Rithm Property Trust Inc (RPT) 2011 Q4 法說會逐字稿

Greetings, and welcome to the Ramco-Gershenson Properties Trust fourth-quarter 2011 earnings call. (Operator Instructions). It is now my pleasure to introduce your host, Dawn Hendershot, Director of Investor Relations for Ramco-Gershenson Properties Trust. Thank you, Ms. Hendershot, you may begin.

Good morning, and thank you for joining us for Ramco-Gershenson Properties Trust fourth quarter conference call. Joining me today are Dennis Gershenson, President and Chief Executive Officer; Gregory Andrews, Chief Financial Officer; and Michael Sullivan, Senior Vice President of Asset Management.

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. Additionally, 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. Although we believe that the expectations reflected in any forward-looking statements are based on reasonable assumptions, factors and risks that could cause actual results to differ from expectations are detailed in the quarterly press release.

I would now like to turn the call over to Dennis for his opening remarks.

Thank you, Dawn. Good morning, ladies and gentlemen. We are pleased you could join us.

If there is one thought I would like you to take away from this call, it is that Ramco-Gershenson has been on a trajectory these last two years to promote quality in all aspects of our business. What do I mean by our commitment to quality? First, we are focused on achieving and maintaining the highest credit quality from our tenant roster and income stream. Second, we are actively engaged in culling from our shopping center portfolio those assets we consider noncore, and at the same time pursuing the acquisition of high quality properties in metropolitan markets with superior demographics. And third, we continue to improve the quality, strength and flexibility of our balance sheet, which will promote a solid foundation for our growth in 2012 and beyond.

In 2011, our focus on quality and asset management can be seen through the progress we made in improving the composition of our rental stream. This was achieved by filling large format vacancies and both replacing underperforming big box users as well as retenanting dark but paying tenants with national credit worthy retailers. The success we have achieved in leasing our anchor space has resulted in the beginning of a repositioning of our lineup of our top 25 anchor tenants. Further, these anchor additions will continue to drive smaller tenant occupancy gains. These results demonstrate that our shopping centers are truly the most desirable locations in our trade areas to accommodate the increasing demand for the expansion plans on the part of numerous national retailers.

Also during 2011 we actively promoted the improvement in the quality of our shopping center portfolio by selling four noncore assets, including three Florida centers and our only property in South Carolina. We replaced the loss of their rental income by acquiring two high quality class A shopping centers in St. Louis, a new market for the Company that created the opportunity to make high quality acquisitions at favorable pricing.

Both St. Louis acquisitions, purchased at a blended cap rate of 7.5%, represent an improvement in the quality of our portfolio demographic profile, a broadening of the credit quality of our tenant roster, and each center presents the opportunity to add real value, as the Company's purchase price was based on income in place. The value add benefit will be realized through the lease-up of vacant space and the expansion at one center by the construction of new retail buildings. We anticipate these value add activities will commence in 2012.

Further in 2011, we continued to promote a transformational change in our capital structure. Our efforts allowed us to exceed all of our balance sheet metric goals. That said, it is important you understand that, as we move into 2012 with an emphasis on growing the Company and continuing our capital recycling plan, we will jealously guard the progress we made with our balance sheet. In summary, 2011 was a year of real and substantial progress for the Company in promoting quality in all aspects of our business.

With a commitment to quality as both the near term and long-term strategy, what are our plans for 2012? First, as it relates to asset management, we expect to further reduce the number of vacant, large-format boxes portfolio wide. In addition, as we are experiencing an acceleration in leasing commitments with national credit quality retailers in the 4,000 to 10,000 square foot range, our portfolio and leasing statistics will benefit by the combining of numerous small shop spaces. This approach answers the challenge of leasing the sheer volume of small tenant spaces our industry is facing as a whole because of the shrinking pool of local retailers who also find themselves seriously undercapitalized.

In other words, Ramco-Gershenson is filling its largest vacancies with the right anchors in their new formatted size. We are converting the space left over from this downsizing into productive, larger-formatted small shop space, and we are reducing the amount of 1,000 to 4,000 square foot premises by bringing exciting new larger retail concepts to our shopping centers. All of these lease signings and tenant format changes, which occurred in 2011 and are continuing in 2012, will have a major impact on our numbers this year and next as they translate into a significant increase in quality recurring FFO as a percentage of total FFO. Occupancy, same center NOI, and leasing spreads are all anticipated to improve during 2012.

Our efforts to grow our portfolio of high quality shopping centers is also progressing. We are presently in contract to sell three noncore centers, and we have identified an additional two assets that no longer fit the type of properties we wish to own going forward. Because of the number of centers we own in Michigan and Florida, coupled with our desire to diversify our portfolio, you should expect that the dispositions will more likely than not involve properties in these two states.

In addition to our planned dispositions, we have identified at least one acquisition prospect that meets our criteria for purchase, including its location in a metropolitan market, the presence of a superior demographic profile, and the number of credit quality anchor tenants. We are working diligently to match prospective acquisitions with our disposition program so as to limit an increase in leverage and managed dilution.

Note that our 2012 FFO guidance includes $25 million to $50 million of noncore asset sales.

An additional area that will be a focus of ours in 2012 is the land we carry on our books for potential development and sale. Please note that we have already moved a land parcel to development in progress, as we are announcing the commencement of phase one of our Parkway Shops project, which is adjacent to our River City Marketplace in Jacksonville, Florida.

We have signed leases with Marshalls and Dick's Sporting Goods. These two national retailers are a terrific complement to our River City anchor lineup, further cementing our assets as the dominant retail shopping destination for a large and growing trade area. Also, at the Parkway Shops development we are currently finalizing leases and letters of intent with enough smaller format retailers to achieve a leased rate of over 90% by the end of the second quarter. Our return on incremental dollars will be approximately 11%.

As for the balance of our land held for development or sale, I have charged our management team with the goal of moving approximately 20% of these nonproductive assets into either active projects or completed sales by the end of 2012. Based on the activities of our asset management team, we are pleased to report that the Company is producing consistent, solid results in our operating metrics. Our expectations for 2012 is a continuation of this trend, with an ever increasing share of FFO being generated by our core operations.

Also, the Company remains committed through its capital recycling plan to the diversification of our markets, with the twin goals of reducing our exposure to our top two market concentrations, while at the same time we will be selling assets to reduce the number of markets where we have a limited presence. In 2012, we will make progress on both of these fronts. Importantly, over the last 24 months and especially in 2011 Ramco has made substantial changes in our organizational structure, including personnel reductions to streamline the Company. We are now appropriately staffed to pursue our plans for growth.

Thus, with a clear vision of building the highest quality portfolio of shopping centers, and with the wind at our back as we continue to post solid, consistent sustainable operating results, Ramco-Gershenson is poised to deliver real growth in shareholder value as we execute on our commitment to quality.

I would now like to turn this call over to Michael Sullivan, and then to Greg Andrews, who will provide the context for our achievements in the fourth quarter and the year 2011. Michael?

Thank you, Dennis. Good morning, ladies and gentlemen.

In keeping with the theme of quality, I believe that our operating performance in 2011 supports the conclusion that our shopping centers are the type of high quality assets where credit worthy tenants want to locate; that national retailers with strong merchandising concepts are making up an ever-growing percentage of our income stream; and that our shopping center metrics provide compelling evidence that we have charted a course to produce solid, consistent and sustainable income growth. The primary driver of our 2011 results is an aggressive leasing and asset management effort designed to grow occupancy and increase NOI. Our success in 2011 may be summarized as follows.

We maintain strong leasing velocity for both new and expiring leases. In 2011, we executed 385 leases totaling over 2 million square feet. We made significant progress in leasing up large format anchor vacancies. In 2011, we executed 14 anchor leases with national credit worthy tenants, reducing the number of vacant anchor spaces from 15 to eight. Included in the anchor lease signings are the replacements of dark and paying tenancies and underperforming anchor tenancies with viable anchor retailers. In the majority of these cases we received substantial lease termination fees, which the Company used to pay for the new tenant improvements. Our achievements in this area can be attributed to our long-standing and strong relationships with top national anchor retailers, including Ross Dress For Less, Marshalls, Michael's, DSW, and Bed, Bath & Beyond. Our anchor leasing efforts in 2011 have produced an anchor leased occupancy rate of 96%.

We also made significant progress on leasing small shop space. In 2011, we executed new leases for 450,000 square feet of small shop space, of which 70% was leased to national or regional tenants. In addition to our success in generating interest in small tenant spaces, we were also proactive in anticipating the trends on the part of some national anchors to downsize their prototypes, both at the end of the existing terms and in some cases mid-term, while at the same time identifying retailers in the 4,000 to 10,000 square foot category who are desirous of being added to our tenant roster.

With the reality of down sizing in our minds in 2011, we converted approximately 80,000 square feet of anchor space to small shop space. We were successful in leasing a significant portion of this additional space by taking advantage of the expansion plans of healthy national tenants in this category, including retailers such as rue21, Five Below, Dollar Tree, Kirkland's, Charming Charlies, Dress Barn, Dots and ULTA, resulting in a leased small shop occupancy rate of 84%. Combined our leasing efforts contributed to a significant improvement in core portfolio leased occupancy of 93.5%, which compares favorably to 92.8% achieved in the third quarter and is 180 basis points above the 91% in 2010.

In addition to our achievements in signing new leases, we are extremely pleased to report an historic high in our renewal retention rate. In 2011, we renewed 82% of expiring leases, while still achieving an average annual rental increase of 1.5% over prior rents paid. Additionally, we achieved rental growth for comparable new leases of approximately 1%.

Asset management continued in 2011 to reduce recoverable and nonrecoverable operating expenses at our centers. Exclusive of acquisitions and dispositions, we were able to lower recoverable operating costs by approximately $3 million versus budget and nonrecoverable costs by $175,000 versus budget, all this while improving our recovery of shopping center expenses to 94.1%. Achieving these objectives has also improved our same center NOI performance.

Our leasing efforts and improved retention of expiring leases has strengthened our minimum rent and recovery income, while our cost containment measures have resulted in lower recoverable and nonrecoverable expenses. This combination helped us achieve a same center NOI gain of 140 basis points for the year. Ramco's asset management team is committed to producing steady improvement in all operating metrics, thereby creating consistent and reliable growth in the portfolio in 2012 and beyond. Greg?

Thank you, Michael.

Before I cover our results, I would like to notify you of a correction to our supplement. Then I will update you on our balance sheet at year end, cover our income statement for the quarter and conclude with comments on our FFO outlook for 2012.

On page 27 of our supplement, in the far right column, we incorrectly reported our pro rata share of joint venture net operating income, or NOI, as $2.395 million for the quarter. The correct figure is $3.459 million. The revised supplement will be posted to our website following this call.

Now, turning to the balance sheet, we ended 2011 in a strong financial position. In particular, I would like to highlight three areas where our debt metrics improved compared to a year ago.

First, our leverage is lower. At year end, net debt to EBITDA was 7.0 times, compared to 8.5 times at the end of last year. We drove this improvement both by reducing our net debt by $55 million and by increasing our EBITDA by nearly $6 million.

Second, our debt structure is stronger. At year end our pool of unencumbered assets had a value of approximately $565 million, which provided more than 3.5 times coverage of our $160 million in unsecured debt. Recall that at the end of 2010 the vast majority of our assets were encumbered. Note also that our weighted average term of consolidated debt is a healthy 6.1 years, and that only 5% of our debt has variable interest rates.

Third, we maintained ample liquidity. In addition to $12 million of cash at year end, we had $144 million in borrowing capacity available under our unsecured revolving line of credit. Our share of debt maturing in 2012 is only $15 million, leaving us with more than sufficient capacity to fund our planned capital projects and to undertake opportunistic investments.

In sum, over a short period we have made substantial progress on our balance sheet. We will remain committed to a strong, flexible and liquid capital structure that affords us the capacity to act when opportunity knocks.

Turning now to the income statement, our FFO for the quarter, adjusted for impairment charges on land and a gain on extinguishment of debt, was $0.22 per share, compared to $0.20 per share in the comparable quarter last year. Note that we had no significant lease termination fees or gains on land sales this quarter.

Our same center NOI was a bright spot, increasing 2.3% for the consolidated portfolio. Total consolidated NOI reflects several items of note, including the acquisition of Town & Country for $37.8 million, which occurred on November 30. As a result, only one month of NOI from this acquisition was included this quarter. In addition, our NOI includes a provision for credit loss that was $200,000 higher than in the third quarter due to some aged receivables where we deemed collection to be doubtful. As a result, our allowance for doubtful accounts is appropriately sized going into 2012.

Also note that our straight-line rent adjustment this quarter was a negative $667,000. This is because we increased our reserve against our straight-line asset to minimize our risk of loss to potential early lease terminations. This increase did not pertain to any tenant in particular. Instead we made adjustments across our entire book of our straight-line assets. These two provisions -- the one for credit loss and the other for straight-line rent -- both affect GAAP NOI, but it is important to realize that they were larger this quarter than we expect them to be on a recurring basis in 2012.

Working down the income statement. We recorded $4.4 million of general and administrative expense for the quarter. This is significantly lower than in prior quarters and reflects the reduction in staffing we implemented at the end of the third quarter. In 2012, our G&A should run modestly higher than our fourth-quarter 2011 rate due to anticipated salary and vendor cost increases.

Our loss from unconsolidated joint ventures was significantly larger than usual. Let me explain this. It reflects primarily two one-time non-FFO items. One, the impairment of a property at one of our joint ventures, which at our share was a loss of $1.6 million. And two, accelerated depreciation at two shopping centers; the shops on lane Columbus, Ohio, where we made room for the expansion of Whole Foods, and Peach Tree Hill in Atlanta, Georgia, where we created the pad for LA Fitness. These items do not affect FFO. In fact, our share of FFO from joint ventures this quarter was roughly equal to the amounts recognized over the prior several quarters.

The last income statement item of note is a gain on extinguishment of debt of $1.2 million. This relates to the transfer of Madison Center, a Kmart anchored property in Madison Heights, Michigan, to the lender in exchange for release from our $9.1 million loan obligation. We have not included this gain in the $0.22 of FFO as adjusted that we are reporting this quarter. However, it is included in the FFO that we report under NAREIT's definition.

Now I would like to comment on our outlook. As stated in our January press release on guidance, we are expecting 2012 FFO to be in the range of $0.94 to $1.02 per share. This reflects our expectation for same center NOI growth of 1% to 2% for the year. Given the timing of lease starts during 2012, we expect this growth to be somewhat back end weighted for the year, that is to say, stronger in the second half than in the first.

Increasing cash flow is one of our goals, but the quality of cash flow is also important. Let me address five ways our quality of FFO is improving between 2011 and 2012. Specifically, our 2012 FFO guidance is based upon the following assumptions and accomplishments. One, lower lease termination fees and gains on land sales than we received in 2011 by approximately $0.06 per share. Two, improving tenant credit quality achieved through leases with the likes of T.J. Maxx, Bed, Bath & Beyond, Ross and others. Three, lower leverage in a primarily fixed rate debt structure. Four, sustainable JVC income based upon management and leasing contracts. And five, a projected straight-line rent adjustment during 2012 that reduces rather than increases FFO by approximately $0.02 for the whole year.

In sum, our FFO should be more predictable and sustainable going forward. We believe this to be important to our shareholders, who are inclined not only to look at reported numbers but to understand the quality that is driving them. As always, we are keenly focused on creating value for shareholders day in and day out.

Now, I would like to turn the call back to the operator for Q&A.

Thank you. (Operator Instructions). Our first question is coming from the line of Todd Thomas with KeyBanc Capital Markets. Please state your question.

Good morning. I'm on with Jordan Sadler as well.

Good morning, guys.

Good morning. First question, just thinking about the vacancy that is still in the portfolio today. I know you mentioned that you have eight anchor vacancies. First, can you just give us an update on the progress you are making to lease those boxes? And then second I was just wondering if you could maybe quantify or break out how the rent spreads would look if you were to break them out between tenants over and under 10,000 square feet?

Todd, Mike Sullivan. The eight spaces -- of the eight spaces we have -- we are negotiating prospects to re-lease three of them, and we expect to be able to qualify that interest over the next 30 to 45 days.

The second question, can you clarify for me about rent spreads by tenant size, large and small?

Right, right. So I saw that you broke out the leasing spreads for tenants that were -- for spaces that were vacant for more than 12 months or less than 12 months. I was just wondering if you could do it by size for tenants that were over and under 10,000 square feet?

I think in general we are seeing, in three different categories, different momentum for lease spreads. Obviously anchor, 19,000 and above, there still is I think some downward pressure on rents, depending upon how far you go back. I think if you are talking pre great recession, we are still having some challenges getting those rental rates up to those levels. I think we are seeing improvements post great recession, and in particular we highlighted the vacant less than 12 months number because we are seeing some trends improving there.

Anchors are still tight. The large format shop users, however, are aggressive. The 4,000 to 10,000 square foot users are in general, especially that list of retailers I alluded to, are aggressive, and we are seeing improving trends in national rent spreads in that category.

Shop, although it is starting to warm up sub-4,000, we are seeing some green shoots in terms of local tenancies coming back, we are really hoping that our -- the greatest impact -- our greatest improvement for those spaces and that category will give us our greatest improvement. We are still cautiously optimistic. We haven't had a track record long enough to document that this is a durable consistent trend.

Okay. That is helpful. And just following up on that then, where do you think that the increased demand from some of the local tenants that you are talking to, where do you think that is coming from?

Well, in terms of our portfolio, it really is outsized in Michigan and Florida, strangely enough. We are getting really an increase in interest, not only in local tenants who have multi-shop operations already, but those involved in new business plans who are potentially better capitalized than they have been in the past. So we are seeing some demand -- some increased demand in both Michigan and Florida.

Let me just add, if I could, to Michael's comment. We are still seeing, as many of the leases run off in some of these secondary shopping centers, still a very significant demand on the more viable concept local retailers for them to move from secondary locations into our shopping centers. And so that trend continues.

Okay. And then, Dennis, with regard to the $25 million to $50 million of asset sales that are I guess baked into guidance, how much -- what are the net proceeds that you are expecting, and how much in value do the three properties that you are under contract to sell account for?

Well, although we wanted to let you know that, indeed, we have made progress in that we have signed these contracts, historically we have tended to make those dollar announcements when we actually close. But we certainly have a very strong confidence that we will meet and surpass the low end of the $25 million, and it is just a question on, as I referenced, moving out of some markets where we have a very limited presence. If we can get the right type of cap rate for those assets then we may move toward the higher end. But I hesitate to start giving you figures until we start closing these transactions.

Okay. Fair enough. Thank you.

Our next question is coming from the line of Nathan Isbee with Stifel Nicolaus. Please state your question.

Hi, good morning.

Good morning.

Dennis, you mentioned in your prepared remarks about leasing spreads improving in 2012. They were down about 8%, 10% in 2011. Can you give us a sense of where you expect those to move here in 2012?

I don't know if Michael has specific numbers, but we definitely -- as Michael has just alluded to in Todd's question, we have absolutely seen an increase in the rental rates that these tenants are willing to pay. What I continue to find interesting is as we look at a number of our peers, et cetera, we have always taken a great deal of pride in the strength of our shopping centers. Those shopping centers in the years 2000 to 2007 produced some very aggressive rents. Are we building back to levels that we had achieved before? We are indeed doing that. But the hurdle rates, because of how successful our centers were, was set a reasonably high bar. But there is no question that we are, indeed, achieving rental rates that are superior to what we achieved in 2010, and we will achieve greater in 2012 over 2011.

I mean just looking at the three box leases you are working on now, I mean, could you just talk broadly about where those rents compared to where box leases you signed last year?

Nathan, they are consistent with those box leases that we've signed within the last 12, 18 months. It's an ism of course that they are down from 2005, 2006, 2007, 2008, but if you just take recent history, 12 to 18 months, they are absolutely in the same neighborhood.

Okay, great. And then can you just talk a little bit about Michigan specifically, and in terms of retailer demand -- new retailer demand to lease in that space given some improvement in the economy there?

Well, Nate, it is a good story. Things are warming up in Michigan in general. If you look at our Michigan stats in terms of fiscal and leased occupancy, in terms of average rent, we are doing really very well in Michigan. We do, in fact, have in that 4,000 to 10,000 square foot category a number of those retailers that I mentioned who have aggressive multiple store programs in Michigan. As Dennis mentioned, they are interested in either a flight to quality, whether it is a new store or relocating, and we are doing a lot of deals.

You have noticed that we have executed several deals with not only Bed, Bath & Beyond but Bye Bye Baby. There are several box retailers who are looking very favorably and aggressively at Michigan. We are getting word that there are several other, if not national, large regional players who are also beginning to develop an open to buy plan in Michigan for late 2012 and early 2013. We are seeing demand increase in Michigan.

And again, let me add something to Michael's comments. If you look in the supplement, Nate, you will see that for the wholly owned shopping centers that are core we are over 97% leased, so we are well above statistical fully leased assets. The -- there are a couple of boxes that are yet to be leased, and we have identified tenants for those boxes in our off balance sheet joint venture. But as you know from our previous conversations, in the depths of a recession, out of the 13 states where we had our shopping centers, Michigan was always the highest statistically as far as occupancy is concerned, and over the entire portfolio in Michigan we are pressing the 94% to 95%. So Michigan not only has not been a problem as far as leasing is concerned, but with the advent of the Bye Bye Babys and the Five Belows and tenants like that, we are seeing a number of retailers who find Michigan a desirable place to locate for new concepts that are coming into the state.

That's helpful, thank you. Then, Greg, can you just talk a little bit about how you see the balance sheet moving this year in terms of maybe further unencumbering some of your assets, and how far you think that can go?

Yes. We have a little bit of mortgage debt coming due this year, which I think we would probably be inclined to pay off using our line rather than refinancing in the mortgage market. And I think that -- it is not a lot this year, but it grows a little bit in the years beyond that. So that would be one source. Also we tended, Nate, to be acquiring properties, maybe more by chance than design, that are unencumbered, and so that helps our pool grow as well.

Okay, thank you.

Our next question is coming from the line of Ben Yang with Keefe, Bruyette & Woods. Please state your question.

Yes, hi, good morning. Dennis, a question on development, specifically on Parkway Shops. 11% incremental return on your $11.3 million that you still have to invest, so really the project will return about 7.3%, including all of the costs that you sunk into the project. I mean, as far as -- do you think this is an asset that would warrant a valuation cap rate below 7.3% once it is open and stabilized? And then second, how do you guys evaluate restarting developments like Parkway versus maybe selling the project? Because I think you mentioned intending to move ahead with 20% of your nonproductive assets. Is it incremental return on investment, and some costs are just sunk costs when you decide to move ahead with something like this?

Well, it is not an uncomplicated question you are asking. We certainly -- as we -- and you have got to bifurcate the properties. Some properties are just land that we own that we intend to sell. Other parcels that are saleable are part of a development because certain anchors will only buy as opposed to lease. But as we look at -- and as we looked at Parkway Shops, we absolutely assessed the differential between just saying let's sell this as a fully entitled site, either with executed leases or with letters of intent, and what could we achieve with that versus going ahead and doing the project.

You will find with us, if we are going to move ahead with a project, at least on incremental dollars, we will achieve a double digit return. As far as the overall return when you add back in the money that we had spent, I'm pleased to say that in the last couple of years we made a decision that we were going to stop capitalizing costs, especially interest, that increased our basis in net land. I think that was a smart decision. I think a number of our peers made that same decision. So that if we had not capitalized that interest from the get-go, I think that the overall return you would have seen would have been even better.

But understand, at least with the projects that we will move ahead on, they are a complement to existing very profitable shopping centers that we own, so part of what drives us forward in the developments that -- with Parkway and the possibility with the Lakeland asset as well, is that it complements what we have demonstrated is a successful asset, as opposed to saying, oh, well, we are going to go out in a potential greenfield area and take the risk of a lot of small tenant leasing. I think that the mere fact that you see that I have made a representation that we will be over 90% leased within the next four months speaks volumes about that location.

Okay. That's helpful. And then changing gears, the geographic diversification strategy. Obviously you bought two assets in St. Louis, which is a new market for you. You intend to acquire more centers this year. I think you said you had one identified. You also said you intend to move out of markets as well. And when you think about entering new markets or growing in existing regions, what is the appropriate size or scale to make the effort worthwhile, given the fact that you are somewhat smaller sized relative to peers? I mean, is it two assets, five assets, what do you think the sweet spot is for you guys before you even exit a market?

Well, let's put it -- as far as entering a market is concerned, I think we would have a goal of three to five shopping centers in that marketplace. And as you can see from the two that we bought and the one center that we are talking about we have identified is again a multi-anchor shopping center. So I think to truly have a representation in a new market -- and we are very careful about the new markets that we choose based upon a whole variety of factors. But I think three to five assets of size makes sense for us.

As far as the markets that we may exit -- and remember in my remarks I mentioned two focuses. One focus is obviously we have a very significant presence in Michigan and Florida. Whether we sell assets out of that or reduce their impact by buying in other markets, that is a focus. The other focus that we have is that we -- it is entirely possible that we may be selling assets that are good assets, it is just that we have maybe one or two assets in that market. It is not an area where we plan to grow, and so we are better off taking the proceeds from the sale of those assets and investing them elsewhere.

Okay. That's helpful. And then just finally, I'm sorry if I missed this, but did you say what the same store NOI was from your joint venture properties for the quarter and for the full year?

We didn't. For the quarter -- and I don't have it in front of me, Ben, but from memory it was actually a bit over 6%.

Positive.

And for the year it was about 3%. Just a little over 3%.

6% for the quarter; 3% for the full year. And can you just remind us how much of your NOI comes from the joint venture properties?

It is around 16% to 18% of pro rata.

Okay. Great. Thank you. Thank you, guys.

Thank you. Our next question is coming from the line of Vincent Chao with Deutsche Bank. Please state your question.

Good morning, everyone. I just want to go back to the leasing environment comments. It sounds like things are trending positively, and you seem pretty positive entering 2012. I just wanted to get some color on that relative to the occupancy guide, which seems to be flat year on year in terms of the core portfolio lease rate. And maybe if you could tie in some comments about what you are seeing from Kmart, as well as I guess there was a couple of new anchors that got added to the month to month. I just wanted to get some update on what is going on with those guys.

Let me start out, and I don't know if Michael or Greg wants to add anything. But as we have indicated, we truly believe we are gaining significant traction and very pleased about these larger format but smaller tenant commitments. The first quarter is always a quarter where you get some real shake up in occupancy relative to any of the boxes that may be leaving, and some of the smaller tenants, because a preponderance of our leases do end on December 31. So I think that the number that we have put out there we believe is a very conservative number, and we understand your inquiry, and we will give you an update on that either at the end of the first or sometime in the second quarter. But you should count on that being a very conservative approach.

Okay. And what you are seeing from Kmart and other stores that may announce some closures here? Can you provide some color there?

This is Mike Sullivan here. We have essentially five Sears/Kmart boxes in the portfolio. One is slated for closure in 2012. A second one is slated for closure in 2013. Both of the stores on the closure list are part of a joint venture partnership assets. We are, in fact, in direct negotiations with several national retailers to re-tenant the Kmart box slated for closure at the end of April in 2012, and we are confident that we will have a replacement plan in place for the closure that is slated for 2013.

The other three stores, two of them are wholly owned, one is in a joint venture. Our indications are, based on our discussions with Kmart, that the three of them are good stores, and we are anticipating them staying. Obviously, between now and the end of the year that could possibly change, but those terms in general are 15 and 17.

Okay. And then --

And Vincent, I would just add that across the board the rents that Kmart/Sears pays are very low, so -- in fact, there is potentially upside, although there is typically some downtime that accompanies re-tenanting that space.

Okay. And just on the comment about the renewal rate of 82% in 2011, is that kind of where you see 2012 shaking out in terms of the renewal rate, or do you think that will go back down to more historical levels, or what are you thinking there?

Actually, our -- pre-2011, our historical rates were in the low 70s. We are really comfortable and confident that 80% or above is achievable for us in 2012, and that is really part of our operating plan.

Okay. But low 70s is sort of the historical?

Yes, if you take the last five years or even farther back, it is 72%, 73% -- it has been 72%, 73%. But we have obviously been looking at the 2012 and 2013 renewals, and we feel pretty comfortable that we can hold the line at 80% or above.

Thanks. And just a last question just in terms of the disposition plan, three under contract, I think two more identified for potential sale. So assuming those all got tested for impairment, just wondering if those five asset sales all close, would that hit your guidance for the year for what you think you are going to dispose of, or is there potential for additional assets to be sold? I'm just trying to get a sense of whether or not there is more impairments potentially coming up here over the course of the rest of the year?

Vincent, we obviously looked across the portfolio at everything we intend to sell. I think we looked at a dozen assets, of which just kind of a handful were the ones where we had to take impairment charges, and all of that constitutes assets that are available for sale. As Dennis mentioned, we may do more or less just depending on pricing, but we have looked at everything that we intend to put to market and have taken the charges appropriately.

Okay. Thank you.

Our next question is coming from the line of Rich Moore with RBC Capital Markets. Please state your question.

Hi, good morning, guys. Greg, on that correction you made on page 26, is that the only sell that changed? I mean, in other words, is the total for the JVs of $13.8 million, was that correct, and it was just the pro rata share that was incorrect?

Yes, that's correct. I would note, however, Rich, that we've also somewhat changed the presentation, where we are now deducting in NOI 100% of the management fee, which was not previously part of the presentation. And we show a line a little bit further down on that page where we in effect add back our share of that management fee, since we can't pay -- we don't pay ourselves or cost ourselves anything in terms of management fee. And I think that add back is really effectively like NOI to us. So I just want you to be aware that the presentation is a little different.

Okay, no, that is a good point. And so is that in operating expenses then now where it wasn't before? Is that --

Yes.

Okay. All right, I got you, good. Thanks. Staying with the JVs a second, I note that you guys have not too much in maturities -- debt maturities this year, but a bunch next year. And I'm curious, have you started looking at those? Is it too soon? Do you have any concerns about being able to refinance those mortgages as they come due?

Yes, we have absolutely looked at that already, and we have also had discussions with our partners with respect to those mortgages. It is a little bit early to take any specific action. And in general the loan to values across the board are reasonable, maybe a little bit at the high end of the range.

Now, when you get down to specific mortgages there may be some that are at higher loan to values than the market would refinance today. And so as a result of that, depending on our plans and the joint venture partner's plans, if we refinance those, we may pay some dollars down. It is not a very large number. It is not something that keeps me awake at night. I don't have a number for you, but having looked at it I don't; it is just not big enough to be worried about.

Okay. And I take it you have no concern that your partners would be able to put their share in?

Correct.

Okay. And then a quick question, if I could, on the land. I think, Dennis, you were saying that you wanted to look at about 20% of the $77 million of land that you have held for development and try to bring that to some sort of fruition, and I'm wondering about the remaining, say, $60 million of land. Is that land that you think you would actually develop something on over time, or has that passed by at this point?

Well, again, my comment really involves -- the land held for future development is $53.5 million, and then land held for sale is $23 million, for a total of $76 million. So when I talk about 20%, I'm talking about 20% of both of those numbers. So to the extent there is out-lots that we sell, that there is land parcels that we sell either as part of a development or just to sell off and develop and may happen later, my druthers would be that we have a greater emphasis on selling off parcels of land and reducing to $23 million, because we continue to work very hard on signing enough anchor leases.

We didn't really talk about our criteria for moving ahead with any prospective development, but the criteria that management has and the criteria that the Board has is very, very strict, as far as the type of commitments that are -- needed to be made, the sheer percentage of leases that have to be signed, and the hurdle rates on returns. So, as with Parkway, if you hear anything from us as far as the development is concerned, it is for all intents and purposes a done deal. So we can go into much greater depth if you want without taking up a lot of time here with everybody on the phone as to where are we at with individual projects, et cetera.

All right. Okay. Good. Thank you, guys. Thanks.

Our next question is coming from the line of Michael Mueller with JPMorgan Chase. Please state your question.

Hi. A couple things. First of all, for the three to five properties that you are under contract for or close to being under contract for, does the aggregate value of those fall within the $25 million to $50 million for the guidance that you put out initially?

You mean will the three to five be $25 million, no, I -- that will come in under the $25 million number. But again, there are other -- we are only identifying for you that truly these five will happen sooner as opposed to later. The assets that will then come after that more likely than not are those that fall into that category of a focus on a market maybe we should exit, as opposed to just lightening up in Michigan or Florida.

Okay. And, Dennis, I think you had mentioned that the -- when you were talking about putting land or I guess projects that are quiet right now back into service, up to 20% of them, I think you said they are going to be very similar to Parkway Shops. About how many announcements could that translate into if you do that full 20%? Is it two or three starts? Is it five starts?

Well, I think, Michael, based upon our past conversations we kind of took a view on Aquia that, more likely than not, that's not going to be a project that we are going to go in and do a multi-use on. At Hartland our focus in the short-term is going to be more on selling off to anchors as opposed to starting a development. So if you -- in all honesty, if you are going to hear another announcement in 2012, and it certainly would be in the latter part of 2012, I think the only thing you would hear about would be our Lakeland site.

Okay. Got it. And then last question, I think Michael mentioned 84% shop occupancy. Where do you expect that to go by year end?

Well, we have approximately a delta of about 200 basis points of physical to leased in terms of shop. We would very much like to maintain that cushion moving forward in 2012. Up.

Okay. So it is 84% leased now but 82% physical? Is that --

Correct.

Okay. And by year end you want to be from 82% to 84%?

That is our operating goal.

Okay. Got it. Okay. Great, thank you.

Our next question is coming from the line of Edward Okine with Besso Capital. Please state your question.

Sure. You did say that the, I believe, debt maturities for 2012 was $15 million. What is your number for 2013 for debt maturities?

Hang on one second, Edward, and I will get that for you. Our consolidated maturities in 2013 are $21 million.

$21 million.

And then in addition to that our joint ventures have debt coming due and -- I don't have the number right in front of me, but kind of eyeballing it, that is probably another in the $30 million to $40 million at our share.

Okay. So $30 million to $40 million will be your share of that maturity?

Yes.

So in total you will be around $40 million to $50 million for 2013?

Yes, I mean I'm giving you some round numbers here, because I don't have the specifics in front of me, but certainly if you look at our supplemental package, you will see our consolidated debt maturity schedule on page eight. And then you can look at the joint venture debt on page 26, and you will be able to get exact numbers.

Okay. And how do you intend to finance that?

Well, we have a variety of means available to us -- the mortgage market, the bank market, and obviously sources of equity capital, common and preferred. So when we get to that point we will be looking at what are the best alternatives for the Company, both in terms of capital structure and in terms of cost.

Okay. Thank you.

Thank you.

There are no further questions at this time. I will now turn the floor back over to management for any additional comments.

We would merely like to thank you all for your attention and your interest. We truly feel that we have charted a course here for growth in all sectors of our business and look forward to talking to you in a couple of months with a report on the first quarter. Thank you again. Have a great day.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time, and we thank you for your participation.