Q4 2021 Regency Centers Corp Earnings Call

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Speaker 1: Greetings and welcome to Regency Centers Corporation, fourth quarter and full year 2021 earnings call.

Greetings and welcome to Regency centers Corporation fourth quarter, and full year 2021 earnings call.

Speaker 1: At this time, all participants are on the listen-only mode. A question and answer session will follow the formal presentation.

At this time all participants are in a listen only mode.

A question and answer session will follow the formal presentation.

Speaker 1: 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.

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.

Speaker 1: It is now my pleasure to introduce your host, Kristi McElroy, Senior Vice President of Capital Markets. Thank you. It is now my pleasure to introduce your host, Kristi McElroy, Senior Vice President of Capital

It is now my pleasure to introduce your host Christine MC Elroy Senior Vice President of capital markets. Thank you you may begin.

Speaker 2: Good morning and welcome to Regency Center's fourth quarter 2021 earnings conference call. Joining me today are Lisa Palmer, President and Chief Executive Officer, Mike Voss, Chief Financial Officer, Jim Thompson, Chief Operating Officer, and Chris Levitt, SVP and Treasurer. As a reminder, today's discussion may contain forward-looking statements about the company's views of future business and financial performance, including forward earnings guidance and future market conditions.

And welcome to Regency Centers' fourth quarter 2021 earnings Conference call. Joining me today are Lisa Palmer, President and Chief Executive Officer, Mike <unk>, Chief Financial Officer, Jim Thompson, Chief operating Officer, and Chris Leavitt SVP and Treasurer as a reminder, today's discussion may contain forward looking statements about the company's views.

Future business and financial performance, including forward earnings guidance and future market conditions. These are based on management's current beliefs and expectations and are subject to various risks and uncertainties.

Speaker 2: These are based on management's current beliefs and expectations and are subject to various risks and uncertainties.

Speaker 2: It's possible that actual results may differ materially from those suggested by the forward-looking statements we may make.

It's possible that actual results may differ materially from those suggested by the forward looking statements we may make.

Speaker 2: Factors and risks that could cause actual results to differ materially from these statements may be included in our presentation today and are described in more detail in our filings with the SEC, specifically our most recent Form 10-K and 10-Q filings. In our discussions today, we will also reference certain non-GAAP financial measures. The comparable GAAP financial measures are included in this quarter's earnings materials, which are posted on our Investor Relations website.

Factors and risks that could cause actual results to differ materially from these statements may be included in our presentation. Today and are described in more detail in our filings with the SEC specifically, our most recent Form 10-K and 10-Q filings.

Our discussion today, we will also reference certain non-GAAP financial measures the comparable GAAP financial measures are included in this quarter's earnings materials, which are posted on our Investor Relations website. Please note that we have also posted a presentation on our website with additional information, including disclosures related to forward earnings guidance on the impact of Cove.

Speaker 2: Please note that we have also posted a presentation on our website with additional information, including disclosures related to forward earnings guidance and the impact of COVID-19 on the company's business. Our caution on forward-looking statements also applies to these presentation materials. Lisa? Thank you, Christy. Good morning, everyone. Thank you for joining us.

19 on the company's business our caution on forward looking statements also applies to these presentation materials Lisa.

Thank you Christy good morning, everyone. Thank you for joining us.

Speaker 3: Reflecting back on 2021, Regency accomplished a great deal over the course of the year, and we have a lot to be proud of. With the disruption caused by the pandemic, it was a year of recovery, but the pace of our progress is a testament to the resiliency of retail properties like ours. As we sit here today, we feel really good about the financial health of our tenants.

Reflecting back on 2021.

Reasonably accomplished a great deal over the course of the year and we have a lot to be proud of with the disruption caused by the pandemic. It was a year of recovery, but the pace of our progress is a testament to the resiliency of retail properties like ours.

As we sit here today, we feel.

Really good about the financial health of our tenants are leasing activity is robust.

Speaker 3: Our leasing activity is robust. Our investment pipeline is full. And our balance sheet is back to pre-pandemic strength. And of course, this didn't just happen. We wouldn't be where we are without the tireless efforts of our people. So if you would, please just give me a moment to thank the Regency team. Thank you, team. It truly...

The pipeline is full and our balance sheet is back to pre pandemic strikes and of course. This doesn't just happen we wouldn't be where we are without the tireless efforts of our people. So if you would please just give me a moment to thank the agency team.

Tim It truly takes all of us.

Speaker 3: So as we've transitioned into 2022 and look ahead, our story is no longer about recovery. We've moved forward with a focus on growth and also with the benefit of hindsight from the last two years.

So as we've transitioned into 2022 and look ahead. Our story is no longer about recovery, we'd move forward with a focus on growth and also with the benefit of hindsight from the last two years.

Speaker 3: while we do see lingering effects of the pandemic on our tenants.

Well, we do see lingering effects of the pandemic on our tenants specifically the impacts of inflation and labor shortages. These headwinds have thus far not impacted demand for our space.

Speaker 3: specifically the impacts of inflation and labor shortages, these headwinds have thus far not impacted demand for our space.

Speaker 3: This focus on growth did begin last year with regards to our capital allocation strategy, as we've discussed on prior calls. We pivoted to offense in 2021.

This focus on growth did begin last year with regards to our capital allocation strategy as we've discussed on prior calls we pivoted to offense in 2021.

Speaker 3: We completed nearly $500 million of acquisitions last year on an accretive, leverage-neutral base.

We completed nearly $500 million of acquisitions last year, and an accretive leverage neutral basis.

Speaker 3: During the fourth quarter, we not only closed on the acquisition of our turducken, Blakeney Shopping Center, but we also announced the purchase of a for-property, grocery-anchored, neighborhood-centered portfolio in Long Island.

During the fourth quarter, we not only closed on the acquisition of our Turducken Blakeney shopping center, but.

We also announced the purchase of a four property grocery anchored neighborhood center portfolio on long Island.

Speaker 3: You've heard me say it before, these types of investments are the bread and butter of what we do, what our company does. Our focus is to invest in strong, well-located, grocery-anchored shopping.

You've heard me say it before these types of investments are the bread and butter of what we do what our company does our focus is to invest in strong well located grocery anchored shopping centers.

Speaker 3: Overall, the private transaction market for the centers we want to own remains really strong. We continue to see cap rate compression and value appreciation and even steeper competition for deals. But despite this, our acquisition pipeline remains active.

Overall, the private transaction market for the centers, we want to own remains really strong we continue to see cap rate compression and value appreciation and even steeper competition for dispute for deals, but despite this our acquisition pipeline remains active.

Speaker 3: That's because our balance sheet and access to capital give us a competitive advantage as does our reach given the boots on the ground in most of our target markets.

That's because our balance sheet and access to capital give us a competitive advantage as does our reach given the boots on the ground in most of our target markets.

Our long island portfolio acquisition was an off market transaction. It was a group of family owned assets kudos to our team in that market for sourcing this deal we.

We will continue to look for opportunities like these where the assets meet our criteria for location quality format and growth.

Speaker 3: We also announced recent dispositions, and in that context, I want to spend a minute on our sales costa verde, since this was previously a part of our redevelopment pipeline.

We also announced the recent dispositions and in that context, I want to spend a minute on our self Costa Verde. Since this was previously a part of our redevelopment pipeline.

As most of you know we've been really excited to undertake a mixed use densification project. There that featured retail at its core we worked for years to entitle the asset de leasing the property all in preparation for future redevelopment, but as time went on the project evolved into predominantly life science, and the highest and best use with no loss.

<unk> a retail centric asset this changed the nature of the project and the risk profile materially.

Speaker 3: We made the decision to sell as it became clear to us that this was the best path to maximize value and manage our risk for the benefit of our shareholders. Importantly, we did get paid well for the value we created at that site, and we immediately reinvested the proceeds.

We made the decision to sell as it became clear to US that this was the best path to maximize value and manage our risk for the benefit of our shareholders. Importantly, we did get paid well for the value we created at that site and we immediately reinvested the proceeds.

Speaker 3: To be very clear, we don't see another Costa Verde in our portfolio. This asset was somewhat of a unicorn, but we do own really great real estate. And there will be other opportunities to add non-retail uses or to densify our properties.

To be very clear, we don't see another cluster of already in our portfolio. This asset with somewhat of a unicorn, but we do own really great real estate and there will be other opportunities to add non retail uses or to densify our properties.

Speaker 3: To the extent that makes sense, we will again pursue a similar path. This could mean partnering with experienced operators, a ground lease, or a sales and non-retail component, but always with the goal of extracting and retaining control over the retail. As an example, we have our West Bart Square project currently underway in Bethesda, Maryland.

To the extent that makes sense, we will again pursue a similar path. This could mean partnering with experienced operators a ground lease or a sale of the non retail component.

But always with the goal of extracting and retaining control over the retail.

As an example, we have our Westport Square project currently underway in Bethesda, Maryland.

Speaker 3: The redevelopment of this shopping center essentially features a refresh of all the retail, including a new store for our already successful giant grocery anchor, but will also include the development of senior living and apartment components on which we have partnered with others.

The redevelopment of this shopping center essentially features a refresh of all the retail, including our new store for our already successful giant grocery anchor.

But will also include the development of senior living and apartment components on which we have partnered with others.

Speaker 3: Before I turn it over to Jim, I'll conclude by saying that Regency emerged from 2020 a stronger company, and we and our tenants spent 2021 adapting to position ourselves for success in the new normal, and we've done just that. We've recovered from the pandemic, we maintained and even raised our dividend, and we are on our front foot today.

Before I turn it over to Jim I'll conclude by saying that regency emerged from 2020, a stronger company and we and our tenants spent 2021 adapting to position ourselves for success in the new normal and we've done just that we've recovered from the pandemic, we maintained and even raised our dividend and we are on our front foot.

Speaker 3: This consistency that you've seen from us over the years, even through the toughest of times, is evidence of the quality of our assets, our investment discipline, the strength of our balance sheet, and most importantly, our people. Jim? Thanks, Lisa. Good morning, everyone.

Hey.

This consistency that you've seen from us over the years, even through the toughest of times is evidence of the quality of our assets our investment discipline, the strength of our balance sheet and most importantly, our people Jim.

Thanks, Lisa good morning, everyone.

Speaker 4: Our teams are encouraged by the positive trends we're seeing in our portfolio and in the overall retail environment.

Our teams are encouraged by the positive trends, we're seeing in our portfolio and in the overall retail environment.

Speaker 4: We saw record new leasing volumes during 2021 at 20% above historical level.

We saw record new leasing volumes during 2021 at 20% above historical levels for the fourth quarter rent collections were 99% and tenants are reporting positive and often record sales.

Speaker 4: For the fourth quarter, rent collections are 99%. And tenants are reporting positive and often record sales.

Speaker 4: With continued strength in our leasing activity and lower tenant move outs, our percent lease rate again rose in the fourth quarter, ending the year at over 94%.

With continued strength in our leasing activity and lower tenant move outs our percent lease rate again rose in the fourth quarter ending the year at over 94%. We've made good progress from our Covid lows, but we continue to see further upside to occupancy from here.

Speaker 4: We've made good progress from our COVID lows, but we continue to see further upside to occupancy from here.

Speaker 4: having achieved historical highs north of 96%.

<unk> achieved historical highs north of 96%.

Speaker 4: Additionally, our teams have an opportunity to further upgrade merchandise mix in this environment and our new leasing pipelines are healthy and building.

Additionally, our teams have an opportunity to further upgrade merchandise mix in this environment and our new leasing pipelines are healthy and building.

Speaker 4: The most active categories include grocers, medical, health and wellness, restaurants, cosmetic, home and off-price.

The most active categories include grocers medical health and wellness restaurants, cosmetic home and off price importantly, we are seeing good activity across all regions for both anchor and shop space.

Speaker 4: Importantly, we are seeing good activity across all regions for both Anchor and Shopspace.

We're also having success keeping our current tenants in place our fourth quarter retention rate was 85% well ahead of the historical average and shop tenant retention was our highest on record in the quarter.

Speaker 4: Our fourth quarter retention rate was 85%, well ahead of the historical average, and shop tenant retention was our highest on record in the quarter.

Speaker 4: Our blended rent spreads were nearly 13% in Q4, positively impacted by the execution of a new anchor lease with Target at a property in Connecticut.

Our blended rent spreads were nearly 13% in Q4 positively impacted by the execution of a new anchor lease with target and a property in Connecticut.

Speaker 4: As we have often discussed on prior calls, our ability to recapture and mark-to-market legacy anchor leases can often be one of the largest contributors to our rent spreads over time.

As we've often discussed on prior calls our ability to recapture and mark to market legacy anchor leases can often be one of the largest contributors to our rent spreads over time.

Speaker 4: We also remain successful at driving contractual rent spreads, achieving over 2% annual growth in the vast majority of our leases executed in the fourth quarter, while continuing to remain judicious in our leasing cap expense.

We also remain successful at driving contractual rents spreads achieving over 2% annual growth in the vast majority of our leases executed in the fourth quarter, while continuing to remain judicious in our leasing capex spend.

Speaker 4: Our consistent focus on embedded rent increases resulted in gap rent spreads of 13% in 2021, while also achieving attractive net effective rent.

Our consistent focus on embedded rent increases resulted in GAAP rent spreads of 13% in 2021, while also achieving attractive net effective rents.

Speaker 4: That said, we are cognizant that tenants are continuing to be impacted by inflation, supply chain issues, permitting challenges, and most notably, labor shortages.

That said, we are cognizant that tenants are continuing to be impacted by inflation supply chain issues permitting challenges and most notably labor shortages, both in operating existing stores and getting new stores open.

Speaker 4: both in operating existing stores and getting new stores open.

Speaker 4: We are sitting and planning for an impact to rent commencement timing on the March.

We are seeing and planning for an impact to rent commencement timing on the margin.

Speaker 4: Importantly, these pressures have not yet impacted demand for some time.

Importantly, these pressures have not yet impacted demand for space, but.

Speaker 4: But we also recognize that may not be sustainable, as labor shortages continue to adversely impact businesses around the country.

But we also recognize that may not be sustainable as labor shortages continue to adversely impact businesses around the country.

Speaker 4: For now, many tenants are showing an ability to adapt, including in-store tech advancements, reuse of equipment, and improved e-commerce and curbside platforms.

For now many tenants showing are showing an ability to adapt including in store tech advancements reuse of equipment and improved e-commerce and curbside platforms.

Speaker 4: Continue to monitor these trends closely and our teams are actively working with current and future tenants on these issues when and where possible.

We continue to monitor these trends closely and our teams are actively working with current and future tenants on these issues when where possible.

Speaker 4: Moving to our development and redevelopment pipeline. Much like what we're acquiring, our teams are focused on creating value within our core competency of grocery anchored neighborhood and community center.

Moving to our development and redevelopment pipeline much like what we're requiring our teams are focused on creating value within our core competency of grocery anchored neighborhood and community centers.

Speaker 4: We're proud of our track record and our proven ability to do so throughout.

We're proud of our track record and our proven ability to do so throughout cycles.

Speaker 4: Even with the pandemic-related challenges facing our industry over the last two years, we continue to start and deliver projects and currently have $300 million in process.

Even with the pandemic related challenges challenges facing our industry over the last two years, we continue to start and deliver projects and currently have $300 million in process.

To highlight a few.

Speaker 4: In the fourth quarter, we completed the first phase of our ground-up HEB-anchored Baybrook development in Houston and look forward to starting an additional phase of this successful project in the near future.

In the fourth quarter, we completed the first phase of our ground up HEB anchored Brook Bay broke development in Houston and look forward to starting an additional phase of this successful project in the near future.

Speaker 4: We completed the redevelopment of the Publix-anchored West Bird Plaza in South Florida this

We completed the redevelopment of the publics anchored Westbury Plaza and South Florida This quarter.

Speaker 4: This project included a complete teardown and rebuild of an older public.

This project included a complete tear down and rebuild of an old Republic store as well as facade and site work improvements to the entire center.

Speaker 4: as well as facade and site work improvements to the entire center.

Speaker 4: The immediate impact of significantly enhanced sales volumes of the grocer over pre-redevelopment volumes, coupled with the modernization of this very well located asset, will enable us to significantly upgrade the merchandising mix and keep the center competitive and relevant for years to come.

The immediate impact of significantly enhanced sales volumes of the grocer over pre redevelopment volumes coupled with the modernization of this very well located assets will enable us to significantly upgrade the merchandising mix and keep the center competitive and relevant for years to come.

Speaker 4: At the Abbott in Cambridge, Massachusetts, we have seen increased leasing activity and anticipate tenant openings later this year.

At the Cambridge.

Abbott in Cambridge, Massachusetts, we have seen increased leasing activity and anticipate tenant openings later this year.

Speaker 4: crossing Clarendon outside of DC. We are nearing construction completion and happy to report that we are now over 95%

The crossing Clarendon outside of D. C. We are nearing construction completion and happy to report that we are now over 95% leased.

Speaker 4: Looking ahead, we continue to target project spending in the range of $150 to $200 million annual.

Looking ahead, we continue to target project spending in the range of $150 million to $200 million annually.

Speaker 4: While our development teams are seeing inflationary pressures on material and labor costs, we are carefully monitoring these increases and adjusting our underwriting.

While our development teams are seeing inflationary pressures on material and labor cost. We are carefully monitoring these increases and Justin and adjusting our underwriting importantly, we've been able to maintain our targeted project yields.

Speaker 4: importantly, we've been able to maintain our targeted project yield.

Speaker 4: Our teams are being proactive on securing bids, ordering materials early, and utilizing our scale, relationships, and connections to mitigate our risks as effectively as possible.

Our teams are being proactive on securing bids ordering materials early and usual utilizing our scale relationships and connections to mitigate our risks as effectively as possible.

Speaker 4: In summary, our team is optimistic about the current retail environment and the positive momentum we are experiencing across all regions in leasing, development, and redevelopment. We are here working with you today toYOU told us this moved Devin to be the times Liu plans,ailing to now leave one of his areas to acquire the turnaround to Taco Circle Federal predicting his return to course it out. Well liquidation quickly pushed rallies from Toronto to work to build and build

In summary, our team is optimistic about the current retail environment and the positive momentum we are experience across all regions and leasing development and redevelopment.

Mike.

Thank you Jim and.

And good morning, everyone.

Speaker 4: I'll start by addressing 4th quarter results, provide some color around sources and uses relating to recent transactions. And then walk through some highlights of our initial 2022 guide.

I'll start by addressing fourth quarter results provide some color around sources and uses related to recent transactions and then walk through some highlights of our initial 2022 guidance.

Speaker 4: Fourth quarter, NAREAD FFO was positively impacted by a few items worth

Fourth quarter NAREIT <unk> was positively impacted by a few items worth mentioning.

Speaker 4: Uncollectible lease income was a positive $6 million in the quarter. And you can see the components of this detailed on page 33 of our supplement.

Collectible lease income was a positive $6 million in the quarter and you can see the components of this detailed on page 33 of our supplemental.

Speaker 4: Additionally, similar to last quarter, straight line rent benefited from the reversal of reserves triggered by the conversion of some cash basis tenants back to accrual.

Additionally, similar to last quarter straight line rent benefited from the reversal of reserves triggered by the conversion of some cash basis tenants back to accrual.

Speaker 4: This non-cash accounting impact benefited uncollectible straight-line rent by about $7 million.

This noncash accounting impact benefit as uncollectible straight line rent by about $7 million.

Speaker 4: To reiterate, straight line rent does not impact our core operating earnings, but these conversions created an outsized benefit to NARED FFO in each of the third and fourth quarters.

To reiterate straight line rent does not impact our core operating earnings, but these conversions created an outsized benefit to NAREIT <unk> and each of the third and fourth quarters.

Speaker 4: Following the conversions back to accrual, we now have 17% of our ABR remaining on a cash basis of account.

Following the conversions back to accrual, we now have 17% of our ABR remaining on a cash basis of accounting.

Speaker 4: For this smaller pool, our cash basis collection rate was 94% in the fourth quarter.

For this smaller pool, our cash basis collection rate was 94% in the fourth quarter.

Speaker 4: From a balance sheet perspective, we ended the year with full capacity on revolver, and we have no unsecured debt maturities until 2024.

From a balance sheet perspective, we ended the year with full capacity on our revolver and we have no unsecured debt maturities until 2024.

Speaker 4: Total leverage is back to well within our targeted range of five to five and a half.

Total leverages back to well within our targeted range of five to five five times.

Speaker 4: The acquisition of Blakeney, which closed in November , was funded with cash on hand and our share of proceeds from dispositions completed in the fourth quarter.

The acquisition of Blakeney, which closed in November was funded with cash on hand, and our share of proceeds from dispositions completed in the fourth quarter.

Speaker 4: The acquisition of the Long Island portfolio, which closed just prior to year-end, was funded with the sale of Costa Verde in early January .

The acquisition of the long island portfolio, which closed just prior to year end was funded with the sale of Costa Verde in early January .

Speaker 4: notably, and a challenge that often goes under the radar with dispositions of long-held assets.

Notably and the challenge that often goes under the radar with dispositions of long held assets in.

Speaker 4: In the last year, we've been able to sell nearly $250 million of properties on a tax-efficient basis by structuring 1031 exchanges.

In the last year, we've been able to sell nearly $250 million of properties on a tax efficient basis by structuring 10 31 exchanges.

Speaker 4: Turning to guidance, please be sure to review the very helpful detail in our press release and business update slide deck posted to our website.

Turning to guidance. Please be sure to review the very helpful detail in our press release and business update slide deck posted to our website.

Speaker 4: While our earnings have historically been more visible and predictable, our 2021 earnings were impacted by a few cash basis accounting adjustments that complicated the picture heading into this year.

While our earnings have historically been more visible and predictable our 2020 . One earnings were impacted by a few cash basis accounting adjustments that complicated the picture heading into this year.

Speaker 4: These include prior-year reserve collections and straight-line rent reversal impacts, where it appears as if expectations around these items resulted in meaningful variability in street estimates.

These include prior year reserve collections and straight line rent reversal impacts where it appears as if expectations around these items resulted in meaningful variability and street estimates.

Speaker 4: To add some clarity, we've increased the transparency even further in our guidance disclosure relating to these items.

To add some clarity.

Kris the transparency, even further in our guidance disclosure related to these items.

Speaker 4: Regarding the collection of prior reserves, last year we collected $46 million that we had billed and reserved in 2020.

Regarding the collection of prior year reserves last year, we collected $46 million that we have built and reserved in 2020.

Speaker 4: This year, we expect to collect about $13 million of revenues billed and reserved in prior years. These impacts are only related.

This year, we expect to collect about $13 million of revenues build and reserved in prior years.

These impacts are only related to the timing of revenue recognition and this timing difference represents a <unk> 19 per share decrease in <unk> year over year and 2022.

Speaker 4: And this timing difference represents a 19 cent per share decrease in Mayread FFO year over year in 2022.

Speaker 4: One of the other big variances, as I mentioned, is the non-cash impact of straight-line rent reserve.

One of the other big variances as I mentioned is the noncash impact of straight line rent reserves.

Speaker 4: Last year we recognized $43 million of non-cash revenues, which included $13 million driven by the conversion of tenants from cash basis back to accrual.

Last year, we recognized $43 million of noncash revenues, which included $13 million driven by the conversion of tenants from cash basis back to accrual.

Speaker 4: This year we are forecasting roughly $28 million of non-cash revenues. That's a nine cent per share difference impacting NARED FFL.

This year, we are forecasting roughly $28 million of noncash revenues.

A <unk> <unk> per share difference impacting the NAREIT <unk>.

Speaker 4: And as we've mentioned on prior calls, we only plan to include cash to accrual conversion impact in forward-looking guidance as tenants are converted. So right now we have zero impact in our 2022 guidance relating to future conversion.

And as we've mentioned on prior calls we only plan to include the cash to accrual conversion impact and forward looking guidance as tenants are converted so right now we have zero impact on our 2022 guidance related to future conversions.

Speaker 4: We mentioned on the last call that the JV promote was recognized in Q3 21 would not recur in 22.

We mentioned on the last call that the JV promote was recognized in Q3, 'twenty, one would not recur in 'twenty two and.

Speaker 4: And we also discussed that our quarterly net GNA run rate would be higher in 22, driven by annual salary increases, filling open positions, and returning to more normalized levels of T&E. Collectively, these impacts are another 14 cents at the midpoint.

And we also discussed at our quarterly net G&A run rate would be higher in 'twenty, two driven by annual salary increases filling open positions and returning to more normalized levels of DNA.

Collectively these impacts are another 14 cents at the midpoint.

We hope you find this walk through material and unusual impacts helpful.

Speaker 4: Pivoting to same-property NOI growth, after adjusting for prior year collections, we are forecasting growth of 3.5% at the mid-period.

Pivoting to same property NOI growth after adjusting for prior year collections, we are forecasting growth of three 5% at the midpoint.

Speaker 4: That's $0.16 per share of incremental positive FFO growth.

<unk> 16 per share of incremental positive <unk> growth.

Speaker 4: We will continue our practice of disclosing the same property NOI growth range, excluding prior year collections, for as long as they meaningfully impact our results.

We will continue our practice of disclosing the same property NOI growth range, excluding prior year collections for as long as they meaningfully impact our results.

Speaker 4: providing some reflection of a more normalized growth rate where the primary contributing component is base rent growth.

Providing some reflection of a more normalized growth rate were the primary contributing component is base rent growth.

Speaker 4: One last reminder on same property NOI, recall that in the first quarter of last year, we were still recording meaningful on collectible lease income at nearly $18 million when excluding any impacts from prior period collection.

One last reminder, on same property NOI recall that in the first quarter of last year, we were still recorded meaningful uncollectible lease income at nearly $18 million when excluding any impacts from prior period collections.

Speaker 4: This compares to roughly two and a half million dollars in the fourth quarter of 21. So as we look to the cadence of growth by quarter during 22, we're anticipating a higher growth rate in the first quarter relative to the other three.

This compares to roughly $2 $5 million in the fourth quarter of 'twenty. One so as we look to the cadence of growth by quarter. During 'twenty. Two we are anticipating a higher growth rate in the first quarter relative to the other three.

Speaker 4: Also included in guidance, we expect transaction activity will be accretive to earnings this year, and while on the surface, our disposition guidance.

Also included in guidance, we expect transaction activity will be accretive to earnings this year.

And while on the surface, our disposition guidance exceeds acquisitions remember.

Speaker 4: Remember that the acquired Long Island portfolio closed on December 30th, so the impact is really that of a 2022 purchase.

Remember that the acquired long island portfolio closed on December 30th So the impact is really that of a 2022 purchase.

Speaker 4: We have about $65 million remaining of unsettled forward ATM equity and expect free cash flow from dividend payments north of $130 million.

We have about $65 million remaining of unsettled forward ATM equity and expect free cash flow from dividend payments north of $130 million this year.

Speaker 4: all of which supports and funds our investment pipeline and future growth opportunities.

All of which supports and funds our investment pipeline and future growth opportunities.

Speaker 4: Finally, a quarter ago, we talked about NOI getting back to 2019 levels on an annualized basis during the first half of 2022. And that was six months sooner than we had originally anticipated.

Finally, a quarter ago, we talked about NOI getting back to 2019 levels on an annualized basis during the first half of 2022.

And that was six months sooner than we had originally anticipated.

Speaker 4: But we're pleased to report that in the fourth quarter of 2021 and after excluding prior year collection.

But we're pleased to report that in the fourth quarter of 2021, and after <unk> and after excluding prior year collections.

Speaker 4: Total NOI has now recovered back to 2019 levels.

Total NOI has now recovered back to 2019 levels.

Speaker 4: As Lisa alluded, with the recovery behind us, we've now pivoted our mindset toward growth in 2022 and beyond.

As Lisa alluded with the recovery behind US, we've now pivoted, our mindset towards toward growth in 2022 and beyond.

And with that we look forward to taking your questions.

Speaker 1: Thank you. Ladies and gentlemen, at this time we will be conducting a question and answer session. If you'd like to ask your question, you may press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Rich Hill with Morgan Stanley . Please proceed with your question.

Thank you ladies and gentlemen at this time, we will be conducting a question and answer session. If you'd like to ask a question you May press star one on your telephone keypad.

Confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the Q4 participants using speaker equipment. It may be necessary to pick up your handset before pressing the star key our first question comes from the line of Rich Hill with Morgan Stanley . Please proceed with your question.

Speaker 5: Hey, good morning guys, I suspect you're gonna get a lot of questions about the guide, but I'd like to start off by saying, I think you've done a really good job bridging that. So so thank you for it. I have more maybe more of a strategic question to kick us off.

Hey, good morning, guys.

I suspect you're going to get a lot of questions about the guide, but I'd like to start off by saying I think you've done a really good job managing that so thank you for it.

To add more maybe more of a strategic question to kick us off.

Speaker 5: Occupancy looks like it's around 100 basis points below 19 levels.

On occupancy it looks like it's around 100 basis points below 19 levels. I'm curious if you can give us a timeline for full recovery and more importantly, when does your calculus begin to change from occupancy recovery to gains from pushing rents more so it sounded like Lisa what you were talking about pivoting to offense.

Speaker 5: Curious if you can give us a timeline for full recovery, and more importantly, when does your calculus begin to change from occupancy recovery to gains from pushing rents more? So it's sort of like, Lisa, what you were talking about pivoting to offense.

Speaker 5: Just a strategic question, how close do you think you are to really pivot?

Strategic question, how close do you think you are to really pivoting.

Speaker 4: Hey Rich, this is Mike. Let me start and then Jim will provide some color as he sees the leasing environment. Let me first say I appreciate your comments on the disclosure. We absolutely understand the complexity and the noise that we've lived through in 20 and 21 and anticipated that and are trying to help as best we can.

Hey, Rich this is Mike let me start and then Jim will provide some color Ccs the leasing environment and let me first say I appreciate your comments on the disclosure.

Absolutely understand the complexity and the noise that we've lived through in 2020 , one and an anticipated that and I'm trying to help.

Speaker 4: From an underlying assumption perspective on our same property and OI growth range, we are planning for increases in both top-line percent leased as well as commenced occupancy rates in the 75 to 100 basis point range. That is what's underlying and supporting our midpoint of 3.5% growth, which

Best we can.

From an underlying assumption perspective on our same property NOI growth range.

Our planning for increases in both top line percent least as well as commenced occupancy rates in the 75 to 100 basis point range that is what's underlying and supporting our mid point of three 5% growth, which.

Speaker 4: Largely is coming from base rent growth Recall we're also getting about 1.3 percent of contractual increases Contributing to our our top-line NOI as well With respect to pricing power. I'll let Jim jump in and provide some color on how the teams are attacking our rollover

Largely as coming from base rent growth.

Recall, we're also getting about one 3% of contractual increases.

Contributing to our topline NOI as well.

With respect to pricing power I'll, let Jim jump in and provide some color on how the teams are attacking on a rollover.

Yes rich.

Speaker 5: We, as you saw, our spreads are getting better. We had...

As you saw our spreads are getting better we had.

Speaker 5: roughly 13% this quarter on a blended basis.

Roughly 13% this quarter on a blended basis.

Speaker 5: When you couple that with the embedded rent steps, we continue to get over 2% in the vast majority of our rents.

When you couple that with.

The embedded rent steps, we continue to get it over 2% in the vast majority of our spaces.

Speaker 5: The prudent leasing capital spend that we're doing is driving really good gap rents as well as net effective rents and combined, when you look at that whole package, that's what we're looking at as far as the positive direction for long-term.

The prudent leasing capital spend that we're doing is driving really good GAAP rents as well as net effective rents and combined when you look at that whole package Thats what were looking at forest.

A positive direction for long term.

Growth in the portfolio.

Speaker 5: The demand continues to be very strong across all regions, like I indicated in the prepared remarks.

The demand continues.

Strong across all regions like I indicated in the prepared remarks.

We think that will continue to at least in our portfolio continued to.

Speaker 5: And we think that will continue to, at least in our portfolio, continue to.

Speaker 5: have the leverage shift more towards the landlord side, we believe as spaces do get more occupied.

Have the leverage shift more towards the landlord side, we believe as as as spaces do get more occupied.

Speaker 5: I think we'll be able to drive even harder deals.

I think we will.

We'll be able to drive even harder deals.

But I think the stay at home.

Speaker 5: change in the entire retail landscape I think has been very positive for us and our product.

Change in the entire retail landscape I think has been very positive for us in our product type.

Speaker 5: We are close to homes, we're in generally very strong demographic, high density marketplaces, not a lot of urban locations. So that has played well for our product type and we continue to see that as a positive.

We are close to homes were generally very strong demographic high density.

Marketplaces.

Not a lot of urban.

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Locations. So that has played well for our product type.

And we continue to see that as a as a positive vehicles to.

To help support the demand going forward.

Speaker 4: And hey, Rich, one last comment, because I realize you were asking a little bit about forward total recovery. Yeah.

One last comment on because I realize youre asking a little bit about forward total total recovery.

Speaker 4: To highlight our top end and how we think about kind of maximum occupancy, we are 96% is where our eyes are. We think our portfolio and the quality of our assets.

Importantly to highlight our top end and how we think about kind of maximum occupancy. We are 96% is where our eyes are we think our portfolio and the quality of our assets and the historical performance of them would support a 96% occupancy rate you drop about 150 basis points off of that for our commenced.

Speaker 4: and the historical performance of them would support a 96% occupancy rate. You drop about 150 basis points off of that for a commenced occupancy rate.

Speaker 4: So not only do we see 75 to 100 basis points supporting our 22.

Betsy right. So not only do we see 75 to 100 basis points supporting our 'twenty two growth, we see growth beyond that of similar rates of increases and if you think about our post GSE recovery progress. This is our this recovery.

Speaker 4: we see growth beyond that of similar rates of increases. And if you think about our post-GFC recovery.

Speaker 4: This recovery, 75 to 100 is a little bit below what we experienced post-GFC, but we did have more room, more vacancy coming out of the GFC, more space to fill than we do now. This trajectory feels right to us, feels healthy, and it feels appropriate for that long-term recovery.

75 to 100 is a little bit below what we experienced post GSE, but we did have more room with more vacancy coming out of the GSE more space to fill and we do know this trajectory feels feels right to us feels healthy and feels appropriate for that long term recovery.

Speaker 6: Got it. So as I, as I think about this, it sounds like to me, you know, a year from now, knock on wood, um, you're going to have, you're going to be in a pretty good place back to where you were prior to the GFC. 2021 was obviously a remarkable year of recovery. 22 is, um, sort of blocking and tackling and a little bit of a transition to get back to that.

Got it.

I think about this it sounds like to me.

A year from now knock on wood, you're going to have you're going to be in a pretty good place back to where you were prior to the GSC 2021 was obviously a remarkable year recovery 'twenty two is sort of a blocking and tackling and a little bit of a transition to get back to that level, where we were prior to why do I say the GSC got COVID-19 .

Speaker 6: level where we were prior to, why do I say the GFC? God, COVID. It sounds like you're going to be in a really good place 12 months from now. Is that fair?

<unk>.

It sounds like Youre going to be.

A really good place 12.

12 months from now is that fair.

Speaker 3: Absolutely, and I think that that's a really good point, Rich. So our NOI really has recovered. Our total NOI has recovered. And I have the utmost confidence that when we look at how we will perform in 2022 from an earnings perspective, despite the complexities that we talked about with the guidance.

Absolutely and I think that that's a really good point.

Our NOI it really has recovered our total NOI has recovered.

And.

I have the utmost confidence that when we look at how we will perform in 2022 from an earnings perspective, despite the complexities that we talked about what the guidance.

Speaker 3: that our recovery will stack up really well versus 2019 versus everyone else in the sector. And that's with our balance sheet actually being even better positioned today. Our net debt to EBITDA is lower today than it was with going into COVID. And that was with maintaining and raising our dividends. So we feel really good about it. And we feel good about 2022.

Is that a recovery.

<unk>.

Stack up really well versus 2019 versus everyone else in the sector and thats with our balance sheet actually being even better positioned today, our net debt to EBITDA is lower today than it was going into COVID-19 and that was less maintaining and raising our dividend. So we feel really good about and we feel good about 'twenty two.

Me too.

Great. Thank you guys.

Speaker 1: Our next question comes from the line of Katie McConnell with Citi. Please proceed with your question.

Our next question comes from the line of Katy Mcconnell with Citi. Please proceed with your question.

Speaker 7: Great thanks, good morning everyone. So I just had two more questions on guidance and the first is within your same store guidance range what are you assuming for new VAD debt expense this year versus 2021? And secondly understanding the straight line guidance will only be updated as those cash tenants are converted back to accrual or can you maybe help us quantify how large that total impact could be in theory if that entire pool was converted back to accrual method tomorrow?

Great. Thanks, good morning, everyone.

Two more questions on guidance in the first 10 years.

So our guidance range, what are you assuming for new bad debt expense this year versus 2021, and secondly, understanding that straight line guidance well, maybe after you get the cash.

You bring it back to accrual or can you maybe help us quantify how large that total impact could be in theory that entire coles converted back to claw back a while.

Speaker 4: Sure, I appreciate those questions, Katie.

Sure.

Appreciate those questions.

Speaker 4: From a bad debt expense perspective, so let's talk about current year billings is the question. In 2021, we ended the year at about 175 basis points of bad debt expense on 2021 billing.

From a bad debt expense perspective, so let's talk about current year billings is the question in 2021, we ended the year at about 175 basis points of bad debt expense on 2021 billings as we think about our underlying assumptions going into 'twenty two we see we see improve.

Speaker 4: As we think about our underlying assumptions going into 22, we see improvements in our cash collection rates. And we're calling for about in the area of 100 basis points on a comparable basis. In dollars, that's equating to about $10 million of improvement.

And our cash collection rates and we're calling for about in the area of 100 basis points on a comparable basis.

Thats equating to about $10 million of improvement.

Speaker 4: We could do better than that on the top end, and we provided for maybe a little bit less collection on the bottom end, but at the top end, we could see us returning to our historical averages by year-end, so not on an average for 22, but by year-end. And that historical average, to remind you, is about 50 basis points of billed revenue.

We could do better than that on the top end.

But we provided for maybe a little bit less collection on the bottom end, but at the top end, we could see us returning to our historical averages by year end.

So not on an average for 'twenty, two but by year end and that historical average to remind you is about 50 basis points of build revenues that.

Speaker 4: And that is where we anticipate ultimately recovering to. The question on straight-line rent is a good one. And I'd point you to page 34 of our supplement, where we've been breaking down more diligently our COVID disclosures.

And that is where we anticipate ultimately recovering too.

The question on the straight line rent is a good one.

And I'd point you to.

Page 34 of our supplement where we have been breaking down our.

More diligently our COVID-19 disclosures what.

Speaker 4: What you'll see there is a reserve on our straight line rents of $33 million. So this is getting to your point of what is the maximum potential in theory that $33 million is the maximum potential. But I a heavy dose of caution there, Katie on

What youll see there is a reserve on our straight line rents of $33 million. So this is getting to your point of what is the maximum potential in theory that $33 million is the maximum potential.

A heavy dose of caution there.

Speaker 4: whether we can, whether we will ever eventually convert all of those tenants back to.

Whether we can whether we will ever eventually convert all of those tenants back to accrual recall, we are 17% as I indicated on a cash basis of accounting today.

Speaker 4: Recall, we have 17%, as I indicated, on a cash basis of accounting today. There is some visibility, as we sit here in mid-February, to converting more tenants in the first quarter.

There is some visibility as we sit here in mid February to converting more tenants in the first quarter.

Speaker 4: I think just to give you a number on that, our outlook calls for in the area of $5 million of potential conversion income on an FFO basis, non-cash. We're on an as-converted basis and we'll continue to update everyone as those conversions occur.

I think just to give you.

A number on that at our outlook calls for in the area of $5 million of potential conversion income on an <unk> basis noncash.

We are on an as converted basis and we will continue to update everyone.

As those conversions occur.

Speaker 8: It's Michael Bowman here with Katie. Maybe Lisa or Mike, maybe just stepping back overall, and I recognize there's a lot of complexities with the prior reserves and non-cash income that clearly, at least it appeared as though the street got a little bit ahead of itself, and that's not only to you, obviously other companies across other sectors as well, it impacted.

Hey, it's Michael Bilerman here with Katie, maybe Lisa or Mike, maybe just stepping back overall and I recognize there's a lot of complexities with the prior year reserves and noncash income.

That clearly at least it appeared as though the street got a little bit ahead of itself not only to you obviously other companies across other sectors as well.

Impacted but when you sort of compare your line item guidance relative to the street.

Speaker 8: But when you sort of compare your line item guidance relative to the street.

Speaker 8: it would seem at least half of it is more core-related, lower core NOI, a bit higher interest expense, higher G&A, even above the levels that you'd sort of previously indicated, and so missing the street by five or six percent, half of that being core. How do you look at that item? Because I don't think all of this is truly just, you know, reserves and non-cash. There seems to be some

It would seem at least half of it is more core related lower core NOI, but higher interest expense higher G&A, even above the levels that you had sort of previously indicated.

And so im missing the street by five or 6% half of that being core.

How do you look at that.

Because I don't think all of this is truly just was.

<unk> noncash there seems to be some.

Speaker 8: either conservatism in your views or that you know the street just got way ahead of itself and so I'm just trying to

Either conservatism in your views.

For that.

Street, just got way ahead of itself and so I'm just trying to.

Speaker 8: understand from your vantage point how you look at things and how you're going to pivot to stronger FFO growth as we roll into 23 and 24.

Understand from your vantage point, how you look at things and how youre going to.

Two stronger SSO growth as we roll into 'twenty three 'twenty four.

Speaker 4: I appreciate the question, Michael and would agree a little bit with maybe getting a little bit ahead just to walk through some of the some of the details just so we're all on the same page. Yes. The non cash conversion item is a is a major component.

I appreciate the question Michael.

Would agree a little bit with.

The street, maybe getting a little bit ahead just.

Just to walk through some of the some of the details because we're all the same page.

Yes, the noncash conversion item is a major component.

Speaker 4: of the of the decelerating growth, right? So if you just look at the fourth quarter on a run rate basis, that's that's five cents of your of your of our issue going forward.

The the decelerating growth right. So if you just look at the fourth quarter on a run rate basis. That's that's <unk> of your of your of our issue going forward and again, we're not guiding on future conversions, Although let me reiterate the the.

Speaker 4: And again, we're not guiding on future conversions, although let me reiterate the potential Q1 conversion of about $5 million.

The potential Q1 conversion of about $5 million.

Speaker 4: Then we get into what we still call our core, which includes prior year collections, and that is an unusual and material moving item. That component of ULI is going to be about a 3% impact to the fourth quarter, so that is impacting our run rate going forward and is effectively, Michael, absorbing our good, healthy growth and base rent and NOI going forward in our 3.5% guide on that line item.

Then we get into what we still call our core which includes prior year collections and that is an unusual material moving item.

That that component of <unk> is going to be about as about a 3% impact to the fourth quarter. So that is impacting our run rate going forward and is effectively Michael absorbing are good healthy growth in base rent and NOI.

Going forward in our 335% guide on that line item.

Speaker 4: which leads and isolates on the core, our increase in GNA as a drag. And again, that's an item that we we we identified in the third quarter call. We wanted to make sure that people's run rates for quarterly GNA was in the twenty million dollar range, which was about a two million dollar increase per quarter over what we experienced in twenty one on that line item.

Which leaves and isolates on the core or increase in G&A.

As a drag and again thats an item that we.

We identified in the third quarter call.

We wanted to make sure that People's run rates for quarterly G&A was in the $20 million range, which was about a $2 million increase per quarter over what we experienced in 'twenty one.

On that line item just for some context.

Speaker 4: You know, as I said on the call, we're filling open positions.

As I said on the call. We're filling open positions. We've increased our we had our annual salary increases are big line, a big component of our increases returning to normalcy on the G&A front.

Speaker 4: We've increased our annual salary increase.

Speaker 4: A big line, a big component of our increase is returning to normalcy on the T&E front. Our teams are back on the road. We are reinflating those line items to 2019 levels. That's about 40% or so of our forecasted increase in G&A.

Our teams are back on the road.

We are re inflating those line items to 2019 levels, that's about 40% or so of our forecasted increase in G&A.

Speaker 4: And then I need to mention that and remind everyone, we did have an unusual one-time negative GNA impact in 21 related to LTI forfeitures.

And then I need.

Dimension that and remind everyone. We did have an unusual one time net.

Negative G&A impact in 'twenty, one related to LTI forfeitures.

Speaker 4: You know, we had some departures, most notably at the CIO level, and there was a one-time impact that benefited 21 that will not recur in 22.

We had some departures most notably at the CIO level and there was a one time impact that benefit of 'twenty, one that will not recur in 'twenty two.

Speaker 4: You put all that together and I think you want us to boil us down and think about and hear how we're thinking about the business.

You put all that together and I think you want to you want us to boil it down and think about and hear how we're thinking about the business.

Speaker 4: looking through prior year collections and thinking about the midpoint of our core range, that's a 3% increase as we're thinking about our core operating business. And if you think about the upper end of that range and try to compare it to 2019, we're only 2% off of that recorded number.

Looking through prior year collections and thinking about the mid point of our core range, that's a 3% increase.

As weird as we're thinking about our core operating business.

And if you think about the upper end of that range and trying to compare it to 2019.

Only 2% off of that reported number.

Speaker 4: as a, if we want to put a line in the sand, as 29th in recovery.

As if we want to put a line in the sand is 29 and recoveries.

Speaker 4: We feel, as Lisa said, we feel great about the outlook for 22. We are on the right vector of recovery on the leasing front. And we're looking forward to growth from this point forward.

We feel as Lisa said, we feel great about the outlook for 'twenty. Two we are on the right vector of recovery on the leasing front.

And we're looking forward to growth from this point forward.

Speaker 8: and you feel like it's an accelerating growth into 23 and 24.

And you feel like it's an accelerating growth into 'twenty three 'twenty four.

Okay.

Yeah.

Speaker 3: I think that it goes back to what we just answered with regards to the continued ability to increase our occupancy. We do feel, we feel good about that. We still have room to run.

I think that.

It goes back to what we just answer with regards to the continued ability to increase our occupancy and we do feel we feel good about that we still have room to run.

Speaker 3: And the fact that also, I think, I appreciate the question, Michael, about the different line items, if you will, but as I think about it, and Mike, I can't articulate it better than Mike did, the core business is the same property NOI guide, excluding all that prior year noise, and that's a midpoint of three and a half percent.

And the fact that also I think.

I appreciate the question Michael about the different line items, if you will but as I think about it and Mike I can articulate it better than Mike did the core business is the same property NOI guide, excluding all of that prior year noise and that's a midpoint of three 5%.

Speaker 3: That's growth to me and continued growth, and I think it's really important to not brush over the fact that I said our net debt to EBITDA is lower today than it was entering COVID. We have capital. We have room to run. We are looking for opportunities and our development pipeline is refilling, and we are really active in the acquisition arena, $500 million last year. I believe I have a lot of confidence on the future growth.

That's growth to me and continued growth.

And I think it's really important to us.

Brush over the fact that I said, our net debt to EBITDA is lower today than it was entering Covid. We have capital we have room to run we are looking for opportunities.

Our development pipeline is refilling and we're really active in the acquisition.

Arena $500 million last year. So, yes, I believe I have a lot of confidence on the future growth of for our company.

Speaker 4: Philosophically, as you know, we don't guide on speculative transactions on the acquisition front. We have $30 million in our 22 guidance. That is an opportunity in the Pacific Northwest that is under contract, and we feel great about closing.

Philosophically, we as you know we don't guide on speculative transactions on the acquisition front, we have $30 million in our 'twenty two guidance that is.

The opportunity in the Pacific Northwest that is under contract and we feel great about closing.

Speaker 4: But as Lisa said, and we've been indicated throughout 21, with our balance sheet and our free cash flow levels exceeding $130 million, we're on our front foot on the investment front and looking forward to putting that.

But as Lisa said and we've indicated throughout 'twenty, one with our balance sheet and our free cash flow levels exceeding a $130 million, we're on our front foot.

On the investment front and looking forward to putting that those opportunities to work.

Speaker 8: Yeah, I think investors are just trying to understand, it's my last comment, I'll yield the floor, but just trying to understand, Lisa, exactly what that top line positive growth, and you can see the occupancy going up and all the initiatives.

Yes, I think investors are just trying to understand so my last comment I'll yield the floor, but just trying to understand exactly what that top line positive growth and you can see the occupancy going up and all of the initiatives.

Speaker 8: uh... the transaction activity the development redevelopment

<unk> activity the development redevelopment.

Should ultimately translate into better growth and with a disappointing guide I think investors are sort of questioning that it may make sense to go the federal route and sort of lay out the multiyear building blocks to your growth. So that people can get comfortable that that top line same store growth and is really going to drive bottom line earnings growth and dividend.

Speaker 8: I think investors are sort of questioning that. It may make sense to go the federal route and sort of lay out the multi-year building blocks to your growth so that people can get comfortable that that top-line same-store growth is really going to drive bottom-line earnings growth and dividend growth. And I know the dividend will never cut, and that's an important part of everything, and the Dow should be in a good position. It may just need a little bit more guidance to the street so that we can see this multi-year growth platform come into effect.

Growth and I know the dividend cut and Thats, an important part of everything in the balance sheet is in good position. It may just need a little bit more.

Guidance to the street, so that we can see this multiyear growth platform come into effect.

Speaker 3: Sure. Absolutely. And I want to make sure I think the team has done a tremendous job of providing the individual components. So I want to make sure that I recognize that of the team and

Sure absolutely and I want to make sure I think the team has done a tremendous job of providing the individual components. So I want to make sure that I recognize that.

<unk> and <unk>.

Speaker 3: There it is a lot of one time things in 2021, which I believe that we have very specifically already laid out, but appreciate the comment. Michael, we not only maintain the dividend. We actually had a pretty significant increase to.

There is a lot of one time things in 2021, which I believe that we have very specifically I already laid out but I appreciate the comment Michael.

We not only maintained the dividend, we actually had a pretty significant increase too.

Speaker 1: Our next question comes from the line of Michael Goldsmith with UBS. Please proceed with your question.

Our next question comes from the line of Michael Goldsmith with UBS. Please proceed with your question.

Speaker 9: Good morning. Thanks a lot for taking my question. Lisa, 2021 was a pretty unique year for retail, where the consumer benefited from stimulus and child tax credits. It was a shift from services to goods. So, we entered 2022.

Good morning, Thanks, a lot for taking my question Liza 2021 is a pretty unique year for retail where the consumer benefited from stimulus and child tax credits. It was a shift from services. The good as we enter 2022.

Speaker 9: we're facing with some factors reversing plus we've got inflation which could lead into discretionary dollars. What is your outlook for kind of the consumer and retail for the year? And given your focus on grocery anchored centers, do you feel like you're really well positioned to kind of stay the course even if this 2022 becomes a little bit of a volatile year for retail and the consumer?

We're facing with some of these factors reversing plus you've got inflation, which could even into discretionary dollars.

Is your outlook for kind of consumer and retail for the year and given your focus on grocery anchored centers do you feel like you're really well positioned.

Of course, even if you.

If this 2022 becomes a little bit of a volatile year for retail and the consumer.

Speaker 3: Michael, I think you answered the question for me yourself. I do feel, I believe that there's no question that there's a lot of impact to the consumer, but with regards to the part of the retail sector that we are playing in, if you will, is the best positioned. So Jim said it in his, in answering the Occupancy question, being close to people's homes.

Michael I think you answered the question for me yourself.

I do feel I believe there is no question that there is a lot of impacts to the consumer but with regards to the brief.

The part of the retail sector that we are playing in if you will is the best positioned so.

Jim said it.

Is that answering the occupancy question being close to People's homes. So there is no question.

Speaker 3: So there's no question. I mean, and we all read the same data and news articles.

We all read the same data and news articles some of the largest increases for that are impacting families are in gasoline and in energy and people are staying closer to home, which is a little bit of a tailwind. If you will even in even in spite of the headwinds of <unk>.

Speaker 3: Some of the largest increases that are impacting families are in gasoline and in energy, and people are staying closer to home, which is a little bit of a tailwind, if you will, even in...

Speaker 3: In spite of the headwinds of rising prices, it's a tailwind for suburban shopping centers and for grocery-anchored shopping centers. People are eating at home more often, and when they're not eating at home, they're staying close to home to eat. So again, it's benefiting our product type. We're seeing it in sales at our shopping centers. Our sales...

Zinc prices as a tailwind for suburban shopping centers and for grocery anchored shopping centers people are eating at home more often and when they're not eating at home. They are staying close to home to eat so again, it's benefiting our our product type we're seeing in sales.

At our shopping centers are sales.

Speaker 3: are up not just over 2021 and 2020, but over 2019, kind of a more normal environment, if you will. So our outlook is still really bullish on grocery-anchored shopping centers. And you're seeing that translate into the demand for that product type as well in the transaction market.

<unk> are up not just over 2021 and 2020, but over 2019.

Kind of on a more normal environment. If you will so our outlook is still really bullish on grocery anchored shopping centers and youre seeing that translate into the demand for that product type as well in the in the transaction market.

Speaker 9: That's helpful. And then, Mike, on the guidance, thanks again for the detailed breakdown. You know, can you outline some of the items that may not be included in your guidance? You talked about future transactions and acquisitions. And then at the same time, you know, your guidance calls for the same property and allied growth of two and three quarters to four and a quarter extra term fees in the prior year reserve collections. If we back out some of the outsize expense recovery from the prior year, does that kind of reflect the go forward growth algorithm of the core business?

That's helpful and then Mike on the guidance. Thanks again for the detailed breakdown.

Can you outline some of the items that may not be included in your guidance you talked about future transactions and acquisitions and then at the same time.

Your guidance calls for our same property NOI growth of two and three quarters to four and a quarter.

Exit term fees in the prior year reserve collections, if we back out some of the outsized expense recovery from the prior year kind of reflects the go forward growth algorithm of the core business.

Speaker 4: Sure, I think much like you do with Lisa, I think you answered some of that there, Michael. We do exclude transaction activity, again, kind of as a rule at Regency, philosophically, and we just don't.

Sure.

Much like you did with Lisa I think you answered some of that there Michael.

We do exclude transaction activity again kind of as a rule at regency philosophically and we just don't.

Speaker 4: We just don't want to set those expectations for us internally into making poor investment decisions. So those will all be incremental as we move forward.

We just don't want to set those expectations expectations for us internally into making poor investment decisions. So those will all be incremental as we move forward.

Speaker 4: Within the same property NOI line item, I appreciate you bringing up the tough comp in Q2 from 21. We did have an outsized recovery experience in 21 that will not recur in 22. That's about a 50 basis point drag. Essentially, there's three big components to the same property growth at the mid.

Within the same property NOI line item I appreciate you, bringing up the tough comp in Q2 from.

From 'twenty, one we did have an outsized recovery experience in 2020 , one that will not recur in 'twenty two that's about a 50 50 basis point drag.

Essentially there's three big components to the same property.

Speaker 4: 400 basis points total, 300 basis points coming from base rent growth.

Growth at the mid 400 basis points.

Total 300 basis points coming from base rent growth and a 100 basis points coming from improvement in <unk> and I went through that assumption on bad debt expense on a previous question and then that drag of 50 basis points is bringing us back down to the three and a half.

Speaker 4: and 100 basis points coming from improvement in ULI. And I went through that assumption on bad debt expense on a previous question.

Speaker 4: And then that drag at 50 basis points is bringing us back down to the three and a half.

Speaker 4: Four percent, compared to historical averages, is pretty healthy. You know, you've heard us and followed us and heard us talk about two and a half to three percent on a stabilized basis being a normal rate of growth annually for Regency. So four percent would reflect a rising level of occupancy, which we articulated in that 75 to 100 basis point range. Thank you. Thank you.

4%.

Compared to historical averages is pretty healthy.

You've heard us and followed us and heard US talk about two 5% to 3% on a stabilized basis being a.

A normal rate of growth annually.

Annually for Regency.

So 4% would would reflect a rising level of occupancy, which we articulated in that 75 to 100 basis point range.

Thank you very much good luck in 2022.

Thanks, Michael.

Speaker 1: Our next question comes from the line of Flores Van Dijkum with Compass Point. Please proceed with your question.

Our next question comes from the line of Floris Van <unk>.

With Compass point. Please proceed with your question.

Speaker 10: Thanks. Morning, everyone. I had a question on.

Thanks, Good morning, everyone.

Had a question on.

Speaker 10: We've heard about the Donahue-Schreiber transaction going at a very low cap rate and we've heard some of your competitors and peers talk about that cap rates are going lower. As you think about allocating capital over the next year or two, Lisa and Mike, how are you thinking about that when you're weighing developments versus...

The obviously, we saw the we've heard about the Donohue Schreiber transaction going at a very low cap rate and we've heard some of your.

Your competitors and peers talk about that cap rates are going lower as you think about allocating capital.

Over the next year or two.

Lisa and Mike.

How are you thinking about that.

When you're weighing developments versus.

Speaker 10: new acquisitions because new acquisitions clearly are going to be at lower cap rates than what they've occurred over the last 18 months. Also, maybe talk a little bit about your differentiated approach to development relative to your two large cap strip peers. Can you put enough capital to work in that space in your view?

The new acquisitions, because new acquisitions, clearly are going to be at lower cap rates than what they've occurred over the last 18 months and then also maybe talk a little bit about your differentiated approach to development relative to your two large cap strip Pierce and can you put enough capital to work in that.

In that space in your view.

Speaker 3: I'll start and I'll allow Mike to add any color as needed.

Hum.

I'll start and allow me to.

To add any color as needed so far as the.

Yes.

Speaker 3: we strategically and how we think about putting capital to work.

We strategically and how we think about putting capital to work.

Speaker 3: We have not changed our point of view. And we do look at investments holistically. And we always say, the best use of our capital is to reinvest back into the centers that we already own and we know really well. And we are constantly intentionally and intensively managing those assets to do that. And we have a pretty good track record of doing so and putting capital work there and getting really good risk-adjusted returns with that capital. But those opportunities are limited. As you've pointed out, I mean, that is not an unlimited open check, if you will.

We have not changed our point of view and we do look at investments Holistically and we always say the best use of our capital is to reinvest back into the centers that we already own and we know really well.

And we are constantly intentionally and intensively managing those assets to do that and then we have a pretty good track record.

Doing so in putting capital to work there and getting really good risk adjusted returns with that capital, but those opportunities are limited as you as you pointed out that is not an unlimited open check if you will.

Speaker 3: And then we also use our free cash flow and balance sheet capacity to invest in ground-up developments. And again, I think we have the best team in the business, we have the best track record in the business. We have, as the Coast of Verde sale...

And then we also use our free cash flow and balance sheet capacity too.

Invest in ground up developments and again I think we have the best team in the business, we had the best track record in the business.

We have as we as.

The Costa Verde sale will show you we have.

Speaker 3: once again really refocused on our bread and butter on what we do best, which is grocery anchored shopping centers. And we've had, we still are enjoying a lot of success there. Just in the past, I lose track of time, but we have a Publix, you know, underway here. I can almost see it outside of my window. In Jacksonville, we just, we're ready to potentially start phase two of an HEB that we actually green-lighted during COVID.

Once again really refocused on our bread and butter on what we do best which is grocery anchored shopping centers and we've had we still are enjoying a lot of success. There just in the past I lose track of time, but we have a publix underway here I can almost say it outside of my window and Jacksonville, We just we're ready to potentially start phase.

To have an HEB that we actually greenlighted during COVID-19 .

Speaker 3: Many of you have had the opportunity to see our recently completed Wegmans in Raleigh. We've got a Publix underway in Richmond, and I can go on and on and on. We've got a fantastic team, and we will continue to get more than our fair share of those opportunities. And as we all know, grocery is growing, and we're going to continue to have the opportunity to do that. And then with acquisitions, I think Blakeney, Long Island, again, success.

Many of you have had the opportunity to see our recently completed wegmans in Raleigh, they've got a publix underway in Richmond, and I can go on and on and on we've got a fantastic team and we will continue to get more than our fair share of those opportunities and as we all know groceries garlic and we're going to continue to have the opportunity to do that and then with acquisitions I think blakeney long.

Island again success.

Speaker 3: You know, Pruneyard prior to that, when we have boots on the ground, we have the team in the ground, we have relationships, really important, that help bring opportunities to us and we do have a cost of capital advantage.

Pruning yard prior to that we when we have boots on the grounding of the team in the ground, we have relationships really important and that.

That helped bring opportunities to us and we do have a cost of capital advantage.

Speaker 3: Um, when we're able to use that and use our expertise.

When we're able to use that and use our expertise and see an opportunity to add to the quality of our portfolio and add to the future growth rate of our portfolio, we're going to take advantage of it and I felt really confident that we'll do that.

Speaker 3: and see an opportunity to add to the quality of our portfolio and add to the future growth rate of our portfolio, we're going to take advantage of it. And I feel really confident.

Speaker 10: Thanks, Lisa. If I can add, maybe have another question here on in terms of, you know, technology and data. I mean, you are, you were the largest owner. You're now the second largest owner, but you've had this, this, you know, wealth of information at your fingertips.

Thanks, Lee if I can add maybe you have another question here in terms of.

Technology and data I mean, you are or you were the largest owner of <unk> now the second largest owner, but you've had this.

Wealth of information at your fingertips.

Speaker 10: Maybe if you can talk a little bit about how all of that information and getting the new information, particularly regarding, you know, cell phone usage or traffic at your centers, how is that helping the business? How is that helping your small shop? And does that actually...

Maybe if you can talk a little bit about how all of that information and getting the new information, particularly regarding.

Cell phone usage or traffic at your centers, how is that helping the business how is that helping your small shop and does that actually.

Speaker 10: you know, allow, you know, Regency to maybe boost.

Allow.

Regency to maybe boost in particular small shop occupancy, which has always lagged your anchor occupancy are there things, where you can actually monetize some of that technology and data and improve the economics of the business.

Speaker 10: in particular, small shop occupancy, which is always lagged, or anchor occupancy, are there things where you can actually monetize some of that technology and data and improve the economics of the business?

Speaker 3: I'll start and Jim can add to the extent that he has any little nuggets, but it is, I appreciate the recognition of the size. I do think that scale matters. We talked about that going back to 2017 when we merged with Equity One.

I'll start and Jim can add.

To the extent that he has any any little nuggets, but it is.

I appreciate the recognition of the size I do think that scale matters.

We talked about that going.

Going back to 2017, when we merged with equity one.

Just that one combination.

Speaker 3: That one combination made a difference with relationship with tenants, with our ability to mine data, as you said, and also just the absolute levels of free cash flow that we have allow us to invest back in the business as well. And that is in technology and in data analysis and in being able to do a little R&D and what can we do to help drive occupancy and drive higher rents in our shopping centers.

<unk> made a difference with relationship with tenants with our ability to mine data as you said and also just the absolute levels of free cash flow that we have allow us to invest back in the business as well and that is in technology and data analysis, and then being able to do a little R&D and what can we do to help drive occupancy.

<unk> and drive higher rents in our shopping centers.

Speaker 3: And I think we continue to see that and we have, I mean, our peers are doing some of the same as well. It's not as if we have a secret sauce. I think we have all gotten better and more sophisticated, certainly over the 25 years that I've been here. And I think we're going to continue to do that. We're going to continue to be able to help our tenants and further drive occupancy. The higher the quality of the shopping center, the more ability you have to do that. And I think, again, we are well positioned.

And I think we continue to see that and we have our peers.

We're doing some of the same as well it's not as if we have a secret sauce I think we have all.

<unk> gotten better and more sophisticated certainly over the 25 years that I've been here and I think we're going to continue to do that we're going to continue to be able to help our tenants and further drive occupancy the higher the quality of the shopping center. The more ability you have to do that and I think again, we are well positioned to do so.

Speaker 11: Thank you.

Thank you.

Speaker 1: Our next question comes from the line of Samir Kunal with Evercore. Please proceed with your question.

Our next question comes from the line of Samir Khanal with Evercore. Please proceed with your question.

Speaker 8: Hi, good morning, everybody. Hey, Jim, correct me if I'm wrong, but I think in your opening remark, you talked about labor shortages, and I think the impact on rent commencement times. Maybe just expand that on a bit, kind of what you're seeing in your portfolio, just trying to understand that a little bit more.

Hey, good morning, everybody, Hey, Jim Correct me, if I'm wrong, but I think in your opening remarks, you talked about labor shortages and its impact on rent commencement tons, maybe just expand that on a bit.

Kind of what Youre seeing in your portfolio, just trying to understand that a little bit more.

Speaker 5: Yes, Samir. Obviously, it's a headwind that we see out there. I would say it has not been impactful to date, but we're cognizant of it and prepared to

Yes Sameer.

It's a headwind that we see out there I would say, it's it has not been impactful to date.

But where we are.

We're cognizant of it and prepared.

Two two.

To expect some some delay on a rent commencement.

Speaker 5: Probably the biggest challenge as I look at it today is still probably on the front end from the permitting perspective. The municipalities are still working from home from a lot of perspectives.

Probably the biggest challenge as I look at it today is still probably on the front end from the from the permitting perspective.

So policies are still working from home from a lot of perspectives, it's hard to get plans approved it's hard to give you. Some factors out so thats, probably the one thing that we're having the hardest time.

Speaker 5: So that's probably the one thing that we're having the hardest time circumventing and figuring out better.

Circumventing in figuring out better ways.

To solve the problem because.

Speaker 6: really that's the toughest issue. Everything else we're getting creative like we're

It's really that's the toughest issue everything else, we're getting creative like ours.

We're figuring out ways to.

Speaker 5: multiple options for different product types, how do you pre-order items, preparing white box well before you need it. Things that.

Multiple options for different product types.

How do your preorder items.

Wearing white box well before you need it.

<unk> that.

Speaker 5: We've always done on the margin, but now are just absolutely critical to think about what's plan B and, and, and be ready to snap to plan B, know what it is, execute on it without losing, without losing time.

We've always done on the margin, but now are just absolutely critical to think about what's plan b.

And be ready to snap to plan B no. One it is execute on it without losing without losing time. So so far like I say it hasn't been an impact.

Speaker 5: So far, like I say, it hadn't been an impact, but eyes wide open. I think the labor issue is the one that kind of.

But.

Eyes wide open.

I think the labor issue is the one that kind of.

Keeps me thinking about.

Speaker 5: The impact, I think, is basically there. Supply chain, we're kind of working around, but the labor, hopefully.

The impact I think is basically their supply chain, we're kind of working around the labor.

Hopefully knock on wood.

Starting to sort itself out.

Speaker 8: Okay, thanks for that. And I guess that's my second question that Mike released. I know you don't guide your transactions, but is there a way to sort of give us an idea of what that pipeline looks like today? I mean, how active is that? Maybe the volume of product you're currently looking at, whether it's portfolios, one-off assets, just trying to get a sense of how much on the offense you can be this year considering what pricing is. And you did, you know, you did that $500 million last year and the ability to repeat that.

Okay. Thanks.

Thanks for that and I guess.

My second question, Mike the lease I know.

You don't guide to transactions.

Is there a way to sort of give us an idea of what that pipeline looks like today I mean, how active is that maybe the volume of product Youre currently looking at whether it's portfolios one off assets just trying to get a sense of how much on the offense you can be this year, considering where pricing is and you did you did that $500 million last year and the ability to repeat that.

Thanks.

Speaker 4: Let me, let me, Samir, start a little bit from a financial perspective and I'll let Lisa speak to our pipeline and our activity. And this dovetails a bit with a question from Flores previously.

Let me let me start.

To start a little bit from a financial perspective.

So to speak to our pipeline and our activity.

And this dovetails a bit with a question.

From Floris previously.

Speaker 4: We've talked a lot about growth, we've talked a lot about continued recovery in 2022 and beyond, and Lisa has been great about mentioning our balance sheet position, so if you put all that together, that organic EBITDA growth...

It's.

We've talked a lot about growth we've talked a lot about continued recovery in 2022 and beyond and Lisa has been great about mentioning our balance sheet position. So if you put all that together that organic EBITDA growth.

Speaker 4: And us intentionally wanting to operate within this five to five and a half balance sheet range and a starting point at 5.1 today, that is going to provide us with that capacity and firepower to continue to be proactive and on our front foot on acquisition activity. You could

And us.

<unk> wanted to operate within this five to five and a half balance sheet range and a starting point at 501 today that is going to provide us with that capacity and.

And firepower to continue to be proactive and on our front foot on acquisition activity.

You could I think the numbers.

Speaker 4: absent any more disruption and a more continual rate of growth, much like we're projecting in 2022 in that three to three and a half percent range, you could pretty easily rationalize

Absent any more disruption in a more continual rate of growth much like we're projecting mid 'twenty two in that three to three 5% range you could you could pre.

Easily rationalize.

Speaker 4: a $200 million to $300 million acquisition pipeline that Regency can afford to bring on without undue pressure from our perspective to our balance.

$2 million to $300 million acquisition pipeline that regency can afford to bring on without undue pressure from our perspective to our balance sheet and we're we're excited and we think that capital so effectively you're you're over leveraging those acquisitions without over leveraging your total balance sheet.

Speaker 4: And we're, you know, we're excited. And then we think that capital, so effectively, you're, you're over leveraging those acquisitions without over leveraging your, your total balance sheet, which is allowing us to be competitive.

Which is allowing us to be competitive.

Speaker 3: I don't know that I have that much to add, but I think that if you do think about the guidance, and we did guide slightly, it says that we felt really, we're really close to being able to announce that.

I don't know that I have that much to add but I think that if you do think about the guidance and we did guide slightly it says that we felt really we're really close to being able to announce that $30 million acquisition.

Speaker 3: $30 million acquisition. But there's a lot behind that as well that we are actively pursuing. It's just that it's never.

But there's a lot behind that as well that we are actively pursuing it's just that it's never just ever definitive in that world until its definitive.

Speaker 3: It's never definitive in that world until it's definitive. And so to the point about not wanting to get ahead of ourselves with guidance, because when we do acquire, it will be effective.

And so to the point about not wanting to get ahead of ourselves with guidance because when we do acquire will be accretive so to the extent that we couldnt meet the guidance. If you would then we would be walking backwards and instead, when we announce an acquisition it's going to be accretive.

Speaker 3: so to the extent that we couldn't meet the guidance if you would then we would be walking backwards and instead when we announce an acquisition it's going to be a creative uh... and we are actively pursuing and i feel confident that we're gonna have some success this year

And we are actively pursuing and I feel confident that we're going to have some success this year.

Thank you.

Speaker 1: Our next question comes from the line of Juan Sanabria with BMO Capital Markets. Please proceed with your question.

Our next question comes from the line of Juan Sanabria with BMO capital markets. Please proceed with your question.

Speaker 10: Hi, thanks for the time. First question would just be cap rate expectations, maybe a range of recognizing you don't want to negotiate against yourself, but.

Hi, Thanks for the time first question would just be cap rate expectations, maybe a range of recognizing you don't want to negotiate against yourself.

Speaker 10: How should we think about cap rates? I know you just said that they're going to be accretive, but just from a...

How should we think about cap rates.

I know you just said that they're going to be accretive, but just from a.

Speaker 10: Given you're using debt to fund it, it sounds like, but just what expectations do we have in mind for capital?

Given you're using debt to fund it it sounds like but just what expectations should we have in mind for cap rate.

Speaker 3: That's a great observation, Juan. That is the point about being able to lean in with our balance sheet, is that when we look at our weighted average cost of capital for new acquisitions, we can lean in a little bit more. But with that said, cap rates continue, you know, set in our prepared remarks, compressed

That's a great observation on that is that is the point about being able to lean in with our balance sheet is that when we look at our weighted average cost of capital for new acquisitions. We can we can lean in a little bit more.

But with that said cap rates continue.

Got it and then.

Our prepared remarks.

Compress.

Speaker 3: Valuations rising. Flourish indicated the report about one large portfolio that is in a sub-five cap rate range. And as I spoke about, the demand for grocery-anchored shopping centers is really strong. The competition is steep in the transaction market. And we continue to see cap rates in the 4.5% to 5.5% range, depending on.

Valuations rising fliers indicated.

The report about one large portfolio that is in a sub five cap rate range and as I spoke about the demand for grocery anchored shopping centers is really strong the competition is steep.

In the transaction market and we continue to see cap rates in the four five to five 5% range depending on.

Speaker 3: Depending on how stabilized they are, how much growth there is to still harvest coming out of kind of the disruption from the last two years, but with that said, I go back to.

And depending on how stabilized they are how much growth there is still harvest.

Out of the disruption from the last two years.

But with that said I'll go back to team, we have 22 offices across the country. We had boots on the ground, we have a competitive advantage with our cost of capital we have a competitive advantage with our our experience and expertise in.

Speaker 3: team, we have 22 offices across the country, we have boots on the ground, we have a competitive advantage with our cost of capital, we have a competitive advantage with our experience and our expertise, and where, like the Blakeneys that were sub-5%, or like the Long Island portfolio that was north of 5%, there's going to be a little bit of a range, but it's going to be in that, basically that band, if you will, for the quality that we're looking for.

Like the Blakeney's that we're sub 5% or like the long island portfolio that was north of five there's going to be a little bit of a range, but it's going to be and that basically that band. If you will for the quality that we're looking for.

Speaker 10: helpful. Thank you. And then just a bigger picture question, hoping you could help.

Helpful. Thank you and then just.

A bigger picture question.

Hoping you could help us frame how.

Speaker 10: rents have moved or grown.

Rents have moved.

Or grown.

Speaker 10: kind of what you're expecting going forward on that front and compare that to cost growth and is the difference maybe cost or outpacing rents, at least for now, a limiting factor and...

What you're expecting going forward on that front.

And compare that to cost growth.

The difference may be costs are outpacing rents at least for now a limiting factor in.

Speaker 10: truly ramping up more significantly your development pipeline, or how are you guys seeing that and thinking about those two variables as drivers?

Truly ramping up more significantly your development pipeline or how are you guys seeing that in thinking about those two variables.

As drivers of capital allocation.

Speaker 3: I let me open I'm going to I'm going to talk to Jim to talk about the rents that we're getting and the fortunate thing with our

Let me open I'm going to I'm going to.

Tough to Jim to talk about that.

The rents that we're getting in.

The fortunate thing with our <unk>.

Speaker 3: type of product, we do have 10 to 14% of our space turned on an annual basis, so you do have an opportunity to kind of keep up with inflation.

Type of product, we do have turned to <unk>.

14% of our space turn.

On an annual basis. So you do have an opportunity to.

Kind of keep up with inflation, if you will and mark rents to market.

Speaker 3: rents to market, in addition to the fact that we're getting contractual annual contractual rent steps and already getting 3% annual increases. So that's also helping us move towards inflation, but from the actual experience of 2021 and results with net effective rent.

In addition to the fact that we're getting contractual annual contractual rent steps and already getting 3% annual.

Annual increases so that's also helping us move.

Move towards inflation, but from the actual experience of 2021 and results with net effective rents.

Speaker 3: uh... which also capture some of that cost increases for the capital that you're spending we have great success uh... and the same with our development in terms of underwriting our costs

Which also capture some of that cost increase is for the capital that Youre spending we have great success and the same with our developments in terms of underwriting our costs.

Speaker 3: uh... capturing that as we're thinking about the go forward we're incorporating that and we still have uh...

Capturing that as we're thinking about the go forward, we're incorporating that and we still have.

Speaker 3: We are still building that pipeline and anticipate being able to achieve the returns that we need to achieve. Right. I would just pile on there on the on the inflation side, as I mentioned, in our redevelopment.

We are still building that pipeline and anticipate being able to achieve the returns that we need to achieve right. Okay.

I would just pile on there on the inflation side.

As I mentioned in our redevelopment and development pipelines were continuing to.

To perform as advertised on yields and as we're underwriting new deals.

Speaker 5: Again, eyes wide open on the inflation, the timing delays, all those things are being built in. And we're

Again eyes wide open on the inflation the timing delays all of those things are being built in and we're maintaining what we believe are appropriate yields.

In.

Thank you.

Okay.

Speaker 1: Our next question comes from the line of Jeff Spector with Bank of America. Please proceed with your question.

Our next question comes from the line of Jeff Spector with Bank of America. Please proceed with your question.

Hi, good morning.

Speaker 12: One follow-up on the guidance, and I apologize if I missed this, but again, just thinking about, I guess, the low end of the same-store NOI guidance at 2.75%, what would cause you to be at that low end? Is it simply thinking about more of a flat occupancy? What would cause the bottom end?

One follow up on the guidance and I apologize if I missed this but again just thinking about I guess, the low end of the same store NOI guidance.

275% what would cause you to be at that low end is it simply thinking about more of a.

A flat occupancy.

Okay, what would cause item and to occur.

Hey, Jeff.

Speaker 4: I appreciate that. It would be a different view on move-outs, primarily, to your point. And it would also include maybe a bit of a delay on contributions from some of our redevelopments as well, a timing delay. In combination, that would be the support for the low-end. We have planned for move-out activity in 2022 to be consistent with our historical average.

I appreciate that it would be a different view on move outs, primarily to your point and it would.

It would also include maybe a bit of a delay on contributions from some of our redevelopments as well a timing delay in combination that would be the support for the low end, we have planned for move out activity in 'twenty two to be consistent with our historical averages.

Speaker 4: You know, Jim mentioned our higher retention rate, but the plan for 22 would be that we revert on the margin down into kind of a more normalized.

Jim mentioned, our higher retention rate.

But the plan for 'twenty, two would be that we revert on the margin down into kind of a more normalized.

Speaker 4: level of move out. And that's part of the business. Tenants will move out in our best of times, or in normal times, you know, a 75% retention rate is considered pretty normal.

A level of move outs and Thats part of the business tenants will move out in our best of times.

In normal times, 75% retention rate is considered pretty.

Pretty normal so.

Speaker 4: That downside would include a little bit.

That down that downside would include a little bit.

Speaker 5: worse environment if you would on the move out front. I think, I'm looking around the table at Jim and Lisa, we're very confident.

Worse environment, if you would on the move out front.

I think I'm looking around the table, Jim and Lisa.

Confident with the mid point.

Speaker 4: with the midpoint of this of this range. We as we sit here in mid-February and think about the environment we're in coming out of this Omicron wave.

Of this range.

As we sit here in mid February and think about the environment, we're in coming out of his omicron waived.

Speaker 4: all else being equal and if we continue on this path, we're pretty confident in delivering at that midpoint and hopefully our eye level is north of that.

All else being equal and if we continue on this path.

We're pretty confident in delivering at that at that midpoint and hopefully our high level is north of that.

Speaker 5: Thank you. And then just a big picture question, Lisa, you've mentioned, you know, gross record centers.

Thank you and then just a big picture question.

You've mentioned grocery anchored centers.

Speaker 13: And we still receive a lot of incoming questions on brick and mortar grocer. I guess, just big picture, like what are your latest thoughts on that business? What are you hearing? What are the grocers doing to keep the brick and mortar relevant? First, let's say this more elevated e-commerce for grocers.

And we still are we still receive a lot of incoming questions on brick and mortar grocer I guess, just big picture like what are your latest thoughts on that business. What are you hearing.

What are the grocery is doing to keep the brick and mortar relevant first let's say.

More.

Elevated e-commerce for for growth for grocery.

Speaker 3: I appreciate the question, Jeff, but I don't know that it's really changed very much in the last 12 to 18 months. There was certainly a lot of acceleration in the early parts of the pandemic with regards to how grocers were reacting and how they were adapting, if you will, to the new challenges. I think that

I don't.

I appreciate the question, Jeff I don't know that its really changed very much in the last 12.

18 months.

There are certainly a lot of acceleration in the early parts of the pandemic with regards to how grocers, we're reacting and how they were adapting if you will to the new challenges.

I think that.

Speaker 3: You've heard me say this before, and it's not just for grocers. It's for all retailers. The most profitable way for them to get their goods into a customer's hands is for the customer to come into the store. So they continue to invest in the store as well. And that experience.

You've heard me say this before and it's not just for grocers, it's for all retailers the most profitable way for them to get their goods into our customers' hands as for the customer to come into the store. So they continue to invest in the store as well and that experience.

Speaker 3: But at the same time, they understand the competitive need to be able to serve the customer through the other methods, if you will, and that is curbside, which a lot made.

But at the same time, they understand the competitive need to be able to serve the customer.

And through the other method, if you will and that is curbside, which a lot made really really quick advances because they had to.

Speaker 3: really, really quick advances because they had to during the beginning of the pandemic. And the successful operators are now doing that extremely successfully. And so curbside is one, no doubt. And then last is the home delivery. And again, they recognize the need, though it's clearly the least profitable for all. And, you know, we see that that is, I mean, look at what Amazon is doing with opening.

During the beginning of the pandemic and the successful operators are now doing that extremely successfully.

And so curbside is one no doubt and then last is the home delivery and again they recognize the need though its clearly the least profitable for all and we see that that is.

Look at what Amazon is doing with opening.

Speaker 3: um, stores so that they can also compliment their home delivery with.

Stores, so that they can also complement their home delivery with <unk>.

Speaker 3: curbside and with pickers, if you will, anything to get closer to the customer, that last mile. And our grocery stores, our shopping centers, have that last mile distribution capability. And so a lot of the operators are then investing into that. And you're seeing different means of...

Curbside and with Pickers, if you will anything to that to get closer to the customer that last mile and our grocery stores. Our shopping centers are that last mile distribution have that last mile distribution capability and so a lot of the operators are then investing into that and youre seeing.

Youre seeing different means of.

Testing.

Speaker 3: R&D, right, Kroger is doing more of the, as we know, right, the Ocado. You're seeing, you know, Albertsons is probably investing the most right now in micro-fulfillment. HEB is doing a kind of a combination of both. And all of the better operators are investing. They're investing in technology. They're investing in the customer experience. They're investing in

R&D right Kroger is doing more of the more as we know the Ocado youre seeing albertsons is probably.

Investing the most right now and micro fulfillment HEB is doing a kind of a combination of both and all of the better operators are investing they are investing in technology, we're investing in the customer experience. They are investing in delivery. If you will whether it's from their store curbside or whether it's to the homes.

Speaker 3: Delivery if you will whether it's from their store curbside or whether it's to the to the homes and again The last mile matters and that's where we're positioned

And again, the last mile matters, and that's why we're positioned.

Speaker 13: Thank you. And then just my last question, I guess, whether it's dispositions or, you know, as you, you know, think about the portfolio positioning for the next few years, can you just talk about regions and, you know, is any, any, are there any regions you're hoping to maybe lighten up on or add to?

Thank you and then just my last question I guess, whether it's dispositions or.

As you think about the portfolio positioning for the next few years can you just talk about regions and.

And are there any regions youre, hoping to maybe lighten up on or add to.

Speaker 3: We really like the markets that we're in. You've heard us speak in the past that I do think.

We really we like the markets that we're in and you've heard us speak in the past that I do think that.

Speaker 3: that the pandemic has actually provided a lot of tailwinds for suburban shopping centers.

The pandemic has actually provided a lot of tailwind for suburban shopping centers.

Speaker 3: which again, is where we are located. It also, there have been some migration patterns and markets are seeing accelerated population growth that they weren't seeing before. Love to talk about my hometown as one of those.

Which again is where we are located it also there has been some migration patterns and markets are seeing accelerated population growth that they weren't seeing before I'd love to talk about my hometown is one of those.

Speaker 3: Jacksonville is seeing quite a bit of population growth. It is a market that we will be looking more aggressively for potential new investment opportunities. You've heard us talk about Phoenix as a market that we are currently not in. It is one that we've added to our target market list, if you will. But beyond that, we like the markets we're in. We're gonna continue to invest capital in compelling opportunities, trade areas.

Jacksonville is seeing quite a bit of population growth that is a market that we were.

We'll be looking more aggressively for potential new investment opportunities you've heard us talk about Phoenix as a market that we are currently not in it is one that we've added to our.

Our target market list, if you will but beyond that we like the markets. We're in we're going to continue to invest capital and compelling opportunities trade areas matter.

Speaker 3: And that is really where we focus our attention, it's on trade areas.

And that is really where we focus our attention on trade areas.

Great. Thank you.

Speaker 1: Our next question comes from the line of Anthony Powell with Barclays. Please proceed with your question.

Our next question comes from the line of Anthony Powell with Barclays. Please proceed with your question.

Speaker 14: Hi, good morning. I have a question on this development. I guess there seems to be more interest in doing things like life sciences, apartments, and offices in suburban, I guess, areas. Have you looked at your portfolio to see if there's an opportunity to systematically mine these development opportunities like you have done with Casa Verde, or are there going to be kind of more one-off developments?

Hi, Good morning, I guess question on it.

This development I guess, there seems to be more interest in doing things like life Sciences apartments, and office and suburban areas.

Have you looked at your portfolio to see if theres, an opportunity to systematically Miami's development opportunities, what you've done with cost severity or are there going to be kind of more of a one off.

No.

Speaker 3: We are constantly evaluating how we can maximize the value at all of our properties, whether that is specifically just.

We are constantly evaluating how we can maximize the value at all of our properties whether that is specifically just harvesting and growing.

Speaker 3: harvesting and growing retail NOI, or whether there is an ability to add different uses. It is a daily conversation at our asset management level. And we do have future opportunities. We've alluded to some.

Retail NOI or whether there is an ability to add different uses it is and it is a daily conversation at our asset management level and we do have future opportunities. We have we've alluded to some.

Speaker 3: uh... and in art supplemental disclosure and will continue to have some we we have a portfolio of over four hundred shopping centers across the country and we own really great

In our supplemental disclosure and we'll continue to have some we have a portfolio of over 400 shopping centers across the country and we own really great.

Speaker 3: real estate dirt under the shopping centers

Real estate dirt under the shopping centers.

Speaker 3: we will continue to target development spend in that $150 to $200 million on an annual basis and some of that's going to come from properties that we already own.

We will continue to target development spend in that $150 million to $200 million on an annual basis and some of that is going to come from properties that we already own.

Speaker 14: Got it. I guess do you see, I guess, you know, a higher mix of new mixed use development or I guess things like that relative to prior levels or is going to be kind of similar to what you've done before?

Got it I guess do you see I guess.

A higher mix of new.

New mixed use development or I guess things like that relative to prior levels or is it going to be kind of similar to what you've done before.

No and again.

Speaker 3: Looking at Costa Verde as an example, we are going to be focused where we can extract the value from the retail to the extent that the capital to be invested for other uses, our goal would be to use an experienced partner, perhaps ground lease that or sell it like we did with Costa Verde. Our dollars invested are going to be focused on retail.

Looking at Costa Verde as an example, we are going to be focused where we can extract the value from the retail to the extent that the dollars the capital the capital to be invested for other uses we are our goal would be to use.

As an experienced partner, perhaps ground lease that or sell it like we did with Costa Verde, So our dollars invested.

We're going to be focused on retail.

Got it okay. Thank you.

Speaker 1: Our next question comes from the line of Keebin Kim with Truist. Please proceed with your question.

Our next question comes from the line of Keybanc Kim withdrew its please proceed with your question.

Speaker 8: Thank you. Good morning. Quick question on your non-same-store NOI projections for 2022 is expected to be a two-cent drag. I'm just curious about that. Is that because of the J-curve nature to some of the development work that was alluded to in the beginning that you should regroup later? If you can help us understand that line item better.

Thank you Ron and good morning.

Quick question on your non same store NOI projections for 2022.

Is it expected to be a <unk> <unk> drag.

I'm just curious about that is that.

This is J curve nature to some of the development work dilutive in the beginning that issued recoup later.

Can help us understand that line item better.

Speaker 4: No, I appreciate that question. Keep in actually the same property pool basically is all of our assets at this point in time. So we really don't have much remaining in the non same pool. This is our captive insurance program that we have classically held in our non same property pool. And what you're seeing here is an incredibly positive 2021 from a from claims perspective. We are anticipating in this guidance that again, we revert to more classic or historical levels of claims.

No I appreciate that question keeping.

Actually the same property pool basically all of our assets at this point in time. So we really don't have much remaining in the non same pool. This is our captive insurance program that we have classically.

Held in our non same property pool, and what Youre seeing here is an incredibly positive 2021 from from.

Claims perspective.

We are anticipating in this guidance that again, we revert to more classic or historical levels of claims but.

Speaker 4: But what you had was a year and 21 absent.

But what you had was a.

A year and 'twenty one absent.

Speaker 4: any hurricanes, absent any tornadic activity. So we're planning for knock on wood that that would not recur.

Any hurricanes absent any tornadic activity.

So we're we're planning for knock on wood.

But that would not recur this year.

Speaker 8: on it. And can you help us understand how mechanics of your expense reimbursement that you're recouping, given the inflationary environment that we're in, I'm curious if, you know, expenses go up 10%, like how much of that are you actually able to pass on to tenants versus creating maybe some additional leakage that might be dragging in front of YWAM?

Got it.

And can you help us understand how the mechanics of your expense reimbursement that you're recouping.

Given the inflationary environment and I'm curious.

We expect it to go up 10% like how much of that are you actually able to pass on to tenants versus <unk>.

Creating maybe some additional leakage that might be dragging that seems kind of like that.

Yes, I mean.

Speaker 5: On a current year basis, our recovery rates we anticipate maintaining at historical levels and growing as we grow our commenced occupancy.

On a current year basis, our recovery rates, we anticipate maintaining.

Historical levels and growing as we grow our commenced occupancy we do have that unique one time item in 'twenty one in the second quarter, which was really a follow on from 'twenty. If you really trace it back.

Speaker 4: We do have that unique one-time item in 21 in the second quarter, which was really a follow-on from 20. If you really trace it back, we were concerned about collecting on recoveries in 21 coming out of the depths of the pandemic in 20. And that's reverberating through our 22 results. So again, you know, unfortunate, some noise. That's in that noise category. But on a current year basis...

We were concerned about collecting on recoveries in 'twenty, one coming out of the depths of the pandemic in 'twenty.

And that's reverberating through our 'twenty two results so again.

Unfortunate some noise.

And thats and that noise category, but on a current year basis.

Speaker 4: We feel confident in whatever increases are to occur on the expense line items, which we are not anticipating to be material. I think our expense growth is in line with historical averages. We are anticipating an ability to pass that through and maintain our recovery rates.

We feel confident and whatever increases are to occur.

Expense line items, which we are not anticipating to be.

Material I think our expense growth is in line with historical averages were.

We're anticipating an ability to pass that through.

And maintain our returns our recovery rates.

Okay. Thank you.

Speaker 1: Our next question comes from the line of Greg McGinnis with Scotiabank. Please proceed with your question.

Our next question comes from the line of Greg Mcginniss with Scotiabank. Please proceed with your question.

Speaker 15: Hey, everyone. Obviously, a lot's been covered, so just one for me, and I apologize. This has already been discussed, but regarding the $85 million impairment this quarter, where Potero was expected to be a transformative redevelopment project within the Equity One portfolio, it appears you're now looking to offload that property. Can you just provide some background on the evolution of that site and why it's no longer a fit for the portfolio?

Hello, everyone.

Obviously, the last thing covered so just one for me and I apologize.

<unk>.

<unk> already been discussed regarding the $85 million impairment this quarter.

<unk> was expected to be a transformative redevelopment project within the equity one portfolio. It appears you are now looking to offload that property can you just provide some background on the evolution of that no longer fit in the portfolio.

Speaker 4: Sure, and good morning, Greg. So really, let me handle it from the accounting standpoint first, and then.

Sure.

And good morning Gregg.

So really no let me let me handle it from an accounting standpoint first and then.

Speaker 5: Lisa or I, we can talk about the future prospects of the project, but impairments are really about whole period analysis. So as we do our work to essentially measure all of our assets, the assumption of whole period is the biggest assumption towards.

Lisa we can talk about the future prospects of the project, but it really impairments are really about whole period analysis.

So as we do our work to essentially measure are all of our assets.

The assumption of whole period is the biggest assumption towards.

Speaker 5: whether or not you have to mark your assets to market. So obviously, sales are a classic example of when you mark your assets to market and you recognize an impairment or a gain. In this case,

Whether or not you'd have to mark your assets to market. So obviously sales are a classic example of when your market your assets to market and you recognize an impairment or a game in this case.

Speaker 4: Together with some of our movement on an asset like Costa Verde, together with some movement in that center city, particular trade area, San Francisco, the probability of sale increased.

Together with some of our movement on an asset like Costa Verde together with some movement in that center City particular trade area of San Francisco.

The probability of sale increased.

Speaker 4: to a level where that trigger from an accounting standpoint resulted in a requirement to mark the asset to fair market value. So you go through that exercise as you're required to do, and the valuation that is supporting that mark is a current valuation as supported by market participants and brokers on what I would deem a retail-only long-term basis. So

To a level where that trigger from an accounting standpoint resulted in our requirement to mark the asset to fair market value.

So you go through that exercise.

As you're required to do.

And the valuation that is supporting that mark.

As a current valuation is supported by.

Market participants and brokers on what I would deem a retail only.

A long term basis so.

Speaker 4: That's what happened from an accounting standpoint.

That's that's what happened from an accounting standpoint.

Speaker 5: The portrayer was a great asset to very good retail center at the time of the original allocation of basis post merger with equity one, there was a near term plan in place that involved a material.

The <unk> was a great asset to very good retail center at.

At the time of the original allocation of basis post merger with equity one there was a near term plan.

In place that involved a material.

Speaker 5: densification project. And to Lisa's point previously, if you think about the allocation of retail to non-retail, it was a significant amount of non-retail densification. And she articulated very well our plans going forward, which is to

Densification project.

So at least this point previously.

If you think about the allocation of retail and non retail it was a significant amount of non retail densification.

And she articulated very well our plans going forward, which is too.

Speaker 5: mine to the best of our ability and extract where we can the retail component of projects, but to use other means of extracting value on non-retail. So that could again include selling air rights, it could include joint ventures, it could include ground leases, it could include monetizing assets and redeploying that, maximizing land value and redeploying that capital as we did from Costa Verde into the Long Island portfolio.

Mine to the best of our ability and extract where we can the retail component of projects, but to use other means.

Of extracting value on non retail so that could again include selling air rights that could it could include joint ventures that could include ground leases that could include monetizing assets and redeployment maximizing land value and redeploying that capital as we did from Costa Verde into the long island portfolio.

Speaker 3: I don't have that much to add, I think Mike you covered it, it becomes essentially a financial

I don't have that much to add I think Mike covered it becomes essentially a financial.

Speaker 3: analysis decision. It's similar to Costa Verde, similar to Sequoia. It's a great retail site.

Analysis decision, it's similar to Costa Verde solar to Sequoia.

It's a great retail site, but what what path maximizes the value while managing the risk and we haven't made a decision.

Speaker 3: what, what path maximizes the value.

Speaker 3: while managing the risk. And we haven't made a decision, which is why, I mean, it's not held for sale, but the probability of the whole period,

Not held for sale, but the probability of the whole period.

Did that change.

Speaker 3: That changed, which triggered the impairment evaluation and analysis. But still more to come. We have not made a decision on that asset.

<unk>, which triggered the impairment evaluation and analysis.

But still more to come we have not made a decision on that asset.

Alright, well, thank you very much for the clarity there.

Okay.

Speaker 1: Our next question comes from the line of Mike Muller with J.P. Morgan. Please proceed with your question.

Our next question comes from the line of Mike Mueller with Jpmorgan. Please proceed with your question.

Sorry about that just have a quick one.

Speaker 6: Just given the demand picture, is there any chance we could see the 150 to 200 development spend accelerate?

Just given the demand picture is there any chance we could see the 150 to 200 development spend accelerate.

Speaker 3: For 2022, the probability of that's not very high because it does take time. And remember, while we have the best team in the business and they were working throughout kind of the disruption period, we did pause for a period of time when there was no visibility to how long this would last, if you will, starting in April of 2020.

For 2022, the probability that's not very high.

Because it does take time and remember.

While we have the best team in the business and they are working throughout.

Kind of a disruption period, we did pause for a period of time when that result, when there was no visibility to how long. This would last if you will.

Starting in April of 2020.

Speaker 3: We flipped switch back on pretty quickly, but even that, but that pause still created a little bit of a delay, if you will, and we are rebuilding and we and.

We flipped the switch back on pretty quickly, but even that but that part is still created a little bit of a delay if you will and we are rebuilding and and.

Speaker 3: there is a potential for it in future years, certainly not for 2022. Yeah, I was thinking more over the next three years or so.

There is a potential for it in future years, certainly not for 2022.

I was thinking more over the next three years or so so.

Speaker 3: Mike, I'd love for you to come set goals for my team and speak to them and let them see if they can do more. The more we can do, the better, because we can fund it. Okay. That was it.

Yes.

Mike I'd Love for you to.

Set goals for my team and speak to them in.

And let them see if they can do more the more we can do the better because we can fund it.

Okay.

That was it thank you.

Speaker 1: As a reminder, it is star one to ask a question. Our next question comes from the line of Linda Sy with Jeffries. Please proceed with your question.

As a reminder, it is star one to ask a question.

Our next question comes from the line of Linda Tsai with Jefferies. Please proceed with your question.

Speaker 16: Yeah, hi. In terms of the comments that 1Q would see a bigger benefit, I think from prior period collections, in terms of the percentage that 1Q will comprise, what would that look like? I think in the past it's ranged from like 23 to 25 percent.

Yeah, Hi.

Terms of the comments that <unk> see a bigger benefit I think from prior period collections in terms of the percentage that <unk> will comprise what would that look like I think in the past, it's strange from like 23% to 25% in recent years pre COVID-19 .

Speaker 4: Yeah, I'm going to go back to the comments, Linda, and just kind of leave it there. But we're coming off an $18 million Q1 charge from bad debt or uncollectible lease income in Q1 of 21. And recall, Q4, we're down to about $2 and 1 half million of a quarterly charge, which is a lot of money.

Yeah, I'm going to go back to the comments, Linda and just kind of leave it there, but we're coming off an $18 million Q1 charge of from.

Bad debt uncollectible lease income in Q1 of 'twenty, one and recall Q4 were down to about $2 $5 million.

Our quarterly charge, which.

Speaker 4: you know, could replicate in Q1 of 22 could improve as we continue to see improvements in cash collection rates. So that's going to be the difference. And what we wanted to do was be mindful of the fact that there's going to be continued variance in that percentage and that Q1, there's a probability that Q1 could have a rate of growth that's higher than the top end of our range and will float back down to within our range over the course of the year. So that's going to be the difference. And what we wanted to do was be mindful of the fact that there's going to be continued variance in that percentage and that Q1, there's a probability that Q1 could have a rate of growth that's higher than the top end of our range and will float back down to within our

Could replicate in Q1 'twenty two could improve as we as we continue to see improvements in cash collection rates, so that thats going to be the difference in what we wanted to do was very was be mindful of the fact that there is going to be continued variance and that percentage and that Q1 <unk>.

Probability that.

Q1 could have a rate of growth.

Higher than the top end of our range and will float back down to within our range over the course of the year.

Speaker 16: for that clarification. And then just in terms of higher energy costs and consumers staying closer to home, sorry about the drilling, are you seeing any bifurcation between the high and low end consumer in terms of spending strength?

Thanks for that clarification, and then just in terms of higher energy costs and consumers staying closer to home sorry about the delay are you seeing any bifurcation between the high and low end consumer in terms of spending strength.

Okay.

Okay.

Speaker 3: I mean, we have a pretty consistent investment philosophy. We don't actually have that wide of a...

Yes.

We don't necessarily we have a pretty consistent investment philosophy, we don't actually have that wide of a.

Speaker 3: kind of a range, if you will. But I think it is more about suburban close to home than it is necessarily about the high-end and low-end consumer. Dollars are being spent within a relatively

Kind of a range if you will but I think it is more about suburban close to home than it is necessarily about the high end and low end consumer.

Dollars are being spent within.

A relatively.

Speaker 3: small circle around consumers' homes. Although travel did pick up too, I'm sure you've seen that as well, in December of 2021, topping 2019. So we are seeing the return of the consumer despite inflationary headwinds. The consumer is spending.

Small circle.

Around consumers' homes.

Although traveled to pickup to I'm sure you've seen that as well.

In December of 2021, topping 2019, so we are seeing the return of the consumer despite inflationary headwinds.

The consumer is spending.

Thank you.

Okay.

Speaker 1: Our next question comes from the line of Chris Lucas with Capital One Securities. Please proceed with your question. Hey. Good morning, everybody. Mike, thanks so much and your team for all the detail, really helped me narrow down some of the gap between my expectations and your guidance.

Our next question comes from the line of Chris Lucas with capital One Securities. Please proceed with your question.

Hey, good morning, everybody, Mike. Thanks, so much and your team for all the detail really help me narrow down some of the gap between my expectations in your guidance.

Speaker 8: But I did want to sort of maybe dig into one other area or two other areas along those lines on the.

But I did want to sort of maybe dig into one other area to other areas along those lines.

On the.

Speaker 8: prior period rent guidance number. Is there an upside to that number that you can quantify for us that could happen in 2022?

Prior period rent guidance number is there upside to that number that you can quantify for us that could happen.

2022.

Speaker 4: It's a great question, Chris. Let me show you where to look, and then we'll talk a little bit about prospects. So we have $13 million of prior year collections, plus or minus, in the plan. If you look at our reserved AR, again, on that very helpful page 34 of the supplement, it's $50 million. So that's, in effect, largely cash-based.

It's a great question, Chris Let me, let me show you what let me show you where to look and then we'll talk a little bit about.

Prospects, so we have $13 million of prior year collections, plus or minus in the plan.

If you look at our reserve they are again on that very helpful. Page 34 of the supplement it's $50 million. So that's in effect.

Largely cash basis reserves.

Speaker 4: I'd be very careful to think about that as a maximum potential collection opportunity. We've talked at length through 21, and we believe this into 22.

I'd be very careful to think about that as a maximum potential collection opportunity we've talked at length through 'twenty, one and we believe this into 'twenty two.

Speaker 4: You know, what's remaining to be collected and what has been reserved is largely for Regency, a West Coast shop space, local.

No.

What's remaining to be collected in what has been reserved is largely for regency, a west coast shop.

Shop space local type of.

Speaker 4: We like the tenants we had in the shopping centers pre-pandemic. We continue to like those users and those tenants post.

We we like the tenants we had in those shopping centers pre pandemic, we continue to like those those users and those tenants post.

Speaker 4: And the team, as directed by Jim, is going to probably more diligently use abatements as a tool. They were down for longer, the hole was deeper.

And the team is directed by Jim is going to probably more diligently use abatements as a tool they were down for longer the whole was deeper.

Speaker 4: Why go through the pain and the cost of replacing a tenant and absorbing the downtime in the capital? So that is just some caution as we think about what is the outperformance potential of that $13 million.

Why go through the pain and the cost of replacing a tenant and absorbed in the downtime and the capital so.

That is I would just.

Some caution as we think about what is the what.

What is the outperformance potential of that $13 million assumption.

Speaker 4: That being said, it's been a hard number to handicap into 21, clearly. I think our initiating guidance in 21 was sub 10 million, and we ended up at 46.

That being said, it's been a hard number to handicap into 'twenty, one clearly I think our initial initiating guidance in 'twenty, one was sub $10 million and we ended up at 46, So I fully.

Speaker 4: So I fully, it's a tough number to get our arms around. We've done, we think 13 is a really good estimate. Importantly, we've collected about, nearly 30% of that through January . But as time goes on, that collection rate will continue to grind down.

A tough number to get our arms around.

<unk> done we think <unk> is a really good estimate.

Importantly, we've collected about nearly 30% of that through January .

But.

As time goes on that collection rate will continue to grind down.

Speaker 8: That's really helpful. And then just thinking about your cash basis tenants, any, again, in the, you know, relative to what you were able to collect on a percentage of a billing last year, was there any delta to that in terms of your guidance assumptions for 22?

Thanks, That's really helpful. And then just thinking about your cash basis tenants any again.

Relative to what you were able to collect on a percentage of billings last year was there any delta to that in terms of your guidance assumptions for 'twenty two.

On the cash basis collection rate.

Yes.

No.

I mean again, that's going to come through are you ally assumptions initial from 'twenty, one and 'twenty, two but we're collecting 94% on our existing cash basis tenancy, which again.

Speaker 5: And again, that's going to come through our ULI assumptions, initial from 21 to 22. But we're collecting 94% on our existing cash basis tenancy, which again.

Speaker 5: Today is 17% of our overall ADR. That is a pretty healthy rent. That's on current billings. I don't want to take that 94% and apply it to what we just talked about from a prior previously reserved amount.

Today is 17% of our overall ABR.

That is a pretty healthy ramp that's on current billings I don't want to take that 94% and apply what we just talked about from a previous from our prior.

Previously reserved amount.

Speaker 4: But, you know, we are, if you think about what I said from a ULI perspective, that would imply, you know, going from 175 basis points of bad debt to in the 100 area, that would imply that we think our cash basis collection rate is going to improve from here. So we feel good about, we feel good about growth, starting in 22 and beyond, and moving occupancy in the right direction, and moving uncollectible lease income in the right direction,

But we are if you think about what I said from a UI perspective that would imply going from 175 basis points of bad debt too in the 100 area that would imply that we think our cash basis collection rate is going to improve from here. So we feel good about we feel good about growth.

<unk> and 'twenty, two and beyond and moving occupancy in the right direction and moving.

Uncollectible lease income in the right direction.

And moving commenced occupancy in the right direction.

Speaker 8: Thanks for that, Mike. And then, Jim, just wanted to follow up on the permitting delays question. Is that mostly a West Coast phenomenon, or is it more widespread than just the West Coast?

Thanks for that Mike and then Jim just wanted to follow up on the permitting delays question.

Sure.

Is that mostly a west coast phenomenon or is there is it more widespread than just the west coast.

I would.

Chris I would say it is.

Probably more predominant on the west.

Speaker 6: as they've been the slowest to recover, they're kind of the laggards on things like this.

Awesome.

As they have been the slowest to recover there.

There is a laggard some things like this so and most of the country.

Getting better service.

Speaker 6: quite frankly, the West is catching up very, very quickly in all the major metrics. So I feel like they're...

And quite frankly, the west is catching up very very quickly and all the major metrics. So.

I feel like.

There.

That too will get cleaned up here pretty quickly.

Okay and last question Lisa.

Speaker 8: And last question, Lisa, on your acquisition underwriting, and this may be way premature, but just wanted to understand, given the backdrop of inflation, does replacement costs become part of the underwriting criteria at this point, or are we well away from it?

On your acquisition underwriting and this may be way premature, but just wanted to understand given the backdrop of inflation does does replacement costs become part of the underwriting criteria at this point or are we well away from that.

Speaker 3: Um, it really doesn't the way we when we are looking at evaluating opportunities, we are certainly just looking at what is the.

It really doesn't delay when we are looking at evaluating opportunities.

We are certainly just looking at what is the.

Speaker 3: the NOI growth profile, if you will. So the going in return plus growth, so essentially getting us to our unlevered IRR or a total return.

The NOI growth profile, if you will so the going in the going in return plus growth.

Essentially getting us to our Unlevered IRR or a total return.

Speaker 3: because our intent is to hold these assets forever.

Because our intent is to hold these assets.

Forever.

Super Thank you guys for your time.

Okay.

Speaker 1: Our next question comes from the line of Tammy Fike with Wells Fargo. Please receive your question.

Our next question comes from the line of Jeremy <unk> with Wells Fargo. Please proceed with your question.

Speaker 17: Thank you. Maybe just following up on Chris's question, what is happening with that bucket of tenants that is giving you confidence in collecting that $13 million of prior period rents and, you know, maybe what isn't happening with the remaining portion that doesn't give you confidence in collecting that and does that full $50 million remain in occupancy today?

Thank you and maybe just following up on Chris's question, what is happening with that bucket of tenants that is it is getting your confidence in collecting that $13 million of prior periods.

And.

Maybe what isn't happening with the remaining portion.

It doesn't give you confidence in collecting that and does that full $50 million remain in occupancy today.

Speaker 4: Yeah, it's really timing Tammy and you know, Jim has hit on it and we've hit on it kind of repeatedly through 21.

Yes. It is.

Really timing Tami and <unk>.

Jim has hit on it and we've hit on it kind of repeatedly through 'twenty one.

Speaker 5: It's the West Coast just being a couple months, three months behind, and it was a very deliberate

It's the West coast, just being a couple of months three months behind and it was a very deliberate.

Speaker 5: snowflake tenant-by-tenant approach that Regency's employed into working through and resolving outstanding obligations.

Flake tenant by tenant approach that regency's employed into working through and resolving outstanding obligations. So.

Speaker 5: You know, we work through a large component of what was an original 85 or so million dollar reserve on 2020 rents, looking back at year end 20 into the, you know, rapid, more rapidly recovering on the East Coast, specifically the Southeast, moving into the central more rapid recovery. And now the West behaviorally has been very similar to those regions.

Okay.

We worked through a large component of what was an original 85 or so million dollar reserve on 2020 rents looking back at year end 'twenty.

Into the rapidly more rapidly recovering on the east coast, specifically, the south east moving into the central more rapid recovery and now the worst behavior really has been very similar to those regions, but again. The difference has been just the time that they were down.

Speaker 5: But again, the difference has been just the time that they were down. The hole that was dug was deeper. And it's just.

The hole that was Doug was deeper and.

And it's just.

Speaker 5: We've made the assessment that it may not be appropriate to chase after previous rent at the risk of.

We've made the assessment that it may not be appropriate to.

Chase after a previous rent.

At the risk of future rent.

Speaker 5: And again, literally, case by case, going back through your rent rolls, do you have the right operator? Do you have the right use? Do you want this use in your space going forward? And do you want to avoid the downtime?

And again, making these.

Case by case going back to your rent Rolls do you have the right. Operator do you have the right use do you want this this using your space going forward and do you wanted to avoid the downtime.

Speaker 5: I think I'd leave it at that, Tammy, for the color as to why that difference to the $50 million exists.

I think I would leave it at that Tammy for the color as to why that.

That's why that that difference to the $50 million exists.

Yes.

Thanks Julien.

Speaker 6: When you, to me, when you look at the cash collections and where we are in the West Coast at 98, and you look at some of the, the tougher categories, the, the.

When you look at the cash collections and where we are in the West coast at 90 days and you look at some of the tougher categories.

Speaker 6: personal services up to 97% collection. You're looking.

Personal services up to 97% collection, you're looking for.

Fitness up to 95%.

Speaker 6: That, the way I interpret that, is we have picked the ponies we want to ride going forward.

That the way I interpret that as we have we have picked the pony, we want to ride going forward and to Mikes point. We are now in the delicate balance of how much how much more do you want to push on collecting really old reps.

Speaker 6: Mike's point, we are now in the delicate balance of how much more do you want to push on collecting really old rats.

We're looking more forward than we are backwards quite frankly.

No financial impact because of the <unk>.

Speaker 17: Got it, thank you, that's helpful. And then just one more, I'm thinking about the 1.3% annual contractual rent increases embedded in things for NOI growth. I know, Jim, you mentioned 2% on new leasing activity. I guess, are you able to drive that portfolio level higher over time, particularly given the inflation levels today?

Got it. Thank you that's helpful. And then just one more I am thinking about the one 3% annual contractual rent increases embedded in same store NOI growth I know, Jim you mentioned, 2% on new leasing activity. I guess are you able to drive that portfolio level higher over time, particularly given the inflation levels.

Today.

Speaker 4: We hope so. But Tammy, it's a tough mountain to move. We have long targeted 1.5% as an upper end of our ability to get there over time, and it's going to take a lot of time, you know, to Lisa's point earlier, only turning about 10% of your portfolio annually. What's happening is we've had such great success over the last...

We hope so, but tammy it's a tough it's a tough mountain to move.

We have long targeted one 5% as an upper end of our ability to get get there over time and it's going to take a lot of time to Lisa's point earlier, it's only turning about 10% of your portfolio annually.

What's happening is we've had such great success over the last.

Speaker 4: eight plus years embedding contractual increases into the majority of our shop spaces really, that as those tenants are replaced with tenants, you're just replacing like-for-like contractual increases.

Eight plus years.

Embedding contractual increases into the majority of our shop space is really that as those tenants are replaced with tenants Youre, just replacing like for like.

Contractual increases.

Speaker 5: So, that is the ability to push that number really ends up coming down to your recapture of anchor spaces and your ability to embed contractual increases there. So, 1.3 today, really healthy number. It's moved off of a 1.2 over the last several years. 1.4 I think is visible and 1.5 is an ultimate target, but that's going to take some time to get to. Thank you.

So that is.

The ability to push that number.

Really ends up coming down to your your recapture of anchor spaces and your ability to embed contractual increases there.

So $1 three today really healthy number.

It's moved off of a one two over the last several years one four I think is visible and one five is an ultimate target, but that's going to take some time to get to.

Great. Thank you I appreciate the time.

Speaker 1: There are no further questions in the queue. I'd like to hand the call back to management for closing remarks.

There are no further questions in the queue I would like to hand, the call back to management for closing remarks.

Speaker 3: Thank you. I just want to thank you all for your time. It was a long one this morning, and I look forward to seeing hopefully most of you live and in person this year.

Thank you I just want to thank you all for your time it was a long one this morning.

I look forward to seeing.

Hopefully most of you live and in person this year.

Thank you.

Speaker 1: Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.

[music].

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Speaker 1: Greetings and welcome to Regency Centers Corporation fourth quarter and full year 2021 earnings call. At this time, all participants are on a listen only mode. A question and answer session will follow the formal presentation.

Greetings and welcome to Regency centers Corporation fourth quarter, and full year 2021 earnings call.

At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

Speaker 1: 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.

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.

Speaker 1: It is now my pleasure to introduce your host, Christy McElroy, Senior Vice President of Capital Markets. Thank you. You may begin.

It is now my pleasure to introduce your host Christine MC Elroy Senior Vice President of capital markets. Thank you you may begin.

Speaker 2: Good morning, and welcome to Regency Center's 4th Quarter 2021 Earnings Conference Call. Joining me today are Lisa Palmer, President and Chief Executive Officer, Mike Vost, Chief Financial Officer, Jim Thompson, Chief Operating Officer, and Chris Levitt, SVP and Treasurer. As a reminder, today's discussion may contain forward-looking statements about the company's views of future business and financial performance, including forward earnings guidance and future market conditions.

Good morning, and welcome to Regency Centers' fourth quarter 2021 earnings Conference call. Joining me today are Lisa Palmer, President and Chief Executive Officer, Mike <unk>, Chief Financial Officer, Jim Thompson, Chief operating Officer, and Chris Leavitt SVP and Treasurer as a reminder, today's discussion may contain forward looking statements about the companys views.

Our future business and financial performance, including forward earnings guidance and future market conditions. These are based on management's current beliefs and expectations and are subject to various risks and uncertainties.

Speaker 2: These are based on management's current beliefs and expectations and are subject to various risks and uncertainties.

Speaker 2: It's possible that actual results may differ materially from those suggested by the forward-looking statements we may make.

It's possible that actual results may differ materially from those suggested by the forward looking statements we may make.

Speaker 2: Factors and risks that could cause actual results to differ materially from these statements may be included in our presentation today and are described in more detail in our filings with the SEC, specifically our most recent Form 10-K and 10-Q filings. In our discussion today, we will also reference certain non-GAAP financial measures. The comparable GAAP financial measures are included in this quarter's earnings materials, which are posted on our Investor Relations website.

Factors and risks that could cause actual results to differ materially from these statements may be included in our presentation. Today and are described in more detail in our filings with the SEC specifically, our most recent Form 10-K , and 10-Q filing and our discussion today. We will also reference certain non-GAAP financial measures the comparable GAAP financial measures are.

<unk> in this quarter's earnings materials, which are posted on our Investor Relations website. Please note that we have also posted a presentation on our website with additional information, including disclosures related to forward earnings guidance on the impact of COVID-19 on the company's business. Our caution on forward looking statements also applies to these presentation.

Speaker 2: Please note that we have also posted a presentation on our website with additional information, including disclosures related to forward earnings guidance and the impacts of COVID-19 on the company's business. Our caution on forward-looking statements also applies to these presentation materials. Lisa? Thank you, Christy. Good morning, everyone. Thank you for joining us.

Lisa thank.

Thank you Christie.

Everyone. Thank you for joining us.

Speaker 3: Reflecting back on 2021, Regency accomplished a great deal over the course of the year, and we have a lot to be proud of. With the disruption caused by the pandemic, it was a year of recovery, but the pace of our progress is a testament to the resiliency of retail properties like ours. As we sit here today, we feel really good about the financial health of our tenants.

Reflecting back on 2021.

Reasonably accomplished a great deal over the course of the year and we have a lot to be proud of with the disruption caused by the pandemic. It was a year of recovery, but the pace of our progress is a testament to the resiliency of retail properties like ours as we sit here today, we feel really good about the financial health of our tenants are leasing activity is Roe.

Speaker 3: our leasing activity is robust, our investment pipeline is full, and our balance sheet is back to pre-pandemic strength. And, of course, this didn't just happen. We wouldn't be where we are without the tireless efforts of our people. So, if you would, please just give me a moment to thank the Regency team. Thank you, team. It truly...

Our investment pipeline is full and our balance sheet is back to pre pandemic strength and of course. This didn't just happen we wouldn't be where we are without the tireless efforts of our people. So if you would please just give me a moment to thank the agency team.

Thank you team it truly takes all of us.

Speaker 3: So as we've transitioned into 2022 and look ahead, our story is no longer about recovery. We've moved forward with a focus on growth and also with the benefit of hindsight from the last two years.

So as we've transitioned into 2022 and look ahead. Our story is no longer about recovery, we'd move forward with a focus on growth and also with the benefit of hindsight from the last two years.

Speaker 3: while we do see lingering effects of the pandemic on our tenants.

While we do see lingering effects of the pandemic on our tenants specifically the impacts of inflation and labor shortages. These headwinds have thus far not impacted demand for our space.

Speaker 3: specifically the impacts of inflation and labor shortages, these headwinds have thus far not impacted demand for our space.

Speaker 3: This focus on growth did begin last year with regards to our capital allocation strategy, as we've discussed on prior calls. We pivoted to offense in 2021.

This focus on growth did begin last year with regards to our capital allocation strategy as we've discussed on prior calls we pivoted to offense in 2021.

Speaker 3: We completed nearly $500 million of acquisitions last year on an accretive, leverage-neutral basis.

We completed nearly $500 million of acquisitions last year.

Creative leveraged neutral basis.

Speaker 3: During the fourth quarter, we not only closed on the acquisition of our Turducken, Blakeney Shopping Center, but we also announced the purchase of a four-property, grocery-anchored, neighborhood-centered portfolio on Long Island.

During the fourth quarter, we not only closed on the acquisition of our <unk> Blakeney shopping center, but.

We also announced the purchase of a four property grocery anchored neighborhood center portfolio on long Island.

Speaker 3: You've heard me say it before, these types of investments are the bread and butter of what we do, what our company does. Our focus is to invest in strong, well-located, grocery-anchored shopping.

You've heard me say it before these types of investments are the bread and butter of what we do what our company does our focus is to invest in strong well located grocery anchored shopping centers.

Speaker 3: Overall, the private transaction market for the centers we want to own remains really strong. We continue to see cap rate compression and value appreciation and even steeper competition for deals. But despite this, our acquisition pipeline remains active.

Overall, the private transaction market for the centers, we want to own remains really strong we continue to see cap rate compression and value appreciation and even steeper competition for <unk> for deals, but despite this our acquisition pipeline remains active.

Speaker 3: That's because our balance sheet and access to capital give us a competitive advantage, as does our reach, given the boots on the ground in most of our target markets.

That's because our balance sheet and access to capital give us a competitive advantage as does our reach given the boots on the ground in most of our target markets.

Speaker 3: Our Long Island portfolio acquisition was an off-market transaction with a group of family-owned assets. Kudos to our team in that market for sourcing this deal.

Our long island portfolio acquisition was an off market transaction. It was a group of family owned assets kudos to our team in that market for sourcing this deal we.

Speaker 3: We will continue to look for opportunities like these where the assets meet our criteria for location, quality, format, and growth.

We will continue to look for opportunities like these where the assets meet our criteria for location quality format and growth.

Speaker 3: We also announced recent dispositions, and in that context, I want to spend a minute on our sales costa verde, since this was previously a part of our redevelopment pipeline.

We also announced the recent dispositions and in that context, I want to spend a minute on our sale of Costa Verde. Since this was previously a part of our redevelopment pipeline.

Speaker 3: As most of you know, we have been really excited to undertake a mixed-use densification project there that featured retail at its core. We worked for years to entitle the asset, de-leasing the property, all in preparation for future redevelopment. But as time went on, the project evolved into predominantly life science, and the highest and best use was no longer a retail-centric asset. This changed the nature of the project and the risk profile materially.

As most of you know we had been really excited to undertake a mixed use densification project. There that featured retail at its core we worked for years to entitle the asset de leasing the property all in preparation for future redevelopment, but as time went on the project evolved into predominantly life science, and the highest and best use with no loss.

<unk> a retail centric asset this changes the nature of the project and the risk profile materially.

Speaker 3: We made the decision to sell as it became clear to us that this was the best path to maximize value and manage our risk for the benefit of our shareholders. Importantly, we did get paid well for the value we created at that site, and we immediately reinvested the proceeds.

We made the decision to sell as it became clear to US that this was the best path to maximize value and manage our risk for the benefit of our shareholders. Importantly, we did get paid well for the value we created at that site and we immediately reinvested the proceeds.

Speaker 3: To be very clear, we don't see another Costa Verde in our portfolio. This asset was somewhat of a unicorn, but we do own really great real estate. And there will be other opportunities to add non-retail uses or to densify our properties.

To be very clear, we don't see another costa Verde in our portfolio. This asset with somewhat of a unicorn, but we do own really great real estate and there will be other opportunities to add non retail uses or to densify our properties.

Speaker 3: To the extent that makes sense, we will again pursue a similar path. This could mean partnering with experienced operators, a ground lease, or a sale of the non-retail component, but always with the goal of extracting and retaining control over the retail. As an example, we have our West Bart Square project currently underway in Bethesda, Maryland.

To the extent that makes sense, we will again pursue a similar path. This could mean partnering with experienced operators a ground lease or a sale of the non retail component.

But always with the goal of extracting and retaining control over the retail.

As an example, we have our Westport Square project currently underway in Bethesda, Maryland.

Speaker 3: The redevelopment of this shopping center essentially features a refresh of all the retail, including a new store for our already successful giant grocery anchor, but will also include the development of senior living and apartment components on which we have partnered with others.

The redevelopment of this shopping center essentially features a refresh of all the retail, including our new store for our already successful giant grocery anchor.

But will also include the development of senior living and apartment components on which we have partnered with others.

Speaker 3: Before I turn it over to Jim, I'll conclude by saying that Regency emerged from 2020 a stronger company, and we and our tenants spent 2021 adapting to position ourselves for success in the new normal, and we've done just that. We've recovered from the pandemic, we maintained and even raised our dividend, and we are on our front foot today.

Before I turn it over to Jim I'll conclude by saying that regency emerged from 2020, a stronger company and we and our tenants spent 2021 adapting to position ourselves for success in the new normal that we have done just that we.

We've recovered from the pandemic, we maintained and even raised our dividend and we are on our front foot today.

Speaker 3: This consistency that you've seen from us over the years, even through the toughest of times, is evidence of the quality of our assets, our investment discipline, the strength of our balance sheet, and most importantly, our people. Jim? Thanks, Lisa. Good morning, everyone.

This consistency that you've seen from us over the years, even through the toughest of times is evidence of the quality of our assets our investment discipline, the strength of our balance sheet and most importantly, our people Jim thanks.

Thanks, Lisa good morning, everyone.

Speaker 6: Our teams are encouraged by the positive trends we're seeing in our portfolio and in the overall retail environment.

Our teams are encouraged by the positive trends, we're seeing in our portfolio and in the overall retail environment.

Speaker 6: We saw record new leasing volumes during 2021 at 20% above historical level.

We saw record new leasing volumes during 2021 at 20% above historical levels for the fourth quarter rent collections were 99% and tenants are reporting positive and often record sales.

Speaker 6: For the fourth quarter, rent collections are 99%. And tenants are reporting positive and often record sales.

Speaker 6: With continued strength in our leasing activity and lower tenant move outs, our percent lease rate, again, rose in the fourth quarter, ending the year at over 94%.

With continued strength in our leasing activity and lower tenant move outs our percent lease rate again rose in the fourth quarter ending the year at over 94%. We've made good progress from our Covid lows, but we continue to see further upside to occupancy from here.

Speaker 6: We've made good progress from our COVID lows, but we continue to see further upside to occupancy from here.

Speaker 6: having achieved historical highs north of 96 percent.

Having achieved historical highs north of 96%.

Speaker 6: Additionally, our teams have an opportunity to further upgrade merchandise mix in this environment and our new leasing pipelines are healthy and building.

Additionally, our teams have an opportunity to further upgrade merchandise mix in this environment and our new leasing pipelines are healthy and building.

Speaker 6: The most active categories include groceries, medical, health and wellness, restaurants, cosmetic, home, and off-price.

The most active categories include grocers medical health and wellness restaurants, cosmetic home and off price importantly.

Speaker 6: Importantly, we are seeing good activity across all regions for both anchor and shop space. We're also

Importantly, we are seeing good activity across all regions for both anchor and shop space.

We're also having success keeping our current tenants in place our fourth quarter retention rate was 85% well ahead of the historical average and shop tenant retention was our highest on record in the quarter.

Speaker 6: Our fourth quarter retention rate was 85%, well ahead of the historical average, and shop tenant retention was our highest on record in the quarter.

Speaker 6: Our blended rent spreads were nearly 13% in Q4, positively impacted by the execution of a new anchor lease with Target at a property in Connecticut.

Our blended rent spreads were nearly 13% in Q4 positively impacted by the execution of a new anchor lease with target at a property in Connecticut.

Speaker 6: As we have often discussed on prior calls, our ability to recapture and mark-to-market legacy anchor leases can often be one of the largest contributors to our rent spreads over time.

As we've often discussed on prior calls our ability to recapture and mark to market legacy anchor leases can often be one of the largest contributors to our rent spreads over time.

Speaker 6: We also remain successful at driving contractual rent spreads, achieving over 2% annual growth in the vast majority of our leases executed in the fourth quarter, while continuing to remain judicious in our leasing CapEx spend.

We also remained successful at driving contractual rent spreads achieving over 2% annual growth in the vast majority of our leases executed in the fourth quarter, while continuing to remain judicious in our leasing capex spend.

Speaker 6: Our consistent focus on embedded rent increases resulted in gap rent spreads of 13% in 2021, while also achieving attractive net effective rent.

Our consistent focus on embedded rent increases resulted in GAAP rent spreads of 13% in 2021, while also achieving attractive net effective rents.

Speaker 6: That said, we are cognizant that tenants are continuing to be impacted by inflation, supply chain issues, permitting challenges, and most notably, labor shortages.

That said, we are cognizant that tenants are continuing to be impacted by inflation supply chain issues permitting challenges and most notably labor shortages, both in operating existing stores and getting new stores open.

Speaker 6: both in operating existing stores and getting new stores open.

Speaker 6: we are seeing and planning for an impact to rent commencement timing on the margin.

We are seeing and planning for an impact to rent commencement timing on the margin.

Speaker 6: Importantly, these pressures have not yet impacted demand for

Importantly, these pressures have not yet impacted demand for space.

Speaker 6: But we also recognize that may not be sustainable, as labor shortages continue to adversely impact businesses around the country.

But we also recognize that may not be sustainable as labor shortages continue to adversely impact businesses around the country.

Speaker 6: For now, many tenants showing and are showing an ability to adapt, including in-store tech advancements, reuse of equipment, and improved e-commerce and curbside platforms.

For now many tenants showing are showing an ability to adapt including in store tech advancements reuse of equipment and improved e-commerce and curbside platforms.

Speaker 6: Continue to monitor these trends closely and our teams are actively working with current and future tenants on these issues when and where possible.

We continue to monitor these trends closely and our teams are actively working with current and future tenants on these issues when where possible.

Speaker 6: Moving to our development and redevelopment pipeline, much like what we're acquiring, our teams are focused on creating value within our core competency of grocery-anchored neighborhood and community centers.

Moving to our development and redevelopment pipeline much like what we're requiring our teams are focused on creating value within our core competency of grocery anchored neighborhood and community centers.

Speaker 6: We're proud of our track record and our proven ability to do so throughout.

We're proud of our track record and our proven ability to do so throughout cycles.

Speaker 6: Even with the pandemic-related challenges facing our industry over the last two years, we continue to start and deliver projects and currently have $300 million in process.

Even with the pandemic related challenges challenges facing our industry over the last two years, we continued to start and deliver projects and currently have $300 million in process.

To highlight a few.

Speaker 6: In the fourth quarter, we completed the first phase of our ground-up HEB-anchored Baybrook development in Houston.

In the fourth quarter, we completed the first phase of our ground up HEB anchored they broke development in Houston and look forward to starting an additional phase of this successful project in the near future.

Speaker 6: I look forward to starting an additional phase of this successful project in the near future.

Speaker 6: We completed the redevelopment of the public's anchored West Bird Plaza in South Florida.

We completed the redevelopment of the publics anchored Westbury Plaza and South Florida This quarter.

Speaker 6: This project included a complete teardown and rebuild of an older public school.

This project included a complete teardown, a rebuild of an old Republic store as well as facade and site work improvements to the entire center.

Speaker 6: as well as facade and site work improvements to the entire center.

Speaker 6: The immediate impact of significantly enhanced sales volumes of the grocer over pre-redevelopment volumes coupled with the modernization of this very well located asset will enable us to significantly upgrade the merchandising mix and keep the center competitive and relevant for years to come.

The immediate impact of significantly enhanced sales volumes of the grocer over pre redevelopment volumes coupled with the modernization of this very well located assets will enable us to significantly upgrade the merchandising mix and keep the center competitive and relevant for years to come.

Speaker 6: At the Abbott in Cambridge, Massachusetts, we have seen increased leasing activity and anticipate tenant openings later this year.

At the Cambridge.

The abbot in Cambridge, Massachusetts, we have seen increased leasing activity and anticipate tenant openings later this year.

Speaker 6: crossing Clarendon outside of DC. We are nearing construction completion and happy to report that we are now over 95%

The crossing Clarendon outside of D. C. We are nearing construction completion and happy to report that we are now over 95% leased.

Speaker 6: Looking ahead, we continue to target project spending in the range of $150 million to $200 million annually.

Looking ahead, we continue to target project spending in the range of $150 million to $200 million annually.

Speaker 6: While our development teams are seeing inflationary pressures on material and labor cost, we are carefully monitoring these increases and adjusting our underwriting.

Our development teams are seeing inflationary pressures on material and labor cost. We are carefully monitoring these increases and Justin and adjusting our underwriting importantly, we've been able to maintain our targeted project yields.

Speaker 6: importantly, we've been able to maintain our targeted project yield.

Speaker 6: Our teams are being proactive on securing bids, ordering materials early, and utilizing our scale, relationships, and connections to mitigate our risks as effectively as possible.

Our teams are being proactive on securing bids ordering materials early and utilizing our scale relationships and connections to mitigate our risks as effectively as possible.

Speaker 6: In summary, our team is optimistic about the current retail environment and the positive momentum we are experiencing across all regions in leasing, development, and redevelopment. Mike, thank you.

In summary, our team is optimistic about the current retail environment and the positive momentum we are experienced across all regions and leasing development and redevelopment.

Mike.

Thank you Jim and.

And good morning, everyone.

Speaker 4: I'll start by addressing fourth quarter results, provide some color around sources and uses relating to recent transactions, and then walk through some highlights of our initial 2022 guidance.

I'll start by addressing fourth quarter results provide some color around sources and uses related to recent transactions and then walk through some highlights of our initial 2022 guidance.

Speaker 5: Fourth quarter NAREAD FFO was positively impacted by a few items worth

Fourth quarter NAREIT <unk> was positively impacted by a few items worth mentioning.

Speaker 5: Uncollectible lease income was a positive $6 million in the quarter, and you can see the components of this detailed on page 33 of our supplement.

Collectible lease income was a positive $6 million in the quarter and you can see the components of this detailed on page 33 of our supplemental.

Speaker 5: Additionally, similar to last quarter, straight line rent benefited from the reversal of reserves triggered by the conversion of some cash basis tenants back to accrual.

Additionally, similar to last quarter straight line rent benefited from the reversal of reserves triggered by the conversion of some cash basis tenants back to accrual.

Speaker 5: This non-cash accounting impact benefited uncollectible straight-line rent by about $7 million.

This noncash accounting impact benefit as uncollectible straight line rent by about $7 million.

Speaker 5: To reiterate, straight-line rent does not impact our core operating earnings, but these conversions created an outsized benefit to NARED FFO in each of the third and fourth quarters.

To reiterate straight line rent does not impact our core operating earnings, but these conversions created an outsized benefit to NAREIT <unk> and each of the third and fourth quarters.

Speaker 4: Following the conversions back to accrual, we now have 17% of our ABR remaining on a cash basis of accounting.

Following the conversions back to accrual, we now have 17% of our ABR remaining on a cash basis of accounting.

Speaker 5: For this smaller pool, our cash basis collection rate was 94% in the fourth quarter.

For this smaller pool, our cash basis collection rate was 94% in the fourth quarter.

Speaker 5: From a balance sheet perspective, we ended the year with full capacity on revolver and we have no unsecured debt maturities until 2024.

From a balance sheet perspective, we ended the year with full capacity on our revolver and we have no unsecured debt maturities until 2024.

Speaker 5: Total leverage is back to well within our targeted range of five to five and a half.

Total leverages back to well within our targeted range of five to five five times.

Speaker 5: The acquisition of Blakeney, which closed in November , was funded with cash on hand and our share of proceeds from dispositions completed in the fourth quarter.

The acquisition of Blakeney, which closed in November was funded with cash on hand, and our share of proceeds from dispositions completed in the fourth quarter.

Speaker 5: The acquisition of the Long Island portfolio, which closed just prior to year-end, was funded with the sale of Costa Verde in early January .

The acquisition of the long island portfolio, which closed just prior to year end was funded with the sale of Costa Verde in early January .

Speaker 5: notably, and the challenge that often goes under the radar with dispositions of long-held assets.

Notably and the challenge that often goes under the radar with dispositions of long held assets in.

Speaker 5: In the last year, we've been able to sell nearly $250 million of properties on a tax-efficient basis by structuring 1031 exchanges.

In the last year, we've been able to sell nearly $250 million of properties on a tax efficient basis by structuring 10 31 exchanges.

Speaker 5: Turning to guidance, please be sure to review the very helpful detail in our press release and business update slide deck posted to our website.

Turning to guidance. Please be sure to review the very helpful detail in our press release and business update slide deck posted to our website.

Speaker 5: While our earnings have historically been more visible and predictable, our 2021 earnings were impacted by a few cash basis accounting adjustments that complicated the picture heading into this year.

While our earnings have historically been more visible and predictable our 2021 earnings were impacted by a few cash basis accounting adjustments that complicated the picture heading into this year.

Speaker 5: These include prior year reserve collections and straight line rent reversal impacts where it appears as if expectations around these items resulted in meaningful variability in street estimates.

These include prior year reserve collections and straight line rent reversal impacts where it appears as if expectations around these items resulted in meaningful variability and street estimates.

Speaker 5: To add some clarity, we've increased the transparency even further in our guidance disclosure relating to these items.

To add some clarity.

Kris the transparency, even further in our guidance disclosure related to these items.

Speaker 5: Regarding the collection of prior reserves, last year we collected $46 million that we had billed and reserved in 2020.

Regarding the collection of prior year reserves last year, we collected $46 million that we have built and reserved in 2020.

Speaker 5: This year, we expect to collect about $13 million of revenues billed and reserved in prior years. These impacts are only related.

This year, we expect to collect about $13 million of revenues build and reserved in prior years.

These impacts are only related to the timing of revenue recognition and this timing difference represents a <unk> 19 per share decrease in <unk> year over year and 2022.

Speaker 5: And this timing difference represents a 19 cent per share decrease in Mayread FFO year over year in 2022.

Speaker 5: One of the other big variances, as I mentioned, is the non-cash impact of straight-line rent reserves.

One of the other big variances as I mentioned is the noncash impact of straight line rent reserves.

Speaker 5: Last year we recognized $43 million of non-cash revenues, which included $13 million driven by the conversion of tenants from cash basis back to accrual.

Last year, we recognized $43 million of noncash revenues, which included $13 million driven by the conversion of tenants from cash basis back to accrual.

Speaker 5: This year, we are forecasting roughly $28 million of non-cash revenues. That's a 9 cent per share difference impacting NARED FFL.

This year, we are forecasting roughly $28 million of noncash revenues.

As of <unk> <unk> per share difference impacting NAREIT <unk>.

Speaker 5: And as we've mentioned on prior calls, we only plan to include the cash to accrual conversion impact in forward-looking guidance as tenants are converted. So right now we have zero impact in our 2022 guidance relating to future conversion.

And as we've mentioned on prior calls we only plan to include the cash to accrual conversion impact and forward looking guidance as tenants are converted so right now we have zero impacted our 2022 guidance related to future conversions.

Speaker 5: We mentioned on the last call that the JV promote was recognized in Q3 21 would not recur in 22.

We mentioned on the last call that the JV promote was recognized in Q3, 'twenty, one would not recur in 'twenty two and.

Speaker 4: And we also discussed that our quarterly net GNA run rate would be higher in 22, driven by annual salary increases, filling open positions, and returning to more normalized levels of T and E. Collectively, these impacts are another 14 cents at the midpoint.

And we also discussed at our quarterly net G&A run run rate would be higher in 'twenty, two driven by annual salary increases filling open positions and returning to more normalized levels of DNA.

Collectively these impacts are another 14 at the midpoint.

We hope you find this walkthrough of material and unusual impacts helpful.

Speaker 4: Pivoting to same property NOI growth, after adjusting for prior year collections, we are forecasting growth of three and a half percent at the mid-

Pivoting to same property NOI growth after adjusting for prior year collections, we are forecasting growth of three 5% at the midpoint.

Speaker 4: That's $0.16 per share of incremental positive FFO growth.

<unk> 16 per share of incremental positive <unk> growth.

Speaker 4: We will continue our practice of disclosing the same property NOI growth range, excluding prior year collections, for as long as they meaningfully impact our results.

We will continue our practice of disclosing the same property NOI growth range, excluding prior year collections for as long as they meaningfully impact our results.

Speaker 4: providing some reflection of a more normalized growth rate where the primary contributing component is base rent growth.

Providing some reflection of a more normalized growth rate were the primary contributing component is base rent growth.

Speaker 4: One last reminder on same property and a lot recall that in the first quarter of last year, we were still recording meaningful on collectible lease income at nearly 18Million dollars when excluding any impacts from prior period collection.

One last reminder, on same property NOI recall that in the first quarter of last year, we were still recorded meaningful uncollectible lease income at nearly $18 million when excluding any impacts from prior period collections.

Speaker 5: This compares to roughly two and a half million dollars in the fourth quarter of 21. So as we look to the cadence of growth by quarter during 22, we're anticipating a higher growth rate in the first quarter relative to the other three.

This compares to roughly $2 $5 million in the fourth quarter of 'twenty. One so as we look to the cadence of growth by quarter. During 'twenty. Two we are anticipating a higher growth rate in the first quarter relative to the other three.

Speaker 4: Also included in guidance, we expect transaction activity will be accretive to earnings this year, and while on the surface, our disposition guidance.

Also included in guidance, we expect transaction activity will be accretive to earnings this year.

And while on the surface, our disposition guidance exceeds acquisitions remember.

Speaker 4: Remember that the acquired Long Island portfolio closed on December 30th, so the impact is really that of a 2022 purchase.

Remember that the acquired long island portfolio closed on December 30, So the impact is really that of a 2022 purchase.

Speaker 4: We have about $65 million remaining of unsettled forward ATM equity, and expect free cash flow from dividend payments north of $130 million.

We have about $65 million remaining of unsettled forward ATM equity and expect free cash flow from dividend payments north of $130 million this year.

Speaker 5: all of which supports and funds our investment pipeline and future growth.

All of which supports and funds our investment pipeline and future growth opportunities.

Speaker 5: Finally, a quarter ago, we talked about NOI getting back to 2019 levels on an annualized basis during the first half of 2022. And that was six months sooner than we had originally anticipated.

Finally, a quarter ago, we talked about NOI getting back to 2019 levels on an annualized basis during the first half of 2022.

And that was six months sooner than we had originally anticipated.

Speaker 5: But we're pleased to report that in the fourth quarter of 2021 and after excluding prior year collection.

But we're pleased to report that in the fourth quarter of 2021, and after <unk> and after excluding prior year collections.

Speaker 4: Total NOI has now recovered back to 2019 levels.

Total NOI has now recovered back to 2019 levels.

Speaker 4: As Lisa alluded, with the recovery behind us, we've now pivoted our mindset toward growth in 2022 and beyond.

As Lisa alluded with the recovery behind US, we've now pivoted, our mindset towards toward growth in 2022 and beyond.

And with that we look forward to taking your questions.

Speaker 1: Thank you. Ladies and gentlemen, at this time, we will be conducting a question and answer session. If you'd like to ask a question, you may press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Rich Hill with Morgan Stanley . Please proceed with your question. Thank you.

Thank you ladies and gentlemen at this time, we will be conducting a question and answer session. If you'd like to ask a question you May press star one on your telephone keypad.

Confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the Q4 participants using speaker equipment. It may be necessary to pick up your handset before pressing the star key our first question comes from the line of Rich Hill with Morgan Stanley . Please proceed with your question.

Speaker 18: Hey, good morning guys, I suspect you're gonna get a lot of questions about the guide, but I'd like to start off by saying, I think you've done a really good job bridging that. So so thank you for it. I have more maybe more of a strategic question to kick us off.

Hey, good morning, guys.

I suspect you're going to have a lot of questions about the guide, but I'd like to start off by saying I think you've done a really good job reaching that so thank you for it.

To add more maybe more of a strategic question to kick us off.

Speaker 18: Occam see looks like it's around 100 basis points below 19 levels

On occupancy it looks like it's around 100 basis points below 19 levels I'm curious if you can give some timeline for full recovery and more importantly, when does your calculus begin to change from occupancy recovery to gains from pushing rents more so it sounded like Lisa what you were talking about pivoting to offense.

Speaker 18: Curious if you can give us a timeline for full recovery, and more importantly, when does your calculus begin to change from occupancy recovery to gains from pushing rents more? So it's sort of like, Lisa, what you were talking about pivoting to offense.

Speaker 18: Just a strategic question, how close do you think you are to really pivot?

Strategic question, how close do you think you are to really pivoting.

Speaker 4: Hey Rich, this is Mike. Let me start and then Jim will provide some color as he sees the leasing environment. Let me first say I appreciate your comments on the disclosure. We absolutely understand the complexity and the noise that we've lived through in 20 and 21 and anticipated that and are trying to help as best we can.

Hey, Rich this is Mike let me start and then Jim will provide some color Ccs the leasing environment and let me first say I appreciate your comments on the disclosure.

Absolutely understand the complexity and the noise that we've lived through in 2020 , one and an anticipated that and are trying to help.

Best we can.

Speaker 4: From an underlying assumption perspective on our same property and our growth range, we are planning for increases in both top line percent leased as well as commenced occupancy rates in the 75 to 100 basis point range. That is what's underlying and supporting our midpoint of 3.5% growth, which

From an underlying assumption perspective on our same property NOI growth range.

Our planning for increases in both top line percent least as well as commenced occupancy rates in the 75 to 100 basis point range that is what's underlying and supporting our mid point of three 5% growth, which.

Speaker 5: largely is coming from base rent growth. Recall, we're also getting about 1.3% of contractual increases and contributing to our top line NOI as well. With respect to pricing power, I'll let Jim jump in and provide some color on how the teams are attacking our rollover.

Largely as coming from base rent growth.

Recall, we're also getting about one 3% of contractual increases.

Contributing to our topline NOI as well.

With respect to pricing power I'll, let Jim jump in and.

Provide some color on how the teams are attacking on a rollover.

Yes rich.

Speaker 6: We, as you saw, we're, our spreads are getting better. We had, um, um.

We did.

As you saw where our spreads are getting better we had.

Speaker 6: roughly 13% this quarter on a blended basis.

Roughly 13% this quarter on a blended basis.

Speaker 6: When you couple that with the embedded rent steps, we continue to get it over 2% in the vast majority of our rents.

When you couple that with.

The embedded rent steps, we continue to get at 2% and the vast majority of our spaces.

Speaker 6: The prudent leasing capital spend that we're doing is driving really good gap rents as well as net effective rents and combined when you look at that whole package, that's what we're looking at as far as the positive direction for long term.

The prudent leasing capital spend that we're doing is driving really good GAAP rents as well as net effective rents and combined when you look at that whole package. That's what we're looking at towards the positive direction for long term.

Growth in the portfolio.

Speaker 6: The demand continues to be very strong across all regions, like I indicated in the prepared remarks.

The demand continues to grow.

Wrong across all regions like I indicated in the prepared remarks.

We think that will continue to at least in our portfolio continue to.

Speaker 6: think that will continue to, at least in our portfolio, continue to.

Speaker 6: have the leverage shift more towards the landlord side, we believe, as spaces do get more occupied.

Have the leverage shift more towards the landlord side, we believe as as as spaces do get more occupied.

Speaker 6: I think we'll be able to drive even harder deals.

I think we'll be able to drive even harder deals.

But I think the stay at home.

Speaker 6: change in the entire retail landscape I think has been very positive for us and our product.

Change in the entire retail landscape I think has been very positive for us in our product type.

Speaker 6: We are close to homes, we're in generally very strong demographic, high density marketplaces, not a lot of urban locations. So that has played well for our product type and we continue to see that as a positive.

We are close to homes were and generally very strong demographic high density.

Marketplaces.

Not a lot of urban urban.

Urban.

<unk> so that has played well for our product type.

And we continue to see that as a as a positive vehicles.

To help support the demand going forward.

Speaker 4: And one last comment because I realized you were you were asking a little bit about forward total total recovery.

One last comment on because I realize youre asking a little bit about forward total total recovery.

Speaker 5: Yeah. Importantly, to highlight our top end and how we think about kind of maximum occupancy, we are 96% is where our eyes are. We think our portfolio and the quality of our assets and the historical performance of them would support a 96% occupancy rate. You drop about 150 basis points off of that for a commenced occupancy rate. So not only do we see 75 to 100 basis points.

Importantly to highlight our top end and how we think about kind of maximum occupancy. We are 96% is where our eyes are we think our portfolio and the quality of our assets and the historical performance of them would support a 96% occupancy rate you drop about 150 basis points off of that for our commence at.

Propensity right. So not only do we see 75 to 100 basis points supporting our 'twenty two growth, we see growth beyond that of similar rates of increases and if you think about our post GSE recovery progress. This is our this recovery.

Speaker 5: supporting our 22 growth, we see growth beyond that, of similar rates of increases. And if you think about our post-GSE recovery.

Speaker 5: This recovery, 75 to 100, is a little bit below what we experienced post-GFC, but we did have more room, more vacancy coming out of the GFC, more space to fill than we do now. This trajectory feels right to us, feels healthy, and feels appropriate for that long-term recovery.

75 to 100 is a little bit below what we experienced post GSE, but we did have more room with more vacancy coming out of the GSC more space to fill and we do know this trajectory feels feels right to us feels healthy and feels appropriate for that long term recovery.

Speaker 18: Got it. So as I, as I think about this, it sounds like to me, you know, a year from now, knock on wood, um, you're going to have, you're going to be in a pretty good place back to where you were prior to the GFC. 2021 was obviously a remarkable year of recovery. 22 is, um, sort of blocking and tackling and a little bit of a transition to get back to that.

Got it.

I think about this it sounds like to me.

A year from now knock on wood.

Have you are going to be in a pretty good place back to where you were prior to the GSC 2021 was obviously a remarkable year recovery 'twenty, two is sort of blocking and tackling and a little bit of a transition to get back to that level, where we were prior to why do I say the GSC.

Speaker 18: level where we were prior to, why do I say the GFC? God, COVID. It sounds like you're going to be in a really good place 12 months from now. Is that fair?

Covid at.

It sounds like Youre going to be.

A really good place 12.

12 months from now is that fair.

Speaker 3: Absolutely, and I think that that's a really good point, Rich. So our NOI really has recovered. Our total NOI has recovered. And I have the utmost confidence that when we look at how we will perform in 2022 from an earnings perspective, despite the complexities that we talked about with the guidance.

Absolutely and I think that that's a really good point.

Our NOI it really has recovered our total NOI has recovered.

And.

I have the utmost confidence that when we look at how we will perform in 2022 from an earnings perspective, despite the complexities that we talked about what the guidance.

Speaker 3: that our recovery will stack up really well versus 2019 versus everyone else in the sector. And that's with our balance sheet actually being even better positioned today. Our net debt to EBITDA is lower today than it was with going into COVID. And that was with maintaining and raising our dividends. So we feel really good about it. And we feel good about 2022.

Is that a recovery.

Paul.

Stack up really well versus 2019 versus everyone else in the sector and thats with our balance sheet actually being even better positioned today, our net debt to EBIT is lower today than it was going into COVID-19 and that was maintaining and raising our dividend. So we feel really good about and we feel good about 'twenty two.

Me too.

Great. Thank you guys.

Okay.

Speaker 1: Our next question comes from the line of Katie McConnell with Citi. Please proceed with your question.

Our next question comes from the line of Katy Mcconnell with Citi. Please proceed with your question.

Speaker 7: Great, thanks. Good morning, everyone. So I just had two more questions on guidance. And the first is, within your same-store guidance range, what are you assuming for new VAD debt expense this year versus 2021? And secondly, understanding the straight-line guidance will only be updated as those cash tenants are converted back to accrual. Or can you maybe help us quantify how large that total impact could be in theory if that entire pool was converted back to accrual method tomorrow? Sure.

Great. Thanks, good morning, everyone.

Two more questions on guidance and the first is that in your same store guidance range. What are you assuming for new bad debt expense this year versus 2021, and secondly, understanding that straight line guidance well, maybe after you get that cash tenants are converted back to accrual or can you maybe help us quantify how large that total impact could be.

In theory, if that entire coles converted back to claw back a while.

Sure.

Appreciate those questions.

Speaker 4: From a bad debt expense perspective, so let's talk about current year billings is the question in 2021. We ended the year at about 175 basis points of bad debt expense on 2021 billing.

From a bad debt expense perspective, so let's talk about current year billings is the question in 2021, we ended the year at about 175 basis points of bad debt expense on 2021 billings as we think about our underlying assumptions going into 'twenty. Two we see we see improve improve.

Speaker 4: As we think about our underlying assumptions going into 22, we see improvements in our cash collection rates. And we're calling for about in the area of 100 basis points on a comparable basis. In dollars, that's equating to about $10 million of improvement.

And our cash collection rates and we're calling for about in the area of 100 basis points on a comparable basis.

Thats equating to about $10 million of improvement.

Speaker 4: We could do better than that on the top end, and we provided for maybe a little bit less collection on the bottom end. But at the top end, we could see us returning to our historical averages by year end. So not on an average for 22, but by year end. And that historical average, to remind you, is about 50 basis points of billed revenue.

We could do better than that on the top end.

But we provided for maybe a little bit less collection on the bottom end, but at the top end, we could see us returning to our historical averages by year end.

So not an average for 'twenty, two but by year end and that historical average to remind you is about 50 basis points of build revenues that.

Speaker 4: And that is where we anticipate ultimately recovering to. The question on straight-line rent is a good one. And I'd point you to page 34 of our supplement, where we've been breaking down more diligently our COVID disclosures.

And that is where we anticipate ultimately recovering too.

The question on the straight line rent is a good one.

And I'd point you to.

Page 34 of our supplement where we have been breaking down our.

More diligently our COVID-19 disclosures what.

Speaker 4: What you'll see there is a reserve on our straight line rents of $33 million. So this is getting to your point of what is the maximum potential in theory that $33 million is the maximum potential. But I a heavy dose of caution there, Katie on

What youll see there is a reserve on our straight line rents of $33 million. So this is getting to your point of what is the maximum potential in theory that $33 million is the maximum potential.

A heavy dose of caution there.

Speaker 4: whether we can, whether we will ever eventually convert all of those tenants back to.

Whether we can whether we will ever eventually convert all of those tenants back to accrual recall, we are 17% as I indicated on a cash basis of accounting today.

Speaker 4: Recall, we have 17%, as I indicated, on a cash basis of accounting today. There is some visibility, as we sit here in mid-February, to converting more tenants in the first quarter.

There is some visibility as we sit here in mid February to converting more tenants in the first quarter.

Speaker 4: I think just to give you a number on that, our outlet calls for in the area of $5 million of potential conversion income on an FFO basis, non-cash. We're on an as-converted basis and we'll continue to update everyone as those conversions occur.

I think just to give you.

A number on that at our outlook calls for in the area of $5 million of potential conversion income on an <unk> basis noncash.

We are on an as converted basis and we will continue to update everyone.

As those conversions occur.

Speaker 19: It's Michael Bowman here with Katie. Maybe Lisa or Mike, maybe just stepping back overall and I recognize there's a lot of complexities with the prior reserves and non-cash income that clearly at least it appeared as though the street got a little bit ahead of itself and that's not only to you obviously other companies across other sectors as well it impacted.

Hey, it's Michael Bilerman here with Katie, maybe Lisa or Mike, maybe just stepping back overall and I recognize there's a lot of complexities with the prior year reserves and noncash income.

That clearly at least it appeared as though the street got a little bit ahead of itself and that's not only to you obviously other companies across other sectors as well.

Impacted but when you sort of compare your line item guidance relative to the street.

Speaker 19: But when you sort of compare your line item guidance relative to the street.

Speaker 19: it would seem at least half of it is more core-related, lower core NOI, a bit higher interest expense, higher G&A, even above the levels that you'd sort of previously indicated, and so missing the street by five or six percent, half of that being core. How do you look at that item? Because I don't think all of this is truly just, you know, reserves and non-cash. There seems to be some...

It would seem at least half of it is more core related lower core NOI, but higher interest expense and a higher G&A even above the levels that you had sort of previously indicated.

And so im missing the street by five or 6% of half of that being core.

How do you look at that.

Because I don't think all of this is.

Truly just.

<unk> noncash there seems to be some.

Speaker 19: either conservatism in your views, or that, you know, the street just got way ahead of itself. And so I'm just trying to

Either conservatism in your views.

Or that the.

The Street, just got way ahead of itself and so I'm just trying to.

Speaker 19: understand from your vantage point how you look at things and how you're going to pivot to stronger FFO growth as we roll into 23 and 24.

I understand from your vantage point, how you look at things and how youre going to.

Two stronger SSO growth as we roll into 'twenty three 'twenty four.

Speaker 4: I appreciate the question, Michael and would agree a little bit with maybe get a little bit ahead just to walk through some of the some of the details just so we're all on the same page. Yes. The non cash conversion item is a is a major component.

I appreciate the question Michael.

I would agree a little bit with.

The street, maybe getting a little bit ahead just.

Just to walk through some of the some of the details just overall page.

Yes, the noncash conversion item is a major component.

Speaker 4: of the decelerating growth, right? So if you just look at the fourth quarter on a run rate basis, that's five cents of our issue going forward.

The the decelerating growth right. So if you just look at the fourth quarter on a run rate basis. That's that's <unk> of your of your of our issue going forward and again, we're not guiding on future conversions, Although let me reiterate the the.

Speaker 4: And again, we're not guiding on future conversions, although let me reiterate the potential Q1 conversion of about $5 million.

The potential Q1 conversion of about $5 million.

Speaker 4: Then we get into what we still call our core, which includes prior year collections, and that is an unusual and immaterial moving item. That component of ULI is going to be about a 3% impact to the fourth quarter. So that is impacting our run rate going forward and is effectively, Michael, absorbing our good, healthy growth and base rent and NOI going forward in our 3.5% guide on that line item.

Then we get into what we still call our core which includes prior year collections and that is an unusual material moving item.

That.

That component of <unk> is going to be about as about a 3% impact to the fourth quarter. So that is impacting our run rate going forward and is effectively Michael absorbing are good healthy growth in base rent and NOI.

Going forward in our 335% guide on that line item.

Speaker 5: which leads and isolates on the core, our increase in GNA as a drag. And again, that's an item that we we identified in the third quarter call, we wanted to make sure that people's run rates for quarterly GNA was in the $20 million range, which was about a $2 million increase per quarter over what we experienced in 21. On that line item, just for some

Which leaves and isolates on the core or increase in G&A.

A drag and again, that's an item that we identified in the third quarter call.

Wanted to make sure that People's run rates for quarterly G&A was in the $20 million range, which was about a $2 million increase per quarter over what we experienced in 'twenty one.

On that line item just for some context.

Speaker 4: Yeah, we were, as I said on the call, we're filling open positions.

As I said on the call. We're filling open positions. We've increased we had our annual salary increases are big line, a big component of our increase is returning to normalcy on the G&A front.

Speaker 4: We've increased our, we had our annual salary increase.

Speaker 5: A big line, a big component of our increase is returning to normalcy on the T&E front. Our teams are back on the road. We are reinflating those line items to 2019 levels. That's about 40% or so of our forecasted increase in G&A.

Our teams are back on the road.

We are re inflating those line items to 2019 levels, that's about 40% or so of our forecasted increase in G&A.

Speaker 4: And then I need to mention that and remind everyone, we did have an unusual one-time negative GNA impact in 21 related to LTI forfeitures.

Then I need to mention that and remind everyone. We did have an unusual one time.

Negative G&A impact in 'twenty, one related to LTI forfeitures.

Speaker 4: You know, we had some departures, most notably at the CIO level, and there was a one-time impact that benefited 21 that will not recur in 22.

We had some departures most notably at the CIO level and there was a one time impact that benefit of 'twenty, one that will not recur in 'twenty two.

Speaker 4: You put all that together and I think you want us to boil us down and think about and hear how we're thinking about the business.

You put all that together and I think you want to you want us to boil it down and think about and hear how we're thinking about the business.

Speaker 5: Looking through prior year collections and thinking about the midpoint of our core range, that's a 3% increase as we're thinking about our core operating business. And if you think about the upper end of that range and try to compare it to 2019, we're only 2% off of that recorded number.

Looking through prior year collections and thinking about the midpoint of our core range.

A 3% increase.

As we're thinking about our core operating business.

And if you think about the upper end of that range and trying to compare to 2019.

Only 2% off of that reported number.

Speaker 5: as a, if we want to put a line in the sand is 29 in recovery. So we feel, as Lisa said, we feel great about the outlook for 22. We are on the right vector of recovery on the leasing front and we're looking forward to growth from this point forward.

As if we want to put a line in the sand is 29 and recoveries.

We feel as Lisa said, we feel great about the outlook for 'twenty. Two we are on the right vector of recovery on the leasing front.

And we're looking forward to growth from this point forward.

Speaker 19: And you feel like it's an accelerating growth into 23 and 24.

And you feel like it's an accelerating growth into 'twenty three 'twenty four.

Speaker 3: I think that it goes back to what we just answered with regards to the continued ability to increase our occupancy. We do feel, we feel good about that. We still have room to run.

I think.

It goes back to what we just answered with regards to the continued ability to increase our occupancy we do feel we feel good about that we still have room to run.

Speaker 3: And the fact that also, I think, I appreciate the question, Michael, about the different line items, if you will, but as I think about it, and Mike, I can't articulate it better than Mike did, the core business is the same property NOI guide, excluding all that prior year noise, and that's a midpoint of three and a half percent.

And the fact that also.

I appreciate the question Michael about the different line items, if you will but as I think about it and Mike I can articulate it better than Mike did the core business is the same property NOI guide, excluding all of that prior year noise and that's a midpoint of three 5%.

Speaker 3: That's growth to me and continued growth, and I think it's really important to not brush over the fact that I said our net debt to EBITDA is lower today than it was entering COVID. We have capital. We have room to run. We are looking for opportunities and our development pipeline is refilling, and we are really active in the acquisition arena, $500 million last year. I believe I have a lot of confidence on the future growth.

That's growth to me and continued growth.

And I think it's really important.

Brushed over the fact that I said, our net debt to EBITDA is lower today than it was entering Covid. We have capital we have room to run we are looking for opportunities.

Our development pipeline is refilling and we're really active in the acquisition.

Arena $500 million last year. So, yes, I believe I have a lot of confidence on the future growth of for our company.

Speaker 4: And philosophically, as you know, we don't guide on speculative transactions on the acquisition front. We have $30 million in our 22 guidance. That is an opportunity in the Pacific Northwest that is under contract, and we feel great about closing. But as Lisa said, and we've indicated throughout 21, with our balance sheet and our free cash flow levels exceeding $130 million, we're on our front foot on the investment front, and looking forward to putting those opportunities.

And philosophically, we as you know we don't guide on speculative transactions on the acquisition front, we have $30 million in our 'twenty two guidance.

It is.

And opportunity in the Pacific Northwest that is under contract and we feel great about closing.

But as Lisa said and we've indicated throughout 'twenty, one with our balance sheet and our free cash flow levels exceeding $130 million, we're on our front foot.

On the investment front and looking forward to putting that those opportunities to work.

Speaker 19: Yeah, I think investors are just trying to understand. It's my last comment. I'll yield the floor, but just trying to understand, Lisa, exactly what that top line positive growth and you can see the occupancy going up and all the initiatives.

Yes, I think investors are just trying to understand so my last comment I'll yield the floor.

But just trying to understand exactly what that top line positive growth and you can see the occupancy going up and all the initiatives.

Speaker 19: uh... the transaction activity the development redevelopment

Transaction activity the development redevelopment.

It should ultimately translate into better growth and with a disappointing guide I think investors are sort of questioning that it may make sense to go the federal route and sort of lay out the multiyear building blocks to your growth. So that people can get comfortable that that top line same store growth is really going to drive bottom line earnings growth and divvy.

Speaker 19: I think investors are sort of questioning that. It may make sense to go the federal route and sort of lay out the multi-year building blocks to your growth so that people can get comfortable that that top-line same-store growth is really going to drive bottom-line earnings growth and dividend growth. And I know that dividend will never cut, and that's an important part of everything, and the Dow should be in good position. It may just need a little bit more guidance to the street so that we can see this multi-year growth platform come into effect.

<unk> growth and I know the dividend cut and Thats, an important part of everything in the balance sheet is in good position. It may just need a little bit more guidance to the street. So that we can see this multiyear growth platform come into effect.

Speaker 3: Sure, absolutely. And I want to make sure I think the team has done a tremendous job of providing the individual components. So I want to make sure that I recognize that of the team and

Sure absolutely and I want to make sure I think the team has done a tremendous job of providing the individual components. So I want to make sure that I have.

Recognize that.

<unk> and <unk>.

Speaker 3: There, it is a lot of one time things in 2021, which I believe that we have very specifically already laid out, but appreciate the comment, Michael. We not only maintain the dividend. We actually had a pretty significant increase too.

There is a lot of one time things in 2021, which I believe that we have very specifically already laid out but I appreciate the comment Michael.

We not only maintain the dividend, we actually had a pretty significant increase too.

Speaker 1: Our next question comes from the line of Michael Goldsmith with UBS. Please proceed with your question.

Our next question comes from the line of Michael Goldsmith with UBS. Please proceed with your question.

Speaker 9: Good morning. Thanks a lot for taking my question. Lisa, 2021 was a pretty unique year for retail, where the consumer benefited from stimulus and child tax credits. There was a shift from services to goods. So we entered 2022.

Good morning, Thanks, a lot for taking my question Liza 2021 is a pretty unique year for retail where the consumer benefited from stimulus and child tax credits. There was a shift from services. The good as we enter 2022 who are.

Speaker 9: we're facing with some factors reversing plus we've got inflation which could lead into discretionary dollars. What is your outlook for kind of the consumer and retail for the year? And given your focus on grocery anchored centers, do you feel like you're really well positioned to kind of stay the course even if this 2022 becomes a little bit of a volatile year for retail and the consumer?

Facing with some of these factors reversing plus you've got inflation, which could even into discretionary dollars. What is your outlook for kind of consumer and retail for the year and given your focus on grocery anchored centers do you feel like you're really well positioned to kind of stay the course, even if.

If this 2022 becomes a little bit of a volatile year for retail and the consumer.

Speaker 3: Michael, I think you answered the question for me yourself. I do feel, I believe that there's no question that there's a lot of impact to the consumer, but with regards to the part of the retail sector that we are playing in, if you will, is the best positioned. So Jim said it in his, in answering the Occupancy question, being close to people's homes.

Michael I think you answered the question for me yourself.

I do feel I believe there is no question that there is a lot of impacts to the consumer but with regards to the brief.

The part of the retail sector that we are playing in if you will is the best positioned so.

Jim said it.

Is that answering the occupancy question being close to People's homes. So there is no question.

Speaker 3: So there's no question. I mean, and we all read the same data and news articles.

We all read the same data and news articles some of the largest increases for that are impacting families are in gasoline and in energy and people are staying closer to home, which is a little bit of a tailwind. If you will even in even in spite of the headwinds of <unk>.

Speaker 3: Some of the largest increases that are impacting families are in gasoline and in energy, and people are staying closer to home, which is a little bit of a tailwind, if you will, even in...

Speaker 3: In spite of the headwinds of rising prices, it's a tailwind for suburban shopping centers and for grocery-anchored shopping centers. People are eating at home more often, and when they're not eating at home, they're staying close to home to eat. So again, it's benefiting our product type. We're seeing it in sales at our shopping centers. Our sales...

Zinc prices as a tailwind for suburban shopping centers and for grocery anchored shopping centers people are eating at home more often and when they're not eating at home. They are staying close to home to eat so again, it's benefiting our our product type we're seeing in sales.

At our shopping centers are sales.

Speaker 3: are up not just over 2021 and 2020, but over 2019, kind of a more normal environment, if you will. So our outlook is still really bullish on grocery-anchored shopping centers. And you're seeing that translate into the demand for that product type as well in the transaction market.

Our up not just over 2021 and 2020, but over 2019.

Kind of on a more normal environment. If you will so our outlook is still really bullish on grocery anchored shopping centers and youre seeing that translate into the demand for that product type as well in the in the transaction market.

Speaker 9: That's helpful. And then, Mike, on the guidance, thanks again for the detailed breakdown. You know, can you outline some of the items that may not be included in your guidance? You talked about future transactions and acquisitions. And then at the same time, you know, your guidance calls for the same property and allied growth of two and three quarters to four and a quarter extra term fees in the prior year reserve collections. If we back out some of the outsize expense recovery from the prior year, does that kind of reflect the go forward growth algorithm of the core business?

That's helpful and then Mike on the guidance. Thanks again for the detailed breakdown.

Can you outline some of the items that may not be included in your guidance you talked about future transactions and acquisitions and then at the same time.

Your guidance calls for our same property NOI growth of two and three quarters to four and a quarter.

Exit term fees in the prior year reserve collections, if we back out some of the outsized expense recovery from the prior year kind of reflects the go forward growth algorithm of the core business.

Speaker 5: Sure, I think much like you do with Lisa, I think you answered some of that there, Michael. We do exclude transaction activity, again, kind of as a rule at Regency, philosophically, and we just don't.

Sure.

Much like you did with Lisa I think you answered some of that there Michael.

We do exclude transaction activity again kind of as a rule at regency philosophically and we just don't.

Speaker 5: We just don't want to set those expectations for us internally into making poor investment decisions. So those will all be incremental as we move forward. Within the same property NOI line item, I appreciate you bringing up the Tuscombe and Q2 from 21. We did have an outsized recovery experience in 21. That will not recur in 22. That's about a 50 basis point drag. Essentially, there's three big components to the same property growth at the mid.

We just don't want to set those expectations expectations for us internally into making poor investment decisions. So those will all be incremental as we move forward.

Within the same property NOI line item I appreciate you, bringing up the tough comp in Q2 from.

From 'twenty, one we did have an outsized recovery experience in 2020 , one that will not recur in 'twenty two that's about a 50 50 basis point drag.

Essentially there's three big components to the same property.

Speaker 5: 400 basis points total, 300 basis points coming from base rent growth.

Growth at the mid 400 basis points.

Total 300 basis points coming from base rent growth and 100 basis points coming from improvement in <unk> and I went through that assumption on bad debt expense on a previous question and then that drag of 50 basis points is bringing us back down to the three and a half.

Speaker 5: and 100 basis points coming from improvement in ULI. And I went through that assumption on bad debt expense on a previous question.

Speaker 5: And then that drag at 50 basis points is bringing us back down to the three and a half.

Speaker 4: 4% compared to historical averages is pretty healthy. You know, you've heard us and followed us and heard us talk about 2.5% to 3% on a stabilized basis being a normal rate of growth annually for Regency. So 4% would reflect a rising level of occupancy, which we articulated in that 75 to 100 basis point range.

4%.

Compared to historical averages is pretty healthy.

You've heard us and followed us and heard US talk about two 5% to 3% on a stabilized basis being.

A normal rate of growth annually.

Annually for Regency.

So 4% would would reflect a rising level of occupancy, which we articulated in that 75 to 100 basis point range.

Thank you very much good luck in 2022.

Thanks, Michael.

Speaker 1: Our next question comes from the line of Flores Van Discham, with Compass Point. Please proceed with your question.

Our next question comes from the line of Floris Van <unk>.

With Compass point. Please proceed with your question.

Speaker 10: Thanks. Good morning, everyone. I had a question on.

Thanks, Good morning, everyone.

Had a question on.

Speaker 10: We've heard about the Donahue-Schreiber transaction going at a very low cap rate and we've heard some of your competitors and peers talk about that cap rates are going lower. As you think about allocating capital over the next year or two, Lisa and Mike, how are you thinking about that when you're weighing developments versus...

The obviously, we saw the we've heard about the Donohue Schreiber transaction going at a very low cap rates and we've heard some of your <unk>.

Your competitors and peers talk about that cap rates are going lower as you think about allocating capital.

Over the next year or two.

Lisa and Mike.

How are you thinking about that.

When you're weighing developments versus.

Speaker 10: new acquisitions because new acquisitions clearly are going to be at lower cap rates than what they've occurred over the last 18 months. Also, maybe talk a little bit about your differentiated approach to development relative to your two large-cap strip peers. Can you put enough capital to work in that space in your view?

The new acquisitions, because new acquisitions, clearly are going to be at lower cap rates than what they've occurred over the last 18 months and then also maybe talk a little bit about your differentiated approach to development relative to your two large cap strip Pierce and can you put enough capital to work in that.

In that space in your view.

Speaker 3: I'll start and I'll allow Mike to add any color as needed.

I'll start and allow me to.

To add any color as needed so far as the.

Yes.

Speaker 3: we strategically and how we think about putting capital to work.

We strategically and how we think about putting capital to work.

Speaker 3: we have not changed our point of view. And we do look at investments holistically. And we always say the best use of our capital is to reinvest back into the centers that we already own and we know really well. And we are constantly intentionally and intensively managing those assets to do that. And we have a pretty good track record of doing so and putting capital work there and getting really good risk-adjusted returns with that capital. But those opportunities are limited as you pointed out. I mean, that is not an unlimited open check, if you will.

We have not changed our point of view and we do look at investments Holistically and we always say the best use of our capital is to reinvest back into the centers that we already own and we know really well.

And we are constantly intentionally and intensively managing those assets to do that and then we have a pretty good track record.

I am doing so in putting capital to work there and getting really good risk adjusted returns with that capital, but those opportunities are limited as you as you pointed out that is not an unlimited open check if you will.

Speaker 3: And then we also use our free cash flow and balance sheet capacity to invest in ground-up developments. And again, I think we have the best team in the business. We have the best track record in the business. We have, as the Costa Verde sale...

And then we also use our free cash flow and balance sheet capacity too.

Invest in ground up developments and again I think we have the best team in the business, we had the best track record in the business.

We have as we.

The Costa Verde sale will show you we have.

Speaker 3: once again really refocused on our bread and butter on what we do best, which is grocery anchored shopping centers. And we've had, we still are enjoying a lot of success there. Just in the past, I lose track of time, but we have a Publix, you know, underway here. I can almost see it outside of my window. In Jacksonville, we just, we're ready to potentially start phase two of an HEB that we actually green lighted during COVID.

Once again really refocused on our bread and butter on what we do best which is grocery anchored shopping centers and we've had we still are enjoying a lot of success. There just in the past I lose track of time, but we have a publix underway here I could almost eight outside of my window and Jacksonville, We just we're ready to potentially start phase.

To have an HEB that we actually greenlighted during COVID-19 .

Speaker 3: Many of you have had the opportunity to see our recently completed Wegmans in Raleigh. We've got a Publix underway in Richmond, and I can go on and on and on. We've got a fantastic team, and we will continue to get more than our fair share of those opportunities. And as we all know, grocery is growing, and we're going to continue to have the opportunity to do that. And then with acquisitions, I think Blakeney, Long Island, again, success.

Many of you have had the opportunity to see our recently completed wegmans in Raleigh, we have got a publix underway in Richmond, and I can go on and on and on we've got a fantastic team and we will continue to get more than our fair share of those opportunities and as we all know groceries garlic and we're going to continue to have the opportunity to do that and then with acquisitions I think blakeney long.

Island again success.

Speaker 3: you know, pruneyard prior to that. We, when we, we have boots on the ground, we have the team in the ground, we have relationships, really important, that help bring opportunities to us. And we do have a cost of capital advantage.

Prune yard prior to that we when we have boots on the grounding of the team on the ground, we have relationships really important and.

That helped bring opportunities to us and we do have a cost of capital advantage.

Speaker 3: when we're able to use that and use our expertise.

When we're able to use that and use our expertise and see an opportunity to add to the quality of our portfolio and add to the future growth rate of our portfolio, we're going to take advantage of it and I felt really confident that we'll do that.

Speaker 3: and see an opportunity to add to the quality of our portfolio and add to the future growth rate of our portfolio, we're going to take advantage of it. And I feel really confident.

Speaker 10: Thanks, Lisa. If I can add, maybe I have another question here in terms of, you know, technology and data. I mean, you are, you were the largest owner, you're now the second largest owner, but you've had this, this, you know, wealth of information at your fingertips.

Thanks, Lisa if I can add maybe you have another question here in terms of.

Technology and data I mean, you are or you were the largest owner of <unk> now the second largest owner, but you've had this this.

No.

Wealth of information at your fingertips.

Speaker 10: Maybe if you can talk a little bit about how all of that information and getting the new information, particularly regarding, you know, cell phone usage or traffic at your centers, how is that helping the business? How is that helping your small shop? And does that actually...

Maybe if you can talk a little bit about how all of that information and getting the new information, particularly regarding.

Cell phone usage or traffic at your centers, how is that helping the business how is that helping your small shop and does that actually.

Speaker 10: you know, allow, you know, Regency to maybe boost.

Allow.

Regency to maybe boost in particular small shop occupancy, which has always lagged your anchor occupancy are there things, where you can actually monetize some of that technology and data and improve the economics of the business.

Speaker 10: in particular, small shop occupancy, which is always lagged, or anchor occupancy, are there things where you can actually monetize some of that technology and data and improve the economics of the business?

Speaker 3: I'll start and Jim can can add it to the extent that he has any any little nuggets, but it is I Appreciate the recognition of the size. I do think that scale matters We talked about that Going back to 2017 when we merged with equity one just

I'll start and Jim can add to.

To the extent that he has any any little nuggets, but it is.

I appreciate the recognition of the size I do think that scale matters.

We talked about that going.

Going back to 2017, when we emerged with equity one.

Speaker 3: And that one combination made a difference with relationship with tenants, with our ability to mine data, as you said, and also just the absolute levels of free cash flow that we have allow us to invest back in the business as well. And that is in technology and in data analysis and in being able to do a little R&D and what can we do to help drive occupancy and drive higher rents in our shopping centers.

Just that one combination.

Made a difference with relationship with tenants with our ability to mine data as you said and also just the absolute levels of free cash flow that we have allow us to invest back into the business as well and that is in technology and data analysis, and then being able to do a little R&D and what can we do to help drive occupancy.

<unk> and drive higher rents in our shopping centers.

Speaker 3: And I think we continue to see that and we have, I mean, our peers are doing some of the same as well. It's not as if we have a secret sauce. I think we have all gotten better and more sophisticated, certainly over the 25 years that I've been here. And I think we're going to continue to do that. We're going to continue to be able to help our tenants and further drive occupancy. The higher the quality of the shopping center, the more ability you have to do that. And I think, again, we are well positioned.

And I think we continue to see that and we have I mean, our peers.

We're doing some of the same as well it's not as if we have a secret sauce I think we have all.

<unk> gotten better and more sophisticated certainly over the 25 years that I've been here and I think we're going to continue to do that we're going to continue to be able to help our tenants and further drive occupancy the higher the quality of the shopping center. The more ability you have to do that and I think again, we are well positioned to do so.

Speaker 11: Thank you.

Thank you.

Speaker 1: Our next question comes from the line of Samir Kinal with Evercore. Please proceed with your question.

Our next question comes from the line of Samir Khanal with Evercore. Please proceed with your question.

Speaker 8: Hi, good morning, everybody. Hey, Jim, correct me if I'm wrong, but I think in your opening remark, you talked about labor shortages, and I think the impact on rent commencement times. Maybe just expand that on a bit, kind of what you're seeing in your portfolio, just trying to understand that a little bit more.

Hey, good morning, everybody, Hey, Jim Correct me, if I'm wrong, but I think in your opening remarks, you talked about labor shortages and I think the impact on rent commencement tons, maybe just expand that on a bit.

Kind of what Youre seeing in your portfolio, just trying to understand that a little bit more.

Speaker 6: Yeah, Samir. Obviously, it's a headwind that we see out there. I would say it's it's it has not been impactful to date. But we're, we're, we're cognizant of it and prepared to

Yes Sameer.

It's a headwind that we see out there I would say it has not been impactful to date.

But where we are.

We're cognizant of it and prepared.

Two two.

To expect some some delay on a rent commencement.

Speaker 6: Probably the biggest challenge as I look at it today is still probably on the front end from the permitting perspective. The municipalities are still working from home from a lot of perspectives.

Probably the biggest challenge as I look at it today is still probably on the front end from the from the permitting perspective. The municipalities are still working from home from a lot of perspectives. It's hard to get plans approved it's hard to get inspectors out so thats, probably the one thing that we are having the hardest time.

Speaker 6: So that's probably the one thing that we're having the hardest time circumventing and figuring out better.

Circumventing in figuring out better ways.

To solve the problem because.

Speaker 10: really that's the toughest issue. Everything else we're getting creative like we're

We really.

That's the toughest issue everything else, we're getting creative like ours.

We're figuring out ways to.

Speaker 6: multiple options for different product types, how do you pre-order items, preparing white box well before you need it, things that.

Multiple options for different product types.

How do your pre order items.

Bearing white box well before you need it.

That.

Speaker 6: We've always done on the margin, but now are just absolutely critical to think about what's plan B and, and, and be ready to snap to plan B, know what it is, execute on it without losing, without losing time.

We've always done on the margin, but now are just absolutely critical to think about what's plan b.

And be ready to snap to plan B no. One it is execute on it without losing without losing time. So so far like I say it hasn't been an impact.

Speaker 6: So far, like I say, it hadn't been an impact, but eyes wide open, I think the labor issue is the one that kind of.

But.

Eyes wide open.

I think the labor issue is the one that kind of.

Keeps me thinking about.

Speaker 6: The impact, I think, is basically there. Supply chain, we're kind of working around, but the labor, hopefully,

The impact I think is basically their supply chain, we're kind of working around but the labor.

Hopefully knock on wood.

Starting to sort itself out.

Speaker 8: Okay, thanks for that. And I guess that's my second question, Mike, at least. I know you don't guide your transactions, but is there a way to sort of give us an idea of what that pipeline looks like today? I mean, how active is that? Maybe the volume of product you're currently looking at, whether it's portfolios, one-off assets, just trying to get a sense of how much on the offense you can be this year considering what pricing is. And you did, you know, you did that $500 million last year and the ability to repeat that.

Okay. Thanks.

Thanks for that and I guess.

My second question, Mike the lease I know.

You don't guide to transactions.

Is there a way to sort of give us an idea of what that pipeline looks like today and how active is that maybe the volume of product Youre currently looking at whether it's portfolios one off assets just trying to get a sense of how much on the offense you can be this year, considering where pricing is and you did you did that $500 million last year and the ability to repeat that.

Thanks.

Speaker 4: Let me, let me, Samir, start a little bit from a financial perspective and I'll let Lisa speak to our, our pipeline and our activity. And this dovetails a bit with a question from Flores previously.

Let me let me start.

Start a little bit from a financial perspective, and I'll, let Lisa speak to our pipeline of activity.

And this dovetails a bit with a question.

From Floris previously.

Speaker 4: Uh, it's, we've talked a lot about growth. We talked a lot about continued recovery in 2022 and beyond. And Lisa has been great about mentioning our balance sheet position. So if you put all that together, that organic EBITDA growth.

It's.

We've talked a lot about growth we've talked a lot about continued recovery in 2022 and beyond and Lisa has been great about mentioning our balance sheet position. So if you put all that together that organic EBITDA growth.

Speaker 5: And us intentionally wanting to operate within this 5 to 5 and a half balance sheet range and a starting point at 5.1 today, that is going to provide us with that capacity and firepower to continue to be proactive and on our front foot on acquisition activity. You could

US intentionally wanting to operate within this five to five and a half balance sheet range and a starting point at 501 today that is going to provide us with that capacity and.

And firepower to continue to be proactive and on our front foot on acquisition activity.

You could I think the numbers.

Speaker 4: absent any more disruption and a more continual rate of growth, much like we're projecting in 2022 in that 3 to 3.5% range, you could pretty easily rationalize

Absent any more disruption in a more continual rate of growth much like we are projecting in 'twenty two in that three to three 5% range you could you could pretty easily rationalize.

Speaker 4: a $200 million to $300 million acquisition pipeline that Regency can afford to bring on without undue pressure from our perspective to our balance.

$2 million to $300 million acquisition pipeline that regency can afford to bring on without undue pressure from our perspective to our balance sheet and.

Speaker 4: And we're, you know, we're excited. And then we think that capital, so effectively, you're over leveraging those acquisitions without over leveraging your total balance sheet, which is allowing us to be competitive.

We're excited and we think that capital so effectively you are over.

Over leveraging those acquisitions without over leveraging your total balance sheet, which is allowing us to be competitive.

Speaker 3: I don't know that I have that much to add, but I think that if you do think about the guidance and we did guide slightly, it says that we don't really, we're really close to being able to announce that.

I don't know that I have that much to add but I think that if you do think about the guidance and we did guide slightly it says that we felt really we're really close to being able to announce that $30 million acquisition.

Speaker 3: $30 million acquisition. But there's a lot behind that as well that we are actively pursuing. It's just that it's never.

But there is there's a lot behind that as well that we are actively pursuing its just that its never ever definitive in that world until its definitive.

Speaker 3: It's never definitive in that world until it's definitive. And so to the point about not wanting to get ahead of ourselves with guidance, because when we do acquire, it will be a

And so to the point about not wanting to get ahead of ourselves with guidance because when we do acquire will be accretive so to the extent that we couldnt meet the guidance. If you would then we would be walking backwards and instead, when we announce an acquisition it's going to be accretive.

Speaker 3: So to the extent that we couldn't meet the guidance, if you would, then we would be walking backwards. And instead, when we announce an acquisition, it's going to be accretive. And we are actively pursuing, and I feel confident that we're going to have some success this year.

We are actively pursuing and I feel confident that we're going to have some success this year.

Thank you.

Speaker 1: Our next question comes from the line of Juan Sanabria with BMO Capital Markets. Please proceed with your question.

Our next question comes from the line of Juan Sanabria with BMO capital markets. Please proceed with your question.

Speaker 8: Hi, thanks for the time. First question would just be cap rate expectations, maybe a range of recognizing you don't want to negotiate against yourself, but.

Hi, Thanks for the time.

First question would just be cap rate expectations, maybe a range of recognizing you don't want to negotiate against yourself, but.

Speaker 8: How should we think about cap rates? I know you just said that they're going to be accretive, but just from a...

How should we think about cap rates I know you just said that they're going to be accretive, but just from a.

Speaker 8: Given you're using debt to fund it, it sounds like, but just what expectations do we have in mind for capital?

Given youre using debt to fund it it sounds like but just.

Expectations that we have in mind for cap rates.

Speaker 3: That's a great observation, Juan. That is the point about being able to lean in with our balance sheet, is that when we look at our weighted average cost of capital for new acquisitions, we can lean in a little bit more. But with that said, cap rates continue, you know, set in our prepared remarks, compressed

That's a great observation on that is that is the point about being able to lean in with our balance sheet is that when we look at our weighted average cost of capital for new acquisitions. We can we can lean in a little bit more.

But with that said cap rates continue.

Got it and in our in our prepared remarks.

Speaker 3: Valuations rising. Floris indicated the report about one large portfolio that is in a sub-five cap rate range. And as I spoke about, the demand for grocery-anchored shopping centers is really strong. The competition is steep in the transaction market. And we continue to see cap rates in the 4.5% to 5.5% range, depending on.

Compress.

<unk> rising Flores indicated.

Yes.

The report about one large portfolio that is in a sub five cap rate range and as I spoke about the demand for grocery anchored shopping centers is really strong the competition is steep.

In the transaction market and we continue to see cap rates in the four five to five 5% range depending on.

Speaker 3: Depending on how stabilized they are, how much growth there is to still harvest coming out of kind of the disruption from the last two years, but with that said, I go back to.

And depending on how stabilized they are how much growth there is to still harvest.

Coming out of kind of the disruption from the last two years.

But with that said I'll go back to team, we have 22 offices across the country. We have boots on the ground, we have a competitive advantage with our cost of capital we have a competitive advantage with our our experience and expertise in.

Speaker 3: team, we have 22 offices across the country, we have boots on the ground, we have a competitive advantage with our cost of capital, we have a competitive advantage with our experience and our expertise, and where, like the Blakeneys that were sub-5%, or like the Long Island portfolio that was north of 5%, there's going to be a little bit of a range, but it's going to be in that, basically that band, if you will, for the quality that we're looking for.

Like the Blakeney's that we're sub 5% or like the long island portfolio that was north of five there's going to be a little bit of a range, but it's going to be and that basically that band. If you will for the quality that we're looking for.

Speaker 8: helpful. Thank you. And then just a bigger picture question, hoping you could help.

Helpful. Thank you and then just.

A bigger picture question.

Hoping you could help us frame how.

Speaker 8: rents have moved or grown.

Rents have moved.

Our growing and kind.

Speaker 8: kind of what you're expecting going forward on that front and compare that to cost growth and is the difference maybe costs or outpacing rents, at least for now, a limiting factor and...

What you're expecting going forward on that front.

And compare that to cost growth.

The difference may be costs are outpacing rents at least for now a limiting factor in.

Speaker 8: truly ramping up more significantly your development pipeline, or how are you guys seeing that and thinking about those two variables as drivers?

Really ramping up more significantly your development pipeline or how are you guys seeing that in thinking about those those two variables.

Drivers of capital allocation.

Speaker 3: Let me open, I'm going to talk to Jim to talk about the rents that we're getting and the fortunate thing with our

Let me open I'm going to.

Tough to Jim to talk about that.

The rents that we're getting in.

The fortunate thing with our <unk>.

Speaker 3: type of product, we do have 10 to 14% of our space turned on an annual basis, so you do have an opportunity to kind of keep up with inflation.

Type of product, we do have turned to <unk>.

<unk> thousand 14% of our space turn.

On an annual basis. So you do have an opportunity to.

Kind of keep up with inflation, if you will and mark rents to market.

Speaker 3: rents to market, in addition to the fact that we're getting annual contractual rent steps and already getting 3% annual increases. So that's also helping us move towards inflation. But from the actual experience of 2021 and results with net effective rents,

In addition to the fact that we're getting contractual annual contractual rent steps and already getting 3%.

You'll increases so that's also helping us.

Move towards inflation, but from the actual experience of 2021 and results with net effective rents.

Speaker 3: uh... which also capture some of that cost increases for the capital that you're spending we have great success uh... and the same with our development in terms of underwriting our costs

Which also capture some of that cost increase is for the capital that Youre spending we have great success and the same with our developments in terms of underwriting our costs.

Speaker 3: uh... capturing that as we're thinking about the go forward we're incorporating that and we still have uh...

Sharing that as we're thinking about the go forward, we're incorporating that and we still have.

Speaker 3: We are still building that pipeline and anticipate being able to achieve the returns that we need to achieve. Right. I would just follow on there on the on the inflation side, as I mentioned, in our redevelopment.

We are still building that pipeline and anticipate being able to achieve the returns that we need to achieve.

I would just pile on there.

The inflation side.

As I mentioned in our redevelopment and development pipelines, we are continuing to.

To perform as advertised on yields and as we're underwriting new deals.

Speaker 6: Again, eyes wide open on the inflation, the timing delays, all those things are being built in. And we're

Again eyes wide open on the inflation the timing delays all of those things are being built in and we're maintaining what we believe are appropriate yields.

In.

Thank you.

Speaker 1: Our next question comes from the line of Jeff Spector with Bank of America. Please proceed with your question.

Our next question comes from the line of Jeff Spector with Bank of America. Please proceed with your question.

Hi, good morning.

Speaker 12: One follow-up on the guidance, and I apologize if I missed this, but again, just thinking about, I guess, the low end of the same-store NOI guidance at 2.75 percent, what would cause you to be at that low end? Is it simply thinking about more of a flat occupancy, like what would cause the bottom end?

One follow up on the guidance and I apologize if I missed this but again just thinking about I guess, the low end of the same store NOI guidance.

275%.

It would cause you to be at that low end is it simply thinking about more of a.

Flat occupancy.

Like what would cause <unk> to occur.

Hey, Jeff.

Speaker 4: I appreciate that. It would be a different view on move-outs, primarily, to your point. And it would also include maybe a bit of a delay on contributions from some of our redevelopments as well, a timing delay. In combination, that would be the support for the low-end. We have planned for move-out activity in 2022 to be consistent with our historical average.

I appreciate that it would be a different view on move outs, primarily to your point and it would.

It would also include maybe a bit of a delay on contributions from some of our redevelopments as well a timing delay in combination that would be the support for the low end, we have planned for move out activity in 'twenty two to be consistent with our historical averages.

Speaker 5: You know, Jim mentioned our higher retention rate, but the plan for 22 would be that we revert on the margin down into kind of a more normalized.

Jim mentioned, our higher retention rate.

But the plan for 'twenty, two would be that we revert on the margin down into kind of a more normalized.

Speaker 5: level of move out. And that's part of the business. Tenants will move out in our best of times or in normal times, you know, a 75% retention rate is considered pretty normal. So that downside would include a little bit

A level of move outs and Thats part of the business tenants will move out in our best of times.

In normal times, 75% retention rate is considered pretty.

Pretty normal so.

That that down that downside would include a little bit.

Speaker 5: worse environment if you would on the move out front i think i'm looking around table at jim lisa we're we're very confident

Worse environment, if you would on the move out front.

I think I'm looking around the table, Jim and Lisa.

Confident with the mid point.

Speaker 5: with the midpoint of this of this range. We as we sit here in mid-February and think about the environment we're in coming out of this Omicron wave.

Of this range.

As we sit here in mid February and think about the environment, we're in coming out of his omicron waived.

Speaker 5: all else being equal and if we continue on this path, we're pretty confident in delivering at that midpoint and hopefully our eye level is north of that.

All else being equal and if we continue on this path.

We're pretty confident in delivering at that at that midpoint and hopefully our high level is north of that.

Speaker 13: Thank you. And then just a big picture question, Lisa, you've mentioned, you know, gross record centers.

Thank you and then just a big picture question.

You've mentioned grocery anchored centers.

Speaker 13: And we still receive a lot of incoming questions on brick-and-mortar grocer, I guess, just big picture. Like, what are your latest thoughts on that business? What are you hearing? What are the grocers doing to keep the brick-and-mortar relevant? First, let's say this more elevated e-commerce for grocers.

And we still are we still receive a lot of incoming questions on brick and mortar grocer I guess, just big picture like what are your latest thoughts on that business. What are you hearing.

What are the grocery is doing to keep the brick and mortar relevant first let's say.

More.

Elevated e-commerce for for growth for grocery.

Speaker 3: I appreciate the question, Jeff, but I don't know that it's really changed very much in the last 12 to 18 months. There was certainly a lot of acceleration in the early parts of the pandemic with regards to how grocers were reacting and how they were adapting, if you will, to the new challenges. I think that

I don't.

I appreciate the question, Jeff I don't know that it's really changed very much in the last 12.

18 months.

There were certainly a lot of acceleration in the early parts of the pandemic with regards to how grocers, we're reacting and how they were adapting if you will to the.

The new challenges.

I think that.

Speaker 3: You've heard me say this before, and it's not just for grocers, it's for all retailers. The most profitable way for them to get their goods into a customer's hands is for the customer to come into the store, so they continue to invest in the store as well, and that experience

You've heard me say this before and it's not just for grocers, it's for all retailers the most profitable way for them to get their goods into our customers' hands as for the customer to come into the store. So they continue to invest in the store as well and that experience.

Speaker 3: But at the same time, they understand the competitive need to be able to serve the customer through the other methods, if you will, and that is curbside, which a lot made.

But at the same time, they understand the competitive need to be able to serve the customer.

And through the other methods, if you will and that is curbside, which a lot made really really quick advances because they had to.

Speaker 3: really, really quick advances because they had to during the beginning of the pandemic. And the successful operators are now doing that extremely successfully. And so curbside is one, no doubt. And then last is the home delivery. And again, they recognize the need, though it's clearly the least profitable for all. And, you know, we see that that is, I mean, look at what Amazon is doing with opening.

During the beginning of the pandemic and the successful operators are now doing that extremely successfully.

And so curbside is one no doubt and then last is the home delivery and again they recognize the need though its clearly the least profitable for all and we see that that is.

Look at what Amazon is doing with opening.

Speaker 3: stores so that they can also complement their home delivery with.

Stores, so that they can also complement their home delivery with <unk>.

Speaker 3: curbside, and with pickers, if you will, anything to get closer to the customer, that last mile. And our grocery stores, our shopping centers, have that last mile distribution capability. And so a lot of the operators are then investing into that. And you're seeing different means of...

Curbside and with Pickers, if you will anything to get closer to the customer that last mile and our grocery stores. Our shopping centers are that last mile distribution have that last mile distribution capability and so a lot of the operators are then investing into that and youre seeing.

Youre seeing different means of.

Testing.

Speaker 3: R&D, right? Kroger is doing more of the more, as we know, right, the Ocado. You're seeing, you know, Albertsons is probably investing the most right now in micro fulfillment. HEB is doing a kind of a combination of both. And all of the better operators are investing. They're investing in technology. They're investing in the customer experience. They're investing in

R&D right Kroger is doing more of the more as we know the Ocado youre seeing albertsons is probably the investing the most right now and micro fulfillment HEB is doing a kind of a combination of both and all of the better operators are investing they are investing in.

<unk> they are investing in the customer experience they are investing in delivery if you will.

Speaker 3: Delivery if you will whether it's from their store curbside or whether it's to the to the homes and again The last mile matters and that's where we're positioned

Whether it's from their store curbside or whether it's to the homes and again the last mile matters and that's why we are positioned.

Speaker 13: Thank you. And then just my last question, I guess, whether it's dispositions or, you know, as you, you know, think about the portfolio positioning for the next few years, can you just talk about regions and, you know, is any, are there any regions you're hoping to maybe lighten up on or add to?

Thank you and then just my last question I guess, whether it's dispositions or.

You think about the portfolio positioning for the next few years can you just talk about regions and.

And are there any regions youre, hoping to maybe lighten up on or add to.

Speaker 3: We, we really we like the markets that we're in. You've heard us speak in the past that I do think

We really we like the markets that we're in and you've heard us speak in the past that I do think.

Speaker 3: that the pandemic has actually provided a lot of tailwinds for suburban shopping centers.

The pandemic has actually provided a lot of tailwind for suburban shopping centers.

Speaker 3: which again is where we are located. It also, there have been some migration patterns and markets are seeing accelerated population growth that they weren't seeing before. Love to talk about my hometown as one of those.

Again, as where we are located it also there has been some migration patterns and markets are seeing accelerated population growth that they weren't seeing before I'd love to talk about my hometown is one of those.

Speaker 3: Jacksonville is seeing quite a bit of population growth. It is a market that we will be looking more aggressively for potential new investment opportunities. You've heard us talk about Phoenix as a market that we are currently not in. It is one that we've added to our target market list, if you will. But beyond that, we like the markets we're in. We're gonna continue to invest capital in compelling opportunities.

Jackson Mill is seeing quite a bit of population growth that is a market that we will be looking more aggressively for potential new investment opportunities you've heard us talk about Phoenix as a market that we are currently not in it is one that we've added to.

Our target market list, if you will but beyond that we like the markets. We're in we're going to continue to invest capital and compelling opportunities trade areas matter and that is really where we focus our attention on trade areas.

Speaker 3: Trade areas matter, and that is really where we focus our attention, on trade areas.

Great. Thank you.

Speaker 1: Our next question comes from the line of Anthony Powell of Barclays. Please proceed with your question.

Our next question comes from the line of Anthony Powell with Barclays. Please proceed with your question.

Speaker 14: Hi, good morning. I have a question on this development. I guess there seems to be more interest in doing things like life sciences, apartments, and offices in suburban, I guess, areas. Have you looked at your portfolio to see if there's an opportunity to systematically mine these development opportunities, like you have done with Costa Verde, or are there going to be kind of more one-off developments?

Hi, Good morning question.

And its development and I guess, there seems to be more interest in doing things like life Sciences apartments, and office and suburban areas.

Have you looked at your portfolio to see if theres an opportunity to systematically.

These development opportunities, what you've done with cost severity or are there going to be kind of more of a one off.

Bill.

Speaker 3: We are constantly evaluating how we can maximize the value at all of our properties, whether that is specifically just.

We are constantly evaluating how we can maximize the value at all of our properties whether that is specifically just harvesting and growing.

Speaker 3: harvesting and growing retail NOI, or whether there is an ability to add different uses. It is a daily conversation at our asset management level. And we do have future opportunities. We've alluded to some.

Retail NOI or whether there is an ability to add different uses it is and it is a daily conversation at our asset management level and we do have future opportunities we've alluded to some.

Speaker 3: uh... and in art supplemental disclosure and will continue to have family we have a portfolio of over four hundred shopping centers across the country and we own really great

In our supplemental disclosure and we will continue to have some we have a portfolio of over 400 shopping centers across the country and we own really great.

Speaker 3: real state dirt under the shopping centers

Real estate dirt under the shopping centers.

<unk>.

Speaker 3: we will continue to target development spend in that $150 to $200 million on an annual basis and some of that's going to come from properties that we already own.

We will continue to target development spend in that $150 million to $200 million on an annual basis.

And some of that is going to come from properties that we already own.

Speaker 14: I guess, do you see, I guess, you know, a higher mix of new mixed use development or I guess things like that relative to prior levels or is it going to be kind of similar to what you've done before?

Got it I guess do you see I guess.

A higher mix of new.

New mixed use development or I guess things like that relative to prior levels or is it going to be kind of similar to what you've done before.

No and again.

Speaker 3: Looking at Costa Verde as an example, we are going to be focused where we can extract the value from the retail to the extent that the capital to be invested for other uses, our goal would be to use an experienced partner, perhaps ground lease that or sell it like we did with Costa Verde. Our dollars invested are going to be focused on retail.

Looking at cost of RNA as an example, we are going to be focused where we can extract the value from the retail to the extent that the dollars the capital the capital to be invested for other uses we are our goal would be to use.

As an experienced partner, perhaps ground lease that or sell it like we did with Costa Verde, So our dollars invested.

We're going to be focused on retail.

Got it okay. Thank you.

Speaker 1: Our next question comes from the line of Keebin Kim with Truist. Please proceed with your question.

Our next question comes from the line of Keybanc Kim what true. It's please proceed with your question.

Speaker 10: Thank you. Good morning. Quick question on your non-SAMS4-NOI projections for 2022. It is expected to be a 2-cent drag. I'm just curious about that. Is that because of those J-curve nature to some of the development work that was alluded to in the beginning that you should regroup later? If you can help us understand that line item better.

Thank you Ron and good morning.

Quick question on your non same store NOI projections for 2022.

Is it expected to be a <unk> <unk> drag.

I'm just curious about that is that.

This is J curve nature to some of the development work dilutive in the beginning that you should recoup later, because if you can help us understand that line item better.

Speaker 4: No, I appreciate that question. Keep in actually that the same property pool basically is all of our assets at this point in time. So we really don't have much remaining in the non same pool. This is our captive insurance program that we have classically held in our non same property pool. And what you're seeing here is an incredibly positive 2021 from a from claims perspective. We are anticipating in this guidance that again, we revert to more classic or historical levels of claims.

No I appreciate that question keeping.

Actually the same property pool basically all of our assets at this point in time. So we really don't have much remaining in the non same pool. This is our captive insurance program that we have classically held.

<unk> in our non same property pool, and what Youre seeing here is an incredibly positive 2021 from from.

Claims perspective.

We are anticipating in this guidance that again, we revert to more classic or historical levels of claims.

Speaker 5: But what you had was a year and 21 absent.

But what you had was.

Our year end 'twenty one absent.

Speaker 5: Um, any hurricanes absent any tornadic activity. Um, so we're, we're planning for knock on wood, uh, that that would not recur the

Any hurricanes absent any tornadic activity.

So were we.

We're planning for knock on wood.

But that would not recur this year.

Speaker 10: on it. And can you help us understand how mechanics of your expense reimbursement that you're recouping, given the inflationary environment that we're in, I'm curious if, you know, expenses go up 10%, like how much of that are you actually able to pass on to tenants versus creating maybe some additional leakage that might be dragging things right away down?

Got it.

And can you help us understand.

How the mechanics of your expense reimbursements that Youre recouping.

Given the inflationary environment ever and I am curious.

Expenses go up 10% like how much of that are you actually able to pass on to tenants versus <unk>.

Creating maybe some additional leakage that might be dragging that can find a way down.

Yes, I mean.

Speaker 4: On a current year basis, our recovery rates we anticipate maintaining at historical levels and growing as we grow our commenced occupancy.

On a current year basis, our recovery rates, we anticipate maintaining.

Historical levels and growing as we grow our commenced occupancy we do.

Speaker 5: We do have that unique one-time item in 21 in the second quarter, which was really a follow-on from 20. If you really trace it back, we were concerned about collecting on recoveries in 21 coming out of the depths of the pandemic in 20. And that's reverberating through our 22 results. So again, you know, unfortunate, some noise. That's in that noise category. But on a current year basis...

Do have that unique one time item in 'twenty, one in the second quarter, which was really a follow on from 'twenty. If you really trace it back we were concerned about collecting on recoveries in 'twenty, one coming out of the depths of the pandemic in 'twenty.

And that's reverberating through R 22 results so again.

Unfortunate some noise.

So that's and that noise category.

But on a current year basis.

Speaker 5: We feel confident in whatever increases are to occur on the expense line items, which we are not anticipating to be material. I think our expense growth is in line with historical averages. We are anticipating an ability to pass that through and maintain our recovery rates.

We feel confident in whatever increases are to occur.

Expense line items, which we are not anticipating to be.

Material.

<unk> growth is in line with historical averages were.

We're anticipating an ability to pass that through.

And maintain our returns our recoveries.

Okay. Thank you.

Speaker 1: Our next question comes from the line of Greg McGinnis with Scotiabank. Please proceed with your question.

Our next question comes from the line of Greg Mcginniss with Scotiabank. Please proceed with your question.

Speaker 15: Hey, everyone, obviously a lot's been covered, so just one for me, and I apologize. This has already been discussed, but regarding the $85 million impairment this quarter, where Potero was expected to be a transformative redevelopment project within the Equity One portfolio, it appears you're now looking to offload that property. Can you just provide some background on the evolution of that site and why it's no longer a fit for the portfolio?

Hello, everyone.

Obviously, the Alaskan covered so just one from me and I apologize.

The.

<unk> already been discussed regarding the $85 million impairment this quarter.

<unk> was expected to be a transformative redevelopment project within the equity one portfolio. It appears you are now looking to offload that property can you just provide some background on the evolution of that site.

Longer fits in the portfolio.

Speaker 5: Sure, and good morning, Greg. So really, let me handle it from the accounting standpoint first, and then.

Sure.

And good morning Gregg.

So really let me let me handle it from an accounting standpoint first and then.

Speaker 4: Lisa or I, we can talk about the future prospects of the project, but impairments are really about whole period analysis. So as we do our work to essentially measure all of our assets, the assumption of whole period is the biggest assumption towards.

Lisa we can talk about the future prospects of the project, but it really impairments are really about whole period analysis.

So as we do our work to essentially measure are all of our assets.

The assumption of whole period is the biggest assumption towards.

Speaker 4: whether or not you have to mark your assets to market. So obviously, sales are a classic example of when you mark your assets to market and you recognize an impairment or a gain. In this case,

Whether or not you'd have to mark your assets to market. So obviously sales are a classic example of when you Mark your assets to market and you recognize an impairment or a game in this case.

Speaker 4: Together with some of our movement on an asset like Costa Verde, together with some movement in that center city, particular trade area of San Francisco, the probability of sale increased.

Together with some of our movement on an asset like Costa Verde together with some movement in that center City particular trade areas San Francisco.

The probability of sale increased to a level where that trigger from an accounting standpoint resulted in our requirement to mark the asset to fair market value.

Speaker 4: to a level where that trigger from an accounting standpoint resulted in a requirement to mark the asset to fair market value. So you go through that exercise as you're required to do, and the valuation that is supporting that mark is a current valuation as supported by market participants and brokers on what I would deem a retail-only long-term basis.

So you go through that exercise.

As you are required to do.

And the valuation that is supporting that mark.

As a current valuation is supported by.

Market participants and brokers on what I would deem a retail only.

A long term basis so.

Speaker 4: That's what happened from an accounting standpoint.

That's that's what happened from an accounting standpoint.

Speaker 5: The portrayer was a great asset. It's a very good retail center at the time of the original allocation of basis post merger with equity one, there was a near term plan in place that involved a material.

The <unk> was a great asset to very good retail center.

At the time of the original allocation of basis post merger with equity one there was a near term plan.

In place that involved a material.

Speaker 4: densification project. And to Lisa's point previously, if you think about the allocation of retail to non-retail, it was a significant amount of non-retail densification. And she articulated very well our plans going forward, which is to

Densification project.

And so at least this point previously.

If you think about the allocation of retail and non retail it was a significant amount of non retail densification.

And she articulated very well our plans going forward, which is too.

Speaker 4: mine to the best of our ability and extract where we can the retail component of projects, but to use other means of extracting value on non-retail. So that could again include selling air rights, it could include joint ventures, it could include ground leases, it could include monetizing assets and redeploying that maximizing land value and redeploying that capital as we did from Costa Verde into the Long Island portfolio.

Mine to the best of our ability and extract where we can the retail component of projects, but to use other means.

Of extracting value on non retail so that could again include selling air rights that could it could include joint ventures that could include ground leases that could include monetizing assets and redeploying that maximizing land value and redeploying that capital as we did from Costa Verde into the long island portfolio.

Speaker 3: I don't have that much to add, I think Mike you covered it, it becomes essentially a financial

I don't have that much to add I think Mike covered it becomes essentially a financial.

Speaker 3: analysis decision. It's similar to Costa Verde, similar to Sequoia. It's a great retail site.

Analysis decision, it's similar to Costa Verde solar to Sequoia.

It's a great retail site, but.

Speaker 3: what what path maximizes the value.

But what path maximizes the value, while managing the risk and we haven't made a decision.

Speaker 3: while managing the risk and we haven't made a decision just what I mean it's not held for sale but the probability of the whole period.

It is not held for sale, but the probability of the whole period.

And did that.

Speaker 3: That changed, which triggered the impairment evaluation and analysis. But still more to come. We have not made a decision on that asset.

That changed.

Its triggered the impairment evaluation and analysis.

But still more to come we have not made a decision on that asset.

Alright, well, thank you very much for the clarity there.

Okay.

Speaker 1: Our next question comes from the line of Mike Muller with J.P. Morgan. Please proceed with your question.

Our next question comes from the line of Mike Mueller with Jpmorgan. Please proceed with your question.

Sorry about that just have a quick one.

Speaker 18: Just given the demand picture, is there any chance we could see the 150 to 200 development spend accelerate?

Just given the demand picture is there any chance we could see the 150 to 200 development spend accelerate.

Speaker 3: For 2022, the probability of that's not very high because it does take time. And remember, while we have the best team in the business and they were working throughout kind of the disruption period, we did pause for a period of time when there was no visibility to how long this would last, if you will, starting in April of 2020.

For 2022, the probability that's not very high.

Because it does take time and remember.

While we have the best team in the business and they were working throughout.

Kind of a disruption period, we did pause for a period of time when there was when there was no visibility to how long. This would last if you will.

Starting in April of 2020.

Speaker 3: We flipped switch back on pretty quickly, but even that, but that pause still created a little bit of a delay, if you will, and we are rebuilding and we and.

We flipped the switch back on pretty quickly, but even that but that pause still created a little bit of a delay if you will and we are rebuilding and and.

Speaker 3: there is a potential for it in future years, certainly not for 2022. Yeah, I was thinking more over the next three years or so.

There is a potential for it in future years, certainly not for 2022.

I was thinking more over the next three years or so so.

Speaker 3: Mike, I'd love for you to come set goals for my team and speak to them and let them see if they can do more. The more we can do, the better, because we can fund it. Okay. That was it.

Yes.

Mike I'd Love for you to.

Set goals for my team and speak to them.

And let them see if they can do more the more we can do the better because we can fund it.

Okay.

That was it thank you.

Speaker 1: As a reminder, it is star one to ask a question. Our next question comes from the line of Linda Sy with Jeffries. Please proceed with your question.

As a reminder, it is star one to ask a question.

Our next question comes from the line of Linda Tsai with Jefferies. Please proceed with your question.

Speaker 16: Yeah, hi. In terms of the comments that 1Q would see a bigger benefit, I think from prior period collections, in terms of the percentage that 1Q will comprise, what would that look like? I think in the past it's ranged from like 23 to 25 percent.

Yeah, Hi.

Terms of the comments that <unk> would see a bigger benefit I think from prior period collections in terms of the percentage that <unk> will comprise what would that look like I think in the past it's ranged from like 23% to 25% in recent years pre COVID-19 .

Speaker 5: Yeah, I'm going to go back to the comments, Linda, and just kind of leave it there. But we're coming off an $18 million Q1 charge from bad debt or uncollectible lease income in Q1 of 21. And recall, Q4, we're down to about $2 and 1 half million of a quarterly charge, which is a lot of money.

Yeah.

Go back to the comments, Linda and just kind of leave it there, but we're coming off an $18 million Q1 charge of from.

Bad debt uncollectible lease income in Q1 of 'twenty, one and recall Q4 were down to about $2 5 million.

Our quarterly charge, which.

Speaker 5: you know, could replicate in Q1 of 22 could improve as we as we continue to see improvements in cash collection rates so that that's going to be the difference and what we wanted to do was very was be mindful of the fact that there's going to be continued variance in that percentage and that Q1 there's a probability that Q1 could have a rate of growth that's higher than the top end of our range and will float back down to within our range over the course of the year.

Could replicate in Q1 of 'twenty two could improve as we as we continue to see improvements in cash collection rates, so that thats going to be the difference in what we wanted to do was very was be mindful.

Mindful of the fact that theres going to be continued variance and that percentage and that Q1.

Probability of that.

Q1 could have a rate of growth.

Higher than the top end of our range and will float back down to within our range over the course of the year.

Speaker 16: for that clarification and then just in terms of higher energy costs and consumers staying closer to home, sorry about the drilling, are you seeing any bifurcation between the high and low end consumer in terms of spending strengths?

Thanks for that clarification, and then just in terms of higher energy costs and consumers staying closer to home sorry about the drilling are you seeing any bifurcation between the high and low end consumer in terms of spending strength.

Yeah.

Speaker 3: I mean, we have a pretty consistent investment philosophy. We don't actually have that wide of a...

Okay.

Sure.

We don't necessarily we have a pretty consistent investment philosophy, we don't actually have that wide of a.

Speaker 3: kind of a range, if you will. But I think it is more about suburban close to home than it is necessarily about the high-end and low-end consumer. Dollars are being spent within a relatively

Kind of a range if you will but I think it is more about suburban close to home than it is necessarily about the high end and low end consumer.

Dollars are being spent within.

A relatively.

Speaker 3: small circle around consumers' homes. Although travel did pick up too, I'm sure you've seen that as well, in December of 2021, topping 2019. So we are seeing the return of the consumer despite inflationary headwinds. The consumer is spending.

Small circle.

Around consumers' homes.

Although traveled to pick up to I'm sure you've seen that as well.

In December of 2021 top in 2019, so we are seeing the return of the consumer despite inflationary headwinds.

The consumer is spending.

Thank you.

Yes.

Speaker 1: Our next question comes from the line of Chris Lucas with Capital One Securities. Please proceed with your question. Hey. Good morning, everybody. Mike, thanks so much and your team for all the detail, really helped me narrow down some of the gap between my expectations and your guidance.

Our next question comes from the line of Chris Lucas with capital One Securities. Please proceed with your question.

Hey, good morning, everybody, Mike. Thanks, so much and your team for all the detail really helped me narrow down some of the gap between my expectations in your guidance.

Speaker 10: But I did want to sort of maybe dig into one other area or two other areas along those lines on the.

But I did want to maybe dig into one other area to other areas along those lines.

On the.

Speaker 10: prior period rent guidance number, is there an upside to that number that you can quantify for us that could happen in 2022?

Prior period rent guidance number is there upside to that number that you can quantify for us that could happen.

2022.

Speaker 5: It's a great question, Chris. Let me show you where to look, and then we'll talk a little bit about prospects. So we have $13 million of prior year collections, plus or minus, in the plan. If you look at our reserved AR, again, on that very helpful page 34 of the supplement, it's $50 million. So that's, in effect, largely cash-back.

It's a great question, Chris Let me, let me show you what let me show you where to look and then we'll talk a little bit about.

Prospects, so we have $13 million of prior year collections, plus or minus in the plan.

If you look at our reserve they are again on that very helpful. Page 34 of the supplement it's $50 million. So that's in effect.

Largely cash basis reserves.

Speaker 5: I'd be very careful to think about that as a maximum potential collection opportunity. We've talked at length through 21, and we believe this into 22.

I'd be very careful to think about that as a maximum potential collection opportunity we've talked at length through 'twenty, one and we believe this into 'twenty two.

Speaker 5: You know, what's remaining to be collected and what has been reserved is largely for Regency, a West Coast shop space, local.

No.

What's remaining to be collecting has been reserved is largely for regency, a west coast shop.

Shop space local type of.

Speaker 5: We like the tenants we had in the shopping centers pre-pandemic. We continue to like those users and those tenants post.

We we like the tenants we had in those shopping centers pre pandemic, we continue to like those those users and those tenants post.

Speaker 5: And the team, as directed by Jim, is going to probably more diligently use abatements as a tool. They were down for longer, the hole was deeper.

And the team is directed by Jim is going to probably more diligently use abatements as a tool they were down for longer that whole was deeper.

Speaker 5: Why go through the pain and the cost of replacing a tenant and absorbing the downtime in the capital? So that is just some caution as we think about what is the outperformance potential of that $13 million.

Why go through the pain and the cost of replacing a tenant and absorbed in the downtime and the capital so.

That is I would just.

Some caution as we think about what is the what.

What is the outperformance potential of that $13 million assumption.

Speaker 5: That being said, it's been a hard number to handicap into 21, clearly. I think our initiating guidance in 21 was sub 10 million, and we ended up at 46.

That being said, it's been a hard number to handicap into 'twenty, one clearly I think our initial initiating guidance in 'twenty, one was sub $10 million and we ended up at 46, So I fully.

Speaker 4: So I fully, it's a tough number to get our arms around. We've done, we think 13 is a really good estimate. Importantly, we've collected about, nearly 30% of that through January . But as time goes on, that collection rate will continue to grind down.

A tough number to get our arms around.

<unk> done we think <unk> is a really good estimate.

Importantly, we've collected about nearly 30% of that through January .

But.

As time goes on that collection rate will continue to grind down.

Speaker 10: That's really helpful. And then just thinking about your cash basis tenants, any, again, in the, you know, relative to what you were able to collect on a percentage of a billing last year, was there any Delta to that in terms of your guidance assumptions for 22. On the cash.

Thanks, That's really helpful. And then just thinking about your cash basis tenants any again.

Relative to what you were able to collect on a percentage of billings last year was there any delta to that in terms of your guidance assumptions for 'twenty two.

On the cash basis collection rate.

Yes.

No.

Speaker 4: I mean, again, that's going to come through our ULI assumptions, initial from 21 to 22. But we're collecting 94% on our existing cash basis tenancy, which again.

I mean again, that's going to come through are you ally assumptions initial from 'twenty, one and 'twenty, two but we're collecting 94% on our existing cash basis tenancy, which again.

Speaker 4: Today is 17% of our overall ABR. That is a pretty healthy rent. That's on current billings. I don't want to, don't take that 94% and apply it to what we just talked about from a previous, from a prior previously reserved amount.

Today is 17% of our overall ABR.

That is a pretty healthy ramp that's on current billings I don't want to take that 94% and apply what we just talked about from a previous from our prior.

Previously reserved amount.

Speaker 5: But, you know, we are, if you think about what I said from a ULI perspective, that would imply, you know, going from 175 basis points of bad debt to in the 100 area, that would imply that we think our cascade basis collection rate is going to improve from here. So we feel good about, we feel good about growth starting in 22 and beyond, and moving occupancy in the right direction, and moving uncollectible lease income in the right direction,

But we are if you think about what I said from a UI perspective that would imply going from 175 basis points of bad debt too in the 100 area that would imply that we think our cash basis collection rate is going to improve from here. So we feel good about we feel good about growth.

<unk> and 'twenty, two and beyond and moving occupancy in the right direction and moving.

Uncollectible lease income in the right direction.

Moving commenced occupancy in the right direction.

Speaker 10: Thanks for that, Mike. And then, Jim, just wanted to follow up on the permitting delays question, or is that mostly a West Coast phenomenon, or is it more widespread than just the West Coast?

Thanks for that Mike and then Jim just wanted to follow up on the permitting delays question.

Sure.

Is that mostly a west coast phenomenon or is there is it more widespread than just the west coast.

I would.

Chris I would say it's <unk>.

Probably more predominant on the west.

Speaker 6: as they've been the slowest to recover, they're kind of the laggards on things like this, so.

Yes.

As they have been the slowest to recover there.

There was a laggard some things like this so.

Most of the country.

We're getting better service.

Speaker 6: quite frankly, the West is catching up very, very quickly in all the major metrics. So I feel like they're...

And quite frankly, the west is catching up very very quickly and all the major metrics. So.

I feel like.

<unk>.

That too will get cleaned up here pretty quickly.

Speaker 10: And last question, Lisa, on your acquisition underwriting, and this may be way premature, but just wanted to understand, given the backdrop of inflation, does replacement cost become part of the underwriting criteria at this point, or are we well away from it?

Okay and last question Lisa.

On your acquisition underwriting and this maybe way way premature, but just wanted to understand given the backdrop of inflation does does replacement costs become part of the underwriting criteria at this point or are we well away from that.

Speaker 3: Um, it really doesn't the way we when we are looking at evaluating opportunities, we are certainly just looking at what is the.

It really doesn't delay when we are looking at evaluating opportunities.

We are certainly just looking at what is the.

Speaker 3: the NOI growth profile, if you will. So the going in return plus growth, so essentially getting us to our unlevered IRR or a total return.

The NOI growth profile, if you will so the going in the going in return plus growth.

Essentially getting us to our Unlevered IRR or a total return.

Speaker 3: because our intent is to hold these assets forever.

Because our intent is to hold these assets.

Forever.

Super Thank you guys for your time.

Speaker 1: Our next question comes from the line of Tammy Fike with Wells Fargo. Please receive your question.

Our next question comes from the line of Tammy <unk> with Wells Fargo. Please proceed with your question.

Speaker 17: Thank you. Maybe just following up on Chris's question, what is happening with that bucket of tenants that is giving you confidence in collecting that $13 million of prior period rents, and maybe what isn't happening with the remaining portion that doesn't give you confidence in collecting that, and does that full $50 million remain in occupancy today?

Thank you and maybe just following up on Chris's question, what is happening with that bucket of tenants that this is giving you confidence in collecting that $13 million of prior period.

And.

Maybe what isn't happening with the remaining portion.

It doesn't give you confidence in collecting that and does that full $50 million remain in occupancy today.

Speaker 5: Yeah, it's really timing Tammy and you know, Jim has hit on it and we've hit on it kind of repeatedly through 21.

Yes. It is.

Timing Tammy.

Jim has hit on it and we've hit on it kind of repeatedly through 'twenty one.

Speaker 4: It's the West Coast just being a couple months, three months behind, and it was a very deliberate

It's the West coast, just being a couple of months three months behind and it was a very deliberate snowflake tenant by tenant approach that regency's employed into working through and resolving outstanding obligations. So.

Speaker 4: snowflake tenant-by-tenant approach that Regency's employed into working through and resolving outstanding obligations.

Speaker 4: You know, we work through a large component of what was an original 85 or so million dollar reserve on 2020 rents, looking back at the year end 20 into the, you know, rapid more rapidly recovering on the East Coast, specifically the Southeast, moving into the central more rapid recovery and now the West behaviorally has been very similar to those regions.

Okay.

We worked through a large component of what was an original 85 or so million dollars reserve on 2020 rents looking back at year end 'twenty.

Into the rapidly more rapidly recovering on the east coast, specifically, the south east moving into the central more rapid recovery and now the worst behavior really has been very similar to those regions, but again. The difference has been just the time that they were down.

Speaker 4: But again, the difference has been just the time that they were down.

Speaker 4: The hole that was dug was deeper and it's just.

The hole that was Doug was deeper and.

And it's just.

Speaker 4: We've made the assessment that it may not be appropriate to chase after previous rent at the risk of.

We've made the assessment that it may not be appropriate to.

Chase after a previous rent.

At the risk of future rent.

Speaker 4: And again, literally, case by case, going back through your rent rolls, do you have the right operator? Do you have the right use? Do you want this use in your space going forward? And do you want to avoid the downtime?

And again, making these.

Case by case going back to your rent Rolls do you have the right. Operator do you have the right use do you want this this using your space going forward and do you wanted to avoid the downtime.

Speaker 4: I think I'd leave it at that, Tammy, for the color as to why that difference to the $50 million exists.

I think I'd leave it at that Tammy for the color as to why that.

That's why that that difference to the $50 million exists.

Yes.

You'll get the cash.

Speaker 6: When you, to me, when you look at the cash collections and where we are in the West Coast at 98, and you look at some of the tougher categories, the.

When you were talking to me look at the cash collections and where we are in the West coast at 90 days and you look at some of the tougher categories.

Speaker 6: personal services up to 97% collection. You're looking.

Personal services up to 97% collection, you're looking for.

Fitness up to 95%.

Speaker 6: That, the way I interpret that is we have picked the ponies we want to ride going forward.

That the way I interpret that as we have we have picked the ponies, we want to ride going forward and to Mike's point. We are now in the delicate balance of how much how much more do you want to push on collecting really old reps in.

Speaker 6: Mike's point, we are now in the delicate balance of how much more do you want to push on collecting really old rats.

We're looking more forward than we are backwards quite frankly.

No financial impact because of the railroad.

Speaker 17: Got it. Thank you. That's helpful. And then just one more. I'm thinking about the 1.3% annual contractual rent increases embedded in things for NOI growth. I know, Jim, you mentioned 2% on new leasing activity. I guess, are you able to drive that portfolio level higher over time, particularly given the inflation levels today?

Got it. Thank you that's helpful. And then just one more I am thinking about the one 3% annual contractual rent increases embedded in same store NOI growth I know, Jim you mentioned, 2% on new leasing activity. I guess are you able to drive that portfolio level higher over time, particularly given the inflation levels.

Today.

Speaker 4: We hope so. But Tammy, it's a tough mountain to move. We have long targeted 1.5% as an upper end of our ability to get there over time, and it's going to take a lot of time, you know, to Lisa's point earlier, only turning about 10% of your portfolio annually. What's happening is we've had such great success over the last...

We hope so, but tammy it's a tough it's a tough mountain to move.

We have long targeted one 5% as an upper end of our ability to get get there over time and it's going to take a lot of time to Lisa's point earlier, it's only turning about 10% of your portfolio annually.

What's happening is we've had such great success over the last.

Speaker 5: eight plus years embedding contractual increases into the majority of our shop spaces really, that as those tenants are replaced with tenants, you're just replacing like-for-like contractual

Eight plus years.

Embedding contractual increases into the majority of our shop space is really that as those tenants are replaced with tenants Youre, just replacing like for like.

Contractual increases.

Speaker 4: So that is the ability to push that number really ends up coming down to your recapture of anchor spaces and your ability to embed contractual increases there. So 1.3 today, really healthy number. It's moved off of 1.2 over the last several years. 1.4, I think, is visible. And 1.5 is an ultimate target, but that's going to take some time to get to.

So that is.

The ability to push that number.

Really ends up coming down to your your recapture of anchor spaces and your ability to embed contractual increases there.

So one three today really healthy number.

It's moved off of one two over the last several years one four I think is visible and one five is an ultimate target, but that's going to take some time to get to.

Great. Thank you I appreciate the time.

Speaker 1: There are no further questions in the queue. I'd like to hand the call back to management for closing remarks.

There are no further questions in the queue I would like to hand, the call back to management for closing remarks.

Speaker 3: Thank you. I just want to thank you all for your time. It was a long one this morning. And I look forward to seeing hopefully most of you live and in person this year.

Thank you I just want to thank you all for your time it was a long one this morning.

I look forward to seeing.

Hopefully most of you live and in person this year.

Thank you.

Speaker 1: Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.