Jim:    Don, how are you?

Don:    Jim, good to be here tonight. Thanks for this opportunity.

Jim:    Yeah, I am sorry that we missed each other in person.

Don:    We will do it again.

Jim:    Look, your stock was down today and there was a lot of profit taking that happened and I think that that was what it was. But I need you to do something to explain to our viewers, there were two kinds of real estate investment trusts. There were the kinds that paid cash and the kind that paid stock. If I want a real estate investment trust, do I really want to be paid in stock?

Don:    Well, look, what I think that what you are referring to is some relaxation of the rules of the real estate investment trusts that allow rates to pay a big part of their dividends in stocks rather than in cash. And I think that in a number of cases, a lot of cases, that can make an awful lot of sense to the extent liquidity is a big issue. But the other side of that is I think, kind of part of the whole re-contract with investors, is the notion that dividends are paid in cash. And it is something that we take real seriously at Federal. Frankly, we have paid a cash dividend that has increased every year for the last 41 years. And I think that if my math is right, that takes us back somewhere since 1967 or so. And we certainly intend to pay that dividend in cash and with a little luck continue to increase it every year. It is an important part of the re-contract with investors.

Jim:    Since we favor dividends on this show, if you reinvest that dividend then you just have a fantastic return. Which is one of the reasons that we advocate stocks on this show so aggressively. Don, another thing that has happened is that we see a lot of equity offerings by real estate investment trusts. They tend to be after the stock has dropped dramatically, and they really are not for the benefit of the current shareholders but to the benefit of the bondholders. I looked at your balance sheet, I looked at how you have been able to repay debt, and roll over debt. You do not seem to need to do one of these, what I call vicious secondaries, that damage the existing shareholders.

Don:    You know, look, there is not question that the capital markets both debt and equity are turbulent. And they have been turbulent for the last 6 months and longer certainly. And that is not over now, that will continue for some period of time. I think what is most important, is that you realize in real estate certainly we are in a cyclic business. And ups and downs over a period of time really aren’t a surprise. Now, no one saw it coming as bad as it is now, I will grant you that. But we have issued equity five or six times, I think, over the past 7 years and so by doing that, and continuing to do that in small amounts over that period of time, we are well positioned. So I think that our debt to total equity is lower than most of our competitors, we are in the 40% range. And so we have room, we have plenty of room. That does not mean that an equity offering can’t make sense, if it can be done opportunistically. But doing, the idea with equity is to do it when you don’t really need it do it.

Jim:    Right, that is what I am saying. I am talking about equity offerings under duress, not opportunistic. Because we like Nordic American Tanker, he does a lot of opportunistic equity offerings and we still embrace what they are doing. Alright, so Wachovia comes out today, and you know I read thru, and they are recommending your stock. But the first thing that they say is new leasing shows softening markets, I looked at your current vacancy rates, your leasing, it seems pretty tight to me. Now give us a sense, is retail in trouble?

Don:    Is retail in trouble? No, retail is not in trouble when you say it absolutely like that. When you look on a relative basis, there is no question that there has been softening over the past year and you know the year over year comparison will continue to be soft for a some period of time a little bit. But if you look at the stock prices, they are also off significantly off of the highs.

Jim:    Right, the stocks acted as if all of your anchor tenants, you have just a huge roll of tenants, but I think that the stocks act as if many of your tenants are about to bankrupt. Since the year began, how many tenants have said to you, I have got to close doors?

Don:    Oh no, it is absolutely happening out there. It is all about mitigating your risk with each tenant though. Certainly when Linens & Things went bankrupt, when Circuit City went bankrupt, recently with Filings Basement when they went bankrupt. That certainly hurts us and it certainly hurts our competitors. Our key is that there is no one tenant that comprises more than 2.5% of our revenue base. So that diversification along with most importantly the current locations that we are at that are certainly more desirable, it gives us a competitive advantage. It is important you know to mitigate the risks that are really out there today.

Jim:    One of the things that we have been saying on Mad Money is that we were in a depression that started with Lehman Brothers, we ended the depression in March when the banks started turning up. Now we are in a recession. Do you think that we are seeing the best, is there a turn?

Don:    I think that what we are seeing is a flattening out. And we will bump along this level for a little bit. I do not think that we are going to see anything dramatic in terms of improvements. But I do think that in many respects the worst is over.