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Taubman Centers Inc  (NYSE:TCO)
Q4 2018 Earnings Conference Call
Feb. 14, 2019, 10:00 a.m. ET

Contents:

Prepared Remarks:

Operator

Thank you for holding and welcome to the Taubman Centers' Fourth Quarter 2018 Earnings Conference Call. The call will begin with prepared remarks and then we'll open the lines to questions. On the call today will be Robert Taubman, Taubman Centers' Chairman, Chief -- President and Chief Executive Officer; Simon Leopold; Chief Financial Officer; and Ryan Hurren; Vice President, Investor Relations.

Now, we'll turn the call over to Ryan for opening marks.

Ryan Hurren -- Vice President of Investor Relations

Thank you, operator, and welcome everyone to our fourth quarter conference call. As you know, during this conference call, we'll make forward-looking statements within the meaning of federal securities laws. These statements reflect our current views with respect to future events, and financial performance, although, actual results may differ materially. Please see yesterday's earnings release, and our SEC filings, including our latest 10-K, and subsequent reports for a discussion of various risks, and uncertainties underlying our forward-looking statements. In addition, a replay of this call will be provided through a link on the Investor Relations section of our website.

During this call, we'll also discuss non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are included when possible in our earnings release, our supplemental information, and our historical SEC filings. Non-GAAP measures referenced on this call may include estimates of future EBITDA, NOI, after tax NOI and or FFO performance of our investment properties. Such forward-looking non-GAAP measures may differ significantly from the corresponding GAAP measure net income due to depreciation and amortisation, tax expense, and or interest expense, some or all of which management has not quantified for the future period.

Following today's prepared remarks we will open the call up for questions. We ask that you limit your questions to two. If you have more, please queue up again. Now let me turn the call over to Bobby.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

Thanks, Ryan, and good morning, everyone. Yesterday, we released our fourth quarter and full year earnings for 2018. We produced very good results this year, in large part due to positive contributions from our newest centres. Before we get into more detail about this quarter and 2018 as a whole, this morning, we announced a key transaction for our Company. We agreed to sell half of our interest, in our three Asia centres, Starfield Hanam, CityOn.Xi'an and CityOn.Zhengzhou to Blackstone. This transaction was valued at $480 million, valuing our total interest at $960 million. We believe the Blackstone partnership represents a tremendous achievement for the Company for several reasons. First, it confirms the value we have created with our Asia platform. Second, as we've done historically, we're recycling capital. Third, this transaction and associated refinancings will improve our liquidity by nearly $0.5 billion. It reduces leverage significantly, yet, will still be accretive to FFO per share. And importantly, we have gained a valuable strategic partner in Blackstone. Their market knowledge, relationships, network and reputation will always serve to benefit Taubman Asia as the platform continues to grow. I'd like to recognize the expertise, capability and dedication that our Taubman Asia team has demonstrated. I'm confident their efforts along with the inside of our local partners, and now Blackstone will continue to create value for shareholders for years to come.

Now let's move to our results. Adjusted FFO was $3.83, up 3.5% for the year. In 2018, rents, net recoveries and operating expenses were all favorable. Comparable center NOI growth including lease termination was 4.4%, our best annual growth rate since 2011. Excluding lease termination income NOI was up 3.8%, our second highest result over the same period. Both results compare very favorably to our initial 2008 guidance of 2% to 3%. Average rent growth -- I'm sorry, average rent per square foot in all comp centers was up 3.3% for the quarter and 3.9% for the year.

In our US comp centers average rent per square foot was up 2.2% this quarter. For the year, it was up 2.4% to $61.75, an all-time high. Our trailing 12 month releasing spreads were 3.9%. The spread remains impacted by a small number of spaces that represent just 10 basis points of GLA and 70 basis points of average base rent. Excluding those short-term leases, our trailing 12 month releasing spread was up nearly 10%. As of December 31st, our comparable center occupancy was 94.7%, down 1% compared to last year, comp center lease space was 96.3%, essentially flat to last year.

Turning to sales, overall sales growth throughout our portfolio continues to be strong. Trailing 12 month tenant sales per square foot in comparable centers was $824, up 8.6%, our best annual growth rate since 2011. Sales per square foot were up 10.1% in the quarter, marking our 10th consecutive quarter of positive sales growth.

This is obviously a great number, and it was a solid quarter. However, Tesla, a tenant, that report sales on a one quarter (ph) lag delivered a significant number of their Model 3s in the third quarter, which had a disproportionately positive impact that will be a tough comp for the fourth quarter of 2019. In Asia, sales per square foot and total sales at our comparable centers was, were up 14% for 2018. Total sales and sales per square foot at CityOn.Zhengzhou, our only non-comparable center in Asia grew and more than twice that pace. In the US portfolio, trailing 12 month sales reached another all-time high. Now $875 per square foot, an increase of 8.2% over last year. Nearly all our centers delivered positive growth in '18, with our most productive and newest centers posting the largest gain.

In the fourth quarter, comp sales per square foot were up nearly 11%. Generally, our key categories of merchandise continue to post healthy increases in the quarter. Women's apparel by far our largest category was up 6.5%, the fourth consecutive quarter of positive growth. Shoes and electronics were up double digits. A few of the best individual performance in our portfolio included Foot Locker, Restoration Hardware, Forever 21, Louis Vuitton, Gucci, Lululemon, American Eagle, Tumi, Vans, Fabletics and Bath & Body Works.

Over the last 12 months, following the elevated number of store closures experienced throughout late 2016 and 2017, the retail landscape seems to be stabilizing for higher-quality assets. Our exposure to the recent state of bankruptcies is relatively low. Gymboree has three brands. We have nine Janie and Jacks, eight US Gymborees, and one Crazy 8, we have six Charlotte Russes, and seven Things Remembered. In total, there are 31 stores representing 70 basis points of occupancy. It's likely that about half will remain open. It's true that bankruptcies create vacancies, but with high-quality real estate, they also provide the opportunity to improve the merchandising of the center. At our fourth quarter call last year, we mentioned 40 deals with emerging brands that were added to our portfolio throughout 2017.

In the last year, we surpassed that amount, as digitally native tenants like Peloton, UNTUCKit, Indochino, Bonobos, Casper and others have continued to add locations in our portfolio. We also continue to incorporate new experiential uses. Peppa Pig, an indoor play land, based on the successful British TV show for preschoolers will open their second location in the US, at Great Lakes Crossing here in suburban Detroit. And data, a physical location where customers can learn about the -- and demo the latest technologies and devices like Google Home products has opened at Short Hills very successfully. Overall, we're pleased with what we've accomplished, both operationally and strategically this year.

Now I'll turn the call over to Simon.

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

Thanks, Bobby. Good morning, everybody and happy Valentine's Day. I'll first review the year-over-year FFO variances for the quarter. They're listed on page nine of our supplemental. For the quarter, our FFO per share was $0.86. After adjusting for the change in fair market value of our Simon Property Group shares, a restructuring charge and cost related to shareholder activism, our AFFO per share was $0.91, which compares to $1.03 of AFFO per share in the fourth quarter of '17. As expected, the primary variances were interest expense, recoveries and lease cancellation income. Interest expense was unfavorable, $0.085, due to the combination of higher rates and borrowings. Net recoveries were down $0.035 primarily due to the timing of recoverable expenses. For the year, net recoveries were $0.045 favorable. Also lease cancel income was down $0.035 due to timing. It was up $0.055 for the year.

Our other year-over-year variances for the quarter were as follows. Minimum rents up a $0.01 due to higher average rents. Other operating expenses $0.015 favorable, primarily due to lower bad debt and lower pre-development expense. G&A was unfavorable by $0.025. We had higher senior executive compensation of bonus expense compared to the fourth quarter of 2017, when very little performance-based compensation was recognized. Lastly, our non-comp centers, Beverly Center, The Mall of San Juan and CityOn.Zhengzhou were in aggregate, up $0.035.

As implied in our annual guidance and in line with our expectations, fourth NOI accelerated. We are up against challenging comps in the US due to the timing of net recoveries and last year's NOI ramp up in Hawaii. Also two significant retail holidays in Asia, Chuseok, which is Korean Thanksgiving and the Chinese Moon Festival in China occurred in the third quarter of this past year, whereas in 2017, they occurred in the fourth quarter. As we discussed on our last earnings call, the timing of our receipt of business interruption proceeds at The Mall of San Juan was uncertain. We did not receive those proceeds in the fourth quarter of 2018. We now expect to receive in sometime in 2019.

Moving to our balance sheet. Since our last earnings call, we have liquidated our remaining Simon Property Group shares. At the end of the third quarter, we owned about 440,000. In late October, we sold 150,000 at an average price of $181 a share or proceeds of about $27 million. In the last week of January, we liquidated the remaining 290,000 shares at an average price of a $180 a share, generating an additional $52 million in proceeds. The collected proceeds from both of these transactions were used to pay down our lines of credit. Since we no longer own the shares, we won't have the mark-to-market FFO volatility in our results going forward. As Bobby talked about earlier, we've entered into a definitive agreement with Blackstone that is significant benefit to the Company. These are highlighted in the investor presentation, we made available on our website this morning. This transaction clearly confirms the value that we've created in Asia.

In aggregate, our basis in the three Asia assets is about $635 million. The total value -- valuation implied in the deal is $960 million (ph) which equates to value creation of $325 million. Beyond demonstrating value creation, these agreements allow the Company recycle majority of our initial equity. Out of the three projects, of the $635 million approximately $480 million is equity and about $155 million is property level debt. After this transaction and the planned property level refinancings of the China assets, we expect all, but $40 million of our $480 million initial equity investment will have been returned, and we will continue only half of our current interest in the projects.

This is the continuation of our capital recycling strategy, which has allowed the Company to grow its market capital over four times since IPO in 1992 while issuing almost no net common equity. We expect roughly $455 million -- $455 million of total proceeds from the transaction and associated China refinancings, which will significantly reduce borrowings on our revolving lines of credit. As we've said in the past we have target debt to EBITDA ratio of 6 times to 8 times. On a pro forma basis, we expect this ratio to be slightly above 8 times after the transactions are completed. About 50 basis points or half a term, where we'd be, if the transactions did not occur.

Finally, in place for all of 2019, we estimate the impact of these transactions will $0.08 to $0.10 accretive to FFO per share. The majority of this accretion about two-thirds will come from higher management fee income and the rest from lower borrowing cost. On our last earnings call, we provided detailed commentary on our progress toward meeting our target of about $150 million of incremental NOI at our share between 2016 and 2020. As a reminder, there are three components of this target, about $50 million of growth from our core assets, an additional $20 million to $30 million from the redevelopment of Green Hills, Beverly Center, the Saks box at Short Hills and three former Sports Authority boxes. And finally, we targeted $70 million to $75 million as our share of NOI from our four most recent development projects, International Market Place in Hawaii, CityOn.Xi'an, CityOn.Zhengzhou and Starfield Hanam.

Generally, our view of the progress expressed in our third quarter call, remains the same for all three components. First on core growth we noted the challenges in meeting the $50 million target. Based upon actual results in '17 and '18 and our expectations for 2019, a growth rate of about 6% to 6.5% in 2020 would be required to meet this target. Given the disruption in the retail environment, it's unlikely that core will grow at this level. Next, positive momentum continues at our redevelopments and we continue to be on track to reach our target range. Beverly Center outperformed our expectations this year, post-renovation sales are near historic peaks and they're growing.

The expansion of The Mall at Green Hills remains on schedule to open in June with the majority of the NOI coming online in 2020. Lastly, the retail tenants on the first two floors of the Saks Box at Short Hills are open and performing well. We expect the third level to be occupied in 2020. Finally, our four recent developments, which produced $35 million of NOI in 2017 grew to $52 million in 2018 -- at 2018, well above what we expected. Recognizing the trajectory of these projects, we believe we're on track to reach our $70 million to $75 million target, although continued strong growth would be required.

However, following the sale of half of our interest in our three Asia centers to Blackstone, this target is no longer applicable. Given the changes in our Company and the retail environment since 2016 and the tremendous progress we've made against these goals, we believe this is an appropriate time to make this our final update. That being said, beginning in the first quarter of 2019, we will now disclose our pro rate share of Company NOI. This will allow you to track our overall progress and will facilitate modelling and valuation of the Company.

Finally, the guidance. As we stated in the release for the full year 2019, we're expecting an FFO per share to be in the range of $3.62 to $3.74 with a midpoint of $3.68. Our range is based on the following assumptions, which can be found on page six of our supplemental. For the year, we expect comp-center NOI, excluding lease cancellation income to be about 2%. Occupancy in our comp-centers is expected to be about 95% at year-end, which is in line with 2018.

For 2019, our share of consolidated and unconsolidated interest expense is expected to be $215 million to $221 million compared to $189 million in 2018. We've also included the breakout of the consolidated and unconsolidated portion of these ranges in our supplemental. We're estimating that lease cancellation will be approximately $12 million at our share, down from $16.9 million in 2018. We expect our quarterly G&A run rate to average $8 million to $9 million in 2019 down compared to 2018. Our guidance range also includes the adoption of the new lease accounting standard, resulting in an additional $5 million to $7 million of expenses.

As a reminder this item will be classified as other operating expense in our financial statements. With respect -- we expect to receive about $5 million of business interruption insurance proceeds in 2019 for the hurricane that occurred in 2017 at The Mall of San Juan. And finally, please note our range excludes the impact of the Blackstone transactions and associated property level refinancing in China, as the closing days have not yet been determined.

And with that, I'll turn the call back to Bobby.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

Thanks, Simon. We've been talking about the bifurcation in the real estate industry for some time. Great assets will get the best retailers, grow their sales and build their NOIs. It will also find capital both debt and equity to continually reinvest, which will be required. As this transition, and what the shopper demand driven by technology, dramatically reinvents the retail industry, lesser quality assets will struggle.

In this context, we've been positioning our Company for a number of years. Today's announcement is an important step in that evolution, we're not only continuing to recycle capital. As we've done throughout our history, we are showing the development which takes patient when done properly, does create value. With this transaction, we have further positioned the Company for continued growth, improved our balance sheet and added a terrific partner in Blackstone.

We have great people, rate assets and believe as the dust settles, our Company will have outperformed. Before we get to questions I would like to sincerely thank Jerry Chazen and Craig Hatkoff, two outstanding and very committed Board members, who've been integral shaping our Company's strategy for many years. In the case of Jerry, since our IPO in 1992, and Craig since 2004. On January 15, they formally transitioned from the Board. They will be missed.

At the same time, we are delighted to welcome Jan Fields and Nancy Killefer to our Board. Their impressive leadership backgrounds in the areas of retail, consumer products and governance, as well as deep public

company Board experience will add tremendous value to the Company. With these appointments, the Company continues to execute on its commitment to shareholders to accelerate Board refreshment while reducing tenure, enhancing diversity and augmenting the relevant skill sets of the Board. Seven of the Company's nine directors will have been appointed within the last three years, bringing the average tenure of all Board members below five years.

The eight independent members of the Board, four of whom are women, now, have an average tenure of about 2.5 years. I would like to thank all of our directors each of whom have worked tirelessly and been very involved in our success over the last year.

So with that, we'll take your questions. As Ryan said, please limit your questions to two. Operator?

Questions and Answers:

Operator

(Operator Instructions) Your first question comes from the line of Alexander Goldfarb from Sandler O'Neill. Your line is open.

Alexander Goldfarb -- Sandler O'Neill -- Analyst

So, Thank you. Good morning, out there (ph). So two questions. First, just going to the transaction -- first, congratulations. But the $0.08 to $0.10 accretion to FFO. So, it sounds like there's no negative impact to FFO on this, it sounds like we all need to add $0.08 to $0.10 to our numbers for sort of a 2020. But with that Simon, the Asia properties have been huge NOI growers and helping the overall portfolio. So can you just help us understand how giving up that NOI doesn't impact FFO and then also as you think about that $150 million goal that you guys had, it sounds like that goal is no longer there. It's off the table, in part because of this transaction. I just want to make sure I'm understanding.

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

The accretion in the transaction, the way we calculate and you need to calculate it this way, because you have to make an assumption on rates, you have make an assumption on share count, you have to make an assumption on debt levels. The way we did this Alex is basically we said if you had this transaction in place for a full year of 2019, which obviously you will not because it's already February and it's going to take some time to close these things, it would be $0.08 to $0.10 accretive. You will get accretion from this as we close these transactions and we will update you as they do close. That accretion will continue until 2020. So, without a view today on rates, share count and the other things I've talked about, I can't tell you exactly how accretive it will be, but that takes into account, the NOI that you just sold the pro rata debt, that Blackstone will be assuming, refinancings on the two assets that we're putting into place it takes into account the entirety of the transaction. So, hopefully that answers the first piece on accretion.

The second piece on the $150 million. We targeted $70 million to $75 million coming from the four developments. The three of which are in China, which are the bulk of that number, that number, clearly is not applicable anymore for that reason. So that is part of the reason why we're not going to report on the $150 million anymore. We also are -- we've given you guidance for this year and a good portion of at least the core portion of that, of that $150 million goal involves 2020 performance of their core, in effect, we'd be giving you guidance or alluded, a large part of guidance on 2020 to continue reporting on that. So you put it all together and we think this is the right time for us to suspend or actually terminate giving guidance specifically on that number. What we are doing in returns, so you can track it, is we're going to start giving investors in our financial statements our pro rata share of NOI. So you will have a realtime ability to track where we are against our NOI growth, our share of NOI growth on a quarterly basis.

Alexander Goldfarb -- Sandler O'Neill -- Analyst

Okay. And then the second question is just on a go-forward, there is a second Korea project, you guys had spoken about bringing in a partner, so curious Blackstone has refill on that. And two are you guys going to continue with the Asia platform or is this a signal that you're basically not going expanded anymore.

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

So, we've been telling the investment community for some time now Alex, that we're looking at a number of options for Asia. The Blackstone deal was one obviously, bringing a capital partner into Anseong was another. I will say Anseong has started and its scheduled to open in the latter portion of 2020. Given our experience with Shinsegae and Hanam, we're very optimistic that it will be delivered on time and on budget. We also feel very good about the leasing there based on all the strength in brands that Shinsegae brings to the table. And our team did a great job in Hanam. We expect to be able to replicate that in Anseong.

That said, it remains our intent to bring a partner into Anseong at some point. This deal with Blackstone gives us a lot more flexibility on the timing. A number of factors have to be considered, but we're really evaluating a decision that involves, our view of development of leasing risk for the project, our balance sheet and the pricing that we could realize. As the Blackstone deal shows, you get better pricing and value creation, bringing a partner in once the assets are built, leased and operating successfully. So we'll see. One final point, Blackstone's investment with us is through an Asian core plus fund, which is generally focus on stabilized assets not on development. Blackstone has a number of pockets of capital, so it's very possible that it will partner with us on development in the future, but not likely that this fund would be the source, specifically as it relates to Anseong, like I said, we'll see. And we'll see what makes the most amount of that, Alex.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

And Alex, as far as the sort of future, I think as we have in the US and clearly would like to get to the point where we're able to recycle capital continuously and eventually make Taubman Asia more self-funded, clearly today's announcement is a step in that direction, but -- we need to build the asset base to spread the platform costs and create greater economies of scale. Now, it's not the fund management model, but it does require less capital per asset than our US model. Now, we're obviously committed to our fourth project, which is Anseong and over time, we hope to add assets in Korea and China, but we're going to continue to be very selective as we have to build really high quality assets.

Clearly Blackstone, this transaction absolutely reconfirms our commitment to the Taubman Asia platform. We believe strongly the demand for our expertise and the opportunities for good investments with higher growth profiles that are exposed to higher growing GDP is going to continue for a long time. So again this is a key transaction for our Company and it really sets us to the future.

Alexander Goldfarb -- Sandler O'Neill -- Analyst

Okay, thank you.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

Thanks, Alex.

Operator

Your next question comes from the line of Jeremy Metz from BMO Capital Markets. Your line is open.

Jeremy Metz -- BMO Capital Markets -- Analyst

Hey, good morning. Bobby, I was wondering if you could just talk a little bit about the process you went through with the Asia transaction. How long have you been in discussions with Blackstone? Were you actively marketing the properties? And if so, were there other bidders, you were actually trading paper before you ultimately settled on Blackstone?

Robert S. Taubman -- Chairman, President and Chief Executive Officer

I think, this was widely marketed, we announced that JP Morgan had to work with us. We spent the better part of the year, there were many interested parties. We very confident that we've made a very strong deal with a great partner. So, we're very pleased with it. And I think as you look at any comparables that you can find, that we've made a good deal, but the most important thing is we've got a great partner as well.

Jeremy Metz -- BMO Capital Markets -- Analyst

And can you talk about the impact on your 2% comp NOI from the Asia assets, this has been and continues to be a meaningful contributor to growth. Sales have been strong, as you noted, therefore if you were to look at a pro forma for the sale, what would comp NOI look like post the transaction?

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

The way we do comp NOI, we do it at a 100%. So, they will remain in our comp NOI stat going forward. So really no impact there. One of the reasons we landed on this is the right structure for us is, because we thought this is the right thing to do in terms of confirming value that we've created. We thought this was the right thing to do from a balance sheet perspective. We thought it was the right thing to do from a liquidity standpoint as well. But we still feel very good about these assets and we feel very good about their growth trajectory. We didn't want to get -- give all of that up and that's why we structure this as a joint venture partnership with Blackstone. So we're still going to maintain exposure to these high growth assets. And as Bobby said, assuming we can find projects that we believe will be as good as Anseong and as the projects we already have there, we will add to this asset base over time.

Lastly and by the way, we're investing -- to just throw in there, that the accretion that we talked about is significant. And a good portion of that comes from management fee income that we would generate from Blackstone to continue to run these assets to create a better return on equity for us, and we think it's -- we think it's the right thing to do from an earnings perspective.

Jeremy Metz -- BMO Capital Markets -- Analyst

Thanks very much.

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

Thank you.

Operator

Your next question comes from the line of Christy Clear (ph), sorry McElroy from Citi. Your line is open.

Michael Bilerman -- Citigroup -- Analyst

Hey, it's Michael Bilerman here with Christy. Morning, Bobby. Congratulations on getting the deal done. Can you just talk about two things? One, sort of what right your partners Wangfujing and Shinsegae had relative to your stake? Whether they had a sort of a right to buy it as you were marketing it? I don't know, it was right first refusal or right of first offer if they had that. And then secondarily, what the structure is now going forward in relation to Blackstone stake, they seem that they are holding into their fund at some point. They're going to want to exit. What rights do you have to buy it back, if you wanted to, or your partners?

Robert S. Taubman -- Chairman, President and Chief Executive Officer

Well, first of all, because it was a partial sale, both Wangfujing and Shinsegae, did not have any rights in front of the -- in essence this, with the Blackstone transaction. As far as sort of ongoing, again this is in their core plus fund. It has a much longer life, then they are classic opportunity funds. There are arrangements between us that are very market in the context of certain rights that they have and that we have in the context of the exit, and that -- I think both of those, we're very comfortable with. And I would again, I would call them very much market kind of rates.

Michael Bilerman -- Citigroup -- Analyst

And then in terms of the $50 million earn-out based on 2019 performance, can you share a little bit about the triggers for that, so that we can think about how and if that $50 million of incremental capital above and beyond what you've already received, which is currently north of where you develop these assets for. How we should think about that $50 million and the probability of that happening?

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

Michael, it's Simon. The way the earn-out is structured, it's fairly simple. It is NOI, incremental NOI above a budgeted amount for 2019. We will know what that actual amount is in the early part of 2020. We're not going to give individual budgets for these three assets. I can give you absolute numbers, but we continue to believe that these assets will create a good deal of growth. At the budgeted levels we have right now, we believe that we will have, we have the ability to recognize some of this earn-out. But it's really going to be based on the performance of it over time.

It's difficult I think for us to give you much more than that at this stage, these are terms and a deal that we really don't feel comfortable disclosing a whole lot more about.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

Yeah. The only thing I would add is, we're all going to be very disappointed if we don't get some significant portion of that earn-out based on how the assets have been growing. And I would say that Blackstone will be happy to pay them to us, because of the increased NOI that they're going to enjoy as well.

Michael Bilerman -- Citigroup -- Analyst

Right. And just -- last, just clarification, is there any accretion baked into the 2019 guidance that you put out for the steel? Or it's completely excluded? I realize $0.08 to $0.10 was an annualized number. But have you baked in any accretion in the numbers, you presented yesterday?

Robert S. Taubman -- Chairman, President and Chief Executive Officer

No. It is completely excluded from guidance.

Michael Bilerman -- Citigroup -- Analyst

Completely excluded. So, as these things close, we'll be adding additional incremental earnings to your numbers.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

That's absolutely right.

Michael Bilerman -- Citigroup -- Analyst

Awesome. Thank you.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

Thanks, Michael.

Operator

Your next question comes from the line of Todd Thomas from KeyBanc Capital. Your line is open.

Todd Thomas -- KeyBanc Capital -- Analyst

Hi, thanks. Good morning. Just following up on the transaction and the timing of the closings which you described as sort of being phased in throughout 2019, can you just give us maybe a little bit of a better sense of some of the moving parts here whether each assets expected to close separately and also maybe the timing around the refinancing of the two China assets?

Robert S. Taubman -- Chairman, President and Chief Executive Officer

Sure. We do expect that these three assets will probably close at different times. We're hopeful that they will close earlier in the year rather than later. Each one of them has got slightly different closing requirements, all of which I would characterize as very highly probable and generally normal course type of things. So we do -- we do anticipate that you'll start to see us being able to announce closings earlier in the year rather than later.

The refinancings are actually largely there to collapse a fairly complicated capital structure that we have in China. Where, which is really the result of some of the challenges in moving capital onshore and offshore in China. The refinancings are going to allow us to collapse that structure into something that's very traditional, where you've got a non-recourse mortgage on the assets. And what that will do is it will allow us to basically take capital that's sitting in bank accounts offshore right now and send that back to the US. And after you're done, you'll have assets, all three of the assets actually. We'll have non-recourse mortgages on them at low LTVs. In Korea, very low LTV. And so we think it will be much simpler going forward. We have the ability to do that because these assets are now stabilized and will attract good mortgage rates and proceeds levels.

I think, that the other thing I should point out here is that, there is no repatriation risk for this capital. This is all offshore capital coming back to the US, it does not need to leave China, does not need to leave Korea for us to get these proceeds. So no risk -- no risk there, which we thought was an important piece of all this. Lastly, the accretion portion of this is all from the sale itself, the refinancing themselves are important for additional liquidity and the cost and the structure as I just talked about, but the accretion comes from the sale of the assets.

Todd Thomas -- KeyBanc Capital -- Analyst

Okay. That's helpful. And Bobby, your comments continue to suggest that growing Asia is part of the future plan. And you have Starfield Anseong under way, but does this transaction help expedite or should we expect any additional announcements in 2019 for future developments in Asia?

Robert S. Taubman -- Chairman, President and Chief Executive Officer

I would say, no, not at this point, but having Blackstone as your partner, in Asia, they clearly want to put out capital, and they've raised a lot of capital. We're one of the ways they might be able to do that. We're working with our partners, both Shinsegae in Korea, as well as Wangfujing in China looking at the pipeline. So we do expect that overtime, additional high-quality assets will come to us. But no, we do not have anything else right now that we expect to begin in 2019.

Todd Thomas -- KeyBanc Capital -- Analyst

Okay. Thank you.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

Thank you, Todd.

Operator

Your next question comes from the line of Richard Hill from Morgan Stanley. Your line is open.

Richard Hill -- Morgan Stanley -- Analyst

Hey, good morning guys. Wanted to maybe flip this discussion unhedged a little bit. I want to go back to your comments about the amount of capital on the sidelines. By your account, there is a tremendous amount of capital on the sidelines. A lot of it's which long term locked up capital. Would you ever consider doing something similar in the United States? How has your experience in Asia negotiating this transaction changed your views at all on the US assets?

Robert S. Taubman -- Chairman, President and Chief Executive Officer

Well, we continue to believe that the demand for new retail supply in the US is extremely limited and frankly, as I think we've said on other calls, and in other ways that we think that retail supply will actually reduce pretty dramatically. And so, we believe they're going to be a lot of centers that are challenged, that will ultimately close. So the ability to sort of build in this fashion as we are in Asia, we really identify more than a decade ago, we are retail supply, demand would be going. It really led us to Asia and the investments that we've made that we're now beginning to capitalize on and build off of. So, if I understand your question properly, we don't see a lot of demand for new space at all in the United States. And so I don't, we don't really see the same opportunity here at all.

Richard Hill -- Morgan Stanley -- Analyst

Yeah. Thanks, Bobby. Maybe I can ask my question, maybe a little bit differently. On something like Beverly Center would you JV that with long-term private equity capital?

Robert S. Taubman -- Chairman, President and Chief Executive Officer

Yeah, I think that -- we have certain assets. I don't want to be specific, but we have certain assets that we would actually be happy to joint venture with, and we would look at our overall balance sheet and the needs and liquidity and everything else. And, but yes, there is interest in high-quality assets. As I said earlier, debt and equity is flowing to the high-quality assets. If you have a lesser quality asset, you got a hard time find debt or equity.

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

Yeah. And Rich, the only thing I'd add to that is, if you look at -- if you look at the assets that are wholly owned in our portfolio. I would say nearly every one of them would fit the category of high-quality assets and would certainly be of interest to folks. This transaction with Blackstone gives us more liquidity, gives us the ability to be opportunistic and reinvest in our own assets in the US, if we have the opportunity to do that. So, it certainly -- it makes it less likely that we would do that, although we think there's a lot of demand, but you would never say, you never say never if the right opportunity comes up.

Richard Hill -- Morgan Stanley -- Analyst

Got it. Simon, was that -- was that one question or two questions that I asked?

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

You have another question, Rich.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

Either way, with high quality.

Richard Hill -- Morgan Stanley -- Analyst

Yeah. Okay. Here is my other question. Look, I guess I sort of understand why you report NOI based up on 100% share, but you did JV in a bunch of assets that were highly, highly productive to your overall portfolio. Why would you consider doing the economic NOI share at some point? Or is that sort of just off the table and just focus on free cash flow and NAV creation over the longer term?

Ryan Hurren -- Vice President of Investor Relations

Hey, Rich, it's Ryan, you may have missed it in Simon's opening comments, but one of the things that he noted at the beginning in the first quarter, we are planning to begin providing our NOI at the Company's share. So look for that in Q1.

Richard Hill -- Morgan Stanley -- Analyst

Got it. Thank you. Sorry for missing that.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

You're fine (ph).

Operator

Your next question comes from the line of Greg McGinniss from Scotiabank. Your line is open.

Greg McGinniss -- Scotiabank -- Analyst

Hey, good morning. Just thinking about kind of bankruptcies that have announced so far this year, I'm curious what your exposure has been, Charlotte Russe, Gymboree, Things Remembered, and what your expectation is for the rest of the year as well for bankruptcy closures Greg.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

We were pretty specific in our prepared comments about how many stores, but in total, all of the recent-stated bankruptcies are 31, and it was about, I think 70 basis points of our overall inline space. If you think about 70 basis points, probably be other bankruptcies in the first quarter seasonably that has always been the highest quarter and typically it's somewhere between 40% and 50% of the entire year.

So the -- if you have 70 -- 50%, that's 1.4% of space, maybe it'll be as high as 2% space. Our historic average over the last decade has been I think 1.6%. So we're really looking thus far, sort of average year if you extrapolate out thus far. What we think we're going to see in the first quarter. So I do think that again for lesser quality assets. There is going to be higher percentage mix of these stores in their spaces, but we have six Charlotte Russe, we have seven Things Remembered. So, if you have 2,000 centers, and you only have seven Things Remembered, it means they don't belong in every shopping center. If you have lesser quality assets, you're going to have Things Remember in every one of your assets. So, I think that what you're seeing with these types of retailers that are struggling, there is less number of them in our assets. So, as far as our historic bankruptcy statistics go, we are very -- comfortably, we think in our historic ranges.

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

And the only thing I'd add to that Greg is, in general, the bankruptcies that we've seen thus far, the tenant that we -- that were on our watch list, that we knew were struggling. In most cases, we have actually started to reduce our expectations, and in some cases reduce rent levels from these tenants. So the actual exposure from us, from a financial perspective is even less than it is in terms of an occupancy perspective. So we feel like we've built in an appropriate level of reserves for what we've already seen and what we think we may see. It's similar to the reserves that we've built in for last year. The good thing in '18, but we outperformed pretty significantly in '18, because we did need all those reserves. We will see what happens in 2019.

Greg McGinniss -- Scotiabank -- Analyst

Right. Okay. And so, thinking about that a bit more on the same store NOI, the 2% comp which includes, let's say outsized contribution from Asia and but then an average number of bankruptcies, I'm wondering what else is kind of impacting the US platform this year?

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

Well, I would say, the first, the biggest piece is the retail environment. While we feel like our assets are clearly, the quality of our assets is clearly coming through, still volatility. So there is still substantial amount of reserves this year. And like I said, we'll see -- we'll see if we need it. Our results '18 we're definitely helped by out-performance in the four new developments. So, the three NOI in Asia and the one in Hawaii. We think those assets will continue to grow. But we're not counting on that level of out-performance again this year. Again, we'll see what happens there.

And so I'd say that's really the sort of the bulk of it. The last piece, I'd throw in there is that, our best assets are doing great. They're growing really nicely. The bulk of our portfolio remains solid. We have a small number of assets where we do expect some meaningful NOI declines this year. One of them has a competitiveness issue and really a couple of them are going through, what I think of is a little bit of a repositioning and a remerchandising.

So you take all of that together, the bulk of the portfolio is real good, the top assets are great, but you are being brought down a little bit by just really a very small number at the bottom. I'd say, you put all these things together, that really is sort of where we are right now, with that 2% guidance figure.

Greg McGinniss -- Scotiabank -- Analyst

All right. Thank you very much.

Operator

Your next question comes from the line of Derek Johnston from Deutsche Bank. Your line is open.

Shivani Sood -- Deutsche Bank -- Analyst

Good morning. This is Shivani Sood on for Derek. Just Bobby, you had spoken a little bit about the impressive sales, trailing 12 month sales figure growth and that it might have been a little bit skewed by Tesla. So I'm wondering if you could share what that was excluding the Tesla amounts. And then sort of traffic trends and retailer sentiment that you're seeing so far this year, just in light of the retail sales figures that was released this morning.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

Well, we can't be specific about one tenant. In this case, Tesla. We did bring it up, because it was a substantial part of the growth. So, and it will be a difficult comp. You know, a year from now. As far as the leasing environment goes., there is good tenant demand for good assets. I mean, we're very pleased with our leasing efforts, we're -- about 75% of this year's leasing is complete. Our deal volume is up. We just closed out a strong deal volume year for 2018. Occupancy remains, you heard around 95% for year-end '18, where we're going in '19, the average rent growth has been good at 3.9%. That's very good.

We think it's very important that we continue to sign these emerging brands. And that has increased year-over-year. We think the tenant pool, which has certainly shrunk over the last few years is now beginning to actually grow again in a very positive way, and our ability to grow rents will improve as some of this weaker supply goes away. So in this market, Detroit, we had a bunch of the big shopping centers literally close up. And what we're seeing is that, our market share and the sales gains, our -- are there -- they're beginning to show, and now will ultimately make its way into NOI. But there is a transition that occurs.

Shivani Sood -- Deutsche Bank -- Analyst

Thanks for that. And then, Simon you had mentioned the business interruption insurance for The Mall of San Juan, do you have any expectation on when within the year should be recognized and can you give us a general sort of update there as well.

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

I really, can't give you an update on the timing. We feel very, very good that it will be in 2019. We're not going to -- we're not going to sign the deal until we feel like it's the right amount in the right way. But we do believe it will be in 2019 and we're working hard to try to get that done soon as we can.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

Yeah. And I would just make a general comment about San Juan. The center post hurricane continues to have very good momentum. And if you look at it, not against '17 which had the disruption of the hurricane, but if you look at '16 and '18. So '16 is your base year and '18 is your current year, we were up almost 40% in our sales per square foot and our total sales were up 16%. We've got 92 stores open now. We have 16 kiosks or our news open.

We just -- since our last call, we opened another four stores including Banana Republic, and we really don't have the tourist element which we always thought was going to be critically important there. We really don't have it yet. But, this is still recovering. So, our shoppers remain primarily local. So over time, if we can get that, the tourist business really recovers, and we are able to grab a significant piece of that. And we think that, that things will improve. And we improve. And we've talked on other calls about the supply of retail space. It remains dramatically less than it was before the hurricane and for lack of insurance and other reasons, people are not going to rebuild it. So we, it's a long process, but we're making progress against that.

Shivani Sood -- Deutsche Bank -- Analyst

Thanks so much.

Operator

Your next question comes from the line of Jim Sullivan from BTIG. Your line is open.

James Sullivan -- BTIG -- Analyst

Thank you. Two questions from me on the deal and congrats on the deal by the way. First of all, the deal has a 4.1% cap rate on '18, but presumably, Hanam was priced at a lower cap rate given how strong that asset is. Can you confirm the cap rate for Hanam versus the two Chinese assets?

Robert S. Taubman -- Chairman, President and Chief Executive Officer

We really can't break out the individual cap rates. The allocation was for all kinds of reasons. The deal was made on an overall basis, and there are tax reasons, there are other -- there are all kinds of reasons that you make allocation. So we can't break it out. Overall, it was a 4.1% cap rate on 2018 income and we feel very good about the pricing.

James Sullivan -- BTIG -- Analyst

Okay. Second question, regarding the process here for the transaction, did you engage with other potential private equity players besides Blackstone and you sold half of your interest. Was that always your goal and the goal of Blackstone or did you consider selling a smaller or bigger slice during the process?

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

Jim, it's Simon. We hired JP Morgan to run what I think of is a widely marketed deal. And we were somewhat flexible in terms of the type of deal that we would accept. We clearly wanted to remain exposed to the GDPs in these assets. We would never -- the idea that we were going to sell it entirely, but we would have been flexible in terms of different terms, different amounts and different structures. We talk to more than 20 investors in that process. We whittled it down to a handful that we thought would be great partners and also we do this deal in terms of infrastructure that we like. And ultimately we landed on Blackstone for a whole host of reasons. I would say the biggest one of which Bobby mentioned, which is, we think that will be a great partner for us going forward.

James Sullivan -- BTIG -- Analyst

So given the comments, Simon, is it fair to say that you would interpret the demand for this type of interest as fairly deep?

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

We were very pleased with the amount of people and the quality of the investors that we're interested in the strength actually.

James Sullivan -- BTIG -- Analyst

Okay. Great. Thank you.

Operator

Your next question comes from the line of Michael Mueller from J.P. Morgan. Your line is open.

Michael Mueller -- J.P. Morgan -- Analyst

Yeah. Hi. First of all congratulations on the transaction as well. My question is on lease spreads. I mean you reported trailing 12 month spreads, and it seems like you've been talking about these depressed 3% to 4% levels for well over a year. So, I'm just curious why have they not anniversaried at this point, and how should we think about that number on a go-forward basis?

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

Mike, it's Simon. I'll take the first part of this at least. We really manage our Company for NOI for occupancy and for merchandising. And the lease spread stat is, we know it's important to folks, but it really is an incomplete, it tells an incomplete story as it relates to the bigger picture. As an example, you may very well take -- you may have a great leasing outcome by taking a piece of -- a piece of your center that is unoccupied currently and you put a tenant in there. It's great for NOI, good for merchandising, good for a whole host of reasons, but it hurts your lease spreads.

All that said, clearly we're still doing some deals that don't have fabulous terms compared to what our norm is and we're doing that, because we think it's the right thing, in those centers, it's typically a handful of centers. And what we think, merchandising and occupancy and some NOI are critically important. So we do certainly expect that these spreads will get better in the future, particularly as sales growth, so as to translate into better leasing terms. If you look at what we said here, where it's really only 10 basis points of occupancy at a meaningful effect on the overall spread, but this is partially that some of the deals we did in '17 and in '18, they're burning up, but we are still doing some deals that have a negative impact on that spread.

Michael Mueller -- J.P. Morgan -- Analyst

(inaudible) I'm sorry.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

Mike, I would focus more on average rent growth, which is always what we've said. We don't manage the business for spreads, and but you take 10 basis points out, which is 70 basis points of the rent, you end up with almost a 10% spread. And on an NOI weighted basis, it's about 12%. So it is -- they're all there for numbers, in the smaller portfolio, as Simon said, one or two stores in the quarter that you decide to make a merchandising decision, that also maybe accretive, maybe it's a large vacant location, it can dramatically impact the spread.

Michael Mueller -- J.P. Morgan -- Analyst

Got it. So it seems like the answer is that the small batch of leases you're talking about today is arguably a different small batch of leases that you were talking about six quarters ago?

Robert S. Taubman -- Chairman, President and Chief Executive Officer

Yeah. I would say, it's a continuum, but yes in general the answer to your question is yes.

Michael Mueller -- J.P. Morgan -- Analyst

Okay. That was it. Thank you.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

Thanks, Mike. Other questions? Operator? Operator, are you there? Hello? Operator, is there anybody else there? Mike, are you still open on your line? If you all -- if you're still on the line with questions, we're trying to figure out what's going on with the operator.

Operator

Your next question comes from the line of Caitlin Burrows of Goldman Sachs. Your line is open.

Caitlin Burrows -- Goldman Sachs -- Analyst

Hi. Good morning, everybody. I guess, just a quick one in terms of occupancy cost. You guys are at 13.6%, which is low compared to your own past few years, but higher than some of the other public companies. So I guess I was just wondering how does that 13.6% compare to where you're signing leases today. And do you -- how do you expect it to kind of trend going forward?

Robert S. Taubman -- Chairman, President and Chief Executive Officer

Well, when you see -- the strong sales growth that we've had through the last 10 quarters, it will tend to, since your occupancy cost come down. And our trailing 12 sales have grown from $789 to $875 over that period. So that's about a 11% increase. We have -- we believe it's going to take some time for the rents to catch up -- in the environment right now is sort of it -- making it take a little longer than it has, but we do think in the mid '13, there is room for us to grow. And in our best and particularly, we are seeing that opportunity.

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

Yeah. And I would, over the years 15% has sort of been the total occupancy number that we've circled. And as Simon says in times of growing the sales it goes lower, in times of slowing the sales it goes higher. So we do feel that number can be higher. And as the tenant pool expands, why these digitally native guys become more brick and mortar footprint, they're going to -- pricing will improve. So, but it takes combination of good sales and good demand, and things are moving positively over time on both those fronts.

Caitlin Burrows -- Goldman Sachs -- Analyst

Got it. Okay. And then maybe just another one. In terms of anchors, I know you guys don't have that many Sears or JCPenney boxes, but could you give any comment to what extent you think there could be some near to medium term redevelopment opportunities?

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

Well we only have really two Sears stores. We had three, one of them is at Fair Oaks, that's owned by Seritage, that is in the process of being redeveloped by them.

The other two, for us our Twelve Oaks and Sunvalley, we see very nominal rent from Sears in both location. So it's really not a huge issue for us and Twelve Oaks they have ceased operating and which is recent. And at Sunvalley, they continue to operate. So that's sort of our Sears exposure. We have four pending stores and again it is not a huge amount. When you look at all of our department store exposure and you look at revenues as a percentage of our overall, it's about 3%. So what you're seeing in Sears with very nominal, and Penneys, and Macy's, it's fairly nominal.

And I think that what you've seen over the years not just with us, but within the industry generally is that there is less and less reliance on department stores as your big traffic generators. And Beverly Center, we specifically focused on the NOI and focused on the street and really when you look across the tenant pool at Beverly, we're from luxury all the way to UNIQLO, Zara and Forever 21, so that we have a full representation of tenants and that's really what's creating the destination at Beverly, not the anchor stores.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

And Caitlin, just the cover that off in response to your question about opportunities in the near and medium term. We've been working on different plans for those three Sears boxes for years now. And we've looked at other opportunities that we think may come up, but we haven't had -- we haven't been able to realize those yet. We certainly have in our plans that we may get those opportunities going forward both. We have nothing to announce right now and we do think it could be some time before we did.

Caitlin Burrows -- Goldman Sachs -- Analyst

Okay. Got it. Thank you.

Operator

Your next question comes from the line of Craig Schmidt of Bank of America. Your line is open.

Craig Schmidt -- Bank of America Securities-Merrill Lynch -- Analyst

Thank you. Simon, you may have touched on this but, is still been able to bring back the money from this tax free?

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

The -- we talked a little, a little bit before Craig about repatriation. That is an easy process that is not onshore in China or in Korea, there is a small tax that we need to pay to do this. It is very small in the scheme of the overall transaction. We're expecting net proceeds from Blackstone, I'm sorry, growth proceeds for Blackstone of $333 million, a shade above that, after transaction costs and taxes, that number gets down to about $315 million. So there is a small tax number, is in that delta between $333 million and $315 million. So a little bit but not much.

Craig Schmidt -- Bank of America Securities-Merrill Lynch -- Analyst

Okay. And then just regarding the addition of Nordstrom Country Club Plaza, are there other changes to accompany this addition and how will you measure the yield on this addition to Country club?

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

When you say other changes, Craig, I mean the -- they are...

Craig Schmidt -- Bank of America Securities-Merrill Lynch -- Analyst

More shop added or...

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

There is very minimal. New space being created off, the Nordstrom event. What really -- we're doing is solidifying the asset and really making us absolute one-stop shop for the merchandise associated with a Nordstrom store in the market. And the combination of that as well as the tremendous food experience, we do over $100 million with net shopping center with over 20 restaurants is -- are really going to be the destination. Remember that center, which is really a group of I think seventeen different blocks or something that come altogether. The center is actually anchor list today there's no department store there today. So this becomes really the department store along with the food as the two critical destination. There is opportunity to actually expand the retail space there. The in-line space there, but we, our first priority is to bring Nordstrom's into the center.

Craig Schmidt -- Bank of America Securities-Merrill Lynch -- Analyst

Okay, thank you.

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

Thank you, Craig.

Operator

Your next question comes from the line of Tayo Okusanya from Jefferies. Your line is open.

Omotayo Okusanya -- Jefferies, LLC -- Analyst

Yes, good morning, everyone. Let me also add my congratulations on the deal. Simon, I just wanted to go back to the question around the same store NOI guide for '19, you kind of talked about provisions the provisioning levels was part of what was driving it down. And just kind of given you don't have a lot of exposure to the retailers that are currently going bankrupt, just trying to understand that, idea of higher provisioning levels and also could tougher year-over-year comps also be part of the reason why you see the slowdown in same-store NOI growth. Is there something in there for lease modifications that? I'm just trying to understand all the different buckets that I'm making up that decline in '19 versus '18.

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

Well, Tayo, you have to remember that we started 2018 with an expectation of 2% to 3%. We were trying to be appropriately conservative given the market, and we've built in not only stuff we knew about, but stuff that we thought could occur in the portfolio. And like I said, we didn't ultimately need all of it. And therefore, we got 4% north of that if you include lease cancel and your number for the year. We put in a similar number for 2019 that is to cover the things that we talked about before, the 31 stores that we know are in bankruptcy and other things that we think could materialize, but you don't -- you don't really know about that yet.

Really important thing to think about here as well is the fact that $7.5 million in a company our size, it's only $7.5 million makes of 1% of that movement in comp NOI. So it doesn't take a lot to move that number in either direction. So it's really important that you dimensionalize it that way. But the other things that we're talking about, we take an extraordinarily granular look at our portfolio. We look at every tenant. We look at every space. We look at where we think the outcomes are going to be there for them and then we decide how much provisioning we need to do. It's pretty hard for me to give you a whole lot more detail about we've already said.

Omotayo Okusanya -- Jefferies, LLC -- Analyst

That context was very helpful. And then one last one again, just to confirm, current guidance, does not include anything in regards to the accretion from the Asia transaction nor does it include any BNI proceeds from San Juan, correct?

Robert S. Taubman -- Chairman, President and Chief Executive Officer

It does not include any accretion from the Blackstone transaction. It does include the business interruption insurance in the FFO, that's not an NOI that's an FFO. But it doesn't include the expectation of $5 million from the business interruption insurance.

Omotayo Okusanya -- Jefferies, LLC -- Analyst

That's all I needed. Thank you very much.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

See, you.

Operator

Your next question comes from the line of Citi -- Christy McElroy of Citi. Your line is open.

Michael Bilerman -- Citigroup -- Analyst

Hey, its Michael Bilerman again. Simon, Just on the same store NOI and dealing with pro rata, so correct me if I'm wrong, starting next quarter you're going to start giving the guidance the from page six, are you up about 2% that's been going to switch to a pro rata number and you'll start showing the same store NOI on a pro rata basis consistent with doing all NOI?

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

We are going to -- we're going to continue to give comp-center NOI growth at a 100%. We are also starting next quarter going to give you our actual NOI on a quarterly basis. Our actual pro rata share of NOI on a quarterly basis.

Michael Bilerman -- Citigroup -- Analyst

So, you're not going to give us the guidance on a pro rata basis that ties to it and I mean, I mean, we would think you should give us both, right. If it's total, to say here's our total portfolio that we're managing doing but what shareholders care about and ultimately the NOI that they own and they don't own 100%, they only own 75% of it. So, why wouldn't you give the guidance on a pro rata basis to what you want?

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

The NOI, our share of NOI is in our FFO. That's I mean, that's how I would answer that question, Ryan, you want to add to that?

Ryan Hurren -- Vice President of Investor Relations

Sure, I would say, we have historically guided comp-center NOI to 100% because it represents a 100% of our assets and how they're performing. I recognize that, at times, it can be slightly different, our share of that NOI growth and now with more joint ventures, particularly with the Blackstone deal, one of the reasons, acknowledging that -- also acknowledging that for NAV calculation purposes for this industry has not historically had our share of NOI for those reasons, we plan to provide it next quarter, but look we'll consider it, but at this time, we do not plan to give another guidance measure for NOI, but we'll consider.

Michael Bilerman -- Citigroup -- Analyst

Yeah, I mean it's helpful to have what your total portfolio is doing, but it doesn't -- that's not in the numbers right. What's in the numbers is your share of that NOI. And if you have joint ventures that are performing substantially better, but don't contribute a lot to the whole, it doesn't matter how well they're doing. Right. All we care about is, what NOI do I own? And what is it performing? So I would strongly be an advocate of providing the NOI growth on a same store basis.

The second question is in terms of asset sales in the US and another analyst has asked, the question about whether the demand that you saw in Asia would lead you to look at some of your wholly owned assets or assets that you owned joint venture stake in today to seek that, and I think the response was, if the right opportunity came about. I'm wondering why you wouldn't take the same approach that in Asia which is higher, an investment bank or to market some stakes in assets and see what gets about rather than waiting.

I think your leverage profile is still probably higher than where you like it to be, your shares. I know Bobby, you think they are trading at a big discount to NAV. So why not be more aggressive with the US assets that the demand for high-quality assets and make the move to engage banks, make the move to engage brokers and start to sell some of the US assets, take that money, buy back your stock, distribute it to shareholders and fund the development and delever the Company.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

It always -- it doesn't always work out the way you said, John -- Michael.

Michael Bilerman -- Citigroup -- Analyst

You know I always get, I get called John sometimes.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

Where is the history?

Michael Bilerman -- Citigroup -- Analyst

There is.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

It doesn't always work out that way, Michael. And it's critically important as to what our base is. These are decisions that we make all the time, obviously you can invest in the assets, you can build new assets, you could buy back their stock. These are all things to do with capital. We've done it over the years and -- we have recycled capital. I think more than anyone else in, frankly in the right space, but certainly in the mall space. And we've done it very effectively. So on a net basis, we've said this before, by a net basis, we have not issued any equity.

You had grown in the way that we have over all these years. But the idea of buying back stock is not sort of a new idea and we absolutely believe our shares are under priced, but capital is also pressured, there are all kinds of tax related issues and other issues that you have to deal with, when you sell an asset and you can't ignore them, there is often breakage in the process. But it is something that we will consider over time as part of the sort of tools in the bag to move share price.

Michael Bilerman -- Citigroup -- Analyst

And I don't want to undermined at all, all the work that you've done, you think back to the Starwood transaction, think about where those assets would be performing today, if the Company still own them, clearly this transaction. And I mean go all the way back to the GM transaction, you did in the late '90s. So I get all that. I was just trying to make a comment about market doing exactly we did in Asia to take demand of what there is for high quality retail assets that will have more staying power, and using that capital to either delever or return more capital to shareholders. So I don't want you to take it as a negative. I'm trying to say as a positive.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

We appreciate your comments, Michael.

Michael Bilerman -- Citigroup -- Analyst

The last thing, there was a line in here on guidance on, in the earnings release that the guidance does not include any future costs that may be incurred related to shareholder activism. Yeah, I didn't know why you have put that in, is there other stuff that we should be aware of or stuff that's going on, I just don't know why that line. I thought all that was done personally.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

Well, we've been for now, I think two and half years we've been sort of consistently putting that in there, that we don't include it. It shouldn't be read as any kind of a comment on the likelihood of what we will incur in the future. It's the same thing, we've been putting in our guidance for a while now. There are some costs that we've incurred along the way. Really, really retention awards for some employees that have a longer life to them in terms of amortization that go into 2019. It's not a very large number.

Michael Bilerman -- Citigroup -- Analyst

Right.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

There will be some small amount in 2019. Past that, no, we should read anything into that line in our guidance, what we've been saying for a while now. And it is just fair that everybody knows that there may or may not be some kind of adjustment as we go forward.

Michael Bilerman -- Citigroup -- Analyst

Right. And that's why, I wanted to make sure, because I wasn't sure why it wasn't there. So I'm glad you clarified that. But it's not something new that we need to be concerned about. Great. Thank you.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

Thank you, Michael.

Operator

Your next question comes from the line of Samir Khanal from Evercore. Your line is open.

Samir Khanal -- Evercore -- Analyst

Hi, Simon. Sorry if I missed this, but what was the reason for the lower interest expense guide for '19 versus what you provide in the -- in the last call.

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

it's simply rates, it's a very different look on the rate outlook than where we were back in October, where we told everybody that we thought we would have an average LIBOR rate of 3% over the course of the year. We now think that, that is very unlikely to materialize. And so we think rates will be lower. So, we've now incorporated that into our guidance. Still, we think in a conservative way. So we are, we feel like we've given guidance that, we feel it's very comfortable for us, but it really is rate at the end of the day.

Samir Khanal -- Evercore -- Analyst

Okay. That's helpful. And then the cap rate on the transaction, did you guys provide any color on what it was on a forward basis, maybe on '19 numbers?

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

We didn't. As you know, as well as anybody, we generally don't guys there on specifically on assets or even performance of assets as subset. So in order to make a comment on the cap rate for '19, we will be giving you a guidance on what we thought was the -- the performance of those three assets in our guidance, which is not something that we do. We're very happy that, cap rate, we were able to achieve.

Samir Khanal -- Evercore -- Analyst

Got it. Okay. Thanks.

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

Thanks.

Operator

We have no further questions in queue. I will turn the call back over to the presenters.

Robert S. Taubman -- Chairman, President and Chief Executive Officer

Well, thank you, operator. We're obviously delighted with our announcement today. We look forward to, you know, hearing whatever questions or comments you have and we look forward to seeing you down at the Citibank Conference soon. So, thank you, everybody. Bye, bye.

Operator

This concludes today's conference call. You may now disconnect.

Duration: 80 minutes

Call participants:

Ryan Hurren -- Vice President of Investor Relations

Robert S. Taubman -- Chairman, President and Chief Executive Officer

Simon J. Leopold -- Executive Vice President and Chief Financial Officer

Alexander Goldfarb -- Sandler O'Neill -- Analyst

Jeremy Metz -- BMO Capital Markets -- Analyst

Michael Bilerman -- Citigroup -- Analyst

Todd Thomas -- KeyBanc Capital -- Analyst

Richard Hill -- Morgan Stanley -- Analyst

Greg McGinniss -- Scotiabank -- Analyst

Shivani Sood -- Deutsche Bank -- Analyst

James Sullivan -- BTIG -- Analyst

Michael Mueller -- J.P. Morgan -- Analyst

Caitlin Burrows -- Goldman Sachs -- Analyst

Craig Schmidt -- Bank of America Securities-Merrill Lynch -- Analyst

Omotayo Okusanya -- Jefferies, LLC -- Analyst

Samir Khanal -- Evercore -- Analyst

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