Rithm Property Trust Inc (RPT) 2014 Q2 法說會逐字稿

Greetings and welcome to the Ramco-Gershenson second-quarter 2014 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded.

I would now like turn the conference over to your host, Ms. Dawn Hendershot, Vice President of Investor Relations and Corporate Communications. Thank you, Ms. Hendershot. You may now begin.

Good morning, and thank you for joining us for the second quarter 2014 conference call for Ramco-Gershenson Properties Trust. With me today are Dennis Gershenson, President and Chief Executive Officer, and Gregory Andrews, the Chief Financial Officer.

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 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 second quarter press release.

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

Thank you, Dawn. Good morning, ladies and gentlemen. It is always a pleasure to report good news. And Ramco-Gershenson's results year to date have been filled with good news. Let me start this morning by first discussing the state of the Company and recent transactions, followed by our outstanding operating performance during the second quarter and ending with our outlook for the balance of the year.

Ramco-Gershenson's business is healthy and flourishing. We continue to maintain a fortress balance sheet, evidenced by our strongest ever debt to EBITDA and coverage ratios. The quality of tenants and the velocity of our leasing continued to accelerate while we maintain record high occupancy levels. We have also been able to source investment opportunities in a very competitive environment while intelligently allocating capital on behalf of our shareholders.

With that in mind, I am pleased to announce that subsequent to quarter end, we purchased two high-quality, multi-anchored shopping centers in leading metropolitan markets: Bridgewater Falls in Cincinnati, and Woodbury Lakes in Minneapolis-St. Paul. Both properties meet our acquisition criteria, including a superior demographic profile with significant population growth, healthy average based rents, high credit quality national anchors, a host of additional convenience and specialty tenants, as well as, and very importantly, both acquisitions include opportunities to add additional value through lease-up, re-leasing, and center expansions.

Each shopping center is anchored by a number of the nation's top retailers, many of whom are already well represented in our existing tenant lineup. Additionally, we are adding a number of new and exciting retailers to our portfolio, including H&M, Victoria's Secret, Banana Republic, and Eddie Bauer.

Bridgewater Falls is our second acquisition within a seven-month period in the Cincinnati, Ohio MSA. At 630,000 square plus feet, it is an outstanding complement to our 460,000 sq. ft. Deerfield Town Center acquired in December of 2013. Both centers are located on the active northern side of the city -- Deerfield in the northeastern suburbs and Bridgewater in the Northwest. Bridgewater's anchors, including Dick's Sporting Goods, T.J. Maxx, Old Navy, Michael's, and Bed Bath and Beyond, increased each of these retailers' presence in our portfolio and helped broaden our tenant concentrations. Also, the ownership of two significant properties in Cincinnati promotes greater efficiencies in this target market.

Woodbury Lakes is located in the affluent eastern suburb of the Minneapolis-St. Paul metropolitan area. The shopping center sports an excellent anchor lineup as well as a host of specialty and convenience retailers. A unique aspect of this property is that the center draws from well into Western Wisconsin, approximately 10 miles east of the shopping center.

With a very low unemployment rate, a superior demographic profile, a population growth rate of a 4.5% by 2019, and the ability to add value by both increasing occupancy from a base of 89% as well as an opportunity to expand the shopping center, Woodbury Lakes is an excellent entry point into the Minneapolis-St. Paul market, a metropolitan area we have researched extensively and have targeted for some time.

The cap rate for the two acquisitions is 6.8%. We funded these purchases through a number of sources, including proceeds from asset sales. Going forward, capital recycling will remain an important source of funds for the Company's growth prospects. And we now expect to sell an additional $50 million to $75 million in non-core assets during the balance of the year, an increase from our prior estimates.

Our efforts on the acquisition and disposition front are instrumental in achieving our long-term goals, including measures growth, further improvement in our already high quality portfolio, and the geographic diversification of our markets.

Relative to shopping center operations, we continued to generate very strong results. Our recent efforts in the second quarter for both new leases and lease renewals combined to produce a rental increase of 5.4% for all comparable spaces at an average base rent of $15.07 per square foot. Our total leasing velocity for the quarter was 643,000 square feet.

You will note that in both the first and second quarters, a significant amount of square footage has been renewed. This is the result of many of our most attractive national anchors recommitting to our shopping centers by extending their terms.

Standouts on the new leasing front during the quarter include two leases for Stein Mart stores. Stein Mart is a new addition to our tenant roster. The first Stein Mart is located at our Town & Country Crossing in St. Louis. The opening of this anchor, coupled with the recent opening of our new Cooper's Hawk winery and restaurant, will complete the value add improvements we promised at this shopping center. Stein Mart joins Target and Whole Foods as the anchors at Town & Country.

The second Stein Mart lease is for our Winchester shopping center in Rochester Hills, Michigan. This store will be Stein Mart's first location in metropolitan Detroit. During the quarter, we also achieved another first by signing the first ever non-mall, non-outlet American Eagle concept store focused on price, quality, and convenience. This store will be located at our Hunter's Square shopping center in Farmington Hills, Michigan.

As a result of our leasing team's efforts, we continue to transform the character of our tenant mix as we bring new and exciting retailers to our shopping centers, improve the credit quality of our tenant roster, and drive healthy rental increases. These accomplishments and our constant vigil in containing operating costs while recovering an ever greater percentage of this variable cost category, has enabled us to continue to drive same center net operating income.

In addition to improving our operating portfolio performance, we continue to make progress on our value add redevelopments and development projects. Coupled with our two redevelopments, where we are adding anchors to long-term portfolio assets, Village Plaza and Merchants Square, we have significantly advanced the development of the adjacent land we purchased as part of recent shopping center acquisitions at Fox River and Harvest Junction.

We are in the process of securing all governmental approvals to proceed with our second expansion of the shops at Fox River in suburban Milwaukee, Wisconsin. The construction of this second phase will more than triple the size of our original acquisition, increasing the center to over 500,000 square feet. We are also finalizing leases and sales agreements for the development of our additional acreage at Harvest Junction in Longmont, Colorado, a suburb of Boulder.

Lastly, we anticipate the grand opening of our newest shopping center development, Lakeland Park Center, in Lakeland, Florida this October with 98% of our tenant square footage participating.

As we enter the second half of 2014, our business prospects remain strong. We anticipate that our leasing efforts will continue to generate healthy rental increases. Our value add redevelopments and our new developments will mature over the next several quarters, contributing to our growth profile both this year as well as in 2015. And we will seek out shopping center candidates for sale -- or I'm sorry; shopping center candidates for purchase that meet our acquisition criteria while promoting geographic market diversification.

Additionally, we will sell non-core properties at a more aggressive pace to help fund our business plan. As we pursue these objectives, we will deploy our capital responsibly, always with a focus on building shareholder value. I would now like to turn the call over to Greg Andrews for his comments. Greg?

Thank you, Dennis. During the quarter, we fortified our already strong balance sheet.

On the debt front, we completed a direct private placement of $100 million in 10- and 12-year fixed rate notes. We also closed a $75 million syndicated bank loan with a seven-year term. Proceeds from these two long-term financings were used to pay off $120 million of term debt that was set to mature in 2017, as well as a $49 million balance outstanding under our revolving line of credit.

Despite somewhat higher interest expense, we achieved a number of desirable goals as a result. First, we staggered our debt maturities. Today, no more than $120 million of debt comes due in any single year. Second, we extended the weighted average term of debt to a healthy 6.5 years. Third, 96% of our debt is now fixed rate or swap to fixed rate. And, finally, we ended the quarter with no borrowings outstanding under our line of credit and $33 million in cash on hand.

On the equity front, we raised $35 million through the sale of shares under our at the market, or ATM, equity program. With restocks rallying through the first half of the year, we deemed it prudent to raise a modest amount of equity in an efficient manner in order to fund anticipated investments. As a result, our balance sheet metrics improved further this quarter.

Debt to EBITDA was 5.8 times for the quarter, down from 6.3 times at year-end. Interest coverage was 4.1 times and fixed charge coverage 3.0 times. In short, our financial position at the end of the quarter was as strong as ever.

Our balance sheet activity was undertaken with a clear purpose: to position the Company to execute on opportunistic investments. Subsequent to quarter end, we closed on two such opportunities in the form of large, high quality, multi-anchored community shopping centers located in target metro markets. Both Bridgewater Falls and Woodbury Lakes provide opportunities to add value through hands-on leasing, intensive management, and the use of excess land or parking fields. Each also enhances the quality of our portfolio by virtue of their superior demographics and high quality tenant lease.

We funded the combined $150 million purchase price with the assumption of mortgage debt and a mix of cash disposition proceeds and borrowings under our line of credit. At present, we have $60 million drawn under our line, leaving over $170 million of borrowing availability. We also have $15 million available to us under our shelf facility with Prudential.

In addition, based upon our $1.4 billion of unencumbered assets, we have the capacity to borrow another $130 million in mortgage, bank, or private placement markets. In other words, we have excellent access to varied sources of debt capital.

Now let's turn to the income statement. Operating FFO for the quarter was $0.31 per diluted share. Operating FFO reflects two adjustments to NAREIT-defined FFO this quarter. One, an add-back of $860,000 for debt extinguishment costs related to our refinancings, and two, an add-back of $451,000 for acquisition costs related to the two centers that we purchased subsequent to quarter end.

Now, here are some of the key drivers of operating FFO this quarter. Cash NOI was $34.6 million or $3.5 million higher than in the comparable quarter. This increase reflects the NOIs generated by our net acquisitions over the last year as well as our robust same center NOI growth.

Same center NOI increased 3.8% this quarter driven primarily by 3% growth in minimum rent. This growth reflects higher same center occupancy by 70 basis points, rental rate increases when releasing space, and contractual rent escalations.

During the quarter, we recorded a provision for credit loss of $307,000, which was approximately the same as in the comparable period.

Our unconsolidated joint ventures generated earnings of $816,000 this quarter. This included $370,000 from a gain on sale of outparcel now leased to McDonald's. Same center NOI for our combined joint ventures increased 3.2% for the quarter.

Turning to expenses, general and administrative costs were $5.6 million or approximately the same as in the year ago period. Interest expense was $7.6 million or $0.3 million higher than in the comparable period due to an increase in borrowings, partly offset by an increase in capitalized interest related to our Lakeland Park development. Note that the higher interest expense related to terming out debt was reflected for only one month in the second quarter.

Now, let me say a few words about our outlook for the balance of 2014. We are increasing our 2014 operating FFO guidance range to $1.22 to $1.26 per diluted share, or $0.01 at the midpoint over our prior guidance. Factors driving this increase include our strong same center NOI growth for the quarter and the anticipated impact of our recently closed acquisition. These drivers of FFO growth are partially offset by the issuance of equity under the ATM program during the first half of the year and higher interest expense from terming out debt.

Our business plan is simple. We seek to harvest the cash flow growth embedded in our portfolio. Vacancies, below market rents, the development opportunities, and excess land provide us with the raw material for doing so. We also seek to enhance our portfolio with select acquisitions of truly superior trade area dominant community centers.

With limited new development, well located centers of the type we seek to acquire are resilient and capable of generating growing cash flow while providing opportunities to add value over time. We are confident that the talented team here at Ramco-Gershenson properties is capable of executing on this plan for the benefit of all our shareholders. Now I would like to turn the call back to the operator for Q&A.

(Operator Instructions) Todd Thomas, KeyBanc Capital Markets.

Just a couple of questions on the acquisitions. First, Dennis, they certainly have more of a lifestyle feel to them. And you even mentioned a number of new were newer mall-like tenants like H&M, Banana, and Victoria's Secret that are new to the portfolio. Should we read into this that you think that these properties are sort of -- are more attractive here today and that additional acquisitions going forward will be more like these properties that have a lifestyle feel to them?

And then I am also wondering if you could share what tenant sales are like at the centers. I am assuming that you get sales reports from most of the tenants at these centers.

A couple things. First, if you reflect on our portfolio, we have owned it for a considerable period of time Shops on Lane in Columbus, Ohio that have reflected this type of tenant mix, which we view as a combination of both convenience and lifestyle. And, in that shopping center we have -- at Shop on Lane, we have tenants such as White House Black Market, Chicos, Soma, et cetera. So, first of all, these tenants are not new to us.

After saying that, as we observe the various retail categories that continue to do well, many of these are what you would call lifestyle tenants, what we will call specialty tenants, continued to do reasonably well even during some of the more difficult economic times. So, to the extent that retailing is always evolving, we certainly find a number of these tenants desirable as part of our overall tenant mix. And, obviously, we are attempting to find the best of that group and we do have experience in leasing to them.

You can also find a number of those in our Deerfield acquisition in Cincinnati, and we have a very nice mix there of convenience and lifestyle. We do look during the acquisition due diligence period at the kind of sales that these tenants are achieving and, for the most part, they are very strong sales.

One of the things we constantly do in asset management is review at least on an annual basis, if not semiannually, the sales of our retailers to see who is performing well. And we even go in and then talk to them about the possibility of extending leases at better economics. And we talk to those who are more challenged to see whether or not we can either be a part of assisting them to do better, or should we be talking about earlier finding a substitute tenant for them.

So, on an asset management approach, we are very aggressive in making sure that all of our tenants achieve as high sales as possible.

Okay. Are you able to just give us a little more context on where the sales are at these centers?

At this juncture, I am not -- a number of tenants report sales. Obviously, the anchors, and the anchors are still a significant percentage of this, do not report sales. So the typical sales per square foot that I might be giving you may be on a dozen or two dozen tenants out of maybe 50, I don't know would be indicative of how the overall center is doing.

Okay. And then, you mentioned the upside potential at these two properties. I was just wondering if you could give any additional color on maybe where you think the blended yields could be on the combined $150 million investment in the years ahead, and sort of what the magnitude of the center expansions that you mentioned might look like.

Let me say this at this point, if I could, Todd. If you look at our successes historically, we have added between 150 and 250 basis points to the returns that we achieved initially at our acquisitions where they are indeed the ability to add value. And I think that, as a general statement, you can use that as a guidepost for what we expect to achieve here.

At both centers, we have identified the ability to expand the shopping centers. We are already working with a number of tenants, especially at Bridgewater Falls, who have been so successful that they would like to enlarge their premises. We are moving some of those around to get a better grouping of the right types of tenants in the right places. And I think that, when we probably see you at the next NAREIT conference, we will probably have a slide or two in our slide deck that talks more specifically to it.

Okay. Great. And then just last question -- just $150 million of deals completed to date; I think you talked about $350 million to $500 million being sort of a loose, but achievable, target for the year. Maybe if you could just give a little color on the pipeline today, what you are seeing and what we should expect in the back half of the year.

Okay. Well, let me say this. I hope I didn't use the words achievable target in my prior comments. What I did attempt to do, though, is set out a marker that our goal was somewhere in the vicinity of $350 million to $500 million. That was primarily based on the successes that we had in 2013 where we bought almost $600 million worth of centers.

We drove FFO by over 13% and we achieved a total shareholder return of approximately 23%. Love to duplicate that again this year.

The one thing that we are finding because, as you will note from these two shopping centers, that these are high quality assets. We are still finding a significant amount of competition, especially from institutional players for these kinds of assets. They do meet all of our criteria. And, obviously, one of our criteria has to be price.

As you have seen from the blended cap rate here of 6.8, we are paying a slightly more aggressive price than we paid in 2013. But, again, these value add components all come into and become a component in how we look at these assets. I think we would be doing our investors a disservice if we said we have got to make it to $350 million or we have somehow let them down.

Can we buy $350 million or more? I would like to think that is a possibility. We do have two more assets that we are taking a serious look at, that again have significant value add opportunities associated with them. But we will always be conscious of what can we do with that asset; what is the going-in cap rate; are these accretive transactions. And if they are, then we will move ahead. And, again, quality, price, ability to add value, and our shareholder interest are what will drive our acquisitions.

R.J. Milligan, Raymond James.

I'd ask a question on the acquisitions. Were they fully marketed or were these more off market?

They were both fully marketed deals.

Okay. Can you talk about how you thought about underwriting the JCPenney at the Cincinnati asset?

Well, as we put in the press release, the JCPenney is a land lease. Our average rent is between $3 and $4 a square foot, so I wish Penney good fortune and I hope they are incredibly successful in the future. But if they ever left this location, we would get the building for practically what -- we get the building for nothing. So our underwriting for JCPenney here was very easy.

Okay. Thanks. And maybe just some broader comments on the opportunities that are out there today, where cap rates are moving in the markets that you are looking at, and if you think we are going to see more transactions not even necessarily with you guys, but more transactions in general or if you think pricing is getting too tight where we might see a slowdown in the amount of acquisition activity we see.

Well, what is interesting is that in probably the first five months of the year, as we looked around, obviously, there were a number of portfolios out there. But, we really found as far as high quality individual assets there was kind of a dearth of opportunities. We have seen that pick up significantly.

Again, we have looked at a number of centers, and in speaking with either the seller or with the brokers, pricing still is very aggressive on some. And so we have to pick through a significant pile of opportunities to come up with those centers that meet our criteria and that we believe we are comfortable moving forward on.

Juan Sanabria, Bank of America.

Just a couple questions, I guess starting with guidance first. Do you have any updates to the previously stated ranges for same-store NOI and/or occupancy for the year?

No, we didn't change those, so we are comfortable with those ranges. Obviously, year to date on same center NOI, we are at 3.5%. So we may be able to stay at the high end of the guidance range we previously gave, but we haven't changed those ranges.

Okay. And then, with regards to acquisitions and dispositions, you sort of said that you are targeting $50 million to $70 million in dispositions in the second half. Is that baked into guidance and, if not, how should we think about that? Is that really just for sales to put potentially finance or help finance second half acquisitions, or not necessarily so? And those would be funding the deals that you just announced post second quarter end?

Well, it is a combination of all of the above. Number one, it is included in our guidance. The dispositions are still part of a plan that we had in place, whether -- some of them we have moved from 2015 into 2014. But it is an attempt either to sell assets that just either no longer fit our criteria for the kinds of shopping centers that we wish to own, or represent some out lots that we can sell at incredibly aggressive prices and, therefore, we are just going to take advantage of an environment where there are an awful lot of prospective buyers out there who are willing to pay more aggressive prices.

Obviously, as we did with the one sale we had in the second quarter, we will use those proceeds to fund our business plan for the second half of the year, be that acquisitions, be it the completion of our Lakeland development, or some of our redevelopment.

Great. And, just to be clear, the acquisitions are not included in guidance, just the dispositions, go forward?

Everything that we have planned for the balance of the year including any potential acquisitions are included in our current guidance.

Okay. Great. And just last question. With regards to dispositions, what is the geographic target? And maybe if you could talk about your plans for the exposure in the greater Detroit area and how pricing is there, relative to your initial expectations when you first thought about maybe decreasing the exposure there? I know you have got that target of below 25% for any one particular market. If you could just give us some color there.

Well, one thing I can tell you is that there are really -- the type of assets that we own in metropolitan Detroit are still really not trading. I think that you have owners in metropolitan Detroit who have very successful centers. I believe that ours, of course, are of the highest quality.

And, as I believe we stated in prior calls, although there will be some Michigan sales involved in our dispositions, we will achieve that ratio both from asset sales and acquisitions as well as the completion of some developments or redevelopments. So we are going to drive our income in other areas, which will help reduce that number. But, I think if you look down our tenant roster, you will find several Michigan assets that still fall into the category of the type of sellers that no longer fit our criteria for ownership going forward, and you can expect that we would indeed sell some of those.

Just lastly, relative to pricing, although there isn't real clarity yet in pricing in metropolitan Detroit, I can tell you that, as we talk to people about the assets that we are looking to sell, the cap rates have come down from what we were looking at six months to a year ago.

Vincent Chao, Deutsche Bank.

Just had a question just going back to the acquisition pipeline. You mentioned, Dennis, a couple deals that you are looking at currently. But I was just curious what the deal pipeline in Minneapolis, specifically, looks like. I mean, that does look like a nice market for you. I am just curious how much opportunity there is in that market in particular?

Well, we have liked the Minneapolis-St. Paul area for quite some time. It is somewhat harder to shake loose opportunities in that area. We have looked at a couple of deals that are either in the market or that are coming to market that are incredibly aggressively priced. And we are not going to pursue those.

There are others, though, that we know will be coming to market in the not-too-distant future. We are already talking to the sellers. It is tough for off-market deals in a very competitive marketplace, because the seller wants to make sure that he doesn't miss a buyer who might be willing to pay an outrageous price for some reason other than just the way we will look at an acquisition.

But the potential acquisitions that I just mentioned are not in the Minneapolis-St. Paul market. But we are looking at beefing up in several of the newer markets that we have entered over the last 12 to 18 months.

Okay. Thanks. That's helpful. And just given the comments about the cap rates compressing, and you mentioned the cap rates on these two deals being a little bit tighter than what you were buying last year, just curious what IRRs you are underwriting to these days.

Well, we are still underwriting to, at a minimum, high single-digit IRRs, if not low double-digits. Again, you have to appreciate that when we look at these centers and when we make these acquisitions, oft times they have not an insignificant amount of excess land, the ability to add value through the construction of additional square footage. Those really are components in driving what we see as -- again, maybe as much as 100 to 150 basis points to our return.

Right. Okay. And then just last one for me. Just curious, Illinois market, occupancy levels there are a little bit lower than the overall portfolio average. Just curious if you could comment on the trends that you're seeing there.

Well, let me just say this. We are seeing real traction in our leasing in Illinois. And I think that you will see, either in the third or fourth quarter, a very nice uptick in our occupancy there either with leases that we have presently signed, or leases that are at least in LOI stage, if not active lease negotiations.

Remember, we bought two centers last year there that were in the low 80% occupancy range. So that contributed to the lower occupancy there. But we bought them with the intent of leasing those up and those activities are currently underway. So I think you will see the proofs of that come forth over the coming quarters.

Michael Mueller, JPMorgan.

Just going back to the acquisitions real quick. So you typically haven't put acquisitions in guidance from what I recall. But it sounds like you have some in there now. What exactly is in there for the balance of the year? I know you said that what you expect to close is in there. It sounds like you have [50 to 75] on -- of asset sales in there, but I'm just unclear on the acquisition side.

Yes. I mean, what is in there, Mike, is basically an offset to the dispositions, so in that same 50-ish range.

Got it, okay that was it. Thank you.

Jeff Dancy, Cutler Capital Management.

A lot of questions about acquisitions and that is what I was going to actually ask about as well. Can you give a little more details on the mortgage debt that you assumed?

Yes, Jeff, we assumed a mortgage on Bridgewater at -- I think it was $58.6 million. It has -- it extends to 2022, so about eight years, and has a rate of 5.7%.

Okay. And do you have any plans to put any debt on Woodbury in the near term?

No. It is an unencumbered property. We will add it to our pool of unencumbered properties.

Okay. So I guess long-term, once Bridgewater is paid down, you would ideally not put another mortgage on it.

Yes. I mean, that is years from now, but in general we are financing the Company at the corporate level rather than the asset level.

Okay. Great. And what is your firm level debt to capital or debt ratio, your target?

Our target? The way we think about it, predominantly, is in terms of net debt to EBITDA. And we have stated I think numerous times that we are comfortable in the 6 to potentially 7 times debt to EBITDA. We have been tracking for probably a couple of years at least in the low 6 net debt to EBITDA. This quarter we were a little below that, but with the acquisitions we have just made, we are probably just above that. So that is the range we are still comfortable with, Jeff.

Okay. So when I think about new acquisitions that you make, how much of that should I think is financed with debt and how much should I think is financed with equity, just if I'm penciling out the economics of these acquisitions?

Yes, I mean, I think you should make an assumption that we are going to try to maintain our current ratios. So that would typically mean 40% to 50% debt and the balance equity.

Okay. And when you talk about dispositions, what type of cap rates should I think about for those?

Well, it will fall into several categories. If we are selling, and we have a significant number of net leased out lots to very high credit quality banks and restaurants and users of that type. So in that area, you can think of either from mid-5s to low 6s. As far as shopping centers, it will depend upon, obviously, who the anchors are and what the credit quality of the anchors are. And, there, you can -- probably somewhere in the 7s is where you can assume the cap rate will be for our dispositions.

Ben Yang, Evercore.

A lot of questions on acquisitions; so, sorry you are going to get another one from me. But I was wondering if you could talk about the thought process behind entering new markets like Minneapolis-St. Paul versus you mentioned beefing up some existing markets, because I mean, are you guys willing to enter new markets with really no plans for additional acquisitions if they do fit the acquisition criteria?

Well, I think there isn't any question that a part of our analysis is that if we are going into an area -- a new area, they must have at least several, not just a couple -- but several pockets of trade areas that meet all of the criteria that we are looking for in order to make acquisitions. As you can see, in Cincinnati, we moved into Cincinnati and, as we said, and less than -- or approximately 7 months, we bought a second asset. We believe there is a minimum of another couple of opportunities in the Cincinnati area with trade areas that we find very desirable, where we would like to have assets that will not cannibalize the existing assets that we have acquired.

So it is in the Minneapolis-St. Paul area that there are a host of opportunities there that we will pursue. We have now established, number one, credibility that we are good buyer in that market. We have worked with a number of brokers in sourcing this opportunity and, therefore, they are out there looking for others that we can buy that meet our general criteria. As I said, it is a little tougher in the Minneapolis-St. Paul market to source centers, but we are looking there.

We are continuing to look in Colorado. So it will never be an approach that we use that we'll say, boy, we found a perfect opportunity for a one-off in a particular state or particular metropolitan area, and that is going to suffice.

Okay. Fair enough. And then, also, I think you mentioned that Bridgewater and Woodbury were marketed sales. Could you maybe talk about the other bidders in the mix? I mean, were there other REITs taking a look? Also talk about maybe how the apps changed during the marketing process for those centers in particular?

Well, the process typically is everybody submits, then they go back to two, three, four organizations that they believe not only are prepared to increase the price, so that when we put in our initial offer, obviously that is not going to be our best offer. But they are really looking as sellers for -- and price is one element. We have won a number of these competitions not by being the highest priced offer, but because people know and we have established a petition reputation that we are, one, not a re-trader and, two, we are an executor. So there is a lot of factors that come into the process when a company is selling a center.

As far as competition, I think we are finding more competition from the representatives for institutions than we are for other REITs, although we have run into a number of our peers. And whatever they did during their very preliminary due diligence to establish valuations, we put a whole team on the ground, even before we bid for the asset, to validate market rents. We obviously have a very good relationship with the lion's share of the anchors, so that we can at least get a feel for how they are doing and their prospects for the future. And, we have our team who look for value-added opportunities so that we really have a pretty complete picture when we put in our initial bid.

Got it. And who was the seller and when did they begin marketing the process? I'm just trying to get a sense of how long this process takes for you guys to close these deals.

Well, usually, the process is around a 30- to 40-day bidding process. Our normal due diligence process after that is 30 days, sometimes up to 45, and then 15 to close.

Got it. So about three months.

Yes. The whole process is probably a three-month process.

Okay that is helpful. Thank you.

(Operator Instructions) Chris Lucas, Capital One Securities.

Greg, just a quick question for you on guidance, specifically related to G&A. I have in my notes that you guided $23 million for the year. And I couldn't remember if that included or excluded acquisition related expenses.

Well, when we gave our guidance, we had not included acquisition -- any acquisitions in the guidance. So it was also not included in G&A. So I think you can expect that number to be a little bit higher for the full year.

But, if I -- let's talk about excluding those acquisition expenses, then, you are running light relative to sort of a prorated number. Should we expect the non-acquisition related G&A cost to be higher than the current run rate for the remainder of the year?

Yes. Well, I think -- yes, there are some timing issues in there, Chris. So we were a little lighter in the second quarter, but we really haven't -- there hasn't been any sort of significant change to alter the full year guidance at about that $23 million number.

Okay. Great. Thank you. And then, Dennis, on the acquisitions -- I'm sorry to keep going back there. But, the vintage is sort of peak of the last housing cycle. I was curious -- certainly with Woodbury next year, theoretically anyways, would be a big lease expiration year 10 years out. I don't know if that's the case, but I am just kind of curious as to what your sense is of mark-to-market on the two assets as it relates to the in-place rents.

Well, again, we do an extensive job of researching the rental rates in -- at the shopping centers as compared to markets. Let me say this.

We are in negotiations now to bring several additional retailers to this shopping center -- or each of the shopping centers. And those rental rates are above not only the market, but above the average at the shopping center. So I would say, if anything, that the rents in both of these properties at this point are below market and we should be able to continue to increase those numbers over the next couple of years.

(Operator Instructions) It appears we have no further questions at this time. I would like to turn the floor back over to management for any closing remarks.

As always, we appreciate your interest and your attention. We are excited about the balance of the year and we look forward to either seeing you at a conference or talking to you in about 90 days. Thank you.

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