Glimcher Realty Trust Q1 2010 Earnings Call Transcript

Glimcher Realty Trust Q1 2010 Earnings Call Transcript
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Glimcher Realty Trust

(

GRT

)

Q1 2010 Earnings Call Transcript

April 21, 2010 11:00 am ET

Executives

Lisa Indest – VP, Finance and Accounting

Michael Glimcher – Chairman and CEO

Mark Yale – EVP, CFO and Treasurer

Marshall Loeb – President and COO

Analysts

Todd Thomas – KeyBanc Capital Markets

Quentin Velleley – Citi

Ben Yang – Keefe, Bruyette & Woods

Carol Kemple – Hilliard Lyons

Rich Moore – RBC Capital Markets

Presentation

Operator

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Good day, ladies and gentlemen, and welcome to the 2010 Glimcher Realty Trust earnings conference call. My name is Derrick and I will be your operator for today. At this time, all participants are in listen-only mode. Later, we will be conducting a question-and-answer session. (Operator Instructions).

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

Lisa Indest

(inaudible) Last evening, a copy of our press release was circulated (inaudible). Copies of both the press release and the first quarter supplemental information packet are available on our website at glimcher.com.

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

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

Michael Glimcher

Thank you, Lisa. Good morning, everyone, and thank you for joining us on today’s call. Here at Glimcher, we are quite pleased with the start of fiscal year 2010. We have made considerable progress on the liquidity and capital fronts and delivered solid financial results for the first quarter, which were supported by stronger than expected property operating fundamentals.

Let me begin by addressing the accomplishments made over the last several months in enhancing the company's balance sheet. As discussed during our previous earnings call, closing on these important capital transactions was a major focus for us and we are proud of our team's successful execution on all fronts.

First, in early March, we closed on the amended and extended corporate credit facility, providing the company with enhanced flexibility and term through the end of 2012. Later in the month, we closed on the Blackstone joint venture, generating $60 million of net proceeds that were used to reduce borrowings under the credit facility.

Then in late March and early April, we closed on the financings of both Polaris Towne Center and The Mall at Johnson City. Both loans have 10-year terms, are non-recourse, and have a fixed interest rate of 6.76%. We were also able to generate over $20 million of excess proceeds from these loans that were used to reduce borrowings under our credit facility.

These transactions not only represent a positive step for our capital structure, but they are also indicative of notable improvement in the broader capital markets. Through these transactions, we have fully addressed all of our 2010 debt maturities and have reduced outstanding borrowings under our credit facility by approximately $120 million since year-end.

We are excited about the significant progress, but do not – but do understand that risks continue to remain within the marketplace. We also recognize that there is more work to be done on the deleveraging front and even though we have more flexibility and time to execute on our strategy, we are not going to lose our acute focus and intense sense of urgency in terms of addressing our balance sheet.

We are encouraged by the incremental improvement in both the capital and debt markets over the last quarter and will continue to look at a host of options of raising capital. Once again, we don't need to do something immediately, but will be opportunistic as market conditions warrant on a basis which is consistent with the company's long-term objectives.

Mirroring the incremental improvement within the capital markets, we are also seeing positive signs with respect to the operating environment. Following a profitable holiday season for retailers, sales trends for the first quarter were solid. In fact, we saw the first growth in quarter-over-quarter comp store sales in several years within the portfolio. Our retail partner sales were up 4% over the first quarter of last year.

We are also starting to see leasing activity accelerate. We signed over 3,000 square feet during the quarter while generating positive re-leasing spreads for our mall stores of 11%. Additionally, we were also able hold total mall occupancy flat when compared to the prior year.

Finally, tenant bankruptcy activity remains muted so far in 2010. In fact, we lost no national tenants to bankruptcy during the first quarter of this year. This positive momentum in part helped support our reported $0.23 of FFO per share, which was ahead of our initial guidance range going into the quarter.

Retailer confidence is clearly growing. Where new opportunities make sense, we are seeing an enhanced openness to getting something done as evidenced by our first quarter leasing activity. Retailers are certainly pleased with the progress made over the last year, but very few are ready to declare that the consumer has fully recovered. Accordingly, we are still seeing and sensing a cautious approach with respect to allocating capital and business expansion.

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