Q1 2020 Earnings Call
Dead dead dead.
Greetings and welcome to the retail properties of America first quarter 2020 earnings conference call.
At this time all participants are in a listen-only mode a brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press six zero on your telephone keypad.
As a reminder this conference is being recorded.
It is now my pleasure to introduce your host Michael Gaiden of Vice President of capital markets and investor relations. Thank you, sir. You may begin.
Thank you operator and welcome to the retail properties of America first quarter earnings conference call in addition to the press release distributed last evening. We have posted accordingly supplemental information package with additional details on a results in the invest section on our website at ww.w on today's call Management's prepared remarks and answers to your questions may include statements that constitute forward-looking statements under Federal Securities laws. These statements are usually identified by the use of words such as anticipates believes expects investigations of such words for similar Expressions actual results, May differ materially from those described in any forward-looking statements and will be affected by a variety of risks and factors that are beyond our control shooting without limitation those set forth in our earnings release issued last night and the risk factors set forth and our most recent form 10-K 10-q and other SEC filings,
As a reminder forward-looking statements represent Management's estimates as of today May 6th 2020 and we assume no obligation to update publicly any forward-looking statements, whether as a result of new information future events, or otherwise additionally on this conference call. We may refer to certain non-gaap Financial measures. You can find a Reconciliation of these non-gaap Financial measures to the most directly comparable gaap numbers and definitions of these non-gaap Financial measures in our quarterly supplemental information package and both the fourth quarter 2019 and first quarter 2020 earnings releases which are available in the investor section of our website at ww.w on today's call. Our speakers will be Steve Grimes chief executive officer. Julie swinehart exact Vice President Chief Financial Officer and treasurer
And she in Garrison.
The VIN and Chief Operating Officer after they're prepared remarks. We will open up the call to your questions with that. I will now turn the call over to Steve Grimes. Thank you, Mike and good morning everyone. I appreciate you joining us today. And I hope all of you listening are healthy and safe while acknowledging the work of so many people on the front lines of the covid-19 pandemic like First Responders and healthcare workers. I would like to start our call by saying thank you to all of our RPI employees who have stepped up in a big way these last two months our team continues to work tirelessly to support our tenants collect rent and reinforce our business through late nights early mornings and weekends and I am deeply appreciative for the above and beyond efforts.
We enter 2020 on the heels of one of our best years on record. We finished 2019 with record highs and occupancy at 95.2% and ABR $19.52 per square foot and a very strong balance sheet with leverage of 5.4 times net debt to adjusted ebitda. Sorry, we carry 2019 successes into the first quarter which included same growth of 1.2% as well as your over your gains and Retail portfolio occupancy percentage least nabr highlighting the momentum of our platform ahead of the pandemic month. However, we have been faced with nebulous and unprecedented conditions since early March and it feels like uncertainty will continue for a period of time while many of our tenants are open and operating many of them have closed for more than a month and they face uncertainty as to how and when reopening can occur.
Our year-end portfolio lease rate of 96.2% combined with an unusually low lease expiration year in 2020 set the table for the current calendar year to hold lower lease volume which was evident in our first quarter leasing stat. However, leasing remains a court focused for us and while many existing tenants have mailed in renewal options during the last month and half prospective tenants are currently showing hesitation in signing Ulisses, which we believe is temporary. Similarly. We have put our asset dispositions on hold for the near-term and our Capital markets activities as well until condition stabilized although Julie and team have been conversing with our lenders about our interest in addressing 20-21 debt maturities. Once the time is right.
However, as I noted many of our tenants are open and operating and paying rents our expansion at One Loudoun has not slowed down tenants build-outs are in progress leasing discussions are taking place.
After distilling are acid footprint through a multi-year at that reconditioning program that concluded in mid 2018. We sit poised to persevere through the current environment and emerging even more relevant as less. Well positioned retail real estate suffers disproportionately from covid-19 related challenges and we believe our investment-grade balance sheet that includes $7,069 million of cash on hand at the end of the first quarter and no debt maturities in 2020 provides us the strength to whether the headwinds of the present this management team successfully navigated through the global financial crisis and learn much in the process which in turn compelled us to take action in subsequent years to place us a much stronger footing from both an asset quality of life balance sheet perspective.
with a stronger operating
Portfolio and much stronger balance sheet. This crisis tested team is positioned to address the challenges. We face today are long track record of execution and experience as well. As our fortitude serve our keys human capital assets at present.
It's Julian Shane will detail we have taken numerous steps to address the current business environment including reduced plan 2020 development spending by $75 to $100 million primarily at Birth as an ounce on March 23rd fully drawing on our $850 revolver as reported on March 30th and temporarily suspending our dividend as announced last night about additional e we have sharpen our pencils when it comes to GNA spend for the year benefiting from adjustments to plant employee incentives reductions in travel conferences and related expenditures. We will continue to take meaningful iterative actions to further improve our positioning.
Our portfolio benefits from the 37% of RAV are tied to essential merchants and office tenants these essential Merchants Supply the goods and services necessary for the public to a junction a Mythic covid-19 outbreak neighborhood and community centers from the largest building block of our portfolio at 47% of our multi-tenant AVR.
Why not seeing the top conditions of many of our tenants and various other retail sectors, I take much encouragement from both the spirit of entrepreneurs mm and creativity demonstrated by these Merchants who have pigs the curbside pickup contact with delivery and other options to bolster Revenue in the current environment and from the local patrons who purposely support their local shops where their authenticity and uniqueness we very much recognize and appreciate the symbiotic relationship between tenants and their landlord and we are working with our tenants to strike the right balance that both supports them and off during this time of Crisis. We are encouraged by the small business tenants who have secured loans in the PPP process and who have in some cases prepaid multiple months of rent early specific to the federal refund. We have obtained via a recent tenant survey some relatively significant numbers, which we know provide valuable insight into our portfolio as we move.
Consider Revenue going forward Shane will provide more specific shortly at the same time. We know that some of our tenants also applied and we're not initially successful but are working to obtain funding and subsequent rounds further from a macro level. So the major shock to consumer confidence and spending presents a significant challenge for the retail industry overall federal government stimulus now measuring roughly 10% of GDP provides an immense shot in the arm to help rejuvenate the economy.
We remain optimistic as state Governors begin to lift shelter-in-place restrictions 86 multi-tenant retail assets from our portfolio of 102 assets page in the top twenty-five essay in the US of those multi-tenant retail assets approximately 72% reside in states where restrictions have been lifted or modified measures may have been established to allow for some level of retail shopping to continue. We anticipate the rollback of these restrictions will have a significant effect on brick-and-mortar retail not only on how much businesses will be able to operate but we'll provide retailers direct access back to its core customers, even if it is in a limited capacity. However, given the uncertainties associated with the covid-19 pandemic, we are mindful that despite the significant demand to gather in and experience open-air centers again, we continue to take an appropriate precautions at our centers.
along with our
Gaston near-term execution amid the strains of the covid-19 pandemics. We also have augmented our approach to ESG and remain focused on enhancing our commitment to this vital topic. Our life is on track to publish our first corporate sustainability report in the second half of the Year where we will provide a detailed overview of existing ESG programs recent successes and future company took it highlighting the governance section of the s g. We have witnessed a strength of our business continuity plan and our robots library of standard operating procedures coupled with our long-term strategic focus on it and data investment have in combination driven our ability to quickly react and continue with day-to-day business operations with minimal disruption to daily activities as well as providing for data integrity and tenant Communication in these difficult times a true Testament to our team and a case study that we plan to highlight in our forthcoming corporate sustainability wage.
Court as a reminder, you can review our progress to date and monitor our ongoing ESG successes via our microsite at RPA. I took summer e we are focused on delivering our updated business plan for 2020 while serving all of our stakeholders responsibly and reinforcing are strong fundamental position. We have worked through challenging times in a business before and emerged in better long-term position on the other side and I expect a similar outcome in our present circumstance with that. I will turn the call over to Julie.
Thank you for you this morning. I will review our first quarter Financial results our capital structure positioning April rent collection progress and our ongoing response to the impact of covid-19 on our business days, including detailing some new accounting considerations as well as addressing our dividend policy.
During the first quarter we generated operating ffo of $0.27 per diluted share flat sequentially and year-over-year and slightly ahead of our internal expectations compared to q1 2019 our same store noi growth and lower G&A expenses and Q 12020 was offset by lower non-cash items and lower lease termination fee income same store. Noi for the birth order twenty-twenty grew 1.2% or 1 million dollars compared to q1 2019 continuing our pattern of results throughout 2019 base rent drove our same-store and I'm contributing 340 basis points with other leads related income also contributing twenty basis points.
I keep in seeing contractual rent increases underpins the space rent expansion followed by releasing spreads demonstrating both the demand for our retail assets and our teams focus on execution.
Serving is partial offset to those girls components are higher bad debt as well as higher property operating expenses in real estate taxes not have recoveries due in part to increases in certain non-recurring expenses and higher net real estate taxes, which were partially offset by lower snow related expenses.
I would also like to
But Although our first quarter Gap results include the impact of a one-time six point 1 million dollar litigation settlement gain from a former tenant our operating ffo and adjusted ebit to re-fix and related metrics exclude this game turning to the balance sheet recall that we entered twenty-twenty was just $18 drawn on our $850 unsecured revolving line of credit in one of the lowest leverage positions in our peer group prior to the end of the first quarter. We drew nearly the full amount available on our revolver to further strengthen our liquidity position and five t a midday covid-19 outbreak and we subsequently deposited these funds into account that FDIC insured institutions.
We ended the first quarter with $769 million dollars of cash on hand and that debt to adjusted ebitda area of 5.7 time which was in line with our internal leverage expectations.
With no debt maturities in twenty-twenty the macroeconomic and retail operating environment as well as the pricing and availability of debt Capital financing will influence our cash balance position not going forward. We do have three hundred fifty million dollars of debt maturing in 2021, which we plan to address over time as a debt Capital markets further stabilized. We continue to actively engage in meaningful discussions with our debt Capital providers, including the 14 Banks and our bank group and several significant holders of both are private and public notes.
Turning the Covenant compliance is disclosed on page seven of our quarterly supplemental. We continue to enjoy Headroom with respect to our financial covenants as of March 31st 2020.
All of our cabinets that contain Anna Li ebitda interest expense or other income statement components are calculated based on the most recent for fiscal quarters with one exception the unencumbered interest coverage, which is computed based on only the most recent fiscal quarter recently. We pursued an amendment to our bank credit agreements updating the calculation of this ratio to be based on the same time. Cuz all of our other covenants across all of our debt instruments, I'm happy to report that we have successfully obtained lender approval for this modification and going forward are unencumbered interest coverage ratio will be computed on a most recent for fiscal quarter basis.
In our supplemental we have disclosed the results of the March 31st 2020 calculation both pre and post Amendment.
Well, the covid-19 pandemic did not impact our business materially in the first quarter. The outbreak has adversely impacted our operations in the second quarter and you may notice that we have increased our level of disclosure on this topic not only in our earnings release and supplemental information package, but also throughout our form 10-q, which we expect to file later today particularly in the risk factor section where we have added covid-19 risk factor and also throughout mdna.
Many of our tenants dealing with reduced customer traffic and revenue have requested these concessions in contrast many of our numerous essential retail tenants remain open and continue to operate during this time. Some of them are experiencing record demand for prospective during April. We collected more than 52% of build strength which along with Cam tax and insurance receipts cover monthly property level operating expenses and real estate taxes as well as GNA and the majority of our interest expense.
the overwhelming majority of tenants who operate essential retail and services including our office component paid April charges so many tenants and other used categories did not
Steve mentioned in the same with further detail you're working through a variety of rent relief solutions with our tenants including utilizing at least a portion of tenant security deposit to alleviate some of the liquid or certain tenants are facing considering that many of these Solutions will result in lease amendments and please can only five of our properties are encumbered by secured debt. We will be able to navigate these workouts much more freely without the extra step of obtaining lender approval since our properties are largely unencumbered.
Currently, I expect a material portion of tenant relief arrangements to qualify for Fantasy least County released Provisions, but cannot reasonably quantify that amount just yet. We expect to share updates on this topic and connection with our Q2 reporting to be clear. The sales be relief Provisions will not impact the reporting of cash received in Q2 and Beyond however to the extent that our tenant deferral call within the provision parameters and essentially require the same total payments over the same least time. We expect to be able to account for Revenue wage. No change to the lease contract was made meaning that we would recognize the income during the deferral. S such in these instances. We do expect gaap lease income as well as a New Jersey either to re and other non-gaap Financial measures to not be negatively impacted in the cases of rent deferral that fall within the allowable categories of the relief provisions.
Again, we expect that some but certainly not all tenant release will qualify for this favorable accounting treatment.
Given that today is just the fourth business day of May. We do not yet have firm statistics on the outlet for my rent collection. However, like what we experienced in April expect our cash collection timeline to remain longer than usual again in May.
Our portfolio benefits from approximately 65% of RAV are coming from grocery-anchored or Shadow grocery-anchored property. 37% of our APR is generated by a potential retail and office wage, including 8% from grocery and Warehouse Club and six percent from office relatedly. We have included new information in our quarterly supplemental information package on page sixteen page regarding tenant resiliency and April rent collection levels.
Largely have taken additional actions to preserve and enhance our liquidity and leverage position and March 23rd. We announced the hall to Vertical construction plans that are Caroline Redevelopment. This decision enabled us just planned 2020 development spending by seventy-five to a hundred million dollars and we are implementing plans to reduce our Capital expenditures including tenant Improvement outlays and certain expenses including her head from our original budget.
The high level of uncertainty surrounding the ongoing and future impacts of covid-19 compelled us to withdraw our existing full year 2020 guidance on March 30th, and we are committed to taking further of iterative steps to reinforce our financial and operating position as the schooling situation continues to evolve.
Well working to bolster our free cash flow Generation profile. We are also working on addressing our finance related cash flows in order to reinforce the strength of our Capital position as a result that's communicated in our earnings release last night. Our board of directors have temporarily suspended our quarterly dividend. I would like to remind investors that we paid to quarterly dividends and wages already in January and again in April at our historic quarterly rate of approximately 16.6 cents per share this temporary suspension now enables us to retain estimately thirty-five million dollars per quarter demonstrating Prudence during these uncertain times and acknowledging the related heightened implied cost of our Equity capital and the current environment may have the need for compliance with taxable income distribution requirements.
Our board will revisit our dividend declaration decision quarterly with the timing and amount of resumption largely dependent on our operating cash flow performance and projections as well as other factors off and now I will turn the call over to Shane.
Thank you, Julie. Our first quarter saw a continuation of the momentum that our platform generated throughout 2019.
Our 1.2% same sort noi growth in q1 was driven by a corresponding 120 basis point year-over-year gain and same-store Retail occupancy to 94.1%
Same-store retail percentage least increased by a smaller Thirty basis points year-over-year to 95.3% underscoring our ongoing commitment to reduce asset downtime and commence rent on time.
Sequentially our aggregate retail portfolio occupancy decreased 110 basis points to 94.1% from your end as expected following several January move-outs discussed on our last name.
retail portfolio percent lease declined by a smaller 90 basis points sequentially to 95.3%
Highlighting our proactive approach to addressing upcoming vacancies following any significant amount of leasing in the last two calendar years that encompassed one third of our total we entered wrong with just 7.2% of our lease roll expiring down from 10.3% in the prior year with a lower pool of addressable leases. We executed 33,000 wage is comparable new leases at a blended 4.8% spread in q1 and an additional 195,000 square feet of renewals that a 4.9% cop.
in aggregate
For the quarter, we completed 82 new and renewal leases or two hundred eighty-five thousand square feet achieving a blended releasing spread of 4.9% further. We achieved average contractual rent increases of 170 basis points on our new leases up from 160 basis points in the fourth quarter adding to embedded contractual growth within our rent row.
Following our first quarter efforts just 4.4% or approximately 650000 square feet of our GLA will expire over the balance of this year providing for additional resources to talk to the leasing amendments and optimization of negotiations contemplated in Q2 as we look to finalize any needed deferrals or other adjustments on a tenant by tenant basis.
That being said there are numerous tenants who can and should pay rent and a significant amount of our time will be spent allocating both human and financial Capital to those tenants that are in the town where in real assistance is needed and who are committed to transparency and collaboration in the spirit of mutual long-term success while this effort will be challenging not without visibility as we seek to allocate our limited capital.
Throughout our portfolio transformation. We concentrated not only on the assets but also on the platform including data integrity and transparency while our heavy multi-year investment clubs and systems was validated Peak cycle. It is apparent that this investment is just as valuable in the challenging environment. We are in today specifically through continued largely electronic patient surveys and verbal feedback. We have aggregated and categorized significant amounts of data with the goal of understanding several points, including anchor non anchor data open close data a category as well as information, including applied versus successful. We view this data as an initial indicator of likelihood of success at the tenant level.
Looking at hard numbers. We currently have approximately 2350 leases and in late April, we surveyed tenants outside our top 50 representing approximately 1,800 leases. We have already received responses from tenants covering approximately eight hundred pieces or roughly 18% of our G and 24% of our ABR of the survey respondents approximately 26% successfully applied for PPP funds and about 47% applied and were not successful while these numbers are significant when considering current liquid and negotiations.
Just as significant are those tenants that did not apply for funding at all 27% of our survey respondents indicated no application for federal funding and we view this as an opportunity as negotiations continue while this broad-based negotiation effort will be bong and likely take several quarters. We have the data and platform to make rational Capital allocation decisions and we will work patiently and pragmatically and I'm confident that given the experience of our team as well as the adjacency and Community centered nature of our assets. We will emerge from this month abrupt stoppage as a better company and every aspect
well, it's
Teaching much in the first quarter from an operational perspective. Our business has shifted dramatically since early March. We have seen record bifurcation and the fundamentals of our tenants while our many potential Merchants have seen strong demand from the mandated stay-at-home lifestyle other tenants such as Jim's movie theaters and soft goods have been deeply affected by the dramatic reductions in same and brick-and-mortar closings.
Against this backdrop. We are seeing an elongation of our leasing pipeline particularly on new leases and expect the space absorption portion of our business to extend as tennis become more cautious wage driven by the macro environment as well as unknown forward sales Trends and the continued attrition and overall reduction of viable retail assets and the month. However, we continue to see an inordinate benefit from our high-quality real estate and subsequent to quarter-end executed in Ankara least back. So it for them on terms that were agreed to over six months prior reinforcing our belief that great assets will persevere while the reduction of retail square footage overall will inevitably continue they much more rapid Pace given recent events.
This process while painful will make the best assets only better and we must focus on balancing economic leasing terms and duration with asset level capital investment that provides for Public Safety as well as experience.
On renewal front given are modestly stroll over the balance of the year. We continue to expect a full year retention rate of Approximately 80% any bankruptcies disruption many tenants continue to press for renewals at existing successful locations. And we continue to realize significant activity with medical office and service tenants. I'm turning to development activity our recent actions taken for our expansion and Redevelopment projects underscore are pragmatic approach to responding to the current environment.
We announced the Hall of our plans for vertical construction at Carillon on March 23rd. We remain aware of the significant demand for the medical office component of this proposed project driven by the needs of a neighboring University of Maryland Medical Center, which serves as the shadow anchor of this project. However, the uncertainties of the current environment the early stage of development work wage as well. As our cost of capital Justified this pause. We will continue to evaluate all of our options for this project from monetization to build out for the medical office jobs as well as multi-family components.
Turning to Loudon, we continue to advance our work at pads G and H and q1 performed work on the garages and foundation and completed underground utilities and infrastructure work on time and on budget subsequent to first-quarter We Begin stick frame construction for the multifamily portion of this expansion as well as construction for the office component of pad Jeep driven by the existing retail amenity base as well as the sustained technology investment-related strength in Northern Virginia. We continue to have robust leasing activity for this office space at 6, at least where she'll construction was nearly completed before the covid-19 pandemic began. We Advanced lease negotiations with several leading National personal service providers for small shop space direct you want in addition to the Ethan Allen angrily sign.
detailed in our federal
While the major shift in the business climate during March pause those negotiations near the goal-line. We remain in active dialogue with multiple tenants and expect progress towards these finalization long as business patterns resume more normal course over the intermediate-term.
Also in the quarter we broke ground at our shorter-term smaller scale projects at the shops at Quarterfield and Southlake Town Square that amount to 11 to 12 and half million in aggregate continue to anticipate on-time on-budget completion of these one hundred percent pre-leased projects at double-digit returns.
While we have taking a proactive approach to all aspects of our business in response to covid-19. I expect more to come from our experience team. This unprecedented circumstance calls for Prudence wage acacian and my confidence in our platform and team has never been higher after seeing the hard work pragmatism and collaboration of our team over the last two months. The current challenges facing our industry will deepen the chasm between relevant and irrelevant real estate against this backdrop. We are poised to perform and come through the other side and an even stronger competitive position as high-quality real real estate assets likely once again lead out of the current downturn with that. I will turn the call back over to Steve.
Thank you. Shane and Julie for your reports. Obviously, a lot of information was shared with all of you just now a lot of which is based on fluid information obtained through April 30th. Well, I'm certain many of them have questions about our predictions for May. Please know that as Julie mentioned we are in the 4th business day of May and technically have had only three business days for processing May rent collections off early to predict at what rate rent will be collected for May. However, we remain encouraged by the easing of stay-at-home orders and retailers beginning to reopen albeit at reduced capacity moved in with that. I would like to turn the call back over to the operator for questions.
Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad month. You may press star to if you would like to remove your question from the Q4 participants using speaker equipment. It may be necessary to pick up your handset before pressing the star Keys. One moment, please while we pull for questions.
Thank you. Our first question comes from line of Derek Johnson with Deutsche Bank. Please proceed with your question.
Hi everyone. Good morning. How should we be thinking about Provisions for bad debt going forward Julie you mentioned in the prepared remarks that unpaid wages would be booked normally and I presume deferred receivables will increase by a like amount then I kind of imagined three buckets established right highly likely to receive a reasonably likely receive an unlikely. So I guess the question is how may we see bad debt flows through the model and can we expect the unlikely bike bucket to be written off in the June quarter or what's the trajectory? Do you guys Envision realizing bad debt over the coming quarters? Good morning, Derek. Thanks. Thanks for the question. And I think some of your comments were spot-on with how cute to put unfold not so much in terms of bad. But just in terms of both uncertainties and the the heavy dependence on this page.
relief provision, you know, you know for
I think about bad debt from q1, you know, we were certainly aware of some tenants being closed or more impacted by the pandemic and I can tell you that some element of that information played into the amounts. We recorded in q1, but going forward to the first to speak to this has to be released Provisions, you know, that's to the extent that any of the girls that we work out or that we anticipate working out fall within the parameters of that and if it falls within the parameters of the fast. Leave provision, you won't see an impact took a negative impact to income but there are many cases. I just want to make sure it's clear whether it be abatement or if there's some significant modification to terms with a 10 until we resolve in Q2, you will see a dividend a y u as it relates to bad debt. We we're going to continue to perform the same careful assessment that we perform each quarter, which is a tenant by tenant basis wage.
Lacrosse teams and starts with property management Asset Management involved my collections team as well as property accounting. So it's kind of by tenant will look at uncollected amounts. I believe we'll have a truck amount of information in Q2 as to where ten and stand with us and their ability to pay so there should be some clarity in Q2, but I think you'll see the table potentially, you know move on throughout the year as it always does so I wouldn't necessarily expect a spike in bad debt in Q2. I think it'll be largely dependent on these relief provisions and and what we understand about our tenants ability to pay at that point. Oh, okay. Thank you. That's helpful. And I guess secondly, you know, how did the board and and management way the suspension of the dividend versus potential deeper cuts to the development platform and you know, what providing confidence that continuing the large-scale Redevelopment project?
outweighs near-term dividends
Derek I'll start with that question then I'll turn it over to Shane. This is Steve. Thanks for the question. The dividend suspension was you know largely discussion that we had in tandem with our discussion about the development spend and understanding the individuality of each of the development projects, which against Shameless speak to momentarily. We we obviously took action there with respect to reduce the spending Caroline largely because we didn't have a lot of significant spend there and we realized that that was a larger longer-dated project that we really needed to be very tactical about starting the one loud that again Shane will talk about adjacent to of very high-performing Center in definitely in a situation right now where it is really calling for that multi-family use, uh, and then obviously Circle to just lease up at this point in time. The other two smaller development spends hundred percent least projects are are very well on track for not only completion, but obviously 10:00 and backfill the wage.
Pension of the dividend. I think you're seeing it with just about everybody in the space and you'll probably see that Trend continue is really just a function of the uncertainty and understanding that perhaps the suspension of the dip and on a quarterly basis, you know.
Let's just say it's cute to will give us time to better understand the impact on the business and more importantly the effect on EMT and are required distribution for the year. So the board will look at dividend tax exemption each quarter in tandem with what our EMT is looking light and what our district distribution requirements are going to be but for specific to the development, I'll turn it over to Shane or quickly either very specific projects that have security of execution if you will and Shane, I'll turn it over to you.
Thanks, Steve Derek. Good morning. I think to just expand on Steve's comments a bit Carillon, you know that seventy five to a hundred million in savings and the current year. That was a very logical stopping point, right? We were at you know in in site work obviously, but had not started Footers, um and our utilities the wet and dry Utilities in the stage where I kind of a logical stopping point, so it wasn't incrementally a significant cost to cap the site when you look at Loudon know mechanically, it's ignition lead-time items on the site the garages the prefab in this case we're up we're going to Podium was in construction. And we we looked at stopping at different stages as an example. The podium would have had to be been re-engineered obviously a significant cost to stop at that point. We also had another significant lead item, which was dead.
Lumber or the stick portion of the project already inbound and that had had a much longer lead-time than we anticipated. So when we looked at stopping versus starting at least this quarter, it didn't make a lot of a lot of sense. I think we'll continue to review that too seems point every quarter and hopefully as we have more visibility as to the depth of the current issue, we will keep that in mind and have some better information to make that make that ultimate decision in the next quarter.
Okay. Thanks for the hard work everybody. Thank you.
Our next question comes from line of Christy McElroy. I would City. Please proceed with your question. Hey guys. Thanks and good morning first. I just want to thank you for the the enhanced Took a ton and exposure and collection data by category. It's really helpful. So my first question Julie you mentioned in your opening remarks in regards to the 52% collection and April that it covers, you know, your objects your g n a and a majority of interest expense. It sounds like from those comments that you're already sort of in a cash burn position before capex and I recognize them, you know, Steve your comments about you know, you very little visibility on May at this point, but let's just say for argument's sake that it ends up being 50% you know cash collection in second quarter of what our can you sort of pain as a picture of what cash burn could look like what are the levers that you have that you could pull on cost and capex, you know also recognizing that you
suspended the dividend, but just maybe just
in a cash burn picture for us
Sure, good morning. And thanks for the commentary on on the additional disclosure Steve. I'll go ahead and start off and if you want to enhance, please feel free to do so. So we did collect 52.4% of April rent and I did mention as you know, the Krispy that that pretty much covers operating expenses real estate taxes GNA and interest. We're really only time I'd say a million a million and half so when I look at maintenance capex, which was a little under seven million in q1 a quarterly cash burn at at the current April rate is about ten to twelve million dollars in a quarter so said differently. Our break-even point would be about 60% collection, you know, in terms of some of the levers we alluded to life savings. I think you see that in the q1 numbers GNA was down a bit.
Kept tax reduction we've we've taken a look at you know, what we can do there and have made another kind of similar called maybe 10% reduction in that so, you know fifty percent collection for a full quarter doesn't feel terribly impactful with that perspective. And again just really happy that we're sitting on, you know, call it 750 million plus in cash wage at this point.
Okay, thank you. And then you also mentioned that you expect to address the 2021 maturities over over time, you know, obviously there's no near-term need but it's been over hang, you know you but you also had some conversations with capital providers. Can you just give us a sense for what those conversations, you know entail, you know, where what are they telling you in terms of? You know how much Capital you could raise the price at which you could you could raise today?
Sure. Yes, we have been in very active discussions that are whole bank group, especially in light of the amendment that we were able to just do across our bank instruments, which we were very happy about so you can imagine had many many conversations in terms of near-term and and projected potential Exploration with them. I can tell you, you know today it feels too soon to explore life meaningfully addressing the 2021 maturities. We do have two hundred fifty million in Bank term debt. It's with the same Bankers that that are supportive of us in our line and with the amendment we've all been conversing with some of the more significant and smaller as well private placement in public noteholders. So everyone's really interested in you know, staying close with us and and we've been a you know, sharing our perspective and also acknowledging, you know, that there's a lot of uncertainty right now. So I do think we'll be able to address those maturities. I can't tell you if it's going to be you know next.
Quarter the one they're after I I love to be in 2020 but you know even if not, we do have the 750 million and More in cash on hand that more than I am covers the 2021 maturities, you know and what I think about the revolver amateurs and 2022. It has to six months extension options, which could effectively make a 2023 and it is by far off our least expensive piece of debt right now. I mean, it's it's varying interest today at about 1.4% So, you know again, I'd love to address it this year, but we do have some coverage frankly we can afford to be patience and we will be patience.
and and Julian
It's going to add on to that one for Christie here. Just you know, this is a very different situation than we were back in 2009. Obviously this company lived through that, you know, the banks in the conversations that I've been having with them have been extremely supportive of rpai and Prudence that we have maintained throughout essentially the recapitalisation of the company over the past couple of years and two Julie's credit had a ongoing conversations keeping this Bank fully informed are all the banks fully informed of our going down being completely transparent and they very much appreciate that so I would say going into a job market that begins to open we stand on pretty solid footing with these Banks because of our prudence and responsibility in these certain certain times.
That's helpful. I appreciate all the color guys. Thank you.
Our next question comes from line of Todd Thomas with KeyBank. Please proceed with your question.
Hi, thanks. Good morning. First question. Just Julie in terms of the April Collections and your commentary. You mentioned you talked about utilizing a portion of 10 and security deposits to attack against rent payments. Does the 52% figure for April rent collections. Is that include the application of any security deposit or is that a go forward strategy or discussion that I'm having with tenants? Um, you know for for for May and Beyond at that at this point
Thanks for asking for clarification there Todd know the the 52.4% that we collected for April is strictly cash received from tenants in April, you know security deposit is something that we're exploring to the extent. It makes sense with certain of our tenants. We we would consider that more on a go-forward basis and it would be happy to you know qualify for that for you going home. We don't I don't expect it to be a significant impact, you know, we have we have amounts that that could be applied for certain tenants and then there's probably others that where we wouldn't pursue that route. So not expecting it to be a material component and certainly not included in the 52.4%
Okay, and then you know, I know it's early in May regarding, you know collections at this point. But do you have a sense for for how they're trending or email to talk about? How collections to date in May those far or maybe tracking compared to to where they were in April?
Todd I'll take that question Julie you can add on if you'd like, obviously as I mentioned in my opening remarks were essentially day 3 into the application of the cash collection. I would say that they're trending a little bit slower to Julie's earlier commentary about the elongated nature of the collections for April and we would expect that to continue through May but I wouldn't say that they're materially wage lower than they were at the beginning of April third business day and but they are a little bit lighter and I think that we had fully expected that a bit but our property management teams and asset management teams are clearly on task with seeking out rent collections to the extent possible and we're just keeping on top of that day to day.
Okay, and then just just lastly I guess, you know sort of a bigger picture question for for you Steve, you know, maybe Shane can chime in but you know over the the the last several years or so really since the IPO you migrate that, you know significant Capital towards more lifestyle and and mixed-use and and sort of live-work-play assets that that have, you know, a little more exposure to you know, traditional mall-based retailers and and and apparel and some entertainment, you know One Loudoun downtown Crown a few other assets and and South Lake and so forth. Can you just share how you feel? The same assets are positioned how they're performing today? Just giving that that greater exposure to some of those those retail categories. And and also how you're you're thinking about, you know, the strategy going forward from here in sort of a you know an environment or you know, after after, you know, the economy reboots and and and reopens.
I'll take that briefly and turn that over to Shane. Obviously, we had shared a number of Statistics in the script in terms of the performance. I would say that the lifestyle centers compared to what you would say, you're a traditional power or grocery-anchored centers. It came in a little bit light in terms of the rent collection, which would imply that there's a little bit more trouble in some of the smaller shaft tendency there but as a practice and as a strategy, I don't think that we're altering things very much. We still very much believe in the hundred two assets that we have all of our lifestyle centers are very strategically located. We're seeing seeing the best occupancy that they had ever had since our IPO back in 2012, and it's just great real estate and I think as things come back to some sense of normalcy. Yes, it will be on a reduced basis, but I do think people are just going to be yearning to get out and be in that type of environment as soon as practicable. So we're very committed to the strategy game.
S chain and pointed out with One Loudoun carrying on with that development bringing the multifamily there but also the South Lakes of the world and the legacies of the world and even the Eastwood Town centres of the world. These are all viable centers that we feel as though maybe a little bit harder hit in the early stages, but I think we'll probably be fairly quick to rebound down the road. I don't know if you want to add anything shame.
No, thank you cover. Well, I would just I guess if to add, you know, look I think if this had played out, I don't know three or four or five years down the road just let's compare situations or wage or progress, you know, obviously a larger portion of our rent would be in multi-family and smaller footprint Boutique office and you know looking at Birth rent receivables today in multi families and you know, what mid-nineties and office at least in our in our space or our portfolio is mid-seventies. So you could argue we would have been better for tomorrow be better for it. If you're just measuring us from a rent received and April standpoint, but no, I don't think it changes the strategy to I think we're very focused on real estate at the edges right? It's income density increase the income density. We've talked about it before you get there one of two ways extreme density with lower average incomes or like Loudon much higher average incomes lower density but much higher population God.
We still think those work very well long-term. And I think that the the current situation we are in certainly will speed up the demise of a lot of the marginal.
More Commodities sites and Retail and when we think about bow or any of the other assets we talked about we have expansion capability, especially vertically. I think they took an inordinate we better and we just need to have the tenacity from a balance sheet and platform to whether this and I think we do.
Okay. Thank you.
As a reminder, if you would like to ask a question, press star one on your telephone keypad. Our next question comes from line of Hans saying with JPMorgan. Please proceed with your question. Yeah. Hi Tom. I'm sorry if it's got touch on before I was wondering in terms of the tax that haven't paid, you know, what portion of those are camps that can afford to pay just have chosen maximum wage.
Hi, good morning. I'll take a shot. We don't have I think it's a bit subjective. Right? It's it's it's our interpretation of who should be paying based on their cash burn rate and you know, they could argue the opposite. I think that there are certainly Nationals that we feel should be paying that have larger balance sheets with better liquidity current liquidity profiles than we do and given that most wage markets. We are in you know, as a reminder 10 of our top ten markets over eighty percent of our ABR have shown either an indication for an opening date of phase one or are open Monday example, Texas and Georgia and Arizona hold over 40% of our base rent and they are largely open for business and I think Jim's and salons and bulbs are coming shortly. So we are certainly encouraged by that that will give us more visibility. I think it is up for us now to set the target as far as yep.
How we are going to position react to some of these stances and we we already have you know, I think as a as a methodology, it's pretty simple when you're faced with what is a long arduous task and certainly a significant amount of volume relative to ordinary course looking at least modifications, even if they were all deferrals in this case. So our Target is dead or going to go through this process. Anyway, we're going to be better for it on the other end. What would be better as a team? But more importantly we're going to focus on stability in the short-term with maximum flexibility from a lease truck a long-term if we're going to modify anything. We're going to be better. Excuse me. So with that Target, there's a menu board that we will deal with and whether it's co-tenancy to Pivot around 6 or exclusives or prohibited uses or blackout periods or no build areas. There is a long and deep menu that is situational to each tenant and the team is armed with that. We are start off.
Those negotiations and Earnest but what we were waiting for quite honestly were something with some visibility on when most of our rent would be open as you can imagine a lot of the Nationals have multiple locations and to just solve broadly with one lease Amendment doesn't make a lot of sense until we have visibility. So we are starting that process. I would tell you the Lion's Share far and away is is a deferment conversation. But again, we will go through it and and certainly have statistics and more visibility in the next quarter, but we will absolutely be better for this process. No question.
Our next question comes from line of Florida and I come with compass point. Please proceed with your question.
Great. Thanks for taking taking my question guys Shane quick quick quick one for you the dissolution or or the the suspension of of development at Carillon. Were there any fees that you want up having to pay to your potential JV Partners there?
Oh, that's a great question. No, we did not long story short. I think better to be lucky than good. But Carolina actually has ended at a perfect stopping point where and we have maximum flexibility with the site plan. Um, and we also have no encumbrances with the partner. So we had not closed on either of the jv's we were both splitting Pursuit costs. And uh, I've finally there was there was no fees to win those up because we hadn't closed.
Got it. Okay, and and and how quickly do you think that you could start that up? And would they would you think that they would you know want to to restart with you? If you decide at the end of this year that said that the timing is correct to to restart.
Yeah, both partners are very interested in moving forward whenever we want and I think we're talking about different structures right now. I think both agree that multi-family and I will be in this case are very viable. They clearly like to go right now. I think to the extent we go sooner than later Flores it would be a modified structure wherein
We would contribute to land underneath the m o b building and of course the pad for the multifamily and we would have at least fifty percent ownership of each of those jv's for that language ocean with no further Capital requirement. And then our partner would go get a third-party loan. Those are the conversations were having right now. I think for us we we would like some visibility and we're working on that page as relates to what was the former retail phase one portion, which was obviously led by a theater which doesn't feel like the best choice right now. It can't suck it won't be in a year. But right now that doesn't make sense. So to the extent we go on those two pads and keep that interest. I think it works. But again, we just want to make sure we're maintaining optionality around what a changing phase one box like
Great. Thank Shane. Yep.
Our next question comes from line of events Tacoma Green Street advisors. Please proceed with your question.
Hey, good morning. How are you? Thinking about the rent paying ability of certain tenets such as restaurants during the initial phases of the opening process. I mean, do you think the full service restaurant? We able to pay the full rent in any point this year giving social distancing requirements will likely impact their sales and profitability.
I'll take that Vince. It's it's a great question. It's it's very top of mind for us, especially given our mixed-use component and we have quite a few years or Regional restaurant operators. So, I don't know. I don't know the answer that it more likely not than yes. I think a lot of the conversations we are having right now involve some form of short-term lease modification that involves visibility around how those operators are going to operate what the expectations are for revised G&A and then obviously sales are a bit more subjective, but let's lay it out and let's just talk through why and what it looks like so to the extent that they are willing to put that foot forward and be transparent and help us understand.
The scope of the ask we're certainly willing to listen, I think, you know to the extent they are not we really questioned viability and certainly question any additional investment in those those operators are operator. And again, we should have more visibility on that in the next quarter or so.
It makes sense. That's helpful. Do you have this a rough sense the rule of thumb in terms of like what level of Revenue compared to let's say a normal run rate a full-service restaurant wage need to be profitable. I'm just trying to I know it's a thin margin business to begin with. So like if they run at 80% of their revenue, do you think they're profitable or is it off even at that level? It's still possibly, you know, not a you know cash flow positive business at that point for a lot of the restaurants then I'm going to take a quick shot real quick change in Paraline, but I think that's almost really indeterminable right now. You've got a situation with most restaurants where they've had to lay off all of their labor. So there's some rehiring that needs to come back and what levels are going to bring up thinking that wages are probably their second largest cost or at least maybe their largest class next to rent. So I think margins are going to be skewed all over the map as they start to attempt to rebound off.
Situation. It's pretty indeterminable in my opinion and I don't know if you have anything to offer there, but I think it's pretty indeterminable at this point.
Yeah, look it's subjective. But I think we acknowledge that. It's a fairly thin margin business and if you're facing the prospect of 25% seating and phase one and fifty 50% seating in phase two as an example and you had a very heavy bar business and liquor business before certainly that's that's tough time getting in the interim. I think the question is what's the proposal and what's the visibility of transparency? And how long do we think this will last um from a collaboration standpoint? We have to be transferred and we are pushing for that. No question.
Thanks for two. That's helpful color. Appreciate it.
Our next question comes from line of Linda's. I was Jeffrey's please proceed with your question.
Hi, I know you have fewer lease is up for renewal in 2020 versus other years, but do you maybe have some tools at your disposal to help preserve pricing power?
Hi, good morning. I think what preserves our pricing power just the overall quality, you know again it last year. We finished the year at $99 and the anchors and them occupied we ever have been as a company and I think again that you were starting to feel that the benefit of higher quality in the best get better. So we still off again and tend to have about 80% retention which I think is probably above some expectations. So there's an indicative there you look at r a b r i think that's an indicative of quality and you know, it's interesting. I think we see a broader bifurcation between the best and the rest almost regardless of of industry. It's just very interesting. There are a couple of anchor users National in this case who are using this this. As an opportunity to to discuss wage.
Watchlist locations and very much understand if we can get control of those locations to opportunistically expand in a recessionary environment. We also have a small shop tenants that have actually elected to prepay months of rent in advance upon receipt of PPP funds. We had won national tenant that the existing temporary call it six week closing as an opportunity to run full cycle 2 to 4 week for models and then open with with kind of the new improved store format. So those are best-case situations, but I think it's example of years of thoughtful Capital allocation from a retailer perspective and being positioned to be opportunistic. So it is not everyone is in upheaval I think which is encouraging and I think when you think about the right real estate and the yep
Quality nature of our portfolio. We certainly see that coming through and are still receiving options, uh-huh even this week.
Thanks for that.
We have reached the end of the question and answer session. I would now like to turn the floor back over to management for closing comments.
Great. Well, thank you for your time and the thoughtful questions today. We hope we were able to provide a bit of clarity during these unprecedented times and more importantly assure you that our crisis proven team is on tap merge from the covid-19 pandemic prudently in strong supported by are resilient portfolio that changes to alluded to our assets are tenants. I've never been more proud of this team board of directors. There have been a number of discussions over the past several weeks with I think dealing with the challenges in the curve balls and the uncertainty but more importantly a lot of damage and good decision-making has taken place while we entered the pandemic with record high occupancy and liquidity. I am encouraged by the thoughtful and decisive actions that we've taken to further enhance our ability to emerge from this situation. Finally. I'd like to mention that we're planning on taking meetings virtually and all will be and we will also be presenting via webcast. So should you desire a meeting wage?
Feel free to reach out to Mike or do you leave?
To schedule a meeting and best of health and safety to you all. Thank you again for your time today.
Ladies and gentlemen, this does conclude today's teleconference. He may disconnect your lines at this time. Thank you for your participation and have a wonderful day.