Winthrop Realty Trust Q3 2008 Earnings Call Transcript

| About: Winthrop Realty (FUR)

Winthrop Realty Trust (NYSE:FUR)

Q3 2008 Earnings Call Transcript

November 6, 2008 2:00 pm ET

Executives

Beverly Bergman – VP and Director of IR

Michael Ashner – Chairman and CEO

John Garilli [ph] – Chief Accounting Officer

Peter Braverman – President

Analysts

Andrew Bord [ph] – Fenemore [ph]

Raymond Hau [ph] – Comprehensive Financial

David Fick – Stifel Nicolaus

Sam Kingsten [ph] – Northern Western [ph]

Brett Reiss – Janney Montgomery Scott

Operator

Greetings and welcome to the Winthrop Realty Trust third quarter earnings release 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. Beverly Bergman, Vice President and Director of Investor Relations with Winthrop Realty Trust. Thank you, Ms. Bergman. You may now begin.

Beverly Bergman

Thank you, Chris, and good afternoon everyone. Welcome to the Winthrop Realty Trust conference call to discuss our third quarter 2008 financial results. With us today from senior management are Michael Ashner, Chairman and Chief Executive Officer; Peter Braverman, President; John Garilli [ph], Chief Accounting Officer, and other members of the management team. Tom Staples, our Chief Financial Officer is unable to be with us today due to a death in his family.

A press release was issued this morning, November 6th, and will be furnished on a Form 8-K with the SEC. These documents are available on Winthrop’s Web site at www.winthropreit.com in the Investor Relations section. Additionally, we are hosting a live webcast of today’s call, which you can access in the site's News and Events section.

At this time, management would like me to inform you that certain statements made during this conference call, which are not historical, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although, Winthrop believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, Winthrop can give no assurance that its expectations will be attained. Factors and risks that could cause actual results to differ materially from those expressed or implied by forward-looking statements are detailed in the press release, and from time to time in Winthrop’s filings with the SEC.

Winthrop does not undertake a duty to update any forward-looking statements. Please note that in the press release, Winthrop has reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with the Reg G requirements. This can be found on page five of the press release.

I’d now like to turn the call over to Michael Ashner for his opening remarks. Please go ahead, Michael.

Michael Ashner

Thank you, Beverly. Good afternoon, everyone. And thank you for joining us today at today’s conference call. Today, Winthrop announced financial results for the third quarter, a period in which all of us experience a continuing difficult market condition. By now, you should have all received a copy of our earnings press release. Momentarily, I’ll turn the call over to our Chief Accounting Officer, John Garilli, substituting for Tom Staples, who’ll review our third quarter performance results. After that, our President, Peter Braverman, will present our operational highlights for the quarter.

First, I’d like to discuss where we see the marketplace and how we are positioning ourselves within the marketplace environment. Simply stated, the collapse of global credit markets, together with both the reality perception and imminent economic downturns, significantly devalued real estate equity and debt related securities. While pricing levels with specific assets have not fallen significantly yet, we believe that it’s only a matter of time before we do (inaudible) demand, and the inability to refinance debt to prior levels will significantly raise capitalization rates, resulting in price reductions.

Consequently, our current investment activities are primarily focused on real estate equity and debt securities with the exception of expanding, where appropriate, our joint ventures with our existing seasoned partners are not strictly considered a form of opportunistic investing. We believe that the repurchase of our own senior debt in equity securities, when valued and underwritten in the same manner as we would a third party investment, is a form of investing, which offers superior risk adjusted returns, which we will pursue when applicable. The principle difference is, of course, the benefit of reduced underwriting risk with respect to purchase of our own securities to our superior knowledge of the underlying assets.

So much for the right side of our balance sheet, in order to take advantage of these emerging opportunities and investor needs liquidity. To that end, and as we will – be discussed more fully momentarily, the company significantly improved its liquidity from the start of the year, increasing cash, cash equivalents, and restricted cash to approximately $219 million in September 30th, 2008 from $42.6 million of December 2007, inclusive of $70 million in borrowings and our credit line with KeyBanc. As a result, we believe we are presently relatively well positioned to take advantage of the increasing flow of investment opportunities that are being presented to us.

Enough of my brief (inaudible) to Alan Greenspan speak that supplied where we’re going to the company’s recent events.

As stated, pricing for specified assets (inaudible) not yet fallen to the levels we believe we will see in 2009. The only specific property related investments made by us during the quarter were with our existing joint venture partners, Marc Realty and the Sealy Group, who share our approach to investing. Specifically, the acquisition of a six building Office-Flex campus for a new venture with the Sealy Group contained approximately 470,000 square feet in Northwest, Atlanta. The property’s adjacent to our existing holding. And the purchase price for the property is $47 million inclusive, of extremely attractive assume of debt of $37 million. A non-recourse loan bears interest at 6.12%, and matures in November of 2016. Our company’s initial ownership percentage of the new venture is 68%. The property is presently 83% occupied, and will be jointly owned and managed with its sister venture.

Pursuant to the terms of the joint venture arrangement, Sealy oversees the day-to-day operations of the joint venture. We underwrote the new venture to yield an initial estimated current return of 10% to 11% (inaudible) equity. We also made a $1.5 million, participating mezzanine loan of the newly acquired property for the Marc Realty portfolio located in 180 North Wacker in Chicago. The loan bears interest at 8.5%, requires monthly payments of interest only, and matures on April 18th, 2012. And contains equity conversion features similar to our existing mezzanine loans with Marc Realty.

Consistent with our views of real estate, equity securities are starting to provide attractive opportunities. We recently acquired, in a privately negotiated transaction, $3.5 million shares of common stock of Lexington Realty Trust for $5.60 per share. In so doing, the sale of the shares provided Winthrop with non-recourse financing equal to 50% of the purchased price for term of three years at an interest rate of 3-month LIBOR plus 250 basis points. No margin costs maybe made by the lender until such times the loan amount equals or exceed 60% of the reduced values of the shares, the equivalent of a $4.67 stock price presently.

In underwriting this investment, we assumed the possibility that Lexington might reduce its dividends significantly, which at a level that would likely provide Winthrop with a 20% plus current returns after giving effective financing, without any benefits from stock appreciation. Because we reviewed our holdings in Piedmont Office Realty Trust as non-core with little near term upside, we determined, together with our partners, to sell our position back to Piedmont for an aggregate purchase price of $32.3 million. In connection with the sale, we received a distribution of our pro-rata share equal to $9 million. In so doing, we realized the cash lost was approximately $1 million, which in all likely would have been greater, but for the four-year stand still agreement we entered into with Piedmont.

During the quarter, we continue to focus our efforts on accretion liquidity and de-levering our balance sheet. As mentioned, at September 30th, we had over $218 million in cash, cash equivalents, and restricted cash, including the $70 million borrowing from KeyBanc, compared with $42.6 million at the end of 2007. The increase in cash came from a variety of sources including the sale of $3.5 million Lexington shares in March for approximately $52.8 million, approximately $37 million from our shareholder rights offering in May, a $10 million distribution from our Concord investment, the aforementioned sale by Lex-Win of our Piedmont shares, and a $70 million of borrowings on our KeyBanc line. It should be noted that we recently repaid $33.7 million of the KeyBanc line.

Accretive de-leveraging of our company is, in our view, a potentially superior risk adjusted return on our capital because of the yield presently realizable, the enhanced strengthening of our balance sheet, and the reduced underwriting risk we have with respect to our own assets.

To this end, Winthrop recently acquired a total of $1 million and $24,000 of its Series B-1 preferred shares for a gross price of $18.6 million, inclusive of transaction costs, which represents a 27.4% discount from their redemption costs in March 2012. In September, Winthrop’s Board of Trustees approved the share repurchase plan, which the company may repurchase up to $5 million of its outstanding common shares. During October 2008, the company repurchased $350,000 of its common shares at an average price of approximately $2.66 per common share for approximately $930,000. In administering the stock repurchase program, it is our intention to only repurchase shares on our company on the same dates as we evaluate any common stock investments.

On August 2nd, 2008, a subsidiary of Inland American Real Estate Trust, Inc. agreed to contribute up to $100 million in preferred capital over the next 18 months to Concord Capitals, our debt platform, to be used primarily for new investments by Concord, and if Inland agrees, to satisfy any future obligations and or repayments of Concord's credit facility. In connection with this investment with Concord, Inland is entitled to receive a priority return of 10% on its contributed and unreturned capital.

Coincident with the closing, Winthrop received the aforementioned distribution of $10 million form our equity investment in Concord. In a series of transactions, Concord has reduced the said obligations from $849 million at December 31st, 2007 to $689 million on October 31st, 2008.

On October 31st, 2008, Concord reduced the balance on its repurchase line with Column Financial by $42.6 million, and extended the line through March 2011. In addition, Concord extended one of its repurchase lines that with RBS Credits, which was scheduled to expire December 15th, 2008 for a period of one year, and reduced the outstanding balance of $21.5 million by way of repayments.

Finally, Concord repurchased approximately $2 million of its Class E and $2 million of its Class F bonds issued by the Concord Real Estate CDO 2006-1 for an aggregate purchase price of $1 million, representing a discount of 75%. As a result, the aggregate internal leverage ratio with Concord improved in 76% to 68% through November 4th. Once again, it is our view that de-leveraging to Concord is an effective and protective use of its capital in this credit constrained market.

Managing the debt platform amidst a credit crisis, such as we are experiencing, is somewhat similar to an endless rollercoaster ride. On the one hand, new loans come with both outside yields and a superior risk profile compared to year ago offerings. On the other hand, the potential stress of the income levels for both new and all loans as well as declining loans to value ratios resulting from increased capitalization rate spell caution.

Moreover, at the leverage debt platform, which itself has the ability to repurchase its own debt at a discount would again reduce underwriting risks. It is suggestive of an alternative investment direction. Finally, the uncertainty of obtaining replacement financing in 2011 also requires careful consideration. All of these options and concerns are being carefully considered by us as well as our partners, Lexington and Inland, in reviewing the future growth and direction of Concord.

To summarize, these are volatile and heady times, which provide our companies with what we believe to be a much improved investment environment, but which also will require the most focused balance sheet diligence in order to mine these opportunities. With that I will now turn the call over to our Chief Accounting Officer, John Garilli to review our financial results. John?

John Garilli

Thank you, Michael. Good afternoon, everyone. I’ll present an overview of our financial results for the third quarter as well as highlights from each of our business segments.

For the three months ended September 30th, 2008, Winthrop reported a net income of $2.2 million, or $0.03 per share, compared with net income of $5.4 million, or $0.08 per share, for the quarter ended September 30th, 2007. The decrease in income for the comparable periods was primarily the result of $1.9 million decrease in revenues with respect to the company’s preferred equity in the Marc Realty portfolio as the 2007 results included equity participating income of $1.5 million relating to the sale of a property. Additionally, interest income decreased by approximately $900,000 as a result of the sale of our mortgage bank securities in February 2008.

For the nine-month ended, September 30th, 2008. We reported a net loss of $15.5 million, or a loss of $0.21 per share, a decrease of $42.3 million from net income of $26.8 million, or $0.36 per share for the nine-month ended September 30th, 2007. The decreased on earnings for the nine-month period is primarily the result of the following, the decrease in earnings from our investment in Concord of approximately $21.5 million due to impairment charges on its available for sale securities of approximately $57 million; a loan loss provision of $8.2 million, which was partially offset by an increase at net interest earnings of $9.7 million. This increase in net interest earnings is the result of significant investment activity during the first nine months of 2007.

Additionally, Concord recognized a gain on extinguishment of debt of approximately $13 million relating to the acquisition of debt issued by its CDO-1 with the face value of $25.1 million for $12.1 million. We recognized our 50% share of each of these items.

With respect to the company’s preferred equity in the Marc Realty portfolio, earnings decreased by approximately $7.9 million, primarily as a result of a decrease in participating equity income of $5.4 million and an impairment loss of approximately $2 million. Additionally, gain on sale of risk securities decreased by approximately $8 million.

Total FFO for the third quarter of 2008 was $5.3 million, or $0.07 per diluted common share, compared with FFO of $10.2 million, or $0.12 per diluted common share for the third quarter of 2007. The company reported a loss of FFO for the nine-month ended September 30th, 2008 of $6.5 million or a loss of $0.09 per diluted common share as compared with FFO of $40.7 million or $0.46 per diluted common share for the nine-month ended September 30th, 2007. The decreases in FFO are primarily due to the same factors, which negatively impacted net earnings noted earlier.

With respect to our operating properties business segment, net operating income was $7.7 million for the three-month ended September 30th, 2008, compared with approximately $7.2 million for the three-month ended September 30th, 2007. For the nine-month ended September 30th, 2008, net operating income was approximately $23.5 million, compared with approximately $23.8 million for the nine-month ended September 30th, 2007. The decrease in net operating income during the nine-month period is due primarily to increased operating and real estate tax expenses of $2.4 million, which were partially offset by an increase in rental income of $1.8 million.

Net operating income from our loan assets and loan securities business segment was approximately $4.4 million for the three months ended September 30th, 2008, as compared with net income of $7.2 million for the three months ended September 30th, 2007. As previously mentioned the decrease is primarily the result of a $1.9 million decrease related to the Marc Realty portfolio and a $900,000 decrease in interest income.

For the nine-month ended September 30th, 2008, the company reported a net operating loss from our loan assets and loan securities business segment of $9.8 million, compared with net operating income of $23.4 million for the nine-month ended September 30th, 2007. This decrease was primarily due to a decrease in earnings from our investment in Concord of $21.5 million, a decrease in earnings from our investment in Marc Realty of $7.9 million, and a decrease in interest earnings of $5.5 million.

The REIT equity interest business segment reported income of $37,000 for the three months ended September 30th, 2008m compared with income of approximately $1.3 million during the prior year period. This was primarily due to a decrease of $1.2 million in dividend income and a decrease of $135,000 from the equity earnings of Lex-Win acquisition, LLC. The decrease in dividend income is primarily from the sale of our Lexington shares earlier this year.

For the nine-month ended September 30th, 2008, income from our re-equity interest business segment decreased by approximately $12.6 million to $1.04 million, from $13.6 million for the nine months ended September 30th, 2007. The decrease in earnings was due primarily to a decrease in the gain on sale of real estate securities of approximately $8 million, a decrease in dividend income of $3.5 million as well as an increase in equity loss in Lex-Win acquisition, LLC of $839,000 and a $207,000 impairment loss recognized in 2008 on available for sale securities.

At September 30th, 2008, we held re-equity interest having the aggregate value of $1.2 million, compared with $71.4 million at December 31st, 2007. The primary change in the balance from December 31, 2007 is due to the sale of our shares in Lexington Realty Trust, which took place during the first quarter of this year, and the sale of our interest in Piedmont Realty Trust, which took place during the third quarter of 2008.

Turning to liquidity, for the nine months ending September 30th, 2008, our cash and cash equivalents increased by approximately $143.1 million. The increase was a result of approximately $24.9 million of cash generated by operating activities and $144.5 million of cash provided by our investing activities. This was partially offset by $26.3 million of cash used in financing activities.

At September 30th, 2008, we had cash, cash equivalence, and restricted cash of $218.8 million. This includes $70 million borrowed under the company’s revolving line of credit with KeyBanc. This facility matures December 16th, 2008 with the option to extend for one additional year. More recently, on October 22nd, 2008, we repaid $33.7 million on that line of credit.

Lastly, a quick review of our dividends, our Board of Trustees declared a regularly – regular quarterly cash dividend of $6.50 per common share during the third quarter of 2008, which was paid on October 15th, 2008. To date this year, we have paid regular quarterly dividends of $6.50 per common share and $40.625 per Series B-1 share.

In addition, during the first quarter of 2008, we paid a special dividend for the year ended December 31, 2007 of $0.18 per common share and $76.39 per Series B-1 share. That concludes my financial review for the period. Now, I’ll turn the call over to Peter Braverman. Peter?

Peter Braverman

Thank you, John, and good afternoon, everyone. I’d like to talk about the key operational issues that have occurred since July. At September 30th, 2008, our portfolio accomplished approximately 9.7 million square feet of space, including properties in the Marc Realty and Sealy portfolios and 230 rental units at multi-family assets.

The Marc Realty portfolio consisted of two participating second mortgage loans and 19 participated convertible mezzanine loans, together with an equity investment in each mezzanine borrower and the aggregate investment amounts, including accrued interest of approximately $56 million $173,000.

As of September 30th, 2008, our wholly owned portfolio had a blended occupancy rate of 97%, which was consistent with the 97% occupancy rate of September 30th, 2007. With respect to the properties with our Marc Realty venture, the blended occupancy rate as of September 30th, 2008 was 82% as compared to 85.5% of September 30th, 2007.

While the suburban properties have experienced a softening in the leasing market, Downtown Chicago remains strong, and maybe set to be improving.

Our Sealy venture properties have a blended occupancy rate of 87% as of September 30th, 2008 as compared to 90% of September 30th, 2007. The 3% decreased in occupancy at the Sealy properties from the prior year period is primarily attributable to a recent vacancy at the Nashville, Tennessee properties. We are experiencing strong leasing interest for the Nashville vacancy.

Turning to the topic portfolio, as of September 30th 2008, Winthrop and Lexington had each contributed $162.5 million to Concord, which has acquired approximately $1.05 billion in assets. And each has received total distributions of $14.6 million, and earned a $9.93 percent annualized return on invested capital during the nine months ended September 30th, 2008.

At this time, the company’s portfolio has only one non-performing bond and four loans, which a loan that Winthrop hasn’t taken. One of which, the Columbus apartment loan, is in default. A receiver is in place at Columbus, and Concord has commenced foreclosure proceedings.

While the platform continues to perform within our current expectations, this is not the time to get high concern over liquidity and future performance of the real estate on relying on our loans.

So to conclude, Winthrop had had a stable quarter in terms of operating performance. We’ve identified some interesting opportunities as demonstrated by our recent repurchase (inaudible), and continue to deliver our projected – to deliver as projected in regards to returns on invested capital. Our balance sheet and liquidity are solid. And we believe we are well positioned to continue to capitalize on the unique opportunities that were presented by this market. With that let’s open up for questions. Operator?

Question-and-Answer Session

Operator

Thank you. We will now be conducting a question-and-answer-session. (Operator instructions) Our first question comes from the line of Andrew Bord [ph] with Fenemore [ph]. Please proceed with your question.

Andrew Bord – Fenemore

Good afternoon, everybody. I appreciate the call. It’s always insightful. I appreciate that. I’m curious on the Concord platform, with the conditions changing with the Inland investment. Has that changed what cash you may pull out of Concord this year in the next, let’s say, 12 months?

Michael Ashner

No. No. It doesn’t. Any cash we take out of Concord this year will be cash that is a return on investment, not a return of investment.

Andrew Bord – Fenemore

Okay. So you don’t feel like you need to retain the cash to pay down debt levels? I guess my real question –

Michael Ashner

No. We may use their cash to pay down debt levels, but yes. I thought your question was whether we were going to take cash out to reduce their equity investment. We don’t intend to do that.

Andrew Bord – Fenemore

Okay. And then on the – on your dividend you pay out, I think most of us understand you’re less like to REIT more like an opportunity fund than anything else I’ve seen. And does it make sense, at this point, to cut your dividends? Do you have more cash to reinvest?

Michael Ashner

Well, we couldn’t kind of cut our dividend if we wanted to. We are at the edge of our taxable income in order to maintain REIT status. But we have to dividend out approximately 100% of our taxable income. So it’s not a question, which we have the option of even considering.

Andrew Bord – Fenemore

Okay. That’s a good answer. I appreciate it. Thank you.

Operator

Our next question comes from the line of Raymond Hau [ph] with Comprehensive Financial. Please proceed with your question.

Raymond Hau – Comprehensive Financial

Hi, guys. A question for – a little – delve a litter deeper on Concord, tell us a little bit about sort of where you see that platform headed. I know you reduced that in the third quarter. Do you see moving more towards that? Or are you still looking at opportunistic situations? Any comment on that, any?

Michael Ashner

Well, Concord was designed and will continue to be a more conventional debt platform. And that is pursuing high yielding debt opportunities, but conventional ones. We’re not doing strange loans or recapitalizations of other companies through Concord. It’s basic, your basic mortgage loans, whether it be a first mortgage mezzanine or preferred equity. So that was the basis it for which it was set up and that’s the basis, in which we’re going to maintain that company. But we are, as I said, being very cautious right now of capital tier. We have approximately $60 million of drawable capital between our KeyBanc Line and Inland partners. And we’re going to make decisions very carefully as to where we want to put that capital over the next year in view of the continuing uncertainty in the credit markets.

Raymond Hau – Comprehensive Financial

What’s the process on the – I guess the property you’re taking back in Concord? Where is that property?

Michael Ashner

Oh God. It is a six-apartment complex in Columbus. It actually could have went very well for us. Normally, in a foreclosure process, you don’t get control of the real estate from near the end. The borrower filed for bankruptcy, they appeared to have – they did not have their resources to maintain the bankruptcy so that the court allowed us to put the receiver in. We’re in the process of taking – well in fact, in effect, have taken control over real estate now.

Raymond Hau – Comprehensive Financial

Was that one of the loans on the – that’s covered by the CDO or – ?

Michael Ashner

No. No. That’s not the CDO?

Raymond Hau – Comprehensive Financial

Okay. And roughly what was the face value volume?

Michael Ashner

$21 million.

Raymond Hau – Comprehensive Financial

Okay.

Michael Ashner

It’s their first mortgage loan. So there will be certainly some level of recovery.

Raymond Hau – Comprehensive Financial

Got you. Last quarter, and Gran, this is small in the big scheme of things. You’ve mentioned a Michigan property inside the Marc portfolio that I guess that in October would have a deadline. I think the state of Michigan was going to let you know something on. Can you comment on that if, any?

Michael Ashner

I think the issue was they were going to – they were going to –

Raymond Hau – Comprehensive Financial

Renew?

Michael Ashner

Yes. Renew. Peter, did they renew? I don’t think they have extended yet. They haven’t vacated the properties from my understanding. But nevertheless, there is durational aspect to their leases, and it’s obviously created the inability to easily refinance their property on these markets. The loan, we’ve contacted the lender, that it’s hard to tell them that we want to extend the loan. And we’re waiting to hear from them.

Raymond Hau – Comprehensive Financial

Okay. What’s generally – on the Verizon and Bellsouth properties, what’s generally the timeline when you’ll know whether they’re going to extend or – ?

Peter Braverman

Anticipating end of first quarter or second quarter of next year.

Raymond Hau – Comprehensive Financial

Okay, okay. Thank you very much.

Michael Ashner

You’re welcome.

Operator

Our next question comes from the line of David Fick with Stifel Nicolaus. Please proceed with your question.

David Fick – Stifel Nicolaus

Good afternoon. The quarter lease expiring in 2010 is a big piece of (inaudible). Could you just walk us through what you believe the status of that lease to be?

Peter Braverman

Well it’s actually, the probe lease is actually 12 separate properties. Each one has its separate lease. So there’s not a consistent story among them. At least two of them, probably, will clearly vacate. In fact, we have one that’s probably going to be sold. We’ve got three that we’re not sure of. And the balance we expect them to renew, although there’s no certainty that they would do that. They don’t have to notify us for at least a year.

David Fick – Stifel Nicolaus

And you feel comfortable that it’s well located real estate, easily re-leased?

Peter Braverman

I think, again, they’re 12 separate storeys. The two that’s being vacated, I think it’ll probably be weaker. The ones that we expect them to stay are stronger. So there’s a range among all 12 as a general – as a general portfolio that is a very well placed portfolio.

Michael Ashner

Yes. We’re hesitant to predict events, David. But we’re not uncomfortable with those assets.

David Fick – Stifel Nicolaus

Okay. Can you walk us through the straight line of rent and CapEx for the quarter?

Peter Braverman

John, can you be helpful on this.

John Garilli

Yes. So on the straight line rent, are you looking for specifics or in terms of the change? Or how it hits our P&O?

David Fick – Stifel Nicolaus

What was it? I mean just what were the numbers?

John Garilli

Oh, I’m sorry. (inaudible) The straight line rent for the quarter –

Peter Braverman

We can get that offline. I will call you back.

John Garilli

The adjustment was – it’s under $1 million for straight line rent.

David Fick – Stifel Nicolaus

What was your CapEx?

John Garilli

Total CapEx for the quarter, I do not have that handy. I have it for –

David Fick – Stifel Nicolaus

Well year-to-date will be fine too.

John Garilli

Okay.

Michael Ashner

David, it’s approximately $3 million year-to-date. But if you want, when we go – if you want to go offline, we’ll give you that schedule on the property by property basis.

David Fick – Stifel Nicolaus

It doesn’t have to be that. I just like to know what’s based building and what’s TI and leasing commissions at some point. The Concord debt facility is expiring in 2009. What do you expect to happen there?

Michael Ashner

Well the one that’s expiring in November of 2009?

David Fick – Stifel Nicolaus

No.

John Garilli

I’m sorry.

Michael Ashner

Right now we have three debt facilities. We have first the – the Columns Financial was now extended now through 2011. That’s done. We extended the RVF branch through November, December of 2009 just recently. And we’re in the process of finalizing an extension or pay down of the J.P Morgan/Bear Stearns. And that’s I think for what? $22 million, Peter?

Peter Braverman

Approximately.

Michael Ashner

$22 million.

Peter Braverman

Yes.

David Fick – Stifel Nicolaus

And so you would expect it to be a combination of an extension and pay down.

Michael Ashner

Yes. That’s how it always worked, somehow.

David Fick – Stifel Nicolaus

Okay. Yes. All right. Thanks.

Michael Ashner

That’s what I anticipate.

David Fick – Stifel Nicolaus

That sounds great. I understand.

Michael Ashner

The stock market’s down 400 points, they tell me. So who knows?

David Fick – Stifel Nicolaus

All right. Thank you.

Michael Ashner

You’re welcome, David.

Operator

(Operator instructions) Our next question comes from the line of Sam Kingsten [ph] with Northern Western [ph]. Please proceed with your question.

Sam Kingsten – Northern Western

Yes. Hi, guys. Just a quick question on the share repurchase, what are your thoughts on how quickly or slowly you’re going to do that and on the repurchase of the Series B-1 versus common? Thank you.

Peter Braverman

Well those are two questions, really. So let’s go with the first one. Candidly, we’re going to – we had skewed any gimmicks with respect to stock repurchase. We’re not buying back the stock to drive up – to impress the market and drive up stock price. We buyback our stock when we think it’s cheap. We do that for shareholders who aren’t selling stock. That’s what we do. So we’re in the market on a constant basis, buying the stock when we think the price is very cheap, and that’s what we’re going to continue to do.

With respect to the Series B-1, it’s obviously – it’s obviously an easily – a more easily a valuable purchase because of its place in the capital structure. Where we think it’s an accretive transaction to our common stock, we buy it back. And we’ll continue to do so there also. I hope that was helpful.

Operator

Our next question comes from the line of Brett Reiss with Janney Montgomery Scott. Please proceed with your question.

Brett Reiss – Janney Montgomery Scott

Thank you. Good afternoon. What should I root for here? I mean, on one sense, the liquidity that you’ve husbanded – I’d like you to be opportunistic and buy commercial properties with higher cap rates on the cheap, but then you do have $9.7 million of properties. I mean, what should I be hoping for here?

Michael Ashner

I’m not sure what’s – perhaps if I can rephrase your question. What is it that you can expect of us? Is that – ?

Brett Reiss – Janney Montgomery Scott

No. No. I mean on the one hand, I want property – I want you to be right on your predictions that property values come down because you’ve husbanded in cash and you’ve got a very strong potential, and you want to be opportunistic and buy things on the cheap. But you do have an existing portfolio of properties. I’m concerned you’ll make it on one end, and we’ll have issues on the other?

Michael Ashner

Let’s talk about this – let’s first focus on the other end of it. We’re very fortunate our properties are very well leased. Marc Realty portfolio’s performing very well, as is Sealy. We have little or no debt maturities in near term. So we’re going to hold our real estate and make the money that the real estate that we bought in the past generates. That’s what we’re going to do. We don’t see any material risk to the holdings that we have. The only caveat to that is, obviously, the one property in Lansing, Michigan. And we’ve been forming market at that. It is what it is.

Brett Reiss – Janney Montgomery Scott

Right.

Michael Ashner

We’ll put that at the right time. We’re not concerned about – not maturely concerned about that which we own. And god forbid that the – we got a 38% unemployment rate, and if that goes to 1,000, then we’ll be concerned about that side. But right now there’s no way we are concerned.

On the other side, we have to weigh carefully where we put our capital. Do we put in equity and debt securities? Do we do more platform size investments, larger deals, which gives us a greater bank for a buck or do we buy individual properties? As we’ve said, right now, we don’t think – we don’t see that property prices are falling through the level where they are particularly attractive relative to the securities we can buy. Look it’s not unknown, you could buy convertible bonds on top tier REITs two weeks ago at – it’ll be over 18%. It’s money good. You can buy perpetual preferred at 20%. You can buy common stocks at a fallen price by 60%. These are things we have to consider.

Brett Reiss – Janney Montgomery Scott

Right. Thank you.

Michael Ashner

Welcome.

Operator

There are no further questions at this time. I would now like to turn the floor back over to management for any closing comments.

Michael Ashner

Again, we thank you all for joining us this afternoon. And as always, we appreciate your continued interest and support. We welcome your input and any questions concerning the company and its business. As we’ve told you in the past, you’re welcome to call any member of management at any time with any particular questions you have regarding the company or its operations. If you’d like to receive additional information about us, please contact Beverly Bergman at our offices. You can also find additional information about us on our Web site at www.winthropreit.com. In addition, please fell free, as I’ve said, to contact me personally or any other member of management.

Operator

Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time, and thank you for your participation. May you all have a wonderful day.

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