Question-and-Answer Session
Operator
Thank you, sir. (Operator instructions) Our first question comes from the line of Chris Lucas with Robert W. Baird. Please go ahead.
Chris Lucas – Robert W. Baird
Hey, good morning, guys.
Barry Bass
Good morning, Chris.
Chris Lucas – Robert W. Baird
Can you – Barry, can you guys provide a little more color on the terms of the JV and terms of the structure and leverage and whether it’s a one-time sort of structure or whether there is some scalability to it?
Barry Bass
A little bit of both, in fact, in terms of the one-time and the scalability. What we are doing is it will be a transaction by transaction venture with AEW, which has advantage in the sense that we are not providing them any exclusivity other than around the properties that we will be buying with them. So, there is no definitive commitment to do all of a certain type of deal with them. The idea is that this transaction is a 75:25 transaction on the Rivers property. We are looking to doing 75:25 or 80:20 transactions on a go forward basis, leverage levels in the 60% range, which is about where you can find capital these days for debt mortgage financing. What else did you need to know on that front?
Chris Lucas – Robert W. Baird
Just on that transaction, are you getting credit at the sort of cost basis that you bought the (inaudible) or there has been some additional adjustment on that or how is that asset gone in?
Barry Bass
It will be at our cost basis.
Chris Lucas – Robert W. Baird
Okay. And then on the – for the quarterly results, just are you seeing any negative trends in your bad debt levels especially in sort of third quarter to second quarter?
Barry Bass
Well, third quarter to second quarter is a little bit of an aberration in the sense that in the second quarter we actually had a pickup because we had a tenant pay a fair amount of their back rent and so into the third quarter we were about half a point in terms of bad debt, which is kind of consistent with historical norms. I mean it definitely went up a little bit from the second quarter.
Doug Donatelli
But, knowing the environment that we are in, it’s something we are keeping a close eye on trying to get ahead as best we’ve possibly can. But we are right now keeping our finger crossed. Things – we’ve worked hard to increase the quality of our tenancy and I think we do benefit from being local and being selective even with some of our smaller tenants. So I think that – maybe before we sign them up, but we are looking at it to see what the effects of the current economic situation is going to be on our tenants across the board. So far we are not seeing anything – tendency [ph] out of the ordinary.
- To read the full transcript on Seeking Alpha, click here »
