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Operator
Greetings and welcome to the Ramco-Gershenson Properties Trust's first quarter 2010 conference 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 now begin.
Dawn Hendershot - Director IR
Good morning and thank you for joining us for Ramco-Gershenson Properties Trust's first quarter conference call.
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.
I would now like introduce Dennis Gershenson, President and Chief Executive Officer and Gregory Andrews, 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.
Dennis Gershenson - President & CEO
Thank you, Dawn. Good morning and welcome. Greg and I plan to take the next 20 minutes to update you on the progress we're making in core operations, the status of our efforts to improve the balance sheet and to explain the rationale for a number of accounting changes and charges.
On the operating front, we had a good first quarter. Our numbers tracked and in several cases exceeded our projections. I'm also pleased to report that tenant interest in our centers is translating into an ever-increasing number of new lease signings.
You will remember that we reported as part of our year-end update the pending departure of Wal-Mart from our Village Lake Center in Northern Tampa, Florida and the loss of Old Time Pottery as a result of their bankruptcy at Promenade in Atlanta, Georgia. Also in Q1 we intentionally terminated the Albertson's lease at Mission Bay in Boca Raton, Florida, a joint venture asset, and received a sizable termination fee.
The departure of these three tenants represents approximately 263,000 square feet or a majority of the space that accounts for the decrease in our occupancy rate to 89.5%.
Offsetting this number was the opening of over 240,000 square feet of new tenancies and the signing of over 156,000 square feet of new leases.
These two statistics consisting of our newly opened retailers and the new lease signings improve our ratio of signed leases to 90.5%. Included in the new leased percentage are three mid-box retailers, each at least 20,000 square feet.
The progress we've made in the first quarter of 2010 as it relates to the leasing of larger format vacancies will continue into the second quarter. We plan to sign a minimum of three additional national credit anchor tenants between April 1 and June 30.
You will note that our leasing statistics presented in supplement show a decrease in rental averages both for new leases signed and lease renewals. You should recall that in our fourth quarter 2009 report we indicated that these ratios would be down slightly in the single-digit range for 2010. I'd like to give you some color for the lease renewal figures.
In the anchor category three retailers account for the lion's share of the negative change - Border's at Hunter's Square, Old Time Pottery at Sunshine Plaza and Marshall's at Southfield Plaza. Each of these lease extensions is for a short term as opposed to a normal five-year renewal. We decided that it made more sense to keep these tenants in occupancy at reduced rentals as long as we didn't burden ourselves with their lower rental rates for the long term.
The extensions will allow us time to negotiate agreements with replacements for these three retailers. Each occupies a prime area location in a highly successful shopping center.
You should also note that we have completed and thus removed from supplement three value-add redevelopments - the River Town Square in Deerfield Beach where we added a Bealls Department Store, the Marketplace of Del Ray in Del Ray Beach to which we added Ross Dress for Less and Dollar Tree while downsizing Office Depot, and we reconfigured our South Bay Shopping Center in Sarasota, Florida in order to add a free-standing CVS drug store.
The remaining five value-add redevelopment projects listed in our supplement are proceeding apace and we expect to bring each online prior to the end of 2010.
All of our value-add redevelopments including those completed in the first quarter and those still underway will create an additional draw to our centers. They will increase net operating income and they'll serve at a catalyst to drive additional small tenant interest in those spaces closest to our newest anchor additions.
The opening of these new retail anchors and the increasing velocity of tenant signings will drive both an increase in NOI and occupancy throughout 2010 and will be a primary driver of our growth over the next 18 months.
As to our development pipeline, although Greg will discuss the rationale for our change in accounting for our core prospective developments, this shift from capitalizing interest and real estate taxes should not be read as a loss of faith in our proposed projects. Instead, we believe that a conservative approach to our retail development opportunities is the prudent move. We will use 2010 as a period to achieve all necessary entitlements and to secure tenant commitments.
Our proposed anchor lineup at all of the projects have reaffirmed their interest and we are well into negotiating letters of intent. It is the timing of store openings and thus the commencement of the development process that has been pushed back.
All of our developmental -- all of our development potentials remain valuable, however, in order to maintain the maximum flexibility relative to the future of these opportunities, we will only commit to each as our traditional criteria for project commencement has been met. That is, sign banker leases, a solid economic return, and the securing of appropriate construction financing.
Our other external growth driver, the acquisition group, continues to review new opportunities. When we commence to make new acquisitions, we will be very selective in those opportunities we pursue. We will focus on markets that present a solid demographic profile. We will choose opportunities that lend themselves to adding value and our purchases will promote geographic diversification.
We will move to acquire appropriate, accretive shopping center purchases at such time as our balance sheet has shown significant additional improvement.
As we have stated in our last several quarterly calls, our primary goals for the near term include maximizing the value of our core portfolio and the improvement of our balance sheet. We're making significant progress in re-tenanting our anchor vacancies which will only increase ancillary tenant interest in joining our centers. We also remain vigilant in containing variable expenses which allow our tenants to benefit from lower occupancy costs.
Relative to the balance sheet we established debt metric goals at the end of last year which we remain confident can be achieved over the next eight months. Financing alternatives, the number of institutions interested in loaning us money and the pricing on our new loans continue to improve. These factors will allow us to refinance some of our short-term debt where appropriate, extending our average maturities.
We are also seeing an ever-increasing interest and growing competition for the purchase of well-leased, high quality, stable shopping centers. This bodes well for the assets we're considering selling.
As a result of these factors a more vibrant debt market and the renewed interest in acquiring quality shopping centers at aggressive CAP rates, we are very comfortable with our capital plans for this year. Even as we still see 2010 as a transition year, we are encouraged by the progress we're making on all fronts.
Although we will not take our eye off the ball as to our primary objectives for 2010, we are also positioning ourselves to take advantage of new and existing external growth opportunities.
In closing, I would like to welcome Greg Andrews as our new CFO. Greg has hit the ground running. He has brought to the Company a high level of professionalism and I'm confident he'll be an important and valuable addition to the team. I would now like to turn this call over to Greg.
Greg Andrews - CFO
Thank you Dennis. Good morning everyone. As many of you know my involvement in the shopping center business goes back many years. Given that this is my first earnings call as CFO of Ramco-Gershenson, I'd like to begin by briefly summarizing the reasons I found this opportunity both personally and professionally exciting and then I'll review our financial position and results for the quarter.
There are three facts about Ramco-Gershenson that I found compelling. First, the Company has interest in nearly $2 billion of shopping center real estate. This scale has led to the creation of a strong operating platform. Although the Company's equity capitalization is smaller than average, the true strength of the Company's platform shows through in the talent, experience and creativity of the people who work here and is evidenced across all disciplines.
Second, Ramco-Gershenson's portfolio consists of high quality centers with strong market positions. In particular I found the following features of our portfolio noteworthy. Approximately 90% of our properties are located in major metropolitan areas. Our typical center is larger than the industry average with over 170,000 square feet and an annual base rent of $1.7 million.
Our portfolio has strong anchor tenants. For example, our supermarkets generate average sales of $465 per square foot, well above the industry average, yet their average rent is only $7.40 per square foot, which is well below market.
Our portfolio also has a solid lineup of shop tenants with 65% of our shop tenants being national or regional chains.
So although we continue to face our share of challenges in the current market, our portfolio is fundamentally sound and I believe it provides upside opportunities in the terms of lease-up potential, ancillary anchor growth and intensified land use.
The third reason I joined Ramco-Gershenson is that the Company is turning a new page. After a thorough strategic review, management and the board have set a new course focused on delivering maximum value for our shareholders. That course includes changes in corporate government, business strategy and financial leverage. Management is fully committed to this plan of action. It is worth emphasizing our long-term incentive plan is tied to our total returns relative to the shopping center peer group.
In short, I'm very pleased to join the Company and I look forward to working closely with Dennis and the rest of the team at Ramco-Gershenson to create value for our shareholders.
Now to summarize our financial position. Our balance sheet ended the quarter in better shape than at year end. During the quarter we obtained a new 10-year CMBS loan for $31.3 million with an interest rate of 6.5%. The proceeds from the CMBS loan were used to pay down borrowing under our revolving line of credit. The weighted average term of our debt now exceeds five years and the weighted average interest rate is 6.1%.
At quarter end our availability under our line of credit was $82.5 million. This is sufficient to meet our remaining 2010 debt maturity, although we do expect to finance or refinance selected assets.
Our goal of course is to strengthen our balance sheet during the remainder of the year, but it is important to note that availability under our line of credit provides us with flexibility as to the manner and timing of achieving our balance sheet goals.
Before I turn to our financial results, a quick comment on the comparable prior period. In reviewing our per-share FFO for the first quarter of 2009, we determined that there was a small error in the computation of our weighted average share equivalent account. Correcting for this difference of less than half a cent, our FFO for that prior period rounded down to $0.55 instead of up to $0.56 as previously reported.
Now turning to our financial results. We recorded a non-cash charge of $2.7 million or $0.08 per share during the quarter. This charge relates to an other-than-temporary impairment of our equity investments in unconsolidated joint ventures. Under GAAP an impairment charge for equity investments is required to reflect the difference between today's fair value and our book value if that difference cannot be considered temporary.
Some of our joint ventures required assets when market pricing was higher than today's pricing. Because we do not currently anticipate recovering these differences, we took this charge this quarter.
We also made a determination in the first quarter to cease capitalizing interest costs and real estate taxes at our predevelopment projects. We concluded that it was prudent not to capitalize these costs until such time as our anchor pre-leasing is in place and we have made a committed decision to proceed with development.
This conservative approach is expected to reduce our full year FFO by approximately $0.12 per share, affecting both our interest expense line item and for the real estate taxes, the Other Income or Expense line item.
Despite this impact on FFO, it is important to note that this change does not affect our current cash flow because we are incurring these costs regardless of accounting treatment. Instead, it's opting the appropriately conservative policy for predevelopment land, increases for quality of our FFO.
Now let me turn to three items that positively affected our FFO for this quarter compared to a normalized FFO run rate.
Number one - our GAAP NOI was materially ahead of run rate. This resulted primarily from two large lease termination fees. One was from Office Max at our West Oak Center in Novi, Michigan. We have executed a lease with Old Navy to take this space. The other was from Wal-Mart at Village Lake in Tampa. We continue to evaluate proposals for that space.
All together lease termination fees accounted for an incremental $1 million or $0.03 per share of FFO for the quarter.
Second, our joint venture related income was also ahead of run rate. One reason is the previously mentioned lease settlement with Albertson's at Mission Bay in Boca Raton who we expect to replace with two new tenants in the second quarter.
Another is that our management and leasing fees, which can be variable quarter to quarter, were strong in this particular quarter.
These joint venture items account for approximately $0.02 of FFO in the quarter, incremental FFO.
Third, our general and administrative expense benefitted from the reversal of an expense accrual. This added $0.01 per share to FFO for the quarter.
As a result of these three items, our FFO for the quarter, excluding impairment changes, was $0.33 per share, which was approximately $0.06 per share above a normalized FFO run rate.
Turing to the operating front, our same-center NOI declined 1.8% for the quarter. In response to feedback from the investment community, we have revised our definition of same-center NOI. We now present it on a cash basis, that is excluding straight-line rent and market-to-market rent. We also exclude lease termination fees to mitigate their volatility, although lease termination fees are certainly a recurring source of income in our business.
To keep our calculation focused on current results, we exclude prior period adjustments which can swing positive or negative in any given quarter.
Our recovery rate of 91.8% for the quarter was negatively impacted by (inaudible) in the quarter. We expect our recovery rate to average 92.5% for the year and to run at 93% at year end.
Our bad debt expense for the quarter was $618,000. This was higher than the rate we expect for the balance of the year. For the full year we expect bad debt expense to be approximately $1.8 million or 1.5% of total revenues.
Our G&A is now expected to be approximately $16.5 million to $17 million for the year. This is due to two non-cash changes. In the quarter we reclassified our Florida office stocks from operating expense to G&A. In addition we will be expensing a modest amount of development G&A going forward.
Turning to our outlook, we are reducing our 2010 FFO guidance by $0.10 per share at the midpoint of the range to a new range of $1.04 to $1.12 per share. The revision to our guidance reflects our decision not to capitalize interest and taxes at our predevelopment projects.
We have also increased the lower end of the guidance range to reflect our comfort level that our business plan for the year is on track.
Let me emphasize several points about this change in guidance. First, to repeat an earlier observation, there's no cash flow impact from the decrease in FFO guidance. The costs we are now expensing are costs we would be incurring regardless of accounting treatment.
Second, our operating results remain on track with our internal budget. Our same-center NOI guidance for the year remains unchanged at -2% to -3%. While the leasing environment continues to be challenging, we believe that we have appropriately accounted for current market conditions in both our prior and current guidance.
Third, our revised FFO guidance range continues to incorporate the impact of our capital plan and deleveraging goals for the year. We remain focused on achieving those goals during the balance of this year.
With that, I'd like to turn the call back over to Christian for questions.
Operator
Thank you. We will now be conducting a question and answer session. (OPERATOR INSTRUCTIONS). One moment while we poll for questions.
(OPERATOR INSTRUCTIONS)
Our first question comes from the line of Todd Thomas KeyBanc Capital Markets. Please proceed with your question. Your mike is now live.
Todd Thomas - Analyst
Hi, good morning. Jordan Sadler is on the line with me as well. Dennis, in your prepared remarks, you mentioned that the Company is looking at new external growth opportunities. Are you engaged in discussions today or is it that you see the Company moving forward through the year on the external growth platform?
Dennis Gershenson - President & CEO
Well, obviously our external growth we consider both acquisitions and development and obviously my comments I believe speak for themselves relative to where we're at on the development side.
On the acquisitions side, we made a conscious choice even as late as last year to keep our channels of communication open with the financial institutions that we deal with relative to assets where they believe that either the borrower is having some problems or that they've taken centers back. We also have a significant broker network that we continue to talk to.
So to the extent that we have an active acquisition team, they continue to look at potential acquisitions, however we have committed that with our balance sheet, as it exists at this moment, we wouldn't go ahead and make an acquisition.
But obviously we're seeing some opportunities. We're seeing some opportunities that we think would make sense for us so the sooner that we move on getting our balance sheet in shape the sooner we'll make those acquisitions.
Todd Thomas - Analyst
Okay, so are the acquisitions maybe predicated on the completion of some asset sales and maybe you can kind of update us as to where you are with your plans to sell some (inaudible) and stabilized properties?
Dennis Gershenson - President & CEO
We have spent the tail end of last year and the first months of this year really looking at and combing over our existing assets to determine which ones that we would indeed be interested in selling. We're very pleased to see what's going on in the marketplace and the rapid descent of the CAP rates for quality assets.
So we have indeed teed up a number of centers that we believe would be ripe for sale and we're on the front end of that process now, but we expect that to accelerate relatively quickly.
Todd Thomas - Analyst
Okay, and then on the development projects, is there a chance that you may begin moving forward on any of them in 2010 or would it mostly be 2011 at this point? And maybe can you rank where you are with each of the projects and which ones sort of may move forward first and so forth?
Dennis Gershenson - President & CEO
As far as the two Florida shopping centers are concerned, we, as I indicated, we've been in discussions with our potential anchor tenants and they have all indicated for those two opportunities that 2012 is the period of time where they would consider opening, which means that more likely than not, work would not be done in 2010.
As far as Heartland is concerned, the lion's share of that project really will involve the sale of properties to anchor tenants such as home improvement, electronics, etcetera, so at least for the immediate future we would see little vertical development -- bite my tongue -- we'll see no vertical development in that, that we will expend money for certainly in 2010.
The only project and we have made significant progress with our prospective joint venture partner, the residential, we have some very significant interest in potential joint ventures on office because we're involved in a number of RFPs, Request for Proposals, for additional office space at our site, and the retail leasing has moved along significantly.
So if there's any possibility that one of these projects could commence in 2010 I would put my money on Aquia.
Jordan Sadler - Analyst
Hi, it's Jordan Sadler. Greg, I just wanted to say congratulations and look forward to working with you. I have a question regarding the -- some of the charges in treatment this quarter. It looks like obviously there's some accounting treatment changes and recognitions and I'm curious about the timing in concert sort of with your addition, like the impairment and the change on the capitalized interest on these developments.
It seems a little bit more than a coincidence so I'm curious, number one, is this your effort, you're putting your mark and taking sort of a conservative stance on these issues? Do you think you're -- I know you're maybe 60 days into the job so it's probably tough to fully get your arms around everything but about how far along do you think you are in the process and how comfortable are you so far with what you've seen given the changes you've made so far?
Greg Andrews - CFO
Let me start taking that in reverse order. I'm very comfortable with all of the processes that we take, undergo in reporting. I'm very comfortable with all the people on our staff who have shown an incredible amount of dedication and work ethic and so in 60 days, you're right, it's a limited amount of time but I think I've come up to speed very quickly.
To address the two major items that you mentioned, one is related to the impairment of our equity in joint ventures. And there, as I mentioned, the sort of key test is whether you consider any kind of change in value to be temporary or otherwise. Certainly what we've seen over the last year is that it's been very hard to peg value and what people thought might have been value a year ago has now rebounded considerably.
And so I think the logic that we have been employing, which was that the market was sort of in some temporary throes of seeking a level has in fact been what played out, today we feel like we're a year away from sort of what precipitated all this and the market has indeed reached a level. We can't predict where it's going forward but clearly because we're still a bit down on a fair value basis compared to our book value, we thought it appropriate to take that charge in this quarter.
And then related to the other issue, the capitalization of interest and taxes, that's a policy decision made by the Company. As we sort of sat down and really looked at the timing of these development projects, we felt that in general we were far enough away from beginning construction in earnest, that it made sense to not add to our basis in those projects while we were continuing to complete our entitlements and prelease the projects.
So that was a change based I think more on just a rigorous look at the timing of when development will begin in earnest.
Jordan Sadler - Analyst
Now from an accounting perspective technically, is it a function of your decision whether or not to increase or maintain the basis? Do you have that leeway? Or is it more for a function of whether or not you're -- you have a plan in place, you're pursuing entitlements, you're in the lease-up process, you're pushing dirt?
Greg Andrews - CFO
You are entitled to be capitalizing interest as long as you're pursuing the activities required to put your asset into service. So then the interpretation of that comes when you say what does pursuing activities mean? In our case we do continue to pursue activities primarily on the preleasing front and the entitlement front but we're not pushing any dirt around.
We're not building anything and I think the adoption of a conservative policy is a statement about where we want to go as a Company in terms of addressing these kinds of issues and certainly we feel like we're in the camp of the sort of better group of peers in adopting this policy.
Jordan Sadler - Analyst
Helpful, thank you.
Operator
Thank you. Our next question comes from the line of Nathan Isbee with Stifel Nicolaus. Please proceed with your question. Your mike is now live.
Nathan Isbee - Analyst
Hi. Good morning.
Dennis Gershenson - President & CEO
Good morning.
Nathan Isbee - Analyst
Just focusing on the renewal rents spread, clearly there was some short -- the short term leases impacted it but even if you X those out, they were still down 9%, which was down significantly from the previous few quarters. If you could just talk about a little bit what was in there and what gives you comfort that that will rebound as we go through the year?
Dennis Gershenson - President & CEO
Nate, we not only looked at the first quarter but we've looked at the numbers for the balance of the year and for better or worse, those retailers that we renewed that we thought were important to the tenant mix and important to the continuation of occupancy, the biggest hit came in the first quarter.
Again, we've looked at the balance of the year. Those leases will come in at much better spreads than we've achieved in the first quarter so that we feel very comfortable saying that the mid to low single digits as far as lease spreads going forward, so that when we look back at this at the end of the year, that's where we'll be. It'll be negative, very low single digits.
So these numbers will change in the second, third and fourth quarters.
Nathan Isbee - Analyst
All right, thank you. And you'd done this last quarter. Can you just give an overall update on where you stand with your empty boxes?
Mike Sullivan - SVP Asset Management
We have -- this is Mike Sullivan -- we have currently 15 vacant boxes over 19,000 square feet and as Dennis mentioned, we're making some progress. We signed actually a total of four in the first quarter. We have a realistic opportunity to do another four in the second quarter and of the balance of those boxes, more than half of them are -- we're currently under negotiations with national retailers. The other half are being actively marketed.
In other cases in the portfolio where we have these short-term extensions or OTAs, and in particular where we have vacant but at least obligated anchors, we are also marketing them aggressively.
So the short answer is we're getting some very positive movement on big boxes.
Nathan Isbee - Analyst
Okay, thanks. And just moving to the development side of things, Greg, can you just walk through -- the CIP line on the balance changed I guess even from 12/31, it went down. I guess there was some reclassification in there. Can you just walk through what happened?
Greg Andrews - CFO
Sure. There were I think two things. One is that we had completed some of our redevelopments as Dennis mentioned earlier, and then we did reclassify Rand at the flyer project that had been classified previously as CIP because of some site work and things that had been done. So I think the goal there was to provide a clearer representation of what our true land held for development is.
Nathan Isbee - Analyst
Okay, thank you.
Operator
Thank you. Our next question comes from the line of Michael Mueller with JPMorgan. Please proceed with your question. Your mike is now live.
Joe Dazio - Analyst
Good morning guys. It's Joe Dazio here on the line with Mike.
Dennis Gershenson - President & CEO
Hi Joe.
Joe Dazio - Analyst
Question about page 19 of the Supplemental, the Lease Expiration Schedule, are those rent per foot numbers cash or GAAP?
Greg Andrews - CFO
Those are cash numbers. And they're -- and also they're the rent in place today. I think some companies I've seen report the rents that they expect at the expiration. These are the current rents.
Joe Dazio - Analyst
Okay. And then just curious I guess, I know, Dennis, that you touched on the balance of 2010 a little bit but in the first quarter it looks like I guess the average rents (inaudible) and maybe that was impacted a little bit by the three short-term anchor extensions. But if you look out the next couple of years, it seems like the expirations are in the $12 range, $12 to $12.50.
Do you think it's safe to say that maybe the mark-to-market is today going to be flat so maybe down 10% or do you think that it's just a function of mix and maybe those are higher rent spaces that are coming due in the next few years?
Dennis Gershenson - President & CEO
If you're specifically talking about anchors, the majority of those, the anchors are either at the same rental on an exercise of a potential option or slightly higher. So I don't see -- especially if the economy comes back as we're hoping it will, we don't see those numbers drifting down significantly.
Joe Dazio - Analyst
Okay, thank you.
Operator
Thank you. (OPERATOR INSTRUCTIONS) Our next question comes from the line of Rich Moore of RBC Capital Markets. Please proceed with your question. Your mike is now live.
Rich Moore - Analyst
Hello. Good morning guys and Greg, I just want to add my congratulations.
Greg Andrews - CFO
Thanks.
Rich Moore - Analyst
And forgive me, guys, we got dropped for a second so I may duplicate a question. But the first thing, on the lease spread and occupancy calculations, did you guys change at all the way you do those this quarter?
Greg Andrews - CFO
Yes, and I guess in a couple of very important ways and I'm glad you asked so we can highlight this. On occupancy, we are presenting it in two ways right now. One is the percent leased and then the other is the percent occupied, meaning economic occupancy so if you look at the property status report in our supplemental, you'll see a column for each of those and that's I think intended to help clarify.
As you know, Rich, most of the peers in our sector report percent leased as occupancy and we were always reporting the actual economic occupancy, which is typically a lower number so we were feeling a little disadvantaged in that regard and we decided let's just present it both ways and you can decide where to focus your attention.
The second thing is on the lease spreads, we are presenting now the lease spreads or leases that were executed in the current quarter and on a cash basis in comparing to the old rent for the same space where available, which in most instances it is available but not all is.
And we used to present the lease spreads more on the basis of what leases had been scheduled to expire in that particular quarter. So now we're focusing more on current leasing activity, which I think gives you a more real-time trend. As Dennis pointed out, what we reported in the first quarter I think was somewhat unusual in terms of the decline and we do anticipate better results in the next few quarters. I think the activity that we've seen so far in April clearly is pointing to a better number so far for the second quarter.
Rich Moore - Analyst
Okay, good. Thank you. And how far back do you go, Greg, looking at the last known rent. These are for boxes vacant, for example, do you --?
Greg Andrews - CFO
It's sort of what's available. Most vacancies aren't vacant forever so it's probably as far back as a couple of years.
Rich Moore - Analyst
Okay, good. Thank you. And then did you give a year-end '10 occupancy target?
Greg Andrews - CFO
We did not.
Dennis Gershenson - President & CEO
We did at the tail end of last year, which was between 90% and 91%.
Rich Moore - Analyst
And you think that stays that way, Dennis?
Dennis Gershenson - President & CEO
Yes, yes.
Rich Moore - Analyst
Okay, good, thanks. And then you were talking about the JVs and the impairments that you made, kind of going back to Jordan's question, would you think, Greg, that that review is complete at this point? You've only been there a short time. Have you been through all of the JV assets and you feel comfortable that we're done with the impairments?
Greg Andrews - CFO
Absolutely. We went through a very thorough process, Rich, where we essentially had to come up with a value of each asset in all of our joint ventures, the nine joint ventures, 33 assets. It was quite an involved process and took work on the part of a whole number of people here from the accounting department, the financial planning department, joint ventures, acquisitions, everything to sort of come up with the assumptions and input.
This is our conclusion from that process. Obviously market conditions can change and so I don't want to speak to what we might have to do in response to a change in market conditions but hazard that, I feel like we're done with that.
Rich Moore - Analyst
Okay, good thanks. And then the last thing I have is on the balance sheet. It seems that your, at least to us, that your debt situation is pretty good at this point. It doesn't seem like you need to rush to make dispositions. You don't need to rush to make new joint ventures to raise equity. You don't need to rush to issue equity, don't have a whole lot of maturities.
Is that accurate? Do you guys view it the same way or is there more urgency than I suspect?
Greg Andrews - CFO
No. You're picking up on a point that I made in my prepared remarks which is that we have considerable flexibility to determine sort of what is a manner in timing will be for any kind of deleveraging activities. That said, we have made that a goal and it's a goal we take seriously and we believe it's the right move for the Company. It's just a question of sort of how we proceed with that -- achieving that goal over the balance of the year.
Rich Moore - Analyst
Okay, very good. Thank you guys.
Operator
Thank you. Our next question comes from the line of David Fick with Stifel Nicolaus. Please proceed with your question. Your mike is now live.
David Fick - Analyst
Good morning.
Dennis Gershenson - President & CEO
Good morning, David.
David Fick - Analyst
Just a followup on that question --
Dennis Gershenson - President & CEO
David, we can't hear you very well.
David Fick - Analyst
Sorry. Can you hear me now?
Dennis Gershenson - President & CEO
A little better, but go ahead. I think we can hear you.
David Fick - Analyst
Sorry about that. Just a followup on Rich's question. Can you talk a little bit about where you might [consider issuing that lease] considering how strong the markets are right now? Is that something that you'll think about doing given your (inaudible) today?
Greg Andrews - CFO
It's certainly on the menu of options along with a number of other options that we've talked about before. Sales of assets, sales of out-parcels, joint venture arrangements and assets, and then we do anticipate refinancing or financing certain properties. So it's definitely on the menu and again, we have some flexibility in terms of how we proceed to choose things from that menu.
David Fick - Analyst
And lastly, one detail, it sounds like the Alberton's releasing and divisions is (inaudible). Can you talk a little bit about both the economics and the need to (inaudible) consideration there?
Dennis Gershenson - President & CEO
Albertson's had intended to close and they had telegraphed this to us for quite some time so we had plenty of time to plan for that. Without -- because until we signed leased historically we never really said who the retailers are but we do expect in the second quarter to be able to tell you exactly who is going into the space. We will replace the existing supermarket at least in part with another supermarket. Albertson's was 65,000 square feet so it was a very significant size space.
So we plan to maintain the food elements as well as bring in another national retailer that will be a destination use for the shopping center and the new rentals should exceed the rentals we would have been receiving from Albertson's. And what also is nice is that the termination fee from Albertson's will, for all intents and purposes, cover all, if not almost all of the costs to put the new retailers in.
Mike Sullivan - SVP Asset Management
And David, just to add, Alberton's was paying less than $6.00 a foot for their space so we have a real opportunity there.
David Fick - Analyst
And the (inaudible)?
Dennis Gershenson - President & CEO
Could you repeat that, David? I'm sorry.
David Fick - Analyst
The redemising costs are essentially covered --?
Dennis Gershenson - President & CEO
Yes.
David Fick - Analyst
All right. Thank you.
Operator
Thank you. Our next question comes from the line of Todd Thomas with KeyBanc Capital Markets. Please proceed with your question. Your mike is now live.
Jordan Sadler - Analyst
Hi, it's Jordan. I just had a quick followup regarding your commentary, Dennis, on acquisitions and pursuit of investment opportunities. You used the word 'aggressive' characterizing some of the CAP rates and I assume by 'aggressive' you meant high and something which could prove to be opportunistic. Could you maybe just flesh out return hurdles on acquisitions or new investment opportunity?
Dennis Gershenson - President & CEO
Let me clarify. If I was talking about aggressive CAP rates, at least in my parlance, I would have meant that the CAP rates would be low for those high quality assets, which encourage me to say that if we, as we look across our portfolio or thinking of selling assets, we would sell the ones that are very stable with little significant growth because we're seeing CAP rates either in the low 7s and even in the 6s.
But as far as acquisitions are concerned, without trying to say we would be looking for assets with specific CAP rates, as I tried to outline for you, we're looking for acquisitions where we see upside potential. That could either be some potential on a relative basis significant lease-up of empty space and that might be on an asset that's a good asset but for a variety of reasons the people who were attempting to lease it don't have the same motivations that we would.
Or that we see an expansion opportunity or some other way where we can add value, so that --. We're not going to buy anything in the 6s and then expect to add value to it, but to say that we would by at 8 or 8.5 really wouldn't tell the story of the types of acquisitions that we're looking for.
But whatever we do, there will be some nice upside on a potential acquisition.
Jordan Sadler - Analyst
And in terms of maybe a stabilized unleveraged CAP rate or unleveraged IRR?
Greg Andrews - CFO
I don't think we want to be disclosing what our hurdles are for some sort of theoretical acquisition that we haven't identified. I think what we certainly can say is that in the marketplace, it appears as thought unleveraged IRRs are settling into the 8% to 9% range kind of just for I guess a fairly typical good quality property. That's what we're seeing out in the marketplace today, Jordan.
Dennis Gershenson - President & CEO
Let me just add one thing to that. I think the upshot of our comments are that, as we've gotten a handle on the balance sheet as hopefully we're communicating here that we're making some very significant progress in improving core assets, we want the investment community to know that we're not lying dormant on those external opportunities which will help drive our growth.
I think that's the primary message we hope you take away from this.
Jordan Sadler - Analyst
That's helpful. And in circling back to your comment on disposition CAP rates for quality stuff versus the previous question regarding equity issuance, how do prioritize these today given sort of the asset markets are coming back and you can sell some assets inside of maybe where you're trading today?
Dennis Gershenson - President & CEO
I will certainly say that asset sales are absolutely part of our capital plan for 2010 and you will indeed see us selling some of our stable assets. Again, whether that's outright or into joint ventures, and obviously into joint ventures would be our preferred mode of raising capital as far as shopping centers are concerned, because we have a tremendous amount of faith in the assets that are in our portfolio in all of our markets.
Greg Andrews - CFO
Jordan, that's a great question. It's obviously a very complex question because there's multiple elements to sort to of that comparison. And certainly there's a way to do a relative pricing, the CAP rate that we might sell an asset at compared to the implied CAP rate on our stock for example.
But there's so many other issues underlying that including a portfolio management strategy, a balance sheet management strategy and so forth, so it's really hard to get into that question in a lot of detail just because there's so many aspects to it.
Jordan Sadler - Analyst
Okay. Thank you.
Greg Andrews - CFO
Thank you.
Operator
Thank you. Our next question comes from the line of Nathan Isbee with Stifel Nicolaus. Please proceed with your question. Your mike is now live.
Nathan Isbee - Analyst
Yes, just looking at both the $100 million invested in Land Held for Development, could you just give me a little color on your thinking? It's really not a cheap carry -- carrying that amount of land on your balance sheet, and how you view the next step there in terms of required returns versus if you were looking at a new development deal.
Dennis Gershenson - President & CEO
What's interesting of course Nate is that there were a number of circumstances that caused us to move ahead and acquire the properties that we now own? The primary driving factor of course that for all intents and purposes with the exception of Heartland, that this land was immediately adjacent to our existing shopping centers and the amount of anchor demand to have gotten into our existing centers really drove us to move ahead with these sites. We also made these moves in economic times that are different from the ones we have now.
Certainly what exactly the hurdle rates would be going forward is an interesting and in part a challenging question partly because obviously the pendulum in dealing with anchor tenants has swung to the benefit of the tenancies as opposed to the landlords. But obviously in a perfect world we would like to achieve and unlevered double-digit return on anything that we do.
Nathan Isbee - Analyst
Is that realistic?
Greg Andrews - CFO
Nate, let me answer the question this way. I think in sort of Business 101, there's a distinction made between sunk costs and then incremental costs going forward and I think our analysis is going to follow the precepts of Business 101 and 201 and 3 and 401 which is let's focus on incremental capital and incremental return.
Obviously there's value to that land so we need to factor in what that value is in making that calculation but I think the appropriate way to look at it is can we earn a good return on money deployed going forward into those projects and that's how we're going to make that analysis.
Nathan Isbee - Analyst
Okay, I get where you're going with that. All right, thanks.
Operator
Thank you. There are no further questions at this time. I would like to turn the floor back over to Dennis Gershenson for any closing comments or remarks you may have.
Dennis Gershenson - President & CEO
Ladies and gentlemen, I just want to say thank you very much for your attention. Again, we feel confident that our 2010 business plan will move ahead on track and we look forward to speaking to you in about another 90 days. Have a great day.
Operator
Ladies and gentlemen, this does conclude today's conference. You may disconnect your lines at this time and we thank you all for your participation. Have a wonderful day.