Q2 2020 Kimco Realty Corp Earnings Call
Good morning, and welcome to the Kimco second quarter 2020 earnings Conference call. All participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.
After today's presentation, there will be an opportunity to ask questions. Please note. This event is being recorded I would now like to turn the conference over to David Bush Nicky. Please go ahead.
Good morning, Thank you for joining kimco second quarter 2020, <unk> earnings call.
Well jump right into it while most of us in the northeast still have power and why five service.
Kim can management team participating on the call today include on a plane Kimco CEO Ross Cooper, President Chief Investment Officer.
One Cohen our CFO.
Hey, Jamison Kimco, Chief operating officer as well other members of our executive team that are also available to answer questions during the call.
As a reminder.
That's made during the course of this call may be deemed forward looking it's important to note that the companys actual results could differ materially from those projected in such forward looking statements.
A variety of risks uncertainties and other factors.
Please refer the company that the SEC filings that address such factors.
In this presentation management, they make reference certain non-GAAP financial measures that we believe help investors better understand kimcos operating results reconciliations of these non-GAAP financial measures can also be found on the Investor Relations area of all website with that I'll now turn the call over the quarter.
Good morning, and thanks for joining us today.
Today I'll give you an update on how we are confronting the challenges posed by covert 19, and how we plan to move forward as part of the country continued to struggle with the virus or other parts really come back.
I will give an update on the transaction market and Glenn will follow with a recap of the numbers for Q2, and our enhanced liquidity position.
The cold virus is a challenge to our entire industry and one that we're addressing had on a kimco are great team high quality assets and strong balance sheet are helping us whether the pandemic and prepare for the future. We haven't effective strategy for dealing with Cowen 19, and have made significant progress since our last call.
First I would like to applaud the entire kimco team for their tireless efforts and ensuring that our centers remain open it operate.
Our people are smart passionate dedicated undetermined.
Simply put there that that's what they do and together we continue to provide our shoppers are kind of our employees are extended kimco family and our local communities at the same experience and it's also worth noting that as a result, the bar national footprint, our best practices and lessons learned from the challenges faced early on in the northeast.
We are now being employed to help those areas in the south east and west in their time of need.
Our portfolio continues to withstand endemic in.
We have reached a for all modification agreements with the vast majority of our top 100 retailers, we deemed non essential and are forced to close in some capacity.
We believe our retailer partnerships or Differentiators for Kimco, and then you challenging time tenant relation matter more than ever.
While working with our tenants to help them get to the other side you have worked at all to remove certain needs restrictions that will enhance redevelopment opportunities and create long term value for our shareholders.
Chronically many of our tenant relationships have actually strengthened during the pandemic, which bodes well for our future success, including the potential for opportunistic investments similar to the successful investment we made an albertsons.
The operating metrics reported today for our repositioned portfolio reflect its quality and resiliency and in times of stress qualities Krulik critical.
We continue to lease base, even in these uncertain time.
In Q2, we executed 52, new leases totaling 256000 square feet at a positive 22.9% spread and renewed 180 leases covering 959000 square feet at a positive 10.7% threat combined our spreads its worth strong plus 12%.
New leasing and tenant retention efforts helped occupancy finish at 95.6 for the quarter anchor occupancy was even stronger at 98.2%.
And small shop occupancy was 88% year over year, our anchor occupancy was flat, which again represents a strong result in the current environment and a further testament to our team and portfolio.
We continue to extend assistance to our small shop tenants, who need help and these challenging times.
Our tenant assistance program or cap is a multi pronged approach to provide valuable resources free of charge.
Program provides our small shop retailers with a three legal advisor to help navigate the numerous state and federal programs available for small businesses, which by our account that's potentially resulted in over 20 million a P.P. funding for our small shop tenants.
Our top program is also helping kinda activate outdoor areas to continue operations.
The National Kimco Curbside pickup initiative has been well received and customers are utilizing the service more and more.
Retailers have told us that our curbside programs dance that they've been counter and it's had a positive impact on their operation.
We have also helped our restaurant activate sidewalk cafes, and green spaces to help with capacity constraints.
All of our efforts in initiative to help our tenants are paying off.
For the month in April we collected cash base rent totaling 68% in May 66% June 76% and July is currently at 82% you're currently trending above our internal forecast for rent collection.
It is encouraging we remain mindful of the rollbacks occurring in certain hotspot and the simple reality that impacted the virus inhibits our industry's ability to forecast for the sense of confidence.
During the second quarter, we granted rest of world totaling 18.5% to be threat.
We feel that recipe or request for July that amounted to only 8% scheduled right and it worked out the Pearl plans for four basis points of total right. This is a significant improvement from the start of the pandemic when in April we feel that deferral requests that amounted to 39% of FBR.
At the end of July our weighted average repayment period for deferral is approximately nine month.
Currently 94% of our tenants are open the only 3% of PBR subjected mandated closures.
Our development and redevelopment pipeline activity is currently focused on achieving multiple entitlement masterplan approvals across the country.
Our goal is to entitle an additional 5000 multifamily units in the next five year old provide us with a total of 10000 units by 2025.
While we are closely controlling our project expenses our goal is to be ready to move forward with several projects when market conditions right.
I for our signature series project, we just received the temporary certificate of occupancy for the new Shoprite grocery anchor at the Boulevard project on Staten Island.
We anticipate opening this fall, but the majority of other retailers opening in the spring of 2021.
Dania Pointe, we recently completed construction and not 15, tenda fit out underway, including urban Outfitters Anthropologie.
First multifamily building the Avery at Dania Pointe, which is on the ground lease has begun moving in the first residents.
Our portfolio strategy is focused on having our grocery home improvement and mixed use anchored assets clustered in strong economic I must say that's served the last mile. These dense areas creates significant barriers entry and a favorable balancing supply and demand.
Our sophisticated retailers are utilizing these last mile stores, an indispensable fulfillment and distribution centers.
Differentiator for Walmart Cosco target home depot load and all of our grocery anchors who continue to serve their customers in multiple ways indoor shopping buy online pickup in store curbside pickup in home delivery.
These services inconveniences are all part of what the consumers know Mandy and those are the stores close to death population are outperforming pure ecommerce players on delivery times and cost efficiency.
We are witnessing a blurring of line between the distribution fulfillment and last mile stores.
We've also seen an uptick in demand from our essential retailers, who are also looking for more last mile location.
Clearly we are experiencing retail darwinism play out in an expedited manner and we believe we are well positioned to take advantage of the future of retail.
Finally in addition to our team and portfolio, we continue to prioritize liquidity that we'll get the details on how we bolstered our balance sheet by issuing our first green bond at an attractive rate paid back our term loan and continue to push out of maturity profile. We have our entire untapped 2 billion dollar line of credit at our disposal limited maturities on the horizon.
Received a further cash infusion from our Alex.
We believe our ongoing efforts to enhance our balance sheet and cash position will enable us to prosper and be opportunistic at a time of <unk> tremendous dislocation and well into the future.
While the current unpredictability of the virus in government action is making forecasting a challenge it could continue to monitor the environment Daily you meet regularly with our board members to keep them up to date review, our cost projections and determine how and when to reinstate our dividends to be clear. It is our intention to paying additional cash dividend in 2020, which.
At a minimum will cover our taxable income.
As I said at the outset the companies that stand out in this environment are those the superior talent superior asset quality and its superior balance sheet. These unsettled times. We believe we have the right combination to weather the storm and will be among the best positions to preserve and succeed over the long term raw.
Thank you caught her and good morning, everyone I would first like to Echo Conor sentiments on the kimco team and the incredible effort put forth. During these challenging times. It has been nothing short of inspirational.
On the business side, our strategy has been fairly straightforward and shore the maximum amount of liquidity and balance sheet strength to enable us to be opportunistic at the appropriate time.
We are confident that we have successfully accomplished the first part of the equation and now we remain patient and ready for the latter thus far the transaction market has been fairly limited with most owners on lenders biding as much time as possible before deciding on a path forward with their assets.
Multi tenant strip center transactions were down by 80% to 90% from April through July This is coming off a vibrant and active January and February which was up 30% and 16% year over year.
The majority of the deals that did close from April to June were pre covert deals that were pushed over the finish line with both sides of the deal willing to compromise to get it done.
Post Cobra deals hitting the market had been sparse with a few exceptions being smaller essential retailer anchored centers that have a very specific reason to consider a sale.
There has been very little capitulation between buyers and sellers in the bid ask at this point.
We anticipate that come to fourth quarter and into the early parts of 2021, there maybe some private owners and operators that ultimately make the decision to be market sellers.
That being said, we're starting to see investment opportunities loosening up in two distinct categories first with our existing retailers.
When it is more important than ever regardless of what category. They operate within and all are looking to bolster cash and strength should strengthen their balance sheets.
We have a proven history of unlocking value and working with retailers to whether a crisis and have started having multiple discussions around mutually beneficial ways to work with those companies that are real estate rich.
Between own stores and distribution centers, there is substantial value in their holdings that can be used to enhance value for their business, while providing a solid growing income stream for us.
The second category is with existing owners in need of offensive growth capital.
In many cases, the traditional sources of financing have dried up for retail property owners.
The exception of down the fairway neighborhood grocery anchored were very strong credit junior lineups lenders have become extremely cautious during this pandemic.
For those like Kimco with liquidity already raised it presents the option to invest rescue capital to those indeed.
And this is not specific to distressed are struggling properties. This includes major market centers with growth opportunities that need capital to execute on the vision.
Where they're coming in as a joint venture partner or a lender there are excellent real estate locations that require investment capital, which we can assist with and we're having those conversations regularly.
As it as for an update on our exploration of an investment vehicle. We have had productive conversations with multiple outside capital sources that are interested in partnering with kimco on unique opportunities.
Because the set of opportunities are wide and varied we continue to evaluate different structures. The best reward kimco shareholders. We will have more updates at the plus business pipeline unfolds.
Why we would be while we will be thoughtful and opportunistic with where we place that capital we're starting to build a potential pipeline for these initiatives. We believe it will take time and patients, but given our knowledge of the sector and broad relationships, we anticipate being able to unlock value for our shareholders in the coming years with this investment approach.
Now, let me pass the call off the gladden for the financial details at the quarter [noise].
Thanks, Ross and good morning.
Well the focus my confidence on second quarter results, including accounts receivable reserves capital markets activities and our strong liquidity position.
For the second quarter 2020, maybe to follow it was 103.5 million look 24 cents per diluted share that's compared to 151.2 million a 36 cents per diluted share for the second quarter last year.
The reduction was mainly due to an increase in credit loss reserves.
1.4 million as compared to the second quarter last year, resulting from the ongoing cobot 19 endemic.
On a positive note we delivered incremental in a why 1.9 million more recently completed development projects at Lincoln Square Grand Parkway Mill station and Dania Pointe.
We also reduced our financing costs by three and a half million achieved with 8.2 million of savings from the previous redemptions of 575 million of preferred stock.
Offset by higher interest expense of 4.7 million due to increased debt levels.
It is worth noting although not included in Navy death, though but included in net income we recognize realized gains totaling over 190 million well 44 cents per diluted share.
Partial monetization of our Albertsons investment in an unrealized gain of 524.7 million on all remaining ownership stake in Albertsons.
We received over 228 million in cash from these transactions and use the proceeds to reduce debt.
As expected our second quarter results were negatively impacted by the force involuntary closures of many of our tenants during the second quarter due to the ongoing cobot 19 endemic.
Those most affected where tenants de nonessential included many of all small shop tenants, we had been working diligently to help as many tenants as possible with deferrals Collectability. Many is questionable and requires us to place those and it's on a cash basis.
So those tenants now want to cash basis, we reserve, 100% their outstanding accounts receivable were continuing to monitor the situation closely.
Now let me provide some additional detail regarding the credit loss reserve for the second quarter of 2021.
We recorded a $40.1 million credit loss reserve against a crude revenues during the quarter and then an additional $11.6 million reserve against noncash straight line rent receivables.
As of June Thirtyth 2020, our total Uncollectable reserve stand at 56.1 million was 32% of a pro rata share of accounts receivable.
Well the total credit loss reserve 22, and a half million is attributable to tenants on a cash basis at the end of two Q 2020, approximately 6.4% of our annual base rent or from cash basis Clemens.
Any collections of the reserve mouse will be included in revenues and period receives in addition.
We have a reserve of 21 point Sixmillion, what 12, and a half a cent against straight line rent receivables.
Turning to the balance sheet, our liquidity position remains strong with over 200 million of cash in 2 billion available on our recently closed revolving credit facility will final maturity in 2025.
During the second quarter 2020, we obtained a fully funded $590 million from loan.
Further enhancing our liquidity position. We subsequently we pay 265 million of this term loan with proceeds from the partial albertsons monetization during the second quarter.
We finished the second quarter 2020, with consolidated net debt to EBITDA of 8.6 times 9.4 times on to look through basis, which includes our preferred stock outstanding and pro rata JV debt.
The increase is attributable to the credit loss reserve, which reduced EBITDA.
Well.
If we include the realized gains from the partial monetization of the Albertsons investment.
Consolidated net debt to EBITDA would be sits in a half times and the looked through metric would be 7.3 times level similar to first quarter 2020 results.
Our weighted average debt maturity profile as of June Thirtyth 2020 was 10.6 years, one of the longest and the read industry.
Subsequent to quarter end, we should a 2.7% 500 million dollar green.
Pending investment ineligible green projects. The proceeds were used to repay inflow. The remaining 325 million outstanding on the April 2020 term loan.
And the early redemption of 200 million of the $484.9 million of bonds due in May 2021.
We will incur an early redemption charge of approximately 3.3 million during Q3 2020.
Our consolidated debt maturity took 2021 of 425 million and our joint venture debt maturities of 195 million are quite manageable, given our liquidity position and availability on our 2 billion dollar revolver availability on $150 million revolver in arc year joint venture in.
In addition, we continually monitor the bond market for opportunistic entry points.
As a result on the ongoing impact from the <unk> 19 pandemic, we're not comfortable providing ethanol or same site NOI guidance at this point.
Regarding our common dividend during 2020, we have so far paying dividends of 56 cents per common share.
It remains our intention during 2020 to take cash dividends at least equal to our taxable income.
We continue to evaluate the business and economic landscape and have monthly dialogue with our board regarding the timing and the level of the common dividend.
Although these are challenging times with are abundant liquidity position highly experienced and motivated team along with a well position portfolio. We have built to withstand the impact of that endemic and thrive when we get to the other side of this unprecedented situation.
With that we'd be happy to take your questions.
Well now begin to question answer session Tesco pushing me Press Star then one on your Touchtone phone.
Using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then too.
The first question comes from Rich Hill from Morgan Stanley. Please go ahead.
Hi, Good morning, guys I want to maybe just start with a higher level a question about a rent deferrals and bad debt and I you know I'm not asking you to get for died by any means I'm wondering if you can give us some historical views into how much of bad debt you ultimately end up color.
Acting and then how much a of deferrals shoot you might you might not come back.
Oh, it's Glenn I mean, it's certainly varies I mean, often told pandemic. If you look at what we've done in the past my credit loss reserve is range somewhere in that 75 basis point range and for the most part that is what you really have one wound up writing off over time.
Well the Pandemics a lot different you have really retailers that are close not because they wanted to be close it not because they were worried financial trouble because of the situation they've been forced to close so trying to estimate what the uncollectible mountain is going to be it's just really really challenging.
We are doing is spending a lot of time with tenants tried to help them said think and stay open and given the opportunity to get the other side to help.
Managed as best as we can.
But really I can't actually give you a number what we would expect here.
Got it that that's helpful. I did want to spend a little bit of time on the covert 19 business update.
Our supplemental first of all thank you for the detailed disclosure it's really helpful. So if I'm looking at your.
Total rent collected person deferrals.
Into Q it was 70% rent collect at almost 19% deferrals and then in July it was 82% rent collect it and 5% deferrals. It's.
And number one are you converting.
Faros into actual rent collections as as a as properties and storage open up and do you think that sort about cadence will continue for the next couple of months, whereby you know you'll you'll have an increase in rent collections and then than than still some bad debt.
Well again, the deferrals deferrals, depending on where the formal is if it's viral that was done on a on a cash basis tenet that's fully reserved so as I mentioned in my opening remarks today that we collect those those are going to wind up as revenue in the period.
Our collected.
But you know again converting to problems to rent collection again as I think it kind of mentioned the weighted average Tom is about nine months for all the deferrals and a lot isn't that far old that are going to be paid really mostly in 2021.
We're really come from a lot of the major tenants that we provided you know those rents or too. So I think you'll see a fair amount of Deparle get collected.
Okay Fair enough I I was really trying to understand what that looks like you have some pretty strong Qaeda <unk>.
Yeah, and rent collections, while deferrals are going down and I. It seems like based upon the prepared remarks about Conor, saying, we would we would expect the rent collection to continue to rise.
And.
That's really about trends.
No. That's that's exactly right rich I think when you saw early in a pandemic we all.
Banded together to work with.
The large tenants to make sure that they have the deferrals nailed down so that we can now take the time to really help the small shop tenants, because they're going to need a longer bridge in my opinion. So the the lions share of the big tenants have been I've been taking care of in terms of deferrals and now were or crafting you know unique deferral probe.
Grabs for our small shop tenants because in my opinion, they don't have the balance sheet. They don't have the cash on hand, and we need to do a bit more for those books.
Got it that's really helpful guys I I really appreciate transparency, it's it's a extremely helpful. Thanks guys.
Next question comes from Craig Mckinnis from Deutsche Bank. Please go ahead.
Hey, good morning.
I was hoping to dig in to maybe bankruptcy is a bit I'm curious what your exposure it's been too what your exposure is to those tenants are so far this year and maybe the expected impact to occupancy also have all those tenants and take into a cash accounting basis. Thanks.
Hey, great Yeah, that's a thought with I'll start with it the second part of your question anyone that's in bankruptcy.
Anyone in bankruptcy is on a cash basis and any are that we have from them is fully reserved ray maybe you want to had about a the hence themselves.
Hi, good Yeah sure Hi, this is ray Edwards.
Last week got tailored brands filed for bankruptcy and in all honesty I think from the with from Kimco of tenants that we felt were at risk and that would be filing joint co bad other than you know maybe AMC with restructured that we think that you know.
When you kind of hit the top of the top major tenant of ours that were concerned about I think the exposure right and you can correct me for the tenants have filed its about but you're gonna have percent baby or something like that.
2.3 modest.
Yep.
So yeah. The only other point I would add Ray and I think you've made this point before that the majority of tenants that have filed due to to the pandemic I've been more of a reorganization they've been a debt for equity or type of exchange and you know there have been some store closures that come along with that but they've been focusing on keeping their best.
Forming stores and Luckily thanks for our transformed portfolio you know, we haven't been impacted significantly from those store closures.
That's correct for example, with GE and see what is actually small tenant for us, but we had about 50 odd locations with them. They filed a motion and there the motion to assume leasing includes about 44 of our 50 odd leases with them. So <unk> number we should we think will be assumed by the tenants and operating on the other side of their bankruptcy.
Okay. Thanks, and then just a follow up on leasing.
Spreads are obviously quite healthy this quarter I'm just wondering how much of that was due to discussions that we're kind of already in place head of Ur Cobot 19 issues, and then kind of expectations on leasing volumes and spreads a into the back half here.
Well, yeah, great question like one.
Sure. Yeah. This is Dave Jamison I'm, sorry, it's there in terms of our spread this quarter at the majority of those leases were pre kobin negotiating leases that were in process at the time prior to the pandemic hitting I'm. So obviously it it should quite well.
As it relates to a go forward basis.
Said consistently in the past its always dependent on the population on a quarter by quarter basis. So it can vary fairly dramatically one by the number of deals you do and to buy those deals that qualify as a as they comps spread that said our below market portfolio. You know enables us to absorb a bit of a cushion if there is a slight decline.
China is still get that positivity out of out of a new lease.
That is executed so we do feel good and comfortable going forward that we still should have some momentum I'd also note that on the leasing side you know the essential retailers, primarily grasher is off price et cetera are really looking to expand during this this opportunity where they see new they can see that Mike.
To market with great real estate, they want to make sure that they capture a those opportunities to expand their market share. So the demand side will be there we've seen it already with our anchor anchor occupancy, obviously holding flat year over year, which is quite positive and on the small shop side. It was reference you know you referenced the out of.
Bankruptcy and as a bankruptcies and as those spaces do become available it does give us that chance that upgrade and to a more well capitalized retail so that is could be another positive I go forward.
Thanks, Dave.
Next question comes from Christy Mcelroy from Citi. Please go ahead.
Thanks, guys. Good morning, I'm could kind are you, saying I pretty vocal about national credit tenants need and Hey, I'm sure you're approaching antennas has evolved it depends when they get the ball. What's your approach today in regard to that you know national tenant base. It hasn't paid how successful. It then.
You mean litigation with any kind of today or do you expect to meet said go that route at some point.
Yes, Hi, Christie, Yeah, we have been I would say from but fair with our national credit tenants. You know we continue to think that.
Since the beginning of that that it's really that responsibility to pay so that we can use our balance sheet to going help though small shops that are most in need and I'm very pleased you know what the team performance of having all of our tenants that were deemed non essential that were in our top 100 I've been put on a deferral plan to help them.
In time of need so yeah. It show it showcases a lot in terms of the the partnership that we have with our retailers. We're not in any litigation. We don't plan to be we've worked through it you know it's been very challenging times very stressful time for all those involved but we look at each tenant individually each lease individually and we try and come up with a mutually.
Beneficial agreement that gives us the ability to potentially loosen up some lease restriction some some potential person redevelopment in the future and you know in terms of the deferral plans I've been very pleased with what we've been able to achieve and the lions share of of our of our big tenants have actually perform.
I have done quite well in there and have been paying their right and so you know it allows us not a really focusing and and help those small shop tenants in times of need.
Okay, Thanks, and they're just in terms of the stub dividend, but you expect to pay later this year to satisfy taxable income when do you ultimately announced it should be looked at it. It's just that that's true up or do you expect to reset it at a point, where you believe that well be sustainable level into 2021.
Christy if the really good question and it's one that we have constant dialogue with our board about and so one we're ready to reinstate it will make sure that you know the board has communicated clearly of how we believe the dividend should be looked that obviously, we know the dividend is important to our investor base.
We want to reinstated at the appropriate time, where we feel like we have visibility into the future cash flow projections and it that it will be well covered so that it can be in a position to grow in the future.
Okay. Thank you.
The next question comes from Derrick Johnson from Deutsche Bank. Please go ahead.
[noise] hi, everyone. Good morning, and thank you so as I looked at the Sop on page 33.
I was wondering you know if you can give some color on the 20 million Delta between the 56 million building and.
Potentially on collapse, and the 35 million potentially uncollectible.
Well, let's say.
56 million of Uncollectable that is all reserve.
Both consolidated and pro rata share.
And it includes both [noise].
Yeah. It includes both the amounts for anyone that's a cash basis, and then I think I mentioned in my opening remarks about 22, and a half million of that reserve relates to tenants that are a cash basis.
And then the balance the balance of it is the other tenants where we've done our full analysis on.
On on the reserves themselves and we could we could give you some insight into how we calculated that was our best that would help you a little bit and I'm not actually let Kathleen they are kinda give you a little bit of insight into that.
So camilo.
No I assume that's one of the assess all back how long tunnel Cashable factor that in light at the Palm damage. We obviously.
Look further I'm, sorry panel, though we ramp I Santa lease by lease level on a fast each of our tolerance for risk perspective on this was done at various levels throughout the company Ali Let me tell presidents about I've got a general comes on the assessment on campus awful long history. The tenant was long Uh huh.
So that's the kind of like long past performance in terms of pull among the operating factors over all the time on them.
No no conversations Abraham cannot get upon banner or perhaps even Alaska.
You know radio silent on us.
So with my thought was risk assessment that allowed.
Turning on what an overall general reserve one thing on our IR.
Well on a straight line receivable I'm. So those general reserves represented about 50% on the <unk> first side, what we talked for Keno Hill on about 67% <unk> I'm still by the second since huh.
Thank you for Colorado process.
Switching to development and has continued development at Boulevard and you did mention Dan Yeah point phase two and three and be opening comments have completion dates been pushed back here. Tom is the first part and then secondly, you know given the pandemic you know how our net effect.
Active rent discussions you know and development yields kind of being impacted versus pre cobot underwriting.
Sure. This is a this is Dave Jamison so.
In terms of the Boulevard as Conor mentioned in his prepared remarks, we didn't get the temporary CEO for the Shoprite grocer, and we anticipate him them opening and the back half in the fall of this year. So that's going to be real parts or with the balance of the retail tenants really scheduled and 21.
On an IR our basis, if you have some delays in tenant openings, obviously that additional time, we'll have some nominal and act, but when we look at the quality and the strength of these two projects the Boulevard Dania Pointe long term value. It is exceptional and that's really how we look at it yeah. These are projects that will hold a into.
Definitely into others, there's no short term or exit plan there in terms of the dania yeah. The activity. There is is going quite well with with 15 active projects or tenant project should outs are underway right now and even for that a few tenants that we've actually gotten back where we.
Hadn't actually done or started to hit out work for them.
There's been a number of retailers and other uses interested in backfilling that space and we're at least with several of those locations already so again long term when you have a private did that size and scale city, along I 90, 540000 cars a day driving past said you have to think beyond that in a short term disruption here.
And really think of bad debt the quality of that real estate and the project.
Into the future and it's going to be quite exceptional so we feel very good about it.
Yeah, just just to add onto that the completion dates are both have not been push because we have been able to actually got waivers for the boulevard to continue to construct during the pandemic and dania continued to construct drain the pandemic. It's the rent commencement dates that that day was referencing that there will be pushed a little bit therein and and we anticipate.
That being a.
Major contributor to 2021.
Thanks, so much everyone.
The next question comes from Craig Schmidt from Bank of America. Please go ahead.
Thank you.
If I mean, it sounds calls going forward that or you know we might have a little more challenged from occupancy on the small shops and the anchors or the total portfolio I'm wondering if you think that to the small shop.
Decline that you experienced a this quarter.
Well be replicated the second half of the or do you think that you're you're up it may help shore that up.
Great question, Craig Yeah. Our hope is that you know it won't continue to decline as it has 135 basis points of the of the decline over this current year, it's been related to those bankruptcies that have occurred but also past bankruptcies that already previously filed by pure one or two.
Herman Charlie's via the vacating a dressbarns et cetera. So that was that was a really big contributor in the in the first half that we started to see that slide but you know our efforts have been extensive and far reaching in terms of retention in the small shops, and we want to absolutely do everything we can possibly get Ken to it to retain those and it didn't really help them bridge to the.
The other side because it's really it's unfortunate that this short term disruption at such an impact on them, but net net in the long term. It if we can retain those tenants and help them thrive on the back end of this we're all better off I think a big I'm a big thing to note as well, it's just that the big difference between the <unk> a great risk.
Fashion and now is the quality of our real estate, Yeah, we had a much larger portfolio at the time spread across a much larger part of the country and now with our really refined portfolio of high quality assets about 400, and top 20 markets I think some of the resilience Gee that we're starting to see from.
From those positions is a real positive again with the anchor side, the holding flat year over year. So you know as we do get the vacancy back the demand we feel confident we'll be there and and yeah, we'll push the other side.
Craig we are in the marriage by the small shops adoption of curbside pickup I think that's you know one of the trends that we've seen really accelerate through the pandemic and the nice part is we we've rolled it out now nationwide, we've seen customers really gravitate towards that and now that the small shops are not program I think the.
Bodes well for them evolving their business model to give them a fighting chance to sort of make it through and hopefully come out the other side of that.
Great and then just you know looking obviously the tenants have done the best her essential and value retailers versus sort of the full price discretionary retailers as you work to fill those vacancies are are you going to continue to focus on a sensible or will you.
Welcome yourself up to more discretionary retailers.
Yeah, our focus says there's always been grocery anchored centers and our internal target goal has always been to get a grocery store and every location that doesn't currently have won so we'll continue to make that a priority. We have we have long extensive conversations with them about the opportunities for them to expand.
And for a lot of the essential as you know the change in format is is active a it was happening Creek opened its happening during Covidien will continue postcode. So where are you saw work where an opportunity you saw it may not have existing into passive now become a real opportunity because they get to Connors point, there adapting their business model.
Is there, there's a finding new ways in which to attract customers, which has different needs and that then there were in the past so that will always be a big focus of ours.
Great. Thank you.
Next question comes from Alexander Goldfarb from Piper Sandler. Please go ahead.
Hey, good morning, good morning, and I hope everyone has power generator.
So two questions first Glenn on the dividend going back to Christys question, how much your taxable income. This year is driven by actual cash versus it's driven by no rent deferrals, where you didn't restructure the leases so they don't so.
Effectively the leases go count a taxable even though you're not necessarily getting the cash currently just sort of curious what the delta is on a on that and how that drives your dividends decision.
Yeah, I mean, the bulk lump all cause what we had just the cash that is collected I mean, you see the amount of reserves the reserves themselves.
Our the portion that has not been collected thus far and those reserves are not taxable deductions until you would actually write them off.
But the bulk of the bulk of what we had its cash collection.
Okay. So basically you're not essentially your dividend decision is one based on cash it's not like you're forced to pay something for rent that you haven't received but are deferred.
No no.
Again, we also you have to keep them up we also have a fair amount of hatch strategies I mean, I mean did the bigger question is we have the gains from Albertsons and we need to be able to shelter those game, which we we haven't variety of tax strategies that we are going to employ a to actually be any.
The shelter those gains in addition to the gains that come from the rest of the business.
Okay and then my second question is going back to the curbside than they had to dine out or or take away service at the restaurants have employed do you guys have a sense of how much your tenants were able to offset you know their traditional shopping or traditional restaurant business by implementing curbside to dine out just sort of curious.
You know I mean, we've seen stats, yeah, hi put out at a Powerpoint with a number of you know stops various retailers and how much business you Gotta stories are picking up by online orders people picking up in store, but on an economic basis do you guys have any sense for the impact and how much the tenants have been able to cover through these two you know curbside to take that.
And take away service.
Sorry, sorry, Alex I, just I just lost power I know my my bad just kidding [noise].
[laughter] no. It's a great question and answer it is it really does vary tenant by tenant. So there's a lot of anecdotal information you know that we've been getting bad that curbside, an outdoor seating has been extremely helpful and trying to generate sales when they had to keep.
They're indoor dining goes so we do know that's been out and it's been beneficial there and we haven't gotten calls from retail tenant asking specifically to expand.
Curbside stalls in certain locations for them and door. It they would sponsor it and contribute to adding new locations on the curbside. So we know from that information that I actually has been quite helpful to them and helping bridge to the other side, but it. It's you know at this point we don't.
Have any hard data that suggest you know how much it's offset lost from.
From sales indoor and instead of restaurant I I'd also say actually and speaking to some restaurants, Dave identified you had the best selling items on their menu or other ways in which they could actually improve profitability and how they can current that they can run there the restaurant into the future adverse how they historically had been doing it.
And some had been seen a real in that benefit there because.
This staff required to say run a new model. It is a fraction of what it wants to do a full sit down service. So some of them are actually taking this is the opportunity to sit back and say hey, we can actually do a little bit better here. If we if we adjust X y Z.
That might be there in their new format going forward. So.
Yeah, we want to say very close to them, but that's that's what we've been here.
Okay.
Thank you.
Next question comes from Kevin Kim from Truest. Please go ahead.
Thanks, Good morning.
Just wanted to go back to your comments about possibly investing or lending a into your attendance.
We're going from third party capital I can you provide some more details behind that I wasn't sure if you're referring to select cases within your portfolio that Dennis I'm I need it or were you thinking kind of bigger picture or things like whats authentic brands has done actually investing into a brand where chain.
Sure I keep it I'm happy to jump into that one so there's obviously two different programs and what I was referring to is on the investment side of looking to help secure real estate solutions for these retailers a that's obviously different than the top program in other ways that we have helped to.
You know bridge the gap for these retailers through the pandemic Ah, but what we've done for you know the history of our plus business for several decades is invest in retailers that are real estate rich and there's obviously a variety of ways to do that the albertsons investment being the most notable but over the years, we've done a variety of investments.
Whether it be sale leaseback opportunities.
Other forms of financing with the real estate as collateral and that's really what we're looking for in terms of future investment categories.
With the authentic brands to Simon you know Brookfield, I think they're probably looking at it a little bit of a different way I don't know exactly the way that they structure. There are deals, but we're going to make sure that the investments that we make our very much on the offensive where we are doing it in a way that we are able to control a significant amount of retail or.
Real estate, I should say and not necessarily doing it in a way to preserve cash flow for those retailers, but that obviously it would be a in added bonus to that situation, but we.
We have a variety of conversations as you'd imagine with our 3500 plus retailers in our portfolio many of which owned real estate.
That they're looking at ways to explore enhancing their liquidity through utilization of that real estate.
Okay. Thanks, and do you have any sense for your small shop tenants, what the occupancy cost ratio it looked like and for the rents are paying I'm.
I'm, just trying to get a sense of when they don't pay rent like how much of that actually helpful. In terms of their overall cost structure.
So yeah.
Again, it's it's different on use a type of operation how they've set themselves up you know where their their primary drivers of revenues are but you know rent labor labor is actually a very big cost component to to the restaurants that that'd be mindful logs. So.
When they've had to close and then they had to look to Restaff. There's a big startup costs that you have to be mindful of and in certain areas as well like California, where there's been the opening three closings.
You've had to reap revamp your supply chain to get it fully staffed and then at that shut down again put pressures on them as well in the short term from a cash flow standpoint. So those are those are their biggest.
Components of the restaurants on.
Okay. Thank you.
Next question comes from Wes Golladay from RBC capital markets. Please go ahead.
Hey, good morning, everyone. Just wondering with covert here for another quarter nosek, it's not going away anytime soon are you looking to change the scope of additional phases of your mixed use projects. It could covert actually accelerate some of your projects I remember you had a few that has some townhome capabilities.
I had to integrate question I hope, it's only a quarter that we have left with whats koeppen I think that would be a good end result, but we're anticipating that might be a little bit longer than that but in terms of our phasing and yet from the very beginning of our signature series. We always wanted to ensure we have off ramps so opportunities.
Where we can phase the projects dependent on the mad dependent on market cycles that conditions.
So we can accelerate and are decelerate as needed no different now on a go forward basis right now.
At our Pentagon, where we have.
The witmer, which is a fully stabilized multifamily project.
We're currently doing underground utility work to prep the opportunity for the second tower at that project, which is where the national landing Amazon headquarters is that directly across the street.
There are we see great opportunities into the future with with Amazon I think having over a thousand hires already and a and the demand drivers being there, but that said you know we're just doing the underground utility work in preparation to move forward, but that's still a decision that we have to make into the future and we'll continue to evaluate.
As a market the ball and that's how we'll always continue these large scale projects.
And West. This is this was Ross I mean, the only thing I would add to that is where you might see an acceleration and we have seen an acceleration is our efforts on the entitlement side. So while were not necessarily going to activate a green light a additional projects and then it's a pandemic we have seen historically during times of disruption where the cooperation with the municipal.
Well it is in the local jurisdictions is actually enhance during these challenging times, so where are full speed ahead on continuing to hit.
Our goals of continuing to increase the amount of a residential units and other uses for these projects going forward.
Okay got it and then turn into the existing tenant base or do you have a timeframe, where you think you resolve all these tenants. It's your reserving for on a cash basis.
Is there, but moratoriums against you kick in some of them out or you're an active conversations with most of them and or I guess when you look at these tenants or most of them open or then that still not open bucket.
So we're always.
Talking to our tenants you know our 7900 plus tenants in our portfolio. Our operating teams are on their phones on a daily basis talking to as many as they possibly can and our real focus right now it is getting to the table, though is that had been somewhat quiet the small shops.
It had not yet responded to some form of deferment plan. So we'll continue our efforts there that's out in terms of them being open yeah. There. There are some that are open and probably some limited capacity and how they're operating in running their business.
And they're focused on getting that business up and running but it's something that we'll continue to hammer on and really.
You know that I'd say, our priority one two and three right now is to get that.
Got it thank you.
Next question comes from Caitlin Burrows from Goldman Sachs. Please go ahead.
Hi, Good morning, and I was wondering if I could just maybe talk a little bit on leasing on the earnings release mentioned that in the second quarter endeavor, he tenant leases and 180 renewals and options. So just wondering if he can talk a little bit of the cadence that we thing and how the conversations now are comparing versus year ago in turn.
[laughter] getting closer to normal.
Sure Yeah, So, yes, 52, new leases and of which were anchor deals again, the majority of those were.
In negotiation prior to Cove, and so is bringing those at finish line and and getting that resolved again on the read only option side I think it's a good testament to the quality of the real estate and obviously that the spread that were associated with that I mean, those were opportunities where tenants had the chance to punch out or look for.
Some other concessionaire consideration on rents, but clearly you know it was the appropriate rent and the right center for them to stay in and we work.
Hard with each of those tenants had to ensure that we retain them. So.
Right now I had mentioned earlier that you know there is a big demand and a big push on the essential retailers looking to expand into space and they're constantly changing their format. So that's that that has continued near throughout the pandemic.
We've also seen other operators even in some distress categories, such as fitness not the lower lower price providers right that cost sensitive.
Operators actually look at space too because they see an opportunity to grab market share post pandemic. So some of the mid priced guys had had pressures at 24 hour filed bankruptcy. So some of these other retail categories are seen that opportunity that yep coming out of this they could really expand their market share within any given.
Trade area. So Oh, we expect you know those conversations continue I want to stay very very close to those that even if they aren't expanding today, but they're well capitalized and we'll have a real plan into the future we want to make sure we're close to them as well.
I guess I'll tell you were saying that some of those leases that were completed in the second quarter were already in conversation like pre code that odd that I guess it suggests that then there would that dip in conversation after that have you to what extent have you seen that conversation.
Increased again I know you kinda just talked about it but I guess it that angle anything else to add.
No I wouldn't say, there and there's been a debt I'm necessarily it's just the timing of getting the deals executed and and the negotiation that in shoes with any given tenet, we hosted a a virtual dealmaking call in June with with you know is as a full day of 30 quest retailers and.
Having conversations across the country all are looking for opportunities to expand so it's just been ongoing.
Yeah.
Yeah at a time out of time like this we really focused on retention, we adopt the phrase loved the one year wet and you're going to see us continue to work on retention as much as possible and then as Dave said, it's pretty exciting to see you know there the essential retailers and we've seen that before and pass dislocations, where retailers that are thriving unit.
Time of disruption they look to upgrade their real estate they look to upgrade their their own store locations and so it's nice to be enough position, where the portfolio has been transformed and we're seeing increased demand because retailers are trying to upgrade their their location.
Got it and then just maybe quickly ask for a day to Q, hi that with 70% collected on the rent I didn't 18% to from any other update you can give for that remaining.
Oh for sanitary thing like the pace of progress to the outlook there.
Yeah, we were I think I mentioned, it a little bit on the on the previous question from the last caller is is that that's our focus is to get them all to the table to get them resolved a under discussion. So that's going to be an ongoing effort that's related to some of the smaller shop retailers that that had been silent through this process and wanting to make sure that.
We work out to plan you have collectively that works both for that meant for US today, we provide that bridge to get into the other side. So well that's that's a top priority in terms of our efforts on the operating side.
Okay. Thanks.
Again, a family question. Please press Star then one.
Next question comes from Mike Miller from JP Morgan. Please go ahead.
And Glenn how did the green bond pricing compared to what you could have done with the traditional bond.
Oh, it's a quick question you know.
I would say a couple of things about the bond itself, you know spreads have widened out so much and part of the objective of issuing this bond was to try and help we set our entire bond complex, which is what happened.
I would tell you that being one of the first green bonds to be done in months was actually very helpful and what we saw what we saw with a lot of demand. So Pete on a $300 million an ounce deal. We had 1.8 billion of waters and that gave us a chance that.
You are the largest size book you have gives you the chance to really reduce your pricing, which is what we did.
It's very hard to pinpoint how many basis points it see relative to what on a regular bonds would have gone, but I would tell you that they were leased a dozen doesn't funds that had green initiatives that we're in this deal.
So I would say definitely had some benefit to its for sure.
Oh, it's very hard to pinpoint an exact number but it definitely it definitely helps.
And on the nice part is the bonds have really traded very well and the whole Bom Bom our whole bank complex is really come back to you know.
Not quite as long as a wise, but too much better levels I mean, the bonds, we issued four weeks ago worth to 10 over their trading today in the in the one seven days. So it the objective really what's it kinda reset the curve in that and that and that's been accomplished so we feel good about golf.
Got it Okay and then on the on the go forward give it and not the 2020 true up.
Hello helps the board thinking about that is the goal is gonna be too you know said it is low as possible just to maximise as much retained cash flow second to be the pie sport.
Yeah, I mean, that's it I think what we've talked about is to have a dividend that would be.
Really no more than 80% of Fad.
You know if it's if it can be love a fine, but that's kind of the target and that's what we've talked about the long time. So I think as we said it that's probably the level that will look towards.
Got it okay. Thank you.
Next question comes from Floris Van <unk> from Compass point. Please go ahead.
Thanks, Good morning, guys.
I I thought a corner of the comment you mentioned you had about the 20 million of PPP estimated funds for your free or small shop tenants was really interesting shows you also I think that you're probably perhaps closer to your tenants were been working more closely with them then and than some others.
Give me again this most of your small shop tenants.
I have security deposits I don't believe you or your national tenants tend to have a security deposits.
Have you apply any deposits.
For any of the cash rent collection and how do you think about that as the PPP funds or.
Oh, you know or used up how how would you look at that relative to the deposits that you have on on a four York small shop tenants and and and how do you.
Have them replenish.
Their deposits with you going forward.
It's Glenn I mean, I'll tell you we have not really applied a lot of those security deposit against that rent yet we're trying to still walk through.
What we've done with the far also we have left that there how will we will use them if they if they go to bankruptcy or they just leave altogether will offset it but even in most cases the security deposits are not the preponderance of being out of elite right here in many cases, you're looking at you know.
One to three months of security deposits.
It's not a it's not a significant amount that you would really be applied against the entire lease.
Fair fair enough and encoder, maybe I mean, the other thing you you mentioned you want to focus more of your time going forward on your small shop tenants, presumably this is where you're going to see some.
Some of it so oh level basements going forward as well how do you.
How flexible will you be with your tenant and is that really dependent on.
How you view them, how important you view them for each center or do you have any sort of.
You know big.
Big picture.
I was thinking beyond that.
Yeah, no. It's a good question florist and we work as a team to go through each tenant individually lease by lease because.
You know it really depends on the local spot that they're in the rent versus market.
The business that they had pre cobot the type of use to make sure that we have the best merchandising mix to drive as much traffic at all points today to the shopping center.
There's no question that small shops are always impacted the most in these types of dislocations and so we're gonna have to do more there's no question about it that's why we've been repeatedly saying that that's where our focus is now now that we've got the top 100 really nail down we feel like we can really take RF or talk to them on a daily basis, making.
Sure, we understand what they're facing and give them the best opportunity to make it to the other side. So it's been an effort that the whole team has as combined to really push obviously, our cat program goes a long way with kind of tracking to understand what they're facing and how do we navigate the the government programs that are available and then.
What can we do as a landlord to also helped them. So it's it's not like sort of a silver bullet out there. We just sort of take all the efforts that we haven't try and do everything we can do to retain as much as possible and help the other side.
Great and last last question for me I guess it in terms of that's the the funds opportunity.
Would you consider.
Maybe doing some sale leasebacks for some of the tenant owned real estate.
Eventually gets more credit risk on your on your book as well or would you look at specific assets, where you really love the real estate and you are willing to own that real estate, even with a.
Credit quality that might not be as as a as pristine as as maybe it was a couple of years ago.
Yeah, I know, it's certainly a combination of factors that we'd evaluate when making those investment decisions at the end of the day, we've always been all about the value on the basis of the real estate and the dirt. So we're obviously looking at credit quality. We're looking at location. We're looking at the pricing we're looking at the yield and when you factor.
They're all those together, we're trying to make investment decisions that have long term value creation opportunities. So there may be some opportunities with credits that were once a a bit more pristine than they are today in this environment, but that doesn't mean that some of the real estate and they control is not a plus stuff. So.
We're very much looking at all those factors and we think that we'll have some things to talk about in the coming Watson quarters.
Thanks Ross.
Next question comes from Linda Tsai from Jefferies. Please go ahead.
Hi, Thanks, I'm on page 11 of your I know why disclosure.
It shows reimbursement income increasing in the quarter and then also on a year to date basis, what's driving that.
Hello.
Hi, sorry, sorry can you repeat that Linda.
Oh, sorry, so I'm on page 11 out of your and why disclosure reimbursement income increased in the quarter and then also on a year to date basis, what's driving that.
I think in its in a de tell a little bit but again. It really is just it's the recovery announced that we have collected.
Well relative to.
Oh, Yeah, just relative to the billings that we put out during the quarter.
I don't think there's anything there's nothing major in it nothing really significant that I would point you to I think it's more normal timing than anything else.
Got it and then I'm one of your peers talk about occupancy hitting the high Eightys and the first half 2021 any color you could provide on this metric headed into next year.
You know I think for us it it will right now it did so lets observed and see how that balance and this year plays out yeah with the pandemic and that destruction that it could have on the retailers. So I would say, it's a little too early to tell I mean, obviously our goal is to.
Maximize retention and increase occupancy it as best we can so we continue to put forth you know all of our efforts to do that.
But I'd say right now and you know we're trying to stay focused on the president and while looking towards the future.
Thanks, just the last one are there certain retail categories. You see is generally having a wider swath, it's better capitalized tenants or does it just boil down to having winners and losers in any given category.
Yeah, I mean, there there's always winners and losers you know there's and those change over time, you know do they have their rights format and the right supply chain and a the right vision for future are there. They led by good merchants to understand exactly how the retailer Ken can adapt.
The change you need to the customer.
But then it all is driven by the balance sheet right, how well capitalized our there how would they determined to deploy that capital for growth mode.
How are they using omni channel. So there's numerous factors and I think probably go through every category and see the winners and losers and it's really it's broken down between those that are well capitalized with a strong vision versus those that are undercapitalize or over extended with that and.
Having having made the necessary investments of ball, but future and the change.
And Linda just to add on on your earlier question on a recovery Capex recoveries is what's driving that.
Thanks.
Next question comes from Vince to bone from Green Street Advisors. Please go ahead.
Hi, Good morning, you mentioned potentially providing rescue capital illiquid private real estate owner is either on the equity or debt side. How are you thinking about the required returns on any new investments given where your stock is trading today, but also how much capital could you see allocating the wonder.
Yeah, I mean, the hurdles are definitely higher theres no question about it but we are seeing opportunities that are starting to hit those hurdles. So by way of example, you know there are owners out there that have signed leases on redevelopment opportunities pretty cove, it at very attractive yields.
That traditionally would have provided you know regular traditional lenders would have provided the capital they're just not there. So when you look at the opportunity whether it be in a preferred equity position or mezz position at double digit you know yields on very high quality real estate week, we would've never imagined that we'd be able.
To participate in that even six months ago and you couple on top of that what we're really focused on is in many cases, having the opportunity to get to write a first refusal on those assets in the event at the asset is sold so we do think that there's some very good short term opportunities to get yield that as attractive but.
Also longer term when things normalize the ability to potentially control that real estate down the road I would tell you that the capital plan and how much we would be willing to invest and that is very dependent on a variety of factors.
So we watch our our balance sheet very closely obviously the Albertsons investment is one that provides us some flexibility with <unk> capital coming down the road that could be utilized as well is dependent upon the ultimate structure.
That we put forth to invest in these types of opportunities would provide us some additional powder.
Outside investors, so I can't pinpoint an exact amount, but I can tell you that the pipeline is starting to form and we want to make sure that were there.
With the capital available to do so at the appropriate time.
Thanks, that's helpful color.
Switching gears just for a second how how long do you think operating expenses can stay at these lower levels. I mean, when do you expect them to kind of rebound and come to you know what they've been historically.
No. It's interesting question I I think when we look at the belt tightening that we've done across the portfolio and what we've been able to do in terms of efficiencies you know, it's our job to continue to look long and hard about how do we do more with less how do we belt tightening for the long term and so.
You know I think the operating expenses one that we continue to monitor to see how it would become more efficient we've invested heavily in technology, we've invested heavily to make sure that the efficiencies gained or things that we can continue on pass the pandemics. So it's not just a short term pop. So it's one that we've been monitoring closely and I think of the large national.
Owner, we get benefits of scale there because the investments we make we can deploy and really see significant efficiencies across the whole portfolio.
Thank you.
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Next question comes from Chris Lucas from capital One Securities. Please go ahead.
Hey, good morning, everybody I'm, sorry, the call so long, but I did have a couple of quick questions for you.
You guys provided great detail on her would have a number of various categories as relates to one collection I just the one category breakdown I was price because if you were sort of national versus regional versus local kindness is there much variation than that or or or was it fairly consistent.
It really is dependent Chris on on the category within that national regional or local obviously, there is essential retailers in each of those there's not essential them and you need to those categories I'm clearly the essential have been gaining market share have been dominant in this period of time, where like they have a lot.
From a competitive set and so it's interesting because.
Never before have we've been in an environment, where you know a government picks winners and losers somebody said the covert 19 pandemic is is extremely smart they can tell the difference between a target and the TJ Maxx, because you know essential versus non essential has been varied widely between what you just had missed municipalities deem essential so.
We're trying to work with everyone as best we can recognizing that some have been put at a disadvantage and we're doing our best to make sure those make it to the other side.
Okay, great. Thank you and then as it relates to you know sort of the the shop space a recovery.
Great financial crisis really.
You know the recovering from that was driven by national kind of the primarily on the shop space in the mom and Pops I think we're very late to the sort of recovery process.
Do you see that sort of scenario playing out because we are I get to the other side here or where do you think that there's you know how much more balanced outcome coming from from but different car types with us.
Hi, Scott.
I can start was that a little bit get your is interesting there there's a major difference between this.
And then to and what happened in a great financial crisis in the <unk>. The difference is how the consumers being handled by the government.
You know the consumers and you know, although the unemployment is still at very high level, the consumers being bridged here, you've had a unemployment insurance plus $600 Applebee's PPP loans, which are really going to be grants.
So the consumer is actually being bridge, where in the great financial recession, you know it was all about saving banks and other financial financial system and the consumer was really left the sense of themselves. So I think you have a better shot of.
Those again a lot of these a lot of these tenants even a small stuff had good solid businesses until they were forced to close so I think that as we openings happening if you get to a vaccine things come back to normal you do have a consumer that has a fair amount of money in their pocket.
You know that there's trillions of dollars that are sitting as additional you know deposits today. So.
Yes that is shot at it.
Yeah. The other thing Chris is it will really depend on the the path of the virus.
You know as you've seen certain hot spots pop up and closure is happening to come back again. The small shops are the ones that are most impacted by you know a a rollback of openings and so you know depended on the path to the virus going forward.
Clearly will depend yeah, we'll see how those small shops are able to be Bible.
Okay, great. Thank you definitely have this morning.
Next question comes from Tammy.
Thick from Wells Fargo. Please go ahead.
Thank you and good morning. Thanks for taking my question you mentioned that 6.4% attendance are now being accounted for on a cash piece I guess you have a sense for what percent of those tenants pay to rent and what percent of those tenants have teach a library and then do you expect to add additional that bucket as he country third quarter or do you think that fixed.
24%, it's fairly assessing that risk at the tenant there. Thank you.
Hey, Dan it's 90% of our tenants paid on our two Q that were cash basis that number's jumped up to a 50% for July.
Great. Thanks, and do you think that additional tenants looking out into the cash thesis bucket as he goes through the third quarter do you think ethics, 24% is really assessing the rest of the tenant base is definitely.
You know again I mean, it's gonna, it's going to really depend on what happened. So if if any if any further tenants go into bankruptcy, they're going to wind up on that on a cash basis.
So we're gonna have to watch it pretty closely for what's happening.
It really really it's really just going to depend on how we assess collectability <unk> and that we go through.
Each period.
It also depends on the course of the virus I mean, the that's obviously a outside of our control and we've been mindful that as soon as we feel like we have a good handle on our projections that we can we can disclose those but as things continue to change daily we've just been taking it they stay at a time.
Okay, great. Thank you.
This concludes our question and answer session I'd like to turn the conference back over to Dave I was looking for any closing remarks.
We want to thank everybody that participate on our call today. If you have an additional follow up question. Please reach out to me or my IR Department otherwise, please continue to be safe social distance and enjoy the weekend. Thank you so much.
The conference has now concluded thanks for attending today's presentation you may now disconnect.
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