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Operator
Greetings, and welcome to the Ramco-Gershenson Properties Trust third quarter 2010 conference call. At this time, all participants are in a listen-only mode. A 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, Dawn Hendershot, Director of Investor Relations for Ramco-Gershenson. Thank you. You may begin.
Dawn Hendershot - Director of IR
Good morning, and thank you for joining us for Ramco-Gershenson Properties Trust third 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 the statements made.
I would now like to 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 today 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'd like to turn the call over to Dennis for his opening remarks.
Dennis Gershenson - Chairman, President, CEO
Thank you, Dawn. Good morning, ladies and gentlemen. We're pleased you could join us. Our third quarter results continued to add to the progress we've experienced since the beginning of the year in all aspects of our business. Our operating metrics have shown steady, positive improvement. We've made additional major strides in filling anchor vacancies, as well as terminating and replacing under-performing major retail tenancies.
Also during the quarter, we reactivated our acquisition program and made significant progress on our developing sites. Even the non-cash impairment charge which we have taken this quarter relates to advances we've made with anchor tenants and partners in finalizing land prices for sales agreements at our four developments.
Further, our leasing activities in the month of October not only builds upon our achievements in the first nine months of the year, but indicates that we will be more successful in advancing our operating metrics than the goals we set at the beginning of 2010.
Although the leasing progress we've made year-to-date indicates a sense of optimism on the part of national and local tenancies, we recognize that the economy is still in a fragile state with the holiday season looming large. Therefore, we temper our enthusiasm for the balance of 2010 and '11 with the conservative mindset we've maintained over the last 12 months.
Let me take a moment to frame for you the progress we've made in filling our larger vacancies and replacing under-performing retailers since the start of 2010. During the first nine months of the year, we have signed 11 anchor leases, accounting for over 300,000 square feet. Of that number, four mid-box leases were executed in the third quarter.
Today, we're announcing that we anticipate signing at least four additional national anchor tenant agreements totaling over 100,000 square feet in the last 90 days of 2010. Thus, in total, we will have added at least 15 new destination-oriented mid-box retailers to our tenant mix in 2010. Of this number, we take pride in the fact that while a substantial portion of our focus has been to fill existing large-format vacancies, we have also bent our efforts, as good stewards of our portfolio, to analyze our existing major tenants' performance and have worked with those retailers who no longer produce the sales volumes that qualify their locations as successful stores. We coordinated terminating their tenancies with the signing of new and exciting replacement users at approximately the same rents.
Examples of these efforts include replacing Albertsons at Mission Bay in Delray Beach, Florida, with Golfsmith and Fresh Market. Also we replaced Office Max at our West Oak Shopping Center in Novi, Michigan, with Old Navy, achieving not only the addition of a soft goods retailer, but also reducing our exposure to the office sector.
And today, we're announcing that we signed a lease with DSW Shoe Warehouse in approximately 20,000 square feet at our New Towne Plaza Center in Canton, Michigan, replacing a number of oversized, under-performing ancillary tenants.
It's important to remember as we relate this progress in improving our occupancy and tenant mix that it can take from nine to 18 months between execution and opening for larger format stores. Understanding this timeframe is especially important when we announce that we are replacing an existing tenant when considering our same-center statistics.
Based on the leases we've signed to date for both anchors and ancillary tenants, and when we include the leases executed during the month of October, as well as transactions in the pipeline, we are projecting our leased occupancy to be between 91 and 92% for the year. Please note that in addition to the increased leasing velocity, our supplement shows a continuing improvement in our leasing statistics, including newly executed leases, lease renewals and total comparable lease metrics.
On a same-center basis, we also continue to experience progress. The primary reason that our year-to-date number shows a negative comparison to 2009 is attributable to the loss of Wal-Mart at our Village Lake Shopping Center in Land O' Lakes, Florida, and Old Time Pottery at Promenade at Pleasant Hill in Duluth, Georgia. Both events occurred in the first quarter of 2010.
As of this week, we have signed a lease for 26,000 square feet of the vacant Wal-Mart space and we are in final lease negotiations with a national, mid-box retailer for an additional 20,000 square feet of the Wal-Mart space. We expect both uses to be under construction in the first quarter of 2011 at rental rates substantially higher than what Wal-Mart was paying. Concerning the Old Time Pottery vacancy, we have identified two destination uses as prospects to reoccupy this space.
Even with the loss of these two significant retailers, we are experiencing steadily improving income numbers. Therefore, today we are revising our same-center estimates for 2010 from a negative 2 to 3% to an average of between negative 1 and negative 2%.
Our overall efforts to date have enabled us to use 2010 as a year to stabilize our rental base and advance our leasing efforts. 2011 will be a period to convert our significant lease executions in 2010 into operating tenancies and thus, we will achieve a full-year effect from those efforts in 2012 with our roster of new retailers.
Switching gears -- in the third quarter, we announced the acquisition of the Liberty Square Shopping Center in Metropolitan Chicago. Also during the quarter, we purchased a note that secured our joint venture shopping center, Merchants' Square in Carmel, Indiana, for approximately 50% of its safe value. We have reached an agreement to acquire the interest of our joint venture partner and we will merge the note and ownership in Q4 to produce an initial double-digit return on this investment.
As for our plans on the acquisition front, it is our intention to continue to review the growing list of acquisition opportunities that fit our criteria which include geographic diversification and the ability to add value to the assets we purchase.
As I mentioned at the outset, our third quarter results also include a $28.8 million non-cash impairment charge related to the value of certain land parcels at our development sites that we will sell to anchors or contribute to joint ventures. We've also written off improvements at our Aquia Project that are being demolished to make way for new uses. The decision to recognize the non-cash impairment charges at this time has been triggered by a signed sales contract and agreements on specific prices as part of letters of intent with anchors at our development sites. Thus, we do not view the impairment charge in a negative light. The price for moving these projects forward is a realistic view of their land values established by agreements and negotiations with real end users.
The securing of these vital elements for our development projects does not mean, however, that a construction start is imminent because in addition to these anchors' timetables, which call for store openings in 2013, we must also secure additional tenant commitments that create a critical mass of retailers for each project, as well as satisfactory financing and firm construction costs.
In addition to these non-cash charges related to our developments, we have incurred an impairment as a result of our purchase of the Merchants' Square note transaction. Greg Andrews will cover the rationale for this charge.
In summary, over the last 12 months, our Company has been committed to increased transparency and the execution of a well-defined business plan. We believe that our efforts through the first nine months of this year demonstrate that we have made real progress on both of these fronts.
Our primary focus through the balance of 2010 and beyond will be to continue our efforts to improve the core portfolio, realize upon accretive external opportunities and continue to strengthen our balance sheet. We are confident that our success in each of these endeavors will translate into continual growth in shareholder value.
I'd now like to turn the call over to Greg Andrews, who will provide insight into our numbers.
Greg Andrews - CFO
Thank you, Dennis. Our quarter was marked by a continuing focus on leasing and management, but also on the deployment of a modest amount of capital at healthy returns. As Dennis noted, we invested $32 million between the acquisition of Liberty Square in Chicago and the purchase of the note at Merchants' Square in Indianapolis. These are two well-located shopping centers in core markets with upside potential from lease-up and intensive management. Once we consolidate Merchants' Square in the fourth quarter, we expect an unleveraged first year return on these two investments exceeding 9.3%.
We can't assure you that we will be able to find these types of opportunities frequently, but we are cognizant that our hurdle rates for new investments remain high. Therefore, our guiding principle on the investment front is discipline, which we will continue to apply to the growing deal flow that we are seeing.
Turning to the balance sheet, during the quarter, we increased our on-balance sheet borrowings by approximately $40 million. As previously noted, 32 million of this was for the acquisitions in the quarter. The remaining 8 million funded the payoff of our share of two mortgages on joint venture properties. As a result of these payoffs, our joint venture balance sheet is now less than 50% leveraged on a book basis with debt of 470 million against assets of over $1 billion. This JV debt will reduce by another 32 million once we complete the consolidation of Merchants' Square.
Our consolidated balance sheet also remains strong. Allow me to cite a few measures. Our debt to market capitalization was 55% at quarter end and is 53% at our current stock price. Our interest coverage ratio is 2.0 times and our fixed charge coverage is 1.7 times. The weighted average term of our debt is 5.2 years and the consolidated debt maturing between now and the end of next year amounts to a manageable $83 million and our pro rata share of JV debt maturing over that same period is less than $6 million.
Finally, our debt to EBITDA is 7.8 times on a consolidated basis and 7.7 times for our joint ventures. While debt to EBITDA has increased modestly this quarter, recall that the quality of our earnings has increased -- has greatly improved. By way of example, we capitalized only $183,000 of interest expense this quarter, compared to nearly three times that amount in the comparable quarter last year.
That said, we remain focused on strengthening our balance sheet over time and increasing our financial flexibility as we grow. We are currently in the market with a number of assets which, if sold, would generate gross proceeds to us of approximately 40 to $45 million. We are also currently in the market to finance certain assets and repay maturing debt. We expect to be able to provide you with an update on both fronts next quarter.
Turning now to the income statement -- as Dennis noted, this quarter we recorded a provision for impairment of $28.8 million related to land held for development and existing buildings that are not consistent with our current development plans. This impairment resulted from plans management adopted during the quarter to sell land, or interest in land, in order to accomplish two goals -- first, to generate cash that could pay down debt or be reinvested, and second, to advance the development prospects for the lands that we intend to retain. I refer you to Page 12 of our Supplemental Package for more detail on the impairment.
As a result of our analysis, we have designated approximately half of our land as available for sale, with the other half being held for development. During the quarter, we entered into a contract with an anchor retailer for a 16.8-acre parcel at Hartland Town Square. Assuming all contingencies are resolved, we anticipate closing this sale in the first half of next year and will apply the proceeds to pay down debt. We expect additional sales of land to occur over ensuing quarters, although the timing will be difficult to predict.
To sum up, we are confident in our conclusion that monetizing a portion of our land value, while enhancing the development potential of the rest of our land, will result in the maximum value for our shareholders.
During the quarter, we also recorded an impairment of $1.8 million related to our 20% interest in Merchants' Square Shopping Center. This entry reflects the loss the joint venture will incur when the property is conveyed to us as the lender in the fourth quarter. Notwithstanding this non-cash accounting charge, Merchants' Square is a transaction with which we are pleased, not only because of our high going-in yield, but because we believe the real estate is sound and provides opportunities to add value.
Turning now to our operating results -- same-center NOI for the consolidated portfolio decreased by 1.6% for the quarter and 1.5% year-to-date. These results, which are better than our previous guidance, reflect a combination of lower occupancy and rent, partly offset by tight expense controls.
Our provision for credit loss for the quarter was 602,000 or about equal to our quarterly run rate this year. At quarter end, our accounts receivable balance is conservatively recorded and we have been particularly mindful of accounts related to tenants that are in bankruptcy, such as Blockbuster.
Focusing on NOI for a moment, our pro rata cash NOI, that is, NOI combining our wholly owned property and our share of JVs, was $23 million for the quarter. This represents an increase of nearly $300,000 from the [pace] in the second quarter even after adjusting for the mid-quarter acquisition of Liberty Square.
As we've stated before, we are focused on increasing our NAV through intensive leasing and efficient operations. This quarter's growth in cash NOI is a good example of what we strive to accomplish. It is also important to note that we did not receive any income from the note at Merchants' Square during the quarter, but do expect to start recognizing NOI from the property once we acquire full ownership in the fourth quarter.
Our results this quarter included gains on land sales of $1.6 million or approximately $0.04 per share from selling an out parcel to Quick Trip at our Promenade Shopping Center in Atlanta, and an out parcel to Tim Horton's at our Hartland development in Hartland, Michigan. Together, these land sales generated net proceeds of approximately $2.2 million. While we won't have out-parcel land sales every quarter, they are, in fact, an ongoing part of our business and we do expect to generate such sales every year.
Now, I'd like to comment on our outlook. As we noted in our press release, we are narrowing our full year FFO guidance to a range of $1.05 to $1.10 per share. This tightening reflects our continued confidence in our core operations offset by a modest amount of unbudgeted legal expense related to our defense in an ongoing construction-related claim. With regards to next year, we are currently in midstream in our budget process and will provide 2011 FFO guidance by no later than next quarter's conference call.
Now I'd like to turn the call back to the operator for Q&A.
Operator
Thank you. We will now conduct the question-and-answer session. (Operator Instructions). Our first question comes from Rich Moore with RBC Capital Markets. Please state your question.
Rich Moore - Analyst
Hello, good morning, guys. A question for you on Merchants' Square. You were saying, Greg, that that was a center that you guys are interested in and I'm curious what you're thinking on that center because it looks to me like you have a vacant Hobby Lobby, as far as I can tell, and rents that are below average, so maybe some color on why that's a good one.
Dennis Gershenson - Chairman, President, CEO
Good morning, Rich. It's Dennis. I'd make several comments. The first is that based upon the configuration of the shopping center, the Hobby Lobby vacancy -- and they still have four years left to run on their lease, even though they're no longer in occupancy, because somebody else bought their lease for them to move elsewhere, but the center is at two very significant roads. It's in a very high-income area. It's anchored by a Marsh Supermarket that is the best supermarket in the area. Marsh is doing extremely well in the location.
And for all intents and purposes, it's much more of a supermarket-anchored shopping center than it was anything that might have risen to the level of a power center, so that really in a sense, with the departure of Hobby Lobby and still with four years left to run on their lease, and its location in the center, which does not impact the other retailers, they really have given us a significant amount of time to find creative and new uses that would fill that space.
So we have some higher quality tenants in the shopping center which respond to the trade area and we feel very comfortable that some of the vacancies that exist -- and there's not a ton of vacancy in the space or in the center -- we'll be able to reasonably quickly [to fill up].
Rich Moore - Analyst
Okay. Thank you, Dennis. And then is there a particular reason -- I realize you can't speak for your previous partner, or your partner for a bit more time -- but is there any particular reason that Teachers wanted out of that particular center?
Dennis Gershenson - Chairman, President, CEO
You mean as far as the loan is concerned?
Rich Moore - Analyst
Yes, and then they're selling the rest of it to you, right?
Dennis Gershenson - Chairman, President, CEO
Well, no, they were not our partner. They were --
Rich Moore - Analyst
Oh, they were not your partner?
Dennis Gershenson - Chairman, President, CEO
Yes. No, obviously, with the change in capitalization rates and due to a variety of factors, we approached Teachers and wanted to recast the loan. They felt that it is was in their best interest, without really explaining to us why, that what -- they were better off selling the note. And so we participated in the auction on the note and we were fortunate enough to win the auction and at a very advantageous price.
Rich Moore - Analyst
Okay. All right, great, good. Got you. And then as far as the impairments went, is there anything else you have for sale that might fall into the same sort of situation where when you agree -- I realize you have some centers, so I was thinking more on the land side of things -- where you might sell something, and then as a result of the agreement to sell, have additional impairments?
Greg Andrews - CFO
Rich, this is Greg. As I mentioned in my prepared remarks, on Page 12 of the Supplement, we kind of break out the impairment by property, and as you'll see, there's sort of something across the board for almost every land holding that we have. So I think what that tells you is that we've gone through a very thorough and comprehensive review of any land that we might intend to sell or hold available for sale or market for sale, and potentially, [wrote] that down to its current fair value.
Rich Moore - Analyst
Okay, yes, and that's good disclosure. I appreciate that, Greg.
Greg Andrews - CFO
Now --
Rich Moore - Analyst
That's good enough.
Greg Andrews - CFO
-- as you know, if -- that's based on current market conditions, so if anything were to change in the market, then that's a different story, but as of current market conditions, we're very comfortable with where we ended up.
Rich Moore - Analyst
Okay, good. Thank you, guys. And the last thing, do you have cap ex numbers for the quarter or will you put those in the Supplemental? And I'm thinking in maintenance cap ex, tenant improvements, leasing commissions, that kind of thing?
Greg Andrews - CFO
Yes, Rich. We've been studying putting that into our Supplement and I think we've had that question from a number of analysts, as well as investors, and it's on our radar screen to make that change. To be honest with you, this quarter, with all the other items that we had to deal with, including these impairment charges, we didn't have time to do that, but I think that that's an important kind of disclosure that we need to consider adding going forward.
Rich Moore - Analyst
Okay, great. Thank you, guys.
Greg Andrews - CFO
Um-hum.
Operator
Thank you. Our next question comes from Vincent Chao with Deutsche Bank. Please state your question.
Vincent Chao - Analyst
Hey, good morning, everyone. Just a question that you guys have done a good job with the big boxes and some of that -- or a bunch of that's going to come through, I guess, in 2011 in terms of [conventions]. Do you guys have a sense of what the NOI pickup is going to look like from those conventions, either on an annualized basis or specifically in 2011?
Dennis Gershenson - Chairman, President, CEO
Yes, Vincent, it's a little early. As I mentioned, we're going through our budgeting process. We have anticipated dates for openings for all of the leases that we've done and even for the leases that we anticipate doing, but we are still working our way through kind of what the impact that that will be --
Vincent Chao - Analyst
Okay.
Dennis Gershenson - Chairman, President, CEO
-- on our numbers next year. So unfortunately, I don't have anything I can share with you right now.
Vincent Chao - Analyst
Okay, that's fair. And then just going back to the impairments just quickly, it sounds like 50% of the land that was on the books was sort of tested as it was a security held for sale. And that looks like maybe about a 30% discount (inaudible) on the books for. Does that sort of -- and is that something we should apply to the remaining 50% in terms of land value? I'm assuming that you didn't have to test for the 50% held for sale.
Greg Andrews - CFO
Yes, that's right. We did not and therefore, I can't really opine onto how to make any adjustments to [that] value, but I think what you started with is broadly accurate.
Dennis Gershenson - Chairman, President, CEO
Let me just add something, and that is in real estate negotiations, especially when you're dealing with anchor tenants, there is a natural ebb and flow of the ability to -- dictate terms maybe is a little strong, but to feel that you have the upper hand in negotiations.
Vincent Chao - Analyst
Right.
Dennis Gershenson - Chairman, President, CEO
The reason for these specific impairments at the development projects is because we have advanced our discussions with those retailers who will buy their parcels to a point where we know basically what they're willing to pay. They happen to hold more cards in their hands than we do at the moment.
Vincent Chao - Analyst
Got you.
Dennis Gershenson - Chairman, President, CEO
So that dictates that side of the equation, but as we're executing many of these mid-box transactions, we're getting approximately the same kinds of rents that we would have gotten several years ago from the mid-box retailers. So if that were the case, then that would justify potentially higher values relative to the land we will continue to hold for development, but it remains somewhat fluid until we put our final stamp on a specific development and move forward with that critical mass and know really what kind of rents we actually have.
Vincent Chao - Analyst
Okay, that's fair. And then just a question on the updated guidance. Are there any returns or (inaudible) the fourth quarter?
Dennis Gershenson - Chairman, President, CEO
The answer is basically no. I think we expect to have perhaps one more land sale that will generate some cash. I don't think we're anticipating any kind of sizeable gain on that.
Vincent Chao - Analyst
Okay. And just one last one, if you don't mind -- just in terms of the holiday outlook, you mentioned it early in the call, Dennis, just that being sort of an unknown. What's your take so far from your tenants in terms of how that's shaping up?
Dennis Gershenson - Chairman, President, CEO
Well, the tenants are mildly optimistic. I mean, they're merchandising for certainly a reasonable Christmas and so I think you're going to see an improvement, but with the type of information that continues to come out in all of the periodicals warning people about where the economy is at, I think it gives the consumer some degree of pause. I am always a half-glass-full kind of guy, so I'd like to think that we'll have a reasonably successful Christmas.
Vincent Chao - Analyst
Okay.
Dennis Gershenson - Chairman, President, CEO
I certainly know that that's my wife is aiming for.
Vincent Chao - Analyst
Okay. Thanks a lot.
Dennis Gershenson - Chairman, President, CEO
Thanks, Vincent.
Operator
Thank you. (Operator Instructions). Our next question comes from Ben Yang with Keefe, Bruyette & Woods. Please state your question.
Ben Yang - Analyst
Hi, good morning. You guys are obviously scouring the market for acquisitions and I'm just wondering, is it your expectation that there are other, say, Merchants' Square type opportunities in your existing portfolio basically where you can buy out your partner's interest in some existing properties?
Dennis Gershenson - Chairman, President, CEO
In the main, I would say no. I mean, never say "never," but I think for the most part -- and you would see that, although we haven't broken it down between off-balance sheet and on-balance sheet assets -- that vis-à-vis the lease signings, that we have made some very significant progress in a substantial number of the assets where we experienced a vacancy or where we bought a center with vacancy already in it. And so our joint venture partners in the main are very happy with the progress that we're making on those assets and I think that they're going to be waiting for those assets to mature before we actually sit down and consider doing something as far as either buying them out or selling the assets.
Ben Yang - Analyst
Okay. So if those opportunities aren't going to be there, can you just maybe comment on what you're seeing in terms of acquisitions that might interest you and in terms of what the size might be, whether you can close before the year end, and maybe what your expectations are in terms of buying for 2011? Is it too early to kind of comment on that or do you see anything in the pipeline at this point?
Dennis Gershenson - Chairman, President, CEO
Well, we -- it's interesting. Number one, in my remarks, I mentioned we are seeing an acceleration of opportunities that are coming our way. We're actually continuing to see some off-market deals which gives us an opportunity hopefully to buy them without a [frothy] competition. There is a possibility that we're looking at one asset; whether or not anything could come from that before the end of the year -- you know, normally, a typical process would require more than approximately 60 days because we aren't in contract with anything at the moment.
As far as 2011 is concerned, we do have a general figure in mind, but I think we'll need to hold that until its part of the big picture with our 2011 budget which at that juncture, we'll be more than happy to share with you.
Ben Yang - Analyst
Okay. And how are you sourcing those off-market opportunities? Are -- do you have a team kind of going out there or are these opportunities coming to you?
Greg Andrews - CFO
Yes, Ben, it's Greg. We -- both. I mean, we're certainly well known in the industry. We have a $2 billion platform which gives us plenty of heft in the industry to be recognized, so on occasion, those deals are coming to us, but we also have a team that's very active working the relationships that all of us have in the industry to source opportunities.
So to sort of amplify on what Dennis said earlier, we're looking at a lot of different stuff of different sizes and configurations, geographies and so forth, but I think as I tried to emphasize, we're being very selective. We're cognizant that for whatever reason that we don't necessarily understand, our cost of capital remains very high, and so we're being very selective and disciplined about where we're choosing to allocate our capital. And I think you'll see us continue to do that.
Ben Yang - Analyst
Okay, great. And then switching gears, I saw an article recently that you guys are abandoning a development project in Michigan called North Point Town Center, but that probably does not appear in your development schedule. And I'm just wondering how many shadow projects you're currently working on that don't appear in the Supplemental at this point.
Thomas Litzler - EVP, Development, New Business Initiatives
Tom Litzler here. We actually terminated that project last year, but we had that land in Jackson under contract throughout the balance of this year. We just elected to terminate the contract early so that the township could get the property back and do what they wanted with it, and that's the only piece that we have in that regard.
Dennis Gershenson - Chairman, President, CEO
Yes, they're -- that was never a piece of property that we owned. As Tom said, it was a piece of property that we had optioned and that we were investigating. The genesis of that interest had been the same as in a number of our other projects which was that there were anchor tenants who could not get into our existing shopping center, which is called Jackson Crossing, at that same location. The difficulty was, however, that it would have been a very substantial undertaking and it just wasn't appropriate for us to do that at that particular time. So it may have actually just expired as far as the contract recently, but that's something that we backed away from at least nine months ago.
Ben Yang - Analyst
Okay, got it. And just final question -- you talked about planning to sell some land. Is that part of the 48 or 45 million of asset sales that you are expecting for the balance of this year or is that kind of (inaudible)?
Dennis Gershenson - Chairman, President, CEO
No. That's a good question, and to clarify, the 40 to 45 are income-producing properties. In addition to that, we are marketing the land and as I mentioned, we have a contract for that one parcel at Hartland and hopefully we'll have some more contracts during the course of next year.
Ben Yang - Analyst
Okay, great. Thanks, guys.
Dennis Gershenson - Chairman, President, CEO
Okay.
Operator
Our next question comes from Nathan Isbee with Stifel Nicolas. Please state your question.
Nathan Isbee - Analyst
Hi, good morning. Just following up on the detail you provided about the anchor leases you signed after you signed the four additional in the fourth quarter. Can you just lay out how many additional vacancies you'd have in the anchor space?
Michael Sullivan - SVP, Asset Management
There's -- this is Mike Sullivan. At the end of the year, given all the mid-box signings we're anticipating, it looks like we'll have approximately 500,000 square feet, give or take, still vacant in mid-box. Of that 500, about 160,000 of it is leased, so that gives us about 340,000 vacant. It's difficult to talk about spaces because we've subdivided the Albertsons at Mission Bay and the Wal-Mart at Village Lake from what was two spaces to five, but 500,000 at year end was 160 leased.
Nathan Isbee - Analyst
Okay. And just [excepting] that pool, is it safe to say that that's generally tougher space to lease, and you should not expect the significant progress you've made this year to continue in that space next year?
Michael Sullivan - SVP, Asset Management
Actually, we do expect continued velocity in our mid-box spaces. Right now, we're projecting conservatively in the first two quarters of '11 to lease about 125,000 square feet of that 340 remaining. That'll be approximately five additional leases. So we expect the velocity to continue, quite frankly, into the first two quarters of '11.
Nathan Isbee - Analyst
Okay. And if you could just give a little more detail on the progress that you've made at Aquia, just (inaudible) activities at Aquia this quarter?
Thomas Litzler - EVP, Development, New Business Initiatives
Nate, Tom Litzler. The area continues to benefit from [Rack and Base Rewinding] Act, as you know. At this point in time, we're -- we have some more leases in the works for the retail portion of the project. We're also competing for a number of RFPs for additional office users that would be down there and we are working with several different potential office joint venture partners which would basically buy the deal from us. So our exposure would be limited in those regards.
We continue to work with our residential partner in their plans to put the residential plans -- integrate those with the retail plans for Main Street. And in addition to that, we're speaking with a couple of different hotel chains which has expressed some sincere interest in locating on the site. So it's still all in the planning stages and again, the marketing stage is down there.
Nathan Isbee - Analyst
Okay. All right. Thanks.
Operator
Our next question comes from [Tayo Okasanyo] with Jefferies & Company. Please state your question.
Tayo Okasanyo - Analyst
Hi, yes, good morning. Just along Ben's line of questioning on the acquisitions front, could you talk a little bit about what you're seeing pricing-wise, and also if you could provide the cap rates for the Liberty Square acquisition?
Greg Andrews - CFO
Yes, hi, [Tayo], it's Greg Andrews.
Tayo Okasanyo - Analyst
Hi, Greg.
Greg Andrews - CFO
We -- what we're seeing on the acquisition side is continued downward pressure on cap rates for A-quality properties and in particular, in the hot markets which generally are aligned with the coasts. We're seeing less of that downward pressure when it comes to B or C assets and maybe somewhat less of that also kind of in the middle of the country. And I think what we've disclosed is that the two acquisitions, Liberty and Merchants' together, will generate a first-year return of in excess of 9.3% [per annum].
Tayo Okasanyo - Analyst
Um-hum, okay. And (inaudible) we talk about the assets in A markets, would you hazard to guess that cap rate is close to, let's say, 8.5% or --
Greg Andrews - CFO
Well, the cap rates always depend on the specific circumstances. I think we've seen cap rates as low as 6% for certain assets in that kind of bracket.
Tayo Okasanyo - Analyst
Um-hum, (inaudible). Thank you. And the second question -- thanks for that. When we start to think about upcoming debt maturities in 2011, how should we start to think about your plans to refinance that?
Greg Andrews - CFO
Well, I think we've made some comments about that on our second quarter call. We generally have financed our company in the mortgage market and as we look out to the mortgages that mature over the next, say, 18 months, most -- on average, those are at reasonable loan to values where we really shouldn't have trouble refinancing the properties to extend the maturities and so that's essentially the plan. And then with respect to the $30 million term loan, we continue to look at our options, including as a backstop, the ability to just pay that off using our line of credit, but also any number of other sources of capital or unencumbered assets that we could finance with mortgage debt.
Tayo Okasanyo - Analyst
Okay. And could you (inaudible) put that mortgage debt on, what kind of rates would you expect to get?
Greg Andrews - CFO
In the low 5s.
Tayo Okasanyo - Analyst
Um-hum. (Inaudible) in the low 5s (inaudible). All right. Thank you: very much.
Greg Andrews - CFO
Thank you.
Operator
Ladies and gentlemen, there are no further questions at this time. I'll turn the conference back over to management for closing remarks. Thank you.
Dennis Gershenson - Chairman, President, CEO
We just want to say thank you again for your interest and your attention, and we look forward to communicating with you, if not before, in approximately 90 days. Have a good holiday.
Operator
Thank you. This concludes today's conference. All parties may now disconnect.