Rithm Property Trust Inc (RPT) 2017 Q2 法說會逐字稿

Greetings, and welcome to the Ramco-Gershenson Properties Trust Second Quarter 2017 Earnings Conference Call.

(Operator Instructions) As a reminder, this conference is being recorded.

I'd like to turn the conference over to your host, Ms. Dawn Hendershot, Senior Vice President of Investor Relations.

Thank you.

You may begin.

Good afternoon, and thank you for joining us for the Second Quarter 2017 Earnings Conference Call for Ramco-Gershenson Properties Trust.

With me today are Dennis Gershenson, President and Chief Executive Officer; John Hendrickson, Chief Operating Officer; Geoff Bedrosian, Chief Financial Officer; and Cathy Clark, Executive Vice President of Transactions.

At this time, management would like me to inform you that certain statements made during this conference call, which are not historical, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Additionally, statements made during the call are made as of the date of this call.

Listeners to any replay should understand that the passage of time by itself will diminish the quality of the statements made.

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

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

Thank you, Dawn.

Good afternoon, ladies and gentlemen.

We have all been subjected to a constant barrage of negative news relative to the future bricks and mortar.

There's no question that e-commerce, the failure of irrelevant and obsolete stores and the fact that there is just too much square footage per capita in our country is having an impact on physical store traffic and sales.

That said, we continue to experience a high 77% of expiring tenants renewing their lease terms at better rental rates, and we are working with healthy, vibrant retailers to fill vacancies, including locations that resulted from recent bankruptcies.

We expect to be able to discuss with you a number of additional anchor lease signings when we report earnings at the end of the third quarter.

Our second quarter results are more a reflection of the timing of leasing transactions and income generation, which are weighted towards the second half of this year.

And thus, our Q2 results are not indicative of our confidence that we will achieve our stated financial goals for the year.

We believe that our ability to thrive in an evolving retail landscape requires insight into the forces that are driving change, a willingness to move beyond traditional norms and approaches and a commitment to embrace a future with innovative omnichannel solutions to position our company for success in good as well as challenging times.

As part of our formula for success in the shopping center industry's future, we have been diligently working on the continuing transformation of our portfolio by acquiring centers that fit our vision of that future as well as selling assets that do not.

This year, we have committed to match our acquisitions with an equal amount of dispositions while improving our geographic footprint by reducing our Michigan exposure.

We are on track to achieve both of these goals.

To date, we have closed on the sale of 5 properties, and by the middle of August, we will have sold 7 assets for a total of $104 million.

By year-end, we expect to have sold centers with a value of at least $170 million, equaling our acquisitions.

These dispositions will reduce our Michigan percentage of base rents to less than 20%.

A validation of our approach to transforming our portfolio can be seen in the expansion of our value-add redevelopment roster.

As of the end of the second quarter, our redevelopment program stands at $86 million, net of those properties completed in the first half of 2017, including the development of additional retail space at Woodbury Lakes and Front Range Village added this quarter.

Each of these projects represents the built-in potential to add significant value that exists in our larger open-air shopping centers.

I am excited about the number of growth opportunities that reside in our portfolio.

I am confident that we will complete our planned capital recycling program for the year.

And I am encouraged by our recent team's commitment to executing on both anchor and small-shop tenant interest, converting prospects and LOIs to executed agreements.

I would now like to turn this call over to John for his remarks.

Thank you, Dennis.

Hello, everyone.

As Dennis discussed, we are currently in a transitional time in our business, and not surprising, certain of our metrics this quarter reflect this.

However, our portfolio and team have never been more prepared to take advantage of this evolution, and we still expect to maintain our lease occupancy and achieve the growth guidance we laid out for the year.

Same-center NOI with redevelopment grew only 1.1% during the quarter due to recoveries and a tough bad debt comp related to Sports Authority credits last year, which together cost about 160 basis points of growth.

Although physical occupancy is down year-over-year, minimum rent grew a strong 2.9%, driven by anchor openings at several of the company's redevelopment properties, including at West Oaks, Town & Country, Mission Bay, Spring Meadows and others.

Year-to-date, same center without redevelopment grew 1% over 2016 and same center with redevelopment grew 2.6%.

While there are a few variables that could impact the rest of the year, including watch list and the final makeup of the same-center pool, we currently still expect to deliver annual same-center growth of 0.5% to 1.5% without redevelopment and 2.5% to 3.5% with redevelopment.

As we discussed in the last quarter, there have been no surprises in the list of recent tenant failures and our guidance forecast range for the year does anticipate the impact of closures related to our watch list, including by tenants such as Gander Mountain, rue21, Gymboree and others, including MC Sports.

Occupancy at the end of the second quarter was 93.7%, slightly lower than last quarter, primarily due to the closing of these 2 MC Sports locations totaling 46,000 square feet.

Looking forward, we expect 3 additional anchor closures this year, including one of our 2 Kmarts, which expires in November, and our 2 Gander Mountain stores, which we expect the bankrupt tenant to close at the end of August.

We anticipated the recapture of these spaces for a while, which has allowed us to get ahead of the leasing.

In fact, for the Gander box in Oakland County, Michigan, we already finalized the lease, with a replacement tenant to take the whole box for 23% more in rent and a planned opening in early December of this year.

We also are finalizing an LOI for half of the other Gander box in Florida and are working with multiple parties, including grocery stores, for the Kmart box.

We expect to have 5 leases for these spaces before the end of the year.

Likewise, we are working to finalize agreements on several other current box vacancies, including our last unleased Sports Authority location.

Thus, with a planned leasing of the anchor boxes, we still expect leased occupancy at the end of the year will be around 94%, essentially equal to year-end 2016 level.

Now turning towards leasing metrics.

Total lease transactions for the quarter were lower than typical entirely because of renewal transactions timing.

It should be noted, we are ahead of last year's pace to address near-term expiration and as Dennis mentioned, are currently experiencing a renewal rate at/or above historical levels.

Comparable rent growth for the quarter was 7.1%, and we expect spreads to remain at this level or higher for the full year.

So our projected occupancy gain and anticipated leasing spreads, together with our implementation of a robust redevelopment pipeline, should set us up well for continued solid same-center growth in 2018.

Regarding redevelopment, as Dennis mentioned, our current pipeline of our projects is $86 million, and each list of projects is expected to stabilize before the end of 2018.

During the quarter, we added the projects of 2 of our strategic redevelopment assets.

At Front Range, we started construction on the 28,000 square-foot health club on an outparcel, which is planning to open before the end of this year or early 2018.

At Woodbury, during the quarter, we finalized a deal with H&M to open a new 20,000 square-foot full-line store at the property and together with the 9-screen Alamo theater addition we announced last quarter, anchor our repositioning of the property, which will also include significant upgrades to the property's common areas.

Both anchor openings and the common area upgrades are scheduled to be complete by mid-2018.

That's all I have now in prepared remarks.

Geoff will now give more details about our operating results and current guidance.

Geoff?

Thanks, John.

Good afternoon, everyone.

Our results for the second quarter are in line with expectations, and we are working diligently to achieve the financial goals we outlined earlier this year.

Operating FFO for the second quarter was $0.35 per share, unchanged from the second quarter of 2016, driven by higher net cash NOI from acquisitions and dispositions and minimum rent growth of $0.01, offset by higher G&A expense of $0.01.

Sequentially, our quarter-over-quarter cash NOI increased $900,000 as a result of a full quarter of earnings from our Providence and Webster Place acquisitions in addition to higher minimum rent growth, partially offset by our disposition activity.

G&A was relatively unchanged from last quarter.

After adjusting for the impact of the $600,000 severance expense in the quarter, G&A would have been $5.8 million.

We believe that $5.8 million per quarter is an appropriate run rate for the remainder of 2017 or approximately $24 million, excluding severance expense.

G&A was higher in the first half of 2017 as we made additional investments into our operating platform.

Interest expense increased as we carried a higher balance on our credit facility as a result of the timing of our transaction activities.

Turning to capital recycling.

Subsequent to quarter end, we completed the disposition of 3 assets, generating net proceeds of $24.9 million, bringing our year-to-date disposition proceeds total to $52.5 million.

We have approximately $48.6 million of additional dispositions we expect to close within the next 30 days.

Proceeds from these sales will be used to further reduce the balance of our revolving credit facility.

On the balance sheet front, net debt-to-adjusted-EBITDA was 7x at the end of the second quarter, flat from the end of the first quarter.

Subsequent to quarter end, liquidity increased over $50 million as we completed the previously mentioned dispositions and received cash proceeds of $26.1 million we had placed in our 1031 escrow account.

Currently, we have $110 million available on our revolving credit facility and expect to continue to reduce the balance of our credit facility as we execute our capital recycling plan.

Our coverage ratios remained strong as our interest and fixed charge coverage ratios ended the quarter at 3.7x and 3.0x respectively.

I would like to remind everyone, we have very manageable debt maturities over the next 30 months of $39.3 million, which provides significant flexibility and mitigates our refinancing risk.

Turning to guidance.

We are maintaining our operating FFO guidance for the year of $1.34 to $1.38 per share and net debt-to-EBITDA target of 6.5x to 6.7x.

As Dennis mentioned earlier, we are very focused on executing on dispositions that match-fund the acquisitions we completed in the first quarter.

From a capital allocation perspective, we will be very disciplined in the remainder of the year as we look to strike the right balance between investment opportunities and building liquidity through additional asset sales.

So with that, I would like to turn the call over to the operator and open the line for questions.

(Operator Instructions) Our first question comes from Paul Puryear from Raymond James.

It's Collin Mings actually from Raymond James.

Just to start off, guys, sorry about the confusion there, can we just talk a little bit more, Dennis, about the disposition plans?

It sounded like you have confidence of about $170 million of the $250 million will close this year.

Should we think about the other $80 million maybe deploying into 2018?

Well, it -- look, first of all, hi, Paul (sic) [Collin].

Let me just clarify the whole picture, if I might.

Our approach to buying and selling $250 million was predicated on the theory that we were going to match acquisitions and dispositions.

We were fortunate enough to acquire 2 compelling assets at the beginning of the year for $167 million.

And so what I'm trying to communicate is that we are absolutely committed to selling at least the $170 million.

Will we buy more assets this year, it's possible, those are going to have to be very compelling, and we will always keep our eye on liquidity.

As far as dispositions are concerned, we're very comfortable that we're going to be able to sell at least $170 million, and again, based upon our focus on liquidity, it's entirely possible that we'll exceed the $170 million as far sales are concerned.

But however we match those things up, we believe that these numbers, and even if we sell more than we buy, we will still come in at the numbers that we had planned for the year, and that at the end of this year, even at the $170 million, we will have completed the transformation that we had planned on.

Okay.

So I guess it sounds that it's a little bit more just kind of function of what else you might end up buying, but the ultimate goal is to kind of get the Michigan exposure kind of what you'd outlined before as kind of the target.

Is that a fair way of thinking about it?

No.

Again, at a minimum, the $170 million, and again, as we look at liquidity, as we look at our debt metrics, we could indeed be a net seller.

Okay.

And then maybe along those lines, can you maybe just discuss what you're seeing in terms of pricing, what -- just kind of the expected pricing on the transactions you have completed or plan to be completed here in the third quarter?

And just how's just the environment, the deal environment, been relative to how you maybe expected earlier this year?

I think on the last call, you made reference of the fact that maybe it had been a little bit lighter in the spring than you had expected as far as interest.

If I may, Paul (sic) [Collin], I'd like to have Cathy Clark participate in that answer.

Hi, Paul (sic) [Collin], relative to our sale, we had very strong interest, and so we continue to expect that we can execute on those.

The buy side, good real estate is still in demand and commanding strong pricing, so for something to be compelling for us, it would have to hit all the markers, including value add.

Those kind of properties are out there, but they're -- it's hard to mine them.

Okay.

I guess just one last one from me.

Just to clarify as far as guidance, Geoff, can you maybe speak to what is the volume and timing kind of incorporated into that guidance range that you affirmed?

Is it the $250 million, or is it the $170 million?

And again, what maybe type of pricing is incorporated into that as far as the dispositions?

Hey, Collin, it's Geoff.

How you doing?

So the way we're taking -- we can triangulate this as we closed on about $125 million and we effectively have that $150 million to balance the last 6 months of the year, so if you use that with an assumed cap rate of about, call it, 8% and we'll -- we kind of lose that cash flow, if you will, from dispositions, you kind of have the $0.04 of dilution at the back half of the year, that kind of gets you to the midpoint of our range.

I apologize, Collin, for not recognizing that voice.

And our next question comes from Todd Thomas from KeyBanc Capital Markets.

Geoff, pro forma the dispositions, you mentioned that the line balance comes down.

It will be a bit under $200 million here, I guess, with what's been completed and then you have more to dispose in the pipeline, which will reduce the balance further.

But what's the plan to permanently finance the remaining line balance and what's in guidance?

Yes, hi, Todd, as we spoke earlier in the year, as part of our guidance, if you remember, we said we had a bond deal kind of late in the year kind of fourth quarter, so that timing right now is intact.

So that's the plan.

Okay.

And John, can you run through that Kmart expiration you mentioned and that happens in November and just talk about that in a little bit more detail, maybe in terms of what Kmart pays in terms of rent, and what the opportunity might look like to re-tenant that box?

Sure, Todd.

The -- so the Kmart box, and we have, if you remember, we have 2 Kmarts in the portfolio.

The one I mentioned expires at the end of November of this year.

So -- and they've elected not to renew.

So we'll -- we're working to backfill that at approximately at a $5 modified gross net rent.

I modified net rent because they don't pay full extras even, so we think there's a very good opportunity to create some value there.

We're looking at several different alternatives, some full box users, but most likely, it will require us splitting up the space.

So we think there's a -- definitely enough demand to get that backfilled in.

We're trying -- we're working to try to get that signed before the end of the year.

Okay.

And as you look at the portfolio today, do you expect the occupancy and same-store NOI growth to fall further in the third quarter before beginning to rebound later in the year?

Or does 2Q sort of mark the bottom for the year based on what you're seeing?

Well, so from a lease occupancy standpoint, we end up about the same as we did -- as we are at this quarter.

And actually from a physical standpoint, we probably expect it to be about the same at year-end too.

So even though we might have the 2 Gander boxes, plus the Kmart that I mentioned, we also have coming online, that offsets that, some lease box spaces.

So from a -- we're basically enough equal to -- a second quarter equal to -- at the end of the year, we'd be about equal to where we are today.

So there might...

Okay.

And then just lastly, for Dennis, I'm just curious, just given your comments earlier around dispositions, it sounds like the demand is there and pricing has not really changed much at all for these assets.

Are you considering accelerating asset sales beyond what you've sort of contemplated at this point, maybe looking at stock buybacks at all?

Well, stock buybacks will always be the province of the board.

We look at that and certainly, management sees our current pricing well below what anybody considers net asset value.

Liquidity, again, is always a consideration.

And there are assets in the portfolio that do not meet the criteria that we would have.

For those type of assets, we want to go own going forward, even including some supermarket-anchored strips.

So it's entirely possible, again, as we look at the balance of the year and the potential for selling additional assets that, that certainly is an arrow in our quiver.

Okay.

And can you remind us, is there an authorization plan in place today?

And if so, how much is it for?

No.

As of this moment, there is not an authorization, but if we were ever to pursue that course of action, you could get the authorization and be in the market the next day.

Our next question is from George Hoglund from Jefferies.

Just, could you just comment on the lease terms?

It seemed like the weighted average lease term on the leasing side was 4.8 years, which is a little bit lower than recent history.

If you could just talk about what kind of tenants that was, too?

Sure, George.

This is John.

The -- if you look at -- if you're looking at our comparable lease, it's mostly, well actually all the new deals this quarter were all small-shop tenants, which would -- skews toward the shorter amount of time, so which is why you're ending at the -- about, well, the 4.8-year average.

So that's why it seems lower is because of that makeup.

Okay.

Got you.

And then just in terms of overall retail outlook and watch list, just kind of how are you guys feeling about it relative to, say, 3 months ago.

Well, from my standpoint, as I mentioned on my prepared remarks, there's been no surprises from the names that -- really from where we started at the beginning of the year, even at the end of last year, so I think our outlook is basically very consistent.

They seem to be -- and we are confident we can address any issues as they come out since we've been able to anticipate them.

(Operator Instructions) And our next question comes from Craig Schmidt from Bank of America.

What are the expectations for yearend tenant improvements and leasing cost?

I noticed on the year-to-date, you're looking favorable year-over-year, but it nearly doubled in 2Q.

Yes, hi, Craig, it's John.

The -- so if you look at -- this quarter might have been a little less than the average, and so if you look at our overall fourth quarter average, I think that's probably where we still end up because you start to have a mix of more of the larger anchor boxes that we'll have before the end of the year, which will entail more capital than we've seen at least in the last 2 quarters.

Great.

And then who are the buyers or in some cases, the potential buyers of the Michigan assets?

Hi, this is Cathy.

So we've had private buyers, we've had fund buyers and primarily private.

A lot of cash buyers, although we have to have some buyers to put that in.

Our next question is from Chris Lucas from Capital One Securities.

John, just a question on the -- on your comments as it relates to sort of occupancy towards the end of the year.

Am I to interpret the maintenance, the same-store NOI guidance at 2.5% to 3.5%, including the redevelopment that -- but you've got occupancy levels essentially consistent.

Is that -- that suggests that you're just getting your same-store NOI growth out of your essentially improved rent levels, is that correct?

Well, it's more about -- what I was answering was more of a year-end kind of number.

When you talk about average occupancy throughout the year, it would be higher.

I mean, a lot of our growth, as I mentioned on the call, the strong minimum rent growth that we had this quarter was driven by the anchor box leasing that we talked about and implemented last year.

So I believe from a leased occupancy standpoint, we'll end up about 90% -- just about 94%.

So even with getting back to -- the one Kmart, the 2 Gander boxes, as we open up some few more anchor boxes later this year, it will offset that -- the negative impact of those closures for this year and set us up to be in good position for the end of the year from a lease standpoint.

Okay.

And then I guess as it relates to the anchor boxes you're expecting to deliver second half of the year, any risks to delays in those deliveries that would cause a problem on your guidance?

Well, they're well along from a process standpoint, so I think a lot of the risk has been taken out of it and from a permitting standpoint and at this point, so no, I feel pretty good about our expectations for the rest of the year.

Okay.

And then just quickly on Gander.

I know that they have completed, in some locations, their liquidation -- inventory liquidation and have effectively -- by the end of the July, so there was expectations that in some cases, the August rent wouldn't be paid in the 2 stores you have.

Are they still going through the inventory liquidation process or were they complete?

Yes -- no, they're still going through.

They're winding down from a merchandise standpoint, especially more at the Michigan location and the Florida location, but they still had merchandise from our standpoint -- so they sell merchandise to sell from what we could tell, so our expectation is still that we have until the end of August.

And the last question I have is there was a press report about you guys working with a private developer on an apartment project.

I think it's Centennial Shops.

Any comment on what your involvement would be?

Yes, hi, it's Dennis.

Somebody jumped the gun on that.

Our construction people were talking to a developer across the major highway who has intended to build a $100 million residential complex.

And we were talking to them about a flyover for a bike path, which is part of an extended bike path development by the city.

That was the totality of our conversation as far as we were concerned.

So as of this juncture, there really is nothing to -- the rumor about a joint venture.

Are we encouraged that there is additional development in the area?

Absolutely.

But I -- we have a reasonably tight site, although we are talking to the property owner immediately adjacent to us about the possibility of doing some things together, but nothing has crystallized and there's absolutely no proof to the prospect of us being involved in a residential development at this time.

Our next question is from Vincent Chao from Deutsche Bank.

Just maybe going back to the sales for bid here.

I think last quarter, Dennis, we were talking about all the Michigan assets that you intended to potentially sell were in the market and if they all were to sell, it would be -- it would get you to the $250 million for the year in terms of your disposition guidance.

I'm just curious, you talked about $100 million or so that are expected to close relatively shortly.

Are the other assets still in the market?

What's the traction with those assets?

Or have they been taken off at this point?

No, no.

They -- hi, Vin.

The other assets are absolutely in the market.

And as I said before, it's entirely possible that we would continue to pursue the sale of the balance of those as we look at liquidity, as we look as forward toward 2018 and the needs we have as far as capital for our redevelopment program and the possibility of truly finding an additional asset.

So we have built in the flexibility to sell the entire $250 million or pull some of that back as circumstances dictate.

Okay.

And then maybe turning to the development side.

So one, appreciate the additional granularity on sort of the timing of the some of the projects.

But then just a couple of questions.

It does look like a few of them got pushed out in terms of the expected timing.

Is there any -- anything you can provide, color-wise, on that -- to some of those changes at Deerfield, I think Fox River and then Phase 1 of Front Range?

Sure, Vin.

It's John.

The -- looking at those 3 projects, the specific -- the Deerfield project is we're continuing to refine exactly our plan from a redevelopment standpoint, including significant place-making at that project that we hope to be -- we'll have further detail probably in the next 30 to 45 days.

So that kind of slowed down from a little bit of our delivery time frame for the new buildings.

So it's -- and then from the other 2 locations, it's continuing, just finishing up from a leasing standpoint, the pace of it.

Now keep in mind, we're -- in our reporting last quarter, we've traditionally just showed years and now we're trying to get refinements by quarter.

So I mean, in essence, a slip of 1 quarter is from the fourth quarter of '17, to the first quarter of '18, would be a slip of really just a quarter, not a full year as we -- it would have looked last time.

But I don't -- there's nothing from the standpoint -- we're continuing to make progress on executing the pipeline and feel very good about hitting the timetables and the budgets that we've outlined.

Okay.

But as far as yield expectations, no changes from that perspective?

No changes, no.

Okay.

Okay.

Just maybe turning to a totally different topic, when we talk about share repurchases, and we were on a GGP call earlier this morning, where they had previously commented about exploring strategic alternatives.

I'm just curious how you think about Ramco longer-term, given its position within the industry, size and scale and things like that.

Is there any thought around potentially a combination with a larger entity just to get that scale that maybe you don't have either on the trading side or in -- with the tenant base?

Well, it -- let me say this.

We're here as stewards of our shareholders.

And we have to do as the board dictates, whatever is in the best interest of those shareholders.

As we look at our plans going forward, we feel very comfortable that we are going to be positioning our portfolio for truly the future of the retail industry.

I think you see that in the evolution of our assets.

We're very comfortable with some real growth prospects as we go forward over the next 36 months.

And as long as we stay on that track, I think we're going to deliver very healthy returns to our shareholders.

If somebody would come along and make an offer that was compelling, we couldn't help but take a good hard look at that and consider it as an alternative to our business plan.

But as of this juncture, none of those individuals or groups have come forward, and so we're keeping our head down and keep on trucking.

Our next question is from Collin Mings from Raymond James.

Just a couple of follow-ups for me.

John, can you maybe just touch on your latest thoughts just around ascena and your exposure there?

Sure, Collin.

So we -- from -- when you look at our ascena portfolio, we have a total of 30 locations -- sorry, I was just grabbing it.

Actually, 29 locations at this point.

And when we -- we've had a sit-down conversation with them and reviewed the portfolio, and there's really about 15 of those 29 that we'll be discussing over the next, really, couple of years.

But there's nothing that we don't think that -- because those are the expirations over the next 2 years, so we certainly think they're -- it's very manageable from that standpoint and addressing them.

We're both keeping it -- we both -- we think in the long term that we'll be able to mitigate any impact that we might have, and they're downsizing the portfolio.

Okay.

And then just sticking kind of with the tenants, John, just curious, you guys have 3 Whole Foods.

Just kind of your thought process on kind of how the Amazon situation will play out there.

I think from our standpoint, we view the whole transaction as a verification of the value of bricks and mortar in an omnichannel retail environment.

And it's hard to tell exactly what that means to the grocery business.

The grocery business has already been very competitive for many years, and we continue to see grocery as an important component in our business and a part of a daily drive.

And I think we'll see a lot of evolution in that, which is healthy evolution in the business over the next couple of years.

All right.

And one last one for me, just Geoff, it looked like there was some impairment charge recognized in the quarter.

I apologize if I missed it, but can you just speak to what that was?

Yes.

It was just really related to an asset sale that was completed subsequent to quarter end, Collin, that's all.

Okay.

Look, I guess here's one that a function of just what you guys sold it at relative to what you had it booked.

I'm just kind of curious, what would have triggered the impairment on the asset sale in particular?

Hey, Collin, sorry, could you repeat that question?

I'm just trying to understand what kind of occurred to trigger that impairment.

Was it in terms of pricing or a shift in kind of how someone was valuing that versus when you guys bought it?

Just trying to understand the impairment a little bit more.

It was really just a function of the transaction at the end of the day that triggered the impairment.

It was more timing versus from an accounting standpoint.

We may have incurred a slight loss as a result of it, but it was really just more of a timing perspective that we incurred the impairment.

Again, more accounting-driven than anything else.

Collin, let me just jump in for a second and amplify Geoff's statement.

As we looked at the field of buyers, there were a number of people that were very interested in the asset.

And certainty of execution was always a consideration.

And so what we did is, really, we picked a buyer that was at a slightly lower price, but we felt much more comfortable with that buyer as opposed to the one that came in at a higher price, then add in the comments that Geoff made, and that was the basis of the impairment.

Our next question is from Floris van Dijkum from Boenning.

I have a question on dispositions and how much more could you step up your dispositions pace, I guess, and most of that would likely occur in 2018, I suppose.

But would you also consider frontloading dispositions to address leverage concerns?

Obviously, this year you sort of made the acquisitions and then sold after that.

But would you consider doing it the opposite way going forward?

Well, it -- Floris, it's always a balancing act.

As we -- both Geoff said and I've said, liquidity, obviously, is a major factor in positioning any of our companies for success in the future.

So we have to balance that against dilution.

And there are a number of assets, and you and I have talked about this at length, that probably there's always a bottom 5% or 6% or 7% of your portfolio.

No matter how good your portfolio is, there is a potential for sale.

So there are also a number of assets that we might consider for sale, where we've got value-add opportunities in them that we're in the process of executing.

So just as I said that we might sell up to the $250 million this year, even though we might not make another acquisition, your question is apt, and it's important that we just look at balance and all the factors that would go into a decision of this type.

And in terms of -- maybe talk maybe a little bit more on your portfolio vision in 3 years' time.

I guess the number of assets presumably will go down.

The average size of those assets will go up and presumably growth.

Is that the idea of buying what you're doing right now?

Well, again, as you and I have talked, we are really looking at owning at the end of the day 3 types of shopping centers.

Certainly, the very large regionally dominant shopping center that is based in value with a significant amount of variety is convenient.

We've talked on a number of calls about our community-first initiatives as well as place-making.

And I think -- and John addressed that as -- at our Deerfield shopping center, more and more of our centers you're going to see this type of improvement.

So that falls into one of the categories.

The other, and you've seen it with the acquisition of Webster and Centennial, the more urban infill shopping center that still satisfies a lion's share of the value, convenience and experience elements.

The third is that we will continue to own sizable commodity shopping centers that weigh in, say, above 250,000 square feet.

And then anything that really doesn't fall into that category is probably a candidate for a future sale.

But once again, we'll look at liquidity, we'll look at dilution, and we'll look at opportunities that complement these 3 categories.

(Operator Instructions) And as there are no further questions, I'd like to turn the floor back over to management for any closing comments.

As always, we thank everyone for their interest and their attention.

We are looking forward to providing some healthy color on our growth prospects in the second half of the year, and we look forward to talking to you in about 90 days.

Have a good day, everyone.

This concludes today's teleconference.

Thank you for your participation.

You may disconnect your lines at this time.