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FARMINGTON HILLS, MI-At the suggestion by an analyst during a conference call that Detroit is “under a cloud,” Dennis Gershenson, president and CEO of locally based Ramco-Gershenson Properties Trust, said his company remained “very bullish” on the market. To punctuate his claim, Gershenson said an additional retail redevelopment for the area would be announced in third quarter.

As for current performance, he said, “one tenant that is vacating space (in the local suburban Detroit asset) at a rate of between $20 per sf and $22 per sf, will be replaced by new retailers in third quarter at between $35 per sf and $40 per sf. We’re doing extremely well in Detroit, and our centers in this area are 98% occupied, pushing 100%.”

During second quarter, the shopping center REIT began five redevelopment projects, three of which are in Michigan. They are Hunter’s Square here, Roseville Town Center in Roseville, and Eastridge Commons in Flint. The other two are Spring Meadows Place in Holland, OH and Mays Crossing in Stockbridge, GA.

Rent rates and occupancy rose throughout the company’s portfolio during the second quarter of the year. It opened 25 non-anchor and six anchor stores at an average rent increase of 10.4%. It also renewed 28 non-anchor and one anchor lease at an average increase of 8.2% over prior rental rates.

As of June 30, the portfolio was 94.6% leased, compared with 92.7% at the same time a year ago. Furthermore, Gershenson said, “if we included tenants that are signed, but have not yet occupied their space, occupancy would be over 95%.”

An ongoing strategy of the company is to acquire what Gershenson called “core-plus assets,” properties in the $15-million price range. These are centers with the opportunity for buying additional land adjacent to them for expansion.

During second quarter, the company substantially completed development of Beacon Square shopping center in Grand Haven, MI and acquired the 90% membership interest from its JV partner. It also completed phase one of River City Marketplace in Jacksonville, FL, which will have a grand opening this October. As for ground-up development over the next 12 months, he said, “we’re looking at several in the 400,000-sf to 600,000-sf range,” but he declined to identify any locations.

The company’s overall net income for second quarter reached $4.8 million, up 17.1% over the same quarter a year ago. Diluted FFO for the most recent quarter rose 7.1% to $13.5 million.

Of Ramco-Gershenson’s ongoing dispute with the IRS, Gershenson acknowledged that the conflict has depressed RPT stock and said, “the case is still pending. It’s a cloud that has hung over us for some time. I’m optimistic that it will be resolved in our favor. I’d like to think (it will reach conclusion) by the end of this year.”

As GSR previously reported, in May 2005, the IRS issued examination reports seeking to disallow certain deductions and losses the company claimed in its 1996 tax year that would disqualify the company as a REIT for the years 1996 through 2004. Gershenson has vigorously contested the IRS claims.

RPT stock ended trading on the NYSE at $28.86 a share on Thurs., July 20, the day of the second-quarter conference call, down nearly 1.3% from the opening of trading on that day. The 52-week high of $30.92 a share was reached on March 15 this year, the 52-week low of $25.49 a share occurred on Oct. 13, 2005.

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