Samir Khanal - Senior Director of Investor Relations Daniel B. Hurwitz - Chief Executive Officer, Director, Chairman of Pricing Committee, and Chairman of Dividend Declaration Committee Paul W. Freddo - Senior Executive Vice President of Leasing & Development David John Oakes - President, Chief Financial Officer and Member of Enterprise Risk Management Committee

Christy McElroy - Citigroup Inc, Research Division Ross T. Nussbaum - UBS Investment Bank, Research Division Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division Craig R. Schmidt - BofA Merrill Lynch, Research Division Paul Morgan - MLV & Co LLC, Research Division Jonathan Pong - Robert W. Baird & Co. Incorporated, Research Division Vincent Chao - Deutsche Bank AG, Research Division Steve Sakwa - ISI Group Inc., Research Division Ki Bin Kim - SunTrust Robinson Humphrey, Inc., Research Division Todd M. Thomas - KeyBanc Capital Markets Inc., Research Division Jason White - Green Street Advisors, Inc., Research Division Michael W. Mueller - JP Morgan Chase & Co, Research Division James W. Sullivan - Cowen and Company, LLC, Research Division Tayo Okusanya

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2013 DDR Corp. Earnings Conference Call. My name is Glenn 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 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 CEO, Dan Hurwitz; Senior Executive Vice President of Leasing and Development, Paul Freddo; and President and CFO, 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 these 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, 2012, and filed with the SEC. In addition, we will be discussing non-GAAP financial measures on today's call, including FFO. 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. [Operator Instructions] At this time, it's my pleasure to introduce our CEO, Dan Hurwitz.

Thank you, Samir. Good morning, and thank you all for joining us. I'd like to start today's call by reiterating that we are very pleased with our fourth quarter and 2013 results. And even more pleased with our 2014 guidance and 15% dividend increase. These results would not be possible without the continued transformation of our portfolio through active portfolio management and capital recycling, a robust and strategic leasing and redevelopment platform and prudent capital allocation and balance sheet management. 2013 was another year of continued progress and achievement towards the goals and objectives contained within our strategic plan. We creatively sourced and acquired over $2.3 billion of prime assets on a one-off basis as well as through larger portfolio transactions, while opportunistically raising and allocating shareholder capital. Operationally, we generated same-store net operating income growth of 3.3%, signed over 1700 leases, achieved blended leasing spreads of more than 8%, and transitioned premium tenants such as Nordstrom Rack, Whole Foods, LA Fitness and Five Below into our top 50 tenant roster, while achieving consensus investment grade ratings. 2013 ended on a strong note and the momentum has accelerated into 2014. As announced in our 2014 guidance press release, we are expecting another year of operating FFO growth north of 7%, driven by continued improvements in operational metrics and strategic capital allocation. 2014 will see the continuation of our efforts to actively monitor, and participate in market opportunities as we pursue the creation of long-term shareholder value on a risk-adjusted basis. In spite of the obvious operating momentum, like clockwork, this time of year always seems to have investors and market participants tepid about growth prospects with their outlooks clouded by various headlines in volatile prognostications. Whether it's headlines regarding holiday sales reports, the impact of unpredictable weather on retail or…

Thanks, Dan. The operational momentum we sought on the first 3 quarters of 2013, clearly continued into fourth quarter and we're extremely proud of our team and the results delivered in the quarter and for the full year. As a result, we surpassed our guidance and year-end lease rate goal of 95.0%, with a 95.1% leased rate up 30 basis points sequentially and 90 basis points year-over-year. We completed $2.5 million square feet of new deals and renewals in the quarter and 10.3 million square feet for the year. This was the 5th consecutive year we topped 10 million square feet in deal volume. Pro rata spreads were again strong with a positive 20.7% new deal spread, a 7.9% in renewal spread and a 10.0% combined spread for the quarter. We continue to execute on the growth levers we laid out at Investor Day and I wanted to highlight a few specific examples of our proactive approach, which continues to grow well beyond the obvious vacancy. In Jupiter, Florida, we terminated an underperforming sign mart and are backfilling the space with Marshalls HomeGoods combo store, resulting in a 185% rental comp as well as dramatic improvement in the credit quality of cash flow. Furthermore, the addition of Marshall's HomeGoods is allowing us to drive leasing and rents for the adjacent small shop space by 20% improving the NOI of this asset by 50%. As you may have seen in our recent press release, we also completed 2 new Nordstorm Rack deals in the quarter. We're capturing the Babies "R" Us lease in brand in Florida and a Barnes & Noble lease in Columbia, South Carolina with rental comps up 160% and 15% respectively. These deals were made possible through a combination of strategic leasing initiatives, the consolidation of small shop…

Thanks, Paul. Operating FFO was $104.5 million, or $0.29 per share for the fourth quarter or 7.4% increase over last year, including nonoperating items FFO for the quarter was $117.2 million, or $0.33 per share. Nonoperating items primarily consisted of the gain on change of control of interest related to the acquisition of 30 prime power centers from the joint venture with Blackstone. For the full year 2013, operating FFO was $366.7 million, or $1.11 per share, an 8% increase over 2012. 2013 was on another robust year of capital raising, as we raised over $2.8 billion of equity and debt capital. For the year, we issued $827 million of common equity at average price of $18.76 per share from the acquisitions of prime power centers and were $150 million of 6.25% preferred stock to redeem a $150 million of 7.375% existing preferred stock. And we also raised $300 million of 10-year senior unsecured notes, at a 3.375% rate in May and $300 million of 7-year senior unsecured notes at 3.5% rate in November. The average spread over U.S. treasuries on the 2 issuances was 154 basis points, which is over 80 basis points tighter than the average spread on 3 prior debt offerings in 2011 and 2012. In addition, we opportunistically accessed attractively priced long-term debt with a proactive refinancing of our credit facilities and secured term loan and advance of their maturity, decreasing the average spread by 20 basis points. As we head into 2014, we've an unencumbered asset pool that is now valued at $5.5 billion, by our bank covenants and much more by the transactional market. A significant increase from $4.3 billion at the end of 2012, and consisting of assets that are of materially higher quality than in the past. The TALF mortgage loan that…

Thank you, David. I'd like to conclude by reiterating that our story remains intact, and performance continues to accelerate. Portfolio quality is excellent. Growth is extremely visible. Macro challenges have become more micro opportunities. And 2014 guidance contemplates confident execution in the face of perceived headwinds. Moreover, this management team is committed in 2014 to remaining visible, available and transparent regarding our specific performance and the overall market conditions that we experience daily. Again, I thank you for joining on our call, and I'll now turn it over to the operator for your questions.

[Operator Instructions] Our first question comes from the line of Christy McElroy from Citigroup.

Dan, sort of a longer term kind of thing or picture question for you, you touched on this a little bit in your opening remarks and Paul you also reiterated continued strong fundamentals. But I'm wondering if you could provide some additional sort of high-level thoughts on the continued noise around the potential for future big box closure? It's consistently a pushback that we get from the investment community given the increasing competition of Amazon, from many of our your tenants and that goes beyond just typical areas of concern in consumer electronics and bookstores and office suppliers? How do you adjust that argument against the future of power center retailers and how do you -- can you provide sort of a sense for how your retailers are using the internet to compete?

Sure, that's a great question and it's an interesting question, Christie, because there is chatter obviously, and we deal with the possibility of store closures on a regular basis. And the truth is we haven't seen it. You've seen the Sears announcement, you've seen the Penny announcements. For years we heard about Best Buy store closures we had won over the years. So it's -- there's a lot of noise about it but there's not a lot of evidence that it's happening in the power center community and that it's going to effect us in any meaningful way. What it does though, however, is it creates an opportunity for us that we are pursuing very, very aggressively. So for example, we are of the opinion that the office supply business in general should stink, it should shrink in square footage, and it should shrink in number of stores. But when you have a portfolio that's 95% leased overall and 97% in prime assets, and you have record demand for space, that's a great opportunity for us, and we are aggressively pursuing those retailers in an attempt to get back that space. The problem is, is that they don’t want to give back space in good assets. They want to give some back space in bad assets and fortunately we don't have a lot of bad assets left. And the good assets require a lot more work to try to get a retailer to give up that real estate. Particularly, if that happened to be a store that's making money. Retailers can't close stores that make money. It's just really is that simple. If they start liquidating profitable stores, then they're really in the real estate business, they're not really in the retail business. So we continue to battle that. Overall…

No, I just want to add that, that said, we're not sitting back waiting for any of the retailers that you might pick out, Christine, such as books or electronics or office supply or toys. We're engaged with these retailers on a regular basis. And we know that demand is great out there for us some of that good real estate and what we've like to have back in, so we are in active negotiations and discussions with these retailers. To Dan's point, not all want to close good stores, but we'll be taking initiative as we look at what we would like back to improve the merchandise mix and the cash flow of the center.

Your next question comes from the line of Ross Nussbaum with UBS.

I appreciate the comments on Puerto Rico, because I think you're right, that's been of focus lately. Can you add some color on what you've been seeing in Brazil lately and if you can give some of the same operating stats and then talk a little bit more about your strategic thoughts in terms of Brazil's fit into the portfolio going forward?

We don't have that significant of an update on Brazil relative to what we've consistently said in the past on performance down there also have to acknowledge that they report earnings in less than 2 weeks with the report on the 26 and the call on the 27th, and so their operating stats will come out at that time, I mean, in great detail. But in general, operating fundamentals remain strong and at the stabilized malls. All of our greenfield assets have now opened. They did present more of a challenge both in terms of cost as well as in terms of time to stabilization. But I think that's very consistent with our comments over the past several quarters in terms of our long-term thought process. I think, the bar is set high for anything that complicates this company and the expectation is that it would require well above average long-term return to justify that complication. And will continue to evaluate all options and choose the course that maximizes the shareholder value for that investment.

Your next question comes from line of Alexander Goldfarb with Sandler O'Neill. Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division: Just thanks for the Puerto Rico comment, because that's been just huge from folks especially who cover the financials. A question David, as you guys, you talked about acquisitions. So one just, if you can remind us what's in your guidance for acquisitions and then two, how you guys think about doing acquisitions, especially if it's a larger scale thing. If you'd still would be a JV structure, sort of like what you use with Blackstone or if you guys are getting more confident in your ability to accelerate IRRs where you're fine issuing your own equity, which on our numbers is around 7, 7.1 to buy maybe mid 6s that may be on an IRR basis you can get a better return. Just wanted to understand that better, especially if there is this disconnect where you guys have a skill set and an operational understanding to act quicker than others and take advantage before the gap continues to close?

Sure. Our guidance included very modest nets acquisitions for the years of about $250 million of acquisitions and $200 million of dispositions. As you can see so far, we are well on our way on the disposition pace and making good progress, although not as advanced on the acquisition pace. It is safe to assume that a large reason for that is even with the increase in interest rates we've seen, we have not seen any downtick at all in the pricing for power centers or uptick at all in the cap rate for power centers and so we've advanced the sell side a little more rapidly than the by side. We continue to look at very large number of opportunities. Some of those marketed. Most of those non-marketed. Most of those continue to be one-off assets, where we believe that we can add some specific value to a center based on our knowledge of the center, the trade area or specific tenant interest within that center. But we also have evaluated a number of portfolio deals, I don't think you will us lose any discipline regarding portfolio deals in terms of underwriting and how cautious we would be with it. And at times that does make it more challenging to underwrite a very large portfolio in a short period of time given the level of due diligence that we would absolutely expect to do. And secondly, the competition for the larger deals, as more capital comes to the space, has only been more significant and so we continue to look at everything some of which is known, some of which certainly is not known broadly, and we continue to evaluate deals and feel comfortable that we can achieve that $250 million or so of acquisitions for the year. We've guided to that level for past several years and we've massively exceeded it. But I think, we've tried to be prudent with guidance, where we're not going to force ourselves to take on a deal where we don't think either the pricing is appropriate or the risk profile is appropriate. So I think, the reasonable guidance is something that benefits us in a year when pricing has been a little higher than we expected, and so we continue to evaluate deals. I think number 1 for us is always the evaluation of the transaction. Can we make money on this shopping center or not? And number 2, then is how we would finance that? And at today's or at the recent share prices, though we have not issued equity, we have not been at all inclined to issue equity and so I think that's an important signal in terms of how we would think about funding deals going forward, and especially as we set ahead on the disposition volume that puts us in a strong position to fund any acquisitions that we're looking at this point.

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

I guess pegging on Alex's question. With your focus to continue to improve DDR's portfolio quality. Is that -- does that look like it may be coming less from acquisitions and more from redevelopment?

I think redevelopment obviously is a great opportunity and it is really the best use of our capital. So we'll continue the redevelopment would be a big part of how we intend to improve the quality of our existing portfolio. A lot of that redevelopment though, keep in mind Craig is really at our very best assets as well. So the improvement in the quality, it's hard to go from an A to an A in some cases. But the improvement really becomes merchandise mix and offering to the consumer. As far as acquisitions are concerned, we still live in an extraordinarily fragmented universe. The owners of quality power centers across the U.S. is as fragmented as it's ever been and we still do view that as an opportunity to improve the portfolio. So it'll be a combination of both. I think the fragmentation and in some cases the mispricing gives us the opportunity on the acquisition side. And the real gap between the supply and demand dynamics that currently exist on the landlord, tenant relationship side gives us extraordinary redevelopment opportunities. So I think you'll see a healthy dose of both.

The next question comes from the line of Paul Morgan with MLV. Paul Morgan - MLV & Co LLC, Research Division: It just encouraging to hear the target for the small shop occupancy. I know -- I don't think you were tracking it that closely in terms of the breakout prior to the recession. So I'm just kind a get sense of how do you get to the 92% number? Is that just kind of based on kind where your top centers and getting others up there and then also where you seeing the strength coming from? Is it larger franchises or segments within the space, like restaurants or healthcare or anything like that? Is there any color you can provide just to how can get from where you are now to 92%?

It's great question Paul. I don’t know if you remember last quarter an investor were probably talking about 90%. The fact is that we've improved the quality of the portfolio and we're more of a power center across the board versus the gross community center. There's a higher quality of small shop space within those assets. Higher-quality anchors higher quality small shop space, a lower percentage of shop space within those assets. We took a hard look over the last couple of months and quite frankly, we were aiming to low. Historically this group is less than 5000 square feet hit about an 89%, maybe 90%. We are quite confident as we look at it now, we look at the improvement and the quality of the portfolio, that 92% is very achievable. And as I said on other goals we've internally set before, I'm not sure we stop there. It's just something that's reaching beyond where we've been in the past and it is all about quality. In terms of who we're leasing to it is all the categories you mentioned, the traditional food, some of the newer nontraditional chipotle, Panera the cell phone users, the service-oriented shops, franchises in general. We are seeing improved health on the part of mom and pops, but they really not going to be the story in our portfolio that power center format going forward. But again better quality of small shop space and quite frankly we were aiming too low and we're confident we can hit that over the next several years.

We do struggle, Paul, a little bit you mentioned, healthcare for example and I know there has been quite a bit of conversation about that. We do have internal discussions on a regular basis as whether we should lease space to non-retail users. And one of the problems with doing that of course is it's typically not an acceptable cotenant to retail users. So it fills space and it pays rent from a merchandise mix standpoint if you have a high-quality center. Can be very careful, where you go in the service industry because the perception of your asset can change depending on who you lease to. So we probably are doing less healthcare, less non-retail if you will, uses in our small shop leasing and I think that will continue out of availability of interest quite frankly. We have enough small shop interest in the typical retail uses that we don't have to go, sort of off the reservation and lease to folks that aren't really compatible with our anchors or the other small shops in the shopping center.

Your next question comes from Jonathan Pong with Robert W. Baird. Jonathan Pong - Robert W. Baird & Co. Incorporated, Research Division: You've been sitting on some ground up development projects for a while, about $215 million on hold. Can you talk a little bit about where you see the activity going in 2014, and maybe the composition of projects there that you'd like to sell versus continue to build?

Yes, Jonathan. We've made some great progress obviously over the last couple of years, whether it's been pad sales, anchor sales, non-retail users. We brought C block, which you see in the of great development, ground-up development project, which will open late second quarter of this year. That plan we held for number of years. As the market, the economy, the demand got better, we now have the center with Walmart, Dick's, Michaels, Ulta, PetSmart, name your best in class retailers. It's a great story. Mary in Kansas recently showed up and our projects under development was also land held for a number of years. Sold the big piece to Ikea and developing around that, again a great story. We've got a couple of more, which are not fully active at this point. But again, as demand increases and the market improves, we see more and more of our Atlanta has been in that held category if becoming ground-up development. We've got one in Connecticut, one in Florida that we're very focused on, and moving towards either at late '14 or '15 start for those projects. That's all great news. Couldn't have told you the same story 4 years ago. But again that's a function of the demand that's out there and the improving market.

Your next question comes from the line of Vincent Chao with Deutsche Bank.

Again, just want to go back to your opening comments, just about the sort of the headlines and some of the noise that we hear every year at the start of the year. Just curious, I mean the headlines have been fairly negative on the retail sector. I'm just wondering what your major takeaways were from holiday 2013?

Well my major takeaways really were that, while it was just a fair season overall for retail, I would much rather be a retailer today then a vendor. The amount of pressure that retailers are putting on the vendors because it's interesting, while sales sometimes aren't great, and even reported margins aren't always terrific, balance sheets are pretty darn good. And one of the reasons why that is, is because vendors are supporting these retailers in the variety of different ways and supporting the sales and supporting the markdowns. So my general feeling was that, I'm not concerned from the retail perspective because there's always support coming from the vendor community. But I think it's going to be an extraordinarily difficult year on the vendor community and I think the pressure that they were under this holiday season was somewhat unprecedented, particularly because we had a shorter selling season, therefore markdowns came earlier and markdowns support had to come earlier. So it's interesting to watch it. I think one of the things that's really happened is that the holiday shopping season has changed dramatically over the years. We used to sit around and really feel that on December 26, if the numbers weren't great, we think Thanksgiving and Christmas, we're going to lose retailers. Things were going to happen. But if you really look at how retailers are adjusting to the holiday season, it's not nearly as significant from a life-and-death perspective as it used to be. Tenants can take a top holiday season, they're not in a position where they're going to disappear overnight the way they were 5 years ago or even 10 or 15 years ago quite frankly. Most tenants have not only do they have reserves, but they have inventory controls in place today that far exceed the risk that you have by having a weaker holiday season. So I'm -- I was somewhat disappointed that some of our retailers didn't go for the holiday season, the way I would have liked. If you walk into the stores, for example, right after Black Friday, inventory levels were relatively low, and often on very unexciting. And when inventory levels were low and the store is not very exciting, it's not going to translate into good sales. However, that was done intentionally for a variety of different reasons and I think balance sheets will prove that retailers manage the holiday season pretty well. So I think it was a decent season for retailers. I don't think it was great. I think it will be less than decent for the vendor community.

Your next question is from the line of Steve Sakwa with ISI Group.

Dan, I know you talk a lot about sort of capital deployment and development and redevelopment, I guess in particular a kind of highest and best use of capital. I guess given the demand for your product type and the disconnect that you believe exist between the public and private market. Does the share buybacks ever make sense? I know you issued equity in the 18s, but the stock is below 16 today. Does that sort of enter your thought process, or is kind of the selling and buying of stock just create too much friction and you just sort of have to kind of grin and bear it at this point and wait for the market to turn?

Well, it's certainly something that we discussed it's not something that we're enthusiastic about or that we're exited about doing. In my view you have to trade at an extraordinarily significant discount to NAV and have really no other options for your capital in order to do that. I think that right now we are in sort of an interesting cycle, where headlines are grabbing people's attention and operating fundamentals are being relatively ignored to a large extent, and that won't last forever. And I don't think it's really in our best interest at this point in time to put a share buyback at the high-end of our priority list, particularly given some of the other opportunities that we have.

Your next question is from Ki Bin Kim with SunTrust.

A quick question about your -- you guys used to talk a lot about splitting up Big Boxes and creating 2 junior boxes. So I have a couple of questions regarding that. Now first, does that show up in your lease spreads or is that categorized as noncomp so there is no true lease spread? And second part of that, how much of you done in terms of square footage in 2013 and how much is there more to do in 2014 and what would the impact look like to your top line?

On the first question, we do not include the split of a Box, any reconfiguration will not make it into spreads and to be honest with you in what would happen is they would be so overstated, typically if you had a box that was leased at $12 a foot and you split it you're going to be in the $16 to $18 range easily. So we're not including that which again lends to the conservative nature of our reporting on spreads. Over the last 2 years, we've done over 18 of these downsizings which were for about 650,000 square feet. There's no specific number out there in terms of what we have left to do. We're going to do what's right for the asset in terms what's the merchandise mix. I mean, Ulta, is clearly a player that comes to mind when you talk about downsizings or splits and they are still very aggressively looking for a 100-plus a year new locations. So there's no given number that we expect we can do at the amount of square feet or X location. It's really just what's best for the mix, what the demand is for the space.

Your next question comes from the line of Todd Thomas with KeyBanc Capital Markets.

Dan, in your opening remarks, you said that momentum has accelerated, and I understand it is still upside in terms of small shop leasing and occupancy and that rents are trending higher. But, there's arguably less occupancy outside today and David mentioned the cap rates are unchanged or even lower despite higher rates and making it more difficult to buy properties. So I was just wondering when you say that momentum has accelerated, what part of the businesses is gaining momentum, specifically in this DDR sort of augmented strategy at all to take advantage of this acceleration at all?

Yes, I mean the momentum is accelerated basically and everything that has to do with the tenant because the demand has continued to increase. As Paul said, there's been no pullback at all from any of our tenants in any significant way and demand is still there and we do augment our business model because we're being much more aggressive on redevelopment. We'll be much more aggressive on potential tenant buyouts, lease terminations if we can, trying to get back space because we know that won't last forever. And we think that this is a very interesting time. I can't remember a time in recent memory for sure where we had tenant demand as high as it is and landlord leverage is high as it is. Well, that's not going to last forever. And while we're still in this particular cycle, I think we do have to take advantage of it. So capital markets aside from then and I think you've seen we get with there a lot of momentum in the capital market side, we've been very transactional in that area. Anything related to the tenants in our particular product type right now is hot. And we need to take advantage of that as best we can. It also includes on the acquisition side, because some assets that we look at because of the fragmented nature of our sector are undermanaged. They're either undermanaged because those landlords didn't have the leverage or they may not have the capital. So there's value-add opportunities or core plus opportunities that if we put assets into our platform given the tenant demand, we can really accelerated our returns on that particular asset regardless of our going in cap rate. Those are the assets we're looking for. So, yes, I mean, we are augmenting our strategy by being much more aggressive in the markets in areas where we can leverage our operating platform and maximize value as quickly as possible.

Your next question is from Jason White with Green Street Advisors.

I was just wondering, is there any evidence that those tenants have been desiring to shrink their sales force foot print, have plans to utilize that excess GLA as distribution space to support their online sales formats in the long-term?

Jason, at this point it's more of a discussion. I don't have any real evidence, but it's clearly something we kick around with the guys like the Best Buys, but where is going to be the space need going forward. Right now, they have not shrunk their sales floor but it's something they're thinking about.

And it's something that they should do at some point in time is that what the market calls for. Because you will need like I mentioned earlier, you will need to be in stock if shop online, pick up in store is important. And now they have to be stock which you have to be convenient to get to and experience when the consumer gets there has to pleasant. You can't have shop online pickup and store and have your consumer going to the loading dock next to the dumpster to pick up the merchandise, that's not a pleasant experience. So retailers are all looking at that now and I think that is one of the reasons why we haven't seen a decline in square footage from the people that often are being publicized as desiring that because they need to know -- they need to have the square footage to support the inventory necessary to satisfy the consumer who shops online to pick up in store. So I think as that evolves, the actual square footage requirements will also evolve but it's not going to be necessarily distribution facility as much as it's going to be inventory areas that not only support the online sales to pickup, to shipping, as well and also support the actual store, and the walk-in consumer also.

Next question is from Michael Mueller with JP Morgan. Michael W. Mueller - JP Morgan Chase & Co, Research Division: These volumes talk a little bit about where shops and box rents are compared to the pre downturn and then just what would be the implications for on what most start to see national development pickup?

We're right about where we were prerecession, Michael. Not all categories, not all locations. But we're very happy and I think you see that reflected in the spread quarter after quarter. We're buffing those mid-teens to 20% this quarter. We're seeing rents that are right there. You got to keep in mind prerecession, different rents for ground-up development versus second-generation space. We've been dealing mostly with the second-generation space in the last 5 years. But to get those rents back to where they were previous session is a big deal and we're there. And I don't think it's slowing down, to be honest with you. The demand we've been talking about on the entire call is terrific and if you just look at the best-in-class guys who are looking to grow aggressively. Their numbers aren't slowing down. In terms of what that means for ground-up development, ground-up development that makes sense will get done. We haven't really been waiting just for rents to be at a certain level. I mean its got to be demand, the site has got to be right, everything has to be right. And if that means it's the best way to monetize some of the land we've had on the books that's what we're going to do. It really hasn't been lets wait for that magic day when rents are the same as they were prerecession.

Next question is from James Sullivan with Cowen Group.

Back on the Analyst Day, Paul, you talked a good deal about the mark-to-market opportunity as option terms and some of the anchor leases burnoff. I'm curious, how those negotiations are going, as a general point? And also to what extent, if any, anchor lease terms on new or renewal leases are becoming more favorable generally to DDR? And what I'm thinking of particularly there is whether or not you're getting more or better bumps in base rents in new leases, whether you're giving fewer or shorter options that kind of thing?

The mark-to-market opportunity is there Jim, and that's what really driving the numbers. The 2 examples I gave with Rack, in Columbia, South Carolina was the deal where we did not renew a naked Barnes & Noble lease with the Babies "R" Us brand in Florida was one that we terminated the lease, I mean the growth leverage exactly as we laid out at Investor Day. That continues to be our focus. Dan and I were both talking earlier about some of the other headline retailers again, whether its office, toys, electronics, books. That is the big focus of our entire team to make sure we're figuring out a way to get that space back. Whether it's natural exploration or negotiation and market-to-market, because that's what's going to drive the spreads and the growth in these assets going forward. I think one of the things that's interesting to look at is the leased rate, one of the other callers asked about, you're at 95-plus percent leased, just to look at the buying of deals that we're still doing, given that lease rate which is now 600 basis points higher than our low back in 2009. And at the function of what we're doing to recycle the space to higher and better uses, higher rents, better mixes, et cetera. In terms of the lease terms, I would tell you that even some of the noneconomic are improving -- some of the noneconomic terms whether it's co-tenancy, we can negotiate harder as space is in demand, people are competing for space. I mean that's an obvious. Its a little bit of leasing one-on-one. When you have demand for space and people competing for that space, you drive the harder bargain. Starts with the rents, but certainly plays out into the options, the bumps and the noneconomic issues within the lease.

Your next question is from Tayo Okusanya with Jefferies.

My question has to do with disposition. Just given that top grades remains a type and your target of generating most of the your NOI from your prime assets, just curious, how much more by way of disposition do you see happening in the portfolio to kind of hit those targets, and what that means for potentially doing more dispositions in 2014 unless it's what's in the guidance?

I think we've obviously been very active on the disposition front, than by far the largest seller of assets particularly non-prime assets. But over the past 5, 6 years, continued to be ahead of the class, you've seen us based on a strong pricing environment accelerate the timing and pace of dispositions. This year with the considerable amount, that we are under contract dominance, so I think you can assume that guidance for the $200 million or so dispositions is very achievable and hopefully something we can exceed. We don't look at that side on it's own. We also are obviously spending considerable amounts of time looking for the reinvestment opportunity in the high-quality prime assets. But given where the market is today, we've certainly seen more progress at the very early stage of the year on the disposition side given where pricing is and we would expect to continue to make progress from the 91.5% or so prime portfolio that exist today up to the 95% target that we established in the 5-year plan. The guidance of past few years has been that $200 million or so year of dispositions. We've exceeded that for past few years, and I think to the extent we continue to see a strong environment. This year we would be happy to accelerate that process. Some of it is always going to be subject to debt that's on assets or specific tenant related items. But we are extremely focused on continuing to dispose of those non-prime assets. There's less of them remaining . There's less inventory. There is a less of the true dregs left that represented the hardest and yet smallest dollar amount of sales. But it continues to be a major focus for our transactions team.

We have a follow-up question from the line of Alexander Goldfarb with Sandler O'neil. Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division: Dan, just want to the circle back with the increased attention the B malls are getting. Obviously the Simon and Spinco and then you've got the Starwood platform out there. Do you think that as these companies consolidate the B malls, they're going to increasingly look to big box tenants more than just anchors and try and do another round of de-malling if you will, like we saw last decade or you think the de-malling thing didn't work, so at the end all we're going to see is just big box as anchors but that's probably about it as these guys acquire more B malls?

That's a great question, Alex. De-malling doesn't work for a B mall, it works for like an F mall. And the reason being is that you have B malls still have tenants that have contractual rights that you need consent from in order to de-mall. It's very, very expensive. It's very time-consuming. And the returns are very, very low. So it didn't really work well with malls. A mall really has to be dead in order to de-malled effectively and in order to make money. So I don't think you'll see it much in the B mall business. And we have not seen that much in the B mall business, if you look at the de-malling that have been done historically including some of the ones that we did, there were like no tenants, or 3 or 4 tenants that you can afford to buy out. But there wasn't a situation where you're 70% leased or 75% leased or even 80% leased, it makes it extraordinarily difficult to get the consent to do what you want to do on a de-malling basis. I think the B mall operators will continue to look at power center tenants and others as they look to fill space. Because obviously, keeping that space filled and keeping it filled at the right price and keeping the shopping center attractive because consumer has been a challenge. And there are some folks out there, that are doing great job of it and there are some folks that are just getting started. But I will say that the opportunity does exist today to deals with some of our tenants, because again there is really very little new supply. Demand is still very high, and if tenants have to make a decision between whether going to a power center or a B mall, our tenants will always pick a power center because that's where they prototype and that's what their economic basis is for their operation. However, if there is no power center available, and they have to make the decision between whether skipping a market or going to a B mall, they will be wise to go to a B mall and those opportunities certainly exist and we're seeing some of that. And we think that's very healthy for the retail environment.

I would now like to turn the call back over to management for closing remarks.

Thank you, all, again for joining us. We are very excited about 2013 and we're even more excited about 2014. And look forward to speaking with you soon. Thank you.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes your presentation. You may now disconnect. Have a wonderful day.