Q2 2020 Cedar Realty Trust Inc Earnings Call
Welcome to the second quarter 2020, Cedar Realty Trust earnings Conference call.
As a reminder, this conference is being recorded.
At this time all audience lines have been placed on mute.
We will conduct a question and answer section following up the formal presentation.
I'll now turn call over to Nicholas parts and.
Please proceed.
Good evening and thank you for joining us for a second quarter 2020, Cedar Realty Trust earnings Conference call.
Participating in today's Colby, Bruce Schanzer Cheez, It Chief Executive Officer, Robin Ziegler, Chief operating officer.
<unk> Chief Financial Officer before we begin please be aware that statements made during the call that are not historical maybe deemed forward looking statements.
Actual results may differ materially some notes indicated by such forward looking statements.
These statements are subject to numerous risks and uncertainties, including those the schools and the company. Its most recent form 10-K to the year ended 2019 as updated by our subsequently filed quarterly reports on form 10-Q, and other periodic filings with the FCC.
As a reminder, the forward looking statements speak only all that data this call August.
2020, and the company undertakes no duty to update.
During this call nightmare for certain non-GAAP financial measures, including funds from operations net operating income. Please see <unk> earnings press release, and supplemental financial information posted on its website for reconciliations of these non-GAAP financial measures, what's the most directly comparable GAAP financial measures.
With that I'll now turn the cold winter Bruce Schanzer.
Good evening. Thank you for joining us for Cedar Realty Trust Q2, 2020 earnings conference call before moving to my prepared remarks, I would like to take a moment to secure to sincerely. Thank my colleagues vote on teams theater and on our board of Directors. This period has been one that we had the jet.
Nation will all remember for long time to call. It is truly generation defining for our company in particular, it has been a defining experience as well.
I've seen the best in my teammates during this period from my kitchen cabinet colleagues to our most junior people.
And I couldn't be prouder, and we're excited about their efforts and accomplishments during this trying time.
Remarkably and what can only be characterized as truly setting the cone from the very top.
Theaters independent directors at the outset of the pandemic waived their board fees for the second quarter and decided last week <unk> two similar we waived their fees for the third quarter.
I know, we speak for all of my colleagues and thanking them for their guidance the court and leadership through both word indeed during this challenging time.
Charles Dickens famously begins the tale of two cities. It was the best at times. It was the worst of times. It was the season up right and it was the season of darkness.
I started this line often over the last four months as we've seen that that's in our people and observed defensiveness of our portfolio, while experiencing the unpredictability of the capital Martin <unk> markets and witnessing the order dislocation of our common stock price from its underlying asset value.
On a daily basis, I never sure whether I should be relieved our assets are so resilient or astounded that our stock price doesn't reflect this remarkable thought.
Hey, good friend of mine, often teasing me for being too optimistic I've learned over the years. It has a common trade amongst the goes.
And I will confess that in reflecting on the on the dichotomy between our strong performance and our weeks your price.
I choose to be excited that the incredible durability of our out of our assets and the professionalism of my Battle tested teenage suggests the future theater is bright indeed.
Well the pandemic began we immediately for day 12 person Cross functional crisis Management Committee that has performed with great intensity and considerable success.
The members of that committee along with their colleagues throughout the organization have pushed themselves incredibly hard enough squeeze everything out of our assets, which shows in our consistently strong results through each cobot critical market of the second quarter.
Notably we have continued Kong, our re back with over 80% cash collections in June and over 80% cash collections for July.
Going Robyn will expand our collection efforts forbearance process, you have to accounting treatment and their prepared remarks.
I'm very proud that this performance has placed us among the best performing shopping center Reits in terms of collections during the second quarter and through July.
Well the Cobot chapter me evoke aspect of a tale of two cities at theater and has really been a tale of one company their professionalism dedication and unified effort demonstrated by seater professionals throughout our regs.
Was critical to obtaining the results we achieved this quarter and to date.
In addition to the strong collections during the pandemic Walt announcing that we have slowed the capital spend on our redevelopment. We also announced the significant redevelopment milestone in finalizing a 20 year built to suit lease with the district of Columbia, a AAA credit tenant free 260000 square foot office build.
Including street level retail that will anchor I'd be the first phase of our northeast tights redevelopment project.
This is a huge win for the redevelopment team led by Robin and I will ask her to expand on this lease in more detail.
I will note two things. However, first this lease represents an extraordinary value creation, you've done for cedar today.
Even before the building is constructed.
And second this is not a retail asset and therefore helps to diversify theater perspective rent stream into another class asset class.
Coupled with the strong relative performance on the asset side, we have found our bank group to be remark, we constructed during the pandemic <unk>.
Okay. Perfect example is their agreement last week the tweak some of the definitions in our credit facility, thereby giving us greater breathing room on our covenant the borrowing base.
Over the years, we're father Bank group led by key bag to be terrific partners, and we especially appreciate their professionalism and support during this once in a career type of experience for all of US Bill will spend a little more time other credit facility modification that we just closed.
And with no rest for the weary, we'd now be got to focus on our upcoming term loan maturity in February.
Taking a step back and looking at what we have done over the past nine years with the balance sheet. It was essentially renovated for precisely this sort of situation.
First we have taken care to stagger, our maturities so that we do not have too much debt maturing in any one year.
Second we have largely unencumbered our portfolio in order to give us the flexibility to be able to explore a number of financing alternatives and a stressed scenario such as the one we aren't and now.
One thing to note more generally is that in addition to debt alternatives. We're also actively marketing a number of pets.
And anticipate generating roughly $20 million, a relatively low cost capital from those asset sales that will help us reduce debt a bit as we bear down on the term loan refinancing efforts in the weeks ahead.
During this remarkable time as we had been challenged ways, we could never ever Notching, both personally and professionally I've continually reminded myself that this period of stress to our business will come to an at risk.
Recessions shows is the one we are in presently.
Offer dangerous Trapster management teams to make rash decisions that'd be the irreversible value destruction.
However, they also presents opportunities for reinvention by companies that had lagged before a recession and do companies that lead coming out of it.
I believe theater might experience such a positive reversals of fortune.
Especially since this recession appears that catalyzed and meaningful suicidal ship.
Both in terms of where people live and shop as well as how they live and shop.
It does it released the theater this isn't just a CEO being optimistic.
Our relatively strong performance over the past four months is not an accident <unk>.
Rather it is a combination of our high reorganized and effective crisis management protocol as well as an outgrowth of these accelerating market trends, we were all observing and experiencing.
For example, as you all know theater how's it predominantly grocery anchored portfolio with among the highest percentage a grocer anchored centers of any retail street.
This is a critical feature that has helped insulate us during the pandemic.
Will serve as the foundation for our portfolio in the years ahead.
Did you might not appreciate is that we have among the most E savvy grocer anchored in our shopping centers, but any shopping center REIT.
In other words.
More of our grocery anchors have evolve their ecommerce businesses organically as opposed to outsourcing this function.
Thereby capturing margin and market share while positioning themselves better for the future.
This online foundation helped our grocers pivot relatively seamlessly to meet the overnight changed need to their customer base.
While maintaining a healthy an uninterrupted stream of customers at our centers.
Moreover, we have among the lowest exposures to at risk retail tenants at any retail street.
Thereby insulating us on a relative basis against the can continued secular decline in retail.
Lastly, we have among the lowest exposures the m. essays wouldn't I get it employment trends and prospects, thereby increasing the chances our tenants will continue recovering.
The pandemic received into the past.
Since their surrounding economies are better performance.
In other words as the world is changing rapidly right before our eyes, we find ourselves in a remarkably solid position to benefit from some of the secular trends continuing to take hold and our industry.
All that said I will conclude my comments with something that I, often told shareholders and prospective shareholders when discussing theater over the years.
When you invest in theater, you are truly partnering with me and my colleagues.
Speaking for myself I have a very significant portion of my net worth invested in theater stock and I invested funds continually into our stock over the years rarely selling any stock.
The collapse of our stock represents a loss for our shareholders and I are the shareholder and right alongside you.
I significantly I can assure you that my colleagues and I are working tirelessly.
Probably harder than many of us have ever worked in our professional lives.
And certainly with greater intensity had focus to navigate the company through this perfect storm.
And thereby driving recovery in our share price.
This is a responsibility we take incredibly seriously.
As it is a challenge that is both professional and personal.
However, as I've already described I am highly optimistic that we will be successful.
With that I would give you robin to discuss our operation a redevelopment projects Robyn.
Thanks, the brands good evening.
The other day, my daughter said to me that in the future. She predicts that there'll be a college core studying the events. That's 2020 I see may actually be right. This year, we have seen no less than the Kobin 19, pandemic and the resulting global economic shut down the black like matter pro class and resulting social unrest.
Travel ban and last week, a hurricane with major power outages in the northeast.
Operation team with ultimate professionalism and selflessness has had to deal with the impossible. Each of these challenges at our shopping centers and has done so <unk> has done well they keen focus on the benefits the theater.
They're holders as well as the needs with our.
Due to our portfolio the social retail merchandising next ANC grocer anchored all of our shopping centers remained open during that call that pandemic.
Well some small shop tenants were close temporarily during the shutdown the shopping centers in which they were located remains open. We then closely follow each jurisdiction <unk> reopening criteria by retail.
I work with our tenants on reopening strategy, which included providing operating assistance social media and marketing Guy book.
And assistance.
During the shutdown and reopening process, we simultaneously reduce comedy your expenses in capital improvements to the minimal level need it to sustain operations.
We launched a curbside pickup program at 13 center strategically selected to allow for social socially duston sales transactions for both retailers and restaurants.
It had been favorably received by our tenants.
Additionally, we initiated a program whereby we provided P. P. P P and food your first responders in conjunction with our restaurant.
The property management team also work with T. restaurants to create outdoor seating to ensure profitability due to limited indoor capacity rules for restaurant.
During these difficult times, we have made especially certain are kind of no that their landlord is supportive and is there to partner with them through these times.
This type of management becomes particularly relevant when it's time for renewal or when a tenant is deciding to open more stores.
Another essential Cronto pandemic crisis management has been extending rent deferral to our tenants.
As I believe was laid out during last quarter's call. Our general times for deferral were as follows the local mom and pop small shop retailers. The qualified for a deferral upon our review of their financial situation. We generally offered two or three months of deferred rent with payback over 12 month beginning January 2021.
For national small shops, and anchors we offer two to three months of defer all what payback over six months commencing July 2020.
We studied the leasing every tenant in the portfolio to determine if there were leased provisions we would like amended and deferral times were negotiated an exchange for these provisions when applicable.
At times, we modified the standard deferral terms to a more customized solution to accommodate the objectives of securing start and lease amendments for example, and limited instances, where it was waived instead of deferred consideration for obtaining release from an unfavorable leaves provision or in exchange for an exercise of an option or four additional time.
As of June 32020, we executed 90, 210, or that's just an agreement 74 deferral agreements totaling $2 million of base rent in the second quarter for 630000 square feet.
Notably, 94% other tenants are with deep lender for all the second quarter I paid their July right.
Similarly, 18 deals were executed during the second quarter that waived rent totaling $400000 for 206000 square feet.
Oh, those tenants who received waivers 84% other tenants is rent was weighed paid rent in July.
Additionally, there are still 30 deals totaling $1.1 million unrest that are in negotiation for deferral and 29% of the July rent in this category has already been paid.
The top grade the top three deals within this category of deals that are still a negotiation I related to la fitness locations throughout our portfolio the planet fitness, the quartermaster and Regal theater at Ravel rates. These deferral negotiations are either tied to the redevelopment project or provide us flexibility.
Given the uncertainty surrounding the fitness and movie industry postcode that.
Our collections during this quarter, how continue to be particularly strong cash collections in April may and June were 76%, 76% and 81%, respectively, resulting in a 77.4% collection rate for the quarter.
This positive trend has continued with 88% collection of our monthly charges in July.
Well, I, certainly maybe bottles and extolling the effectiveness of our team and the process that we put in place to deal with collections.
I am certain that the one on one very hands on approach that we employ with each and every tenant had a positive effect.
That being said undoubtedly our merchandising makeup is a key as well we mentioned that the fact that we have a largely essential.
As mentioned the fact that we have a largely essential retail portfolio, but let's parse through that.
Our total annualized base rent is a hazard and $2 million.
29 million of that or 28.5% is from grocery anchors with a collection rate of 99.7%.
7.1 million comes from fast casual restaurant, where the collection rate of 77%.
<unk> million dollars comes from dollar stores with the collection rate of 90% medical facilities make up $4.6 million of Iran. Well the collection rate of 75% and discount department stores comprised $4.5 million well the collection rate of 81%.
These are just the top five but I think the trends as a parent all of these uses proved to be relatively coded resistance.
There is potential uses that permeate our portfolio such as banking drugstores home improvement government office liquor stores and automotive all had collection rates over 95%.
Related to second quarter 2020 leasing performance, we signed 21 leases totaling 182300 square feet.
17 renewal totaling 170000 square feet at an average rent of $9 in 70, 777 cents well they positive spread of 2.6% and four new leases at an average base rent up $22 than 60 cents per square foot well the negative spread.
30% this results in an overall comparable leasing spread of negative 3.9%.
No this quarter during the pendency, <unk>, Petsmart, and New London Mall was renewed and options, where exercise with ACMI and Academy cloud and food Lion Yorktown.
The negative leasing spread is primarily attributable to choose small shop deals at our redevelopment properties. We're still long terms vacancy and provided early termination rights where applicable.
At the outset of the pandemic, we articulated three simple directed to the team.
Maximum cash inflow minimize cash outflow and do not lose any tenants as a result of the mandatory closures.
There are new guys just reference as well as these two deals demonstrate this idea as we are focused more than ever on maintaining occupancy in our centers.
But our overarching missions remain to do deals that make sense economically taking into account credit risk.
As of June 32020, our current leased occupancy is 90%, which is a 180 basis point reduction from prior quarter.
This decrease is fine principally related to the closure of AC more that point and new London as well as the bankruptcy or 24 hour fitness a crime is plaza, we are actively seeking backfills for all three locations.
Last quarter, we discussed that we have reduced our capital spend in 2024 mixed use urban redevelopment and value added renovations to a level of approximately $20 million. This development budget remains unchanged as of the second quarter that being said the development construction and leasing team remain hard at work.
It's John crossing is progressing nicely Starbucks has been delivered and game stocking Nifty 50 are scheduled to deliver in August.
Yeah, I D. A grocery store besides innovation will commence this fall or at least has been executed with the original hotdogs factories, we will now be joining the tendency. Some of you may have heard of this fast casual restaurant as its owner isn't that half of the housewives of Atlanta, especially on crop and it'll be one of their first Philadelphia location.
Post quarter end, north northeast height benefited from a significant.
What the execution of a 260000 square foot office building, including three four retail to the district of Columbia Department of General services.
This government agency a comprised of more than 700 skilled professional employees with expertise in the areas of construction building management and maintenance portfolio management sustainability and security.
At District owned properties. This office building will be part of the first phase of northeast Heights, and the employees and related services will provide a strong demographic daytime traffic driver for the remainder of northeast type.
The accretive deal structure over a 20 year 10 months term is based on a net rent up $22.52 per square foot and our gross rent that's $56.43 per square foot, which include the T.I. amortization of $14, a nine cents per square foot.
Our ability to get a winning recipient of this competitive RFP process was largely based on relationships built with leadership throughout the day trip as well as community relationship.
Significantly being awarded this deal truly exemplifies the district overall support of the northeast Heights project and their commitment to the revitalization of downtown warts, seven well wish we sincerely. Thank them. After the residents of worth seven who will be the beneficiaries of this building and project.
Our team is busy her team is focused these are difficult times and we are up to the challenge taking each situation navigating through it solving problems as they arrive and all the while ultimately always seeking ways to create value for our shareholders and the communities we serve.
With that I will give yourself.
Thanks Robin.
What discussing our operating results and balance sheet and what the first provide insight and details related it's hard revenue recognition for the quarter.
I think the best way to do this is the walk through each of the various revenue component along with that related accounting treatment.
But this discussion let's set aside noncash item that just straight line rent and the amortization of intangible leases and just focused on tenant though.
Our total tenant billings for the for basement and recovery combined for the quarter were $33.6 million.
During the quarter, we collected and recognized as revenue $26 million or 77%. These bill.
Additionally, we recognize as revenue another $3.3 million or 10% that'd be determined to be collectible consisting of $2 million for which we have signed deferral agreement.
And 1.3 million, which is either in advanced negotiations or defer all agreements, where we otherwise will believe will be paid.
Accordingly, combining the 77% collected but the 10% dependent collectible and accrued recognizes revenue 29.3 million or 87% of our total billings for the quarter.
Moving to the 4.4 million or 13% they did not recognize.
This consists of $4 million that is not paid by tenants that we have determined at this time should be accounted for on a cash basis at $400000. We have agreed to waive for this quarter.
Declared just because we have placed certain tenants on the cost basis. It doesn't that mean that we will not collect anything from that.
Well some cafes attendants may fail expect many of them well something they can't get the payments or partial payment.
Which we will recognize as revenue literacy.
The preparation to financial statements always required that must be made.
As always our leasing team asset management.
The accounting leased administration property management and collections all work diligently together to make our estimates for the quarter.
At the Miss by their very nature, not 100% precise and only the passage of a year or more ultimately determined the precision of that that's we have made related to defend them.
However, based on that kind of that pay written July at least initially appears our estimates for the quarter recruiting and done with good judgment.
Moving to operating results.
For the quarter operating FFO was $5.7 million or six cents per share.
This reflects the $4.4 million billon got discuss that were not recognized as revenue and the write off of $1.2 million a straight line rent and $500000 accounts receivable from prior periods both related to tenants that are placed on the cash basis during this quarter.
Same property NOI decreased 14.6% over the comparable period in 2019, excluding worried about their properties and decreased 19.7% when redevelopment [laughter].
The larger decrease including redevelopment is primarily driven by night payments from an existing Jim and theater anchor at these properties.
Moving to the balance sheet, we did not sell or acquire any properties during the quarter.
However, after the quarter. If we did have several note that the balance sheet activities.
On July nine we sold Metro square for $4.3 million.
As you may recall in the previous quarter, we negotiated a termination agreement with the dark anchor at this property every seat at 7.1 million dollar early termination payment.
Sequenced the dark anchor termination and the subsequent sell other property in this manner as we determined it was the best way to maximize Christie instead of simply selling the property with a dark anchor still in play.
On August four we amended our unsecured revolving credit facility can turn loves to compute both financial ratios and our borrowing base using the trailing four quarters as opposed to dependent quarter annualized.
Also exclude interest rate swap liabilities that our hedge of existing debt from the definition of that.
Further on August seven Levy paid $70 million at borrowings under our revolving credit facility after which we had $74.5 million.
The under this facility at $4.5 million unrestricted cash.
One final note. We did include an additional disclosure or supplemental financial information filed earlier today.
A schedule a base rent and delay by tenant category forgot provided on page 17.
Now also includes cash collections for each of these tenant categories.
During this pandemic, we're starting to be as transparent as possible about our portfolio and our operations I Hope you find information contained in our press release financial supplement and prepared remarks today to be informative and helpful.
With that I'll open the call the question.
Thank you at this time would be conducting a question and answer session. If you'd like to ask the question. Please press star one on your telephone keypad.
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Your first question comes from the line.
Our J. Milligan with Baird. Please proceed with your question.
Hey, good afternoon, everybody, obviously pretty strong rent collections in July at 8% Robin I. Appreciate you sort of running through the different buckets, but is everybody that you could just bucket. The additional 12 versus you know working on deferrals.
Or you know.
Expectations that rent won't be paid.
Yes. Thank you R.J. so yeah the way that we are.
Looking at it is.
Really.
Focusing on the different types of tenants and based on the essential retail mix that we have and the level of collection that we have in July and even so far and Ah.
Oh, I guess you know the this high so the the the collections that we have so far.
We think that we will have that level coming into HM August as as well and you know Phil can kinda talk to you about how we have bifurcated the portfolio I think he went through that a little bit in his his comment based on how we typically for cafs and how we.
Forecasted now based on tenants we have.
Have paid rent historically, you know through co bid and tenants that we think well I'm not pay based on what we've seen and that's how we've kind of bracket it out the oh back that out the buckets.
Okay. So it's hard to assume that.
Good though.
Yeah. So a lot of the increase the majority of it was related tenet.
The 2 million that we did a deferral agreements with with like Robin said the numbers about 95% at it paid in July. So that's a lot of increase this that plus you know some of the cast faces guys did pay as we expect them you know to make you know partial or periodic payments, but then paid and then.
They're out of the ones, we are negotiating deferral agreements with I believe about third of them already paid July also so it was primarily driven by completed the first agreement.
Along with you know a little bit from each of the other buckets that Robert talked about.
And then so what's what's remaining in the 12% that's uncollected.
So it's I don't know about but.
Well go through some of that is going to be yeah. We talked about the rent that was wave and then some of the tenants are you know.
Tenants that we still you know won't pay whether it's our our categories that we are questioning whether they're going to pay whether it's the some of the fitness centers.
Some of the movie Theater, we have one movie theater that we're negotiating left that we talked about.
Some of the some of those categories that we that were a our issues prior to co that that we are yeah. We just put a handicap on those so we're just being a little bit conservative in in our treatment that so those are those.
What's left in that that last bucket, we kinda went through their tenant by tenant and sad and some of those are ones that were still negotiating with but we're just not all together [noise] ER positive as to how they're going to.
Perform long term like the Chinese buffets in such that are more challenged in the co that as far as how they can.
Perform so that's smaller percentage were just putting an extra handicapping extra conservative on.
Yeah, Hey, our Jade its still have yet you look at page 17 or supplement got all the categories.
[noise] and its Scott.
At the base rent they make up but they're collection. The 12% you know you can see it by the lowest paying category then there's what's driving the remaining 12% with Robert mentioned was permanently fitness isn't the theater, we have but if you go through there and you look at the lowest three four categories. That's what's driving.
The 12% yesterday.
Okay, that's helpful and.
And then so there's a term loan coming due at the beginning of next year can you talk about thoughts on addressing that.
Yes, so you're correct. The next maturity, we had 75 million dollar unsecured term loan a maturing in February 2021, Oh. We're currently looking at three option to refinance it first the secured debt market, you're starting to see CMBS and life go alone.
The closing for grocery anchored centers like ours.
Okay.
The MBS terms are generally seeing or 60% to 70% loan to value.
25 to 30 year anymore, and right three and a half the 4% that not all that differ from that long that's a maturing the like those that are closing generally similar terms, but lower loan to value more in the kind of 50% to 60%.
Range.
The second you know ops and we're looking at is.
At a syndicated bank or unsecured love syndicated Bank group. The banks currently aren't doing a five year seven year loans, what they typically do but they are you seeing them close a lot of kind of oneplus ones or even you know occasionally one plus one plus one just kind of bridge or you know their clients to a longer term financing and.
Flexibility I'm. So that's something else, we're looking at and thirdly, we did have one basis in our existing bank group approaches with something that would be.
Definitely kind of a three year unsecured term loan.
<unk> that we might consider it's it's a probably having a little higher frictional cost to do that but I think now with the whole quarter behind us and he's their collections ramping up in approaching 90% and it won't gauge a lot more robust discussions.
On all three of these options.
And the other thing that's really helpful with Robin.
Just on his with these deferral agreement and.
And the small amount of way Remy did we get cells reporting. So that's helpful. You know if we go to secured debt market.
More tenants reporting so.
And just one of the topic that definitely the only other maturity in 2021 is our line of credit matured and September 2021, who do have a one year extension option at our election for that.
So that's kind of how we're thinking about it currently.
That's helpful.
Yep, that's great guys, that's all huh.
That's hurting target.
[laughter].
As a reminder, excuse like to ask a question. Please press star one on your telephone keypad as a reminder, if you'd like to ask a question. Please press star one on your telephone keypad one moment, please what we pull for more questions.
Your next question comes from mine of Todd Thomas with Keybanc. Please proceed with your question.
Hi, Thanks. Good afternoon I was just for first question I wanted to ask about the Lee said Senator square I guess in the northeast Heights.
Seems like there would be an opportunity to to monetize that that leeson development upfront take a lot of risk off the table and maybe raise capital for de leveraging how are you weighing your potential options there.
Hi, Todd its Bruce.
Thanks for asking that question.
Of course, we're very excited about two weeks and.
It's certainly as you correctly note or something of value today, just by its very execution, even before we started the construction is certainly isn't something that caught us by surprise from working on it for.
The better part of your.
And so weve.
As.
Lisa I started to crystallize and as we realized with a fairly high degree of certainty that it was gonna come together, we started exploring a whole slew of different options.
And we continue to do that we're not yet at a point, where we can publicly disclose what our plans are right.
Sure and we were very excited about.
This lease as it represents the first phase of a significant project that we think will add a lot of value both to our shareholders and to the community and so you do you are correct.
One path would be to potentially monetize it in de risk, but there are a lot of considerations I begin that go into how were.
How we're going to mix, how we're going to.
Exploit.
This lease and also how we're going to do right by yeah. The folks that were hoping to to help.
We've been downtime warts and so on.
Certainly something that are we've been actively exploring that we'll continue to explore now that it's I know, but it's been finalized.
How does this lease deal you know compliment the other the other components of the the project and the build out there are there other components that are underway that that you can you can comment on more that are more you know more meaningfully today.
Yeah, I'm going to introduce them to let Robin who really deals in the day to day much more handle that although there were small company. We all spend time on these things.
The North East type project its arguably the most ambitious the redevelopment projects that we have underway all right and it certainly does have some very distinct phases in from a mixed use perspective, I guess office residential as well as retail and this is going to be the first phase.
Hi, it's gonna be a significant traffic driver to the area.
As Robin mentioned in her comments and even more significantly I. It's also going to be an economic engine for the neighborhood I. So much in the way that bringing workforce housing to the neighborhood will allow people to have a good solid affordable housing and the retail.
And that he will get people access to fresh fruit groceries and a nice retail amenities. The office is gonna hoped we'd be a significant economic driver in unemployment driver and and a daytime traffic generator for the area, but wondering what Rob said I'm out a little bit since again a very.
Exciting development and I certainly.
It's a very important part of the project.
I mean, yeah, I think Bruce really hit on the on the key points. There I mean, one of the things that I will just add to that is just when you look at other areas.
In Washington, D.C. District agencies, losing two areas similar to ward seven historically have shown I'm just when you look at other historical trends. It shows that the type of economic engine that disturbs agencies have.
Had they can and have provided so we do look for the Dgs headquarter move to do the same for northeast hide it all so can beat a catalyst for other I'll call them sister agencies for lack of a better term or other and so.
Larry uses to want to move to the project a move near to wants to be near or de G.S.. So it's a catalyst for other leasing activity that way.
And you know it is as I said the kick off for the first phase. So it does allow us to think about what other what other buildings, we want to kick off that's part of that whether it'd be the you know the big Street building or another residential building or other things that.
Could be affected as part of outgrowth of DGF coming to the project and that can just you know those our future considerations and you know.
So we could think about under.
And and kind of way and marry the different capital considerations, along that come along with that but the the notion of CGF coming to the project does allow for I'm kind of the kick off of a bunch of different options.
For the project.
Okay, and then and and how much ground floor retail at this building is being contemplated and and Phil maybe can you can you comment on you know the availability in terms of of construction financing that's available today.
So I'll answer the first question on them. So can answer the second the ground floor retail I want the base. The building a 17800 square feet. We do have the ability to relocate some of our existing tenants some of our existing.
Tenants to to the DGF building up if that's that ultimately as our decision as part of our merchandising plan.
Or we May may opt to two you know bring more new retail to that building, but the total a 17800 square feet.
And as far as no financing options Todd I'm, because it's such good credit you know there's a.
Few options available there.
If construction.
Conventional construction loans are available, obviously, a loan to value might be or the loan to cost there.
It would be like 70% or so and those are happening for very high credit like this.
I'm also a you know there's I don't if you're familiar to us the credit a term loan market. When you have very high credit tenants like this taking up the entire building are substantially all of it that could go either 90% of a cost, but that's generally pretty much a fully amortizing loan over the life.
The lease that would be a 20 year loan it'd be pretty much fully amortizing.
The other thing to consider is you know if we have a JV partner on here that JV partner.
Might bring into other construction financing and options to the table that would be available to us with them as our partner.
So there's there's multiple options here and it's all driven by you know very very strong credit.
I'm in a very long lease.
Okay, and what what would be the timing that you would look to nailed down a financing for for the product.
Yeah, I mean, we would do that you know probably before this year.
Okay.
All right and just so last question real quick fill in the in the press release I think you know as noted the bankruptcies.
No represented I think 600000 of rent and recoveries I just wanted to clarify is that that was for the quarter. So that's a 2.4 million of annual revenue from from those tenants.
Is that correct that would be you that would be the annual run rate for those tenants.
There is.
No rent really paid in the current quarters, that's Arctic flushed out if you're trying to run off their car order, but if you're looking at kind of pre cobot numbers.
That is the annual run rate.
Okay got it alright, great. Thank you.
Ladies and gentlemen, we have reached the end of the question answer session and I would like to turn the call back to Mr., Bruce Schanzer for closing remarks.
Thank you all for joining us this evening.
Behalf of the entire team here at Cedar recycling for participating in our earnings conference call and wish you a healthy and peaceful conclusion to the summer.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
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