Q2 2020 Weingarten Realty Investors Earnings Call
Thank you.
[music].
Good morning, good welcome to the Weingarten Realty Inc. second quarter, 2020 earnings call Muddied spread and I'll be your operator for today at this time all participants are going to listen only mode. Later, we will conduct a question to dance recession during which you can delstar. One if you have to question. Please note. This conference is being recorded.
Well now turn it over to Michelle Wiggs Michel you may begin.
Good morning, and welcome to our second quarter 2020 Conference call. Joining me today, It's drew Alexander Johnny Hendrix, Steve Richter, Jay shape or as a reminder, certain statements made during the course this car forward looking statements within the meaning of the private Securities Litigation Reform Act.
Statements are based on management's current expectations and are subject to uncertainty and changes in circumstances actual results could differ materially from those projected in such forward looking statements due to a variety of factors more information about these factors contained in the Companys SBC filing.
Also during this conference call management May make reference to certain non-GAAP financial measures such as funds from operations are at that though that's for a name rate, which we believe help analysts and investors to better understand Weingartens operating result, reconciliations of these non-GAAP financial measures is available in our supplemental information package.
Located under the Investor Relations tab of our website.
Now I'll turn the call over to drew Alexander Thank you Michelle and thanks to all of you for joining us.
I want to stress, our first priority safety and will be associates since stakeholders in the broader community during these challenging times.
Let me also remind you of the forward looking disclosure Michele just mentioned.
Considering the severity of the pandemic I think W.I. performed well this quarter.
We're pleased relatively speaking with their cash collections and went deferrals today.
The significant increase in cobot 19 cases in the last several weeks is obviously a cause for concern Johnny will get into our ongoing efforts with our tenants, but I can assure you. The company's engaged an extensive tenant communications as we do what we can to assist them in this difficult time.
Our collections were good for the quarter in July is continuing the upward trend.
Well, we will have challenges as we move forward the multiyear transformation of our portfolio has certainly made the road ahead easier our transformation resulted in a much higher percentage of grocery anchored centers a much improved tenant base and most importantly, a much stronger balance sheet with little near term debt maturities.
And our 2020 dispositions have further strengthened our liquidity position will further de risking the portfolio.
While the timing of the recovery is uncertain, we're confident that we have more than adequate liquidity to weather the storm.
Consistent with our message in the first quarter, we announced the dividend of 18 cents per share for the second quarter, given our dispositions of 131 million to date, it's likely that we will also pay special dividend near year end.
Later in the year, we will know more about 2020 dispositions and the performance of the portfolio.
We will carefully monitor our cash flow and liquidity and further adjust the dividend as appropriate.
All three of our new development projects are progressing nicely theres minimal additional investment in central and West Alex in DC and leasing is continuing to progress.
Instruction is ongoing at the Driscoll in Houston with leasing recently underway. These are good projects and while there may be some short term issues longer term. These are great properties Steve.
Thank you very core FFO for the quarter ended June Thirtyth 2020 was 34 cents per share compared to 53 cents per share for the same quarter of the prior year. The decrease is primarily due to the impact of the pandemic, which resulted in a charge to income in the quarter of 19.3 million, our 15 cents per share relate.
To the Collectability of revenue, which includes $4.8 million or four cents per share for noncash straight line rent receivables.
As a reminder, we also recorded reserves for uncollectible regret uncollectible revenue in the first quarter of 9.4 million, which included noncash straight line rent receivable of 7.6 me.
A reconciliation of net income to core FFO is included in our press release.
Let me add a little color on our bad debt expense, we realized for the quarter.
From a business perspective, we'd look at operations on a pro rata basis at quarter end on a pro rata basis, we recorded a reserve for bad debt, a 14.7 million, which excludes reserves for straight line rent and Unbilled risk accruals.
Our cash collections at quarter end again on a pro rata basis were 73%.
So with the remaining 27% of uncollected rents, we reserved 46% a little less than half of that rent which includes deferrals.
Subsequent to quarter end, we collected an additional 4.4 million of cash improving our pro rata cash collections for the second quarter to 77%.
We have provided some additional details of our collections that can be found on page 41 of the supplement.
With respect to our balance sheet during the second quarter, we paid all amounts outstanding under our credit facility.
Based on our current projections, we will have more than adequate liquidity, even after the payment of dividends. The comfortably sustain operations I want to remind everyone that we have no material maturities until October of 2022.
Currently we have 498 million of current capacity under the revolver and about $24 million of excess cash.
Johnny.
Thanks, Steve.
First I'd like to take this opportunity to take all our associates, who produce the best results possible given very difficult circumstances.
We have a highly motivated team along with the strong diversified transform portfolio.
80% of our annual base rent comes from shopping centers with the supermarket component.
Pre pandemic those supermarkets average very strong sales of $712 per square foot.
Not only have our supermarkets been driving during the pandemic they are poised for the future.
Over 75% of all our supermarkets have some sort of online component offering curbside pickup indoor delivery services and we work with them to improve these logistics during the pandemic.
We feel strongly that our team and our portfolio or physician to withstand current headwinds and drive into the future.
For the second quarter, we collected 77% of the rent Bill.
This includes triple net charges billed monthly and base minimum rent.
Weve accounted for over 90% of the rent owed during the second quarter with either Rick collected or some other agreements like deferrals.
13% of the second quarter it was deferred.
In broad general terms, what can think of two types of deferrals.
Strategic for lifeline.
Strategic deferrals are generally with major tenants, mostly in our top 25, where we've been able to support their cash flow, while negotiating beneficial admits that will help weingarten in the future.
This could be suspending co tenancy, loosening exclusives or restrictions or allowing future redevelopment.
Well I outlined deferrals are mostly with smaller tenants, we just need hill.
About a third of our deferrals in this quarter, our strategic deferrals, we feel strongly these will be repaid.
It's challenging to estimate how much of the lifeline deferrals will ultimately be repaid.
Today about 95% of our tenants are open as a result July collections have shown improvement.
Today, we've collected cash for 82% of the July rent Bill.
We obviously are concerned about the bankruptcies over the last several months.
We do not have a lot of exposure to any single tenant, but the collective weighted the bankruptcy is impactful.
24 hour fit this terminated three leases we have three remaining.
We had six stage stores, four and ventures and 200% of.
Initially they have closed one store and plan to liquidate the company over the next several months.
We have nine Tuesday morning, Stuart's none of those have been rejected today.
We have three suite Tomatoes, all were rejected.
We had 23 GNC stores.
Three have been terminated today.
We also had 10 leases with the Sina.
Two leases or on the rejection lids filed last week.
Finally, we have one sterling top which we think will be a firm in one New York and company store, which will be terminate.
These bankruptcies represent $3.4 million, an annual base minimum rent being terminated.
Going forward, we are particularly concerned about large health clubs theaters and high end restaurants.
Fortunately our exposure to these tenet is pretty small combined these three categories are only about 3% of our hbr.
The company currently has contractual commitments for leases signed and not commenced for $9.1 million that we expect to commence over the next four quarters. Some of these commitment commitments have already been delayed but together with our tenants. We continue to move forward plans and construction spaces.
During the quarter, we executed 27, new leases for $1.8 million in base minimum rent.
While this is less than previous periods, we see some demand returning.
Currently we have 62, new leases being negotiated in our legal department. This is slightly higher than our 12 month trailing average which is very encouraging.
We're working with discount clothing stores hardware stores banks dollar stores like five below and dollar tree restaurants, mainly QSR and medical tests.
The company is already ramping up leasing production capabilities, adding leasing construction and legal personnel. So we will be prepared when we get to the other side of this pandemic.
Weingarten has always excelled at leasing and we will again as we released our very strong properties drew thanks.
Thanks, Johnny.
For years Weingarten Realty has been known as a great operator of real estate.
While our current situation is challenging I'm confident that we once again rise to the occasion.
Heartfelt. Thanks goes out to all our associates, who are working so very hard right now in a genuine thanks to our board of trust managers, who provided constant quality feedback throughout these difficult times, great people great properties integrate platform with great results I think all of you for joining the call today and for your country.
Renewed interest in Weingarten, operator, we would now be happy to take questions.
Thanks Drew and we'll now begin the question answer session. If you had a question. Please press star one of your telephone keypad, if you'd like to be removed from the Q. Please press the pound side with the Heskey.
Turning to speakerphone, please pick up your headset first before dialing.
Once again, if you have a question. Please tell star one on your phone keypad.
And from Citigroup, we have Christy Mcelroy. Please go ahead.
Hi, good morning, Thanks all.
In thinking about the collections and what you have under deferral agreement that leaves about 10% unresolved and if you reserved about 30% against the deferrals and it sounds like the majority of that is a lifeline tenants add the balance implies that Youve reserve close to 75% or the unresolved bucket just as we move into August and.
Our collection are you expecting that bill is under deferral agreement will pay rent in those markets and how much of that unresolved bucket could ultimately fall out and turning to vacancy.
Hey, Christie drew all I'll start out here, and then I think Steve and perhaps even Johnny will attempt to opine.
And so challenging to say, we've got a good tenant profile.
We know a lot of the tenants are paying on their deferrals, 95% of our tenant base is open many tenants report good.
No sales all things considered exceptions Jain cited in some of the upscale restaurants in them and then those tenants who are close so were optimistic about it so Steve if you Wanna.
I'm in the degree.
The only thing I could add to that to that Christy is that as as we go through that the amount of deferrals that we're now executing is going down. So you you have a little bit of mixture in there and and as drew mentioned, it's just too tough to understand exactly how this thing will rollout, especially with the.
So what I call the second surge and so forth going forward. So.
I think that you can draw some.
You can.
You can get some feeling from history, but I think going forward is still a challenge.
So I guess just to get a better terms for then moving parts and thinking about the upward trends of collections and sort of throughout Q2.
But also into July is there anything changing in the calculation that we should be aware. So just trying to get a sense for how much of the rising collection has been driven by tenants paying that weren't before.
Any change in the denominator, that's been impacted by occupancy loss or rent abatement.
We really haven't factored in the denominator change yet that's something we've talked about and as Johnny alluded to.
Yes, as bankruptcies progress we will so it is definitely mostly tenants paying rent, which is certainly tied to.
Almost all of them are open.
Steve.
I think it gets a little granular, but I think Dave that thing that one has to think about is is the deferrals year reserving for rent earlier and Q2, then and some of those tenants have open back up and Thats, where you see that collections going forward in July improving so.
I think you know how much of that we collect going forward I was out those deferrals as question and we reserved.
Good chunk of that so I think it's a little bit of a moving target, but also realizing that as those tenants open back up they're able to pay rent going forward. It Christy one other things through again it might help unless donated to jump in on this but but this might help you also understand.
The vast majority I think John any of the tenants that we haven't resolve things with our that are the tenants in the categories that you talked about where there's just no visibility too right.
The orders right.
Scale restaurant right. There are few of the tenants that we are working through.
We may have a handshake agreement, we don't have a legal agreement yet.
Some of that 10% or those tenants others are for tenants, where theres just no visibility as to how.
Actually this thing will turn out.
And we're really just waiting to resolve that there are some tenants the smaller tenants that.
In their own mine Havent come to grips with how this thing is what it looks like on the other side and have just not been willing to agree to to anything.
Alright, thanks to the target patient.
Thank you.
From Scotia Bank, we have Greg. Thank goodness. Please go ahead.
Good morning, and just wanted to dig into cash spacing cash basis counting all of it Im curious, how many tenants or what percent of rent hasnt shifted to cash accounting since the beginning of the year.
What's that level of contractual rent from cash basis tenants and then what percent of rent from the cash based tenants was paid in Q2 in July so far.
Good morning, Greg This is Steve.
At June Thirtyth at quarter end, 15% of our Q2 billings were.
Categorized as cash basis under the new accounting rules.
We had collected as of quarter end about 31% of that and that's grown since quarter end to about 43%.
So that gives you some feeling kind of back to Christys question as as we go forward things have gotten a little better.
And then they all the other thing I would add to that is as of that group we have reserved.
About 86% of the amounts that were unpaid at quarter end that gives you a perspective of of our reserving.
The cash based as tenants.
At this point.
So just to clarify your reserving rent on previously accrued renting the cash basis tenants I guess.
Yes, and as a full all the receivables and it's it's basically whatever they have sitting as a receivable that's that's correct.
Okay.
And then I guess, maybe from Johnny real quick here so.
Rent spreads.
Hosting decently healthy.
This quarter. So I'm just curious how much that was due to leases already in discussion the head of the pandemic and then based on the new leases. The currently sitting with legal department kind of what are your expectations for rent spreads into the back half the year.
Good morning, Greg.
I wouldn't read a whole lot through the.
The risks spreads that we reported this quarter.
Significant number of those were.
Renewals that were actually completed prior to the pandemic in our commencing this quarter. Some of those are new leases that were agreed to prior.
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I think I think going forward very difficult to understand.
What will happen to rent growth I think it will be more negative than it was this quarter.
For the leases that we have in process today.
There is not a lot of growth theres, not it's not low either.
So I don't I don't see that we really have much visibility even with the new leases that were working on right now.
And a lot of it ultimately will depend on which ones end up getting signs.
Traditionally we've got somewhere around 95% hit ratio, we complete about 95% of the leases that go into my legal Department I think today, we're probably more in the 75% to 80% range, So who knows which ones of those leases actually get signed in in completed.
Well I appreciate the color. Thank you very much.
Thank you.
From Bank of America with Craig Smith. Please go ahead.
Yes. Thank you.
Im just wondering in terms of.
The states that have shown a spike up, Texas, California, Arizona and Florida.
Is there a potential that youre, 95% tenants open may decrease.
Given newer mandates most states or are you thinking you're going to stay with that 90% open.
Hey, Craig Good morning drew.
I'll give you my thoughts and then John and can give you his but.
Anything is possible.
You know.
We we have seen Fortunately here in Texas cases, moderate and that's true in a lot of places.
My my personal feeling leading a lot.
We'll be little involved in medical stuff is I think.
But there won't be significant shutdown there are obviously issues around bars and gathering sports under other thing.
Because when you just look across the world.
Theres, a big economic impact to it so.
It's certainly possible we're 63%.
Essential services, which we think is a good thing.
Limited exposure to the.
You know things that are really risk of don't think it'll happen, but but it's certainly possible and.
Courage people to stay safe and pleased to see the numbers getting better.
Hi, John Hey, Craig Good morning.
Most it really of California is the guide most of the focus.
On.
Closing back down is on the bars.
Restaurants geos.
For the most part our exposure there is fairly limited and so long as that remains the case I think 95 is probably a number does it go to 90 maybe.
But I think we're probably be in pretty good shape unless it becomes more severe.
Great and then.
Just got a curiosity the sporting goods rent collection was relatively lower than the other essential.
Uses was there anything that explain that lower per cent for sporting goods.
I think that was a strategic deferral going yes.
Okay. So there is one perhaps one or more tenants that made the strategic decision on.
Right and as Johnny said, a lot of that is around trade that its credit worthy. So.
Doesn't hurt us and we make improvements to the Lisa. So these are things that we really look to win win to held strong merchants.
With inventory.
In improving our position for co tendency to exclusives redevelopments et cetera.
Okay. Thank you.
From Green Street, we has it's cheap. Please go ahead.
Hi, good morning.
Hi, good transaction that closed in the second or third core segment third quarter. I'm curious if you are these deals that were negotiated pre coven and you've got across the finish line are these new property. The put on the market since March and also if you could just share some color on current trends on secured debt available.
Realty and the private transactions market.
Good morning vintage drew so I'll certainly take the first part and give you little bit on on the debt and then Steve can.
Give you more accuracy on the death in my high level cones, and good morning, too so, yes, the things, especially that we closed.
Earlier this month, we're done.
Post.
Post crisis, the what we did in the quarter was a little bit over of a blend.
We have been very selective about.
What we're selling routine non supermarkets.
So and I think I can say to you also looking at lower tap scores.
Yes, as part of it.
Very pleased to exit, Utah, which is something that we've been working on for long time in.
Like utilize a place to see in visited center of it but.
Happy to be.
Focused in other places and not doing business. There. So as mentioned we are looking at continuing to hone the map to.
De risk where we can.
To to focus on the better market stronger tenants. So.
There are issues around financing.
Seems to be mostly.
Timing issues that everything takes longer.
A lot of its just the logistics around travel with.
Inspections service fees et cetera.
We do find people able to to get financing generally.
So things are.
Functioning, okay, certainly much better than the GNC, Steven the other more detail observation.
Good morning events at that.
Comments I would make is the CNB as market is.
I have not heard of any retail deals recently being priced into to that market. We're not that close to it we don't finance, but obviously some of the sellers assuming some of the buyers that we're selling to do but I'm not aware of anything there. The lifetime market is as I think still open they're very focused on gross.
Sure. He anchored centers that you can't get your arms around the NOI of the center with a lot of.
Strong tenancy there that you can get deals done I think most of the transactions that that I've heard about our saying are really it's more bank relationship type financing that is just short term bridging type stuff. So I think money is out there I think it would be bear say retails not the most favorite class today.
Having said that I don't think the market is totally shut down.
That's helpful color, maybe one follow up on that just curious on the sales in the third quarter in your mind was there a big decline in value on these.
On the remarks compared to what you could have sold the thing that let's say six months ago.
No Vincent back one other things we're very pleased with we review this with our board is we look at sales price relative to our internal estimates of than a movie and so far we've been very successful.
Selling properties.
That makes strategic sense to sell off in in the bottom of the portfolio at equal to or in many cases better than our pre coded.
In a d. So do appreciate it causes some short term pain the dilution but.
Given the discount the stock is to current estimates isn't a busy in the significant discounts and stock would be at to pre covered in the TV to sell strategically improving properties at pre code in the V or better is a very desirable thing for us long term.
Can't warrant that that conventional Cindy will continue to look at each sale that so far so good.
Great. Thanks for the time.
Thank you.
From Compass point, we have Floris van Dijkum. Please go ahead.
Great. Thank you for taking my question.
Steve maybe if you could are you.
Cash rent accounting for all of your restaurant exposure.
No not and good morning, good morning.
Not all of it know what we specifically identified some restaurants that are obviously on the list, but not every restaurant is on there. We we came up with categorizations and so forth, but no not all the restaurant Throm forces driving a lot of our restaurants or ground leases a lot.
We're big change like Darden and other so as Steve said, we went through listed every specific situation.
Yes, I was I was pleasantly surprised by the the cash rent question number there it looks it looked pretty good maybe if I can ask in another really another question.
Can you maybe talk about the yield expectations on your development have they changed or do you expect.
You'll start to come down a bit and maybe also talk about.
Your views on cap rates I know, you've just said you sold your assets this past quarter at.
Prices.
Akin to what you thought you would've gotten before co goods.
Yes, I have cap rates stayed pretty pretty steady for your for your assets in your view.
Good morning forces drew so cap rates, we think it's a fairly steady for most of the portfolio.
And John can chime in and then if he wants we haven't really tried selling too much of the really good stuff, but from what we hear those cap rates are likely down and what we see in the acquisition market would support that really good qualities down just because interest rates are so low.
There does seem to be possibly some widening.
And significant widening if there is.
Appreciable risk and watch list tenants that is it the top of market or over market, whose leases up in the next 18 months.
Thats something that that I would think there is a widening of the cap rate that's something that we probably wouldn't sell can strategically for us. It's about de risking it's not about what I call locking in a worst case scenarios. So we would probably try to.
To work through that and just not.
We'll go into the piece of that kind of problem because because we don't we don't we're only interested in selling if we can improve things strategically in de risk on the developments, it's hard to say, yes, there could be some slippage, but but I don't think it will be significant.
Things are taking longer we have made a lot of progress in.
The two DC projects in fact that.
Wes Alex we've increased our leasing.
By few units since we reported a bone almost a 27%.
Continuing to make good progress at Centro.
Over 91% leased there.
Harris Teeter is due for permits at west Alex it's on the schedule for them to open.
In November of 21, there's been a lot of internal talk that they might open early perhaps say 13 months from now which would certainly help the projects. So it might move a little bit as you know everything is taking longer with the permits and everything but but generally speaking good.
At the Driscoll here in Houston, we have started leasing we've leased 15 units.
Obviously between Kobin oil there are some concerns that so far the quality locations in and around the Driscoll.
Held up real well on the market rents. The project was always envisioned to more of an empty nester, who was selling their home and one of the lock and leave lifestyle. So it's not as.
Affected.
Some other things.
Great locations and with the apartment rents we can we can reprice. So we're pleased with things might move a little bit but.
Very good long term locations.
And we'll be in joining them for a while any other cap rate thoughts on drew just really maybe repeating what you said when.
When one can win an investor can see and understand the in July they are they're seemingly willing to pay a cap rate that is at least pre cove and maybe even lower it really when you look at the cap rate at a project where the in Hawaii is is.
Not easily determined.
That's where I think we're going to see some real.
Rising cap rates and in.
Over over time.
Great. Thanks, guys.
Thank you.
From Jpmorgan, we have like Miller. Please go ahead.
Yes, hi.
A couple of questions first fall for the Uncollectible Reserve I mean, how do you see that trending in Q3, just given the cash collections.
We have been picking up recently.
Any material changes.
Good morning, Mike.
You know if that that's a tough question going forward. It depends on so many things that the reserve is obviously evaluated at quarter end each quarter.
And we go through that valuation at that time and given that just a set of circumstances. So I think you know.
When we get to September will will have obviously, a better feel but that's a tough window to really predict at this point.
Got it Okay and then.
You talked about what you're seeing on the ground in terms of sales levels at for the local tenants reopened regardless theyre not to pay rent, but just have consumer spend has traffic than their people been spending money or or not.
Hey, good morning, Mike.
You know, it's it's a it's a mixed bag.
There are some retailers who have been creative and are creating tremendous sales with the opportunities that they have available.
There are some that are trying to basically do business. The same way they've had historically and are doing as well overall I would I would tell you that sales are generally lower particularly as it related to the service businesses the hair salons to the dry cleaners and in there.
There's some concern for on my part that.
Over time.
That would be more permanent situation, but.
Again, it's really mixed a lot of the restaurant seem to be doing well some of them not not so much but.
Most of our tenants are you were out there working with them and trying to encourage them to keep on cushion.
Got it okay that was a thank you.
From Jefferies. We have excuse me, we have Linda Tsai. Please go ahead.
Hi.
We're security deposits procured for recollections into Q or in July.
Hi, Linda this as Johnny No is a very short answer to that we I think one lease that was a couple of thousand dollars. We took a tenant security deposit for as part of a renewal agreement, but no we have not taken.
Security deposits and applied them.
Got it.
And then in terms of lifeline tenants, maybe that's fairly obvious it sounds like there's some smaller businesses. There could you just give us more color on the composition.
I'm, sorry, what what kind of tenants the lifeline Oh, the like Oh, Yeah, Yeah, Yeah, Yeah, I would say that that's more of the services nail salons dry cleaners folks that just didnt have the resources what are the things that we tried to emphasize is the first thing we need to do as a company is be compassion.
It towards the smaller tenants to through no fault of their own have had had problems. We've tried to get together with them in workout solutions that work for us for them and for our shareholders and in a lot of cases that has just been a deferment of ret and hope.
The things will will get better for them later on.
And then in your earlier remarks, you said, there's no guarantee that these rents can be collected but how do you go about stratifying collectability.
Internally.
It's hard.
[laughter] I you know, we just trying to look at every single tenant trying to understand what their financial condition is what type of business, they have where they're at and try to to make the best estimates we possibly can.
How do you have any sense of how much and then have received loans.
I don't think we have any hard data on on what percent of our our retailers have received loans.
We were working with them early on to for them to file et cetera in assisted them.
With information, but I.
I don't think we have.
They don't exactly who received bumps.
Thanks.
Thank you.
From Suntrust, we have Ki bin Kim. Please go ahead.
Good morning.
So for the 10% of tenants that are unresolved.
How would you think about that bucket because I'm guessing that's fight evolves over time meeting or play some opportunistic tenants that.
Didn't agree to deferral, but just didn't pay.
And today, maybe that's changed to just tenants that really aren't trouble. So how do you think about that bucket.
Thank you BN Johnny.
Yeah, It's you such a mixed bag. There's so many so many stories involved in each and everyone where we have something in legal we think we're close to an agreement trying to work out that last location out of out of a portfolio.
Generally I would tell you there they're difficult situations. If you look at the entire 10% of tenants.
People Havent not agreed with us because they don't want to.
There are a little bit confused about what their what they're doing some of these tenants may be almost in bankruptcy.
Generally say that that that 10% of tenants is in some amount of trouble in the collectability of those things would be difficult.
Okay and.
From the deferral segment, the two thirds that you'd consider lifeline tenants.
Just approximately how much how many of those tenants or money good entering fine pre Colgate.
Versus the segment that might have been already have living on the Leds.
I'd say almost all of them, we're we're money good predictor of it.
Okay, well, that's a positive data point and last question, Hi, TV and let me let me let me point out to you what are the things that we're we're we're working through here is you know these tenants were good tenets.
And again through no fault of their own there there in some amount of trouble and it may be that we have to do some things differently. We have to do some abatements later on.
Or do some longer term deferrals.
To get them to the other side and I think it to our benefit to to help the smaller tenants get to the other side because you know there they're better than other tenants that we don't know about yet and by the time it takes us a year to release get the space reopened pay some more money.
So where we're not saying that we won't end up doing some things that we havent really done yet.
And we're we're going to try to get the tenants who were good tenants prior to the time that that this came about to the other side.
Yeah, that's an important point I guess last question.
Analysts early but how do you see private operators.
Behaving in this kind of corporate era.
'cause accuracy, you guys being responsible and you have to quality assets and trying to maintain let integrity, but if everyone around two isn't that makes an impact.
So ki bin drew you're talking about private owners or tenants.
Other competing shopping centers.
Yes, I'll give you my thoughts and live CEO John.
And can I think most.
Private folks have have operated pretty much like us because its.
It's pretty much the right thing to do from a lot of perspectives as Johnny said.
The tenant was in good standing before the crisis.
Probably in the landlords best interest to keep them and worked with them versus dealing with the downtime in the change so just talking to my wins.
No directly and also hearing from our leasing people I think it's pretty consistent.
As to how the folks are behaving.
It comes down to the quality of the real estate and the tenant makeup and that's where you know I have friends, who have great quality real estate and friends not so much good quality real estate I think generally speaking the public wreaks havoc way better than.
As an average of the 30000 shopping centers of the Weingarten portfolio. I think is good within reason and all the rins together better than the average centers.
I don't see too much differences in the differences I do see would be more around the quality of the real Smith.
And Doug.
Good.
So I was more referring to not given deferrals are working and tenants across more referring to kind of live leasing right.
If.
Other shopping center owners are starting to undercut rise or give much bigger ti packages things that you would probably I expect to see.
And if that creates undue pressure on your own operations going forward.
I've seen it yet and we'll respond and lease to market in a lot of cases, the private folks have partners.
Loans.
We can oftentimes be more nimble.
The nice thing about retail is it is not a commodity.
Rent for a retailer is pretty low cost lease of either sale. So.
You might be competing for one of the secondary uses is looking at.
Just cheap, but but in most of our centers.
Yes people will pay a fair rent for someplace mills in the sale.
Yes, I think that you see you will start to see some bouncing around of tenants from seat ceased centers to be to today, and I think thats, where the opportunity for us will be is to take some tenants, who who want to to upgrade their their environment.
Okay. Thank you.
Steve.
And once again, if you do have a question. Please delstar one that your telephone keypad and from capital one we as Chris Lucas. Please go ahead.
Yes, Hey, Johnny you sort of started to answer the question I was going to have because I guess I was thinking about the past, particularly like the great financial crisis, and even going back to though.
Mid Eightys with the oil depression, you guys have been nylander react very quickly to market conditions.
And really move on getting deadbeat tenants out fast and sort of looking to replace some of it sounds like the environment that different today.
And those other two crises and so is there or.
Is there a point in time, which should be thinking about a change in mindset as it relates to how you're working with tenants today, we'll need to move on to two other tenants at some point.
Chris I don't know that I could define that today.
You know like you said, we've got a team. That's that's worked together a long time through a lot of these these issues.
I think me drew and Steve probably averaged somewhere over 30 years.
The regional leaders on our on our team or or with the company broker 17 years.
And we have a lot of competence in each other and were able to delegate responsibility and communicate very effectively with each other.
I think there the great thing that we have is this regional a series of footprints, where we have individual leaders, making decisions that are in the best interest of the of the shopping center in the in the retailers and it's really going to be them, who make that decision do we do we change pass.
Today or is it a month from now but at some point, we'll have to see where we are with with individual tenants with their occupancy and in those sorts of things and I think it will be I think I think hopefully would could be somewhere in the next six months, we'd be in a position to be able to understand that better.
Okay and then.
Steve a couple of specific questions just as it relates to the DNA.
Sounds like you're adding some headcount in Europe, because there are some shifting pieces. So the good generally run rate on a cash basis is going to be flat or should we expect some increase in DNA as you guys staff up.
Yeah, Good morning, Chris.
Give me that the DNA I think the run rate that you see about eight and a half million dollars a quarter is a good number going forward as a run rate. There was some movement. Obviously, we didnt have 10, even people weren't traveling and Q2 I see as the cost et cetera, and as you noted we have Uh huh.
Our leasing are adding some leasing staff legal staff collections et cetera. So all that there was a little bit of mixing going on but I think the eight and a half is a good run rate going forward.
Okay and then my last question just as it relates to the 4.4 million cash rents that were seat was received in July.
How much of that was from.
Tenants that are on a cash accounting basis.
Oh.
I'm not I don't have that at my fingertips, Chris will get back to your with that after after the call.
Okay, great. Thank you that's all I have.
Thank you Sir Thank you and we'll now turn it back to you for closing comments.
Thank you brand and appreciate it.
I wish everybody does best Thank you very much for your interest in wind aren't certainly available through more questions as mentioned I think.
Things considered we had a good quarter and I appreciate your interest to Weingarten wish everybody.
Stay safe and good luck all thanks again.
Thank you ladies and gentlemen. This concludes today's conference. Thank you for joining you may now disconnect.