Greetings, and welcome to the Ramco-Gershenson Properties Trust Second Quarter 2015 Earnings Conference 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. I would now like to turn the conference over to your host, Dawn Hendershot, Vice President of Investor Relations and Corporate Communications. Thank you, Ms. Hendershot. You may now begin.

Good morning and thank you for joining us for the second quarter 2015 earnings conference call for Ramco-Gershenson Properties Trust. With me today are Dennis Gershenson, President and Chief Executive Officer; John Hendrickson, Chief Operating 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 the date of this call. Listeners to any replay should understand that the passage of time by itself would 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. The last 90 days has been a busy period for our company. Our acquisitions, dispositions announced value-add redevelopments and retenantings, all helped to streamline our portfolio and improve its quality. In this last quarter, in addition to announcing the acquisition of the majority of the shopping centers and our Heitman 450 joint venture and one of the two remaining centers in the Clarion venture. We acquired two small income producing parcels that are part of two of our shopping centers. Most of these purchases were pursued to ensure our control of their tenancies as we continue to upgrade the retail mix at all of our properties. The acquisition of our partners' interest in seven high quality shopping centers simplifies our capital and ownership structure. These acquisitions support our strategy of owning centers in strong metropolitan markets and our goal of diversifying our geographic footprint. Further, each center includes a grocer, which is either a leading supermarket in its trade area or is a specialty grocer like whole foods at The Shops on Lane Avenue in Columbus, Ohio. Additionally, the individual centers acquired presents an opportunity to add value through redevelopment, retenanting and regenerating and expansion, which is consistent with our historical acquisition criteria. We will be funding these acquisitions through our capital recycling program, which is a very efficient source of capital to effectuate our business plan as we simultaneously dispose of those assets we consider non-core. To that end, during the quarter, we sold two land parcels generating approximately $13 million. These sales constitute all of the lands at Aquia with the exception of the office building and one valuable block [ph]. We will also sell through our partner in the 450 venture and interest in the Plaza at Delray in…

Thank you, Dennis. Good morning everyone. I just finished my second month at the company and now that I have visited nearly all of our shopping centers, I have got to know most of our team, I could not be more excited about the quality of the platform we have in terms of our markets, our assets and our personnel, all of which are important elements to continue to drive value for our shareholders. As Dennis mentioned, our focus remains on continuing to transform the portfolio. The changes we are implementing in the organization now and over the next few months will enhance value through smarter execution and a more streamlined business model. I will some of these initiatives we have already started to implement, but first I want to talk about this quarter's operating results. We continue to see strong tenant demand for our portfolio. This is reflected both, in the consisted number of lease transactions completed this quarter and the comparable cash flow overspreads of 9.1%. We also continue to see demand from best-in-class retailers, which are helping to transform our portfolio. Recent example of this, include additions of 100 square Saks OFF 5TH, one of only two in Michigan and DSW. At Mission Bay Plaza and Boca Raton, Florida, we are expanding LA Fitness and we are releasing an underperforming acre space to another best-in-class retailer that we will soon announce. Also in the works is a lease with a unique high-quality new to Michigan retailer at our West Oaks property. Look for announcements on both of these tenants in the next 60 days. While these property transformations may have a short-term impact on occupancy, we believe it is most important to drive a long-term value. At our current overall leased occupancy of over 95%, near-term, we…

Thanks John. Good morning everyone. Let me start by discussing our balance sheet. Assets, liabilities and equity, each changed modestly in the second quarter. In terms of assets, we sold our Town Center at Aquia, which was purchased primarily as developable land for $13.4 million. We used $10.5 million of the proceeds to acquire previously non-owned portions of two of our shopping centers. We will benefit not only by generating income on our capital, but also by better controlling the market at these two centers. On the debt front, we paid off $18.1 million of mortgages where interest rates were scheduled to reset to higher levels. We also negotiated a one-year extension to the mortgage on our Town Center at Aquia office building while we lease up vacancy there. We expect this loan extension to close in the third quarter. Finally, on the equity front, we converted approximately $7.5 million of our convertible preferred stock into common stock. Our balance sheet ended the quarter in strong shape with low leverage, high coverage and ample liquidity. As previously mentioned, we are acquiring interest in seven shopping centers for $186 million. We will fund the acquisitions as follows. Number one, $48 million of assumed mortgage debt bearing a weighted average interest rate of 4.8%, two, $50 million of newly issued 10-year unsecured senior notes at 4.2%. Three, approximately $88 million of borrowings under our line of credit, we expect to pay down the borrowings with $60 million to 75 million of disposition proceeds in the second half of the year. As a result of this transaction, our leverage will increase modestly. Pro forma net debt to EBITDA will be approximately 6.5 times. As I have mentioned on previous calls, leverage at this level is well within our comfort zone, particularly given that…

Thank you. We will now be conducting question and answer session. [Operator Instructions] Thank you. Our first question is coming from the line of Todd Thomas of KeyBanc Capital. Please go with your questions.

Hi, thanks. Good morning. First question, can you provide a little more clarity on the cap rates you might expect on the asset sales that you are planning to fund the disposition of the seven properties at a 6, 7 cap rate. I am just trying to understand the Delta between what you are selling and what you are buying.

Yes. Good morning, Todd. You know, there are going to be some of them all over the map. Obviously, as I referred to in my prepared remarks, the Plaza Delray, the Chester Shopping Center and the other Florida asset that we sold earlier in the year went off at very aggressive cap rates. I think the majority of shopping centers that we will sell later in the year will command cap rates well in the 7s, so I think that for modeling purposes if you picked something in the very low 7s, you probably would be on target for an average of all of those dispositions.

Okay. Then with what you are planning to sell? You talked about $60 million to $75 million of proceeds. I mean, can you maybe book and the gross value of the real estate that you expect to sell. Then may be a little more specific with regard to the timing would also be helpful. I certainly can talk to the timing. We are in contract on several sales now. The buyers are going through due diligence, so I expect to be able to articulate you know at least in our next call a number of those and some information around them. When we talk about the $60 million to $75 million, the first centers that we have sold, the ones that I talked about, obviously, those were just centers where we owned a portion of them, but the balance of the year, if you wanted to take those out we are probably talking somewhere in the $45 million to $55 million range for the value of the centers that we will be selling.

Okay. Then, Greg, maybe a question for you, just aside from the dispositions and the proceeds that the sales will generate, are there any additional financing or capital raising assumptions baked in the guidance from here on out?

You know, we continue to evaluate as I said our plans for refinancing some of the mortgage debt that is coming due in the second half of the year and the markets are very accommodating whether it's the bank market or the private placement market. Our bias generally is to maintain a fairly long weighted average term of debt, so I think it is not unreasonable to assume that there might be some additional activity to term out debt in the 5-year to 10-yrear range.

Okay. The 6.5 times net debt to EBITDA ratio that you mentioned is that where you expect leverage to be at year end after completing the dispositions that you are anticipating?

That is a pro forma for the acquisitions adjusted for the dispositions we described, so I do not want you to take it as a guidance for year end as much as it is just a pro forma calculation. There are other pieces of our business including you know investment in redevelopment so forth, so we do not typically give a specific guidance for where leverage will be a point in time, but it is a pro forma so it will be a little higher with the acquisitions and then come down a little bit as we sell properties and pay-off debt.

Okay. Got it. All right. Thank you. The next question is from the line of Craig Schmidt of Bank of America. Please go ahead with your question.

Thank you. How much money was raised through the asset sells of Plaza Delray and Chester Springs?

Hi Craig, it is Greg. Our partners have asked us not to disclose those numbers to you, so I think unfortunately you will have to get creative and maybe looking at other ways to sort of estimate those numbers.

Okay. Is that part of the $60 million to $75 million or is that in addition to these sales?

Yes. It is part of that number. Okay. What is your same-store NOI guidance? Are you staying with the previous guidance?

Hey, Craig, it is John Hendrickson. We have actually narrowed our guidance as I mentioned in my prepared remarks to 2.5% to 3% now.

Okay. I am sorry. Thanks.

As I mentioned, the reason for that is that we are not driving occupancy gains probably above 2014 levels, so that because we are choosing now to take quality over quantity really.

In terms of tenants?

In terms of tenants quality. Exactly.

Okay. Thank you.

The next question from the line of Michael Mueller with JPMorgan. Please go ahead with your questions.

Hi. Just following up on that answer about occupancy, should we be thinking of occupancy as just not going up from here or do you see a little bit of disruption through this process where we are going to see a little bit of a pullback?

Hi, Michael, it is John Hendrickson again. I think you should expect that by the end of the year that occupancy probably will have some gain, but the probably not materially more than 2014 levels at the end of the year.

Okay. That was it. Thank you.

Your next question comes from the line of Vincent Chao with Deutsche Bank. Please go ahead with your questions.

Yes. Hi. John, a question for you, you had mentioned in your prepared remarks that you feel like the infrastructure there is able to support much higher than that $50 million to $75 million redevelopments, which has been sort of number that has been tossed around on an annual basis. Just curious how much you think could be done a year. Obviously, you have to find the projects, but just I am trying to get a goal post here for what the current structure can support.

Hey, Vincent, I do not know that I can give a guide specific number. I certainly think there is more opportunity here as we work through the portfolio, at this time I do not think I am ready to give a specific number, but certainly will be pushing to drive that over the next year really.

Got it. I guess relative to prior to you getting there, I guess, was this just not as much of a focus you are going to place on it. I guess, why have not we seen a little bit more aggressiveness on the redevelopment side here so far? Just curious what your thoughts are on that.

I think it is more of an opportunity, a new focus, a new perspective coming in and also that I think it kind of ties into why we are doing re-org from a standpoint of providing new focus that I think we will able to get to things quicker, make decisions quicker and execute quicker and that will help demonstrate that pipeline.

Yes. Vince this is Greg. If I might just add to what John said, some of the projects that he mentioned in his opening remarks are the centers that we bought over the last year, so those are relatively new properties in our portfolio and it has take us a little bit of time to integrate them and then develop the plans that we want to go forward with. I think a part of it is also just the recency effect of those properties.

Okay. That makes sense. Maybe just one last one on the organizational side, when do you think the organization will be sort of fully ramped up and at full productivity under the new structure.

Under the new structure, I would hope by the end of the year, we could really be starting to be - everybody organized in direction and know their roles and are working together as a team, so that is kind of my target for that.

Okay. Sorry. Just last one Greg for you on the G&A side. I know the guidance is unchanged for the year, but I guess, do you think the third quarter will reflect full run rate of what G&A will be going forward given the new hires or do you think it will still be ramping up into fourth quarter?

No. I think that is correct, Vince, that the third and fourth quarter will be about the same and be fully ramped up and we may come in just slightly under that guidance if we manage it well, but that is still kind of our working assumption right now.

Okay. Thanks a lot, guys.

Thanks, Vince.

Our next question is from the line of Vineet Khanna with Capital One Securities. Please go ahead with your questions.

Yes. Hi. Good morning. Would you mind talking about sort of cap rates and new center acquisition trends in your market, are you seeing more competition now than you were 3 months ago, 6 months ago and 12 months ago?

Good morning. I think that the cap rates are certainly every bit as aggressive as they were before. You still have significant institutional money that is looking to be placed. Although we continue to keep our toes in the water as far as understanding not just cap rates, but opportunities in the markets that we find most desirable we certainly are seeing that the vast majority of properties that we would have an interest in are priced at numbers that are more aggressive than we would consider paying. I think that the acquisitions that we made with our partners and truly understanding the upside potential for them and then add a blended cap rate of 6.7% was an opportunistic purchase for us and we are not finding too many opportunities anywhere near those numbers.

Thank you. Then, John, I know you gave us sort of your impression of the portfolio announced structural changes, but more broadly could you speak to any surprises, you know, you had positive or negative since your arrival?

Well, honestly coming from my background I guess I am probably more surprised positive negative. I certainly feel like the portfolio has opportunities that may not be widely appreciated and I did not from an outsider standpoint did not appreciate the standpoint of the opportunities to both, push rents and drive just net asset value through redevelopment in those properties both, because of the position of the where they are positioned within the markets but also know our team in place to execute on those. I do not know that and I can speak specifically to any - I think, I can't think of any specific negatives at the moment, but that has really been the overall impression so far.

Then just finally, can you guys give us sort of an update on the Community First initiative? How that is going, if you are thinking about rolling that out in more centers?

Well, yes. We have a number of specific events going on at several of our shopping centers, specifically six centers, and the reception is not only great with literally hundreds of people showing up. Our Walking Club program is going extremely well. We are making outstanding use of technology in really being able to track the number of people who are registering for our events and their opportunity to actually earn either, prizes or gift certificates, et cetera, through the Internet. I think, one-year results will really tell the tale on how successful we have really been and we are looking forward to that right around the first part of next year, but so far all indications are that this is a very successful program.

All right. Thank you. That is it for me.

Thanks Vineet.

Our next question is coming from the line of Jennifer Hummert with Stifel. Please go ahead with your questions.

Hi, good morning. It's Nate here with Jennifer. Just going back to the adjusted same-store NOI range, you attributed to the limited occupancy gains due to, I guess, some more of a hard line approach on the tenant quality. Would you say that was 100% of the adjustment or has there been any increase in unplanned move-outs?

Hey, Nate.

…or slowdown in leasing velocity for that matter?

No I do not think there is a slowdown in our tenant demand or when I have looked at historically compared with our tenant move outs has been basically in lines, so I think you are seeing the near-term occupancy change you are seeing it is a bit of a timing issue, but really it is about our focus on trying to drive value besides through occupancy gain is really what is driving it. I do not see it any place else.

Yes. I would add, Nate, that, because certain changes in tenancies where we have been more than willing to not renew, certain individual tenants when their leases come up or with some of the opportunities in retenanting that we do not consider a significant enough to call them, quote a redevelopment. We are going to see a gap between the income that we had with certain of those tenants and then putting in the new retailer whether it is an Ulta or Heartlands retailers who fall into anywhere from the 8,000 square feet to 10,000 square feet. You have got downtime for those people and therefore that is going to impact same center and we thought it was prudent to revise that guidance.

All right, thank you so much.

Thank you. Our next question comes from the line of Collin Mings with Raymond James. Please proceed with your questions.

Hey, thanks. Good morning, a couple of quick questions for me. First, just during the quarter it looked like there was an increase in TIs. Maybe I missed it, but can you maybe put a little bit more color on that?

Yes. Collin, it is John Hendrickson. Yes. There was an increase showing. It is really just a product of a leases that are signed in the quarter. We had several high quality Junior and anchor boxes and restaurants that are driving that. I do not think it is an indication of really anything of the future necessarily, but I think over the next our 12 months run rate is probably is a good guideline of future levels.

Okay. That is helpful. Then just going back to the JV buyouts, as you think about the opportunities from here, how do you think about the opportunity set as far as to continue kind of simplify the portfolio or you think most of the heavy lifting at this point is done?

Well, we have got one asset left in the Clarion joint venture and that really is waiting us just leasing some additional space that was left over when the original big box was vacated and we have leased approximately half of that. Our partner wanted to wait sometime to see if we could realize on that. Then we have several additional assets in a Heitman relationship, but it was not associated with the 450 joint venture. Those were much more opportunistic. As we execute on those or complete execution then I would assume that you could expect those to be sold as well.

Okay. All right, but those being sold then, assets you do you want to take on to your balance sheet or just those - relationships?

Well, in looking at the several that are in the ventures, there certainly is at least one that we would find desirable that a whole foods as an anchor. The other will have to be considered as we look at the situation when our partner feels that it is appropriate to sell it. We have very small interesting those, because our interest is really only about 7%.

Okay. Fair enough. Then just one last one, just going back, John, to the conversation around the trade-off between pushing occupancy and kind of focusing on better tenants and pushing rent, can you just maybe speak are there any like maybe geographic or other characteristics on where you do not feel like maybe where you are more focused on occupancy and trying to still kind of lease up versus pushing on pricing power and tenant quality and all those other aspects or is it pretty much across the board where you feel like it has now really shifted more to that quality and pricing?

Well, I think generally it is across the board that pushing on quality over quantity as I say. I mean the one opportunity obviously, the portfolio we just bought still has opportunities the Heitman portfolio will have opportunity as I mentioned in my prepared remarks that are certain it should be able to gains some small shop occupancy there, but I do not think there is necessarily a geographical distinction goal at the moment.

Okay. Thanks guys.

Our next question is from Todd Thomas, KeyBanc Capital Markets. Please go ahead with your question.

Hi, thanks. Just a couple of quick follow-ups, John, you mentioned the 2.5% to 3% same-store NOI growth does not include redevelopment. I am just looking at the footnotes in the redevelopment pipeline, I just want to confirm whether or not the Ross at Deer Grove, the Stein Mart at Winchester whether those leases will be included in same-store NOI when they come on line. Then also the timing, I was just curious relative to last quarter, you removed when they are expected to be completed. Are they still fourth quarter '15 lease commencements?

Yes. First off to confirm, yes, as our footnotes have indicated on development pipeline, those the Ross at Deer Grove and Stein Mart at Winchester are will be included in the same center as they come off. I believe the timing is still fourth quarter for that.

Okay. Then also the yields, if we look back to last quarter, you had deals broken out for each projects. Now you are showing a weighted average of 9% to 10%, which is consistent. Just curious those 10 projects there though, any changes to the individual projects relative to last quarter?

Hey, Todd, it is Greg. No. There really is not. I think just from a standpoint kind of a competitive standpoint and at the preference of our and some of the retailers and we do business with, we are now providing that guidance on an aggregate basis for the portfolio, which is really how you are going to model it any way.

Okay. Then just lastly, you talked about the retail and the land that you sold at Aquia. I was just curious if you could provide us with an update on the office portion and whether or not there is any progress thus far to backfill the vacancy or any indication on when that might fill up?

Yes. Todd, this is Greg again. I think, we mentioned last quarter that we had at least a portion of what was vacated at year end and that tenant took occupancy I believe and started paying rent in May, and we have a number of prospects in the queue some of them are waiting to see how their business fares, some of them are defense contractors and are dependent on getting awarded contracts, but they are in the queue and we are very optimistic that we will fill more space there. In the meantime, we are negotiating this one-year extension with the lender, so that gives us time to get that building leased up. Ultimately, I think, you and others understand, we are not in the office business and this asset is really not part of the core type of investment that we want to own, but we do want to extract value from it by getting at leased-up and paying good NOI.

Okay. Thank you.

Thank you. [Operator Instructions]. Thank you. It seems we have no further questions at this time. I will turn the floor back to management for further comments.

As always, we would like to thank you for your interest and your time. We are bullish about our prospects and executing on all of our plans and we look forward to talking with you in approximately 90 days. Have a good day.