Good day, ladies and gentlemen, and welcome to the Federal Realty Investment Trust First Quarter 2016 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time [Operator Instructions]. I would now like to introduce your host for today's conference, Leah Andress. Ma’am you may begin.

Good morning everyone. Thank you for joining us today for Federal Realty's first quarter 2016 earnings conference call. Joining me on the call are Don Wood, Jim Taylor, Dawn Becker, Jeff Berkes, Chris Weilminster, Jeff Mooalem and Melissa Solis. They will be available to take your questions at the conclusion of our prepared remarks. Certain matters discussed on this call, maybe deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include any annualized or projected information as well as statements referring to expected or anticipated events or results. Although Federal Realty believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, Federal Realty's future operations and its actual performance may differ materially from the information in our forward-looking statements. And we can give no assurance that these expectations can be attained. The earnings release and supplemental reporting package that we issued yesterday, our Annual Report filed on Form 10-K and our other financial disclosure documents provide a more in-depth discussion of Risk Factors that may affect our financial condition and results of operations. These documents are available on our Web site at federalrealty.com. And with that, I'd like to turn the call over to Don Wood to begin our discussion of our first quarter 2016 results. Don?

Thanks, Leah, and good morning, everyone. Thank you all for joining us today and I look forward to speaking to all or most of you in a few weeks at the conference in New York where we can talk more about our Company and the many changes affecting our industry. As most of you are aware by now, this will the last earnings call with my good friend and colleague Jim Taylor who will be on as the CFO of Federal. The team is certainly going to miss him but I for one am genuinely proud of him and the opportunities going to get at Brixmor, their board made a great choice. I am also personally grateful for his many contributions to the Company, his wise council and most importantly his. Enough about Jim for the moment. Onward to the quarterly results and to our prospects for the future, really good quarter all the way around for us FFO per share of $1.38 highest quarterly result of all time and 9% better than last year’s quarter. Same center growth of 4.2%, again validating how important our redevelopment program is to us. So we don’t expect to maintain this level for the year, given the significant investment for the future initiatives that we have underway and lease termination fees that helped us this quarter by $600,000 or so, more on all that later. 85 possible deals done for nearly 400,000 feet of space and 3,353 per foot, 13% higher on a cash basis than the deals previously, that’s up 23% on acres, 10% of small shops. It's up 21% on new leases, 9% on renewals. It's up on all those metrics in the core shopping center business in the Mixed-Use Division and on the West Coast. Strong consistent leasing progress throughout…

Thank you, Don, and good morning everyone. As Don highlighted our team delivered again another record for the Trust in terms of FFO per share, which is $1.38, representing 9.5% growth over the prior year quarter. In a quarter where we continue to invest in the future through commencing future development phases, adding to our team, taking down box vacancy, et cetera, we are particularly pleased with bottom line results driven by our operations leasing, acquisition and development team. Turning to the numbers. Overall property operating income grew 7.9% over the prior year, even with the decline of 130 basis points of occupancy, reflecting the higher anchor rollovers we’ve discussed. Our core portfolio continued to be a significant driver of our POI growth. That core grew at 4.2% on a same store basis including redevelopment. This quarter the downtime associated with anchor rollover produced about 130 basis points drag. We highlighted this trend in the last two quarters, and as I will discuss further on guidance, we expect this rollover drag to continue this year. Our first phases at Assembly Row and Pike & Rose contributed approximately $4.5 million of POI in the quarter, up on a sequential basis as the Palace high rise opening approach breakeven occupancy and office spaces continue to rent in that. Finally our acquisition of Coco and Sunset Place, which are performing very well against our acquisition underwriting also contributed significantly overall to POI growth. G&A remained flat on a sequential basis, did $8 million for the quarter and down year-over-year principally to higher transaction cost in 2015 with respect to our San Antonio center acquisition. We do expect our G&A line item to grow as we continue to invest in our platform. Interest expense declined 400,000 reflecting the lower average rate achieved through our…

Thank you [Operator Instructions]. And our first question comes from Jeff Donnelly with Wells Fargo. Your line is now open.

Good morning, guys. Don, I am sorry, I should have told you when you hired Jim, he is a bit of a floozy and it wouldn't last.

You've seen it before Jeff.

I have. I have. Congratulations, Jim, and hopefully you didn't just read off the list of the names of people you're going to target when you are at Brixmor. A question about Pike & Rose. I am just curious what is driving the reduction in the stabilized yield. I got on a minute late so I'm not sure if you guys talked about that in your remarks.

Yes, Jeff we did. It is really all about residential, as you know that first phase and the second phase has a significant residential component to it. The bottom-line is we were too aggressive in thinking what we were, going to be able to get for residential rent and the market place has an awful lot of supply on it and the place is absolutely a construction zone and will be for some time and so it's, what I always worry about with you know when changing numbers like this is that there's a tank on the project itself. Because there can't be, the project is going as well or better than we expected in terms of its acceptance even in terms of its performance when performance on the residential side compared to the marketplace, is just that the marketplace is significantly lower than we had hoped and thought it would be when we underwrote this. So it's all that. Now obviously the good side of that is we're not locking into 15 year deals or 20 year deals these are 12 month leases. But it would be, it just wouldn't be right for me to have the same expectations of being able to lease up the rest of the buildings we have on phase one and the residential building in phase two at rents that when I look at it right now and our team looks at it right now we don't think we can hit. And that's what causing that. I really don't want to see that as a failure of the project it's market timing.

And maybe to switch gears, I want to maybe circle back on the decentralization plan. I think we've been talking on the call maybe a year, year and a half ago about why it is difficult for the industry or seemingly difficult for the industry to produce call it future leaders and then you announced that plan. I guess I am just curious what was the impetus for it? What do you think it accomplishes for Federal? And I guess not to bring it back to dollars and cents all the time but how do you think we should be thinking about the ultimate effect on G&A as we sort of reorganize people?

It's a good, probably my favorite question Jeff, look the bottom line is this company grew and has grown pretty darned consistently over the last 15 years in terms of its value, in terms of what it does for a living, in terms of its breadth and growth. We had to effectively get management closer to the real estate because the real estate is so different. Managing a Pike & Rose and managing an assembly row and managing -- having an opportunity like Sunset and Coco is just darned different than the core shopping center business. So we needed to do -- we needed to align management more closely with the real estate business, that's our business, we are really not a portfolio manager we look at it asset by asset. Now when you do that, there's obviously going to be incremental overhead to be able to set it up that way and that overhead is incremental not only on the to use the hotel vernacular front of the house stuff but also back of the house systems and reporting, accounting all of that. We're in the middle of that transition and that transition takes some time. If you think about an incremental few million dollars a year basically we got to more than make up for that in incremental value. Now where that would that incremental value come from, comes in every part of our business, first and foremost by getting to things more quickly. By getting tenants to through the process of leasing to tenant co-ordinations, opening their door to rent start, that's done a whole lot better if the leasing agent and the asset manager and the developer, tenant coordinator are all working together, there's a lot of that. Secondly down at that level we'll know our markets better, we do know our markets better and closer so that, I'll give a couple of examples. We're talking about Brick Township right now, Brick Plaza. Brick is a great shopping center in Brick, New Jersey that we've owned for a long time. Part of the reason that we haven't been able to get to doing a better job at Brick Plaza is because of the ANP lease and we talked to that about that. But another part of the reason is because it's geographically further away. This helps us focus more on it, it helps us create business and that -- I could say that about 20 or 25 of our shopping centers. So this is truly an evolution of our business, it's a investment in the next decade where the combination of great products in terms of next year's development that we're doing with a more active and proactively managed core together should make the few million dollars of incremental G&A nothing compared to the incremental value that we create. So that's what it is that we're trying to do.

To put the numbers in a little bit of context, still well below 5% of revenue which has grown substantially.

Okay, thanks, Jim. Maybe one last question. Don, do you have any specific goals going into ICSC? I think typically you guys go in there with one or two things you really want to walk away with.

The goals are not -- you know it's so funny we don't and everybody on this call get this. You don’t go into ICSC thinking you are getting leases done. The goals you go into ICSC before is to make sure that you bring as many people to the critical parts of the Company that you can. So for us it is our redevelopment pipeline and in the core it's our Florida stuff that we’re going to be wanting everybody to see and understand. It's the future basis of Pike & Rose and Assembly, as well as our West Coast asset. It's a focus on those things, it's not, we’re going to get this lease done and that lease done, because it’s just doesn’t happen that way. What normally happens is somewhere in the next 30, 60, 90, or 120 days after ICSC there is a lot more deals that get done because they were germinated and taken to the next level of ICSC, that’s what we’re doing there.

Thank you. Our next question comes from Christy McElroy with Citi. Your line is now open.

First, congrats, Jim. We won't miss you because we still get to work with you. So sorry, Don. Maybe just an update on your plans for the center in Noroton Heights given that you recently proposed plans and renderings to the community?

Here is where we are. So as you remember you may remember at Darien we’re talking about, Stop & Shop controls the corner event shopping center and so 2020 something 3-something like that. We have to come far more encouraged though that there will be a way to work with Stop & Shop. So that long before that period of time, we’ll be able to create specialty shopping center and I am hopeful with residential as part of that plan over on top and around to be able to really create a great community shopping center there. As you know, lots of work to do with the community itself with the entitlement process and certainly then with tenants like Stop & Shop, and others in the center, so I am not ready to quit out, it's not on the redevelopment schedule yet, it will be on the redevelopment schedule to the extent we can make headway with the community, and so far so good.

Just a follow-up on your comments on occupancy, just looking at the residential occupancy 95.5, and the same-store pool down 180 basis points year-over-year. Just in terms of trying to keep track of what is in the same-store pool out of the same-store pool, what were the main drivers of that decline for the properties that were in the pool?

You will note that I am looking directly at Melissa Solis right now. So if you can grad again Melissa, we can do that, if you can’t we’ll follow up…

We’d probably need to follow up with you in more detail. But the bigger drivers in the same store pool are going to be the multifamily as Santana, the Crest Apartments at Congressional as well as Rolling Wood. And I would tell you based on what we’re seeing in terms of the rents we’re real pleased with the trends in Northern California. And as Don alluded to in suburban Maryland, Washington DC are we’ve seen a little bit of softness. The other asset in there of course would be Bethesda Row.

And Christy, Palace and Versailles at Pike & Rose are the two assets that are in the same center pool.

They are not in the same pool, right?

They have not been…

And then just lastly on the $600,000 of lease term fees, what was the same-store impact, so was that fully in the same-store and what retailers was that related to?

I can’t tell you the retailers off top of my head, but that’s about 60 bps of impact.

They were two smaller retailers Christy and one in Rockville Town Square and one at Pentagon.

Thank you. And our next question comes from Jason White with Green Street Advisors. Your line is now open.

Just two quick ones for me, I would just ask them both at once because they will probably be quick ones. A&P, I think you talked about on the last call. I just wondered generically if you could kind of walk through the progress you are making and maybe just what you are seeing from market rents versus where the rents were in place. And then just jumping over to Santana, Westfield the mall is going to have a big redevelopment and wondering how you see that impacting Santana and if that changes the way you merchandise?

Yes, Jeff jump in at just anything on A&P. But as you remember Jason we have four A&Ps, one of those was assumed and is underway in terms of being built out on Long Island at Greenlawn, which leaves three more. Melville Mall also on the Island and I did not mentioned when I talked about the good stuff that’s happening at Melville Mall to-date with the signing of Dick’s for example. So last space that we at Melville Mall is the former Walbaums's box and we are making real good progress, but we’re not in a place where I can tell you it's a signed deal yet, and you will like everything about that. The next one is at Brick where again it's part of a much bigger redevelopment and remerchandising of the entire center. And we’re not as close to as Melville but making real good progress. We'll have something to say very next couple of quarters there I think. And the final one is Troy which is in New Jersey and we're hopeful, I shouldn't say it exactly this way. I don't know whether we're going to backfill it or whether it's going to be a bigger redevelopment possibility there, which would include some residential in a more densely populated shopping center, obviously if it comes to something like that which would add the most value which I would love there's a lot of work to do with respect to the community and figuring out if something like that is vital. That's what we're working on there, so that would be the last one of the three that you'll hear anything about I would think. Oh then Cynthiana, let's got to Cynthiana. Oh yes, Valley Fair does what they're doing and Jeff's on the phone, there'll absolutely be an impact. They're talking about adding hundreds of thousands of square feet you know and -- in a great node at a great place. That will perform a very different function than what we do, and I wouldn’t think -- confident that it wouldn’t have a long term impact on the property but if they're leasing up that much space for that period of time that has to I would think impact us and I just don't know by how much yet, nothing any significant way whether they actually you know they haven't started construction yet, whether they will, when they will, what the timing is that's still I just don’t have the answer to that. But there'd be an impact, I just can't quantify it for you today. Again, a short term impact.

The only thing I'd add to that Don, Jason we've known this is coming for some time, they got the entitlement before the recession, so you know over the last four or five years we've been doing the blocking and tackling that we need to do with Santana to put the property in the best position as possible including a lot of remerchandising of the stores on the street which I'm sure you're familiar with and continuing to build out the property not the least which is adding more parking and building 500 Santana Row, when Splunk is not in occupancy during the week we'll be available to retail and the restaurant customers nights and weekends. So you know again it's something we've been thinking about for many years now and doing what we can do to put ourselves in the best position and when it happens it happens and we'll deal with it as best we can.

Great, thanks.

Thank you, and our next question comes from Tayo Okusanya with Jefferies, your line is open.

Hi, this is George Hoglund on for Tayo. Just one question in terms of REITs getting their own GIC sector later this year. Have you been getting more inquiries from generalist investors and have you been doing anything sort of planning to market the company differently for preparing for those inquiries?

Sure, let me start with that and Jimmy if you got something you want to add to that, please do. I can tell you that obviously nobody knows really what the impact's going to be in terms of supply and demand and that'll be what it's going to be. It has not changed our approach which has always been very broad based in terms of who it has that we want to invest I mean we have taken pretty regular trips to Europe for example to talk to generalists there we have done that in New York in a broader way. We've always tried to do that and we had some pretty good luck frankly in getting generalist investors interested in our story, whether it helps it or not you know we'll know at some point after September after it get put in place. But that's pretty much what we're doing we you know obviously it's a change in your world more than it is in terms of what we do and just with respect to what we do all I'm really saying is we've been broad for a long time in terms of who we aim for.

Okay, thanks. All my other questions were answered.

Thank you, and our next question comes from Anthony Hau with SunTrust, your line is now open.

Good morning, guys. First off, Jim, Ki Bin and I just want to congratulate you on your new opportunity. And anyways, just a quick question regarding same-store NOI. Given that this year's winter was less severe than last year, I think last year snow removal costs was around $10 million. What was the impact from that in same-store NOI and can you quantify that?

It was -- first let me just the main point and look over to Melissa, it was definitely a benefit, not nearly as much as you think because so much of it is recoverable at least the portfolio -- it was a couple hundred grand of benefit.

It's a 150 in your number actually.

300.

300.

Okay. And when you look at your lease expiration schedule, what percentage of your expiring leases is considered as vintage leases? And over the next few years how much of an impact do you think this is going to have on the blended rent spread?

You know, it's an interesting question because when you looked at our lease maturity schedule, the truth is that we always get to more space than what would be otherwise indicated by that and if you look at our trend and it's important to look at this trend over the last several quarters of where we're signing our new deals and you've seen that average continue to climb that gives you a sense of what the mark to market is if you will over what we have in place, it’s not perfect but if you go back far enough you're going to capture enough of a subset of the portfolio to look at that, and again we've earned this assets for a long period of time, so we have vintage leases rolling every year. There isn’t as far as I can tell not a particular year in which we’ve got a lot of finished closing coming to market if you will. So, best thing to do to get a sense of that though again is to look at our marginal rents that we’re signing each quarter.

Thank you. And our next question comes from Michael Mueller with JPMorgan. Your line is now open.

Jim, I guess a quick question. Are you guiding to the lower end of the range, or are you just laying out the laundry list of everything that can point you to the lower end of the range? It sounded like you are guiding toward the bottom end.

I think everyone would be wise to consider this is a range and to think about the lower end of the range. It’s hard to disappoint, to handicap everything, but all the items that I referred to again represent investments in the future, but certainly would be a drag on where we end up for the year.

Thank you. And our last question comes from Chris Lucas with Capital One Securities. Your line is now open.

Good morning, everyone. Don, just a couple of quick questions, on the TSA outcome if you were to get the stores back, are there certain centers that would be helped as it relates to maybe future redevelopment timing?

Let’s go through on, so here are the five centers and which were in the marketplace. So, you know what’s happening to that marketplace versus because of what we’re doing in the Mixed-Use project adjacent to it. It’s been a very positive thing. And certainly the interest in that power center that’s adjacent is significantly higher than it was before we built the project. So, we’ve got that back that be okay, good thing there. Brick Plaza is the next one. Again in the middle of a complete rebuild, timing of that would be great in terms of the future of Brick Plaza. Crow Canyon, which is out on the West Coast and that’s the smaller store out there and then latest one that we did, we did it some years back. But nonetheless that was the -- the last one it's smaller in a center that we had just redone, which is a good thing in terms of the demand characteristics that you would have. Montrose Crossing is the fourth that’s the one directly across from Pike & Rose, that’s over 35 acres where the section of the shopping center where they are would be dramatically impacted to the extent we can better merchandise that. And the last one is East Bay Bridge, out in Emeryville which the rents in place there are extremely low. And the upside would be terrific and that’s another place that we just put in to new we’re really re-merchandised the shopping center. So as I sit back and look at TSA this is a good tenant to work through this portfolio and into better things in all the locations that we have. But it's a lot of rent in the meantime. And so again can you look through the short term pay for the long-term gain.

And final question, the Silver Line in Tysons has been a disruptor providing a boon and an opportunity for some property owners, but changing certain patterns to the detriment of others. My understanding is that sales at Pike 7 have been weaker. Are there things you can do there that change the view there or is there some view to the timing of future redevelopment that you would look towards?

First of all on the premise I am not with you, in terms of the impact of sales at Pike 7, Pike 7 is an amazing shopping center. Frankly if sales were hit significantly going Pike 7 first of all they would happen during the construction of the Silver Line when basically the entrances were closed and they did in any significant way. But if they were, then we’d had a lower hurdle to be able to do a larger Mixed-Use project at this site which would be great. Having said that your point, your bigger point, so stopping right there, Pike 7 is a great asset for us. What we do there long-term will only be positive. And part of the issue is if so successful for what it is right now, and therefore the hurdle. So I’d say to do something better financially centered there. So that’s Pike 7. And that’s at the bigger premise and just likely it gets really important in terms of the judgment that we showed there. I think you’re right the way the Silver Line is working through Tysons there are winners and there are losers. The type of projects that are being built there, there are winner there are losers. We did not jump and say oh god we got to be the first one to market. We sat back, we renewed leases, we kick out so that we were able to get to face if we needed to, but we’ve created, we are disciplined at that particular asset has so north to our benefit that’s only because we really -- we ran it like a true real estate company would and real estate play and not like a drunken sailor with respect to development for Pete’s sake in terms of what it should be. So I want a little, I guess I really want as I can look the credit for the discipline that we showed in not jumping to what the new Tysons is going to be because as you just point out, it takes a long time with a major infrastructure chains like the Silver Line is to figure out what Tysons should be.

Thanks so much. Thanks for giving me a chance on the soapbox by the way.

You're welcome, thanks a lot, appreciate the comments.

You bet.

And I'm showing no further questions at this time, I'd like to turn the call over to Leah Andress for closing remarks.

Thank you everyone for joining us today and we look forward to seeing you REIT Week in New York in a couple of weeks, thank you.

Ladies and gentlemen thank you for participating in today's conference, this does conclude today's program, you may all disconnect. Everyone have a great day.