Q4 2019 Earnings Call
Good day, and welcome to kimco's fourth quarter 2019 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal, specialist by pressing the star key followed by zero after the presentation will be an opportunity to ask questions to ask a question. You may press * then 1 on your touchtone phone with earlier question, please press * then two.
Please note that the van is being recorded and not like to turn the conference over to mister David. Did you Nikki senior vice president, please? Go ahead.
Morning, and thank you for joining Kim Coast fourth quarter 2019 earnings call joining me on the call. Today are Connor Flynn Kim co-ceo Ross Cooper President Chief investment officer, Dave Jameson our chief operating officer as well as other members of our executive team that present and available to answer questions during the course of this fall as a reminder statements made during the course of this call may be deemed forward-looking. It's important to note that the company's actual results could differ materially from those projected in such forward-looking statements due to a variety of risks with certainty that other factors, please refer the company's SEC filings that address such factors during this presentation management may make certain reference to non-GAAP financial measures that may help investors better understand kimco's operating results reconciliations of these non-GAAP Financial measures can be found in the investor relations website.
With that on the turn the call over to come.
Steve good morning, everyone as you begin the final year of our twenty-twenty vision strategy our 2019 results are particularly satisfying these results reflect both our commitment to our faith in our determination to stay the course. We finished 2019 with strong operating metrics an improved balance sheet a higher quality portfolio and a development and Redevelopment pipeline that continues to age is long-term growth. I will begin today's remarks with an overview of our operating metrics our view of the Retail Landscape and an update on our Signature Series development and Redevelopment projects both of you into how we think about ESG and our efforts Ross will follow with an update on transaction activity and observations on General market conditions and glan will discuss our activity in the capital markets balance sheet metrics and our 2023 positioning of our core portfolio is in top twenty markets where we see a favorable favorable supply and demand Dynamic continues to pay dividends dead.
the team produced wrong metrics across the
The dollar forty four dollars a share and a dollar forty cents per share is adjusted for the year a great result. We achieved 3% same site noi growth for the year back in the high end of our guidance range for the year our occupancy remains at an all-time high finishing the year at 96.4% Anchor anchor occupancy hit a new high at 98.9% while small shop occupancy finish slightly down at 89.3% due to recent closings of Dress Barn Avenue and Charming Charlie activity on our small shop vacancy remains strong and we view this as a source of ffo growth for 2020 the spread of physical the economic occupancy said the 240 basis points, which is primarily the result of anchor boxes. Yes, Typically once the anchor becomes activated the small shops, usually follow driving higher rents and strong annual increase our spreads for the quarter. We're healthy with new leasing spreads at 12 a.m.
And renewals and options.
4% the increase in spreads for new leases represents the 24th consecutive quarter in which spreads increased over 10% are positive spreads for the year of 20.8% for New Jersey and 5.4% for rules and options highlights. The mark-to-market opportunities imbedded in our portfolio our intensive Asset Management platform and investment in technology has a name to be more proactive in monitoring quickly addressing existing and potential vacancies reducing downtime and driving faster rent commencement date.
Well our portfolio continues to perform in this era retail Darwinism, we recognize the challenges confronting our sector and some of our Legacy retailers. We see our customer continue to gravitate towards convenience service experience and value not all retailers will successfully make the pivot necessary to service the demands of today's consumer bankruptcy is store optimization plans downsizing store saturation automated distribution facilities and e-commerce penetration are all risks. We must acknowledge in space head on our twenty-twenty vision strategic plan was designed life is challenges in mind are tightly clustered portfolio and the top markets where we have efficiencies of scale and significant barriers to entry are mixed-used platform are tremendous access to Capital and our world-class team put us in a great position to embrace the inevitable change and create significant long-term shareholder value.
our Signature Series pipeline continues to produce large quality Flagship assets
Stronger noi in higher-growth We believe We have elevated the Kymco Brandon with customers and in the communities, we serve our focus on long-term value-creation together with our commitment to sustainability has helped establish trust with local governments and Community groups in which in turn helps us with our Master planning and entitlement.
Now have entitlements for over four thousand five hundred apartment units over 800 Hotel Keys over 1.2 million square feet of office space and we are only just getting started. We belong are invested in developing a mixed-use team Second To None has created a platform premium that will allow us to develop an optimal plan for every asset in our portfolio and to acquire assets with us. Free development potential retail always be the driving force of Kymco, but recognizing the untapped potential of our asset-based the critical and defining aspect of our strategy going forward.
At the end of 2019 we place Mill Station into service and out of the gate. Our anchors were exceeding pro-forma. Salem. Dania point is making enormous strides where we recently cut the ribbon for the groundbreaking of Spirit Airlines new headquarters spirit will be investing over 250 million dollars and bringing over a thousand employees to the site where they will enjoy the campus feel of our amenities off offerings.
Boulevard is
Also moving closer to activation as our first tenants plan to open later this year. We will also be activating the second residential Tower at our Pentagon City National Landing asset later in 2020. Good morning. The operator was speaking privately. May I have your first and last name?
Good morning.
You are now the Pentagon will continue to create value for years to come in closing. Our twenty-twenty vision strategy was primarily focused on our Palm quality and balance sheet strength as we continue to move forward in 2020 and Beyond the challenges. We Face are not limited to the changing nature of retail and real estate to be the best. We need to connect to listen to all of our stakeholders and the issues that concern them. We need to be vigilant and responsive to hitting impacting corporate governance practices or diversity and refreshments director of skills. That's shareholder engagement and sustainability while we have already made large strides and all of these areas we can do more a particular note our recent Nary towards as leader in the light bulb into the ESG leader and all of retail real estate is something we are proud of and don't take for granted and shines a light on all of our efforts and making Kymco such a special place of birth.
Thank you Connor and good morning.
Our 2019 transaction activity which we reported earlier this month reflects another excellent year of execution and the redeployment of capital into our future growth opportunities to read the full year. We sold thirty two properties for a gross value of 542 million with $375 million as pimco's rep perspective Cher factoring in the acquisition of the three grocery stores through a sale-leaseback transaction in January of 2019. Arnett shopping center dispositions were 341 million of notice a significant portion of the sales activity occurred in the fourth quarter, as we accelerated several asset sales that were originally slated for a 20 20 closing. We had a total of 12 properties on the market for sale in the second half of the year off and we close one hundred percent of them. Our transaction success reflects. Both are dedicated team and the quality of our upgraded portfolio.
As a result of the dispositions completed in 2019. We now own a portfolio of 409 shopping centers tightly concentrated in our top twenty markets with substantial growth potential identification opportunities that will continue to strengthen our asset-based for years to come now to our outlook for 2020. We intend to continue selling at a modest level pruning between two hundred and three hundred million of operating properties at Emco share. We anticipate cap rates to blend in the 7% to 7 1/2 percent range proceeds from the sales will help fund her signature series Redevelopment program and potential acquisition opportunities within our targeted markets as for the latter we intend to go back on offense in twenty-twenty and selectively add projects that fit our strategy. We plan to acquire between 100 million and 200 million of assets with cap rates in the 5% to 6% range. We have demonstrated our disciplined approach over the past month.
years with no new shops
Recenter Acquisitions in the summer of 2017 with our reshaped portfolio and improved cost of capital. We believe it is the appropriate time for us to selectively acquire high-quality property which offer future value creation potential when the opportunity presents itself while these are hard to find we have already identified one particularly exciting asset that we're currently evaluating and hope to Chef details with you in the second quarter as for Market activity generally cap rates continue to be aggressive for institutional-quality assets in our core markets. We saw transactions in California, Texas, Florida and Pennsylvania in the high fours and low fives in the fourth quarter and with interest rates remaining at their current low levels. There is no shortage of investor Capital both Equity interested in pursuing our product type. We look forward to building additional long-term value as we move through 2020, and now it's a glance of the financial results. Thanks for us and good morning.
finished 2019 with
Strong fourth-quarter operating results you maintained our occupancy level at an all-time high The Limited another quarter of double-digit you leasing spreads and generated positive same site and a wide range. In addition. We further fortified our balance sheet with the issuance of common Equity utilizing our ATM program.
As a reminder in connection with the Navy fo definition clarification no longer include gains and losses from land sales marketable Securities and preferred Equity investment in Navy death FM. We are presenting prior periods to confirm with this election. These transactional items were already excluded from SFO is adjusted and therefore I have no impact on that calculation also as previously communicated beginning this year. We will only be reporting on Navy f f o and then the event we have a unique transactional Gaynor charge you will be sure to point it out now for some additional color on our fourth quarter results. F f o was 151.9 million or 36 cents per diluted share for the fourth quarter 2019 is compared to 149.6 million or 36 cents per diluted share for the fourth quarter 2018 net transactional charges for the fourth quarter 2019 total 3.4 million or 100,000.
And for diluted share comprised.
The 7.2 million of preferred stock Redemption charges or set by 3.8 million of transactional income from Puerto. Rico insurance claims and forgiveness exact Navy that's odd for the fourth quarter 2018 included 2.2 million of net transactional income.
SFO is adjusted which excludes transactional income and expenses and non-operating impairments was thirty-seven cents per diluted share for the fourth quarter 2019 as compared to $0.35 per diluted share for the same period last year the primary drivers of the increase were higher and Ally of 3.1 million lower financing costs of 2.2 million and higher wage.
Full year 2019 Navy SFO was a dollar forty four per diluted share and includes 11.7 million with 3 cents per share of net transactional expense primary backup from 18 and 1/2 million of preferred stock Redemption. Our 2019 ffo is adjusted came in at 620.1 million or a dollar forty seven Pennsylvania, which is the upper end of our guidance range fully your 2018 ffo is adjusted with $630 million or a dollar forty-five cents diluted share the primary drivers of the month. We're lower financing costs 13.2 million lower income tax expense and higher management being come.
the full year increases
Further impacted by lower analyzing of about 9 million dollars attributable to the full-year impact of 2018 and 2019 dispositions and higher G&A expenses resulting from the lease accounting change and the effect of no longer capitalizing indirect leasing costs.
A high-quality property portfolio continues to produce positive results during the fourth quarter. We signed 263 leases totaling 1.4 million square feet at a weighted average APR $18.63 per square foot further improving our pro-rata portfolio ABR the $17.99 per square foot home or in the occupancy held steady at an all-time high of sixty basis points from the beginning of the year. This increase was driven by positive net absorption and the positive impact from dispositions wage for New leases options and renewal sign. We're positive 6% for the fourth quarter and positive 7.9% for the full year 2019.
Same site in a while.
Was positive 2.7% for the fourth quarter 2019 and includes ten basis points from Redevelopment full year 2019 same site and a y growth was positive 3% with no impact from Redevelopment activities. The primary drivers of the same site and a wide web for increases in minimum rents from continually sup contractual rent bumps and rash judgements box.
I was same site leased occupancy stands at 96.4% and the same site economic occupancy is 94% which bodes well for continued same site and I drove off turning to the balance sheet. We were active again in the capital markets be utilized our ATM program opportunistically issue 9.5 million shares of common stock at a weighted average net price of $21.03 per share amazing over two hundred million dollars. We use the proceeds to redeem $225 million of 5.5% preferred stock as a result of reduced our look through net debt-to-ebitda by three times to a level of 7.2 times and reduced our fixed charges by twelve point four million dollars annually.
We remain focused on.
Reducing looking at that to even a further over time. Who did he position is excellent with over $2 billion of immediate quiddity available our debt maturities for 2020 our faith manageable, but only ninety million Consolidated Mortgage Debt to and approximately 150 million do in order to inventors are weighted average debt. Maturity profile is 10.6 years continuing to be one of the longest in the industry. We successfully executed on many fronts and we have 2019 meeting or exceeding our targets want to thank God for their commitment dedication and effort to produce these results. We are enthusiastic about the future but know full. Well there is more to be done in this ever-changing Retail Landscape.
Moving on to 2020 guidance and the underlying assumptions our initial near e f f o guidance range for 2020 is a dollar forty six to a dollar fifty per diluted share with this per share guidance range assumes a growth rate range for same site and a wide of one and half percent to 2% including redevelopments and a hundred basis points incredible includes incremental and a wide breadth of twelve to fourteen million from development projects and lower Noy by Twenty 1 million associated with a full year impact of 2019 that dispositions other assumptions include reduced financing costs of 11 to 17 million primarily from the Redemption of $575 million of preferred stock to meet 2019 flat to lower G&A in 2020 is compared to 2019 and the impact of the increased Share account from the equity issuances 2019.
In addition is Russ mentioned.
Our disposition Target ranges from $200 billion to $300 billion in our acquisition Target is 100 million two hundred million lastly our Navy ffo per share guidance range as soon as Thursday transactional income or expense and no additional common Equity issue. And with that we'd be happy to take your questions before we start the Q&A. I just want to offer a reminder that you may ask a question with an appropriate follow-up. If you have additional questions, you're welcome to rejoin the Q4 happy to take the first question.
I'll begin the question-and-answer session to ask a question you press star one on your touchtone phone you're using a speakerphone. Please pick up your handset before pressing the keys withdraw your question, please press star to this time. We will pause momentarily to assemble our roster.
First question comes from Christine McElroy from City, please go ahead. Hi. Thanks. I appreciate it morning. Just wanted to follow up on your your initial sort of seeing some guidance 1 and 1/2 to 2% I think, you know, everyone's sort of trying to figure out in the context of the deceleration from last year. How is that sort of an initial conservative or is that realistic in the context of what you're expecting for Fallout, you know, there's there's what you know right now in terms of Fallout versus what you maybe you know anticipating as far as unknown buffer or bad debt reserve and I think we're just trying to get our arms around, you know, is that an initial, you know cognitive range or is it, you know disappointing based on what you are currently expecting and I know that there's not a lot of moving, you know Parts there's some properties that are expected to to join the
will this year that are potentially a creative to the
Growth rate, so just wanted to get some color around that. Thank you.
Hey Christy. Yeah, if we're very much focused on that and it's very early in the year. As you know, we're focused on outperforming, you know, we've got 11 months to do so and if appropriate we will hopefully I'll perform and raise it throughout the year, but you know, we do have hundred basis points reserve for for credit loss. We think it's an appropriate range to start the year. It's a very fluid environment as you know, we've made some assumptions and believe that it's a good place to start and continue to believe that the transformed portfolio will continue to shine.
And then just on the comment around the properties adding to the same circle like Boulevard. How much is that expected to be accretive?
So the the boulevard the boulevard would add in a range of around, you know, 3 to 5 million dollars as part of it. So on, you know, nine hundred million dollars off. It's helpful. But smartest redevelopments. Christy should be about somewhere between 20 to 40 basis points within the same site guidance range. Okay, and that one and half to two that's excluding Redevelopment. That's including that effect.
That's included.
Okay. Thank you.
Next question comes from Craig Smith Bank of America, please. Go ahead.
I wonder how much of the hundred bits of the reserve you had last year you needed to use in 2019.
Early in the year, we're focused on performing like we have been doing and we have 11 months to do so.
Okay. Well, thank you.
Our next question comes from tight in cam of SunTrust, please. Go ahead.
Thanks, good morning, your renewal spread the 4% We've seen it hover around at 4% Mark for three consecutive quarters. Is this a somewhat of a newer run rate that we should be going forward?
Yeah, it's again. It's all dependent on the population of Any Given quarter between the renewals and options of the last two quarters. There were several options that were flat on some of our large brownies cakes boxes that maintained a lower Blended spread and in addition to that as as you know, whether anchor occupancy being added as it is the the small shops are slightly closer to Market. So this quarter in particular almost ninety percent of our new deals were small shop deals around 5,000 or 5,000 square feet. Is that sometimes God it's a closer mark-to-market equation, which can have an impact on your spread. But as I mentioned in my earlier comments, when you look when you look forward, there's opportunity to continue to push the the name spreads on a go-forward basis.
Okay, and just going back to our prior question on rent restructuring or just rent Cuts just if you get if you can give us a sense of how often that it's actually happening I can go and get that following up to that. Is there a just a larger concern that even tenants that don't need a rent cut starts to look more increasingly at the at the landscape whether their attendant with you or or off a different owner and the sorry to ask for something similar because if you're a strong pennant, maybe the mindset starts to shift from what paying rent based on what I could pay to what I owe to pay.
There's so many variables that go into any discussion. Everything's in negotiation is a case-by-case analysis both of the tenant side and the landlord side. The value was Kymco is a high quality of our portfolio. Someone could could look for
For a lesser Quality Property, maybe pay slightly less rent. But if you want to have the full benefit of our ahead and see our location our real estate and the markets in which we operate them that starts to weigh into the the final decision that's made so it's always a case-by-case and and that's something that we we do on an ongoing basis. We really haven't done any restructuring if you look through the palm and look at our occupancy, you know, we'd like to get some spaces back. So we get the mark-to-market opportunity so that that's what's given us the ability to have, you know confidence in the transform portfolio. Cuz typically, if a tenant misses an option or wants to leave we have the opportunity to backfill at a much higher rent. That's what's driving our 20% plus new store leasing spreads when we get those spaces back. It's a nice position to be in because I bought it all comes down to the competitive set when you're shopping center is placed in the corridor and we feel like we've got below Market rent and great locations and the right balance of supply and demand
All right. Thank you.
Our next question is from Alexander Gould for Piper Sandler, please go ahead.
Christie's questioning, you know, if we look at you know, your last year's sorry, NY guidance, you know you said in response to to Craig that you only used about forty five basis points and yet he needed the top end of your analyzed by fifty this year. You're talking about a hundred basis points, which again seems pretty darn conservative. So just sort of curious it so you guys look up to 2020. How much is already in your same-store? That's one based on Legacy what closed in 2019 second like peer one or what, you know is going to close down here and then three, you know the sort of unknown factor your budgeting of X percent. So it's a hundred basis points sort of that X percent and therefore Pier One and the legs from last year are the Deltas that were all trying to solve for as to why the same store looked so low relative to what you produced last year.
Yeah, so what we do is for all known closures, we take those out of our budget. So the the sites where we know tenants are going to be vacating we take them out of the budget and then on top of that we put in a hundred thousand points of credit reserved. And so you feel that gives us the the cushion to understand that it's very fluid environment, you know, the last few years, obviously we've been able to to raise throughout the year. It's very early in the year. We're focused on outperforming we've got 11 months to do so and we'll continue to you know, if appropriate we will raise throughout the year. So Connor, how much is already in there? Like is there a said they're worth of cushion, there's already an extra hundred from closure. I'm just trying to understand what the actual closure amount that's already in there. In addition to what the hundred cushion is.
There's it's Glen. There's roughly Thirty basis points that were aware of so, so we're starting with that as a kind of a beginning point and then the balance is really for what's unknown. So, you know again we are trying to take the approach to deal with against an environment. That is sometimes it's fluid and has its challenges and we want to just set the stage for us to be able to go through the year and hopefully I'll perform. Okay and then next is just an update and the other thing to just bear in mind. We actually have a very tough, the first quarter. The first quarter of last year was 3.7% So just kind of bear that in mind as we go
okay, and then just
You know an Albertsons obviously was in the newspaper potential IPO, you know, just what what you can share with us as far as potential for timing if you if it will go won't go what the latest is dead. Yeah. I mean with regard to the the room on the s-1 really can't comment on that for us. What we what we do understand and know is that for the last couple of years the management the board and that's a real good focused on delivering the company the tools to really succeed and that includes reducing debt through sale-leaseback sand-cast like three billion dollars over the last two years improving the operation of the company bring it in to see which really invigorated the management team there and we've kind of you know, as we've said in the last couple of times you really working set the company up to execute at the same time right value also to understand for Kimco we have about thirty five locations with Albertsons or across the banners. We want this to be a very successful company for the long term. So we're not going to rush. Yep.
It doesn't make sense long term of that business. Thank you.
I guess Glen. Can I ask you to go over the sources and uses? I'm just trying to understand. You know, you're funding the the 225 amount of Redevelopment. So you have a hundred million coming from dispositions. You'll have free cash. I think it was still feel you'll be a bit short of the 225 mm. Just maybe address the capital plans what you're assuming per guy and it's maybe on that Monday. Or even Equity side.
So in terms of the capital plan to be able to film the balance, we actually have some contracts in place on some of our preferred Equity Investments and some land Parcels that will also be able to find that so that's not part of Russia's guidance in terms of disposition and that that amount can be, you know, fifty to seventy-five million. So that's one piece to the bridge, you know, the other things again, we're going to watch the capital markets closely. It's not baked into our numbers to be using the equity markets. But again similar to what we did in 2019, we would urge to be opportunistic and then the balance comes from you know, we have enormous liquidity between cash and our line of credit and you know if need be the bond market is a quite favorable at the moment here. So we have a lot of different options and a lot of different places to be able to create the funding methods.
Next question is from Samara Canal Abercorn, please go ahead. Good morning guys. Can I?
Okay, great. And then I
I guess my second question is on um on on Dana Point. I know you've got the the Forever 21 bucks there. You've got the the Lucky's gross or I guess a month on on those two tenants and then I guess is there's some co-tenancy risks that can impact income coming through that development and in the event that those stores close there.
Yeah, it's a good question. So sorry on the Forever 21 box is to step back. This is a lease. We signed, you know, almost three years ago. And when you look at the evolution of the project, we couldn't be happier with the opportunity to the back fill this location with the the recent signings of urban Urban Outfitters and anthropology to Anchor, you know, the other two locations on Main Street complimented Birthday to Tommy Bahama's we're just going to do is create a create a new opportunity for us to backfill initially that lease was a somewhat of a loss leader to bring others into the project and now we're able to bring that close from market. So that's an opportunity for us and we already have strong activity. It's one of the best locations in in the in the center itself as it relates to Lucky's it's a Kroger backgrounds from them. Again. This is another opportunity where we had a grocery component in there on the low ground rent. We're now able to bring that closer to Market and then with program currently is currently on the lease.
We have recaptured the Forever 21 space and we're actively marketing it right now the ground lease that's backed by a Kroger we have yet to recapture.
Okay. Thanks for the color guys.
Next question is from Greg McKenna's of scholarship, please go ahead.
Hey, good morning. Everyone Connor. I was just hoping to dig into the expected growth of it more. So guidance implies 1% of earnings growth, which is similar to 2019. But in 2020, we're not expecting a drag from the lease accounting change. There's fewer prior-year dispositions and seemingly there's a greater contribution from development. So considering these items. Can you just help us bridge bridge the gap on my growth maybe appears mm versus what was achieved in 2019?
I mean, I think to your point look it's very early in the year. You know, we feel like we've got a transformed portfolio the developments and redevelopments are starting to come online but it's a very fluid environment. We we we recognized that you know retail is changing daily. And we feel like we have to position ourselves to be able to recognize that you know, if we are able to outperform will be able to hopefully appropriately raised throughout the year. We feel like the the 2019 accomplishments shine a light on how far we've come off but that being said, you know, we've got a lot of work to do there's a lot of projects that need to come online. There's a lot of policing that needs to get done and there's there's still some retailer retailers out there that we have our eyes on may not be able to Pivot and meet the needs of the consumers. So we have to take that into consideration and that's what's really sort of creating this the range that we put out there.
Okay.
About that that drag from dispositions a bit more roster you help me with this one. So the messaging on dispositions going forward some consistent at this, you know, two hundred three hundred million dollar range, but we came in, you know, seventy-five feet above the expected range in 2019. It's still expect two hundred three hundred twenty twenty twenty if there is some deterioration in operating performance at certain assets, which led you to be slightly more aggressive on disposition and then potentially what could lead to an increase in the disposition range for 2020. Yeah. I certainly wouldn't characterize it as a deterioration in the operations. There were a few assets that clothes in the last 10 days of the year that we initially had anticipated would be twenty-twenty this position so that certainly factored into a as it relates to the overage on the the guidance in nineteen that guidance is always a net transaction guidance. So when you factor in the the sale-leaseback that was achieved in the the early part of nineteen, it was really about four years.
And so it's a little bit less than the 70.
But again, it was really just having a very robust demand for the assets. We typically in years past had about eighty to eighty 5% success rate on the outset that we had in the market to closing the second half of 19 every single aspect that we put into the market close including ones that we thought would have been a few months too late. So that elevates the the range of it for nineteen, but we're very comfortable that will be sticking within the range for 2020 and we have no no desire or anticipation that we would move that arrange ramp up or or desire to sell more.
Okay. Thanks for asking.
Next question comes from handle same juice from Missoula, please. Go ahead.
Hey there. Good morning.
Morning. So hey Glen, maybe you can help me with the the build vs. Occupied. How should we be thinking about your opportunity for narrowing? That sounds like 270 basis point gap this year.
All right, it's Thursday. It's it's 240 basis points currently so it can press to 7 to 2:40. When we look at the twenty-twenty and the in the flow of that rent. We expect anywhere from $5 to come from that 240 basis points and it'll be heavily weighted towards the back half of 20. So when we look on the Outlook whether or not it looks wage under contract right now, I think we feel good about the range. We we do know, you know, if if some additional space does come back but we start signing those new businesses expand expand a little busy but feel like right now we are in the range and will continue to open new stores and that, you know work on compressing it.
Reset that. Thanks. And then I probably want to go back to the boulevard for a second run. I think you mentioned three to five million dollars coming online this year wage, which is like it's pretty far below what I was thinking just going through this quick math, 214 million six cats mid-year convention. I guess we're around six six and a half million in a while. So maybe he took me through what I might be missing there and some some color on on that number. They say they will take it should take you to the timing right now. We're going through the process of preparing the. For opening and we'll look to start opening them towards the back after twenty, you know, there are items when you deal with Pro development and in the New York tri-state area or in the New York area related to inspect and the utility company that you continue to manage and work through. So we're just as we're continuing to to finalize the construction phase of this project. There will be influence on the time and dependency. So that said when you look at the wage,
David a project stabilization, you know, we still very feel very very confident about where this is going to where this is going to end up in the quality of ShopRite et cetera, but it's it's really just a matter of the timing of the openings as well to look out towards the back half of 20 and the 21.
Right stable stabilization for the assets should be towards the end of 21.
Next question for Brian Hawthorne RBC Capital markets, please. Go ahead.
Can you talk about your expectations for the timing of dispositions in 2020?
Sure. I think the first quarter will certainly be on the lighter side as I mentioned, you know a few few assets that we thought would close in q1 previously ended up closing the end of the at the end of last year's. So we'll see a little bit of a ramp up in Hughes, you know, two three and four and at that point, it should be somewhat routable, but q1 will be late on the disposition, but
Okay, and then do you have your anchor mark-to-market for the lease is expiring in 2020?
He with the currently on our on our list you have 89 leases are expiring some of which have options and that's currently at $11 and put $11.54 when you took our current anchors today. We're just a $14 a month.
Okay. Thank you.
Next question is from Rich Hill Morgan Stanley , please go ahead.
And guys a couple of clarification questions maybe going back to the beginning when you thought about the headwind from Redevelopment to same store noi was was that 12:30 basis points. Did I hear that right?
It's 20 to 40 basis points. Not as a headwind though. It's in it's just embedded in the number that we use. No, no, sorry for using the wrong term. I just wanted to make sure I understood what impact Redevelopment was having on same story in Hawaii. And then and then on the loss to reserve you mentioned a hundred basis points, which I completely understand and our math as per the cellphone now agrees with your 44 basis points, but when you talked about the known Thirty basis points, is that included in a hundred basis points or we should we be thinking about the loss Reserve is closer to like a hundred thirty basis, 30 basis points vs 100.
Take out of Economist. We takeout known tenants that are that are not going to be this. So those are out of it. There are other pieces that make up that where we see this other Thirty basis points. So I would say if no one else went out we would expect Thirty basis points of credit loss, but we know that's not going to happen. So we have this extra 70 basis point that is built into our budget process for them the other unknowns so I would say no it's not a hundred thirty basis points at the total of 100 in our budget process. Got it that that is that's very helpful. Thank you for the clarification and then I'm just thinking about the sort of the trajectory of same store noi throughout the year. Obviously one q19 was was a really good year with I think three point seven and same-store in a while. I could you could you maybe just revisit how you think about the trajectory of same-store in a lie throughout 2020. Do you expect one Q2 2 B may be as strong as wage?
2019 or was there something it's
There's something specific that we should be thinking about on the year-over-year basis. Although we don't give quarterly cause I will tell you that it's our expectation that the first quarter would probably be the low point in terms of what we would report for the year and you'll see it ramp up as we go throughout the 2020. You got it. Thank you guys. That's very helpful clarification from me. That's it.
Next questions from Florence landed chicken from compass point please. Go ahead.
A quick question on a clarification I guess on on on Pier One. I think you have Thirty locations about fifty basis points of a rental impact wage. What is your expectation? If you were to get that back I know that the the average rent is around $22 a square foot, which is well in excess of your average anchor Rent Em, you know, are you actively looking to Market that lease or or already marketing that space right now?
yeah, we
We've been leaving proactively looking to pre-lease the Pier One boxes for a period of time and just to clarify pure 1 ranges in size and actually a sizable of the sides of them are actually below what we came is an anger, which is anything over ten thousand square feet. So using the the anchor average rent is not necessarily the most appropriate way to determine a mark-to-market benefit package will be up soon will be down. But if you like we have a good opportunity there in addition to that we're obviously will be upgrading the quality of the tenancy and then bring it in thriving retailers to help occupy those spaces wage as as we continue to look at in a twenty. We're we're monitoring the situation very closely and will continue to actively releases boxes.
Right. Thanks. That's it for me.
Next question from Linda's I Jefferies, please. Go ahead.
Sorry on the 20 20 Acquisitions the 5 to 6% cap rate what upside you expected rent? And what does the same store profile look like relatives the in place for folio?
Yeah, I mean, I think that they're they're slightly different between the two and we're looking at acquisition opportunities. We we anticipate given the market that and and the location in the quality of what will be buying that the cap rates will be in the five to six range in year one. But any opportunity that we look at would certainly have a pretty significant growth opportunity whether it be with the lounge is Redevelopment opportunities. So we think that anything we look to acquire over time. We'll have a growth rate that that out size compared to the existing portfolio and would continue to be accretive to the quality and the growth of the portfolio long term, but I can't really comment on the specifics of a particular acquisition at this time.
Thanks, and then it looks like straight-line rent was higher on a quarter-over-quarter and year of your basis. Why did this go up a bit and you know with the more realistic run rate for twenty $20 a month.
So again straight line is somewhat tied to leases that are getting signed and the lease is being in the the Box being ready for opening delivery to the tenant moved just a matter. That's really what it's driving is, you know, you have a lot of you have a lot of new leases that were signed in places, you know, like Neil station. You have a lot of leases that are getting off my data. So there's a lot of free rent tied to those where you spot straight lining that in the the run-rate the Run rates lower than what you see in in the fourth quarter off.
Okay, and then I think you mentioned the prepared remarks.
want to lower G&A in twenty-twenty with driving that
more efficiency for one thing, you know, if you if you look what we've done we've reduced the size of the portfolio.
And also the leasing cost from a year of your perspective. It's it's really yeah, we we do it very, you know, we we spend a lot of time monitoring weird T&A stands and try to do everything we can to keep it, you know measured and again as the portfolio is reduced in size. We we have reduced the size of some staff over the years. I've updated our systems as well. You know, we switched over to one of them are I I mean a lot of investment there. So we think there's going to be significant efficiencies and synergies coming from that investment.
Thanks.
Our next question comes from Chris Lucas Capital One Securities, please go ahead and guys real quick. When do you have anything under contract right now as far as Acquisitions go home.
No.
Something under contract at the moment. Okay. And then please be patient with me. I do need to go back to same store on a clarification just so I fully understand so so bear with me last time you did 3% both with and without read of the guidance the 1 and 1/2 to 2% is includes the re Dev. Do I understand to say then that without read it off the the guidance would have been what one three two, you know one six or something. Is that how I should be thinking about this without? Yes, that would be broken. Okay. Okay. Thanks again. And again Chris Chris again. It's a it's a starting point for us what we look at it understood and you and you're baking in a hundred basis points of credit loss of life. Yeah. So so let me let me go to the next point which is the known fall-outs that you had from 2019. So the dress Barn's and all that that's a 130 basis-point.
You know going into the share, correct?
That's already built into our right, right? So so that's that's an initial drag, you know that going in so that's already one-thirty. So now we're looking at going into this year. You have a hundred basis points wage of essentially reserve and thirty of it you already kind of know about so there's seventy left of sort of whatever for the rest of the year. Is that correct? I think what you're trying to get off Edwin from the Lost rents of some of those retailers that went bankrupt at the end of last year that somewhere about 40 basis points that is factored into the initial guidance. And that's not part of South first starting point guy instead of a credit loss of a hundred based on. All right, so right it's just it's just just to clarify. It's not a hundred thirty. That's good. There's 40 basis points from off Dress Barn. Okay. Okay. There we go. Okay. That's the number I was looking for. Thank you lost rent that's already out those that we anticipate.
Going bankrupt over the course of twenty.
Right Said differently if those tenants were all still there the guidance would be 40 basis points higher we know they're out so we started with that out of the number already. Perfect Glen. Thank God that's what I needed to hear. That's all they have.
Going to be have a question, please. Press * then 1.
Thanks. We have a fault walk from Christine McElroy of City, please go ahead. Hey, so sorry just to continue that conversation a little bit of that unknown you mentioned 30070 basis points of the hundred basis point reserved is the thirty basis points All Forever 21, and where does sort of peer one fall into that that I assume that's in a 70 and any you know, what sort of what are your expectations around mode how Modell's plays out like is that impacted in the seventy? Maybe you can just give a little bit more detail on what you're expecting for the individual retailers or not.
so so we
Seeing the Pier One closing list and we've modeled in not again. We just got the list price what we were doing so we know that some of those stores we expect to close that's part of that Thursday that I was saying is no, okay. It's not it's not being driven by Forever 21
Where does Forever 21 Fallen is that in that's not even in the hundred because it's already in the range.
Yeah in for over twenty. We had a very small exposure. So when you talk about Dania, it's India that phase two is not in our same side pool. So that would be part of it and it was only one so that that's not part of the issue as you mentioned Christy that hey when we go through here one put that initial closing list. We know that there's some number of those stores that we have right away that factors into the hundred basis points off then for some of the other names that you've mentioned and and some of the other ones out there we factor in that impact. We look at the sensitivity maybe potential timing of when during the course of the year that could happen. It's dead. We'll have better visibility after the first quarter and that's what typically when we re-evaluate everything going forward. Okay, and then just to follow up on Windows question around the non-cash rent them. Should we be aware of any sort of right off of straight line right receivable related to you know, some of the, you know questionable and collect ability or any sort of acceleration of size one forty-one this month.
Based on any early space recapture that you're expecting.
well, okay last year we had you know, some below Market rents, which were certainly helpful within the number there's there is less amount of below-market rent benefit modeled in our plans for this year than we had in 2019 as it relates to writing off of straight-line rent again, it's going to depend on the tenants so we run through and if my tenant their credit quality and if if the tenant goes out