Katie Reinsmidt - Senior Vice President, Investor Relations and Corporate Investments Stephen Lebovitz - President and Chief Executive Officer Farzana Mitchell - Executive Vice President and Chief Financial Officer.

Christy McElroy - Citi Todd Thomas - KeyBanc Capital Markets Jeremy Metz – UBS Albert Lin - Morgan Stanley Carol Kemple - Hilliard Lyons Rich Moore - RBC Capital Markets Caitlin Burrows - Goldman Sachs D. J. Busch - Green Street Advisors Ben Yang - Evercore Partners Lina Rudashevski – JPMorgan.

Ladies and gentlemen thank you for standing by. Welcome to the CBL & Associates Properties Second Quarter 2014 Conference Call. During the presentation, all participants will be in a listen-only-mode. Afterwards, we will conduct a question-and-answer session. (Operator Instructions).

As a reminder this conference is being recorded today Wednesday, July 30, 2014. I would now like to turn the conference over to Katie Reinsmidt, Senior Vice President, Investor Relations and Corporate Investments. Please go ahead madam..

Thank you Nelson and good morning. We appreciate your participation in the CBL & Associates Properties Inc’s conference call to discuss second quarter results. Joining me today are Stephen Lebovitz, President and CEO; and Farzana Mitchell, Executive Vice President and CFO.

I will begin by reading our Safe Harbor disclosures and then I will turn it over to Stephen for his remarks. This conference call contains forward-looking statements within the meaning of the federal securities laws. Such statements are inherently subject to risks and uncertainties.

Future events and actual results, financial and otherwise, may differ materially from the events and results discussed in the forward-looking statements. We direct you to the Company’s various filings with the Securities and Exchange Commission, including without limitation, the Company’s most recent Annual Report on Form 10-K.

During our discussion today, references made to per share amounts are based on a fully diluted converted share basis. During this call, the Company may discuss non-GAAP financial measures as defined by SEC Regulation G.

A reconciliation of each non-GAAP financial measure to the comparable GAAP financial measure will be included in today’s earnings release that is furnished on Form 8-K along with the transcript of today’s comments and additional supplemental schedules.

This call will also be available for replay on the Internet through a link on our Web site at cblproperties.com..

Thank you, Katie and good morning. We appreciate everyone joining us to review this quarter’s results. We are pleased with the improvement in our financial and operational performance for the second quarter. Same-center NOI growth has been our top priority this year, and with this quarter’s results we are at the high end of our 1% to 2% guidance range.

Lease spreads and occupancy showed encouraging progress. Additionally we are proactively reducing exposure to underperforming retailers and anchors through our redevelopment program which Katie will discuss in a few minutes. Before getting into more specifics on our quarterly performance, I wanted to provide an update on our strategic transformation.

One of our primary goals is to achieve a higher growth portfolio through targeted divestitures of stable but lower growth malls and non-core properties as well as accretive investments in higher growth assets.

Progressing towards this goal, we closed on the sale of Lakeshore Mall in Sebring, Florida, as well as a small associated center expansion as previously announced. We have also entered into a contract to sell a mall and its associated center as well as a contract for the sale of a community center.

The mall was not marketed but was sourced as a reverse enquiry through a broker. Both transactions are subject to due diligence in normal closing conditions and are not binding at this time. Once the buyers are financially committed we will announce transaction details but pricing is in line with our expectations.

The total aggregate transaction value for these sales is less than $25 million and we anticipate closing on both transactions later this year. We are in active negotiations on several additional assets. The level of response we are receiving for our properties is solid and represents interest from a broad range of investors.

The types of buyers that we are negotiating with tend to be smaller private institutions and real estate operators, high net worth individuals and opportunity funds. We also continue see reverse inquiries on select assets.

We are spending a significant amount of time getting prospective buyers to ensure that once we enter into a transaction our execution risk is limited. Last quarter, we discussed three malls being broadly marketed and seven malls being privately marketed.

We have recently broadened our marketing efforts and now more than a dozen parties seriously evaluating all our portion of the 10 malls. We initially targeted a few select investors that we believe would be a good fit for these malls, but due to the interest received we elected to broaden our marketing efforts.

The interest remains high and we’re optimistic that we will receive attractive proposals for transactions on these assets. In addition to selling assets, investing into higher growth opportunities is equally important.

Our outlet new development and redevelopment programs are generating accretive returns in the 7% to 12% range as well as ongoing growth for CBL. This year we will invest roughly $250 million in new and expansion projects and at the same time we are building up a pipeline for the next several years.

Tomorrow we’ll celebrate the grand opening of our newest outlet center. The outlet shops at the Bluegrass located between Louisville and Lexington in Simpsonville Kentucky. The centre is offering 100% leased and committed to a 12% on leveraged return.

Our partnership with Horizon continues to create significant value by adding high growth assets with double-digit on leverage returns to the portfolio. This opening represents fifth outlet center in the CBL portfolio, with our goal of adding a new project every 12 to 18 months. We hope to make another announcement in the near future.

Now let me spend a few minutes reviewing our operational performance for the quarter. We are pleased with our results as they reflect the positive impact of our strategic initiatives and are in line with our expectations and guidance.

Same-center NOI improved above the strong pace set in the first quarter, increasing 1.9% at the high end of our guidance range for the year. Leasing results improved over the fourth quarter with approximately 427,000 square feet of leases executed in the mall portfolio at an average spread of 11.7%.

Increases on new leases continue to be impressive at 27.8% and as anticipated renewal lease spreads improved over first quarter results of 4.2%.

Given the level of retail demand we are experiencing, we are confident that we’ll be successful in maintaining double-digit lease spreads throughout the year as we continue our tenant upgrade program in our properties.

Occupancy in the same-center mall pool increased 70 basis points from the first quarter and declined 10 basis points year-over-year to 92.9%. Overall occupancy in the portfolio increased 50 basis points to 93.5%. As Katie will discuss shortly, we have a number of boxes coming online later this year which will further boost our occupancy numbers.

Sales were up approximately 1% in the quarter bringing our rolling 12 months sales to a decline of 2.7% or $354 per square feet. April sales rebounded significantly following a week first quarter while sales in May and June were both flat.

Given the decrease for the first six months, we expect that it will difficult for sales to turn meaningfully positive for the year. We are still experiencing challenges in women’s, family and junior apparel, but we have seen strength in sporting goods, jewelry and cosmetics.

Despite the slowdown in sales the industry is experiencing, retail demand across our portfolio is strong and we have been successful in upgrading underperforming retailers and driving rents spreads. I will now turn call back over to Katie to provide an overview of our redevelopment and development pipeline..

Thank you, Stephen. We have a number of great retail names opening throughout our portfolio as part of our expansion and redevelopment program. At Meridian Mall in Lansing, Michigan, we opened H&M in June in a new Gordmans is scheduled for construction to start later this year with an opening expected in summer 2015.

We have three additional H&M locations under construction and opening later this year at Bellevue Mall, Asheville Mall, and Burnsville Mall.

In August, we are opening a new 12-screen theater Cinemark theater and Carmike theater at Hammock Landing, our open-air center in West Melbourne Florida, and we’ll soon start construction on a new academy of sports. The opening is anticipated in spring 2015.

In October, Nordstrom Rack will join West Towne Crossing an associated center next to West Towne in Madison, Wisconsin. The 31,000 square-foot store replaces the former Gander Mountain Location. Burlington is scheduled to celebrate its grand opening at Northgate Mall here in Chattanooga Tennessee this September.

The new 63,000 square-foot store taking space formerly occupied by a Belk Home store and shop space and is expected to open later this year. We’re continuing our redevelopment of Northgate Mall adding a new streetscape with Old Chicago Pizza & Taproom, Old Navy which opened earlier this year, and addition retail and restaurant.

Dick's Sporting Goods is celebrating their grand opening next month at Monroeville Mall in Pittsburgh, Pennsylvania and the remaining portion of a former department store space. The new 86,000 square-foot store is a great addition to the mall and continues our revitalization of the center.

NOI and sales growth at Monroeville Mall has been improving as we open new stores such an H&M and a new 12-screen Cinemark Theater. Last week Belk held a grand opening for their first free standing Belk Home location at our family center in Greensboro, North Carolina.

The new 30,000 square-foot store was developed on land that was formerly occupied by two single-tenant office buildings. This is a great addition to the center and has already started off the sales of well above plan.

Just in time for the holiday season, we will celebrate the grand opening as many of the new stores joining Fayette Mall in Lexington Kentucky as part of the serious redevelopment. H&M, Michael Kors, Aveda, and Vera Bradley are several of the names that will be new to the market.

Cheesecake Factory is under construction and will open later this year at both Fayette and CoolSprings Galleria. Construction on the serious redevelopment at CoolSprings Galleria which includes Nashville’s First American Girl as well Belk Home, H&M and two quality sit-down restaurants have commenced with the opening scheduled for 2015.

We are finalizing plans for the former JCPenney locations that closed in two of our malls in May. We anticipate subdividing the locations to accommodate junior anchor retailers. We plan to make announcements later this year once leases are executed and in place within early 2015 construction start.

During 2014, we will open more than a dozen boxes and 11 restaurants across our portfolio broadening the shopping experience at our mall to our customers. In addition to the grand opening of the outlets of Bluegrass which Stephen mentioned earlier.

Later this summer we will open the two expansions we have under construction at our outlet centers in Oklahoma City and El Paso. Those 35,000 square-foot expansion of the outlet shops at Oklahoma City is underway with new retailers Forever 21 and Lids.

At the outlet shops at El Paso the 45,000 square feet expansion will include great brands just as H&M and Nautica. Construction on phase 2 of Fremaux Town Center in Slidell, Louisiana is underway. The 265,000 square foot project will be anchored by Dillard’s and will include a great line up as fashion oriented shops.

The opening is scheduled for October 2015. Construction started this month on our latest community center development Parkway Plaza, a 134,000 square feet project in the Chattanooga suburb at Fort Oglethorpe, Georgia.

At the opening in spring 2015 the 16 acre site will deliver several retailers that are new to the area, including anchor stores Ross Dress for Less, Hobby Lobby, Marshalls, and Petco. Finally, we’ve added a new project to our shadow development pipeline.

We are working Stirling our partner on Fremaux Towne Center to develop a 4,000 square feet open-air center in Lafayette, Louisiana. Preleasing is strong and we are working to execute leases with the great line up at box retailers and complementary shops. Construction is expected to start late this year for a fall 2015 opening.

I’ll now turn the call over to Farzana to provide an update on financing as well as the review of our financial performance..

Thank you, Katie, and good morning. We are pleased with our operating results for the second quarter, which continued the positive momentum achieved in the first quarter. FFO in the second quarter of $0.55 per share was flat compared with adjusted FFO in the prior year period.

FFO benefitted by more than $0.02 from rental growth in our existing wholly owned and joint venture properties as well as income from newly developed properties expansions and redevelopments. However, as you know we sold several properties last year and issued stock under our ATM program, which collectively impacted FFO by more than $0.03 per share.

We enjoyed a benefit to FFO from the pay-off the Westfield preferred units of approximately $0.02 per share. This was partially offset by slightly higher interest expense due to additional borrowings and higher interest rate on the bonds issued in the fourth quarter 2013.

G&A as a percentage of total revenue was 4.4% for the quarter compared with 5% in the prior year period. Our cost recovery ratio for the second quarter declined to 100.8% compared with 103.5% in the prior year period, due to higher real-estate taxes and flat tenant reimbursements.

Portfolio of same tenant NOI growth in the quarter was 1.9% including a 1.4% increase in the mall category over the prior year period. Growth in the quarter continued to be fueled by top line revenue with minimum brands increasing by 3.5 million partially offset by 0.7 million decline in percentage rents.

Property operating expenses were down roughly 0.4 million and maintenance and repairs declined 0.8 million, while real-estate taxes increased 0.4 million. We continued to maintain tight expense controls and look for opportunities to further reduce cost and drive efficiency.

Now I will turn to the balance sheet, financing and liquidity as well as highlight a few significant transactions. On July 11th, we closed on a new $126 million secured by Coastal Grand in Myrtle Beach, South Carolina. Coastal Grand is open, is owned in a 50-50 joint venture. The 10 year non-recourse loan bears fixed interest at 4.0865%.

Proceeds from the new loan were used to retire the existing $75.2 million loan and our share of the net proceeds of 25 million was used to pay down outstanding balances on the lines of credit.

We anticipate using availability on our lines of credit to retire our one remaining 2014 loan maturity, the $113.4 million loan secured by Mall del Norte, in Laredo, Texas. The highly productive mall will the added to a pool of unencumbered assets. In July, the loan secured by Chapel Hill Mall was placed into receivership.

We are no longer providing management or leasing services for the property and anticipate the servicer to proceed with their foreclosures or to accept a deed into foreclosure with the next several months. At that time we would anticipate recording a gain on the extinguishment of debt.

We ended the quarter with approximately $917 million available on our lines of credits. Our financial covenants remains sound with a fixed charge coverage ratio of 2.2 times compared with 2.1 times last year. Our bond covenants are well in excess of the minimum required and we expect continued improvements over time.

The secured debt to gross book value ratio was 39.6% at quarter end. Our bonds continued to trade extremely well at 90 to 100 basis points below the issue coupon of 5.25%.

We would anticipate taking advantage of the ongoing positive market conditions later this year, continuing to execute on our stated strategy to create a balanced financial structure.

Based on our strong performance for the first quarter of the year bolstered by double-digit lease spreads, we are reaffirming adjusted FFO guidance for 2014 in the range of $2.22 to $2.26 per share which includes the impact of properties under contract today.

Our FFO guidance assumes same-center NOI growth in a range of 1% to 2%, flat to positive 25 basis points increase in occupancy throughout the year. Our guidance does not include any future unannounced asset sales, bond issuances or acquisitions. I will now turn the call over to Stephen for concluding remarks..

Thank you, Farzana. Thank you again for joining us this morning. We’re pleased with the continued improvements in our operating portfolio as well as the progress we are making on our strategic initiatives. Retail demand for the CBL portfolio is high and we look forward to generating further enhancements to our portfolio and our results.

Before we open it up for questions I wanted to take a minute to recognize Charlie Willett. After four decades with CBL Charlie has decided to retire.

Charlie originally joined CBL’s predecessor company and throughout his time has made tremendous contributions to our growth including maintaining relationships with many of you as well as our lending partners. We appreciate his loyalty and dedication to CBL and wish him the best in his retirement.

We are now happy to answer any questions you may have..

(Operator Instructions) Our first question comes from the line of Christy McElroy with Citi. Please proceed..

In terms of the assets that are under active negotiation, if I heard you right, it sounds like there are 12 bidders looking at all or a portion of the 10 malls you are actively marketing? Can you share with us a sense of pricing and timing? Do you have any greater confidence at this point, and in the ability to close on a specific volume of deals or number of malls before year-end?.

The pricing that we’re talking about is in line with what we said originally when we did the call in April, talking about the sales of 21 properties, 21 malls which is in the high single-digits and we are seeing pricing discussions consistent with that. As far as the timing, we are pushing to get these done as quickly as we can.

We’re pleased with the progress. It is a process and it takes time and we have roughly a dozen groups that are looking at all the portion of these 10 malls. And we’re having a lot of communication with them in terms of providing them information and working to move the process forward as quickly as we can..

How many of the dozen are portfolio buyers versus single asset buyers?.

It’s a mix, I would say the majority are looking at only portions of the portfolio. But we do have several parties looking at all 10..

And in terms of the bidding process, I mean can you provide some more details on that? Are there any sort of timeframes around the bidding?.

No we haven’t set specific timeframes. We’re pushing different people along, some people have had the information longer than others, but we are working like I said just to move in as quickly as we can..

And then just I appreciate your opening comments on sales. This quarter some of the other malls REITs have started kind of dissecting sales a little bit further to look at year-over growth in total in line sales, to try to capture tenants greater than 10,000 square-feet.

Have you looked at some of these trends within your portfolio? So if I think about that 12 months trailing sales down 2.7%.

What would that rate of growth? And then if you sort of include some or all the in line tenants greater than 10,000 square-feet on a same-store basis?.

Yes, we don’t have the number that we are comfortable releasing it as part of this earnings call. We’re going to evaluate it and look at it and hope to have it in the future. But it is something that we want to make sure that once we put it out there that it’s accurate information..

Our next question comes from the line of Todd Thomas with KeyBanc Capital Markets. Please proceed. .

First question just starting up on the asset sales. Question regarding the malls that are not being marketed.

What’s the strategy to sell those? Can you just remind us? Are you having active discussions on any of those or are they just not prime for sale at this time?.

Like we said, this is two year to three year process and right now with 10 properties out in the market, that’s a level we are comfortable with in terms of the markets ability to absorb.

So for the other properties that are on our list, we’re not having discussions at this time, and it says we’re able to make progress with the ones out there, then we will start adding more to the marketing process..

Okay. And in terms of the time commitment to evaluate buyers and work with vendors and sort of size-up the offers. I was just curious if you could talk about how the process is being handled internally? It seems like it would be taking out quite a bit of time and resources.

Just curious how you’re sort of dealing-up the process here internally?.

Luckily, we have a team involved and dedicated to this process. So it does involve sometime on the senior level for two to three of us.

But in addition, we’ve got really our entire organization gets involved in discussions, potential buyers want to talk with leasing, they want to talk with management to understand the market, there is financial information legal. So yes it is a commitment.

But like we said, it’s very important to us and this is a top priority for us to move this process along because it is key to the transformation that we’re committed to..

Okay. And then just shifting over to operations, in terms of the same-store NOI growth you trading ahead of the midpoint of the range that you set out, 1.9%, as you mentioned versus 1% to 2% range.

And I think you mentioned previously that there will be a ramp in growth in the back-half of the year as leases commenced and you are also cycling relatively easy comps.

So is that still the expectation? And what would sort of get you back down toward the low end of the range from here?.

We are holding the guidance, like we said, at 1% to 2%. We’re pleased that we’re almost at the top-end and our goal is to achieve the top end of our guidance. There are still retailers out there that are having their challenges. It’s is well-publicized. So that’s the factor that we’ve got to be worry-of as we enter the second-half.

And so we want to be cautiously optimistic. But we’re very focused on achieving the high-end of that range..

Okay, thank you..

Thanks Todd, and thanks for the wishes for Charlie..

Our next question comes from the line of Jeremy Metz with UBS, please proceed..

Can you just talk about how is the NOI growth trended between the different tiers this quarter?.

The trend with the NOI growth, by trend is consistent with what it’s been, and it’s linear. Tier 1 has the highest NOI growth this quarter and year-to-date and it progresses as we go down through Tier-2 and 3..

So is Tier 1 in that 3.5% to 4% range or is it closer to 3%.

Are you able to say?.

Yes, we’re not giving the specific numbers. So, I can’t really give you any direct answer to that..

Okay. And then you’ve seen some solid releasing spreads.

Can you just talk a little bit about the cost to retain some of these tenants? Are you giving any more or less GI these days, free rent, break some reimbursements?.

Yes, it’s consistent with what we have seen in the last year in terms of new releasing. So we haven’t seen any types of concessions. Like I said, the demand from retailers is strong. We’re seeing a lot of new concepts and new retailers that we’re able to work with throughout the portfolio.

We’re doing more restaurant deals, which is contributing as well. And there is very little new supply coming on line. So that helps as well in terms of creating the demand. And we are seeing that as a result the high leasing spreads on the new leasing that we’re achieving..

Our next question from the line of Albert Lin with Morgan Stanley, please proceed. .

On the new lease spreads you were quite strong as you alluded to.

Is that being driven by demand for the Tier 1 malls or is that perhaps a function of the Tier 2, 3 where absolute rents are lower? And as a follow-up, would you say that leasing spread growth is more of a function of the expiring leases that are well below market and you’re just getting them up to par or are retailers willing to pay a premium?.

The leasing spreads for Tier 1 are higher than Tier 2 and 3, but we are seeing positive leasing spreads for all the tiers, but it is a comparable linear result that we’re seeing. So Tier 1 is contributing to that to a greater degree, but we are seeing good progress really across all the different properties.

And then, what was your second question?.

And the second one was on the leasing spread growth.

Is that more of a portion of the expiring leases that are below market and you’re just kind of getting them up to par or are retailers willing to pay a premium in, say your Tier 1 malls?.

Yes, it’s really the new leases and it’s not so much catching tenants up from where they previously had been. The renewals are averaged 4.2%. So that’s not as high obviously as the new leasing, but it is higher than we had in the first quarter and it’s back on track with the levels we were seeing last year..

Our next question comes from the line of Carol Kemple with Hilliard Lyons, please proceed. .

Are you all seeing anything different in your conversations with JCPenney and Sears concerning them wanting to sell box space back to you?.

JCPenney is continuing to improve. Their sales results have shown good progress and they’re continuing with their turnaround, haven’t indicated that anything is off-track from the improvements that they have made.

We are being proactive with them in terms of stores that we think are on the bubble or potentially at risk and working with potential replacements for them. We’ve made good progress on the four stores, like I talked about, that they closed earlier this year. And we talk to them all the time. They were in Chattanooga a month or so ago.

We visit with them. So, we’re really satisfied with what we’re seeing on their part. As far as Sears, again we continue to talk to them. They haven’t really changed any from their approach. We were successful, as you know, in buying a couple of source from them and we’re continuing to have conversations about others that might work down the road.

But they haven’t indicated any type of change in their mindset. And we’re just being proactive and vigilant in making sure that we can get ahead of any downside exposure..

And then on page 23 in the supplement, you have the five properties that you’ve talked about in the past working something out the lender probably just returned the keys back over to them. I know you mentioned, you think something will be done with Chapel Hill in the next few months.

When do you the other properties will disappear from the portfolio?.

Hi Carol. Working with the lenders is just with the service particularly is an arduous process, and it’s a long process. So, nothing happens overnight. We are continuing to work with the lender on Columbia Place as well as on Chapel Hill. I ventured the guess that Chapel Hill will happen sooner than Columbia.

So needless to say we’re totally focused on it and trying to get both these projects off our balance sheet..

And are you talking to lenders on the other three, which is the slower process?.

We are talking to the lender on Triangle and as well as Gulf Coast Galleria. And so Gulf Coast Town Center is progressing slowly but we expect that we will have some results in the next six months, hopefully before year-end. So that’s our goal to get that off our books as well.

Because I think as a restructure, it’s not working out on the restructure basis, so we’re going to continue to work between restructure or giving the property back. So, we hope to have it answer there soon..

Okay, thank you all, and for all of you that are coming to the new outlets tomorrow, all nearby, have fun shopping..

Well, you got to come and do your part..

I will be there on this week. I will be there this weekend..

Our next question comes from the line of Rich Moore with RBC Capital Markets, please proceed..

I’m curious on the line of credit Farzana it’s the line of credits the usage has jumped. And now you’re going to be adding the Laredo Mall to the line.

Are you going to be doing a bond, I guess anytime sooner? Or do you wait till December when you put that loan on from Laredo?.

Sequentially, we are pretty much flat, and yes from year-end we were up by another $100 million. We paid off the St. Clair loan. Our goal -- and we do have Mall Del Norte coming up, so that gets us to a little over $ 400 million.

We are definitely looking to come into the market at the end of third or fourth quarter and sometime in that timeframe to take advantage of the low interest rates and clear line with the bond issuance, that’s our goal. And next year we have several hundred million of maturities in the earlier part of 2014.

So in preparation for that, so the third and fourth quarter make sense to us to be issuing a bond..

Okay.

So do you have to wait until December to pay-off the Mall Del Norte loan?.

No, we can pay that off October 1st actually. They’re open to prepay date and we will take advantage of the higher interest coupon it has and pay that off earlier through formal lines of credit..

Okay, I got you.

And then do you just extend Promenade? Is that what you do on that one to take that up to 18?.

We have the option to either extend it or take it out, it just depends on how much -- but if we are successful and we think we will be successful on the bond issuance so we have the option to either push it out or put it back into on unencumbered property list, which will add tremendous NOI to that pool which we like to see.

And of course as a process towards an S&P rating, we would like to do that..

Okay, so then, I got a question for you on how do you make the decision on which of these like, you to Coastal Grand and you put in place a new mortgage on that one. But in others you’re taking off so that you can use your unsecured feature to do bonds.

So how do you decide what gets, which assets get mortgages and which go into the unencumbered pool?.

Yes, all of our joint-venture properties, we will be putting secured financing on that and Coastal Grand is a joint-venture property, it’s unconsolidated, and it’s not included in our bond covenants anyway, the calculation and our requirement with the partners, we do have secured financing that we will place on all of our, majority of our joint venture properties.

So that’s in sort an easy decision, wholly owned we unencumbered and joint-venture properties we continue with our secured financing. However, we are focused on the leverage, the level of leverage we put on there..

Okay got you, I forgot that was a joint-venture.

So you are seeing anything in the consolidated portfolio you will, on the wholly owned portfolio, you will do unencumbered if you can?.

That’s correct..

Okay great, and then the last thing, the mortgages and notes receivable bounced higher.

What’s in there just out of curiosity and why is that going up?.

When we sold Lakeshore we took back a note, and that note should be paid-off pretty quickly here, a portion was cash and a portion was note..

Okay, you kind of cut out on me, so it was, say again?.

Lakeshore Mall, when we sold Lakeshore Mall, it was $ 14 million transaction. We took back $10 million purchase money mortgage a note receivable which should be paid-off the next week or so..

Our next question comes from the line of Caitlin Burrows with Goldman Sachs, please proceed. .

I was just wondering I know Katie mentioned a little bit before on the four JCPenney locations that we’re planning to close this year. I was just wondering if you could give any more detail on that. I know she mentioned that two of the locations were going to be subdivided. But I guess are there additional detail on those two centers or the other two..

Yes, we do have retailers that we are working with that have leases out for signature on, we need to get executed. So we’re being a little quiet on their names until we have executed leases and their permission to announce. We have to retailers that are lined-up to take one location and then one that will take the majority of the second space..

Okay, and then another, I am not sure if you could comment further. But we noticed that there is an article on the Wausau Mall and just about how you are planning on spending $375,000 on improvements, and also potentially being able to waive some of the, I think it is ground lease that you normally pay. I was wondering if you could comment on that..

Caitlin, this is Farzana. I’ve been working with the city of Wausau to get their help towards finding a portion of the improvement dollars, the tenant improvement dollars as well as another location that we are working to expand and revitalise that centre and re-tenant it.

So the City of Wausau is very much involved in dialogue with us and they want to see this centre continue to grow and expand and they are showing considerable amount of level of encouragement to us in providing us financing and additional TA dollars and also working to exclude, or terminate the ground grant..

And our next question comes from the line of D. J. Busch with Green Street Advisors; please proceed..

Stephen, it seems like mall financing has remained quite strong.

Have you seen any improvements or changes in the terms of financing for properties under $300 a square foot? Or is that kind of where CMBS and prime lenders continue to draw a line in the sand?.

We’re not actively looking for CMBS financing for malls under $300 a foot because of our unsecured strategy. So I don’t know if we are in the best position to comment. As far as potential buyers, they’re indicating that they have a number of sources of financing available through private sources.

But for the most part they’re not tapping into the CMBS market as part of their acquisition activity..

Okay. And then maybe just on the operations side. Occupancy was slightly down in the mall portfolio you mentioned there were some troubled retailers.

How much of your occupancy has been impacted by the recent bankruptcies for maybe some forced closures by those troubled retailers?.

The dip in occupancy which was pretty insignificant was more a function of some of the redevelopment activity that we’re doing at some the malls that Fayette and CoolSprings projects where we have the Sears and moving tenants around as part of that, the H&Ms that we’re adding to the malls and the tenants that get relocated as part of that.

And most of it comes on line in the third and fourth quarter. So the second quarter is when we see the brunt of it. As far as any struggling retailers, we did have the impact of Subaru earlier in the year, Coldwater Creek, has recently or is closing stores. So that’s an impact.

But fortunately that occurred early enough in the year that we’ve had the chance to line-up replacements for that. And I wouldn’t say every spec is down but we’ve made a lot of progress there..

Okay. And maybe last question. It looks like you added about $35 million to the development and shadow pipeline.

Can you remind us what the run rate of redevelopment you’re planning to do over the next couple of years? And will that run-rate kind of change if the level of success in the disposition program changes?.

It’s been pretty consistent and the 150 to 200 range, as far as redevelopment and new redevelopment, this year it’s little higher because of the Sears, the two Sears buildings. And so given the success of the timing of the dispositions then we would look to ramp-up the redevelopments with some of the boxes as well, so it could go into that 250 range.

But that’s a pretty consistent level and these projects they don’t happen overnight. So, it does take time to ramp-up the spending there..

And our next question comes from the line of Ben Yang with Evercore. Please proceed..

Stephen, there was an article in the real-estate newsletter about a month ago that you guys had three malls under contract for sale, for about 150 million.

Did you guys actually have a contract with the buyer that just sort of fell out during the diligence process?.

No, that report was in air, and we call the reporter and told them there was no basis to it. And we don’t know where it came from, but it just wasn’t actually true..

Okay that’s it for me. Thanks..

Okay, thanks..

Our next question comes from the line of Lina Rao with JPMorgan. Please proceed..

Hi, this is Lina Rudashevski.

Based on how the assets sale marketing is going so far, do you have a rough dollar estimate of how much you think could be sold this year?.

We’re not providing any type of estimates for this year. Like I said earlier, we’re committed to this process and making it happening as quickly as we can. We’ve got 10 malls that are out in the market now and we will update everyone as soon as we have anything definitive as far as binding commitments that we can communicate..

Thanks..

And Mr. Lebovitz, there are no further questions at this time. I’ll now turn the call back to you..

Thank you everyone for your time this morning. And we look forward to talking to you and seeing you shortly. Bye..

Thank you ladies and gentlemen. That does conclude the conference call for today. We thank you for your participation and ask you to please disconnect your line..