Q3 2019 Earnings Call
Well, ladies and gentlemen, thank you for standing by and welcome to the third quarter 2019, <unk> earnings Conference call. At this time, all purchased friends and I <unk> I finished speaker presentation there'll be a question and answer session ask the questions. During this session you want me depressed starved wine on your telephone if you're cry.
Any further systems he's fresh start cigarettes out now like to have a conference over to your speaker today frame Mccarthy Senior Vice President marketing and communications. Please l. had sir.
Thank you and good morning, everyone welcome to take real two groups third quarter earnings call.
Some of today's comments contained forward looking statements that are based on assumptions of future events that are subject to inherent risks uncertainties.
Actual results may differ materially from these statements for more information about the factors that can adversely affect companies results. Please T.R.S.C.C. filings, including our most recent 10 k.
Today's remarks also include I'm, certainly not get financial measures. Please refer to yesterday's earnings press release available on our website for reconciliation of these noncat performance measures to work at financial results.
Call with me today from take real cheaper or chairman and Chief Executive Officer, John <unk>.
Resident Chief operating officer, Tom the gallon.
Executive Vice President and Chief Financial Officer cheap fear.
Executive Vice President portfolio management, Wade pocket box senior Vice President and Chief Accounting Officer, Dave fuel and senior Vice President capital markets and Investor Relations Jason Cool.
<unk> to job.
<unk> good morning, everybody.
Oh before reviewing our results I wanted to take a minute to discuss project focus.
In February we announced a bold plan to sell up to half a billion dollars noncore assets.
And d. leverage the balance sheet.
Here, we are just eight months later and we've sold 20 assets for $502 million and grows proceeds.
Incredibly grateful and proud of the team for executing so flawlessly.
Some interesting facts about project focus.
Thing was exactly as expected, resulting in a blended cap rate.
<unk> noncore assets approximately 8%.
We train is acted with 16 different buyers.
The spectrum of Investor profiles.
Yeah Bridge weighted closing date was late June versus our original expectation of late August .
After we announced or plan, we were often asked why now.
I don't think we could've picked a better time.
Not only did we deliver on the total gross proceeds.
Resulting impacts are in line with that that we expected.
The lower growth noncore assets, we sold had an A.B.R. of $14 in 66 cents.
This compares to our pro forma portfolio hbr of $17 at 70 cents.
We've got a more focused portfolio with approximately 76% of k. or G.S.A.B.R. now located in the southern and Western United States.
And these are markets.
Dan to benefit from migration demographic trends that are undeniably accelerating.
As of today, we've got the zero drawn on our 600 million dollar line of credit.
Which allows us to satisfy all debt maturities through 2025.
Taking into account the three sales after the end of the corridor.
Debt to keep it dot is 5.9 times.
We started the year with net debt to keep it 6.7 times.
As a reminder, we have no outstanding prefer.
Bottom line, we've improved we haven't improved in more focused portfolio.
The balance sheet, it's affording a tremendous optionality is we had into 2020.
With project focus behind this it naturally begs the question what's next.
Literally we've been referring to this as beyond focus.
Not elaborate plan.
It's a commitment to three anchoring principles.
Produce consistent earnings growth through superior operations and prudent capital allocation.
Scale and our target markets.
And maintain an investment grade low leverage balance sheet.
<unk> gross is all about focusing on operations filling vacancy.
Pushing gross rent spreads.
Betting contractual bumps implementing fix cam.
Covering organic redevelopment opportunities and doing all this with high quality tenants.
As for gaining scale and our target markets. Our current cost of capital requires us to be resourceful and creative.
Match funding opportunistic acquisitions with select dispositions is likely.
Provided that it's not at cross purposes, with growing our earnings and maintaining leverage goals.
Most importantly will continue to chop away at our discount any v.
Switching gears acquisitions during the quarter, we purchased 140000 square foot community center in Indianapolis for $29 million.
We were able to purchase this whole foods anchored and target Chateau anchored center in an off market transactions.
We have great expectations for this asset with please upgrade the Tennessee and drive rents to levels to reflect the high quality real estate.
The Springs total acquisitions for 2019.
58, and a half million dollars approximately 70 per cent blended cap rate.
Now, let's take a look at our earnings and operational highlights.
Regenerated adjusted <unk> $33 million or 39 cents per share.
For the nine months ended September 30th.
We we generated adjusted <unk>, Oh, Oh $1.26 per share.
We grew same property N.Y. by 2.3% compared to last year, driven primarily by increases and base rent and expense savings.
During the third quarter, we executed 70, new and renewal leases for over 560000 square feet.
It's important to know the 15 of the renewals, we're anchor tenants, representing approximately 340000 square feet and all but one of these leases at positive red spreads.
Over the trailing 12 months, we've executed 320, 20, 322, new and renewal leases for over 2.2 million square feet.
We continue to make very good progress with our big botched search program, signing another lease and the third quarter.
This brings the total a big box leases to nine year to date and 21 since the beginning of 2018.
21 boxes, we've signed since 2018 include over 556000 square feet.
15 comparable leases had a cash spread of approximately 17%.
As of September 30, we've opened 10 of the 21, new leases with the remainder anticipated the opening queue for 2019 and early 2020.
An item to know.
Estimated total capital cost associated with the 21 leases is approximately $44 million.
Within estimated return on cost over 15%.
Some investors have asked us about the depth of our redevelopment pipeline.
All the big box search has been aren't de facto redevelopment pipe wine with better risk adjusted returns.
As a result of our significant leasing efforts are retail anchored least rate standard 97%.
A 230 basis point year over year increase.
<unk> small shop least rate is 92% hundred and 10 basis point Europe , a year increase and still an all time high for K.R.G.
Our total portfolio economic occupancy is currently at 92.1%, which is a 330 basis, which spread.
To our lease percentage of 95.4%.
The spread equates to over 8 million of N.Y. that will come on line over the next 18 months with over 5 million attributable to the success of the Big Bucks search.
Turning the Gidus, we're raising our 2000, a 19 same property N.Y. gross assumption by 25 basis points.
At the midpoint to a range of two 2.5%.
We're also tightening the 2019, oh guidance to $1.63 to $1.67 cents cents per share.
Which maintains our midpoint of $1.65 per share.
The positive impacts of our proves same store assumptions are roughly offset by us having achieved the higher end of the disposition range.
We sat at the beginning of the year, we're going to embark on a strategy to not only focus and improved portfolio.
Also deliver the company.
<unk> exactly what we laid out.
And are extremely pleased with the results.
I'm fortunate to partner with common keys and to be surrounded by a team with intense passion and drive.
Our company's now well position for the future growth with a fortress like balance sheet.
And I'm more focused strategy concentrating on the southern United States.
Would that operator, we're ready for questions. Thank you.
Yeah, and again, ladies and gentlemen, if he didn't have a question at this time.
I didn't wind on your telephone.
The question press the pound key.
Standby wildly compiled the county roster.
I first question comes from.
All right if city airline open.
Thank you so much drinking morning, guys.
Fits with the looking at your guidance.
So it didn't make plain F. Q4 39.
And you're like $1.56 should we think about that.
Sort of close disposition faith or run rate from which to compare things like.
Dividend payout and free cash flow to invest or are there other factors taken care that it would be really fat low weight or not.
I I would say to run right basis Christie, obviously with loss of revenue inside the fourth quarter. So we're still 39.
A third quarter, but that's really being made up my term.
Received some other that's not good about right you know <unk> fees for about three so.
So I I pad.
A little bit higher alright.
Yeah, and <unk> Christy I would just add if you go back to what we laid out last quarter in terms of the assumed dilution.
From the total impact of the of the asset sales really the only difference is the pool full word out for the acceleration of the two months sooner. So as you think about 2020 were obviously not talking about 2020 guidance or anything like that.
What we had laid out previously was pretty accurate relative to the dilution from the sales.
Okay. So just as you think about no you're not getting 2020 got him cap. It just does he think about sort of that you know that ongoing right. Great. How are you you know considering.
Already and I started as you look ahead to <unk>, you know period of time, where you're not going to be disposing at more much funding.
Pretty clever it's more looking at it from across perspective, you know how are you thinking about that free cash flow component from which to me and you know what are you dominate retenanting our marketing.
Sure I mean, I think it's very similar to what we talked about last quarter, which was that you know we we took that into obviously, we took that into consideration when we embarked on the planet. We knew we knew that we had been quite frankly per very conservative on the payout ratio historically and had room to to actually execute on this.
Plan. So as you look at it in 19 and 20 those are really the years, where you have significant spend on the big box search, which honestly I mean, if you look at what we spent.
You know year to date, and 19, and what's remaining to spend as I pointed out the $44 million that we're spending on those 21 leases.
I mean, that's two times are normal rate that we would be spending per year. So.
It's the same as it was that we laid out which was that we knew that 19 and 20, we would be bumping up against that but we are comfortable that the cash flow growth that it's coming from the box sleazy and the shop leasing and the redevelopment there will be coming on line is sufficient to grow cash flow.
You know in 20 122 to a comfortable level at the existing dividend and and as as I pointed out you know we had raised the <unk> dividend significantly over the previous five years and you know we think that as it at this point the dividend is in a place that is where comfortable with but wouldn't necessarily be looking to raise it.
So long long answer, but it's the same as last quarter were very comfortable and when we look at our projections and we look at the leasing that we've done and the cash flow is coming online.
Anyone in inspected and 22, we feel pretty good about that.
Great. Thank you. Thank you.
Thank you.
Tons from Paul Thomas of keeping capital markets Carolina open.
Hi, Thanks come morning first question just regarding project focus here in the reduction in leverage and following up on that a little bit I believe you originally had target of mid to high five times on.
As for leverage and the dispositions came in at the high end of the range. So I'm just curious what the the variance you know relative to your forecast was that you know prevented leverage from coming down a little closer to the low into the range and then are there any updated thoughts about leverage around that longer term target for for the company.
Yeah.
Target is yet you know mid to high five at least half in the very beginning should we achieve the higher the range that that that that that.
Five dinosaur exactly what we thought we were going to be yeah, and I I think when we talk about mid to high five.
That's over a period of time, that's not that we never said that we would be at five and a half for example, right now, but when you look at where we are and you make some assumptions over the next couple of years. It would we certainly could <unk>, we could move down to the mid five times.
As Heath and he said earlier I mean, we want to be in this range because that creates more optionality and remember. This is also into backdrop of a debt maturities schedule that is extremely favorable and a 600 million dollar on drawn line of credit. So it's really last about whether it's five and a half or 5.7 or five.
Late night and more about the Optionality of a very strong balance sheet and a very strong cash position, which is really why we're very comfortable when we look out over the next couple of years that you know we're in a good position to to be able to look to grow the business in the future and that's what this was all about.
Strengthening the company positioning us to grow.
Okay and then in terms of you know additional investment <unk>. Following nor applies can just talk about you know what else you, you're you're sort of seeing and and how we should think about acquisition heading into 2020.
Sure I mean, I say, let's talk about it in a macro level as as I said it might prepared remarks.
You know first of all project focus was it was just at a very focused operation.
And it was very focused on a you know small set a goal should we achieved each one of them.
What we what we're now thinking about is going forward you know how can we participate in acquiring assets, adding value to the existing assets growing cash flow growing earnings you know with our current cost to Capitol. So that's what I was referring to in the <unk>.
Potential and likelihood of us continuing to sell a handful of assets match fun those with acquisitions with better growth profiles. So as we look at that we have to be.
<unk>, how can we acquire assets that we want with our costs to Capitol. So I think it's a limited exercise, but there will be a handful more disposition there'll be a handful more acquisitions and and very similar to what we just acquired a in the whole whole whole foods center that you mentioned it.
Comes up.
Competitive nature, if that's what you're referring to it's extremely competitive to buy quality assets much more so than I think maybe the market even realizes and obviously if we can sell half a billion an eight months at the exact numbers that we anticipated we would it shows you the depth of the market. So.
It's a competitive environment, but we think we can find opportunities in our target markets that have good upside.
Okay. That's helpful and just just the last quick one for he's on on the model straight line rent flip this quarter. So detracted from from gap rental income is there anything one time in the quarter or should we expect that to normalize going forward. Yeah. There was a million dollar a straight line receivable right off.
One of our back okay.
Okay got it. Thank you it'll normalize next door.
<unk>, Yeah, and then next time from Daniel Santana I stand O'neil.
<unk>.
Hey, good morning, Thanks for taking my question. My first one is on bad debt. It's come in below budget. This year would you say that tenants are in an overall better position or are you expecting to see a bit of a retailer purge after the holiday season.
Well I mean, I think are bad debt is is right in line you know with what we projected it to be.
When we look at the fourth quarter, you know, we're comfortable with our remaining bad debt reserve.
As I said, we're not getting into 2020, right now, but I I think in a macro when you when you look at the total retailer landscape.
And you look at the the the comings and goings if you will it it's a it's a pretty positive environment. I mean, you know when you look at you you look at the statistics that it's kind of Amazes me that people just seemed a gloss over the.
Statistics that we're generating 97% least you know in our big boxes Ah. That's that's a pretty phenomenal number I mean, what that means is that we have.
Eight vacant boxes out of 280.
That's pretty healthy business. So I think that you're always we're back to the normal when you have tenets that do well how does that don't do well our job as landlords is to own great real estate. So that we have lots of optionality.
And I think you know, that's probably where we are calm you want to add anything to the tenant landscape.
Yeah, I think one of the best parts that were saying, it's just diversification a general on the side.
Yeah, you'd look at the at 21 boxes and that we've done.
17 or or on on on single accounts and when we had only to to add two spaces. Each so that just shows is that we're not focused on one or two tenets.
Or focus on a wide variety of curved so.
So we spent a lot of time, we've been on on a lot of portfolio trips. This year, just making sure we nurture those relationships I think the same old true on the small shop components as we are able to work with the bed Bath. So so for us towards persona, a lot and nice names as well as.
Overall <unk> of tenets of we'd go after each and every year. So I think the the same as we got Optionality and we're going to continue to use that leverage as we move forward with a limited amount of them the Torah.
God. It that's helpful. Just keeping with that sort of tenet theme. There was an article this morning about Kroger reporting strong results just after following their sort of two year and restructuring plan would you say that this is sort of one off the Kroger or are you think are you feeling more positively in grocery store house and grocery anchored assets.
I mean as far as our portfolio goes our grocers are very healthy.
You know again, it's it's no different than any other segment or sub segment of the retail landscape.
Have winners or losers, but clearly the winters into space are investing into physical platform.
Yes, Kroger has a lot of things going on as it relates to buy online and pick up in store and things of that nature, but the fundamental similarity amongst the successful retailers is a strong physical footprint that supports the online business and kroger's.
And a great job.
In that particular instance, doing that but.
Quite frankly by the same token you can look at our approach or like a publics, who you know is a little more traditional but execute an extreme level. So I think you know from my personal perspective, the grocery business is strong doesn't mean that there won't be some players that struggle.
But again with our portfolio district of our real estate, especially the strength of it today as it relates to you know the beginning of the year, we feel extremely.
Comfortable would that say that sector.
Oh, Great think that's really helpful.
Yeah.
Flashing times from Florida.
Compass point airline is open.
Right. Thanks for taking my question.
40.
That morning, I was wondering if you guys could maybe comments on your your <unk> and what kind of impact you expect that to have going for.
Earnings as well as on your you are markets.
Sure.
I I would just say again the fix Cam initiative is something that we've been working on for the past you know four years I'll say in terms of intensely.
And yeah, I think it's a positive both for the landlord and the retailers because it simplifies kind of an arcane older complex.
A a process of you know dealing with Pam reconciliations at the end of a year, having that stretch out into the following year, having to go back and forth on you know what expenses were actually ask them. You know, we're we're disputable at non disputable. So the fixed cam eliminates all of that.
That enables both costs and the retailer to budget the cost of occupancy for the year and really simplifies it and obviously, we're we're also able to grow it on an annual basis, you want to add to it yeah I think the key for US is the <unk> points.
The John talked about but at the same time, we can now try to accelerate this by doing more of a portfolio wide six scam initiative Osama far larger boxes, and I think we're starting to seem more and more companies.
Just Burlington then.
Discussions about what's the best way to execute on that and then they'll always be discussions on what the annual bumps our entire inside the six Cam initiative, but we are very much entrenched and dedicated to this process because we know the great benefits to the company yeah. So floors for some facts or so 37% of or at least.
<unk>.
76% of releases or do whatever leases are are attorneys depicts cap so.
<unk>.
<unk>, we should have over 55% of our reasons into here so.
<unk> well, you'll see you'll see our recovery ratio should also increasing.
So it's a it's a great program it cause a lot less noise at the at the here and in terms of the Cat reconciliation.
And and I and you know relief for US I mean, our our focus is our gross rents.
And you know I think I think people, sometimes lose sight of the they get all they get very fixated on this A.B.R., but in the end of the day. It's it's really the A.G.R. that is the most important thing what is your gross rent what are you recovering.
And what is the occupancy costs for the tennis I mean, that's that's what this businesses. So I think you'll see us pivot more and more to conversing with you guys about our gross friends because I think they compare very favorably.
And and if we look across to the mall sector certainly some of the the better operators like Simon and you know before got bought G.D.P. I mean actually your the the you know the recoveries were a profit center.
It'd be possible, where you guys get to you more than 100% expense recoveries. If if you were to obviously you know institute this on a greater percentage of your portfolio.
Well I I, obviously, I mean, it depends on the overall occupancy is a portfolio and the nature of each individual deal, but <unk>, but look I I don't think we're so focused on it as as as as a profit center I mean, it <unk>. That's that's maybe a sub result of the efficiency.
We're more focused on the efficiency and ultimately that efficiency can lead to a more profitable enterprise. Both in terms of cost associated with you know overseeing this this complex process and simplifying it there's a cost savings there.
You know from in a lot of different ways and then over time for both the retailer and the landlord you know I think it's just a better way to run the business and hopefully that does turn into somewhat of a profit center, but that's not the drive behind it.
Right <unk>, one more fall off if I, if I may just on the the whole Mark the whole foods acquisition you know.
If you're you're insinuating, it's done it around to seven cap.
Why that seems that seems high for for that kind of anchor a grocery anchor center, <unk> and where is the upside.
Assume it's pretty flat income or where do you think that you can really drive rent is going forward.
Well you know as it relates to the price I mean, you know, it's an off market transactions and we feel like it was it was it was good execution for everybody. So we're happy with that and you know we're pleased with the number of let's put it that way as it relates to going forward I mean, we're really well you know we're really more focused on I.R.
Ours anyway, so the the going in cap rate can can be just <unk> deceiving on any particular detail here. It's you know favorable to the I.R.R. and the I.R.R. will will obviously see that so I think the upside is in the fact that this is a property that.
Is extremely well located.
We believe we can do with it what we've done with other properties in the market, which sit on you know what we would call you know very very strong real estate arguably irreplaceable real estate.
And ultimately over time, we will invest capital we will get strong returns, we will ultimately drive the rents vis-a-vis that.
And the I.R.R.'s you know, we think will be strong. So you know what <unk> looking at one deal. It's you can get kind of caught up in that it's a great deal for us.
And there's definitely upside.
Yeah, the only thing I would add as as part of this decision beyond simply the retailers, we really focused on the real estate and you know we have this tremendous 12 acre parcel and parcel can create value.
The years, so that was a big part of of being in the best sub market in the city and target just enhance the store was significant renovation.
Doing well so that all leads us to believe that we can be successful there.
Right that's it for me.
Thank you.
Yeah, and they're nice machine comes from Frank <unk> M.B.L.A.L.A. Okay.
Oh, thank you.
I just wanted I think you guys have eight of Phoenix I mean, the eight dressbarns out of the 22 in Phoenix I Wonder if you could tell me what the the A.B.R. on those seats stores are and if you've done any or expect you wouldn't be releasing prior to your rent.
Oh yeah.
The total racquetball trust farther than a basis for.
And what they're supposed to day locations.
<unk>.
Why don't we soul.
Negotiations three or prospecting.
Dressbarn.
Okay.
Oh, you think Oh.
I was just kind of say Craig we got very early action on this we had a trip set up with that whole weekend.
We expect three of those leases to be signed here very shortly.
And then and what type of tenants I'm not looking for name, but just stop you know the type of business or those replacement fan.
You know, it's it's somewhat of a tricky size component.
We are getting into that eight to 10000, Oh, we have we have national retailers off off costs.
In terms of the actually used itself.
So one of the groups will be taken three of those spaces, but they are good strong national tenants that we're working on.
Great. Thank you.
Thanks.
Yeah.
Question from.
<unk>.
Great. Thank you I'm, just thinking about the trajectory of seems turned away from the drivers be threaten <unk> <unk> spread in the least documentary widening furthering q. screen town, you mentioned I think eight.
Ah coming on line over the next 18 months, how much of a terrible in despair in the commencement executed Lisa.
<unk> forward. The next one to two quarters per Se you know kind of no longer term, what do you anticipate that spread remaining wide for a little while mm narrowing sort of internet here or is that <unk>.
Oh, <unk>, 40% of that kind of come on line this year.
For several come on the first half of 2020. So you should see that spread you know decline fairly rapidly over the course of the next three quarters.
Okay, and then take the follow up on that there were covering ratio discussion that looks like you know in part that that seems sarkar straight with help I got decline in real estate taxes here every year in Q3 white drove that <unk>.
A one time easy comp there or is there a longer <unk> I'm, a recovering rate there and he talked about.
<unk> question about that moved to fix can but I'm just wondering about that the taxes.
Recovery ratio and two versus two or three was really just expense timing.
Some of the expensive budgeted for for <unk>.
Sort of hi.
Versus 92 and thinking.
Two.
So.
Yeah, yeah, but.
Okay. Okay. Yeah, I just didn't know if there was something in the in attacked.
In time, you know what county, or something like that Okay, and then just.
Yeah, just last week looking back on the team did he mean geographically within the portfolio and 2019, most notably you know you.
Virginia in New Hampshire, Wisconsin are there any other market tags. It out as you further call. The portfolio you know I care as you're kind of match funding in the future and what market carry targeting you talked about dating scaling target market to what what markets are you looking picking scaling.
Yeah, I mean, I think in terms of future exiting.
It's a little pretty mature probably right now to say, but I do think that there will be continued.
You know narrowing of that so there may be a couple more markets that we get out of Christie and I I just want to be careful without right this minute but.
As far as where we want to be more importantly, I think.
It's it's continuing that theme of the markets that we think will benefit.
From what we're seeing you know as I said kind of undeniable migration into these <unk>, what we call the warmer cheaper markets.
You know in the South Eastern United States in Texas in Las Vegas, you've seen what we're seeing good demographic.
You know movement in Salt Lake So.
So really at southern and you know kind of southwestern but for Vegas.
Markets, we continue to see you know, there's a lot of opportunity there.
And then in terms of narrowing disco you know will you know even though we just bought an asset in Indy and we continue to narrow the mid western scope a little bit.
You know, we we we have a handful of assets in a couple other markets. So yes. It is likely that a couple of the markets will exit from and really try to bolster our position in those 15 to 20 markets. In what were you know defining as though you know kind of southern and Western U.S.
Okay. Thanks for the tandem thank you.
Thank you.
Tons from calling me.
Yeah.
Thanks, Good morning, everyone I just wanted to go back to some of the a discussion is actually a few calls ago. John when you can you maybe just provide it's an update on your thoughts around joint venture opportunities I know you left the door open as it relates to it being a potential Avenue to complete project focus, but just what are your thoughts if you look forward as far as growth opportunities.
No I think I think we're still we're still.
Interested in the potential of expanding.
Are you know our joint venture platform.
As I mentioned in the prepared remarks, you know, we're we're we're very focused on capital allocation.
And you know prudence.
Particularly prudent capital allocation so.
<unk> of our current cost of capital that means that we have to be very thoughtful around what we would do going forward any type of acquisition.
And J.V. is a potential opportunity there I think there is a lot of institutional capital it's cued up.
I'm looking for opportunities and you know look obviously, you've seen a ton of ton of money go into other sectors. Some of them seem to be a little along in the to to me, but that's just be a and I think when you look at the retail sector.
Particularly you know the open air space.
There's tremendous opportunities here and I think people are beginning to really take note of that which is kind of why I was talking about.
And when you just look at the metrics when you just look at our our our occupancy is our spreads R.N.Y. grow relative to value. It's to me, it's like alarm bells going off this is a good place to be so yeah. We will continue to have discussions and I wouldn't be surprised there's nothing eminently today, but.
We're interested in that potential.
Okay. That's a helpful update on that front and then just one other question me just to clarify and follow up on pause and Chris. These questions on acquisitions, just anything else under contract at the moment.
Acquisition Wise now there's nothing under the contract that I know of right. This second but we're certainly analyzing.
Things and as I mentioned, you know there there'll be a handful more rebalancing opportunities here, where we can maybe a handful more dispose isn't a handful of acquisitions, but you were talking moderate size.
But after that you know we will be very focused on these core markets that we want to be and you know the deal that we just acquired off market is a great example of our skill set.
To to acquire what we believe to be a gym at at at at an excellent opportunity for us.
But we can do that in Indy we can do that in Raleigh, we can do that in Nashville, we can do that in Dallas, We can do that Houston, we can do that in Salt Lake I can go on and on so there's places for us to focus once we get through this.
Alright, Thank you John .
Thank you.
Yeah, and again, ladies and gentlemen.
Clash at this time.
Sorry, I didn't line on your touch tone telephone.
Question comes from.
That's.
<unk>.
Hey, good morning, everybody just a couple of quick follow ups, if I could just on the Dressbarn did you guys agreed to some sort of x. it with them as their expected rent in fourth quarter and if you can give us how much that'd be great.
Yeah, Chris We just you know I think like a lot of of the peers. You know we agreed to keep them into the to the end of the year. So we expect that they'll be in through the end of the year and then you know our our current assumptions or are they will be gone after that and as Tom mentioned in when he answered. The question you know.
We only have I think three that are kind of unspoken for right now when we're negotiating with tennis [noise].
And as you mentioned you know the spaces are a little different size some of them or 6500. Some of her 8500. So we've worked with that but I mean, it's it it really is a testament to the demand in the depths of this space no different than the toys, you know nobody really talks about toys anymore, but I think we only have one.
Toys box that we don't have a deal in right now it's not like it.
So I mean, the the tremendous you know underlying strength in our sector is not be in my personal opinion recognized in terms of tendency but.
Spun off on you, they're a little bit [laughter], that's okay. John and then just on the current portfolio is it sits do up a sense as to what the annual embedded growth rate is on on the compression better growth rate is on the phone that portfolio.
On on which portfolio the one that exists today.
Or same store will be for next year, yeah yeah.
It's around 160 around 1.6% you know that it.
1.6, yeah, Okay, and that's that's the whole portfolio.
Okay, and then just as it relates to.
The project focus is there any additional G.N.A. costs, we should be looking for in the fourth quarter.
G.N.A. costs related to probably helped.
Yeah.
No give me like referring to like you know like commissions and things like that or no more things like when you exit it markets and had you know if you've had any oh, Oh <unk> deal with no. There's nothing specific to that at this point.
Okay.
Yeah that covers it for me thank you.
Alright, Thank you <unk>.
<unk> Yeah <unk>.
Lazing element Miss does he go question answer session.
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Right.
Okay, well I just wanted to thank everybody and look forward to seeing many of you next week. It neary. Thank you.
Oh.
Please space Conference Oh, Thank you for participating we now just snack.