remarks.

Thank you, Dawn, and good morning.

Today we would like to share with you the highlights from our second quarter and the first six months of 2009.

My comments will address our leasing achievements, our core portfolio performance, an update on our balance sheet and liquidity, the strategic review process, and guidance for the year.

We're very pleased with our performance for this quarter, in light of both the current economic difficulties facing our industry and the distress the American homeowner, worker, and consumer are experiencing.

Together these issues have had a profound effect on the retail community, including both the public and private shopping center owners.

In the second quarter, Ramco-Gershenson faced a number of challenges, including confronting and resolving a proxy contest.

We expanded our Board of Trustees by two members, adding Matthew Ostrower and David Nettina, who have attended several Board meetings to date and are already making a positive and constructive contribution.

The cost of the proxy contest, coupled with the third-party expenses associated with our strategic alternative study, resulted in an extraordinary charge of $0.04 per share.

Excluding these extraordinary items, our FFO for the second quarter would have been $0.56 per diluted share, exceeding First Call estimates.

One of the most significant challenges to be met by our management team in 2009 is replacing vacancies in our tenant roster created by the bankruptcies of Linens 'n Things and Circuit City, as well as a number of other mid-box locations.

Our leasing progress since the start of 2009 has been substantial.

We have executed leases with or opened seven anchor stores accounting for approximately 200,000 square feet.

And we have signed leases with more small-format retailers year to date than in the same period in 2008 and 2007.

Balancing the increase in leasing velocity is the reality that the newly signed mid-box retailers will not be paying rental rates comparable to the tenancies they are replacing due to a number of factors, including the significant availability of large-format spaces; the type of goods sold by the replacement tenants; and expectations for a slower pace of consumer spending.

Because Ramco-Gershenson is having success signing leases with national, regional, and local retail tenants, we are not supplementing our leasing program with creative alternative uses.

Our experience this year to date includes an increase in interest from local tenants with strong customer loyalties who are relocating to our centers to take advantage of the vacancies created in stronger shopping centers.

We feel that our leasing success is due to the fact that our shopping centers are best-in-class; that they are tenanted with the right mix of retailers; are located at the most heavily trafficked intersections in their trade areas; and provide the most desirable shopping experience for the customer.

We have also had success in the first six months of 2009 retenanting the Linens space in our Troy, Michigan, center with the opening of Golfsmith and the signing of two new leases with Ross Dress For Less for shopping centers in Florida, one to replace a vacant Linens at our Plaza at Delray shopping center in Delray Beach, Florida.

As I have mentioned in past calls, there are several sets of leasing statistics which determine the direction and success of our leasing efforts.

The first two sets of numbers are presented in our supplement and include both new retailers who have taken occupancy of their premises in the first and second quarters of the year, and those tenants we have retained at the expiration of their leases.

An equally important statistic and one which we track internally is for leases actually being signed during these periods with tenants who will open later in 2009 or, in the case of anchor tenants, possibly in 2010.

Concerning those new tenants who opened in the second quarter of 2009, one of the 13 smaller format retailers exceeded 10,000 square feet in size and is paying a single-digit rent.

Excluding this one retailer, our rental average for the remaining 12 new tenancies would have been $18.95, comfortably above our non-anchor-tenant average.

Please note as well that of the 67 leases that expired during the second quarter we retained over 83%, and year-to-date over 77%, which exceeds our historical average of 73% to 75%.

This emphasis on tenant retention pays dividends as we avoid downtime, legal costs, and capital expenditures if we had to refill their spaces with new tenants.

Even with this higher retention rate for renewals, we're achieving rental increases for both the quarter and year to date of 5.7% and 3.7%, respectively.

Potentially an even more important indicator of our leasing direction than tenants who have opened in the quarter is the number of retailers we have committed to new lease agreements in the last 90 days and the first six months.

For the quarter, we signed 25 new non-anchor leases at an average rental rate of $16.50, slightly above our portfolio average for all non-anchor tenants.

To date this year, we have executed 50 non-anchor new leases, compared to 37 for the same period last year and 35 in 2007.

All of our leasing activity has translated into an improving occupancy rate of 91.3% for Q2, which is 40 basis points higher than our occupancy rate of 90.9% at the end of the first quarter.

Tempering our leasing success in the first half of the year is the impact of Circuit City and the Linens closings.

These bankruptcies have negatively affected one of our more important operating metrics, the same-center NOI comparison for the quarter and year to date.

Our same-center numbers for the quarter and the first six months were down 3% for the quarter and 1.2% year-to-date.

Excluding the impact of Linens 'n Things and Circuit City, our same-center NOI would have been a negative 0.3% for the quarter and a slightly positive figure of 0.8% for the first six months.

An additional reason for the income reduction in the second quarter is the rental relief we have given to a limited number of mid-box retailers.

Although this rental reduction is not significant relative to any one lease, we have worked with a few anchors to ensure their continued tenancy in our center as they contemplate their strategy of reducing store counts in a number of metropolitan markets.

Our understanding with these merchants also includes the extension of their lease term by the early exercise of an option, giving us a longer secured rental stream.

We feel that this trade-off is a win-win for both the tenant and landlord.

Other operating statistics of note include our ability to maintain an operating expense recovery ratio above 100% on the same-center basis.

Even with the superior ratio, the financial health of our tenancies is crucial; and thus year to date we have been successful in reducing CAM costs we pass on to our tenants by over $1.6 million portfolio-wide.

We believe that our large, multi-anchor shopping centers averaging over 220,000 square feet have always created a major leasing advantage.

In light of the current market conditions, we feel this advantage is magnified.

Our multi-anchor approach insulates our assets from the loss of any one major tenant.

And our larger centers, with several major anchor retailers and a variety of smaller tenants complementing the anchor mix, promote a greater opportunity for cross-shopping as compared to the single-anchored supermarket center, which is where historically there is little cross-shopping.

I know that you're interested in an update on our strategic alternative study.

The Board and management team has been focused on evaluating our future over the past several months.

The Board has met on a number of locations, including as late as two weeks ago.

This is an ongoing process; but let me assure you that the Board and the management team during this period have taken positive, definitive steps to move this Company forward in order to maximize the value of all shareholders and to ensure that Ramco remains a strong, healthy, ongoing concern.

Thus, good stewardship requires us to take a number of actions, including the extension of our line of credit through 2012 and the sale of a number of non-core assets.

These transactions will strengthen our balance sheet and improve liquidity.

Rich Smith will discuss the elements of our capital plan in more detail.

I will merely say that we continue to work with our bank group and feel that we are on the one-yard line in securing all the approvals necessary to extend the full $250 million credit facility.

The pace of the refinancing is meeting our expectations.

As for our asset sales, because of the uncertainty in the investment sales market for shopping centers, be they stable or opportunistic, we chose to pursue the disposition of a number of national credit-quality net land leases for which there is presently a vibrant stable of buyers.

As I shared with you on our last call, we are in contract to sell three of these properties and due diligence is drawing to a close.

All three properties are unencumbered, and we expect to raise approximately $30 million, which will initially be used to pay down our line.

Our revolving line of credit and term loan refinancings, our asset sales, as well as the cost of the proxy contest and our strategic review will all impact our 2009 FFO guidance.

As the timing of some of these changes are not yet exactly determined, we are not in a position today to give explicit revised FFO guidance for 2009.

This number should be clarified in the third quarter as we complete each of these processes.

It is important to note, however, that we do not plan to reduce our 2009 FFO guidance as a result of any change in the performance of our shopping centers.

I would now like to turn this call over to Rich Smith for his brief remarks.

Thank you, Dennis, and good morning, everyone.

For the quarter, our diluted FFO per share was $0.52.

Without the costs related to our recent proxy contest and our strategic review, we would have exceeded First Call estimates by $0.01, and our diluted FFO per share would have been $0.56.

This compares to the $0.62 reported in 2008.

Some significant changes quarter-to-quarter included reductions in property level income and expenses due mostly from the effects of contributing assets to off-balance sheet joint ventures in 2008; from taking income off line for planned redevelopments; and lost revenues due to the closings of Circuit City and Linens 'n Things.

Other decreases in FFO included a decrease in our fee income resulting from reductions in development and acquisition fees, and an increase in our G&A expense resulting from the costs of our proxy contest and our ongoing strategic review.

Excluding those costs, our G&A would have decreased by approximately $250,000 from the same period last year.

These reductions in FFO were offset by increases in lease termination and interest income and a decrease in interest expense, due to reduced borrowings at a lower average interest rate, offset by a reduction in capitalized interest on development projects.

For the six months ended June 30, our diluted FFO per share decreased 12.2% or $0.15.

We went from $1.23 in 2008 to $1.08 in 2009.

Again, without the extraordinary charges associated with our proxy contest and strategic review, we would have been at $1.12 per share.

For the six months, significant changes included reductions in property level income and expenses, due mostly from intervening assets to off-balance sheet joint ventures, redevelopment activity, and the closings of Linens 'n Things and Circuit City.

The changes also included a decrease in our fee income, resulting from a reduction in development, leasing, and acquisition fees.

As I previously mentioned, G&A increased due to the costs associated with the proxy contest and our strategic review.

The decreases in FFO were offset by an increase in other income, which was due to higher interest and lease termination income as well as additional income from our retail maintenance services.

FFO was positively impacted by a decrease in interest expense which, as with the quarter, was the result of reduced borrowings at a lower average interest rate, again offset by a reduction in capitalized interest on redevelopment projects.

Since our last call, we've made significant progress in replacing our two unsecured credit facilities and our credit facility secured by Aquia.

Currently these facilities, assuming we exercise all extension options, are scheduled to mature in December 2010.

We have agreed in principle on the material terms for a new $150 million revolving credit facility, a $100 million term loan, both of which are expected to be secured by 33 assets which are currently unencumbered, and a new $40 million revolving credit facility secured by our Aquia project.

The material terms for all the facilities have been agreed to by KeyBanc, which will act as our lead arranger and administrative agent.

We're well into this process and have received commitments from approximately three-quarters of the required capital and are actively collecting the remaining commitments from the bank group.

We expect to close on the new facility subject to documentation, due diligence, and customary conditions by late third quarter or early fourth quarter.

After the credit facilities are refinanced, we do not have any significant maturities over the next few years.

Our total debt at quarter-end was $662.2 million at an average rate of 4.8% and an average term remaining of 4.3 years.

72.5% of our debt was fixed at an average rate of 5.8%; and 27.5% of our debt was floating at an average rate of 2.3%.

The availability at the quarter-end on our credit facilities was $21 million.

Our EBITDA interest coverage for the six months was 2.2 times.

Our fixed charge coverage was approximately 1.9 times.

And our FFO payout ratio was only 43%.

We feel that between asset sales which are under contract, our line availability, and cash retained from operations, we have ample liquidity to satisfy our capital needs beyond 2010.

As Dennis discussed, the Company will provide revised guidance once it has completed the strategic review, the refinancing of its credit facilities, and planned asset sales.

And again as Dennis mentioned, it is our expectation that these will be resolved during the third quarter of 2009.

We expect our same-center NOI for the year to be down to approximately 3% as a result of the closures of Circuit City and Linens 'n Things.

We anticipate this number to improve as the space comes back on line.

At this time I would like to turn the call back over to Dennis for his closing comments.

I think it's important before we take your questions that you understand our two near-term business objectives.

First, we will continue to maximize the value of our assets; and second, we will increase the strength of our balance sheet, improving our liquidity and financial flexibility.

Although it's always been a primary focus of Ramco-Gershenson, we will continue to analyze all aspects of our portfolio in order to maximize the value of all of our assets.

This process includes assuring that our centers are the dominant players in their trade areas; that they are well tenanted with a diverse mix of retailers who reflect current trends; and that the credit quality and net operating income growth assures us of a very valuable portfolio of assets.

Second, we will build a balance sheet that reflects a conservative debt ratio and provides sufficient liquidity to overcome the challenges the entire economy is facing, in order to be positioned to seize opportunities as they arise.

Finally, while having a strong portfolio of assets and a good balance sheet are prerequisites for future growth, the next chapter of the shopping center industry will be profoundly affected by the consequences of this recession.

Thus, the management teams that will produce superior results in the future are those that can demonstrate flexibility and creativity.

Ramco's team of professionals, with their long history of tackling the challenges associated with our numerous successful redevelopments, will be ideally positioned to overcome the countless complexities that will attend the forthcoming shopping center opportunities; and in turn, our efforts will create value for our shareholders.

We would now be pleased to take your questions.

Everett?

(Operator Instructions) Nathan Isbee, Stifel Nicolaus.

Good morning.

Dennis, just to clarify, you had said that you didn't expect guidance to change due to any changes in your core real estate fundamentals.

Your updated same-store guidance is negative 2 to negative 3.

Previously you had mentioned or communicated in meetings that the guidance assumed like flat to slightly up.

So I'm just trying to understand how your guidance could stay the same given that change in the same-store NOI guidance.

Again, a lot of it has to do with the Circuit City and Linens 'n Things departure.

I think when we looked at that before, I think that was not totally included in there.

All the impact of it was not included in there.

So that is the basic difference, and I would expect that -- as Dennis talked about -- as these tenants come back on line to turn positive.

Again, the hope is sometime next year that that happens.

I understand your question, Nate.

What I mean to say by my comments is that a number of our peers have been talking about deteriorating fundamentals relative to rentals across the board, occupancy, receivables, etc.

So to clarify, what I really mean is that going forward we do not see a deterioration in any of those for the balance of the year.

When we really take into full account the Linens and Circuit Citys, they had a bigger impact.

And the complexities of the new deals that we're making with the replacement tenants and then working with the communities are taking somewhat longer than we expected.

Okay.

That's helpful.

So I guess as part of my follow-up, one of your peers this week had attributed a guidance revision due to specific mom-and-pop retailer weakness.

You are not seeing that?

I understand you do have less of that than some of your peers.

But you're not seeing that in what you have?

As a matter of fact, what we're seeing is that -- and we have not provided the statistic here -- that we have, just relative to the new leases we're assigning, we are probably signing more mom-and-pop choices than we are national tenant leases.

Pursuant to my prepared remarks, what we are really seeing is that we are making deals with retailers who have been in business for a long time, but they are coming from shopping centers that have suffered some issues either with the overall tenancy in the center or their anchors.

And they are moving to our centers.

That, in large part is due to our canvassing program, etc.

Okay.

Then how about the mom-and-pops that you have now?

Not the new ones.

I mean, are you seeing uptick in bad debt?

I would ask Mike Sullivan to address that.

Michael?

Do you want to make a comment on bad debt and receivables?

Actually, yes.

Mike Sullivan here.

We are not seeing an increase in either tenant aged receivables or bad debt allowances due to delinquency or collection actions with local mom-and-pop tenants.

In fact, in most cases we are flat from Q1 into Q2 in both those categories.

All right.

That's helpful.

Thanks.

David Fick, Stifel Nicolaus.

Hey, we are double teaming you today.

Dennis, you are in what the investment market perceives as two of the toughest economic environments in the US, Detroit and Florida.

I know you have spent the last three years addressing that.

But are you seeing any differences now?

Specifically I think everybody is focused on Florida today, because of some of the peer actions.

Can you talk about the relative strength or weakness in those two markets as it relates to the rest of the country?

Well, let me say this, David.

I continue to banging the drum more often than not; I kind of get the feeling that people aren't necessarily listening.

But the mid-boxes we have signed, the Linens and Circuit Citys have both been in the -- when we have refilled the spaces, they have been in Michigan and Florida.

I had some comments and I'm just talking off the cuff here, but in the third quarter we will announce at least two more signings of Circuit City and Linens boxes because the leases are out now.

One is in Michigan and one is in Ohio.

So those retailers who operate in our states, and I am including Florida, know that there is good business to be done in those states as long as they are located in the right centers.

Our occupancy has either stayed stable or is increasing in Michigan and Florida.

And our rental statistics specifically with Michigan and Florida have been reasonably strong, compared to our overall averages.

Okay.

What is your current forward development commitment, the capital that you're going to need (inaudible) invest?

David, if I look at that just from 10,000 feet, I am looking at that development, which is in our supplement.

We're looking at roughly, development, redevelopment roughly about $30 million through the end of next year.

And our property level CapEx that we are -- between now and next year again, about $28 million.

So I'm looking at $58 million in total.

I am looking for sources.

Yes, but wait a minute, Rich.

I don't want you to give the wrong impression.

Of the $50 million, also almost exclusively all -- the vast majority of that money has to do with redevelopment.

It has to do with redevelopment where we have commitments.

In the supplement that we've provided are the numbers relative to the redevelopment.

And again any -- I mean as far as development.

And any development numbers that we have in there I will reiterate my comment, which is we are in the fortunate position relative to capital expenditures for development that nothing will be spent without a signed lease, without a joint venture partner, and without a construction loan.

So over the next two years, through the end of 2010, our expenditures for development are extremely modest.

Okay.

Could you give us an update on dividend policy and what you are thinking right now going forward?

As we have said in the past, this is totally within the province of our Board.

We have cut our dividend to approximately the income that we are required to distribute.

In the last Board meeting, there was no discussion specifically as to the direction of the dividend.

But I think at least at this moment you can rely on the fact that the dividend policy will stay as we've stated it at the beginning of the year.

Great.

Well congratulations on your hard work and getting your financings moving forward and on pretty good quarter results.

Thank you very much.

(Operator Instructions) Richard Moore, RBC Capital Markets.

Hello.

Good morning, guys.

When you think about your strategic alternatives, process, how much should we factor in, I guess, for the rest of the year?

Maybe just for the third quarter, in terms of additional G&A related to that program?

Yes, Rich here.

I think for the quarter, we probably had about $840,000 in there; and we would expect maybe on the low end through the end of the year to have a total of about $1.4 million in there, somewhere in that range.

That assumes that a lot of things continue on.

Again, biggest thing obviously are the underwriters' fees and legal that we are paying.

Everything else is kind of diminished.

Okay, so that $1.4 million, Rich, is for the full year or for the rest of the year?

Full year.

Full year, okay.

$1.4 million to $1.7 million I think is what we had in our plan right now through the -- in our forecast through the end of the year, in that range.

Okay.

Dennis, why does the strategic alternatives process go on so long?

It would seem to me to be more of a -- something you do, and you get an answer, and then you execute, and then the alternatives process is sort of done.

Well, I think it's important, Rich that -- I think people, when they hear a buzzword like strategic alternatives, are focused only on, are you selling or are you not selling?

I would assume everybody, at least in the REIT world, is looking at their strategic alternatives, because we are going to be coming out of a very difficult economic time; and the rules of the game going forward will not be the same as the rules for the last 24 months.

Because of that, our strategic review involves more than saying, well, would you sell the Company or would you continue to operate?

What we are looking at when we talk about moving forward would be what -- will this Company look like?

What would our capital requirements be?

How do we want to structure the balance sheet?

Etc.

So there are a whole host of variables that we have been working on, but I think you can gather from my comments that there will be clarity in the third quarter.

Okay.

So should we put some of the same kind of G&A expense in next year as well?

It just kind of continues?

(multiple speakers) another $1 million or so?

No.

Absolutely not.

No?

No.

Okay.

All right.

So, then, yes, I wanted to get to the third-quarter thing.

Do I understand from your comments that the line of credit, the term loan, asset sales, and possibly JVs will all be -- we can all pretty much count on those being concluded to some extent -- I realize they are always ongoing -- but to some extent by the third-quarter call?

Is that right?

All other things being equal, I would agree with the first two or three you mentioned.

I'm not sure.

If you are referencing joint ventures for development deals, that may take a bit longer.

Although at Aquia relative to the residential, we have made significant progress.

But that residential construction with our partner would not commence until 2010.

Okay.

You think you will have the whole $250 million term loan and line of credit combination?

That capacity you think will be the capacity going forward to 2012?

Again, we will give you more details on that I am hopeful within a very short period of time.

As Rich has referenced we're approximately 75% home with commitments from the vast majority of our banks.

We just have what I'd like to think is a small hurdle to get over to get the rest committed.

There will be some amortization in that that we've agreed to and is in our business plan.

Okay.

All right, good.

Thank you.

Then I was a little surprised that actually development fees went up from the first quarter.

They definitely went down from the year-ago quarter but they went up from the first quarter.

I would have thought development was slowing.

Again, I am trying to figure out exactly what we put in for fee income as we look at the rest of the year.

Yes, I think most of that, Rich, is our Hartland project; and most of that is probably the SAD work that is going on there.

We are getting fees on that.

Okay, does that continue for a while, Rich?

Yes; Tom can help out.

Probably -- Rich, this is Tom.

We've got another three to four months of SAD work to do up there.

It's road widening and what have you for Meijer's.

Again, keep in mind -- I know you had a question relative to payables.

I think that some of that is impacting us, and I've got a receivable payable.

We are doing the work, getting reimbursed on the SAD, so it's neutral to us from a cash perspective.

But again, we're earning fees on that, on the service we're providing there.

Okay, so that was a question I had, Rich.

So the $5 million increase in payables is related to Hartland?

Well, two.

Probably a little less than half of it is Hartland and the rest is a buildup in the real estate tax accrual that we have this time of year.

The Michigan real estate taxes are due next quarter, so you build it up.

You are probably at the peak now from that perspective.

We pay those next quarter, and then it will go down by year-end.

Okay.

Pretty traditional (inaudible).

Okay, I got you, yes.

Then on concessions, you guys talked about concessions.

Is that something that has already happened?

By that I mean we're already seeing the impact of that in the NOI?

Or should we see the impact of that going forward, do you think?

I mean a new impact, not just a continued impact.

Rich, Mike Sullivan here.

It's really already happening.

We don't expect any new impacts or really, through the remainder of the year, any adverse impact from what we are trying to do.

Okay, good.

Thanks.

Then I've been thinking that at some point acquisitions are going to look interesting.

I realize that acquisitions aren't necessarily foremost in your mind at this point.

But with Catherine there, I was curious maybe what you guys are thinking or what you are seeing in the marketplace out there, in terms of either distressed assets or just assets in general that you think might be interesting sometime down the road.

Yes, we are, Rich, looking at -- we are working with banks and looking at some distressed assets.

We've seen some opportunities, but none that have really hit the market yet.

So is that mostly from a pricing standpoint that it's just not exciting, or just not high-quality assets that are interesting?

Well, some are in levels of distress for a reason.

And yes, pricing still is a little bit elusive.

Let me just add to that, Rich.

I think that everybody is talking about all of these incredible opportunities that are going to be forthcoming.

Financing is obviously a significant issue, as far as those acquisitions are concerned.

And unlike the experiences that we have had in the past, because of a number of bankruptcies and major tenants pulling back, you can't count on the speed of major tenants responding to you, to fill either vacancies or for you to feel reasonably comfortable that you are going to be able to execute a plan that will make that asset more valuable.

So pursuant to my closing remarks relative to Ramco's background, I think that all of these, quote, opportunities that are going to come down the line because of inability to repay debt is going to be more difficult than some people are contemplating to get done.

Okay, great.

Thank you, Dennis.

And last thing, guys, I forgot one thing on G&A.

The second-quarter G&A seems to be high naturally each year.

Is that right, Rich?

I mean, it seemed to be high last year and it was high this year; of course you had the extra $0.04.

But then by the third quarter, do we see the usual seasonal drop in G&A, unrelated of course to the strategic alternatives?

Rich, when I look at our plans [seller] G&A is maybe in the high-end of guidance, but within the guidance we gave last quarter, which is roughly the $14.5 billion to $15 million.

Again that does not include the strategic alternatives.

Okay, great.

Great.

Thank you guys.

Nathan Isbee, Stifel Nicolaus.

Just a quick follow-up.

In your discussion with your lenders on the line and the term loan, what are the new terms, for instance the new rates that you think you are going to be paying on this line?

Again, I think it's going to be pretty much market.

Again, I hate to say anything until we're done and jinx the deal, but what I'm seeing in the market is somewhere between three-fifty and 4, and I would expect to be within that range.

three-fifty and 4 over.

With a floor?

It will be a floor as well.

And again, you don't have a floor or unsecured, but again I think the floor I've seen is anywhere from one-fifty to 200 is what I have seen the floor [riding].

I think again, we'd be within that range.

Okay, great.

Thank you.

Thank you.

Ladies and gentlemen, we have no further questions at this time.

I would like to turn the floor back to management.

We thank you all, again, for your attention and your interest.

If you have any follow-up questions, we would be more than happy to field them; and then we will talk to you in about 90 days.

Ladies and gentlemen, this concludes today's teleconference.

You may disconnect your lines at this time.

Thank you for your participation.