Rithm Property Trust Inc (RPT) 2013 Q2 法說會逐字稿

Greetings and welcome to the Ramco-Gershenson Properties Trust second quarter 2013 earnings call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions).

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Ms. Dawn Hendershot, Director of Investor Relations. Thank you ma'am. You may now begin.

Good morning and thank you for joining us for Ramco-Gershenson Properties Trust second-quarter 2013 earnings 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. And good morning ladies and gentlemen. Ramco-Gershenson's strong second-quarter results and our ability to post positive metrics quarter after quarter speaks to a Company that is highly productive and well-positioned to deliver continued sustainable growth. Our positive broad-based accomplishments and the attendant increase in funds from operations furthers our Company's overall business strategy and moves us toward achieving all of our 2013 goals.

In its simplest terms, our strategic mission is to be the best in class owner of a portfolio of geographically diverse, high-quality multi-anchor shopping centers with built-in above average income growth potential. Our 2013 goals which advance this strategy include, first, growing and refining our shopping center portfolio through accretive acquisitions and non-core dispositions, value-add redevelopments and center expansions.

Second, diversifying our geographic footprint so that no one market represents more than 25% of our average base rent. Third, generating consistent, sustainable same center net operating income growth through a proactive leasing and asset management program. And lastly, accomplishing all of these growth and diversification goals while maintaining and improving a strong, flexible balance sheet.

We are confident that successfully executing on each of these objectives ensures that our stakeholders will experience ever-increasing share value and a competitive dividend.

How have we done so far this year against these metrics? In the first six months of 2013, we acquired over $430 million of high-quality multi-anchor shopping centers at an average capitalization rate of 7.4%. In addition to these acquisitions, we are in the process of realizing how the opportunity to develop both land parcels we purchased adjacent to our recent acquisitions at Fox River in Milwaukee, Town & Country in St. Louis, and Harvest Junction in Longmont, Colorado.

Each of these projects involve constructing additional square footage and the leasing of out lots at the shopping centers, generating not only accretive returns on the new capital investment, but also producing higher property NOI while increasing each shopping center's net asset value.

In addition to acquiring shopping centers in targeted markets, as part of our efforts to refine our shopping center portfolio, and diversify our geographic footprint, we are actively engaged in the process of selling a number of additional non-core properties. We expect to complete these sales in the second half of this year.

Complementing our strong showing in external growth during the second quarter and the first six months, our asset management team continues to demonstrate its ability to drive healthy increases in all of our portfolio operating statistics. Key metrics of a highly desirable and successful shopping center portfolio, including same center NOI growth, leasing spread increases, improving occupancy levels and healthy operating margins all advance for us in the second quarter.

Of special note is the success we are achieving in signing highly desirable anchor and small tenant leases. Based upon the letters of intent and leases we are negotiating, we reasonably expect to sign at least one additional anchor lease with a leading national retailer by year's end.

We also anticipate a continued acceleration in our small tenant leasing momentum. You should remember that I indicated in our first-quarter conference call that our small tenant lease occupancy goal for 2013 was between 89% and 90%. We are presently on track to reach the target.

The advances we've made in both our anchor and small tenant occupancy will by no means slow our potential for income growth. Rather, in addition to contractual rental increases and options exercised, we have multiple sources to drive property level income over the next several years.

These sources include, one, renegotiating leases of replacing tenants we signed in 2008 through 2011, a period of retrenching. We anticipate that we will generate rental rate increases for both new and expiring leases, similar to those we are achieving in the second quarter and the year to date 2013.

Two, capitalizing on a significant lineup of value-add redevelopments, which we only announce and include in our supplement when we have solidified plans for the project. As I mentioned, these projects currently include Harvest Junction, Roseville Town Center, and The Shoppes at Fox River.

And lastly, a third source of strong net operating income growth will come from the pipeline we are creating for expansions at newly acquired shopping centers. An example of the potential for this type of future income growth is our most recent acquisition, Mount Prospect Plaza. This core-plus community shopping center, located in a dense in-fill northwestern suburb of Chicago, was approximately 85% leased at the date of purchase.

Based on a strong demographic profile, position in the market, roster of national credit tenants and the existence of significant retailer demands, we believe that we can move quickly to lease the majority of the existing vacant space. Our plans also include having at least one out lot and constructing an additional retail building on the site.

Thus, pursuing all of these avenues to grow our income stream will enable us to broaden and deepen the income growth potential to be mined from our expanding shopping center portfolio.

As we undertake all of our external and internal growth initiatives, we are ever mindful to maintain a strong balance sheet. Our capital activities in the second quarter and the year to date reinforce our commitment to limit interest-rate risk while emphasizing equity as an integral part of funding our acquisitions, developments and core portfolio improvements.

Our continued focus on value-add acquisitions, operational excellence, and a strong capital structure has produced a steady improvement in our earnings. Based on these results, we are increasing our FFO guidance for 2013 by $0.04 at the midpoint of our range.

Over the balance of the year, we will continue to deliver in our business plan. As part of that plan, we expect to acquire an additional $40 million to $80 million of high-quality, value-add shopping centers in our targeted markets.

The first half of 2013 has positioned your Company to reap the benefits of all of our growth initiatives. We anticipate the second half of the year will be a very productive period as well.

I would now like to turn this call over to Michael Sullivan, who will provide insight into our operating metrics.

Thank you, Dennis. Good morning everyone. Ramco's asset management team is pleased to report second-quarter operating results. We think the continuing improvement in our operating metrics speak volumes about not only the quality of our shopping center portfolio, but also about the opportunities embedded in our centers.

Asset management is on track in executing its 2013 business plan, which supports Ramco's broader strategic goals. Leasing continues to drive our portfolio productivity. In the second quarter, we generated strong leasing velocity at positive rent spreads for both new and expiring leases. Total lease transaction volume exceeded 475,000 square feet. And on a comparable basis, the cash rental spread was up 9.1%. We continued to take advantage of an active retail leasing environment at several levels.

Shop leasing velocity was strong the second quarter, accounting for approximately 70% or 150,000 square feet of total new leases signed. There are three key areas driving this activity. Number one, local small shop tenants are expanding and opening new stores at a higher rate than they have in past years, accounting for approximately 50,000 square feet of new shop leases executed during the quarter.

Our selection process embedding new local tenancies has become very stringent, allowing us to pick winners in this category, which we view as those specific concepts desired in our markets that add a flavor and excitement to our centers, while benefiting from the traditional high rental rates achieved from these tenants.

Number two, we also continued to benefit from high interest from national and regional small shop retailers that are expanding their stores including The Children's Place, America's Best, H&R Block and [Salon Law].

Number three, large-format shopping, those over 5000 square feet, continue to be a very important element in our high-quality multi-anchor centers. In the quarter we signed 75,000 square feet of these leases with expanding retail concepts including DSW, Advance Auto, Kirkland's, Buffalo Wild Wings, and Rue 21.

Our success in our shop leasing program is a prime contributor to the increase in our core average rents to $12.04 a square foot. Additionally, anchor leasing continues to be active as national retailers expand and relocate to the best positioned shopping centers. We executed three anchor leases in the second quarter, one of which has T.J. Maxx replacing a departing Staples.

Our anchor leases occupied rates stand at approximately 97%. We attribute these leasing trends to several factors. Retail sales continued to increase. Retailers view growth through expansion most favorably and the lack of new development places a premium on existing spaces and well-positioned, high quality, multi-anchored shopping centers.

On the renewal front, we renewed approximately 83% of expiring leases with the rental growth of positive 6.8%. We see this trend continuing. In fact, demand for spaces in our shopping centers has presented us with an opportunity to be more selective in renewing tenancies and more aggressive in driving rental increases.

As a result of our successful leasing program, occupancy in our core properties continues to increase. In the second quarter, we posted a lease occupancy rate of 95.1%. This was the result of positive improvements across all regions of our portfolio. The greatest increases were realized in Georgia, Florida, Ohio and Michigan.

Michigan now has a leased and occupied rate of 97%.

The asset management team is focused on supplementing its growth through value-added redevelopments and expansions. Tenant interest in our Fox River and Harvest Junction properties will result in lease agreements sufficient to expand those centers in the coming quarters.

Our Roseville redevelopment involving a Walmart supercenter and retenanting the balance of the center with national retailers is on schedule. And we have identified a pipeline of future projects.

Ramco's team continues its focus on driving income and reducing cost with positive effect. In the second quarter, our operating margin was 73.4%, a 190 basis point improvement over last quarter and a 210 basis point improvement over the comparable quarter last year.

Achieving our leasing renewal income and cost-containment objectives has also improved our same center NOI performance. We posted a same center NOI gain of 3.2%.

Our asset management team is committed to generating consistent, sustainable internal growth through operational successes in leasing, value-add redevelopments, shopping center expansion and cost containment.

With that, I'll turn it over to Greg.

Thank you, Michael. In the second quarter we took large strides forward in our capital structure and our earnings. I'll begin by covering the balance sheet, then I'll review our income for the quarter and conclude with our outlook for the year.

During the quarter, assets increased approximately $50 million. We bought two high-quality shopping centers for a combined $58.8 million -- Nagawaukee Center, located in a high income suburb of Milwaukee, and Mount Prospect Plaza located in a dense in-fill suburb of Chicago. Both properties strengthen our presence in existing markets and exemplify our strategy of investing in well-anchored centers located in higher income trade areas.

We also sold one non-core property in Atlanta for $8.4 million. During the quarter, our $17 million development of Phase 1 of Parkway Shops in Jacksonville, Florida was completed and opened and we initiated expansion projects at The Shoppes at Fox River and at Harvest Junction.

We funded our $50 million in asset growth with the assumption of a $9.2 million mortgage loan on Nagawaukee Center, the addition of $29.5 million of incremental debt, and the issuance of $12.5 million in common equity through our asset market equity programs.

In terms of the liabilities management, we broke new ground in the second quarter by closing a $110 million private placement of senior notes. This was our inaugural issuance in the private placement market. We are delighted to have earned the confidence and support a highly selective group of net investors. By establishing our access to this source of unsecured debt capital, we have demonstrated our ability to diversify beyond the bank market and to extend our debt maturities.

The unsecured notes are in three tranches maturing in 8, 10 and 12 years. The weighted average term is 9.9 years and the weighted average interest rate is 4%.

In order to stagger our debt maturities, we also closed a $50 million seven-year bank term loan during the quarter. We swapped the full notional amount of this loan to a fixed interest rate at the current loan spread of 3.5%. We used the proceeds from these two long-term fixed rate, unsecured financing to pay off five maturing mortgage loans totaling $113.6 million, and to pay down our line of credit to an outstanding balance at June 30 of just $3 million.

So let me sum up our quarter end financial position following these transactions. One, our debt to total market capitalization is 39.3%. Two, our interest coverage is 3.6 times and our fixed charge coverage is 2.5 times.

Three, we have over $230 million available under our existing line of credit. Four, our unencumbered operating real estate provides a borrowing base exceeding $1.1 billion, which equates to 65% of our total operating real estate. And five, our weighted average term debt including our pro rata of joint venture debt, has increased to 5.8 years.

In short, our financial position provides ever greater strength and flexibility to execute on our business plan. Now, let's turn to the income statement.

FFO for the quarter was $0.28 per diluted share or 8% higher than the $0.26 reported in the same quarter last year. Here are some of the key items driving FFO this quarter.

On the operating side, cash NOI was $31.2 million, or $9.6 million higher than in the comparable quarter. This increase reflects the addition of $430 million in real estate for a consolidated balance sheet this year, as well as $150 million of acquisitions closed in 2012.

Notably, our acquisition of 12 properties from the Ramco/Lion joint venture, which closed in March, is performing slightly ahead of our underwritten expectations. As Michael noted, same center NOI increased 3.2%.

On a same center basis, occupancy increased 1.1%. This uptick in occupancy helped drive an increase in rental income (technical difficulty) by 2.2% and in our recovery ratio by 70 basis points.

We recorded an overall provision for credit loss of (technical difficulty) [$313,000] this quarter which, at 0.7% of revenue, was the same percentage as recorded in the comparable period.

General and administrative expense of $5.6 million for the quarter was higher than the $4.9 million (technical difficulty) a year ago. G&A in the second quarter included $449,000 of acquisition costs related to closed, pending and debt deals. Our revised forecasts for G&A expense for the full year is approximately $21.5 million.

During the quarter, we booked a gain of $332,000 or approximately [$0.015] per share on the sale of an outparcel to a restaurant operator at our Parkway Shops development. We expect to close one additional outparcel sale in the fourth quarter that should result in a gain of between $200,000 and $300,000.

Our joint venture results this quarter reflect diminished JV earnings as a result of the sale of 12 properties by the Ramco /Lion venture. For those who are modeling earnings, the amounts reported this quarter for management fee income, earnings from joint ventures and the add-back to FFO of our share of JV depreciation all reflect approximately quarterly run rates going forward.

Now, let me say a few words about our outlook. We are increasing our 2013 FFO guidance to a range of $1.10 to $1.16 per diluted share. The $0.04 increase at the midpoint reflects contributions in three areas.

On the internal growth front, we now anticipate that same center NOI for the year will be at the high end of our prior guidance range of 2% to 3%. Both the pace of leasing and the rents being achieved are driving this improvement, which adds about $0.01 per share. On the external growth front, we have added two strong properties to our roster this quarter and at returns that are immediately accretive to earnings, also by approximately $0.01 per share.

Lastly, our interest expense projection is lower by approximately $0.02 per share, in part because we used our line in the second quarter to prepay mortgages and bridge to our new long-term financing, and in part because those long-term financings were priced favorably.

In closing, our financial position has strengthened yet again, our leasing pipeline remains healthy and our markets continue to provide compelling investment opportunities. We look forward to executing our business plan for the remainder of the year.

With that, I'd like to turn the call back to Jesse for Q&A.

(Operator Instructions) Todd Thomas, KeyBanc Capital Markets.

Thanks, I'm on with Jordan Sadler as well. In terms of acquisitions, Dennis, you mentioned an additional $40 million $80 million in the balance of the year. I was just wondering if you've seen any change in the competition and or pricing for property with where interest rates have moved.

Well, if I could give you just a little broader perspective, starting at the beginning of the year we saw a significant uptick in supply as well as competition for the assets that we were interested in. Since the end of May or May 21, there has definitely been somewhat of a stall in the market. Less product is indeed coming to market as certain sellers are wondering about the mood of the buyers.

We keep in touch with many of our peers. And everybody really has somewhat taken a wait-and-see attitude. I think what we need is the sellers to become more used to what is going on in the environment, and to accept the fact that with an interest rate increase, there will obviously have to be some adjustment in cap rates. How large that will be is yet to be determined.

Okay, and these acquisitions should we expect these to be wholly-owned or are you working with Clarion on these acquisitions? I know you had confirmed an agreement with them after acquiring the 12 properties from them last quarter to move forward with pursuing additional acquisitions.

Without going into their criteria, we do continue to show them opportunities. At this juncture the $40 million to $80 million we are contemplating would be on balance sheet.

Okay, and I just wanted to get your thoughts. At Ramco doesn't own a whole lot of property within the City of Detroit. But sometimes what's good or bad for the city may be good or bad for the state and have some other implications.

I'm just wondering if there was anything that you're thinking about or anything that you're doing internally, or any impact that you're thinking about regarding the properties that you own in the metro area given the situation in Detroit.

All right, well, look, first of all I'm glad you asked the question. We certainly knew it would come up as part of this call.

And you know, because some see our Michigan presence as the elephant the room, from our perspective if there is an elephant there, it's a baby elephant. And we have made it a point in most all of our conference calls to say that, look, not because we have lost faith in Michigan, in the communities we're in, in the assets or our tenants. But because there is this concentration, because we don't think it's healthy to have a more than that approximately 25% that we referenced, we are working to reduce the concentration in part between acquisitions as well as disposition.

I think that there are a number of people who truly have done their research on the state of Michigan. Some of them have been here and have seen our centers. However, there are those who don't understand Michigan and Detroit at all. And worse, there are those who don't care to learn about Michigan but are absolutely prepared to articulate with you anyway. And that is both frustrating and disappointing.

So, let me set the record straight if I could. Number one, just the facts. We do not own any shopping centers or any assets whatsoever in the City of Detroit. We do own shopping centers in the communities that surround the city to the north and to the west.

The majority of centers we own in these areas as well as the majority of the square footage is located in Oakland County. And as we have said in the past, Oakland County is one of the wealthiest counties in the United States with populations over 500,000 people.

Oakland County is also one of only a handful of the 3100 counties with a AAA credit rating. Our trade areas where our ship centers are located all have above average demographics, populations that are well educated, significant job growth that is occurring today, and a broad base of both industries and businesses.

Just putting Detroit in its context, we all have to remember that Detroit's problems are not new. They did not occur during the latest recession, but have gone on for decades. So any impact the City of the Detroit would've had on our shopping centers obviously would have occurred over that extended time period.

But even in the latest recessions, we were never lower than 92% leased. And primarily, if we could go through those tenants, over 90% are national or regional chains.

At the present time, we are 97% leased and occupied in Michigan. I'll back that statistic up against any of our peers. So if you take a look at our assets, where they are located, the rental increases we are experiencing, the demand for space, I will say unequivocally that the Detroit problems will have absolutely no effect on our shopping centers.

Now, do we wish Detroit well? We do. Do we believe that with Governor Snyder's help, the city can clean house and restore some fiscal sanity to their existing problems and cut out of this in a much stronger position? We will continue to mind our own business and to take care of our assets, and to lease the very few remaining spaces we have in our Michigan shopping centers at ever-increasing rents.

I hope that answers your question.

Great, thanks a lot.

RJ Milligan, Raymond James and Associates.

Dennis, in your opening comments you talked about dispositions expected for the second half of the year. I was just wondering if you could quantify those and at what cap rates you expect those dispositions [to stand at].

We're thinking about something in the range of $25 million to $35 million. These will be assets that are located in secondary markets. And typically the anchors that go with these assets are not the type or the creditworthiness of the anchors that we really want in our portfolio going forward.

So I think rather than give you a specific cap rate, we are securing bids as we speak on a number of assets. And I can tell you that Michigan will be the primary source of those sales.

Will they exceed the cap rates for the assets were buying? Absolutely. But again, I would emphasize that it's the difference in the type and quality of anchor that will make that determination.

Thanks, and can you talk about who the potential buyers of these assets are? Are they individual buyers, small buyers? Are they private equity? Who's coming to the market looking for these assets?

It really is a lot of all of the above. There are some institutional players who are looking for higher cap rate acquisitions. But we are [buying with individual] buyers who are truly prepared to roll up their sleeves and really focus on those assets specifically, because they don't have a rather large portfolio, are the people who are coming in with the best offers.

Okay, thanks. And for your occupancy -- if you get small shop occupancy over 90% by the end of year, where does that take portfolio occupancy?

The -- (multiple speakers)

We anticipate the core lease occupancy to really be at the high end of the range we've identified, which is pretty much quarter-over-quarter close to this 95% number.

That's core.

Core, correct.

That's [above] the entire portfolio.

I mean we see the trends still continuing in economic occupancy for the portfolio as well increasing. You know, there is sort of a relationship. We see the spread changing from quarter to quarter, but there is a relationship between our core leased and our combined portfolio leased that -- that spread can be anywhere from 30 to 80 basis points. We see that basically the combined portfolio increasing as well.

Okay, thanks. My last question is just on the acquisition front. Given the trend that we've seen over the past year and a half, and the increase in retail demand for space, as you think about your target markets, would you prefer an asset that has lease-up opportunity? Or are cap rates still attractive enough to buy stabilized property that will still provide a good yield?

We have always looked at the potential acquisitions for those that may appear reasonably stable to the seller, but always have value-add opportunity for us. Whether we expand an anchor, we expand a center and add an out lot, we just have not been stable asset acquirers.

Okay, thanks guys.

Vincent Chao, Deutsche Bank.

Just want to go back to your comments about -- it sounds like you're driving some rent growth for some leases that were signed in 2011 and 2012 timeframe when leverage was more in the tenants' hands. Can you just give us some color on how much in terms of leasing is available there and maybe what the mark to market you think looks like on that set of assets or leases?

Let's take the first question which is really about rental growth. Is that accurate?

No, specifically to the comment made about renewing or rolling over some of the 2011/2012 lease signings that were maybe done in tougher times and seeing some opportunity there. Just trying to get a sense of how much specifically that represents and what you think the mark to market on that set of leases looks like.

Well, I'd really refer to 2008 to 2011. Most of the leases we signed in that timeframe were either three-year or five-year leases, so we are seeing those now rolling over. The ones that obviously we've assigned in 2011 in 2012 will be coming up in 2014, 2015, 2016.

Again, I think you can use the yardstick, the kinds of increases we are achieving year to date, and anywhere from the 5% to 10% on average increases over the entire group. One of the issues, obviously, is in any particular quarter are you negotiating with an anchor or a group of bankers, or are you negotiating with smaller format tenants who, obviously, if we negotiated from 2008 to 2011 we can see a much healthier increase.

So depending on the mix on the quarter it will vary. But for the year, certainly I think 5%, 6%, 7% is not out of the question.

Okay thanks, and just going back to the investment environment, it sounds like people are sitting on their hands a little bit and maybe less assets coming to market. Just curious, though, on the deals that you are still working on, are you seeing any changes in potential buyer behavior in terms of number of buyers on different deals? I know you do probably mostly off market, but bid-ask spreads and things like that. Are you seeing any material changes in those kinds of areas?

I think the reality is it may be a little early. I think we'd be in a better position to answer that in the third quarter because the deals -- again, in talking with our peers and our activities, those deals that we're in contracts for, we're pretty much sticking with. You test the water a little bit with the seller to see if there might be some movement.

If reasonable questions come up in the acquisition, then that will give you more leverage to change the purchase price. But in the main, I think people are sticking with the contracts that they have and we're all waiting just a little bit, maybe another 30 or 60 days before everybody dives back in and feels comfortable with the cap rates they're willing to buy at, will indeed generate transactions with the sellers.

Okay, thank you.

(Operator Instructions) Mike Mueller, JPMorgan.

Hi, thanks, just a few quick things here. I know you laid out the second half of the year acquisitions and dispositions and guidance. Just want to -- I know it's not going to have a huge impact in this year's estimates, but are those factored into the earnings guidance as well? Or is that just kind of exclusive of it?

It's exclusive of it, Mike, just that's sort of consistent with how we've always modeled and provided guidance. But as you point out, I don't think it's going to have a big impact one way or the other because we're heading into the back half of the year now.

Got it, and as we look forward to the next few years -- next couple of years, few years, what do you think is a good baseline we should be thinking about for asset sales over, you know, in a given year? Is it, which is if you're sitting where we are, do you think $50 million? Do you think it's more than that per year to kind of get you to your goals?

I think at least a safe number is $30 million to $40 million.

Okay, got it. And then where do you think development, redevelopment spend ramps up to, say, in 2014 and 2015 per year?

Well, we have -- we didn't talk about it on this call, but out there obviously is our project in Lakeland that is a $40 million project. And you could expect that to kick off of the second half of this year with the majority of the spend coming in, in 2014.

But as we've articulated in a number of our past calls, I think the majority of the developments you are going to see from us will be things like we're pursuing at Fox River, which are typically anywhere from $10 million to $20 million as far as new construction or expansions of the center of concern.

Okay, and then last question -- and I know I can get this from the transcript, but toward the end of your comments, Greg, you rattled off a couple of smaller line items where you said these are good run rates going forward. Can you just hit those again?

Yes, those or anything related to our joint ventures, so the management fees line item, the earnings from joint ventures and then the depreciation add-backs [in our share]. Just because I have -- I imagine everyone following the Clarion deal we did in the first quarter is looking for a little guidance on the joint venture, I think this quarter's run rates are for all three of those items are good run rates for modeling purposes.

Okay, got it. Thanks, that's it.

Edward Okine, Basso Capital.

Yes, I just had a quick question on the Detroit and Michigan issues. What I'm just [referring to] is what percentage of your NOI comes from that region or that city and state?

Well, as Dennis said, none of our NOI comes from the City of Detroit (multiple speakers). In the Southeast Michigan area, which includes the surrounding counties, it is about 30% of our net operating income, which as Dennis pointed out is largely from Oakland County, but also includes Macomb and Wayne County.

All right, thank you.

(Operator Instructions). It appears there are no further questions at this time. I would like to turn the floor back over to Mr. Dennis Gershenson for any concluding remarks.

Ladies and gentlemen, as always, we truly appreciate your interest and your attention. This organization is on an upward trend. We're very excited about the balance of 2013 as well as the prospects for our portfolio, and we look forward to talking with you in approximately 90 days. Be well.

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