WP GLIMCHER Inc. (NYSE:WPG) Q3 2018 Earnings Conference Call Transcript

Oct 25, 2018 • 11:00 am ET


WP GLIMCHER Inc. (NYSE:WPG) Q3 2018 Earnings Conference Call Transcript


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Good day, ladies and gentlemen, and welcome to the Third Quarter 2018 Washington Prime Group Earnings Conference Call. (Operator Instructions) As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Lisa Indest, Senior Vice President and Chief Accounting Officer. Please go ahead, ma'am.

Melissa Indest

Good morning, and welcome to WPG's Third Quarter 2018 Earnings Call.

(Forward-Looking Cautionary Statements)

Management may also discuss certain non-GAAP financial measures. Reconciliations of each non-GAAP measure to the comparable GAAP measure are included in our press release, supplemental information packet and SEC filings, which are available on 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 Leasing; and Josh Lindimore, Head of Leasing. Now I'll turn the call over to Lou.

Louis Conforti

Thanks, Lisa. Hey, everybody. Let's cut to the chase. First, we are reaffirming fiscal 2018 FFO guidance between $1.48 and $1.56, and third quarter FFO was $0.37, which was $0.01 above consensus. Second, this reaffirmation as well as our measured optimism is in spite of a certain department store filing for Chapter 11 bankruptcy protection on October 15. Remember Brady Bunch drinking game where everybody had to chug a beverage, when Marcia said 'groovy' or Alice was caught making out with Sam the Butcher? In similar fashion, Mark, Lisa and I have to imbibe every single time the name of this retailer is mentioned within our presence.

Running tally is about 14.7 million times and has become somewhat of an issue as we have now run out of red plastic cups. Let's continue talking about department stores.

We recently supplemented our institutional investor presentation with a detailed progress report for the 28 department store spaces we consider at risk. Within Tier 1 and Open Air, excluding spaces owned by Seritage and other third parties, we are actively planning redevelopment or -- and/or are in discussions for 24 to 28 spaces. Stay tuned.

As I stated last quarter, future prospects for us are brighter today and resolving this department store -- resolving department stores, in general, provides us with increased visibility, and allows us to further our dominant secondary town center mandate.

Now furthermore, we've allocated $300 million to $325 million of capital necessary to retrofit the aforementioned 28 spaces, with consideration over a 3- to 5-year period and that is included within our previously announced redevelopment spend of $100 million per annum.

Don't get me wrong. While losing a tenant even a lackluster one, it's the pain in the behind. We've prepared ourselves financially and operationally. And now we're in a position to reap the rewards of replacing these department stores with heaven forbid things that people actually want. Therein lies the opportunity. I guess, the Damocles Sword which pundits saw dangling over our head pretty much turned out to be a butter knife. And this was because Mark, Lisa, Greg, Josh, everybody, we were