WPG
#Good morning.
The have been no changes to our methodology and our pull for same store.
Those corporate allocated costs to property level were excluded from that calculation, and repairs and maintenance are still in property operating expenses, <UNK> <UNK>.
Yes, there's a little bit of a catch up in the first quarter from the savings 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 in the first quarter from that.
I think in terms of if you want to look at the moderating growth out of the next couple quarters, I think it relates to the bankruptcies and working through, and as we mentioned, we have provided an accommodation of about 50 basis points in our overall growth.
And, we're just being cautious as it relates to how we're viewing the NOI growth the remainder of the year.
Hi, it's <UNK>.
I don't want to comment on any particular retailer.
I would just say that we've got on appropriate accommodation for what we know today.
There are public lists out there.
I think it's 10% or 12% of our stores are on that list.
So it's certainly manageable.
I would also say that if you look at generally speaking occupancy cost for that retailer would be about where a retailer would focus and want it to be.
In terms of our projections going forward.
Yes.
We're making some assessment that we are going to a keep a portion of that portfolio.
So we're factoring in what we think our potential exposure would be in terms of downsizing, what they're going to look like through restructure, reorder.
<UNK>, I'll tell you what's exciting to me is we have multiple offers to refinance the asset.
We really have multiple options here.
At this point we haven't made a final decision, but I think we'll make one shortly.
Absolutely.
Absolutely correct.
And we certainly have that optionality.
<UNK>, it's interesting because we're obviously ---+ we're increasing our occupancy, we are 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.
It's easy to paint A or B with a broad brush, and generally is A going to be better than B.
Sure.
But if you look at it on a case-by-case basis and you look at examples, like a Longview we've talked about a lot.
It's one of our big redevelopments, one of the first malls I visited after the merger where we're adding a Dick's Sporting Goods and an H&M, and we've got a dozen stores putting new store fronts and committing to new ten year terms.
It's a case-by-case, mall by mall study, but I think you are absolutely correct that what's being said in the media and what we're seeing out in the field are very different.
The CMBS market has definitely stabilized since probably last time we were on the phone for our year end call.
As <UNK> said, and we're not going to get into the specific commentary on Mesa, but we're in the market and there's interest in firm financing, there's interest from CMBS lenders on that opportunity.
So I think the CMBS market itself is clearly moving in the right direction.
There's a lot of stabilization there.
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.
You know <UNK>, 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'll 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 the road.
Yes, I think in most of those deals there's a concept of a qualified borrower.
It's going to range in terms of what those qualifications are.
But typically there are the ability to transfer those loans.
<UNK>, it's <UNK>.
It's really across the board ---+ I'm sorry, <UNK>.
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.
I think people look at the non-core list, and we had calls on that.
But since we've created the categories, there is reverse inquiry really in all the categories.
No, not at all.
I would say we are very open-minded and willing to sell assets and upgrade and [cull] the portfolio.
It's certainly has fared well for others, and it certainly has fared well for myself and <UNK> in the past.
So that's something we consider.
It's just not a program that we are 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's been a lot of activity here over the last 12 months.
There's only so much that an organization can handle at one given time.
When we developed 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.
We want to create a Company that can deliver meaningful growth on an ongoing basis so that we really categorize 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.
Hey <UNK>, this is <UNK>.
Absolutely.
I think as we get through the process and we understand what's working well and what could be working better, we're always looking to tighten up the belt, and we think there's definitely opportunity going forward to cut costs.
No.
I think as we come out of this year and look into next year, it's something we would probably talk more about as we talk about our guidance for next year.
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.
As it relates to Tier 1 and Tier 2 we have 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.
It's just about leasing space and bettering occupancy and performance across the portfolio.
<UNK>, I would 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 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 were my head is.
<UNK>, this is <UNK>.
I think this 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 at 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.
We do have ---+ we're bringing Dick's Sporting Goods into New Towne Mall to replace the Sears.
That's a Tier 2.
But as <UNK> 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.
Thank you.
Well, 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.
But we've got a lot of experience in terms of how to deal with it.
And we're trying to address the timing.
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.
You are.
Yes.
You can't just stop paying interest.
That's not the way it works.
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 <UNK> was referring to were projects that were actually going to come online in 2016.
Some of that we have 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.
It's <UNK> again.
We see these same opportunities as I've said ---+ as I've traveled, as I've seen these assets, as we build our development team up.
We continue to find opportunities, and 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.
Thanks so much.
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Thank you all for joining us today, and have a great day.
