Q2 2020 Simon Property Group Inc Earnings Call
I'm all participants are going to listen only mode. Later, we'll conduct a question answer session and instructions will follow what starts time, if anyone should look worse I sensed during the conference. Please press star zero on your touched I will tell the show as a reminder, this conference call is being recorded.
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Thank you Robert coverage all for joining us today, presenting on todays call, David Simon Chairman, Chief Executive Officer President.
Nicole Board agreed to foods lobster.
<unk> Chief Accounting officer.
Before we begin a quick reminder, that statements made during this call may be deemed forward looking statements within the meaning of the safe Harbor. The private Securities Litigation Reform Act of might you noted photos.
Actual results may differ materially due to a variety of risks uncertainties and other functions. We refer you to today's press release, a t. Farley for a detailed discussion of the risk factors relating to those forward looking statements. Please note that this code boots information that may be accurate only I'd love to do very well.
Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included within the press release in the supplemental information in todays Fortunately Farley with.
Both approach waits for the supplemental information for available on our website, but it seems that final dotcom.
For those who would like to participate in the quarter moved from session. We ask that you. Please respect a request to limit yourself to one question and one follow up question. So you might alone are the ones that you see opportunity to participate for program works, we're pleased to introduce Davidson.
Oh, good evening and thank you for joining us this evening.
Before I turn to our second quarter results.
I really just want to again express my gratitude.
To the entire Simon team for their tireless work.
We continue to do for shoppers communities retailers.
As we've said previously the safety of our communities.
Which we sure.
It is our top priority and the team has managed unprecedented circumstances in dealing with the pandemic.
Certain reach a natural disasters, obviously the unfortunately.
Lighting that also occurred.
So we've been dealing with obviously a lot.
And frankly, I'm extremely proud grateful for the dedication.
And commitment of our team.
As they've demonstrated during these ah.
Challenging times from opening.
In closing the opening to watch securing our buildings.
You know they've done a heck of a job so let's go to the numbers.
Second quarter reported funds from operation was 700, and for 46 million point $5 million or to $22.12 per share.
I'm pleased with the resiliency of our portfolio into solid profitability and positive cash flow, we achieved in the second quarter keep in mind, please or profitability was achieved despite our U.S. portfolio.
Being close to the public for nearly 10500 shopping days during the second quarter or domestic and international operations in the quarter were negatively impacted by approximately $1.13 cents per diluted share.
Primarily due to reduced lease income.
And ciliary property revenue and ancillary property Rep revenues as a result of the covert 19 disruption.
Partially offset by approximately 36 cents per diluted share from cost reduction.
Initiatives or a net 77 cents per diluted share in the second quarter now let me walk you through.
Let me walk you through the components of the year over year change.
In the context of our portfolio in Hawaii.
Pick the best way to do that is it fall on page 17.
Of our supplement that we issued today. This will help you understand the impact of covert 19.
First of all told total portfolio and a wire net operating income decreased from $1.5 billion and the second quarter last year to approximately 1.2 billion. This year a decrease of 21%.
Approximately $315 million the year over year decline for the second quarter was due primarily to the following.
Approximately 215 million.
From domestic rent abatements and a higher provision.
For credit losses, given the lack of local state and federal government support for our industry. We went out of our way to a ban rent for thousands of local small businesses.
That's true and entrepreneurs and restaurant tours and other retailers for the period they were close.
Approximately 145 million.
More sales based rats short term leasing.
And Simon brand venture income solely due to the fact that our properties were closed.
At approximately 60 million of lower income.
From our international outlet portfolio again to the fact that they were closed as well during the second quarter. So that's 215 145 and 60.
These decreases were partially offset by approximately $105 million from our cost reduction initiatives. As a reminder, that variances I. Just explained do not include the negative impact of 36 million dollar.
Others from a straight line increase deduction.
Yeah, It's straight line impact has always been excluded from portfolio in Hawaii.
Our operating statistics metrics were as follows mall in premium.
I'll, let occupancy at quarter end was 92.9% down approximately 110 basis points from the first quarter of 2020 tenant bankruptcies and lower specialty leasing during the second quarter due to cope with 19 impacted occupancy.
Approximately 60 basis points average base minimum rent was $56.02.
2.8% year over year, and our leasing spreads were essentially flat for the toiling trailing 12 month period now regarding collections, we have collected from our U.S. retail portfolio, including some level of.
Rent deferrals, approximately 51% upper contractual build grant for April and May combined approximately 69% for June and approximately 73% for June July with only Diminimus deferrals.
These per cents percentages are not reduced.
Bahrainis abatement granted during that period that I previously talked about.
Now prior reopening our properties, we implemented a series of robust safety protocols to ensure the highest possible safety and cleanliness standards. We reopened our you are U.S. properties, starting in early may and our entire ports.
Folio for July 10.
As permitted even with the ever changing governmental orders that frankly I've been on a constant state.
I have a flux in 37 states and 150 different counties all with different protocols on July 15th to California Governors issued a new restrictive order required us to closed seven of our properties in the state so.
We're all open except for the seven recent.
Closings in California.
We've been generally encouraged by the shopper response to our reopening, particularly in certain locations, where there's been a steady improvement in traffic with many tenants reporting sales better than their initial expectations, just a little color on that and the centers that real.
Opened in early May tenet.
Tenants, who reported sales reported may was approximately 50% of their previous.
Year volume for the same period and in June that increased to more than 80% of prior year volumes and its continue to reopen and we currently have 91% of all tenants or nearly 23000.
Tenants across our.
You asked portfolio are open and operating.
The remaining tenants that have not open.
Not really opened more than half of those are close because of the remaining restrictive governmental orders limiting or prohibiting their operations included in that category.
Would be movie theaters fitness facilities and in some instances restaurants internationally all of our designer and international premium, though outlets are open and operating.
Hundred percent of all those stores in our design or outlets are open and operating with shop shopper traffic and retail sales at approximately 90% of prior year levels and we continue to see steady improvement in traffic and sales at our international premium out.
Let's with all retail stores open and sales across that portfolio nearing last years levels with our partner.
Cyan per watt, we opened a cyan premium outlets in Bangkok, our first premium outlet center.
In Thailand, the centers approximately 90% leased it's it's extremely well located and has an on liable premium shopping experience featuring leading brands such as Burberry Valencia coach Ferragamo and many more we also.
Completed several several redevelopment, including phase four that's good tamba premium outlets, which is a 100% leased.
Yeah, Tim but premium outlets is the largest outlet center in Asia ex China, and we projected annual retail sales to be an excess of $1 billion.
Our net investment focus continues to be on those projects nearing completion and our share of the remaining net cash funding required to complete the projects currently under construction.
It is approximately $140 million through 2021.
We have a track record.
On capitalizing on.
Various value, creating opportunities as you know spar group.
Our 50 50 joint venture with authentic brands group submitted stalking horse bid to acquire Brooks brothers and Lucky brand Jeans under section 363 of the bank, Let's see code just a few things I think it's really important to keep in mind on these.
Potential deal first spark is buying them.
Out of bankruptcy.
So it is acquiring the inventory.
At or below cost.
And to the extent, we buy the intellectual property, we are doing so at attractive values second when sport integrate acquisitions in its platform. It reduces the acquired companies overhead significantly.
And third spark is able because of the bankruptcy code and designation lights able to reject Amy leases that do not meet its criteria and all stores are projected to have a four wall EBITDA upon assumption of lease these invest.
Rents are expected to generate positive EBITDA soon after their integration in the spark.
We expect any equity investments should be return within a year after integration of operations and rise by as I had mentioned previously we have created real value are ready and our investments and spark and of course, a BG and we.
Continue to look forward to other opportunities just a few words on the balance sheet again active.
As you might imagine at the ended the quarter, our liquidity was approximately $8.5 billion, consisting of $4.9 billion available credit facility borrowing capacity and $3.6 billion of cash, including our share of joint venture.
Your cash as a reminder, the eight and a half billion dollars of liquidity is net of the 700 million.
Dollars of us.
Commercial paper, that's outstanding at quarter end subsequent to the quarter end we paid.
Down a total of.
Two and a half billion dollars under our credit facilities. We also completed the optional redemption at par.
$500 million in two and half percent nodes and 370 million.
Euros, and 2.3% notes or both of those notes had maturity dates later this year and I'm also pleased to know that our net debt.
Has not increased.
By the ended the second quarter through this.
Pandemic period so.
No and our debt covenants remain well above well above the required levels with significant headroom.
As you know dividend, we paid our second quarter dividend of $1.30 per share in cash on July 24th.
The board will declare third quarter dividend.
By September 30, yet and we expect in total for 20 twond need to pay at least $6 per share in cash.
For dividends conclusion conclusion would be simply again I want to thank my colleagues for their continued resolved during this.
Tragic set of events for the entire country. Our results are only possible through the ongoing ingenuity flexibility and dogged determination of the Simon team.
We're quite proud to play our small part.
And helping local small businesses entrepreneurs and communities work through either their way through this recovery by continuing.
To help them get back.
So that they can open their business and and move forward so with that we're ready for questions.
Thank you.
And at this time I would like to remind everyone in order to ask a question. Please press star one on your telesales.
First question, we have in the line will be coming from Caitlin Burrows with Goldman Sachs. Your line is open.
Hi, good evening everyone.
I guess.
As of August 19 mentioned, not 91% of tenants where reopened but then July collection.
73%. So just wondering if you can go through kind of why that amount even closer to 91, obviously better than the previous two months and how quickly you think you get to a point where rents being paid is more similar to the amount of story as.
Well July is at 73.
And why because certain tenants unpaid rent.
They have contracts there.
Obligated to but certain tenants haven't paid.
Okay and IDEXX when you think about the amount that hasn't yet and I know on the May call.
I had a good steady so just kind of making that point. They don't you have leases on my for bankruptcy you expect them to be tank.
So I guess could you just start to the status of the portion from Q2 that weren't paid.
Whether it's that it sounds like there are minimal amounts of abatements kind of what portion is still under discussion first is rent deferrals you didn't either.
Give or other categories.
Well, we're you know as as you might imagine.
We're in active negotiations with all of our retailers.
We did provide abatement.
For primarily local businesses and entrepreneurs restaurant tours during the abatement period, so I'm charged to the closure period.
And we're finalizing you know a number of.
Number of or.
Remaining open issues with our retailers.
As again I mentioned to you that we took a hit of $215 million, which is a combination of abatements.
And write offs from.
Bankrupt tenants et cetera, we're not going to go through you know that the percentages of each category, primarily because we're still an active negotiations with tenants regarding April may.
And we don't think you know that information we believe is.
Proprietary and it puts us in a awkward position as we finalize our negotiation we've done over at 9000 amendments.
I think we're in very good shape.
We are certainly pretty much on you know for not being essential remember we work green for whatever reason non essential retail. So we lost 10500 shopping days and we're going through an orderly process. So we've taken their heads that we think.
It's going to show up in Q2.
And we're processing the balance, but you know.
You know.
Hopefully that will all be behind us here in the near future.
We're making very good progress on.
As I mentioned in July being it over 73%.
But we still got retailers that we need to deal with and we're going through the process in an orderly thoughtful fashion like we do everything else.
Okay. Thank you.
Sure.
Next question will be coming from the line of Alexander Goldfarb with my first handler. Your line is open.
Hey.
Good good afternoon out there David how are you.
Hi.
Out here is going to be.
The resurgence of the Midwest is around the corner my friend, Okay. So just remember that go ahead.
Like careful what you look for because all the a lean new Yorkers will end up by moving in next door to you and Carmel. So just be careful what you wish for about.
The Midwest.
So two questions just following up on Caitlin.
I understand your hesitation, but still if we look at your accounts receivable indefinitely.
Yeah from first quarter, two at the second quarter meaningfully.
So it sounds like a lot of it sounds like you probably had not that much straight line rent write off and you think that most of this is money. Good. So is there are ways for one.
But but also remember that's quarter and a lot of collections.
You know.
We made a lot as lot of collections in July apply into Q2, and so you know just that's a moment in time you got to be very careful about drawing any conclusions, but again.
You know and we're continuing to.
Firstly finish a number deal. So just just don't you can't go from that from that point to the other point without knowing this was an everyday it changes.
Okay, but still it can you just give us some flavor even without the numbers, but just like percentage is just some color you had a bunch of tenants who people weren't paying than people started to pay your tenants who asked you for hey can we make a deal some of those were flat out rejected some you worked with some you obviously have brought to.
Court, but can you just give us a flavor like I'm a shopping center side, you know they've been pretty detailed as far as you know the percentages of prove that have percentage about perks, who who's abated, who deferral and the bounce that they've said no and the amount that are remaining to be negotiated with so can you can you at least give some framework.
Around that just to help I understand better, yes, I'd guess, Alex I have such a different philosophical.
Difference you know for me the Air mine that get let's just pick a hypothetical let's say a deferred half the guys rent and the guy that I didn't differentially rent and I told you our deferred half is right. It's going to end up saying why didn't you do this for me when you did it for other people so.
I think this is proprietary information obviously all of this flows through our income statement, it's all gap.
We did tell you we took a bunch of abatements than we did we did that we did have a negative 36 million dollar straight line rent variance again, that's not in that 215, because portfolio analyzed as you know we always excluded straight line, but in this and this cases.
The first quarter, we've ever had negative straight line as far as as far as I can tell so it's a pretty big gap, so, but I don't I just don't want to.
You know kind of go through that beyond what we've told you I mean, we told you collections. We told you we did do some level of deferrals.
Nothing.
Out of the ordinary the deferrals in July were de Minimis.
Florals and in June were less than April and May So, it's all moving into right direction.
And the collections are.
We haven't given up on you know April may as Q2 collections, we expect to other than what we abated and wrote off.
Through bankruptcy.
We expect you know to reach a deal on the vast majority of and you're right. Some of you know we'd have a one really big receivable out there that you know is a public record.
And obviously.
That's out there is a big receivable we think that's.
Now going to get collected but you know that's that's a that's a big increase in our accounts receivable.
So.
You know the deferrals and the abatements.
We're clearly.
You know under.
Not anywhere near.
The majority of our.
Rental.
Rent role and we still have what I'd say about 28% to 30% of our negotiations still to be done.
Okay that.
That's helpful. The 28 still to be done, Okay, and then that would be done.
Yeah, 20% still to be done okay. The second question is can and that's that's moving down I'm looking at some numbers here. We've got 20, 20% in July that still under negotiation.
But at the entered the day.
We expect roughly with abatements and everything else.
Collect.
85% roughly of Q2 and 93% of.
July and then hopefully get back to Kinda you know the normal run rate, which has been in the 90, 798% level.
Okay. The second question is from I mean, you your hallmark apart from cash flow is your balance sheet.
Hi.
And I see that you know a few the rating agencies I think have you guys on negative, but you're doing a lot more with JBG, obviously, there's litigation with tall. Ben there was the discussion the journal today with Amazon I'll, let someone else asked that question and then you did continue to pay a dividend, albeit at a reduced level, but still you're paying skills.
Sure happy dividend, how does the rating agencies view all of these transactions have debuted all of these it's favorable or they're comfortable or have you had to alter some of your plan based on your desire, which I assume if you've maintained your current ratings.
Yeah, we're not we're not concerned about that I mean, just even with you know all of the closures you know again 10000 days.
We were cash flow positive this quarter.
Now we were obviously aggressive in our.
No not many folks that I've read I have shared there.
Reductions in cost, but we we took out a $105 million of cost across both corporate and the portfolio.
But were cash flow positive our ratios are our covenants are well covered.
And again, I mean, I I see the narrative out there the amount of equity.
Yeah, and both the Lucky in the Brooks brothers.
Investments is.
Is.
Is I don't want to say diminimus, but it's.
What would make what would you think would be a non event from our standpoint.
In terms of what we have to invest either directly or in spark.
It would you say Alex.
Hi in that two I'm going to guess maybe it.
100 million, maybe 100 to 150 million an aggregate okay.
It's going to be half half of that.
So okay. So 75 between the two no no no no I'd say half is 100.
Okay, Okay nationally and that's only in a short period of time.
You know until we refinanced the whole thing and again I know, we're buying them, but remember you bought when you bought the inventory at cost or below and then you sell it for gross margin, which you're supposed to.
We're not buying it and retail we're buying a cost. So you have a 35, 40% gross margin you're going to make 35, 40% on your your you know we're not buying the inventory at a retail cost to the consumer we're buying it isn't that basically the cost at the retailer has and then we sell.
So there's there's profit in there that's why people. That's why you see you know a b else finance the left and right now.
Because they're buying in costs and there was a gross margin in there so that's where the market doesn't really get it but those two investments.
Either directly or through.
Capital contribution to spark will be under $50 million from us.
Okay right, there's just no way and let me repeat no way.
That.
The rating agencies are going to think.
Twice the volume.
Right, but JC Penney would be different.
Well again.
Not going to respond to market rumors or speculation.
But.
What's out there in the public is that penny is likely.
If they are to restructure the do an opco propco and out of.
Equity required to do the operating company would it's going to be a lot less than you would think.
So again you know.
Yes.
It's not overly complicated, but there are fast that just aren't out there that is that if we thought first of all lucky and add a Brooks brothers to the extent that we.
Get this and by the way the one thing we should talk about is the fact that we're saving indicates a Brooks brothers 4000 jobs okay.
I mean, that's what we should talk about I mean, we're doing our fair share.
For trying to keep you know this world is.
Normal as we can.
But.
But but going back I mean.
Yeah.
If if brooks brothers or lucky or even spark.
Or even a b G were material two or so.
Financial.
Situation.
Then we would disclose it but it's not material. It said, it's a sideline business and I do see the narrative that.
And I don't by end of this analysis, United has discussion that we're buying into these retailers to pay us rat.
We're doing it because we for one reason only we believed in the brand and we think we can make money. If we didnt believe in Atlanta, We didn't think we could make money we wouldn't do it.
And it's those same people are probably the same people that told Amazon the state just in the elect to in the book business. Okay. So.
Let's just think a little bit little bit there's just nothing out there that says.
You can't make smart investments.
Outside of your core business is what you what we do you know all the time and look kimco did with Albertsons. They did a pretty damn good job and that you know kudos to them.
Thank you David short.
Next question will be coming from the line up for Rich Hill with Morgan Stanley. Your line is open.
Hey, David Good afternoon, I wanted to maybe just chat with you about the return to normal off from a cash flow standpoint, obviously, something you focus on a lot and in many respects. This environment is different than the GFC given given the headwinds facing retail real estate.
For thinking about the implications of cope at 19, but I'm sure. There's some lessons learned from the GFC as well and you were obviously very successfully navigating the GFC. So I think what a lot of us or trying to understand is what does that returned to normal look like and you mentioned when speaking to Alex.
In collections in the high Ninetys relatively soon but you know when when this cash flow from the way you look at it returned to where it was last year, how long does it take you get there.
It's a fair question and a good question.
But I don't have an answer look I do think without question. The the pandemic has.
You know obviously.
Had a dramatic impact a much greater and I know I've experienced a lotta.
Volatility in my career, you know that the the great recession frankly.
Does it pales in comparison to what we're dealing with obviously the male bankruptcies in.
Our sector.
His tremendous.
And.
It's more reminiscent to me.
What we're dealing with.
What we dealt with in the early nineties send the great recession.
And frankly, the early nineties took some time I mean, you know it was.
And again I, you know, if I say stopped and you're going to think I'm, saying, something but I'm just using that as an example, I mean in the early nineties.
The real estate recession, there took frankly 234 years to overcome.
And again, I'm, not making that prediction here.
But I don't think it's going to be an immediate.
Snapped back that doesn't mean, you know our company can't do great work.
The.
You know be a via important.
Player in getting the country back helpful local communities and all that stuff, but you know it's going to take time, there's no doubt about it and this is different this is not your this is not your grandmothers.
This is not your grandmothers recession, I mean, when you have GDP dropped.
30, whatever was 34%.
I mean, that's not that's not normal we're dealing a lot more bankruptcies.
And this is going to have a.
More of a duration durational impact then.
What weve to what we've experienced.
Probably since the early nineties now reality is in the early nineties for those.
Those that survives we're able to prosper after that period of time.
Last but you know when you in order to really answer that question. It's you got to have a medical.
You got to tie it to a medical and I am nowhere.
Nowhere in a position to respond to that.
[music].
And you got to have a country moving in the right you know moving more or less together and obviously that's not happening so.
I wish I could pinpoint it but we're not we're not we're anticipating more.
More of a durational impact here.
And our planning is being very conservative.
And that's why we cut our Capex, that's why we cut our overhead that's why we're working with our local entrepreneurs and the baiding rent because frankly, if we foresee issue they wouldn't opened the doors again.
And and that's why we're trying to be you know if if our retailers are willing to work with us we're willing to work with them if they are not.
And we continue to try to work with them and they're still not working with us.
You know then that's that's when we have to look at what could unfortunately, they look at other options. So.
I wish I could pinpoint it it's a fair question.
I think we'll have a better I think as every month and quarter goes on all has a better impact certainly would be our view.
No by by the end of this year that like lay out you know what we see in 2021.
I think we're getting closer to that.
I haven't my own mine, what it will be.
But I'm not not willing to share with you not because I don't like you I do.
I'm not willing to share.
Oh, that's that's all fair I I I've I would hope for more but but I I completely understand that David I do want to have one follow up question, if I may and you alluded to that.
I think there's a lot of media headline that retail real estate dying in malls are dying.
I pushed back on that for a variety of reasons I think we have too much retail real estate in the United States.
So on the other side of this once retail real estate rationalize is I would agree with you that we're going to be stronger.
So I definitely would have I would ask you how how much do you think pass to rationalize given what you know about cobot 19 isn't 10% 20%.
40% I think in the past you've talked about a 20% to 30% number if I go back many years.
How do you think about that because I could see the industry post rationalization being a lot stronger putting then this today.
Well I, there's no question, there's going to be a material.
Material rationalization.
Cross the whole spectrum.
And that's all the all the product categories.
Within our retail sector, so it'll be mall strip centers, though so outlets certain outlets.
Power centers lifestyle centers look it's hard to its hard to again, it's hard to put a handle on it I think I think the bigger thing will not be so much.
So, whether it's 20 or 30%, but just it's going to happen like.
Now, it's not a lot of the lot of the time when you had a.
When you had a product that was limping along.
It could lift for a while I.
That that half life has shortened.
Over the last 567 years.
Now, it's like a immediately shorten so.
You know you're going to you're going to see.
You're going to see it rationalization without question.
And it's going to happen quicker, but again I'd be reluctant to give you a real real number the hang your hat on but.
Your number.
You mentioned certainly sounds within the realm of a.
Possibilities.
All right. Thanks, David that's the journey Yeah no one.
Next question will be coming from the line of Haendel St. You with Mizuho. Your line is open.
Hello out there.
Oh, yes so.
Hey, David So.
When asked a question that Alex less offices laundry list of questions earlier about Amazon So.
I'm curious and I know a lot of invested ours, while on your thoughts on the idea of Amazon potentially taking up.
At malls and form anchor boxes.
You think it would work from a practical sense.
Out any value to or benefit to the centers shoppers for the retailers and couldn't even potentially.
But even work from an economic.
Perspective.
Well I'm really not in any position to respond to market rumors or speculation slow. So so you know that's that's.
Really.
With respect to that I mean generally.
I'd say the important thing going on.
We're seeing is that more and more retailers are.
Distributing their E commerce.
Orders from their stores.
And the Ross so they are fulfilling from their stories.
And they're also you know the curbside pickup for all sorts of fulfillment options are available that's a good trend.
Long term for us.
But beyond that I don't want to get into logistics.
Or any kind of speculation really around penny and or Amazon.
And.
You know, we should we should leave it there.
Fair enough. Thank you for that my second question is really a question on the spreads that turning flat here in the quarter pipeline. There was a meaningful decline in second quarter curious, how we should think about.
The leases.
Signed during the quarter any big deals of note, they're having a disproportional impact where these leases jelly sign pre or post cobot in how should we think about the near term trajectory of spread near term. If you extrapolate what we saw in Twoq. Thank you well. It's a good question. Obviously Q2, we did not do will look a lot of NEWP. If it's okay. So.
We were in a.
Mostly tree on.
Levels, I mean, I hope everybody appreciates you know the.
You know.
What we had to deal with from a you know again this pales in comparison I'm not putting you know our slice of the world anywhere near you know the health and welfare of of of people in the hospitals and all that the we were dealing with a with a you know with.
Cold environment, we had to close.
Pretty quickly.
We reopened we had all sorts of different rules across all sorts of different counties.
We try to manage that process the best of our abilities.
We've got very little if any.
Well on either real estate tax.
Sales tax.
You know we've got we've a lot of what we had a lot of guidelines. We had the then reinforce our buildings, where we have the tragic.
Consequences of.
Okay.
The the problems you know at the end of May which cost us several million dollars, which kinda ended up in our in our numbers as well and fortifying our stuff.
We had to work remotely and then we had to help a lot of our local tenants in our luck law the local restaurant tours and so on so we've been you know.
Drinking from the fire hose trying to you know all of these things are unbelievable everyday is a judgment call. You know what do you do do you do this can you do that you're not going to get perfect.
I'm not going to have you're going to offend somebody somewhere at some time.
He's just try to be level headed and do it.
So with all that said we went after trying to stabilize our tenant base. The best that we could we tried this we tried to reach out we made a corporate decision to to abate all local tenants as much you know again.
I'm sure. We there was a mistake somewhere somehow but we tried to do that immediately.
Because we knew they were under a lot more pressure than we were.
And the new business just wasn't there for Q2, what I'm told by our new business group is that people are starting.
To think about new business most of that's going to if it if it does surface most of that will be in 2021.
I do think we'll see is or the benefit of a number of pop ups in our portfolio.
Those are primarily in the outlet business from a number of great brands because.
There are sitting on X excess merchandise, we think that's a great opportunity hopefully they'll do great business and they will.
Stay longer.
And so I think the spreads this year, just gonna be whacking enough to like discounted.
And you don't because I don't think we're going to do as much new business. Obviously renewals are going to be we didnt finish all of our 2020 renewals. So thats going to be a mother judgment call about you know what you know what's the right level of rent is that's going to.
The.
You know retailer by retailer decision, that's going to be no whether they are.
You us as the as a good partner or not no Gobi.
Number of cases were workout something acceptable to both parties there'll be some that we wall.
We hope that will be in the minority.
And frankly, we're I'm not going to spend much time worrying about spreads this year.
I just think you know we're we're you know we're just focused on getting our retailers open getting traffic back.
Creating a safe environment for the communities to shop feel comfortable again and that kind of mass all worry about next year.
Thank you for the thoughts good luck.
Sure.
Next question, a little will be coming from the line, if Mike Miller with JP Morgan.
Okay.
Just curious how much of the second quarter cost reductions should we see continue in the second half.
It's hard to say I mean corporately.
You know I must admit.
I have not had mutiny, yet, but at some point, it's around the corner okay. So.
You know the executives here are still.
You know it reduced salaries and reduce cost.
That's a tough one for me I.
I think about it a lot.
So I don't have an answer for that so there'll be some of that.
[music].
Obviously on the operating expenses are not as much because you know the standards of what not that we I mean, I hope everyone appreciates that we've always run our properties.
No.
Again, we're not perfect I'm sure there's mistakes.
Potholes here and there but.
You know we have a new standard that we have to produce that's that's that's going to be more expenses. So from a property level, we probably won't see a lot of benefit and forward. It would be great. If we got some health if you look at RPL.
The one area, we did not get any health and retail real estate tax so.
I would hope that these local municipalities would look favorably on what we delivered to the community.
What the AD goal oriented patches are for retail real estate compared to other forms of.
Real estate and give us a break we deserve it we're not treated fairly.
And we need it so.
No I don't think we'll get it but that's where we showed good.
Got it okay, and just as a follow up what percentage of FBR is tied to entertainment dining and fitness.
That's a good question I don't know anybody to off the top my head no I don't know you mean in general that Justin Yeah agenda.
I'm going to say, probably 5%, but but Tom will probably give you an exact number.
Great. Thank you sure.
Next question will be coming from blindness, Kevin Kevin What's true best your line is okay.
Okay, I love it because the dog, it's the dog needs to it.
The walk there fed.
[laughter].
So I wanted to go back to kind of high level of Vancocin data that you provided so is it looks like you click about 57% of grants to Q.
We're not going kind of like category just high level.
What percent of the rent that do you not collected you actually write off our reserve for.
Well again, I don't want to get too much but it's in the.
I mean I [laughter].
We probably in that 15% to 20% range somewhere in that range.
Again, I don't want to I don't want to give too much on this because.
You know all the all this will eventually come out you know and we're making just yet to make as you know yet the new rules.
And all of this will be you know off with a wash by by year end, but that's kind of where we think we took a pretty big hit this quarter.
You know as you know I mean, we roughly 215 between abatements and.
And write offs, so that it on the portfolio wide could you kind of gives you the number for the quarter.
And.
Do you have any data on like what percent of your tendency you you deem last local tenants.
And if you're thinking about actually providing alone skews kind of besides just time abatements or deferrals.
We don't really give out the local number and we don't we don't provide any real loans.
If they are it's it said you know it's a it's you know maybe there is and maybe that you know historically, we might get notes with a local tenet if they've had a you know.
Problem with their business, but it's not something that we do upfront and maybe a note because rent has been paid over time, but but but we don't we don't loan we rarely route loan tenants money.
Yes.
You know to the to the point of kind of a non event for us.
And would that be the same for restaurants too.
Great assuming that if rectangle gol, having it back we'll do tenant allowance.
You know for Ah you know for you right, you know for retailers and restaurants, but we won't loan money.
And again, we're pretty good on.
No credit.
You know, making sure that the if we are if we are providing a some form of the buildout one the but the retailers, providing the bulk of that and and and that they have a credit stand behind it.
Okay. Thank you.
Sure.
Next question will be coming from the lineup Linda Tsai It with Jefferies. Your line is open.
Hi, I'm in terms of buying out the bankrupt retailers you talk to some hypothetical numbers buying at or below cost generating gross margins of 35% to 40% I would think theres a lot of opportunities I think since you know how do you go about picking and choosing.
Oh, Great question and you know it's not like.
You know, we want a a huge portfolios as but.
Listen we ate BG authentic brands grew.
Is a.
Fantastic intellectual property group does business throughout the world.
And has a ton of brand. So you know normally and they provide a lot of value on sourcing marketing.
International operations.
Et cetera.
So normally when we're doing.
Doing that you know we work with them, they're very very good.
About understanding you know what you know where there is value in the brand because they know how they can monetize that intellectual property. Obviously, we have a point of view because we know what the consumer like so you put the two of US together in a room.
And that's how we do it so we're not we don't play in.
You know, we rarely play I mean, they've been a lot to.
Unfortunately, a lot of bankruptcies. This year, it's not like we were playing in a lot of them others, all and the other thing I'd point out Linda is that we get rumored we're playing and we would not playing.
And again, because we don't want to Mark we don't want to talk about market rumors and speculation. We don't you know did I rumors as well, but we're very selective and what and what we look yet and again the brands Gotta have value, we got to believe weekend.
Without.
Trying to you know trying to.
Hidden inside straight we better believe we can we can make it easy but ER.
Positive pretty easily.
We don't we're not we're not into into you know miracle worker here, we want to be able to do it like what we've done in the past.
Thanks for that and then discuss how cold it impacted how covidien talks varied across your different property types. Yeah, maybe say the mills premium outlets are enclosed malls as it relates to rent collections and then you know traffic upon reopening.
Well I would say generally and again it depends on it depends on location, but.
I think it's undeniable.
At this point.
It's a little bit location oriented.
And a lot of that is kind of we are.
We see.
Stability, maybe in that market and lack of realizing.
And.
In a in a in the cope with cases.
In addition to that I mean, I do think the consumer generally feels.
A little more comfortable in the outdoor environment.
But I would also really really underline that a lot of it is just tied to where the cases.
You know where are these cases ebb and flow.
And that right now is a big determinant.
Two different collections very at all across property types.
They have but you know since we deal with.
These retailers basically across the board, it's not like it can pay us in this and this center or not pay us and that center because once in closing ones open.
When we're talking to them.
No we're talking to them across the portfolio. So.
You may see different trends, if you only have this kind of product versus that kind of product, but since we're dealing with these retailers across our portfolio for us. It hasn't there's no differential you know for others it might be a different tenants.
Thanks, just one last one in terms the 215 and abatement. Some write offs how would you expect that number to trend in this and three Q4 Q.
My guess it'll still be they'll be.
We'll be some again, it's a little bit.
It's a little bit Ah Ah unpredictable.
But there'll be some I'm sure we'll deal with some more in August September.
No we do have as I mentioned properties closed again.
I hope I hope.
You know for all sorts of reasons, you know primarily because.
Oh, it's not rising that would be great for all of us, but we still there's still a risk that we might.
You know because we're in this.
You know weird dilemma that were not considered essential we run the risk. So it's hard to predict I can't make a prediction on that.
I was feeling pretty good in June.
Finally, getting back to work and I feel less good.
In July and I'm now I'm totally confused.
But I'm sure you know, we're still going to deal with.
With with issues going forward.
And so they'll be I'm sure there'll be some level abatements.
And some collection issues you know is as we move forward.
For the rest of the year.
Thanks.
Next question will be coming from the line as Nick Yulico, but still get bank. Your line is open.
Thank you I'm I'm, just trying to reconcile a couple numbers here you know I know you gave the collections data, which is inclusive of deferrals for April May June they ran.
50% of contractual rent to 70%.
In those months yet you know if you look at your cash flow statement in the 10-Q, it's showing that.
You know your quarterly.
Cash flow from operations were down over 90%.
She if you just try and figure out what the quarter number is not the six month number. So I mean that would this that would presumably mean, a pretty low cash collections number I know you guys haven't.
Given the cash collection number but is there anything more you can explain on this issue as it were looking at these I I think frankly Nick.
You're maybe having a hard time with our income statement, we're happy to.
Talk to you offline, but.
Again, we had a or a lot of deals were done at the end of the quarter and processed in early July so.
We had a lot of collections in July all the way through July.
You know the numbers are the numbers. So if there's a particular number.
You know, we we we do have some retailers that haven't paid period and we haven't we're still under negotiation with a a good chunk of our retailers to find out kind of where that stands. So we haven't press the brews on every one at this point.
We certainly have the option to do so we can't find a satisfactory deal.
And so I'm not sure.
So what you're referring to but we're happy to walk through it.
If you you know with.
You know in more detail.
Yeah, No I I was specifically looking at the cash flow statement not the income statement, what you're showing your cash flow down a lot a from a cash from operation standpoint in the second quarter versus a year ago.
And so that's you know I guess, what well I mean, we weigh did had we did have abatement okay.
And we did have a reduction in our I I mean, I don't if you were here earlier, but I laid out how you went from property in Hawaii.
To kind of where we were we did lose you know roughly 300, and our 460 million less or.
That's our saving so I'm sure.
You know no one on this call once for the repeat that but it's it's it's available there for you on the transcript.
Okay, Yeah, I can follow up online offline.
Yeah, there's no denying we have reduction and our cash flow from operations. We we went through that earlier.
I guess, what I'm, what I'm trying to understand is what we what exactly we should be a what's the take away from.
You know the fact that you're saying that youre collections.
Our improving.
You know in July versus the second quarter is that a function of just to be clear does it mean your cash collections or can are improving or you just now more floral agreement. Nick. Unfortunately, I've said a lot of this are you I don't think you.
Maybe you weren't on the early part, yes, I said our cash collections.
Clear in the teleconference text that our cash collections in July improved.
Are you know.
Improved to 73% with the Minimis level of deferrals I said that earlier okay.
Next question will be coming from the line up there, but Johnson with them CIT Bank. Your line is open.
Hi, David Hi, everyone. Thank you.
What was your process and determining the level of abatements granted and into US what is seemingly a kind shared pain approach could you take that's through the decision process and granting abatements.
Only a few have time for me to talk about 9000 lease amendments okay. So.
Derek a lot goes into that I mentioned earlier, it's a lot of judgment calls its all about the relationship. We went out of our way universally again I'm sure there'll be some local retailer or restaurant tore where.
You know something got lost in translation with our field, but we went out of our way universally true update all local.
Entrepreneurs and businesses and I'm sure they'll be somebody that said, hey, I didn't get it but that was that that was the message from top and then.
There were other retailers and it was all a function of understanding their credit understanding whether there were some some potential trades.
Every situation was different again, that's why we don't like to get ended the granularity.
Every deal because.
No I certainly don't want one retailer to say, where I didn't get that white to do that versus this but.
It's years, it's it's been in business almost 60 years and me personally been doing this for a 30 years that ends up you know a scene Grace over you know what's the right way to proceed is with a retailer and again, let me reinforce.
I'm sure we made mistakes I'm sure, we didnt handle everything right, but we did the best that we could put the set of circumstances that we were dealing with.
Okay I appreciate that thanks, and now what is the return to development plan Phipps Plaza.
Could you guys quantify the likely timeline or what you need to see happen in order to resume subscription and really you know how far is completion kind of pushed off at this point.
Yeah. That's a good question so on fits.
But we are we are getting very close to resuming in finishing the hotel we had that building called the anchor building.
Which we're currently evaluating what our options. There are and then we also have a office building that was part of that that.
We are.
And then you know we could sit on that for a while we're assessing the.
The good news about that as we really never going to start that till next year anyway.
So we're going to it we have the chance to kinda.
Give it a few months to see but I'm expecting the hotel.
To resume construction here in the near future and ultimately the anchor building.
Probably within the next two to three months.
And then the office building you know will be market.
Depended and will probably not knowing that it's.
Probably not know that till early next year.
The timing that is.
Thank you David short.
Next question will be coming from the line for John Kim with BMO capital markets. Your line is something.
Thank you good afternoon.
David you provided the monthly trajectory of both when collections and deferrals, which have been improving sequentially.
Wondering if you could provide the same details about how rent abatements have been trending over the past few months.
Yeah, I would say are way down and the fact is.
You know since we're not closed.
You know the renovate mum was around the period of time were close so.
You know now that essentially other than the California situation, we're not closed.
Are there might be an abatement here or there are but it's generally.
I would hope well past us.
Okay. So this is not a case, where the collections were favorably.
Reported because of the abatements going up as well, okay. Yes that now I've said that it might text and I think that's very important to.
To reinforce so our collections that I quoted you.
We're were based on our rent roll that we sent out that we built so if we took abatements that percent would be dramatically increased okay. We gave you the rent roll period ends of story.
Pre abatements. So if you took the abatement our collections would as a percent would be much higher but we chose not to not to do it on that basis.
Okay. Thanks for the clarity sure.
Next question will be coming from the line. If then Steve O'neil with Green Street Advisors. Your line is open.
Hi, Good afternoon could you share house.
Good could you Cerro Sop shopper traffic and tenant sales that your domestic centers wasn't July compared to the prior year.
We don't get July infill.
Basically August twentyth so.
We don't get that near until the end of the month.
Is there any color you can provide on maybe just near term since reopening like ours is tenet is foot traffic down 50% of the down 20% any ballpark figure you could provide us where that's probably get domestically. It's all over the board and again I said earlier events that you.
No. It when we first opened it actually what we were.
It traffic was down but conversion was was high and you know as cases rise frankly, the consumers being cautious and traffic is down I mean overall traffic is down.
But it's so.
So location driven.
Yeah, and and geographic.
Driven that I'd hate to give you a national a national average it really is a function of when we opened and whether or not told that resurfaced in those markets.
Fair enough and then he just is there any more color you could provide on a geographic differences like which regions are performing much closer to normal on where the so a lot slower.
Well I think when we first opened.
Look I think the hardest hit areas continue or in that tourism areas.
You know that is and as you know that's.
You know that that's important do our industry in totality.
That's been and continues to be the worst performing.
Frankly the.
The the locations you know in early.
Early when we got open the consumers excited to get other house, we saw so basically the sunbelt southwest west was not to that outside of the tourist areas.
So with.
Obviously increased in those areas.
And.
That's had a.
Slowdown for sure northeast was late to open.
Now I mean, frankly, we just opened.
You know the northeast basically at the end of.
June and ER and in some cases.
Youre in July. So it's you know we really don't have a lot to tell you on that but traffic has been slowly building.
Ex the tourist areas.
I appreciate that color one more quick one for me what percentage of your contractual rent is correct.
The second quarter occupancy.
I'm, sorry, you broke up there.
So I'm sorry, I asked what percentage of your contractual rent is currently in bankruptcy.
And then second quarter occupancy.
Uh huh around four four ish percent that's in bankruptcy that that flew through the second quarter.
Okay. Thank you sure.
Yeah.
Next question will be coming from the line of floor is fun tie column with Compass point. Your line is open.
Great. Thanks, Thanks for taking my question.
David.
Clearly the retail industry, it's it's a facing some headwinds right now.
And you've seen the the non essential retail essentially being mandated shots as you look forward does this change your thinking on how your malls are going to look and also how your outlets are going to look and in particular.
Obviously in Europe, and Asia, what you see in lot of the malls.
More than in the U.S. It is grocer anchors I do you envision more grocers are at Simon malls in three years time, and maybe also comment on your view, particularly regarding the outlet and maybe.
Using the the.
You know the prevalence of of apparel, and maybe adding other things to a two year I'll let properties.
Well I'm, a big believer in the outlets and that Europe is any indication the outlets across Europe, and Asia or basically.
Almost back to where they work.
And so I think the big issue on general the outlets is just.
No we don't have cope with yet.
Stabilized.
Obviously, we got some retailer.
Bankruptcies and whatnot. So we're gonna have to deal with that said all of retail real estate in effect, though the outlets as well, but I don't I don't think there's anything.
[music].
You know dramatically broken with the outlet business I think it's just a function of.
I was getting people.
Back to where they feel comfortable of no getting other houses and and shopping and they really like the outlet product. So I'm not overly worried about it obviously.
Outlets that are in tourism areas are going to be harder hit.
Or you know just whether its domestic or international tourism, just because of lack of Ah.
You know general mobility or I'm hopeful that yes that may take some time, but eventually.
We will get passed at the duration or that could could be some time could be a year or two but will be a will be passed that.
You know listen to the and then the.
You know I.
There will be a.
Continual change with football product.
No I mean.
We do think that's going to present some opportunities are we probably have too many department stores per Dick ball, but generally the real estates really good and you know we're going to densify I think the idea that what we had the was working on.
Overtime will be will continue I mean, we may you know we may have to get through this.
Rough patch that the industry is going through but you know the this is good real estate that can be redevelopment or basis is very very low our basis in the department stores, whether through leases or.
It is very low so I think they'll be.
A number of opportunities for us to redevelop that real estate, so I do think.
Earlier question was you know we have too many malls shore.
What do you know.
[music].
They'll be will be you know the malls that ultimately survival will benefit from that contraction and look who knows I mean, you know there's all sorts of ideas floating around about what the mall can do and holliston service to community.
And we continue to work on a lot of those things. So I think I think great real estate will always a way out way you know.
And I just think we got to continue to evolve the product.
Which we were making very good progress on and we'll continue to do so.
And would that potentially includes you know it you know enhanced or increase grocery exposure in malls.
And your view on hopeful I hope so I mean, you know their real estate requirements are.
You know.
Are you know obviously have a lot of constraints to them, so, but yes, I am hopeful that we can certainly do more business with that category.
Great and if I can have an a follow up question, maybe regarding your investment in retailers and.
Clearly, it's you know.
Some some and people see not you seem to be somewhat concerned about you know going you know outside the <unk> off the fairway, if you will and in some of your.
<unk>.
Investments it whether it's Brooks brothers Lucky brand or Forever, 21, and obviously, the big one potentially JC Penney.
Presumably the return expectations for you to do something outside of your core business has got to be higher.
What gets you.
You know what deals get you most excited.
And where do you think you're going to make the highest returns you know you can share some of that with with US well again on on we're not going to comment on.
Market rumors public rumors et cetera.
We didn't mention Brooks and.
Lucky because those are out there on the public through the bankruptcy process.
I'd say the very simple thing is I want to see.
You know in retail there is more volatility in retail for sure.
So the payback it's got to be immediately you know we're hopeful that by these things that you know.
At least on the equity I mean in some cases, you know one to two times EBITDA you know get our investment back immediately and it's got to be really cheap and you know we're not buying this these retailers.
Both arrow.
And forever 21, and if we.
You know were awarded the stalking horse and Brooks brothers, but we'll see if we win.
Could be you know, we'll see what happens lucky's in the same spot. We're finally in bankruptcy.
So I think that that we're not buying these that retail you know you know retailer today would try a trade it.
Who knows but trade is five.
You know, maybe five or six times EBITDA.
I know I mean, it's all over the place, but yeah, we're buying these things that basically.
If we have to put equity and if we have to.
No we're going to get our investment back into your one so that everything's everything else is on.
And then if you have it if you have a great brand.
Got you know listen we could end up taking spark in selling into us back for $4 billion and then.
No.
Then you'll say hey, what a good idea just give us just give us cost him to just give us time to prove our thesis right.
ER or do you ended the day, if we if we screw up we will have the lost they diminimus amount of money given our market cap.
Thanks, David.
Yeah no worse.
Next question will be coming from the line, it's Michael Bilerman with Citi. Your line is open.
Thanks, and good evening, David and hopefully, it's probably your blossom water. After 90 minutes I appreciate the sticking around.
The first question was around corporate structure and number of years ago, and we started had this conversation off and on over many years.
Right versus de <unk> and you know if you saw one of the prison, we decided to do you read.
But just given the evolution of your business and where the puck is going to becoming a little bit more vertically integrated how do you think about.
Being a read versus not being read and obviously the dividend that comes with that.
Well no real change I mean, we just we study that you know at least once a year.
What does the likely prospect of corporate income tax is going up is is probably pretty pretty high. So you know obviously, we are committed to pain or a very meaningful dividend our yield is scrumptious.
So we study it no no real intension, you know there are certain limitations or because of the restructure in you know.
You know o'dea retailers, even though we own through joint ventures that you know we're working with.
With with.
Legislators that hopefully they'll see the benefit of it I mean, we are literally saving jobs, we say.
Good zillion genetic Israeli and I mean, it's silly [laughter].
We say a ton of jobs forever 21.
Now you know a ton of jobs at Arrow.
We're going to save a bunch of jobs at Lucky and.
And.
And and Brooks and the reality is.
You know the legislators you are these restrictions on you know.
Bad income, which we're big enough that doesn't really restrict us.
At some point it could give us a headache.
We're hopeful that the you know government is focused on jobs, we know that regardless of the side of the island drawn.
And we're hopeful that common sense will prevail. This rule comes this rule is from the 1960 recent legislation.
It's irrelevant today, it's good for the economy, if we're in a position with our partners to save jobs.
I'm hopeful common sense will prevail.
But you don't feel that given the liquidity and just you know you've managed your balance sheet exceptionally well going into this and you have a kind of liquidity, but having that dividend obligation and not having complete clarity on how deep you can go in the vertical integration it doesn't sound like that altered.
Youre thinking of repurchases not read.
[noise] not not at this time.
Very good question, we think about it like I said once a year, but I'd get I do think Michael I mean look who knows but what tax corporate tax rates could go back up and obviously makes that equation.
Even in today's world, we're still profitable we'd still have even with all the update and then some you know all the problems we're dealing with we're going to have taxable income.
So you know I mean, right, we did taxpaying entity.
And I'm, not where we are hopeful that even though we're.
Completely out of favor as an investment that you know and you know it is what it is that rightly there is some attraction to our dividend paying a.
Abilities.
And you talk about jobs and paying jobs in terms of investments, you're making the retailers why hasn't never been widespread government support at the federal level at the state level at the local level for the retail industry has a whole, whereas it breaking down is it the animosity between the land.
Towards independents are just can't get together is that the leadership of the government in relations that are in the retail industry has like why.
<unk>.
What's going on like why hasn't been done for an industry that show critical to so many jobs in the country.
Well I I, just just to be clear, where we are not looking for.
You know federal government health.
Our biggest frustration is how we get taxed.
Real estate tax at the Orient tax.
Our biggest frustration historically as you know was the moratorium on the Internet sales taxation.
Thankfully the Supreme Court.
You know overruled the.
The the Quinn decision.
Quail decision to forget it's been to long ago forget to forget the name, but thankfully we couldn't never get legislators to you know tree commerce.
Fairly whether its bricks and mortar internet or without as you know unless we're wherever they had lexus.
So now that that is more or less and they left it to the stage, which I'm fine with you know pretty much everything stack a the way.
On an equal Plainfield, my biggest frustration is.
We're just we are the Golden Goose when it comes to real estate tax.
Payments compared to other real estate properties, whether you look at you know how were assessed per value versus.
You know warehouse industrial.
That needs to be addressed.
But that's a local game I mean, that's not you know there's nothing nationally that's going to be done.
Obviously, there's been a lot of jurisdictions in.
The cope with scenario that has treated enclosed malls.
A lot differently then.
In close retail even when they open forget central by the way I.
I get a central I was I had no problem with the central.
And you know the both the federal and state governments had to do what they had to do but when they open back up you know a number of states dealt with the enclosed mall a lot differently.
Then other retailers and you know we.
You know we were cleaner were better protocols, we had better air and all this other stuff, but that was a high level of frustration continues to be the cage.
As we you know see what's going on in California. So yeah, no. We yet you know trying to restructure the.
No CMBS and that we're not expecting that I don't we don't you know left the documents be the documents I got no problem with that.
But it would be nice that we just you know got a little bit of the benefit on the real estate tax and.
No treating retailer you know there's not a lot of difference you know frankly between a cosco store in a Anna Simon ball when it comes to protocols and cleanliness and air quality and by and large man, let us let us compete.
Yes.
We suffered to minus 10500 days, where we could not compete and that's what you know that's that's just not fair. So I don't want any.
Other than to the ability to compete.
Yeah.
Last question if I may just you know your reference to the early nineties made me think too.
We took a lot of those companies public right. It was chapter 11, Russia love them for the read industry and you think about where other retail landlords are today.
Relative to your position, where they don't have the balance sheet. They don't have to capital. They don't have as much institutional knowledge now have the operating history and know how that you have.
I guess, they're reacting does that put competitive pressure on new because there just trying to survive a right where so many others within that.
Vertical are so much more balance sheet challenged and have a weaker assets that they may be doing an economical transactions that that roll over to you work.
Impede any of your negotiations with tenants.
I don't worry about that one iota.
You know we.
You know we do.
Again, we I'm sure, we're going to make mistakes, but we.
We have to look at it from our standpoint.
And a lot less what others are doing.
I don't think about local.
Okay.
Thanks for the time, David Yeah. Thank you Michael.
Okay I'm, sorry, we are warbled on there, but thanks, thanks for your calls and.
Be safe everyone.
And this concludes today's conference call. Thank you everyone for your participation you may now disconnect.
[music].