Good day, ladies and gentlemen, and welcome to the Federal Realty Investment Trust Third Quarter 2014 Earnings Conference Call. [Operator Instructions] As a reminder, this call may be recorded. I would now like to introduce your host for today's conference, Brittany Schmelz. You may begin.

Good morning. I'd like to thank everyone for joining us today for Federal Realty's Third Quarter 2014 Earnings Conference Call. Joining me on the call are Don Wood, Dawn Becker, Jim Taylor, Jeff Berkes, Chris Weilminster and Melissa Solis. They will be available to take your questions at the conclusion of our prepared remarks. Certain matters discussed on this call may be deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements include any annualized or projected information as well as statements referring to expected or anticipated events or results. Although Federal Realty believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, Federal Realty's future operations and its actual performance may differ materially from the information contained in our forward-looking statements, and we can give no assurance that these expectations will be attained. The earnings release and supplemental reporting package that were issued yesterday, our annual report filed on Form 10-K and our other financial disclosure documents provide a more in-depth discussion of risk factors that may affect our financial condition and results of operations. These documents are available on our website at www.federalrealty.com. And with that, I'd like to turn the call over to Don Wood to begin our discussion of our third quarter 2014 results. Don?

Thanks, Brittany. Good morning, everybody. Lots of things are coming together for our company these days, as evidenced by our reported results this quarter, along with a very strong opening in Assembly Row in Massachusetts, and our official decision to move forward with the next phase of Pike & Rose. More on the latter two in a minute. Let's start with the quarter where FFO per share of $1.23 matched our second quarter result and beat last year by a solid 6%, despite the inevitable drag of delivering big development projects. Our core portfolio continues to be the cash flow horse, with same-center growth of 3.3% when excluding the quarter-over-quarter effects of properties under redevelopment and 4.4% when including those properties. That all happened with strong and consistent occupancy reflected at 94.7% this year versus 94.6% last year, and that 94.7% reflects a sequential improvement over the second quarter of 40 basis points. Personally, I'd like to see those numbers rise into the 95% plus range over the next 12 months, as we've moved -- pushed to improve the small shop numbers throughout the portfolio, particularly in the Northeast and the Mid-Atlantic regions. Leases signed during the quarter also bode well for future earnings growth, as 108 deals were signed covering over 430,000 square feet. 90 of those deals were for comparable space, and that is existing space where there was a previous tenant, and those deals were signed at $35.69 a foot, 13% better than the $31.55 a foot the previous tenant was paying in their final year of the lease. The [indiscernible] comparable deals related primarily to Assembly Row and Pike & Rose, in addition to a few at expanded redevelopments like Tower Shops in Florida and Willow Lawn in Richmond, and were written on average at nearly…

Thanks, Don, and good morning, everyone. As Don just covered the quarter's key financial operational results, let me pause and deeply highlight again that this quarter's bottom line FFO per share at $1.23 not only matched last quarter's record, which was up -- and is up 6% year-over-year, importantly, this bottom line growth was achieved with stable occupancy while we continue to invest in future growth. A year ago at our Investor Day at Assembly, we laid out for you a pipeline of $520 million approximately of value creation activity, that we either have delivered or will be delivering over the next 12 months, importantly, on time and on budget. And again, through this period of significant investment in future growth, we continue to deliver bottom line growth that's impressive for our sector. Our margins have remained stable as well as our G&A. That disciplined growth and consistency is truly unmatched, all while we achieved the key operational and development milestones that Don just highlighted. Before turning to our outlook for the balance of this year and next, let's look at our balance sheet as well as our acquisition and disposition pipeline. During the quarter, we raised $50 million under our ATM at an average price of $124.71. We raised an additional $10 million from our sale of Pleasant Shops, our asset owned in the JV with ING Clarion, which sale we highlighted on last quarter's conference call. We ended the quarter with approximately $24 million in cash and only $11 million drawn under our $600 million revolver. From a leverage perspective, our debt EBITDA remains low at 5.3x and our fixed charge coverage strong at 3.8x. We still, importantly, have less than 1% of our debt floating and the stated interest rate on our debt maturing over the next…

[Operator Instructions] Our first question comes from Jeff Donnelly with Wells Fargo Securities.

Jim, can you talk a little bit about the factors that are underlying your outlook for 2015? I think recently you had said that you thought NOI growth would accelerate next year. And I guess I wanted to get a little more detail.

Well, I think what I said, Jeff, was that we expected to see a little bit of a downtick in this quarter as we rolled some significant space. As we look forward into 2015, we expect our NOI growth rate to be in that mid-4% -- mid-3s to 4% range, which again is on an occupancy neutral basis. Certainly if we are able to pick up some of the occupancy improvements that Don highlighted in the call we could be at the high end or above that range. But really on a run rate basis when you consider our portfolio is close to fully occupied, that's a reasonable level of expectation.

And I don't want to leave Don out, but Westgate -- out west is transitioning to maybe more of an outlet or discount orientation, it seems like, and somewhat similar to Assembly. Do you see Federal having a bigger role in the outlet business? And maybe, stepping back, is your plan to sort of morph Federal into this diversified player in retail: grocery-anchored, street retail, mixed-use, outlets? Do malls have a role at Federal?

Let me get to the last part first. Malls do not have a role at Federal. And really it's a different business, Jeff. The -- I think I've said before, we take a lot of pride in basically producing the right product for the particular environment they're in, despite whether it's grocery-anchored or outlet-based or whatever else. There is no question that having the well-located type of centers that we have -- and Westgate is a great example. Westgate was an old mall. And the notion of where that is going to service this community, the community going forward, you can't make it a good old mall. It's an old mall. So the idea of being able to take the demographics and the great location that we have and turn it into a value-based center, where we have had great success with tenants like -- these tenants, it's Gap outlet, it's J.Crew outlet. That's under construction right now. The Nike outlet concept is open, I was in it yesterday, it's blowing it away. It's about finding the right retail concepts for the locations that we're in. But the mall business is a different business and it won't be for us.

And just one last question. Out at Santana, I don't know if Jeff is on, but the rents you're achieving on Lot 8B, the new residential units out there, what do the rents you're achieving either in dollar terms or dollars per square foot tell you about the potential for the in-place residential authority there? Is there sort of an embedded upside? Do you see them sort of revealing that to you?

Yes, Jeff, we have and continue to see a really strong demand across all the product here. You look at Misora, and clearly that's the top of the market, the newest, freshest stuff, which is getting rents north of $3 a foot. And if you remember, too, we still have a fair number of units were built now nearly 10 years ago. And those units are very well occupied and we've been able to drive rents in that product as well. Given the success at Levare, given the success of Misora, you'll see us next year and probably trickling into '16 look at doing some upgrades on our older product to capture that rent potential.

Jeff, let me add one more, a little bit more color to it. We're taking this call right know, the whole management team is at Santana. We're sitting in a conference room there because our board meeting was out here over the last couple of days. And I was going through Misora yesterday. I was going through it with the residential-leasing person, who has been here 10 years. She lives here. And she basically -- she blew me away. She could sell anything because she knows the place so well. She knows the 3 or 4 different residential type products that we have here. She is amazingly optimistic, based on what is happening with the Street and what's happening in the economy together, and it really does get to the point. If you haven't been to Santana in a while, take a trip. It's really compelling. And what it really does say is in these type of projects, if you do them right, if you continue to work them, the benefit, the premium to live here or to office here is -- it's real. We did just sign an office lease here with Avalon Bay.

We're 100% leased in our office space.

And Avalon Bay is putting their west -- I think it's their western region headquarters here. A very strong market number to be here. It's all here because of the environment. It really works if you do it right. The upside continues.

Our next question comes from Jason White with Green Street Advisors.

Just a question, follow-up on Phase II of Pike & Rose. I was wondering how you walk through the -- I know it's a cohesive project and it's hard to strip things out, but when you look at the hotel and -- I was just trying to figure out how you underwrite those and what some of the assumptions are, and just how you get comfortable with adding those various moving pieces to this project?

Yes. Jason, it's a very good question, and I'm going to let Jimmy go through specifics with you in a minute if that's helpful. But the basic concept, we're putting together these environments, there's no question in our mind that it is the mix of uses working together that creates the upside at a premium above what normally happens with these uses separately. A vibrant hotel in the middle of one of these projects is a clear, clear positive. Now, we're not in the hotel business, so we need to figure out how to underwrite it and how to mitigate that risk. And I'm going to talk about that with the structure in a second. The same thing on for-sale housing. We're not in the for-sale housing business per se. But to the extent, we could, on a risk-adjusted basis, include those elements into the overall basic business of retail and renting apartments that we think we do pretty darn well, we really enhance the ability to get paid on the other uses. So it does come down to the structure of the uses that we don't know as well. And I'll let Jimmy take it from there.

Yes. Jason, when you consider, as Don highlighted in his remarks, our investment in the hotel of approximately $5 million, that's in a venture with Buccini/Pollin, who is one of Hilton's leading developers, very well-established and successful hotel developer and operator. But what we thought was important is that we do get to participate through this investment, which is in a preferred structure, in the ultimate success of the hotel, which we think it will be very successful given the lack of truly comparable product in Montgomery County. But in terms of its relative investment in the overall project, it's smaller for the -- some of the reasons that your questions imply. But we're excited and we think it will fit well within what we're delivering.

Okay. That's very helpful. And then, I guess, one other question on your Assembly resi that Assembly -- or that Avalon is working on right now. I think they disclosed some leasing velocity in their earnings announcement. Looked like the prior period had really good velocity and then this last period had weaker-than-expected velocity. Is there anything going on there that's unique or maybe you can talk about your thoughts on Phase II, adding resi yourself based on their experience so far?

The overall experience on resi up there clearly has me envious. And when I take a look at any -- there is no trend in a month here or a quarter here, et cetera, with respect to leasing velocity. The -- it's Boston and the season is changing. And so I'm sure that's part of what's happening in that second building. Remember, they had 2 buildings there. The first one is done. And so you saw that initial lease-up in that first building that was really spectacular and, as I said, makes me a little envious. The second building that is there is really just being delivered and just getting started now. So I would expect them to have nothing to worry about as you get into next year. But it's certainly not because of a strong in one period and then weaker in the next. If you were there, and you kind of saw how it played out, you would understand our optimism. When we fit out and we think about the next phase that we're talking about right now, we do expect residential, as we've said in the past, additional residential in that second phase. We absolutely believe that market will be very deep for residential demand. And so there'll be some phase of residential. But we want that streak to be longer. We want the retail environment to be deeper than it is today. And even what it is today is outperforming what we had in terms of expectations.

Our next question comes from Paul Morgan with MLV. Paul Morgan - MLV & Co LLC, Research Division: The Mountain View deal, I just wanted to follow that a little bit more. I'm sure we'll hear more about it in the future, but can you just give a little color -- I mean, also congratulations on that. Obviously, there's the big mixed-use project right next to it. How -- I mean, how do you see that as an investment? I mean, what's your, kind of, short-term versus longer-term plans there and the opportunity for densifying that?

Take it, Jeff.

Yes. I mean, Paul, you know the area real well and obviously you know the property next door that was developed by Ramone and Guirre [ph] that was built at a much, much higher density level than the property we're acquiring. And they've got a second phase to do there where they're going to add more residential and more office space. So that whole node is just kind of the heart of Silicon Valley right now, if you will. And short term we've got some -- a little bit of leasing to do at the property. There's a couple of vacancies. But we'll be working with the City of Mountain View to set the property up long term to match what's going on in the rest of the neighborhood. Obviously we have existing leases that we have to deal with. So the timing of all that is not clear and could be out there a ways. But as we've experienced in the rest of our portfolio, you never know when things like that will change. And if they do we'll be in a position to take advantage of it because it's just an outstanding location. It's like Jim said, close to Caltrain, not far from Google's headquarters, it's right at the corner of where Los Altos, Palo Alto and Mountain View meet. So location couldn't be better.

Paul, I have to tell you one other thing. How many times are we talking about building what it is that we do in the mixed-use basis and then having all the adjacent landlords effectively benefit as a result of that, and God, if we only knew more. Here we are in a situation where it's reversed. And I think you know Ramone and Guirre [ph] out here. These guys do a great job. And they've done a fine job in their first phase. They will, I assume, be able to continue and finish that up, as Jeff had said. And that can only be great news for the benefit to that -- north of the property that we are adjacent to. Paul Morgan - MLV & Co LLC, Research Division: Right. And now going to the other coast, with the metro now going to Tyson's and kind of Pike 7 is still sitting there in your long-term redevelopment pipeline, have you spent a lot of time there since the metro opening? Thoughts on what might happen over the next couple of years at Pike 7?

Yes. There's a number -- there's a lot of things we're thinking about. It is awesome to have the metro going there. We're watching numbers, by the way, month by month to see what's playing out. As I think I've said here in the past, we didn't want to be first to the game at Pike 7. What was really needed in that community was a nice big parking lot in front of a traditional shopping center. And that's worked out really well for us. As you see it grow now and as we'll be -- as we're looking at it, we do have adjacent property owners, and ironically Avalon is one of them, in the back, that if we put those 2 pieces together might be even a more compelling type of project going forward. We don't know whether there will be a deal there, but it's one of the things we're looking at. If not, simply on the existing property, because of where that metro stop stops, there will clearly be more density, but we can't tell you too much more about that yet. We've still got some years left in the leases that are there. Paul Morgan - MLV & Co LLC, Research Division: Okay. And then just lastly on -- a bigger picture has been a ramp-up in M&A recently in the space and you've, over the years, explored opportunities. And just wondering if -- the retail REITs have made a lot of progress, a lot of them over the past number of years, at pruning their portfolios, making them higher-quality, whether you think that as those programs get closer to fruition we might see kind of a continued stream of M&A and whether you think that it might get more appetizing for you, looking at other companies, given that they're making this progress?

Always possible, but I wouldn't count on it. When you think about capital allocation decisions, which is certainly what that is, in the biggest way, it's fantastic to be able to have controlled lands and controlled opportunities that we've got for years and years to come. So sure, if something were compelling, I know I've been looking for 15 years, I know I haven't found anything in a significant way that's compelling. So underwrite that low.

[Operator Instructions] Our next question comes from Christy McElroy.

This is Katy McConnell, on for Christy. Just another follow up on Pike & Rose. How are you thinking about the timing of construction and delivery of each of the different components for Phase II?

As you think about Phase II, we're really looking at late 2016, early 2017 delivery. Much larger retail component in that phase, Katy. And from a staging perspective we're going to be delivering more of that concurrently so that we continue the Main Street, Grand Park Avenue there following on what we're doing in Phase I. So we -- in Phase I, of course, we'll be delivering Pallas, a high-rise residential building, middle of next year, and then obviously working towards the delivery of Building 6 and 7, some of the ancillary retail buildings on the street again for later delivery in 2016 and early 2017.

Our next question comes from Ryan Peterson with Sandler O'Neill.

Just wanted to get your thoughts on the -- where you're at in the South Florida market with cap rates continuing to compress there. Are you guys thinking about increasing your scale or is -- any thoughts changed on how you're handling that market?

No. No thought to change. In fact, I'd love to increase our scale there with the right type of products. But as you say, it's hard to make deals that make sense. We've said, I don't know if you heard in the prepared remarks that I went through, but I really did try to highlight Tower Shops just outside of Fort Lauderdale because of demand exceeding supply on the -- on that -- in that particular node, on that type of property, a large property. And we'd love to have a few more of those. There's a couple of things that we're looking at right now. But prices are high, so it's got to make some sense for us.

Okay. And then one other question on a different note. A lot of your peers over the past couple of days have talked about mall tenants and outlet tenants coming into some of their centers. Just wanted to get your general thoughts on whether you think those kind of outlet versus full-priced tenants and whether they can coexist in the same centers together?

There's no question in my mind they can. There's no question in my mind. Now, listen, every retailer has got their business plan. And certainly, when you talk about those outlet tenants, we just have experienced at Westgate. Nike will be there with Gap. Gap will be there with J.Crew. They clearly like to work together. But in that center, which also has a big Target, which has Ross, which has Old Navy, which has Burlington Coat, which has Nordstrom Rack, when you think of how they all work together -- there are also full priced small shop tenants in there. It can work together. But it depends on the particular environment and really what their choices are in the marketplace. If you've got a hole in the market, there's much more openness to be able to -- from those retailers to be able to do a deal where historically they weren't.

Yes. And it's really all about location in that area, right? There's 200,000 people within 3 miles of Westgate. And Westgate is not that far from Santana Row and Valley Fair, which is the dominant full price shopping there, in this trade area. Yet we've been successful positioning Westgate to be the value alternative. And you can't do that everywhere, You can only do that where you've got this kind of population density and $100,000 a year average household income in that 3-mile radius. So it is very location-dependent. Just keep that in mind as you think through that across the country.

Our next question comes from Chris Lucas with Capital One Securities.

Don, just maybe if you could give us a little bit of feel for how you're thinking about the new apartment project at Phase II at Pike & Rose relative to PerSei and Pallas and sort of how you're thinking about the market niche that that particular building will be looking to penetrate?

Yes. It's a great question and I did say, somewhere along the line in this call earlier, I was talking about Santana and the 3 very -- 3 or 4 very different types of products here and how they work together and aspirationally help. A resident who comes into one of our products looks to -- if they like where the environment is, they'd love to step up to something a little bit more expensive or move it along as they go. When you think about Pike & Rose, the PerSei building that we're leasing up very well now there is a -- it's a luxury product but it's not the high-rise. The high-rise is a different type of living experience and that's what the -- that's the next thing up. When you get to the second phase and we look at the product that's going there, it will be right on the street. It will be right in the center of the product. It will be directly across the street from the hotel and condos on top of that hotel with retail. So it will be in the center of the action. Some people like that; some people don't like that. The ability to create enough balance between different product types on the entire site is the key to making it all work out. So while they're similar, they're located differently, they feel a little bit differently, their height is different. But it's all going to be upper-middle product, if you will.

Okay. And then, and maybe just taking a step back on the demand, and really the lease terms that you're writing for leases today versus maybe a year ago, where is the -- where are the escalators running at this point for your small shop space?

It depends. I mean, we target and we get in over half of our leases 3% bumps. 3% annual bumps is a big deal. Does everybody try to stop and negotiate, too, or something different? Of course they do. But in the small shops, in well-anchored shopping centers that we have, we're still largely able to get that. That hasn't changed very much at all. The biggest push from tenants, the biggest change over the years, and it's something that we think about and work on hard, is the capital requirements. There is no doubt that any well-capitalized tenant -- anybody who doesn't need money wants money from the landlord. And so we battle that. It's not nearly as much as the bumps, at least from my perspective, as it is the capital contribution. And we're not going to invest in anybody who we don't see a future in. So that's partly a credit decision, too. Big part.

I'm not showing any further questions. I would now like to turn the call back to Brittany Schmelz for any closing remarks.

Thank you, everyone, for joining us. We look forward to seeing you next week at NAREIT.