Q4 2008 Ramco-Gershenson Properties Trust Earnings Conference Call - Final.(Broadcast transcript)

OPERATOR: Greetings and welcome to the Ramco-Gershenson Properties Trust fourth-quarter 2008 year-end 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 of Investor Relations. Thank you. Ms. Hendershot. You may now begin.

DAWN HENDERSHOT, IR, RAMCO-GERSHENSON PROPERTIES TRUST: Good morning and thank you for joining us for Ramco-Gershenson Properties Trust's fourth-quarter year-end conference call. I am hopeful that everyone received our press release and supplemental financial package, which are available on our website 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 attained.

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; Richard Smith, Chief Financial Officer; Thomas Litzler, Executive Vice President of Development; and Michael Sullivan, Senior Vice President of Asset Management.

At this time I would like to turn the call over to Dennis for his opening remarks.

DENNIS GERSHENSON, CHAIRMAN, PRESIDENT, CEO, RAMCO-GERSHENSON PROPERTIES TRUST: Thank you, Dawn. Good morning and welcome. No matter what amplifying adjectives you choose to describe the state of our economy and its various sectors, 2008 was a very difficult year. Further, no one is terribly sanguine about the prospects for recovery in 2009.

With that in mind, I believe that this morning you are most interested in having us address two topics. First, what is our plan to remain a successful public REIT in these challenging times? And what are our catalysts for growth once the skies begin to clear?

Although it has been many years since our industry experienced such a confluence of negative circumstances, those of us who have been in the shopping center business for a long time are no strangers to an environment where the consumers are hesitant to spend, significant retailers are going out of business or postponing their expansion plans, and the credit markets are stubbornly uncooperative.

Now as then, the key to surviving these problems and ultimately growing one's business in the future is the ownership of a portfolio of shopping centers that is well located, well tenanted, and the destination of choice for the consumer. Ramco-Gershenson's portfolio of shopping centers meets these criteria.

Our centers are predominantly located in metropolitan areas with significant barriers to entry. Our properties' demographic profile includes large trade areas with population bases averaging over 190,000 persons, with average household incomes of $77,000, well above the national average.

In addition to these solid trade area statistics, our shopping center characteristics promote stability in these troubled times. Our centers are anchored by the dominant supermarkets in the area, the most successful discount department stores, and the most recognized national, destination-oriented, popularly priced mid-box retailers.

Our average shopping center is 225,000 square feet, well above the average size of our peers. The Ramco portfolio boasts an average of over two anchors per center, insulating our properties from the catastrophic results of losing a landlord's one and only anchor, especially if that draw is a supermarket.

Thus, the location as well as the destination-oriented everyday goods and service tenant mix of our shopping centers positions our properties to weather this economic storm.

An additional indicator of the strength of our shopping center portfolio is the number of anchor tenants who are either expanding their existing stores or joining our tenant lineup. At the beginning of 2008, we commenced major value-add redevelopments at 13 of our shopping centers. As of today, four have been completed and nine are still underway. The anchors who will be added or expanded as part of these projects will come online over the next 18 months.

Even with a portfolio of dominant shopping centers, we are not immune to the closing of retailers such as Linens 'n Things and Circuit City. However, in addition to the one Michigan Linens 'n Things location which we have already re-leased and opened as a 34,800 square foot Golfsmith store, we are currently negotiating letters of understanding with replacement tenants at almost every center where a vacancy has occurred. At a number of our locations, we are discussing terms with two or three national retail anchors for the same vacant space.

Further, our 2008 leasing statistics show steady, positive momentum both in tenant renewals -- where we extended over 70% of our lease expirations at an average rental increase of 11.6% -- and with new tenancies. We opened 25 new stores in the fourth quarter alone at a rental rate 4.4% about our portfolio average.

Our supplement counts only those retailers who opened during last year. As telling an indicator of our leasing progress is the number of new leases we signed in the fourth quarter of 2008 and the first two months of 2009. In Q4 of last year, we signed 20 new leases, compared to 23 in the last quarter of 2007. And in the first 45 days of 2009, we have signed 16 new lease agreements with an additional 21 leases out and under final negotiation.

Mr. Michael Sullivan, our Senior Vice President of Asset Management will expand on these statistics and provide some color on our plans for the year and the leasing environment for 2009. He will also provide insight into how our Michigan and Florida assets are performing.

2008 occupancy for our wholly-owned and joint venture properties, excluding centers in redevelopment, was 93.7% at year-end. Occupancy for the entire portfolio, including planned vacancies we created to facilitate the outstanding nine major redevelopments, stood at 91.3% at year-end. This number includes the impact of all but one Linens 'n Things vacancy, but does not include any of the Circuit City closures.

The major impact to our 2009 occupancy number will be the one additional Linens store; all four of the Circuit City locations; plus the Wal-Mart at our Ridgeview Center, where we took an impairment charge. These vacancies will be offset in part by those anchor tenancies that will come online this year as part of our redevelopments.

That said, we are projecting occupancy in 2009 at between 50 and 100 basis points below the 2008 level. Understand, however, that to be conservative we have not included in our 2009 occupancy projection any retenanting of the six remaining Linens stores or the four Circuit City locations, even though we're making substantial progress on letters of intent for many of these vacancies.

Based upon the schedule of openings of the new anchors in our redevelopments, plus the retenanting of the Linens and Circuit City stores, we anticipate a significant increase in our occupancy number in 2010.

The ongoing viability of our Company, as I stated at the outset of this call, relies primarily on the strength of our …