Question-and-Answer Session
Operator
(Operator Instructions) Your first question is from David Wigginton – Macquarie.
David Wigginton – Macquarie Research Equities
It sounds like from your commentary that you expect the line of credit to be completed in the first quarter. Do you have any sense at this point in time with respect to capacity and whether or not the debt covenants are going to be more restrictive this time around?
Edward Glickman
At this point we're not prepared to make any further comments on the line of credit except for the fact that we've agreed to a term sheet with Wells Fargo and that the term sheet is being circulated through the balance of the bank group.
David Wigginton – Macquarie Research Equities
Have your discussions I guess with Lowe's or any of the other members been affected by the breach of your gross asset value or debt yield covenants at this point or is that a non-factor since it's coming to the end of the –
Robert McCadden
There's no breach of any covenants at the end of September where both the debt yield and leverage covenants are within the ratios permitted by our existing credit facility in term loans.
David Wigginton – Macquarie Research Equities
I'm sorry, I misspoke there. But you are in excess of the 65% on the asset ratio and you're below the 9.75 on the debt yield and I recognize you can be that way for two quarters. But does that create any problems in your conversations with the lenders?
Robert McCadden
No.
David Wigginton – Macquarie Research Equities
With respect to the retirement of your exchangeable notes, are those transactions solicited or are they unsolicited and are you anticipating future exchanges?
Robert McCadden
More often than not we're getting approached by the holders of the notes looking for some type of liquidity and between now and the maturity date of the notes in 2012, we would expect to continue to have opportunities to repurchase notes on a periodic basis.
David Wigginton – Macquarie Research Equities
Just the pricing on that, I mean is this just a negotiation since there's not really an active market for the notes or?
Robert McCadden
Yes, it's not an active market so each deal is negotiated on a case-by-case basis.
David Wigginton – Macquarie Research Equities
Just my final question comes back to Bob, your comments about expense recovery and the reduction as a result of higher vacancy and increased tenants paying percentage rents. Should we expect to see recovery ratios to continue at the levels is was at this quarter or is it going to continue to deteriorate?
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