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Executives

Kevin Berry - Vice President of Investor Relations

Sandeep Lakhmi Mathrani - Chief Executive Officer and Director

Michael B. Berman - Chief Financial Officer and Executive Vice President

Analysts

Daniel Oppenheim - Crédit Suisse AG, Research Division

Craig R. Schmidt - BofA Merrill Lynch, Research Division

Michael Bilerman - Citigroup Inc, Research Division

Ross T. Nussbaum - UBS Investment Bank, Research Division

Joshua Patinkin

Ki Bin Kim - SunTrust Robinson Humphrey, Inc., Research Division

Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division

Jeffrey J. Donnelly - Wells Fargo Securities, LLC, Research Division

Vincent Chao - Deutsche Bank AG, Research Division

Benjamin Yang - Evercore Partners Inc., Research Division

Caitlin Burrows - Goldman Sachs Group Inc., Research Division

Richard C. Moore - RBC Capital Markets, LLC, Research Division

Samit Parikh - ISI Group Inc., Research Division

General Growth Properties, Inc (GGP) Q3 2013 Earnings Call October 29, 2013 10:00 AM ET

Operator

Good day, ladies and gentlemen, and welcome to the General Growth Properties Third Quarter 2013 Earnings Conference Call. [Operator Instructions] And as a reminder, today's conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Kevin Berry. Sir, you may begin.

Kevin Berry

Thank you, Mary. Good morning, everyone. Welcome to the General Growth Properties' third quarter of 2013 earnings conference call hosted by Sandeep Mathrani, Chief Executive Officer; and Michael Berman, Chief Financial Officer. Certain statements made during the call may be deemed forward-looking statements. And actual results may differ materially from those indicated due to a variety of risks, uncertainties and other factors. Please refer to our reports filed with the SEC for a more detailed discussion. Statements made during this call may include time-sensitive information accurate only as of today, October 29, 2013. We will discuss certain non-GAAP financial measures and have provided a reconciliation of each measure to its comparable GAAP measures. Reconciliations are included in our earnings release and supplemental information package was filed with the SEC and available on our website. It's my pleasure to turn the call over to Sandeep and Mike.

Sandeep Lakhmi Mathrani

Thank you, Kevin. Good morning, everyone, and thank you for joining our conference call. I'll begin with an overview of our financial and operating results for the quarter, a discussion of our development initiatives throughout the portfolio and perspectives on the retail property sector. Michael will provide more detail on our results and guidance for the remainder of the year. Yesterday evening, we reported FFO per share of $0.29 for the third quarter, 26% higher than last year and above our guidance range. Same-store net operating income increased 6.8% driven primarily of higher permanent occupancy, in-place rents and managing operating expenses i.e. from the business. Overall, company NOI increased 5% after taking into account acquisition and disposition activity during the period. And EBITDA grew 4.4% quarter-over-quarter.

Year-to-date, FFO per share is 19% higher than last year. Same-store NOI is up 5.9%. Overall company NOI is up 5.1%. And EBITDA is up 4.5%. The financial performance to-date and outlook for the remainder of the year leads us to increase the quarterly dividend of $0.01 to $0.14 per share. The fourth quarter dividend is up 27% from last year's fourth quarter.

Turning to growth. We are very focused on the core sources of long-term growth for this company, increasing permanent occupancy, achieving positive rental spreads and creating value from our development initiatives. The growing permanent occupancy and reletting space at higher rents are the main sources of growth for next year as the portfolio reaches stabilized occupancy. Our reported occupancy of 94.6% at quarter-end includes permanent occupancy of 90.1%, which has increased over 2% from this time last year, when it was 88%. We're on track to approach 92% by year-end and over 93% by end of 2014. Through October, approximately 65% of the incremental leasing towards next year's permanent occupancy goal has been complete.

The next key component of growth is achieving positive rent spreads. On a suite-to-suite basis, the initial gross rent's on 4.6 million square feet taking occupancy this year by 12% higher than expiring rent on the same-suite basis. Excluding camp and tax charges from the gross rents results in 17% to 18% net suite-to-suite rental spreads. As you can see in our supplemental disclosure, rent spreads for 2014 suite-to-suite commencements are about 11.5%. There is an additional 1 million square feet not included in the disclosure since those are leases approved, but not signed. If included, the spreads on gross rents are about 13%. Once again, we report on gross spreads. We're obviously not finished with leasing for 2014 and expect gross rent spreads to moderate to approximately 8% to 10%.

The third primary source of GDP's growth is the value creation from our development initiatives. Overall, the total project cost is about $2 billion with returns of 9% to 11% upon stabilization. We currently have approximately $1.3 billion of development projects in process, all complete including the following: the successful opening earlier this year of 90,000 square feet of additional in-line retail space and the Macy's Men's store at Fashion Show Mall in Las Vegas. This represents the true value creation exercise as it replaced a vacant anchor to previously Robinsons-May department store; an extensive reconfiguration and retenanting of the outdoor plaza area at Northridge Fashion Center in California, bringing a new element of dining and shopping to the mall is complete; the grand opening of Boscov's department store at Woodbridge Center, occupying a once-vacant anchor, i.e. a portion of department store is complete; the near completion next month of our flagship redevelopment, the complete interior, exterior redevelopment and renovation of Glendale Galleria in Los Angeles, California capped with the opening of a new Bloomingdales in the long vacant Mervyn's department store box. The Bloomingdales is scheduled to open on November 6. The major expansion and renovation of Ala Moana Center, our most productive asset, which will soon be home to Bloomingdales and many new tenants, is under construction. The expansion of Macy's and future openings of Nordstrom's at Ridgedale Center in the Minneapolis market is under construction, and the future opening of Nordstrom's at Mayfair Mall. In addition, approximately $750 million of projects are in the pipeline and include the exterior renovation and expansion of Staten Island Mall in New York, the expansion of Baybrook Mall near Houston, the extensive redeveloping and rebranding of Southwest Plaza in Denver and the planned ground-up development in Fairfield County, Connecticut, which we envision will be a highly productive retail center anchored by 2 department stores. Our development strategy varies by assets. But overall, our goal is to strengthen malls within its marketplace, fortified from sources of future competition and generate very attractive risk-adjusted returns of 9% to 11% on assets we already own and know very well.

Besides Ala Moana and the new mall development in Fairfield County, the projects are all tenant-driven, not done speculatively. In addition, we've expanded our supplemental disclosure regarding our redevelopment activities to provide more transparency to you of our efforts.

Turning to our malls and some of our metrics. We firmly believe that good things happen to good assets. And over the long-term, the most opportunities and highest value creation opportunity will be within the high-quality end of the property spectrum. Our mission is to own and operate high-quality retail assets in the United States. Today, our mall portfolio is one of the best. Off-peak, 123 malls in the portfolio, 73 are A malls and account for 75% of our net operating income and post-sales over $650 per square foot. The portfolio's current inflation of high-quality malls was achieved to an extraordinary number of transformative transactions, including the disposition of all 80 assets since the fall of 2010, a very focused leasing and remerchandising effort that never ends and high level of attention to details starting with my senior management team spending most of our time in the field and with our retailers. The bulk of our development efforts are allocated to making our A malls even better and moving a B+ mall up to an A mall. However, we're not done as we continue to selectively dispose our assets and make opportunistic acquisitions. Subsequent to quarter-end, we saw Eden Prairie in Minnesota, a high-occupancy mall with sales of around $300 of square foot. In addition, we're under contract to sell 2 malls which we hope will close in the month of November. So by year-end, we anticipate owning 120 malls. The proceeds from asset sales are being recycled into high-quality assets, acquiring boxes and anchor pads within the portfolio to control more of our real estate are opportunistically acquiring flagship high-quality urban retail asset so we can unlock value by expanding the site, renewing expiring leases at higher market rents or capitalizing on space within not currently used at its highest value. These assets represent a source of growth for GDP as we look out over the long term and the opportunity for value creation is extraordinary.

As noted in our earnings release, in August, we acquired an interest in Apple and the Bulgari flagship stores in the prime Union Square retail district in San Francisco. We also acquired the asset located at 830 North Michigan Ave. in Chicago, home to Topshop flagship store and highly valuable retail location directly across from Water Tower Place.

Finally, last week, we closed on 200 Lafayette St. in the SoHo neighborhood in New York City. The asset's location is excellent and contains significant scale. At closing, we were able to recapture a retail portion of the building from JCPenney.

Finally, a few perspectives on current retail sales and what it means to the mall sector. Just about this time last year, I was on a panel at an investor conference with 2 of my peers. And we talked about the eventual slowdown that will occur in retail sales growth. At the time, tenant sales were growing at 8% to 10%. And we have predicted a more normalized rate will be somewhere in the range of 3% to 4%, especially given that the growth of the country is 1.5% to 2.5%. So we found it to be highly improbable that retail sales can grow much beyond what the growth of -- what the GDP of the United States would grow at.

In addition, I'd like to remind everyone that retail sales are at a new all-time high, almost 25% higher in our portfolio than it was in 2007. So the moderation that we are seeing in retail sales was expected and we do not believe would have any impact on the demand for space from the retailers. The demand is from domestic retailers looking to expand the existing footprints to scale up new concepts, international retailers seeking to enter or expand within the U.S. market and the traditional destination retailers that are coming into the mall. It is also an opportunity for us to replace lower productivity tenants with a higher productivity tenant, thereby supporting a continued growth in sales at the malls.

Lastly, our occupancy box is at 13%, thereby giving us runway to continue to have higher suite-to-suite spreads. And one last comment is we don't anticipate there should be any meaningful supply in the mall space. We may see a handful of malls being built in the next decade.

In closing, we set our mission to own high-quality retail assets. And today, our exclusive U.S. portfolio is of the highest quality. We've matched the quality of our portfolio with a well-laddered maturity profile of our debt and has significantly mitigated the impact to our earnings from changes and interest rates. I'm extremely proud of the heavy lifting that my colleagues at GGP have done. They've come together as one, focused on a common set of goals. We're instilling a culture through our ranks that promotes entrepreneurialism, collaboration and respect. We just needed to create a winning company, and will bear fruit for the long-term. With that, I'll turn over to Michael to cover the financial results and the outlook for the remainder of this year.

Michael B. Berman

Thanks, Sandeep, and good morning, everyone. I'll make a few comments on our third quarter results followed by guidance for our fourth quarter and an update to our guidance for the full year of 2013. Finally, I will provide an update on our balance sheet activities before we open it up for questions. Please remember my numbers are intended to be points on a range. Also, please note that Aliansce's results have been moved to discontinued operations. Same-store mall revenues came in at $723 million in the quarter, up 4.7% to last year. Permanent occupancy, as Sandeep noted, was up 2% underpinning our growth. In addition, overall expense growth was flat despite growth in real estate taxes. Same-store mall NOI came in at $521 million, up almost 7% to last year and $5 million ahead of our expectations. We continue to manage our operations well. Company NOI for the quarter came in at $538 million, $26 million better than 2012, or 5% growth. Keep in mind, we gave up approximately almost 2 points of growth of NOI in the quarter due to the sale of ownership interest in Grand Canal last quarter. Net G&A for the quarter was minus $42 million, up slightly from 2012. Nonrecurring fees for financings and development were down $2.5 million in 2013 compared to 2012. Our net G&A was slightly favorable to our expectation.

EBITDA at $496 million for the quarter came in almost $10 million over our prior-year guidance. Financing costs for the quarter were approximately $216 million down from $248 million last year. Overall, company FFO came in at $283 million, or approximately $0.29 per share, an increase of almost 26% on a per-share basis. This is above the top end of our previously stated guidance range of $265 million to $275 million and over $50 million better than last year.

For the fourth quarter, we expect same-store NOI of around $580 million, growth of around 5% and EBITDA of approximately $560 million, around 4% growth over 2012. We expect financing costs of approximately $216 million compared to $238 million in 2012. We expect fourth quarter FFO of $335 million to $350 million, yielding FFO per share of $0.34 to $0.36 on a per-share basis, growth of almost 18% over 2012.

For the full year of 2013, we expect same-store NOI growth between 5.5% and 6%, up from 5% to 6% on our last call. Our updated 2013 FFO per-share guidance is $1.15 to $1.17, up from $1.13 to $1.15 on the last call, and is going to hopefully be approximately 18% growth on a per-share basis.

As for our balance sheet, as we noted in our press release, we purchased over 28 million shares during the quarter at an average price of $20. As the bulk of these shares were purchased in September, the impact of the third quarter share count is minimal. During the third quarter, we refinanced $1.5 billion at share and mortgages, generating approximately $240 million in proceeds and reducing the weighted average rate on these particular loans from 5.3% to a little less than 4%. In addition, during October, we amended our $1 billion revolver, improving pricing across the grid significantly and extending maturity to October of 2018. We increased the accordion feature from $250 million to $500 million. In addition, we reduced our unused fee from 35 basis points to 20 basis points. This transaction demonstrates the strength of our balance sheet. And with that, let's open it up for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Dan Oppenheim from Crédit Suisse.

Daniel Oppenheim - Crédit Suisse AG, Research Division

I was wondering if you can talk a little bit in terms of the strategy of the acquisitions, clearly very small in terms of just what you've done with the -- in Union Square San Francisco or your selling the capacitors of adding a lot of value to assets in terms of buying good assets is very good. I'm wondering how much you're going to do in terms of adding value here to those single-tenant assets?

Sandeep Lakhmi Mathrani

First, Dan, buying this kind of retail assets is nothing more than the extension of our existing business. It's almost like buying out parcels or buying ankle pads. There's no additional overhead that we spend in buying these assets, managing these assets or leasing these assets. It's exactly the same tenant relationships seen at -- whether that be Apple in San Francisco or Bulgari or Loro Piana or JCPenney or Topshop. There's tremendous value creation in all these assets that we've acquired. If you look at the asset in San Francisco that you just talked about, there's an Apple lease that basically goes until 2019. It's tremendously below market. Apple is relocating on the square. So we hope to recapture it before 2019. The Bulgari building also has leases coming up that are substantially below market in 2014 and 2015. And simplistically, on this acquisition, which at share was about $80 million, the existing NOI is $5 million. And it'll go to $12 million. So it's $7.5 million total between the 2 assets. It's $5 million for the Apple building and $2.5 million for the Bulgari building. That's $7.5 million. And we'll go to $12 million by 2017, 2018. And if you actually look at that, you're taking $160 million acquisition total value, $80 million at share. And with the cap rates that today stabilized assets would create for the value will be $300 million. And so if you look at it from an equity perspective, you are -- it's almost a 3x on this one acquisition. So we see tremendous value creation. And this doesn't even take into account, in the Apple building, that there's 7,000 square feet of unused equity hour. So we think there's tremendous value creation in these urban assets, which is nothing more than the extension of our business. It's what we do.

Daniel Oppenheim - Crédit Suisse AG, Research Division

And then I guess second question. I'm wondering about your comment about the -- really some spreads moderating from the current levels. Is that driven by sort of the anything in terms of the retail climate? Or is it more a function of also that you've boosted some of the current occupancy? And so there's less to capture there from that?

Sandeep Lakhmi Mathrani

Okay. So again, when we've talked about the leasing spreads moderating to 8% to 10%, again ours is on a gross basis. So if you can roll it back to a net basis, it'll be low to mid-teens. From a net basis, the reason is multipled. One is you have to look at expiring rents that come into play for the remainder of 2014. Two, you have to look at where the space is located. Usually, the spaces that are remaining to be leased in 2014 are not of the 50-hour line. So we view that to be moderating. It has nothing to do with sales because the leases are being leased based upon current sales, which are 20% to 25% higher than the expiring sales when the leases were done in 2007 or in 2002, as the case may be. So it's based upon the existing sales, not the moderation of sales. So there's no co-relationship between the 2.

Operator

Our next question comes from Craig Schmidt from Bank of America.

Craig R. Schmidt - BofA Merrill Lynch, Research Division

Sandeep, I wondered if you could talk about the flagship urban high street retail's potential for growth relative to an A mall portfolio? Which one do you think has -- it sounds like you think the street retail has the higher, but...

Sandeep Lakhmi Mathrani

It reminds me of a conference I attended where there was some debate at lunchtime between 2 titans in the industry. So I won't go down that path of which one is better. I think they're like businesses. I think they're very similar in many aspects, same trend relationships. Our portfolio now, it's high productivity malls, suite retail at high productivity sales, usually. And so the -- I don't want to identify one versus the other. The only thing we will say is that the assets that we acquire, whether it be a mall, whether it be street retail has to have the element of growth attached to it. And so it has to equate to what will be spent on a redevelopment basis. If we can produce on a stabilized basis similar returns, we will either buy malls, buy street retail or do a development activity. They seem to be, in our eyes, a way to invest on capital prudently.

Craig R. Schmidt - BofA Merrill Lynch, Research Division

Okay. And I guess I wondered what are the next major steps in pursuing the regional mall in Norwalk, Connecticut?

Sandeep Lakhmi Mathrani

We hope to acquire the land in the fourth quarter of this year. They will be about an 18-month -- 12- to 18-month approval process. And we hope to start construction sometime in the summer of 2015 or an opening in 2017 or early 2018.

Operator

Our next question comes from Michael Bilerman from Citi.

Michael Bilerman - Citigroup Inc, Research Division

Sandeep, can you talk a little bit about sort of capital allocation and how you make the decision to reduce the equity flow buyback stock versus deleveraging versus harvesting capital for development and redevelopment or effectively buying assets that granted have some growth, but at a very low cap rates? How do you sort of think about the range of opportunities within that scope?

Sandeep Lakhmi Mathrani

So I'm going to let Michael address the -- your first part of the question and then he'll turn it back to me to talk about the assets which have a initial going-in yield that's lower and what the growth rate is. So Michael, would you?

Michael B. Berman

Sure. We have a large cash position coming in from the Brazil sale. We felt our development pipeline is essentially funded, it's not perfect every year but it's reasonably close. We had an opportunity to take Pershing Square below 5%. More importantly, we had an opportunity to purchase our portfolio at a 6% cap rate which we thought was an extremely good buy. We did debate the premium back and forth, and then essentially, decided it was worth paying up a little bit to get the large block. So that was the stock buyback thought process that we had.

Sandeep Lakhmi Mathrani

So addressing the assets. Again, we sort of, as I said to Craig earlier, we look at whether you're buying -- you're buying high-quality retail. We don't differentiate between street retailer or buying a mall. And if you actually look at the 3 acquisitions that we've made, effectively at share, the cost is $400 million, in fact, $200 million of equity. And we see the NOI going from $13 million to $24 million between now and 2017. And that, on an equity basis, is a 2x multiple. And so, we view this to be a highly accretive transaction, and if we could produce these sort of returns, whether it would be in development or a retail acquisition, we would pursue it.

Michael Bilerman - Citigroup Inc, Research Division

But I guess there's some element of where cap rates are going to be in a few years. So you think about this stuff in Union Square going in at 4 7 that will grow to a 7 5 . I think you said those assets would be worth 300, that's using a 4 cap rate. I guess at some point, in part of buying low cap rates today is at embedded growth, what gives you so much confidence that, a, cap rates would stay flat or go down on what would be then market rents? I'm just trying to understand that versus putting capital to work and almost double digits in the redevelopment and development pipeline, why spend any money on this strategy? Even though I understand the growth, but to me, you're paying for it upfront.

Sandeep Lakhmi Mathrani

You're only paying for it if you believe that there is no growth in the NOI. So even if I put aside the cap rate discussion, because we're not in the sales business, okay, if you can show me assets where the NOI can virtually go from $13 million to $24 million on current trends and then each one of the 3 situations, okay, we've been able to recapture the space today. So we're not looking at future rents but I'm looking at future market rents but basing on current market trends which are much higher than the existing rental market. So today, we are re-leasing the Apple still in San Francisco. Today, we are re-leasing a 50% vacancy at 830 North Michigan Avenue, and today, we are leasing the retail portion of 200 Lafayette. So purely on an NOI basis, there's tremendous growth in current dollars, right? So the yields on, if you look at it on a levered basis, are going to be virtually the same, if not better than developing yield. We do look at them in the same way. And it is not a situation whereby we're using capital, okay, that could otherwise be used in the development business. And that, I think, is an important factor, okay, developing businesses. We've view it to be fully funded, we have capital to perform for 2015, '16 and '17 -- I'm sorry, and '14, and so we're not depriving ourselves of the development opportunities that exist in that portfolio.

Michael Bilerman - Citigroup Inc, Research Division

And who's your partner in San Fran, you bought 50%? Was that the existing seller or someone new?

Sandeep Lakhmi Mathrani

No, it's someone new.

Michael Bilerman - Citigroup Inc, Research Division

And what -- how would you characterize that partner?

Sandeep Lakhmi Mathrani

They're viable. They own a lot of retail real estate throughout the country. They're a national player, substantial assets. They're an operator. They're not an institutional partner.

Operator

Our next question comes from Ross Nussbaum from UBS.

Ross T. Nussbaum - UBS Investment Bank, Research Division

Can you talk a little bit more about Ala Moana, which obviously is your biggest project from a capital spend perspective? And if there's been any change in terms of the tone of discussions now that Taubman is moving full-pledged board in Hawaii and I know they have talked very favorably about their project there? Can you just give us some color on how that has shifted the competitive environment, if it all?

Sandeep Lakhmi Mathrani

So if you actually look at Waikiki, there are 2 projects like all of them, one is the street in Waikiki Beach and one is Ala Moana. They both have existed for a long time. The duplication of tenants today are extensive. I think there are 50 plus tenants duplicated between 2 streets. They both do tremendous volumes. Almost will say that the first store going into the market will go into Ala Moana -- it's true and tried. We are anchored by a Bloomingdale's, Neimann Marcus and Macy's and a Nordstrom's. It's more traditional and I think both projects are going to exist and can sustain themselves, as Waikiki and Ala Moana have existed. And so, we don't view one to go from the other. On the contrary, we think they both going to exist simultaneously than they both do today. I mean, all of the retailers that actually exist in Waikiki existed in Ala Moana. And they have, for numerous years and actually, they have existed through in the Great Recession and continued to perform incredibly well. As a matter of fact, Ala Moana is today almost a $1,600 of square-foot mall at the Great Recession or prior to the Great Recession, it had been $500 of square-foot mall. The growth has been astronomical and that growth has occurred as Waikiki's street retailers actually blossomed. So proving the point that actually both can exist and co-exist and will co-exist.

Ross T. Nussbaum - UBS Investment Bank, Research Division

Second question, I had asked David Simon this, I figured this was your baby so I should let you comment as well. Can you talk about the vision you have for the beta program is to live and how you see the integration of same-day delivery? Is that the future of the mall or is this just an ancillary service that you're going to be providing?

Sandeep Lakhmi Mathrani

So Ross, firstly, I'll tell you this is an industry effort. I think, I'm pleased that all of us have sort of come together to make this a reality, that it's a pilot in malls that will span across, I think may switch Westfield, Simon and up. And the aspects here is that we have 2 things. The malls have, which is it has a point of distribution which is the malls themselves and they have exclusive product, which is the tenants. And it is an ancillary service. If we all believe that omnichannel retailing is the future, which every retailer is focused on. As a matter fact, if you speak to pure online retailers who are desirous of getting a scale such as [indiscernible], they will tell you that having a bricks-and-mortar presence is a very important. As a matter of fact, what we are seeing is a growth in the size of the store so whether it be Victoria's Secret, whether it be Foot Locker, whether it be Hot Topic, you're seeing retailers expanding the size of their stores to be able to present more of their merchandise -- H&M, Zara. And that also facilitates the ability for online retailer. So we think it's a -- we think are in an omnichannel world and we are just facilitators of our tenants. And the industry is hopefully going to be able to show to the pilot that it is the future.

Operator

Our next question comes from Josh Patinkin from BMO Capital Markets.

Joshua Patinkin

On the temp/permanent occupancy strategy, I think you started at about 88%, not 91%. Can you give us a sense for what's left to do, what the space looks like and if we can expect similar rent spreads going forward?

Sandeep Lakhmi Mathrani

So we actually looked at the end of the year, like I said, to be 92% permanently occupied. I mean, our original projections were to have about 3% temp occupancy and a point or so of signed-not-open for a grand total of 96%. We think the year could end at the same 92% permanent occupancy, maybe 4% temp occupancy incurred a point of signed-not-opened for 96.5% to 97% total occupancy. The rent spreads for the temp-to-perm conversions and that will continue to be in the quarter, 100% to 125%, but we do think that portfolio starts to stabilized at 93-plus percent permanent occupancy. So you will continuously see, call it 2% to 3% temp occupancy in the portfolio. So you've got another -- at the end of this year, got another 100-or-so basis points at conversion -- 100 [indiscernible] point conversion.

Joshua Patinkin

So success in getting that strategy going and you're well into it now, it -- has that enabled you to start focusing on some of the external growth opportunities you're pursuing? Can you talk about how you allocate your time and how you think about the business going forward, I mean turnaround?

Sandeep Lakhmi Mathrani

So 90% of our effort goes into looking at organic growth, which is continuing with the occupancy. It's a long way still from 92% to 93-plus percent. The 2014 is a very critical year for us to get to stabilization. It will account for leasing 7 million to 8 million square feet of space. So, we're very focused on that. Spreads continued to be very important. So we're focused on making sure not only we're leasing space, where we get the right spreads. For development activities, we put $1.3 billion into construction. We've got $750 million more to go into construction. We are laser-focused to make sure that we bring these things in on budget, on time and with the yields that we have stated in our sheets. So 90% of our energy thus goes into the existing business, focusing on the culture of the organization, focusing that we work in an efficient manner, okay? We spend very little time on external opportunities. They're opportunistic. They have to have a growth associated with it. And we do believe, as we said, continuously that our growth until 2017 is going to come organically, not from external opportunities. Not to say that we will not look at external opportunities, but that's not where our focus is.

Joshua Patinkin

Again, and lastly, was the dividend increase tax-motivated?

Michael B. Berman

No, the dividend increase came from just growth in cash flow. We thought we though we continue to share with the shareholders.

Operator

Our next question comes from Ki Bin Kim from SunTrust.

Ki Bin Kim - SunTrust Robinson Humphrey, Inc., Research Division

Going back to your new development in Norwalk, Connecticut, could you talk a little bit about how that deal came about? And to get your 8% to 10% expected return, what do they imply about the sales per square foot that you would have to generate at that mall?

Sandeep Lakhmi Mathrani

One is we're always in the market, looking at where the opportunities lie for potential mall developments. There are a handful in the country. The northeast obviously presents a good opportunity. There is a hole in the marketplace in Fairfield County so -- which we can support a what I would call a higher-price-point mall. And so, we would say that sales productivity for new mall needs to be north of $650 of square foot and which is what we project here as it will -- it should be an A mall, the demographics support it, the type of tenants so we look at putting in it traditionally do better than $650 of square foot on a chain average. And so we feel that's the sales productivity of the center.

Ki Bin Kim - SunTrust Robinson Humphrey, Inc., Research Division

And just one last question. If I look at the couple of few new projects you disclosed on your perspective pipeline, for example, Southwest Plaza and Staten Island Mall, I wouldn't consider these your top-quartile malls in terms of productivity. What is the -- I guess, why -- is it better to spend money at these types of malls versus your top quartile? I mean, where do you get -- I guess where is the best return for your redevelopment dollars?

Sandeep Lakhmi Mathrani

I actually don't know if it's in the top quartile but Staten Island Mall is definitely an A, maybe an A+ mall. It does -- I'm doing this from memory, $650, $700 of square foot in sales. So it sort of sticks out there to be a very high quality A mall. It is the only mall in the entire island. It's got a population of about 500,000 people. This project, as a matter of fact, is fully, fully leased. So we're just awaiting approvals for this tremendous demand for the space. As a matter of fact, UNIQLO just opened here incredibly well. It has [indiscernible] that does huge volumes. So it's -- it probably is -- I thought you would say is in top quartile portfolio but I don't know that we haven't done the math to figure that out. Southwest is a very interesting project. Southwest, the way we look at it, is we happen to own the land. It virtually -- it sits in fabulous demographics. We own Park Meadows, which is incredibly strong. There's been tremendous demand. This is one that basically we think you could take a B mall and make it into an A mall. And so investing virtually, redeveloping the entire assets to upgrade the portfolio. So this are the kind of opportunities you want in your existing portfolio. If you've got a good piece of land, it's got the right bones, it's got the right fundamentals and if you can redevelop it, it's cheaper than buying from the outside.

Operator

Our next question comes from Alexander Goldfarb from Sandler O'Neill.

Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division

First question is on the stock buyback. Michael, you mentioned that you guys had an influx of cash from the sale of Aliansce that facilitated the decision-making easier to buy back from Pershing Square to get them under 5%. Should we read those comments that, going forward, unless there was another large disposition that the company suddenly came with a bunch of cash, that we shouldn't really think about more stock buybacks? In other words, stock buybacks would only be funded with large dispositions or do you think through normal cash flow generation we would see you guys buying back more stock?

Michael B. Berman

It would probably have to be event-connected where there was a large chunk of cash and we didn't feel the need that it was going to go anywhere else. It also depends on the value we see in the stock. We thought what we got was a great deal. Don't see us in the near-term using free cash flow to buy stock even if we need to use that to fund the development pipeline. So again, I would say, if it's a -- there's a large cash event, it would certainly be one of the things we would consider.

Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division

Okay. And along those lines, how much -- I mean, obviously, you guys have a lot of shares outstanding. Presumably, your focus, you would focus on reducing the share count as opposed to doing something like a reversed split to reduce the share count, correct?

Michael B. Berman

Yes, we've talked about a reverse split. Not really sure it really adds a lot of value here. So we do some share count that way, not really sure if it accomplishes anything.

Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division

Okay. And the second question is you guys have obviously stepped up the external front, certainly here in Norwalk, San Francisco, the JCPenney building down SoHo. Just sort of curious, as you're doing more on the external side and you still have a lot of stuff going on with the core portfolio, did you -- I mean, do you feel that you need to hire another person or more people? Or I mean I would imagine especially given street retail often falls to the various retailer's CEO to make that relationship, presumably that's a Sandeep thing but at the same time, the company's about to embark on ground-up retail which it hasn't done in quite a long time. It would like seem there's a lot going on and that perhaps, senior management is stretched or there needs to be a point person for some of the new activities going on.

Sandeep Lakhmi Mathrani

Alex, you have to appreciate that we've actually sold 80 assets along the way. Even recently, I would almost venture to tell you there's more effort in leasing B assets than there is A assets, and we have just sold Eden Prairie. We've got 2 other B assets that are under contract to be sold. So as a matter of fact, if you look at it from a time perspective, okay, we don't need to hire anymore people. In addition, day 1, we develop -- we fostered a development group within the company to unearth this development pipeline or redevelopment pipeline, and if you look at it $1.3 billion in construction. So in life, you would need a pipeline. And if you look at Norwalk, it doesn't start until 2015 which is almost when Ala Moana will be complete. So we don't view the need to add on anymore people and neither could be assets, and we talked about it on the street. As a matter fact, you've got that single-tenant building with 1 vacancy. And if you look at the mall, we're leasing it to 200 tenants. So that was an effort is very different. We don't view this that you need to meet additional overhead to make this happen.

Alexander David Goldfarb - Sandler O'Neill + Partners, L.P., Research Division

Okay. And just a final thing. Sandeep, just going back to one of the earlier question, when you guys look at street retail, because -- I mean, yes, your heritage has street retail and there is sort of similar playbook where there's an under -- there's a spot that's under market and expires the next number of years and then there's the upside from that. But it seems like the value creation is created at that point and then a new long-term lease is structured. So do you view that each street retail has to stand purely on its own economics or do you also look at the side effect that where because you're having that CEO relationship, that you're able to get better NOI or better rents at some of your other malls and therefore, the evaluation isn't just purely on the street retail property itself but it's in the totality of the portfolio?

Sandeep Lakhmi Mathrani

Each deal has to stand on his its own. The merits of each deals, we're economic animals and each deal has to be economic on its own.

Operator

Our next question comes from Jeff Donnelly from Wells Fargo.

Jeffrey J. Donnelly - Wells Fargo Securities, LLC, Research Division

Sandeep, it sounds like the growth prospects of the urban acquisitions are they -- what appeals to you? I guess, if I heard you correctly, you're expecting future retail sales to decelerate maybe towards the pace down the road, in line with GDP growth. How does that lead you to think out the whole sell analysis on malls, what I'll call fairly high occupancy cost ratios, even your iconic malls? I mean, are they a source of funds because they don't have the embedded mark-to-market rent adjustments to fuel premium NOI growth?

Sandeep Lakhmi Mathrani

Jeff, we have -- our leases have, call it 2% to 3% built-in growth. And even if sales grow at 3% a year, leases come up every 5 years, okay, you're getting 15% to 20% compounded growth rate, should you get an 8% to 10% spread? Yes. So I think the beauty of having good assets, which should outperform the general market from a sales productivity perspective, will continue to have growth. In addition, in almost every situation, good things happen to good assets. When we had predicted, Ala Moana that we could buy back the Sears box. The last recession, would you predicted you could have bought back the JCPenney box in the same mall which one led to a Nordstrom's and an expansion, the second led to a Bloomingdale's with an expansion. So one, it has inherent growth just in rental growth, okay? It should outperform on a sales productivity basis which will end the least churn inspection still be quite healthy. And two, always good things happen to good assets. And so you want actually to be laser-focused and have great assets in your portfolio that you can mine when the opportunity presents itself.

Jeffrey J. Donnelly - Wells Fargo Securities, LLC, Research Division

I understood, I mean, I understand it. You tend to see retail sales go with every year and have embedded bumps in your lease, but you could say many malls have that. And I guess my question was for your malls, it might have a "smaller" mark-to-market adjustments today, does that lead you to think that those are a source of funds going forward?

Sandeep Lakhmi Mathrani

Look, we evaluate all sources of fund depending on how we can invest capital, so if you could -- if what you were saying is, could I sell an A mall at a sub 4 cap and invest it in 9 caps somewhere else, would I do that as a source of capital? The answer would be yes. We're economic animals and we do the right thing to recycle capital. Right now, our motion is to recycle capital by selling lower productivity malls and investing in it. And could that change at sometime in the future as long as opportunities present themselves? The answer could be yes.

Jeffrey J. Donnelly - Wells Fargo Securities, LLC, Research Division

And maybe do you have an estimate of maybe how ambitions you could be in the next few years in terms of recycling capital, maybe toward some of these, I guess, the examples where you came thus far, you got a lower yield, and maybe higher growth assets? Is there a pipeline of dispositions you sort of think about at this point? And maybe as an add-on question to that, concerning Eden Prairie, do you have any details on that sale you can share with us, even just capital operators, anything unique about that in terms of rental or capital needs there?

Sandeep Lakhmi Mathrani

So again, we don't have a pipeline to -- right now, our focus has been out of the company, [indiscernible] it's projections of 4% to 5% NOI growth, it's 4% to 5% EBITDA growth and on a per-share basis, a double-digit FFO growth the next 3 to 5 years.

But right now, our focus has been out of the company. We lock to it's -- with projections of 4% to 5% NOI growth, of 4% to 5% EBITDA growth and on a per-shared basis, a double-digit FFO growth for the next 3 to 5 years. We have a plan in place, which we have said and demonstrated. It's fully funded. So we don't have a need for capital at this moment in time to basically produce the kind of returns that we expect from now until 2017. Could opportunities present themselves? And then would we look at things so differently? So that's running a business. I can't predict the future today. But we don't have a pipeline of assets to sell to generate capital to invest because we see opportunities with higher returns there today. We actually don't see that many. Second question I think you asked was about Eden Prairie. And when we sell assets, we look at 2 things. We look at the fundamentals, okay? And we look at what the tax benefit or tax planning is. Eden Prairie was a high-occupancy mall. I think it's 17%, 18% occupancy mall at $300 of square foot in sales, and there was a tremendous tax benefit to us, which is what motivated us to sell the asset.

Operator

Our next question comes from Vincent Chao from Deutsche Bank.

Vincent Chao - Deutsche Bank AG, Research Division

Just to follow-up on the asset sales, 2 more I expect you to sell by the end of the fourth quarter. Just wondering if you could give us -- or end of the year, if you could give us some general sense of the size of the dispositions and then whether or not you have anything else out in the market and then -- and maybe provide some color on the buyer interest in that kind of asset. It seems like a number of your sales and the number of competitors have been selling assets today in that B range here recently. Just curious if you're seeing a pickup in interest and if that's resulted in any cap recompression in that particular layer of the mall space?

Sandeep Lakhmi Mathrani

So they're both very small. They're a $20 million, $30 million assets. So they're small. Again, low sales productivity assets. Again, both helped in our tax planning efforts. And there is actually an interesting demand for that space and for those kinds of malls, and it comes from multiple sources, private equity money, small funds, entrepreneurial ownership. So we do see a demand. Our cap rates are depending on the asset, if it's -- it had definitely come down a good 100 basis points when we saw them a year ago. So there has been improvement than there is demand.

Vincent Chao - Deutsche Bank AG, Research Division

Okay. And then just going back to the sales commentary. Obviously, sales growth was expected to slow, but just curious. I think, last quarter, you were talking about modeling flattish year-over-year percentage rents in the fourth quarter. Just wondering, now that we've gotten past back-to-school, if that's still the expectation that you can hold percentage rents flat in fourth quarter?

Sandeep Lakhmi Mathrani

Don't forget, we said flat to last year. So if we still see a 3% growth, the point is we should still be okay on the percentage rent line item because it's flat to last year. So we're expecting no growth in our projections. So if it goes 3%, it's a benefit.

Vincent Chao - Deutsche Bank AG, Research Division

Okay. So you're modeling 0% growth for fourth quarter. Okay.

Sandeep Lakhmi Mathrani

Just from a modeling perspective.

Vincent Chao - Deutsche Bank AG, Research Division

Okay. And then just lastly, just on the $5 million of upside to the same-store NOI for the quarter. Your earlier comments, Sandeep, were that the growth was coming from all the places you'd want, the occupancy rent growth and operating expense management. Just curious on the $5 million of upside, was that pretty equally split amongst those 3 buckets? Or did you see anything that really drove the outperformance versus your own expectations?

Michael B. Berman

We had over a 4.5% permanent revenue increase, which takes into account a lot of what Sandeep was talking about. We did benefit a little bit from a better business developments. We did have a couple of small onetime events. But the bulk of the gain over last year was really the drivers of growth that we've been through.

Operator

Our next question comes from Ben Yang from Evercore.

Benjamin Yang - Evercore Partners Inc., Research Division

Sandeep, maybe another question on Eden Prairie. I know it's only 1 asset, but I believe you've been marketing this mall for almost 2 years. So I'm just curious, was there any reason that you were a more motivated seller for tax purposes today versus, say, 2 years ago, or was there anything else in the market that changed that made this deal transact?

Sandeep Lakhmi Mathrani

Yes, I mean, absolutely, Ben. It was absolutely the tax planning aspect of it because, obviously, we've made -- we went through the Aliansce transaction, and we wanted to be able to shelter more of the cash. And so we were much more motivated because of the tax planning aspect.

Benjamin Yang - Evercore Partners Inc., Research Division

Okay. And can you maybe talk about how the pricing for this particular asset changed since you listed it versus what it's sold for?

Sandeep Lakhmi Mathrani

So actually, this particular asset, the pricing extended by about 100 basis points.

Benjamin Yang - Evercore Partners Inc., Research Division

Okay, great. And maybe just last question, switching gears. I thought the color on the Union Square acquisition was helpful. Can you also maybe talk about the value creation opportunity at 200 Lafayette, including the price we paid and the NOI upside for that particular asset?

Sandeep Lakhmi Mathrani

Sure. So 200 Lafayette, again, when we bought the asset and we wanted a contractor to buy the asset, the JCPenney was paying about $8 million. We bought the asset for $150 million, about little over 5 cap. The value we saw was the retail portion of the building was tremendously undervalued. And it was our hope that we could recapture the asset from JCPenney. We were able to actually accomplish that at closing. So we have recaptured that portion of it. And so we actually anticipate the NOI for the asset to be, call it, $9 million to $10 million, and we should have that leased sometime in 2014.

Benjamin Yang - Evercore Partners Inc., Research Division

And then do you have a tenant in mind for that space already, or is that a specific you need to still work on?

Sandeep Lakhmi Mathrani

The answer is yes.

Operator

Our next question comes from Andrew Rosivach from Goldman Sachs.

Caitlin Burrows - Goldman Sachs Group Inc., Research Division

This is actually Caitlin Burrows. Just a quick one. You mentioned the natural slowdown in tenant sales growth, and I know we're in a omni-channel world. But last week, Amazon reported a 31% increase in their North American sales. So the Internet has obviously been on topic for a while now, but we are wondering if you think there's been a recent acceleration in the Internet's impact on your business?

Sandeep Lakhmi Mathrani

As a matter fact, I don't want to get into Amazon's business. But we've just proven that omni-channel works. Retail sales of bricks and mortar continues to go up. It still occupies, call it, 10% of total retail sales. If you actually go back historically and you look at catalog sales and then you look at Home Shopping Network sales, and you'll see that a portion of our retailers sales, almost 10%, was to other sources. And then you have to then see what are really the impacts. But we do believe that we live in an omni-channel world. Internet sales is one that's present, omnipresent. And the question's going to be will the bricks and mortar retailers be able to do it well? And as long as they remain exclusive in their product pipeline, which they will, I think they will be perfectly fine. I think they can all coexist.

Caitlin Burrows - Goldman Sachs Group Inc., Research Division

Okay. Just referencing that 10% that there has been historically, do you think that the Internet portion will kind of get to be larger than the, say, catalog part was than in the past?

Sandeep Lakhmi Mathrani

Hard to answer. Again, what you're going to see -- and the reason I say hard to answer is because as time goes on, I think the lines are going to blur. And when people are going to report, you're not going to be able to tell the difference, whether it's online retail or bricks and mortar retail so it's hard to tell.

Operator

Our next question comes from Rich Moore from RBC Capital Markets.

Richard C. Moore - RBC Capital Markets, LLC, Research Division

Okay. So I'm thinking about this. You've got buybacks. You've got acquisitions, redevelopments, developments, and I'm guessing more are coming. Free cash flow, I think, can only cover a portion of this as we go forward. So as we model over the next couple of years, do we always think in terms of asset sales as a source of capital, or do we leverage go higher, or do we even think, perhaps, of equity issuance as part of the plan?

Michael B. Berman

So generally, Rich, I would say free cash flow. Again, that's after the dividends plus the amortizations add back. We should be generating $350 million to $400 million, maybe $450 million depending on the year of cash available to us. That's essentially going to fund the development pipeline. Like I said, it might not be perfect every year. Outside of that, acquisitions, dispositions are things we utilize with respect to portfolio planning. The stock buyback happens to have been a unique situation. And if something unique comes up, I'm sure we'll figure out a way to fund it. But I wouldn't look for equity. We do think about joint ventures from time to time as sources of funds. There's nothing on the horizon, but that is an excellent source of capital for us. We did one earlier in the year. As we said, it took about a couple of weeks at the end of the day. So half a Class A asset in Las Vegas through an institutional partner. We have tapped the preferred market. Although with the yields today, I'm not sure I would be recommending that to the team here. So again, we do have a lot going on. But if you look at the way we have structured ourselves, most of the funding comes from internally generated funds.

Richard C. Moore - RBC Capital Markets, LLC, Research Division

Okay. So Michael, the joint ventures is really -- that's an asset sale too. So I'm trying to figure out, are you guys constrained in a sense by what you -- for what you can do externally, by how much you can sell going forward? Or do we just -- if we're thinking in terms of a greater number of -- a greater amount of external growth, do we sort of leverage go higher than what we have today.

Michael B. Berman

I don’t know about the leverage going higher. If you think about what we're doing on the 3 assets here, we have partners. We're borrowing at 50%. The actual amount of equity capital is something that we had on our balance sheet already. If there was a $2 billion acquisition, then again, we would probably think about -- again, assuming it's high quality with a growth worth, just to pick a number to make a point, we'd probably borrow 50% to 60%. In that size, we'd probably bring in a partner. So the amount of capital that we need to control assets is not nearly as large as the purchase price.

Sandeep Lakhmi Mathrani

Richard, I'll add to that a little bit. Our focus, if you look at the way we've operated is we spend the money to buy back the pads. So we bought back 11 pads from Sears. And we focus our energies on leasing those pads before looking at the next. So my nature in life is to basically go through an acquisition, make sure it's stabilized, make sure we prove out our thesis before going on to the next. And it is not -- we're not just purely an accumulator of assets, and I think it's very, very important. I don't want to use the word -- we're not deal junkies because we have to go prove our thesis, show the value to the shareholders before going onto the next transaction. And we actually have enough capital to make that happen. Our business plan is fully funded. Should there be other external opportunities as time goes on, there are plenty of sources of capital, which will obviously be accretive in any fashion to the shareholder. So we're very careful of that.

Richard C. Moore - RBC Capital Markets, LLC, Research Division

Okay, yes. It's just the sale of assets is not accretive and I'm just thinking, if we always are balancing asset purchases or development trade-bound center with sales and it's...

Sandeep Lakhmi Mathrani

So Richard, I'll just point out. We're recycling capital to better quality assets, okay? So if we were happy with our asset portfolio, that's going to make a likely a big difference. So the fact that you continuously recycling and bettering your asset quality, you're not only selling the asset to raise capital, you're selling the asset because you want to create a better quality portfolio, which will hopefully get a better quality of income, which will hopefully give you the right model.

Richard C. Moore - RBC Capital Markets, LLC, Research Division

Sure, yes. Fair enough, Sandeep. And okay. Then the second with the help from you guys. Do you have thoughts on JCPenney at this point? I mean, I know you guys have been a little careful talking about tenants, but have you -- I guess, have you got any color for us on how you see those guys doing this upcoming holiday season?

Sandeep Lakhmi Mathrani

It's hard for us to project. We think the direction being adopted is correct. The stores look great. I mean, we heard Ullman speak yesterday that things were moving in a positive direction, so we have -- we can only assume that the store sales or trends have reversed themselves.

Operator

Our next question is a follow-up from Michael Bilerman from Citi.

Michael Bilerman - Citigroup Inc, Research Division

So just 2 follow-ups. Just one on sort of redevelopment. I guess with all the projects you are going to add into the supplemental, sort of 36 current and 17 in planning and then another 6 completed, we're looking at about 53 assets that have been touched from what's half of the mall base today. And then you start adding in all the expansions and margin redevelopment projects. It almost -- I can imagine that, that number is quite large. And I just -- I'm trying to think about how you think about that capital, call it, anywhere from $5 million to $10 million a pop on an asset, sort of impacts same-store, whether you look at it that way, and sort of just how much of this was a defensive capital versus more opportunistic capital?

Sandeep Lakhmi Mathrani

Well, I'd sort of sit back and say most of what we've done has been opportunistic. The way that we looked at it is defensive. There are a couple of handful of defensive projects, but most of it is opportunistic. And we see this to have tremendous impact on sales productivity of the malls, which will actually lead to better rental growth rate. And just recently, we finished a renovation in Alabama, and we saw that a department store reported to us double-digit increase in sales because, of course, the renovation. So obviously, there's a direct co-relationship when you make an asset better and you invest in it, so whether you add tenants, whether you expand, whether you refresh it, which will effectively give you better growth rate going forward, which again is not factored into any of our math. This could just be a natural byproduct because sales productivity should increase.

Michael Bilerman - Citigroup Inc, Research Division

And then how many assets do you think prior -- so when you come on board, if there's 53 that are effectively -- or 59 that are targeted, either that was just recently completed, how many assets have been touched with capital?

Sandeep Lakhmi Mathrani

Okay, repeat your question again.

Michael Bilerman - Citigroup Inc, Research Division

What I'm saying -- with what's in the sub now, you have 36 projects underway, 17 that are in the pipeline, 6 that were just completed. That's 59 assets out of a base of 123, excluding some larger redevelopment projects. So I'm just trying to think about the last few years, plus what you have in the future, what percentage of 123 million that you owned are going to be touched?

Sandeep Lakhmi Mathrani

I mean, we do touch on an annual basis 4 to 6 assets, just by refreshing them. That's just part of our core business. So -- and then I think our current redevelopment is to touch another 11. So we make it to 70 assets, let's call it, 3 or 4 years. So I would say 80 to 90 would be touched between now and 2017.

Michael Bilerman - Citigroup Inc, Research Division

And can we just clarify just on the sales. You have 4 assets on the market, Meadows, Eastridge, Grand Teton, and Red Cliffs. They have got about just under $300 million of debt on them. You talked about Eden Prairie. I think it has $71 million of debt. I didn't hear a sales price on a gross basis. And then you mentioned 2 assets that were smaller. I'm just trying to get a sense of the magnitude gross versus net proceeds, and how much of overlap is between some of these comments?

Michael B. Berman

Net proceeds on the 4 you mentioned. We don't really want to comment too much on pricing, Michael, just given that we're in the marketplace. So I'm going to be a little circumspect with my answer. But I would say, on the Red Cliffs, those 4 order magnitudes, net proceeds could be anywhere from $90 million to $100 million after debts. The other 2 smaller ones that Sandeep mentioned, I would say, order magnitude of $20 million in total with debt. And then, Eden Prairie, the one that closed, I think it was roughly $25 million above the debt, something like that, $30 million above the debt.

Michael Bilerman - Citigroup Inc, Research Division

Right. So this -- when you think about this totality, 150 or so of net equity, that wouldn't change any sort of dynamic that effectively goes to fund some of the recent acquisitions and future development, like that's...

Michael B. Berman

Yes. I mean, we all talk about acquisitions as if it's a separate pool and redevelopment as if it's a separate pool. I like to say cash is cash.

Michael Bilerman - Citigroup Inc, Research Division

Yes. And then last question, just to Sandeep, would you be very kind to provide sort of the NOIs on San Fran, New York? And you talked to last quarter about Chicago being a 5% yield. But can you just sort of give the same sort of math of where NOI is today, where you think it's going to get in the future. So it sort of ties out to that comment? I think you said $13 million going to $24 million which is hard to reconcile from...

Sandeep Lakhmi Mathrani

So I'll give it to you, right? So the 2 San Francisco assets existing NOI is $7.5 million. 830 is $5 million. 200 Lafayette, now that I've recaptured the retail and the seventh level of the office from JCPenney, is $4 million. So if you add those up, that's $13 million, and it goes to $24 million. So the 3 assets -- the 2 assets in San Francisco go at $12 million, 830 North Michigan is a little over $9 million and 200 Lafayette, between $9 million and $10 million. That gets you to $24 million.

Operator

Our next question comes from Samit Parikh from ISI.

Samit Parikh - ISI Group Inc., Research Division

Just Sears announced this morning just a few leases they're selling in Canada for a pretty hefty price, and I know one of the malls is probably considered the second-best mall in all of Canada. Sandeep, I just wanted to see if you think there's any near-term opportunity for GGP to maybe recapture anymore of those flagship Sears leases or owned boxes?

Sandeep Lakhmi Mathrani

I would rather not comment, Samit. But obviously, they are -- I read the same thing you read, which seems they are obviously willing to sell flagship assets. But I'd rather not comment.

Samit Parikh - ISI Group Inc., Research Division

Okay. That's fair. Also, Michael, maybe this is something -- just sort of curious -- just curious about the definition when you're defining same-store NOI growth going forward. Are all of the redevelopments you list included in that same-store pool, or will some come out and some come back in?

Sandeep Lakhmi Mathrani

For example, Southwest Plaza, we took out of the same-store pool. You can see that in one of the pages of the supplement. I forgot which one. Generally speaking, we've been leasing in the projects unless it's like just a total redo. And then going forward, I would say that whatever NOI we get out of those projects, we'll consider to be part of same-store. I know you could go another way and say, "It's not part of the same-store because you're changing the asset." But for simplicity purposes, it's the same portfolio, so we'll probably include it on the same-store, unless we tell you we're taking it out.

Sandeep Lakhmi Mathrani

I mean, it sounds just like a major redevelopment except this one we have to take it out, while the others are more just adds and puts and takes.

Samit Parikh - ISI Group Inc., Research Division

Okay. But just on the -- on all the other ones besides Southwest, is there a way to quantify, and I'm not if there was a drag, but if there was any sort of drag this year on same-store because of maybe some repositioning that happened there, or if you have an estimate on what that could be next year when it ramps up even further?

Michael B. Berman

Next year when we give guidance, we'd probably give you a flavor for that. This year, with the income coming in and the income that went offline, I think a positive $5 million to $10 million in our favor.

Operator

I show no further questions at this time and would like to turn the conference back to Mr. Sandeep Mathrani for closing remarks.

Sandeep Lakhmi Mathrani

Thank you for participating in our earnings call this morning. Once again, if you, all, have any questions, please contact Michael Berman or Kevin Berry. Have a great day.

Operator

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may all disconnect at this time.

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