Good morning and welcome to the DDR Corp., Second Quarter 2015 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to [Meghan Dudwala], Senior Financial Analyst. Please go ahead.

Good morning and thank you for joining us. On today’s call, you will hear from President and CEO, David Oakes; CFO and Treasurer, Luke Petherbridge; and Senior Executive Vice President of Leasing & Development, Paul Freddo. 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 that these statements are subject to risks and uncertainties, and actual results may differ materially from the forward-looking statements. Additional information about such risks and uncertainties that could cause actual results to differ may be found in the press release issued yesterday and the documents that we filed with the SEC, including our Form 10-K for the year ended December 31, 2014 as amended. In addition, we will be discussing non-GAAP financial measures on today’s call, including FFO and operating 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 the opportunity to participate. If you have additional questions, please rejoin the queue. At this time, it is my pleasure to introduce our President and Chief Executive Officer, David Oakes.

Thank you, Meghan. Good morning and thank you for joining us. Today, I would like to discuss five items. First, the progress we’ve made internally over the past five months, second, the results from our annual shareholder meeting. And finally the three pillars that this management team has outlined and is chiefly focused on the progress on all fronts. The internal progress of this team given the mandate in February has far exceeded our expectations. We have retained our top talent, transformed the culture and put new controls and processes in place to focus our operations team on the quality and the quantity that are already having an impact on the bottom line. This progress was evident in this quarter as we produced strong same-store NOI growth and leasing metrics, all while we continue to encourage vacancy to upgrade the caliber of our tenancy. I am proud of our organization, thus far, and I am confident that our operational efforts and our produce-first, message-later mentality will translate into outperformance over time. And the team takes the recent underperformance where very crucially and it [indiscernible] motivated even further. Next, important changes were made at the board level following our shareholder meeting in May. We’ve welcomed our largest shareholder, Alexander Otto, onto the board, further aligning our board with shareholders as well as adding in very experienced retail real estate minds to the boardroom. We were pleased to receive very strong support in our proxy vote for the shareholder alignment compensation program and all of our other directors. There are three pillars that our team has outlined over the course of the year that I would like to expand on next. The first is our refining focus on portfolio quality that places greater emphasis on the quality of the dirt, which is…

Thank you, David. The overall leasing environment and resultant operating fundamentals remained positive in the second quarter as evidenced by exceptional deal volume and continued strength in leasing spreads. We executed 369 new deals and renewals for 2.9 million square feet, an outstanding quarter for our portfolio that is 95.5% leased. I’d also like to highlight the starting rents for the new deals and renewals at $20.35 per square foot and $15.04 per square foot respectively, both great numbers and both indicative of the positive leasing environment and the quality of our portfolio. For the quarter, we achieved a positive pro-rata new deal spread of 25.4% and a positive pro-rata renewal spread of 7.2%, resulting in a combined pro-rata spread of 10.2%. I would like to remind everyone that renewal spread based upon the starting rent in the renewal period measured against the last rent in the current term. What is not included in the calculation of this spread is any future contractual increase built into the renewal. In this quarter alone, we had 91 renewals with bumps averaging 3% per year over the starting rent, obviously leading to additional growth. And this focus on annual rent steps is one of the most significant recent changes we have made when negotiating and analyzing deals. Our overall leased rate at 100% ownership remained flat quarter-over-quarter at 95.5%, an increase by 20 basis points year-over-year. The nature of the flat leased rate quarter-over-quarter was due to a couple of factors. First, we sold low-growth assets with leased rates in the high-90s to 100% and acquired high quality assets with vacancy, obviously offering significant growth opportunities through lease-up and/or redevelopment. The second contributing factor was the signing of new leases on spaces that were already included in the leased rate. So despite significant…

Thanks, Mike. Operating FFO was $111.4 million or $0.31 per share for the second quarter which is a 10% increase over the prior year. Including non-operating items, FFO for the quarter was $105.4 million or $0.29 per share. Non-operating items primarily consisted transaction costs. As David mentioned, we are pleased to report another quarter of robust transactional activity which included the acquisition of two prime power centers that we believe exemplified this management team’s disciplined focus on acquiring high-quality dirt at attractive pricing. International Drive Value Center in Orlando, Florida which we acquired at the end of April, is located in one of the nation’s strongest retail submarket. And it’s situated within 1 mile of two highly productive eight plus retail centers. Orlando Premium Outlets and The Mall at Millenia which both produce sales in excess of $1,200 a square foot. The center’s TJX, Ross Dress for Less, Bed Bath & Beyond are amongst each respective chains top performing stores. Willowbrook Plaza which we acquired in June is also directly adjacent to our highly productive Willowbrook Mall in Houston and offers significant NOI and occupancy run rate given its 87% leased rate. We view the opportunity to invest capital in Houston as attractive from a pricing standpoint combined with our relatively low exposure to the submarket. And we are confident the quality of this real estate and the submarket will perform well throughout the cycle even with any short-term headwinds. Both assets were acquired in excess of a six cap and in place NOI and provide considerable and visible growth over the coming years. And we are excited to have these efforts in our platform. The quarter further advanced our portfolio management activity as we ended June with $340 million of assets sold or under contract which will exceed our…

Thanks, Luke. I would like to conclude by reiterating our original 2015 full year earnings guidance of $1.20 to $1.25 per share of operating FFO. Operating fundamentals remain very strong. Our portfolio transformation remains on target and we continue to find avenues to mitigate the potential dilution from this year’s increased asset sales. Thank you for your time. I’ll now ask the operator to open up the call for questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question will come from Craig Schmidt of Bank of America.

Good morning.

Hi, Craig.

David, I was wondering what's the trigger to get you to go - it seems a little further on the portfolio transformation, and maybe just a little more color on the assets you were selling like you had said low economic ownership?

Yes. I think you’ve seen us make extraordinary progress selling 500-plus assets in the past, six or seven years. So I do think there’s been a focus on portfolio improvements for quite a number of years. I think where it’s become more nuance recently as we’ve sold the truly non-institutional stuff, we’ve sold the truly non-prime product. And now it comes down to a portfolio management exercise of selling assets that are pretty good but simply don’t need our current criteria for growth or future total return expectation. And so I think as we have eliminated the worst assets and as we have seen a private market for shopping centers, this continues to be very strong. Everything is lined up to allow us to continue the sales process but selling higher quality inventory now than what we were selling a few years ago and therefore getting the much more attractive pricing associated with that. And so I think we’re just being more thoughtful as we take this next step in selling institutional quality assets, but one that we think the current private market values too highly and where we think we can redeploy those proceeds and do much more attractive higher growth assets and larger MSAs as we continue to be active on both acquisition and disposition front.

And Craig, this is Luke. With regards to the low economic ownership that’s just a reference to the joint venture assets that are being sold. So, year-to-date, we sold five assets out of the Blackstone joint venture which when we originally acquired that portfolio, we highlighted that there would be some pruning in conjunction with discussions with Blackstone. Of the 18 assets we have under contract today, 10 of those are in that Blackstone joint venture where our economic ownership is only 5%.

And our next question will come from Christy McElroy of Citi.

Hi, good morning, guys. David, just your comment about this focus on development returns and looking at sort of the overall construction pipeline in a different bucket between developments, major redevelopments and minor redevelopments. Can you break out by bucket, the average projected yields on those existing projects? And sort of thinking ahead to the future pipeline, what sort of yields are you underwriting to when you're thinking about the feasibility of ground-up projects versus redevelopment?

Yes, Christy. This is Paul. Starting with the redevelopment, John, so on the minor redevelopments and typically with all of our lease-up CapEx, our hurdle is going to be 10%. We would expect nothing less than that in terms of yield. On the major developments, slightly as some of these are our little defensive at times but also bigger projects and typically with assets that we’re trading over 5%, 5.5% cap, so something in the high single digits, it’s 7.5% to 9% on some of the major redevelopments, some still exceeding that 10% hurdle, by the way. And on the ground-up, as we said in the past, with the legacy land, some of the stuff we’re developing right now, all in, you’re looking at mid-single yields with an incremental yield somewhere in the 7.5%, 7% to 8% range. But we would expect, mostly with the major redevelopments and minor redevelopments to be in that high singles and north of 10% with the minors. The focus will still be spread. We will continue to look for development opportunities, major redevelopments, it’s going to be more. You’re going to see that are very exciting, and we’ve got in the early stages that will eventually make it to our reporting, and we’ll talk more about them in great markets, and great opportunities to create value. Minor redevelopments will continue to be a big focus also, and I would estimate that we’re going to be in that $100 million to $150 million run rate range on the entire redevelopment program.

And the next question will come from Todd Thomas of KeyBanc Capital Markets.

Hi, it's Grant Keeney on for Todd. Good morning. Regarding G&A, you mentioned in recent quarters you had some opportunities, and it sounds like you've made some progress, but just wanted to get some additional color on the timing and scale, and just another follow up, it looks like 2Q, you had a separation charge, so as just see what a good run rate was for the rest of the year?

Yes. I think what you’ve seen in the first two quarters is we have been able to operate even more efficiently. And so I think you’ve seen most of that show up in results, obviously a little bit of one-time charges in terms of some separation agreements this quarter. But I think at this point, you’re seeing most of those efficiencies show up in the run rate. And so I think historically we guided to 5% of total revenues as a reasonable G&A range and certainly a G&A range lower than our peers for many years. And today, I think that number can be a little bit lower than that. And so I think you’ve seen now the first full quarter of that show up, and we think that can be recurring going forward, but wouldn’t model in anything else too significant on that front.

And next, we have a question from Ki Bin Kim of SunTrust Robinson Humphrey.

Thank you. So going back to dispositions, David, maybe you could wrap it up for us, easily digestible package, you guys just saw some JVs possibly and make some wholly-owned assets, but when you look at kind of total pool of which call consider non-prime or what's realistically you're going to sell over the next couple of years, what does that - on your share basis, what does that look like?

From our share basis. So when we look at it, I think this year, we’re probably going to achieve between $400 million to $500 million of sales which majority, we have under contract today. I think then as we look forward, as David pointed out, I think the non-prime bucket has reduced dramatically, just probably 20 to 25 assets in there which are smaller assets and a couple of $100 million there. But then it’s really looking at just ongoing portfolio pruning and rotating capital out of assets that we deemed that we can reallocate our equity into high growth assets. So I think over time, we could continue to achieve. I don’t think we’re going to have dispositions that are the size of this year. I think this year, is a larger year but I think going forward, we’ll continue to look at rotating capital. But we will be mindful on any sort of dilution that comes from that. I think we can mitigate a lot of that with one of the assets we’re selling, a better quality and we’re getting better cap rates on that which you’ve seen. This year, it’s sort of 7.25 level. I think the stuff we are looking at going forward maybe even tied on that. But I think it’s opportunistic of where we deem we can pull capital out of low growth assets or assets that we don’t believe has the long-term return profile that we’re looking for.

Yes. We’re thinking about two sides of it, Ki Bin. The first one is just, capital recycling which is a constant process but redeploying capital out of those prime minus assets with lower growth rates into higher growth assets where we think we’re taking no real change in current cash flow by swapping that, but we’re certainly positioning ourselves better for long-term growth. The second part of it is net buyer or net seller outside of that recycling activity. You saw some significant net buyer a few years ago when we saw pricing was relatively low for power centers, and we had an acceptable cost of capital. You saw as a net buyer. We significantly added to the portfolio and improved the portfolio through those years. Today, we look at the private market, and you see pricing is relatively high. And so, our natural response to that is to increase the volume of sales, and that’s exactly what we’ve seen for this year.

And the next question comes from Jason White of Green Street Advisors.

Hey guys, just want to know I know I really just can’t pinpoint this, but in a more general sense, can you kind of walk through the Blackstone assets that you have? How many are left out of the original I think it was 70? And what you would relate to keep longer term? What that means? Maybe for fees and then getting the prep payback and just kind of walk through that whole deal in general?

Yes. Sure, Jason. That’s right. There was 70 asset acquisitions. Five assets are bank sold. There’s another 10 under contract that we’d expect to be sold in the coming weeks. With regards to long-term ownership, we do have a ROPO on the top 10, so we’ve clearly identified the 10 that we aim of the long-term ownership. Clearly, we don’t have the right just to buy them. It is something that Blackstone controls. And their exit is something that they control. So, I think in signs that over the coming years, there is an opportunity that we feel we’re best – we’re well positioned to get control and ownership of the assets that we deem that would be long-term prime and prime plus assets but for our portfolio. What that means for the fees and the prep, I don’t think there’s any near-term impact for that. I think the prep will start to be paid down in the course of 2016. But not a dramatic right. But I do think that prep will start to come down. Obviously, the fees will come down, as well as we sell assets, but I don’t think this is a near-term catalyst where the ownership would change from Blackstone to DDR.

And the next question comes from Haendel St. Juste of Morgan Stanley.

Hey, good morning guys. So, a quick two part on capital allocation, understanding your debt reduction goals and [your recent] funding requirements. What is the stock buyback today, separating your capital allocation thought with the stock down on 16 well below many of them are basically your own. I would also love to know your thought on the high coupon debt maturity upcoming during 2016 and 2017 rates and I guess 7% in 2016 and 6% in 2017. What's your current thought of these upcoming maturities and how are you weighing the opportunity to perhaps refinance that versus debt pre-pays?

Yes. Capital allocation as mentioned in the opening remarks and I think is talked about regularly as a very significant focus for us – you look back several years ago when I think we did have a more attractive cost of capital and the private market wasn’t reflecting the value and quality of power centers. We were an issuer of equity to buy shopping centers. So I think today, when we look at the considerable disconnect between the value, the private market value of our assets, and the public market valuation of our stock, certainly, we see a disconnect there. And absolutely I thought about it and considered share repurchase where we stand today, we do have other attractive uses of capital. But share repurchase certainly is something that we talked about and thought about and will continue to do, but if not active at all at this point. But certainly, it’s something that is on the radar screen for us with constant view that the balance sheet improvement is very important to us, and so not something that we would consider at the expense of our risk profile, but something that we do think is certainly possible. I think we’ve taken important steps in the first part of recognizing that arbitrage between public and private markets by being a considerable net seller of the assets recently and what we’re forecasting for the second half of that year – second half of the year, and would certainly consider all uses of those proceeds as we continue through the next several quarters on the maturities, I’ll pass it to Luke.

Yes, Haendel. With regards to the high coupon paper in 2016 and 2017, we obviously still have financing to come this year, which is the converts, which is $350 million, 2016 there is, clearly is the [non-prime] which provides a nice earnings tow into a portion of that year. Repaying that early, I think, obviously, we'd need to economically make the decision or not, I don’t think it makes sense right now today. And then 2017, I just want to make one point on that, which is something I made in my prepared remarks is that although it is 7.5% in that year, we do have some dip, the difference between the cash and the GAAP rate for that year. There is a differential where the cash interest rate for that year is 6.5%, but the GAAP rate is 5.8%. So although, we do anticipate a significant cash saving on the interest expense, the GAAP savings will not be as much, although it won’t be quite the impact that we’re seeing that are highlighted earlier, but it’s probably just worth noting. There is a slight difference there. We do think that there is an opportunity over the coming years to do better than the rates that are coming, and we think that provides an FFO tailwind for the company.

And the next question will come from Vincent Chao of Deutsche Bank.

Good morning, everyone. Just Luke, going back to your comments, I think I heard you say that you have about $400 million to $500 million of disposal you think, for this year. And I think it's year-to-date $300 million plus, including those that's under contract, so that seems like it's a little bit higher than we returned the last quarter. And I'm just trying to understand from a guidance perspective and I know the focus is on – not necessary on earnings per se, but with the guidance unchanged, and dispose stepping up a little bit, and presumably financing costs, maybe up a little bit from earlier in the year on the unsecured that's coming down the road. Just curious what are other levers that you've been talking about as being offset? Are those being pulled? What's actually being done today to kind of be able to get you to that midpoint?

Yes. I think and David probably have some comments, clearly, there are some operational efficiencies that we are starting to see flow through. With regards to dispositions increasing, I think that comes back to the point David and I have been making is that this is the market that we see as an opportunity to sell not just only the non-prime stuff, but some of the prime minor stuff that we think has lower returns. So I think there’s an opportunity for us particularly in the second half of the year. And that’s really where you’re not going to have the full-year impact there, but we are able to sell some assets at pricing that we see is very, very attractive for the long-term return of this company. And we do believe that we are able to reinvest that capital probably not completely this year, but over time, we’re going to be able to reinvest that capital to generate longer term returns. We’ve just seen that the pricing for assets highlighted by the two that David mentioned in his prepared remarks. We’re seeing pricing that’s far exceeding what we deem as the long-term value of some of those assets.

Yes. I think, we guided reasonably operations could come in strong and that’s why we create a range so I think we – it contemplates some of the risks that could happen on the downside, it contemplates higher volume of sales, and earlier refinancing activity. And so where we stand today, we remain very comfortable with guidance despite the fact that we are absolutely on track to be net seller this year.

And the next question comes from Jeremy Metz of UBS.

Hey, good morning, guys. First, just on the prior question from Haendel, do you actually have a buyback program in place today? And then, as we think about the dispositions you talked about targeting $400 million, $450 million this year. So I guess after those how much more do you have left to sell if you are to kind of get to the ideal go-forward portfolio, and then how should we be thinking about the earnings growth profile for DDR here, as we look into 2016 and 2017?

So Jeremy, its Luke. We don’t have a buyback program in place. With regard to dispositions, as we’ve highlighted, we will be a continual disposer of assets, the size and velocity of that will depend on the market. We do have some non-prime assets although that is dramatically going to reduce this year. It’s really going into the prime minus assets which are just assets that we believe may not have the growth profile that we are looking for from our equity. So we are able to rotate those out opportunistically and reinvest that capital whether internally or into new acquisitions, that’ll be an opportunity that we’ll review at current mark or the market timing. So I do believe our goal is to build the portfolio that will withstand all cycles of the market or all market cycles and long-term produce the return. I think the one thing that I probably would like to note is that the vast number of assets so if we think of the number of asset we’re going to sell, the majority of those will actually – we’ll have a lower economic interest because they are joint venture assets that will be disposed off. So our economic interest in those assets vary from 5% to 20%. So the impact to our earnings is somewhat reduced.

And our next question comes from Tayo Okusanya of Jefferies.

Hi, yes, good morning. Just a quick one for Luke. Luke the page 39 that you highlighted in the presentation, trying to understand the passthrough and FFO impact of the debt refinancing. Could you just kind of walk us through that real quick, again why kind of like the big difference with regards to the rate cash-wise and rate GAAP-wise on these pieces of debt?

Yes. Absolutely, Tayo. There’s a real reason why there was a different rate to GAAP is when you acquire assets, you mark the debt to market. So when we acquired using our hallmark portfolio that was debt that was actually put in place when it was the Australian joint venture. So it was done with long-term debt. When we acquired it, it was dramatically a shorter-term debt. So you mark the debt to market. I think that, yes, from a GAAP point of view or a cash point of view, we don’t have a dramatic amount of those. I think one thing that works the other way is obviously the converts which have lower cash to GAAP rate. But there are some pieces of debt when we actually acquired and assumed a debt that are going to have the differences. This is an abnormal year. This really is looking at home art is their largest one which we have and that was the Blackstone acquisition. As I mentioned, there is a small amount in 2017, but really it’s just the mark-to-market of the debt when we acquired the asset?

And next, we have Sameer Kanal of Evercore ISI.

Hi, guys, David just going back to G&A and I was just curious as you reduce G&A just through a reduction of – is it mainly through a reduction in headcount or are you doing something else differently? Are there any other changes that you're doing internally more from, let's say, a sort of an expense savings standpoint?

Not really, any sort of noticeable head count reduction. Obviously, Dan transitioned out earlier this year and we didn’t replace him with an outsider, and so I think you have some simple straightforward stuff like that. When we look beyond that, it’s just being timing ways where we can operate more efficiently with the very high quality team that we have in place today. And so I think you’ve seen some of those benefits show up over the last quarter or two.

And the next question comes from Michael Mueller of JPMorgan.

Yes, hi, just going back to asset sales for a second. About how long do you think it'll take to go from 400 properties now down to that 250 to 300 properties, because I know you talked about the selling the JV stuff, and I think that's around 60 properties give or take, but you're going to be offsetting with some new acquisitions. So what sort of timeframe you are looking at?

Yes, Michael. This is Luke. I think that’s over a couple of years. I think the vast – as I mentioned, the vast majority of asset in number that would be sold will be out of joint ventures. So we don’t have total control over the exit of those. So we do think that the joint venture number of assets will start to shrink, but the platform is probably going to stay comparable size. So probably over the next couple of years, I think, you’ll see our asset count start to go down pretty quickly.

And I think we want to be careful that in a way that we were addressing this because we are talking about reinvesting a majority of that capital in the high quality larger assets versus fractional ownership of a smaller asset. And so, this isn’t a way of us trying to bring dilution in the upcoming years. We think the transaction market is strong enough and our team is executing well enough where this is really portfolio strategy. This is not reasons why we don’t think FFO will grow in excess of peers over the next several years. And so, it really is two separate discussions. I think from the portfolio standpoint, you will see a greater focus on a smaller number of larger, higher quality, faster growth assets, but we’re not doing that at the expense of earnings even in the short term.

And our next question will come from Ryan Peterson of Sandler O'Neill.

Yes, thanks guys. A quick question from me, you've done a good job with the supplemental and simplifying things, so that is easier and clear for the Street to be able to model us. I was just wondering if you have any other initiatives or other areas that you expect to continue to provide more clarity to make it easier for the Street to understand guidance and what the out years are going to look like?

Yes, I mean we have that renewed focus on transparency. I think, for a number of years, we tried to be at the forefront of improving our disclosure, both through supplemental as well as through our regularly updated investor update to try to make both company and the industry as well understood as possible. So we can continue to make strides. Absolutely, open to your feedback. When people have asked us for stuff that they thought would be more useful, we’ve changed our disclosure a number of times. I think we’ve added some additional development disclosure this year. We’ve added some of the additional disclosures. Luke was talking about earlier just regarding the differences between the true cash benefit of some of our refinancing versus the GAAP earnings detriment. And so we’re trying to be very thoughtful with those materials to make sure that we’re as transparent as possible and people understand the strength of this business and portfolio, but clearly are open to additional ideas of what would be helpful because, obviously, we do want to make sure people have the best understanding possible of the strength of this company, our portfolio, our balance sheet and our expected growth rate going forward.

And then next we have Chris Lucas from Capital One Security.

Yes, good morning, everyone. I guess Luke, the question about the unsecured markets. We've seen companies that have issued earlier this year that spreads that have been wider than expected and some that have pulled the yields, and go on to term loan market, I guess what I'm wondering is, what is your expectation as it relates to the spread on the deal that you're looking at for later in the year and do you feel like the market will be perspective given what you're hearing from your consults at this point.

Yes. Chris, so what we’re hearing from our fixed income investors, so I think it’s worth noting that we do spend a lot of time with our fixed income investors. I do believe that we’d be receptive to a daily hour offering. I think there is a difference between DDR and some of the other issuer that came or gone to the private market, the main one being size and liquidity. I think it’s something that’s very important to bond holders at the moment. I do think a good example is DDR being able to issue $500 million earlier this year. That was in a time of uncertainty for the management team or we’re in management transition. And we still had a significant overwhelming amount of support from the fixed income community. So I do believe, right now, that we feel that we could make an issue – we could get an issuance done at most channels on the curve. With regard to where our spread is, it clearly is wider than what it was earlier this year. I think overall funding costs have gone up. I do feel – we’re seeing one of our peers in the market today. I do feel we would be pricing something around that $170, after 10 years sort of $175 to $180 area. If we issued today, I think we could probably do better than that if we were to start to move towards an issuance later this year. So I think we keep our eye on the market very closely. I think we’re looking at what channel we actually want to do. We look at obviously our maturity profile. And then also, it’s just going to be the amount of capital we actually need to pay back some of the debt which we’re going to refinance and then also some of the – with asset sales as well.

And our next question is from Rich Moore of RBC Capital Markets.

Hi, good morning guys. I'm curious, you mentioned that you had reorganized the National Accounts team. And I'm wondering, what was the team like before, and I guess, what makes it better under the new reorganized team?

Yes, Rich. Good morning, Paul. Before, we had it structured mostly as multiple and in a quite a few accounts reps scattered that we kept track of and did a good job of that. I don’t want to make it sound like this is brand new to us. But it wasn’t as coordinated an effort as I would have liked. So, the biggest difference is really restructuring under a Senior VP who reports directly to me, and he’s got a fairly senior staff that works exclusively on some of these major accounts in terms of some of things like I mentioned, package renewals and the like. It’s something obviously we see with all of the mall players. And I just thought we could do a much better job better than we have. I mean, it’s producing phenomenal results. It doesn’t mean the deal makers out there aren’t still communicating and coordinating with their retail partners because they are. And they are the deal makers. But when you have so many large accounts, and I mentioned the number 70 to 100 leases with any single tenant, we’ve got quite a number of those, and it needs that higher level, higher coordination, something that all of us here at the senior level can get involved in. And it’s just going to produce much greater results, and that’s the significant change.

And the next question is a follow-up from Ki Bin Kim.

Thanks. Just a couple of quick ones, the CapEx per square foot you show on page 12, is that TI plus landlord works plus recent commissions, one of your what’s in that bucket? And our second question is just on your same-store base rents, why – I mean maybe you can talk a little bit about the 1.9% versus last quarter's 2.4%, and how that should – if there is any investment pulling that down this quarter, and how that should trend throughout the year? Thanks.

Yeah. On the CapEx, Ki Bin, that is all inclusive. We do have our landlord work, tenant improvements or tenant allowance and leasing commissions. So, it’s all inclusive, which we think is the way everybody should be disclosing their net effect of rent. We feel great about where that number has gone, where the net effective rent has gone. Your quarter-over-quarter starting rent was up. CapEx was down approximately 14% on a per-square-foot basis, resulting in net effects of rent that were up 16%. That’s a big deal, and that’s going to pay dividends going forward. In terms of that base rent, you’re looking at in the same-store account. There are a couple issues. Some of the bankruptcies were in there. Puerto Rico clearly had a little bit of an impact. But what you’re often not seeing are the new deals that assign debt at much higher rents that will eventually drive that number up. End of Q&A

And this concludes our question-and-answer session. The conference is now concluded. We thank you for attending today’s presentation. You may now disconnect.