Michael Berman – Executive Vice President, Chief Financial Officer
General Growth Properties (GGP) Special Conference Call September 12, 2012 9:00 AM ET
Ross Smotrich - Barclays
Good morning. I’m Ross Smotrich, I’m the REIT analyst here at Barclays, and I want to thank you all very much for joining us this morning. We appreciate your interest.
It’s my pleasure to introduce Michael Berman, Executive Vice President and Chief Financial Officer of General Growth Properties. As Michael will walk you through the story, you’ll come to realize that GGP owns interests in 149 malls, regional malls across 41 states and Brazil, making the company the second-largest mall company out there. Michael joined GGP in December of 2011 after serving as CFO of Equity LifeStyles. He brings 25 years—more than 25 years of combined real estate and finance experience to the table, and I’m proud to say I was there near the inception.
So Michael, we very much appreciate your coming this morning and I’ll turn it over to you to tell the story. Thank you.
Thank you, Ross. What Ross left out was we shared a cubicle many years ago at Chemical Bank, where he taught me everything I know about real estate, so I’m very indebted to him.
Today I’d like to talk about my favorite company, General Growth Properties. A little bit on my background – as Ross mentioned, I’ve been in the real estate business for what feels like a rather long time, and prior to that I had—I’ve had experiences both as a chief financial officer, a money manager, and had a long career at Merrill Lynch real estate investment banking.
One of the things that a new management team likes to do is come up with it’s mission statement for it’s various constituencies, and we probably spent three, four months going back and forth in terms of the wording, and I think we ended up with one that we’re quite proud and we have now put all over our headquarters building and various offices around the country, and I just want to take a moment to read it. Our mission is to own and operate best-in-class malls that provide an outstanding environment and experience for our communities, retailers, employees, consumers and shareholders. And hopefully you’ll see some of those things in the presentation as we move along.
I’m going to cover three things today – a little bit of a GGP overview, kind of a GGP 101 as I would refer to it; going to the regional mall sector for those of you that might not necessarily be familiar with real estate, and in particular the regional mall sector of the business; and then tying it all back together by focusing on the specific fundamentals of GGP itself.
So we have narrowed our strategic focus – one, we want to own and really just want to focus on high-quality regional malls. We get a lot of questions about whether or not we want to own outlets. We say no. We get a lot of questions about whether or not we’re going to be aggressive in terms of acquisition activity. We say if it’s a class A mall and it’s reasonably priced, we’ll take a look at it; but we’re very focused on our current portfolio. Lease, lease, lease is a term that we use a lot in the shop. We have an opportunity to lease millions of square feet of space, and leasing drives the business. The mantra lease, lease, lease, you’ll see some of the activity that we’ve done over the last couple of years is really quite impressive.
Our growth focus is internal – as I mentioned, not really that focused on external acquisitions, although we have spent some capital over the last couple of years to do that; and capital investment really refers to a redevelopment/development program for existing assets inside the portfolio. And a prior and always a current topic for us is how do we de-risk our balance sheet and are we reducing our leverage.
A brief background on our portfolio – today, we own 133 regional malls comprising almost 57 million square feet of inline GLA – gross leasable area. That doesn’t include the anchor space that would substantially inflate that number. Seventy – so more than half – the malls are class A. Class A, class B, class C are terms of ours used in the mall business. Generally, the distinction relates to the sales productivity, sales per square foot of a particular mall. If it’s more than $400 a square foot, it’s generally deemed to be a class A mall. That’s a little bit more art than science, but you know a class A mall when you see it and these assets generate over 70% of our net operating income.
We are almost 94.5% leased as of the end of the second quarter, and we’ll talk a little bit more about the components of that leasing, and we have $533 of tenant sales per square foot which puts us in the top of—we’re near the top of the industry.
Originally this slide had a little history, starting in 1952 when the company was founded, that I thought might had been a bit much going back 60 years, so I thought I’d focus on more recent history. The company came out of bankruptcy in 2010 with a $6.3 billion recapitalization led by Brookfield Asset Management. Howard Hughes Corporation was spun off to shareholders and then there was an initial public offering or a re-initial public offering, if you will, in November of 2010 for $2.3 billion of equity in the real estate space, one of the larger capital raises that was done in the equity markets in the last 15, 20 years.
A new management team came in at the end of 2010, beginning of 2011. Sandeep Mathrani became CEO. He brought in a new head of leasing, new head of development, and they basically got on a plane and visited every single asset, came up with a plan, a strategic plan for every asset. One of the things that they decided upon was this investment program in the assets, which I’ll refer to again later. We sold over 14 million square feet. That statistic includes the spin-off of Rouse Properties that we accomplished earlier this year, and we refinanced over $4 billion of commercial mortgage debt, which we’ll talk a little bit more about the leverage in a few minutes, and we leased 11 million square feet. Appreciate how much square feet that is – that’s more than twice the square footage that we had coming due in that particular year.
Moving on to 2012, as I mentioned, Rouse Properties was spun off as a dividend to shareholders earlier this year. One of our strategies is to buy the anchor boxes when they become available. A notable transaction we did earlier this spring was the acquisition of $270 million worth of Sears stores, 200 of which was for one particular store at our flagship asset in Honolulu called Ala Moana. We’ll talk about that as well. And so far this year, we’ve refinanced almost $6 billion of debt and we’re looking at doing additional financings between now and the end of the year. Through June, we have leased almost 8 million square feet and we recently announced a 10% increase in our quarterly dividend payment.
The regional mall sector is pretty easy to understand. We’re not building any more malls. Maybe we’re going to build one or two over the next five to 10 years. We haven’t really built that many malls. It’s really hard to find 100 acres of land at the intersection of two highways in areas of the country where you think there’s going to be a lot of shoppers. It’s been pretty picked over, and as a result the existing assets, I believe, are going to continue to show more and more value over a long period of time.
Demand from retailers, despite the current economic conditions, continues to be strong. There are retailers who want to expand that are from either Europe or Asia and want to come to the United States and take space. Generally they are looking for the higher quality malls and the better demographic markets. There are retailers that are expanding within their spaces. Victoria’s Secret is going to probably launch some other stores that come out of some of the products that they’re selling in there to take additional space in the malls, in addition to increasing the space that they already have at some of their stores. That’s just one example of retailers looking to expand their footprints, their existing footprints.
And one thing that is very important to note about us given the quality of our assets and the locations of our assets, our typical customer is college educated. There’s a 4% unemployment rate. We are seeing, as I mentioned, $533 currently in tenant sales – that’s been, like, an 8% compounded growth rate over the last two, three years.
New store opening plans, from what we hear from the retailers, are at a four-year high. Again, in a fixed supply market that’s certainly very helpful. As I mentioned, we are an attractive market to international retailers, and one question we get asked a lot is the impact of the Internet on our business. It’s very interesting some of the things that are happening. A customer that just goes to the Internet might spend $100; a customer that goes to the store might spend $100, but when there are both types of customer, they may spend $400. A lot of people buy stuff online and then go to the store and return it and end up spending more money at the mall, so the interplay between the Internet, the mall and the retailer so far is not showing what we otherwise would have thought, which is a diminution of the mall, but in fact it’s becoming part of the enhancement of the real estate.
As you probably know, having been to a number of malls in your lifetime, the department stores anchor the malls. They are a critical piece of the real estate, and generally speaking they are thriving and expanding. Outside of one or two larger, in the news so to speak retailers, they’re generally increasing sales, increasing their footprints, and they pull the traffic through the mall. The design of the mall is very much trying to move from one wing to another, and the anchors play a critical role in that. What we have here is kind of an example of what happens when an anchor closes.
This is an asset in Glendale, California – the home of the first Disney Store, the home of the first Apple Store. Mervin’s closed a number of years ago because of the bankruptcy or whatever. There was no new anchor being brought in. Recently we signed a transaction with Bloomingdale’s. They’re going to take over the store. We’re completely—we’re putting in about $100 million into this property. It’s already a $650 square foot property and we think that we’ll earn, when it’s all stabilized, a 10% return on our capital.
As I mentioned, we own a stellar portfolio, 25 of the top 100 malls in the United States and 100 of the top 600 malls in the United States – that’s per some research done by Green Street Advisors. As I mentioned, our class A assets dominate our portfolio, and they by themselves average $625 a square foot. What we’re also doing is monetizing what we call non-core assets. We have a small portfolio of strip centers, we have a small portfolio of office buildings, and we have a handful of malls that we are looking to sell. It isn’t billions of dollars of assets, but at the margin it will help continue our focus.
Our redevelopment pipeline is a billion and a half dollars. Our share of some of the projects are in joint ventures. Glendale, for example, is $100 million project. We own 50% of the assets, so we’ll be investing 50 million of our capital. And as I mentioned, and we’ll talk a little bit more on the next slide, our focus is on our internal growth prospects.
It’s really quite simple story – three things that we think are going to push up both the revenues and the EBITDA of the company. One is to increase occupancy – that goes back to lease, lease, lease. We started the year at 86% of permanent occupancy. By the end of the year, we expect to be at 88%. Two points of occupancy is roughly a million and a half square feet – that’s a lot of square footage to be adding in a portfolio. Increasing rents and executing rents on our development plan, and we have been, at least so far, very focused on managing our operating expenses and our overhead, and much of the operating expense base does get recovered from the tenants.
Our focus in terms of creating value is to focus on long-term occupancy, what we call permanent occupancy. Here we’ve put in our goals for the next few years. As you can see, we’re looking to take the permanent occupancy up five points between now and the end of 2014 and push down that temporary space. So if you go to a mall and you see the guy selling the Halloween costumes, he might not be a permanent tenant, he might be a temporary tenant filling some space for a period of time. We have a rather large and successful group that focuses on what we call business development income, and they take a certain amount of space in the mall, backfilling when tenants haven’t moved in yet. It’s a very dynamic group and over time, hopefully, they’ll work themselves down to where they’re only 3% of the overall portfolio versus 5.
We do have a portion of what we call our occupancy in signed not opened, similar to deferred revenue at Microsoft where you’re going to get it down the road, they just haven’t paid you yet. We get paid when they open, but the leases are all signed and we tend to count it in the industry in terms of our occupancy statistics.
Increasing rents comes about from a couple of ways – one, generally speaking, we have fixed, built in rent increases that just happen every year, so in 90% of the portfolio that’s not expiring, we’re going to get order of magnitude at 2%, 3% increase in the rents. Another measure of possible rent increases is an industry term called occupancy cost ratio. It’s the retailers cost of occupying space, how much rent he’s paying versus what his expected sales are. We generally like to sign rents at 15% occupancy cost ratio or better, depending on the quality of the mall. A flagship asset such as Ala Moana, our flagship asset in Honolulu, we would look to an 18 to 20% occupancy cost ratio. That’s a mall that does over $1,200 a square foot in sales. Currently as we provide our statistic supplementally each quarter, our occupancy cost ratio is 13%, so as sales continue to move up, we’ll be lagging a little bit in that occupancy cost ratio.
And then another statistic that kind of gives you a flavor for how well we are doing on pushing rents is what we call suite to suite, which is literally the same spot – you know, this 1,000 square feet tenant moved out; this same 1,000 square feet new tenant moves in, what’s the change in the rent? It’s not all the turnover that occurs in the portfolio, but it’s a substantial portion, and right now those spreads – so if the old rent was $50, the new rent is $55, that spread is 10%, and that’s what I’m referring to here in the last bullet point.
As I’ve mentioned a number of times, we have a redevelopment plan. This year, we plan to spend $420 million of our billion and a half. We spent approximately $270 million of that on the acquisition of 11 Sears stores. Another chunk of that capital is going into Glendale Galleria and some other projects. Of the billion and a half, there are a handful of projects that are large scale. Ala Moana, for example, is going to eventually be a 5, $600 million project, including the Sears store. We’re going to build 250, 300,000 square feet of inline space, and we expect to earn when it’s all said and done 50 to $60 million on that capital investment. And in general, we expect to get high single digits, low double digits on all of the projects that we are undertaking.
One topic that we are generally in discussion with investors on, and I wanted to just kind of walk through some of our thoughts here, is our balance sheet strategy. If you’ve done any kind of comparative work on us versus the rest of the REIT business, people tend to tell us we have high leverage. As a chief financial officer, my first question is not whether or not the leverage is high or low but do I have the financial flexibility to execute the business plan, then I could deal with the level of leverage after that. And I think we’re quite comfortable with our financial flexibility. We would have great access to the capital markets in the current environment, and we have a high confidence level that we have the cash resources to execute not only our occupancy plans but also our redevelopment plans.
One of the things that we’ve done, and I’ve got another slide then I’ll talk about this a little bit more in a minute, is de-risk our balance sheet through maturity extensions. You could have a lot of absolute debt, but depending on how much you have coming due in any particular year is really the risk inside your debt stack. Philosophically, we are not going to be large users of unsecured debt. At the level of leverage that we’re at, we think it’s probably not a great mix to do that. There might be certain instances where you might put on some unsecured debt, but generally speaking one asset, one mortgage, if there’s an issue, then you get to deal with it on an individual asset basis. It actually reduces your corporate risk when you can address assets that way. And over the last couple of years, we have eliminated cross-collateral provisions, eliminated corporate guarantees so that most of the debt today is on a non-recourse basis.
Our capital markets team over the last couple years has refinanced over $10 billion of debt, which is just a stunning number in the real estate business. I think in 2011, we were 8% of the CMBS market, and what we’ve really done, as you can see here, is the red is what the maturity schedule looked like coming out of bankruptcy, and the blue is what the maturity schedule looks like now. You can just see how we’re trying to push it down so that in any given year, maybe 10% of the debt is rolling. We need to finance in ’13, ’14 and ’15, call it $5 billion. We’ve done that two years in a row where it’s hard to argue that the environment for real estate lending has been unbelievably robust. It’s been very strong in the investment grade area, whether it’s in the unsecured market or in the CMBS market; but it’d be very difficult today to go get an 85% loan. Not that I would suggest we do that, but just appreciate that there is a strong bid for high quality debt and not a strong bid for very leveraged debt. 2022 looks like a big year. That is when the loan on Ala Moana comes due. That is a 1.4 billion standalone financing, and it’s the type of asset that you don’t really worry about refinancing.
In today’s real estate market, the main discussion point is about our debt to EBITDA leverage ratio, and I can assure you when Ross was teaching me all about the real estate business, we never talked about the debt to EBITDA ratio. We would talk about loan to value, we would talk about interest coverage, we’d talk about how much amortization. We’d talk about what the value of the asset might be at the end of the loan. Not one conversation was ever about debt to EBITDA. Debt to EBITDA grew out of the financial crisis, and basically what financial institutions said was I want to make sure I don’t lose any money here, so I’m going to make it tougher for you to get money and you might have a 5% regional mall, cap rate asset, Mr. Berman, but I’m only going to lend to you an 11% cap rate, and that’s what that ratio really reflects. And the real estate business in general has gone less and less towards a de-leveraging model. We are comfortable where we are. The way we’re going to address the level of leverage to come close to our peers is by increasing the denominator of that ratio, the EBITDA.
We provide our earnings guidance. We generally like to provide it enough detail that you can do your own modeling or play around with it. This presentation is on our website, so you don’t have to write down every number; but we’re looking to do same store NOI growth this year of, call it 3.5%. Again, in the real estate business in this environment, we think that’s a pretty good performance, and with a double digit FFO per share growth we are looking forward to even better performance in the future, but feel that 2012 we’re on the right track and showing the right trends.
And I guess with that, we’ll open it up for some questions.
Question and Answer Session
Ross Smotrich - Barclays
Michael, thank you very much. Questions from the audience? Quiet today. (Inaudible) perhaps?
Thank you, Michael. A couple quick questions on the balance sheet. So you said you want to increase EBITDA to drive down leverage. Is there a steady state that you would like to target over the long run?
Personally I’m not sure there’s an exact right number for what the right level of leverage is. Again, I focus on that financial flexibility concept. The company has talked about driving it down towards seven, and I think given our business plan over the next three to five years, we should easily get there, all else being equal.
Great, thank you. Another quick question – most of your peers have a broader mix of unsecured versus secured, and you’re moving towards more of the secured. Is there a point in time that you would consider more unsecured, and what is the sort of distinction that would move you towards more a unsecured model rather than a secured model?
I was chief financial officer of Equity LifeStyle Properties for eight years. We had the same secured debt model. One asset, one loan, if you run into a problem, you’re not taking any corporate risk. Doesn’t mean you’re not taking reputational risk in the marketplace with lenders, but you’re not taking corporate risk. The balance sheet that the team inherited had a loan on every property. In order to really be an effective unsecured borrower – I’m talking about investment grade, 35% levered – you need to have a pool of unencumbered assets. It would take us—I’m not sure how long it would take us where we would be able to start unleashing assets into an unsecured pool because you’re talking about an average loan might be 100, $200 million. We’ve got—you know, Ala Moana has a 1.4 billion loan, it’s worth order of magnitude $3 billion. I don’t know how I’d get that unencumbered, so I struggle with whether or not you’re going to be a classic investment-grade unsecured borrower. I don’t want to say never, but given the balance sheet that we currently are working with, I think we’re going to try to manage the leverage and the flexibility by continuing to amortize our debt to lower the—you know, not to over-borrow on a particular asset and improve the operations.
Great, thank you.
Ross Smotrich – Barclays
Was there one in the back there? No? Okay. Bob?
Michael, I was struck by your comment that you were in an earlier life a portfolio manager, because the room is full of them. And so I’m wondering what you would do with GGP stock right now if you were still a money manager, given the events of the last two weeks.
Well, I was waiting for that first one.
Well because it appears as if—you know, unless the filings that Pershing Square put out were incorrect, which seems unusual or unlikely given that they were filed with the SEC, you’ve had meetings between David Simon and Pershing. You’ve had discussions with GGP, Simon and Brookfield. And according to Bill, Sandeep did meetings with Brookfield Asset Management to potential investors, so this would all seem to be corporate events that would at least justify a special committee of the board, and yet we haven’t seen that. So there’s a logical question around corporate governance, and I’d like to get your opinion.
So we put out a press release stating our position, but I’m really going to answer the question that I think you asked me, which was what would I do as a money manager. I had the opportunity back in 1994 to start a hedge fund with my then-client, Sam Zell (ph). It was focused on real estate securities, and within 18 months I was out of business because I put all my money in apartments – they went down, game over. So as a money manager, I really haven’t been too successful, so it’s hard for me to answer your question.
I can’t really comment on all the other stuff. Whatever we’re going to say is in the press release, and it’s difficult for me to comment beyond that.
Thanks. Just to clarify, it was noted that you had hired a financial advisor to consider Ackman’s comments. Is it fair to say that you are no longer working with a financial advisor to consider those comments and that your press release reflects that the case is—the discussion is closed?
If the company hires a financial advisor, I would imagine we would report it in a press release.
Ross Smotrich – Barclays
Other questions? So if not, maybe I’ll pick one up. How’s that?
Ross Smotrich – Barclays
You know, when Sandeep took over the company, he laid out a fairly aggressive plan to sell assets, clean up the portfolio. I’m wondering if you can give us an update. So obviously we know about Hughes, we know about Rouse. Curious where you are on, as you called it, some of the non-core assets. And by extension, how do you think the company looks two, three, four years down the road?
We have an office portfolio we’re in the marketplace with. There’s been some recent news stories about we are in the process of selling the strip centers that we have in the portfolio. We think it will take six to 18 months before we’re completed with all of those sales. There’s also order of magnitude five to eight malls on that list. Some malls are just ones where we don’t really see where we can have much upside. We recently closed, for example, on an asset in Colorado that was basically a redevelopment project where it might be a high return opportunity, but it wasn’t a lot of dollars and we thought it would be a disproportionate amount of time to management, so instead of spending time on a very intense project, we decided to sell it, got what we thought was fair value.
Some assets are located in places where sometimes the challenge to manage them just geographically, there’s no other assets in the immediate area, so if you can get a fair price for those, you might sell them. But again, we’re talking five, six, seven, eight out of 133. I think we’ve pretty much winnowed it down to most of the essence, and again if we can execute on some of these other assets sales, we’ll generate a nice amount of proceeds. It’s not going to-
Ross Smotrich – Barclays
I was going to ask – order of magnitude?
It’s not going to change a $40 billion company one way or the other, but it might add another couple of hundred million dollars, give or take, to our existing resource.
Ross Smotrich – Barclays
So it’s fair to expect that 18, 24 month forward, no strips, no office?
Hopefully. Hopefully faster than that, but yes.
Ross Smotrich – Barclays
Right, very good. And sort of the core mall portfolio from there?
Ross Smotrich – Barclays
Okay. And if you think about sort of sustainable growth out of that core portfolio, not a guidance question for next year but on a normalized basis, how do you see that accreting over time?
So generally speaking, there’s about 3 billion of revenues. About 500 million of those revenues are outside what I would call minimum rent and recoveries – you know, business development, overage, other income, things like that where it’s hard to predict growth rates. But on the 2.5 billion, you’re generally getting a 2%-plus step-up in income. Now, we might lose a little bit of income because we were getting some income from the Sears stores that might offset that a little bit, but generally speaking you’re looking at an inflation-like increase. The occupancy, 2% gains on occupancy—you know, on average it’s 1% in a particular year. You’re talking about 750,000 square feet where you might be getting an average rent somewhere in the 50s. You might do some big box in 35 and you might do some high-end stores at 75, 80; but call it order of magnitude $50 a foot. And then you have the turn, so if you have 5 million rolling and you’re picking up 4 or $5 on a spread – and I’m being a little conservative here – but again, that would add incrementally through that.
You might not see it all in 2013 specifically. As you engage in these development projects, you might start to take some space offline, lose some income in order to make that investment more profitable in ’14 and ’15, but the general model is as I’ve laid it out.
Ross Smotrich – Barclays
Great. Turning back to our guests, any other questions here? Okay. So I’ll keep going for another minute or two. So you look forward, call it three years, right? You’ve gotten rid of the core assets, hopefully the economy stays relatively solid, the market allows you to do what you just suggested. The portfolio at that point is kind of that core 130 malls that Sandeep has talked about. You’ve done some renovation or redevelopment. Where do you expand from there? I mean, what strikes me is that the mall business is a mature business, and as you suggested, there’s no new construction. There probably won’t be three years from now. So the stock market likes growth. How do you produce growth from there?
First of all, three years is a really long time. I don’t know what you were doing three years ago, but my life is a lot different than it was three years ago.
Ross Smotrich – Barclays
I understand. I’ve had three jobs in the interim.
I would say that part of the longer term strategy is to eventually become an acquirer of assets. Not something that we’re focused on now, but I could see three, four, five years out being in a position, given the balance sheet strength, given the expected performance, where we might be an acquirer of assets. Maybe there’s more an international platform. I did neglect to mention we have an investment in a public company down in Brazil called Aliansce. It’s not a big number today in terms of our NOI. We do expect it grow. There might be more capital investment down there potentially in the future. Maybe there’s other international markets that eventually you go into, but right now in the immediate term, the core focus is on the existing U.S. portfolio, getting the occupancies up, getting the rents up.
Ross Smotrich – Barclays
Right. So I was actually going to ask you next about Brazil Aliansce. You just recently increased your stake, I guess, in the company. Perhaps you could talk a little bit about the strategic justification and kind of the long-term thought there.
We had an opportunity to buy a 14% block all at once at a price we thought was pretty good. I think the stock is trading now above the price that we paid, so that always makes you feel better. And it’s a marketplace that we like a lot. It’s got long-term, great demographics, consumer growth looks to be very strong. It’s a position that we inherited. I think the company has been in this particular investment since 2004. Sandeep and Shobi Khan, our Chief Operating Officer, are on the board. And we just happen to like the investment, and when you can get that big a block in a marketplace that trades $300,000 a day at the price we got it at, we thought it was a pretty good opportunity for us.
Ross Smotrich – Barclays
Are there other questions? Last one from me, I guess, or perhaps second to last. You’ve got this incredible operating platform. What we’re seeing is a plan sponsor desire to get more actively involved, so I’m curious what you’re seeing in terms of joint venture capital and whether that’s something you might think about pursuing a little bit more actively going forward.
We already have a number of joint venture investments. We have excellent relations with our partners. You know, the debate you have with yourself is if you have a really great asset, do you really want to sell half of it? On the other hand, it is an opportunity for liquidity, potential tax issues aside. In the near term, if we do see class A assets that we like, I could see us doing those in joint venture format in order to mitigate the capital needs. So joint ventures has always been a big part of the mall business, has always been a big part of GGP’s business. I don’t see that changing going forward. We have a lot of requests – we’d like to do business with you – but you really have balance do you want to give up high quality, high growth assets, and what are you going to do with the capital when you get it.
Ross Smotrich – Barclays
Right, great. Good, thank you. Last chance? So my last question, I guess, is what are you worrying about these days, other than perhaps the obvious? But from a business perspective--?
You know, as a chief financial officer in particular, your concerns are—you wake up in the morning and you think about your balance sheet. So I think we’re in pretty good shape, but again markets can get disrupted. That’s happened in the near term, it could happen again. I think we’ve got a good Plan B. We’ve got a billion dollar unsecured line of credit. You can see how we’ve managed the balance sheets.
You know, the business is a long-tail business. You’re signing leases that are seven to 10 years in length, so you’re not that worried about the revenue stream per se. There could be hiccups on some of the shorter term revenue streams, such as the business development and the overage rent, if perhaps the economy starts to deteriorate. I think, again, that’s mitigated by our locations and the type of assets that we have, but those are some of the things I would worry about. Will the retail environment continue to be dynamic? I think it will be, but it hasn’t always been.
Ross Smotrich – Barclays
Great, great. Listen, thank you all very much for joining us today. Michael, thank you for presenting, and we appreciate it. Thank you.