Q4 2007 Ramco-Gershenson Properties Trust Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Greetings and welcome to the Ramco-Gershenson Properties Trust fourth quarter and year-end 2007 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. (OPERATOR INSTRUCTIONS). As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Ms. Dawn Hendershot, Director Investor Relations for Ramco-Gershenson Properties Trust. Thank you, Ms. Hendershot, you may begin.

DAWN HENDERSHOT, DIRECTOR OF IR, RAMCO-GERSHENSON PROPERTIES TRUST: Good morning, and thank you for joining us for Ramco-Gershenson Properties Trust fourth quarter year-end conference call. I am hopeful that everyone received our press release and supplemental financial package, which are available on our Web site at RGPT.com. At this time, management would like me to inform you that certain statements made during this conference call, which are not historical may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Although Ramco-Gershenson believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be obtained. Factors and risks that could cause actual results to differ from expectations are detailed in the press release and from time to time in the Company's filings with the SEC. Additionally, we want to let everyone know that the information and statements made during the call are made as of the date of this call. Listeners to any replay should understand that the passage of time by itself will diminish the quality of the statements made. Also, the contents of the call are the property of the Company and any replay or transmission of the call may be done only with the consent of Ramco-Gershenson Properties Trust. I would now like to introduce Dennis Gershenson, President and Chief Executive Officer; and Richard Smith, Chief Financial Officer, who will be making prepared remarks this morning, as well as Mr. Tom Litzler, Executive Vice President of Development, who is available to answer questions. At this time, I would like to turn the call over to Dennis for his opening remarks.

DENNIS GERSHENSON, PRESIDENT - CEO - CHAIRMAN, RAMCO-GERSHENSON PROPERTIES TRUST: Thank you, Dawn. Good morning, and welcome to our year-end conference call. Given the economic uncertainty that has impacted all aspects of our economy, I believe that in addition to touching on our fourth quarter and year-end results, which are outlined in our supplement and covered in our press release, you want to hear from us as to how our portfolio is positioned to perform in this economic cycle. How have we structured our business plan for 2008? How we intend to fund our immediate and near-term capital needs, and what do our FFO projections for this year indicate for 2009 and beyond? Briefly, my view of our industry in the current economic climate is that retail real estate fundamentals for well-run, well positioned assets remain sound.

Although we read about a number of national retailers who are cutting back their expansion programs, we see continued interest from national and regional chains for both our redevelopment and our new development projects. Therefore, I am cautiously optimistic in the near-term and bullish about our sector's long-term prospects. Concerning Ramco specifically, you should know that with the potential for an economic slowdown looming on the horizon, as early as the middle of last year, we thoroughly reviewed our portfolio, our existing business plan, our capital needs and the composition of our funds from operations with our management team, our board of trustees, and a group of third-party professionals in order to develop a five-year business plan. It is our goal and focus to have our stock trade at a number which reflects our true net asset value. To do so, we believe strongly in running our business with an eye to preserving and improving our shopping centers, as well as protecting our balance sheet. To that end, let me make a few comments.

First, I want to assure you that our core portfolio is strong and stable. This conclusion is supported by both trade area and shopping center statistics. Our centers are located with rare exception in metropolitan markets. Our trade areas show an average population of 165,000 people within a five-mile radius indicating a solid residential base. An average household incomes for these markets are significantly above national averages at $73,000. Our average center size is 225,000 square feet, with an average of 2.4 anchors per shopping center. Current occupancy and rental statistics also support both the health of our trade area and our assets. Occupancy at year-end for our operating properties excluding centers under redevelopment stood at 94.6%. Same-center NOI grew at a healthy 5.7% for all of last year. Our rents for the fourth quarter for tenants renewing their leases and for tenants taking occupancy under new leases both exceeded historical averages. These statistics; however, are for tenants who open stores in the fourth quarter. Therefore, you might inquire what about conditions presently? To give you an understanding of our leasing progress this year, I'm pleased to report that since January the 1st of 2008, we have executed 17 lease renewals and average rental rate increase of 14.2% above rents these tenants were paying previously. And we have signed 17 new leases at an average rental rate of $20.27, which is over 26% above our portfolio average. Thus, in both lease renewals and new leases just executed, we are showing solid growth. These numbers reinforce the conclusion that retailers want to be a part of our centers and that our assets are indeed well located.

In addition to strong occupancy and increasing rental rates, a valuable indicator in demonstrating the success and desirability of our assets is the interest of existing anchors in expanding their premises and agreements with national mid-box retailers and department stores in joining the tenant line-up in over a dozen of our shopping centers. We have under way for 2008, 11 value-add redevelopment, this excludes our Aquia project. These include a Kroger Supermarket expansion in metropolitan Detroit, the addition of a 50,000-square foot Hobby Lobby in Flint, Michigan, the construction of a 40,000-square foot Sports Authority at our Paulding Pavilion Center in Georgia and the recovery of retail space at a number of our shopping centers in Florida, Michigan and Wisconsin to make way for both national midbox retailers and department stores who will occupy these areas at substantially higher rental rates than we've been receiving. Our supplement identifies these centers, the opportunities to add value, the approximate cost to complete the redevelopment, and the additional income we will achieve from these projects upon stabilization. Please note in our supplement, that these value-add redevelopment will produce a return on new dollars invested of approximately 13%.

Let me emphasize that these improvements to already successful and stable shopping centers, many of which are peers would consider core, untouchable assets will improve our tenant mix, increase our net operating income and produce a return on capital invested in excessive of returns for both acquisitions and development. The benefit of these redevelopment; however, usually do not come without a short-term income cost. More often than not, in …