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Glimcher Realty Trust (NYSE:GRT)

Q1 2013 Earnings Conference Call

April 25, 2013 11:00 ET

Executives

Lisa Indest - Senior Vice President, Finance and Accounting

Michael Glimcher - Chairman and Chief Executive Officer

Marshall Loeb - President and Chief Operating Officer

Mark Yale - Chief Financial Officer

Analysts

Todd Thomas - KeyBanc Capital Markets

Jeff Donnelly - Wells Fargo

Richard Milligan - Raymond James & Associates

Carol Kemple – Hilliard Lyons

Nathan Isbee - Stifel

Daniel Busch - Green Street Advisors

Ben Yang - Evercore

Quentin Velleley - Citigroup

Jeff Donnelley - Wells Fargo

Keith Ambachtsheer - Goldman Sachs

Operator

Good day, ladies and gentlemen, and welcome to the First Quarter 2013 Glimcher Realty Trust Earnings Conference Call. My name is Lisa and I will be your coordinator for today. At this time, all participants are in listen-only mode. We will facilitate a question-and-answer session towards the end of this conference. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the call over to your host for today, Ms. Lisa Indest, Senior Vice President, Finance and Accounting. Please proceed, ma’am.

Lisa Indest - Senior Vice President, Finance and Accounting

Good morning, and welcome to the Glimcher Realty Trust first quarter 2013 conference call. Last evening, a copy of our press release was circulated on the newswire, and hopefully each of you have had the opportunity to review our results. Copies of both the press release and the first quarter supplemental information package are available on our website at glimcher.com.

Certain statements made during this conference call, which are not historical maybe deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For a more detailed description of the risks and uncertainties that may cause future events to differ from the results discussed in the forward-looking statements, please refer to our earnings release and to our various SEC filings.

Management may also discuss certain non-GAAP financial measures. Reconciliations of each non-GAAP financial measure to the comparable GAAP measure are included in our earnings release and the financial reports we filed with the Securities and Exchange Commission.

Members of management with us today are Michael Glimcher, Chairman and CEO; Marshall Loeb, President and COO; and Mark Yale, CFO.

And now, I would like to turn the call over to Michael Glimcher.

Michael Glimcher - Chairman and Chief Executive Officer

Thank you, Lisa. Good morning everyone and thank you for joining us on today’s call. We are very encouraged by the start of fiscal year 2013 and excited about how it positions us for the rest of the year in terms of the continued execution of our business plan and strategy.

First, from a financial perspective, our $0.16 of adjusted FFO per share was right in line with our guidance and represents 7% growth over the first quarter of 2012. From an operational standpoint, we are pleased with another strong quarter of fundamentals turned in from a core mall portfolio aided in part by the addition of University Park Village during the first quarter. We continue to drive growth and productivity within our portfolio with quarter end sales reaching a new record level of $453 per square foot representing 9% growth over the prior year.

Total occupancy increased 40 basis points over last year which included an increase in mall store occupancy of 100 basis points. Re-leasing spreads were positive again at 13% for the quarter while maintaining a positive occupancy cost ratio at near historical low levels of 10.5%. Most importantly, core mall NOI growth accelerated to approximately 4% during the first quarter showcasing that our recent investments in the company’s growth platform are starting to generate tangible results. We have been consistently talking about 2013 being the year that we turned the corner in terms of delivering growth more in line with our Class A mall peers. We believe this will be an important positive catalyst for the company and we are pleased to be off to a solid start on this initiative

As we look out to the rest of 2013, we expect to be able to continue to drive positive re-leasing spreads throughout the portfolio while enhancing the overall quality of our tenant mix. Additionally, reinvesting in our core properties through redevelopment will continue to be a priority in terms of capital allocation. In addition to our investment in our two outlet collection properties, we see further opportunities throughout the portfolio, including Polaris Fashion Place where we are in the initial planning phase for the redevelopment of the former Great Indoor space. Scottsdale Quarter’s first two phases have attractive guidance during the quarter. And we are excited about the near terms scheduled openings of approximately 20,000 square feet at this center including urban outfitters in May. In terms of Phase 3 our multi-family developer has made substantial progress on the zoning and entitlement process for a 275 for-rent residential unit project. While some contingencies remain, we have non-refundable moneys on deposit, so we are very pleased with the progress. Additionally we continue to move forward with discussions on the zeal to bring a fashion department store anchor to the site as well. As discussed during our last call the desire to proceed on both sides is extremely strong.

As it relates to our external growth we were excited to start the year with the acquisition of University Park Village in Forth Worth, Texas with sales of over $800 per square feet and occupancy cost in the single digits and a decent amount of space rolling over the next three years, we are confident regarding the NOI growth potential of the property moving forward. The search for similar joint opportunities will continue in 2013 with a focus on properties with high sales productivity, outsized growth potential and a rent roll of tenants that we have or aspire to have relationships with. Incrementally, we are seeing more opportunities, but also heightened competition in the marketplace, accordingly we will continue to maintain our discipline in terms of our future allocation of capital.

Now from a capital perspective, we are already off to a strong start this year in terms of enhancing our balance sheet as well as our liquidity. Our progress is evidenced by the February modification of our corporate credit facility, which involved moving from a secured to an unsecured structure, lowering the pricing on the overall facility, while extending the final maturity date out to 2018. The company’s access to attractively priced capital continues as well. We are pleased with the recent financings on Polaris Fashion Place and University Park Village. Both were white collar executions and involve terms up to 15 years at rates below 4%. We were also able to issue a new series of preferred stock at a coupon of 6.78% with a plan to redeem $90 million of our Series G preferred stock with a coupon of 8.8% does reducing the borrowing costs on such securities by over $1 million on an annualized basis.

Finally, we are also focused on improving our quality and our growth profile through divestitures. Tulsa is again under contract for sale with money of risk from the buyer. The transaction is scheduled to close during the second quarter. Conversations also continue with the special servicer on the loan for our Eastland Mall property. We believe the mall remains viable, but is settled with an unsustainable debt burden. We will also be keeping an eye on the so called B mall market. If pricing firms up this could represent attractively priced capital as we continue to execute our transformation.

Now with that said, I would like to turn the call over to Mark Yale to provide you with more on our financial results.

Mark Yale - Chief Financial Officer

Thank you, Michael and good morning to everyone. Our adjusted FFO per share for the first quarter of $0.16 fell solidly within our guidance range going into the period. The biggest driver of this performance was property operations. As expected, core mall net operating income growth accelerated during the first quarter, up 3.9%, which was actually ahead of our plan. This upside was offset by lease termination income which came in below expectations for the quarter. With respect to the contribution from Scottsdale Quarter, the yield on the project for the first quarter was approximately 3.5%, in line with our forecast. Excluded from our adjusted FFO per share was a $9.3 million non-cash write off of original issuance costs and discounts associated with the preferred stock redemption to be executed later this month.

Now, let’s our attention to the balance sheet, driven by net proceeds from our March preferred offering, we finished the quarter with $75 million of cash on hand and no outstanding balance on our unsecured revolver giving us ample capacity to fund the $90 million partial redemption of our series G preferred stock schedule to occur later this month.

In terms of our remaining 2013 debt maturities, we are in discussions with our JV partner on the refinancing of Lloyd Center mortgage which has a June 2013 maturity date. The maturity date on the $1.4 million loan for Town Square at Surprise will be extended through the end of 2014 and we would expect to pay off the $30 million loan on the Scottsdale Quarter Phase 3 grant with proceeds from the sale of the northern parcel and availability under our revolver. As previously discussed we anticipate utilizing the company’s ATM program to match fund against accretive redevelopment and major re-tenanting throughout the portfolio. During the first quarter, we issued approximately $10 million under the program. We currently have $18 million of capacity remaining on our ATM. And accordingly, we will be looking to reload the program at some point in the near future.

Finally, we did update our FFO guidance for fiscal year 2013 solely to reflect the $9.3 million non-cash write-off associated with the preferred stock redemption previously mentioned. The revised FFO range is now $0.63 to $0.67 per share. Other key assumptions as detailed in our initial guidance remained the same. We also provided FFO guidance for the second quarter of 2013 in the range of $0.15 to $0.17 per share. Key assumptions driving the guidance include net fee income of approximately $750,000, lease termination income of over a million dollars, and core mall NOI growth of approximately 4%. We should also note that due to the timing delay between the issuance of the new Series I Preferred Stock, and the corresponding partial redemption of the Series G, the second quarter will be burdened by approximately 30 days of additional dividend expense. For the full year 2013, this additional expense will be essentially offset by the savings that will be achieved subsequent to the redemption.

I’d now like to turn the call over to Marshall.

Marshall Loeb - President and Chief Operating Officer

Thanks Mark. While we are pleased with forecasted 2013 growth as we said on our last earnings call, it will ultimately be more important that we deliver on these assumptions. Accordingly, we are encouraged with the 4% growth realized during the quarter and are working hard to follow through for the balance of the year. We have had to accomplish this through executing on redevelopment projects, raising occupancy quality by replacing weaker performers, and driving rents upon lease roll.

While sales productivity moderated towards the end of first quarter, we saw positive quarterly comp sales of approximately 3% generated from the portfolio and remain enthusiastic with the overall help of our operating fundamentals. Total occupancy increased over last year. Re-leasing spreads were positive again at 13%. And portfolio occupancy costs sit below 11%. Retailer profitability remains solid as we lost no national tenants to bankruptcy. Accordingly, we have the strong pipeline of new deals sailing into the Las Vegas ReCon Conference, and 2013 renewals are on par with historical trends.

Solid progress continues in terms of about roughly $60 million investment and our two outlet collection centers, Jersey Gardens and Seattle. At Jersey Gardens, we are on target to complete the major interior and exterior renovations by mid 2013. We are excited about the recent addition of Century 21 and are pleased to have surpassed $700 per square foot in sales at quarter end. In terms of the outlet collection in Seattle, we are moving forward with physical enhancements to the center. During the first quarter, we opened a new cut through to improve traffic flow as well as relocated the food court with respect to the 100,000 square foot of space we have targeted for new key outlet retailers over 70,000 square feet is addressed through sign leases or leases after signature. Letters of intent are outstanding on the balance of the space. With the type tenants we are working with, we see the potential to drive sales well above $400 per square foot. The grand reopening is scheduled for October 17. And we look forward to seeing many of you there.

We expect to earn a high single-digit return on our outlet investments and to begin seeing those financial contributions this year and into 2014. In terms of new 2013 redevelopment opportunities, we are focused on the parcel at Polaris formally occupied by the Great Indoors. As previously discussed, we have the opportunity to add approximately 125,000 square feet of additional open-air retail, restaurant and entertainment space. The redevelopment will blend into the existing open-air section of the mall creating greater critical mass and improved traffic flow. This will be a focal point for our leasing team in Las Vegas. Additionally, we continue looking at ways to take advantage of consolidating big box retail into malls throughout our portfolio. We are pleased to see that our Tier 1 portfolio has grown to over 90% of the company’s NOI and is a portfolio that generates nearly $500 per square foot in sales with occupancy around 95%.

Finally, we have received numerous questions over the several quarters regarding the viability of several of our department store anchors. While we see no issues in the short-term regarding these operators, we should note that of the nearly 100 boxes greater than 50,000 square feet in our portfolio, only 3 are currently vacant. And of those three, we are holding meaningful dialogue with tenants on two of these. We are seeing steady demand in our anchor space over the last several years and expect this demand to continue given the lack of meaningful new development nationwide.

At this time, I will turn the call back to Michael.

Michael Glimcher - Chairman and Chief Executive Officer

Thanks, Marshall. When I look at our approach going forward, we will continue to be aggressive in our leasing, prudent in our acquisition strategy, and measured in our allocation of capital. We will be cognizant of the changing retail landscape making our properties reflective of the categories our shoppers want and abundant in the experiences that bring them back to our centers. Each decision will be made to make a better tomorrow than we are today. Now, with all that said, we would like to open up our call for any questions you may have.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Todd Thomas from KeyBanc Capital Markets.

Todd Thomas - KeyBanc Capital Markets

Hi, good morning. I am on with Jordan Sadler as well. First in terms of the 3.9% same-store NOI growth in the quarter, it seemed to ramp nicely from last quarter. I was just wondering how to think about the same-store performance throughout the balance of the year, because I think last quarter you mentioned that the first quarter would potentially be the weakest of the year, and the second and third would be the strong and then the fourth quarter would be a tougher comp, but still strong. Is that consistent with your projections in the context of your same-store forecast of 3.5% to 4.5% for the year?

Mark Yale

Yes, Todd, it’s Mark. We are looking at pretty consistent with the first quarter for the second and third, and then a little bit of tail off as we get into the fourth quarter.

Todd Thomas - KeyBanc Capital Markets

Okay. And then regarding the redevelopment spend that you have planned at the two outlet collection properties of $60 million, some of that incremental NOIs online, I guess with the Coach stores, for example, in Century 21, and some of the other leases are starting to commence. Can you just help us understand how that incremental NOI may come online over the next few quarters?

Mark Yale

Well, I think Jersey is a pretty consistent contributor throughout 2013, you are right we did the Coach stores in the fourth quarter. Other stores are coming online. Seattle is going to be much more of a help late in the fourth quarter really in the 2014.

Todd Thomas - KeyBanc Capital Markets

Okay. So, if I think about that $60 million bucket overall and the returns that you have projected I mean, I guess the better way to think about it is how much of that incremental NOI pickup is already in the numbers?

Mark Yale

You know, I would say that probably a little less than half is in the numbers at this point, you will get a little bit of help as we go through the rest of this year. And as we said about half of that $60 million really relates to Seattle and we won’t see the bulk of that return and that benefit until we get into 2014.

Todd Thomas - KeyBanc Capital Markets

Okay. And then just one question for Marshall, it looked like the renewal spreads on about 100,000 square feet were 7.5%, so pretty strong for renewals. And you still have over 1 million square feet of non-anchor space this year about $20 million of base rent, are you expecting on that renewal bucket to see similar spreads throughout the rest of the year on the 2013 expirations?

Marshall Loeb

We are happy with our occupancy cost, good question. We think on a blended basis. Last year, we were at 10% and with the 13% re-leasing spreads first quarter, I think we’ll be in that range that 10% to 15% range for the year is where we hope to be blended. Again, it’s hard to pinpoint just renewals versus new, but it’s been a nice trend off the last few years on our re-leasing spreads and I would expect that first quarter to be more emblematic of the balance of the year.

Todd Thomas - KeyBanc Capital Markets

Okay. And actually one last question on the expirations, I am looking at the schedule in the supplement and it looks like the expiring GLA in ‘13 for the non-anchor leases, it decreased from last quarter by about 600,000 square feet, but we only signed about 250,000 square feet of total non-anchor leasing in the quarter. I was just wondering why wouldn’t that expiring lease bucket this quarter have only decreased by that amount, is there something related to the methodology or something else that I am missing or not thinking about I guess?

Marshall Loeb

I think it’s difficult to look kind of quarter-to-quarter sequentially. I will say just looking at our expirations for ‘13 compared to where we were at the same time last year, I mean, we are down. It was close to 11% was rolling in the current year or down to 8.5%.

Todd Thomas - KeyBanc Capital Markets

Right, so but last quarter the 13, it was showing 13 non-anchor expirations of 1.6 million, now it’s 1 million, but you only signed 250,000 square feet of non-anchor leasing. I guess, that’s just having I am trying to figure out what happened to the other 350,000 square feet this quarter?

Marshall Loeb

Yeah, probably, it has to do with long-term specialty, which isn’t necessarily on that renewal schedule, and maybe we can just, we can talk about it offline and reconcile it for you.

Todd Thomas - KeyBanc Capital Markets

Okay.

Lisa Indest

Yeah, it’s in the lease expirations and not in the leasing results. And some of that moved to ‘14 Todd.

Todd Thomas - KeyBanc Capital Markets

Okay, great. Thank you.

Operator

Your next question comes from the line of Jeff Donnelly with Wells Fargo. Please proceed.

Jeff Donnelly - Wells Fargo

Good morning folks. Just first question as it relates to Pearlridge Center, with I think looking to open maybe 300,000 square feet in downtown Honolulu and I think spring of ‘15, do you think that impacts Pearlridge either in just the risk of direct loss of tenants or in the positioning of your property in that market?

Michael Glimcher

Jeff, it’s Michael speaking. Pearlridge has been a huge success for us. We could be more pleased about owning the entire asset. We have really catered to the locals where local mall, their proposed location is really in a dense tourist area on (indiscernible) Beach and there would just be additional retail on top of the retail that already exist there. So, they are really catering to a completely different demographics. We see sales increase and we have seen substantial re-leasing spreads. Our biggest issue at Pearlridge is getting space the demand on far waste space we have available. So, yeah, I would consider that to be a non-issue.

Jeff Donnelly - Wells Fargo

And with that redevelopment that they are doing and then I think the Macy’s box downtown became available, I mean, is there any risk that you think of any anchors in your property you are looking to move or do you think that’s kind of put to bed?

Michael Glimcher

The anchor sales in our property are very strong for both Macy’s and Sears are exceptional volumes. We don’t see any risk in fact in a property like that, like most of our portfolio when you think about being almost fully occupied. You would be excited to get space back, but I don’t think we will be getting any of it back anytime soon.

Jeff Donnelly - Wells Fargo

Okay. And then – and just concerning Scottsdale specifically the retail leasing, it’s been maybe a little choppy in the occupancy side in recent quarters, is there anything specific with the ICSC Convention coming up that you guys are trying to tackle when you go to ICSC that relates to Scottsdale?

Michael Glimcher

Jeff, Scottsdale again from a sales performance standpoint, the quality of asset standpoint, it’s been a tremendous success. The yield as we have said previously hadn’t been as high as we wanted to be. Where is the point now, where we are really trying to not just finish off the leasing, we have got about 95% slow good quarter, about 88% open. It’s really more about fine tuning the mix as we have said on a couple of the previous quarterly calls there were some tenants we took initially that maybe warrant the right long-term tenants. So, you are going to seeing into now over the next year or so. And we continue to upgrade the mix. We got rid of a mediocre restaurant. And now we have an Urban Outfitters opening. We talked about 20,000 feet of new stores. The demand for the property is really high. Their performance is you have got to be in the top decile of retail in the nation. So, I think while the yield maybe isn’t as high as we would have liked to be at this point. And it certainly stabilized really nicely. The performance is exceptional and exceptional not only in the market and probably the top performing in the state, but some of the best in the nation.

Jeff Donnelly - Wells Fargo

And I don’t want to leave market, I was just curious heavier than active issuing under the ATM since the end of the quarter.

Marshall Loeb

Obviously you are actually in a blackout, so until we get earnings through when you get our Q5 and go through the diligence and things of that sort – we are not back into the market at this point

Jeff Donnelly - Wells Fargo

Okay, I want to be sure, thanks guys.

Marshall Loeb

Think a lot.

Operator

Your next question comes from the line of Richard Milligan with Raymond James & Associates. Please proceed.

Richard Milligan - Raymond James & Associates

Hey, good morning guys. So, a while ago, you said the sales per square foot goal of 400 bucks of foot and then once you suppress that you went to 450, I am guessing 500s of the next logical step and curious when you think you can get there and what drives that between acquisitions, disposition, and internal growth.

Michael Glimcher

RJ, good question, you must want through a big sign is a 500 on it. We clearly that’s our next goal of next threshold. We are talking about what was exciting to breakthrough 400 and certainly 450 is a really important number. Part of it is just an organic growth, part of it as we talked about as opportunities are there that we dispositions and we also are looking at acquisition, so it just could be a combination of those three things and timing wise hopefully that will happen in the next 12 months or so, that it’s hard to really predict things down the course are going or may happen sooner if things slow down a little bit after a little later, but are feeling really good about the sales, but for us really putting out that almost NOI growth, which we said sales are really proxy for future NOI growth that’s the number we are most excited about it.

Richard Milligan - Raymond James & Associates

So I guess the different way to answer that, are you feeling more optimistic about the acquisition opportunities over the next 12 months with those high quality, high productivity assets or are you feeling more enthusiastic about the disposition opportunities over the next 12 months given sort of the reemergence of the CMBS market and may be a pickup and that will be more transaction activity.

Michael Glimcher

I would say on the disposition side there is probably – there has been reversing a lot of interest. There is capital available. It may be a little bit easier than the acquisition side. The acquisition side will remain disciplined, we think about something like University Park Village not only having high sales, but having space ruling where we can really push the NOI up, this is not really difficult opportunities to find so, it’s probably can be more difficult for us to find our acquisition than the great disposition opportunities, but we are committed to doing both.

Richard Milligan - Raymond James & Associates

Okay, thanks. And one of your I guess another retail read talked about some footlocker closures this week and I was wondering given that there are large center viewers if you have any plan footlocker closures, how many and when that’s a percent.

Marshall Loeb

We have no plan footlocker closure certainly not on a corporate basis, I mean they have a lot of different concepts and we moved them around a fair amount, but I know that yeah, but nothing planned with footlocker. I would also say from a category standpoint with footlocker with finish line and most of our malls we try to have fewer within the category and lot of our malls we’ve given the category to one tenant and what the new one larger store so that’s are not really going head-to-head. So, we’ve been cognizant into that as Marshall and team thought about merchandizing I think we planned really so we probably expect too have fewer, these kind of issues.

Richard Milligan – Raymond James & Associates

Okay, great, thanks guys.

Operator

Your next question comes from the line of Carol Kemple with Hilliard Lyons.

Carol Kemple – Hilliard Lyons

Good morning. Earlier in the call you all talked about that you are speaking with services on (indiscernible), I know you discussed that on the last call, can you give any more color around those discussions of what you think the potential outcome will be.

Mark Yale

Carol, it’s Mark, we really can’t – we are engaged with the service, but at this point there is nothing specific update and hopefully as we have news we will provide that update as appropriate.

Carol Kemple - Hilliard Lyons

Do you have any idea on the timing of when you will?

Mark Yale

And not at this point, it’s certainly a process and we are certainly moving forward and interested in furthering that dialogue, but it’s hard to predict the timetable at this point.

Carol Kemple - Hilliard Lyons

Okay. And then earlier in the call you mentioned you have three vacant spaces which to your own series negotiations on, I know you probably don’t want to mention the tenants you are talking too, but can you let us know those traditional anchors or non-traditional anchors?

Marshall Loeb

Yeah, Carol, it’s Marshall, the three that we have available here, they would be non-traditional anchors, I mean, one I’d call entertainment and two, were power center type tenants and some of that’s more reflective of where – what properties they are waking in northern and then small there are smaller anchors as well and we are kind of looking at the 50,000 square feet not 100, 100,000 plus square feet as well is probably what dictate some of that.

Carol Kemple - Hilliard Lyons

Okay. And then since the last call have you all had any conversations with user J.C. Penney’s about them wanting to sell base back to you.

Michael Glimcher

It’s Michael, we speak with our anchored tenants is minimum we’re in the offices once the quarter and we speak to them regularly and so certainly there has been regular dialogue since the last call and there is no indication for either those tenants that they want to give spaces back to us.

Carol Kemple - Hilliard Lyons

Okay, thank you.

Operator

Your next question comes from the line of Nathan Isbee with Stifel. Please proceed.

Nathan Isbee - Stifel

Hi, good morning. Michael, you talked a little bit – you talked in your prepared remarks about still being out they are looking for acquisitions, you’ve been very active over the last two years on the acquisition side and you have a lot of balls in the area in the existing portfolio. At what point does it perhaps make sense to say what we should just take a little bit of a breather here on the acquisition side and perhaps wait till things settle down in the existing portfolio before trying to growing more?

Michael Glimcher

That’s a good question obviously we are really busy last year and although we closed University Park Village right after the first to the year, it was really activity from last year, I think that we set down here at the first to the year as we plan for this year, we sign any activity where it probably of course the second half of the year and not the first half it’s important to absorb the acquisitions that we found into the portfolio and also what really like I dig into the share price and what people realized how much it’s impacted our performance, which is really then positive and we are excited about so, I’d say anything that we would be waited until the second half of the year, but with the lot of discipline and also I think you have the balance in and out if there is incremental opportunities to divest of assets and that capital freeze up and that may make you a little more encouraged to be a little more aggressive on acquisition. We certainly on looking the strength of portfolio or looking to grow at, but last year I think was a year that we probably had more activity than we’ve had historically may be more than any other given your, but it was – lot of that because of the opportunities that can do us. So, at this point I think we are letting things baked in at least for the first half of the year and may be went for the first two-thirds of three quarters of the year just based on what I see our pipeline.

Nathan Isbee - Stifel

Okay. And then on Scottsdale, we’ve heard the comments on last number of calls the interest remains on both side at what point do you say why it’s not moving forward perhaps we should moved the plan be here perhaps more residential hotel etcetera.

Michael Glimcher

That’s a good question and fair one, first of all centers doing incredibly well like I said earlier but we are very confident about the apartment tower with ground floor retail so that provide us more growth at the asset that would take one of the three remaining parcels. There is another parcel that would be bargaining with retail and office above and then there is a third parcel that could potentially be in the department store space so, there is no – we are not slowing down on the other two of the three parcels and it really is going to come down to interest from the department store company as well as economics and making sure that matches up for both side. So, again this isn’t have to do situation at something that we could do and I think we are going to develop the other two parcels in the meantime and we are moving forward on the one very aggressively with the retail and apartment and we are also working on plans and leases for the other parcel. So, we haven’t really slow down at all, I think on the hindsight we probably shouldn’t talked to cut this all publicly as soon as we did and we probably got out ahead and talked about little too soon that if there is any mistake we made was that, but interest from of these department store retailers is across the board very strong in the property.

Nathan Isbee - Stifel

And you say in your mind that the retail interest is a strong today as it’s been.

Michael Glimcher

Absolutely.

Nathan Isbee - Stifel

And then when do we expect the tenant announcements on Seattle?

Michael Glimcher

I think for us we really wanted to have a really large group so, we talked about the October 17th at 10 a.m. Thursday hopefully you can be there opening, I think we want to get this closed this possible to having a majority of the tenant deal sign and we do have a large list of signed leases. We do have coach already opened there, but the tenants a lot of them signed the leases and then they take position of the space so, it’s probably going to be later in the year, but we are very confident, we are getting the right names on the assets is looking great and we are getting probably better names and we expected so, it’s something we’d rather have a little more impact in a longer list of name when we do announce it.

Nathan Isbee - Stifel

Okay, thanks.

Operator

Your next question comes from the line of Daniel Busch with Green Street Advisors. Please proceed.

Daniel Busch - Green Street Advisors

Thank you. Michael, can you give us a little more color about the sales growth in the quarter I know the tier 1 and tier 2 is helpful, but just within the tear 1, there is a quite a wide range of sales productivity. Can you give us a little more color on where that growth is being driven from or is it more broad-based?

Michael Glimcher

It’s fairly broad, I mean, we talked about jersey going over $700,000 that’s a significant number, but used to be you could name up one or two assets that we are providing the growth and I think you have to keep on going pretty deep into the group and again we are seeing sales growth really across the board and that’s I think was exciting there was sales growth on a comp basis and then – and the acquisitions also helps. So, it’s really coming from everywhere and I think the comment that Marshall made about 90% of our NOI is coming from centers that are about 95% lease doing about $500 of foot that’s a pretty significant number that we were enable to say year or two ago so, it’s – it just be coming across the board and more high quality portfolio.

Daniel Busch - Green Street Advisors

Right and then it looks like rents kind of moved up at a similar phase, can the same be set for rents or is there a little more disparity and where you are able to push rents at this time.

Mark Yale

DJ, it’s Mark. I think there is a pretty good correlation between where the sales growth is and where the rents are being pushed certainly the new acquisitions are helping that number, but we had growth within the core mall portfolio pretty much with in line with where the sales growth has been.

Daniel Busch - Green Street Advisors

Okay and Mark just on a University Park Village players you mentioned there were Lifeco deals, was there an opportunity to work with the CMBS lenders on those given that the pricing has been pretty attractive for hyperactivity assets, we’ll may do decide to go with live companies on those two deals.

Mark Yale

Yeah, we absolutely have the opportunity on each to do CMBS but those were 10 year costs and we had an opportunity for what we felt was a modest difference in pricing to go out up to 15 years. So from our perspective, we thought that made active lot of sense for us then we really pleased with the execution still got great pricing and got the term and that was a pretty easy decision in our book.

Daniel Busch - Green Street Advisors

Great, thanks guys.

Mark Yale

Yep.

Operator

Your next question comes from the line of Ben Yang with Evercore. Please proceed.

Ben Yang - Evercore

Hi, good morning thanks. May be for Mark, can you talk about why we pay the mortgage at Colonial Park Mall, I mean, it does, sales we are seeing some other recent refinancing of malls with similar sales, pretty good rates may be in that high 3% low 4% range, I mean and unique about Colonial Park Mall that’s what may be you kind of get a run in that property.

Mark Yale

No, that on the case span I mean really was an opportunity where we can unencumbered the asset and use it as part of the collateral pool for unsecured credit facility and if you actually look at the execution on that in terms of the advance rate and where the pricing is on the line you just get much better execution from that perspective and that’s one of the things we are looking at is overtime we want to unencumbered more assets we think that gives us more flexibility and we had the opportunity to do that with Colonial Park with the maturity coming up.

Ben Yang - Evercore

Okay, so it didn’t go up. And see what type of rate in terms of you could get for that particular mall?

Mark Yale

No, we did not even do that. It was never our plan.

Ben Yang - Evercore

Okay. And then I am sure every financing is unique just like every mall is also unique, but is there a level of sales versus CMBS just really drag the line say may be below 300, just won’t touch types of malls, are you encountering that in your discussion with CMBS lenders today?

Mark Yale

I would say $300 is important but obviously I think you’ve seen some execution from others. We were able to get Puente Hills Mall done last summer, I think it’s a little bit harder work, but if you got a story, you got good anchors, there are lenders even CMBS who will look I think what we are finding and we haven’t been in the market since last summer more on those B&C malls, it’s size is a challenge and the larger the asset account to B or C asset, the larger it’s going to be in a pool and that’s where it can be a bit of a challenge. So, what we are hearing is kind of the smaller B type of execution is a little path – little easier to get done, but at this point $300 is important and certainly easier, but we have seen execution under $300 per square foot, you just have to have a really good story and positive momentum.

Ben Yang – Evercore

Okay and then along that size thing I mean how big is too big for a B mall financing?

Michael Glimcher

Ben, it’s Michael I think again for us this is an infrequent activity for us and it’s something that we are not going to be dealing with in the near term and hopefully not in the long-term, but we don’t see within our portfolio any assets where we have any issue getting the financing we need and that is probably what’s most important to us.

Ben Yang – Evercore

Okay, fair enough. And just kind of a final question picking on the same I mean CMBS or bank loan or white collar have you noticed any recent shifts in how lenders view the risk that JP Penny given obviously some of the recent news that’s going on there?

Michael Glimcher

I mean I think we are seeing the lenders and certainly as I have said we have not been necessarily active in any assets over the last six months where we had the JC Penny serious issue. But what we are hearing is that lenders are looking towards that, it really gets to the health of the mall and the viability of the mall and that’s what we have been talking about. I mean that’s the business there is going to be changes over time it really comes down to the viability of the asset, and where your momentum is in terms of sales, recent leasing activity, and things of that sort.

Ben Yang – Evercore

Okay, great. Thank you.

Operator

Your next question comes from the line of Quentin Velleley with Citigroup. Please proceed.

Quentin Velleley - Citigroup

Hi, good morning. With respect to (indiscernible) just in terms of the spread between the occupied in Middle East the 88% to 95% I am somewhat curious on the timing of when those sign but not yet commenced places will start. I think you said you have got the 20,000 feet in retail including urban outfitters, which commences soon and that would close at about half of that spread, what other tenants, what other leases have you got in there, and how should we thinking about the timing of those leases?

Mark Yale

Yeah. I think Quentin, it’s Mark, we should hit the 90% threshold with the tenants that Michael talked about really as we get into the second quarter. And then start really bridging the gap to the 95% as we proceed through the end of year.

Michael Glimcher

And Quentin it’s Michael, it’s interesting in most places you see retailers open in the spring and the fall in the Arizona market and one of harder markets something like that, more weather markets, most retailers definitely only open in the fall. So, the fact that we even have the amount of activity that we have earlier in the year bodes well for the quality of the asset, and people just wanted to get their doors open there?

Quentin Velleley - Citigroup

Right and I know you have sort of cleared out some of the tenants that weren’t performing where the concept just didn’t really work are there any others that are sort of are still struggling at the moment?

Michael Glimcher

I mean that’s always the case. We run effectively a mutual fund of tenants and with anywhere from less than 1%, 1% to 3% exposure of any given retailer, so at any given time there is a tenant in every property that you would like to replace. I think it’s getting to the point and have to get fully occupied that will become just like other property where you are constantly fine tuning the mix, is what Marshall and our team do everyday.

Quentin Velleley - Citigroup

Okay, thank you. Just lastly Tulsa and Eastland seems will be leaving the balance sheet soon, are there other assets, other lower productivity weaker quality assets that you are moving forward with a potential at the moment or is that something that you fear you have to maybe wait another year or two for?

Michael Glimcher

Quentin there is always bottom, when we sell assets there is always a new bottom. So, we have had and there are also assets that maybe performed well that just don’t fit our go forward strategy. As we said we have some fairly substantial reverse enquiry and people realized it, we are taking the portfolio in one direction there maybe assets that are more valuable to someone else than they are to us. So, I think we are – it’s our intent that we are always going to have a new portfolio every time a new bottom is created, it’s going to create a new opportunity to sell something.

Quentin Velleley - Citigroup

Okay, thank you.

Michael Glimcher

Thank you.

Operator

Your next question is a follow-up from the line of Jeff Donnelley with Wells Fargo. Please proceed.

Jeff Donnelley - Wells Fargo

Thanks guys. Just firstly, maybe a two part question on the outlet re-development, but I am sorry if I missed this, but what do you think the first 12 months yield will be on those projects and how long you think it will take to reach the stabilized yields?

Michael Glimcher

The first 12 months, I mean I think in Jersey it’s really fine tuning tenants, some of those are already open so we are probably we haven’t spent all of $30 million, but we are probably effectively close to earning that high-single digit return at Jersey. If the clock starts at Seattle, and I am saying on October 17 or when get these still be a few tenants as best as we are trying they will come in later than that, but if I could use all of 14, I think we will close to that high single digits on Seattle as well. So, Seattle is more of a light switch whereas Jersey is more of gradual and again that probably reflects where those assets were. I had that reversed, I am sorry. Jersey is more gradual, Seattle is the light switch, is what I’m saying.

Jeff Donnelley - Wells Fargo

Okay, but in other words it’s not a long drawn out ramp in other words.

Michael Glimcher

No, it’s a bunch of stores that will open in Seattle and as spaces become available and upgraded Jersey over really the last 12 months already.

Jeff Donnelley - Wells Fargo

And then just a follow-up on Scottsdale as it relates to the anchor leasingI a m just curious if it doesn’t play out as you hope, maybe with the demand is there, but the pricing is not I am curious maybe playing B options do you currently have for that space, are there other uses that you currently have entitlements for, I think earlier this month you guys went back to have your entitlements changed for or increased for multifamily if I am not mistaken is there another property type or product type I should say that you would consider in that space?

Michael Glimcher

Yeah, Jeff, its Michael there is absolutely we have so much reverse inquiry there. We have actually gotten that capacity to go taller or we went with a 60 point height, we do not develop up to 90 feet, it’s what we have been working on. And so hospitality currently wants to be there and we are into one of the sub-submarkets of the market. There is more retail that wants to be there. Our office is full and this if there is small sample of the little bit of space that’s turned, we are achieving again top of market office rent as we have been historically just top of the market now moving up. So, we have a real opportunity to continue with more mysterious and even with department store, we would add retail with that, we would also be able to add other components. So, what’s really exciting about a project like this if you just think about like a segment of a city or an urban area, you can go with a lot of different uses and the demand is really there in every group.

Jeff Donnelley - Wells Fargo

Thank you.

Operator

Your next question is a follow up from the line of Todd Thomas with KeyBanc Capital Markets. Please proceed.

Todd Thomas - KeyBanc Capital Markets

Hi, thanks just one quick follow up on the same store performance, last quarter you gave the guidance included with Scottsdale and excluding Scottsdale so 2 %to 3%, without Scottsdale just wondering I am assuming a 3.9% this quarter included Scottsdale, but just wondering what it would have been without…

Michael Glimcher

Yeah, Todd it would have been above 2%, so without Scottsdale it would have been right in that 2% to 3% range that we provided so tracking in line.

Todd Thomas - KeyBanc Capital Markets

Okay, great. Alright, thank you.

Operator

Your next question comes from the line of Andrew Wilson with Goldman Sachs. Please proceed.

Keith Ambachtsheer - Goldman Sachs

This is actually Keith Ambachtsheer, I was wondering if you just could comment on some of the differences you are seeing between your A malls and B malls maybe in terms of sales growth, rent growth, occupancy, selling spaces, things like that?

Marshall Loeb

Thank you. And it’s Marshall, we are certainly seeing as people talk about it there is no secret better sales growth within our A malls, than our B, but that’s where we are over 95% occupied as a portfolio and the B malls we are over 90, we are well into that we are pushing our ends there, what we do see is with the lack of new kind of power centers being built and things some of those type big box users have worked their way into the B malls, so that kind of leads us back to the only three open banker anchors within our portfolio. So, we feel good about that activity. We continue to fill those tenants, it’s just a different list of prospects we have for those centers than you do some of your A Centers and the growth rate isn’t as fast, but the car is moving forward on those as well.

Michael Glimcher

I think for us what’s really exciting is with such a highly occupied portfolio and really the center doing so well, there are lot of retailers that aren’t want to be in A property that need to find the home and are looking to the B property, so we are seen activity really from top to bottom of the portfolio, but I can’t go without saying that the comment that Marshall made earlier in our prepared remarks of 90% at 95% occupancy and $500 per square foot in sales, we are really migrating towards an over all A quality portfolio we are heading in that direction.

Keith Ambachtsheer - Goldman Sachs

Alright, and then just one other comment, I know – or a question I know that last year and some of the acquisitions you guys made you had, you now had the opportunity to get some relationships with tenants you had in the past. I was just wondering how those talks have progressed to the relationships and if you think that they will be able to help you in some of the other locations?

Michael Glimcher

It absolutely has, I mean we were talking about when first discussed the quarter it was first our Apple store and now we have multiple stores and our first (indiscernible) multiple stores and we have done with more with anthropology and urban outfitters and free people. And so very clearly you are in dialogues, you are with these tenants. They like working with us and we think we are a great partner to our retail partners and so it’s absolutely not just what we have acquired but we developed, it’s Scottsdale and as we upgrade Polaris in Georgia and other our relationships are growing with better tenants and that’s certainly very exciting for us.

Keith Ambachtsheer - Goldman Sachs

Okay. Great thanks.

Operator

There are no additional questions at this time. I would now like to turn the presentation back over to Ms. Lisa Indest for closing remarks.

Lisa Indest - Senior Vice President, Finance and Accounting

Thank you, everyone for participating in the Glimcher Realty Trust first quarter conference call. You may contact us directly with additional question or access our filings through glimcher.com.

Operator

This concludes the presentation. You may now disconnect. Have a great day.

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