Washington Prime Group Inc (NYSE:WPG) Q1 2018 Earnings Conference Call - Preliminary Transcript

Apr 26, 2018 • 11:00 am ET

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Washington Prime Group Inc (NYSE:WPG) Q1 2018 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the Washington Prime Group's First Quarter 2018 Earnings Conference Call. At this time all participants are in listen-only mode. Later we'll conduct a question-and-answer session and instructions will follow at that tie. (Operator Instructions). As a reminder, this conference maybe recorded.

I would now like to introduce your host for today's conference Lisa Indest, Senior Vice President and Chief Accounting Officer. You may begin.

Executive
Lisa Indest

Good morning and welcome to WPG's first quarter 2018 earnings call.

During today's call, we will make certain forward-looking statements as defined by the Federal Security laws. These statements relate to expectations, beliefs, projections, plans, and other matters that are not historical and are subject to the risks and uncertainties that might affect future events or results.

For a detailed description of these risks, please refer to our earnings release and various SEC filings. Management may also discuss certain non-GAAP financial measures. Reconciliations of each non-GAAP financial measure to the comparable GAAP measure are included in our press release, supplemental information packet and SEC filings, which are availableon the Investor Relations section of our website.

Members of management with us today are Lou Conforti, CEO; Mark Yale, CFO; Greg Zimmerman, Head of Development; Paul Ajdaharian, Head of Open Air Centers; and Josh Lindimore, Head of Leasing.

Now, I'd like to turn the call over to Lou.

Executive
Lou Conforti

Thanks, Lisa. Good afternoon, everybody. First and foremost we're reaffirming guidance for fiscal 2018 FFO in a range of between $1.48 and $1.56 per diluted share, as well as reaffirming our guidance for fiscal 2018 comp NOI growth within a range of negative 100 basis points to flat. As emphasized previously, our charter is to provide cash flow stability ie minimal variance as we redefine our assets.

Let me put this into perspective. Since 2014, we've had about 2.3 million square feet, think about this 10% of in-line space to come to the black-cloaked, scythe-wielding grim reaper known as bankruptcy. In spite of this, we've evidenced minimal variance relating operating metrics. Between 2014 and 2018 portfolio-wide occupancy decreased by only 160 basis points, comp NOI has increased by a 1% and tenant allowances have actually decreased.

So there existed delicate balance between the financial and operational namely diversifying tenancy, activating common area, introducing new initiatives and of course large scale redevelopment require time and money. We're accomplishing all of the above while continuing to improve balance sheet strength which Mark will describe in detail.

As it relates to operating metrics, I'd characterize the first quarter as a continuation of our roll up your sleeves, kind of noble incremental approach. Sure I'd be happy as a kid and a Shelby's Sugar Shop of comp NOI growth was better. But let me add up a few line items which account for the vast majority of the decline.

Year-over-year snow removal on 100bps, year-over-year bankruptcy related 270, and the maraschino cherry on top was the 30 basis point missed timing of a liquor license. In addition