Site Centers Corp (SITC) 2013 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the quarter-three 2013 DDR Corporation earnings conference call. My name is Patrick, and I will be your coordinator for today. At this time participants are in listen only mode. We will facilitate a question and answer session toward the end of the conference. (Operator Instructions)

As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Mr. Samir Khanal, Senior Director, Investor Relations. Please proceed, sir.

Good morning, and thank you for joining us. On today's call, you will hear from CEO, Dan Hurwitz, Senior Executive Vice President of Leasing and Development, Paul Freddo, and President and CFO, David Oakes.

Please be aware that certain of our statements today may be forward-looking. Although we believe such statements are based upon reasonable assumptions, you should understand those statements are subject to risks and uncertainties, and actual results may differ materially from the forward-looking statements. Additional information about such factors and uncertainties that could cause actual results to differ may be found in the press release issued yesterday and filed with the SEC on Form 8-K and in our Form 10-K for the year ended December 31, 2012, and filed with the SEC.

In addition, we will be discussing non-GAAP financial measures on today's call, including FFO. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in our earnings release issued yesterday. This release and our quarterly financial supplement are available on our website.

Last, we will be observing a one-question limit during the Q&A portion of our call in order to give everyone a chance to participate. If you have additional questions, please rejoin the queue.

At this time, it's my pleasure to introduce our CEO, Dan Hurwitz.

Thank you, Samir. Good morning, and thank you for joining us.

As you know, we recently hosted our Investor Day in Charlotte, at which time we outlined and reiterated many of our long-term goals and aspirations, highlighted our deep and talented bench of real estate executives, and toured recently-acquired and developed assets in the local market. We were very pleased and appreciative of the strong turnout, and I would like to once again personally thank each of you that took the time to travel to Charlotte and spend the day with us.

It was our goal to present thoughtful content, provide unlimited access to our entire management team, and conduct a property tour that enhanced the articulation of our investment thesis and how we intend to execute our stated goals and objectives. For those of you that were not able to attend Investor Day, we trust that you've been able to review the presentation materials and webcast that are posted on our website and have since been in contact with our Investor Relations team regarding any questions you may have.

The overarching theme of our strategy is a continued obsession with consistency and capital allocation. We will continue to articulate our long-term aspirations and highlight the opportunities we are pursuing to deliver consistent and compelling results, like you have seen once again this quarter.

Given the abundance of disclosure over the past month, our prepared remarks today will be rather brief to reserve time for Q&A. Paul will address the growth levers we are pursuing on the operations side, and David will focus on the operating and transactional results over the quarter before we open the line up for questions.

With that, I will now turn the call over to Paul.

Thanks, Dan. As Dan mentioned, I will briefly highlight the leasing results for the third quarter before addressing recent activity in the portfolio that is consistent with the strategic growth levers we discussed in Charlotte. We posted another strong quarter with significant leasing volume, resulting in a 20 basis point improvement in the leased rate over the second quarter and 80 basis points year over year, while achieving further improvement in leasing spreads.

Despite a portfolio leased rate of nearly 95%, we leased over 3 million square feet during the quarter. We executed 210 new deals for 900,000 square feet, achieving a positive pro rata spread of 14.5% and 12.3% at 100% ownership. We also executed 233 renewals for 2.1 million square feet at a pro rata spread of 7% and 7.4% at 100% ownership.

This represents our highest renewal spread in 21 quarters and is the continuation of a significant trend we are seeing in the portfolio. Combined, pro rata spreads for the quarter were 8.6% and 8.4% at 100% ownership, again displaying the continued outperformance of the wholly-owned portfolio, which illustrates the impact of our capital recycling program and quality improvement.

As for examples of the strategic growth levers we are pursuing, the consolidation of small-shop space continues to be a robust area of growth in our portfolio. At Commonwealth Center, a newly-acquired power center in Richmond, Virginia, we recently finalized a new 10-year deal with Ulta, which resulted in the consolidation of six former small-shop units.

This deal consolidated three chronically vacant small-shop units and three units previously occupied by local low-credit retailers with high turnover. We successfully consolidated these six units into a single 10,000 square-foot box and achieved a 100% increase in rent and recovery rate for the consolidated space, increased the credit quality of cash flow, outperformed our original underwriting, generated significant value creation, and introduced a great retailer to the overall merchandise mix of the center.

Our continued proactive consolidation of small-shop space has contributed to the improvement in our leased rate for units less than 5,000 square feet by 110 basis points over the second quarter to 86.3%. Our long-term occupancy goal for this space is at least 90%, but we will continue to reduce exposure to this category, given its nature of lower-credit-quality tenants and high turnover.

Naked leases and redevelopment were two other strategic growth levers highlighted at Investor Day that continue to provide attractive risk-adjusted returns and considerable rental growth through the proactive leasing of units occupied by tenants with no options, near-term lease expirations, and below-market rents. A recent example of these growth levers can be highlighted by activity at Brentwood Promenade in St. Louis, a 300,000 square-foot market dominant prime power center anchored by Target, Trader Joe's, Bed Bath, PetSmart, and World Market.

We had a large-format jewelry store whose lease expired in January 2013 with no options, and therefore, no control of the space. With a prominent location adjacent to World Market and the recently expanded Trader Joe's, we developed a merchandise plan that called for the redevelopment of this portion of the center. After razing the 10,000 square-foot jewelry store, we constructed 19,000 square feet of new GLA, which is now fully occupied by Ulta, Carter's, and Lane Bryant.

All three recently celebrated their grand openings within nine months of the former tenant's expiration. The recapture of the jewelry store and redevelopment resulted in three new traffic-driving retailers with strong credit profiles, positive comps, additional GLA, and ultimately, a 16% unlevered cash-on-cost yield.

As highlighted at Investor Day, we have identified over 120 anchors in prime centers that represent naked leases and mark-to-market opportunities. Additionally, given the evolution of the portfolio and continued flexibility exhibited by retailers, we have identified an additional $500 million of redevelopment opportunities.

The small-shop consolidation enrichment and the recapture and redevelopment of a naked lease in St. Louis are just two examples that highlight the proactive approach we are taking throughout the portfolio to maximize growth. I remain extremely confident in our ability to continue to drive significant organic growth through these various strategic levers.

And I will now turn the call over to David.

Thanks, Paul. With operating FFO and FFO including nonoperating items were $90 million, or $0.28 per share for the third quarter a 4% percent increase in operating FFO over last year. Nonoperating items were primarily related to transaction costs that were offset by gains on land sales.

In the third quarter and subsequent to quarter end, we continued to upgrade the quality of our portfolio through the acquisition of prime power centers in large and growing markets with strong tenant demand and employment population. We acquired 39 prime power centers, of which the majority was sourced through our strong relationships with our joint venture partners.

The prime power centers, which total 15.6 million square feet, feature high-credit-quality retailers and enjoy average trade area household income of $88,000 and a population of 494,000 people, more than 10% above the prime portfolio average. The average size of the 39 centers is 400,000 square feet, and the average price was in excess of $50 million, further demonstrating our preference for large-scale, market-dominant power centers.

As previously announced, we acquired a portfolio of 7 prime power centers in a newly-formed venture with Blackstone for $332 million in August, 2 market-dominant regional power centers in Orlando and Atlanta for $259 million in July, and 30 prime power centers from our existing joint venture with Blackstone for $1.46 billion at the beginning of October.

The investments were funded with proceeds from the May common equity offering, the repayment of our preferred equity in mezzanine loans, the unsecured bond issuance in May, asset sales, and assumed mortgage debt. Regarding asset pricing, despite the increase in Treasury rates in recent months, we have seen little to no change in pricing for institutional-quality power centers. And we will continue to take advantage of cap rates that have yet to reflect the stability and credit quality of cash flows produced by high-quality power centers.

In terms of the balance sheet, we continue to remain focused on debt duration and maintaining strong liquidity. At the end of the quarter, our weighted average consolidated debt maturity was five years, a significant improvement from 2.7 years in 2011 and in line with our target of four to six years.

In addition, we have over 90% availability on our credit facility; and we also continue to increase the size and quality of our unencumbered pool, which based upon conservative covenant calculation is over $5 billion in value today, a significant increase from the $4 billion at the end of 2010. Looking at future capital needs, we have no consolidated maturities remaining this year and no unsecured consolidated maturities until May 2015.

We also continued to sell non-prime properties during the quarter, with $138 million of dispositions, of which $104 million was at DDR's share. Looking forward, we currently have $117 million of non-prime and non-income producing assets under contract for sale. As we outlined in our Investor Day, this aggressive capital recycling strategy has significantly improved our portfolio and enhanced the credit quality of our cash flows.

Finally, with three quarters now complete and operating metrics generally stronger than expected, we are increasing our guidance for 2013 operating FFO to a range of between $1.10 and $1.12 per share. At the midpoint, this represents a 2% increase over the midpoint of original 2013 guidance and an 8% increase over 2012 actual operating FFO, which we feel is compelling and extremely competitive within the peer group.

We will continue to remain focused on both NAV and earnings growth, on further improving portfolio quality while continuing to lower leverage and risk, and above all else, continuing to increase shareholder value.

At this point, I'll stop and turn the call back to the operator for questions.

(Operator Instructions) Craig Schmidt, Bank of America.

I was looking at one of your recent acquisitions, Winter Garden and Village, and it seemed like it had a really strong restaurant component. And then that got me thinking, how does management think about restaurants? I know they are a little bit more expensive upfront, but I'm just wondering if they keep the consumer longer at your center, or how you think it fits in with your future redevelopments?

Craig, this is Paul. Restaurants are obviously a big component of centers such as Winter Garden, with over 1 million square feet in a location where you clearly, with the mix we have there, you want to keep people as long as possible.

Some examples, you know, the fast casual and casual are doing extremely well today. Restaurants such as Panera is another example of a restaurant we love to see at many of our centers, just because it keeps the consumer there for long periods of time.

So where we are high on it, you know, the high-end restaurants are struggling a little bit right now, but the casual and fast casual are doing fine. And again, with a center like Winter Garden, if you've seen that already, it's absolutely one that you need a few restaurants. With the range of mix and retailers we have at that center, we clearly want to keep the customer there as long as possible.

From a financial and risk management standpoint, we are going to be following Paul's lead on which restaurants make the most sense for a center, but we're still going to err on the side of more often than not doing ground leases. And so the significant level of improvement in some of those are someone else's risk, and not ours, and just where we think we can get the best risk-adjusted returns while still doing the right thing for the merchandise mix for the center.

Samit Parikh, ISI.

I noticed, basically, year to date that net effective rents are up just over 6% versus last year. And looks like for the quarter, they were up nearly 15% versus the net effective rents on new deals last year. Could you just comment on how you see the trend of rent growth going up next year on a CapEx-adjusted basis?

Yes, Samit, we see the rents, obviously, continuing to grow in a small, high single to low double-digit growth rate, as evidenced by the spreads on the new deals. But the net effective rent deserves a little bit of an explanation, because you have to be careful. The starting rent in the supplement is going to be a function of the type of deals made in the quarter. You may have some more box deals, or some smaller shop deals which are going to vary.

The key is to watch the spread between that starting rent and the net effective rent, and that's what we are focusing on. And what you'll see in this quarter is where the costs associated with the individual deals came down dramatically.

So I'm more focused on that spread between starting rent and net effective rent. The starting rent is going to be very lumpy. You're going to see that fluctuate, again, just based on the character deals over the quarter. Overall, though, you will see starting base rents continue to grow, as we live in this great environment of great demand and limited supply.

Andrew Schaffer, Sandler O'Neill.

We've seen a lot of activity in the office sector with companies acquiring assets in the special servicers. I was wondering why we haven't seen similar activity from the shopping center space? And as these peaks and maturities roll in 2015, 2016, 2017, would you consider this as a potential acquisition pipeline?

We've been very active, trying to look as broadly as possible for unique, attractively-priced acquisition opportunities from the stuff that's closest to home, where you've seen us execute on a number of acquisitions from joint venture partners, where the partners were looking at exit, to doing exactly what you are saying in terms of scouring the universe of secured assets, scouring the universe of assets that are in special servicing or about to be headed to special servicing.

But we really haven't had any luck. And I think your point is reasonable, that you could say it even more broadly for the retail space in general at finding distressed assets with special servicers that represented an opportunity for us. I think one very important reason for that versus other property types is when an asset in our sector does become somewhat distressed, and then capital constrained, and goes into that period of servicing, which oftentimes can take several years to get through, by the time someone can get hold of that asset, it's not simply a quality office building in a good location that is 50% leased that someone can lease up. You really have found a situation where the asset might have become more distressed over time than that because of the level of active management that this property type requires, because it's not just a commodity sort of property.

And so for us, while we've looked considerably across many channels, including special servicers and CMBS, more broadly, we really haven't found anything that we thought represented an attractive opportunity going forward. You could certainly find opportunities where you were buying something at a discount to what the value would have been a few years ago. But for us, in many cases, the advantage we have in underwriting is the incredible amount of tenant feedback we can get. And we really haven't found tangible opportunities where we could get control of something quickly enough in a special servicing situation to be able to take advantage of that opportunity going forward.

We have in a few cases helped private owners refinance assets by putting in a piece of mezz debt, where we could get an attractive return and hopefully control of the assets. But we haven't bought anything out of servicing.

Yasmine Kamaruddin, JPMorgan.

I know you're still working on 2014 guidance, but any reason to believe that your base case for acquisitions and dispositions will be that far off from this year?

Our base case for acquisitions and dispositions will be exactly what we outlined at Investor Day earlier last month. While we always want to be aggressive in the market, we always want to look at what advantages are available to us both on acquisition and disposition side. And we've never not exceeded both our disposition number and our acquisition number since we've been giving written guidance in the manner in which we have.

We will still not put ourselves in a position where we feel the need where we have to buy something, we're compelled to buy something to make a number, or that we are actually forced to sell things that we don't think it's right to sell, given the cycle we're in in the market. So the numbers that we have presented throughout really the year and most recently articulated during the October presentation is where we will be when we release our guidance in January.

Todd Thomas, KeyBanc Capital Markets.

Just a question. Bankruptcy and bad debt has been at very low levels generally. And I was just curious, as you look at the retail environment, what your expectations are around the holiday season, maybe around post-holiday season fallout this year, based on some conversations you are having with retailers? The last two years or so it's been somewhat more muted, and I was just wondering if you can comment on what you're thinking about what we might expect to see this holiday season?

We expect that bankruptcy will continue to be mute, and we think that bad debt will also continue to be relatively insignificant, not just because of the health of the retailers, but because of the improvement of the quality of the portfolio. We have had such an impact in our capital recycling program and upgrading the portfolio that bad debt as a percent of our total just continues to go down as the quality of your portfolio continues to go up.

Plus, most of our retailers today, if you look at where they sit, their balance sheets are as strong as we have seen in sort of the modern era. They've learned how to do business in a tough, low-GDP environment; and their balance sheets are strong as they've ever been.

Keep in mind, when it comes to bankruptcy, though, very few tenants will declare bankruptcy during the holiday season. Because if you made it to the holiday season, you want to get through the holiday season and do your sales. So if anything happens at all, it'll happen after the holiday season. But we are not projecting anything significant based on our conversations with retailers, the analysis of the credit quality of our cash flow, and the quality of our portfolio.

Jonathan Pong, RW Baird.

Maybe going back to the acquisition environment, we've heard a lot about how there's just a dearth of well-priced core product available for the smaller grocery-anchored community centers out there. Are you starting to see some of your institutional competition that's typically been focused on those assets migrate towards more of the power center product? And if so, do you see that creating any meaningful cap rate compression near-term? Thanks.

We have certainly seen, over the past 6 to 12 months, an increase in the number of institutions actively looking at power centers. I'd still say there's a disproportionate focus on other parts of retail, particularly Class A regional malls as well as grocery-anchored community shopping centers that continue to be more in favor. But we've absolutely seen both pension funds, pension fund advisors, and some sovereign wealth groups more actively looking at power centers.

So I think from a long-term opportunity to see compression in cap rates that is a positive early sign. But as we have seen many cases, that community is generally slow to move. And so we're still seeing an opportunity selectively to acquire the highest-quality power centers around that fit our exact investment thesis of finding larger-scale centers in major markets where we can really grow NOI over time.

So we still see an opportunity out there. But we certainly have seen some names participating in the sector that have not been around for many years. And so I think you are seeing some momentum to the exact theme that you referenced, in terms of institutional capital looking more seriously at the sector.

Tayo Okusanya, Jefferies.

Just along the lines of the last question asked, why exactly do you feel like those sovereign wealth guys and private equity continue to remain somewhat hesitant to really go all-in on the power centers? What's really holding them back? Is it the attendant risk? What exactly are they so concerned about?

I think there are several things. And, you know, we've published the power center investment thesis book for the past year and a half or so to try to go through exactly some of that. And now we've got a lot of those slides incorporated into our other materials to highlight the true story about the power centers, and the strength of the underlying tenants, and the stability of the cash flows over time.

But the institutional capital community consistently has been focused on trailing returns and trailing volatility. So I think any change in their investment strategy is one that takes a considerable amount of time to see that actually occur. And so that's what we're going through right now. As you're showing quarter after quarter of extremely strong returns from power center tenants, you are removing some of the greatest risks in terms of certain headline tenants, like a Best Buy two years ago, where we were getting questioned constantly about the viability of that retailer that we consistently stood by during that period. But it was one that I think stood out in investors' minds as a concern for the sector that is now in a position where it is much better understood.

And so I think these things just take a while to play out. But if you simply are looking at retailer results, you're going to see not only the best sales results, the best earnings growth, the best inventory turn, the best margins from the power center tenants, and so, I think, quarter after quarter, our underlying tenants show that. The consumer is clearly voting, and it shows up in the performance of the centers. When that translates into meaningful cap rate change in the private market, we can't tell you exactly; but we certainly experienced changes in the past to be pretty glacial in terms of the private capital community.

Rich Moore, RBC Capital Markets.

You did the two big transactions that you had with Blackstone. And I realize there were some unique circumstances in there, but how do you view today joint ventures? Are they really more of an intermediary for you guys, like the Blackstone stuff has kind of been, or is there a long-term component to the joint venture strategy?

Well, Rich, as you know, our history has been very checkered with joint ventures. We've had some very successful ones of late, but we had some stunningly unsuccessful ones in the past. And we have learned from those mistakes.

So as we look at where joint ventures fit in, number one, it has to be a very specific type of partner. It has to be a partner that is well capitalized, that is truly aligned with the interests of our strategy, and one that brings something to the table that we don't have ourselves, namely, access to capital, if we are in the position where we need to access private capital.

We would certainly entertain joint ventures where they bring us product that we wouldn't have available to us. The second Blackstone joint venture is a great example of that. We are very, very excited about that transaction.

But that is not a transaction that we would have had a look at but for the fact that Blackstone brought it to us. So now we end up in, again, a joint venture with a first-class partner. At the same time, we end up with the first look at assets if and when it comes time to get out of that venture. And you know that time will come.

So it gives us an insider advantage, if you will, to manage and lease those assets for a number of years; and it takes a lot of the risk out of the due diligence process. So we like joint ventures if we need them. We like joint ventures if it's with the right person and the right entity. And we like joint ventures if they bring to us assets that we would otherwise not have an opportunity to acquire in the future.

Where we don't like joint ventures is obviously where the partner fails our due diligence test or where they are going to require us to seed the particular venture with prime assets. We've had a lot of offers of folks that would like to joint venture with us on an institutional basis, but they are requiring us to seed the venture with a series of assets from our wholly-owned prime portfolio. And that is not something that we are willing to do, because we lose control of what we consider to be franchise assets.

So we are not against joint ventures with the right person, but we are going to be highly, highly selective. And we want to ensure that whatever the venture brings to the table is consistent with our strategic objectives and the types of assets that we want to own.

Ross Nussbaum, UBS.

Can you give me a sense of where you think the occupancy cost is for the portfolio today, and maybe how that compares back to prior peak levels?

We're just a little south of 9% now, Ross, and at the trough, we were down about 8%. And we think we can continue to grow this to somewhere in that 10% to 12% range in our portfolio, which is south of 9% right now.

And where do you think market rents need to go before development really starts making more sense?

I think it's important to keep in mind that one of the reasons why development doesn't make sense is not necessarily because of the market rents. There are situations where market rents, they do make a lot of sense, but across the board, on a risk-adjusted basis, if you look at the entitlement risk in particular, that preventing development from going forward even more so than just base rents. So I think you can have very constructive conversation with tenants today. I think rents can get to the point where something on paper would look somewhat interesting; but at the same time, your entitlement risk, the fact that you have to land bank with an uncertain outcome, etc., just doesn't make that project competitive for your other capital opportunities, particularly redevelopment.

So if you take a look at where we can allocate capital today, whether it's just through lease up or through the expansion of our redevelopment pipeline, where you have much, much less risk, and you have much higher returns, development is just not competitive on a risk-adjusted basis. If you look at it on a pure numbers basis, you can get to a number if you ignore risk. But if you take risk into account today, development is not really compelling; and it's not just because of the base rents.

There are tenants out there willing to pay the right rents to get to a decent return. That doesn't mean that the landowner is willing to give you a long-term option and not require you to buy the land. And the land is not entitled. And there's no guarantee that the state, federal, and municipal, the local municipalities will cooperate with you.

So if you take a look back, what happened in 2006, 2007 in particular, that's where people got into trouble. That's where we got into trouble with too much land on the balance sheet. You had to take too much risk. And right now redevelopment is much, much more compelling. And I think that's why you're seeing most of the capital allocators putting their capital into redevelopment and not new ground-up development. So it's not purely a rent issue. It's a holistic issue. And it's an alternative capital investment opportunity issue.

Luke McCarthy, Deutsche Bank.

Just if you could provide a little bit more color on the consolidation in the small spaces? I'm just trying to understand the dynamics a little better there.

So in the $500 million of redevelopment opportunities you've identified, how much of that $500 million is a consolidation opportunity? And with those opportunities, what is the genesis of them? Is it more the tenants you have stronger relationships with saying, hey, guys, we want more space? Or is it more a function of you guys pruning your small-shop tenant watchlist?

It's all over the place, Luke. First of all, in terms of the amount of the redevelopment spend that's devoted to consolidation, that's not a number we can put our fingers on. It's clearly a component of certain redevelopments. I mean, the redevelopments can include downsizings, consolidation of small shops, recapture of naked lease, whatever it is, but it's all part of a redevelopment process.

I would tell you, on the small-shop space specifically, which I think is where you're going with the question, it usually is a function of space. We know the demand; we know the demand because we're talking to the retailers who are seeking space every day. And we are trying to figure out the best way to marry up that demand with space in our assets. And in some cases, it's going to take some relocation of shops; some cases, we're going to have some chronically vacant space.

So there's no simple cookie-cutter method to what we're doing with consolidation. But clearly, we know, as in the example I gave in the prepared remarks in St. Louis, or in Richmond, where we have some chronically vacant and some low-credit-quality, smaller retailers, and we've got a retailer such as Ulta that wants space, that's when we are aggressively looking at the different ways we can consolidate the space.

Chris Lucas, Capital One Securities.

Just a quick question. As you guys described the current positive supply demand dynamic, I was wondering if, besides the growth in base rent, are there other lease terms that you are seeing swinging towards the landlords' favor, whether they be annual bumps, or tenant rights, or other things along those lines?

Yes, Chris. It all goes with the demand for space and the lack of supply. But I would tell you, the improvement in other than specifically rent-related issues over the past five years have been dramatic, as we see improvement in our co-tenancy negotiations, in other requirements, exclusives. These are things that, common sense, as we hold more leverage in the negotiations, we are going to continue to clean up those closets. And we are making great progress.

In terms of the bumps, also an economic issue. But yes, again, we're saying improvement. More frequent -- you know, typically, with the junior anchors it'll be every five years. But the percentage bump is going to be a negotiated item in every deal. And we are going to see improvement in that.

And with the smaller shops, we see more frequent, sometimes even annual bumps. So it's all working in our favor, and the entire leasing team is driven to improve everything within those leases with every deal.

Christy McElroy, Citi.

I just wanted to follow up on Rich's JV question. In terms of some of your existing JVs, with $6.8 billion of assets unconsolidated, and you've pointed out that you have roughly 50% of your nonprime assets in the JVs, can you talk about what the timeline and resolution of some of this stuff looks like in the coming years, as you continue to pare down your exposure to nonprime?

Yes. The process of selling the nonprime assets within the joint ventures has at times taken a little bit longer, either because the joint ventures are almost exclusively capitalized with mortgage debt; so in some cases that sets a timeline. In some cases, it's just really cash flow requirements or desires of a partner, where they are more interested in today's cash flow than what exactly might be the situation a few years out. And obviously, we are working closely with our partners on all those.

You have seen an acceleration in the sale of nonprime assets within the ventures. And you will see more of that. Like I said, some of it just relates to the maturity of certain debt pools that finally allows us to transact. And in other cases, it's the partner's timeline. But we are certainly very actively talking to those guys about our fundamental recommendations, in terms of what assets are more likely to see challenges over time.

And today we do actively have assets being marketed for sale within every one of our major joint ventures, as the partners have more recently been in agreements that there are good opportunities to sell some of those assets today rather than sit with some of the risks for future years. And so, acknowledge exactly what you say, that the progress on the unconsolidated side has been slow. There are some good reasons for that, but you're absolutely seeing more progress today, and you should expect to continue to see that in 2014.

There are no remaining questions in the queue. I would now like to turn the call back over to management for closing remarks.

Once again, thank you for joining us for another earnings call of a very strong quarter for DDR. And we look forward to continued momentum and talking to you next quarter. Have a good day.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.