Q2 2020 Acadia Realty Trust Earnings Call

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Ladies and gentlemen, today's conference is scheduled to begin shortly please continue to stand by thank you for your patience.

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Ladies and gentlemen, thank you for standing by and welcome to the Q2 Twentytwenty Acadia Realty Trust earnings Conference call. At this time, all participant lines are and they listen only mode. After the speakers presentation. There will be a question and answer session to ask a question.

During this session you will need to press star one on your telephone.

Please be advised that today's conference is being recorded if you require any further assistance. Please press star Zero I would now like Dan The conference over to your Speaker today jointly. Thank you. Please go ahead Madam.

Good morning, and thank you for joining us sort of second quarter 2020, Acadia Realty Trust earnings Conference call.

My name is join Bill and I am an intern in our finance and capital markets Department.

Before we begin please be aware that statements made during the call are not historically, maybe forward looking statement within the meaning of the Securities and Exchange Act of 1934.

Actual results may differ materially from those indicated by such forward looking statements.

Due to a variety of risks and uncertainties, including those disclosed in the company's most recent form 10-K, and other periodic filings with the FCC forward looking statements speak only as of the B of this call August six 2020, and the company undertakes no duty to update them.

During this call management may refer to certain non-GAAP financial measures, including funds from operation and that operating income.

We see Acadias earnings press release posted on its website for reconciliations of these non-GAAP financial measure the most directly comparable GAAP financial measure.

Once the call becomes open for questions. We ask that you limit your first round two questions for color to give everyone the opportunity to participate.

You may ask further questions by Reinserting yourself into the queue and we want to answer as time permits.

Now it is my pleasure to turn the call over 10, Bernstein, President and Chief Executive Officer, who will begin todays management remarks.

Thank you enjoy well done and thank you to all of our summer interns. This summer.

Welcome everybody well, we had plenty of detail that we're going to drill into today I think it's worth.

Beginning with an overview of the progress that we have made since our last earnings call.

As you May recall back in April we announced we were at a 50% collection right.

And on the 50% of tennis, not paying about half of them, where national credit tenants seeking recipe.

Hi, Jim we saw many of the nonpaying credit tenants back off their initial positions a force majeure.

And re commenced paying such that by the end of the second quarter, we were collecting in excess of 70% cash and then inclusive of short term strategic deferrals with national creditor.

We are at above 80%.

Also we're seeing continued improvement in collections such that June was better than may.

July better than July and August is showing positive trends as well.

So the first question is how solid is that 80%.

Well, we have longer term leases with average lease role of less than 10% a year over the next three years, we have a nice blend of credit.

Essential retailers high quality locations in strong demand.

But we need to take into account. The fact that there still is credit loss roll over and supply demand pricing pressures and Additionally, we're still in the very early days of understanding which segments of the consumer will be most impacted and most sideline.

As government support abates, and as the new normal for unemployment and the economy emerges.

Nevertheless, given the demographic quality of our portfolio given the quality of our locations and the credit quality for our portfolio. This 80% portion of our revenues feel solid.

So then what about the remaining 20%.

Well just about half.

Our leases with credit tenants that are not yet resolved.

But that portion will likely get there both with respect to background.

As well as rents going forward.

Then the other half of the 20% is.

Split into two buckets roughly equally about half consists of both local tenets not yet fully reopened.

Or 10 is highly dependent on post cobot conditions, whether they be jim's or theaters or sit down restaurants and here. The repayment of back ran frankly is less of an issue.

And when can these tenants gets fully reopened.

Then the other bucket.

Our tenants on our watch list.

Here, we're not expecting many of these tenants to survive much less thrive we're rooting for.

And we'll work with them.

But we are far more focused on the quality of these locations, which is very strong and we feel good.

About our ability to re tenant though.

And John will discuss we have taken reserves, but those tenants that either entered into the crisis on week footing.

And who is likely demise has been accelerated.

As well as those that have been impacted at least in the short term by code.

So when we take into account the headwinds facing retailers both from the pandemic.

And prior headwinds.

And then based on the percentages that I just walked through.

We expect the M Pat.

To blend to roughly 10%.

Over and Ohio over the next year or so before it starts to bounce back.

This 10% hit is certainly.

A significant decline in there remains a unusually broad range.

Outcomes in terms of this but this 10% is not nearly as much as the public market seems to be pricing it.

Then as we think past the pandemic and try to evaluate the impact of longer term consumer trends impacting our portfolio, it's worth contrasting that different components of our portfolio.

Now as we've discussed in the past our portfolio is highly differentiated but it is also highly diversified.

As you know our core portfolio represents approximately 90% of our earnings our fund platform represents approximately 10% within our core portfolio.

Roughly 40% over in Hawaii comes from Street retail, 20% from urban and 40% from suburban.

Arms of the urban component.

These urban shopping centers are dominated by tenants like target, which also happens to be the largest tenant throughout our portfolio as well as whole foods and others and this segment has less satellite space and thus has had the strongest collection rate of our three components.

And then with respect to our suburban portfolio that is split fairly evenly between supermarket anchored and community centers and here, we're seeing similar short term outcomes in collections and performance from the half of our portfolio that is supermarket anchored versus community the.

Good news on the supermarket anchored side is that the properties are anchored by a central retailers that stayed open throughout the lock down.

Now counterbalancing. This is the fact that.

Often our satellite space represents as much as 50% of the an ally in those properties and the outcome for our satellite is much more dependent on the economy reopening.

And recovery.

And then on the other hand with the community centers.

They're generally populated with a higher percentage of credit tenants, but as we have seen these credit tenants also have sharper elbows than our satellite tenants.

Finally, with respect to our street retail.

Again, it's worth thinking about it in two components roughly half.

Our lower density or more neighborhood focused street retail.

Thats meeting the more local needs of the community with tenants ranging from trader Joe's and Walgreens, but also properties in affluent suburbs like Greenwich or Westport, Connecticut.

Given the essential and lower density suburban characteristics, but this half of our street retail portfolio. These properties are reopening faster and might also benefit from some shifts that we're seeing in spending patterns in suburbia.

Then the other half of our street retail portfolio is based on mission critical streets in the key gateway markets in the United States.

This portion is much more dependent on the reopening of our gateway cities as they serve both local residents, but also shoppers from all around the world.

These properties include Soho in New York, North, Michigan Avenue in Chicago and throughout our portfolio in the country and it is unrealistic for us to expect an immediate rebound during the pandemic.

In the somewhat upside down world that covert has created the most sought after dense location have pause during this crisis.

Now that being said these great locations will likely provide the most.

Hey, symmetrical upside when we get to the other side.

In most markets that have reopened we have seen pent up demand, we have seen enthusiasm by the consumer in excess of expectations, perhaps in some cases too much enthusiasm.

And I can't imagine once these major corridors reopen that we won't see that same pent up demand and enthusiasm as well.

As we've discussed rents on some of these great streets have been correcting for the past several years, we were very careful and disciplined in what we acquired during the 2010 to 2015 period, and thus were relatively well insulated in New York City for instance, Manhattan represents approximately.

10% of our NOI.

Our rents in our portfolio their average out to about $250 a foot well below.

Where market rents were last year and certainly much less.

Then prior peak stuff.

While we have some impact FFO lease up of mission critical locations to do we should be well position.

Not only to maintain an important portion of that on a line, but then also capitalize on it as conditions improve.

Now we can debate.

How much rents might further drop during the pandemic or what properties in Soho might be worse today, but they are certainly.

Not worth less than zero.

And in prior cycles.

When these corridors.

Rebounded they usually retest prior peaks now needless to say, we don't need and we don't expect rents at prior peaks anytime soon.

Even half that amount would provide significant growth in S in excess of expectations.

There is an ongoing and worthwhile debate.

As to the future of our great cities.

During the initial phase of the coded crisis density.

Has certainly been enough vertical.

Prior to co that there was a growing premium placed on the type of knowledge that is best produced by people Inc.

Close proximity to other people.

Now today, many wonder whether this pandemic will lead to.

A longer term movement away from cities.

Whether its work from home or work from a ski slopes in the short term both ideas sound compelling.

But longer term post health crisis historically, the de Densification trend has just not played out.

Most recently, we saw this in Shanghai in Hong Kong after the Sars outbreak, where once the pandemic was under control.

We saw further densification and further demand.

Now the ship for some families to suburbia or other up and coming cities will not always makes sense.

But keep in mind as we saw in New York City. After 911, many families departure.

Some temporarily.

Theres permanently, but ultimately more moved in.

Then moved out.

Now we understand that this segment of our business is not for the pain apart.

But the diversification that comes from the other components of our business.

Should add the stability, we need to weather the storm.

And the rebound could be compelling.

So as we look at our core portfolio in the short term our focus is going to be getting our stores reopened and our collection rate to a more normalized level.

Then as we look further down the road.

Our team is focused on executing on our leasing pipeline, which is very encouraging.

We have leases under negotiation.

For approximately $6 million of and Hawaii.

Which for us equates to approximately 5% of our overall and Hawaii or roughly half of the 10% disruption I just discussed.

This pipeline is a good first step and as retailers be going to look beyond the shutdown.

They are telling us that they expect are kind of locations to benefit from the ongoing trends of retailers doing more with less.

The shift in retailing channels as well as the continued rise of omni channel.

Turning to our fund platform as you know this provides further diversification of cash flow for us and it also gives us the ability to play offense irrespective of our stock price.

Amy will update you as to the status of our funds, but in terms of new investments given the amount of disruption to the retail sector. It's still a bit earlier. However, if the public markets are any indication.

Theres going to be outsized opportunities.

It'll be interesting to see where most of these opportunities arrive.

Historically.

We have focused on.

Real estate embedded in retailers, such as our Albertsons transaction.

Last few years, we had been focusing on buying out of favor higher yielding assets that populate our fund five.

But also opportunistically acquiring on key streets like our success on Lincoln Road in Miami, and then throughout the country and if we can find sellers.

Who do not have the staying power.

For the patients to wait for recovery or sellers, who buy into the narrative.

That the sellers that excuse me that the cities are never rebounding and that rents are going to be dialed back by decades and forever.

Well, we could find pricing.

That will be cheaper than in a generation.

So to conclude as we work through a health crisis and work through an economic crisis.

We recognize that a full recovery will require patience will require perseverance and discipline and I assure you. Our team is up to this challenge.

Given the diversification of our portfolio.

The opportunities via our fund platform.

And then the embedded growth when we get to the other side of this pandemic.

We are well positioned not only.

To survive, but thrive.

And with that I would like to thank our team for their work over the last quarter and I will turn the call over to John.

Thank you Ken good morning, everyone.

Ill start off with a discussion of our second quarter results focusing on how cold It has impacted our portfolio along with a few observations as to what we are beginning to see in a post pandemic environment and then closing with the discussion on our balance sheet.

Starting with FFF FFO as adjusted was 29 cents a share and within our adjusted FFR, we generated approximately $6.5 million or seven cents issue a share related to our realized gains this quarter from our investment in Albertsons.

He is going to provide some further color on investments specifics, but I did want to spend a moment and how we are treating albertsons within our adjusted EPS.

Consistent with our past practice, our adjusted FFO will only reflect realized gains thus any unrealized mark to market adjustments will be excluded until the underlying shares and sold.

As a reminder, at EUR, 28% pro rata interest we have approximately 1 million shares remaining.

We expect will be sold over the course of the next two years.

In terms of 10 cents of covert related credit losses. This quarter. This translates to $9.4 million and is comprised of $2.7 million reserves on straight line rent and $6.7 million on current period buildings.

First starting with the $2.7 million a straight line rent reserve.

While the current period reserve is somewhat irrelevant given that it represents an amount that has built up over multiple years I think the more relevant data point is what remains on our books at June Thirtyth.

At quarter end, our pro rata core strike straight line rent balance was approximately $35 million.

And today, we have reserved approximately 30% or $10 million against this amount.

Now moving onto the $6.7 million reserves that we took against Filgrastim recoveries.

To sum up $6 million relates to our core portfolio.

Which means that we reserved approximately 40% against our uncollected balanced uncollected balances and this reserve was spread relatively proportionally amongst our street urban and suburban portfolios with our street in suburban portfolio, each recognizing approximately 45% of the reserve as compared to the 40% that each of these generate and maybe are.

With the remaining 10% of the reserves coming from our urban portfolio, which comprises 20% of or maybe are.

While our quarterly results certainly highlight that we aren't immune from the pen data pandemic as Ken mentioned, our exposure to those tenants that could see extended impacts on their business feels relatively manageable specifically, we think about those categories as gyms and theaters, which represent less than 5% of right of our hbr and under 2% coming from.

Full service restaurant venues.

So now moving into how we translated the cash received to the revenue that we recognized during the second quarter.

Our core rents and recoveries for the second quarter were just under $50 million prior to establishing a $6 million reserve.

End of this amount as Ken mentioned, we collected over 80% of it in cash along with money good deferral agreement.

In terms of the deferral agreements the vast majority we view as strategic deferrals with predominantly national credit tenants and repayment periods under a year.

And should these tenants live up to these agreements, which we anticipate we're back to full pre tobin rents by the fourth quarter. This year.

Thus all else being equal we expect our cash collection rate to trend towards 80% in the near term.

So after receiving cash in money good deferral agreements for over 80% I now want to walk through how we approach the remaining 20, 20% roughly $10 million and it falls into two relatively equal buckets.

So call it 10% roughly.

$5 million each.

The first bucket represents those credit tenants that hedge that have both chosen not to pay for inter enter into deferral agreement with us however, given their credit coupled with the importance of our locations to their operations. We feel strongly these amounts will be collected and thus did not apply a reserve against their uncollected balance and in fact, we are continuing to.

These amounts showing up in a recent cash collections.

The second bucket bucket actually slightly in excess of 10%, reflecting the $6 million reserve, we have wrote off meaning that we don't expect to collect it.

Now it's worthwhile to further separate this bucket into two distinct components first about half of the write off was from our watch list.

And the most likely outcome for this group is that we get the space back in our leasing team is already in the process of identifying replacement tenants.

Our watch list includes those that have declared bankruptcy or we believe on the verge in doing so the largest of which is a scene. As a reminder, we have four locations in our core portfolio.

With annual base rent and recoveries of approximately $3 million or about 1.8% of our of our SBR.

We have fully reserved all of our seen exposure, including but both build brands along with any straight line balances.

Additionally, what a process is still fluid our expectation is that we take back all four of these spaces within the next few months.

And our leasing team has already working on profit to be really releasing each of these locations with over 90% of the are coming from some of our most dynamic locations in North Michigan Avenue in Lincoln Park in Chicago.

The second scenario write offs involves those that we think we'll need our short term assistance to get to the other side.

These are the tenants that had probably profitable businesses prior to the pandemic with our locations being vital to their continued success.

The open questions are how much of our support will they need and for how long will they needed.

I would just this last bucket of write offs that we believe forms of current thinking about the projected drop of 10% in our analyze that Ken mentioned.

While it's too early to provide any front guidance, we are starting to see similar similar results of this roughly 10% drop playing out in our preliminary projections as we work through a detailed update of our internal models.

Now moving on to same store NOI, our same store NOI declined by nearly 19% during the quarter.

Driven by the credit reserves I just discussed.

While the reserves were by far the single largest driver to other factors weight into the quarterly decline first.

Given the current environment and preservation of capital, we have not moved any properties into redevelopment notwithstanding our belief that some of these may ultimately be redeveloped.

And secondly, as you May expect we're seeing some short term delays on achieving rent commencement dates on a few of our key street leases.

The good news is that these tenants are excited about opening but the bad news is at the pandemic push the day forward a few months, including key street locations in Chicago in Greenwich, Connecticut.

So notwithstanding the unfortunate and very significant significant implications that cobot had on our portfolio during the quarter.

Our same store NOI results would have otherwise been tracking in the 2% range.

Lastly, I want to highlight a few items on our balance sheet at our current cash collection levels in excess of 70%, we're retaining cash and as a reminder, we are able to breakeven with core cash collections of under 50%. After factoring in the fees and distributions that are we are that we are actually receiving from our profitable fund business as well.

Interest income on our structured finance book.

Additionally, we have sufficient liquidity in excess of $100 million comprised of pro rata cash on hand, along with remaining cap capacity on our core and fund facilities.

In terms of our dividend as I just mentioned, we have retaining capital at current collection rates and we have the tax cover to continue doing so for the balance of the year, while at the same time, maintaining compliance with our requirements.

In summary, and that's good think I speak for many of US. This has certainly been one of the most challenging periods of my professional career.

We have a lot of hard work in front of us along with some great opportunities.

Given the strength of our portfolio, our balance sheet and the laser focus of our incredibly passionate and experienced team. We look forward to accretive lead getting to the other side of this extraordinary challenge that we are facing.

I'm now going to turn the call over to Amy to discuss our fund business.

Thanks, John.

Now I'll provide an update on our fund platform.

First with respect to our capital allocation strategy, our funds are Nick the street urban and suburban retail.

Over the last few years, we knew we were late cycle.

Accordingly, we shifted our fund acquisitions focus away from value add development to more stable, but out at the bird shopping centers.

Since 2016, we successfully aggregated approximately 650 million dollar portfolio, a 14 open air suburban shopping centers on behalf of fund side.

The portfolio had strong geographic and tenant diversity.

We acquired these properties that a substantial discount to replacement cost.

An unleveraged yield of approximately 8%.

And we secured two thirds leverage at a blended interest rate of 3.7%.

Please go ahead, we were clipping a current labreck yield of approximately 17%.

Over the past several months that's done collection rate has generally remains consistent with that of our core.

Given the overall durability of funds by cash flow in May we reinstated our monthly operating cash flow distribution to our fund investors after a two month pod.

Looking ahead, if we assume that on site and alike returns to be kind of 90% of pre corporate level by next year consistent with Kent earlier remark.

Then the fund will still be delivering a mid teens current return on average basis.

And that feels pretty good, especially compared to alternative alternative investment in the real estate sector.

On the acquisition front the transaction markets remain quiet, we have approximately $200 million and dry powder or approximately 600 million I'm going to leverage basis.

We have at least a year to invest yet.

Given increased headwinds in the near term due to Kobe 19, we will remain appropriately disciplined.

Since launching our fund platform more than 20 years ago, we have invested into four key strategies.

Opportunistic which include Sunnyside suburban high yield strategy.

Let me tell urban retail and just fast retailers.

Yes, well category includes continued investment in Mervyns Department stores and Albertsons supermarkets.

Thank you still owns an approximate 1% interest in Albertsons.

Since inception, the fund has received $112 million distributions on 24 million dollar investment, including $23 million up cash received during the second quarter.

This has resulted in a real nice 4.8 multiple on invested equity and an internal rate of return in excess of 250%.

Additionally, the fund still owns approximately 4 million shares.

At yesterday's closing share price this equates to another $64 million of expected cash, which would increase the projected equity multiple to nearly seven times.

As previously discussed Acadias pro rata share of the fund and the Albertsons investment is 28%.

On the disposition front as previously discussed during the second quarter fund for completed the sale of kidney Plaza one up originally eight properties in our northeast grocery portfolio investment to attend 31 buyer.

More generally the capital markets I mean on pause, especially for opportunistic sellers like that.

That said, we continue to evaluate our existing portfolio for disposition candidates in the near to medium term, particularly some of our supermarket anchored centers that are especially buyer friendly in a couple then world.

Turning briefly to city point the property continues to serve the needs of downtown Brooklyn.

With respect to our anchor trader Joe's and target remains open and operating as they have throughout the pandemic and century 21 has now reopened.

Several of our smaller shops.

Facing influences are also open, including Casper camp and Tele Barbara.

And so I build up our market Hall vendors are also operating stall in our pop up outdoor market.

It's been great to see pent up consumer demand manifest into foot traffic at our property with Brooklyn notice, we busier than in.

In fact at times, our retailers have had to manage fine outside their stores to prevent overcrowding, including to know one surprise Peter Ken.

We are prepared to fully reopen the property with the appropriate air filters. Another safety measures in place when government restrictions are lifted our new who haven't store. It's also point to open.

Finally, with respect to fund level that we have ample liquidity on our subscription mine and we are actively working to address any 2020 and 2021 maturities.

Our lenders remain highly cooperative and supportive.

In conclusion, our fund platform remains well positioned to successfully whether this period of unprecedented disruption with the successful capital allocation strategy and ample dry powder to continue to execute on it.

Now we will open the call to your questions.

As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key.

Please stand back when we compiled acuity roster.

Your first question comes from Craig Schmidt.

With bank of America.

Thank you.

You guys.

Executed 25, new and renewal leases.

In the corner on folio and the basically you said that the when so core the close were pretty near what do you talk pretty cold good expectations could you provide a little more detailed on that as well as maybe a leases that are coming up what kind of.

Rent spreads are you seeing.

Sean why do you go first and then I will.

Yeah, absolutely correction to two things I think on the the first the first point on on where we're seeing.

Rents in line with our pre Tobin expectation that's on the that's on the pipeline. So on the pipeline and Ken mentioned in his remarks that we have over $6 million of of leases sprinkled throughout our.

Each of our each of our portfolios that are well along in the process whether at lease or under LOI and we are seeing those being signed.

Right in line with where we would have expected it before that the pandemic head.

On the so that was stats on where we mentioned on the and access or Ed inline with expectations of then in terms of the other point that we put in the press release on on new and renewal leases out of those there were no new conforming leases in the core we just had renewals and those were.

So if those were spread throughout the throughout the portfolio.

And then just in terms of.

Color and feedback that we're getting from those retailers ready to go back on offense.

Many of them think back to the last recession in every recession is different but those that feel that they are well positioned then there will be many to go back on office and that their business models are are well situated for what they see over the next several years.

What they're telling US is they don't they do not want to wait and Miss the opportunities and so we do seeing them stepping up some of them.

Are the off price retailers, who are not really thinking about omni channel, who are really executing and just want the best locations and we're very encouraged by their interest throughout our portfolio, including in our urban assets.

And then there are variety of retailers, who are recognizing the benefits.

Of omni channel whether it is some of the digitally native that we've been talking about for awhile. But then also look at what target has been doing in the new leases that they have sign post Cove. It in New York City alone.

And that also is giving a positive indications so those retailers that.

Recognized there to weather the storm and recognize that then are being a strong position, they're starting to step up.

Great and then just.

For a follow up how long do you think you might be before Onefive starts and see some opportunities and you know what type of assets would you be targeting.

In terms of acquisitions.

And and it's impossible impossible to predict precisely crack because as you know our capital is fully discretionary and on call. So for the right deal the answer could be tomorrow.

I doubt it will be tomorrow, because I would know about that today.

[laughter], there's so much disruption in the system.

And that we are seeing real estate embedded into retailers that's quite entry.

We are seeing.

Especially from the private market.

A variety of Ownerships that used too much debt and now there is going to be restructuring whether it results in foreclosure and the purchase of debt.

Or preferred equity taking over and looking for a new operating partner still too early to tell.

And then there is all of the other areas that are in our core competency. So.

Yeah.

What I'd say in them very short term we saw.

That everyone froze.

Stood still for a bit to just figure this out and now we're starting to have those kind of conversations they could hit quickly, but if they don't and we have to be patient. Our capital is very patient and we'll wait till we see the right now.

Okay. Thank you sure.

Your next question comes from Christy Mcelroy with Citi.

Hi, good morning, Thanks to Kenya in regard to your comments about the potential for a 10% NOI impairment and I. Appreciate your willingness to put that number out there. How do you think about the impact from occupancy boss adverse isn't it Japanese tier in place right. So just trying to think about it.

Bob you know occupancy, which can be backfill for say why were in place rents that could be locked in trouble on there.

Yes, and Christy as you know with us it even gets more complicated because.

We have some very valuable spaces that are low square footage versus a kmart box somewhere in suburbia, which has a lot of square footage. So it will be hard to track on a square footage and this is what our occupancy will decline to that being said, if we think about it from an economic.

Occupancy if you will I do think that the majority.

We'll be.

From tenants that go away and then get refill so that falls more into the vacancy.

Then from.

Just melting ice cubes and.

A significant amount of rent declines and that just has to do with where our basis is in terms of rent per square foot as I said in Manhattan, Thankfully we were careful.

That we didn't.

Have top of market rents, we tried but the leases where long term. So we didnt get to get to those peak. So we don't have that problem of significant rent decline there'll be some some in some spot, but overall, we feel pretty well insulated on that side, we feel very well insulated as it relates to our long term lease.

It is with target for instance, where it's measured in decades not years.

So I do think it will be losing tenants.

Or tenants pausing until they can fully reopened.

And then climbing back to.

The new normal rents.

And then I wanted to go back to comment that you made an answer to Craig's question about how.

About the real estate embedded in retailers that could be intriguing and how would you think about taking advantage in some of those opportunities can you maybe expand more on that comment given your willingness on the path to do those sorts of retailer sort of an investor confidence. We just saw with albertsons that can be profitable.

Sure and the same thing with Mervyns way back when where there was a department store chain that needed a turnaround at the opco level, but equally important was a turnaround at the propco level and that's where we were involve taking closed stores and converting them into other.

<unk> retail uses or other mix thesis.

Without getting into the specifics of which retailers today have real estate that that's an highest use probably goes beyond their current use.

Those are the conversations that are acquisition teams have with the bankers and brokers and owners all the time and there certainly are some of them today because.

One of the many things that Cove it has done it certainly accelerate.

The reinvention of a wide variety of real estate.

And we have the capital and the skill set to execute on that again it requires the stars aligning it needs to make sense.

I can.

Gladly talk about Mervyns and Albertsons. The deals we did do I could talk a lot about the deals we did not do so so we'll see.

If if that right real estate shows up but if it does will be there.

Thank you.

Your next question comes from Todd Thomas from Keybanc capital markets.

Hi, Thanks, Good morning, Ken just following up on the your comments around the 10%.

Hi reduction that you know you discussed over the next year. So as you think about the portfolio. How do you think that that NOI losses.

Spread out across the suburban street and urban segments of the portfolio.

Sure and John feel free to.

I'm in the as well as what we as we said.

The.

Urban piece so their major cities, but these are shopping centers anchored by target or whole foods or trader Joe's.

That the collection rate.

Feels or has been the strongest of all three components and my guess is that that will continue to be the case any and why will be the most stable now the flip side of that is as you can imagine the contractual growth of a target anchored property with limited satellite space is also the least so.

The growth, but that 20% of our portfolio comes from Densification and you see us executing on that where we're.

Redeveloping in San Francisco, Our city center, and there will be others over an extended period of time, but none of them happened quickly and nor do we need them too so that will be the strongest.

And.

So far I think if you think about the.

40% that we say is our street portfolio the half of that the 20% that isn't the major markets.

I think that's where we're going to see at least in the short run the.

The biggest short term challenges, but the good news here as.

We're in touch with all of those retailers and.

Almost without exception all of them look forward to reopening once it safe for their employees once they can.

Get their businesses back in.

On track and none of them are saying these are markets, we don't want to be in so what I can't answer right now.

Todd is.

How long is that depth.

And how quick is that rebound, but that would be the area. Conversely that were probably most focused on in the short.

John I don't know if there's additional color you want to.

No kinetic that that that summarizes a well.

All right and then and then just digging in on that leasing pipeline. So you talked about $6 million of event. A why can you can you talk about the timing that you might expect to see that materialize.

Is that is that largely for.

Sorta, new Noncomparable space in the portfolio or is that demand waiting to retenant. Some existing space I guess, you frame that up as you know it backfilling more than 50% of that 10% NOI loss as it targeted to replace tenants.

Yeah, you know or just you know thats, how sort of how you're framing it up I was just curious if you could comment on that.

So the vast vast majority falls into that 10%.

You are correct, Todd, meaning some of those spaces. If you think about the 10% and some of them or tenants on our watch list, we don't have control of that space yet.

But we do anticipate and some of this space. It has been in high demand for years.

Don't want to say much more than that but so retailers. It's been on their radar screen for awhile and now they're saying you know what we think you might have the opportunity to get this back sooner rather than later and so we are trading paper on that.

It is dependent on us getting those spaces back the good news if we don't get the space back is it.

In Hawaii right now the bad news is I'm much more excited about the new tenants coming in within the existing ones there.

So that's a decent chunk of that $6 million is scattered throughout our core portfolio on that side.

And then others are just vacancies that you and I have discussed over the last year or two high quality locations, where tenants we're gearing up.

With cobot everything cost for a couple of months and now thankfully what our retailers are saying is they're ready to come back the challenge as to timing Todd is.

I don't expect nor do we really encourage retailers to open and start paying rent before a given community center or street is reopened and so this summer will be will be challenging and I think that.

It would be imprudent for us to expect a lot happening during this quarter.

Then I, what we're hearing from our retailers as soon as they can safely reopened they want to be open they're doing site visits now.

They are.

Actively negotiating this is not just people staying busy and so I am encouraged as we get passed the health crisis that we will see these over the next several quarters.

All right. That's helpful. Just a quick one for John you mentioned, the 1.8% exposure to a sina.

That was reserved against this quarter, how much hbr exposure do you have to to bankrupt tenants in the portfolio overall.

So in terms of bankrupt tenants in the overall so.

I would say Todd it's probably in the.

Three to four inclusive of machines.

So maybe another one or 2% on top of that.

Okay got it yeah overall watch list that we took was around 5% so I'd put it probably another.

One 1.5% on top.

Okay.

Alright, thank you.

Your next question comes from Mike Mueller from with JP Morgan.

Yes, Hi, I'm, just curious to know can be handled teasing people have on what street rents are today, whether it's in Soho or George town, or where Chicago, what's what's that visibility it looked like.

The visibility has.

Probably never been worse Mike.

It on one hand, we all think that this is.

Just something that landlords and tenants agree on in a vacuum, but the reality is it sales base.

That retailers are thinking about what revenue can they produced out of those four walls and then what other halo effect or other.

Incremental benefits might exist in omni channel or otherwise.

But in a market that shut down.

The best they can do is look back to what were comparable sales pre cove it.

What might.

The recession look like once we get.

Pass this initial phase and so there's not a lot of clarity.

The flip side is they know where their customers are ordering from.

They have very good data for those that have online for instance.

Additionally, as opposed to the last recession.

On this one has not hit the housing market has not hit the white collar market has not hit the affluent market and those shoppers are still shopping there just shopping in other ways. So many of our retailer say we know if we can open a store here once we are post pandemic we.

You can see based on where we're shifting to that that's where the shopper is.

So there are there are ways that people are feeling our way through but it's still very early days.

Got it and then thinking about the core portfolio.

Thank you thinking about how your capital deployment looked over the past three years whenever you start putting money to work again on a go forward basis. How do you think it'll be do you think it'll be similar to the types of investments you made in recent years are different.

Somehow whether it's geographically or the type of property by.

Way too early to know.

Because of first of all all of the realities of working through this crisis and everything I touched on but also just the reality of where the riet market and our stock price has gone.

Don't think were alone and as I think theres very few retail rates that are trading at or.

At a premium.

Two there and Avi such that they could use their currency and we have always been very clear that we need to be able to match fund in order to accretively acquire so step one is we need to see a recovery or a reconciliation between the private markets in the public markets before we can think.

About using our currency for just about anything and then once we get to that point.

And I hope we do.

I'm confident we will.

And then where will the best opportunities to grow our core portfolio today and so much of that depends on what this looks like when we get to the other side.

We have always worked very hard to listen to our retailers and hear from them, where they see their strongest growth opportunities.

And we're still in the early days of that we'll get a better sense as we see how the lease up plays out.

But then also a whole host of other shifts.

That are occurring in our economy in the consumer and then how the consumer shopping so that's a long way of saying we have a pretty broad.

Set of core competencies of we have biases and we're.

Certainly going to be guided based on where the retailers calm, but first and foremost <unk>.

We just need to focus on leasing up some really valuable space.

Getting that in Hawaii, and EFO to the bottom line and then we'll figure out the other stuff.

Got it okay that was helpful. Thanks.

Your next question comes from Linda Tsai with Jefferies.

Hi, Thanks in terms of the 10% hits in Hawaii, and it not being a snap back how are you thinking about the pace of recovery returning to 2019 levels. You know acknowledging there's some obvious differences you know do you think the financial crisis schools any clues.

I don't know so here's what.

Puzzling within Linda we're all looking at similar data I, probably spend more time talking to retailers.

But we're all seeing a bunch of things that are playing out similar and many that are different to the financial crisis as I pointed out earlier during the G.S.C. The housing bubble burst and you saw housing prices dropped dramatically the stock market dropped dramatically.

And now if you look at the S&P 500, or naming any housing markets, perhaps outside of New York City and others, you see a lot of stability.

What I can't predict because some of this isn't the government had some of this is dependent on when the health crisis and how it is resolved.

As to what shape or how long it takes and and and I'm hesitant to guess other than to say, we're going to watch all of these trends carefully.

We are not in the be presumptuous as to predicting when we.

I see the resolution of the health crisis.

And then we're going to see in the next few weeks what the government support.

The next round it looks like and that May give us some sense of which portions of the consumer are going to be in tougher shape than others and that then also will guide with portions of our portfolio recover faster.

But if you just think about what I've said, we may see and it wouldn't surprise me to see that recoveries follow that portion of the consumer that is that are insulated from this crisis than others.

That makes sense. Thanks, and then a one for John what's the level of collections, you're getting from restaurant Synergen's.

Yeah, Hi, Linda so starting with the to James I think that James is it's less than 3% of our hbr.

And on a collection percentage those are those fall under the category of not get open given in the locations, where our gyms are and where we're seeing around 20% collections on those and have have reserved appropriately and then on the restaurant side, it's kind of give it a bit more nuance or overall as you will.

In our supplemental restaurant exposure, we list that 8%, but it's in we think about in different different categories. As it relates to collection. So I think the when I highlighted my remarks was where I think is is that the most challenged at the moment is on a full service side, which is under under 2% of our Hbr.

And that one struggling and we're seeing less than 30% collections shambles right around 29% collections on our full service and then when we look at the other categories a restaurant, whether its coffee our fast food.

That is trending almost at the at full collections and then we have some what we refer to as quick service and that's less than half you'll call that 45% that we're seeing there I just want to blended basis, Linda were about 45% collections on our on a restaurant exposure overall.

Thanks for that Kelly.

Your next question comes from Floris Van Dijkum.

With Compass point.

Hey, guys question on your closed space and I might have missed this in your early remarks.

Ken, but what percentage of these stores and Avianca. That's closed his mandate it closed versus closed by choice.

John do you have that data.

I do yeah of course, I would say the.

Vast vast vast majority is is.

What is closed its mandated by close and then the other no ones that are not is for the health in health and safety of other employees. So think what we don't have in their portfolio, but like an Apple where there are choosing for the protection employees not too.

Not to opens I think it's a relatively small bucket that are truly that are.

Actually not open for read into that could be.

Great and maybe can you also talk somebody other some of your peers have talked about August.

Initial August collection trends can you comment maybe on that.

ER and give some more insight.

Yes, I think floors, what I could I could you know almost I came up with what Ken Ken side is that if we when we first started looking at cash collections is being such a important metric in the first time. We did this we're at 50% when we when we talked about April. We then you know next time, we spoke to a with 56.

Percent moved to 71% and you know where I'd now 74% in July the point being that I think as the world's trying to reopen and the relative relevancy of the physical space to the retailers became very apparent we saw collections rise as part of that.

So what I would say in August and we're still early into the month and following up on what Ken said in his remarks is we are seeing similar similar.

Upward trends in our cash collections or don't don't want to give a percentage at because there is still several days left to go but we're seeing the same same positive news a store start to continue to reopen as we the deferral agreements as I mentioned flip to full rent.

You know, where we see us ourselves trending towards the 80, 80% range and and hopefully very near term.

Great. Thanks.

As a reminder, if you have a question please press star one.

To withdraw your question Chris to pound key.

Your next question comes from then to bone.

From Broome Street advisors.

Hey, guys for for tenants that are open in your street portfolio, Howard sales trending relative to last year and other big differences based on geography.

There are big differences based on geography, there are big differences based on whether those retailers had going into the crisis, a strong digital omni channel.

Presence and the US we're able to execute through the crisis and use the stores for all of the benefits. There. So those we have seen.

The a strong rebound on street retail sale the others, obviously Vince.

Trader Joe's target.

And some of the other essential retailers you have seen sales growth that is hard to wrap your head around because of the obvious shift.

Where I think it has been the toughest has been those retailers with our strong digital.

And that the cities are.

Reopening and there is quiet and I would expect it to be quiet in places like Soho until new Yorkers really come back and I think Thats, a post labor day phenomenon and that's what we'll be watching for.

That's helpful, but I know you need to just quantify a little bit more on.

Average street retail collections for what the open or the goal even too early to have that.

It's still a little too early and the other thing I'd remind you.

Is we don't get official monthly sales reports.

So.

The dialogue, we're having with these retailers certainly there are discussing their sales and if sales are good you tend to hear about those and recollections high and the others I'm a little less so so I, it's still a little early I think thats, a worthwhile conversation for us to have post labor day.

Makes sense one more for me you discussed the background on the town center transaction and the conversion there.

John you want to cover the Yep.

Okay.

Since you're referring to within the supplement how we.

Converted a what was a note into an equity ownership into into town center and that was just part of a tax transaction, which we did several years ago and several steps to the conversion where it was where we converted a note that was tied to a equity interest in that the partnership and in a noncash exchange.

Exchange that note for a full ownership in the property.

And that was shot it happened over the past several years.

What's the price pre negotiated or I'm trying to get a sense is this at all the call of what you negotiated transaction could be because I've way I'm looking at as you acquired 27% us additional interest for Andy.

Yes.

$39 million, so I'm, just trying to get a sense. This new frightening rebuild any benefit is all prenegotiated prenegotiated several years ago, so not an indication of post cove, it or or anything like that.

Okay, great. Thank you.

Sure.

[laughter].

Showing no further questions at this time I would now like to turn the conference back to Mr. Kenneth Bernstein for closing remarks.

Great. Thank you all for joining us look forward to catching up with all of you on our next call and until then stay safe and well.

Ladies and gentlemen. This concludes today's conference. Thank you for participating you may now disconnect.

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Ladies and gentlemen, thank you for standing by and welcome to.

The Q2, Twentytwenty Acadia Realty Trust earnings Conference call at this time, all participant lines are and they listen only mode.

After the speakers presentation, there will be a question and answer session to ask a question. During this session you will need to press star one on your telephone.

Please be advised to todays conference is being recorded if you require any further assistance. Please press star zero I would now like down the conference over to your speaker today Joy <unk>. Thank you. Please go ahead Latam.

Good morning, and thank you for joining us sort of second quarter 2020, Acadia Realty Trust earnings Conference call.

My name is joy <unk> and I am in turn in our finance and capital markets.

Before we begin please be aware that statements made during the call are not historically, maybe forward looking statements within the meaning of the Securities and Exchange Act of 1934 and actual results may differ materially from those indicated by such forward looking statements.

Due to a variety of risks and uncertainties, including those disclosed in the company's most recent form 10-K, and other periodic filings with the FCC forward looking statements speak only as of the base of this call August 620, 20, and the company undertakes no duty to update that.

During this call management may refer to certain non-GAAP financial measures, including funds from operations and net operating income.

Please see Acadias earnings press release puts it on flipside for reconciliations of these non-GAAP financial measure the most directly comparable GAAP financial measure.

Once the called becomes open for questions. We ask that you limit your first dropped to two questions for color to give everyone the opportunity to participate.

You may ask further questions by Reinserting yourself into the queue and we will answer as time permits.

Now it is my pleasure to turn the call over kind of Bernstein, President and Chief Executive Officer, who will begin todays management remarks.

Thank you enjoy well done and thank you to all of our summer interns. This summer.

Welcome everybody well, we had plenty of detail that we're going to drill into today I think it's worth.

Beginning with an overview of the progress that we have made a since our last earnings call.

As you May recall back in April we announced we were at a 50% collection right.

And over 50% of Tennessee, not paying about half of them, where national credit tenants seeking recipe.

Hi, Jim we saw many of the knocking credit tenants back off their initial positions a force majeure.

And re commands paying such that by the end of the second quarter, we were collecting in excess of 70% cash and then inclusive of short term strategic deferrals with national credit that we are out above 80%.

Also we're seeing continued improvement in collections such that Jim was better than me.

A lot better than July and August is showing positive trends as well.

So the first question is how solid and that 80%.

Well, we have longer term leases with average.

Just roll of less than 10% a year over the next three years, we have a nice blend of credit.

Essential retailers high quality locations in strong demand.

But we need to take into account. The fact that there still is credit loss roll over and supply demand pricing pressure and Additionally, we're still in the very early days of understanding which segments of the consumer will be most impacted and most cyberark as government support debates.

And as the new normal for unemployment and the economy emerges.

Nevertheless, given the demographic quality of our portfolio given the quality of our locations and the credit quality for our portfolio. This 80% portion of our revenue Skillsoft.

So then what about the remaining 20%.

Well just about half.

Our leases with credit tenants that are not yeah resolved.

But that portion will likely get there both with respect to background.

As well as rents going forward.

Then the other half of the 20% is.

Split into two buckets roughly equally about half consists of both local tenants not yet fully reopened.

Or 10 is highly dependent on postcode conditions, whether they be Jim zorn theaters or sit down restaurants and here the repayment of back rent frankly is less of an issue.

And then when can these tenants gets fully reopened.

And the other bucket.

Our tenants on our watch list.

Here, we're not expecting many of these tenants to survive much less thrive we're rooting for.

And we'll work with them.

But we are far more focused on the quality Oh jeez locations, which is very strong.

And we feel good.

About our ability to retire.

And John will discuss we have taken reserves, but those tenants that either entered into the crisis on weeks one.

And who is likely demise as Ben accelerated.

As well as those that have been impacted at least in the short term by code.

So when we take into account the headwinds facing retailers both from the pandemic.

And prior headwinds.

And then based on the percentages that I just walked through.

We expect the in Pat.

To blend to roughly 10%.

Over an ally over the next year or so before it starts to bounce back.

This 10% hit is certainly.

Significant decline in there remains a unusually broad range.

Oh the outcomes.

In terms of this but this 10% is not nearly as much as the public market seems to be pricing it.

Then as we think path the pandemic and try to evaluate the impact of longer term consumer trends impacting our portfolio. Its work contrasting that different components of our portfolio.

Now as we've discussed in the past our portfolio is highly differentiated but it is also highly diversified.

As you know our core portfolio represents approximately 90% of our earnings our fund platform represents approximately 10% within our core portfolio.

Roughly 40% over in Hawaii comes from Street retail, 20% from urban and 40% from suburb in terms of the urban component.

These urban shopping centers are dominated by tenants like target, which also happens to be the largest tenant throughout our portfolio as well as whole foods that others. As this segment has less satellite space and that's it had the strongest collection rate of our three components.

Then with respect to our suburban portfolio that is split fairly evenly between supermarket anchored and community centers and here. We are seeing similar short term outcomes in collections and performance from the half of our portfolio that is supermarket anchored versus community the guy.

Good news on the supermarket anchored side is that the properties are anchored by a central retailers that stayed open throughout the locked down.

Now counterbalancing. This is the fact that often our satellite space represents as much as 50% of the an ally in those properties and the outcome for our satellite is much more dependent on the economy reopening.

And recover.

And then on the other hand with the community centers.

They're generally populated with a higher percentage of credit tenants, but as we have seen these credit tenants also have sharper elbows than our satellite tenants.

Finally, with respect to our street retail.

Again, it's worth thinking about it in two components roughly half.

Our lower density or more neighborhood focused street retail.

Thats meeting the more local needs of the community with tenants ranging from trader Joe's and Walgreens, but also properties in affluent suburb slight granix or Westport, Connecticut.

Given the essential and lower density suburban characteristics, but this half of our street retail portfolio. These properties are reopening faster and might also benefit from some shifts that we're seeing in spending patterns in suburban.

Then the other half of our street retail portfolio is based on mission critical streets in the key gateway markets in the United States.

This portion is much more dependent on the reopening of our gateway cities as they serve both local residents, but also shoppers from all around the world.

These properties include Soho in New York, North, Michigan Avenue in Chicago, and throughout our portfolio in the country and it did unrealistic for us to expect an immediate rebound during the pandemic.

In the somewhat upside down world that cobot has created the most sought after dense locations have pause during this crisis.

Now that being said these great locations will likely provide the most.

Symmetrical upside when we get to the other side.

In most markets that have reopened we have seen pent up demand, we have seen enthusiasm by the consumer in excess of expectations, perhaps in some cases too much enthusiasm.

And I can't imagine once these major corridors reopened that we won't see that same pent up demand and enthusiasm as well.

As we have discussed rents on some of these growth rates have been correcting for the past several years, we were very careful and disciplined in what we acquired during the 2010 to 2015 period and thus we are relatively well insulated in New York City for instance, Manhattan represents approximately.

10% of our NOI.

Our rents in our portfolio their average out to about $250 a foot well below.

Where market rents were last year and certainly much less.

Then prior peaks.

While we have some impactful lease up of mission critical locations to do we should be well position.

Not only to maintain an important portion of that NOI, but then also capitalize on it as conditions improve.

Now we can debate.

How much rents might further drop during the pandemic or what properties in Soho might be worth today, but they are certainly.

Not worth less than zero.

And in prior cycles.

When these corridors.

Rebounded they usually retest prior peaks snap needless to say, we don't need and we don't expect rents at prior peaks anytime soon.

Even half that amount would provide significant growth in excess of expectations.

There is an ongoing and worthwhile debate.

As to the future of our great settings.

During the initial phase of the covert crisis density.

Has certainly been an obstacle.

Prior to co that there was a growing premium placed on the type of knowledge that is best produced by people Inc.

Close proximity to other people.

Now today, many wonder whether this pandemic will lead to.

A longer term movement away from cities.

Whether its work from home or work from a ski slopes in the short term both ideas sound compelling.

But longer term.

Post health crisis historically the D. Densification trend has just not played out.

Most recently, we saw this in Shanghai in Hong Kong after the Sars outbreak, where once the pandemic was under control.

We saw further densification and further demand.

Now the ship for some families to suburbia or other up and coming cities well that always makes sense.

But keep in mind as we saw in New York City. After 911, many families department.

Some temporarily others permanently but ultimately more then then moved out.

Now we understand that this segment of our business is not for the pain apart.

But the diversification that comes from the other components of our business.

Should add the stability, we need to weather the storm.

And the rebound could be compelling.

So as we look at our core portfolio in the short term our focus is going to be getting our stores reopened and our collection rate to a more normalized level.

Then as we look further down the road.

Our team is focused on executing on our leasing pipeline, which is very encouraging.

We have leases under negotiation.

For approximately $6 million and Hawaii.

Which for us equates to approximately 5% of our overall NOI or roughly half of the 10% disruption I just discussed.

This pipeline is a good first step and as retailers begin to look beyond the shutdown.

They are telling us that they expect are kind of locations to benefit from the ongoing trends of retailers doing more with less.

The shift in retailing channels.

As well as the continued rise of omni channel.

Turning to our fund platform as you know this provides further diversification of cash flow for us and it also gives us the ability to play offense irrespective of our stock price.

Amy will update you add to the status of our funds, but in terms of new investments given the amount of disruption to the retail sector. It's still a better however, if the public markets are any indication.

There's going to be outsized opportunities.

It'll be interesting to see where most of these opportunities arrive.

Historically.

We have focused on.

Real estate embedded in retailers, such as our Albertsons transaction.

Last few years, we had been focused on buying out of favor higher yielding assets.

Matt populate our fund five.

But also opportunistically acquiring on key streets like our success on Lincoln Road in Miami and that throughout the country and if we can find sellers.

Who do not have the staying power.

For the patients to wait for recovery, our sellers, who buy into the narrative.

The sellers that excuse me that the cities are never rebounding and that rents are going to be dial back by decade and forever.

Well, we could find pricing.

That will be cheaper than in a generation.

So to conclude as we work through a health crisis and work through an economic crisis.

We recognize that eight full recovery will require patience will require perseverance and discipline and I assure you.

Our team is up to this challenge.

Given the diversification of our portfolio.

The opportunities via our fund platform.

And then the embedded growth when we get to the other side of this pandemic.

We are well positioned not only.

To survive, but thrive.

And with that I would like to thank our team for their work over the last quarter and I will turn the call over to John.

Thank you Ken good morning, everyone.

Ill start off with a discussion of our second quarter results focusing on how kobin has impacted our portfolio.

Along with a few observations as to what we are beginning to see in a post pandemic environment and then closing with a discussion on our balance sheet.

Starting with FFF FFO as adjusted was 29 cents a share and within our adjusted FFO, we generated approximately $6.5 million or seven cents a ship share in related to our realized gains this quarter from our investment in allergens.

He is going to provide some further color on investments specifics, but I did want to spend a moment on how we are treating albertsons within our adjusted EPS.

Consistent with our past practice, our adjusted FFO will only reflect realized gains thus any unrealized mark to market adjustments will be excluded until the underlying shares and salt.

As a reminder, at our 28% pro rata interest we have approximately 1 million shares remaining.

We expect will be sold over the course of the next two years.

In terms of 10 cents of Colbert related credit losses. This quarter. This translates to $9.4 million and is comprised of $2.7 million and reserves on straight line rent and $6.7 million on current period buildings.

First starting with the $2.7 million a straight line rent reserve.

While the current period reserve is somewhat irrelevant given that it represents an amount that has built up over multiple years I think the more relevant data point is what remains on our books at June Thirtyth.

At quarter end, our pro rata core strike straight line rent balance was approximately $35 million.

And today, we have reserved approximately 30% or $10 million against this amount.

Now moving onto the $6.7 million reserves that we took against build brands and recoveries.

To sum up $6 million relates to our core portfolio.

Which means that we reserved approximately 40% against our uncollected balanced uncollected balances and this reserve was spread relatively proportionally amongst our street urban and suburban portfolios with our street in suburban portfolio, each recognizing approximately 45% of the reserve as compared to the 40% that each of these generate an AB are.

With the remaining 10% of the reserve coming from our urban portfolio, which comprises 20% of or maybe are.

While our quarterly results certainly highlight that we aren't immune from the pandemic pandemic as Ken mentioned, our exposure to those tenants that could see extended impacts on their business feels relatively manageable specifically, we think about those categories as James in theaters, which represent less than 5% of right of our hbr and under 2% coming from.

Full service restaurant venues.

So now moving into how we translate into cash received to the revenue that we recognized during the second quarter.

Our core rents and recoveries for the second quarter were just under $50 million prior to establishing a $6 million reserve.

And of this amount as Ken mentioned, we collected over 80% of it in cash along with money good deferral agreements.

In terms of a deferral agreements.

The vast majority we view as strategic deferrals with predominantly national credit tenants and repayment periods under a year.

And should these tenants live up to these agreements, which we anticipate we're back to fall pre covered rents by the fourth quarter of this year.

Thus all else being equal we expect our cash collection rate to trend towards 80% in the near term.

So after receiving cash and money good deferral agreements for over 80% I now want to walk through how we approach the remaining 20, 20% roughly $10 million and it falls into two relatively equal buckets.

So call it 10% roughly.

$5 million each.

The first bucket represents those credit tenants that have such that if both chosen not to pay our into enter into deferral agreement with us however, given their credit coupled with the importance of our locations to their operations. We feel strongly these amounts will be collected and thus did not apply a reserve against their uncollected balance and in fact, we're continuing to see.

These amounts showing up in a recent cash collections.

The second bucket bucket actually slightly in excess of 10%, reflecting the $6 million reserve. We have wrote off meaning that we don't expect to collect that.

Now it's worthwhile to further separate this bucket into two distinct components first about half of the write off was from our watch list.

And the most likely outcome for this group is that we get the space back and our leasing team has already in the process of identifying replacement tenants.

Our watch list includes those that have declared bankruptcy or we believe on the verge of doing so the largest of which has a sina as a reminder, we have four locations in our core portfolio.

With annual base rent and recoveries of approximately $3 million or about 1.8% of our of our PR.

We have fully reserved all of our seen exposure, including but both build brands along with any straight line balances.

Additionally, while the process is still fluid our expectation is that we take back all four of these spaces within the next few months.

And our leasing team has already working on profitability really releasing each of these locations with over 90% of the are coming from some of our most dynamic locations on North, Michigan Avenue and Lincoln Park in Chicago.

The second scenario of write offs involves those that we think we'll need our short term assistance to get to the other side.

These are the tenants that had product profitable businesses prior to the pandemic with our locations being vital to their continued success.

Hoping questions are how much of our support will they need and for how long will they need.

Now lets this last bucket of write offs that we believe forms our current thinking about the projected drop of 10% in our analyzed that Ken mentioned.

While it's too early to provide any front guidance, we're starting to see similar similar results of this roughly 10% drop playing out in our preliminary projections as we work through a detailed update of our internal models.

Now moving on to same store NOI, our same store NOI declined by nearly 19% during the quarter.

Driven by the credit reserves I just discussed.

While the reserves were by far the single largest driver to other factors weight into the quarterly decline.

First.

Given the current environment and preservation of capital, we have not moved any properties into redevelopment notwithstanding our belief that some of these may ultimately be redeveloped.

Secondly, as you May expect we're seeing some short term delays on achieving rent commencement dates on a few of our key street leases.

The good news is that these tenants are excited about opening but the bad news is at the pandemic push the day forward a few months, including key street locations in Chicago and Greenwich, Connecticut.

So notwithstanding the unfortunate and very significant significant implications that cobot had on our portfolio during the quarter.

Our same store NOI results would have otherwise been tracking in the 2% range.

Lastly, I want to highlight a few items on our balance sheet at our current cash collection levels in excess of 70%, we're retaining cash and as a reminder, we're able to breakeven with core cash collections of under 50%. After factoring in the fees and distributions that are we are that we are actually receiving from our profitable fund business as well the.

Interest income on our structured finance book.

Additionally, we have sufficient liquidity in excess of $100 million comprised of pro rata cash on hand, along with remaining cap capacity on our core and fund facilities.

In terms of our dividend as I just mentioned, we have retaining capital at current collection rates and we have the tax cover to continue doing so for the balance of the year, while at the same time, maintaining compliance with our requirements.

In summary, and I think I speak for many of US. This has certainly been one of the most challenging periods of my professional career.

We have a lot of hard work in front of us along with some great opportunities.

Given the strength of our portfolio, our balance sheet and the laser focus of our incredibly passionate and experienced team. We look forward to accretive Lee getting to the other side of this extraordinary challenge that we are facing.

I'm now going to turn the call over to Amy to discuss our fund business.

Thanks, John.

Now I'll provide an update on Auckland platform.

First with respect to our capital allocation strategy.

Our next step street urban and suburban retail.

Over the last few years, we knew we were late cycle.

Accordingly, we shifted our fund acquisitions focus away from value add development to more stable, but out of the bird shopping centers.

Since 2016, we've successfully aggregated.

Nearly 650 million dollar portfolio of 14 open air suburban shopping centers on behalf of fund side.

The portfolio had strong geographic and tenant diversity.

We acquired these properties that a substantial discount to replacement cost.

An unleveraged yield of approximately 8%.

We secured two thirds leverage at a blended interest rate of 3.7%.

Please go ahead, we were clipping a current leverage yield of approximately 17%.

Over the past several months the fun collection rate has generally remains consistent with that of our core.

Given the overall durability of fungicide cash flow in May we reinstated our monthly operating cash flow distribution to our fund investors after a two month pod.

Looking ahead, if we assume that on side and alike returns to at baseline of 90% of pre corporate level by next year consistent with Kent earlier remarks, then the fund will still be delivering a mid teens current return on the leverage basis.

And that feels pretty good, especially compared to alternative alternative investment in the real estate sector.

On the acquisition front the transaction markets remain quiet, we have approximately $200 million of dry powder or approximately 600 million I'm going to leverage basis.

We have at least a year to invest yet.

Given increased headwinds in the near term due to Kobe 19, we will remain appropriately disciplined.

Since launching our fund platform more than 20 years ago.

We have invested under four key strategies.

Opportunistic which includes fungicides suburban high yield strategy.

Street retail urban retail and distressed retailers.

Yes, well category includes fund choose investments in Mervyns Department stores and Albertsons supermarkets.

Thank you still owns an approximate 1% interest in Albertsons.

Since inception, the fund has received $112 million and distribution on 24 million dollar investment, including $23 million up cash received during the second quarter.

This has resulted in a realized 4.8 multiple on invested equity and internal rate of return in excess of 250%.

Additionally, the fund still owns approximately 4 million shares.

At yesterday's closing share price this equates to another $64 million of expected cash, which would increase the projected equity multiple to nearly seven times.

As previously discussed at Tds Pro rata share of this fund and the Albertsons investment is 28%.

On the disposition front as previously discussed during the second quarter Sun for completed the sale of currently Plaza. One of originally eight properties in our northeast grocery portfolio investment to attend 31 buyer.

More generally the capital markets remain on pause, especially for opportunistic sellers like that.

That said, we continue to evaluate our existing portfolio for disposition candidates in the near to medium term, particularly some of our supermarket anchored centers that are especially buyer friendly in a kobin world.

Turning briefly to city point the property continues to serve the needs of downtown Brooklyn.

With respect to our anchor trader Joe's and target remains open and operating as they have throughout the pandemic Infantry 21 has now reopened.

Several of our smaller shops.

Facing influences are also open, including Casper camp and Stella Barbara.

And several of our market Hall vendors are also operating stall in our pop up outdoor market.

It's been great to see pent up consumer demand manifest into that topic at our property with Brooklyn notice, we busier than Manhattan.

That at times, our retailers have had to manage line outside their stores to prevent overcrowding, including to know one surprise Peter Ken.

We are prepared to fully reopen the property with the appropriate air filters and other safety measures in place when government restrictions are lifted our new 11 store is also poised to open.

Finally, with respect to fund level debt, we have ample liquidity on our subscription mine.

We are actively working to address any 2020 and 2021 maturities.

Our lenders remain highly cooperative and supportive.

In conclusion, our fund platform remains well positioned to successfully whether this period of unprecedented disruption with the successful capital allocation strategy and ample dry powder to continue to execute on it.

Now we will open the call to your questions.

As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key.

Please standby well, we compile the culinary roster.

Okay.

Your first question comes from Craig Schmidt.

With bank of America.

Thank you.

You guys have you executed 25, new and renewal leases.

In the corn on folio and the basically you said that the rent. So core closed were pretty near what do you thought pre code. Good expectations could you provide a little more detail on that as well as maybe.

Leases that are coming up what kind of.

Rent spreads are you seeing.

Okay.

John What are you go first and then I will.

Yeah, absolutely correct to two things I think on the the first the first point on on where we're seeing.

Rents in line with our pre Tobin expectation that's on the that's on the pipeline. So on the pipeline and Ken mentioned in his remarks that we have over $6 million of of leases sprinkled throughout our.

Each of our each of our portfolios that are well along in the process whether at lease or under LOI and we are seeing those being signed.

Right in line with where we would have expected it before that the pandemic hit.

On the so that was stats on where we mentioned on the.

And access or in line with expectations of then in terms of the other point that we put in the press release on on new and renewal leases of of those there were no new conforming leases in the core we just had renewals.

And those were those were spread throughout the throughout the portfolio.

And then just in terms of.

Color and feedback that we're getting from those retailers ready to go back on offense.

Many of them think back to the last recession in every recession is different but those that feel that they are well positioned then there will be many.

To go back on office and that their business models are are well situated for what they see over the next several years.

What they're telling US is they don't they do not want to wait and Miss the opportunities and so we do seeing them stepping up some of them.

Are the off price retailers, who are not really thinking about omni channel, who are really executing and just want the best locations and we're very encouraged by their interest throughout our portfolio, including in our urban assets.

And then there are variety of retailers, who are recognizing the benefits.

Of omni channel whether it is some of the digitally native that we've been talking about for awhile. But then also look at what target has been doing in the new leases that they have sign post Cove. It in New York City alone.

And that also is giving a positive indication so those retailers that.

Recognized there to weather the storm and recognize that that are being a strong position, they're starting to step up.

Great and then just.

A follow up.

How long do you think you might be one price cuts the see some opportunities and.

What type of assets would you be targeting.

In terms of acquisitions.

And and it's impossible impossible to predict precisely crack because as you know our capital is fully discretionary and on call. So for the right deal the answer could be tomorrow.

I doubt it will be tomorrow, because I would know about that today.

But there's so much disruption in the system.

And that we are seeing real estate embedded into retailers that's quite entry.

We are seeing.

Especially from the private market.

Variety of Ownerships that used too much debt and now there is going to be restructuring whether it results in foreclosure and the purchase of debt.

Or preferred equity taking over and looking for a new operating partner still too early to tell.

And then there is all of the other areas that are in our core competencies. So.

What I'd say in the very short term, we saw that everyone froze.

Stood still for a bit to just figure this out and now we're starting to have those kind of conversations they could hit quickly, but if they don't and we have to be patient. Our capital is very patient and we'll wait till we see the right time.

Okay. Thank you sure.

Your next question comes from Christy Mcelroy with Citi.

Hi, good morning. Thanks.

Ken in regard to your comments about the potential for a 10% NOI impairment and I. Appreciate your willingness to put that number out there. How do you think about the impact from occupancy loss purchase and it just next year in place right. So just trying to think about it from that perspective, you know occupancy which can be backfill.

First phase lower in place rents that could be box and trouble on there.

And Chris the as you know with adjusted even gets more complicated because.

We have some very valuable spaces that are low square footage versus a kmart box somewhere in suburbia, which has a lot of square footage. So it will be hard to track on a square footage and this is what our occupancy will decline to that being said, if we think about it from an economic.

Occupancy if you will.

I do think that the majority.

We'll be.

From tenants that go away and then get refill so that falls more into the vacancy.

Then from.

Just melting ice skews and.

A significant amount of rent declines and that just has to do with where our basis is in terms of rent per square foot as I said in Manhattan, Thankfully we were careful.

That we didn't.

Have top of market rents, we tried but the leases where long term. So we didnt get to get to those peak. So we don't have that problem of significant rent decline there'll be some some in some spots, but overall, we feel pretty well insulated on that side, we feel very well insulated as it relates to our long term lease.

It is with target for instance, where it's measured in decades not years.

So I do think it will be losing tenants.

Or tenants pausing until they can fully reopened.

And then climbing back to.

The new normal rents.

And then I wanted to go back to your comment that you made an answer to Craig's question about how.

About the real estate embedded in retailers that could be intriguing and how would you think about taking advantage in some of those opportunities can you maybe expand more on that comment given your willingness on the path to do those sorts of retailer sort of NN bank loans, we just saw with albertsons that can be profitable.

Sure and the same thing with Mervyns way back when where there was a department store chain that needed a turnaround at the.

Go level, but equally important was a turnaround at the propco level and that's where we were involve taking closed stores and converting them into other retail uses or other mix thesis.

Without getting into the specifics of which retailers today have real estate that best in high as you probably goes beyond their current use.

Those are the conversations that are acquisition teams have with the bankers and brokers and owners all the time and there certainly are some of them today because.

One of them many things that Cove. It has done is certainly accelerated.

The reinvention of a wide variety of real estate and we have the capital and the skill set to execute on that again it requires.

The stars aligning it needs to make sense.

I can.

Gladly talk about Mervyns and Albertsons. The deals we did do I could talk a lot about the deals we did not do so so we'll see.

If that right real estate shows up but if it does will be either.

Thank you.

Your next question comes from Todd Thomas from Keybanc capital markets.

Hi, Thanks, Good morning, Ken just following up on the your comments around the 10%.

Hi reduction that you know you discussed over the next year. So as you think about the portfolio. How do you think that that NOI losses.

Spread out across the suburban street and urban segments of the portfolio.

Sure and John feel free to chime in as well as what we as we said.

The urban piece so their major cities, but these are shopping centers anchored by target or whole foods or trader Joe's.

Seth.

Collection rate.

Feels or has been the strongest of all three components and my guess is that that will continue to be the case any and all I will be the most stable now the flip side of that is as you can imagine the contractual growth.

A target anchored property with limited satellites base is also the least so the growth, but that 20% of our portfolio comes from Densification and you see us executing on that where were.

Redeveloping in San Francisco, Our city center, and there will be others over an extended period of time, but none of them happened quickly and nor do we need them too so that will be the strongest.

And.

So far I think if you think about the.

40% that we say is our street portfolio the half of that.

20% that isn't the major markets.

I think thats, where were going to see at least in the short run.

The biggest short term challenges, but the good news here is.

In touch with all of those retailers and.

Almost without exception all of them look forward to reopening once it safe for their employees once they can.

Get their businesses back in.

On track and none of them are saying these are markets, we don't want to be in so what I can't answer right now.

Todd is.

How long is that depth.

And how quick is that rebound, but that would be the area. Conversely that were probably most focused on in the short.

John I don't know if there's additional color you want to.

No Ken I think that that.

That summarizes a wall.

Alright.

And then and then just digging in on that leasing pipeline. So you talked about $6 million of that NOI can you can you talk about the timing that you might expect to see that materialize.

Is that is that largely for.

Sorta, new Noncomparable space in the portfolio or is that demand waiting to re tenant some existing space I guess, you frame that up as.

Backfilling more than 50% of that 10% NOI loss as it targeted to replace tenants.

You know or just you know thats, how sort of how you're framing it up I was just curious if you could comment on that yes. So the vast vast majority falls into that 10%.

You're correct, Todd, meaning some of those spaces. If you think about the 10% and some of them our tenants on our watch list, we don't have control of that space yet.

But we do anticipate and some of this space. It has been in high demand for years.

I don't want to say much more than that but so retailers. It's been on the radar screen for awhile and now they're saying you know what we think you might have the opportunity to get this back sooner rather than later and so we are trading paper on that.

It is dependent on us getting those spaces back the good news if we don't get the space back is it.

And Hawaii right now.

The bad news is I'm much more excited about the new tenants coming in than the existing ones there.

So that's a decent chunk of the $6 million is scattered throughout our core portfolio on that side.

And then others are just vacancies that you and I have discussed over the last year or two high quality locations, where tenants we're gearing up.

Cobot everything cost for a couple of months and now thankfully what our retailers are saying is they're ready to come back.

The challenge as to timing Todd is.

I don't expect nor do we really encourage retailers to open and start paying rent, but for a given community center or street is reopened and so this summer will be.

We will be challenging and I think that it would be imprudent for us to expect a lot happening during this quarter.

Then I, what we're hearing from our retailers as soon as they can safely reopened they want to be open they're doing site visits now.

They are.

Actively negotiating this is not just people staying busy and so I am encouraged as we get passed the health crisis that we will see these over the next several quarters.

Alright Thats helpful. Just a quick one for John you mentioned, the 1.8% exposure to a sina.

That was reserved against this quarter, how much hbr exposure do you have to to bankrupt tenants in the portfolio overall.

So in terms of bankrupt tenants in the overall so.

I would say Todd it's probably in the.

Three to four inclusive of Messina.

So maybe another one or 2% on top of that.

Okay got it yes overall watch list that we took was around 5% so I'd put it probably another.

One one of the half percent on top.

Okay.

Alright, thank you.

Your next question comes from Mike Mueller from with JP Morgan.

Yes, hi.

Hi, QST who's going to handle teasing people have on what street rents are today, whether it's in Soho, Georgetown or where Chicago, what's what's that visibility look like.

At the visibility has.

Probably never been worth Mike.

On one hand, we all think that this is.

Just something that landlords and tenants agree on in a vacuum, but the reality is it sales base.

That retailers are thinking about what revenue can they produce out of those four walls and then what other halo effect or other.

Incremental benefits might exist in omni channel or otherwise.

But in a market that shut down.

The best they can do is look back to what were comparable sales pre cove it.

What might.

Recession look like once we get.

Pass this initial phase.

And so there's not a lot of clarity.

The flip side is they know where their customers are ordering from.

They have very good data, but those that have online for instance.

Additionally, as opposed to the last recession.

This one has not hit the housing market has not hit the white collar market has not hit the affluent market and those shoppers are still shopping there just shopping in other ways. So many of our retailer say we know if we can open a store here once we are post pandemic weaken.

Based on where we're shifting to that Thats, where the shoppers.

So there are there are ways that people are feeling our way through but it's still very early days.

Got it and then thinking about the core portfolio.

Thank you thinking about how your capital deployment looked over the past three years whenever you start putting money to work again on a go forward basis. How do you think it'll be do you think it'll be similar to the types of investments you made in recent years are different.

Somehow whether it's geographically or the type property by.

Wait too early to know.

Because of first of all all of the realities of working through this crisis and everything I touched on but also just the reality of where the riet market and our stock price has gone.

I don't think were alone and as I think theres very few retail rates that are trading at or.

At a premium.

To their end Avi such that they could use their currency and we have always been very clear that we need to be able to match fund in order to accretively acquire so step one is we need to see a recovery or a reconciliation between the private markets and the public market.

Before we can think about using our currency for just about anything and then once we get to that point.

And I hope we do.

Confident we will.

And then where will the best opportunities to grow our core portfolio today and so much of that depends on what this looks like when we get to the other side. We have always worked very hard to listen to our retailers and hear from them.

Were they see their strongest growth opportunities.

And we're still in the early days of that we'll get a better sense as we see how the lease up plays out.

But then also a whole host of other tests.

That are occurring in our economy in the consumer and then how the consumer shopping so that's a long way of saying we have a pretty broad.

Set of core competencies.

We have biases and we're.

Certainly going to be guided based on where the retailers comp, but first and foremost.

You just need to focus on leasing up some really valuable space.

Getting that an ally and EFO to the bottom line and then we'll figure out the other stuff.

Got it okay that was helpful. Thanks.

Your next question comes from Linda Tsai with Jefferies.

Hi, Thanks in terms of the 10% hits in Hawaii, and it not being a snap back how are you thinking about the pace of recovery returning to 2019 levels acknowledging theres. Some obvious differences do you think the financial crisis holds any clues.

I don't know so here's what.

Puzzling within Linda we're all looking at similar data.

I, probably spend more time talking to retailers.

But we're all seeing a bunch of things that are playing out similar and many that are different to the financial crisis as I pointed out earlier.

During the GFC the housing bubble burst and you saw housing prices dropped dramatically the stock market dropped dramatically.

Now if you look at the S&P 500, or naming any housing markets, perhaps outside of New York City and others.

You see a lot of stability.

I can't predict because some of this isn't the government had some of this is dependent on when the health crisis and how it is resolved.

As to what shape or how long it takes and and and I'm hesitant to guess other than to say, we're going to watch all of these trends carefully.

We are not to be presumptuous as to predicting when we.

See the resolution of the health crisis.

And then we're going to see in the next few weeks what the government support.

The next round it looks like and that May give us some sense of which portions of the consumer are going to be in tougher shape than others and that then also will guide with portions of our portfolio recover faster.

But if you just think about what I've said, we may see and it wouldn't surprise me to see that recoveries follow that portion of the consumer that is that are insulated from this crisis than others.

That makes sense. Thanks, and then one for John what's the level of collections, you're getting from restaurant send gens.

Yes, hi, Linda so starting with the.

Jim So I think that James is it's less than 3% of our hbr.

And on a collection percentage those are those fall under the category.

Not yet open given in the locations, where our gyms are and where we're seeing around 20% collections on those in have.

Have reserved appropriately.

And then on the restaurant side, it's kind of thinking a bit more nuance or overall as you'll see in our supplemental restaurant exposure, we list that 8%, but it's in we think about in different different categories. As it relates to collection. So I think the what I highlighted my remarks was where I think is is the most challenged at the moment is on a full service.

Side, which is under under 2% of our Hbr and that one struggling and we're seeing less than 30% collections right around 29% collections on our full service and then when we look at the other categories or restaurant, whether its coffee our fast food.

That is trending almost at the at full collections and then we have some what we refer to as quick service and that's less than half you'll call that 45% that we're seeing there I just want to blended basis, Linda were about 45% collections on our on a restaurant.

Exposure overall.

Thanks for that Kelly.

Okay.

Your next question comes from Floris Van Dijkum.

With Compass point.

Hey, guys.

Question on your.

Closed space and I might have missed this in your early remarks.

Ken but.

What percentage of these stores and Avianca that's closed his mandate it closed versus.

Close by choice.

John do you have that data.

I do yeah of course, I would say the.

The vast vast vast majority is is.

What is closed its mandated by close and then the other no ones that are not is for the health in health and safety of of employees. So think while we don't have any our portfolio, but like an apple where they're choosing for the protection that employees not too.

Not to open so I think it's a relatively small bucket that are truly that our.

Actually not open for.

You'll read into that could be.

Great and maybe can you also talk so many other some of your peers have talked about August.

Initial August collection trends can you comment maybe on that.

And give some more insight.

Yes, I think for us what I could I could not.

Almost that grew up with what Ken Ken side is that if we when we first started looking at cash collections is being such a important metric in the first time. We did this we're at 50% when we when we talked about April we then.

Next time, we spoke to aware at 56% move to 71%.

And where I'd now 74% in July the point being that I think as the world's trying to reopen and the relative relevancy of the physical space to the retailers became very apparent we saw collections rise as part of that.

So what I would say in August and we're still early into the month and following up on what Ken said in his remarks is we are seeing similar similar.

Upward trends in our cash collections or don't don't want to give a percentage at because there is still several days left to go but we're seeing the same.

Same positive news a store start to continue to reopen as we the deferral agreements as I mentioned flip to full rent.

Where we see us ourselves trending towards the 80, 80% range and the and hopefully very near term.

Great. Thanks.

As a reminder, if you have a question please press star one.

To withdraw your question press the pound key.

Your next question comes from then to bone.

From Broome Street advisors.

Hey, guys for for tenants that are open in your street portfolio, However, sales trending relative to last year and other big differences based on geography.

There are big differences based on geography, there are big differences based on whether those retailers had going into the crisis, a strong digital omni channel.

Presence and thus, we're able to execute through the crisis and use the stores for all of the benefits. There. So those we have seen.

The a strong rebound on street retail sale the others, obviously Vince.

Trader Joe's target.

And some of the other essential retailers you have seen sales growth that is hard to wrap your head around because of the obvious shift.

Where I think it has been the toughest has been those retailers with our strong digital.

That the cities are.

Reopening and there is quiet and I would expect it to be quiet in places like Soho.

Till new Yorkers really come back and I think Thats, a post labor day phenomenon and that's what we'll be watching for.

That's helpful. But I know you me just quantify a little bit more on.

Average street retail collections for what the open or the goal even too early to have that.

It's still a little too early and the other thing I'd remind you.

Is we don't get official monthly sales reports.

So.

The dialogue, we're having with these retailers certainly there are discussing their sales and if sales are good you tend to hear about those and rent collections high and the others.

A little less so I, it's still a little early I think thats, a worthwhile conversation for us to have post labor day.

Makes sense one more for me can you discuss the background on the town center transaction and the conversion there.

John you want to cover that place so Ken.

Since you're referring to within the supplement how we.

Converted a.

What was a note into an equity ownership into into town center and that was just part of a tax transaction, which we did several years ago and several steps to the conversion where it was where we converted.

A note that was tied to a equity interest in that the partnership and in a noncash exchange exchange that note for a full ownership in the property.

And that was shot it happened over the past several years.

The price pre negotiated or I'm trying to get a sense at all the comp of what you negotiated transaction could be because I'm glad I'm looking at as you acquired 27% us additional interest for.

Yes.

$39 million.

Im just trying to get us into this new pricing refilled any benefit is all prenegotiated prenegotiated several years ago, so not an indication of postcode hit or or anything like that.

Okay, great. Thank you.

Sure.

Im showing no further questions at this time I would now like to turn the conference back to Mr. Kenneth Bernstein for closing remarks.

Great. Thank you offered joining us look forward to catching up with all of you on our next call and until then stay safe and well.

Ladies and gentlemen. This concludes today's conference. Thank you for participating you may now disconnect.