Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Christine McElroy with Banc of America Securities.
Christine McElroy - Banc of America Securities
Dave, regarding your new joint venture, can you provide a little bit more color and maybe quantify all the various property and asset management fees, as well as the acquisition and leasing fees?
David Rogers
It’s pretty straight-forward and pretty simple. We get a reimbursement of our acquisition and [inaudible] costs of 50 basis points of the net cost of the property. There is a 6% management fee and we are using our call center and charging 1% of revenues for the call center. Then there is a promote that we don’t expect to hit for the next two years.
Christine McElroy - Banc of America Securities
So then just reconciling some of your guidance assumptions, you said that you expect that the rise in G&A will offset some of the fees going forward. Can you give us a sense for how accretive you expect the fees will be, kind of net of G&A? I think I heard $0.02-$0.03 in 2008. Is that net of G&A?
David Rogers
It is.
Christine McElroy - Banc of America Securities
And then can you update us on any acquisitions that are in the pipeline and kind of what cap rates do you see being able to buy assets today versus a year ago? And kind of given an overall decline in property level growth assumptions, what does that mean for where you think cap rates should be? Assuming kind of similar IR requirements in your underwriting?
David Rogers
Unfortunately we haven’t seen much of a decrease in Sovran expectation for quality properties. So the 21-pack that we bought to start the joint venture are best-in-class in every market we’re in. Those are wonderful stores. We had about a 7-1, 7-2 cap on those. The stores that we’re looking at for heightening our all of a similar vein, very strong with great likelihood strong cash flow. Upside potential for this joint venture, while important, is not as important as basically being bullet-proof.
So, we’re looking at stabilized, mature properties, best in the markets, and that we expect to pay around a 7, 7-1 cap for. Really, there’s a lot of stuff that’s sub-par, some of it might be good turn-around type opportunity, that’s going for high 7s perhaps, but for the most part, anything that we will be interested in buying for this venture, at this point anyway, is not moving and probably going to be in the very close shouting distance of a 7. We just don’t see any movement.
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