Glimcher Realty Trust CEO Discusses Q2 2012 Results - Earnings Call Transcript

Glimcher Realty Trust (GRT)

Q2 2012 Earnings Call

July 20, 2012 11:00 a.m. ET

Executives

Lisa Indest - SVP Finance and Accounting

Michael Glimcher - CE
Mark Yale - CFO

Marshall Loeb - President and COO

Analysts

Todd Thomas - KeyBanc

Nathan Isbee - Stifel Nicolaus

RJ Milligan - Raymond James

Jeff Donnelly - Wells Fargo

Ki Bin Kim - Macquarie

Carol Kemple - Hilliard Lyons

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter 2012 Glimcher Realty Trust Earnings Conference Call. My name is Karris, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this call is being recorded for replay purposes.

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

Lisa Indest

Good morning, and welcome to the Glimcher Realty Trust 2012 second quarter conference call. Last evening, a copy of our press release was circulated on the newswire, and hopefully, each of you have had the opportunity to review our result. Copies of both the press release and the second quarter supplemental information package 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 in the forward-looking statements, please refer to our earnings release and to our various SEC filings.

Management may also discuss certain non-GAAP financial measures. Reconciliation of each non-GAAP financial measures to the comparable GAAP measure are included in our earnings release and the financial reports we file 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.

Michael Glimcher

Thank you, Lisa. Good morning, everyone, and thank you for joining us on today's call. As we mentioned during our recent investor day, we are extremely proud of the progress made in the execution of our strategy to transform Glimcher into a Class A mall REIT.

In terms of specific progress, we are particularly pleased to now have portfolio sales over $430 per square foot, a significant improvement from the low $300 per square foot generated by our portfolio just a mere five years ago. Balance sheet leverage has decreased from near 80% in late 2008 to around 50% today.

And finally, during this timeframe we have been able to strengthen the quality of our brands offered within the portfolio with the additions of such retailers as Apple, lululemon, H&M, Crate and Barrel, Anthropologie, and Tory Burch.

Our next steps in terms of continuing our quality transformation center around positioning the core mall portfolio for growth more in line with our Class A mall peers. This focus includes reinvesting in our current portfolio through redevelopment, adding quality through acquisition, disposing of lower tier assets, stabilizing the first two phases of Scottsdale Quarter and providing more tangible plans for Phase 3 of Scottsdale Quarter.

We are continuously focusing on ways to enhance the quality of our existing properties through redevelopment. When you consider that we already have an intimate knowledge of the property, control of the site, and will be enhancing the value of a current asset, we view redevelopment as the best use of our capital on a risk-adjusted basis.

Accordingly, this will continue to be a priority in terms of our capital allocation. In terms of acquisitions, we are please to have added over $0.50 billion of high quality properties to our portfolio over the last six months, which include One Nineteen and Malibu Lumber Yard. These transactions highlight our ability to continue to be creative in finding opportunities at fairer pricing that supports our quality strategy.

While our current focus is clearly on successfully incorporating these acquisitions into the Glimcher platform, we will continue to search for new opportunities that meet our acquisition criteria. Such criteria include, properties with high sales productivity, outside (ph) growth potential, and significant tenant correlation.

But we are comfortable with the issuance of common equity to date we understand the need to be measured with the use of such capital going forward. At this point, we would not anticipate issuing common equity in any significant manner until we have made further progress integrating our recent acquisitions into our platform, demonstrated a more tangible growth trajectory from our core mall portfolio, and are closer to finalizing the plans for Phase 3 of Scottsdale Quarter.

In terms of other capital we are hopeful to have the opportunity to supplement our available sources with the ability to extract capital from our current portfolio through dispositions. If pricing can firm up for the so-called B mall market this could represent attractively priced capital as we look to dispose from the bottom and add high quality properties at the top, accelerating our transformation strategy.

We will certainly be keeping an eye on development and activity within this space. As we previously communicated our two remaining properties jointly owned with Blackstone, Lloyd Center and WestShore Plaza, had been listed and marketed for sale during the second quarter. While the process has not formally concluded it appears at this point there will be no change in ownership in either property. As previously discussed we remain comfortable with our current 40% ownership and are pleased to continue our relationship with Blackstone.

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