Good day, and welcome to the Regency Centers Corporation First Quarter 2013 Earnings Conference Call. Today's conference is being recorded. And at this time, I would like to turn the conference over to Mr. Mike Mas. Please go ahead, sir.

Good morning, and thank you for joining us. On the call with me this morning are Hap Stein, Brian Smith, Lisa Palmer, and Chris Leavitt. Before we start, I'd like to address forward-looking statements that may be discussed on the call. Forward-looking statements involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements. Please refer to the documents filed by Regency Centers Corporation with the SEC, specifically the most recent reports on Forms 10-K and 10-Q, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements. I'll now turn the call over to Hap Stein.

Thank you, Mike. Good morning, everyone, and thank you for joining us on the call today. As you'll hear from Lisa and Brian, we continue to make good progress in all aspects of our business. Our operating fundamentals remain strong and our portfolio is realizing the benefits from its inherent high quality, particularly the infiltrate areas that enjoy supply constraints and substantial buying power from average household incomes and population densities that totaled $200,000, as well as highly-productive grocers with sales that averaged $27 million and over $500 per square foot; robust tenant demand from retailers, from restaurants and from service providers, combined with a limited amount of new supply; replacement of weaker tenants that were weeded out by either the recession or our operations team and we're replacing them with stronger and better operators; enhancements to the portfolio in developments, acquisitions and sales during the last 3 years; a significant amount of leasing and net absorption accomplished last year, specifically in our smaller-sized spaces; and the positive impact from distinguishing the appearance in merchandising our centers to hands-on maintenance and well-conceived redevelopments and renovations. The result was 5.1% growth in NOI in the first quarter of this year. Our in-process developments were nearly 90% leased at quarter-end, which is especially satisfying given that construction, while on schedule, is only 50% complete. Furthermore, the pipeline of high-quality infill developments is encouraging and the potential for value-added redevelopments is growing. Regarding our ongoing portfolio and NOI enhancement efforts, we are seeing an increase in demand for noninstitutional quality centers. And although there are very few A-quality shopping centers in the market, our team is working diligently behind the scenes to source acquisitions. And I expect their efforts in our 2 dozen attractive target markets to produce some gems that will meet our stringent criteria for quality and growth. Our balance sheet is rock solid and the markets for raising capital and selling shopping centers are favorable by any historic standard. As these conditions won't remain in effect forever, we will continue to take advantage of opportunities to cost-effectively fund our developments, redevelopments and acquisitions. Brian, Lisa and I recognize that a positive single quarter or even a year does not meet Regency's standard for success. Much still needs to be accomplished, particularly meeting our near-term objective of 95% leased. We remain confident that the portfolio will soon return to the milestone -- that milestone and repeat our 1999 to 2008 track record of consistent annual NOI growth that was never below 2.5%. To sum it up, Regency is well-positioned to sustain growth and shareholder value. Lisa?

Thank you, Hap. Good morning, everyone. As Hap stated, we are pleased with our first quarter results which outpaced projections. The continued strength in operating fundamentals, coupled with higher recoveries and percentage rent, lifted net operating income by 5.1%. This level of NOI was the primary driver of the $0.02 beat on the high-end of our first quarter guidance. With respect to capital markets activity, we issued 1.2 million shares during the quarter through our ATM program. This resulted in net proceeds of just over $62 million, which is pre-funding the $350 million of forecasted new investment activity, which includes the cost to complete our in-process developments and redevelopments, and development starts and acquisitions. This issuance is consistent with our strategy to cost-effectively fund new investment activity. The additional benefit is the further improvement of our healthy balance sheet metrics, bringing us closer to our targets. Subsequent to quarter-end, we entered into an agreement to sell all the assets owned by our closed-end fund in which Regency owns a 20% interest. We expect that the sale will close in the third quarter, but the timing is contingent on the lender consent process of 6 of the 9 assets encumbered by secured mortgages. Once closed, the partnership will dissolve. Lastly, I'd like to walk through the revisions to our full-year guidance for 2013. In response to the continued strength in operating fundamentals, we now expect same-property NOI growth, excluding termination fees, to be in the range of 2.5% to 3.2%. It is important to note that approximately 2/3 of the same-property NOI growth in the first quarter did come from base rent. The other drivers, other income, recoveries and percentage rent are expected to normalize over the remainder of the year. Additionally, although the impact of redevelopments added 30 basis points in the first quarter, we expect that ramp up and redevelopments later in the year will take some NOI off-line and will moderate 2013 growth from this point forward. I'm really looking forward to realizing the benefits of this activity in future earnings. Additionally, we increased guidance for dispositions by $50 million at the midpoint. This was somewhat impacted by the agreement to sell the fund's assets as our initial guidance included only a probability that the properties would sell by the end of the year. As you'll hear from Brian in just a little bit, it was a mostly a result of the increased visibility of our development and redevelopment pipeline, as well as the improvement in demand and pricing for shopping centers. Based on these market conditions, we believe there's an opportunity to dispose of lower growth assets as part of our funding strategy, and remain consistent with our goal to enhance our ability to deliver same-property growth on a long-term basis in excess of 2.5%. Combined, all these factors result in a raise of $0.02 to the bottom end and $0.01 to the top end of the raises for both core FFO and FFO per share. Brian?

Thank you, Lisa. Good morning, everyone. In the last 5 quarters, our portfolio has performed at a level consistent with Regency's high standards. I believe this is a testament to its inherent quality, robust tenant demand, coupled with a limited amount of new supply and the significant strides that our talented team is making, enhancing the quality of the portfolio at the property and tenant levels. We leased nearly 1 million square feet of space this quarter, roughly 1/4 of which were new leases. While the volumes were down compared to last year, remember that 2012 was a record year for leasing. It would be difficult to sustain those levels, especially as we approach 95% leased. That said, tenant demand in the leasing pipeline remains strong, so there's still room to run. As a matter of fact, leasing velocity has consistently increased every month this year, including April, with a vast majority being small-shop space. While we did experience a seasonal decline in occupancy, it was not historically significant. And a good deal of our move-outs were the result of the operations team taking a much more proactive approach to evicting weaker tenants in order to upgrade them in terms of credit and merchandising. What's more, pricing power is returning in nearly every market as can be seen in our rent growth, which is positive 5.4% for the first quarter including almost 15% on new leases. Our team is working hard to push rents and is now benefiting from the leverage to do so. As a matter of fact, over 80% of the new leases showed increases in the average small-shops rent signed during the quarter of $28 per square foot, was above pre-recession levels. Turning now to developments, the $190 million of total in-process developments are already approaching 90%…

Thanks, Brian, and thank you, Lisa. In closing, I feel that the first quarter was a real good way to start the year. I continue to be gratified by the dedicated efforts and creativity that our team brings to the table each and every day to execute our strategy. Much heavy lifting needs to be done, but we are poised to grow net asset value per share and shareholder value. We thank you for your time, and welcome your questions.

[Operator Instructions] And we'll take our first question from Christy McElroy with UBS.

Lisa, if I think about your Q1 FFO of $0.64 and your Q2 guidance of $0.62 to $0.64, what are some of the factors that are built into that range that could cause your FFO to be down sequentially, whether it's timing of move-outs or something else? And what impact is assumed for captive insurance profits on other income? I think, that's a Q2 thing, right?

I'll start with the -- actually, the run rate. With $0.64 and then the range of $0.62 to $0.64, there isn't that much of a sequential decline. But again, I'll come back to the fact that were 5.1% same-property growth for this quarter, and we're expecting our range for the remainder of the year is 2.5% to 3.2%, so we are expecting some of it to moderate. That would be -- that would have a negative impact. At the same time, we would expect to have lower G&A for the quarter because, as you'll note, year-over-year we're about $2 million higher, and that's almost directly related to a lower amount of development overhead capitalization. And as Brian mentioned, the Schererville start as well as some other potential expected starts, we would expect capitalization to normalize and so the north -- the run rate to hit the G&A of $60 million to $63 million for the year, will occur in the second quarter. With regards to other income, yes, you're correct. I mean, we used to recognize the captive insurance income in one quarter. We're now recognizing that on a monthly basis, so it's going to be more even throughout the year. In 2012, our other income was north of $10 million. The first quarter of this year was, I think, I believe, was like about $2.2 million. So it's -- that's a pretty good run rate. So we would expect that to be flat. The difference being the first quarter of last year, we were less than $1 million. So we just had an easier comp for the first quarter.

Okay. And then Brian, with regard to ground-up development starts, can you talk a little bit about the markets that you're targeting, the anchors that are driving some of those starts and what kind of yields are you looking at? And sort of what's changed over the last year or 2 with regard to your confidence in leasing up the small-shop space?

Sure. Well, if you talk about -- I'm sorry, what?

This leasing of small-shop space on development.

Okay. We'll start with the anchors. You talked about the anchors. In terms of what we're working on right now, that are at least, I would say, in the high probability category, we have 6 or 7 Whole Foods projects we're working on, actually, about 3 of those are redevelopments. So on ground-up, it'd be 3 or 4 Whole Foods, 3 Publix, we've got a Mariano's that we hope to start this year in Chicago, Northgate, a Hispanic grocery in urban L.A. and then possibly a King Sooper and a Fresh Market. In terms of pipeline, we feel really confident in our ability to hit within the guidance and returns right now look like they will be about 8% for the year. And if you look at that on an incremental basis, because Schererville is coming out of land held, it would be about 9%. And then in terms of what's giving us confidence, we're building in infill markets, we're building in Washington, D.C., Miami, coastal California, Seattle. So large high barrier markets where there's limited new supply coming on anywhere. But in those particular markets, it's very tight, there's strong retailer demand and we're rightsizing the amount of shop space we build. So I think we mentioned on the call that we are approaching 90% on our in-process developments, even though it's only about 50% funded. And really, that's consistent with what we've done since the downturn. It's just the rightsizing and building in the right areas.

And we'll take our next question from Nate Isbee with Stifel. Nathan Isbee - Stifel, Nicolaus & Co., Inc., Research Division: Just 2 quick questions. You had mentioned that the redevelopment in the rest of the year is negatively impacting same-store NOI. Can you quantify like how much that is impacting, let's say, the normalized base without the redevelopment where your same-store NOI would come in?

Sure. The first quarter was the 4.8%. As I mentioned, it was a 30 basis points impact, without redevelopments. And for the full year forecast, we're expecting it basically to have 0 impact. So it's going to go from the 30 basis point positive down to flat. Nathan Isbee - Stifel, Nicolaus & Co., Inc., Research Division: So there's no negative impact there where you've taken...

Not negative. It's just that we're going to lose the positive impact in the 5.1%. Nathan Isbee - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And then just finally, on the development, you talked about renewed opportunities here with the Whole Foods, et cetera. How many of these deals, would you say, are old deals that you're taking out of storage versus new opportunities that are arising at this point?

So Nate, I'd look at our total pipeline for 2013 and 2014, and there's only 1 or maybe 2, there'll be 1 next year. So they're almost all new opportunities, except for on the redevelopment front. Nathan Isbee - Stifel, Nicolaus & Co., Inc., Research Division: Okay. So these are deals that you have newly-sourced. It's not even like you were monitoring them, working on them without taking the land down prior to the crash?

Well, not entirely. We'll start one here this year in urban L.A. that I mentioned with the Northgate. And that one, I started working on 20 years ago before coming to Regency. So it's been something we've been working on a long, long, long time. But I would say, you're right. The vast majority of these are all newly-sourced. But renting newly, we've probably been working on all of them for at least a minimum of 2 years, maybe 1 is new this year.

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

It seemed like there was a lot of interest from big-box retailers, grocers, et cetera, to expand and open stores, wasn't enough good space. And so looking again at developments. I mean, are these guys willing to pay the rent now, is that what's changing? Or are you seeing something interesting, I guess, from a more macro development standpoint about what's going on out there?

Rich, as I look at kind of what the reasons are for the lack of development, there's several things. First of all, the anchors had many options, I think, is what -- where you're headed. And that second-generation space was -- it was plentiful and it was far cheaper. The new developments didn't pencil in most areas because the retailers were really being really careful about their sales projections. The lack at housing growths obviously prevented people from expanding out in the suburbs. But even if there was housing growth, the retailers aren't opening stores out there. They are opting for the infill, and of course, capital was tough. And I'd say what's been changing lately is the second-generation space is clearly not an option. The retailers are getting more aggressive on rents. Although they're still focused on infill and in the areas where we want to develop, the cities are still very, very tough in terms of the fees and the other costs. Though housing is improving, again, that's not what's driving the new development. So I think going forward, what is happening, is the retailers do want deals. They are much more aggressive both in terms of the number of stores they want to open and the rents they'll pay, but it has to be the right areas. And in those -- I think that's what driving it mostly. I think in the areas, again, where we want to develop though, you better have a lot of capital because, as I mentioned, the cities are tough, the approvals take a long time, there's no lay-ups there and you better be prepared for the long-haul on the redevelopment expenses.

Okay, so you're saying, Brian, that more previously, the key retailers probably wouldn't pay the rents or didn't want to bump up their rental expectations. Now, maybe they are willing to do that so we could see maybe a beginning of a boom in development again?

No. I think what I was trying to say, Rich, is they are getting more aggressive on their rents, but still in the areas where they can summon a lot of purchasing power. So again, it remains the infill more affluent areas. And the ability to get those is not great because, again, a small developer, one, doesn't have the capability to pursue all the predevelopment costs and risks that you have to do, and capital is still tight. So what you're seeing, in terms of development out there -- we just had a meeting with about 3 of the leading retailers, anchors who would drive developments, and talked to them about them about what they're seeing across the board. And what they were saying is the opportunities for the grocers are often in the mixed-use projects as part of multifamily. One of the leading anchors is doing a lot of self-development and they see a lot of standalone. So where there's opportunities to -- there's just not that many opportunities for them to get new stores, so when they have the right kind of opportunity, they will step-up and pay the rents. So I think you will see more development, but until the banks loosen up and the retailers start going in less difficult places to develop, it'll still be pretty muted, I think.

Okay, good. I got you. And then on redevelopment, I wasn't sure I understood exactly. Were you saying that there would be an additional $40 million, you thought, of redevelopment-type activity on top of the basic development starts you think you'll do?

$25 million to $40 million of redevelopments. So ground up is what we've been talking about. On top of that, redevelopments $25 million to $40 million.

I'll just add from a more technical standpoint, we've modified our guidance on, I think it's the third page from the end on the supplemental where we give our starts for the year, to now include redevelopments. We didn't restate the past years, if you will. So the $125 million to $175 million of new expected starts in 2013 includes redevelopments.

Okay. And what does that look like, I guess, going forward? Do you guys have a lot of redevelopment opportunities? Is that something you see getting bigger? Or I guess how do you look at that?

We do have a lot of opportunities. They aren't that big in any individual one. And what they are, they're everything from, like you're seeing in -- like we did at Heritage in Southern California last year, which is a major renovation of the entire center, to other situations where we're doing a second phase on a development that maybe we started several years ago, to doing just some creative things, like we're doing at Carriage Gate in Tallahassee where we got control of the Winn-Dixie box that had been subleased to T.J. Maxx. We got -- that unleashed a whole new redevelopment that allowed us to move out a tax collection agency and move in at Trader Joe's. And so a lot of that kind of stuff, each one is different. Sometimes it's adding GLA, sometimes it's just creating value in other manners.

And the $25 million to $40 million is a significant increase from what we have been doing in the past years.

And we'll take our next question from Michael Mueller with JPMorgan. Michael W. Mueller - JP Morgan Chase & Co, Research Division: A couple of questions. I guess on Deer Springs, the cap rate, was 6.75% below the 7% to 8% range you have in for guidance. When you're thinking about the, I guess the Regency retail partners sale, other stuff that may be in the queue, does it feel like you could be at the bottom end of that range in terms of the cap rates?

Michael, I think we absolutely could. It's possible.

But there is a range for a reason, as I kick Brian under the table. Michael W. Mueller - JP Morgan Chase & Co, Research Division: And then maybe sticking with something on the JV topic. I mean, you have a JV unwind sale in the process, and is that just kind of a coincidence or why now? Is there something, maybe a little bit bigger picture, going on where you're trying to unwind some of this, shrink that business and bring more on balance sheet? Or is it just pure coincidence?

It really is a pure coincidence. The Charter Hall that they've been attempting to exit the U.S. this, we're in the third year or fourth year of their strategy, and it's taken that long to do it. And I think you'll recall the fund was originally an open-end fund that was put in place to be the takeout for our community center developments. And unfortunately, we know what happened with developments and how much the leasing slowed down even with what we had in process. So with the partners in that fund, we converted it to a closed-end fund and have really been working on an exit strategy ever since.

Although it is a coincidence, we do think that reducing the number of partnerships is a good outcome. We loved our partners, but I think that reducing the number makes more sense. Michael W. Mueller - JP Morgan Chase & Co, Research Division: Okay. I mean, so there could be visibility to seeing a few more announcements like this over the next couple of years?

No. There's no business -- no, we're...

We wouldn't expect any changes to what we -- with the partnerships...

Hap's referring to these specific 2.

These 2, which should take us down to 4 in size.

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

Just on the -- you mentioned like 13 or 14 grocery-anchored projects. Are those -- I mean, is that what constitutes the -- I mean, if I'm trying to reconcile that with kind of the $150 million number in '13 and '14. I mean, are those -- if you did all of those, would the number be higher? Are there any projects that are kind of not sort of neighborhood grocery-anchored, but maybe more larger format, kind of power centers? I think those are all questions I need.

We didn't have what I would call a power center. The one we started in first quarter is a little atypical. Again, that's Schererville, Shops on Main, that's coming out of land held, and that, right now, does not have a grocery. And it's got Gordmans Department Store, TJX's HomeGoods concept, Ross and DSW Shoes. There is a possibility that a high-end grocer will go there. The question is, what's the kind of value and whether we want to do it. But to get to the numbers we're talking about, there are a couple of larger projects, Schererville would be one of them. And we have another one coming in South Florida, that will be a -- it'll have some community anchored-type centers or community anchors, but it will also have a neighborhood component with the leading grocer. So every one of the developments has a grocer right now planned for it, except for the one that just started. And as I said, we may put one in, in the later phase.

And from a size and scope related to new developments, I think that, that was all included as far as the pipeline for '13 and '14.

All those projects are basically kind of in those numbers when you get to $150 million per year.

Yes.

Okay. Great. And then I think you talked about this a little bit, maybe just get a little bit more clarity. Kind of what really drove the boost in same-store NOI sequentially from last quarter to this quarter, as you look in the year? What did you see that came in differently or stronger?

Again, approximately 2/3 of it did come from base rent. That's a result of the leasing that we did last year. Our percent rent-paying tenants was up pretty significantly.

Wouldn't you have already known that, though?

I'm sorry, Paul?

Wouldn't you have already known that last quarter? I'm trying to see kind of what is the delta and why you raised guidance?

Oh, I'm sorry. I thought you were asking to explain how we go from 5.1% to 2.5% to 3.2%. It's just a matter of we're 4 months into the year. We have more clarity. Move-outs are always the things that are the most uncertain. And we had a lower-than-expected number in the first quarter. It's as simple as that.

And we'll take our next question from Samit Parikh with ISI Group.

Lisa, just a question. How does the bond market play into your funding plans for this year comparatively to using the ATM? Are you thinking about sort of something similar to what some of your peers did in terms of raising a larger -- raising a $250 million type bond issuance to pay off or call a later bond but since the rates are lower today, it's sort of a neutral on FFO when you raise cash?

You may recall from our last -- the last quarter call and also the K that we did put into place a couple of forward-starting slots to mitigate and to lock in the interest rates of today. So we would have no need to do it early. And so the...

That's for '14 and '15 maturities.

For '14 and '15 maturities. So we -- unless something changes in terms of other opportunity -- investment opportunities, we wouldn't expect to hit the bond market until April 2014.

Okay. That make sense. And then I guess thinking about sort of strategically, how you envision the size of the company going forward, and kind of continuous deleveraging that you're doing here by using your ATM, et cetera. Are you positioning the company, in a way, to make sure you're always flexible for maybe a very large scale acquisition that may come to the market? Or are you -- do you not envision that for Regency? Are you happy with sort of the asset size of the company today?

Well, just kind of in general, our view on size is that bigger isn't necessarily better, and bigger isn't necessarily bad. So the key thing is growing intrinsic value per share. I think that our funding strategies, to me, is basically how do we cost-effectively fund our current and potential and visible future investment activity. And I think today, we got 2 attractive alternatives and that being some low growth assets and last quarter, we tapped the ATM program. So there's 2 levers that we've used in the past, and I think an outgrowth of that cost-effective funding strategy is that it has improved our financial ratios, and as a result, the balance sheet has gotten stronger. And we do want to have a balance sheet that can take advantage of those opportunities when they appear, where there continue growth of development program, or attractive, high-growth acquisitions. And if there's another financial crisis, we want to be able to not only survive that, but also thrive in a period like that.

[Operator Instructions] And we'll take our next question from Vincent Chao with Deutsche Bank.

Sorry to kill the same-store NOI question, but I just want to recap here. So the 5.1%, 2/3 of that is from better AVR which sounds like it was lower move-outs than expected, and then the other 1/3 of the growth was sort of CAM-related and percentage rent-related. But then, I guess, since the occupancy guidance is the same, are we to assume that you're just taking the move-outs that didn't happen in the first quarter and you're moving them into the balance of the year? Is that -- and I guess, are the expectations for the balance of the year different from what they were previously?

First of all, we -- I said 2/3 of it was from AVR, which isn't just necessarily from lower move-outs, it's from the leasing that we completed. So we have a higher percent rent-paying. The difference from the last question is, that was expected. What was better than we expected was the lower number of move-outs which caused us to raise our guidance. And I mean, that's -- so that's the only change. And the other things are some of the things that were in the first quarter only, that will normalize during the year, which is moderating growth. It was the timing of percentage rent and recovery rate and the lower comp and other income. So as those moderate, that brings us back down to the 2.5%...

And it is hard to predict timing on move-outs. And that's gotten -- I mean, and our team is being much more proactive as far as, as Brian mentioned, as far as evicting weaker tenants or even signing leases and assuming that we are able to move out those tenants.

Okay. That's helpful. And then just going to the [indiscernible], the noninstitutional is seeing some increased demand. That's something we've heard from a number of folks over the course of the quarter here. Can you just comment, what is the spread you're seeing right now between institutional and noninstitutional from a cap rate perspective?

I'd say about 175 basis points.

Spread. About -- so like, if you compare that to a year ago, that'll be more like 200, 250, something like that?

I think more like about 200.

250, yes.

So -- okay. Okay. That's helpful. And then I think you had also commented that just in terms of the development demand, it's really still in the infill area and you're seeing some willingness on the retailers' part to pay higher rents for the right locations in the infill markets. But we've also heard from others that they're also starting to -- some of the increased demand in the noninstitutional seems to be that there's more leasing activity in that area, and maybe some of these guys that are not as willing to pay up are taking more the noninstitutional space as opposed to paying for developments. I mean, is that consistent with what you're seeing? It seemed like your comments were maybe a little different from that.

Well, again, it's going to depend where. We are working on a property in one of the -- is in one of the better markets in the San Francisco Bay area. And we've got restaurants and shops lining up to pay $60 a square foot, and we have probably 2x the amount of demand as we have supply. So in that one, clearly, stepping forward and rather be at that center than they would in the other noninstitutional ones.

Okay. And just maybe some final, or just clean-up kind of questions. One, did you guys kind of see what the commence rate was this period? I don’t know if I missed it or not.

Vincent, that's -- this is now #4. If you like to get back in the queue, we'd love to have you back in there.

And we'll take our next question from Tom Lesnick with Robert Baird. Thomas J. Lesnick - Robert W. Baird & Co. Incorporated, Research Division: I'm just standing in for Paula. Honing in on percentage rents for a minute, what percentage of your small-shop tenants are currently paying percentage rent and how many more are close to hitting their breakpoints?

I don't have that number for you, but I would say on the small shops, it would be a very small amount. What happens is we set those, the natural breakpoint, which would just be the rent divided by the percentage factor. So if it's $20 rent and that's a 2%, you divide the $20 by the 2% and that becomes your breakpoint. Most retailers cannot hit that for several years. There is an exception. We have an anchor in a redevelopment we did last year that hit it big time, first year. Typically, it's your anchors' going to hit it because they will have much longer term leases, whereas the small shops have short terms. Thomas J. Lesnick - Robert W. Baird & Co. Incorporated, Research Division: Great. And then I know you previously mentioned the timing of percentage rents was contributing to the NOI guidance for the rest of the year. How should we think about that cadence over the quarter?

Well, we do provide guidance for percentage rents, and we've received almost half of it, at least on the low end. As you think about the rest of the year, you could assume that we had another, call it, 1/3 to potentially a little bit more in the fourth quarter with a little bit in between. Thomas J. Lesnick - Robert W. Baird & Co. Incorporated, Research Division: All right. And then just kind of a big picture question. Looking out 3 years, which of your markets do you expect to be strongest and weakest, and why?

I would say we've got 2 dozen very attractive target markets. And our Coastal markets are performing well, our Texas markets, our Houston, Austin and Dallas are performing well, including Denver. Atlanta is on the way back. Our markets in North Carolina are doing extremely well. Our Florida markets are starting to exercise a comeback. So we feel really, really good about the canvas under which we're investing and operating.

And we'll take our next question from Tammi Fique, Wells Fargo Securities.

I just wanted to follow up again on the move-outs. Just kind of curious, the same property leased rates fell from the fourth quarter to the first quarter for spaces under 20,000 square feet. I guess is that reflective of move-outs that maybe occurred toward end of the quarter? Maybe just trying to get some color around that.

I'll go first, then Brian can add color. Again, it's -- I'm talking about guidance and how we performed versus our guidance. We expected more, so they were lower. We still have some, as Brian talked about, but not at all significant on a historical basis. And the percent, the drop-in percent leased on the small-shop space, I'll let Brian talk about that because that had to do with spaces that were more in the 5,000 to 10,000 square foot range.

Right. Yes, in terms of the comment about historical reference, we generally add occupancy -- we always add occupancy in the second, third and fourth quarters, and we lose occupancy in the first. That losses average typically about 30 basis points. In this quarter, we were about 20 basis points. So it was actually better than historical for us. And in terms of this -- the loss in the small shops, that was really driven by the larger small shops, if you will, the ones from 5,000 to 10,000 as opposed to less than 5,000. And we had 130 basis point decrease there. And a lot of that was as a result of chain-wide bankruptcies like Fashion Bug. They averaged about 7,000 square feet. We lost 3 of those. Large restaurants and the like. Whereas the small shops, less than 5,000 square feet, it was just 40 basis points.

Okay. And then just sticking with the move-outs, are the trends for the second quarter better than you perhaps was expected at this point?

Was it -- I'm sorry, is that for development?

K We're only -- I mean, we're only 1 month in, so it's a little too early to comment on that yet.

Okay. And then turning to the Grand Ridge development, the yield on that project is down about 100 basis points in the last 6 months. I know you talked briefly about it in your opening remarks. But I think last quarter you talked about the city demanding some upgrades that maybe weren't originally budgeted. Is that what drove the construction costs up another $7 million this quarter, or is there something else going on there?

Well, actually, last -- yes, I was basically telling things were happening after the quarter-end. Last quarter, we had some cost increases related to changing some ground leases to build to suits which were NOI and return neutral. But in terms of this year, yes, we had -- or this quarter, we had, I think, $7.3 million cost increases. And really, what was happening there, it was just a perfect storm of several things coming together, much of which were outside of our control. I'd put those into 3 categories. The first one was unusually severe weather, even by Seattle standards where it not only rained a lot, but it just didn't stop. So the soil never got a chance to dry out and it just became saturated. And ultimately, that led to the on-site stormwater management pond overflowing and it flooded the entire site. And so we had to bring heavy equipment on that would not only pump the water off site, but first, has to treat it, and -- that means you're not pumping dirty water off site. We had to haul off other soils, dry soils, cement treat the pads, redo the erosion control. So a lot of it was that severe weather. And the second area of cost increases that were outside of our control were those city-imposed costs. And there were a couple categories of that. One were the fees. There's a schedule of fees that's published by the city and it just -- they didn't adhere to it. They just went beyond that for traffic mitigation and for other fees. And then they not only upgraded the design standards, so a lot of things that we have designed, like demanding canopies on all sides of buildings, but in landscaping, hardscaping, but actually added scope. So they added, for example, a tiered plaza area that we didn't even have in our proposed development. And then the final thing was just the construction cost increases, which we are seeing around the country. They're a little more severe up there because it is such an anti-growth environment that you don't have many subs, so there wasn't very much depth to the bidding. But at the end of the day, I think the development program is under control. We did 12 -- we've done 12 projects since 2009 and if you strip this one out, we're actually over a couple of million dollars under budget, including East Washington Place which is also on the West Coast. And at the end of the day, Grand Ridge Plaza is still going to have about 200 basis points spread over the exit cap rates and that thing is 96% leased and committed, and we're working on LOIs for another 2%. So it should be a great project. I don't mean to diminish the importance of the cost, but as I said, a lot of those were outside our control.

And that does conclude today's question-and-answer session. I'd like to turn the call over to our host for any closing or additional remarks.

We appreciate your participation in the call, and wish that you have a great rest of the week. Thank you very much.

And that does conclude today's call. Thank you for your participation.