SITE Centers Corp. (SITC) Q3 2011 Earnings Report, Transcript and Summary

David John Oakes - Chief Financial officer and Senior Executive Vice President Samir Khanal - Paul W. Freddo - Senior Executive Vice President of Leasing & Development Daniel B. Hurwitz - Chief Executive Officer, President, Member of Board of Directors, Chairman of Other Committee, Member of Executive Committee, Member of Management Committee, Member of Pricing Committee and Member of Investment Committee

Christy McElroy - UBS Investment Bank, Research Division Ross T. Nussbaum - UBS Investment Bank, Research Division Jonathan Habermann - Goldman Sachs Group Inc., Research Division Michael W. Mueller - JP Morgan Chase & Co, Research Division Michael Odell - Medlife Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division Richard C. Moore - RBC Capital Markets, LLC, Research Division Jeffrey J. Donnelly - Wells Fargo Securities, LLC, Research Division Michael Bilerman - Citigroup Inc, Research Division Cedrik Lachance - Green Street Advisors, Inc., Research Division Ki Bin Kim - Macquarie Research Quentin Velleley - Citigroup Inc, Research Division Paul Morgan - Morgan Stanley, Research Division Craig R. Schmidt - BofA Merrill Lynch, Research Division Omotayo T. Okusanya - Jefferies & Company, Inc., Research Division Samit Parikh - ISI Group Inc., Research Division

Good day, ladies and gentlemen, and welcome to the Third Quarter 2011 DDR Corp. Earnings Conference Call. My name is Lisa, and I'll be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Samir Khanal, Senior Director of Investor Relations. Please proceed.

Good morning, and thank you for joining us. On today's call, you will hear from President and CEO Dan Hurwitz; Senior Executive Vice President of Leasing and development, Paul Freddo; and Chief Financial Officer, David Oakes. Please be aware that certain of our statements today may be forward-looking. Although we believe such statements are based upon reasonable assumptions, you should understand those statements are subject to risks and uncertainties and actual results may differ materially from the forward-looking statements. Additional information about such factors and uncertainties that could cause actual results to differ may be found in the press release issued yesterday and filed with the SEC on Form 8-K and in our Form 10-K for the year ended December 31, 2010, and filed with the SEC. In addition, we will be discussing non-GAAP financial measures on today's call, including FFOs. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in our earnings press release issued yesterday. This release and our quarterly financial supplement are available on our website at www.ddr.com. Last, we will be observing a one question limit during the Q&A portion of our call in order to give everyone a chance to participate. If you have additional questions, please rejoin the queue. At this time, it's my pleasure to introduce our CEO, Dan Hurwitz.

Thank you, Samir. Good morning, everyone, and welcome to our third quarter earnings conference call. I'd like to begin the call with a brief discussion about the status of DDR corporately. It is important to note that today, regardless of market volatility, DDR has become both financially and operationally a stable and growing company. And while it appears that as though market fluctuations will continue, I assure you that such volatility does not accurately reflect the stability of our capital structure nor the consistency reflected in our operating metrics. Simply put, while the market may be volatile, we are not. Since the trough of the cycle, we have reduced debt by about 30%, extended our debt maturity profile from 3 years to 4.5 years, increased our portfolio leased rate by 270 basis points to 93.4% leased and have sold $2.3 billion of non-prime and non-income-producing assets. And we are not done. When we laid out our plan in 2009 to address the various hurdles we needed to overcome, we vowed to be better prepared for the next capital market's dislocation. While the past several months have certainly highlighted the magnitude and speed at which markets can change direction, as a management team, we are confident in the position of the company to benefit from the opportunities that always arise from market corrections. In that regard and looking forward, we see tremendous opportunities for continued growth, combined with balance sheet and asset quality improvement. With regard to our capital recycling strategy, we continue to see demand for non-prime assets and have also been successful disposing of non-income-producing assets in land held for development. While non-prime asset sales will decelerate due primarily to our progress to date and the size of the remaining bucket, we are confident we will soon achieve our strategic goal of 90% of total NOI being derived from our prime portfolio. Currently, 88.3% of the total NOI comes from prime assets. With non-prime assets under contract for sale and continued disposition of non-income-producing assets, coupled with prime asset acquisitions, achieving 90% is years ahead of schedule. As announced at quarter end, we reinvested $150 million from non-prime dispositions into prime asset acquisitions. In 2011, that will contribute to the continued growth and improvement of our portfolio. In addition to the assets purchased, we are working towards the closing of the previously announced asset swap with our friends at Glimcher in which DDR will sell Leawood Town Center in Kansas City and acquire Polaris Towne Center, a power center in Columbus, Ohio. This transaction highlights our continued focus on simplifying our message and portfolio ownership by taking a creative approach to its sourcing opportunities. And to further simplify our story, during the quarter, we changed our name and launched a new brand identity. While development is still a core competency, it no longer warrants top billing and from an asset-ownership perspective, we aspire to be the premier owner of prime power centers, which renders the word "diversified" as completely inaccurate. As a result, we thank you for your embrace of the new name DDR Corp. The market reaction has been overwhelmingly positive. I will now turn the call over to Paul to discuss portfolio operations and share his perspective on the retail landscape.

Thank you, Dan. I'll spend some time today talking about the retail environment, the strong connection between retailer and consumer and what we're hearing from retailers about holiday expectations. While we can all acknowledge that we are shadowed by an unstable macroeconomic backdrop with a future impact that is not fully understood, the supply and demand dynamic is dramatically different than in 2008. Landlords, retailers and consumers alike are better prepared, making calculated decisions and are capable of successfully navigating today's uncertain times. Furthermore, for those retailers able to take advantage of lessons learned in the past recession, today presents a compelling opportunity to gain market share, maintain and grow margins and continue to execute upon steady growth plans. We need not look any further than recent retail sales reports to confirm this trend as productivity and stores continues to outpace the macroeconomic news. At DDR, our commitment to upgrading the quality of our portfolio is translating into results; results in the form of higher average rent per square foot, new deal leasing spreads in the mid-teens and year-over-year net effective rent growth. Despite a smaller portfolio, the combination of our higher-quality shopping centers and persistent retailer demand resulted in more new leases being signed in the third quarter than in any previous quarter in the company's history. Quite simply, demand for quality real estate remains robust. In the third quarter, we signed 220 new leases for 973,000 square feet with a positive spread of 16% and 296 renewals for 1.6 million square feet with a positive spread of 6%. In total, we completed 516 deals for over 2.5 million square feet with a blended spread of 7%. As a result, our domestic leased rate is now 93.1%, a 30-basis point increase over last quarter and 110-basis point increase over the third quarter of 2010. Including Brazil, our leased rate is now 93.4%. This represents our sixth straight quarter of positive leasing spreads and reflects the continued demand we are seeing from retailers. Though we do not expect to see new lease spread levels this high every quarter due to the natural mix of deals, we do expect spreads to remain comfortably positive. It is important to note that this growth will be partially reflected in our income statement in the coming year with full annual impact showing up in 2013. I would like to briefly address Brazil's impact on operating metrics and why it is relevant to our business and important to these disclosures. Brazil represents 8% of our NOI and continues to grow. While others have exposure to emerging markets, it is likely a less significant factor and may not warrant inclusion due to the immaterial nature of the contribution. However, 8% is material and will be disclosed as such. Quite simply, when you invest in DDR, you are investing in the U.S., Puerto Rico and Brazil with Puerto Rico and Brazil accounting for almost 25% of total NOI. Turning back to domestic. With the continued evolution of the supply and demand dynamic we are experiencing in the Power Center business, it begs the question, when will development be a viable growth alternative? While retailers continue to show a willingness to pay more for the right location, they are still unwilling to take lesser space based on reduced rental rates alone. When you couple retail demand with limited new supply, the fact is simple: existing quality space is worth more. However, the increased level of demand does not necessarily translate into a rush for new ground-up development. On a risk-adjusted basis, yields on most new ground-up development projects do not yet make economic sense. So the positive leasing momentum on existing space will continue for the foreseeable future. In contrast, redevelopment continues to serve as a significant growth driver for retailers in need of new stores. As you might have seen in our recent Puerto Rico redevelopment press release, we are investing $50 million in what are some of our most productive assets and project to generate a return of over 10%. Consistent with the U.S., the demand for space on the island is robust with retailers preferring to take newly configured space, in proven quality centers, not risking their growth on untested new developments with the certainty of product and consumer traffic is left to projections and unproven operating results. The sales productivity of the assets we are reinvesting in ranges from $400 to $520 per square foot, which tells a very compelling story to prospective tenants. For the consumer, we've seen no real wage or employment growth since the recession. This has forced the consumer to manage their personal balance sheets and as seen by the continued positive same store sales results and healthy margins achieved by many retailers over the past year. Our tenants have appropriately refined merchandising and sales strategies to match the appetite and spending capability of the consumer. And while sales are one indicator of a retailer's health, the operating margin is what is most important as they pay rent with margin, not with comp store sales. And when it comes to margin, there is nothing more important than inventory level and inventory turns. Inventory level plays a critical role on a retailer's bottom line and no season is more important to the bottom line than the upcoming holiday season. It's important to note that shipping levels at the 5 largest U.S. ports are down 5% to 10% compared to 2010 levels. This shows a positive level of inventory discipline that should translate into controlled markdowns and predictable margins regardless of comp store sales. Lower inventory levels should not be viewed as retailer pessimism regarding holiday sales, but more importantly, as sensible business planning. As you recall, the reason retailers struggled in 2008 was because they had too much inventory and had to sell at deep discounts, dramatically reducing margins. Today, retailers are on a much better position to sell inventory at close to full price as they continue to manage their businesses effectively. Retailers would much rather make arrangements for last minute deliveries, or what it's often referred to as chasing inventory due to higher levels of demand, than to eat away at margins by lowering inventory turnover and selling products at deeply discounted prices. Simply put, retailers are more willing to miss a sale this holiday season than to mark it down. From what I'm also hearing from retailers, the expectations are for holiday sales to be marginally positive. Back-to-school sales are a great indicator of holiday sales, and August and September sales were up roughly 5%. Furthermore, the vast majority of prime retailers, of our prime retailers, have been increasing earnings guidance. Walmart, TJX, PetSmart, Kohl's, Bed Bath & Beyond, Ross, Dick Sporting Goods and Kroger are just a handful of our top tenants that have increased earnings guidance in 2011. As evidenced by the progress we've made in the leasing of our former Borders boxes, the retailers' need for quality locations, top line growth and their desire to grow market share will continue to be the driving force behind the demand we continue to see across our portfolio. And I will now turn the call over to David.

Thanks, Paul. For the third quarter, operating FFO is $67.4 million or $0.24 per share, which is in line with our estimates. Including non-operating items, FFO for the quarter was $8.1 million or $0.03 per share. Non-operating items were primarily noncash impairment charges mainly the results of recently accelerated plans to sell developed land in Russia and Canada. Gains of approximately $7 million on asset sales were also recognized during the quarter and are excluded from both FFO and operating FFO. Fourth quarter transactional activity may lead to additional gains and losses, including the Leewood transaction where we expect to record a gain of approximately $60 million related to the swap that Dan described in his remarks. As you notice from our press release, we are tightening our guidance for 2011 operating FFO per share on both ends to $0.95 to $1 per share. While we are very pleased that the pace of investments has accelerated, we have continued to be a net seller of properties in 2011. Despite this and the accelerated refinancings earlier this year, we are pleased to maintain our original guidance midpoint. That speaks volumes about overall portfolio performance and sends many encouraging signs for long term. We are proud to be the leader among retail REITs in recycling capital. Proceeds from asset sales represent an extremely valuable source of capital, and we remain confident that acquisitions and redevelopment projects funded with this equity will create significant future value. For the first 9 months of this year, asset sales generated $166 million of proceeds and we closed on $150 million of prime acquisitions. We also have a pipeline of disposition that could generate nearly $200 million of additional proceeds over the next 2 quarters. While asset sales will decelerate in 2012, primarily due to progress made to date in the reduced remaining non-prime inventory, we are pleased with the portfolio realignment achieved through our Asset Management strategy. In addition to acquisitions, future sales proceeds will fund lower risk redevelopment activity such as the new stores and expansions that we have announced recently with target Walmart and the investments in our portfolio and supply constraint in Puerto Rico. We believe this activity will result in a more valuable NOI stream with better long-term growth prospects. While much of the incremental NOI for redevelopment investments won't come online until 2013 or later, this effort will create net asset value, which is consistent with our long-term objectives. We are also pleased to report progress on our effort to monetize some of our non-income-producing assets. During the coming quarters, we expect to close on the sale of development land in Russia and Canada that will result in sales proceeds of approximately $35 million. In Russia, the Yaroslavl development represents an in-field vertical development, and while a viable project, offers no strategic fit to our portfolio. At this point, the liquidity that can be generated from this proposed sale is more valuable to us than holding out for a higher value that could be recognized over time, which was a basis for estimating fair value when we wrote this investment down in mid-2010. With respect to Canada, we are under contract to exit the only non-retail development site we have in Toronto. We have decided to dispose of our interest in these projects and will invest the capital in projects, where DDR can add greater value. In addition to generating the capital to fund the activity with better risk-adjusted returns, these transactions improve our debt to EBITDA ratios through the elimination [indiscernible] that further lower our risk profile. Over the last few years, you have heard us frequently mention the need to maintain access to all possible pools of capital and the recent volatility in the equity and debt market highlight why this is so important for commercial real estate companies. Our significant efforts over the past few years to lower and balance the leverage profile of DDR just put us in much stronger position today than in the past with much fewer near-term maturities. The market for corporate debt, as CMBS said, is currently uncertain. But we have no need to access either in the near term. Balance sheet lenders continue to bid aggressively on high-quality shopping centers such as ours, and we are very pleased with terms of secured loans that we have closed recently. During the quarter, we closed $162 million of financings with 3 life insurance companies. The new loans have a weighted average interest rate of 5.1%, where used retire debt with a weighted average interest rate of 6.1% and resulted in excess proceeds of more than $40 million, while extending our average debt maturity more than 9 years on those loans. We maintain a significant portfolio of high-quality unencumbered assets. So if the spread between the cost of secured debt and unsecured debt remains wide for an extended period of time. We could certainly raise additional mortgage debt to fund our maturities and still maintain more than adequate cushion on our unencumbered asset ratios. Our 2012 consolidated debt maturities consist of $180 million of convertible notes due in March, $220 million of unsecured notes that mature in October and approximately $90 million of mortgage debt. We have nearly $600 million of capacity in our revolving credit facilities, retain a considerable portion of free cash flow, have access to attractively priced secured debt, expect to continue to generate capital through asset sales and numerous other potential options under consideration. So we believe these maturities to be quite manageable. The last item that I want to cover this morning is our common stock dividend. The $0.06 dividend paid earlier this month represents a 50% increase from the second quarter. [indiscernible] an annualized basis, still results in a very low payout ratio of approximately 25% of operating FFO. Today we remain confident in our long-term prospects and would expect to be in a position to recommend additional increases to our Board of Directors in the coming quarters, while still retaining an above average percentage of free cash flow. We believe that the value creation and mixed dividend we have underway, combined with a safe and growing dividend, and improving leverage ratios provide a compelling opportunity for investors with long-term focus. At this point, I'll stop and turn the call back over to Dan for closing remarks.

Thank you, David. In conclusion, I'd like to highlight our continued focus on corporate governance and the evolution of our Board of Directors. On September 19, we announced the addition of Rebecca Maccardini to our Board of Directors. Ms. Maccardini brings to our board unparalleled shopping center operations experience, international marketing expertise, deep industry relationships and additional board diversity in gender and in thought. Ms. Maccardini was the first female ICSC worldwide chairman and has a 35-year tenure in the shopping center industry. The addition of Rebecca marks the fifth new Board member since March of 2009, and highlights our continued focus to enhance board-level engagement, corporate governance and best practices for all board-related activities. Before we turn the call over to questions, as Samir mentioned earlier, as many of you know, we have always tried and attempted to make ourselves easily available for questions within this forum. While we have tried to limit questions to a maximum of 2, we really haven't done a very good job on enforcing that. As a result, and accepting the advice of many on this call, we're going to try to police the process a little better. Each caller will be limited to one question and then placed back into listen-only mode while being answered. If there's a follow up, you are welcome to reenter the queue and we'd be happy to take your question. This should enable all questioners to interact with management in a more efficient and timely manner. Thank you for your understanding and we look forward to giving this a try. With that, operator, we will be happy to take questions.

[Operator Instructions] Your first question comes from the line of Samit Parikh from ISI.

My question really is about guidance. I know you guys tightened guidance for the year, but it still sort of leaves a fairly wide range for the fourth quarter. Could you just discuss sort of the drivers to get -- that could be -- get you maybe to the higher end of that range in the fourth quarter or to the lower end?

Yes. So we're happy that year-to-date, we have been able to keep same guidance midpoint throughout the year. We've tightened that consistently throughout the year and so don't want you to think that there's any sort of unforeseen variability in the results. That said, as we continue to make sure that our numbers are as credible as possible, wanted to make sure that we do have a range in there and as we think about it with not much of the year left, but still a few factors that could move around. You've got exchange rates in Brazil that have been more volatile than we've seen in recent times. You've got a LIBOR rate that's been very consistent recently, but it's only a couple of years ago that we saw the dramatic spike in LIBOR in the fourth quarter. In terms of operating results, I don't think we see much that can change percentage rents, and seasonal, we've seen, are pretty well known and a very, very small part of results. So I don't think we view there to be much variability at all in the operating results. But do acknowledge there are few things on the financial side that could push the numbers $0.01 or $0.02 in either direction. And so we just want to make sure that we've got a range that contemplates that and creates an extremely low-risk profile that we end up outside of that range.

Your next question comes from the line of Christy McElroy with UBS.

David, just with regard to the converts and bonds that mature next year, what are your other options for more permanent refinancing if the bond market remain status quo? And can you also address the term loan in the credit facilities in the Crest JV, where are you in talks on refinancing those and would both partners potentially have to pay down some of the equity?

For the consolidated debt maturities, the $180 million of converts, 220-and-change-million of unsecured notes. We are seeing just in the past week or 2 weeks an improvement in the bond market. I think our base case is that we'll be able to access the unsecured market at some point over the next 6 to 12 months to access long-term unsecured debt the way we did earlier this year at 475 rate for 7-year paper. We would hope that some of the volatility we've seen just in the past couple months abates at some point during that multi-quarter window that we have to be able to raise unsecured notes during that time to replace the existing unsecured maturities. That said, we're certainly not counting on that and so we do have other plans in place. We've got a significant unencumbered asset pool. We've been through this before where the unsecured markets were closed in a much more troubling time with much more near-term maturities. And we were able to raise considerable secured debt and attractive price in that environment, and I think we believe that would be the case again today. So to the extent that the unsecured market isn't there for us at acceptable pricing, there's considerable access and we've shown it on a consistent quarterly basis to the secured market where we believe we could raise at least that $400 million at a price somewhere depending on where rates are in a given day, somewhere in the 4% -- in the 4% to 5% range for 10-year paper. So I think we believe that's a very strong backup plan that we're advancing today, but would expect to see some rationalization in the unsecured market that would allow us to do a deal there. In addition, we mentioned the asset sale proceeds, the considerable free cash flow, as some of the other means that we do have to address those maturities. And thinking about the joint venture maturities, the great majority of those are in our DDR TC venture, which is the venture of with TIA-CREF, extremely large sophisticated well-capitalized partner, we're in discussions with the lender on the 5-year note that matures in 2012. We're also in discussions with a consortium of banks that comprise the line of credit for that venture that represents the large majority of the maturities. For next year and between us and TIAA-CREF Resources, we would feel confident that we get that done, that we get that refinanced and extended as we look out over the next several quarters, but active negotiations today, and so don't want your say too much there. But we are well positioned to deal with those, based on the quality underlying assets, and like I said, a quality and well capitalized partner where if we did fund some capital, and we'd capable of doing that, talking to lenders today about what exactly the outcome is going to be there.

Your next question comes from the line of Craig Schmidt with Bank of America.

Given your success in Brazil, I'm just wondering if you're considering any expansion into other areas of South America.

We are not. We feel that given the current conditions in Brazil and the current opportunities in Brazil, that is where we should direct our attention to make sure that we're maximizing the value that we've already harvested in Brazil. There are other opportunities that do come our way from time to time. But we want to be very, very focused on really 3 factors of our business, Craig. It's Puerto Rico, it's domestic U.S. and it's Brazil. And we think that, that's a prudent way to approach the business. And we'll continue in that manner. Doesn't mean we don't look at things, but very rarely do things get to a level where we give it serious consideration.

Yes. And you're not going to see this company misinterpret, again, the success of a great investment and platform that we helped build in Brazil with the notion that it goes to our ego and said that need to be a massive South American consolidator. So I think we feel great about what we have today but would really struggle to see how we add anywhere close to as much value entering a new market.

Your next question comes from the line of Ki Bin Kim with Macquarie.

It looks like you guys made some progress in leasing of the small shop space. Can you just a little bit more about that and what kind of tenants are moving in?

Yes. Quite frankly, it's still a struggle in that category. And as you might have seen in the supplement and in fact, the only, the smallest category of space we have between 0 and 2,500 was our only size category with a slight decline. And one thing that's important to know is that it's not a significant number that moves the needle a little each way and some of that was actually planned from some redevelopment operations. But what we are seeing on the positive side continues to be improvement in the franchise area. UPS is one that comes to mind that we're working very closely with and achieving great success with those guys as they get back in the game. The food categories are some of the more active tenants in that space. And I think one of the things we all need to focus on is that we continue, whether it's through asset sales or redevelopment or just general lease-up. We will continue to improve that and I don't want anybody looking at that small negative in the third quarter of '11 is any kind of trend because it won't be. We're still confident we'll get that smallest category up with the rest of the portfolio somewhere in the mid-80s, high 80s as we continue to lease up the portfolio and get closer to a full occupancy situation.

Your next question comes from the line of Paul Morgan with Morgan Stanley.

When you started your discussion today, you talked about the stability of the company and the balance sheet and all the kind of tumultuous financial markets. I think about that, the fewer number of moving pieces that you have in '12 with you kind of running through the non-core, non-prime asset sales, why not think about just recalibrating the dividend. I mean it's still at a very low payout ratio. And I know it's growing and it has room to grow. But have you considered, what are the reasons why you might not just consider more of a step up to get to a yield closer to the peers?.

Yes. That's a great question. It's something we talk about on a regular basis both as a management team and with our board. One of the things that we wanted to make sure as we look at enterprise risk management and the status of the company and the status of the market is that when we do go to that level, we want to make sure that we are as stable as we can be and that we are operating in a market that has some forward visibility, which has not been the case for quite some time and most importantly as we mentioned in prior calls, we want to make sure that we were in a position where all of our debt maturities were very manageable. And we think we are at that point. We had a significant raise from a percentage standpoint in the dividend recently. And as David mentioned in the script, it's something that we will have a conversation with our board about in the very near future because we do think that 2012 presents an opportunity for us to have additional increases as we look at the overall portfolio, the operations and we realize quite frankly that this is as stable as DDR has been in recent memory, for sure. So we hear you, we agree. It is absolutely our goal to get our dividend in line with our industry peers, and we will work towards that and it is a constant source of conversation but most importantly it is clearly a sign of our comfort level and the stability of the company. And from a management team, we are there.

Your next question comes from the line of Alex Goldfarb with Sandler O'Neill. Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division: Dan, just want to go to your sort of similar, your initial comments talking about the health of the company. If you look over the past few months when the world started to melt apart again in August, September, CBS[ph] gapped out. You guys went from being under the REIT average for CBS[ph] to being well outside. Thankfully, everything's retightening. But just sort of curious, were your comments driven because you were seeing an impact from a corporate or liquidity standpoint from the CBS[ph] gap out? Or were your comments totally separate from the CBS[ph] gap out and sort of just trying to understand how your bondholders, your lenders look at CBS[ph] that we see on Bloomberg versus your internal financials.

Sure. It really had no impact on us and my comments are really outside of that. My comments are really -- there are certainly times in the last several months where it looked like, that people were playing the 2008 card all over again. And while frustrating to see that when it completely ignores the progress that we've made to date, we recognize the fact it will take some time for the market to truly understand the progress that we've made. But I thought it was important at least to say that while there is volatility in the market and while we still trade as a high-data[ph] name and we do still have a higher leverage than our peer group average and we recognize that. The strategy is the same, the success rate will be the same. Our focus is absolutely directed towards all the strategic objectives that we have outlined to you in the past. And that while some folks might want to play a 2008 card, this is not a 2008 company. And that's really what I was trying to indicate, was that we are not particularly volatile. If you look at our operating performance, if you look at our guidance and what we're coming in with our guidance, there's certain level of consistency and predictability with us that would certainly indicate anything but volatility. But that being said, we recognize that we have a history and we recognize the fact that we do live in a bigger world then just the one in which we currently trade and there were impacts on the company as a result. And we're sensitive to that. But we just wanted people to be certainly reassured and reminded that we are not the same company today than we were in 2008, and we are completely committed to our strategy to continue to improve the financial metrics of this company in a way that we've outlined.

Your next question comes from the line of Jeffrey Donnelly with Wells Fargo.

Dan, can you talk about what you're hearing from retailers about net square footage growth over the next 2 to 3 years? And just maybe if I could squeak in a second part, just remind us when the lion's share of the gap between your percentage leased and commenced is realized for you guys?

Yes, I'll share the answer with Paul. But I think that question is interesting and very, very timely, Jeff, because there is a lot of speculation in the market and a lot of chatter about what about downsizing and things of that nature and what you're hearing from the retailers in that regard. I think a little perspective in this sort of sea of speculation is probably in order. One of the things that we don't have to do is we don't have to guess. We have access to the retailers that are talking about downsizing. We have met with them, Paul and his team are with them on a regular basis. So taking a look at some of the facts that we have and what we're hearing is actually pretty interesting and it goes to the total immaterial nature of what the potential downsizing for a company like ours could be. If you look at the store like Best Buy, which has talked about downsizing and you look at the office supply stores, et cetera, et cetera. As we talk to those guys, in the best case scenario where they had either some leverage or a very, very strong desire over very extended period of time, we might see something in the neighborhood of 350,000 square feet of space that gets returned to our portfolio. And to put that in perspective, it's going to end up being less than 3% of our annual volume of leasing. And probably just from a reference standpoint, the space that we're talking about on the reduction side represents about 9% of the bank of space we got back over the last few years, which is already leased or sold in the high 90% range. So you're talking about an opportunity that -- and by the way, in many cases we would like that opportunity to be better, because we like the concept of marking to market space in 95-plus percent lease prime assets. So if we can mark space to market, we can make a lot more money. But we're really not going to get a lot of that back. And I think this is going to be one of those situations where there's much more chatter in the market about it, much more guessing, much more speculation, and actually much less execution than what people are concerned about and what they're talking about. The best way, though, that we're dealing with this, Jeff, is to not guess. People like to make statements like we are concerned about precipitous downsizing in the sector. That's a pure guess. So what we're doing is we're spending a lot of time with the retailers, we're quantifying the number. And as a result, we're looking at what the potential impact could be, both positively and negatively. And the truth is, it's immaterial. And I think if that changes, obviously, we'll let you know. But we are not in the business guessing of guessing what the future impact is going to be. We are at a point now where the conversations are deep enough and long enough that we know what to expect. And one thing we know we can do at this company is lease space. So again as a percentage to a total of what we do, it's not going to be a major factor for DDR. Paul?

Jeff, I want to add a few comments to Dan's, but let me first answer your second question. The spread between the leased rate and the lease commenced or rent paying rate is 260 basis points as of the end of the third quarter, which is 10 basis points higher than we ended the second quarter. Important to note that, by the way, it's good news because it comes with a lot of lease-up. Obviously it helps drive that spread. But we have a significant number in that pool of signed but not rent-commenced opening in the fourth quarter of 2011. So we will see a drop by year end, but again that's because of the significant number of leased tenants that are opening in the fourth quarter, any time after October 1. Just a quick follow up to Dan, it is about the communication and the sitting with the retailers, the face-to-face discussions that we have regularly. And as Dan put it, not guessing but knowing exactly where they're coming from, how we can work together, I think -- Old Navy is a great example of a company that we've worked well with to execute on a few downsizes and bring in tenants like Carter's and Justice and Alta. It's been a good story because we communicate regularly with them. I would like to make one other point, speaking of The Gap. The recent news coming out of Gap Inc. was certainly not news to us. And the fact is, just so there is no misunderstanding of our exposure, of to 40 plus Gap Inc. units we have, there are only 4 gap units. And in fact, 3 of those have recently been renewed through their exercise of options. So most of our exposure obviously is with Old Navy, we're working closely, our average size with Old Navy is 18,000 and we don't have a lot of risk there either.

Your next question as a follow-up from the line of Ki Bin Kim.

If you could help out with developments, you have a lot of assets on hold. Any thoughts on that and how much further do rents have to climb to justify the economics on those deals?

We continue to work them, which is one thing that should be understood meaning we continue to discuss the opportunities regularly with the retail community we deal with regularly. It's hard to put a number on exactly where it needs to get because other things impact the return, obviously, such as the cost of the construction, et cetera, and what those prices 'may do'. But the fact is that it's not there today, and we absolutely see no reason to rush into it and we're not seeing it from our competitors quite frankly. So it's not there. There are some sites that someday will probably be developed but again that's just a matter of continuing to talk to the retailers. The art of negotiation is one obviously where we're continuing to talk them up and remind them that there's a limited supply out there. But again no rush to jump into it.

Your next question comes from the line of Quentin Velleley with Citi.

I'm here with Michael Bilerman as well. Dan I think in your opening remarks you commented on some of the tremendous opportunities for external growth that you're seeing as a function of some of the dislocation in credit markets recently. Just wondering if you can elaborate a little bit more in terms of what you're seeing and whether or not that's just one-off prime asset acquisitions or whether there's some bigger opportunity you're seeing?

We look at the opportunities in sort of 2 buckets. Yes to the prime asset acquisitions. In fact, one of the prime assets that we acquired was a situation where there were 2 assets on the market. We were not interested in one, we were interested in the other. We were unable to come to terms on a single asset purchase, someone else put their 2 assets under contract, which would not have been acceptable to us because one was clearly non-prime. And because of the market dislocation, the entity that put the 2 assets under contract were unable to close and so it came back to us. And said are you still interested in the one, we were interested in the one at a slightly different price. And we ended up having an outstanding execution in the acquisition of a prime asset. That never would have happened if we didn't hit situation where CMBS went south and overall market sentiment was poor. So that's one area, for sure. The other area's actually in what we call a development partnerships group and our development partnerships are a group of individuals within all[ph] organizations that are meeting with a lot of private developers who continue to struggle -- even when things were good, as you all know, for the public companies, the capital availability for the private companies was still strained. And there are viable projects out there that have a very low risk profile in the sense that the land is already owned by someone else. It's entitled and there's significant tenant interest, but there are capital needs. So that is an area where we can bring our platform to help with leasing. We certainly bring our construction and our site-planning expertise to help with the layout, without having to take local entitlement risk and land banking risk, which we will much prefer to go to a local sharpshooter than to us. So that is something that is presenting itself as a result of still significant capital dislocation in the private development world. And third, we talk about all the time and it shouldn't be overlooked. The redevelopment bucket will continue to grow. Tenant demand is so far outstripping supply and tenant flexibility, which is something that is, tenant and flexibility are two words that have been mutually exclusive for many years. So tenant flexibility is continuing to increase, and that's creating opportunity at existing assets. So as Paul said, existing space is going to be worth more. And we're seeing that come through on a regular basis. Assets that have an operating history, have the appropriate co-tenancy, are in prime markets and have availability are very valuable today. And because of the size and scope of our portfolio, we're seeing redevelopment opportunities continue to grow. So we think between redevelopment, some potential maybe new development and joint venture with local sharpshooters. And prime acquisitions with less competition from the private sector we're seeing quite a bit of opportunity.

Your next question comes from the line of Jay Habermann with Goldman Sachs.

I guess for Paul or for Dan, you mentioned obviously the very strong third quarter and then the pickup you expect into the fourth quarter if tenants open. Can you give us just some sort of update on the potential for 2012 in terms of the NOI pickup, in terms of leasing achieved thus far and what you expect to hit, I guess the bottom line for next year?

No J. we're really -- we're not in a position to give that direction. We've been pretty disciplined in how we give guidance over the last couple of years. And one of the reasons why we've been much more accurate in our guidance delivery is we'll do it in a disciplined manner. We will provide guidance in January. The NOI number will be very clearly spelled out as it has been in the past. And we'll hold off until that point.

Your next question comes from the line of Rich Moore with RBC Capital Markets.

On the redevelopment and development fronts, is $750 million, I think that's the number you threw out last quarter, is that the number that you still expect over the next several years for the scope of the redevelopment program? And then if that flows into development, is the stuff on Page 32, is that land that you have there, is that where you might actually do a development or should we think of those as sort of defunct at this point?

On the redevelopment piece, Rich, that is still our number. We have a spend issue[ph] somewhere in the mid-50s and, keep in mind that space will come online at all different times over the next year and a half. I mean some of these redevelopment projects are expensive projects. But we're going to continue to grow that pace of spend. We've got a pretty good program for 2012 laid out, and beyond. We continue to look at additional opportunities. But right now, that 750 is still something we're sticking with.

And, Rich, in regard to the roster on Page 32 of the supplement, some of those are projects that we continue to work, where we -- and will get built over time if we feel that we can get an appropriate return on incremental capital to warrant the development of those properties or those locations. Our goal obviously is to monetize all of that and we'll either monetize it through actually building it with appropriate returns or through the sale of some of these assets and some of the land here because there will be interest from others in markets where we had an interest in developing and we no longer do.

[indiscernible] will be our hybrid where you see development going on in some of that land. But it's a capital inflow for DDR revenue and outflow if demand from the major anchors remain extremely strong and the opportunity for us to sell parcels to those guys may result in something being built on that land but not in a capital-intensive way for DDR.

One of the things that we just have to keep in mind when we look at that list of land is that the world has changed. And the world has changed since we entitled the law of that land, the world has changed since we bought it, for sure. And the world continues to change and that's why it's so important to stay in front of tenants because if you look at some of those properties and some of those markets, the tenants that we were proceeding in those markets were either are no longer interested or already there, or some of them don't even exist. But the flip side is also true, there are a whole new cadre of tenants that are interested because they have a desire for market expansion, they have new prototypes and they need growth. They need external growth. So again as Paul said, we're still far below on the development side where rents need to be in order to start any kind of development pipeline to get an appropriate return on a risk-adjusted basis. But that being said, some of these actually will get built and they will be monetized through the construction of retailers on this land and some of them will just have to [indiscernible].

Your next question comes from the line of Michael Mueller with JPMorgan. Michael W. Mueller - JP Morgan Chase & Co, Research Division: David, you talked about the non-prime dispositions I believe being less in 2012 than what we saw in 2011. Can you just talk about how big of a pull is left that you would like to sell over time? Are you still going to have some sales over the next few years or does 2012 knock out the bulk of what's left?

I think we believe it's an important consistent discipline that in a portfolio of this size, there should always be something that we think appropriate to sell, based on the expected total return of prospects over the next several years. The NOI growth or more likely for these assets decline prospects over the next couple of years. So I think we expect to stay active in the disposition business. It's just going from a non-prime portfolio that exceeded $1.5 billion a few years ago, just 2 years ago. And today being in the $600 million, $700 million range where it's barely 10% of our NOI. We have reduced it significantly, sometimes you got debt issues that make sales harder, sometimes you've got partner issues that immediately encourage a sale. And so we made more progress than anyone else in disposing, in total, close to $2.5 billion of non-prime assets when you look over the past 4 years. And so I think we believe it to be a continued important discipline, just don't think that the multi-hundred million dollars pace for the past few years is achievable, or justify going forward if there's just a lot less of that product on our books to sell. And so we'll continue to be active portfolio managers, eliminating assets where we think the IRRs are the worst over the next several years, based on our views and based on feedback from tenants. But just wouldn't expect to see the volume that you've seen over the past couple of years.

Your next question comes from the line of Cedrik Lachance with Green Street Advisors.

You did a good job talking about your 2012 maturities and how you're going to be able to handle them. But one thing that I don't think you've been talking about much lately is whether or not you should add equity to the balance sheet. What's your appetite at this point to add equity?

Our view and the strategic long-term plan we've tried to articulate is that we do have balance sheet metrics that include improvement in our credit ratios, improvement in our credit ratings that we want to and expect to execute upon over the next several years. But at this point, we do not at all believe that new common equity is required to achieve those metrics based on the monetization nonproducing assets based on the retention of free cash flow, based on the continued growth in EBITDA that we've seen and expect to continue to see in a significant way going forward. And so I think we have a very firm focus on continued improvement in our leverage profile, both duration as well as total amount, improvement in our credit ratios, but we don't believe additional common equity needs to be a part of those plans to do that immediately.

Your next question comes from the line of Omotayo Okusanya with Jefferies. Omotayo T. Okusanya - Jefferies & Company, Inc., Research Division: Just along those same lines. You just talk a bit about, when you do talk to the credit rating agencies right now and kind of their requirements and their benchmarks to you, I don't offer[ph] you guys to get any additional credit rating upgrade and kind of where you are relative to those benchmarks and how quickly you think you might be able to get to those benchmarks?

Sure. We actually met with the 3 agencies just a couple of weeks ago. We characterize it as very good meetings across the board. I think the tone from a macro standpoint is no one's looking to upgrade anything right now. It's just given this level of uncertainty in the world, given the volume of time that the agencies are spending on either securitized debt or probably even more importantly sovereign debt, mid-cap corporates are not on the top of the list of any sort of meaningful ratings change certainly not on the upgrade side just given the uncertainty in the world. That said, I think they're very pleased with our progress. We've been very open with them. We've had a great dialogue with them over the past couple of years where we've outlined what we were going to do. And then we've done it, so I think it's not just the improvements in the metrics, it's the credibility that we've earned back that's been important to them. And so I can't see that we see any immediate signs of upgrades. We have seen considerable upgrade activity either in outlook or rating over the past several quarters and we'd expect that to continue as we look out over the next year or so. But hard to point to anything immediate. We are the only REIT, I believe, that Fitch has a positive outlook on. And so encouraged there for what could be the next catalyst on that side and focus on our continued very strong positive dialogue with them. I think the metric that we and they have probably ended talking about and focusing on the most is fixed charge coverage. We have improved that ratio through numerous transactions including the common equity for preferred redemption that we did earlier this year. We've improved that ratio from just below 1.7x to 1.8x today. And I think as we show more and more credibility over the next several quarters, to a year and change of getting that back to 2x, I think that would be one important specific metric that we're very focused on, and I think they're very focused on. And it doesn't have to necessarily already be there but I think as we both -- as we continue to show them the clear bright[ph] path for how we get to that point and they've get credibility in our ability to execute, that becomes an important catalyst.

Your next question comes from the line of Michael Odell with AIG Asset Management.

I was just hoping if you could provide us with 2012 in terms of the JV debt in 2012, what's the recourse to DDR?

Almost extremely little of that debt would be recoursed to DDR. The debt we talked about earlier in the joint ventures was in the DDR T/C Venture where that is not going to be recoursed to DDR. As we look at the other 12 maturities, it's extremely uncommon for us to provide recourse on any joint venture debt. So the only place historically or currently that you're going to find it is on the development asset that were developed through joint ventures. And so it would be a small amount of the debt particularly in the Coventry joint venture we're there were some development projects that would probably be the only 2012 maturity. We would have[ph] recourse, we can go through that, the entire list, and get yourself in a little more specific after the call. But it's extremely uncommon for us to offer recourse in any situation. So it would really just be on the new development assets and joint ventures, there may be some DDR recourse.

Next question is a follow up from the line of Samit Parikh with ISI.

Just a follow up for Dan and Paul. Paul, you talked about sort of a compelling opportunity for certain retailers to gain market share at this point. Just want to ask you in terms of expansions for these specific retailers, sort of what are you hearing on that? Are they scaling back at all for 2012? And if they're not, what type of -- where are they targeting and maybe specifically to sort of the type of demographics that they're targeting?

Okay. We're seeing very few scale back. There are a couple of exceptions, none of them were significant to us. Lowe's just recently announced that they were going to pretty much cut their new store opening plan and quite frankly, we were working with nothing on them, with them, anyway. Staples and Best Buy would be the other 2 examples that quickly come to mind that people slow down their growth and for obvious reasons. That said, we're seeing as aggressive an approach by the key retailers we deal with all the time, as we have in the past couple of years even more so as they're competing for the same space. Redevelopments, expansions of centers. That's what they need to focus on. We've talked quite a bit about the lack of new supply and they get that. So they are looking at how they fit into an existing site, how we might reconfigure, if you will. But they are also looking at some different demographics. It's not across the board. Some are going to stick very closely to what they need in terms of density and household incomes. But we are seeing quite a few that are -- have looked at a smaller prototype. I think the pet stores are a great example. The arts and crafts guys, they're looking much smaller than they used to, and that gives them the ability to hit smaller markets, smaller population densities. Income levels, they're still looking pretty much the same thing they always have. PETCO is a classic example. They went down to a 12,000 prototype and now have something, they call unleashed, which is down to 6,000 feet, which is more of a very convenience-oriented look at some more metro areas. But it's a focus on how they redevelop existing properties and where they might be able to improve their market share through discovering new markets through smaller stores.

One of the things that we should all keep in mind is that a lot of these retailers are probably companies too, and they have awful lot of spend on some of things that they sell. And I think it's important that someone asked the question periodically when retailers announced that they're going to scale back, there's a couple of reasons for that, usually the reason for that is because they missed they're open to buy because availability is low. So what a number of retailers are hearing is that the markets would like them to scale back and be a little more conservative perhaps on growth. So they're giving you something that they never had. So the question that we often ask retailers when they say we're going to reduce from 40 stores to say 30 stores, the question is how many of those 10 stores were you really committed to and the answer is typically none. Because there is often a disconnect between the expectations articulated to the market and the execution of the real estate department for individual retailers and we bumped into that many, many times. So expectations scaling back are usually not a function of business model. It's usually the function of the availability of space to meet the strategic growth needs, and instead of basically going back to the markets and saying oops, we overpromised and are under delivering, they're going back and saying well we're going to be conservative and deliver fewer stores. But the stores were never there to begin with. And I think that's sort of the question we always ask. And in some cases, there is a good business reason why retailers will pull back in their store count. But in most cases, it's because the space is simply not available, and that is particularly the case in this environment where nothing new is being built.

Your next question is a follow up from the line of Jeffrey Donnelly with Wells Fargo.

Just thinking about your run rate as it relates to Q4, what are you guys seeing from pop-up tenant demand this holiday season? Many retailers experimented with it last year. I was curious if you see a greater impact this coming quarter than maybe last year.

Jeff, it's pretty much right in line with last year. The one that's been well publicized, Toys "R" Us -- has cut back a little bit on their temporary space. But we're seeing the same success rate we have in the past. And even with less vacant space to deal with, our number's right in line with where it was last year. And one thing that brings to mind is that with the Borders, which we talked about in a recent press release, one of the things that I think sometimes gets lost is we achieved almost $300,000 in temporary income just to Halloween stores in several of those locations. So the appetite is still there. Again I think the one exception Toys "R" Us has come out recently and talked about just fewer locations for their temp space this holiday.

Your next follow-up question comes from the line of Quentin Velleley with Citi.

It's Michael Bilerman. Dan and Paul, I'd appreciate your comments regarding the sort of downsizing, retailers downsizing, and not wanting to guess. I guess there does run a pretty wide gamut I'm sure of all the experiences that you've had and discussions that you have, and I was wondering if you can sort of share some examples of what's happened. And when I think about it, you've probably had stores that wanted to be resized and you've been able to release that, the excess space of the retailers. You've had retailers that wanted to resize but you haven't been able to release that space where you've had to, it hasn't been part of the shopping center and you've basically had to take it away or leave it vacant. I assume that there's some tenants that are just using -- they're not using all their floor space. And they'll wait to the roll and they'll either try and negotiate lower rent or they'll resize at that point. I assume that there's some vacant but renting tenants in the portfolio, and I assume there's also cases where you don't own the box and what those retailers are doing if they have a desire to downsize and whether they're trying to release out there is space or carve out their space as well. So I was just wondering if you can sort of delve down deeper into the specific examples of what you've been hearing things so that we can get a better grasp on what's happening.

As Dan mentioned earlier, Michael, the key is being with the tenants that we all can identify who might be more prone to downsizing. Maybe examples I gave earlier were some of our better ones, where with Carter's and Alta and Five Below and Justice. We haven't executed on a downsize with any tenant where we don't have an answer for residual space. And I'll also point out that we haven't lost a tenant because we haven't been able to downsize them. That just hasn't been the case. That said, we're not kidding ourselves and we know which ones we need to work with and work with closely. But they have obligations also. I'm not quite sure, I'm sure there's some examples where tenants have simply moth-balled some space in the back room, if you will, to downsize their selling area but that hasn't been an issue with us getting space back or even retenanting it. One of the things, Dan mentioned an acquisition earlier and Best Buy is in that center. And we quite frankly, look at the oversized Best Buy as an opportunity. Talked with Best Buy before we close on the transaction and we're working hard with them to do backfill [ph] the space which there's a lot of demand for. And then it just gets to the negotiation on the economics and we're finding that the retailers who are serious about downsizing or [ph] maybe was one of them, Best Buy is probably next in the category, will invest in that downsizing. They're not looking for this to be all on the developer's nickel. And so it's pretty much a cooperative effort. I'll give you one other example where with Best Buy if they're giving back 8,000 feet and we can really only utilize 4,000 because of the configuration, where we're working hard to see that we can convert that space which will be moth-balled into out-parcel opportunity. And that's a great example of what we'll be doing in a lot of these locations. So I don't want to overemphasize it, Michael, but we do see it as an opportunity with not a lot of risk.

I think the other thing that's important is while we do see it as an opportunity with not a lot of risk. But unfortunately the opportunity, on the positive side or the negative side, is not going to move the needle all that much. Because while we are very aggressively working with some folks about mothballing some space and like Paul just mentioned, during out-parcels, they're resisting that. They're resisting that because they feel that there may be a time in the future when they want to go back into the space. So this is a very fluid situation. Many of these tenants that we're talking about who have interest in downsizing have had a multiple formats over the last several years. So we don't really know. Are they 50,000-foot tenant, are they a 35,000-square foot tenant, are they had 20,000. Old Navy was at 11,000 they went to 15,000 they went to 25,000, they came back down to 18,000. I mean some of these guys have sort of been all over the place. And one of the things retailers hate to do, particularly merchants, is give up flexibility. They like the flexibility of the box. Now there are clearly some retailers that should be smaller and we'll work with them in that regard. But our caution on this and when we talk about materiality of it is not to jump to geological[ph] extremes, either on the positive or the negative side of it. Because retail is such a fluid business and it changes so quickly, particularly in this market. We are all seeing different prototypes, different strategies, on a regular basis and what we hear today may not be the case tomorrow. So we have to stay in front of retailers, we're spending a lot more time doing that than we've ever done in the history of this company to stay up to speed. But we have to just keep sort of a balance on what this is going to be. It's not going to be a material negative and it's certainly not going to be a material positive either. Even though if you look at, for example, Best Buy, every Best Buy store we have is in a prime asset. Our prime assets run around 95% leased and I think we all know that best Buy is not the greatest rent payer. If we can get that space back, it will be a nice positive growth story. I just think the success rate of getting some of that space back is going to be pretty rough. So when we do our own sort of internal calculation, if there's 50% of the Best Buy stores would like to give back space, we'd probably only get 50% of that 50% and when we start to look at the numbers, it doesn't really move the needle very much and it doesn't become a material factor in how we run the business. We are much more focused on merchandising strategy and we're much more interested in what some of these retailers who were talking about downsizing are going to do from a merchandising perspective to warrant future deals. Because again it's our job to guess about nothing. We need to know who's going to be the winner and who's going to be the loser in a particular category. And if someone's evolving and is on the downside of that bell-shaped curve, we need to see what they're going to do to pick it back up and that's what we're spending a lot of time doing. Size of the space becomes a bit of background noise in the overall conversation.

Your next question comes from the line of Christy McElroy with UBS.

It's Ross Nussbaum here with Christy. A couple of questions, I might have missed this. What was the going-in yield on the third quarter acquisitions and on Polaris, that's part 1. And then part 2 is, if I start thinking about your acquisitions from a price per square foot perspective, it looks like the couple you did in the third quarter were a little over 150 a foot, Polaris was 110 a foot. But then I start thinking about your portfolio being frankly much better geographically than what those deals were. So to me that would imply that the rest of your portfolio would garner a higher per square foot valuation. Can you help me with all this?

Sure. All in everything that we've acquired this year has been in the low to mid 7% cap rate range on a going-in initial return basis. And the third quarter deals represent a majority of that so it's certainly consistent with that. We've looked at opportunities much lower than that but all in we've ended up around that 7, 7.25 sort of overall range with a few outliers a little lower, a few outliers a little higher. But we think that's a good starting point relative to our cost of capital if there is an appropriate growth story to go along with them and we certainly believe that's the case here. On the price per square foot comment, would generally agree with you on a price per pound, do think this portfolio would be valued more highly than what's implicit in the stock price today. And you can see that from the transactional activity. But we have committed as well the other high-quality shopping center companies where acquisitions and generally been higher in price per square foot to reflect what good assets are really trading for. But you always have some exceptions where you just have a low in long-term historic rent that's going to drive that a little lower. But in general, I think your comment and your perception is the right one.

Your next question as a follow up from the line of Alex Goldfarb with Sandler O'Neill. Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division: Just want to go back to the Teachers loan, just to make sure I'm not missing something. I'm assuming the 555, that's mortgage, meaning traditional mortgage, not CMBS. And then assuming that it is traditional mortgage, it seems like that market has held up with the, obviously the corporate market's had some gapping out recently and given that this does mature in March of '12, I would think that the life companies would have full annual allocations at that point whereas right now they may be running out of allocations. So what would be -- what's the risk of the refinancing, is it asset quality or is it just generic market risk?

You're generally right and I would generally characterize it as just the overall market risk, for a loan that is reasonable in size. It's a cross collateralized pool so it's just a more complicated than a simple one-off mortgage. You're exactly right, it's not a CMBS deal. This is financing we did with one insurance company that we have a very good relationship with. And we're in the process of talking to them about what exactly the right refinancing, restructure, next steps could be, either with them or with a new deal in the market in a different fashion. So we completely agree with your comment that the mortgage business when dealing with balance sheet lenders, insurance companies and commercial banks, continues to be extremely strong. We've seen a few that it may be commented that you referenced in terms of being out of, or close to out of allocations for the year. But honestly, we haven't seen many people say that they're out of business and need to wait for 12, but do agree with your notion that the nature of that business is people getting new allocations on Jan 1 and being more active in that first couple of quarters for the year. And we think that's an encouraging sign on top of the market that's already pretty strong and pretty attractively priced, just a negotiation that we have to work through on these specific deals.

Ladies and gentlemen, thank you very much. This concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.