Greetings and welcome to the Ramco-Gershenson Properties Trust Third Quarter 2014 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dawn Hendershot, Vice President of Investor Relations. Thank you. You may begin.

Good morning and thank you for joining us for the third quarter 2014 earnings conference call for Ramco-Gershenson Properties Trust. With me today are Dennis Gershenson, President and Chief Executive Officer; and Gregory Andrews, Chief Financial Officer. At this time, management would like me to inform you that certain statements made during this conference call, which are not historical, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Additionally, statements made during the call are made as of the date of this call. Listeners to any replay should understand that the passage of time by itself will diminish the quality of the statements made, although we believe that the expectations reflected in any forward-looking statements are based on reasonable assumptions, factors and risks that could cause actual results to differ from expectations are detailed in the second quarter press release. I would now like to turn the call over to Dennis Gershenson for his opening remarks.

Thank you, Dawn. Good morning, ladies and gentlemen. Among this quarter's highlights, the acquisitions of core market dominant shopping centers were $322 million, and the average cap rate of 6.5% stands out for several reasons, all of which reinforce our company's focus by growing shareholder value through the ownership of high-quality centers with built-in value-add potential, which when realized will contribute to driving earnings and building net asset value over the next three to five years. These acquisitions coupled with the superior returns we're generating from the expansions and improvements at those centers we acquired over the last 36 months as well as our recent core portfolio redevelopment complements the consistent growth we're registering quarter-after-quarter in our operating metrics. The four shopping centers we acquired this quarter promote our goals of geographic diversification, demographic profile improvement and increased average base rents. The shopping centers have an average household income of more than $85,000 and average base rents of $15.85. Each of the shopping centers affords us the opportunity to add significant value by developing additional retail space, recent and current vacancies and land leasing or selling multiple out-parcels. These acquisitions also bolster our presence in our 12 target markets. The purchase of Bridgewater Falls and the Buttermilk Towne Center expands our footprint in metropolitan Cincinnati and together with our December 2013 acquisition of the Deerfield Towne Center promotes efficiencies of scale and leasing leverage. We now three market-dominant shopping centers in the very desirable Northeast, Northwest and Southeastern suburbs of Cincinnati. Each of these properties has a minimum of four anchors, which provides the additional benefit of broadening the representation in our tenant roster of such national retailers as Dick's Sporting Goods, LA Fitness, Home Depot, Michaels Crafts, Bed Bath & Beyond, Old Navy and PetSmart. Our Woodbury Lakes acquisition…

Thank you, Dennis. While the stock and bond markets have been exhibiting increased volatility, we benefit from the security and stability of owning a diverse portfolio of high-quality shopping centers, supported by a strong capital structure and managed based upon a well-defined business plan. This three-part focus on asset quality, financial strength and strategic clarity provides a solid foundation for delivering best-in-class results over time, regardless of the daily gyrations of the financial markets. Let me start by covering our balance sheet. We've spent $322 million in acquisitions this quarter, approximately one-half with proceeds from dispositions and the issuance to common equity and one-half with new and assumed debt. As a result, our balance sheet metrics including net debt to EBITDA of 6.1 times and fixed charge coverage of 3.1 times remain healthy and well within our target zone. Subsequent to quarter-end, we amended our unsecured revolving credit facility. We expanded the facility size, pushed the maturity date out several years and recast pricing to current market levels. Our amended facility has commitments totaling $350 million from nine banks. The final maturity date has been extended to October 2019. Spread pricing is covered by our leverage and is approximately 30 basis points tighter than the core. The facility is supported by a pool of high-quality unencumbered properties that is currently valued at over $1.7 billion. At quarter-end, we had $122 million outstanding under our line. We anticipate closing a sale of $100 million on senior notes to New York Life in early November. This is our second direct project placement at debt this year. The weighted average interest rate will be 4.23% for a blend of 10 and 12-year debt. With the closing of these notes, 97% of our debt will be fixed rate and our average term to debt…

(Operator Instructions) Our first question is coming from the line of Todd Thomas with KeyBanc Capital Markets.

Dennis, can you provide a little color on the property that you mentioned that's under contract for sale? Maybe the potential gross proceeds that you raised if everything closes and how pricing compares to the 8% cap rate that you mentioned was for the two property sales that closed after the quarter ended.

I'll give you a little bit of color, obviously, because it's under contract and until something actually closes it's never a sale. Number one, we will reaffirm that we still have an intention and maybe a deal might slip into the very early parts of the first quarter of '15 just based on some due diligence requirements. But we're still within the range of guidance on the dispositions that we gave you, which is in the $50 million to $75 million category. Secondly, several of the assets that we're dealing are part of the number that I gave you relative to no one state exceeding 30%. So that probably gives you some indication of where that asset or assets are located. Again, just to summarize, we do have several dispositions in the pipeline. There are definitely shopping centers or assets that just do not fit where we plan to go. They are part of getting our metrics down to a point where no one state will represent more, at least by year-end, of 30%. And we feel relatively confident that this acquisition or this disposition or dispositions will close.

The re-anchorings that you talked about, that you plan to discuss a bit more in the fourth quarter, I was just curious if those transactions are taking place prior to the original tenants' expiration and if you expect any downtime in 2015. And also maybe what kind of returns you are expecting on the re-tenanting for those spaces.

Really all of them involve, as I mentioned, either downsizing of a very viable anchor who just has a different size requirement today and we're going to put in several very exciting retailers, important national draws that will significantly add to the draw of our shopping centers. They are outstanding retailers. In at least one case, we will be replacing an office supply operation with a major national credit draw. There will be of course some downtime and that will have an impact on our 2015 numbers, but we still expect to be able to post some very healthy increases for 2015, those downtimes aside.

Were these instances where the tenant approached you before expiration, or are these mostly taking place at expiration? Or did you approach them sort of proactively with tenants in your back pocket? I mean has there been any change in retailers beyond the stores that are underperforming a bit?

For the most part, all of these occurring during the tenants' ongoing lease. So these are not at lease expiration. And as I mentioned in my prepared remarks, what's very nice about our shopping centers is we have a host of high-quality retailers, new retailers to the market, new retail concepts who are constantly approaching us and asking us for entrance into our centers. And therefore, what we do is we have approached a number of people who we know were either too large, but still had significant time on their lease or retailers like with the Office Depot and the Staples we meet with them at their headquarters on at least a couple of times a year. We understand which stores are doing well, which stores they want to downsize, which stores they would prefer to close. And we leverage off of that with some of these retailers.

Just lastly for Greg, in terms of guidance, I was wondering what the current forecast includes for land sale gains in the fourth quarter. I think they were supposed to be second-half waiting towards something more meaningful than what was realized in the quarter. Is that still the plan?

Actually we have, I think, baked in a relatively modest amount in the fourth quarter. I think our gains on land sales for the year will be less than our initial guidance at the beginning of the year. I do think we're negotiating in one situation at least termination fee that could be meaningful in the fourth quarter. And so that is I think the primary component that differentiates sort of between the lower end and the higher end of the range.

Our next question is coming from the line of Juan Sanabria with Bank of America.

Just wanted to ask a little bit about these re-tenanting opportunities you have in the fourth quarter and just generally how we should be thinking about the size or scope of the redevelopment or development opportunities, given these significant acquisitions you completed during the quarter, and how that should evolve over time.

Well, typically, Juan, what we do is only at such time as we have executed a lease, we have commenced a redevelopment do we really put a specific dollar amount on that. That's why when we talk about the $55 million that we're spending on the five centers that we're adding value to, those are all well in process. We have three additional projects that I referenced in redevelopment, and that's about $18 million to $20 million. You can expect in a number of the value-add re-anchorings that we're talking. In some of them, the tenants are spending their own money. In others, we're doing the improvements. And that will probably with the four that we're talking about equal around $10 million. And when we talk about the repositionings and the dollars we're spending, you need to appreciate that we are putting dollar amounts on specific redevelopments, but in a number of our shopping centers where what we're doing is adding new anchors or adding modest square footage, we do not count that as a redevelopment. So really the dollars spent to improve our portfolio, to bring in new tenants, et cetera, will exceed the $55 million as well as the $20 million that we're spending on the redevelopments that we're enumerated.

Can you comment a little bit about what you're seeing in the acquisitions opportunities out there, geographic focus? I mean should we be expecting further acquisitions, given the upsizing of the line of credit? If you could just talk about the environment and just generally what you're seeing, that would be great.

Well, number one, we're seeing a significant number of shopping centers that are coming to market. So there is no shortage of opportunities, but I'm hopeful that as you look across the centers that we acquired over the last three to four years, the centers that we acquired this year, because they each have a significant value-add opportunity, there are a lot of centers that are for sale that for all intents and purposes are either 100% leased or 95% leased. We don't see any opportunity to add value. And thus, we're really not going to be a player as far as those centers are concerned. What's interesting about the acquisition landscape is that the people who will pay up significant dollars for acquisitions, the institutional players and the representatives for those, really don't like the challenges of the upside that we find is our forte. So we have to come through a significant number of opportunities to find those centers that we truly feel are worth acquiring. And I think you can see from the acquisitions that we've made, including our desire to have entered the Minneapolis St. Paul market, that we are focused on basically 12 markets. And I think at least for the near future, you'll see that's where all of our efforts will be.

Just lastly, you made the reference that no state will be above 30%. Is Michigan currently above 30%? I thought it was already below that with the recent acquisitions. And kind of where would you like to take that to or what do you think is feasible?

If in our conversations with you we mentioned that, it probably really reflected the projection through the end of the year. We're very close. We're slightly above 30%. But come the end of the year, that's where we expect to be.

Our next question is coming from the line of RJ Milligan with Raymond James.

After you guys sell the $50 million to $75 million, how much more of the portfolio would you classify as non-core or non-strategic assets that you'd like to sell looking into '15 and '16?

First of all, we'll give you some more clarity specifically about 2015 when we give 2015 guidance. But what I will say is this is that we're very pleased with the fact that all of our shopping centers in the portfolio are well leased. And invariably in any portfolio, you'll have a bottom 5%, 10%, 12% of the centers either that are as the portfolio evolves don't quite fit or our centers where we truly believe that we have maximized anything that we could do at those assets. So I'm pleased to tell you that any assets that might have been challenged are long gone and that what we will be doing going forward will be matching up our acquisitions with our dispositions, so that the dispositions will indeed help fund our business plan going forward and that you can expect some dispositions, however they will be shopping centers that are basically fully leased and just fall into one of those three criteria that I mentioned on previous calls.

And for the 6.5% cap rate on the acquisitions in the quarter, where do you think you can take that and how long do you think it will take to get there, given the value-add opportunities?

Well, let me just again refer you back to the centers that I mentioned that we bought between 2011 and 2013, and that is that we have been averaging low double-digit returns. We expect that we can continue on that track. And you're probably talking to realize the value on all four of these acquisitions anywhere from 24 months to 36 months. What's nice about that then is as with the re-anchoring of our existing portfolio, the rents we're able to push in the core, the redevelopments we have in the pipeline, the 11 to 13 acquisitions and these, we really are building into our portfolio a constant source of income increases that our shareholders will reap again for the foreseeable future, which I feel comfortable is at least three to five years.

Our next question is coming from the line of Vincent Chao with Deutsche Bank.

I just had a question on the same-store side. Just looking at the same-store expenses, they were up 7.8% in the quarter. Just curious if there was anything notable in that and was that sort of within expectations? It seems like overall year-to-date same-store NOI growth is right on track with your plan, but wanted to see if there was anything to note on the 7.8% this quarter.

Sometimes, some of these expenses, there're timing differences with the discretionary maintenance and repair expenses. And I think that's what explained for this quarter.

If you look at the recovery ratios, even with the increases in expenses, we've brought certain additional assets into the same center numbers that if you look at the recoveries, the recovery shows some nice increases from the three months of last year as well as the nine months year-to-date.

Going back to the repositionings and also some of the comments between how you split out between what's redevelopment versus just ongoing type of investments, just curious, do you expect TIs to materially move higher in '15 as a result of some of these repositioning activities or do you think that should be relatively stable?

Again, I hope I address this at least in part when RJ asked this questions or maybe Juan, and that is that some of these re-anchorings that we're talking about will indeed require taking some of the space offline either if we're downsizing or bringing in the new tenants. So do I expect that we will be able to continue to increase same center? I do. Do I expect to be able to show growth in funds from operations for next year? I do. But you have to moderate all of the wonderful things that we're doing in '14 with some of the downtime that we'll be required to bring these new retailers onstream in '15.

Then maybe just one last question on the acquisition side. You've got a couple assets in Cincinnati, a couple in Colorado. I think last quarter, we talked about a couple of the deals being marketed deals. The number of properties, if you will, do you think you'll see maybe more off-market opportunities where you can potentially get a little bit better rate on the deals?

We bought these four centers, the smallest of which was $42 million. The owners of the centers of that size and larger, it's extremely uncommon for them not to market the property. It's obviously a way to ensure they're getting efficient pricing. And to the extent that something like that does end up being off-market deal, it probably means that the price they got offered exceeded their wildest expectations to begin with. So we do work our relationships in our networks to identify certain deals. We've negotiated some of those. Nothing has come to fruition in that vein. But we certainly are working at it all the time.

Our next question is coming from the line of Mike Mueller with JPMorgan.

First of all, on the dispositions coming Q4 and Q1, Dennis already mentioned the $50 million to $75 million. Was that $50 million to $75 million to come or just reiterating more of a full year number?

That's referenced, the 2014 number. We'll give you guidance, though, in general on our dispositions for '15 prior to the end of the year when we give our '15 guidance.

And then if you're looking at the redevelopment pipeline and thinking out over the next few years, what do you see as an average balance or an average amount in progress at any given time?

I think that the number of $30 million to $50 million has been a consistent figure that we've put out there.

Our next question is coming from the line of Nathan Isbee with Stifel.

Just going back to the question about the anchor repositionings next year, I guess asked differently, as you look at the deals you're doing for '15, how much capital are you giving to these tenants to build out the space in '15 relative to where it was last year, let's say?

I think that for a general statement, I would say that the TIs or tenant incentives that we'll be dealing with will approximate what we've given the retailers in the last few years. Some of our space, we're pleased to say, because of the quality of the asset and the interest in certain retailers coming into our shopping center, we will give little to nothing in certain instances. But I think that in a downsizing of a specific retailer, you have to deal with the downsizing cost as well as what will I have to put into the new space. But again, I think that you can expect that the returns on those will be in the low double-digits.

Could you just comment on the timing on when you issued those shares through your ATM during the quarter and at what price?

We stated in the press release that that was in July.

Have you tapped it so far this quarter?

We're not commenting on activity subsequent to quarter-end. We stated in the press release that those shares were issued in July.

It appears we have no further questions at this time. I would like to turn the floor back over to Mr. Gershenson for any additional or concluding comments.

Ladies and gentlemen, as always, we greatly appreciate your interest and your attention. We're excited about the balance of the year as well as 2015 and look forward to speaking to you just after the 1st of the year. So if we don't speak before, hope you have a Happy New Year.