Glimcher CEO Discusses Q3 2010 Results - Earnings Call Transcript

Glimcher CEO Discusses Q3 2010 Results - Earnings Call Transcript
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Glimcher Realty Trust (

GRT

)

Q3 2010 Earnings Call

October 29, 2010 10:00 am ET

Executives

Lisa Indest - SVP, Finance and Accounting

Michael Glimcher - Chairman and CEO

Marshall Loeb - President and COO

Mark Yale - CFO

Analysts

Quentin Velleley - Citi

Nathan Isbee - Stifel Nicolaus

Fredrick Mckans - Green Street Advisors

Todd Thomas - KeyBanc Capital Markets

Jordan Sadler - KeyBanc Capital Markets

Carol Kemple - Hilliard Lyons

Rich Moore - RBC Capital

Ben Yang - Keefe, Bruyette & Woods

Presentation

Operator

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Previous Statements by GRT
» Glimcher Realty Trust Q2 2010 Earnings Call Transcript
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» Glimcher Realty Trust Q3 2009 Earnings Call Transcript

Welcome to the Third Quarter 2010 Glimcher Realty Trust Earnings Conference Call. My name is Francine and I am your operator for today. At this time, all participants are in listen-only mode. Later we will conduct a question-and-answer session (Operator Instructions)

I would now like to turn the presentation over to your host for today's call, Lisa Indest, Senior Vice President of Finance and Accounting. Ma'am you may proceed.

Lisa Indest

Good morning and welcome to the Glimcher Realty Trust 2010 third quarter conference call. Last evening, a copy of the press release was circulated on the Newswire and hopefully each of you had the opportunity to review our results. Copies of both the press release and the third quarter supplemental information packet are available on our website at glimcher.com.

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

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

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

Now I would like to turn the call over to Michael.

Michael Glimcher

Thank you Lisa, good morning everyone and thank you for joining us on today's call. As we have previously mentioned, we are quite pleased with the recent progress we have made on the liquidity and capital front. The solid financial and operational results delivered so far during 2010 and more importantly how the company is positioned for future growth.

Let me begin with what is currently been the key area focused over the last year or so, the company’s balance sheet and overall liquidity position, our public equity offerings and our Blackstone joint venture transaction, we have successfully raised nearly $350 million of capital over the last year.

Accordingly we have been able to reduce outstanding borrowings under the company’s credit facility from a high of $400 million in 2009 down to approximately $110 million as of the end of the third quarter. Additionally, we fully addressed all of our 2010 debt maturities and we have minimum mortgage maturity risk through 2012.

The progresses on the balance sheet side is certainly been critical, but at the same time it is also been just as important to ensure that we are maximizing property operations within our mall portfolio. In that regard, we have been extremely pleased with how well our portfolio has responded over the last couple of years, as evidenced by strong operating performance so far in 2010.

For the third quarter of 2010, net operating income growth was positive again, up 1% over last year, but total mall and inline occupancy increased sequentially from the second quarter with total portfolio occupancy now exceeding 93% as of September 30, 2010.

Comparable store sales continue to trend positive as well, up 4% over the third quarter of the prior year. We also continue to lease space throughout the entire portfolio, signing leases were approximately 325,000 square feet during the third quarter, while generating positive releasing spreads of 6%.

Retailers remain cautious, but we have sensed positive tone and growing confidence from this group. Accordingly, we are seeing an enhanced openness to focus on new business as evidenced by our new leasing activity year-to-date in 2010, up 30% over the first nine months of 2009. Finally, tenant bankruptcy activity remains muted so far this year.

With the meaningful progress made on the balance sheet, we can now continue to focus on the next phase for the company. As we have previously discussed, our size posses an unique position, with the large enough platform to be in the leasing game, but some enough to be nimble and responsive to our retailers, our partners and the capital markets.

Additionally, with just a handful of strategic asset additions, we can dramatically change the makeup of our portfolio, as we continue to focus on upgrading its quality. We believe the recently announced Pearlridge Center and Scottsdale Quarter acquisitions bid that bill and are clearly inline with our strategy to improve portfolio quality.

Let me first discuss the Pearlridge Center opportunity. During the third quarter, we entered into an agreement along with the Blackstone Group to purchase Pearlridge Center in Honolulu, Hawaii for $245 million resulting in an implied cap rate in about the 8% range.

The center will be acquired by joint venture, which is owned 80% by Blackstone and 20% by Glimcher. We will manage and lease the property on behalf of the venture. The purchase price will be funded by proceeds from a new mortgage loan of approximately $175 million that will be obtained at closing and partner equity contributions with Glimcher putting in approximately $15 million based upon our 20% ownership.

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