Washington Prime Group Inc.
Q1 2016 Earnings Call Transcript

Published: 5 May 2016

[Operator:]

Good day, ladies and gentlemen, and welcome to the WP Glimcher’s First Quarter 2016 Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Later, we will conduct a question-and-answer session and instructions will be given at that time. As a reminder, today’s conference maybe recorded. I would now like to introduce your host for today’s conference, Lisa Indest, Senior Vice President of Finance and Accounting. Ma’am, please go ahead.

[Lisa Indest:]

Good morning, and welcome to WP Glimcher’s first quarter 2016 earnings call. During today’s call, we will make certain forward-looking statements as defined by the Federal Securities Law. These statements relate to expectations, beliefs, projections, plans and other matters that are not historical and are subject to the risks and uncertainties that might affect future events or results. For a detailed description of these risks, please refer to our earnings release and various SEC filings. Management may also discuss certain non-GAAP financial measures. Reconciliations of each non-GAAP financial measure to comparable GAAP measure are included in our press release, supplemental information report and SEC filings, which are available on the Investor Relations section of our website at wpglimcher.com. Members of management with us today are Michael Glimcher, CEO; Butch Knerr, COO; and Mark Yale, CFO. Now, I’d like to turn the call over to Michael.

[Michael Glimcher:]

Thanks, Lisa. Good morning, and thank you for joining us on today’s call. We are pleased by the start of 2016 and remain optimistic about how it positions us for the rest of the year in terms of continued execution of our strategy. As previously discussed, 2015 was a transition year as we built the foundation to drive future growth. During the first quarter of 2016, our fully integrated team and platform, strong leasing deal pipeline and focused execution, delivered solid results. FFO was in line with our expectations and previous guidance. Same-property NOI increased 4.3% for our core portfolio. When looking at our performance, our Tier 1 malls and community centers, which represent nearly three quarters of our NOI were the biggest drivers of growth during the first quarter. As you saw in our release, we are increasing the top-end of our guidance range for comp NOI and now expect growth in the range of 1.5% to 2.5% this year. While we still have work to get done, we are encouraged by the continued improvement in our operating metrics. Sales per square foot in our core malls increased 6% to $374 per square foot on a trailing 12 month basis. Core portfolio occupancy was 92.4% at the end of the first quarter driven by modest improvements across our malls and a year-over-year increase of 120 basis points in occupancy for our community centers, which are now 96.4% leased. Our community center leasing team continue to produce strong leasing volume, and average rents increased by about 3% year-over-year. The community center spread for new leases was at 18.1%. Our primary focus across our core malls is occupancy, and while mall re-leasing spreads were flat this quarter, they were directly in line with our current expectations. Mall occupancy is up from a year ago and we have re-leased most of our space associated with retailer bankruptcies in 2015. We acknowledge that there are challenges ahead as we've seen a few national retailers file for bankruptcy protection in the first half of the year, and it’s possible we may see a few others. And while it’s too early to know what the full impact that these retailers will have, the overall level of bankruptcies and store closings remains significantly lower than what we saw in the first half of 2015. While the junior category has clearly been hit the hardest, keep in mind that these locations are typically in spaces with high visibility within our malls, which presents an opportunity to re-lease those spaces at more attractive rents. So while we can't predict the future, we believe our exposure to underperforming retailers remains manageable based on what we know today. And we feel we've made an appropriate accommodation within our guidance. Retail store closures are simply a part of the business. I personally have been doing this for over 25 years and I know with certainty that they will continue and we will also continue to replace them. With respect to the planned divestitures of four of our Tier 2 encumbered malls, Chesapeake Square transitioned ownership in April. The debt yield on Chesapeake was 9%, much lower than the high double-digit cap rates many investors have used to value our Tier 2 encumbered assets. At the end of the quarter, the average debt yield for Tier 2 encumbered malls was 10.8%. Mark will provide an update on the timing of other planned divestitures. Now before I turn the call over to Butch, I'm pleased to announce that we are now operating as a standalone company as we completed our integration as of March 1. And I'd like to congratulate the team on a successful completion. Now we can narrow our focus and continue to execute on our stated goals; driving growth across our core portfolio, operating a lean and efficient business model, and maintaining and improving our investment grade balance sheet. With this increased focus, we will only get better from here. Butch?

[Butch Knerr:]

Thank you. As Michael mentioned, we delivered strong NOI growth during the quarter. There were several factors driving this growth. First, our team’s aggressive efforts to build out our leasing pipeline are paying off. We executed leases totaling over 800,000 square feet during the quarter, a significant increase compared to a year-ago. In addition, we had a 137 leases signed, but not open at the end of the quarter representing over $13.5 million in annual revenue. During the quarter, we opened over 155,000 square feet of new tenants. Restaurants represented 34% of those total openings, which demonstrates our continued focus on creating the right experience at our centers. Also significant drivers of NOI growth were our re-tenanting and redevelopment projects. We completed five small and large scale projects during the first quarter, including the additions of a new Saks Off 5th at Gateway Center, a completely renovated JCPenney at Rushmore Mall, Pier 1 at Bloomingdale Court, a renovation of The Arboretum in Austin, Texas and Bob's Discount Furniture at Lake View Plaza. We have another 30 projects across 25 centers, and while I won’t go through every project listed in the supplemental, we are pleased with our continued progress. As previously announced, we are proactively reducing our exposure to underperforming anchor spaces. We terminated the Sears lease at Newtown Mall in April and we will replace it with the new Dick's Sporting Goods set to open in November, marking our third new Dick's location opening in 2016. And at Rushmore Mall in Rapid City, South Dakota, At Home is under construction and will open later this year bringing our core mall department store occupancy to 99%. At Lindale Mall in Cedar Rapids, Iowa, we are 100% leased and under construction on a new multitenant building adding Kirkland’s, Oshkosh and Carter’s. This is in addition to the new Panda Express that is under construction and scheduled to open this summer. And at Scottsdale Quarter, approximately 60,000 square feet of office space came online in the first quarter with the addition of the JDA Software and Platinum Wealth Advisors. The remaining 25 2016 projects are on schedule and on budget. The team remains focused on driving traffic and extending visits to our malls. As I talked about at our Investors Day, we continue to execute on grassroots marketing that is tailored for each community. These types of events bring communities together and attract guests of all ages. For example, we recently hosted Savor Bowie, a food, wine and music festival at Bowie Town Center. The event attracted more than 20,000 people over two days. And in Johnson City, Tennessee, our mall recently held Rejoice in the Arts, a concert and art show that is put on by the elementary and middle school students. This one day event drew more than 2,000 guests to the center. We're doing these types of grassroots events throughout our portfolio, because we know that when we drive traffic, we will increase sales. In summary, the team is well-positioned to deliver NOI growth through improved occupancy at our malls, rent growth across our community centers and continued execution on our redevelopment pipeline. With that I'll turn the call over to Mark.

[Mark Yale:]

Thanks Butch, let's now turn to the balance sheet where we continue to take steps to improve our capital structure and liquidity. Our strategic focus for us to continue to drive improvement, it's important to remember that we do have a solid and stable balance sheet currently. Net debt to EBITDA is trending right below 7 times for the trailing 12 months ended March 31, 2016. Debt service coverage in 2016 is projected to be approximately 3.5 times. And most importantly we ended the first quarter of 2016 with nearly $750 million of available liquidity between credit facility capacity and cash on hand. We also have a very strong unencumbered pool comprising approximately 55% of our total NOI with over $255 million coming from our community centers and tier 1 mall. As discussed during our Investor Day, we believe our upcoming debt maturities through fiscal year 2018 which are comprised solely of secured mortgages are very manageable. In terms of the specific 2016 debt maturities, we completed the transition of Chesapeake Square back to service on April 25. We expect a similar outcome with the next 45 day on Merritt Square Mall. Discussions continue regarding to the respective loan servicers from River Valley Mall in Southern Hills. The good news is with the four loans that represent $260 million in total outstandings and all having debt yields in the single digits, the ultimate exit of these malls in this fashion will allow us to improve the Company's overall debt leverage. These properties also represent approximately 30% of the tier 2 encumbered group. Finally, both the loans on Mesa Mall and Weberstown Mall will mature in June of this year. As previously discussed our goal is to refinance mortgages and we're currently working on both. Weberstown will most likely be a short-term bank deal while on Mesa we're currently pursuing permanent financing for the property. Now let me turn to our quarterly financial results. Our FFO for the first quarter was $0.42 per diluted share falling right in the middle of our guidance range going into the period. During the quarter, $2.3 million non-cash charge relating to hedging effectiveness and a shortfall in straight-line rental revenue were offset by outperformance at the property level. NOI contributions from our core portfolio were generally ahead of our expectations for the quarter at 4.3%. This included growth of 6.2% in the tier 1 malls, 4.8% from our community centers and flat NOI from our tier 2 malls. As noted in the release, tier 1 growth was positively impacted by real estate tax savings realized during the first quarter of 2016. However, even without the positive tax contributions, growth was solid at 4.1% for the tier 1 malls and 3.3% for the overall core portfolio. In terms of the contribution from redevelopment approximately 150 basis points of our quarterly growth was driven from these activities. Finally in terms of our outlook, we reaffirm within the release previous FFO guidance in the range of $1.76 to $1.82 per diluted share. The guidance assumes the transfer if Merritt during the second quarter and River Valley and Southern Hills during the third quarter of 2016. Additionally after considering first quarter results, we now are expecting comp NOI growth in the range of 1.5% and 2.5% for 2016. Other key assumptions for the full year did not change from previous guidance. We're also introducing FFO guidance for the second quarter 2016 in the range of $0.41 to $0.43 per diluted share. We expect core comp NOI in the second quarter to be up 1% to 2% compared to the year prior. Michael?

[Michael Glimcher:]

Thanks Mark. In closing, we are very pleased with our improved results, which demonstrate the team's ability to execute our business plan. We have a best-in-class team in place which has proven to yield strong progress in the first quarter. More importantly, it's a team that understands the changing dynamics of our industry and how to position and upgrade this portfolio. We remain keenly focused on improving occupancy across our malls, shifting the tenant mix to drive increased traffic and frequency of visit, repositioning underperforming space and unlocking previously overlooked value through our redevelopment efforts as is becoming evident in our results. Now at this point, we'd like to open up our call for any questions you may have.

[Operator:]

[Operation Instructions] Our first question comes from line of Ki Bin Kim with SunTrust. Your line is now open.

[Ki Bin Kim:]

Just a little quick accounting question first, I just want to make sure that in your guidance you included property allocated overhead into the G&A bucket, I'm pretty sure it's not going to seem that way, but I just want to confirm there was no shifting of G&A from one bucket to another. And I guess similar question for repairs and maintenance which is just kind of grouped together to property operating expenses.

[Michael Glimcher:]

There have been no changes to our methodology in our pool for same-store, so those corporate allocated cost to the property-level are excluded from that calculation and repairs and maintenance are still in property operating expenses Ki Bin.

[Ki Bin Kim:]

In terms of your same-store NOI guidance for rest of the year, I mean I guess mathematically implies that 1% to 2% for the remaining part of the year. Just curious to know, with this tax benefit that you guys thought is that a purely a one first-quarter event? And I guess further, what causes the same-store NOI to come down to 1% to 2% for the rest of the year.

[Michael Glimcher:]

I mean there is a little bit of a catch up in the first quarter from the savings that we realized but then on a go-forward basis, it does reduce what the property taxes will be on those properties going forward but certainly a bigger impact than the first quarter from that. I think in terms of kind of if you want to look at the moderating growth out of the next couple of quarters, I think it relates to the bankruptcies and working through and as we mentioned, we have provided a combination of about 50 basis points in our overall growth and we are just being cautious as relates to how we're viewing the NOI growth the remainder of the year.

[Ki Bin Kim:]

And I believe despite 30 basis points of ADR tied to PacSun, could you comment on [indiscernible]?

[Michael Glimcher:]

Hi, its Michael, I don't want to comment on any particular retailer, we'll just say that we've got an appropriate accommodation for what we know today and there are public list out there and I think 10%, 12% of our stores are on that list. So it's it certainly manageable. I would also say that if you look at generally speaking occupancy cost for that retailer would be about were our retailer would focus and wanted to be.

[Butch Knerr:]

And I would just add that last year we were dealing with, at this time we had about 140 plus stores closing in our portfolio this year it is barely over a handful and so we think about our occupancy gains that were above what we were a year ago, I think handling these two or three tenants above bankruptcy are going to be very easy for us to handle.

[Ki Bin Kim:]

Okay. And just generally speaking when you guys reserve, you don't reserve for an entire APR, right, you guys reserve for what you think is they are going to close versus remain open right?

[Michael Glimcher:]

In terms of our projections going forward or?

[Ki Bin Kim:]

Yeah.

[Michael Glimcher:]

Yeah. So I mean we're making some assessment that we're going to keep a proportion of that portfolio, so we're factoring in what we think are our potential exposure would be in terms of downsizing what they are going to look like through restructure, reorg.

[Ki Bin Kim:]

Okay, thank you guys.

[Operator:]

Our next question comes from the line of Andrew Rosivach with Goldman Sachs. Your line is now open.

[Andrew Rosivach:]

Hey good morning guys. I wanted to focus on the Mesa Mall. Your prior disclosure was 11 debt yield property and per your opening comments on other defaults, Michael, we think this strategy makes a heap of sense. And WPG at $11 is definitely evaluating Mesa for less than its debt. I think that kind of leads to the question, if you can't finance Mesa, would you potentially give the keys back on the property?

[Michael Glimcher:]

Andrew, I will tell you what’s exciting to me is we have multiple offers to refinance the assets that we really have multiple options here and at this point we haven't made a final decision, but I think we will make one shortly.

[Andrew Rosivach:]

I had a feeling that the good news was I didn't have to worry about, I think I'm trying to ask this question publicly, because I know you and I are kind of trying to make the point to the market that these assets with non-course debt you can’t value them for less than the debt.

[Michael Glimcher:]

Absolutely correct and we certainly have that optionality.

[Andrew Rosivach:]

Thanks for that. And then second, I actually wanted to commit a heresy and I think this is like this The Emperor's New Clothes that nobody talks about. The orthodoxy has been for years that B malls were terrible, A malls are great which the journal seems to write about every week as if it's new news. But we are now a year into this now where B sales has been better than A. The spread has actually been widening. And I think we are past the point where you can blame it survivorship bias. My question to you guys is, are decision-makers starting to notice this and making people rethink to the degree, if you will, of that A versus B pieces maybe starting with the retailers themselves?

[Michael Glimcher:]

Andrew, it’s interesting because we are obviously - we are increasing our occupancy, we're increasing our deal pipeline. There are certainly - what the retailers are doing and what the level of interest is in these assets is very different than what you read about in the media and especially with these redevelopments we have going on and positioning these malls to be dominant in their markets, so it is easy to paint A or B with the broad brush and generally is A going to be better than B, sure. But if you look at on a case by case basis and you look at examples like a long view we've talked about a lot. It's one of our big redevelopment, one of the first malls I’ve visited after the merger where we're working adding DICK'S Sporting Goods and H&M and we've got a dozen stores putting new storefronts and committed to new 10-year terms. It’s a case by case, mall by mall study, but I think you're absolutely correct that what is being said in the media and what we're seeing out in the field are very different.

[Butch Knerr:]

And Andrew I would add - this is Butch. I would add that last year we had 94 portfolio reviews with different tenants and what we have found is that when we sit down with them, we can make deals with them where they're profitable. And that's obviously very important for them. And so I think what we're seeing is that these retailers realized that they can do business in these centers and they can make a lot of money.

[Andrew Rosivach:]

And then maybe to follow up also, Mark, on the financing side, there has been this can't do CMBS and these can’t do secured on deals. Has there been any change in sentiment watching these sales numbers on a relative basis towards the assets class?

[Mark Yale:]

Well, I mean the CMBS market has definitely stabilized since by last time around, around our year-end call and as Michael said we are not going to get into the specific commentary on Mesa, but we are in the market and there is interest in firm financing, there is interest from CMBS lenders on that opportunity. So I think the CMBS market itself is clearly moving in the right direction, lot of stabilization there. And I think if you’ve got a good story on a property and you've got a stable NOI and stable situation with your tenants, there are opportunities today.

[Andrew Rosivach:]

Great. Thanks for taking my questions guys.

[Mark Yale:]

Thank you.

[Operator:]

Our next question comes from the line of DJ Busch with Green Street Advisors. Your line is open.

[DJ Busch:]

Thanks. Just staying on the financing, Mark, why do a bank deal [indiscernible] it’s one of your tier 1 properties, why not do some longer - put some longer-term debt in place on that asset?

[Mark Yale:]

DJ, that’s an asset we’d ultimately like to unencumber, so our plan ultimately is to get back into the unsecured bond market and when we do, doing a bank deal gives us ultimate flexibility because we will move forward with the financing that is pre-payable without penalty and it is a great asset. It's doing over $500 per square foot and we'd like to add it to our unencumbered pull down road.

[DJ Busch:]

Okay. And then just the Tier 2 encumbered malls, are all those loans assumable if you were to sell them?

[Mark Yale:]

Yeah, I think in most of those deals there is a concept of a qualified borrower and it is going to range in terms of what those qualifications are, but typically there are the ability to transfer those loans.

[DJ Busch:]

And because of that, I know Michael has mentioned in the past that you are obviously not - I guess you don't have a disposition program maybe like some of your peers, but you have gotten some reverse inquiries. Do most reverse inquiries focus on those ones that are already encumbered?

[Michael Glimcher:]

Andrew, it’s Michael. It's really across the board, I am sorry, DJ. It’s really across the board and if you think about the handful that are going back to lender plus the two non-core we sold that’s about 6% of our NOI, so it's a fairly significant amount of the portfolio, but I think people look at the non-core list and we have calls on that, but since we’ve created the categories those reverse inquiry really in all the categories.

[DJ Busch:]

Okay. So it's not exclusive to the encumbered ones?

[Michael Glimcher:]

No, not at all.

[DJ Busch:]

So I guess Michael, why - I know you mentioned and I guess we just mentioned that you don't have an aggressive or any type of disposition program, but are you hoping to selling more assets? I know it's not in your guidance and it’s not something that’s top of mind, but if those reverse inquiries come in, how active or willing of a participant are you if you do get some interest in those assets?

[Michael Glimcher:]

I would say we're very open minded and willing to sell assets and upgrade and call the portfolio. It certainly has fared well for others and it’s certainly has fared well for myself and Mark in the past, so that's something we would consider. It’s just not a program that we're out there talking about. If you think about the last year, there was the integration, there was building the deal pipeline, they were putting systems in place. We've sold some assets. We've taken some assets and transitioned them to lenders. So there has been a lot of activity here over the last 12 months and there's only so much that an organization can handle at one given time.

[DJ Busch:]

Okay. And then maybe just one final questions. From a sales productive perspective, there is obviously a pretty [indiscernible] gap between tier 1 and tier 2 buckets. Are there - how many of those tier 2 whether it's encumbered or unencumbered assets would you expect to move into the tier 1 over time.

[Michael Glimcher:]

When we develop those categories, we tried to do our best job of understanding. It was really more about growth than it was about sales per square foot and we want to create a company that can deliver meaningful growth on an ongoing basis, so that we really categorized the tier 1 as the higher growth assets. And hopefully we did a good job of creating the bucket that you wouldn’t see a lot of movement of these malls going forward other than outward.

[DJ Busch:]

Okay, thank you guys.

[Michael Glimcher:]

Thank you.

[Operator:]

Our next question comes from the line of Floris van Dijkum with Boenning. Your line is now open.

[Floris van Dijkum:]

Thank you. Question for you Michael and Butch, this is your first full year of having an integrated platform. Do you guys foresee any further cost efficiencies or operational efficiencies going forward?

[Michael Glimcher:]

Floris, it's Michael. Absolutely. I think as we get through the process and we understand what's working well and what can be working better, we're always looking to tighten up the belt and we think there is definitely opportunity going forward to cut cost.

[Floris van Dijkum:]

Do you have - can you sort of give a range potentially of what you could expect over the next year?

[Michael Glimcher:]

No. I think as we come out of this year and look into next year or something, we would probably talk more about as we talk about our guidance for next year. And it was really getting through the integration, building this pipeline, delivering results. And then as we get here in the second half of the year, looking where we can tighten up the belt.

[Floris van Dijkum:]

Great. The other question I have is basically in your Tier 2 or C rated malls, can you tell us a little bit about the leasing that you're looking to do and we heard one of your peers talk about potentially having more turnover based rents to get the occupancy up and to increase flow in traffic. Are you guys looking at doing that as well or are you holding out to get more fixed rent or maybe talk a little bit about the environment and the push and pull between TIs and getting space leased for that kind of - for those boxes.

[Michael Glimcher:]

As it relates to Tier 1 and Tier 2, we’ve asked the leasing team not to even look at the list and the development team not to look at the list, because we want to treat every asset equally. As it relates to investing, there's clearly a much higher threshold to invest capital into Tier 2. But when we're meeting with retailers and we're marketing the portfolio, we're really agnostic between Tier 1 and Tier 2 and it's just about leasing space and bettering occupancy and performance across the portfolio.

[Butch Knerr:]

And I would - and Floris, this is Butch. I would say that when we’re talking to these retailers, they don't even look at the tiers differently. If they can do business and they can make money in these assets, they don't differentiate.

[Floris van Dijkum:]

Okay. One final question I guess is, if you look at the - as you've looked today and talk about how you feel relative to how you felt last year in terms of your view towards the business, are you feeling more optimistic about growth in your portfolio now as opposed to when you started on this venture?

[Michael Glimcher:]

Floris, I'd probably use the word opportunistic versus optimistic in that I personally have seen about 90% of the NOI been out with the retailers, we've gotten our arms round the portfolio, we've built this deal pipeline. So we're seeing a lot more opportunity. It's hard to use the world optimistic when you look at where the world is today. The environment is really difficult and it's a very challenging business. But we're seeing opportunities everywhere and the more I travel and the more I see these assets, and now we're getting through the cycle of actually having things come online that we've invested in, we're seeing a lot of opportunity. So that's where my head is.

[Butch Knerr:]

And I would say Floris, the thing that's probably most exciting for me is the redevelopment opportunities throughout this portfolio. As I mentioned earlier, we have 30 projects that are going to open this year. And when you think of what we have in the pipeline coming on in the future, it's pretty significant and we've done a really good job of bringing these projects in on-time and on budget. And I don't see, I don't foresee that changing as we go forward. So I'm opportunistic and I think there's great opportunity to grow these centers.

[Floris van Dijkum:]

Great. And maybe I guess, maybe one more. In terms of those projects, I guess they would be primarily the Tier 1 and your community centers where you're allocating capital. Do you foresee any chance that you're going to allocate capital on new development or any Tier 2 assets?

[Mark Yale:]

Floris, this is Mark. I think as it relates to ground-up development, we had one project that has been in the works ground-up on the community center side that we have underway, Fairfield town center, we will move forward with that. It made sense to do that, but we have nothing else in the works right now. And Tier 2, we will be opportunistic. I think that's the word. I mean, we do have - we're bringing Dick’s Sporting Goods into New Towne Mall to replace Sears. That's a Tier 2. But as Michael mentioned, the return threshold is a little bit different in terms of how we look at allocating capital. But we will be opportunistic and there will be opportunities for us to create value in the Tier 2 as well.

[Operator:]

We have a follow-up question from the line of Ki Bin Kim with SunTrust. Your line is now open.

[Ki Bin Kim:]

Thank you. So going back to your encumbered asset pool, what is your internal thinking process regarding the timing of potentially when to get those back to the lenders?

[Michael Glimcher:]

Well, Ki, it's a process with the servicer and you need to be in default, and if you've got an asset that's generating cash flow, you typically can't engage in those discussions with the special servicer until you're closer to maturity. So right now, we've got plenty on our plate that we're working through. It is a process. It takes months and multiple quarters typically. And, but we've got a lot of experience in terms of how to deal with it and trying to address the timing. But a lot of it is just driven to the point where you need to have some type of default and if you've got a property that's cash flowing, it's hard to get there until you have a payment default.

[Ki Bin Kim:]

Okay. I thought the payment default would be at your election though. Am I mistaken?

[Michael Glimcher:]

You are. Yes. You can't just stop paying interest. That's not the way it works.

[Ki Bin Kim:]

Okay. And going back to your redevelopment pipeline commentary, how much of those 30 projects - I guess, first of all, what would the dollar amount kind of look like or range at this point? And how much of those projects do you have, I guess, otherwise or some kind of understanding of what types of tenants would be in those projects versus kind of earlier on in the planning stage?

[Michael Glimcher:]

I mean, our pipeline and our redevelopment spend in 2016 is about $150 million to $200 million. Probably with where we're trending right now, we're probably going to be on the lower end. I think what Butch was referring to were projects that were actually going to come online in 2016, some of that we've already spent the capital. But I think as we look out this year into the next several years that about $150 million to $200 million is kind of a good run rate in terms of opportunities for redevelopment that we think we have in the portfolio.

[Butch Knerr:]

And we don't move forward until they are substantially committed to. We get the leases signed first and we understand where the cost is and then for the majority of the tenants.

[Ki Bin Kim:]

So that's what I was referring to more so is that you have about $220 million [ph] of supplemental projects listed. So what are the prospects that as these come online, which majority of them seem in 2016, 2017, that it could be reloaded with reasonably high conviction, lesser risk type of redevelopment opportunities to hit that $150 million to $200 million?

[Michael Glimcher:]

It's Michael again. We see the same opportunities as I've said, as I've traveled, as I've seen these assets, as we've built our development team up, we continue to find opportunities that I think for the next few years, anyways, I can't look much further out than that. We can have these same type of opportunities for growth.

[Operator:]

We're showing no further question in queue at this time. I'd like to turn the call back to Lisa Indest for closing remarks.

[Lisa Indest:]

You may contact us directly if you have any additional questions. Thank you all for joining us today and have a great day.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program and you may now disconnect. Everyone, have a great day.