使用警語:中文譯文來源為 Google 翻譯,僅供參考,實際內容請以英文原文為主
Operator
Greetings and welcome to the Ramco-Gershenson fourth quarter 2013 earnings call. (Operator Instructions). I would now like to turn the conference over to your host, Dawn Hendershot, President of Investor Relations. Thank you. You may begin.
Dawn Hendershot - President-IR
Good morning, and thank you for joining us for the fourth quarter year end 2013 earnings conference call for Ramco-Gershenson Properties Trust. With 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 our quarterly press release. I would now like to turn the call over to Dennis for his opening remarks.
Dennis Gershenson - President, CEO
Good morning, ladies and gentlemen. Thank you for joining us. 2013 was an exceptional year for our Company both in terms of operational achievements and return on investment for our shareholders. As a matter of fact, 2013 capped our five-year, total shareholder return at 251%, compared to our shopping center peer group average of 64.7%.
This consistent, superior performance has handsomely rewarded those stakeholders who invested in our strategic vision. In 2013 alone, we achieved what I like to call a trifecta. That is first, we grew the Company's total capitalization from $1.3 billion in 2012 to approximately $2 billion at the end of 2013. We also grew out total assets to over $2 billion by acquiring $567 million of high quality shopping centers. Last year, as part of our capital recycling program, we sold $35 million of non-core assets.
The second aspect of our trifecta was an increase in funds from operations of 13%. We grew FFO per share from $1.04 to $1.17. And the third element of the trifecta involved the continued improvement in our overall and already strong balance sheet and capital structure as evidenced by the positive changes in all of our debt metrics as well as the substantial increase in our unencumbered asset base. These significant 2013 accomplishments were supported by a healthy improvement in all of our operating metrics including the same center net operating income, comparable leasing statistics and operating margins.
All of which are indicative of a highly productive dominant community shopping center portfolio. An important aspect of our 2013 asset management plan was to have our leasing team focus a critical eye on those tenants whose leases were expiring with the intent of keeping only those retailers with healthy sales volumes and a progressive business plan. This approach enabled us to achieve not only a real increase in comparable renewal rents, but also allowed us to refresh our tenant mix with exciting new retail concepts.
As a result of these efforts, at December 31st, we achieved a leased occupancy rate in our core portfolio of 96%. Thus, we finished 2013 with a larger portfolio of high quality well leased shopping centers. We grew our presence in a number of targeted markets further diversifying our geographic footprints, and we increased our roster of best in class national retailers through our acquisitions, redevelopments, and leasing in our core portfolio.
So as we begin the new year, what can you expect from us in 2014? You can expect that we will continue to generate outsized growth as a result of both our external and internal initiatives which will also drive net asset value. On the external front, we have begun to reap the benefits from our acquisition of high quality shopping centers that were either purchased with significant retail vacancies including our 2013 acquisitions of Mt. Prospect Plaza and Deer Grove in metropolitan Chicago or from our shopping center acquisitions with adjacent land parcels upon which we have planned expansions.
This latter group includes Harvest Junction in Longmont, Colorado and Fox River in Milwaukee, Wisconsin. At Harvest Junction, we are in the process of securing governmental approvals to add additional retail space. At this shopping center, we are also currently executing agreements for land leases and sales that include no less than four out lots.
At Fox River, our expansion plans are to ultimately triple the size of the shopping center's original footprint. At present, we are completing the construction of phase two of the shopping center which encompasses over 100,000 square feet with the addition of a new prototypical Hobby Lobby store. In 2014, we will also begin to benefit from the completion of our current value add redevelopment program in our core portfolio as we bring online L.A. Fitness at Promenade in Atlanta, Georgia, Marshalls at Roseville Towne Center in metropolitan Detroit and Ross Dress for Less at Market Plaza in Glen Ellyn, Illinois.
These significant income drivers provide the additional benefit of bringing to our shopping centers the best in class retailers while they bolster each center's dominance in its trade area. Our 2014 numbers will be further augmented by the full year effect of our 100% leased Parkway Shops development in Jacksonville, Florida, and the opening this fall of our 96% pre-leased Lakeland Park project in Lakeland, Florida.
In addition to these enumerated growth projects, our 2014 plans include the acquisition of additional high-quality shopping centers with value add characteristics similar to our most recent purchases. These centers will be large, destination-oriented, multi-anchored properties, often with a strong grocery component. Our capital recycling plans for 2014 includes the sale of approximately $40 million of assets consisting of both shopping centers and land parcels.
All of these growth initiatives complement the healthy income increases we anticipate from our core portfolio. Where we grew same center net operating income by 3% in 2013, we have provided guidance for an increase in our same center metrics of 3% to 4% in 2014. Also, just those new leases we signed in 2013 which do not commence until sometime in 2014, will produce an increase in minimum rents of in excess of $3.3 million and their full-year impact in 2015 will exceed $7 million.
Further, all of the new tenancies who took occupancy in the second half of 2013 or are to open in 2014 will have a positive effect on our variable cost recoveries going forward. We also anticipate -- excuse me -- we also anticipate that the comparable leasing spreads in 2014 will either approximate or exceed the growth levels achieved last year. Operating margins will also remain at or above 2013 levels.
Thus, we begin 2014 with a portfolio of high-quality shopping centers, tenanted by best in class retailers. Our current external and internal growth drivers will ensure that we will have another very successful year. Our acquisition and disposition program will enable us to continue to grow a geographically, diversified portfolio.
And our capital plans for 2014 will allow us to make additional strides in improving an already strong balance sheet. All of these initiatives and built-in growth factors combine to position our Company for a very exciting and profitable 2014. I would now like to turn this call over to Michael Sullivan for his remarks. Michael?
Michael Sullivan - SVP Asset Management
Thank you, Dennis. Good morning, everyone. Ramco's asset management team is pleased to report our fourth quarter and full-year operating results. Our portfolio management approach is focused on improving the quality of our shopping center portfolio while we unlock growth opportunities that deliver strong financial results and in turn, increase shareholder value. Leasing continues to drive our portfolio productivity.
In 2013, our new lease transaction volume was up 15% over 2012. And total leased square footage was almost 1.7 million square feet.
Leasing spreads were healthy again with total lease rental growth on a comparable cash basis up 7.6% for the quarter and 8.2% for the year. We expect these trends to continue in 2014.
Our leasing focus and methodology generated improvement, not only in the credit quality of our income stream but our tenant roster as well. TJX is our number one tenant and Whole Foods now rounds out our top ten retailer list. Approximately 75% of our new leases executed in 2013 were with national and regional retailers and had an average base rent of $17.08 per square foot or 16% higher than those with local tenants.
Additionally, core portfolio average base rent continued to improve to $12.35 a foot in the fourth quarter up from $12.04 in the third quarter and $11.54 at the end of 2012.
National retailers with aggressive store opening plans are at the center of this activity. Including TJX, Ross, L.A. Fitness, Ulta, Rue 21, and Pier 1. Given our relationships with these retailers and the opportunities in our portfolio, we expect to continue leasing to this type of active retailer in 2014.
We take the same leasing approach in our renewal strategy. We target only those tenants that contribute to improving tenant mix and increasing income streams. In 2013, this selective renewal tactic resulted in over 800,000 square feet of leases renewed in expiration with a positive rental spread of 6.2%.
Although our retention was at a very attractive 80%, it was slightly lower than our target of 85% and reflected our preference for attracting more credit worthy and exciting tenants such as Carter's, America's Best, Five Below, Shoe Carnival, The Joint, and Buffalo Wild Wings. Leasing productivity translated into another quarter and full year of improving occupancy. Our core portfolio physical occupancy increased 10 basis points in the fourth quarter and 80 basis points for the year to 94.8%.
Leased occupancy increased 40 basis points in the fourth quarter and 140 basis points for the year to 96%. This marks the fifth consecutive year of improvement in portfolio leased occupancy. The increases in lease occupancy were most noticeable in our shop leasing results. In particular, for those spaces smaller than 10,000 square feet.
We believe there is still an opportunity for continued growth in this size category by tapping into this active market on both the national and local levels. Service providers, food service outlets, and hard goods should continue to dominate this activity. As Dennis mentioned, Ramco team continues to identify growth opportunities through redevelopment and expansion projects that improve asset value and quality. When completed, our active projects in Florida, Colorado, Wisconsin, and Indianapolis will improve the quality of the income streaming, tenant mix and shopping experience at these shopping centers.
We are confident in our ability to identify a pipeline of new redevelopment and expansion possibilities in 2014. Ramco's asset management team is also focused on supporting those growth opportunities present at our acquisition properties. While our recent acquisitions improve our average portfolio demographics and tenant roster, we have identified ways for additional long-term value growth at these centers.
Again, as Dennis mentioned, at Deer Grove and Mt. Prospect in the Chicago area, our release date is gaining real traction in filling both of the vacant boxes and shop spaces. We have identified additional tenant prospects that could support expansions in the future.
Our fourth quarter acquisitions of Deer Creek in St. Louis, Missouri and Deerfield Town Center in Cincinnati, Ohio, both core plus properties compliment our dominance in multi-anchored shopping center portfolio and feature excellent trade area demographics with household incomes within a three-mile range averaging $89,000 and $97,000 respectively. The centers have strong anchor line-ups with exciting credit tenants such as Whole Foods, TJX companies and Bed Bath & Beyond.
Because of their strong tenancies, we feel we will be able to leverage below market, in place rents as well as the modest vacancies at these properties. Even as we acquire high-quality centers, the Ramco team constantly identifies new growth initiatives at these centers and will have a positive near-term effect on their value. Our pro-active portfolio management approach to improving operating efficiencies continue to produce strong results in 2012.
We ended the year with an operating margin of 72.4%, a 120 base point improvement over prior year. Same center NOI was also a bright spot. We posted a 3.8% increase in the fourth quarter and a 3% improvement for the year.
This marks the third consecutive year of improving same center NOI. With our 2014 plan firmly in place and our continuing focus on increasing rents and containing costs, we expect similar results moving forward. Asset management is employing creative solutions to reduce cost at our centers including utility management, LED and lighting conversions, alternative energy suppliers and more efficient roofing systems.
On the income side, we are surfacing new ancillary income sources including additional electric resale, partnership with vendors to provide cost-saving services to our tenants, solar panels and cell tower leases. The team remains diligent in focusing on our tenant watch list. The recent Office Depot/Office Max merger provides us with a number of new opportunities to recapture every tenant or downsize these stores with higher quality, national tenants to higher rents.
We have been pro-active, continue to be in close contact with this retailer and are confident in our ability to create strong leasing and redevelopment opportunities with these ventures. We are also confident in our ability to maintain our high anchor occupancy. Ramco's asset management team is committed to operating excellence and ensuring our shopping centers remain the dominant centers in their trade areas. With that, I will turn it over to Greg.
Gregory Andrews - CFO
Thank you, Michael. Let me begin by covering our activity during the quarter and our financial position at year end. Then I will review our income statement and conclude with our outlook.
During the quarter, we made net investments of $117 million. On the acquisition front, we bought two outstanding properties for $120 million. These high-quality shopping centers have strong tenants, below market rents, and are unencumbered.
On the development redevelopment front, we invested $6 million, the majority of which was funded toward our Lakeland Park Center project in Lakeland, Florida. Site work is well underway and the 96% pre-lease project is on schedule and on budget. On the disposition front, we sold one noncore center and one land parcel for an aggregate $10 million. We funded our net investment with 2/3 equity and 1/3 debt.
Our new debt includes a $25 million expansion of a bank term loan due in 2020 which we swapped through maturity at an interest rate of 3.9%. We also increased our borrowings under our line of credit moderately, ending the year with a balance of $27 million drawn under the $240 million line. Roughly $4 million of these borrowings were used to pay off two small mortgage loans on our Hoover 11 Shopping Center. Our investment activity in the fourth quarter complemented our full-year activity in terms of growing our assets and improving our portfolio quality.
Our average base rent has increased. Our trade areas have higher incomes and densities and our tenant credit quality has improved. Compared to a year ago, our portfolio has greater potential to generate better long-term NOI growth.
At the same time as we improved our portfolio, we strengthened our balance sheet. Compared to the end of last year, we have lower leverage, higher coverage, and a longer average term of debt. During the year, we tapped long-term, unsecured debt at attractive pricing in both the private placement market and the bank market. Our year end debt metrics reflect this continuing strengthening of our financial position in three areas.
Number one, debt ratios, our key reactions are debt to EBITDA of 6.3 times, interest coverage of 3.7 times and fixed charge coverage of 2.7 times.
These are strong credit metrics and they reflect our commitment to maintaining an investment grade profile. Number two, debt structure. Approximately 88% of our debt is fixed rate. Our weighted average term to maturity is a healthy 5.4 years.
We have only $35 million of loans coming due between now and the end of 2014. Number three, liquidity, we have $205 million of borrowing availability under our existing line of credit. In addition, our $1.3 billion of unencumbered operating real estate can support more than $150 million in unsecured borrowing above and beyond our current line availability.
In short, our financial position remains excellent. Our balance sheet focus in 2014 will continue to be reducing mortgage debt, increasing and diversifying our unencumbered pool, churning out debt opportunistically, and maintaining a high level of liquidity to support our business plan. Now, let us turn to the income statement.
Operating FFO for the quarter was $0.29 per diluted share or 7% higher than the $0.27 reported in the same quarter last year. Operating FFO reflects two adjustments made to NAREIT FFO. First, an add back of $0.005 per share reflects a loss on extinguishment of debt. This resulted from prepaying the high coupon mortgage loans on our Hoover 11 Center.
Second, an add back of $0.005 per share reflects impairment charges related to certain land parcels that are available for sale. Here are some of the key drivers of FFO this quarter. On the operating side, cash NOI was $32.9 million or $9.2 million higher than in the comparable quarter. The increase reflects primarily the addition of $567 million in real estate to our consolidated balance sheet this year.
As Michael noted, same center NOI increased 3.8%. This was driven by a 3.5% increase in minimum rents. Higher occupancy and rental increases both contributed to these results.
We expect minimum rent growth to remain strong in 2014 as tenants begin paying rent under already executed leases. During the quarter, we recorded a provision for credit loss of $107,000 or over $200,000 better than in the comparable period. While we had a particularly low provision this quarter, collection trends appear sustainable in the current economic environment.
General and administrative expense of $5.8 million for the quarter was higher than the $4.7 million a year ago. The increase is explained primarily by higher acquisition costs and higher accruals under the Company's long term incentive plan. Our current forecast is for G&A expense to be approximately $23 million in 2014.
Finally, our higher weighted average share count reflects the issuance of equity early in the quarter. Note that the timing of our equity offering in advance of our acquisitions resulted in dilution to FFO of $0.01 per share for the quarter. Now, let me say a few words about our outlook for 2014.
We are reiterating our 2014 operating FFO guidance range of $1.20 to $1.22 per diluted share. We do not provide FFO guidance by quarter, but we expect the back half of the year to be moderately stronger than the front half. This is due to the expected timing of identified land sales and to continuing lease up and rent commencement occurring throughout the year.
In closing, in 2013, we strengthened our portfolio quality and our financial position. We continue to seek compelling investment opportunities both inside our portfolio and externally that provide opportunities to create value. We look forward to updating you on our progress on our first quarter earnings call. Now, I would like to turn the call back to the operator for Q&A.
Operator
Thank you. (Operating Instructions). The first question comes from the line of Craig Schmidt with Bank of America. Please proceed with your question.
Craig Schmidt - Analyst
Thank you. Looking at the projected year-end core portfolio occupancy of 95 to 96, a midpoint of 95.5, that is lower than the core portfolio now at 96. I assume you are still pushing the small shop occupancy. How do we get to that somewhat more conservative number?
Michael Sullivan - SVP Asset Management
Craig, good morning. I think what we have laid out is exactly that. A conservative number. I know that, you know, if pushed, we would probably say that there is a maximum occupancy in any portfolio based upon lease rollover, et cetera. And we might put that number at 97%. We are very optimistic about our ability, truly, at the end of the day to be able to push our occupancy. But we thought at least at this juncture, this early in the year, something that would be more conservative, we would lay out as a marker. Really, that number is no more than that.
Craig Schmidt - Analyst
Okay. And then just looking at the last four assets you acquired, they average over 300,000 square feet alone and if we included the shadow anchors, it would be even larger. Are you going to have a continued preference for these larger power centers? And what are the cap rates of those relative to say the smaller or larger community centers say in the 200,000, 250,000 range?
Michael Sullivan - SVP Asset Management
Number one, especially with the shopping center, the Deerfield Towne Center is really an exceptional asset because it not only combined a broad breadth of high-quality anchors but you have both commodity as well as lifestyle tenants in that development. So we really have a nice balance to draw all different types of customers. And it further included a growth recomponent in one of the best in Whole Foods. I would love to be able to say that all of our acquisitions in 2014 and into the future would look very similar to that. We have committed to multi-anchor centers, but probably you will find them more in the 250,000 square foot range than the larger ones just because you combine more of those. As far as cap rates are concerned, I think it has less to do with the size of the center and more to do with the quality of the income stream. So I don't think that the cap rates are dramatically different. Hard [panels] reflects the markets in which we combine the assets.
Craig Schmidt - Analyst
Okay. Thank you.
Operator
Our next question comes from the line of R.J. Milligan with Raymond James. Please proceed with your question.
Todd Thomas - Analyst
Good morning, guys.
Dennis Gershenson - President, CEO
Good morning, R.J.
R.J. Milligan - Analyst
So obviously big announcement from one of your smaller cap peers earlier this week. Big acquisition or merger, increasing their size. Obviously it was a move toward increasing their liquidity, access to capital markets.
What we have been hearing from a lot of the other smaller cap, smaller than you guys, strip shopping center names is that they want to grow their asset base to increase their exposure to those capital markets. You guys have increased from $1.3 billion to $2 billion over the course of 2013. Is this where you want to be in terms of portfolio size, and how much bigger do you want to grow the portfolio before you think you can enjoy some of those benefits and how do you get there?
Gregory Andrews - CFO
I will start, R.J. It is Greg. I do think that, you know that growth is part of the REIT story, and we are interested in growing our portfolio. We are also interested in improving our portfolio. But I think for us, the bottom line focus is return to shareholders. We want to do that in a manner that we feel will deliver good returns to our shareholders.
Operator
Please go ahead.
Michael Sullivan - SVP Asset Management
I would just add that in 2013, we are certainly not bashful about acquiring almost $600 million worth of assets. I would comment that so far, early in the year here, we have not seen a tremendous amount of new properties coming to market, but in our conversations, with the brokerage community, there is significant bidding to be able to represent some sellers. So we do see assets coming to market. In a perfect world, I would love to be able to acquire at least as much as we did last year, but obviously we cannot make any representations until we start marching through the year.
But we will grow. We hopefully will grow intelligently and as we have commented in many of our past conference calls, I think if we walk through each of the individual acquisitions that we have made, we are able to demonstrate to you that each has a value add component. So that we certainly plan to increase not only the value of those assets while improving the quality of the tenancies, but also see opportunities through expansions, adding of out lots, driving substantially the income of those assets.
Operator
Thank you. Our next question comes from the line of Todd Thomas with KeyBanc. Please proceed with your question.
Todd Thomas - Analyst
Hello, good morning. Jordan Sattler is on with me, as well. First question just on guidance. You completed the $72 million equity offering in early November just ahead of the closing of Deer Creek which was $24 million.
So you sat on some excess cash for a bit in the quarter which was a drag, as you mentioned, a drag about a penny in the quarter. I was just curious though because then you provided guidance for 2014 in early December which presumably took into account all of that activity. I was just wondering what the closing of Deerfield Towne Center in Cincinnati at the very end of December for $97 million. What is keeping the FFO guidance range intact here? I know it is a little early in the year. But with everything in the run rate, day one in January, it seemed like there would be a little bit more accretion from that transaction.
Gregory Andrews - CFO
Well, Todd, I think when we provided our guidance, even though we had not closed on the deal, we assumed we were going to close on that deal. And so we -- bake that into our numbers and our budget for 2014.
Todd Thomas - Analyst
Okay. All right. That is helpful. And then in terms of guidance, Dennis, you mentioned $40 million of sales are baked into guidance. What was the assumption for additional acquisitions then in 2014?
Dennis Gershenson - President, CEO
Well, we have not given -- at this juncture, we have not given a specific amount. We do plan to be an aggressive acquirer assuming again that we can find the type of assets that meet our criteria.
Todd Thomas - Analyst
Okay. And are you able to share what the cap rate on the Deerfield Towne Center transaction looked like?
Gregory Andrews - CFO
It approximated a 7 cap.
Todd Thomas - Analyst
Okay. And then just one more question here from me. I think Jordan has one after. But Michael, I was wondering if you could talk about the Office Max, Office Depot exposure in a little more detail. What the exposure looks like it. Looks like it is 14 boxes overall. I was curious how much overlap there is and how many you expect to get back to have an opportunity to redevelop?
Michael Sullivan - SVP Asset Management
Todd, you know, as you and I have spoken about this before. We have been in very close contact with actually Office Depot and Office Max before the merge. We continued to be very pro-active in terms of discussing each of the stores. We have done our own homework to identify where the competing stores are.
Not only competing Max versus Depot but also Staples. To the extent that we can, we have been able to glean not only the positioning but the performance of these stores. What I will say is that we are still waiting for that merger, shakeout for the Depot company to really come out with their plans in terms of their store positioning. What their new prototypes are.
We have an inkling of what the new prototypes are. We have actually been discussing with them locations that involve their new prototype. But in general, I can tell you that we have a good understanding of each of the store's performance and their location in the trade market. These are at very good centers.
And I think if you look at the rents, we feel comfortable they are roughly equal to market rents. We are very optimistic about our opportunity. Even if they come back to us with either closure or a downsize scenario in both cases, we are prepared to embrace it and do what we do best and that is to retenant, redevelop, and downsize.
Dennis Gershenson - President, CEO
I would just add, Todd, that in a number of these locations, again, reiterating Michael's reference to being pro-active. We have been in very preliminary discussions with a Max or a Depot relative to specific locations where we had already identified specific tenancies who were going to take the individual locations. They kind of pulled back a little bit when they put the merger together just so that they could regroup and make sure that their philosophies were still the same.
So we have tenants waiting in the wings for specific locations that we believe ultimately we will get back. I would add, as well, that you know, you could look at the expiration schedule. We have got plenty of time on these. Ergo, we will probably be terminating them early and with that termination, there is a potential for a fee.
Jordan Sattler - Analyst
Dennis, I was curious -- it is Jordan -- just following up on R.J.'s question, if -- you guys had the opportunity to take a look at Inland Diversified over the course of the last year or so. Is that something like that would have been of interest to get to scale a little bit faster. If it did not fit into your wheel house, I would be curious why.
Dennis Gershenson - President, CEO
I will certainly say that we did take a look at the Inland Diversified portfolio. I am very happy for John Kiep. He is indeed in the process of acquiring that. Once again, I would merely say that with the acquisitions that we made in 2013, I believe we have demonstrated we absolutely have the capability of taking on a portfolio of size, and it will always come down to what kind of benefits would the acquisition make?
What kind of value can we add? And then based upon the cap rate that we would have to pay, is this in the best interest of our shareholders? And you know, with that kind of criteria, we will look at anything that comes across the trends.
Jordan Sattler - Analyst
Thanks for the color.
Operator
Thank you. Our next question comes from the line of Vincent Chao with Deutsche Bank. Please proceed with your question.
Vincent Chao - Analyst
Good morning, everyone. Just sticking with acquisitions. Earlier you said that you are not seeing that much new come to the market but just curious in terms of the overall pipeline of deals that you are looking at. Has that significantly dropped off here to start the new year after your [120] in the fourth quarter? Or how is the pipeline looking?
Dennis Gershenson - President, CEO
No. We still believe that this will be a year with healthy opportunities. We are looking at a couple of centers at the present time. What I meant to imply is that I think that what we are seeing is more potential sellers are -- at this juncture based upon our research, working with the brokerage teams as they compete to be the representative for those. So therefore, we think that as we move through the latter part of the first quarter into the second quarter, we should see an uptick in opportunities.
Vincent Chao - Analyst
Okay. And just in terms of their expectations, are cap rates for the types of deals you're looking at, have they moved much here in the last three, four months and maybe if you could just provide the average cap rate on the acquisitions for all 2013 as well as sort of the average cap rate for the 2013 dispositions.
Dennis Gershenson - President, CEO
That would be helpful. Again, the average cap rate that we paid is -- would be a little different in part because if you remember that the reference I made to the two Chicago assets, part of this depends upon who the seller is. What was the motivation of the seller. One of the Chicago assets we bought from a special servicer. And the other was with a very motivated seller.
So the cap rates we paid in 2013 especially for the assets that were not anywhere near as well leased, but were in high-quality trade areas with the anchors replaced being high quality. We probably bought those more in the 7.5 cap rate range. And then the Deerfield is down around to 7.
I do not see much movement unless something happens on a more macro level with the cap rates. I think somewhere between 6.75 and 7.25 is where -- for the quality that we are looking at, still with opportunity that I believe that is a relatively good range.
And again, I am talking about on average. We may see an outstanding opportunity with a slightly lower cap rate, but if we bought that, we are not a positive spread acquirer. We would absolutely have some type of value add to bring to the table.
Vincent Chao - Analyst
Okay. Just moving over to the retail side of things. Just curious what you are hearing from Best Buy. Obviously fairly disappointing quarter for them on the sales front. Just curious how those conversations have been going with them in terms of getting any clarity on what their real estate plans look like here in 2014.
Michael Sullivan - SVP Asset Management
Michael here. Obviously, Best Buy, one of our most important tenants, obviously we are in constant -- a tenant with whom we have some boxes. We have conversations on-going with them, trying to decide exactly where they are shaking out in terms of their average store size and what their plans are. I will be honest with you. There is no news from them on the retail side from them.
Vincent Chao - Analyst
Okay. Thanks, guys.
Operator
Thank you. (Operator Instructions). Our next question comes from the line of Mike Mueller with JPMorgan. Please proceed with your question.
Mike Mueller - Analyst
Yes, hello. If we are looking at the supplemental, at the development/redevelopment page, and if we fast forward a couple of years from now, how do you think the size of what is in the current pipeline compares today to where it would be in a couple of years? Do you think it is bigger or smaller, kind of roughly about the same kind of volume?
Dennis Gershenson - President, CEO
Typically, we would say -- Michael, this is Dennis -- you can estimate that it will run approximately the same volume. We have been an organization that until the redevelopment has actually been announced and underway, we do not really include it in that redevelopment schedule. Thus, we do have a pipeline that extends for a number of years. We just tend not to announce it. One of the things that we have done with a number of these tenants, especially with the "expansions," is wherever possible, we very much like the retailer to build their own stores. Thus we will have land leases, et cetera.
So the income that we can generate, the opportunities that exist are not necessarily reflected in the dollars that will be spent. But we believe that we do have a robust pipeline going forward. We are very excited about announcing additional deals in 2014 and we have a number that we expect in 2015 and beyond.
Mike Mueller - Analyst
Got it. Okay. And then one quick numbers question. It looks like land sales, you got $0.04 or $0.05 in 2014. In 2013, did you have about -- was it about $0.03 cents in there in 2013 that was booked into FFO?
Gregory Andrews - CFO
No. It was higher, Mike. I do not have a number handy, but it was more in the $0.05 to $0.06 range. We had a large sale of land to Walmart at Roseville. So it was higher than $0.03. I think it was $0.05 to $0.06.
Mike Mueller - Analyst
Okay, great. Thank you.
Operator
Our next question comes from the line of Chris Lucas with Capital One Securities. Please proceed with your question.
Chris Lucas - Anayst
Good morning, guys. Just a couple of quick questions on the current period trends if I could. One, Michael, I was wondering if you could comment about what you are seeing on the tenant fallout so far this period as it compares to last year at this time.
Michael Sullivan - SVP Asset Management
Chris, as you probably know, the first quarter for Ramco post holiday was lease expirations. We have a certain history there. I can tell you the snapshot, at least right in the first half of the quarter. We feel confident that our absorption is not only manageable, but actually slightly better than it has been historically in previous first quarters. So we are confident that we have the absorption thing under control.
Chris Lucas - Anayst
Okay. Then the second question is very much -- for this current period, the winter has been brutal up in the upper Midwest, and I guess I was just trying to understand whether or not there might be a measurable difference in terms of the operating expense margin between this year and last year as it relates to maybe some of the nonrecoverable expenses such as some of the snow removal expenses and utility costs.
Gregory Andrews - CFO
Chris, specifically most of our recoverable operating expenses are contracted. Years ago, we moved away from variable operating costs based on either weather or energy rates, et cetera, et cetera. So we are very comfortable with our operating expenses being -- according to contract and budget.
And we have very excellent utility programs. Especially for those centers in Michigan and Ohio where we have electric resale, those changes, those ebbs and flows of usage and rates very seldom have a negative effect if ever on us. Remember, that to the greatest extent possible of passing through those utility surges or ebbs and flows. So we are very confident that we are viewing to our budgeted expectations in the opening periods relative to operating expenses.
Chris Lucas - Anayst
Great. Thanks a lot, guys.
Operator
Our next question comes from the line of Todd Thomas with KeyBanc. Please proceed with your question.
Jordan Sattler - Analyst
It is Jordan Sattler just following up on the guidance. I guess, Greg, you know, you walk through sort of bridging the annualized -- the quarter number on an annualized basis to guidance a little bit. I am curious, if you took the $0.29 in the quarter and added back the penny dilution from the equity and added some accretion from the acquisitions completed in the quarter from a timing perspective, obviously, and you add, you know, the $0.04 contribution from the same store NOI growth in the quarter. Don't you get above the high end of your guidance? And what would be the drag relative to sort of that math?
Gregory Andrews - CFO
When you start with any quarter, your same center is not measured off the quarter. It is measured year to year. So you cannot just take a full growth of same center off of the fourth quarter. You really have to take that relative to all of 2013.
Things that cut the other way for us, you know, G&A expense is an item that tends to increase a little bit. And interest expense is something that I think is highly variable depending on how you finance your -- the acquisitions or investments or refinance debt in this environment. The curve is very steep. And so you have opportunities at the long or short end that can be meaningfully different in terms of how it impacts FFO. So those are some of the items that we have taken into consideration in providing our guidance.
Jordan Sattler - Analyst
So you have been a little bit conservative on the interest rate assumption. And what about the leverage assumption? Are you leverage neutral effectively? Throughout the year? Or do you assume the $40 million of sales and no acquisitions or investments to offset that?
Gregory Andrews - CFO
Well, I don't think -- we are getting pretty granular in our assumptions here, but we are not assuming the $40 million is paying down debt. We would say that would be reinvested. But what is - - I think going to happen is through the year is we hope our EBITDA grows and that the EBITDA modestly ticks down from where we ended in 2013.
Jordan Sattler - Analyst
Okay. Thank you.
Operator
Since we have no further questions at this time, I would like to turn the floor back over for closing comments.
Dawn Hendershot - President-IR
Well, ladies and gentlemen, thank you, as always, for your interest and your attention. We look forward to speaking to you again at the end of the first quarter. Have a wonderful day.
Operator
Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.