Stacy Slater - Investor Relations Michael Carroll - Chief Executive Officer Michael Pappagallo - President and Chief Financial Officer Steve Splain - Executive Vice President and Chief Accounting Officer Dean Bernstein - Executive Vice President, Acquisitions and Dispositions.

Christy McElroy - Citi Craig Schmidt - Bank of America Michael Mueller - JPMorgan Todd Thomas - KeyBanc Capital Markets Jason White - Green Street Advisors Alexander Goldfarb - Sandler O'Neill Ki Bin Kim - SunTrust Jonathan Pong - Robert W. Baird Linda Tsai - Barclays Vincent Chao - Deutsche Bank.

Good afternoon and welcome to the Brixmor Property Group Incorporated’s Second Quarter 2014 Earnings Conference Call. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Stacy Slater. Please go ahead..

Thank you, operator and thank you all for joining Brixmor’s second quarter teleconference. With me on the call today are Michael Carroll, Chief Executive Officer and Michael Pappagallo, President and Chief Financial Officer as well as other key executives who will be available for Q&A.

Before we begin, I would like to remind everyone that our remarks and responses to your questions today may contain forward-looking statements that are based on current expectations of management and involve inherent risks and uncertainties that could cause actual results to differ materially from those indicated including those identified in the Risk Factors section of our Annual Report on Form 10-K as such factors maybe updated from time-to-time in our filings with the SEC, which are available on our website.

We assume no obligation to update any forward-looking statements.

In today’s remarks, we will refer to certain non-GAAP financial measures, reconciliations of these non-GAAP financial measures to the most comparable measures calculated and presented in accordance with GAAP are available in the earnings release and supplemental disclosure on the Investor Relations portion of our website.

At this time, it’s my pleasure to introduce Mike Carroll..

Thank you, Stacy and good afternoon. When Brixmor went public last year, I communicated the vision for the company to be clean, straightforward and transparent. We took advantage of our time in the private market and cleansed the company. We came forward with a differentiated investment proposition, a national grocery anchored platform.

And as we are wholly owned, investors get the full benefit of our growth. Our goal was to deliver consistency that emanates from the simplicity that we created. The guidance range we have provided for same-property NOI and FFO were the narrowest in the sector at 40 basis points and $0.04 respectively.

We don’t believe in an under-promise and over-deliver approach. The simplicity that we have created doesn’t require that we protect our earnings expectations. By having wholly owned assets with contractual leases, we can forecast earnings accurately. And as importantly, Brixmor offers a unique perspective in portfolio growth.

We have a steady state portfolio with a large same property pool that is delivering consistent organic growth. We have now achieved same property NOI growth in excess of 3.5% for the eighth consecutive quarter reporting strong 3.8% growth this quarter driven again by increasing rents.

Helping drive our rents is solid leasing spreads, with this being the fourth consecutive quarter with blended spreads of 11% or higher. I am not aware any other company in our space that can make these statements. As I said, we are consistent, transparent and easy to understand.

Our business is performing well across all markets pointing to the inherent strength of our grocery anchored portfolio, the market position of our properties, the age and tenure of our centers and the strong sales being generated by our grocers. As a result of these characteristics, our business is built to perform for the long-term.

These continued solid same-property NOI results and leasing spreads are indicative of the upside inherent in our below market leases. This will be an ongoing defining characteristic of our portfolio.

While it has been clear to many that our expiry schedule presents the near-term opportunity, the real long-term opportunity is evident when looking at our expiring leases in 2018 and beyond at $11.11 per square foot.

When you overlay, the continued growth in our grocer sales with the improvements in our leasing, the takeaway is that our portfolio and more importantly our locations are getting better as a result of our efforts.

When you contrast those improvements with the declining expiring rents in the coming years, you see the long-term nature of our growth opportunity. We believe that we are well-positioned to deliver growth into the next decade. Harvesting this opportunity will continue to be our primary objective.

At the same time, we continue to make strong progress in increasing our occupancy. Our total occupancy increased 90 basis points year-over-year and anchor occupancy has climbed to 97%. New lease volume during the quarter totaled 1.1 million square feet.

The last time we experienced a similar level of productivity was in 2011 following the Blackstone transaction when the doors to capital opened and we were able to execute on pent up demand.

Occupancy for spaces less than 10,000 square feet, increased 150 basis points year-over-year, with 90% of new leases executed during the quarter for small shop space. As we have discussed before our occupancy gains will be measured as we seek to maximize rents resulting from our anchor leasing progress.

In fact in this quarter our ABR per square foot for small shops reached a new all-time high of $19.02 per square foot, which is up 3% from last year. Gains were consistent for both spaces between 5,000 and 10,000 square feet and below 5,000 square feet. Our national accounts program continues to play an important role in our leasing success.

We are seeing great results in achieving multiple deals with small shop retailers. Examples of small shop tenants with multiple deal activity across our portfolio include BootBarn, Xfinity, Comcast, GNC and Sally Beauty all of which we did four or more deals with.

We have also executed three deals with each of Anytime Fitness, Great Clips, Hibbett Sports, PetValu and Sleepy’s. There continues to be ongoing demand for space from quick service restaurants. For example we just completed our third Habit Burger lease this year, an up scale California concept.

In addition we have recently executed three leases with Dickey’s Barbecue. We are also committed to progressing our early renewal program. This program is designed to lock in strong credit retailers with long-term leases, while achieving higher rents with earlier starts and renegotiating unfavorable lease terms.

In the fourth quarter we talked about our success with TJX, who we continue to paper additional early renewals. We have had similar success with Dollar Tree locking in five early renewals at 13% total increase in rent. Anchor space repositioning and redevelopment play a critical role in our ongoing remerchandising efforts.

Our program continues to progress. During this quarter we added eight new projects to the portfolio. We currently have 21 projects in our pipeline. The upgrades that we are making through this program are transforming our assets base.

For example bringing in a 29,000 square foot first time grocer, replacing a regional furniture operator in Cincinnati, replacing a sports authority with WinCo Foods and creating a grocery anchors center with a leading traditional grocer in Dallas, replacing a former Winn-Dixie with a Wal-Mart neighborhood market in South Florida and upgrading our merchandising mix by replacing an Office Depot with DSW in Milwaukee.

Of note, we have decreased our exposure to Office Depot from last quarter like 8% of ABR upgrading it every term and we continue to focus on proactively addressing these leases.

As I have consistently said anchor commencements and tenant upgrades have been the primary catalyst of our small shop occupancy gains and should continue to benefit us as we continue to aggressively push down this path. We are starting to see the longer term impact of these efforts as we renew or re-lease the incremental space at these centers.

At centers where our anchor space repositioning or redevelopment is in process or has been completed over the past three years, blended REIT leasing spreads over the last 18 months have been almost double and occupancy has increased by 400 basis points.

In simple terms this has been our strategy, upgrade the anchor offering and then really push the leasing focusing on maximizing the rental rate. Our internal mantra for this is win on rate.

We want to capitalize on the anchored leasing that we have done, the strength of our grocers and the traffic that they provide as well as the very favorable supply demand dynamic. The combination of these factors allows us to win on rate like never before. I will now turn the call to Mike to review our financial results and balance sheet updates..

Thank you, Mike. The second quarter was characterized by a continuation of strong financial results consistent with our expectations at the beginning of 2014. FFO per share of $0.46 grew by $0.05 or 12% from 2013 second quarter pro forma level of $0.41.

Of that increase, about $0.03 was attributable to growth in EBITDA and about $0.02 from lower interest cost. The increased EBITDA in turn reflects essentially the growth in net operating income, once more underscoring the fact that NOI growth flows through to the bottom line with very little disruption along the way.

Consistent with the recent trends, rental growth was the primary driver in our same-property NOI results with additional impact from improved operating expense recoveries. The portfolio metrics underscore and bear out the positive operating environment and the opportunity that is specific to our portfolio.

This past quarter’s new leased GLA of 1.1 million square feet and the new ABR of $13.7 million represents the highest quarterly volumes in three years. The deal composition reflects acceleration in anchor leasing activity, some of the examples which Mike mentioned earlier.

While composite ABR per square foot for new deals of $12.52 was less than the past couple of quarters due to increase in anchor space leasing, the strength of those deals can be seen in the comparable spreads of over 27%.

Please note that we are now incorporating the rent per square foot data on these comparable deals and our supplement as requested by investors and analysts. The turnover in anchor spaces and focus on improved merchandising is evident in the shift in tenant exposures.

For example, Best Buy and Safeway have fallen out of the top 10 with PetSmart and Bed Bath moving in. Bi-Lo has fallen out of the top 20. As we now announced in May, our progress and balance sheet management and direction was recognized by Moody’s with the issuance of Baa3 rating for our operating partnership subsidiary.

We continue to be in dialogue with the other rating agencies as to the short and long-term balance sheet positioning. While there are no contractual maturities of any significance remaining in 2014, there is an ability to accelerate $205 million of debt into late 2014 plus another $275 million due in the first two months of 2015.

The blended interest rate of these instruments combined is 6.9% providing a positive arbitrage on refinancing even in the phase of potential interest rate increases. We would most likely be in a position to enter the bond market later this year based on the rate and pace of progress we have made during the past 12 months.

With respect to our guidance on earnings and operating metrics, we again affirmed the ranges set forth previously. For same-property NOI range of 3.7% to 4.1%, the primary remaining variables in the range are the timing of rent commencements for both executed and pending leases.

As to FFO, the range of between $1.80 and $1.84 mostly reflects the potential impact associated with capital markets transaction, specifically the cost associated with any acceleration of debt instruments for prepayment and increases in interest cost from terming out more debt via the bond market.

We will update this range further as these events unfold in the last half of the year. Finally, in closing, I would like to call out the success of the secondary offering completed on behalf of Blackstone in June.

It’s fair to say that we were all quite pleased with the performance of the stock during the roadshow and the investor demand at the offering and the follow-on benefits to investors from improved float and liquidity. Over the past 12 months, we have raised almost $5 billion in capital between the equity markets and bank credit facilities.

We are heartened by the response from investors and financial institutions to support our straight and focused business strategy and are single-minded in delivering on our commitment. And with that, we will be happy to answer any questions you have..

Thank you. We will now begin the question-and-answer session. (Operator Instructions) And our first question comes from Christy McElroy of Citi. Please go ahead..

Hi, good afternoon guys.

Mike, I just wanted to follow-up on the comments that you just made regarding the rating agencies and debt prepayment and thinking about obtaining an assessment grade rating, how do you see sort of the process and the timeline unfolding both from a rating agency perspective, what are some of the hurdles that you feel you need to cross and you talked about prepayment of earlier repayment of some of that debt? I am assuming that I think you said a lot of that was mortgages to the extent that you can encumber those mortgages.

How does that get you further along that timeline?.

Yes. Well, Christy as it relates to where we stand today and in thinking about the immediate future say the next year, I would offer that the ratings, investment grade ratings issued by Moody’s provides evidence and indication that we are already at place we need to be. We are investment grade.

And I think the agency recognized the clarity and the focus on our plan to continue to reduce the secured debt content and the encumbered NOI proportion of our operating metric. So, for us, it’s continuing the steady stage progress we have made and we will continue to make over the next year.

The other rating agencies are continuing to evaluate that position just based on some activity that S&P took earlier in the second quarter. We would expect more clarity in terms of their views with respect to Brixmor over the next few months.

And I think with that signal in hand, we would have good clarity in terms of issuing or going to the bond market.

The reason why I pointed out those maturities that we could accelerate, because if conditions warrant we have what I would consider a sufficient amount of debt that we could repay in the fourth quarter and replace that with inaugural bond.

If for whatever reason, conditions are such that we would wait until early ‘15, similarly we have the ability to repay and gain benefit from the positive arbitrage. That’s kind of how we are thinking about it right now.

And as we go forward say the next conference call, there will be even more clarity than there is today in terms of where we stand on the investment grade spectrum..

Okay.

And are you able to disclose any cost that you incurred in the second quarter relating to the Blackstone secondary offering, where do they flow through the P&L? And within your guidance range, how much of those costs have you budgeted for? So, we are thinking about any additional costs that you may incur, if Blackstone decides to do another offering before the end of October, to what extent is that in your guidance?.

This is Steve Splain. So the costs that we incurred in the second quarter are in the line, the other expense line, which you can see on the P&L as well as on Page 11 of the supplement. The costs are about $900,000 in the quarter..

And in the second part of the question Christy in providing that guidance range and then thinking about capital markets transactions, the possibility of another Blackstone offering and the attendant cost would be part of that guidance range..

Okay. And then just lastly sorry if I missed this if it was in your opening remarks in looking at your net effective rent schedule, it would seem that your TIs have continued to sort of tick up higher over the last six quarters.

Is this sort of a mix issue in terms of the space that you are leasing each quarter? Maybe you could provide some color on your approach to that?.

Yes. It is purely a mix issue as it relates to the content of anchors relative to small shop leasing in so far as GLA. This quarter, the content percentage of ABR was about 50:50 between anchored leases and small shops, contrast that to the last quarter whereas 40% anchors and 60% small shops.

And the other way I would look at it is if you combine the tenant allowance work and the landlord work in the NER schedule, net effective rent schedule, you will see that on balance. They are roughly in line with $2.52 this quarter, $2.60 last quarter, $2.65 a quarter before.

So, on absolute terms, it’s higher because there is more anchored leasing, but on a relative basis in terms of net recovery we are pretty much in line recognizing that anchors as a general matter, there is more cost attendant to it, right..

Thank you..

And our next question comes from Mr. Craig Schmidt of Bank of America. Please go ahead..

Thank you.

I was wondering, could Blackstone do a margin loan with Brixmor, similar its Hilton deal in July?.

They could. I think there is certainly nothing that precludes them from doing that. I think that when they’re thinking about different ways to return capital to their investors, that could be a path that they take..

Great. And then I know that you guys are particularly quick in processing leases. Have you seen that timeframe quick and still from where was they 6, 9 months ago..

I think we are still generally tightening it up. And I would tell you, Craig, it’s more about the work that we’re doing and I’d say it’s one of the benefits of the scale of the company that were meaningful relationship for a number of these retailers and their recognition.

And if they invest sometime with us to count out of firm and agree on a lease firm that we can things a lot faster. And so I think that it continues and it’s something our national accounts team continues to work on.

And our goal and I’m looking across the table at Steven Siegel, our General Counsel, is to have everything be 30 days or less and it’s a great goal to aspire to when we continue to try to make that happen wherever we can, tighten those times wherever we can..

Okay. Thank you..

But we’re not sensing if your question is our retailers pulling back. We’re not sensing any of that..

Yes, I was just curious. But my sense is that you’re not feeling that yet..

And our next question comes from Mr. Michael Mueller of JPMorgan. Please go ahead..

Yes, hi. I was wondering for small shop occupancy, it looks like there is 82% in the quarter.

Where do you it ending 2014 and where do you see the ending 2015?.

Mike has got that – you’ve got that matrix basically. But I think that we would say to you and what we’ve been saying is we’re in the 150 to 200 basis points a year is our range kind of picking that number up. So we started this year at roughly 81, is that roughly right, 81.

So I think we’re going to be in between the 82 and 83, 82.5 to 83 somewhere in that ballpark. And then I think just continue that, we’re very comfortable with that pace. And I think a lot of work we’re trying to do, Mike, is make sure that we do things sequentially the right way.

And so as we mentioned some of these deals this quarter where we have WinCo coming and we have Wal-Mart neighborhood coming, we aren’t happy. We want to make those leases as or after those tenants are opening and not in advance. So we can make the most rates.

So we’re not just trying to fill the bucket, we’re trying to really, really hit on rate recognizing that this is our opportunity to do that..

Got it. And then switching gears looking at the redevelopment pipeline, if you are thinking out over the next few years or so, just looking at the different opportunities in the portfolio.

What do you think that average annual investment kind of ramps up to or does it ramp up?.

I think look we are still very comfortable with where we articulated that spend to be and we think that spend is generally in a $70 million, $100 million a year. We are taking a hard look at, I think as you look at some of the opportunities that are presented by the supply dynamic that’s out there.

And some of the opportunities as concepts evolve to recapture and downsize space, could it ramp up in – as we move forward? It could. But I’d say to you today that we’re still comfortable in that $70 million to $100 million a year of redevelopment spend and deliver..

Got it. Okay, thank you..

And our next question comes from Todd Thomas of KeyBanc Capital Markets. Please go ahead..

Hi, thanks. Good afternoon. I’m just sticking with the anchor repositionings a little bit here. You added a few more projects to the pipeline. And as we look at the 20 n process projects, I guess. I’m just curious, how many of those involve recapturing space from a retailer prior to lease expiration.

And along that same thought, maybe you could just talk more generally about retailers’ willingness to work with you and give back space or downsize maybe what you’re saying?.

Look, I have to get back to you on an exact number of what has been recaptured there. But a lot of what we are talking about is those opportunities, not cute making a conscious choice, not to renew sports authority. We took out a Winn-Dixie this quarter for Wal-Mart.

We are making those kind of group – kind of moves and we think about this generally taught is it’s out day-to-day business. We’re looking for retailers who aren’t maximizing the space and we’re looking to get them out and put in retailers who can maximize sales in the space and help us maximize value in the space.

So it’s going to be an ongoing process and I think it’s always part of the business and it’s a natural life cycle of retailers and as they evolve and as they change and as their models either become – or their business becomes outdated or out of favor with consumers.

Those are opportunities for us to take space and bring it back to market and put it in better hands. And that’s our business. I don’t know what else to say. But that’s our business on what we think about everyday..

Okay. And then back to the debt schedule I guess. On the $205 million that can be pulled forward into late 2014 at the end of this year and then $275 million that you say it could be pulled ahead to the first two months of next year.

What’s the original maturity of that debt, are you able to break that out by any chance?.

Yes. The 2014 acceleration and those are sitting in the 2015 debt maturity stack and the other part, the amount that is in 2015, there wasn’t so much an acceleration, Todd, it was just an identification that there is that much, which is ready for prepayment in the first month or so of 2015.

And I just offer those numbers because putting them together, give or take, it’s about $500 million repayment and when we think about the potential of its inaugural bond offering, that $500 million size sounds about right. So I was just trying to provide some clarity or connection in terms of what those proceeds on an inaugural bond would be.

And the positive interest arbitrage if we did it either in late 2014 or early 2015. .

And what’s the latest with the inland preferred, is that part of that amount that you mentioned?.

That is..

Okay, alright. Great. Thank you..

And our next question comes from Jason White of Green Street Advisors. Please go ahead..

Hey, how are you doing? I just had a quick question about perhaps your traffic or sales from the retailers are reported to you. What those trends look like if they’re flat or increasing or decreasing.

Do you have a sense?.

We do. Look, I think the one that we track closest is our grocer sales and we’re continuing to see good increases there. We were north of 3% on grocer sales this year. We just say to you it’s been consistent. So we haven’t seen any change there and it just as we’ve looked at this quarter what’s come in has been better as well.

So, look I think that’s the real beauty of our platform and our space is the consistency of the traffic and I think it’s why grocery anchored shopping centers have always been desirable because it’s non-seasonal, it’s non-cyclical and it’s very consistent traffic.

So that’s helping us and it’s helping our leasing, it’s helping our rents and it’s helping us to just continue to grow the business..

Okay. Thanks. And then on the acquisition front, have you guys seen anything is material that’s crossed your play via your own efforts or via Blackstone and I guess looking forward, should we anticipate anything different than what you have commented about in the past about your level of interest in acquisitions..

We are seeing some things crossed our – we have seen some things, where some things move that are out there in the market, I’d say it’s been a little bit of ramp up and there are some larger portfolios coming to market and I will let Dean talk a little bit about what you are seeing, go ahead..

Yes. Sure, it’s Dean Bernstein. We are looking more aggressively I think at one-off transactions. We are seeing some portfolio deals as well. We are very much obviously still in the sellers market and pricing is aggressive. We are not under pressure to buy and we are being fairly disciplined.

But we are bidding on certain assets and I would hope and expect that we have a few successes over the next few months and into next year..

Okay, but nothing in any kind of larger portfolio sense that you may….

You are not going to see us do anything that’s dramatically different from what we have said to you. We are going to continue to look and the hurdles are high. We want to have something that has growth.

We want to see not buy something that we feel is at top of the market and we want to have it be consistent with the growth opportunities we have in the portfolio. And we continue to tell and see we have good investment opportunities in the portfolio. So I think the bar is high for a new property to hit from.

And from that point of view I would say it would be a very measured approach to that program..

Okay. Thank you..

And your next question comes from Alexander Goldfarb of Sandler O'Neill. Please go ahead sir..

Good afternoon. Just a few questions here first. Mike P.

on the credit rating, what is the pricing difference if you guys only have Moody’s versus having let’s say Moody’s and S&P and should we infer from your comments that if you don’t get S&P, you wouldn’t go out with initial – with just the Moody’s standalone?.

No I don’t infer that Alex. I just think for us we want a little bit more clarity in terms of where that second rating would be. Certainly we won’t go out without a second rating, but whether with two investment grades or whether it’s as they say two investments grades or its five Bs and then of course there is trading service to consider as well.

So the pricing differential hard to say at this point because the market right now is shifting a little, but I don’t think that’s notwithstanding what it would be, that’s really not the focus, because for us it’s about getting into the market, we will have positive interest rate arbitrage whether the pricing differential is 20 basis points or 30 basis points etcetera.

We are not micromanaging the rate or the spread here. We just want to be in a position to go out, have a strong execution. Ideally, I would like to be investment grade from two agencies and ideally I would like to be investment grade from three agencies.

But what I want first is clarity and then based on that clarity we will make some specific decisions on timing and size..

But the point is that you want two ratings, you don’t want to go out with just one rating?.

We can’t. I don’t think we can..

Okay.

I mean there are folks who do the private placement before they are rated and…?.

And this dialogue has been strictly thinking about things in the public market. I certainly recognize that private placements are available to us and that’s always part of the calculus. So again once there is clarity, we will make some more strategic actions..

Okay.

And then switching gears on the portfolio, if we look at the percent leased that over the past year has grown quicker than the percent build and really it’s driven by that under 10,000 square foot user, so should we expect this gap to grow or should we expect the percent build to catch up and make up some of the spread difference between their percent build and the percent leased, if you can just give some color?.

I think it’s wide right now. It’s 200 basis points, I think this would normally be Alex I think the widest point in the year. And as you start to move towards when kind of the cycle people sign early in the year than open later in the year, it will start to tighten.

But I would think and what we are expecting over the next couple of years is that gap continues to be and I am going to call just a range of kind of 150 to 200.

And it just continues to move higher together on both the leased and the build side just moving up because we still have good run way of opportunity as it relates to occupancy and I would think for the next couple of years that ought to be what you would expect to see, but through the year, you would lighten out in certain parts of the year and tighten towards the end of the year..

Okay, thank you..

Yes..

(Operator Instructions) Our next question comes from Ki Bin Kim of SunTrust. Please go ahead..

Thanks. Just a couple of quick follow-ups.

Going back to your comments about grocer sales being up roughly 3% a year and could you just talk a little about what are the main points or main data points or variables that I have like the highest correlation to your lease spreads? Is that are your better centers doing a majority of the better lease spreads and the ones that are doing worse are poor in grocer sales per square foot and poor on lease spreads or how divergent does it get to your portfolio?.

Well, I am going to start and just say on just same-store NOI, where we are seeing better progress on the grocery anchored centers than the non-grocery anchored centers. We are seeing basically 4% year-to-date on the grocery-anchored centers and the centers without a grocer are in the mid 3s. So, that would be first.

And then spreads, it really is – it’s that dominant grocer that really helps us drive spreads. So, where we are seeing stronger sales that’s where we are really getting our lift.

And it really shines the focus on what we have done with the portfolio and having number one or number two grocers and having sales about 500 a foot, that’s really pushed into spreads.

But when we look at a lot of cuts as the way we think about the spreads, we are looking at markets and larger markets, smaller markets, etcetera and really the broad-based nature of what we are seeing today is it gives us a lot of I’d just say confidence in just our fundamentals and the fundamentals around the types of centers that we have in the demand for that space.

And so it is very broad-based. It’s the best way to say..

And is there any – if I look at your portfolio from a demographic point, it probably doesn’t show in the best light on a recession or relative basis, but do you think there is a bit of a correlation breakdown when you look at demographics.

So, some of your properties that maybe don’t look that great in demographics are doing just as good or is it basically – is it lined up pretty closely to the denser locations?.

No, it doesn’t. I am going to tell you, it’s surprisingly it be the opposite.

And what I would tell you why that is, is I can talk about our properties and our properties in Metro New York and Philadelphia and we feel very good about those properties, but it’s very hard for me to point to a property in market like metropolitan New York and say I have the best grocery anchored center in metropolitan New York.

And that the market is too vast for me to really say that accurately, but when I breakout and go to some of our other markets and our markets that are, call it, non-top 100 markets in Naples, Florida, I can tell you very definitively we have the best grocery anchored center in the Naples market. Retailers know it.

And we are able to drive rents, because of it. I can say the same thing in places like Boulder, Colorado and Odessa, Texas and Hilton Head and the Ann Arbor, Michigan and whatever I can say things like that in those markets. And that’s allowing us to drive spreads there and we are doing that. We are seeing good follow-through in those markets.

And we are seeking a high 4s and 5s on same-property NOI growth in those markets, because we have truly the dominant property and the market is consolidated very nice around what we have..

Great, that’s helpful.

And does that (indiscernible) to that, in terms of acquisitions, will you be looking more at the New York type of assets that you talked about or the latter that you just described?.

No, look I think what we are really looking for is we are looking for dominant grocery anchored properties. And we have a broad spectrum of markets. I think we are very comparable to be in the top 50. We are very comfortable in the right situations to be outside of the top 50, but it’s going to start with dominant grocery operators in strong locations.

And so, I think that’s what is unique about our platform, is we haven’t narrowed our view to ten markets. We have a much broader view.

We think grocery-anchored – quality in the grocery-anchored space is defined by the operator and the sale that operator is doing and its location within the market and demographics while a data point aren’t really the driver. So, I think we’ve got a broader opportunity set.

And so, you’re going to see us when we’re in the acquisition mode utilize that broader opportunity set..

Okay. Thank you..

And our next question comes from Jonathan Pong of Robert W. Baird. Please go ahead sir..

Hi, good afternoon, guys.

You know, I was just wondering if you could share your thoughts on when do you think the supply of acquisition opportunities, think the market could loosen up a bit, particularly where grocery cap rates are right down and do you get the sense, I guess when you’re on/off and sort of more meaningful way next year, you could see a much more willing seller base looking to transact..

I think it’s – if you look at it the market – I think the market the way we see it today, the way I see it, it’s a very good time to own assets and I think a lot of owners look at that way. You look at lack of development that’s out there today and lack of development comes about for a couple of reasons.

There is not a lot of large format retailer expansion, but also the cost, I think your cost today of doing something on a replacement basis new is going to be well over $200 of square foot and the rents to do that really put – kind of a base rent across the property north of $20.

And I think that’s very – it’s very challenging with the four developers and four tenants to take that on. So, I think you’re looking at owners who say I’ve got a good opportunity to continue to grow rents in the properties I have and so, I don’t think there is going to be a lot in any material lake flooding on to – on to the market.

So, I think it’s going to continue to be a high transaction market a seller’s market where there is a few properties out there and they’re going to be did up significantly. So, we’re not planning on having a monstrous acquisition program here because we think the fundamentals of the space right now are going to argue against it..

And I hear that you are saying in terms of obviously more on the single asset pipeline in the near term, but when you do get that second investment grade rating, clean up the balance sheet further, how are you guys thinking about potential non-traded REIT portfolios look at for liquidity events we could potentially get more scale quicker?.

I think it continues to present an opportunity. I think our concern on non-traded REIT portfolios generally are quality. They are usually not the most prudent buyers as they raise money, they invest money and they usually don’t have the most discerning eye. And so those portfolios generally require a great deal of caution..

Great. That’s helpful. Thank you..

And the next question comes from Linda Tsai of Barclays. Please go ahead..

Hi, thanks for taking my question.

When you’re ready to do acquisitions, would you fund that by matching it with dispositions and if and when you do start to look at dispositions with those properties fall more within the top 20 MSAs since it seems like you’re very confident in your ability to drive rents in the more secondary or treasury markets or was they reading into your earlier comments little bit too much..

Linda, just from a kind of financial planning point of view, we are assuming somewhat of a zero – a zero net acquisition effect, then it’s not so much that we’re consciously going to match acquisitions and dispositions.

But as we think about the next couple of years, there are going to be some opportunities as difficult as the market is to buy some properties and likewise as we continue to execute our asset management and portfolio management strategies, we are going to sell some properties.

We said in different occasions, we feel we have maximized growth and we feel that there is a risk in a particular market or particular center, we will sell that center. We are not exiting markets. We are not wholesale moving out of state. It is an asset by asset determination and because of that it can as readily be MSA number 3, as MSA number 100.

So expect to see that sort of velocity pick up to some extent on the buying and the selling into ’15 and beyond. But again to underscore, we are an internal growth reinvestments story. So buying and selling will be impact on the margin to more fine tune the portfolio and to position ourselves for further growth..

Linda I am just going to add to that to just to the second part of your question about markets. And look I really – this really gets to our differentiation point as a company. We have not followed the herd to say we want to be in 20 markets or 10 markets or 5 markets or 10 or whatever the number is. This is a different business.

This is not a power center business. This is grocery anchored business. And the key to success in this business is the right operators in the right markets and being comfortable with the core of that operation and its relative positioning within those markets.

And because of those facts, we think we have a much broader opportunity set and that gives – that’s going to give us an opportunity to acquire an arbitrage because the majority of our REIT brethren have narrowed their focus, our platform, our grocery anchored thesis is a larger market set thesis and so that’s where our focus is..

Thanks..

And the next question comes from Vincent Chao of Deutsche Bank. Please go ahead..

Hi guys.

Just going back to your comments on the lack of development, just curious we have heard for some of your peers that things are improving and they are starting to think about development a little bit more seriously here, just curios if there are any markets that you guys are operate in that where you are seeing a little bit more activity and in particular any activity from non-public REITs on the development side?.

Look, at the end of the day I know our peers are talking about doing some and I think that the REITs have never been the material driver of development. It’s always been the regional players, the regional non-public players. And we look at the conditions for that. And the conditions for that really haven’t changed.

Those players need large format retailers to commit to the able to underwrite a project. For a public REIT who has land on their books to do something without a large format retailer it’s not that hard to do, right. I mean it’s a different, they have – they don’t need the financing.

They have a different approach to those projects, the private guys their scenario is different. They need the financing and they need it. So I look at that and then I look at where things are on a replacement cost basis today and it’s just there are two things working against it, right. You don’t have large format retailers out there.

You have a replacement cost or a cost to develop today in the $200 plus a foot range. When I look at where our implied value is at today in mid-$150s and it really shows the gap and that’s why we feel really good about our ability to continue with our rents. We feel like that our value will ultimately migrate to what replacement cost value will be.

But that being said to where we do see some development the Texas markets, we do see some activity down there. And I think you look at where, is there some large format expansion and GB is doing some expansion work in Texas. There is some activity there. There is some activity in Charlotte because Publix is doing some work there.

But when we look beyond that we really see very little. So I hope that answers your question..

It does. Thank you. And just one other question going back to the small shop leasing, which has been pretty active here.

Just curious on the mom and pop side, true mom and pops, I mean, are you starting to see a turnaround in that side of the business where they are starting to be a little bit more active with leasing and I guess the other question would be how interested are you in those types of leases, obviously, they come with a bigger rents, but higher risk.

So, just curious how much of the portfolio you would be willing to allocate to those kinds of tenants?.

I think it’s early days on small shop leasing as far as mom and pops coming back, I mean, I think it hasn’t – we haven’t seen any really true material pickup in our portfolio and given what we’re trying to do and the transmission that we’re trying to make in the anchor repositioning and then the follow-on that we want to get – we’ve been really trying to focus on getting best in breed, best in class retailers and as time goes here without development, our national and regional attention and our throughput there, has been very strong.

So we’ve been very consistent with mom and pop, it is relatively small level and it’s really been the national and regional teams or businesses that have been driving our shop activity..

Okay, thanks guys..

Yes..

And this concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks..

Okay. Thank you very much operator. We certainly appreciate everybody’s time and the second half of 2014 will bring the one-year mark of our IPO. We’re very pleased with the progress we have made to-date and we definitely feel like we are well-positioned to continue executing on our growth story.

So, thank you for your time today and enjoy the rest of your summer..

Thank you. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect your lines..