Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Analyst for Michael Bilerman - Citigroup.
Analyst for Michael Bilerman - Citigroup
Can you give some color on the mezza investments that you made in the quarter? Are those cash interest that you’re getting or are they accrued interest?
Kenneth F. Bernstein
Two different investments and one of them is cash flowing right now, the Georgetown properties, although there’s significant rental growth so it will go from cash to the extent available and some accrual over the next couple years to full cash flowing. Now on 72nd Street, it’s a development project and there are interest reserves that will pay about two-thirds of the total expected return and then the back third is an exit payment on seller refinancing. But obviously since it’s construction there’s no current cash flow on that.
Analyst for Michael Bilerman - Citigroup
Can you update us on the re-leasing of the Home Depot boxes, just give us a sense of how long you think it’ll take to get a new tenant lined up? And then at Pelham, if you do not find a tenant to re-lease or to take the space, if Home Depot has any contingencies where they could just open and then subsequently close?
Kenneth F. Bernstein
First, Canarsie. That’s an earlier stage deal and that’s why we structured it as we took a lump sum payment and a very attractive lump sum payment to take the risk of re-tenanting because there are some moving pieces. My guess is we ought to assume it takes us six to 12 months to work with the tenants that we’re talking to now, and I expect one of them will step up, but also work through the planning and construction issues associated with that.
As it relates to Pelham where the building that Home Depot constructed at their own cost is substantially completed, the re-tenanting there, as I said we’re in the final stages of lease negotiations and getting the necessary approvals, so we hope to count that process in weeks not months and then there’s just the refitting for that specific tenant. In the event that that didn’t occur, Home Depot has an obligation to open. But as you pointed out, they could at some point close. However, it’s not that simple because if they close then we have various recapture rights. And we negotiate very hard for these and there’s a cost potentially to it but the cost depending on how long they stayed open ranges from $0 to up to the $5 million initial payment that they made to us giving them back that. So in that eventuality, it could be even more economically attractive. However, it feels like a higher risk game of poker because we have tenants interested today. It’s an overall center with co-tenancy. I rather get the right tenants in at a very attractive incremental return for us today than kind of go through that process.
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