Good day and welcome to the Kimco's Second Quarter 2015 Earnings Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Mr. David Bujnicki, Vice President. Please go ahead, sir.

Thanks, Chad. Good morning and thank you all for joining Kimco's second quarter 2015 earnings call. With me on the call this morning are Milton Cooper, our Executive Chairman; Dave Henry, Chief Executive Officer; Conor Flynn, President and Chief Operating Officer; and Glenn Cohen, CFO. There are also other executives who will be available to address questions at the conclusion of our prepared remarks. As a reminder, statements made during the course of this call may be deemed forward-looking and it's important to note that the company's actual results could differ materially from those projected in such forward-looking statements, due to a variety of risks, uncertainties and other factors. Please refer to the company's SEC filings that address such factors. During this presentation, management may make reference to certain non-GAAP financial measures that we believe help investors better understand Kimco's operating results. Examples include, but are not limited to, funds from operations and net operating income. Reconciliation of these non-GAAP financial measures are available on our website. And we have one housekeeping item to address. Kimco is hosting an Investor Day on December 10 of this year in New York City. We recently sent out invitations for this event and if you did not receive it, please contact my office and we'll make sure to get this to you. We've also provided more details on this event, with the opportunity to RSVP on our Investor Relations website and with that, I'll turn the call over to Dave Henry.

Good morning, and thank you for joining our call today. We are very pleased to report strong second quarter financial and operating results. As usual, Glenn and Conor will discuss the specific details, while Milton will provide some general thoughts. Overall both our earnings and property fundamentals looked terrific, as we continue to upgrade our portfolio and sell lower tier retail assets. Combined with limited new supply and healthy growth of both national discounters and service-oriented retailers, our operating metrics are strong and bode well for future earnings growth. It is particularly encouraging to note another strong quarter of US same-site NOI growth at 3.7%. Despite modest retail sales figures, national retailers continue their expansion plans, which in turn is fueling higher occupancies, redevelopment projects and some limited ground up development in certain markets. Effective rents are moving up sharply and property values continue to increase. In fact, the only disappointing current trend is the rising disconnect between private market evaluations and the implied cap rates property values of REITs in general. Retail properties of all quality types and an almost all markets are experiencing strong demand with cap rates continuing to drift down. Wherever possible, Kimco is continuing to take advantage of the robust sales market by selling our remaining second tier assets and redeploying the capital into redeveloping our larger properties and acquiring the equity interest of our institutional partners. In the latter case, we have the advantage of having managed the assets for many years and have in most cases, a long term presence in these markets. With respect to our overall strategy, we have now sold our remaining retail assets in Mexico and we've begun to sell certain Canadian properties, as we take steps to reduce our leverage levels which temporarily rose in the first quarter…

Thanks, Dave and good morning. Our second quarter results were strong with solid execution at the property operating level and additional contribution from our Plus business. As we reported last night, headline FFO per share, which represents the official NAREIT definition, was $0.44 for the second quarter. A 29.4% increase from the $0.34 over the last quarter. Our strong performance is attributable to NOI increase of $8 million or $0.02 per share from the shopping center portfolio and higher transactional income primarily from the $32.4 million marketable security gain on the cost of sale of our super value investment. For the six months, headline FFO per share is $0.81 up from the $0.68 per share level for the comparable period last year, a 19.1% increase. FFO was adjusted or recurring FFO which excludes non-operating impairments and transactional income and expense was $0.37 for the second quarter up from $0.35 last year, a 5.7% increase. It's worth noting that, this level of growth was achieved even with the impact of $900 million of US asset sold over $400 million of asset sold in Mexico, Latin America and Canada and a negative impact from currency fluctuations. This transformational activity have diluted impact of $0.06 per share. However it was more than offset with acquisitions of over $2 billion of high quality shopping centers and many from our joint venture programs and reduced debt cost from opportunistic refinancing. For the six months, FFO is adjusted per share is $0.73 from $0.69 for the comparable period last year of 5.8% increase. Portfolio operating metrics of occupancy, leasing spreads and same-site NOI growth continue to deliver strong levels. Our US pro rata occupancy stands at 95.7% up 70 basis points from a year ago. US leasing spreads continue to increase with new leases up 26%…

Thanks, Glenn and good morning, everyone. Today I'll start by recapping our major metrics followed by our progress on our acquisitions and dispositions and finish with updates on our strategic development and redevelopment pipeline. Overall, we continue to see the fundamentals of our business improved in this favourable supply and demand environment. Our retailers in open-air centers which include off price soft goods, specialty grocers, fitness and wellness concepts and fast casual restaurants continue with the their aggressive expansion plans. Regardless of the interest rate noise that's creating a disconnect between public and private pricing, we are laser focused on execution. These core initiatives include the blocking and tackling of leasing. Continuous efforts to improve operations with an eye towards sustainability and finishing off our disposition by taking advantage of the healthy demand for hard assets with a strong yield. Turning to our major metrics, the US portfolio maintained occupancy at 95.7% even with the disposition of over 1.2 million square feet of fully occupied space. Due to the disposition, the small shop occupancy took a slight dip to 88% at 20 basis point decrease in prior quarter. But we remain confident about the overall improvement in the small shop leasing environment and the ability to grow occupancy throughout the rest of the year. Anchor absorption made up the difference as it increased to 98.4% by executing new deals with Wal-Mart, Fresh Thyme Farmers Market, Total Wine and Planet Fitness to help keep the overall US occupancy flat over prior quarter. Our combined spreads for the second quarter were almost 12% a strong indicator that pricing power exist in our key markets, where we see demand outpacing supply. Same-site NOI and continues to trend over 3% in the US and the lease up with small shop vacancies, redevelopments and strong…

Thanks, Conor. I would once again like to congratulate our team which is second to none on an excellent quarter. In particular, I would like to thank Ray Edwards, who continues to spearhead our Plus business activities and was instrumental in the Albertsons investment. Ray is just one example of our deep bench strength. And as I've said before, we've great people, great assets and a great future. On another topic, the recent bankruptcy filing of A&P, as it relates to our portfolio. Got me thinking about the off and cited premise, that high rents are a proxy for value and quality. Now with respect to our A&P sites. Four leases with below market rents are being site of the grosses generating a profit to A&P, while two other stores with above market rents will be closing. Now this admittedly is a small sample, but I think it is telling. A rent that as if, market or below is much more sustainable over the long-term as the embedded value represents an upside for both the landlord and the tenant. These win-win scenarios for the owner or the retailer are what creates long-term value. As such, I believe that low market rents and sometimes we're talking about ground rent, should be recorded lower cap rates conversely, while higher rents maybe an indicator of a quality assets. They may also reflect more risk, if the rents aren't sustainable over the long run. When underwriting of potential acquisition determining of replacement rents for some to high paying tenants is critical to the overall valuation of that site. In short, one size does not fit all. And now we'll be happy to take any questions.

We're ready to move the question-and-answer portion of the call, we have a very deep queue. So we request that you respect to limited one question, with an appropriate follows up to all of our callers have an opportunity to speak with management. If you have additional questions, you're welcome to rejoin the queue. Chad, you may take the first caller.

[Operator Instructions] our first question comes today from Craig Schmidt with Bank of America

I know that Kimco is working on becoming a more urban portfolio, but outside of continuing to concentrate the portfolio around the top metro markets, what are some of the steps you're taking to become a more urban portfolio?

I think the number of different steps we're taking, we're really divesting of the asset that fall outside of our core urban markets. we're also looking to acquire adjacent parcels to our assets that are within the core urban areas. And we're looking to develop within those core markets. so combining acquisitions with development and redevelopment and disposition. We really are trying to transform the portfolio to become a more urban portfolio.

And what are you seeing in terms of spreads of either NOI gain or leasing spreads in terms of the urban properties versus maybe some of the properties in the second tier cities?

It really is a case-by-case analysis. You've got to look at the ones that we continue to try and redevelop, even if they're in second markets because those will actually return very nice returns. But we're seeing the embedded growth whether it's a same-site NOI or the leasing spreads on the mark-to-markets within the core urban markets, definitely are growing at a higher pace. We've seen that, the urban markets have higher embedded growth and more demand from our retailers and that's a real reason why, we're focusing on that chapter.

Thank you.

Next question comes from Christy McElroy with Citigroup.

Conor, just following up on your comments around development. As you look at your portfolio and are considering more sort of larger scale projects, whether identification of existing assets or new development. And you also talked about the large redevelopment pipeline sort of a shadow pipeline looking out. How do you think about sort of annual pace of realizing some of those opportunities. So I think, you're in process pipeline is only about 2% to 3% of your growth assets value currently. Do you have a desire to growth that overtime?

It's a good question, I think breaking it down to two different buckets. Redevelopment is one that I love to do more of, we're trying to focus and see, how we can expand that $1.1 billion pipeline by adding more projects. Clearly, we're doing a good job in terms of expanding that and also delivering on it. We saw at this quarter, we did more than last quarter and we continue to try and scale that. On the development side, we're being very selective on what we try and pick up for developments. It really has to be within our key markets. we're trying to develop these long-term Tier 1 assets because they've high growth embedded in them. And it's very difficult to find ones that check all those boxes. So we want to try and trying to be measured in terms of what we take on in development. But we're also making sure that we try and look for those opportunities because right now, where cap rates are headed. We don't see a lot of opportunity to create a tremendous amount of value from the acquisition market. So we're looking from our own portfolio, we're looking at acquiring adjacent parcels that may land itself to larger redevelopments overtime and we're also looking at the development side of it. So I'd like to see us grow, on all fronts. That being said, we don't have a target in place. It's really, we're trying to look at every opportunity and make sure it's the right one for Kimco.

And are there any investments that you need to make sort of internally staffing wise. You already set up for sort of growing that redevelopment pipeline.

We have already made those investments. We are already staffed up in terms of the development and redevelopment side of the business. We knew very early on, that this was going to be a growing pipeline and made sure that, within the regions that we staffed accordingly because we were very active in terms of trying to identify this early on and make sure, that we get out ahead of it before the development pipeline gets even larger.

Thank you.

The next question comes from George Auerbach with Credit Suisse.

You took out the equity rates from guidance and replaced it with more asset sales which makes a lot of sense given the way your stock is trading. How do you think, earnings growth trajectory of the company in the near term, given the back end loading of dispositions. Do you think Kimco can be a sort of mid single-digit FFO grower next year or do you see 2016 as being maybe a bit more low growth given the dispositions?

Hi, it's Glenn. We started off this year, thinking that this was going really be our bridge year and we're performing pretty well, where you're going to see pretty decent growth come from it. You're right, we're back ending some of the sales. But the growth in next year should still be, I would say comparable to where we're this year.

Thanks, Glenn that's helpful. I guess, as a follow-up should we read into next year's disposition volume given the comments on the call about, how healthy is the transaction markets are? Do you think next year, we could see a similar level of dispositions or is this year sort of the bulk, as we think about the next 18 months?

No, I don't think you're going to see the same level. I mean, we're talking about total dispositions at our share somewhere between $800 million and a $1 billion for this year. I don't think it will be anywhere near that next year. Certainly, we're finishing up what we've done in the US. You will still see us do some level of dispositions. I think we've - as a company have been very clear about really looking at every asset and where we see risk in that asset or a market moving away. We've been trying to be aggressive about selling those assets and really focusing on that Tier 1 portfolio.

Great, thank you.

The next question comes from Ki Bin Kim with SunTrust Robinson Humphrey

So you guys made an interesting comment about the rent and how that is critical to underwriting deals. I'm just curious and maybe this is more for our anchor spaces. But for what percent of your tenants do you have occupancy cost data? And how does that look like and are there any retailers in your list, that might screen as maybe too high of an occupancy cost where it might be at risk going forward?

It's a good question; I think occupancy cost is one that we watch closely, where we have the sales data available. It's one that is difficult to track when we don't have the sales data obviously. So unfortunately our portfolio doesn't have a tremendous amount of sales data. But where we do, we feel very comfortable with where this the occupancy cost sits relative to the industry standard. So we think, that we actually have some significant embedded mark-to-market opportunities, not only from the existing operator but also just from the open market. So we try and look, we try and track occupancy cost, where we have the sales data and we also look at the market rent replacement value, just in the open market as well.

So maybe just to follow-up on that. So any retailers top 20, top 40 list that you think, not in trouble today, but maybe is heading towards that direction next year.

I think in our sector, we're in the sweet spot right now in terms of the occupancy cost because many of the retailers in our Rolodex are actually producing pretty solid same-store sales and you'll see that continue I think through this next cycle. So we don't see any other dark clouds on the horizon other than the few watch list tenants that we've been watching for a long period of time.

Okay, thank you very much.

The next question comes from Samir Khanal with Evercore

Looks like you've been trending at about 3.5% on same-store NOI growth year-to-date, which is at the higher end of the range. But you kept the guidance unchanged and I'm just trying to understand if you're just being conservative, due to some of the recent store closings or is it just the fact that you're also facing some tough comps. I know, last year in the second half you were sort of 4.5% range. So can you just provide some color around this?

Sure. Our buyers at this point is more towards the upper end of our range, where we've been. But again, you have to look at some of the bankruptcies that have occurred. So we have to be a little cautious from that standpoint. But when our buyers is towards the upper end of the range, but we don't have enough clarity to sit there and try and raise it at this point.

And the leasing velocity continues to be strong. I think that, even though you see that our small shop occupancy decreased this quarter. It was really driven by the dispositions and we actually had more small shop leasing volume in the second quarter, that we did in the first quarter. So we feel pretty optimistic that the fundamentals are there.

Right and as a follow-up to that, just on the metrics. I mean, your spreads are on a blended basis are trending kind of in the low double digits this time and in the past, it'd been high single digits. I mean, one of your peers is been reporting new rent spreads to kind of 40% to 50% increases. I mean, could we see a point where maybe your blended spreads moves up to maybe the mid to high-teens levels as well.

I think you've seen our spreads, continue to move up. If you look past at the last few quarters. You'll continue to see that trend. We feel pretty confident that we are continuing to push pricing where we can. So there is that opportunity to, where we're able to recapture space, leases that don't have any more options. That's where we really see a dramatic rent increases and we do have a few of those coming up, not only in this year but in the next few years.

And we take some comfort that, our sector still is in a recovery mode. Rents and many markets are still climbing back to their previous highs. So that gives some tailwind to where we're going.

Okay, thank you.

The next question comes from Jason White with Green Street Advisors

Quick question on your kind of percentage of anchor space versus small shop space. You historically been heavier on the anchor side, I think more than roughly three quarters of your spaces, anchor space. I'm curious if that's by design or if that's just what's kind of become of the portfolio overtime and how you kind of think about that going forward?

It is something, that we actually tout as a differentiator for us because we have 77% of our, income coming from our anchors. It's one that we think we can manage effectively because of the investment grade credit ratings that they receive and we are very conscious of watching how they expand or contract. We have a national relationships that we can very much take into effect when we're looking for new projects or new developments. And we think the risk involved with the national anchors is a little bit less than, then say the small shop. So we like the way our portfolio is designed. We continue to develop asset that have a good mix in anchor tenants as well as some restaurants and some small shop tenants and you'll see that, as we continue to try and push the, the grocery initiative. We'll start to become a much more grocery anchored portfolio as we're already over 70% grocery anchor.

Okay, so you look at that anchor space being, having a point of going forward. Is it harder kind of ex-redev to push same-store NOI given that small shops turn faster, so in an up market, you can obviously roll those leases quicker and much market faster than you can anchors, is that kind of trade off?

I think that's a fair statement. I think, the smaller shops definitely have more turnover, more mark-to-market opportunities. Being said, we saw on the last downturn that the small shops for the ones that got hit the hardest. So we feel like, we're trying to position ourselves for the ultimate cycle. We're feeling pretty confident that, where our leases are maturing, where the rents are, we feel like, we have significant mark-to-market opportunities in both small shop and anchor leases.

Great, thanks.

Our next question comes from Alexander Goldfarb with Sandler O'Neill

First, nice job on getting the Jericho parcel. Question for you on Canada and harvesting the Albertsons stake. As you guys, obviously love to do that presumably you have this nice game in Albertsons. Do you think, that you can do both simultaneously from an efficiency standpoint or because of structuring things? You'd have to favor one versus the other, in terms of timing.

Well let's take both sequentially. In Canada, it's going to be some time before we sell a number of assets up there. We have a number of joint ventures and just like the US, we've identified it, a Tier 1 and a Tier 2 group of assets there. The Tier 2 assets are much easier to put on the market because you generally have consensus with your operating partner. On the Tier 1 asset, it's more of a discussion and it will take more time to do because we're near the tail end of this year, what we even start today some of that's going to fall into next year. So I guess, when we look at Canada in harvesting some of those assets in order to provide capital, to pay down debt. It's going to be spread over the next couple years as it is. When you look at Albertsons even if the IPO is successful, there will be a lockout period and Ray can go into that a little bit. So that's more of a longer term harvesting in our mind.

Yes, I mean. On Albertsons, if the IPO does happen in the fall as we hope, to be at minimum 180 day lockout to sell any of the shares on the company. I mean for us, duality with Albertsons transaction was, when we closing the deal in February nobody thought, it'll be seven months going out there as an IPO. So we're way ahead of the curve in our ability to monetize the investment whether because we're moving up the IPO timing.

Okay, but Dave if I hear you correctly, then it sounds like the exit from Canada is going to take years whereas the Albertsons could be quicker subject obviously after the 180 days, but just subject to normal, have the stock.

No, I would actually reverse that. I'm a little more confident that Canada, at least not some of those assets can be done relatively quickly over the next, let's call it 18 months. So by the end of next year, there will be a significant amount of monetization going on, which will help us achieve our targets. The IPO and the timing of monetization that is a little more, an estimate of maybe the backend of next year, is when that could start to happen.

I mean, it could take time. Our consortium will still own 855 of the company. We have to prudently figure out how we're going to monetize investment.

Okay, thank you.

The next question comes from Vincent Chao with Deutsche Bank

Just sticking with some of the Albertsons side discussion here. Just on the rest of the Supervalu stake just curious what the plan is there?

We'll probably try to monetize it over the balance of the year, which is obviously our plan.

Okay and I guess, just in terms of Canada performance. Curious, can you provide some additional color on sort of what you're seeing at the ground level there, obviously the company is being impacted and you've got to deal with the target stores. But just curious, what trends you're seeing there more recently?

You've got two headwinds for retailers up there. One is the energy downturn, which has impacted employment, it's impacted the whole commodity pricing sector has impacted Canada and it's led to softening in many respects in terms of consumer confidence, consumer sales and so forth. Secondly, many retailers get their inventory of goods from the US and the strong US Dollar and the quite substantial movement in that US Dollar has really hurt retailer margins in many cases. Particularly, fashion and that has impacted retail sales, retail margins, retail profitability. So you've got a few more bankruptcies and liquidations of retailers in Canada right now then we're seeing in the US. So the fundamentals are definitely a little softer in Canada, but we're coming off of 15 years where Canada in many respects, was stronger than the US in terms of portfolio occupancy and rents. It was very solid performer for us. So it was softened lately and the Target bankruptcy doesn't help, but there has been some pretty good demand for the space. And you're going to see more of it, now that these leases have been rejected. It opens up a more discussion between landlords and users. As an example, many of these Target leases had food restrictions in them. So the ability for the Wal-Marts of the world and the grocery stores in Canada to bid for the leases, there just wasn't that much demand. So it's not a coincidence that Canadian Tires and Lowe's were the two big purchasers of the Target Canada leases because they didn't have to deal with the food issue.

Okay, thank you.

The next question comes from Paul Morgan with Canaccord Genuity

Just talking about the cost business. I mean you've gone through Supervalu and Albertsons, but how are you thinking about kind of the forward-looking side of things. I mean there is a lots of retailers kind of looking hard at doing something with their real estate and are you out there proactively approaching retailers or if we look at any kind of future deals, would they be more you know where you step into a club deals like you've done before?

Well it all depends. I mean club deal for Albertsons. When you're buying operating company, you really want to bring in about other people who have expertise that we might not have. On that deal, we were the experts on the real estate evaluation and help to do that. But we needed, in that case [indiscernible] to help us with the capital structure of the goal concern and bringing the right operator. But we have done deals and we do look at opportunities to do deal directly with retailers. We've done small deals in the past, we did a deal with Winn-Dixie about a year and half ago. We got a great a little shopping center in Marathon and development, a couple years. So we look at, reaching out through retailers. We have great relation with them and most of them know, that we've been in this business. I've been here for 15 years, but Milton's been doing it for 50 years that we're someone that they can talk to and help them figure out what they can do with their real estate and help monetize it. And really some things are win-win, we're not out there gorging these retailers because ultimately we want them to be around because we wanted to be, tenants in our shopping centers. And so very good relation for them to work with us.

We've seen the Sears REIT Darden [ph] and the other people talking about during REITs and there have been JV's on the mall side with yours in particular. I mean, what do you think about this wave of retailer REIT conversions and whether you might, play a role there somehow whether it's from a JV perspective or taking investments stake. I mean, do you have any view on that trend?

I mean part of it is, one of the issues I've always had with the, major factors. We don't want to take tenants and make them 8% or 10% of our average base rent. If you do tell me a transaction. So while these larger deals, are really not for us to work on because of that. But like I said, what we do with Winn-Dixie, where they have five properties, where they're very manageable, very good locations. We can take that. We can help these guys, but they're doing a REIT like, here surcharge. I mean 80% of the properties are malls, that's not our business. And that's, where why they work with General Growth and Macerich and others because they really needed them to doing a redevelopment because without the mall developers, you really can't develop those sites, they're different animal. We've bought from Sears, they had a facility one of our development deals that property that we bought from Sears that we closed on last year. So we're selectively looking for deals. I'm not sure, we're looking for that headline $100 million, $200 million, $300 million, $500 million deal. I think, we're trying to work around the edges and our main business is you know for Conor and Company to run the main business.

We do want to keep the Plus business, a Plus business and we're committed to making the best modest debts and we love these one off opportunities that Ray did mention, but when Sims went into bankruptcy, we bought one of their better assets out of that. So we like the smaller opportunities to truly be plus for us and one of the keys to growing this Plus business over the years is to increase the number of relationships we have, not only with retailers which we already have, but with the private equity and the opportunity funds and the hedge funds, which have their own ways to originate opportunities here. So we want to be the first call from a private equity firm that's tied up a retailer that owns a lot of its own real estate.

We did buy a number of few food stores quietly a year or so ago, when real estate in City of New York and so we quietly do our share.

All right, thanks.

The next question comes from Michael Mueller with J.P. Morgan

I know you talked about Canada generally, but did you mentioned. How much of the 2015 increased disposition volume is tied to Canada and then, Dave I think you talked about being making substantial progress over the next 18 months or so with Canada sales. Can you put some bill rough numbers around that?

I'll let Glenn.

I mean the increase in the disposition guidance about $200 million of it, the proceeds will come from Canadian sales. So that's part of it and then, as we look at further dispositions, that will come into 2016, another $200 million.

Most of our partners do know, that we would like to monetize the lower tier assets, as the first step and in some cases. We're willing to sell to them some upper tier assets as an example, you've seen us sell three properties to our partner RioCan, which had different plans for those properties then we did overtime and we were, in first instance we were actually able to trade, the interest that they have in a very nice property in Dallas, Fort Worth where we had done an original joint venture with them. So we were effectively able to buyout their interest in Texas, while they bought our interest in three assets in Canada. So there may be more opportunities to do things like that.

Okay, do you expect the 2016 Canada disposition volume to be significantly different from the $200 million this year?

I suspect it will be higher, yes.

Okay, thank you.

Next question comes from Jim Sullivan of Cowen

Question on demand, kind of two part question. First of all, I think Conor you mentioned recently doing a Planet Fitness deal and as you probably know, they have their IPO queued up here and they're talking about very significant level of expansion. I wonder if you could share with us kind of a how they box might differ from an LA Fitness or 24 Hour Fitness Box and what your appetite is to do more deals with them? I think you mentioned the category, there's a growth segment. And then secondly with regard to small shop occupancy, you've talked before about kind of your clicks to bricks initiative. One of you could just give us an update on any progress or kind of notable deals you've done there, that give you grounds for optimism?

Sure, on Planet Fitness they have been aggressive actually over the past. I would call, 2 years to 3 years. So their expansion plans continue. Their pricing point is lower than LA Fitness. So it's certain demographic, they're the perfect user. They do bring on a traffic and we've seen actually from a co-tendency side of it. A lot of our retailers who are at first against the health club have actually come around and Sprouts for example is one that actually likes the gym to come into the shopping center because it's the whole health conscious type customer, that they're looking to go after. So you're starting to see that the health clubs become more of a, an integral part of that live, work, play environment that we're trying to create. And I think Planet Fitness has done a good job in terms of expansion and what they're looking to do going forward. That being said, they're in that size where we have so much demand right now. We're at 98.4% in our spaces over 10,000 square feet. And Planet Fitness will be bidding against a lot of these guys that are looking to come in, for that same size box. I see that as being a headwind for their expansion plans, but they do run a great operation and we have a number of deals with them and a number other of more deals in the pipeline. And then on the Clicks to Bricks question. This is something we've been tracking now for probably close to 5 years and it's a program we've been targeting pure online retailers to come into the physical shopping center world. The transformation of that eCommerce to the bricks and mortar space has been slow, but you're seeing and start to speed up now. Some of the pure online retailers now opening physical stores. It haven't necessarily been in the open-air shopping center sector. It's been more in the high street retail core owners as they're looking to jump into the Soho's of the world, to showcase their brand and to have a space to show-off their goods. That being said, there is rumors of Amazon developing a store, that we're watching closely in California that actually has a drive-thru attached to it. So if that comes to fruition, it may open a whole slew of new operators to come into our shopping center, that would create even more demand sources for us. So we're watching it closely, we're encouraging some of the modern top online players to come in our shopping centers, but it has been material of late.

Good, thank you.

The next question comes from Rich Moore with RBC

Conor, I missed a little bit of your initial presentation, I got cut off. But did you mention. If your small shop leasing target is still 90% for next year. Is that still what you're headed toward?

That's correct.

Okay and in getting to that, is it really just a matter of demand by, demand for new store opening and how hard you guys work or is it also partly getting some of these redevelopments done, maybe adding some anchors to some centers that kind of thing to, you can get that kind of push?

I think it's a combination of both. I think our leasing team is really focused on the small shops because we all know that, that's really what we have left to push in terms of our same-store NOI growth. So we have changed some incentives around to make sure that, before we might have been more heavily weighted and incentives towards leasing bigger boxes, we're now shifting that towards the smaller shops. And we're also looking at, you know our redevelopments when we take down portions of shopping centers. Typically it's the junior anchors that are stepping up and paying the rents, to get the space. So they are, it's a combination of both and yes, we're still doing close to 150 small shop deals a quarter. We don't see that slowing down, it's about 50-50 split between regional and national small shop tenants the mom and pop tenants and it's a lot of service based users that we think are sticky the ones that will stay in our shopping centers for the long haul and that's where we see significant annual increase as well coming from the small shops.

From a 50,000 foot level, Rich. We've talked about this before but the whole environment for small shops and small businesses is starting to improve. Finally, the community banks are lending again and your local jewellery store, your local dry cleaners, they're looking to expand again. So the bigger national retailers recovered first coming out of the great recession, if you will and now small businesses beginning to find its legs and so we benefit across the sector from that as well.

Okay, thank you guys.

Our next question comes from Haendel St. Juste with Morgan Stanley

Question on the JVs. Obviously you've done a lot of effort to your last 1 year or 2 year simplifying the platforms. Three big JVs last year, it looks like Prudential, Care and RioCan which maybe you're starting to address here in Canada already, but question is, what's the status of your conversations with those partners. Looks like the Pru JV had a lot of debt maturities in 2016, wondering if that could be a catalyst to buying in some of that JV?

Yes, Pru has made it pretty clear that they're not interested in disposing of their interest in most of the properties we have together with them. They have a lot of money to put to work, they're not interested in monetizing at this point in time and in fact, they've been very cooperative in terms of paying off debt on some of the properties, that we have together because they'd like in act to put out more money, so some of the properties are scheduled become unencumbered. That said, they've also agreed to our concept where we truly have secondary assets in tertiary markets that those should be put on the market and they've cooperated with us in selling those to third parties. But in terms of buying out, their interest in certain properties it's probably not going to happen in the near future. RioCan, we have talked about and I think you'll see that joint venture be reduced over time as we began to identify certain assets that we both think should be sold, as well as certain assets, where they have plans to convert more to a mixed use or redevelop and those might be opportunities for us to reduce the size of our joint venture. That said, they've been a wonderful partner all the way long. In terms of Care, we've had some discussions but at this point they're inconclusive and as you probably know New York Common is going through a change of leadership in real estate side, so it will be a while before they really settle out on their long-term strategy I believe.

But they've also been very cooperative and agreeable about selling assets that we don't fit in that Tier 1 category.

Appreciated the color, a follow-up, if I may? On redev, I think Conor you mentioned earlier, pipeline today $1.1 billion. I'm curious as to how big the correct opportunity the redev opportunity within your current portfolio is today, ball park? How large you'd be comfortable growing the redev pipeline either in total dollars or as a percentage of JV?

Well, $1.1 billion is a gross value that includes the JV properties. So we've gone pretty deep in each and every asset to see what we can do in terms of unlocking value. Our redevelopment definition is very simple. It's changing the square footage, changing the footprint of the asset. So adding density is one that where we're laser focused on trying to add more to the pipeline. We continue to try and see what we can add to it, but it really is typically based off of opportunities that come as we go through the year. So with lease maturities, if tenants for example going after size options all of a sudden that triggers redevelopment opportunity that we didn't necessarily think was actionable. So one just recently happened and we're adding it to the redevelopment pipeline in addition to potentially looking for more of a mixed use, approach to it as well as looking at other opportunities that we have yet to really to the redevelopment pipeline. So that's how we look at it.

Appreciated.

The next question comes from Christopher Lucas with Capital One Securities

Kind of follow-up on the last question. Conor, you did talk about the ways of growing the redevelopment program beyond the $1.1 billion and I guess given the success you had so far, I was just wondering if one of the ways you can grow that is to literally just change how you're thinking about the underwriting given, again the success you've had so far?

Well it's a good point, I mean rents are definitely moving up. So the returns that come along with those higher rents definitely justify more projects and we're looking at that. In addition to adding potentially some mixed use opportunities that we have yet to really add. So we're trying to dive through the portfolio and also looking at new acquisitions that have redevelopment potential. So some of the ones we've been looking at, I think now have to have redevelopment component for us to really get excited about. So you're right on there that, as we look at returns. We might start to look at other opportunities as rents have moved up, now it start to make more sense.

Great, thanks a lot.

Our next question is a follow-up from George Auerbach with Credit Suisse

Great, thanks. Just quickly on the sales in Canada and the Albertsons stake overtime. Is there any way to shield or manage through the taxable gains in those investments? Or do you just sort of pay the taxes and move on and that's it?

Well actually, we do have some room in terms of handling. In Canada, so there's two components to the tax, there is a Canadian tax that has to get paid on the gains. So you do have an actual cash tax that occurs in Canada and then there's the remaining piece that will flow back into our US entity. So it's all the matter of how we shield that, now we have done a lot of analysis about doing cost EC studies and other things like that repair regs analysis that give us a lot more depreciation expense from a tax standpoint to help manage it. In addition, we have been doing a lot more 1031 exchanges on the assets that we sold in the US. So although, we've been reporting a lot of gains in US from a taxable standpoint, they're actually being deferred. So we have a pretty sizable bucket to be able to deal with the gains that will come.

Great, thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to David Bujnicki for any closing remarks.

Thanks, Chad and to everybody that participated in our call today. As a reminder, additional information for the company can be found in our supplemental that is posted on our website. Have a good day.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.