Q4 2020 Kimco Realty Corp Earnings Call
[music].
Good morning, welcome to Kimco fourth quarter 'twenty 'twenty earnings Conference call. All participants will be in listen mode. Only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After today's presentation there'll be an opportunity to ask questions.
Please note this event is being recorded.
I would now like to turn the conference over to David Bush Snooki Senior VP Investor Relations and strategy go ahead.
Good morning, and thank you for joining kimco is fourth quarter 2020 earnings call. The Kimco management team participating on the call. Today include Conor Flynn Kimco, CEO, Ross Cooper, President and Chief Investment Officer, Glenn Cohen, Our CFO, David Jamieson Kimco as Chief operating officer as well as other members of our.
Executive team that are also available to answer questions during the call.
As a reminder, statements made during the course of this call maybe deemed forward looking and it's important to note that the company's actual results could differ materially from those projected in such forward looking statements due to a variety of risks uncertainties and other factors.
Please refer the company's SEC filings that address such factors.
During this presentation management may make reference to certain non-GAAP financial measures that we believe help investors better understand kimco is operating results reconciliations of these non-GAAP measures can be found in the Investor relations area of our website.
In the event, our core was to incur technical difficulties, we'll try to resolve as quickly as possible.
And if the need arises we will post additional information to our IR website with that I'll turn the call over to Conor.
Thanks, Dave Good morning, and thanks for joining us today.
I will begin by giving a quick overview of our accomplishments in 2020, and our strategic focus for 2021 and beyond Ross will follow with updates on transaction and Glenn will close with our key metrics and guidance for 2021.
For all of our 2020 was a year that will not be forgotten.
The political landscape social unrest and the responses to these events all converged in a way that will forever change our way of life.
2020 was also a year that demonstrated in volatile times. The best companies are the ones that are able to withstand economic challenges mitigate risk and take advantage of opportunities in the shopping center sector. This requires a strong balance sheet, a resilient well located portfolio and the superior management team.
Happy to report that while we are not immune to the volatility of 2020 Kimco is open air grocery anchored shopping centers and mixed use assets performed well and we have stayed strong confident and positive about the opportunity in the coming year.
Our portfolio withstood all the pandemic threw at us as our 2020 vision strategy to reposition our portfolio was validated.
Our grocery anchored essential services and mixed use assets concentrated in the strongest markets in the U S proved resilient in 2020, we saw continued improvement in both the percentage of ABR coming from essential retailers and grocery anchored centers.
Growing the portfolio from 77% of ABR from grocery anchored properties to 85% plus remains a strategic focus across the organization.
We are encouraged by the progress and the increasing level of opportunities in the pipeline. We are currently evaluating.
As part of these efforts we are pleased to share today, the upcoming opening of Amazon fresh at our marketplace. The factorial in Bellevue Washington.
During the fourth quarter, we executed 92, new leases totaling 406000 square feet, which exceeded the amount achieved in the fourth quarter of 2019.
The true test of our portfolios quality and durability as leasing and the ability to drive rent.
That point, new leasing spreads remained positive rising six 8% during the fourth quarter, we anticipate that our range between economic and physical occupancy will continue to widen as a precursor to future cash flow growth.
With the help of our nationwide network of relationships tenants brokers and our in house team, we are experiencing robust demand from our essential retailers, who continue to take advantage of the COVID-19 surge that allows them to boost cash reserves invest in existing stores and expand their store portfolio to better serve their customers.
Also laser focused on keeping our existing tenants and continue to do everything we can to help them overcome the pandemic.
To be positioned to prosper.
Our tenant assistance program, our tap helps small businesses navigate the new round of PPP funding after successfully helping our small shop tenants navigate the first round of PPP funding. We believe we are aligned with best in class partners to continue to aid our small business tenants and accessing capital at their most critical time of need.
Our strong balance sheet, well positioned portfolio and tenant initiatives are all the result of our best in class team and approach spin.
Specifically, our leasing team was proactive in its efforts to work with current and prospective tenants and our financing planning technology Investor Relations and legal teams effectively navigated numerous obstacles and kept us focused without skipping a beat.
So where do we go from here.
First our highest priority is leasing leasing lease on the good news is we have visible growth in the portfolio and meaningful free cash flow to fund our leasing strategy. This has provided us the confidence to provide an outlook for 2021.
We anticipate the first half of the year to remain challenging, especially for those categories dramatically impacted by the pandemic induced shutdowns. It is worth highlighting that our team pushed this portfolio to all time high Occupancies pre pandemic and we are determined to get back debt level and exceed it.
Anticipating the speed at which we will recover NOI is challenging we do expect rents to hold up especially in our well located boxes that are in high demand from categories that include grocery off price home goods home improvement furniture health and wellness medical and beauty.
Interesting to note, we are starting to experience a rebound in both restaurant demand and value fitness retailers.
Finally on our long term strategic focus we continue to believe that streamlining the portfolio over the past five years will result in meaningful long term value creation for our shareholders. We are focused on the highest and best use of our real estate and believe the 80 20 rule applies to our assets and gives us tremendous flexibility and adaptability to create value of the fee.
Through our entitlement initiatives.
Typically 80% of our real estate consists of parking lots that are not generating any revenue and 20% of single storey buildings.
With our focus on clustering our assets in dense areas with significant barriers to entry are assets are an ideal position for growth as the surrounding areas have gone vertical.
Our entitlement team is sharing our ESG accomplishments with all local municipalities as part of our efforts to show that we will be good stewards of their neighborhoods and then we want to work together to make sure our assets continue to evolve alongside the community.
We believe it is important that our approach to real estate evolve with the changing circumstances because that is exactly what our tenants are doing.
The best in class tenants are looking at their real estate differently and in many cases, they're real estate team is now integrated into the entire supply chain.
Distribution fulfillment E Commerce and store decisions are all integrated on how to best service the customer the store, which is optimized for distribution and fulfillment continues to shine as the most economic way to get goods and services into customers' hands.
Best buy CEO Corie Barry at the CES Conference was very clear when she said physical stores are expected to play a massive role in the company's fulfillment effort.
<unk> also stated that more than 95% of sales are fulfilled by stores.
Continuing to share the words from our largest tenants.
The role of the physical store is poised to become broader than ever but the location serving as fulfillment epicenters that quickly and easily get customers whenever they need.
Put another way the convergence of retail and industrial has accelerated and we are positioning the kimco portfolio to take advantage of this new utilization by partnering with our retailers to ensure that kimco assets are optimized to gain market share and to make the stores at kimco, even more valuable and clothing Kimco is open air grocery anchor.
Portfolio provides consumers a safe and easily accessible destination for goods and services are diverse tenant mix and targeted geographic presence and the strongest growth markets supported by a well capitalized balance sheet and our entrepreneurial approach positions us to unlock value for all stakeholders in the years to come with that I'll turn the call.
Over to Ross.
Thank you Conor and good morning.
Conor discussed 2020 was a challenging year, but there are signs of life on the transactions market with deal flow starting to pick back on yield.
The overall transaction volumes from March through year end, we're down close to 85%, but there were several late 2020 deals that showcase the general theme, we have seen occurring the.
The majority of the transactions have been with essential based retail anchors, notably grocery.
For the most part size is good but too big can result in the inability to finance the large or non essential based tenancy, thus requiring a much bigger equity check for those deals.
So the smaller grocery asset the financing community has remained resilient, but again rent rolling cash flow uncertainty for the Chunkier assets have made those a bit more challenging.
Multiple grocery anchor deals have transacted at sub 6% cap rates in Denver, South, Florida, California, Washington, D C North Carolina and throughout the major primary and secondary markets in the U S.
While we are bullish on that asset type, which represent the core products within our portfolio. There was no shortage of capital chasing those deals.
As we discussed on last quarter's earnings call. The limited supply of attractively priced high quality asset versus our current cost of capital has let us to tailor our investment program.
As it relates to our structured investments program. We made two small investments on a pair of very high quality shopping centers during the quarter.
$25 million mezzanine financing on a strong south, Florida shopping center, and a $10 million preferred equity investment on a densely located center in Queens, New York, both of which will generate an accretive return versus our cost of capital with a chance to possibly acquire in the future.
Additionally, as we have done many times recently, we were able to leverage our strong tenant relationships, particularly with those that are real estate rich to uncover another unique investment debt represents significant dislocation in value.
To that point, we completed a sale leaseback transaction in which we acquired two rite aid distribution centers in California for approximately $85 million.
These distribution centers service, all 540, plus stores for the pharmacy chain in the state of California.
Right at Rite aid as re leasing these back on a long term basis with annual rent bumps and zero landlord obligation.
This investment will provide an attractive return with an IRR well in excess of our cost of capital and enhanced NAV for the company.
We continue to evaluate new opportunities selectively and believe our tenant relationships flexible structuring and conviction in our product type puts us in an enviable position to capture upside in a period of dislocation.
This is an important long term complement to our business with the one constant being our approach of owning high quality asset at a positive spread to our current cost of capital while mitigating potential downside risk.
Furthermore, we believe this approach will create a future pipeline of opportunistic acquisitions with a writer first refusal or right of first offer when our cost of capital returns with that I will pass it along to Glenn for the financial summary.
Thanks, Ross and good morning.
With our fourth quarter operating results, we delivered further improvement compared to the sequential third quarter with higher rent collections and improvement in credit loss for.
For the fourth quarter of 2020, NAREIT <unk> was $133 million or 31 cents per diluted share as compared to 151 9 million was 36 cents per diluted share for the fourth quarter 2019.
The reduction was mainly due to rent abatements and increased credit loss of $21 2 million and low net recovery income of $5 7 million.
This reduction was offset by lower preferred dividends of $3 1 million and a $7 $2 million charge from the redemption of preferred stock in the fourth quarter of 2019.
Now although not included in the Navy desktop flow during the fourth quarter 2020, we did record a $150 1 million unrealized gain on the mark to market of our marketable securities, which was primarily driven by the change in value of our $39 8 million shares of Albertson stock.
Our stake in Albertsons is valued in excess of $650 million today.
For the full year 2020.
<unk> was $503 7 million or $1 17 per diluted share as compared to $608 4 million or $1 44 per diluted share for the prior year.
The change was primarily due to increases in rent abatements credit loss and straight line reserves aggregating $105 8 million.
On the NOI impact of disposition activity during 2019, and 2020 totaling $24 7 million.
In addition, during 2020, we incurred a seven and a half million dollar charge for the early extinguishment of debt.
These reductions were offset by lower financing costs of $15 7 million.
18, and a half million dollar charge for the redemption of $575 million of preferred stock during 2019.
Although we continue to be impacted by the effects of the pandemic. Our operating portfolio has shown signs of improvement as Tom discussed earlier on.
All of our shopping centers remain open and over 97% of our tenants are open and operating <unk>.
Collections have continued to improve.
We collected 92% of fourth quarter base rents and this compares to third quarter collections of 90%.
Federal's granted during the fourth quarter with just under 2% down from 5% during the third quarter.
At year end 2028, 2% of our annual base rents were from tenants on a cash basis of accounting.
50% of that has been collected.
As of year end, our total uncollectible reserve was $80 1 million or 46% of our total pro rata share of outstanding accounts receivable.
Now turning to the balance sheet, we finished the fourth quarter with consolidated net debt to EBITDA of seven one times and on a look through basis, including pro rata share of JV debt and preferred stock outstanding the level of seven nine times.
This represents further progress from the seven six times.
And a half time levels reported last quarter with the improvement attributable to low credit loss.
On a pro forma basis, if our albertsons investment was converted to cash these metrics would improve by a full turn to six one times and seven times, respectively levels better than we began last year.
We ended 2020 with a strong liquidity position comprised of all the $290 million in cash and $2 billion available on our untapped revolving credit facility.
We have <unk>, we have only $140 million of consolidated mortgage debt maturing during 2021, and our next bond does not mature until November 2022.
Our consolidated weighted average debt maturity profile stood at 10 nine years, one of the longest in the REIT industry.
In addition, our unsecured bonds credit spreads have improved significantly by way of example, our 10 year Green Bond issued in July 2020 at 210 basis points over the 10 year Treasury is currently trading in the area of 90 basis points over treasuries. This spread is the lowest among all.
<unk> peers.
Regarding our common dividend, we paid a fourth quarter 2020 common dividend of <unk> 16 per share.
As such we expect our board of directors to declare the common dividend during the first quarter of 2021, reflecting a more normalized level that at least equals our expected 2021 taxable income.
NASA guidance, while the pandemic and its effects on certain of our tenants continues we are comfortable establishing NAREIT <unk> per share guidance for 2021.
Our initial NAREIT <unk> per share guidance range is it salary came to $1 24.
This is also a wider range than we have historically provided take into accounts the potential variability on credit loss levels.
The ongoing pandemic.
Other than some other assumptions include.
Flat to modestly higher corporate financing costs, and G&A expenses as well as minimal net neutral acquisition and disposition activity.
This 2021 guidance range assumes no transactional income or expense no monetization of our Albertsons investment and no additional common equity issued.
Lastly, keep in mind that our 2021 first quarter results will be relative to a pre COVID-19 first quarter in 2020, notwithstanding the expected optics of the first quarter results on NAREIT <unk> per share guidance range of $1 18 to $1 24.
<unk> growth over 2020 at both the low and high end of the range.
And with that we'd be happy to take your questions.
Before we start the Q&A just wanted to let you know that the lineup for people in the queue is very deep so in order to make this efficient again, just a reminder, that you may ask a question and then have one follow up and then you're more than welcome to rejoin the queue. So we can get through this pretty efficiently with.
With that you could take the first caller.
Yeah, just kind of give them instructions. We will now begin the question and answer session to ask a question you May press star on the Touchtone phone, you're using a speakerphone.
Please pickup your handset before pressing the case okay. Our first question is from Rich Hill from Morgan Stanley Go ahead, Hey, good morning, guys.
I just wanted to talk through the guide a little bit.
Yeah.
On my perception is that you guys have.
History of being conservative and when I look at the guide the high end of the range. It looks like it's just an annualized <unk> of <unk>.
The low end of the range looks looks fairly low can you just maybe walk through that and how we're supposed to think about it and again I recognize given the uncertainty in the world why you'd want to be conservative so I'm not.
Calling you out for it I'm, just trying to understand a little bit better and where the risk might be to the upside or on the downside.
Sure Rich.
So it's nice to hear from you.
Look we've never given guidance that a pandemic before we think it was important to give guidance.
Really to showcase that we have a good handle on the portfolio on the cash flows.
Clearly theres a lot of unknown, that's still can exist in the coming year, we're not out of the woods yet on the pandemic. If you think about the variants that are out there on the virus. If you think about the distribution of the of the vaccine Theres a lot of things that.
That could really dramatically impacts some of the returns that we're anticipating.
And we thought that it's important to showcase growth and showcase that we believe that we are we have a defense defensive nature portfolio debt is now sort of up and running even in the midst of.
On the pandemic.
But clearly there's a lot of unknowns that could impact the earnings potential for 2021.
Yeah, Brian Let me just add a couple of things that May help you also.
The credit loss levels, obviously on a pretty wide ranging and that's a big part of what's in those guidance numbers. So we had as I mentioned $106 million of credit loss between abatements.
<unk> reserves and straight line reserves. So we are still we baked into this guidance still another 80 to 100 millions for this year. So that's a component of what's in there. The other thing that I want to bring out also as you know we do have less interest capitalization, because because the projects that have come on.
On line and net interest capitalization will be $8 million to $10 million less for this year.
And similarly, we're tapping less construction payroll of another $4 million to $6 million.
So take take those into account the cash.
<unk> differences when you're looking at the guidance as well.
Got it that's helpful I'm not asking any more questions because I don't want Bush Nikki tracking me down the telling me I asked too many so thanks guys.
Okay.
Our next question is from Caitlin Burrows from Goldman Sachs go ahead.
Hi, Good morning on maybe just in terms of the deferrals that you did grant in 2020 to the tenants that needed them.
Could you go through the expected timing for receipt of those and to the extent that any have been paid or should have been paid by now how is that outlook for receiving the deferrals on time as Kelly.
Yes, so the deferrals that we've done.
Most of the deferrals will get.
<unk> to get collected over the next 18 month period. So a good portion during 2021 and some into 2022 of the deferrals that we have built most of you know in the fourth quarter, mostly in the fourth quarter over 90% of the ones that we have built have actually been collected so so.
Far it's going pretty well.
Okay.
And then in terms of on the sectors that look like they're weighing down on the rent collections, our services, which isn't surprising but there are also a question rates under 100% rather of categories, including essential ones. So just wondering if you could go through does it seem like rent collections are plateauing or what's your outlook for when the essential tenants in those non Sn.
<unk> won but not directly impacted by capacity constraints.
Could improve to 100%.
Well, we've never really had a 100% I think that's a starting point right for them.
Most part on a historic basis normally we would collect around 95% during a given month and then over the following months, we would collect the other.
3% to 4% and then you have your credit loss that comes into play.
On.
You know when you look at.
The collections again collections.
92% for the quarter, so definitely we are seeing improvement.
91% collected so far for January we.
We don't think that we've hit the peak yet we still have more to do and again, we're still being impacted.
On the closures that have occurred suddenly out on the west coast.
Restaurants on a lot of the non essentials, but.
Collections are continuing to improve.
Okay. Thank you.
Our next question is from Samir Khanal from Evercore go ahead.
Greg Good morning, Conor I'm, just trying to get a better feel for that.
Of the recovery of how the recovery plays out over the next several quarters and sort of the pace of that recovery.
Assuming if we're assuming occupancy trough, let's say in the second quarter or third quarter.
Quickly do you think you can get back to sort of pre pandemic levels right.
Occupancy at midnight age given.
Given the amount of leasing in the robust demand you've been talking about.
Yeah. It's a good question I think a lot of it has to do with I think the demand is going to be there first and foremost we're seeing it now come back on the small shop side, because originally the box demand or the anchor demands never really subsided. So clearly it was heavily weighted towards essential retailers through the past few quarters and now you.
Moving to see some of the non essentials come back for any type of well located anchor box that's available.
I would anticipate that to come back first but now what's interesting is the small shops are starting to come back and we're seeing it a pretty wide spread demand sources.
I'll have Dave Jamieson coming on on some of the small shop demand that he's seeing.
Yeah, No I appreciate it I mean right now we're seeing it on the.
There are the restaurant on the service side is actually coming back and surprising way and in a positive way and I think what you're seeing is our operators entrepreneurs restaurant tours.
<unk> seen the the the vacancy within high quality portfolios in the near term as a way in which to either expand their existing operation or get into markets that the otherwise we're challenged to do so and so we will start to see that pick up and when you look at the velocity in Q4 of 2020.
I thought that was a really encouraging sign.
From a from a lease up standpoint on what we're currently seeing as we move through Q1 is that that momentum is continuing to build so I think the one the one good thing is that the vaccine has provided some endpoint. The idea that you know at some point and hopefully they're not too distant future we'll see.
This pandemic somewhat behind us. So people are starting to prepare investors are starting to prepare for what that will look like and how do they set up their business accordingly.
And again on the non essential side.
You know, we say non essential but when you think of the the performance, especially with the investment grade retailers and how well they've done from a public standpoint, you know through this pandemic from a stock share.
So it's they're there they're really in on on sound footing and see this opportunity to expand their market share.
And and again enter into higher quality portfolios.
Knowing that that window will only be open for a limited time, so we're cautiously optimistic about the future.
And then I guess as a follow up I mean has your view changed on an NOI growth, let's say not for 'twenty, one not so much focus on 'twenty, one, but let's say.
This peak to trough and of 19 to 21 22.
Has your view do you feel like you can do better than down 10% I mean.
How are your views today, how do they compare to let's say end of <unk> last year and even into <unk> of last year.
Well clearly the demand side has changed since we talked about it in Q2 Q3 of last year.
And you know I think that there's still a number of variables there on the NOI because I think the the biggest variable is is on the most impacted categories and how theyre going to weather through these next few quarters entertainment restaurants fitness.
Services those are really where.
There's a pretty wide spread of.
Scenarios that could play out we feel good about pent up demand, we do feel like there's going to be a lot of revenge shopping and revenge spending.
I can't tell you how many conversations I've had about what restaurants people are going to go to or what you know fitness club theyre going to go back to or what what trip, they're gonna take so I think if it if we think that the vaccine plays out and Theres not a variant of the virus that doesn't have a another sort of wave of infections.
We clearly have some visibility now that there's some green shoots on the horizon that we're cautiously optimistic about.
Great that's it from me thanks.
Our next question is from handle so same juice from Mizuho go ahead.
Thank you operator a zone.
Hey, good morning out there guys.
Question on redevelopment.
Pipeline here about people like appointment at year end, including the New Pentagon Centre.
That's up.
Pretty meaningfully from last quarter I.
I guess are we back into redevelopment.
Game here, how do you foresee the near term prospects for the pipeline what type of yield how large will that.
He funded with disposition proceeds or perhaps.
Some of the Albertsons stock now that the window is open for for some of that.
Sure I can start and Dave can give some more color on it.
What you've seen in our supplemental that we've added the entitlements that we've achieved over the past five years, we believe there's a lot of value to be created on our asset base just on the entitlement initiative.
And then when we look through is the is the decision tree of how to activate those entitlements and what we've done over the past five years as we've sold some entitlements.
Roundly, some entitlements and we've joint ventured some entitlements to unlock that value and depending on our cost of capital depending on the supply and demand in that in that trade area, we'd really look at the spread to our ROI, what the exit cap would be and trying to have a 200 basis points spread there between what we believe we can deliver the project debt and what we could sell the project.
And so Pentagon, obviously is the one where we feel like there's a pretty unique set of circumstances. There. If you haven't seen the Amazon rendering of the helix and what they're doing right across the street from our Pentagon Centre, it's gonna be pretty dramatic and with the success of the witmer.
And some of the cap rates that are traded in that trade area, we feel very comfortable with adding that to the pipeline in a joint venture with CPP, we have a very solid a multifamily expert that helped us with the first tower. That's also helping on the second tower and we feel like that's the right project to add to the pipeline.
But going forward, we're going to be very selective we do like the initiative of ground leasing a lot of our entitlements and we feel like that's the way. It did not have a significant amount of capital tied up into these larger scale projects, but we loved the smaller scale projects that are double digit type returns.
Where you're adding an out parcel or a pad with a drive through our expanding on existing tenants. Those are ones that typically run in the range of $75 billion to $100 billion, a year and have that double digit type return, so you'll see that being consistent but we will be mindful of how much we add to the pipeline going forward it would be very selective on that.
Okay, and then any comment on that you'd make on albertsons. The window understand opened earlier this year for a portion of the essentially all the stuff on the shelves. So curious have you can comment and would that be to fund some redevelopments debt pay down.
On some of these mezzanine debt what youre looking at curious what the catalyst would be incorrect.
Hi handle its Glenn.
As I mentioned in my prepared remarks that the guidance that we have has.
No albertsons monetization in 2021 in it.
Again, we will monitor the investment obviously very closely on.
And it's really geared towards debt reduction more than anything else. That's what we've kind of earmarked those proceeds over time for <unk>.
Again, you know cash is fungible, but again, we think of it more in terms of debt.
On the ability for further debt reduction as we go forward.
Got it got it thank you guys.
Our next question is from Derek Johnston from Deutsche Bank go ahead.
Hi, everybody. Thank you.
So omni channel and focus trends have been very encouraging and you actually pointed them out pretty well on the investor presentation. What's the driver. Besides COVID-19 is it that fulfillment is easier at the local store level, our retailers using their store fleet now in lieu of possibly more.
Expense of industrial or distribution facilities. So as you talk to your retailer management teams like what are the key drivers that they speak to with would be an increase in this trend.
Yeah, you're exactly right and I think when we have open dialogue with our retailers. They are looking at their real estate differently and they're seeing their store base are they distribution fulfillment point that can solve for the last mile. The last mile is something that's been tried to be cracks now for a number of years and with focus.
With curbside pickup.
You have to have that amenity available to your customer to offer a suite of services.
What's being whats being unlocked I think as the stores being optimized to service that last mile in more ways than one and you start you're seeing.
The changes being made primarily from the best in class retailers as they set the blueprint for others to follow but it is very clear when you look at who are the most successful retailers are but the store is being utilized as that last mile fulfillment point.
And I wouldn't be surprised if you start to see more incentives for customers to to drive to the store because the margin is higher there and they can take advantage of that by incentivizing them with coupons or other offers that really can get people to take control over when they want the good how they want to.
Good and it does drive up margin for the retailer so theyre looking at it very differently.
Okay. Thank you that's helpful. And then just a very quick follow up.
Clearly a bright spot has been leasing.
Where would you say your leasing pipeline is now versus pre COVID-19 levels and thanks guys.
Yeah on our leasing pipeline is I mean, as I mentioned earlier related to Q4 2020 performance in and when you compare year over year.
Basically it was at that level of pre pandemic.
And when you look into 'twenty one.
91, Q1 is usually historically, a little bit lighter post holiday and you tend to see an increase in vacancies, which is normal but what we've been seeing is extremely encouraging so again as you know.
People are seamless opportunity of displacements any vacancies coming to market. They wanted to take advantage of it knowing that that window will close.
Yeah.
Shortly thereafter.
Our next question is from Mike Mueller from J P. Morgan go ahead.
Yeah, Hi, a quick question I guess on the Rite aid warehouse on acquisitions. So how should we think about that and what's on the table now to buy how wide is the scope for which you put capital into.
Sure Mike I'm happy to answer that so when you look at the Rite aid transaction I would just point to sort of the history of our plus business and the fact that we have taken advantage of sale leaseback opportunities many times in the past.
Most recently, obviously, the Albertsons investment, where you know a smaller component of that transaction that that maybe it doesn't get the same level of Uh huh of showcases the the bigger investment is that we were able to acquire several of their grocery stores within shopping centers that we control, where we didn't have the grocer.
You know dating a little bit further back we had a very successful transaction with Winn Dixie, where we acquired five of their freestanding locations and one shopping center that day, one and subsequently we sold off four of those that pretty significant prop.
Profits and held on to the shopping center in the Florida Keys, which is a redevelopment asset as well as a freestanding one in Miami, which is now slated for future redevelopment and potentially density. So when we look at the specifics of the Rite aid transaction, we're in constant communication with our retailers, particularly those that are real estate rich.
Helping them provide I would say solutions for some of their liquidity needs or desires and when this opportunity presented itself, while I can't get too much into the economics of it because we're bound by confidentiality I can tell you that directionally you know the cap rate that we were able to negotiate is significantly higher than.
The core grocery product that we're seeing transact on this market when we look at the cap rate here at substantially higher than the other distribution centers that were seeing trading in the state of California.
And lastly, I would just say that we are holding it in our Trs, which provides us the maximum flexibility in terms of our hold period in our exit strategy. So I'm not suggesting that this is sort of a wide ranging opportunity, but selectively we do like to take advantage when those opportunities present themselves.
Got it so it sounds like we should be thinking about this as a.
Some sort of sale leaseback transaction as opposed to an industrial transaction, where you're headed carving a path out now and going to the retailers and.
Trying to take down some of the industrial assets is that fair.
Yes, exactly there's zero landlord obligation here. It is a sale leaseback that they've leased for an extended period of time.
So we don't anticipate that there'll be any sort of operational.
Involvement in those locations. This was really just an opportunistic investment at a point in time.
Got it thank you.
Sure.
Next question is from Greg Mcginniss from Scotiabank go ahead.
Hey, good morning.
So it was nice to see that the new leasing volume was up compared to last year, but it looked like the re leasing volume was down compared to the 2019 average just curious what the drivers are of that where and how does the pace of 'twenty 'twenty one renewals at this point compared to the historical average.
Yeah. Thanks, John This is Dave it's a great question. So on the unreleased seems obviously some of the impact was for those tenants that vacated so that that would drive down the average a little bit as a result of the pandemic as we look forward into 'twenty and 'twenty one it is.
Still early obviously were only in the beginning of February but we're continuing to see some good momentum both from options being exercised as well as renewables.
But more importantly, I think when you look at that shaded the rollover schedule. The the rent per square foot for 'twenty. One is the lowest relative to the coming years and said when we see the mark to market opportunity on those years, there's plenty of room to run on the spread side, so that should give us some additional lift.
As we secured the renewals of the tendency or <unk>. They exercised options as we go Corp.
Okay. Thank you and just one more from me.
On may be more modeling related but potentially uncollectible rent adjustment in Q4 was appeared to be a $3 million positive does this reflect primarily the cash basis tenants paying debt rent or how should we be interpreting that number.
Well, Greg it's Kathleen I'll help you out there.
So if you look at the page you're really on let me take the three line items that are together, so rent abatement cash basis 10 on adjustments and then also that's come from high school friends on from a Japanese together to come up with what the total P&L lines on debt and the reason for that.
But the size of the income to find them on the adjustment line is really primarily to the weighted representing that.
So on tenants that we were looking at the reserve.
The potential for future rent abatement, we would take a reserve on that channel or is there any extra abatements as a cash you'll see it come through that rent abatement mindset that reserve that we had put out previously are slipping on that line that the uncollectible adjustment.
So really overall three lines together.
So it's not it's not some cash basis tenants paying background. Then it's just it's just reflecting the timing of the abatements.
That's exactly the timing of the reserve restaurant on actually happened.
Okay, great. Thanks, so much.
Our next question is from Michael Bilerman from Citi Go ahead.
Hey, good morning.
Conor you talked about the occupancy and lease spread likely widening before it starts to narrow again, if you can talk a little bit about the cadence that you expect throughout the year.
I mean leased and occupied space.
Sure happy to and Dave can comment as well.
What we're seeing is the demand continuing as David mentioned earlier.
On the anchor side of it never really ebbed and flowed it was pretty consistent through the pandemic as most of our essential retailers saw a lot of market share up for grab and improving their portfolio by by locating in high quality assets that werent typically available to them before I do think that the big change that we've experienced is on the small shop side.
And that's what's really I think going to continue to improve the spread between physical and economic occupancy as we go through the year.
I think historically, we were voted the Glen probably around 275 basis points wide between those two I wouldn't be surprised if we eclipsed that I wouldn't be surprised if we hit 300.
Just because I think there's a lot of pent up demand a lot of market share up for grabs.
And when you look at how retailers are thinking about this the deals they're signing today on.
Are really more like six to 12 months out before they open and so they feel like now is the time to grab market share so that when the reopening occurs there on the best position possible to soak up that market share. So we feel like with a transformed portfolio. We're in really good shape to to have that spread widen out too.
<unk> its all time high.
Yeah, Okay, and then just.
To give you a little I was going to say if you want a little perspective.
At the end of the third quarter. The spread was 150 basis points. We ended the year at 190 basis points on a historic basis. Our peak I think was about 330 basis points.
So as we continue obviously this lease up.
You know and you're seeing the leasing momentum.
On this point I would expect that we should exceed three.
300 basis points before it starts coming back down as those rent start flowing.
Right go on just sticking with you as a follow up and it's relating to the guidance on.
Thank you acknowledged it's wider and you sort of called out some impact on question.
And I appreciate having the bottom line number I think just given the amount of impact that occurred in 2020.
For Q and a likely that there are going to be.
Significant impacts during 2021 relative to those numbers in 2020 can you provide just a very detailed.
Most category line by line sort of ranges.
Especially on the NOI side, given all the abatements and.
Deferrals and bad debt and I know Theres a lot of uncertainty, but you did provide a bottom line number I would say for us it's actually having all the components are the more interesting.
An important variables and then we know how many shares outstanding you have we can divide to figure it out, but it's sort of very opaque just having this bottom line number.
And so I don't know if you can do it after the call or if there's more detail that you can provide now in terms of those impacts both on a GAAP and cash basis.
And so I don't know what I don't know why it wasn't provided so maybe you can provide a little bit more detail around that.
But again I tried to give you a little bit of flavor on.
Certainly what's happening on the reserve World again baked into the guidance there is $80 million to $100 million of potential credit loss. So you have a pretty wide gap there.
Do see what's happening on the financing costs against financing costs are relatively stable except for the you know we're going to have less capitalization and as I mentioned, so there's about $8 million to $10 million less of capitalized interest in 2021 baked into the guidance versus 2020.
G&A also was it was relatively stable we did have a voluntary early retirement program, which we do expect would create savings of somewhere between four and $5 million a year.
That's being offset by lower capitalization of construction payroll somewhere between four and $6 million mm C. C. You had those components.
Those are the major drivers of what's sitting in there against the NOI itself you know.
It is really dependent on getting further lease up as well as just how much impact from is on the credit book, but we'd be happy to provide some further detail after the call.
Yes.
It's very clear, there's a very clear summary of going from <unk> numbers, and taking the 31 and breaking it out to its component parts and then matching that up to what the go forward plan is because it's a very opaque.
When you throw numbers out on the call I think having it in a clear format and I really appreciate the bottom line number it's all the components. So that theres no ambiguity about how numbers are being cut.
Great.
Yeah, Michael It's David Nicky also in terms of the annualized Glenn mentioned I mean really the high end of our range is based on the fourth quarter annualized nation and really looking at the credit loss, where it could be obviously the high end of the range represents a continuation of the reserves on the $20 million reserves, we took on a fourth Florida or.
The low end is really a $100 million and really as Glenn mentioned the lease up.
Timing and the width of the spread between the leased and the occupancy just makes it a little bit difficult from that standpoint, and really as we haven't.
Provided much differently than we have in the past in terms of the guidance, where we have here. So net neutral, but we'll see what we could do in terms of breaking it down further.
We haven't been in a pandemic before right. So I think.
So where things are much more stable theres just so many one time and impact on some of them are buried in different line items that carry just went through right. So I think it's just having net income state presentations that used to have way back when of those line items and ranges I think would be very helpful for the analysts and investor community.
Well, we will make sure to do that Michael we're always best in class in terms of disclosure and obviously theres a lot more variables on a pandemic, but we can walk you through how we came through with the with the guidance and we think it's important to have guidance out there just to show that we have confidence in the growth profile of the cash flow. So we can we can help you through the components.
Yeah, I totally agree and that's and I want them. It is a positive on the bottom line I'm just trying to get the details and who knows if there's mandated closures in your forward numbers are not at the low end and interest.
Just trying to get some of the detail around that would be helpful. Thank you.
Our next question is from Alexander Goldfarb from Piper Sandler go ahead.
Hey, good morning so.
Maybe I'll just take that just from a bigger picture perspective.
Conor.
Now that you guys are you know we're in February hard to believe that we're almost a year into this.
A lot about improvement, especially restaurants are entrepreneurs. So as we look at it you have 92% rent collections.
Deferrals at less than 2% in the fourth quarter on.
So that's about.
I'm always scared to do math on a public call, but it sounds like about 6% remaining on.
How do you feel about that 6% remaining credit do you feel like basically let's call. It half of those folks will be good the other half to 3% will go tap yoga or do you feel like where do you feel because ultimately that's the real question that we're all getting at is you're sitting here, we know there's going to be residual but we would also seem like right.
Now you have a pretty good handle on which tenants are going to make it in which tenants.
Got you guys ready to go you know padlock the store.
Yeah. It's a good question, Alex and I think it's one that changes almost weekly I mean, if you look at what happened with AMC.
That was pretty remarkable to see the stock run up and have them take advantage of it.
And so I think that you have to go tenant by tenant which.
Which we can do offline.
A lot of it comes down to the.
Categories that were most impacted.
That are still closed right or they still have significant capacity constraints and how quickly can they get reopened how quickly can they come back to full capacity. Those are all questions that are really hard to answer because it all depends on things that are outside of our control.
So when you look at how we've approached it.
Our mentality is if a retailer has kept their lights on through this pandemic to this point, it's our responsibility to try and help them make it through this last phase of it and hopefully this is the last phase of it and so that's the way we're approaching it and we're trying to make sure. We work with those tenants that have put their best foot forward to throw everything at stake.
On a flow and.
Luckily that kimco is a big partner with a lot of these retailers that can help them and and navigate the PPP funding round can structure leases to give them the breathing room to hopefully make it through but it is a tenant by tenant approach that we have done that really takes into account the category that they're in the capacity.
Transit, they're facing potentially the product that they are waiting to get if it's if it's you know blockbuster movies. So all of these things are really components that make up the assumptions that come to our guidance range that we feel comfortable disclosing and feel like it's our job to exceed it.
But I mean, so basically conor they're 6% outstanding are all those people's lights on or half of their lights are off or just maybe just some.
Big Picture, you must have some big picture views on that 6% remaining.
I can add in a little bit here, Alex Thanks, Dave.
Yeah. So you know it it does it it it it does vary as Conor mentioned, you know, but it's not to say that tend to be on collected all the tenants themselves are you know dark or are they vacated and you know we could be working out a deal where we cut a deferment early on in the pandemic and had their their collection start date.
In January but say there on the west coast and they had to go through a second closing which impacted their business more so than originally expected, we probably work with them on extending out that deferment star data and that could be in process now and just not yet paper. So that that's that's not uncommon.
These situations while in others, we're working now.
What would make a a reasonable agreement between both parties, where we get some additional flexibility within their existing lease to reposition redevelop parts of the center and we're still negotiating that so I wouldn't by any means take debt at 6% and assume that theyre darker they vacated it it is not that it is Jim.
The ongoing dialogue with the tenants there.
Okay and then just second question is Spacs are all the rage.
You guys, obviously, having success on the plus business. So are your how are your views.
Raising its back similar to what Simon is doing is that something where you would see a positive because you could raise outside capital and therefore free up kimco capital or that's not something that you really actively pursuing.
So Alex it's a good question I think obviously, there's a crazy amount of specs every day. If you remember back in June which seems like an attorney Diego We did do a press release that we were exploring from an investment vehicle when.
Then you can extrapolate from there, but we elected to do was really focus on the core business. We felt like there was a lot of blocking and tackling that we needed to focus our time and effort on and when you look at what's going to drive earnings growth, what's going to drive outperformance for kimco and their shareholders. We believed it was focusing on the core business and then <unk>.
<unk> to look for opportunities focusing on retailers that are real estate rich you know looking to take advantage of a dislocation in our sector because of our balance sheet strength because of our liquidity position and then provide that upside to our shareholders versus a separate entity.
Okay. Thanks Conor.
Our next question is from Craig Smith from Bank of America go ahead.
Thank you.
On previous calls you've mentioned, having over 10, a brochure opportunities that we're currently in negotiations on thanks.
Thanks for the mention Amazon Fresh I Wonder if you could update us where those other opportunities he stand.
Yeah.
Sure Craig that Dave we executed three over the quarter in Q4.
And the balance of the opportunities are in various forms of discussion can be early LOI stage to negotiating a lease in that population does vary.
You know as the negotiations progress some fallout some new opportunities come on but I'd say, there's our regional teams are hyper focused on exploring every opportunity with groceries at all of our locations either backfill in existing grocery or conversion two of non grocery to grocery and where.
Seeing the demand drivers from really all of all sectors, whether its the value oriented groceries have all day and lethal to the specialties.
Sprouts trader Joe's.
And others to the more mainstream.
It is really a you know an overall.
Effort and and also the the ethnic oriented grocers, whether it'd be 90 day Ranch H Mart, they're all actively expanding to two increase their market share in each of these markets. So.
We're encouraged by by that focus and by the conversations we've been having with each of these operators. So we see this as a.
Our goal long term is really to convert more.
We currently have today net of grocery.
Yeah.
Great and then just looking at Boulevard I see that it's 88% do you know what percent is opened and what is the schedule, even though those openings and then just finally, how are retailers looking at new projects versus existing projects regarding leasing.
Sure Yeah. The Boulevard I used to shop right Open day opened and and I believe October of 2020, they had an incredible opening and it was actually the biggest in there and their fleets history. So that was a that was a great first sign of what we see as the long term success of the Boulevard.
Balance of the junior box tenants are scheduled to open in the second half of this year going into the summer and then into the fall of 'twenty, One and then that will be complemented by the the small shops on the first floor that will go through 'twenty one into 'twenty two as well so that is a that's what was planned.
And we're currently on track for that.
And as it relates to the demand between new projects and existing obviously for US you know the focus is on our existing portfolio. The core portfolio. We've been very encouraged by the activity we've seen.
Both at Dania and the Boulevard through you know as we're coming through the pandemic and leasing starts to accelerate.
And when you look at the quality of real estate and the quality of the projects you know Fortunately they speak for themselves.
Can drive that drive the demand there.
Yeah.
Thank you.
Our next question is from Kevin Kim from Truest go ahead.
Thanks, Dan and good morning.
So you guys talked about some of the cadence that we should expect in 2021, thousands curious we're almost done with the first quarter.
What kind of.
On the impact do you think.
You'll see from kind of seasonal bankruptcies.
So far we haven't experienced a whole lot of bankruptcies this quarter.
Ray you can comment on the detail, but really the last bankruptcy that was of any sort of significance was back and I think it was November.
For November when I started on cheese right.
Go ahead mature center guitar Center filed on November 15th and actually came out by the middle of December.
We've had no major bankruptcies from basically three months now and you know obviously a M. C was on our radar, but with all the craziness in the market they've gotten themselves from breathing room. So.
We just keep monitoring the movie theaters and the trip from the gyms, but they seem to be coming out of this right now.
Okay.
And I know this isn't going to be a mutually exclusive situation but.
I was just curious if there is no two competing spaces I'm sure you have from high quality centers with high rent and you have some others that are maybe lower quality with low rent.
Theoretically speaking as a retailer more inclined to go after your higher quality, a higher rent location or.
The lower quality one.
And I know those aren't mutually exclusive in each retailer has a different target zone, but I was just curious just high level.
Yeah. It it. It's there are so many variables that get factored into a retailer's decision to take any particular space. You know sometimes there is a retailer that has a significant demand in one of their existing locations and so they're looking for a pressure valve to release some of that demand on one store. So they'll look at it and say for grocery there.
So maybe take a smaller format.
Our center if that was available on some people look at book and Dana trade area, and while others look to saturate it with multiple stores Ross has a double down strategy, where they will and they're higher productive markets still look to put stores almost across the street from one another so it really just depends on where.
They are in terms of their fleet strategy and how it complements.
How do they view trade areas and grabbing market share and with the pandemic.
What it's really done is accelerate I think a lot of the discussions that had been ongoing whether its curbside. Both there's distribution last mile and so those conversations are ongoing and ever changing within within the retailer world.
And so it's incumbent upon us to stay very very close to them knowing that month to month their view of a market or a state may vary and made changes to our benefits we want to make sure that we're always out in front. So long story short, it's really hard to peg it towards just one element, it's a number of attributes and variables that get factored in.
Got it I would say that retailers also are very focused on that.
The curb appeal.
And the the accessibility as well as the convenience factor so.
They.
Four wall EBITDA is usually very profitable for our major retailers and so they're really focused on making sure. They get the right real estate and right now they have been taking advantage of I think some of the the market share that's up for grabs where some of the weaker players are not necessarily defending their flank and theyre coming in and.
Being able to upgrade their portfolio quality.
Yeah, and I would actually sorry, I'd add one more thing to Congress point.
Retailers are also looking at well capitalized landlords in into this idea of curb appeal I mean, we've invested a tremendous amount of making sure that.
Our centers show extremely well and are the highest class and in any given market, which we represent but it is really long term, making sure that the landlord themselves can continue to make those investments to make it as appealing as possible to service their customers, which are the same as our customers.
And that does factor in as well.
Our next question is from Juan Sanabria from BMO Capital go ahead.
Thank you and excellent pronunciation operator.
I'm just curious if you guys could give a little bit more flavor with regards to.
On a S S. Our fad relative to your NAREIT <unk> guidance and as part of that.
How do you think about taxable income given your comments.
On on how you are at least as of that.
That kind of a worst case and correct me if I'm wrong the dividend going forward it gets readjusted.
Well you know.
You know we're targeting the.
The dividend at least to be really right at around tax.
Taxable income.
And for the most part that should bring us to a level, where our E. S. S flow would probably be in the mid seventeens as a payout ratio. So that's kind of kind of where the target is again you have the difference of.
The capital that's spent on Ti and leasing commissions and Capex, obviously that are.
The reconciliation between <unk> on the SFO.
But that's kind of where we see it net taxable income we continue to.
Look for all sorts of plaque strategies to manage it and keep it in check.
But again I think you can get a better flavor.
Once again with our board and we declare our first quarter dividend.
Okay. Thank you that's it from me.
Our next question is from Linda Tsai from Jefferies Go ahead.
Hi in terms of staying opportunistic during this time of disruption are there specific markets, where you're seeing better opportunities you know like maybe regions, where lockdown restrictions were stricter or is it not so black and white.
Yeah, It really hasn't been geographic in nature, I think it's very specific to them.
You know individual circumstances.
As we talked about a little bit previously we have started to see some additional opportunity from owners that have specific capital needs for their assets, whether its repositioning or debt maturities. So I wouldn't necessarily break it down in terms of a trend.
In terms of location Geographics or property type it is sort of a specific circumstance of that individual owner or investor.
Thanks, and then I think earlier you guys said that you were seeing more demand for space from fitness operators is this from existing ones or new entrants.
We're seeing that we're seeing demand from a lot of value oriented fitness operators. The planets. The crunches on the world, where I think they see the the opportunity here again to enter markets or centers that otherwise weren't previously available and I also think the price point that they are servicing and providing now is probably appropriate.
Brigit coming out of the pandemic to start that's usually where they see the quickest expansion opportunity.
With that I'm sure, we'll see variance of our boutique fitness that emerge as it always is the case, obviously the M.
Yeah at home the online app trends out of debt.
Yeah, no. It's been developed through the pandemic I'm sure. It's forms of that will transfer over into into brick and mortar on our four walls on that most of you will see a combination of all those come together.
Thanks.
Our next question is from Floris Van <unk> from Compass point go ahead.
Thank you van Dijk them.
Thanks for taking my question.
Conor.
And you.
You guys had some some interesting comments about.
You know your land value.
And about the obviously you're you you have indicated you're looking at.
Doing more grocery anchor deals, obviously grocery anchor adding to your existing centers, but also maybe looking at buying grocery anchored centers.
What is the how do you think about the relative value of grocery anchored vs lifestyle centers no. One seems to talk about lifestyle centers. These days and also maybe talk about the opportunity that you have within your ground rent portfolio and is that being undervalued and how do you how do you.
Look at all of those components.
It's a good question Floris.
When we see the grocery opportunity, it's first and foremost being led by the demand we're seeing from all the different grocery categories that Dave outlined.
You know its interesting theres, a big cap rate difference when you have a grocery anchor versus when you don't and we have a lot of product that lends itself to just leasing up boxes to grocery stores, which in my opinion is the best risk adjusted return we can find today and so that's where our focus is and we have these deep relationships with these retailers that are looking to.
And so we have I think a deep pipeline of opportunity there that we want to take advantage of and that may lend itself to acquisitions as well in the future, where we can buy assets that don't necessarily have a grocery component, but we have the connections that we have the wherewithal to sort of a lineup that grocery before even close on that asset because it does compress the cap rate.
Does start to generate some additional traffic flow from cross shopping that usually leads to higher rents and the surrounding spaces and that's the secret sauce, you want to sort of get that lift without paying for it. So we are encouraged by what we're seeing so far we have a lot of work to do but.
But we feel like the strategy on the focus is there across the organization on your second question between lifestyle and grocery anchored.
Lifestyle is sort of the dynamic that got hit hardest from the pandemic right. If you think about lifestyle, it's usually heavily loaded with restaurants and entertainment.
And most of those leases are percentage rent driven.
And so you sort of live and breathe with the success of your retailers and so on the best day is you're killing it in the worst of day, you're taking it on the Chin just like they are so it's one of those those product types that I think is very volatile, it's not very essential and defensive.
But there's there's opportunity there if you can underwrite it correctly I'm not sure we're gonna be playing in the in the pool of lifestyle centers, but we'd like to underwrite everything just to get a sense of where we think we can add value.
And maybe you know maybe lifestyle portions of lifestyle centers lend themselves to a repositioning to a grocery anchored center or maybe some of them can be unlocked for future densification through entitlement work. So that's where our platform really comes in and it has value because we feel like we can look at the real estate and not necessarily just judge it on on the way it sits today.
Trying to envision what should be there with them with a blank slate and then have our team go and unlock that highest and best use from that value for our shareholders and so that's the way we look at real estate.
Thanks, Thanks Conor for that.
And in terms of your ground rents portfolio and Ross maybe you can comment on this I think you have something like $100 million of ground rents I mean, the cap rates on those things are really tight these days.
And probably underappreciated by the market.
What about doing a larger scale transaction to two to realize some of that value.
Yeah, no you're exactly right I mean, I think the value is underappreciated for that product. The challenge that we would have in terms of unlocking that is that a significant amount of that is contained within.
Some of our best assets. So it's it's one thing to have a freestanding ground lease with a high credit investment grade.
Tenancy, it's another win that ground rent is contained within the heart of some of our best assets. So we we obviously want to retain control of as much of the GLA in the acreage of our best assets to enhance and create future opportunity. So we've certainly been approached.
And we know that there is underlying value and a lot of those leases, but our objective is to retain that into continued to turn that into future value because those in many cases are the lowest rent large parcels that one day it could be something significantly greater.
Yeah. The other the other initiative, we have as I mentioned is on the entitlement side. You know I think we've done a number of apartment complexes on ground leases and I think that bodes well for our future to do more of that to help unlock the value also control the real estate.
And start to continue to.
Expand that that percentage of ABR coming from ground leases, which I think is now over 11%.
Yeah.
Is there any any sort of you know can you.
Antiphon, what the what the future potential of something like a ground.
Ground rents under under apartment complex this could be.
We did start to disclose the entitlements on the supplemental and you can start you can start to extrapolate valuations there on a per unit basis, and we can help you on some of the ground lease deals that we've done so far that we feel like is a good barometer for the future.
Thanks, guys I appreciate it.
Our next question is from Chris Lucas from capital One go ahead.
Hey, good morning, guys I just wanted to go back to the dividend policy if I could normally at this point you guys would have to.
Declared a first quarter dividend just kind of curious as to whether there's going to be paying quarterly dividends should we interpret much in sort of the first dividend announcement as it relates to future run rate or is the focus going to really be on.
I'm getting to sort of year end and just paying off the taxable minimum so it could be a little lumpy.
Hi, Chris now what we're planning to do quarterly dividends as we always have and we didn't even what we did quarterly dividends even during 2020, so we temporarily suspended and we shifted the timing so.
We'll meet with our board later this month and declare the dividend for the first quarter weighted it'll be paid in the first quarter and we do plan to have as I mentioned on.
A more normalized dividend level that will reflect our core.
Closer to taxable income.
So I think you'll I think you'll see a normalized level and something that over time, we should be able to growth from.
Yeah, Chris the dialogue with the board was was was focused on really since we're in the midst of the pandemic still you know well.
Why don't we see what we collect what do we see what the rent is that's coming through the door for the first quarter before we announced the dividend.
And I think that's just a logical I think that's the way we in terms of understanding what we really have before we elect the dividend amount.
Okay. Thank you.
Our next question is from probably macro Huff from Queens two go ahead.
Good morning.
Could you. Please provide an update on on a pro forma on the stuff you're tenant assistance program and particularly as it relates to the last round of PPP loans.
Are you or your tenants taking advantage of these resources in a meaningful way in your opinion.
Also on.
More broadly speaking what is your assessment.
On the health of your low cost small tenants are you worried not so much.
We have seen good engagement on the tenant assistance program.
You know really the partners that we are aligned with our best in class in terms of navigating the PPP funding round.
The details are you know we have a couple of hundred already engaged with that with that program. I think it was Dave correct me, if I'm wrong with 300 or 400.
I think it was around three.
300 or so.
It's been so far so good but we're waiting to see obviously, how much funding day, they're able to process.
And again I think at this point in time in the cycle you know, there's there's people that need the access to capital and it was our our mission to make sure that we give them the fastest path possible to get access to that capital.
And then Dave do you want to comment a little bit about our small shops.
Yeah, but they're small shops.
We're actively speaking to each of them on a regular basis, you know some have done fairly well through this while others have continued to struggle and you know that that's no surprise to anyone.
But the small shops are the lifeblood.
We want to continue to the whole close to ourselves to make sure that we.
We provide all the resources and the tools that they need to get through the pandemic and that they are they are in the best position on the best footing to really drive on the back end of the of the pandemic. So we continue to work very closely with them and taps a great example of one of those tools that we deployed early on and we redeployed when that when the second.
On a assistance came and we will continue to modify and provide additional resources as needed to help build their business back so.
And then a second question do you think their tenant categories that will emerge from this pandemic more.
Permanently damaged and did you see any structural changes I'm trying to think beyond the temporary impact on social distancing measures on search and.
And I know your opinion about 10 on categories that this thing will take longer to heal.
Yeah.
Well I think you know in terms of structural changes again, I think COVID-19 and depend on like where catalysts to trends that were already emerging whether it's you know both this curbside et cetera. These are conversations that we've had for several years prior to the pandemic. It just pulled all of those efforts toward.
And essentially overnight, we're required to deploy and build out the infrastructure to support that so I would expect just the efficiency of how consumers and retailers engaged with each other will continue to improve and where that will create new opportunities whether it's you know.
Wholesale modifications or changes to business strategy.
It's hard to tell it really is a case by case, but I think it just does.
Gives retailers more opportunities to create touch points with their end customer.
And for US, it's important that as a landlord.
We invest.
The time and the resources necessary to make sure that you know where the desired location for those retailers and get and get built into the you know.
Social fabric and behavior of the customers to make sure that they always return back to our centers and that's where the engagement both.
To the shopper as well as the retailers really important for US is to best understand how these trends are emerging.
Thank you.
This concludes our question and answer session I would now like to turn the conference back over to David Bush Sneaky for closing remarks.
Just wanted to thank everybody that participated on our call today. Please continue to be safe and I wish you. The best during this earnings season, thanks, so much and take care.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.