Q2 2020 Retail Opportunity Investments Corp Earnings Call
[music].
When I listen only mode. Following the company's prepared comments to coal will be open for questions.
No that certain matters discussed in this call today constitute forward looking statements, but the meaning of federal Securities law.
Although the company believes the expectations reflected in such forward looking statements are based on reasonable assumptions. The company can give no assurance that these expectations will be achieved.
Such forward looking statements involve known and unknown risks uncertainties and other factors, which may cause actual results to differ materially from future results expressed or implied by such forward looking statements and expectations.
Information regarding such risks and factors described in the company's filings with the Securities and Exchange Commission, including his most recent annual report on form 10-K participants are encouraged to refer to the company filing with the as easy regarding it such risks and factors as well as more information regarding the Companys financial and operational.
The company filings can be found on its website now like to introduce Stuart Tanz to commit Chief Executive Officer.
Thank you.
Good day, everyone. We hope that all of you in your families are doing well and have remained say.
Here with me today, it's Michael Haines, our Chief Financial Officer, and Rich Schoebel, our Chief operating officer.
These past few months has been incredibly challenging for everyone across the country and the world in terms of the West coast and specifically as it relates to our shopping center business, we too faced with extraordinary challenges.
At the time of her last earnings call three months ago in April the West coast as in the early stages of to stay at home or we're only businesses that were deemed essential were allowed to be open.
Fortunately given our long standing focus on the gross grocery daily necessity sector. The bulk of our tenant base is a central.
So while countless retail properties across the west coast, where almost completely shut down back in April our shopping centers remain active adult over 70% of our tenants open and operating at that time.
As a second quarter progress capitalizing on our long standing strategy have always been proactively engage with our cats and very hands on in terms of offering her shopping centers, we made significant strides with putting our portfolio on a strong and study course towards returning to normal full operations.
We implemented a number of strategic initiatives at the property level to adopt best positioned nerve centers. During this time.
Including adding new enhanced health safety and cleaning protocols, along with reworking parky patterns to enable its fiction safe no contact curbside pickup.
Additionally, we implemented a comprehensive new signings program I mean over 700 signs across our portfolio addressing a variety of key items from social that's the same masking hygiene protocols to providing 10 status information.
Furthermore, we worked creatively quote collaboratively with our full service restaurants tends to introduce new safe and pleasant outdoor areas for dawn utilizing shaded brought sidewalk areas and existing core yard space as well as adjacent lot of parking areas, where a number of our restaurant tenants have now.
Created private umbrella spaces for additional outdoor dining.
We're pleased to report that our hard work and strategic initiatives are serving to facilitate facilitate seamless transition in terms of getting tenants efficiently reopened in this new environment.
Stay at home orders have been slowly left it.
Today, 88% or tenants are open and operating again.
Actually the terms of rent for C back in April.
You may recall that we have received about 67% of work total base rent at that point. Since then as a result over property in their system working closely with tenants over the past several months, we've increased that 67% significantly to 82% not just for April but in terms of rent received today.
Date for the entire second quarter.
As opposed to begin to reopen our initial expectation is that we would take time for customers to return to their normal shopping and dining cotter.
Sure surprise from what we've seen thus far across our portfolio customers are we're turning quickly and returning in force parking lots her box linked stores are active as our restaurant.
Importantly customers the tenants are falling safety guidelines and mandates.
With respect to leasing that trust retailers in the marketplace are currently taking notice to customers were turning at our shopping centers.
Over the past month, or so we've seen a considerable increasing the amount of inquiries from retailers searching for space.
The vast majority of these are in the service the specialty sectors as well as traditional indoor mall retailers thinking seeking to relocate their businesses to open air centers.
Additionally, we're getting a lot of interest from astute restaurant, a boutique fitness operators, who are seeking to quickly stepping to any available former restaurant or fitness space.
While still early in the reopening process on the West Coast. We are encouraged by what we have seen thus far now I'll turn the call over to Michael Haines, Our CFO, Mike. Thanks, Stuart well, we're encouraged by how things are progressing across our portfolio dependent make took its toll on our business during the second quarter in terms of our financial results.
GAAP net income attributable to common shareholders for the second quarter 2020 was 4.6 million. According to four cents per diluted share.
Funds from operations for the second quarter 2020 totaled 29.2 million equating to 23 cents diluted share.
It looks to say our results are down considerably from the same comparative period a year ago.
Putting same center net operating income, which after eight consecutive years and 33 consecutive quarters of growth declined 9.3% in the second quarter, 3.1% for the first six months the 2020.
As Steve noted today, we've received 82% of or total base rent for the second quarter.
With respect to the remaining 18%, which totals approximately $9.3 million an outstanding reference second quarter.
Up approximately 20, sorry, 2.2 million husband defer to date pursuit to sign agreements the bulk of whats requires tenants to pay the deferred amounts in monthly installments between now and you're right.
Additionally, we're currently working to establish additional deferment agreements, which together totaled approximately 2.2 million of the 9.3 might about sending second quarter right.
Lastly to be conservative in the second quarter, we reported 5.9 million in bad debt expense of which approximately $1 million related to prior cost cuts that was written off in the second quarter and a $4.9 million bad debt reserve for current tennis.
Turning to our balance sheet as we discussed in our last earnings call back in April which are 130 million from our credit facility to enhance the company liquidity position in order to be prepared for the challenges and potential cash needs going forward as a result of the pandemic.
Since April while implementing the various initiatives that Stuart touched on to adapt them enhancer centers. We also worked hard to conserve cash.
Today, we now have a 161.3 million of cash on our balance sheet, representing a 27.8 million increase since April which takes into account, having made or semiannual bond interest payments in June which totaled 16.5 million.
Given the ongoing tend to make and the related uncertainty as to the potential long term impact to the shopping center industry and so our business specifically, we intend to continue carefully conserving cash flow now I'll turn the call over to rich Schoebel, our CFO rich thanks, Mike.
Notwithstanding the entire west coast from San Diego up to Seattle, having been under strict stay at home orders for good portion of the second quarter, our portfolio held up remarkably well.
Starting with our portfolio lease rate when the pandemic hit and the stay at home orders were issued back in March or portfolio lease rate stood at 97.7%.
Just shy of our all time record high of 97.9% that we set last year.
Despite having roughly 30% of our tenant base temporarily closed for a good portion of the second quarter in terms of actual tenant fallout. We only had a handful of tenants close for good such that our portfolio lease rate held up well ending the second quarter at 97%.
And regarding the tenants that did close we're close to now having their space spoken for with new tenants.
However, though that's not the suggests that we expect our portfolio lease rate to rise in the months ahead.
No doubt there will be additional space that will become available as a pandemic continues.
In terms of leasing activity deals being executed were all but not exist in at the outset of a second quarter during which time, we were largely consumed with rent deferrals.
However that stay at home orders started being lifted in late May and June it was as if the leasing switch was suddenly flip back on with retailer demand quickly ramping up such that we were able to finished the second quarter, but good momentum posting over 8% rent growth on new leases and over 7% on renewals.
Just to highlight a few of the leases we signed during the second quarter to give you a sense of the type of activity, we executed a new lease with a restaurant operator that has had a very successful business for over 16 years at an indoor mall, we decided that the time had come to move and re establish their business and an open air shopping center.
Additionally, we also signed a new lease with the new pharmacy concept, that's based in northern California, who notwithstanding the pandemic is seeking to expand into southern California with the goal of securing a number of key locations in southern California by year end, our center being their first location.
We also signed a 10 year lease with a fast growing national fitness, operator, who replaced a prior anchor fitness tenant.
In addition to leases we signed in the second quarter. We currently have a number of lease transactions in various stages of negotiation with a variety of service and specialty retailers.
Additionally, we continue to receive inquiries from opportunistic retailer seeking to earmark prime spaces at our centers in the event of tenant fallout.
And not surprising restaurant operators are aggressively seeking spaces with outdoor patios as well as drive through capability.
So it's Stuart stated we're encouraged by what we are seeing across our portfolio. Thus far in terms of demand for space returning.
Looking ahead at our anchor lease expirations during the second half a 2020, we only have one anchor lease scheduled to expire between now and year end the leases with one of our strongest national grocers. They have a five year renewal option remaining on their current lease however, rather than simply exercised a renewal option they would like to establish a new.
Long term lease which are currently discussing with them.
Looking out for further at next year.
As of June Thirtyth, we had 11 anchor leases scheduled to expire in Twentytwenty, one eight of which are with grocery and drug stores. We expect that all eight will stay.
In terms of the other three anchor leases one is just renewed their lease early and we're currently expect that the other two anchor tenants will renew as well all three of these anchor tenants have remained open during the pandemic and their stores have been performing exceptionally well.
Lastly, with respect to our ongoing densification initiatives all three projects that we have been pursuing continue to progress through the entitlement process.
While the frequency of discussions with city officials has slowed a bit given the pandemic and the related logistical challenges city officials continued to be proactively engage with us and continue to be supportive and moving the process forward.
Now I'll turn the call back over to Stewart, Thanks Rich.
While we are encouraged by the progress that we are making today by what we are seen in the marketplace. We know that path to getting back to full operations will not be straight in simple.
In fact with the recent rise in cases in California officials have paused the reopening for certain businesses such as movie theaters for example, and mandated that a number of other businesses that had reopens scaled back or temporarily close again, such a salons gems in full service restaurants.
However, they are allowed to conduct business outside where feasible without in mind, we are redoubling, our efforts in helping tenants utilize shaded outdoor areas as well as created additional shaded outdoor space as I mentioned.
In terms of grocery stores drugstores in general retail those tenants all continued to be open and operating thus far the new orders have not had a meaningful impact to our California shopping centers Needless to say, we're watching it very closely I continue to work on creative is safe ways to help tenants continue to see.
Serve their communities.
In terms of the third quarter to date, we have received 85% of total base rent for July.
As we move to the second half of 2020, our hope is that we will continue to steadily moved forward towards full operations again.
That said as all of its continues to evolve a considerable uncertainty, including the recent pullback in California, and how that could impact our business in the third quarter. Our board out of out of an abundance of caution has decided to keep the company's quarterly dividend temporarily suspended and order that we continue to conserve as much cash.
Well as possible.
Lastly bought four months ago.
Stay at home orders commenced and we began working from our homes.
We were not quite sure what the impact would be in terms of how we function as an organization.
Fortunately everyone across the company has stepped up incredibly today four months into it I'm pleased to say that having to work remotely is actually brought the organization closer together.
The manner in which we conduct business isn't ball has evolved into a greater collaboration of exchange and ideas.
Additionally, we have become more efficient in our communications considerably more agile with turning good ideas quickly into productive actions.
Looking ahead. Once this passes were all optimistic that we will indeed emerge as a strong organization thats better equipped.
And our portfolio better position to build value going forward.
Now we will open up the call for your questions.
Operator.
Yes at this time if anyone does have a question you can press star and the number one on your telephone keypad again that Star then one on your telephone keypad for any questions ill pause for just one Mount loudly compiler acuity roster.
[noise] and we do have a fresh questions coming in now I first question is from the line of Christy Mcelroy from Citi.
Hi, good morning, Christy good morning.
So the 5.9 million a bad debt number it it sounds like that was just on rents in recoveries being reserved it doesn't sound like there was any sort of straight line rent reserve in there. So I'm just wondering if you could help me reconcile the straight line rent component of rental revenue. This 319000 in second quarter, how much was that impact.
Good by any sort of right off of straight line rent receivable, resulting from converting to any tenancy cash basis, and and was there also any positive offsetting impacts from leases that were treated as a modification to do any updated rad.
Well first of all we haven't done any lease modifications for bid rounds that we've been focusing on deferrals.
We have not moved any anyone to a cash basis the straight line rent number.
Does have an impact of about 185000 total write offs for straight line rent.
The bulk of it was actually came from one fitness center, which is 130000. So that's a net number on the income statement for straight line rent income so our straight line rent right. It was fairly mean not very meaningful number.
Yeah, Chris you I've been fortunate from the standpoint that we haven't really had much impact from all the bankruptcies out there and I think it's Mike as articulating.
The one anchor lease that we've lost which you actually was released turned the corner right away was 24 hour fitness right.
Okay, and then can see you gave some numbers in the opening it sounds like from what you said the 2.2 million it sounds about right. If I think about the 18%. It was not collected in the second quarter about 400 basis points of that is under deferral. So I'm just wondering how much of the reserve was attributable to tenants that are under deferral agree.
<unk> versus those you know enough in the 14% that are unresolved.
Well there I don't think of of the four point of millennials recurrent tenants there wasn't a meaningful number there was relative to the about that we actually deferred it was basically just being conservative across the portfolio largely for categories that we wanted to be cautious about like the restaurants in the fitness users.
Okay. So more of a general reserves I know we signed me.
Right.
Okay and then just one last question for rich just following up on your comments on leasing Adobe says that we're executing in the quarter that you talked about any showed in the supplemental it if they were signed in the second quarter when were those leases negotiated so I'm just trying to get a sense for what leasing really looks like.
In the midst of the covert environment versus those that were meaty previously under our lie and convert it to find during this period.
Yeah, I think as I touched on in the prepared remarks, you know there were a few leases that were you know just at the finish line at the end of the first quarter that came in early in the second quarter, but.
Some of these were initiated within the second quarter. You know there was a bit of a pause. After those first few that were first quarter deals came in and then the activity picked up as we went through the quarter. So I.
I don't have this specific breakdown of which now how many were started in the first quarter, but the majority of those that are in the second quarter numbers. You know were commenced a negotiated in the second quarter.
Okay. Thank you.
And our next question from the line of Todd Thomas from Keybanc Capital management.
Good morning, Todd.
Hi, Thanks, Good morning, Stuart maybe rich I was just wondering you know if you were able to comment at all on on your your expectations around August collections. You know me, maybe any idea what you might expect relative to the 84.9% for rent paid in July and then also.
In terms of the percent of the portfolio open at 87.5% has that decreased from June levels. As a result of some more recent closures and of the virus you know flaring up in some of your markets and do you see a path to getting that back to the low to mid 90%.
Yeah, I think that you know in terms of the second part of your question there.
There was a few tennis that had to modify their operations, but the good news is as you'd probably read is the state of California has allowed more operators to go out into the common area, which has allowed them to continue to.
While further services, you know and particularly in the health and beauty sector.
And we have accelerated our.
No opening up of the common areas for fitness and restaurant users. So we expect that that open number will stay probably around this range hopefully start to trend better as we go through the balance of the year and things hopefully more did uses are allowed to reopen.
And then in terms of collections Todd I mean August is number one it's very fluid as as you know out there by and we are working around the clock in terms of collections.
You know I do think that it's a bit too early right now as it relates to August.
To give you any indication by a the one thing we have found as you saw it for the for the second quarter as a whole a is that you know as we continue through these deferrals are there are a number of tenants that have been open have done quite well and still haven't paid us any rat. So it's still a fluid situation.
The good news there in my view is that those numbers will continue to tick tick up because every time you assign it to permit you typically get paid for the prior months and that's why I believe even the second quarter, we'll continue to tick up as we move through the third quarter.
Because as these deferments do require these tends to go all the way back and pay us at the start of the second quarter through odd that through the third quarter.
Okay, and then you spoke about some activity you know in the fitness category and you mentioned you know 24 hour fitness they filed bankruptcy during the quarter and that you you know it sounds like you've got one one back that you might have released already.
How many more 24 hour fitness locations do you have and can you provide some additional color on that category in.
The leases that you're you're signing or negotiating in terms of what those leases look like in the rents, perhaps I'm just considering that only 35% of the fitness spaces open and you're you're collecting 40% of the base rent today.
Sure.
So we have a total of three additional 20 for our fitness.
Locations in our portfolio they account for less than 1% of our total base for end.
They were all very good locations from all indications that we have had prior to the pandemic and we expect that they will hopefully be accepted but do you know I was just no way too to predict.
In terms of the you know the fitness category.
We have about 11 national anchor fitness Jim's in the portfolio and those account for only about a 2.4% of our total base rent.
So most of our fitness operators are smaller boutique one on one personal trainers things like that they have been able to transition out into the common areas in most cases.
And you're correct, we lost 120 for our fitness it was actually a concept of 24 hour called be fit.
They basically jettisoned immediately and we had a opportunistic operator, local operator, who saw an opportunity to come in and grab that location and.
Be up and operating very quick Leslie quickly and seamlessly and with very little T.I.s Todd.
Okay. Mike I think you mentioned that you didnt transition any tenants to cash basis accounting in the quarter. How does that work. So there's three additional 24 hour fitness is you know and maybe some others you didnt they're not.
Being accounted for on a cash basis can you just explain how that how that works.
Well the leases are still in place and even though they may not be open and operating that sold down lease under accounting rules and so unless we have a sense that they're actually going to leave the party. The straight line rent as I have a justification are counting rules to write it off the one anchor the one the one that rich mentioned the beef that that's the one that we did write up 100.
30004 that hits straight line rent of enough that the revenue.
So by and large that with over 80% of or tenants current on the rent Cam and given their business continued to form we don't have a reason to switch anyone over to our cash basis. At this time and we did reserve all of the written cash associated with those leases right. During the course didn't touch the straight on America's leases are still valid leases.
Okay.
Alright, thank you.
Thanks.
And our next question on the line comes from the line of Brian Hawthorne from RBC capital markets.
Good morning, Brian one.
How do you have done today.
Oh, that's doing well and you.
Thank you.
My first question is so when you guys have these open spaces, how deep the demand for those locations like on the leases that you're you our siding.
I mean, I think a you know typically we have you know a couple to three people buying for these spaces. I think I think we are benefited from the fact that we don't have a lot of space available to begin with.
Our centers are all primarily grocery drug anchored and have been very busy throughout.
The pandemic and I think that people that.
May not be operating in a grocery anchored center are looking for these opportunities to get where the foot traffic on the customers are so.
This is.
Been helpful in terms of bus keeping the spaces spoken for.
Okay, and then however request for what really changed as the portfolio opened and how does the health of the local small shop tenants.
I'm not sure that it's really changed all that much I mean, we are dealing with this on an individual basis everybody circumstances are different I mean, you. It ranges from people that have been in business for decades to people that just open you know the week before the shutdown and and you know we spend a lot of time focused on.
How their sales were leading into the pandemic, how they've been held up throughout the pandemic. We you know it's not just a you know common asked for something when you get it.
We really want to make sure that its tailored to the tenants situation that we can structure as a a proposal that gets them keeps them open and operating and and hopefully gets them back into full business as quickly as possible.
Great. Thank you.
Thank you.
And we do have more questions. On next question comes from the line of Craig Smith from Bank of America.
Good morning, Craig.
Congrats.
Yeah, I'm I'm, we saw that regional and national rent collection increased.
In July over second quarter, but.
Local is more or less flat I'm wondering do you think that if you go to the third quarter that that will remain flat or is there potential for increase.
From the local tenant base I think there's still the potential for increase I think as Stuart touched on you know there's you know as we.
Wrap up these deferral agreements it typically involves them becoming current on that rent that they have not paid in the previous quarter.
Some of these tenants have withheld the rent as Stuart said, they've been open they've been operating but they withheld the rent primarily we assumed through trying to use it as some form of leverage in terms of the negotiations.
But once the deferral agreement is signed it brings us in the retroactive run and we would expect that the tenant.
It would pay that going forward, which should increase the the collection percentage.
Great and then just.
First half of DNA expense, a good run rate for the second half.
Probably so that two things in packaging in the second quarter or over it was a little bit lower compared last year and we also second last year in the second quarter, we had a legal expenses related to.
Resolving longstanding issue with the seller probably has acquired 10 years ago, but going forward in terms. The second half I think DNA should be approximately four to four and a half million a quarter.
Great. Thank you.
Thanks, Craig Thank you.
That's more questions on my next question comes from the line of Mike moment from JP Morgan.
Good morning, Mike.
Hey couple questions here on the deferrals curious the if if you're having tenants pay to back rent to get a deferral. So they have to pay April may June or so theoretically what what exactly is being deferred on a go forward basis that.
Well again as I as I said, you know, it's very very individualized so.
It really depends on whether they're back in operation are there still shutdown I mean, we have you know some fitness type users like swim schools up in Seattle that have basically you know are not able to operator operate only we'd like four to five students at a time. So they're deferral, we may have deferred some future rent as well to help them through what we.
Anticipate to be.
They're opening period in many cases, we're tying that deferral.
I would be for a fixed period of months, but if they were happened to be allowed to open up during that period. They would have to you know not happen deferred rent so.
That helps.
So for the 9.3 million a renter uncollectable, where we are I think you said 2.2 million, it's been deferred to date.
Is that 2.2 million a pass with that wasn't paid ends being deferred or that's future rent that's being deferred.
I think the 2.2 is was second quarter rent that's been deferred and I think maybe we'll richness are referred to about future deferrals involving paying past rent if someone didnt pay any rent during the for the full second quarter, and we're going to defer say 25 or 50% they have to pay the other 50% due from second quarter to get the deferral for the other piece.
Got it could be a common.
Deferring some of the second quarter and potentially some of the third quarter, depending on the tenant use exactly okay. Okay.
That makes it clear that and then on top of that 2.2 million did you see there is another 2.2 million that was in the works as well for deferrals.
Yeah, we've executed 2.2, and deferment agreements and the other 2.2 or in the works currently for the ones who have just not paid anything we're still negotiating with those types of Stuart mentioned.
Yeah, I just wanted to be sure because it's the same number so okay. Yes.
Element.
Yeah and again, Mike is if you know assuming we get those done over the next several weeks they will have to pay what they always in the second quarter and that's why I made my comment about collections will probably continue to go up.
Got it and then lastly question so the the remaining five liter. So that's not accounted for can you just give us a little bit of color about that bucket.
In common what types of tenants and wouldn't negotiations or.
Our kind of like going on there.
Sure I mean.
You know its.
It's continuing to work with its a different set of tenants they.
Primarily its restaurants.
A couple of fitness places and.
And then a spot or some other types of uses.
And you know I think we're working very hard at closing that gap I think you'll see a meaningful closing of that gap in the third quarter, because we are making some very good headway. We as you probably know Mike the courts systems outside of Seattle been closed on the West coast. So it's this this game of.
You know the communicating with the tenants and.
We were doing certain things to bring them to the table that are working so I believe that you know will pose that got the gap.
You know that capital close pretty good of during the third quarter.
Got it.
Okay. That's it thank you.
Thank you.
We do more question face pressure because a lot of.
Kevin from Green Street advisor.
Good morning, Ben.
Hey, good morning.
Of the tenants in your portfolio that are still not open do you know the split between the one that are forced to be closed due to government mandate and one that are still close even though they could be open.
There's very few tenants that are not open that would be allowed to open.
And usually that's for specific personal reason of their own.
But it's it and it's not you know the larger tenants at some mom and pop tenants that maybe are just too afraid to open.
But they are out any of that Ted.
And then are you do you have the sense of how many tenants if any in your portfolio that you know or permanently going to close I mean, that's some updated occupancy I guess, but you have it any any rough estimate abroad there.
Not really I mean, you know for the most part you know.
Particularly from the local and tenant base. You know this is this is what they know this is what they do you know there really isn't a plan b for them. So.
They're they're doing whatever they can to get their businesses back up and running.
To support their families and they're very enthusiastic in terms of their business, they've all done very well as rich articulated some have been in these centers for many decades and we just finding we have conversations with them that they are very enthusiastic and really want to work hard in terms of getting things we opened Laurent open.
And then once they're open I think there were very creative in terms of creating a ways are finding ways of increase in sales.
Make sense one more for me can you just help me understand how exactly you calculate same property NOI. It you stayed the same property cash NOI that doesn't appear to be the case, given second quarter collection level, just want to just reconcile that and confirm I have the right understanding here.
Well, we calculate same store NOI the way we always have.
On accrual basis, with noncash straight line rent and above and below market rent amortization stripped out of that so its thats.
It's really it's the same store cash rate for the service improvements, but you strip out the gap noncash components that you've got it name level.
Still accrual basis, but it just backs out those two items. That's my thought but just on threat from and then just on a are you able to provide same property NOI in the quarter on a true cash basis, what it was the current rent collection levels.
I don't really non.
Short answer is no only because you'd have to have a separate sort of books do truecash accounting, which would be cash operating expenses cash rent collected.
Yes, we're not.
Fair to do that.
Okay fair enough. Thank you exited the time.
Our next question, Chris Your line of Linda Tsai from Jefferies.
Good morning, Linda.
Hello.
Like these national tenants that have done well during the pandemic still don't pay brands and this is certainly something many are appears mentioned to what's your expectations when their leases come up for renewal do you think there'll be similarly contentious in terms of seeking reduced rents going forward or do you view. This stubbornness is more isolated to business shutdowns.
Well, it's very simple they don't pay a threat you leave that simple.
You know one way or another who after this pandemic leaves a we believe the and what we've seen so far is there will be a pickup in terms of demand given the quality of assets that we own them, where we are you don't pay rack you don't stay in occupancy it's that simple.
The good news is that we don't have a lot of anchor tenants at this point that we have some that haven't paid us any rent, but we're getting very close to really working things out from that perspective, so as we move into the third quarter I don't think there'll be many left in our portfolio.
And again remember the majority of our anchors are grocery stores and drug stores as well as other essential daily necessity retailers.
So that also helps.
And then in terms of them all based tenant coming into your center did this tenant occupy inline space or was it a larger.
Juniors junior anchor size tenant.
It was a.
More of a shop type tenant it was a restaurant values.
In terms of side.
And last question on the line comes from Chris Lucas from capital One Securities.
Hi, Good morning, Chris It crashed hey, good morning, guys.
Couple simple ones I hope on.
Your recollection metrics, you seem base rents as the sort of denominator basement build.
You included sort of expenses as well with that would those numbers be that different.
No I think they're pretty comparable and you could recoveries as well.
Okay and then just.
As it relates to the recollection numbers, just making sure utilize any security deposit or letters of credit to sort of support torture rent.
No not at all so have our security problems on the balance is still have a nice security deposits sitting in the back from every cat.
Okay, that's really only had I appreciate it thank you.
Thank you.
And we did have one more question come in the line from Atlanta, Christy make everyone from Citi.
Hey currently.
It's Michael Bilerman sorry.
Hey, Mike.
Hi, how are you.
Good I think itself. Good so I just wanted to know and I apologize if I understood at the beginning.
Is there any sort of update on external growth, but you know I know we spoke back it may read about your desire or and potential capital partners coming to you.
Are you thinking about how you started ROIC coming out of the G fee Where's the mindset today in terms of deploying capital in terms of structure balance sheet joint venture so fun the blind pool, how how are you thinking about it.
We continue to think about it we obviously like everyone else the transaction market is pretty well frozen.
You know, there's still there's big issue of underwriting and ROI.
And so.
And then the on the other had we do realize that having a very transparent and straightforward company is very important to us.
And our shareholders and so right now we continue to think about it we continue to have conversations.
But nothing yet has been done and we'll continue to look at those opportunities.
And and see what might come up but at the present time, we're still moving down the same path as we always have.
In those conversations or conversations with potential sellers are those are conversations with potential other capital partners.
It's both we have had conversations with both including sellers that have wanted to Taco P units.
But obviously, we're not issuing opium, that's where our stock is currently trading but those conversations are ongoing and I think those will continue to be ongoing.
Right.
Good alright, thank you.
Thank you.
I do you have one more question. It comes on line. This is from the line if Chris Lucas Capital One securities.
Yes, sorry, sorry.
So it's hard to go back into the can I just had one other question I will I mentioned this earlier in your comments, but do you have any sense as to.
What level of tenant participation you had in their PPP loan program.
That sounds like yes, it's hard to give you a you know sort of a percentage or anything like that certainly you know our tenant base has been seeking out every opportunity that can be anything from a local grant from a local city that has come up with a program to help their their mom and pop type tenants in all the way up to the federal programs all of our to.
Several agreements require that they apply for whatever assistance, that's available and that they direct any assistance they receive for rent to us to payback the deferred rent sooner.
And then we're also working very closely with the tenant base, you know ourselves to make them aware of the programs as they come out, particularly the local ones, which aren't always you know.
Highly advertised so we've been very successful and getting some of these local grants directed to our tenant base.
Thank you.
You're welcome.
And we do have one more question Q lines from the line of John Kim BMO capital markets.
Hey, John John.
Good morning, you said in your prepared remarks that you are attracting some multi tenants interior space.
And I'm wondering if you could elaborate and what industries that coming from outside of restaurants.
And if you think this is the change in their real estate strategy or districts shopping around for a cheaper rent.
I think it could be a structural change personally.
We have been very active both in the open air format as well as the mall format. We think the Windows opened up given that operating costs are a lot less in open air centers and more importantly, I think is rich touched on its the amount of foot traffic, it's being generated by the grocery stores and the drug stores.
We have found that that is really.
Caught a lot of tenants mall tenants sort of ears and eyes in terms of opportunity. So I think this could be more of a structural change and you can bet. We're taking advantage of this in a big way.
Any commentary on the tenants or the industry is there and what may have surprised you with some of these kind of.
Well I think there's been eight it's really surprised this I think that mid come from a broad range of uses.
You know, obviously, 97% occupancy we have to target the tenant that will fit the space. So.
You know I think that that drives the use more so than than anything else.
Great. Thank you.
Thank you.
And at the current on their no other questions. Thank you.
Well in closing thank you again for your time today, if anyone has any additional questions about please feel free to contact Mike richer myself directly we hope that you in your families all remain safe and healthy. Thank you don't have a great day everyone.
This concludes our conference call you know.