Q1 2021 Federal Realty Investment Trust Earnings Call
Greetings and welcome to the Federal Realty Investment Trust first quarter 2021 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference. Please press star zero.
On your telephone keypad.
As a reminder, this conference is being recorded I would now like to turn the conference over to your host Leah Brady.
Good morning, Thank you for joining us today from that area third quarter 2021 earnings conference call. Joining me on the call are Don Wood Dan.
You just forget when do you see are doing back anymore.
It will be available to take your questions at the conclusion of our prepared remarks.
A reminder, that certain matters discussed on this call may be deemed to be forward looking statements within the meaning of the private Securities Litigation Reform Act.
Forward looking statements include any annualized or projected information as well as statements, referring to expected or anticipated events or results.
Got it.
Although federal Realty believes expectations reflected in such forward looking statements are based on reasonable assumptions at our Realty is is your operations and its actual performance may differ materially from the information in our forward looking statements and we can give no assurance that these expectations can be attained the earnings release and supplemental reporting package that we issued yesterday our.
In our report filed on form 10-K, and our other financial disclosure documents provide a more in depth discussion of risk factors that may affect our financial condition and results of operations.
We've also provided some additional information for you in our Investor presentation, which is available on our website.
Then the number of participants on the call. We kindly ask you limit your questions to one or two per person and feel free to jump back in queue with additional questions.
I will turn the call over to Don Wood to begin the discussion of our first quarter results Don.
Thanks, Lee and good afternoon, everybody good morning.
What a difference a couple of months make you know the natural positive annual spend the minimum spring fall and winter coupled with them forgot the vaccine rollout stimulus money and then it didn't cite mentality.
We got a long way in validating our optimism for a strong 2022 and 2023.
First quarter <unk> per share of <unk> 17 was sequentially better than the 2024th quarter of $1 14, a positive surprise for us and the result of far fewer tenant failures than anticipated during the quarter, but far better cash recoveries than anticipated.
As a result, we're confident enough to update our 2022 earnings guidance and provide some clarity on the next three quarters of 2020, One day I don't cover that a few minutes.
[noise] pent up consumer demand.
We see it in virtually all of our properties in all of our markets. Despite government imposed restrictions that's still persists in our markets.
And when coupled with government stimulus cash is really powerful.
P P and other COVID-19 related programs that many of our tenants are taking advantage of that serve an important role in buying time and getting both current and deferred rent eight.
The $29 billion restaurant revitalization funds earmarked specifically for restaurants and similar place.
As part of the massive COVID-19 relief Bill will undoubtedly also create strong channel tailwind for that retail category.
Well the genzyme that if authorized will allow the small business administration to make COVID-19 related grants the privately owned fitness facilities. These programs among others, a particularly good news from federal lifestyle oriented properties, which are recovering very nicely. It has quickly become a very optimistic time in our business.
Yeah as you would expect from me a warning about over exuberance. This year is an order as many retailers, particularly smaller funds along with theaters from gens are in a weakened state.
And well buoyed by temporary stimulus need more growth in their sales and they're currently generating could be viable long term business.
Having said that we'll certainly get the opportunity to succeed because traffic is back in large numbers across the board.
Perhaps the greatest indication of a bright future is the continuation of exceptionally strong leasing volumes, including first quarter deals for over a half a million square feet.
From a whole space.
35% more deals than last year is largely pre COVID-19 first quarter for 9% more GLA.
Actually 24% more GLA than the average of our first quarter production over the last five years.
By any measure we're doing a lot of ways.
Fact that it was also done at 9% higher rates than the previous tenants were paying for the same space bodes extremely well for 'twenty to 'twenty, two and beyond when those deals are earnings contributors.
The rate and volume of new deals as opposed to renewals was particularly impressive 54, new deals for more than 220000 square feet at 18% more rent than the previous tenant was paying.
What's particularly encouraging to me is how broad base, our leasing continues to be.
In the first quarter, we did grocery and drugstore deals with giant all foods and Cvs.
Did box deals with Dick's and bed Bath, we did fitness deals where the crunch and planet fitness, we did lifestyle deals with CD to American Eagle Madewell, Athleta Blue bottle Cafe coffee and a couple of dozen restaurant and specialty service oriented retail strong demand all across the board.
Particularly in California.
In fact, let me take some time today to focus their non California, because it really is a microcosm of our portfolio.
Particularly our non essential lifestyle product and in my opinion.
Leading indicator into the future of the Bethesda Row's Pike <unk> Roses, the assembly rows in our portfolio.
Whether good or bad things always see nickel first this huge and complex market.
First the Governor there has previously announced that all COVID-19 restrictions would be removed next month.
Great News.
We did 50% more data more new deals in California in the first quarter than we did in the fourth quarter, which itself was strong.
As you know, we're heavily investing in and around Silicon Valley in the north and in the greater Los Angeles area in the South.
We are fully committed to investing in California in the future.
Tenant demand in consumer traffic are among the strongest anywhere in our portfolio.
2021 should be an all time record for us in terms of the number of new retail leases, we expect to do that.
It's really hard to short great real estate in California, Despite the head.
Let's start with San Jose and Silicon Valley, which has become a beneficiary of urban to suburban migration from San Francisco to the norm.
Santana row car traffic as measured by our parking systems rose, 69% in April compared with January and is fast approaching pre COVID-19 levels.
Residential occupancy is back up over 95% after dipping two of COVID-19 low point of 91% in the middle of last year.
And as you may have seen late last month Santana row was the recipient of the first large silicon Valley COVID-19 our office lease.
As Fortune 500 cloud led software company net out.
Decided to relocate their headquarters to Santana row, and 700 Santana row, the 300000 square foot building not yet populated but previously leased splunk.
Their stated reason.
Better facilitate a winning employee experience and a more connected space.
In other words state of the art facilities and are fully in minutes environment that makes retaining employees and hiring great talent easier.
No lost economics to us versus the Splunk deal, but two more years of term and a better diversified tenant base and by the way another candidate for additional office space at Santana as their Silicon Valley footprint grows Splunk of course remains fully committed to Santana row at 500 Santana.
Now across the street at Santana West our 375000 square foot spec office building under construction remains on lease at least it has certainly been setback in terms of timing of lease up with the pause in overall office leasing during COVID-19, but we remain in fact are more optimistic about its leasing.
Prospects and we've been since COVID-19 hit and are encouraged by the office centric back to work comments made by the Silicon Valley town centers like Google Amazon, Apple Netflix et cetera.
These and others are all hiring in the South Bay and are showing heightened desire for newly constructed office space with walkable amenities and ample core.
Southern California, our prime store portfolio, which caters to a largely Latino population in Los Angeles remains among the top performing group of shopping centers among all federal centers nationwide in terms of rent collection and property operating income compared with pre COVID-19 levels.
Big assets like Plaza, El Segundo, and the point are recovering nicely and started the beach cities of Manhattan or most of it in Redondo Beach places, which are even more attractive than they were pre COVID-19.
So I guess, it's somewhat obvious conclusion here is that California is as big and complex and economy as any region can be actually bigger and more complex than most countries and as with every major market varies greatly within the sub markets, where the supply and demand characteristics of the specific real estate dictate performed.
We've got some great great real estate there.
Alright, a few other proactive comments before turning it over to Dan.
Well always a key part of our business plan, we've turned up the heat on the number and the scope of shopping center redevelopment and repositioning that are or about debate or about to be underway.
Combined capital budget in excess of $75 million over 17 projects aimed at ensuring relevant best in class community centric centers in a post COVID-19 environment.
More gathering areas more outdoor seating more designated curbside pickup spots federal landscaping covered walkways, you'll get the idea.
Everything aimed at ensuring our properties other consolidators and they're given submarket.
In terms of core developments, we're really looking forward to showing off the new cocoa walk when investors are back to traveling regular.
Today tenants continue to open where the retail space at 98% and office space, 82% under leased or executed LOI.
The initial market acceptance of this revitalized center of coconut Grove has been phenomenal.
It should only get better over the next 12 months as more and more retailers open their doors.
Heading north the Darien, Connecticut, we're very bullish about our mixed use neighborhood, that's well under construction here, especially given it's a perfect location for a hybrid New York City work model.
For those of you who live near are familiar with our project you should start to be able to get a sense for what that mixed use development is going to feel like as construction and leasing move forward as anticipated.
Office leasing activity has picked up markedly this past quarter at 909 rooms.
Earnings were <unk> 75 per cent of both.
In GLA and or 219000 square foot office building is either unbelief or executed LOI not only activity, but dealmaking feel so much more productive than it did just a few weeks ago.
At Assembly row, whom that is just a couple of months away from opening their new U S headquarters and welcoming employees back to work and.
And we will begin to market our <unk>.
And separately will begin to market our residential project there in earnest this month.
Like in Poland, or Pike, <unk> Rose office leasing activity has picked up here to not to the same extent Boston Metropolitan area is poised for recovery, but clearly lags behind what feels feels the others what by what feels like several weeks or a month.
Okay from developments and Redevelopments acquisitions core.
Our first acquisition of 2021 last week in the form of Chester book Shopping center in the affluent first strength easy suburb called Mclean, Virginia.
We paid $26 million, an initial five GAAP for an 80% controlling interest in this 83% leased Safeway anchored center and where the market repositioning plans.
Under market in place rents, we expect strong short term growth and significant value at.
We're also under contract and in our due diligence period. Several other acquisitions that have some negative surprises will close later in the year I'm not ready to talk further about them at this point, but more to come here over the next few months.
Okay. That's about all I have from my prepared remarks today, let me turn it over to Dan I'm always happy to entertain your questions after that.
Thank you Don and good morning, everyone. Good afternoon, everyone.
To Echo Don's initial comments, we've been the beneficiary.
The broad based recovery that the entire open air retail real estate industry has experienced the first core.
We significantly outperformed the quarter reporting oh per share of about 17 up.
3% sequentially from <unk>.
All ahead of our internal expectations.
We went from the dark days of December and January were government mandated shutdowns at our markets impacted over 90% the federal of assets and.
We experienced weaker consumer traffic and collections and prior months to now.
90 days later, where after another round of PPP supporting our tenants successful vaccine rollout and reopening of our markets all make things seems somewhat sustainable give.
Given this increased stability, we were able to beat our internal forecast.
Higher revenues in Hawaii broadly from higher collections and forecast in the current period and from prior periods as well.
Less fallout from small shop tenants unexpected higher term fees and.
In percentage rents and forecast.
Set by higher property level debt.
<unk>, primarily due to snow.
Positive trend COVID-19, Collectibility reserves continues as we had just $14 8 million in the quarter down 20% sequentially versus <unk>.
We expect that progress to continue over the course of the year.
$10 million of that amount is driven by our strategic decision to be more accommodative with our tenants.
More on that in a moment.
We continue to prove on collections, achieving 90% of the quarter steady progress despite weakness in January due to the aforementioned shutdowns.
Our strategic decision to be more accommodative toward tenants differentiates us from many of our peers.
In our disclosure, you'll see negotiated abatements, the form of temporary percentage rent and other arrangements totaling $10 million or about 5% of billed rent.
So the core that accounts for roughly 50% of our uncollected rent.
Those agreements are scheduled to burn off over the balance of the year and into 2022.
Combined collections deferrals, and abatements total, 96%, leaving about 4% of our billed monthly rents unresolved relative to the steady state pre COVID-19, 1% to 2% level.
Another area, where we outperformed our forecast occupancy our tenants have demonstrated surprising resiliency for a combination of better than expected renewal activity and fewer tenant failures.
Leased occupancy metric stands at 91, 8% at quarter end and our occupied metric dipped below 90 to 89 five.
Both stronger levels than we predicted to start the year.
Our leased to occupied spread has increased to 230 basis points and represents roughly $20 million of ABR upside in the future and given the strong pace of leasing activity.
That spread should grow in the coming quarters.
While we still expect continued pressure on our occupancy over the next quarter or two.
Expect the trough as deep as previously feared as continued leasing activity at volumes, we've achieved over the last three quarters plus our strong forward leasing pipeline should set us up for a more pronounced growth in 'twenty two.
Now to the balance sheet and an update on liquidity.
We ended the first quarter were $1 8 billion of total available capital comprised of $780 million of cash and an undrawn $1 billion revolver.
We amended our term loan in April pushing the maturity out to 2024 with the option to extend through 2026, we reduced the spread from $1 35 to 80 basis points over LIBOR and paid down the loan balance to lead $300 million outstanding.
Completed the sale from.
$20 million of Graham Park Plaza land parcel to a regionally based townhome developer.
Please note that we do have a participation interest here, which could provide some additional upside given the strength in the server.
Anymore.
We have further solidified our well ladder maturity schedule with only $125 million of debt maturing between now and mid 2023.
All of which is secured and has earmarked for repayment from cash on hand.
This will increase our unencumbered pool to 92% of EBITDA.
And lastly, as we have done programmatically every year since 2011, we sold common equity through our ATM program.
$124 million at a blended share price of 105 to start the year.
Our remaining to spend on our $1 2 billion in process development pipeline stands at just over $360 million.
As we have throughout the past year, we sit with significant dry powder.
Now onto guidance for 'twenty, one and 'twenty two.
Now please keep in mind before I start there is still a high degree of uncertainty in our forecast given the continued impact of the pandemic on our business.
But with that being said, we are providing 2021 guidance.
And the range of $4 54 to $4 70 per share.
Despite a strong first quarter.
Some of that outperformance is not expected to be recurring.
Let me be a bit more helpful.
Think of <unk> roughly flat to <unk>.
At $1 15 to $1 20 per share.
Now the second half of the year will be negatively impacted primarily from the delivery of our large residential project at assembly row due to the negative NOI during lease up as well as reduced GAAP.
Reduced capitalized interest.
As a result figure in the third quarter at roughly 110 to one <unk> in the fourth quarter back towards the FERC first half's run rate of $1 15 to 120.
Which gets you to the midpoint of our range at 462 per share a 10 cent increase the 2021 guideposts, we provided on last quarter's call.
Assumptions behind this guidance.
Comparable growth of roughly 2% as we expect some choppiness over the next quarter or two but we do not expect to have term fees in 2021 at the same levels of 2020, or 2019, which were both north of $14 million.
Please note that comparable growth as a metric continues to have limited utility in this environment.
Collectability metrics should improve over the course of the year, but we will not return to pre COVID-19 levels until sometime in 'twenty two.
As discussed we expect lower occupancy levels in the next quarter or two before stabilizing later in the year, but remain optimistic that it will not be as bad as previously.
Targeting a trough in the 88% range per occupied percentage with the lease percentage remaining above 90%.
G&A will average roughly $11 million to $12 million per quarter.
On the capital side, we project spend on development and redevelopment of roughly $350 million to $400 million.
And contributions from our large development projects.
We'll be modestly negative in 2021 P. O Y from Coco walks lease up will be more than offset by bringing online the phase threes at both Pike, <unk> Rose and assembly row, including the aforementioned building, which as I mentioned are initially dilutive during lease up.
We project another $150 million of opportunistic equity issuance on our ATM over the course of the year and as our custom this guidance assumes no acquisitions or dispositions over the balance of 'twenty one.
We will adjust those as we go however.
Our recently acquired adjusted our shopping center Demographically strong Mclean, Virginia is included in these numbers.
For 2022, we are providing a range of $5 five to $5 25.
Which represents implicit double digit <unk> growth from 2022.
This is being driven by lower COVID-19 collection challenges as deferrals or repaid an abatement agreements earn off.
The expectation of growing occupancy levels back into the low ninety's and stronger contributions from our development pipeline is leasing activity more meaningfully translates to Peel off.
More detail on 2022, as we get further into the year.
And with that operator.
Please open up the line for questions.
At this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that Youre line is from the question queue. You May press star two if he would like to remove your question from Mchugh from.
Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
One moment, please while we poll for questions.
Our first question is with Samir Khanal with Evercore ISI. Please proceed with your question.
Hey, good afternoon, everyone.
Hey, Dan can you provide some color on the guidance for the year, mainly what are you assuming to get to the low end here.
54.
Well I think theres, a fair amount of uncertainty still as well.
Sure.
I think.
Relying upon I think better performance from <unk>.
Keep your money and so forth.
Let's wait and see how well our tenants do.
Uh huh.
Later in the year to see how well they perform without PPP money and so forth.
Think that if the expectations that net cash collections generally.
Our consistent with where we are we have more weakness.
Weakness in occupancy, where we're probably at the lower end of the range closer to 88%.
Hum.
A driver there and then it's also.
Continued lease up.
Perform over the course of the year.
Okay got it and then I guess Don from My second question is on transaction I mean, how do you think about your acquisition strategy today, we're sort of on the other side of COVID-19 I mean, do you find yourself targeting kind of the non gateway markets, giving them a great migration trends, we've been seeing are at sort of.
At the same as what you've done to kind of you are you targeting sort of coastal markets. At this point, yes, no Sameer. It's it's a great question you know it is.
There's a number of things that have become really clear doing COVID-19 from my perspective and that is the migration that is so talked about is largely from the city. So the first ring suburbs.
And so when I say I see what is happening in the places that we're at I know that.
We're going to continue to invest in those places for all the reasons that we felt good about them for all those years. So the first thing is you should feel you should understand that is that federal is very committed to the markets that were in wood for future acquisitions.
Second is it's an interesting concept I've talked in the past about about Arizona I talked in the past about.
South and west.
Acquisitions, but you know what that's mostly about is the is the reality that.
For stuff that we want and that will not change. It is the high quality stuff that has leasing and redevelopment potential we need a few more ponds sufficient if you will because we are.
And it just seven or eight markets and it is pretty clear that markets like Phoenix, and Scottsdale markets potentially like like like Dallas, maybe Atlanta will see certainly south Florida.
The similar characteristics to those markets that have worked real well for us. So you know the stuff that we've got tied up that I can't give you too much on.
I can tell you that.
One of those assets are in an existing market that we're in one of those markets.
The new one.
Terms of the southwest as you might imagine so I hope, we get both of them over to the over the transom their book, but really what that's about.
When you invested in federal you invest in federal to look towards those markets with high barriers to entry lots of jobs, great education and includes the ones that were in and yes. It includes a few new ones potentially over the over the next several years, so trying to think about it that way.
Thanks, so much.
Our next question is with Derek Johnston from Deutsche Bank. Please proceed with your question.
Hi, everyone. Thank you.
Okay. It's no secret that you have the highest ABR among your property type of peers.
Wood wood, Brent rolling a bit lower actually be that bad of a thing.
This significant spread to peers and of course acknowledging the quality.
I guess the question is how do you look at balancing occupancy and rent growth in this emerging post COVID-19 environment.
Well, it's a great question Derek.
As you think about it.
Conversation about rents.
Has to be talked about in the same conversation as productivity.
When you think about what it what the occupancy cost is a particular retailer retailer.
Is looking to make money and create value and that's going to be very dependent upon what it is that they do.
In topline either onsite or in their total business as well as the cost structure throughout the whole business. So I know what he just said it's obvious but it feels like we sometimes so focus on the absolute rent number we don't focus on the business that effectively is there that is creating value for that that particular companies.
There is from shareholders so from a from a rent perspective.
I can tell you I feel pretty darn good that that we will actually have enhanced demand we have seen.
<unk>.
At our properties now.
Got it.
That doesn't mean you won't.
Accommodations, if you will during during.
During COVID-19, we certainly will and have demonstrated that we'll do that probably to a greater extent than others.
<unk> are willing to do that but that's only because we have great.
Faith in in our properties going forward. So we're always going to try to get the best economic deal that we can that works for that particular tenant. The key is to find the right tenants to find those tenants that are those that can do the volumes and then those that cannot just pay the highest rents that can do the volumes to create.
The synergies within a shopping center that they make.
The whole effectively.
Impacted by each of the parts. So so you know that's not a I don't want to answer your question in terms of isn't so bad if rents rolled out.
I don't think about it that way, we think about it as as from a shopping center perspective, how do we make the overall total sales of that shopping center go up.
And because of that happens whether again, it's online or a combination of online or in store.
That happens rents a byproduct.
Of that it's not the leading indicator so when he gulfport for the leading indicator. It feels to me like you know you are competing in a business based on being the cheapest guy that's not a business I want to have anything to do with running that's no fun I thought it would be able to be the guy that you want to come to you because you can make the most money and have all youre looking at.
Cheap rent to be able to do that I think it's pretty myopic.
Thanks, Dan very helpful, Hey, I'll pass the baton. Thank you.
Okay.
Yeah.
Yeah.
Yeah are you there.
Our next question is with Alexander Goldfarb with Piper Sandler.
Please proceed with your question.
Hey.
Good evening.
So two questions first.
There've been a number.
Stories articles et cetera.
Labor shortages caused by you know basically.
People, who would I guess staff restaurants are paid board has stood at home with the extended unemployment, but actually taking jobs.
Across your portfolio or any of your sort of lifestyle tenants youre experiential tenants who would have.
On the labor front as part of their offering or any of those tenants expressing to you.
The issue with the ability to hire labor or across your tenants, they're not having a theyre not seeing that impact.
Oh, no I well first of all there's two questions there.
Alex first is are they expressing to us no not particularly.
But I don't know why they wood that's not the same question is are they experiencing problems in getting labor in the answer to that is obviously, yes, but I don't need to know that as a you know what the landlord because it's not.
Particularly germane to me as a landlord.
In the short period during COVID-19.
It's absolutely impacting I bet, you most people who have either been newer restaurants, not even restaurants to a store and kind of seen the understaffing at persist right now and in some cases quality labor force. Its a problem I would I would not candy-coat that one bit now.
It's good to be the landlord effectively because we're talking about commitments for the long term and I do not expect this to be.
A participant.
In terms of being able to find it but right now with unemployment where it is with the state of mind.
That that kind of the the country has been enduring this I absolutely believe that there are numerous businesses not just restaurants that are struggling to find qualified.
Okay and then the second question is you laid out guidance for this year and and guidance for next year. So I don't think we're expecting the 2022, but Don telling you over the years you don't lay out anything unless you're absolutely certain that you could achieve it which then suggests that your real.
2022 number is above you know the $5 25 that you laid out at the top end. So just help us walk through why we shouldn't believe the real number is better than the range that you laid out.
Well I guess the basic reason is your logic is flawed.
I mean number one I am certainly not.
Something out because whatever your words, where they are absolutely positive.
Seriously.
Here's where we are we've got lots of.
Accommodate of deals that will be burning off we know that when they burn off day one.
If we turn to two rent now hopefully those tenants will be able to pay that full rent in and continue to do that we know that certainly we've got.
Net development.
Projects that are being delivered of force when you deliver a big residential building there.
Elution associated with it I mean, we all know that that's how it works.
On your way to creating.
A bunch of value there we know.
The volume of leasing that we've already done and rolling into what income stream, that's going to produce is pretty predictable and so kind of like I said on the last call Alex 'twenty two for us isn't it.
Many respects more predictable than it is in.
In 'twenty, one for any particular period and I think that that's still.
Hangs out there now so the again the here comes the bridge from from those comments too and therefore, we need to flow through the numbers of 2022 that we've laid out I don't know how to get there I mean, there is we tried to put out a range there as best we see it today based on those things going away.
The accommodations going away the developments coming on their impacts positive or negative associated with it and the leasing that is being done those three primary thing and we get comfortable that that for that period of time, we should be in that range lots of things could go wrong from there and a few things could go right.
So you're right I mean, let me tell you we're gonna be due at all we tend to blow through those numbers.
Please don't take that as a de facto.
Given that that can happen because I don't have that much of a crystal ball and I don't know if that's helpful or not but.
Just the way you characterize it didn't suggest.
The way I feel.
Well no I mean.
It's a positive for you right you guys had in pre COVID-19 hadn't intended tendency to beat and raise and that was the hallmark of you guys and it's baked over time of your track record, which is kudos to you right.
Oh look I appreciate that and you can bet that that's what we will try to do all the way through but it is I just didn't want you to take it as far as it did.
With respect to the undoubtedly this is what's going to happen because you'd deal all up better than I am or any of us or if you could you know if you'd be able to be that precise.
Okay. Thank you.
<unk>.
Our next question is with Katy Mcconnell from Citi. Please proceed with your question.
Great. Thank you.
First of all we very appreciate the added disclosure on the 2021 and 2020 guidance.
And to just dig into the drivers a little more could you provide some goalposts around how much genome and completion of leased assets.
Tribute into the range EPS and I assume that one of the main drivers with a wider range in 2022 in particular.
So we focus on 'twenty, 'twenty, two or 2021 and 2021.
Contributions to <unk>.
From development are going to be actually negative.
We had highland it's actually going to be what we're focused on is on 22.
We've got primary drivers being the two big buildings.
At Assembly.
They will begin to contribute in 2022, what will not fully contribute until 2023.
Cocoa work should begin to stabilize in 2022.
And and then hit a fully a full run rate at some point.
Over the course of the year as should at some point the building here at Pike <unk> Rose.
Yes, I think that there should be probably contribution.
And then around.
An additional.
$10 million of additional incremental.
Relative to 'twenty one contribution.
Over the course of the year.
Okay to your question is is that right.
The if you think about us delivering.
Assembly is an easy one to understand right, we're going to deliver.
This year.
Big residential building.
The pace of lease up.
How do you get through 500 units.
Is going to determine in some respect how quickly the dilution burns off when you start being accretive.
What kind of rents were getting et cetera, and there was a lot of.
There's a lot of question around the how that's going to work I don't know that we're going to be doing.
20 to 30 units a month or we're going to be able to do 40 or 45 units a month and at what rent. So if you kind of roll that through a model you've got a just from that big project.
Got range, what our range for 2022 is way beyond that it really has to include some <unk>.
Basic assumptions on.
Lease up with the portfolio as you know as Dan said, we'll be at 88 or 89% are later this year, we got again it back that back up to 92 or 93, the pace by which that happens is going to very much determined that but I do feel great frankly about the not only the dirt.
<unk> net we're headed but because of the volume that we're doing it because of the progress we're making on the developments that while we can't be precise with respect to exactly how net income streams going to come on we certainly know what the direction of it is in within the range that I actually think is pretty tight given.
Yes.
Sure.
<unk> to 'twenty.
<unk>.
18 months out I think it's pretty tight.
And so all of those things considering I think we got a pretty good if.
He can give you more visibility than we've been able to give you since the beginning of the pandemic.
Hey, Todd its Michael Bilerman.
I too want to thank you for giving US a lot of the details on the guidance from the actual numbers isn't it jumped down my throat, if I ask you to put that in the supplemental this quarter.
Michael that's a <unk>.
<unk> switch you had JD start and ask a question and then you jumped right in there if I knew that we would put you at the end of the line.
Oh geez.
I thought we were friends.
Okay.
Just kidding.
You can certainly ask that and that is certainly something that Dan G and Melissa Solis and the financial side of this company will certainly come to a conclusion with the help of book General Counsel as to what you'd go in there. So I don't know I don't have anything to say with respect that the day Michael.
Hum.
Well it would be great that way there is no confusion over the numbers.
On these conference calls they can quickly be heard of us.
15 or something.
My question was you talked on the call earlier and your focus on California, and you spend a lot of time talking about Santana row and prime store.
What is the focus more so on what you have today or do you want to highlight California, and an area in the country that you wanted to deploy incremental capital outside of Santana row, and Prime store I just wanted to know sort of in the background to it no. That's a very fair and the answer the short answer is book.
And then so I hope, we are making incrementally new investments and cash in California, but you know why we brought that up and I spent so much time on that so FERC and I.
It had been going back and forth on on you know I'll send out an article to him that I read.
Say, its only telling half the story and yell at me.
We would we sit there and debate.
Important, California is as a market today, and where it's going to be tomorrow. What are we really seeing with respect to leasing demand is that changing as is the state is everybody moving to Texas. How is this all really playing out and we really came down to this.
Very good understanding that the headlines are.
Our more exaggerated than effectively the supply and demand characteristics of the markets that we're in that we can certainly talk about wood.
With knowledge, because we're out there doing those leases and as a result.
The ability to find other places, where we would like to continue to invest we do have another one that we're looking at really really closely in southern California.
Is that I hope, we can get over to pull over the transom because I think the long term opportunity is amazing.
No.
I wanted to go through that really as a headline Buster.
If you will and I do think it's a great microcosm of and predictor of what you will see at the Massachusetts economy.
Opens back up it is interesting if you look at weather.
No.
As you head north.
You can say okay.
Pike <unk> rose is behind Florida, but ahead of Boston Boston is.
No behind Pike, <unk> rose, but we can see where it's going relative to California.
The warmer against the nicer the weather by far as it seems to be the biggest predictor of traffic levels and sales.
Sales.
Okay. Thanks for the color John.
Michael and we are friends.
I know.
Take care.
Our next question is with Greg Mcginniss with Scotiabank. Please proceed with your question.
Hey, good evening.
First on on development, maybe residential more specifically.
I understand that there's some uncertainties on the.
Speed of residential lease up at Assembly row, I'm, just curious what the expected stabilized yield is there and then also how do you feel about starting additional funds.
Potential development at this time and when might you break ground on future demand.
So so Greg that's fair the stabilized yield.
I don't feel differently about it.
It might take another year to get there.
Sure.
You know I mean, the greatest the best part of residential and I'm sure you're hearing on every residential all of that is the same thing as the worst part of residential for one year leases.
A little bit less a little bit more so so it's not like you build something.
And a great market, but at the wrong time, and you're stuck in purgatory forever as happens on the retail side and certainly on the officer in hand and so.
I know today it is as we've talked about net.
You have been made this year it is our toughest market from a residential perspective.
To be able to make progress in and that is where we're opening up a new project. So there is less predictability in terms of that timing, where we'd go I do believe we will be.
Where we said we'd be at.
Upon stabilization, even if that stabilization is later than <unk>.
Obviously, then it would've been a free COVID-19 will have to see wants to play that out.
In terms of investing in residential in other places sure we will I still feel I feel very good about that at our mixed use property again, not standalone, but where they are mixed use properties. The real question. There is what are we going to are we going to be able to make the numbers work with.
With construction prices, which are absolutely at this point of time out of control.
And whether that is a long term AR.
Phenomenon or a short term phenomena as is.
To be seen clearly supply train of materials has been lately disrupted.
In the last year globally and that impacts prices.
So we have to see where that will go but at Palatin Wood for example in.
Our shopping center, there outside of Philadelphia, lower Merion couch it.
We're leasing up our small project and we really wanted to do a small project there as a precursor to see what kind of demand we would have.
Sure.
Larger projects that would include residential.
On the Lord <unk> Taylor site that is there one of the best pieces of land in all of it in the whole federal portfolio and I am extremely.
Bullish on on what has.
The initial demand on even during COVID-19 over the small project that we did there and on the township in the.
The design process of what we're building. So it comes that we're an economic company. It comes down to can we make money.
Can we add value.
To the extent we can with.
With residential on our existing properties, we will still do that.
Okay.
Okay, and one from one for Dan here.
On the accommodative tenant agreements that you were talking about.
Just curious what the total magnitude and cadence of those agreements are going to be as they burn off.
Later, this year and into 'twenty, two and what types of tenants are those provided too.
Primarily we've talked about this on calls before I mean, we've made accommodated Murray with a fair amount of restaurants.
Operating during COVID-19 time kind of a doing a.
Great.
Hum.
Fixed rent that's less than their contractual rent for a temporary period of time or a percentage of sales.
We'll see how well they burn off.
<unk> because it depends on how you know whether or not we get the upside of percentage rent and then it should burn off over time Ratably.
It's not that much.
[noise] accommodative agreements are not all $10 million of abatements that we had during the quarter, but that should burn off ratably probably over the next I would say 12 to 18 months.
Okay. So these are not new agreements, it's just continuation of ones that were already in place.
Yes, correct.
Thank you.
For the time.
Our next question is with Juan Sanabria, So <unk> with BMO capital markets. Please proceed with your question.
Hi, Thanks for the time I was just hoping if you could give us a little color on the leased versus occupancy spread kind of talked about a 20 million dollar number.
How much of that is truly truly additive versus kind of musical chairs in between.
Tablets or space.
And how you think the timing of that and true.
So coming online.
That's primarily it.
Is that it is a non.
Not a lot of musical chairs not a lot of moving around of tenants it's added.
Great.
Sure.
Could you sit up from 10, sorry.
Yes, Brian I would just say you'll see that starting in the second half of 'twenty, one and 'twenty two in terms of the timing.
Great. Thank you.
And then on the leasing side you had a huge number on the leasing spread for new deals 18%.
Thing unusual in the numbers in the quarter that kind of skewed that or is that kind of how you're thinking about our future volume for the balance of the year maybe.
I don't know how it will come out from the rest of the year, but I can tell you. There's always a few deals in there that are especially good.
Including a couple that we had this time up at Assembly row.
But I think that's kind of what you see with US is always a couple of good ones in there and just end there might be Uh huh.
There is a quarter, where we got a couple of bad ones.
In there, but overall I kind of like the trajectory that interesting.
Thank you.
Our next question is with Craig Schmidt with Bank of America. Please proceed with your question.
Yeah. Thank you I wanted to talk I mean, the increase in leasing volume.
I know you talked to a lot of new leases, but I think more essential or are they more discretionary.
And are you seeing new names to your portfolio or are these people that have properties.
They are looking to expand in your portfolio.
Yeah, Let me, let me start on that I'd love, either Jeff or Wendy to add on to my point, but our total.
So my comments, but a couple of things Greg.
The thing that keeps you.
Striking me throughout this process is how broad based.
Leasing has been I've been looking for places to say Okay. Here is a category that is that is very active right. Now in this other category is not doing deal I'm not seeing that I'm seeing this.
Broad based now what I know is you'll use the number of deals that you're seeing at some of like the essential sorry, the non essential D lifestyle type projects.
Securely goods and.
And I think that's.
A factor or a notion of Av.
Yeah.
I believe there is a groundswell that is becoming more and more accepted that day. These first tier.
Suburbs with places that are.
That can be more than just your shopping center that are effectively.
An integral part of your life or a place to be so what we're really trying to do and <unk> seen some really good success. There is getting new leases from tenants that had been.
Not our new to market and we see that we've seen that in a large way at Santana I know, Jeff can talk more.
About that we've seen that in a huge way on the the hike in rows village at Shirlington first rose.
Suburbs outside of Washington D C for four new food concepts.
Certainly.
For some gym concepts that have been newly capitalized.
Along the way and even apparel.
This is about as broad as it's been we certainly have grocery deals in there.
D S deal in there.
Along the way, but it's it's I'm most excited to tell you the true not about the boxes are boxes or find and they've got a lot of leverage and there is a national companies that will pay the rent and is an exciting.
It's really exciting when you killed by COVID-19, not particular exciting going forward and there's not a lot of growth in this kind of what it is I'm excited by day. These small shop potentials at consolidating places.
Or either mixed Jews, we're dominant in the dominant shopping centers in their in their markets, because that's where I think there'll be value to add significantly over the next few years.
Jeff for Wendy.
Craig always at the best questions.
I know and Craig Craig I have to I. Appreciate the question because the truth be told with the amount of activity that we've had this quarter and what's Bubbling up I was a little eager to jump in in terms of leasing so I appreciate it.
Very true broad based is what certainly we're seeing all over the east I'm not just as a lifestyle center centers, certainly, but our community centers, our neighborhood centers or power centers as Don said, we maintain a strong steady and healthy.
Our level of anchor activity.
Just in dairy.
Good and supported and kind of continue with that.
Spike has been on the smaller shops.
All the way from the mom and Pops from Taco Bond bond, which is the coveted Taco player in Northern Virginia that just signed a deal with us and congressional in Rockville to Athleta to room and board to American Eagle to Gregory Coffey, who is joining us in long island, so new names.
In addition, we had strong tenants like Starbucks, what where we're doing several deals with them where theyre taking their focus on these first ring suburbs, and they're investing and we're investing and creating some opportunities for them that would also maintain and provide a drive.
So.
So that's kind of what we what we've.
What we've done for the quarter in conjunction with that what I'm also pretty excited about is what I see in the pipeline.
And that is again broad based all the way across to our property formats and robust so not just in N renewals, but in net new deal. So I'm very encouraged by what I'm seeing lately.
Yeah, and Craig really saying.
Same on the West coast, whether it's up at Santana within the Prime store portfolio or some of our other southern California properties. Both on the new deal on a renewal side and then yeah. Both in let's call. It the more traditional neighborhood and community center type small shop.
When he was talking about or the more.
Let's call it lifestyle oriented tenant like we will see it at.
And at the point, where we did an ever you deal or.
Up at Santana World, We've done a number of new to market clothing retailer deals, which we've mentioned on prior calls.
And restaurants.
Restaurant under construction first unit out of San Francisco, we have another restaurant.
Under construction Thats new to market.
Notable chef the fourth restaurant that he is opening.
First one in California, So we're really encouraged.
You know not only by what we have.
Accomplish so far.
Let's call it the last three quarters or so coming.
So we started to come out of COVID-19, but if you look at the pipeline of deals that are being negotiated right now.
That's very strong.
Couldn't be happier about that.
Great. Thanks for the detail on that and then I guess just one other thing the big the Big difference for me between fourth quarter and first quarter has been.
The change on the impact from government restrictions I.
I think January was described earlier in the call. The Dark day and then we look at your ABR open at 98% in April 30th how much of February and March were closer to that April performance versus the January performance.
That's a great question and an overall.
It's a pretty straight line.
And.
And again I kind of think.
The straight line that took you from January to April.
It's heavily weather dependent.
You know I mean look the issue is if you say what do I worry about I mean, the government stimulus has literally been helpful. There will be more to come but thats clearly helpful, but for businesses to be long term viable.
Those government restrictions have to go away and those businesses have to see if they can they can you know.
Survive long term.
It took me is still a question Mark right you can't have a bid that you've got a business that 25% open paying rent because the stimulus is allowing them to pay rent.
But the signal if it goes away.
You can't make any money at 25 or 50%. So so it's really that's what what is yet to be seen encouraging side of that trade.
But all the way through it's the traffic that has come out has been impressive.
And so these people have the opportunity to buy it to eat and suspend I believe they will at least those retailers will not have much of an excuse if those folks are they are in the government restrictions were going to be able to make money in their businesses.
Okay, and just one quick one here just given the acceleration of the business when Mike Federal will be able to cover their dividend with operating cash flow.
You should expect 2022, I'm, not sure which quarter yet in 2022, a third to the fourth quarter, but later in 2022.
It is where we hope to be there.
Great. Thank you.
Our next question is with Handel St. Joe Smith.
Mizuho. Please proceed with your question.
Okay. Thank you.
Good evening out there.
So first of all is a bit of a follow up on Chris' question on leasing the blended rents in the quarter were up 9% I'm curious how that compared in your mixed use versus a more grocery anchored centers and also what's your sense of how that plays out that that dynamic that spread perhaps given the demand and pricing trends you're seeing in the mixed use.
Grocery anchored portfolio. Thanks.
Uh huh.
You may have to do the second part first so in the in the first part of your question.
We did better in the mixed use properties in terms of the new deals moving forward than we did in the in the more basic shopping centers the essential stuff.
And then kind of in line with what I was.
Talking about.
A few minutes ago, but the second part of your question I just didn't get I don't think Dan did either.
Sure No I was getting I was getting at sort of what you were seeing within those two segments are today comparatively to the 9% overall for the portfolio and then what's your sense of how that plays out over the near term given the demand and pricing power pricing trend youre seeing in each and each piece.
Pizza liberally.
I do have a point of view on that day.
When you say near term I'm not sure if we're talking about the next three quarters or so because the answer from my perspective, I don't know.
You know you'll see.
It'll depend as I've said earlier on the call to the deals that got the particular deals that got done in a in a particular quarter as it kind of always assets, but longer term I would expect to see better growth.
From the 25% non a central part of the company than I would the 75 per cent, but the 75% is critical to to not only the stability of the company, but but but some level of growth so that the.
The remaining 25 kind of takes that and builds on it that's how we look at it and see it over the next let's say three years.
I don't know Jeff for Wendy if you want to add anything to that.
No I think you've I think you've got it done.
Okay fair enough.
And then maybe for you Dan.
Can you talk about the restaurant and movie theater rents how they trended in April and what that implies for your full year 'twenty, One guide and maybe also remind us what percentage of the outstanding reserves attached to those two industries.
Okay.
Yeah, I I didn't quite get your question.
A little low.
I ask that if you could talk about the <unk>.
Restaurant and movie theater rents, how they trended in April and what that implies for the full year 'twenty. One guide and then also if you could remind us what percentage of the outcome reserves are tied to those two industries.
I would say of our reserves, probably about 40% of the reserves.
Just get it as a specific number I don't have at my fingertips.
Okay.
Maybe wanted to Jamie to take this offline I'm happy to answer it over the phone call.
That's a detail we did prepare for GAAP.
Maybe I can substitute a different second question.
Don't know if I missed it but did you guys disclose the cap rate on the grocers that are required in Virginia, and maybe some thoughts on the long term opportunity and returns there right.
Five going in.
You should expect that to be at least a six and three quarters and maybe a seven.
And then just a few years.
Got it is that some occupancy or occupancy plus rents.
Yes, and yes.
[laughter] price.
Early read this is to the extent, we get to re merchandize the shopping center.
Which we very much expect to do just to be able to provide Mclean, Virginia with the with the kind of product that we'd like it to.
It should be a great addition, you'd been a wildwood in Bethesda right.
Yeah claimed as one.
Got it alright.
Alright wonderful that's it from me thank you.
Okay.
Our next question is this is Mike Mueller with Jpmorgan. Please proceed with your question.
Yeah, Hi, two of them here.
Dan I think you talked about prior period rent collections that were in the number of benefit this quarter can you throw out what that what that number was.
Then also I know you don't put acquisitions in guidance for 'twenty, one or 'twenty, two but can you help us think about the cash on hand, youre raising incremental equity if you talked about $3 50 to 400 your talent and spend this year.
How significant could acquisitions be and to the extent they are not I mean whats your development spend look like in 2022, just thinking about burning through the cash.
Yeah sure I'll doesn't pay a true two questions together I'll take the first one quickly we had about $8 billion of prior period true brands.
We had projected some prior period rents to be paid that was there was a bit more than we expected. We've had prior period rents in the second quarter in the third quarter.
The third quarter and fourth quarter of last year, and so forth, it's hard to predict kind of what that level will be on a go forward basis.
This year, so that's a little bit of also some of the variability of what we're expecting so much prior period, Brent we have to do to collecting and.
And on the second piece.
With regards to cash.
We're trying to keep a we've got <unk>.
<unk> that we're expecting this year.
We've got some opportunities.
From an acquisition perspective in the quarter at $800 million and an Undrawn line of credit I mean, we're plenty of dry powder and I think we really can be pretty tactical with regards to how we deploy that capital and we've got.
That's not a concern for us both in terms of.
How we pay for the opportunities that we'll see over the course of the next 12 to 18 months like we got about we got about $170 million left.
After this year on the on the existing developments that are.
That are under way now.
And I think you know I don't know, what it's about 250 million or so left for this year.
Under existing maybe 300.
So if you think about $4 50, or some kind of number like that to finish up the existing developments that we that we have again the $800 million on the of cash on the balance sheet and so it will be acquisitions that we're looking at.
I am not Dunkin' this simply don't really want to give you a size of that right now because I don't want to.
I don't want people to know which assets we're looking at.
Right now got it.
Effectively.
In two different markets.
Nothing Crazy Big.
I'll take that.
Enough that they play that the asking handle.
So let me leave it at there if I can say don't get in trouble with the dam port.
Core purpose.
Yeah no. That's good that's helpful. Thanks.
Yep.
Our next question is with Keybank Kim with true. Please proceed with your question.
Thanks, hopefully I'll be quick here.
You already discussed some of the tenant demand youre seeing in the house broad based but I'm just curious like high level are.
Are you getting the types of tenants that you want the credit quality that you want.
And how.
How high on the pedestal as merchandising mix in an environment like this when you have inventory to sell.
He'd been it's I mean.
That is the secret sauce of our business right our business, how we how we balance occupancy with merchandising mix with the credit of that particular tenant. So a way we look at it first of all cash.
Cash and never going to convince me that merchandising is not among the most important things to do in a retail environment. We all know that even after the pandemic, there's too much theres too many choices for places to shop out there we've got to be the one of choice if we're going to have.
Any.
Possibility of pushing rents, which we want to do and so what were so just like the 75 million Bucks that we're spending on redevelopment projects, which are all about much more much more than new roofs and parking lots. These are about places to hang so that you can.
Be there.
In the morning.
Our long term periods for short term periods to use this as part of your life. If you do that then.
And then we the biggest part of that is getting the right tenants that let you have that type of lifestyle. What we've seen is great demand from a very wide variety of tenants like that I think Jeff PERC has talked about them now when you're talking about restaurants is the credit rate and a restaurant no.
Is the fact that 110000 restaurants in the country went away during COVID-19 are positive yes.
Because supply and demand.
Is is reaching a much better balance in that very important category for the type of assets that we have and frankly, we're doubling down on restaurants I love it.
Love the idea of being the consolidator to have a place where were those.
Key gathering places have those choices and when you go out and spend your time I think you would agree it may worry about who's going to fill a theater box if that business doesn't work three years from now five years from now, but I think we've proven I think the country has proven that restaurants outdoor dining.
Here to stay.
And effectively.
We've got the places for that particular group. We also have the places and we've been seeing it in terms of those digitally native brands that want only a few places.
To make sure that there.
Brand.
Is appropriately reflected we've gotten more than our fair share of that certainly hit the road property.
It is.
Going back to where we started.
It's not that there's a lot of choice. If you will four for any particular tenant it is that the best tenants do seem to be coming and we get a shot at that.
And if we get a shot at them, we got a shot at creating the best placed and that's how we can push rents.
And create value so you know from.
From my perspective, very encouraged by what we've seen over the last nine months frankly in terms of in.
In terms of our places and demand there are places.
And I would call a few minutes.
Key keeping as Jeff and just to kind of add onto what John saying, one thing and we've discussed this on past calls I think one one thing that's different about this crisis then yeah.
2009, 2010, and even if you dial back to the tech bubble bursting.
In Silicon Valley right. When we're delivering the first phase of Santana row is there is a ridiculous amount of capital on the sidelines.
And you know, whether it's money to fund new restaurants, or new restaurant concepts. It certainly wasn't around you know when we delivered Santana row.
Back in the day, which is why we are doing investment in those restaurants ourselves.
We're seeing this time just completely different availability of capital for new business and new business formation, particularly in the restaurant category. We're also seeing it in the fitness and I would call. It the health care and wellness segment, where we've seen.
A few new concepts come that.
They are very well back very well financially backed.
And a couple of fitness operators, you know day.
Didn't have legacy issues for whatever reason, they've invested a ridiculous amount of equity capital and the fitness sector and.
Really well.
A lot different.
From that perspective, then.
Prior downturns so.
We're not relaxing our credit quality standards at all.
And quite frankly, we haven't needed to.
Thanks for that very color, France or.
Just one quick one.
Are there any changes to some of the leasing language that gives kind of more out.
Yeah.
When do whether that be sales based.
So so.
In terms of our contracts I mean, it depends so if we're talking about tenants that we have that have a proven history with us and strong sales and we see them as a key fundamental.
The places and and the environments that we want to continue to build upon that foundation. We as Dan had said we had mentioned that we can be creative provided that it's going to benefit the tenant and that we're gonna be able to sharing that upside as well as it relates to other <unk>.
Going forward new coming in.
It depends on the center and it depends on the concept, we sometimes don't mind dependent upon the capital allocation is very limited or zero, where we can make an opportunity for a tenant they can try us we can try them and see how that marriage works and we maintain <unk>.
Trolls over over the shopping center, so that can often times be a win win so it really depends I'm sounding like I'm not answering you, but it really depends on the operator and it also depends.
What we're seeing more today than we've seen in the past is if we had choices right. If we had choices between two great operators and that happens and it's happening more often than not.
Now so.
So all those factors come into play as as we continue to kind of.
Emerge post COVID-19.
Okay. Thank you.
Our next question is with Linda Tsai with Jefferies. Please proceed with your question.
Hi, just to clarify the $8 million of prior period rents and <unk>, where those from both deferrals and cash basis tenants paying back.
That's cash basis.
Okay. Thanks.
Back.
Got it and then so within guidance, there's some assumption for some level of that baked in as well.
Exactly exactly.
Yeah.
A low range for the lower end, yet and then maybe we continue on we've seen in the third fourth and in this quarter.
Reasonable prior period rent collections, we don't expect that to continue at the pace that we've had we expect that certainly to burn off.
So we have different assumptions in there, but we don't expect 8 million every quarter for the balance of the year that should shrink to a much smaller number by the fourth quarter.
Thanks, and then your comment on Pelican wood as a precursor to gauge demand for larger residential projects, how is progress that pelican wood versus expectations.
Hi.
There in terms of.
So I mean.
Let me answer that Linda really the right way.
Everything stopped in terms of demand between April.
Of 2020 and November December of 2020.
So from that perspective, we're behind and you would expect us to be but I'm, referring what I was talking about is now when you look at this spring and what's happening there in February and March and April.
Better than we expected so clearly a trough and now.
Like the rest of the country I guess, this renewed ability to come out and make decisions including living decisions.
And so we should be leased up fully there within the next few months.
Thanks.
Okay.
Yes.
Our next question is from Floris Van <unk>.
With Compass point. Please proceed with your question.
Yeah.
Thanks, guys for taking my question I Hope, David Simon was listening to your comments earlier.
About productive real estate generating high rents. So I think that's a part of his.
Spiro as well.
One or two.
The talk ask about the the past due rent collection 8 million. It's been 11 cent impact. This quarter. Obviously, you said, Dan you've baked in some of that going down the road could you quantify all of the <unk>.
Past due rents.
From existing tenants that you have in your portfolio and how much potential there is of that.
You haven't collected.
Well, we've got a.
Under our receivable of how big the about $80 million.
We certainly do not expect to collect 80 million but.
That's what the the receivable is growth.
The gross receivable, so I mean, it could be yeah.
So that's not in our forecast.
Or.
It's just it's a portion of that that you are a small portion. So it was like 20% of that is that sort of the ballpark what I'm hearing.
Is it.
The right assumption for for.
Past due rents to be collected.
Or is it higher.
No.
It's 28 book.
I don't have that number.
Kind of off hand.
What I guess I could do is.
Yes.
As a follow up with you offline.
Okay. Okay.
And a follow up question maybe.
So obviously the ATM issuance I think you did 87 million during the quarter and some post the quarter I think you mentioned on the core $124 million in total.
Maybe you can talk about the average price and and you know maybe the implications for where your share price is relative journey as well.
Yeah, Hey look.
In my comments, we E E.
Transactions sold stock at a.
105.
$88 million of that was in the cash market.
$36 million of that was in the ballpark.
And honestly I think we're in and around kind of bar.
Our estimate for AAV.
Not too far off where kind of a that's a moving target force.
The one thing about us that I guess, you probably I know you know about us but.
I Hope you appreciate about US is that we try to do some every year.
And effectively.
You know, obviously, we're not going to do it down at levels that are.
<unk> dilutive, but but in every year as a REIT, we want to stay very active in acquisitions development and property improvement plan, we wanted to stay very active at being able to.
It leads to the best assets.
We want to stay very active in making sure that the dividend gets gets paid this company believes in the future and our long term future and when you do that you want to issue equity in modest amounts, but but each year in each period as you can.
So are.
You know doing it at $105 I think we're worth more than that I think you think were worth more than that I think everybody. Thanks board more net but but effectively in being in that range to be able to utilize the ATM to create some level of.
Equity inclusion, we think is prudent and as you know.
Unbalance, an important part of the overall capital plan.
Thanks, Tom I appreciate it.
Our next question is with Chris Lucas with capital One Securities. Please proceed with your question.
Hey, good evening, everybody sorry for the long call, but I do have a couple of quick questions.
Don first congratulations on Chester book.
Hard to find an assets that actually improves your demographics, but you did it.
And the other comment I would make is that that could be used to federal correction. When I was in high school. So just exactly.
That's why I, that's why I think you should be really happy you will be really happy when you see the growth that we generate from it I think it's a low bar.
I would agree.
The one thing that I did want to talk a little bit about it was just on the apartment.
Lease rate nice improvement since the fourth quarter. Just curious was that just snap back in demand or would you have to do any significant.
Centralizing it to drive that improved activity.
Significant incentivizing up in Boston.
Very little activity at all in California.
Which is snapping back beautifully in the same here at Pike <unk> Rose in fact, the leader by the way.
Among those three in terms of.
In terms of rent.
Rent growth and.
Or lack of.
Rent and edition is Pike <unk> rose.
Okay, and then Dan two quick ones for you I'd be remiss, if I didn't ask what lease term fees were for the quarter.
Yes.
Were flat to last year at $2 8 million in each of those.
First quarter of 2020 in first quarter 'twenty one.
And then in that way.
When we get back that was above what we had forecast.
Right I was going to say so have you in your guidance for this year have you.
Up to your expectations for lease term fees.
No I mean look I think that we've got a range at the high end of the range and at the low end of the range is kind of our average over the last.
10 15 years.
So the figure that.
We will but we're not anticipating getting to $14 billion in any of those cases.
Okay and then last question from me can you kind of give us a little more color on sort of the ins and outs.
What splunk is sort of timing of Splunk sort of I guess lease term fee you versus or how theyre, making up the difference between sort of when net net app starts paying your rent. However that works, but can you kind of go through some of the timing issues.
Assuming it's a net.
Net neutral, but just can you kind of walk through the timing of the true.
Transaction there.
You bet, Jeff can you take that.
Yeah.
Yeah, Chris I think Don said this in his opening comments, but we're made whole.
And there is no lapse and rent payment.
Between when that Splunk stops and net up starts.
So it made hold from that perspective.
Basically it Jeff I appreciate Chris Yes cool.
No I was just going to say basically they make the make whole wasn't a cash payment.
Effectively right now and that are.
You know we had a straight line receivable that we had to write off so those things kind of netted effectively but we added two years of of term at a big number.
Okay. So that's the second core transaction, so let's straight line more cash that's not a bad thing.
Okay, one more time just to make sure I got that.
So its a second quarter event right that's true yes.
And so but.
The net is less straight line from more cash which is a good thing.
Yes, that's correct.
And <unk> is correct.
Perfect. Okay. Thank you that's all I had I appreciate it.
Thanks, Chris.
Ladies and gentlemen, we have reached the end of the question and answer session and I would like to turn the call back to Leah Brady for closing remarks.
Thanks, everyone for joining us today, we look forward to seeing you at NAREIT and please reach out to federal meeting.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.