Welcome to The Macerich Company third quarter 2012 earnings conference call. (Operator Instructions) I would now like to turn conference over to Jean Wood, Vice President of Investor Relations.

Thank you, everyone, for joining us today on our third quarter earnings call. During the course of this call management will be making forward-looking statements which are subject to uncertainties and risks, associated with our business and industry. For a more detailed description of these risks, please refer to the company's press release and SEC filing. As this call will be webcast for some time to come, we believe it is important to note that the passage of time can render information stale and you should not rely on the continued accuracy of this material. During this call we will discuss certain non-GAAP financial measures that defined by the SEC Regulation G. The reconciliation of each non-GAAP financial measure to the most directly comparable GAAP measure is included in the press release and a supplemental 8-K filing for the quarter which are posted in the Investor Section of the company's website at www.macerich.com. Joining us today are Art Coppola, CEO and Chairman of the Board; Ed Coppola, President; Tom O'Hern, Senior Executive VP and Chief Financial Officer; and Robert Perlmutter, Executive VP, Leasing. With that, I would like to turn the call over to Tom.

Thank you, Jean. Welcome everyone. First of, I'd like to say our thoughts and prayers are going out to those of you that have been affected by Hurricane Sandy. From our end, we're mobilizing all our malls in the region with the Red Cross to help with the recovery where we can. Fortunately, we have sustained no material damage at our malls. Today, we'll be discussing the third quarter results, capital activity and our outlook for the balance of the year. It was another strong quarter for us in terms of the fundamentals in our business. Retail sales had a strong increase and we saw very significant increases in occupancy up to 93%, which is a 190 basis point increase from a year ago. The leasing volumes were good. We signed 247,000 square feet of mall shop leases in the quarter. And we the average re-leasing spread was a positive 18.5%. If you look at occupancy, sequentially compared to June 30, we're also up, we're at 92.7% at the end of June and then we're at 93.0% at the end of September. Occupancy cost as a percent of sales for the trailing 12 months was at 12.6% that compared to 13% a year ago. Looking now at results of operations for the quarter, adjusted FFO was $0.78 a share, up from $0.75 a year ago. Same-center net operating income excluding termination revenue SFAS 141 was up 2.6%. Negatively impacting the quarter were lease termination revenues, which decreased by $3.2 million compared to the third quarter of last year. Also negatively impacting the quarter on a comparative basis was the reduction in SFAS 141 revenue, which was $1.9 million decrease from the third quarter of last year. Management company expenses were up for the quarter at $20.7 million compared to $20…

Thank you, Jean. Welcome everyone. First of, I'd like to say our thoughts and prayers are going out to those of you that have been affected by Hurricane Sandy. From our end, we're mobilizing all our malls in the region with the Red Cross to help with the recovery where we can. Fortunately, we have sustained no material damage at our malls. Today, we'll be discussing the third quarter results, capital activity and our outlook for the balance of the year. It was another strong quarter for us in terms of the fundamentals in our business. Retail sales had a strong increase and we saw very significant increases in occupancy up to 93%, which is a 190 basis point increase from a year ago. The leasing volumes were good. We signed 247,000 square feet of mall shop leases in the quarter. And we the average re-leasing spread was a positive 18.5%. If you look at occupancy, sequentially compared to June 30, we're also up, we're at 92.7% at the end of June and then we're at 93.0% at the end of September. Occupancy cost as a percent of sales for the trailing 12 months was at 12.6% that compared to 13% a year ago. Looking now at results of operations for the quarter, adjusted FFO was $0.78 a share, up from $0.75 a year ago. Same-center net operating income excluding termination revenue SFAS 141 was up 2.6%. Negatively impacting the quarter were lease termination revenues, which decreased by $3.2 million compared to the third quarter of last year. Also negatively impacting the quarter on a comparative basis was the reduction in SFAS 141 revenue, which was $1.9 million decrease from the third quarter of last year. Management company expenses were up for the quarter at $20.7 million compared to $20…

Thanks Tom, I just want to echo our thoughts and prayers on folks on the east coast. I know that it was devastating. All of our properties are open for business today, with the exception of Freehold which has a power issue. We anticipate that will be open shortly. And again, we are mobilized that each of the properties to provide help with the recovery efforts, and we'll do everything that we can to assist in that regard. If you take a look at what we are reporting to you this quarter, you will see that it is a precise reflection of what we laid out for you in my shareholders letter to you, 18 months ago in March of 2011. We've extended our maturities. We've lowered our debt levels. We've sold non-core assets, and we've invested into our core markets. We've increased our productivity of the portfolio, and increased the focus of the portfolio, what I feel is great discipline. On the operation side, you can see that sales continue to be very strong, that occupancies are very good, leasing spreads continue to be very strong. We're very optimistic on the leasing side. We have had continued good progress on a number of fronts on the leasing side. And on the operating side of the business, even though, I'm sure that a lot of the discussion today will be balance sheet dispositions and acquisitions, I want to reemphasize that the operating side of our business is extremely strong. I've seen some people right recently about the possibility as this month sales, the rate of increase declined a little bit or not, that's really irrelevant. You need to understand that our retailers are making commitments for 10 years. Maybe we care less what happened this month or last month. Bottom…

(Operator Instructions) And we'll take our first question from Michael Bilerman with Citi.

Just a question on North Park, just want to understand what the income statement impact is in terms, I recognize the $75 million was a preferred investment. What were you actually accruing in terms of NOI within the unconsolidated joint venture statement, was it just a preferred return on the $75 million or were you actually earning 50% of the NOI?

The FFO impact was based on our equity investment and it was approximating $10 million a year.

The FFO impact was based on our equity investment and it was approximating $10 million a year.

It had nothing to do with the NOI. It was related to the preferred return, I believe, right Tom?

Yes.

Yes.

I think there was some investor concern that from an NAV perspective that your NAV, you would have been ticking up 50% of the NOI, but clearly on the implied sales price for an asset of that stature, it would imply something much less. So what you are saying is the NOI that was being derived was off of a $75 million base and some fix percentage of that rather than 50% of the NOI.

The bottom line impact was $10 million over the last couple of years as the investment grew over $100 million. So roughly 9.65% return on that amount.

The bottom line impact was $10 million over the last couple of years as the investment grew over $100 million. So roughly 9.65% return on that amount.

There was $163 million of debt, right?

There was also a kicker on top of that debt that could have been as much as $75 million to $80 million.

There was also a kicker on top of that debt that could have been as much as $75 million to $80 million.

And then in terms of FlatIron, I completely agree selling assets at that point was much, much better than selling stock. I just want to make sure I understand the dynamics in terms of the yield that you're buying backing at, I assume there has been some growth in NOI. Is it fair to assume that the buyback was at about 6.5 cap?

Closer to 6. Partner buybacks are difficult to talk about, but you're in the zip code, but it's closer to 6.

Closer to 6. Partner buybacks are difficult to talk about, but you're in the zip code, but it's closer to 6.

And then it was extraordinarily helpful, Art, as you went through the sources and uses. I guess from an ATM perspective you talked about what was done in the third quarter. I assume that means nothing within the fourth quarter or you continue to tap that?

We've done nothing in the fourth quarter.

And then as you think going forward, clearly just as sources and uses, there was more debt in getting excess proceeds. Do you think about adding more equity to the base or you feel comfortable where you are today going forward?

If you roll through pro forma and factor in the acquisition of Kings Plaza and Green Acres, we're comfortable where we're at. The debt-to-market cap is about 45%. As we said that average maturity schedule gets pushed way out to over six years and the debt-to-EBITDA is in the high-sevens, low-eights. All levels we are comfortable with. On the hand I will say, that when we announced earlier in January that we were going to be disposing at non-core assets, at the time it was really intended to recycle capital predominantly into our portfolio whether it was going to be into the redevelopment pipeline, the development pipeline, reducing leverage, just focusing on our core opportunities. The opportunity through these acquisitions to effectively have recycled that money from dispositions directly into a home, turned out to be terrific for us. Look I'm not a big fan of creating earnings accretion through cheap debt. It's just a fact function of the math. But the fact that we did also use a fair amount of equity as part of consummating transaction between the equity and ATM equity, and the real estate equity is over $400 million of equity that was recycled into these acquisitions. So they were completely levered up. However, our goal remains the same. We can never have too much equity and we can never too little debt. We can never have too much core assets and we can never have to view non-core assets. So the idea of continuing to opportunistically go ahead and think about recycling somewhat of what we considered to be our non-core assets, which will include malls that we might consider, somewhat considered to be B Malls and even Cs, they'd be even in A over the course of this next year is clearly something that we will consider. And when you're sitting on $0.10 a share of forward-looking and when you really look at the acquisition as a total, if you got the $0.10 by clawing back, the $0.10 of dilution it's really $0.20, when you really do the math of the acquisitions. There is an opportunity to do continued dispositions, which will take debt off the balance sheet, raise equity to reduce further debt, improve the ratios and still have a decent amount of accretion from this activity and have an even stronger balance sheet and then we're going to continue to do it. There are no further dispositions planned that will happen this year. There are clearly dispositions that are being looked at in the near term.

And we'll take our next question come from Paul Morgan with Morgan Stanley.

So basically, when you were talking about the non-core sales last quarter, you maybe didn't expected, but that actually included North Park and not a lot of the other sort of B-Malls that you have talked about going to being in a bottom 20 of your centers?

It includes both. In beginning of the year, it was primarily the other stuff. As the year went on, when we raised our guidance level on dispositions are began to North Park. But that was still up for debate as to whether or not that was going to be disposed up. But clearly considered North Park to have been our non-core, in fact the factor because we didn't manage it, we didn't release it, and we didn't get any synergies from it, we didn't control it. It was just a financial investment. It had a big hope certificate. And you know what, I would do that with South Coast Plaza and Bellevue Square and centers of that nature all-day along. I would make the same investments with the hope certificate that it became a real pursuit, it did not. It is what it is. The opportunity to recycle $300 million of debt and equity back into opportunities for Kings and Green Acres and owning all the FlatIron worked out terrific for us.

And then on Tysons last quarter you talked about March or April being the next drop where there could be kind of more focused, go, no-go decisions. And based on your comments today, it sounds like and at least in two of the three components that it continues to lean more towards a go at that point?

Well, the only thing that was potentially going to be paused was the office tower. The platform that gets build and believe me this is a one dimensional communication and it's a three dimensional project. So I know it's probably hard to imagine. But we're doing all of the sub-terrain infrastructure right now, which includes couple thousand sub-terrain parking spaces. We build it up to a platform which is two acres of a Plaza up in the air that is above the ring road, above the parking lot, speeds into metro link and speeds into the second level of the mall, and then sitting on top of that is the hotel and the residential tower, and the office tower. The hotel is a go, it's Hyatt Regency. We're very happy about that. The residential is a go. The thing that I mentioned before in terms of the phasing of the construction was that our go or no-go decision. We would have to make that decision in the spring, March, April or May to have it continue to be on exactly the same schedule as the others. My prognosis and the thing that would drive it is if you are more than 50% leased or you feel really good about the leasing, which is really a lead tenant or two. Today I'm much more optimistic, well that can change, about where we stand on the leasing. And again I would not at all be surprised if we were to make an announcement before our next earnings call that would show that we're more than half leased, that we have anchor tenants there, that would cause us to continue with the office tower. And in fact the result of all that is that the office tower opens before any of the three towers. It opens up I think in the spring of '14 and then I think the hotel and the residential tower come mid and then late '14. We're very, very bullish about where we see our conversations on the leasing and the office side.

Then just lastly, do you have the regional sales growth?

Yes, we do.

Yes, regional sales growth was 17% in Arizona; 6.7% in the east; 11% in California, Northern California and Pacific Northwest 11%; Southern California 10.8%; and Central region on a comp basis excluding North Park up 8.2%.

Yes, regional sales growth was 17% in Arizona; 6.7% in the east; 11% in California, Northern California and Pacific Northwest 11%; Southern California 10.8%; and Central region on a comp basis excluding North Park up 8.2%.

And we'll take our next question from Nathan Isbee with Stifel Nicolaus.

Art, just going back to your comment before about the pro forma debt-to-EBITDA in the high sevens to low eight, is that including all the development projects and redevelopments you have teamed up?

No, that's as of January this year we closed on Green Acres. Obviously, the developments don't stretch the value as much as an outright acquisition, because obviously we're looking at strong returns in the 8% to 10% range and value substantially lower than 6%. So there is kind of built-in equity there.

No, that's as of January this year we closed on Green Acres. Obviously, the developments don't stretch the value as much as an outright acquisition, because obviously we're looking at strong returns in the 8% to 10% range and value substantially lower than 6%. So there is kind of built-in equity there.

So you're comfortable even with all that activity?

Well, obviously, the developments will temporarily until they come online and start. Servicing debt will increase debt-to-EBITDA slightly. But on the other hand, you've got the disposition effort that Art mentioned, that we expect to be ongoing. And we're not done with that initiative of selling non-core assets and redeploying capital. That will be going on as well.

Well, obviously, the developments will temporarily until they come online and start. Servicing debt will increase debt-to-EBITDA slightly. But on the other hand, you've got the disposition effort that Art mentioned, that we expect to be ongoing. And we're not done with that initiative of selling non-core assets and redeploying capital. That will be going on as well.

The method involve here outright dispositions, it could also involve the possibility of allowing somebody to co-invest with us on a partnership level on certain assets.

On the Kings Plaza, when you talked about the efforts there to take the sales from the $650 up to the Queens Center type levels. Kings Plaza clearly it's in good asset, but has not had a lot of money put into it for many years, both interior and exterior. Can you talk about what type of dollars you might have to spend there just to get those sales to attract those types of tenants?

The truth of the matter is you don't have to spend anything to do the day-to-day re-leasing that we do to increase the productivity. We took the sales at Queens Center in the first five years of ownership from $600 to $1,000 a foot, and didn't put a penny into it. And it was pretty old and beat up too. So look it's a great opportunity to give it a fresh face. Do I think it's a Queens Center in terms of $1,000 a foot center? No. But I think it's got the opportunity to have, at least a couple $100 a foot in productivity increases, which isn't so bad, especially when you also have the opportunity to potentially increase the mall shop GLA by recapturing anchor spaces. It's what we do every day. It's taking big spaces that defensively got leased to big boxes, and carving out into smaller spaces. It's recycling functionally obsolete huge anchors. I mean 339,000 feet, four levels for an anchor store is ridiculously big. And recycling that square footage, it's what we do every day. And it doesn't involve having to buy any more land, building. It's all within the four walls of the building. We have taken a look at some numbers. And we actually have a plan to, one of them to recycle about half of the Sears building into shops and/or anchor space, and freshen up the mall and I think that plan is in the $50 million to $75 million neighborhood total. But the returns on that, which are not in our acquisition numbers, because we don't control recapture of facilities, we're mid-teens cash-on-cash. Our development money that we spend because it has a high hurdle, especially when you're buying a center that has not been brought up to date. And we know centers that have not been brought up to date also, just to let you know. We try and stay ahead of the curve. But you spend the money, when it makes sense to spend the money. You don't spend the money just to be spending the money. The time to spend the money is part of an anchor repositioning. And then you'll completely reinvent the center. So that five years from now, you could walk into Kings Plaza with a blindfold on compared to today and you wouldn't recognize it, I'd totally believe that, totally believe that.

So it's safe to say that any significant work there would be coupled with some activity on the Sears space?

Well, that's a big opportunity. But on the other hand there is lots of low hanging fruit. But what we do and that's not a criticism of the former owner. Look we bought Queens from somebody that was a pro. We bought Santa Monica Place from the Rouse Company, they were pros. Anytime a new owner comes in that has a vision that's different from the old owners vision, and the vision can be made to reality. And it was a good idea. We make a lot of money. We generally that's what we look for when we buy.

And then focusing on Green Acres for a minute is that an asset that you clearly want to own long-term or is it more that it came along in the package and you're evaluating your options with it?

We had a conversation with the owners of Vornado a year ago, and they own more than just Kings in Green Acres. If you were to told me a year later that we were able to get control of Kings and Green Acres, I would have said, boy, that was a good years of work. We're very happy with the outcome.

And we'll take our next question from Jeffrey Spector with Merrill Lynch.

I wanted to focus on operating metrics specifically same-store NOI. I'm not sure how much you can say or not but when I look at the increase in sales per square foot over the last seven or eight quarters, and the last time you reported occupancy costs to sales, it seems like there was a big opportunity here to push same-store NOI over the next 12, 24 months. I don't know how much you can talk about that?

Jeff, the re-leasing spreads really relate, and I'd given here to about 8% to 10% on the portfolio. So if you were to have a positive spread of in this case, 18%, you have to multiply that by 10%. You know you're going to pick up 1.5% to 1.8% on your same-store NOI line. So it's certainly a key part of that. But given the trends it would indicate that the sales are going up faster because just we can get only get our hands on 10% of that space in a given year, but it does bode well for the future.

Jeff, the re-leasing spreads really relate, and I'd given here to about 8% to 10% on the portfolio. So if you were to have a positive spread of in this case, 18%, you have to multiply that by 10%. You know you're going to pick up 1.5% to 1.8% on your same-store NOI line. So it's certainly a key part of that. But given the trends it would indicate that the sales are going up faster because just we can get only get our hands on 10% of that space in a given year, but it does bode well for the future.

Let me answer it a little more granularly. We just came through a budget meeting with the executive team and with Bobby Perlmutter who is with us now. And actually a lot of you will be meeting him at NAREIT. So that will be great. And so we have great visibility into each asset. And we're very bullish about the activity we have. I don't care if it's Queens, Corte Madera, North Bridge. I'm bullish on Tysons Corner. Those are great things happening in Washington Square, Santa Monica Place, we're doing some terrific things. Cerritos, Kierland Commons, Broadway Plaza on the development side, Arrow Head Fashion Fair, Fresno, I mean I go through each and every center. And I see great activity levels. Now, when we don't see great activity levels and we just see flatness and stability or even a downward trend, those are the ones we're going to be exposing to the disposition market. But the keepers, the ones that are in that top 85% to 90% of NOI, on a granular basis, I could spend 30 minutes on every asset with you, and talk to you about what we see in the next year or two. So yes, we see great same-center NOI. It's up to us to produce it. And we can't do it to meet quarterly expectations, because we're always thinking about the bigger issue, which is value creation. So we're patient about how we do it. You have the day-to-day stuff that we're doing it every one of our centers. I do think there is some opportunities at the acquired centers. There is an opportunity at FlatIron that I mentioned earlier in the call. And then you add to that bringing online Fashion Outlets of Chicago in August, which is going to be just a huge hit. We're very optimistic about where it will be on that and obviously we'll be giving you guidance for next year on the next call.

Sorry, if I missed this, but did you discuss I guess development specifically given the high sales increase again in Arizona?

We talked about the development that are underway which is Tysons and Fashion Outlets of Chicago, where there is real money being spent. Other than that we talked about a lot of action going on in North Bridge, but not a lot of money.

So nothing else new?

No.

No.

I wanted to ask an update on Santa Monica Place, I just heard, Art, you mentioned it quickly. I guess any new updates there?

It's going to be one by one. There is a lot of activity going on. I can tell you that it's in the second generation of leasing as I've said before. It's unusual for a new center to be in the second generation two years in. It's not unusual for a great new center to be in the second generation, because within two years it becomes really obvious what concepts are working and what concepts are not. And then Darvin takes over and the productive guys come in and they pretty much force their way in to take over the unproductive guys with our systems.

And then, my last question, I'm not sure if you can answer this. But, just to give us a feel for Kings Plaza, Green Acres performance, can you mention how their sales the sales trend there over the last 12 months?

They've been similar to our portfolio and they're on positive sales trends at both.

They've been similar to our portfolio and they're on positive sales trends at both.

And we'll take our next question from Richard Moore with RBC Capital Markets.

Just curious more broadly what you guys are hearing in general from the tenants out there especially for the regional malls, as they look going into the holiday season here, and then into next year as well?

They're making capital commitments. They want to grow their business. Nobody knows where Christmas and Holiday sales are going to be until December 31st. I don't need to be trying about, but it's just, we get this question every year and I don't know. But if you look at the prospects for the next year to two years, to five years, to ten years, they're bullish as they can be. I do hear some anecdotal evidence that those that you can measure on the department store side are increasing their hiring to have more staff on the floor in anticipation of greater sales. But you know what it's going to be what it's going to be.

Do you sense any change?

Can you tell me who is going to win the election?

Can you tell me who is going to win the election?

I'll take a shot at that, but I will not do it here. The thing is, I'm in Ohio and listen my vote is open for sale. What I was thinking more about is from last quarter to this quarter is there any change. I mean are they accelerating the way their positive thought process or maybe gotten little more cautious?

Sure. Bobby is here. Bobby Perlmutter you want to comment on the leasing side, Bobby?

I'd say it's a general role. We see the market continuing to improve. I think generally people think it will be a good, but not great holiday season. I think one of the real positive trends is some of the companies with larger fleets are really more focused in the BB plus category for their expansion, which is probably a significant improvement over the last couple of years. But we look at our biggest tenants and our biggest tenants generally their business is good and when their business is good, they open more stores and in particular gap, who is a large tenant for everybody seems to have stabilized significantly over last 12 months.

So if we think about year-end occupancy, where are you thinking, I guess, year-end occupancy for this year?

The occupancy always moves up a little but at year-end. Last year it was 92.7% and that was up from about 92% at the end of the third quarter. So we expect to see that maybe 93.5% something like that, Rich, little bit of tickup in the fourth quarter.

The occupancy always moves up a little but at year-end. Last year it was 92.7% and that was up from about 92% at the end of the third quarter. So we expect to see that maybe 93.5% something like that, Rich, little bit of tickup in the fourth quarter.

And then kind of a strange question, we don't have the JV data yet. The depreciation expense in the JV seem to go down substantially which changes of course the FFO based on what the income line is. Is there anything special that happened in I mean in the D&A I guess of the JV line?

You're saying that JV line went down sequentially or compared to last year?

You're saying that JV line went down sequentially or compared to last year?

Sequentially, exactly.

I'll have to get back to you on that one, Rich.

I'll have to get back to you on that one, Rich.

Then the last thing I had was the $255 million on your line of credit Tom, are you comfortable leaving a balance on the line or you have some plans I guess to clear it down to zero?

There's a lot of capital activity Rich. And as we raise cash it will go against the line, obviously going the other direction as we borrow for the development of Tysons. But certainly we have a lot of capacity above that. It's a $1.5 billion line that we can take to $1.8 billion and we've got less than 300 outstanding at the end of the quarter. So we're very comfortable with that. Keep in mind the interest rate is about 2% on that, and also keep in mind throughout all these other transactions we keep pushing down the percentage of our floating rate debt in total. And so when you combine all those things we're very comfortable with where we stand on that.

There's a lot of capital activity Rich. And as we raise cash it will go against the line, obviously going the other direction as we borrow for the development of Tysons. But certainly we have a lot of capacity above that. It's a $1.5 billion line that we can take to $1.8 billion and we've got less than 300 outstanding at the end of the quarter. So we're very comfortable with that. Keep in mind the interest rate is about 2% on that, and also keep in mind throughout all these other transactions we keep pushing down the percentage of our floating rate debt in total. And so when you combine all those things we're very comfortable with where we stand on that.

And we'll take our next question from (inaudible)

What was the timing during the quarter of the North Park sale?

North Park was in mid-August.

North Park was in mid-August.

And I know you said that you don't have any structure similar to North Parks in your JVs, but just one question on the Heitman JV, I know there's a repurchase agreement for Macerich seven years when it occurred. Is that a repurchase agreement? Is that a fixed price that's already been negotiated or is that more of after price?

My recollection is that it's a formula price at a fixed number. Those joint ventures as well as the FlatIron joint ventures had disproportionate shares of income and residuals at times coming to us after the investor saw certainly return. But you're right. We did get the opportunity to have some form of a formula right in that agreement with them. But look they are great partner and they would love to expand their relationships with us. So I don't see that to factor.

My recollection is that it's a formula price at a fixed number. Those joint ventures as well as the FlatIron joint ventures had disproportionate shares of income and residuals at times coming to us after the investor saw certainly return. But you're right. We did get the opportunity to have some form of a formula right in that agreement with them. But look they are great partner and they would love to expand their relationships with us. So I don't see that to factor.

And we'll take our next question from Todd Thomas with KeyBanc.

Just wanted to follow-up on Nath's question from earlier, it looked like from the language filed with regard to the acquisitions that the Green Acres sale was conditioned on the closings of Kings Plaza. But it's a little hard to understand from whose perspective that might be from? It sounds like they both have additional investment opportunities and some upside. Was one of those centers more attractive in your view?

Yes, Kings was a bit more attractive because, there are very few centers that have the opportunity to do something along the lines of what we did with Queens. At Queens, we hit a grand slam four times in the same game. At Kings, we think we've got huge opportunities. Green Acres is just a real citizen. It's very solid sales over $530 a foot. The total center does $800 a foot. We have a very specific profitable, simple, easy to execute expansion plan that doesn't involve a ridiculous amount of money. And we own plenty of centers in Los Angeles like Lakewood and Stonewood in Downey that are in markets like this that are incredibly dense, high barrier to entry markets where they density protects you on the down side and it also gives you opportunity on the upside. Which one do I think, has got the opportunity to become an A Plus, A Plus, but Green Acres is a very solid citizen. And it's a type of property that I grew up. And in terms of the tenant mix and the anchor line up, the fundamentals are basically very good there. But the big opportunity is Kings. And don't forget, and I'm not going to speak for them, but there were different owners of the two centers, two different public companies. So we were happy to transact on both of them and are happy to transact on both of them. And as to any linkage, I would recommend you to talk to the sellers, not to me.

And you mentioned that there was minimal damage, if any, at your properties from the hurricane. Any update on Green Acres and Kings Plaza, how they were during the storm?

We were in close contact with the folks there, and they are both opened for business and a nominal damage at each. I'd say they fit into category of a whole bunch of assets as well as lives on the East Coast that things could have been a lot worse. And then, you all know that better than I do, because I wasn't there for it. But I understand natural disasters and we feel for everybody. It could have been a lot worse, just form our own selfish view point. But at the end of the day, we were closed one to two days at a half of dozen properties, including Kings and Green Acres, which by the way, we don't have a history of announcing acquisitions the time that we put them under contract in definitive agreement. But it's hard to say this, but it was material for the solo, but not material for us. But that's what they told us, so it had to be disclosed.

And then, a question for Tom. In terms of leverage, I get the improvement in fixed charge coverage ratios and the reduction in floating rate debt, and the extension of the average duration of your debt portfolio that's set to improve meaningfully. But the absolute level of leverage is edging higher. And I was just wondering, what specific metric do you focus on for leverage and where are you comfortable taking that to?

Look, Todd, we don't focus on just one metric, I think that's a mistake. I mean we look at certainly layering out the maturity schedule trying to not have too much rolling in any one year, and that was really the emphasis this year and we've extended that significantly. Our floating rate debt has come down a lot because we look at that as well, and although today's rates are extremely low that could change pretty quickly. So we're really focused on reducing the floating rate debt level, which is something we look at. We do look at debt-to-EBITDA, but we realize that's going to move up and down a little bit depending on where we are in the development cycle and where we're with dispositions, and that's done that. I mean at the end of the third quarter debt-to-EBITDA was about 6.9 times, which is unrealistically low. That was after we raised the equity from the ATM and before we'd closed on FlatIron. After most of this activity, it will be closer to eight times and we're not uncomfortable with that either, given the coverage level. So we look at overall leverage. We look at the maturity schedule. We look at the amount of floating rate debt and we look at debt-to-EBITDA.

I'll try and immune on that. There is again, just one of those, you can never have too much equity and you can never have too little debt. But the most important metrics that has changed for us in the last two to three years and even in the last year is, the impending maturity schedule and the average length of the maturity schedule. As Tom mentioned, I think you mentioned Tom, that by the end of the year our average maturities will be six years. Those are average maturities of fixed rate loans that are non-recourse at a property level that Tom and his group have been staggering out. We're at the point to where today we sit here and debate with each other over whether or not we have too much debt coming due in the year 2022. And that's a quality problem compared to worrying about how much debt do I have coming due next month or next year. So we've lengthened out our maturity schedule dramatically. We do have a couple of big maturities coming up next year and the year after, but they aren't great assets. You got Scottsdale Fashion Square, I think is next year, Freehold is a healthy one next year. But the market looks like it does today to increase that non-recourse financing significantly, if you wanted to. And then February of 2014 is probably the most under levered asset that we have. It is a big mortgage of $300 million, but that property can support the mortgage a big multiple of that if it wanted to. And then, you look at our overall liquidity levels, and we're sitting there with let's say $1 billion over capacity left on our line of credit. But we do have in our ongoing business plan,…

And we'll take our next question from Alexander Goldfarb with Sandler O'Neill.

Just going to Kings Plaza and Green Acres, as you've outlined Kings Plaza, your intension is to bring it to a Queens Center type mall. As you see Green Acres, can you talk about the big sales that generates, do you see that as you think about your redevelopment being more of a big box center or you think it's going to still be a lot of in line? Where do you see more of the growth essentially, adding more big box or adding more in lines?

It's repositioning Penny to a prototypical store. So right now they've got about 97,000 feet, but it's all in line shop space, and half of it is basement. And in spite of that they're doing the highest sales per foot or any Penny I think that we have in our portfolio. Two stores that Macy's has a Kings and Green Acres rank in the top four Macy stores that we have in our company out of 60 stores. The Penny store at Green Acres is maybe the highest sales per foot we have in our portfolio. And the Sears, the stores that they have at Green Acres and Kings, both are in the top 10% of the 40-some Sears stores that we own. But the opportunity is to help Penny. They very much want to build a new store there. They see a massive opportunity here for themselves. They see it as one of their top priorities in their company. We talked to Macy's about it, they talked about that store just doing gangbusters, and the special returns are doing $530 a foot. So the simple opportunity as I see it, is to help Penny look at an expansion in a new building, outboard of their existing building, redemise their existing shops space into more traditional mall retail. And potentially connect that new two level Penny into the existing partial second level, which is only anchored by Sears in the food court and other shops. I don't want to say it's routine, but it's pretty routine is what we do every day. It's fairly sizeable.

And the Wal-Mart, I forget if that's a super or not, but is that also source of potential improvement or they own their box?

They're a tenant. They lease space.

So is there upside there to extend their size?

I think there is an expansion and a significant increase in rent that's underway right now and in documentation.

So, Tom, as you think about financing these, sometimes we hear folks say, if they're going to redevelop assets, your floating rate short term debt as they can improve the NOI before long-term fixing it out. You guys are long-term fixing out. Is there more because of the attractive rates that exist today or is that because of the timing of the redevelopment is uncertain at this point, and therefore it may take several years versus something more in the near term?

Actually, it's a function of being a very strong borrowers market, Alexander. So rates are good, spreads are good. We're able to build into the documents latitude to do expansions on those space recapture that space. I got to tell you the Queens financing was very, very competitive. We saw the same thing on Deptford. Kings and Green Acres are going to be the same. And we're able to get a fair amount of latitude to get our hands on the asset and redevelop down the road.

Look, if we were closing down the center, like we did at Santa Monica Place, the idea of putting seven-year financing on it, you wouldn't do it. But all the work that we're going to be doing is within the confines of what can be carved out in a new loan and look being able to borrow $500 million at a sub 4% interest rate for seven years give or take at Kings. It takes a lot of interest rate risk off the table. And from the viewpoint of, does it take proceeds five or seven years from now opportunity away from yourself, I would say not so much. And in the meantime I'd rather be locked in and say 3.6% for seven years, and not play the interest rate game. So we do see huge upside there in terms of what we can do. It will take some time. Realistically, our property like that, it's three to five years give or take. But if the loan would have gotten in the way of the redevelopment and you couldn't carve it out, then you wouldn't put a long-term loan on it. And we've been one of those people that say such a thing. But we think it's just prudent balance sheet strategy to go ahead and take advantage of the proceeds level. We had no maturities to speak of in 2018. We could have gone 10 years. But like I said earlier, we're already beginning to say, alright, we got a lot of stuff coming due 10 years from now because of all the work that we've been doing lately.

Just final question is on Tysons. Can you give some color as to the tenants, are these tenants who are relocating from nearby submarkets or are these tenants who are growing substantially, and therefore need to have new space? Clearly, the story is coming out of DC on the office side have not been too upbeat. So sort of curious, where these tenants are coming from, if they are new to the market, if they are just relocating or if they need to really expand, just a little more color?

Relocation.

From within DC or within the suburbs?

I'm really not going to get more specifics than that.

And we'll take our next question from Ross Nussbaum with UBS.

Not to beat a dead horse, but I just want to be crystal clear on what you're saying. You have no intention to issue any common equity in the next couple of months to either fund the acquisitions you've done or otherwise. Is that what the message you're trying to get across here?

We are fully financed at this point in time, permanently financed. And I'm not going to say anything more than that.

If I just think about FlatIron, did GI have a put rate? What enabled the timing of that now versus in the future?

That was very much a financial transaction at the time. They're more of a financial investor than a real estate financial investor or a mall real estate financial investor, a dedicated mall type of partner. So it was a fairly structured deal, where they had the rights after a three-year period. No, that was not a put. They had the right to look at exposing their position to the marketplace. They did that and along the way we elected to step in and take control of the assets, once they had some clarity as to what the marketplace felt their position was worth. We were already into a significant promote on the property over and above our 25% interest, and that enabled us to buy in at a very attractive rate, which represented part of our promote too.

So not even quite a buy-sell either?

There is a buy-sell in every partnership agreement generally that I have ever seen. But that's not what was used here. They just had the right to take their position to the market. And while they were doing that, we were in constant conversations and we elected to go ahead and to take control of the asset. We had to balance that against other opportunities that we're looking at in the marketplace. And when it felt that this was the best place to put our capital, we stepped up and did it.

And we'll take our next call from Omotayo Okusanya with Jefferies & Company. Omotayo Okusanya - Jefferies & Company: A quick question, just curious how you guys are thinking about the unsecured market at this point just when I think about all the financing you're doing, a lot of it is basically secured?

Tayo, we've looked at that from time to time, the unsecured that we have on our balance sheet is primarily just our line of credit, but we keep an eye on that market. However, we given the size and quality of our assets, they tend to be very, very big financings institutional quality and getting some extremely attractive rates. So we see some good financing on the unsecured side. But it would limit what we could do on the secured side, if we were to go that route. So we're very happy with the direction we've gone and type of financings we're able to put in place. But we do realize the unsecured market looks good as well. Omotayo Okusanya - Jefferies & Company: And then, Art, just a quick question in regards to Arizona and that whole market, how you're thinking about it at this point. I know it's still a lot of interesting things you could be doing there. You haven't put a timeline. But I'm just curious whether it's getting closer or whether still watching and then we'll take a while before you do anything new in that market?

The market continues to get better. You're right about that. By many measures, it's a lot better than what people realize. And homebuilders are building again, and they're even complaining that they've got labor shortages, believe it or not, and there is tech coming into the marketplace. All of the fundamentals are really good in Phoenix. And if you look at the cycles in Phoenix, it's up and down, about every 10 years something happens, and usually it's like a year or so and it bounces back. This was highly unusual, but this was like a three-year bottom. But it's clearly on its way back. When we feel that we have sufficient tailwind that justifies ground-up development in Phoenix, then we'll be talking about it. We're not talking about it today.

And we'll take our next question from Cedrik Lachance with Green Street Advisors.

Just two quick questions. Just going back to the JV theme, so I'm crystal clear on that. In all the JVs you have at this point, are there any ventures in which your economic position is different than the position that is represented in the 8-K at the moment?

I think the only ones would be on the plus side that there are some promotes that we have, where we have a bigger piece of the upside in a couple of joint ventures that are out there. But as Tom indicated earlier, if you're applying whatever cap rate you're applying to our portfolio income, the NAV accretion or dilution on the sale of North Park is relatively de-minimis. But there is nothing else of that nature in the portfolio.

Just staying on North Park. The interest cost was roughly $11.5 million a year. I think on the loan that was in place and prior, and so there is a $10 million FFO hit. It means that you've been reporting so far $21.5 million or something of that nature as part of your unconsolidated NOI on that property, is that correct?

The NOI was closer to $20 million, but in fact you're trying to come up with an NAV a piece if you may not be aware of is, there was a kicker on that loan. When that loan can due, there was a kicker due to lender, and so you'd have to factor that into your valuation as well.

What were the circumstances around that kicker?

That's got nothing to do with us, Tom. Honestly, it did not affect our position, it affects the properties position, and the family that owns it now is positioned. It doesn't affect us, never was going to affect us. We had a preferred equity position, and at the end the total FFO that was coming in from that preferred equity position, Tom said earlier was around $10 million. And the dilution from getting rid of that $300 million investment was around $0.05 a share. And the dilution from the other dispositions was around $0.05 a share. And when you take into consideration, where we put that money, the accretion is net $0.10 a share positive. And we've gone from non-core to core and we're very excited to be where we're at.

And we'll take our last question from Ben Yang with Evercore Partners.

Just a quick one for me. I think, Art, you mentioned buying partners out can be quite noisy, highly structured transactions, but at the same time I think you said your partners at FlatIron tested the market for that piece. I was curious how far that 6% is from a market and maybe more on like transaction? Is there a good rule of thumb to adjust cap rates, when we see stuff like this happening?

Could you repeat that please, Ben? You were kind of coming in and out on that.

I'm just wondering the 6% on FlatIron highly structured, but at the same time the partners tested the market out as well. What's a good rule of thumb to adjust? I mean what would the market cap rate look like on FlatIron, is it 6%, is it 5.75%. Just curious, if you have any thoughts on that, given the fact, that they did test the market?

The property is on its own, on a standout basis would probably trade at least a 100 basis points lower than the position that we were able to come back in at. But that was a function of the structure of the deal that had structural advantages in the deal that aren't necessarily transparent to everybody just reading that we owned a 25% interest in the center that we had another 20% promote that we were already into the promote. There is no rule of thumb.

So that's when you think it's about a 100 basis points in size?

The bottomline is, if you're buying a partner out, the partner wants to believe that they got full value and you don't want to pay more than full value. And you do it for reasons that are the reasons, that you do it for at the time. So we felt it was a very good use of our capital. We were happy to do it. And there really are no rules of thumb. It was a very attractive transaction from our viewpoint and it was an attractive transaction from our partner's viewpoint, both at the inception and at its conclusion. And that's a basis of good partnerships.

Is there still kind of a mid $400 a foot mall or has sales trended up since you sold that interest to your partner?

No, sales are north of $500 a foot. And we've got some very attractive simple plans there that we think are going to help us take it up to its next level. And it's a great center, couple that with our 29th Street, just 8 or 10 miles up the street, it's a very nice concentration that we've got there.

We look forward to seeing all of you in a couple of weeks in San Diego. And thank you for joining our call.

Ladies and gentlemen, that concludes today's conference call. We thank you for your participation.