Q4 2021 Phillips Edison & Co Inc Earnings Call

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Speaker 2: Music

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Speaker 1: Good afternoon and welcome to Philips Edison and Company's fourth quarter 2021 results presentation. My name is Carmen. I'll be your... I represent glaciers in very seamless ways.

Good afternoon, and welcome to Phillips Edison <unk> company's fourth quarter 2021 results presentation. My name is <unk> and I'll be your conference call operator today.

Speaker 1: Before we begin, I would like to remind our listeners that today's presentation is being recorded and simultaneously web...

Before we begin I would like to remind our listeners that today's presentation is being recorded and simultaneously webcast.

Speaker 1: Companies earnings release and quarterly financial supplements were issued yesterday, February 10th.

The company's earnings release, and quarterly financial supplement were issued yesterday after market close.

Speaker 1: Documents and a replay of today's presentation can be accessed from the Investor section of the Philips Edison and Company website at philipsedison.com.

These documents and a replay of today's presentation can be accessed on the investors section of the Phillips Edison Company Web site at Phillips Edison Dot com.

I would now like to turn the call over to Michael Keller with Phillips Edison <unk> Company. Sir. Please proceed.

Speaker 3: Thank you, operator. Good afternoon, everyone, and thank you for joining us. I am Michael Kaler, Vice President of Investor Relations with Phillips Edison Inc.

Thank you operator, good afternoon, everyone and thank you for joining us I am Michael Taylor, Vice President of Investor Relations with Phillips Edison and company joining me on today's call are chairman and Chief Executive Officer, Jeff.

Speaker 3: Joining me on today's call are our Chairman and Chief Executive Officer, Jeff Edison, our President, Devin Murphy, and our Chief Financial Officer, John Caulfield.

Listen, our President Devin Murphy, and our Chief Financial Officer, John Caulfield during.

Speaker 3: During today's presentation, Jeff will provide a brief overview of Phillips Edison and Company, our differentiated strategy, and touch on the highlights of the quarter.

During today's presentation, Jeff will provide a brief overview of Phillips Edison and company discussed our differentiated strategy and touch on the highlights of the quarter Devin.

Speaker 3: Devin will discuss our fourth quarter operational results. John will review our fourth quarter financial results and discuss our 2022 financial guidance.

Kevin will discuss our fourth quarter operational results John will review, our fourth quarter financial results and discuss our 2022 financial guidance Lastly, Jeff will return to provide an update on our acquisition and disposition activity and gave our 2022 acquisitions guidance and provide some closing comments.

Speaker 3: Lastly, Jeff will return to provide an update on our acquisition and disposition activity and give our 2022 acquisitions guidance and provide some closing comments.

Speaker 3: Following our prepared remarks, we will answer questions from the Institutional Analyst Community.

Following our prepared remarks, we will answer questions from the institutional analyst community.

Speaker 3: Before we begin, I would like to remind our audience that during the course of this call, management may make forward-looking statements within the meaning of federal securities law. These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements.

Before we begin I would like to remind our audience that during the course of this call management may make forward looking statements within the meaning of federal Securities law.

These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward looking statements.

Speaker 3: Such forward-looking statements are made only as of today and will not be updated as actual events unfold.

Such forward looking statements are made only as of today and we will not be updated as actual events unfold. Please refer to yesterday's earnings release, and our filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward looking statements made today in.

Speaker 3: Please refer to yesterday's earnings release and our filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statement made today.

Speaker 3: In addition, we will also refer to certain non-GAAP financial measures. Information regarding our use of these measures and reconciliations of these measures to our GAAP results are available in our earnings release and supplemental disclosure issued yesterday, which are on our website. With that, it's my pleasure to turn the call over to Jeff Edison, our Chief Executive Officer. Jeff?

In addition, we will also refer to certain non-GAAP financial measures information regarding our use of these measures and reconciliations of these measures to our GAAP results are available in our earnings release and supplemental disclosure issued yesterday, which are on our website with that it's my pleasure to turn the call over to Jeff Edison, Our Chief Executive Officer, Jeff.

Speaker 4: Thank you, Michael. Good afternoon, everyone, and thank you for being on the call.

Thank you Michael Good afternoon, everyone and thank you for being on the call.

Speaker 4: Bill Edison Company is exclusively focused on owning and operating neighborhood, gross-tranquored, omni-channel shopping center.

Bill said assumed company is exclusively focused on owning and operating neighborhood grocery anchored omnichannel shopping centers.

Speaker 4: We are one of our nation's largest owners of this type of center.

One of our nation's largest owners of this type of center.

Speaker 4: As we speak today, you will notice that we call our tenants our neighbors. We do this because we work hard to create community at our centers and we treat our retailers as neighbors in that community.

As we speak today, you'll notice that we call our tenants our neighbors. We do this because we work hard to create community at our centers and we treat our retailers as neighbors in that community.

Speaker 4: We also prioritize customer service and believe that this nomenclature reminds our team to treat our tenants like we would our neighbors.

We also prioritized customer service and believe that this nomenclature reminds our team to treat our tenants like we would our neighbors.

Speaker 4: When it comes to our centers, we believe that format drives results and also facilitates attractive long-term growth.

When it comes to our centers, we believe that format drives results and it also facilitates attractive long term growth.

Speaker 4: Our average center is 115,000 square feet, which is among the smallest average size in the REIT universe.

Our average centers 115000 square feet, which is among the smallest average size in the REIT universe.

Speaker 4: We believe our smaller centers allow for better growth because our average tenant space of 2,300 square feet aligns well with leasing demand.

We believe our smaller centers allow for better growth because our average tenant space of 'twenty 300 square feet aligns well with leasing demand approx.

Speaker 4: Approximately 70% of leases in strip centers are executed in spaces smaller than 2,500 square feet.

Approximately 70% of leases in strip centers are executed in space is smaller than 2500 square feet.

Speaker 4: This demand drives higher retention rates, higher releasing spreads, and overall positive leasing dynamics for PECO.

This demand drives higher retention rates higher releasing spreads and overall positive leasing dynamics for Pico.

Speaker 4: Higher retention rates result in less downtime, lower TI costs, and higher NOI.

Higher retention rates result, in less downtime lower ti costs and higher NOI growth.

Speaker 4: When it comes to our properties, our strategy is simple. We focus on owning centers with the number one or two grocer in the market. Our centers have an omni-channel neighbor base, where the grocer and the center have both delivery and buy online and pick up in the store, or BOPUS capabilities.

When it comes to our properties. Our strategy is simple we focus on OA centers with the number one or two grocer in the market our centers have an omnichannel neighbor base, where the grocer in the center have both delivery and buy online and pickup in the store are bogus capabilities.

Speaker 4: Our centers have a high exposure to neighbors selling necessity-based goods and services. In fact, 72% of our rent comes from neighbors offering both necessity goods and services.

Our centers have a high exposure to nabors selling necessity based goods and services in fact, 72% of our rent comes from neighbors offering both necessity goods and services.

Speaker 4: We focus on owning centers and trade areas with favorable demographics where our neighbors can be successful.

We focus on owning centers in trade areas with favorable demographics, where our neighbors can be successful.

Speaker 4: Looking forward, we believe we are well-positioned for long-term growth. Our long-term growth includes both strong external and internal growth.

Looking forward, we believe we are well positioned for long term growth. Our long term growth includes both strong external and internal growth.

Speaker 4: We improved our balance sheet with the capital we raised during our underwritten IPO last July .

We improved our balance sheet with the capital we raised during our underwritten IPO last July .

Speaker 4: Subsequently, we executed our debut $350 million public bond offering as our investment grade issuer.

Subsequently, we executed our debut $350 million public bond offering.

<unk> grade issuer.

Speaker 4: With our leverage currently at 5.6 times debt to EBITDA, our goal is to execute a billion dollars of acquisitions net of dispositions over three years.

With our leverage currently at five six times debt to EBITDA. Our goal is to execute $1 billion of acquisitions net of dispositions over three years.

Speaker 4: Our strategy creates significant opportunity for acquisitions, which I'll discuss later.

Our strategy creates significant opportunity for acquisitions, which I'll discuss later.

Speaker 4: This external growth will complement our strong internal growth over the long term.

This external growth will complement our strong internal growth over the long term.

Speaker 4: The key drivers of our internal growth include growing rents through new and renewal leasing spreads, executing leases with annual fixed rental increases.

The key drivers of our internal growth include growing rents through new and renewal leasing spreads executing leases with annual fixed rental increases leasing vacant space to new neighbors and executing redevelopment opportunities, which are primarily single tenant ground up out parcel development and tear down and rebuild opportunity.

Speaker 4: leasing vacant space to new neighbors, and executing redevelopment opportunities, which are primarily single-tenant, ground-up, out-parcel developments, and tear-down and rebuild opportunities for our grocer anchors.

<unk> for our grocery anchors.

Speaker 4: We believe our strategy has historically and will continue to prospectively generate superior risk-adjusted returns. We do believe that

We believe our strategy has historically and will continue to prospectively generate superior risk adjusted returns.

We do believe that format drives results are.

Speaker 4: Our differentiated strategy allows us to realize higher initial yields on acquisitions plus higher NOI growth plus lower CapEx. This leads to superior economic returns.

Our differentiated strategy allows us to realize higher initial yields on acquisitions, plus higher NOI growth plus lower capex.

This leads to superior economic returns.

Our results in the fourth quarter, we are no exception.

Speaker 4: The fourth quarter continued the momentum we have seen through 2021. For the full year, we exceeded our annual core FFO per share and same center NOI guidance. The key components of our

The fourth quarter continued the momentum we have seen through 2021 for the full year, we exceeded our annual core <unk> per share and same center NOI guidance.

The key components of our results are as follows.

Speaker 4: The operating environment remains as strong as we've seen it in our 30 years in the business. Our rent collections are at pre-pandemic.

The operating environment remains as strong as we've seen it in our 30 years in the business are.

Our rent collections are at pre pandemic levels.

Speaker 4: We enjoyed continued high demand for retail space in our well-located small-format centers. We realized strong internal growth.

We enjoyed continued high demand for retail space in our well located small format centers.

We realized strong internal growth.

Leased occupancy.

Speaker 4: reached an all-time high of 96.3%. Comparable new and renewal rent spreads were healthy at 18.3% and 7.8% respectively. On average, our new and renewal inline leases executed in the fourth quarter had annual contractual rent bumps of 2.4%. We also realized.

Reached an all time high of 96, 3% comp.

Comparable new and renewal rent spreads were healthy at 18, 3% and seven 8% respectively on average our new and renewal in line leases executed in the fourth quarter had annual contractual rent bumps of two 4%.

We also realized strong external growth.

Speaker 4: We continue to execute our goal of acquiring a billion dollars of real estate by June of 2024. Since our IPO in July , we acquired $350 million of assets, which we believe meet our internal return requirement of an 8% unlevered IRR.

We continued to execute our goal of acquiring $1 billion of real estate by June of 2024.

Since our IPO in July we acquired $350 million of assets, which we believe meet our internal return requirement of an 8% Unlevered IRR.

Speaker 4: Looking forward, we believe the strong operating environment enhances our ability to execute our internal and external growth plans. It positions us for meaningful long-term growth. John will provide more details on our outlook in a few moments during our 2020 meeting.

Looking forward, we believe the strong operating environment enhances our ability to execute our internal and external growth plans it.

It positions us for meaningful long term growth.

John will provide more details on our outlook in a few moments.

During our 2020 guidance discussion.

Speaker 4: Now I'd like to turn it over to Devin who will speak in more detail about our operating results for the quarter.

Now I'd like to turn it over to Devin who will speak in more detail about our operating results for the quarter Devon.

Speaker 5: Thank you Jeff, good afternoon everyone, and thank you for joining us today.

Thank you Jeff.

Afternoon, everyone and thank you for joining us today.

Speaker 5: Our differentiated strategy of owning and operating small format centers anchored by the number one or number two grocer continues to generate strong results and resulted in positive results for the fourth quarter.

Our differentiated strategy of owning and operating small format centers anchored by the number one or number two grocer.

He needs to generate strong results and resulted in positive results for the fourth quarter.

Speaker 5: At the end of the fourth quarter, lease portfolio occupancy totaled 96.3% compared to 94.7% at December 31, 2020.

At the end of the fourth quarter lease portfolio occupancy totaled 96, 3%.

Impaired to 94, 7% at December 31, 2020.

Occupancy reached an all time high in the quarter.

Speaker 5: Occupancy reached an all-time high in the quarter.

Speaker 5: Anchor lease occupancy increased to 98.1%.

Anchor occupancy increased to 98, 1%.

Speaker 5: In line, lease occupancy increased to 92.7%.

In line back you can see increased to 92, 7%.

Speaker 5: Our least occupancy to economic occupancy spread was 100 basis points for the quarter.

Our lease occupancy.

Economic occupancy spread was 100 basis points for the quarter.

Speaker 5: primarily as a result of our anchor leasing activity.

Primarily as a result of our anchor leasing activity.

Speaker 5: our inline spread compressed to 80 basis points this quarter.

Our in line spread.

To 80 basis points this quarter.

Speaker 5: We believe that we can increase inline occupancy to 95% over time, which will add approximately 70 basis points to our total occupancy rate.

We believe that we can increase in line occupancy to 95% overtime.

Which will add approximately 70 basis points to our total occupancy rate.

Speaker 5: During the quarter, we executed 121 new leases.

During the quarter, we executed 121, new leases.

Speaker 5: and 132 renewal and option leases totaling 1.4 million square feet of space.

And 132 renewal and option leases totaling one 4 million square feet space.

Speaker 5: We have leased approximately 1.4 million square feet now for four consecutive quarters.

We have leased approximately one 4 million square feet now for four consecutive quarters.

Speaker 5: illustrating the continued strong demand from retailers for space at our center.

Illustrating the continued strong demand from retailers for space at our centers.

Speaker 5: Comparable new lease rent spreads were 18.3%.

Comparable new lease rent spreads were 18, 3%.

Speaker 5: and comparable renewal lease rent spreads were 7.8%.

And comparable renewal lease rent spreads were seven 8%.

Our in house leasing team has been busy executing new in line leases with neighbors, including sports clips Dunkin' Donuts.

Speaker 5: Our in-house leasing team has been busy executing new in-line leases with neighbors including Sports Clips, Dunkin' Donuts, and retailers from many different lines of necessity retail.

And retailers for many different lines of necessity retail.

Speaker 5: Demand for our retail space is coming from retailers in many different businesses.

Demand for our retail space is coming from retailers many different businesses.

Speaker 5: A growing trend that we have seen is national retailers, such as Chipotle, Starbucks, and Humana, looking to expand their footprints in our suburban market.

<unk> trend that we have seen national retailers, such as Chipotle, Starbucks and Humana looking to expand their footprints in our suburban market.

Speaker 5: Additionally, we have a dedicated renewals team focused exclusively on keeping our existing neighbors in our center.

Additionally, we have a dedicated renewals team folk.

<unk> exclusively on keeping our existing neighbors in our centers.

Speaker 5: We enjoyed a retention rate of 86% for the quarter, which is just shy of our full year retention rate of 88%.

We enjoyed a retention rate of 86% for the quarter.

Which is just shy of our full year retention rate of 88%.

Speaker 5: and in line with our 2017 to 2020 average retention rate of 87 percent. We believe our retention…

And in line with our 2017 to 2020 average retention rate of 87%.

We believe our retention rates are market leading.

Speaker 5: These high retention rates are important because we suffer no downtime and have to invest less tenant improvement dollars into the space.

These high retention rates are important because we suffer no downtime and have to invest less tenant improvement dollars into the space.

Speaker 5: In Q4, our average PI for renewals was only $1.29 per square foot, and for the year averaged 95 cents per square foot.

In Q4, our average Ti for renewals was only $1 29 per square foot.

And for the year averaged <unk> 95 per square foot.

Speaker 5: No downtime and lower TI results in better cash flow growth.

No downtime and lower Ti results and better cash flow growth.

These solid retention rates are evident.

Speaker 5: These solid retention rates are evidence that our retail space is a great place for our neighbors to successfully operate their business.

Our retail space is a great place for our neighbors.

Secondly operate their businesses.

An important part of our internal growth story is redevelopment.

Speaker 5: An important part of our internal growth story is redevelopment.

Speaker 5: During the quarter, we stabilized two ground up Alpharsa developments, one at Plaza 23 in the Newark, New Jersey MSA, and one at Alameda Crossing in the Phoenix MSA.

During the quarter, we stabilized two ground up out parts of development when it 5% to 23 in the Newark, New Jersey, MSA and one at Alameda crossing in the Phoenix MSA.

Speaker 5: This additional GLA of 7,300 square feet is fully leased and the neighbors took possession of this space during the quarter.

It's additional GLA of 7300 square feet is fully leased and the neighbors took possession of the space during the quarter.

Speaker 5: We have 17 additional redevelopment projects that we began during 2021.

We have 17 additional redevelopment project that we began during 2021.

Speaker 5: The total projected cost for these ground-up redevelopment projects is $45 million.

The total projected cost for these ground up redevelopment.

Redevelopment project with $45 million.

Speaker 5: We currently expect incremental underwritten yields on these projects to be between 10% and 12% on leverage.

We currently expect incremental underwritten yields on these projects to be between 10 and 12% Unlevered.

Speaker 5: Our pipeline currently includes eight additional projects in 2022, which represents an additional $23 million of investment.

Our pipeline currently includes eight additional project in 2022.

Which represents an additional $23 million of investment.

Speaker 5: We expect this pipeline of redevelopment opportunities to grow throughout the year.

We expect this pipeline of redevelopment opportunity to grow throughout the year.

Speaker 5: For full year 2022, we expect to invest approximately $45 to $50 million in ground up and redevelopment opportunities.

For full year 2022, we expect to invest approximately $45 million to $50 million in ground up and redevelopment opportunities.

In addition, we expect to spend $50 million to $55 million on capital improvements.

Speaker 5: In addition, we expect to spend $50 to $55 million on capital improvements, tenant improvements, and leasing commissions at our center.

Improvements and leasing commissions at our centers.

Speaker 5: The results that I just reviewed exhibit the strong operating environment that we currently enjoy and believe we'll continue to enjoy through 2022.

The results that I just reviewed exhibit strong operating environment that we currently enjoy and believe we'll continue to enjoy through 2022.

Speaker 5: I will now turn the call over to John for a discussion of our financial results, our recent capital markets activity, and our 2022 financial guidance. John ? Thank you, Devin.

I will now turn the call over to John for a discussion of our financial results. Our recent capital markets activity and our 2022 financial guidance John .

Thank you Devin and good afternoon, everyone.

Speaker 6: Fourth quarter 2021, Nareed FFO increased 7.3% to $49.4 million, or $0.39 per diluted share.

Fourth quarter 2021, NAREIT <unk> increased seven 3% to $49 4 million or <unk> 39 per diluted share.

Speaker 6: fourth quarter core FFO increased 24.5% to $60.8 million or $0.47 per diluted share.

Fourth quarter core SSO increased 24, 5% to $68 million or <unk> 47 per diluted share.

Speaker 6: The increase in both NAREIT and CORE FSO for the fourth quarter of 2021 was driven by increased revenue at our properties and improved collection.

The increase in both NAREIT and core <unk> for the fourth quarter of 2021 was driven by increased revenue at our properties and improved collections further driving the increase was a reduction in interest expense versus the fourth quarter of 2020.

Speaker 6: further driving the increase was a reduction in interest expense versus the fourth quarter of 2020.

Speaker 6: We had a non-cash charge of $7.4 million for our earn-out liability in Q4 2021, impacting our NARED FFO, and we expect an additional charge in the first quarter of 2022, totaling $1.8 million, to cover the final settlement of the earn-out in January 2022.

We had a noncash charge of $7 $4 million for our earn out liability in Q4, 2021 impacting our NAREIT <unk> and we expect an additional charge in the first quarter of 2022 totaling $1 $8 million to cover the final settlement of the earn out in January 2022.

Speaker 6: Approximately 1.6 million Operating Partnership Units were delivered in January , marking the end of the earn-out period.

Approximately $1 6 million operating partnership units were delivered in January marking the end of the earn out period.

Speaker 6: As we look at the fourth quarter, our general and administrative expenses were higher than other quarters primarily due to performance-based compensation on our short and long-term incentive programs realized in the quarter.

As we look at the fourth quarter, our general and administrative expenses were higher than other quarters, primarily due to performance based compensation on our short and long term incentive program is realized in the quarter.

Speaker 6: We anticipate our full year 2022 GNA to be in line with our full year 2021 GNA, which was $48.8 million.

We anticipate our full year 2022, G&A to be in line with our full year, 2021, G&A, which was $48 $8 million.

Speaker 6: Also in the quarter, our capital expenditures were higher on a run rate basis than other quarters due to timing and increased tenant improvement dollars spent in the quarter driven by the high volume of leasing activity.

Also in the quarter, our capital expenditures were higher on a run rate basis than other quarters due to timing and increased tenant improvement dollars spent in the quarter driven by the high volume of leasing activity.

Speaker 6: Compared to 2020, our NARIT and Core FFO per share results were impacted by a 15% increase in our weighted average share count as a result of issuing 19.55 million shares during our July 2021 IPO.

Compared to 2020, our NAREIT and core <unk> per share results were impacted by a 15% increase in our weighted average share count as a result of issuing 19, five 5 million shares during our July 2021 IPO.

Speaker 6: For the full year, our core FFO per share of $2.19 exceeded the high end of our guidance of $2.14 to $2.18.

For the full year, our core <unk> per share of $2 19 exceeded.

We exceeded the high end of our guidance of $2 14 to $2 18.

Speaker 6: Several things lined up for us during the quarter, which pushed our results above the top end of our guidance.

Several things lined up for us during the quarter, which pushed our results.

Above the top end of our guidance.

Speaker 6: We had a number of acquisitions in the pipeline that we were able to close before the end of the year. Our occupancy increased, exceeded expectations. Our neighbors began paying rent more quickly than anticipated and our prior period collections were higher than expected.

We had a number of acquisitions in the pipeline that we were able to close before the end of the year, our occupancy increased exceeded expectations. Our neighbors began paying rent more quickly than anticipated and our prior period collections were higher than expected.

Speaker 6: We still have a little over $3 million outstanding on payment plans with our neighbors. We will continue to be conservative in our estimates for collections at the midpoint of our guidance range for 2022, which I will get to shortly.

We still have a little over $3 million outstanding on payment plans with our neighbours, we will continue to be conservative interestingly for collections at the midpoint of our guidance range for 2022, which I will get to shortly.

Speaker 6: Our fourth quarter 2021 Same Center NOI improved to $88.8 million, up 15.2% from a year ago.

Our fourth quarter 2021, same center NOI improved to $88 8 million up 15, 2% from a year ago.

Speaker 6: This improvement was primarily driven by a 2.4% increase in average base rent per square foot, stronger collections compared to 2020, and out-of-period collections for the quarter of $2.3 million.

This improvement was primarily driven by a two 4% increase in average base rent per square foot stronger collections compared to 2020 and out of period collections for the quarter of $2 3 million.

Speaker 6: When comparing our results to the quarter ended December 31st, 2009.

When comparing our results for the quarter ended December 31, 2019, our same center NOI increased three 9%. We believe this is a true indicators that we are experiencing growth in our same center portfolio above and beyond the COVID-19 recovery.

Speaker 6: our same center NOI increased 3.9 percent. We believe this is a true indicator that we are experiencing growth in our same center portfolio above and beyond the COVID recovery.

Speaker 6: As of December 31, 2021, we had approximately $604 million of total liquidity comprised of $116 million of cash, cash equivalents and restricted cash, plus $489 million of borrowing capacity available on our $500 million credit fund.

As of December 31, 2021, we had approximately $604 million of total liquidity comprised of $116 million of cash cash equivalents and restricted cash plus $489 million of borrowing capacity available on our $500 million credit facility.

Speaker 6: As of December 31st, 2021, our net debt to adjusted EBITDAR was 5.6 times compared to 7.3 times at December 31st, 2021.

As of December 31, 2021, our net debt to adjusted EBITDAR was five six times compared to seven three times at December 31 2020.

Speaker 6: At December 31, 2021, our debt had a weighted average interest rate of 3.3% and a weighted average maturity of 5.2 years. Approximately 99% of our debt is fixed rate.

At December 31, 2021, our debt had a weighted average interest rate of three 3% and a weighted average maturity of five two years approximately 99% of our debt is fixed rate.

Speaker 6: Our debt ratios and maturities have improved as a result of our IPO in July and debut public debt offering that closed in the fourth quarter.

Our debt ratios and maturities have improved as a result of our IPO in July and debut public debt offering that closed in the fourth quarter.

Speaker 6: The $350 million 2.625% coupon 10-year notes significantly extended our debt maturity profile while also diversifying our capital.

The $350 million to six 5% coupon 10 year notes significantly extended our debt maturity profile, while also diversifying our capital sources.

Speaker 6: Given our growth plans and maturity profile, we believe we can become a serial issuer in this market.

Given our growth plans and maturity profile, we believe we can become a serial issuer in this market.

Speaker 6: On February 10th, we filed a shelf registration statement and a $250 million ATM equity offering program.

On February 10th we filed a shelf registration statement and a $250 million ATM equity offering program.

Speaker 6: Following our July IPO, this is the logical next step for us and allows us to efficiently access the capital markets as opportunities arise. We have no immediate plans to utilize the ATM program, but wanted to have this option available to us as we continue to evaluate market conditions and capital needs.

Following our July IPO. This is the logical next step for us and allows us to efficiently access the capital markets as opportunities arise we have no immediate plans to utilize the ATM program, but wanted to have this option available to us as we continue to evaluate market conditions and capital needs.

Speaker 6: Yesterday, on February 10th, 2022, we issued our 2022 full year guidance in our earnings report.

Yesterday on February 10th 2022, we issued our 2022 full year guidance in our earnings release for.

Speaker 6: For 2022, our same-center NOI growth guidance is between 3% and 4%. This is consistent with the growth we have delivered on a historical basis and what we believe we can continue to deliver going forward.

For 2022, our same center NOI growth guidance is between 3% and 4%. This is consistent with the growth we have delivered on a historical basis and what we believe we can continue to deliver going forward.

Speaker 6: Our NOI growth will be one of the core drivers for our core FFO growth. Additionally, we expect to see a reduction in interest expense due to less debt on our balance sheet.

Our NOI growth will be one of the core drivers for our core <unk> growth. Additionally, we expect to see a reduction in interest expense due to less debt on our balance sheet.

Speaker 6: For 2022, our core FFO guidance range is between $2.16 and $2.24. When compared to 2021, we expect total core FFO to increase by approximately 11% to $282 million using the midpoint of our guidance.

For 2022, our core <unk> guidance range is between $2 16, and $2 24.

When compared to 2021, we expect total core <unk> increased by approximately 11% to $282 million using the midpoint of our guidance.

Speaker 6: With that, I would like to turn the call back over to Jeff to discuss our recent portfolio activity, provide our 2022 acquisition guidance, and recap our long-term growth strategy.

With that I would like to turn the call back over to Jeff to discuss our recent portfolio activity provide our 2022 acquisition guidance and recap our long term growth strategy Jeff.

Thanks, John .

Speaker 4: Following our IPO in July of 2021 through December 31st of 2021, we acquired seven gross ranker centers and two out parcels for $267.4 million. This was at the high end of our guidance range.

Following our IPO in July of 2021 through December 31, 2021, we acquired seven grocery anchored centers and two out parcels for 267 $4 million.

This was at the high end of our guidance range.

Speaker 4: So far, in 2022, we've acquired two additional grocery anchor shopping centers for $82.9 million and have an additional center under contract for $17.5 million.

So far in 2022, we've acquired two additional grocery anchored shopping centers were $82 9 million.

We have an additional set of under contract for $17 5 million.

Speaker 4: Our 2022 acquisitions included Cascades Overlook in Arlington, Virginia, a suburb of Washington, D.C. This 151,000 square foot center is anchored by Harris Teeter, a Kroger banner.

Our 2022 acquisitions included Cascades overlook in Arlington, Virginia, a suburb of Washington D. C. This 151000 square foot center is anchored by Harris Teeter, a Kroger banner.

Speaker 7: and Oak Meadows Marketplace in Georgetown, Texas, which is an Austin suburb. The 79,000 square foot center is anchored by Randall's and Albertson's banner.

And.

<unk> metals marketplace in Georgetown, Texas, which is in Austin suburb.

79000 square foot center is anchored by Randalls and Albertsons banner.

We believe the centers, we have acquired since our IPO, we will meet or exceed our unlevered IRR target of 8%.

Speaker 4: We believe the centers we have acquired since our IPL will meet or exceed our unlevered IRR target of 8%.

Speaker 4: Our acquisition pipeline is healthy. For 2022, we are guiding to acquire between $300 and $400 million of assets, net of disposition activity.

Our acquisition pipeline is healthy for 2022, we are guiding to acquire between 300 and $400 million of assets net of disposition activity.

Speaker 4: As we have discussed in the past, we identified 5,800 grocery-anchored shopping centers in the United States that fit our strategy. These centers are all anchored by the number one or two grocer in their respective markets and meet our demographic requirements.

As we have discussed in the past, we identified 5800 grocery anchored shopping centers in the United States that fit our strategy. These centers are all anchored by the number one or two grocer in their respective markets and meet our demographic requirements.

Speaker 4: We are focused on the three-mile area around each center. We believe this strategy presents a wider and deeper pool of assets to choose from, versus a strategy strictly focused on a limited number of markets.

We are focused on the three mile area around each center. We believe this strategy presents a wider and deeper pool of assets to choose from versus a strategy strictly focused on a limited number of markets to meet our stated goal of $1 billion of net acquisitions by June of 2024, we need to acquire approximately 15 assets per year.

Speaker 4: To meet our stated goal of a billion dollars of net acquisitions by June of 2024, we need to acquire approximately 15 assets per year. This represents approximately 2% of our targeted shopping centers that trade each year. We are well on our way to meeting our billion dollar goal.

This represents approximately 2% of our targeted shopping centers that trade each year, we are well on our way to meeting our $1 billion goal.

Speaker 4: To optimize our internal growth, we will continue to selectively recycle assets. These proceeds will be deployed into higher quality, higher growth assets.

To optimize our internal growth, we will continue to selectively recycle assets. These proceeds will be deployed into higher quality higher growth assets.

Speaker 4: Since our IPO, we have disposed of 11 wholly-owned centers, two out parcels, and one land parcel, totaling approximately 1.1 million square feet for $91.7 million. This was slightly below the low end of the guidance range of $95 to $105 million, which we gave on our third quarter earnings call.

Since our IPO, we have disposed of 11 wholly owned centers to out parcels and one land parcel totaling approximately $1 1 million square feet for $91 $7 million.

This was slightly below the low end of the guidance range of $95 million to $105 million, which we gave on our third quarter earnings call.

Speaker 4: Now, before we get to the Q&A section, I would like to quickly recap our quarter.

Now before we get to the Q&A section I would like to quickly recap our quarter.

Speaker 4: The operating environment remains strong. We realize strong internal growth. We also realize strong external growth. Our differentiated strategy produced strong results for the quarter and has set high expectations for 2022.

The operating environment remains strong we realized strong internal growth.

We also realized strong external growth.

Our differentiated strategy produced strong results for the quarter and have set high expectations for 2022.

Speaker 4: With that, we'll begin the Q&A portion of our call. Operator? Thank you.

With that we will begin the Q&A portion of our call.

Operator.

Thank you.

And to maintain an efficient Q&A session. You may ask a question with an additional follow up.

Speaker 1: you may ask a question with an additional follow-up. If you have additional questions, you're more than welcome to rejoin the queue. To ask a question, simply press star one on your telephone. To withdraw the question, press the hash key or the pound key. Please stand by while we compile the.

You have additional questions you're more than welcome to rejoin the queue.

To ask a question simply press star one on your telephone to withdraw that question press, the hash key or Japan Keene.

Please standby, while we compile the Q&A roster.

Your first question comes from Rich Hill at Morgan Stanley . Your line is open.

Speaker 8: Hey guys, first of all, congrats on a really nice quarter. I wanted to talk through the guide. It is very strong on an absolute and relative basis compared to your peers.

Hey, guys first of all congrats on a really nice quarter.

I wanted to talk through the guide it is very strong on an absolute and relative basis compared to your peers.

Speaker 8: And, you know, I want to maybe just understand and unpack a little bit more if there's something differentiated about your portfolio. Many of your peers talked about bad debt being a headwind in 2022, and I think back to your portfolio already being above 2019 levels on a same-story-no-why basis.

I wanted to maybe just understand and unpack a little bit more if theres something differentiated about your portfolio. Many.

Many of your peers talked about bad debt being a headwind in 2022.

I think back to your portfolio are already being above 2019 levels on a same store NOI basis. So I guess, that's a long way of saying is there something different about your portfolio do you not have as much bad debt or is this really about your portfolio, just holding up and bouncing back a little bit better than peers, which is leading to a guy that looks real.

Speaker 8: So I guess that's a long way of saying, is there something different about your portfolio? Do you not have as much bad debt? Or is this really about your portfolio just holding up and bouncing back a little bit better than peers, which is leading to a guy that looks really strong.

Strong.

Speaker 4: Rich, thanks for the for the question and being on today. You know, we, we, we do, as you know, we really do believe that our

Rich thanks for the question being on today.

We.

We do as you know, we really do believe that our.

Speaker 4: the format drives results, and we do think that our format of having the grocery store with the necessity-based goods

Format drives results and we do think that our format of having the grocery store with the necessity based goods does purport has performed well during the pandemic and we'll continue to do.

Speaker 4: has performed well during the pandemic and will continue to do that going forward. So I would say that we are optimistic about the year, but we also, you know, we've taken a really hard look and we think these are achievable goals for us and we wouldn't have them there if we didn't believe that. So I would say that, you know, overall it is, you know, the format that we've got that I think is driving these results. John , do you want to give our Devin a little more detail on that? Sure.

Do that going forward. So I would say that we are optimistic about the year.

But we also we've taken a really hard look and we think these are these are achievable goals for us and.

We wouldn't have there if we didn't believe that so.

I would say that overall it is the format that we've got that I think is driving these results, but John do you want to give our Devon did a little more detail on that.

Sure Thanks, Jeff and thanks for the question rich so as we look at it the biggest component to the <unk> growth is really the NOI growth and so our peers have talked about the <unk>.

Speaker 6: So as we look at it, the biggest component to the core for full growth is really the NOI growth. And so our peers have talked about the bad debt impact and ultimately because our impact in 21 was not as significant, as we go to 22, we've got a base of stability. So we've been communicating and our properties have been operating in a new world of post COVID world. And ultimately it's a combination of the organic growth that we're driving.

Did that impact and ultimately because our impact in 'twenty, one was not as significant.

As we go into 'twenty, two we've got a basis stability. So we've been communicating in our properties have been operating in a new world of post Covid World and ultimately it's a combination of organic growth that we're driving as well as the acquisitions that we've been able to to make and that were projected to me.

Speaker 6: as well as the acquisitions that we've been able to make and that we're projected to make. And so just to get ahead of the question that I'm sure I'll be asked.

And so just to get ahead of the question that I'm sure I'll be asked the impact on the quarter specifically of out of period collections is it only is about $2 3 million.

Speaker 6: The impact on the quarter specifically of out-of-period collections is about 2.3 million.

Speaker 6: So that's the quarter that was, you know, kind of the bad debt reversal in the quarter. And as we look to the next year, we only have $3 million of payment plans outstanding left. And so as we looked at our guidance on the same store basis and on an FFO, we do anticipate collecting that and it is kind of, it is accounted for in the upper end of our guidance.

So thats the quarter that was.

The bad debt reversal.

In the quarter and as we look to the next year.

We only have $3 million of payment plans outstanding left and so as we looked at our guidance on a same store basis and so we do anticipate collecting that and it is kind of it is accounted for in the upper end of our guidance.

Speaker 8: Got it. Thank you. And if I may, just one more question. I know you guys focus on levered IRRs when you're acquiring properties. So forgive a sell-side question here, but could you maybe give a little bit of guidance on what the cap rates for your acquisitions would be in 2022? Sure. Sure.

Got it thank you and if I if I may just one more question I know you guys focus on Unlevered IRR is when you are.

You are acquiring properties. So forgive a sell side question here, but could you maybe give a little bit of.

Guidance on what the cap rates for your acquisitions would be in 2022.

Sure.

Go ahead, yes go ahead Deb.

Okay.

Speaker 5: Hey, Rich. Thanks for being on the call this morning. Where we are acquiring assets, Rich, today in the market is between a low of 5 and 3 quarters and up to 6 and 3 quarters. So it's in that range that we are acquiring assets. And you'll note that for full year 21, the weighted average capital.

Rich.

Thanks for being on the call this morning.

Where we are acquiring assets rich today in the market is between a low of five and three quarters.

And up to six and three quarters. So it's in that range.

That we are acquiring assets and you'll note that for full year 'twenty one.

The weighted average cap ex for on acquisitions and in the in the first quarter the tap.

Speaker 5: 6.4 on acquisitions, and in the first quarter, the cap rate was almost 6, just under 6.

Cap rate was.

Almost six just under six so it's in that range and Thats, where we expect it to stay on a go forward.

Speaker 5: So it's in that range and that's where we expect it to stay on a go forward.

Speaker 8: Okay, so somewhere between six and six four for 2022, maybe as tight as 575. Okay, I got it. Thank you guys. Congrats on a good quarter again.

Yes.

Okay, so somewhere between six and six four.

For 2022, maybe maybe its tightest 575, okay got it. Thank you guys. Congrats on a good day everyone.

Thanks, Craig.

Speaker 1: Your next question comes from Caitlyn Burrows with Goldman Sachs. Your question...

Your next question comes from Caitlin Burrows with Goldman Sachs. Your question. Please.

Speaker 9: Hi, good afternoon, everyone. Maybe one on occupancy, you guys had some meaningful increases in occupancy in the third quarter. And again, in the fourth quarter, Devin, I think you mentioned that you think inline occupancy could get to 95% increasing occupancy, 70 basis points overall. So, I was just wondering if you could give some more detail on your expectations for 2022 and given the strong operating environment, how much additional increase is realistic?

Hi, Good afternoon, everyone. Maybe one on occupancy you guys had some meaningful increases in occupancy in the third quarter and again in the fourth quarter. Kevin I think you mentioned that you think inline occupancy could get to 95% increasing occupancy 70 basis points overall.

Wondering if you could give some more detail on your expectations for 2022, and given the challenging operating environment, how much additional increases realistic near term.

Yes.

Speaker 5: Thanks Caitlin. As you saw both in the fourth quarter and through full year 21, we were successful in increasing our occupancy to the level that we're currently reporting. We guided on that occupancy increase to occur over the next two years.

Thanks Caitlin.

So both in the fourth quarter and through full year 'twenty. One we were successful in increasing our occupancy.

To the left that we're currently reporting.

We guided on that occupancy increase to occur over the next two years.

Speaker 5: So we believe that we will get that inline occupancy up to 95% over the next 24 months.

So we believe that we will get that in line occupancy up to 95% over the next 24 months.

Speaker 5: And how much of that we're going to get in 22 is hard to know. But based on how strong the pipeline is currently, we will probably get a meaningful component of that in calendar year 22.

And how much of that we're going to get in 'twenty two.

Is it is hard to know, but based on how strong the pipeline is currently.

We will probably get a meaningful component of that in calendar year 'twenty two.

Yeah.

Speaker 9: Got it, okay. And then maybe just one on development. You guys have a number of development and redevelopment projects, and it looks like a few had either the stabilization quarter pushed out a little or a little change in cost. So just wondering if you could give some detail or background on the trends you're seeing in time to complete projects and also on the cost side and the impact that has on PICO.

Got it Okay and then maybe just one on development you guys have a number of development and redevelopment projects and it looks like a few had either the stabilization quarter pushed out a little or a little change in costs. So just wondering if you could give some detail or background on the trends youre seeing in time to complete projects and also on the call.

Cost side and the impact that has on pick up.

Sure.

Speaker 5: So, on our redevelopment, Caitlin, you know that they are smaller redevelopments and therefore they have shorter cycle times. And so, that makes it a little bit easier for us to anticipate when they're going to come online.

So on a redevelopment.

You know that they are smaller redevelopments generic for they have shorter cycle times.

And so that makes it a little bit easier for us to anticipate when theyre going to come online.

Speaker 5: We have seen increases in costs and we have included those increases in costs in our budgeted numbers and the returns that we've articulated include the increases that we're seeing on costs.

We have seen increases in costs and we have included those increases in cost in our budgeted numbers and the returns that we've articulated include the increases that we're seeing on cost where we're seeing delays in the permitting process and then in some instances in terms of the availability.

Speaker 5: Where we're seeing delays is in the permitting process and then in some instances in terms of the availability of the necessary goods. But all of that is built into our expectations and therefore the numbers that we gave in our earnings release we're confident we will deliver on and we continue to be very happy with the kind of returns we're able to generate on this activity.

<unk>.

The necessary goods, but all of that is built into our expectations and therefore.

The numbers that we gave in our earnings release, we're confident we will deliver on and we continue to be very happy with the kind of returns we're able to generate on this activity.

Speaker 4: And Kaitlin, we continue to see really strong demand for these particular outlots, so

And we.

We are seeing we continue to see really strong demand.

For these particular.

So we're we are I would say we are optimistic that we will continue to to have that strong demand from the retailers look and looking to expand into these locations. So we're not seeing any anything on the leasing side. There is some stuff on the permitting side and as you pointed out.

Speaker 4: You know, we are, I would say we're optimistic that we will continue to have that strong demand from the retailers looking to expand into these locations. So we're, and we're not seeing any.

Speaker 4: anything on the leasing side, you know, there is some stuff on the permitting side, and as you point out, the cost side, but in terms of tenant demand, it is extremely high for these locations. And they do, you know, they do have drive-thrus, and they do have the conveniences that a lot of the retailers are focused on right now. Yeah, that makes sense. Thank you.

The cost side, but but in terms of.

Tenant demand.

Is extremely high for these locations and they do they do have drive throughs and they do have the conveniences that.

A lot of the retailers are focused on right now.

Yes that makes sense. Thank you.

Our next question comes from Craig Schmidt with Bank of America. Please go ahead.

Speaker 10: Yes, thank you. I guess, you know, throughout the fourth quarter earnings, we've been hearing about a transaction market that's getting much more competitive and seeing cap, compressing cap rates. I'm just wondering, given your, you know, different approach to servicing your acquisitions, are you seeing that same challenge or are you able to circumvent it?

Yes. Thank you.

I guess throughout the fourth quarter earnings we've been hearing about a transaction market that's getting much more competitive.

<unk> seen compressing cap rates I'm, just wondering given your.

Different approach.

Servicing your acquisitions are you seeing that.

Our same challenge or are you able to circumvent that.

Greg It's great. It's a great question and the answer is yes. We are we are seeing more competition.

Speaker 4: It's a great question, and the answer is yes, we are seeing more competition for the properties that we're buying than we have historically. We are starting to see, we think, a fairly significant increase in volume of product that's coming onto the market. It's early days, but it does look like we are starting to see a lot more product on the market.

For our for the properties that we're buying than we have historically.

We are starting to see we think a fairly significant increase in volume.

Product thats coming onto the market, it's early days, but it does look like.

We're starting to see.

More product on the market.

Speaker 4: The major competitions coming on the portfolio side, as you know, I mean, there's some really aggressive pricing happening on the portfolio side on the individual asset, you know, which is what we're buying, you know, in that, you know,

The major competitions coming out on the portfolio side as you.

I mean, there is some really aggressive pricing happening on the portfolio side on the individual asset which is what we are buying in that.

The smaller size.

Speaker 4: smaller bite size, again, we are seeing increased competition, but in terms of dramatic pricing changes, no, certainly not what we're seeing on the portfolio side. I think there's been probably 50 basis points of compression in our markets.

But smaller.

Smaller bite size.

We are again, we are seeing increased competition, but in terms of dramatic pricing changes no certainly not what we're seeing on but.

On the portfolio side.

I think there has been.

Probably 50 basis points of compression.

In our markets.

Speaker 4: $25 to $50, and we think that will continue. As we said earlier with Rich's question, we are seeing that $5.75 to $6.25 as the range on the cap rates, but again, we continue to selectively find the assets where we can get that 8% on levered IRR, and that part we continue to be optimistic about.

25% to 50, and we think that will continue.

We we as we said earlier with Richard's question.

We're seeing that five and three quarters to six and a quarter as the range on the cap rates.

But again, we continue to selectively find the assets, where we can get that 8% unlevered IRR in that.

That part.

We continue.

Continue to be optimistic about.

Speaker 10: Great. And then just as a follow-up, store closings were unusually low at 21, and they have remained so, heading into 22. What are your expectations for store closings the rest of the year, and what is your watchlist?

Great and then just as a follow up.

Store closings were unusually low in 'twenty, one and they have remained so heading into 'twenty two.

What are your expectations for store closings and the rest of the year and what is your watch list look like.

Speaker 4: Um, so the, um, uh,

So the.

<unk>.

Yeah.

Speaker 4: We're, we are, I would say we're optimistic this year about store closures. We don't, we don't think there's gonna be a spike. We're not hearing anything that would give us a spike.

We're we are I would say we are optimistic this year about store closures. We don't we don't think theres going to be a spike we're not hearing anything that would give us a spike.

Speaker 4: in store closures in the second half of this year. You know, we did have, we've had a lot of fallout over the last couple of years.

In store closures in the second half of this year.

We did have we've had a lot of fallout over the last couple of years.

Speaker 4: And I, you know, we think a lot of our retailers are on pretty stable ground right now, and the ones that we have been most concerned about, you know, have stabilized to a big degree. You know, we are fortunate in not having...

We think a lot of our retailers are pretty stable ground right now and the ones that we were had been most concerned about.

Stabilized.

Big degree, we are fortunate and not having.

Speaker 4: much exposure to that second anchor. And our grocers who make up 34% of our income, they're doing really well. And they're working through the inflation and supply chain issues in a way that we think is really positive and certainly are seeing really good results on the ground in terms of their sales.

Much exposure to.

Second anchor.

And our grocers, who are who make up 34% of our income.

They're doing really well and they.

They are working through the inflation and supply chain issues in a way that we think is really positive and certainly are seeing.

Really good.

<unk> on the ground in terms of.

There their sales.

Speaker 4: The other areas, the non-grocery, non-necessity-based...

The other areas.

<unk>.

Non non grocery not necessity based.

Speaker 4: You're always watching those and how the consumer is going to be affected by that.

Youre always watching those and how the consumer's going to be.

By that.

Jeff the only the only thing I would add to that is Craig.

Speaker 5: Jeff, the only thing I would add to that is, Craig, on our watch list, you know, the largest tenants on our watch list are in fitness.

On our watch list.

Largest tenants on our watch list are in fitness.

Speaker 5: pet supplies, office supplies, those categories. But the top five tenants on our watch list represent less than 2.5% of our total ABR. So it's not a meaningful exposure. And

Pet supplies office supplies those category.

But the top five tenants on our watch list represent less than two 5% of our total ABR. So it's not a meaningful exposure and.

Speaker 5: As we come out of the pandemic, a lot of these retailers, businesses are improving, particularly fitness.

As we come out of the pandemic.

A lot of the retailers.

Retailers businesses are improving particularly fitness.

Speaker 5: So, again, it's something we watch closely, but the beauty of our business model is we are highly diversified in terms of our exposure to tenants, and therefore, the watch list exposure is well diversified.

So again, it's something we watch closely but the beauty of our business model is we are highly diversified in terms of our exposure to tenants and therefore.

The watch list exposure is well diversified.

Okay.

Thank you.

Speaker 1: Thank you. Our next question comes from Juan Sanabria with BMO Capital Markets. Your line is open. Hi. Thanks for the time.

Thank you. Our next question comes from Vincent <unk> with BMO capital markets. Your line is open.

Alright, thanks for the time.

A big picture question for me.

Speaker 10: Do you have a sense of the latest trends across?

Do you have a sense of the latest trends across your portfolio from a consumer perspective, just given some of the inflationary pressures we have.

Speaker 10: your portfolio from a consumer perspective, just given some of the inflationary pressures. We had a headline consumer confidence today, take a ding. People are clearly feeling a little worse off given the rise in prices, but just curious what you guys are seeing on the ground from your portfolio.

Headline consumer confidence today ticket thing people are currently feeling a little.

Our soft given the rise in prices, but just curious what you guys are seeing on the ground.

From your from your.

From your pockets of consumers.

Speaker 4: Yeah, it's a great question, and we are watching it in real time. We continue to see strong use of our centers, and if you look at the stats, we have more customers visiting our centers today than 19. So that part, and that continues happening in real time, so we're optimistic about that. Yeah.

Yes.

It's a great question and we are.

Watching it in real time.

We continue to see.

Strong use of our centers and if you look at the.

The stats, we have more customers visiting our centers today, the 19th so that part and that continues.

Yes.

<unk> happening in real time, so we're optimistic about that.

Speaker 4: and looking at it sort of closely, for any kind of potential changes in that. But certainly you're hearing a lot about inflation and it is affecting specific retailers more than others.

And looking at it sort of closely.

Sure.

Any kind of potential changes in that.

But.

Certainly youre hearing a lot about inflation.

And it is affecting specific retailers more than others.

Speaker 4: But I would say overall, our view of the consumer is that, and again, you know, we're in the necessity part of the business, so we're not as variable to some of retail as others are. In our space, you know, we would say that...

But I would say overall, our view of the consumer is that and again.

We're in the necessity part of the business. So we're not as variable to.

Some of the some.

Some of retail as others are.

In our in our space.

We would say that.

Speaker 4: We're very positive about the environment that we're in right now. And we're not seeing the consumer really pulling back, particularly on the necessity side. If anything, we're seeing really solid growth and our retailers are seeing solid growth as well. I don't know, Devin, if you have any other thoughts on that, but that's been our.

We're very positive about the environment that we're in right now.

And we're not seeing the consumer really pulling back, particularly on the necessity side if anything.

There, we're seeing really solid growth in are our retailers are seeing solid growth in as well I don't know Devin if you have any other thoughts on that but that's been on that.

Speaker 5: I think you nailed it, Jeff. I mean, the thing that protects us to a degree is the fact that 73 percent of our rents are coming from necessity-based goods, necessity.

I think you nailed it Jeff I mean, the thing that protects us two and to a degree is the fact that 73% of our rents are coming from necessity based goods.

Necessity.

Retailers and obviously the consumer had less discretion.

Speaker 5: And obviously, the consumer has less discretion in terms of necessity goods than they do in non-necessity goods. And so, we have not seen the current environment.

In terms of necessity goods than they do in non necessity goods and so.

We have not seen the current environment.

Speaker 5: yet become a meaningful headwind, but again, it's something that we're concerned about and are watching closely.

Yet he come a meaningful headwind.

But again, it's something that we're concerned about and are watching closely.

Speaker 10: Thanks, and then just a follow-up on the balance sheet.

Thanks, and then just a follow up on the balance sheet.

Speaker 10: Recognizing the ATM is maybe more just best practice and gives you optionality, but any rethinking of leverage targets to maybe keep it lower for longer and use your strong cost of capital, you guys have performed well since the IPO.

Recognizing the ATM.

Is it more just best practice and it gives you optionality, but any.

Rethinking of leverage targets to maybe keep that lower for longer.

Use your strong cost of capital you guys have performed well since the IPO.

Speaker 10: to kind of match from an equity perspective rather than using up the dry powder over the, with the billion dollar target for acquisitions.

To kind of match fund and equity perspective, rather than using up the dry powder over the with the one.

$1 billion target for acquisitions.

Yes.

Speaker 4: We, you know, we continue to be committed to the fact that if we can find projects that we can get an 8% unlevered IRR on a consistent basis with our strict underwriting criteria and we're buying the number one or two grosser in a market that has, you know, really strong potential. So, thank you. Thank you.

We continue to be committed to the fact that if we can find projects that we can get a 8% unlevered IRR on a consistent basis with our strict underwriting criteria and we're buying the number one or two grocer in the market.

That has really strong potential.

So.

Speaker 4: If we can do that, we're going to continue on our acquisition strategy. The market will drive us to reduce that, but again, as we made the big jump at the IPO, we are committed to keeping our balance sheet at investment grade. Could we get up to the low sixes in terms of debt to EBITDA? I think we can. I think we can. I think we can.

If we can do that we're going to continue.

On our acquisition.

Our strategy.

The market will drive us to reduce that.

We will but but again we are.

As we've made the big jump on the at the IPO, we are committed to keeping our balance sheet.

At investment grade.

Could we get up to the low sixes in terms of debt to EBITDA, yes.

Speaker 4: that's a possibility that the market will drive us to.

That is that's a possibility.

That we will that the market will drive us to.

But the.

Speaker 4: That's our strategy. We continue to believe there are strong opportunities to buy selectively. And at that pace of 350 million, we're at a very, you know,

That's our that's our strategy. We continue to believe there are strong opportunities to buy selectively.

And at that pace of $350 million were not.

We're at a very.

Speaker 4: cadenced acquisition pace that's not putting pressure on us to get money out, but giving us the opportunity to get the right amount out. And we'll stay disciplined on it, but if we're getting 8% on levered IRRs with our criteria for the grocery, we think that's going to give us really strong returns and be able to outpace our peers, we hope, in terms of results.

Cadenced.

Sure.

Acquisition pace.

Thats not putting pressure on us to get money out of giving us the opportunity.

To get the right amount out and we will stay.

One is on it and that will.

If we're getting 8% unlevered IRR with the with our criteria for the grocery we think that's a really strong.

US really strong returns and be able to outpace our peers. We hope on in terms of result.

Thank you.

Thanks.

Your next question comes from Henderson Juste with Mizuho. Your line is open.

Speaker 1: Your next question comes from Hendelson, just with Ms. Wolff, your line.

Speaker 11: Hey, good afternoon, I suppose. First question.

Hey.

Good afternoon.

The first question.

Speaker 11: First question is on the lease price. I know they can be lumpy, especially on the new side. But with that in mind, I guess, can you discuss the jump in new lease rates in the fourth quarter? Is that more an anomaly, maybe perhaps due to mix? And then how would you assess the near term outlook for spreads if you look at your expiring rents here over the next year or two versus market rents?

First question is on the lease.

I know they can be lumpy, especially on the new side.

But with that in mind I guess can you discuss that thats up in new lease rates in the fourth quarter is that more an anomaly that you perhaps due to mix and then how would you assess the near term outlook for spreads. If you look at your expiring rents here over the next year or two versus market rent.

Speaker 5: Yeah, Hendel, if you look at our leasing spreads over time, and you take the pandemic year of 2020 out of the picture, and you go back to 2017 and look at 2017, 2018, 2019, and 2021,

Yeah, and Alex if you look at our leasing spreads over time and you take the pandemic year 2020 out of the picture and you go back to 2017 and look at 2017, 2018, 2019 and 2021, the average new leasing spread for US was <unk> 14.

Speaker 5: The average new leasing spread for us was 14.9%.

9%.

Speaker 5: And so, you know, the metric that we put up in 2021 of 15.7 is in line with what we've been able to do historically.

And so the metric that we put up in 2021 of $15 seven.

It is in line with what we've been able to do historically.

Speaker 5: So, we don't tend to see the volatility in leasing spread. I mean, if you look at that four-year window, you know, the low was 13.3 and 19 and the high was 15.9 and 17 with an average of 14.9.

So we don't we don't tend to see the volatility in leasing spreads and if you look at that four year window. The low was 13, 3% to 19 and the high was 15, 9% and 17 with an average of $14 nine.

Speaker 11: That's helpful, Devin. I suppose that's perhaps more due to having less big box space in the mix? Is that part of the consensus? Yes. I mean, again, it's still hand out. One of the things that, you know, we think really differentiates us is the fact that our average center is 115,000 square feet, and that X the grocer, or our average tenant, is less than 2,500 square feet, and we have less exposure to the B box.

That's helpful. David I suppose.

Perhaps more due to having less big box space and the mix of that part of the year.

I mean again it <unk> one of the things that.

We think really differentiates us is the fact that our average centers 115000 square feet and that X. The grocer. Our average tenant is less than 2500 square feet and we have less exposure to the B box.

Speaker 5: retailer and you know that's one of the reasons why there's less volatility in our leasing spread than there may be in other.

Retailer.

And that's one of the reasons why there is less volatility in our leasing spreads then there may be.

In others.

Speaker 11: Fair, got it, got it. I think I heard, maybe it was John who mentioned this in his comments, that TI dollars for leasing in the fourth quarter were higher. Can you talk about that a bit more? Was that a bit of an anomaly, something to do with some specific space that might have been, I don't know, for some reason perhaps more difficult to lease, and how we should think about that level of spend into 2022? Thanks.

Got it got it I think I heard maybe you as John mentioned in his comments that.

Ti dollars.

For leasing in the fourth quarter were higher can you talk about that a bit more was that a bit of an anomaly something to do with some specific space that might have been I don't know if for some reason, perhaps more difficult to lease and how we should think about those.

That level of spend into.

2022.

Sure.

Yes.

Speaker 12: Yeah, so Hendo, you did hear that. So in the fourth quarter, they were higher dollars. And I wouldn't say it was any space in particular, absolutely.

Yes. So you did hear here that so in the fourth quarter. They were higher dollars and I wouldn't say it was any space in particular, absolutely the kind of cost per space does vary by the Houston the size, but I would say in terms of the timing. It was higher when you look at the quarter individually on both the Ti and the capital side.

Speaker 6: kind of cost per space does vary by the use and the size.

Speaker 6: But I would say in terms of the timing, it was higher when you look at the quarter individually on both the TI and the capital side, just the capital improvements, if you look at the supplement, you know, almost two-thirds of our capital improvements were spent in the fourth quarter.

Just the capital improvement if you look at the supplement that almost two thirds of our capital improvements were spent in the fourth quarter.

Speaker 6: The TI is really a function of we've had increased leasing volumes. And I would say that that is, you know, that will carry into 2022. I believe it was in Devin's remarks we provided some.

So ti is really a function of we've had increased leasing volumes and I would say that that is.

That will carry into 2022 I believe it was in kevins remarks.

We provided some comments that it would be approximately $50 million to $55 million for that lump sum for the full year is what we're expecting and that would be.

Speaker 6: comments that it would be approximately $50 to $55 million for that lump sum for the full year is what we're expecting. And that would be CI, TI, as well as losing commission.

Ti as well as leasing commissions.

Got it got it very helpful. And then if I could just one follow up on an earlier comment I think it was Craig was talking about redevelopment.

Speaker 11: Got it. Got it. Very helpful. And then if I could, just one follow-up on an earlier comment, I think it was Craig who was asking about redevelopment. I know your project is a bit more bite-sized, but I guess I'm curious how you're thinking about the sizing of the overall pipeline here. Obviously, cap rates are compressing. There's strong demand for space.

I know your practice is a bit more bite size, but I guess I'm curious, how you're thinking about the sizing of the overall pipeline here, obviously cap rates are compressing the strong demand for space I guess, how much of a capacity or maybe a desire to make this a more meaningful contributor to earnings I know you are adding a few more projects this year, but.

Speaker 11: How much of a capacity or maybe a desire to make this a more meaningful contributor earnings? I know you're guiding a few more projects this year, but not moving the needle too dramatically. So I guess I'm curious, in light of what's going on around it, why not?

Sure.

Moving needle too dramatically. So I guess I'm curious in light of what's going on around why not.

Speaker 4: And Dale, it's a great question, and the answer is we'd do more if we could. We are working really hard to build that up. We have a really disciplined view of what we want to do on the development side, and it's primarily single-tenant and small multi-tenant spaces.

Expanded more.

It's a great. It's a great question and the answer is we do more if we could we are working really hard to build that up.

We're really disciplined view of what we want to do on the development side, and it's primarily single tenant and small multi tenant spaces.

Adjacent to our to our centers and then some of the tear down and rebuild we do for the grocers.

Speaker 4: adjacent to our to our centers and then some of the teardown and rebuilds we do for the the grocers That we get good economics on if we could do a bigger volume we would we just don't you know given the the the the timing it takes to get these up and running and the You know the volume they're in you know, they're a million to three million kind of bites You you know

But we get good economics on if we could do a bigger volume we would.

We just don't given the.

The timing it takes to get these up and running and the.

The volume there in the $1 million.

$3 million kind of bites.

You.

Speaker 4: It just takes a lot of time and effort to get those in, and that's why we do it. But at the kind of returns that we're getting, in that nine to 10,

It just takes a lot of it takes a lot of time and effort to get those in and that's why we do it but at the kind of returns that we're getting.

Nine to 10.

Speaker 4: return on that investment, it is a great vehicle and if we could get it bigger, we would. We will continue to work on ways to do that, but for the foreseeable future, I think looking at it as about a $50 million a year business, I think that is a good way of looking at it.

The return on that investment it's a really.

It is a great vehicle.

We could get a bigger we would and we will continue to work on ways to do that but for the foreseeable future I think looking at it is about a 50 billion a $50 million.

A year business I think that's a good way of looking at.

That's great color and good luck to the Bengals.

Speaker 13: Have a good one. Hootay. Ah, hootay, thank you.

Yes.

Good day.

Thank you.

Yeah.

Our next question comes from Mike Mueller with Jpmorgan. Please go ahead.

Speaker 1: Your next question comes from Mike Mueller with JPMorgan, please go ahead.

Speaker 8: Yeah, hi. So, so 47 cents in the fourth quarter, if we back out a couple of cents of prior period, you're at 45 annualizes to about 180.

Hi.

So some 47 in the fourth quarter, if we back out the couple of cents of prior period, you're at 45 annualized is still about 180.

Speaker 8: The, I guess, you know, the average annual, the average quarterly number to get 220 is about 55 cents. Can you help us bridge the gap in terms of the ramp from 45 to that average of 55 or, you know, the higher at the end of the year?

The I guess the average annual average quarterly number to get to 20 is about 55.

Can you help us bridge the gap in terms of the ramp from 45 to that average of 55.

The higher at the end of the year.

Speaker 8: Because it seems like you get a couple of cents from or a few cents from core growth and it's the rest just acquisitions.

Because it seems like you've got a couple of cents from or a few cents from core growth and is the rest just acquisitions.

Speaker 12: So, hey, Mike, thanks for the question. On the quarter, the $0.47, one thing I would say is that, yes, there was the prior period collections, but we did have higher expenses going through that goes through that NOI number because of the corporate kind of what we call corporate property operating. We mentioned that on the G&A side that we had higher performance.

So hey, Mike Thanks for the question.

On the quarter, the 47, and one thing I would say is that yes. There was the prior care collections, but we did have higher expenses going through that goes to that NOI number because of the corporate kind of what we call corporate property operating we mentioned that on the G&A side that we had higher performance compensation and that also is true for those debt.

Speaker 6: competition and that also is true for those that run our properties because they had an amazing year as well. So I think those two kind of neutralize, they kind of offset each other.

Our properties because they had an amazing year as well so I think those two kind of neutralize that kind of offset each other and then so when you take that you add in the same center growth the acquisitions that we made in 2021 and then the net acquisition that we are looking at for 2022.

Speaker 12: And then, so when you take that, you add in the same center growth, the acquisitions that we made in 2021, and then the net acquisitions that we are looking at for 2022.

Speaker 12: It's really, when you look at the jump, the core is at NOI. I also, in my prepared remarks, I mentioned that on a cost level, GNA actually will be pretty constant. It'll be in line at about that number.

It's really when you look at the jump.

The core is that NOI I also in my prepared remarks, I had mentioned that.

On a cost level of G&A actually will be pretty pretty constant will be in line at about that number.

Speaker 12: And then interest will be a little less than it was in 2021 because of the lower debt load.

And then interest will be a little less than it was in 2021 because of the lower debt load.

Speaker 8: Got it, okay. And then just thinking about your escalators, can you talk about what you were getting on 2021 leases in terms of bumps versus the in-place for the portfolio?

Got it Okay and then.

Just thinking about your escalators can you talk about what you were getting 2021 leases in terms of bumps versus the in place for the portfolio.

Certainly not.

Okay.

Speaker 5: John , go ahead. I wasn't sure if Mike's question, if he was asking about what the built-in rent taker is on new leases. Was that your question, Mike? Yeah, yeah. Basically, you know, what's your average in place today? And in terms of the 2021 lease signings, how did those bumps on the new leases compared to what's in place?

John go ahead.

Sure. It's Mike question, if he was asking about what the built in rent CAGR is on new leases was that your question.

Yes basically.

What's your average in place today.

In terms of the 2021 lease signings, how does those bumps on new leases compared to what's in place.

Sean go ahead sure. Okay, Yes, I'll go ahead and take that so we continue to.

Speaker 6: Sean, go ahead. Sure. Okay. Yeah, I'll go ahead and take that. So, you know, we continue to...

Speaker 6: Our new leasing and our renewal leasing, we continue to push and add, you know, embedded rent bumps that I would say are in the 2 to 2.5% range. I would say in the embedded base in the portfolio today, that comes through in NOI at about 60 to 70 basis points. And again, that's because the 2% is primarily on our inline neighbors. And then when you consider that's about half of.

New leasing and renewal leasing we continue to pushing ad.

Bedded rent bumps that I would say are in the two to two 5% range I would say in the embedded base in the portfolio today that comes through in NOI at about 60 to 70 basis points and again, that's because the 2% is primarily on our inline neighbors and then when you consider that's about half of our.

Speaker 12: That would be 100 basis points, but then it's.

That would be a 100 basis points, but then it's.

Speaker 12: you know, in our portfolio, it weighs to about, you know, 70 basis points. Got it.

In our portfolio.

It's to about 70 basis points.

Got it okay that was it thank you.

Great. Thanks, Mike.

Our next question comes from Thomas.

Speaker 1: comes from Tammy Fick with Wells Fargo Securities. Your line is open.

Wells Fargo Securities. Your line is open.

Speaker 14: Great. Thank you. Just a question on guidance. I'm just wondering if you can maybe help us and you answered this a little bit just a moment ago about the 70 basis points of contractual bonds embedded in the portfolio, but what are the other components of 2022 same-store NOI growth guidance to just maybe help us frame that up beyond the 70 basis points from the

Great. Thank you.

A question on guidance and I'm just wondering if you can maybe help us.

Into this a little bit just a moment ago about the 70 basis points.

Back to our bumps embedded in our portfolio, but.

What are the other components.

22 same store NOI growth guide.

Guidance, just maybe help us frame that up beyond the 70 basis points from.

The rent bumps.

Speaker 6: Sure. I'll go ahead and take that one. Thanks, Tammy. So, in our 3 to 4% NOI guidance, I did just mention that the rent bumps piece, we would say is, you know, 60 to 70 basis points from the embedded portfolio. I would say new leasing spreads are, you know, and again, this is for 22, 70 to 80 basis points.

Sure I'll go ahead and take that one thank you Tammy.

So in our 3% to 4% same store NOI guidance I did just mention that the rent bumps piece. We would say is 60 to 70 basis points from the embedded portfolio I would say new leasing spreads are and again. This is for 'twenty two seven.

70 to 80 basis points I would also say that redevelopment of 70 to 80 basis points. That's.

Speaker 12: I would also say that redevelopment is 70-80 basis points. That's the out parcel projects that we've been discussing previously. The big lift is in occupancy. You know, we, you know, have meaningfully increased occupancy and that will continue to carry income into 2022 as well as our projections. And so that's 200 to 250 basis points of our growth.

The out parcel projects that we've been discussing previously the big lift in occupancy we have meaningfully increased occupancy and that will continue to carry income into 2022 as well as our projections and so thats 200 to 250 basis points of our growth.

Speaker 15: And then the math is actually similar to what it is that we have about, you know, call it 80 basis points assumed of a loss in same-center related to bad debt. So in the 2022 year, we are anticipating that our bad debt will return to historical levels.

And then the math is actually similar to what it is that we have about call. It 80 basis points assumed if a loss in same center NOI related to bad debt.

So in the in the 2022 year, we are anticipating that our bad debt will return to historical levels, which is between 60 and 80 basis points of revenue.

Speaker 12: 60 and 80 basis points of revenue, and that range is what's giving us the 3 to 4%.

And that range is what is giving us 3% to 4%.

Speaker 14: perfect. That's really helpful. And then I appreciate the comments around the consistency in releasing spread. But given, you know, currently high occupancy and expectations for continued growth there. I mean, should we be thinking about

Perfect Thats very helpful.

And then I appreciate the comments around the consistency.

Thanks, Brad.

Given currently high occupancy and expectations for growth there.

We'd be thinking about.

Speaker 14: bigger releasing spreads going forward, if you can sustain that occupancy level? Or do you feel like you're putting tenants up against kind of higher occupancy costs?

Bigger re leasing spreads going forward, if you can sustain that occupancy level or do you feel like you're putting tenants up against.

Kind of higher occupancy cost at this point.

Speaker 4: Tim, it's a great question and it's one that we, you know, you're balancing as we get to the, you know, to improve the occupancy and your levels where you have more pricing power than you have that we've had historically. Can we realize that in higher rent spreads?

Kevin It's a great question and it's one that we.

You are balancing as we get to the.

<unk> improved the occupancy and Youre at levels, where you have more pricing power that you have that we've had historically.

Can we can we realize that in higher rent spreads.

Speaker 4: The answer is we have not assumed that in our assumptions, but we do think that there is that opportunity.

We have not assumed that in our assumptions, but we do think that there is that opportunity.

Sure.

Speaker 4: And we're going to be, you know, we're going to be testing that this year to see if we can do that. That's, I think it's early in terms of whether we're going to be able to go above those numbers on a go-forward basis, but we are, you know, we are in about as good of an operating environment as we've ever been, so we're hopeful that we can push those a bit.

And we're going to be we're going to be testing that this year to see if we can.

We can do that.

That's I'd say, it's early in terms of whether we're going to be able to go above those numbers on a go forward basis, but we are we are in about as good of an operating environment as we've ever been so we're hopeful that we can we can push those a bit.

Speaker 6: And Jeff, just to add on to that, Timmy, the second part of your question was whether, you know, the pressure that we're putting on our neighbors.

And Jeff just to add onto that came in the second part of your question was whether the pressure that we're putting on our neighbors.

Speaker 12: You know, I would first say that, you know, our grocery health ratio we reported was 2.4%. And really, those are very long.

Say that our grocery health ratio, we reported was two 4% and really those are very long leases. So that's not really where the pressure will be applied when we look at our inline nabors from a ratio standpoint, where our estimates are we're about 10% of their of their cost and that varies based on the usage.

Speaker 12: that's not really where the pressure will be applied. When we look at our inline neighbors, you know, from a ratio standpoint, we're, you know, our estimates are we're about 10% of their, of their cost, and that varies based on the usage. And so as we look at the growth that they're realizing, given the necessity based nature and their ability to push those costs.

And so as we look at the growth that they are realizing given the necessity based nature and their ability to push those costs. We believe we can achieve these and maintain that relationship without putting excess pressure on our neighbors.

Speaker 12: You know, we believe we can achieve these and maintain that relationship without putting excess pressure on our neighbors.

Speaker 4: And Tammy, I – oh, go ahead, Dan.

And can you hear me.

Good.

Speaker 5: The last piece is we don't believe that our in-line tenants are feeling pressure because as you note in our retention rate at 88%, nine out of every 10 tenants are renewing and they're renewing at these kind of spreads that we've been talking about. So the evidence is clear that the tenants do not feel pressured, you know, their businesses are.

The last piece is.

We don't believe that our inline tenants are feeling pressure because as you note in our retention rate at 88% nine out of every 10 tenants are renewing and they are renewing at these kind of spreads that we've been talking about so the evidence is clear that the tenants do not feel.

Pressured.

Their businesses are thriving in our centers and therefore, they want to stay in our centers and the retention rate is reflective of that.

Speaker 5: thriving in our centers and therefore they want to stay in our centers and the retention rate is reflective of that.

Dynamic.

Yes.

Speaker 4: Yeah. And, Tammy, one thing that I would add in as well is when you think about inflation, I mean, we've been getting these kind of spreads in a 2% inflation environment. If we were to move to 3 to 5% inflation, that would also, we believe that would give us additional impetus to be able to grow our rental spreads. So, but we'll see. I mean, again, that is to, you know, to be seen as we progress through the year.

One thing that I would add in as well when you think about deflation I mean, we've been getting these kind of spreads in a 2% inflation environment.

If we if we were to move to 3% to 5% inflation that would also we believe that will give us additional impetus to to be able to grow our.

Our rental spreads.

But we will see I mean again.

Is too.

To be seen as the as we progress through the year.

Speaker 14: I appreciate that. And then maybe just one last question. Just as we think about dispositions in 2022, I'm curious if you have anything teed up there and maybe what you're expecting for the year in total and just if you can give us a sense for cap rates on the pool of assets that you're looking to sell.

Okay I appreciate that and then maybe just one last question just ask when you think about dispositions in 2022 curious if you have anything teed up there.

And maybe what youre expecting for the year in total and just if you can give us a sense for cap rates on the pool of assets that youre looking to sell.

Speaker 4: So, as we talked about, we do know like we are, the $350 million is a net number, so our dispos will be on top of that. So, our acquisitions would be higher by whatever that number is. And that range we've given of $300 to $400, we think there'll be, you know, I,

So as we as we talked about we do know like we are.

The $350 million is a net number.

Our dispose will be on top of that so our acquisitions would be higher by whatever that number is.

And that that range, we've given the 300 to 400.

We think there'll be.

Speaker 4: We haven't given guidance in terms of what our dispos are. I mean, historically, they've been $100 to $125 million a year, and I think as we think about it, we're probably thinking in that kind of a frame, but again, we're really focused on making sure that we get the incremental growth from the net acquisitions. Thank you.

In a.

We haven't given guidance in terms of what our dispose or.

I mean, historically, they've been $100 million to $125 million a year.

And I think.

As we think about it.

We're probably thinking in that kind of a frame, but but again.

Where.

We're really focused on making sure that we get the incremental growth from the net acquisitions.

Great. Thank you.

Speaker 1: This question comes from Todd Thomas with KeyBank.

Our next question comes from Todd Thomas with Keybanc. Your line is open.

Speaker 16: First question, I just wanted to follow up on investments and the

Hi, Thanks.

Just first question I, just wanted to follow up on investments and in the Street.

Strategy.

Speaker 16: strategy, there does seem to be a bit of product coming to the market. Is there any appetite for sort of a small or mid-sized portfolio, or should we generally expect the one-offs primarily? And would there be a scenario where it might make sense to grow the joint venture and asset management platform?

There does seem to be a bit of product coming to the market is there is there any appetite for sort of a small or mid sized portfolio or should we generally expect the one offs, primarily in and would there be a scenario, where it might make sense to to grow that joint venture and <unk>.

Asset management platform.

Speaker 4: Todd, thanks for being on. It's a great question. Yes, there is additional product coming on the market. Yes, we are looking at every portfolio that is for sale and have obviously looked at all the ones that have either transacted or been committed to date.

Todd Thanks for being on its great question.

Yes, there is additional product coming on the market.

Yes, we are looking at every portfolio that is for <unk>.

Sale.

And have looked at obviously looked at all of the ones that have either transacted or been committed to date.

We I would not anticipate us getting involved in our portfolio in the current environment, where there is a <unk>.

Speaker 4: I would not anticipate us getting involved in a portfolio in the current environment where there is a large premium paid. We believe there's a portfolio premium paid.

<unk> premium.

We believe Theres a portfolio premium paid.

Speaker 4: If that continues to be the case, then we would anticipate, you know, continuing to grow through individual acquisitions. But again, you know, if we can find something that meets our eight unlevered IRR in a portfolio basis that we think where we think we're getting market, not a, you know, a premium to market, we obviously, we would be very, we'd love to look at that. And we'd love to, you know, to buy that if that.

<unk>.

If that continues to be the case that we would anticipate continuing to grow through individual acquisitions.

But again, if we can find something that meets our eight levered IRR in a portfolio basis that we think we're we think we're getting market not.

A premium.

Premium to market.

We obviously, we would be very we'd love to look at that and we'd love.

So by that if that if.

Speaker 4: if we can. But again, it's going to be driven by can we underwrite it to an 8 on levered IRR and do we think we're buying it at more of a market rate than a portfolio premium type of rate. So that's how we're kind of thinking about it.

If we can.

No.

But again, it's going to be driven by.

Can we underwrite it to an eight unlevered IRR and do we think we're buying it at a.

At more of a market rate than that.

The portfolio premium type of rates. So that's how that's how we're kind of.

Thinking about it.

Speaker 4: We look at basically everything that comes on the market because we've been doing this for a long time. We have the relationships and we're on the top of the list of anybody who's selling.

We do.

We look at basically everything that comes on the market because.

We've been doing this for a long time, we have the relationships and we are on the top of the list of anybody who is selling.

Speaker 4: of open-air centers to talk to us. And so we will continue to review those and try and find the best opportunity. I don't know if you have any other thoughts on that.

Open air centers to talk to us and so we will continue to review those and try to find the best opportunities I don't know Kevin if you have any other thoughts on that.

Speaker 5: Yeah, the only thing I would add, Todd, is, as you know, we built this portfolio over time, asset by asset, and, you know, the reason we haven't been successful in buying a lot of portfolios is because we believe that there is a portfolio premium that's typically paid, and that makes it more difficult for us to hit our return objective.

Yes, the only thing I would add Todd as you know we built this portfolio over time asset by asset and the reason we haven't been successful in buying a lot of portfolio. It is because we believe that there is a portfolio premium that typically paid.

And that makes it more difficult for us to hit our return objectives.

Speaker 5: And that would be the answer on that part of your question. And then on the second part of your question regarding the asset management business.

And that would be the answer on that key part of your question and then on the second part of your question regarding the asset management business. We are constantly approached by institutional investors to partner with them. So that they can get the benefit of our operating platform.

Speaker 5: You know, we are constantly approached by institutional investors to partner with them so that they can get the benefit of our operating platform for their investment dollars. You know, it's something that we will continue to look closely at, and if we can find, you know, the right partner that allows us to meet our objectives for our on balance sheet growth, et cetera, we would entertain it.

For their investment dollars, it's something that we will continue to look closely at and if we can find the right partner that allows us to meet our objectives for our on balance sheet growth et cetera, we would entertain it.

Speaker 16: Okay, and then in terms of some of the acquisitions that you completed.

Okay and then in.

In terms of some of the acquisitions that you completed.

Speaker 16: I was wondering if you could speak to both Arapahoe and maybe in town and country, about 200,000 square feet or a little bit more, not out of bounds. You have a number of centers that are a little bit larger in size, but they are typically larger than what the company owns today with a bunch more boxes. Should we expect to see some

Here in the quarter and also what's in the pipeline.

I was wondering if you could speak to.

<unk>.

Both our <unk> and maybe in town and country about 200000 square feet or a little bit more not not out of bounds you have.

A number of centers that are.

Little bit larger in size, but they are typically larger than what the company owns today.

A bunch more boxes should we expect to see some.

Speaker 16: investments going forward be a little bit larger, a little bit boxier in nature, or is it just sort of mixed in the quarter?

Investments going forward to be a little bit larger a little bit box here in nature or is it just sort of mix in the quarter.

Speaker 4: I would say it's mixed in the quarter, and the two centers, Arapahoe and Town and Country. Town and Country is a very specific case, which it is larger, but it does have two gross rankers. It operates as two different centers, and it's a physical issue you've got to look at, but it's almost like we bought two different centers. In that case, it's not a large property acquisition when you think of it as two centers. Arapahoe was a very unique situation where we felt

I would say it's mixed in the quarter.

And the two I mean the.

The two centers Arapahoe in town and country.

The town and country is a very specific case, which it does it is it is larger but it does have two grocery anchors.

Operator has two different kind of different centers.

It's a physical issue you got to look at but it's almost like we bought two different centers and.

In that case, they arent they are not large.

It's not a large property acquisition when you think of it as two centers.

<unk> was a very unique situation, where we felt a part of the center operated as.

Speaker 4: part of the center operated as a grocery shopping center, and the majority of that, and we had two boxes that we had to buy in order to get that, and those two boxes were long-term, but bye!

Our grocery anchored shopping center and the majority of that and we had two boxes that we had to buy in order to get that.

Two boxes were long term.

But.

Speaker 4: good credit properties that we felt like we will take that in order to get what we really wanted, which was the grocery anchor shopping center part of the center. Unfortunately, it's

Good credit.

Properties that we felt like okay, we will.

Take that in order to get what we really wanted which was the grocery anchored shopping center part of the center and.

Unfortunately, its too.

Speaker 4: To date, it's worked out extremely well, both of them, from a new leasing and our ability to grow rents at both of those locations really early on, obviously, in our ownership process. We're very happy with the progress we've made on those centers in a very short time.

To date, it's worked out extremely well both both of them from.

From a new leasing.

And our ability to grow rents at both of those locations really early on obviously in their acquisition.

Ownership process so.

We're very happy with the progress we've made on on those centers in a very short time.

Speaker 16: Okay, and then if I could, real quick, John , two questions.

Okay, and then if I could real quick John .

Two questions.

Speaker 16: uh... related to the to the guidance and and and the quarter here uh... you know first was was there any uh... benefit history

Related to the to the guidance in the quarter here.

First was there any.

Benefits of straight line rent realized in the quarter.

Speaker 16: realized in the quarter that we should think about moving forward, or is the roughly $2 million of straight-line rent in the quarter, is that a good run rate to think about for 2022? And then also, in the core FFO reconciliation, I think there's the $0.07 to $0.08.

We should think about moving forward or is the roughly $2 million.

Straight line rent in the quarter or is that is that a good run rate to think about for 'twenty. Two and then also in the core <unk> reconciliation I think there is the <unk>.

<unk> for transaction costs and other what is that exactly and where does that show up in the income statement.

Speaker 16: for transaction costs and other, what is that exactly and where does that show up in the income statement?

Speaker 6: Sure. So in terms of straight line rent, I would say that for the quarter, I would think that as I looked at 2022, the fourth quarter is a little higher. I would say, you know, kind of two to two and a half million dollars is a good estimate for straight line rent specifically.

Sure.

In terms of straight line rent I would say that for the quarter I would think that as I look to 2020 to the fourth quarter was a little higher.

Kind of two to $2 $5 million is a good estimate for straight line rent specifically.

Speaker 6: And then to your question on transaction costs and transaction activity, at this time, I believe those are actually going to go through on our income statement. I think we have a caption right now and I'm pulling it up. That actually is, it's going to be in the other expense and income net line on our income statement. And then in our reconciliations, they'll come through as that transaction and acquisition expense.

And then T.

To your question on transaction costs and transaction activity.

At this time I believe those are actually going to go through on our income statement I think we have a caption right now and I'm pulling it up.

That actually is it's going to be any other expense and income net line on our income statement and then in our reconciliations they'll come through is that transaction and acquisition expenses.

Speaker 12: which we have as an ad back to chlorofluvobudy does impact may read FSO.

Which we have as an add back to <unk>, but it does impact NAREIT asset sale.

Speaker 16: Right. And so what is that exactly? The transaction, how much of it is related to, you know, sort of abandoned or, you know, I guess acquisition costs versus.

Right and so what is that exactly the transaction how much of it is related to.

Sort of abandoned or or.

I guess acquisition costs.

<unk> versus other.

Speaker 12: So those are, it's more transaction over on the corporate side. So it would be, some of it is failed to transaction or failed acquisitions, but other components are just expenses that we had related to the IPO that we are paying. And it's actually, some of it is non-cash expenses that we're recording.

So those are.

It's more transaction over on the corporate side. So it would be some of it has failed to transaction clear failed acquisitions, but other components are just expenses that we had related to the to the IPO that we are paying and it's actually some of it is noncash expenses that were recording.

Speaker 12: going forward. So, I would expect it to be at this level in 2022 and then kind of tapering from there. Okay. All right. Great. Thank you.

Going forward I would expect it to be at this level in 2022, and then kind of tapering from there.

Okay Alright.

Alright, great. Thank you.

Yeah.

Thanks Scott.

And this concludes our Q&A.

Answer session I would like to turn it back to Mr. Edison for some closing comments.

Thank you.

Speaker 4: Thank you. Thanks, everybody, for being on the call and for your questions. We had a really nice quarter. We enter 2022, I think, in a really good position. We're excited about some of the opportunities that's going to create for us. Again, we appreciate

Thanks, everybody for being on the call and for your questions.

It's.

We had a really nice quarter.

We enter two.

2022, I think in a really good position.

Sure.

Cited about some of the opportunities thats going to.

Great for Us and again, we appreciate your questions and obviously, we are here to answer them as we as we go forward.

Speaker 4: your questions and obviously we're here to answer them as we go forward. We'll root for the Bengals this weekend because we have to, because we got our Cincinnati base. But for you guys, we thank you for your time today and look forward to hopefully having a really good 2022. It's certainly starting off really well. So let's keep our fingers crossed. Thanks, guys.

We will we will route for the Bangles this weekend, because we have to because they are.

We got our Cincinnati base.

Sure.

But but for you guys. We thank you for your time today.

Look forward to hopefully having a really good 'twenty.

'twenty two.

Certainly starting off really well so let's keep our fingers crossed thanks, guys I appreciate it.

And you may now disconnect.

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Speaker 1: Good afternoon, and welcome to Philips Edison & Company's fourth quarter 2021 results presentation. My name is Carmen, and I'll be your...

Good afternoon, and welcome to Phillips Edison and company's fourth quarter 2021 results presentation. My name is Carmen and I'll be your conference call operator today.

Speaker 1: Before we begin, I would like to remind our listeners that today's presentation is being recorded and simultaneously webcasted.

Before we begin I would like to remind our listeners that today's presentation is being recorded and simultaneously webcast on.

Speaker 1: Company's earnings release and quarterly financial supplement were issued yesterday, February 10.

The company's earnings release, and quarterly financial supplement were issued yesterday February till after market close.

Speaker 1: Documents and a replay of today's presentation can be accessed from the Investor section of the Philips Edison and Company website at philipsedison.com.

These documents and a replay of today's presentation can be accessed on the investors section of the Phillips Edison and company website.

Phillips Edison Dotcom.

I would now like to turn the call over to Michael Keller with Phillips Edison and company. Sir. Please proceed.

Speaker 3: Thank you, Operator. Good afternoon, everyone, and thank you for joining us. I am Michael Koehler, Vice President of Investor Relations with Phillips Edison.

Thank you operator, good afternoon, everyone and thank you for joining us I am Michael Keeler, Vice President of Investor Relations with Phillips Edison and company joining me on today's call are our chairman and Chief Executive Officer, Jeff.

Speaker 3: Joining me on today's call are our Chairman and Chief Executive Officer, Jeff Edison, our President, Devin Murphy, and our Chief Financial Officer, John Kaufman.

Edison, our president Devin Murphy, and our Chief Financial Officer, John Caulfield.

Speaker 3: During today's presentation, Jeff will provide a brief overview of Phillips Edison and Company, discuss our differentiated strategy, and touch on the highlights of the quarter.

During today's presentation, Jeff will provide a brief overview of Phillips Edison and company discussed our differentiated strategy and touch on the highlights of the quarter.

Speaker 3: Devin will discuss our fourth quarter operational results. John will review our fourth quarter financial results and discuss our 2022 financial guidance.

Kevin will discuss our fourth quarter operational results John will review, our fourth quarter financial results and discuss our 2022 financial guidance Lastly, Jeff will return to provide an update on our acquisition and disposition activity and gave our 2022 acquisitions guidance and provide some closing comments.

Speaker 3: Lastly, Jeff will return to provide an update on our acquisition and disposition activity and give our 2022 acquisitions guidance and provide some closing comments.

Speaker 3: Following our prepared remarks, we will answer questions from the Institutional Analyst Community.

Following our prepared remarks, we will answer questions from the institutional analyst community.

Speaker 3: Before we begin, I would like to remind our audience that during the course of this call, management may make forward-looking statements within the meaning of federal securities law. These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements.

Before we begin I would like to remind our audience that during the course of this call management may make forward looking statements within the meaning of federal Securities law.

These statements are based on management's current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward looking statements.

Speaker 3: Such forward-looking statements are made only as of today and will not be updated as actual events unfold.

Such forward looking statements are made only as of today and we will not be updated as actual events unfold. Please refer to yesterday's earnings release, and our filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward looking statement made today in.

Speaker 3: Please refer to yesterday's earnings release and our filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statement made today.

Speaker 3: In addition, we will also refer to certain non-GAAP financial measures. Information regarding our use of these measures and reconciliations of these measures to our GAAP results are available in our earnings release and supplemental disclosure issued yesterday, which are on our website. With that, it's my pleasure to turn the call over to Jeff Edison, our Chief Executive Officer. Jeff?

In addition, we will also refer to certain non-GAAP financial measures information regarding our use of these measures and reconciliations of these measures to our GAAP results are available in our earnings release and supplemental disclosure issued yesterday, which are on our website with that it's my pleasure to turn the call over to Jeff Edison, Our Chief Executive Officer, Jeff.

Speaker 4: Thank you, Michael. Good afternoon, everyone, and thank you for being on the call.

Thank you Michael Good afternoon, everyone and thank you for being on the call.

Speaker 4: Bill's Medicine Company is exclusively focused on owning and operating neighborhood, grocery anchored, omni-channel shopping centers.

Bill said assumed company is exclusively focused on owning and operating neighborhood grocery anchored omnichannel shopping centers.

Speaker 4: We are one of our nation's largest owners of this type of center.

We are one of our nation's largest owners of this type of center.

Speaker 4: As we speak today, you will notice that we call our tenants our neighbors. We do this because we work hard to create community at our centers and we treat our retailers as neighbors in that community.

As we speak today, you'll notice that we call our tenants our neighbors. We do this because we work hard to create nearly at our centers and we treat our retailers as neighbors in that community.

Speaker 4: We also prioritize customer service and believe that this nomenclature reminds our team to treat our tenants like we would our neighbors.

We also prioritized customer service and believe that this nomenclature reminds our team to treat our tenants like we would our neighbors.

Speaker 4: When it comes to our centers, we believe that format drives results and also facilitates attractive long-term growth.

When it comes to our centers, we believe that format drives results and also facilitate attractive long term growth.

Speaker 4: Our average center is 115,000 square feet, which is among the smallest average size in the REIT universe.

Our average center is 150000 square feet, which is among the smallest average size in the REIT universe.

Speaker 4: We believe our smaller centers allow for better growth because of our average tenant space of 2,300 square feet aligns well with leasing demand.

We believe our smaller centers allow for better growth because of our average tenant space of 2300 square feet aligns well with leasing demand.

Speaker 4: Approximately 70% of leases in strip centers are executed in spaces smaller than 2,500 square feet.

Approximately 70% of leases in strip centers are executed in space is smaller than 2500 square feet.

Speaker 4: This demand drives higher retention rates, higher releasing spreads, and overall positive leasing dynamics for PECO.

This demand drives higher retention rates higher releasing spreads and overall positive leasing dynamics for Pico.

Speaker 4: Higher retention rates result in less downtime, lower TI costs, and higher NOI growth.

Higher retention rates result, in less downtime lower ti costs and higher NOI growth.

Speaker 4: When it comes to our properties, our strategy is simple. We focus on owning centers with the number one or two grocer in the market. Our centers have an omni-channel neighbor base where the grocer and the center have both delivery and buy online and pick up in the store or BOPUS capabilities.

When it comes to our properties. Our strategy is simple we focus on owning centers with a number one or two grocer in the market. Our centers have an omnichannel neighbor base, where the grocer in the center have both delivery and buy online and pickup in the store our focus capabilities.

Speaker 4: Our centers have a high exposure to neighbors selling necessity-based goods and services. In fact, 72% of our rent comes from neighbors offering both necessity goods and services.

Our centers have a high exposure to nabors selling necessity based goods and services in fact, 72% of our rent comes from neighbors offering both necessity goods and services.

Speaker 4: We focus on owning centers and trade areas with favorable demographics where our neighbors can be successful.

We focus on owning centers in trade areas with favorable demographics, where our neighbors can be successful.

Looking forward, we believe we are well positioned for long term growth.

Speaker 4: Looking forward, we believe we are well-positioned for long-term growth. Our long-term growth includes both strong external and internal growth.

Long term growth includes both strong external and internal growth.

Speaker 4: We improved our balance sheet with the capital we raised during our underwritten IPO last July .

We improved our balance sheet with the capital we raised during our underwritten IPO last July .

Speaker 4: Subsequently, we executed our debut $350 million public bond offering as our investment grade issuer.

Subsequently, we executed our debut $350 million public bond offering.

<unk> grade issuer.

Speaker 4: With our leverage currently at 5.6 times debt to EBITDA, our goal is to execute a billion dollars of acquisitions net of dispositions over three years.

With our leverage currently at five six times debt to EBITDA. Our goal is to execute $1 billion of acquisitions net of dispositions over three years.

Speaker 4: Our strategy creates significant opportunity for acquisitions, which I'll discuss later.

Our strategy creates significant opportunity for acquisitions, which I'll discuss later.

Speaker 4: This external growth will complement our strong internal growth over the long term.

This external growth will complement our strong internal growth over the long term.

Speaker 4: The key drivers of our internal growth include growing rents through new and renewal leasing spreads, executing leases with annual fixed rental increases.

The key drivers of our internal growth include growing rents through new and renewal leasing spreads executing leases with annual fixed rental increases leasing vacant space to new neighbors and executing redevelopment opportunities, which are primarily single tenant ground up out parcel development and tear down and rebuild opportunity.

Speaker 4: leasing vacant space to new neighbors, and executing redevelopment opportunities, which are primarily single-tenant, ground-up, out-parcel developments, and tear-down and rebuild opportunities for our grocer anchors.

<unk> for our grocery anchors.

Speaker 4: We believe our strategy has historically and will continue to prospectively generate superior risk-adjusted returns. We do believe that

We believe our strategy has historically and will continue to prospectively generate superior risk adjusted returns.

We do believe that format drives results are.

Speaker 4: Our differentiated strategy allows us to realize higher initial yields on acquisitions, plus higher NOI growth, plus lower CapEx. This leads to superior economic returns.

Our differentiated strategy allows us to realize higher initial yields on acquisitions, plus higher NOI growth plus lower capex.

This leads to superior economic returns.

Our results in the fourth quarter were no exception.

Speaker 18: The fourth quarter continued the momentum we have seen through 2021. For the full year, we exceeded our annual core FFO per share and same center NOI guidance. The key components of our

The fourth quarter continued the momentum we have seen through 2021 for the full year, we exceeded our annual core <unk> per share and same center NOI guidance.

The key components of our results are as follows.

Speaker 4: The operating environment remains as strong as we've seen it in our 30 years in the business. Our rent collections are at pre-pandemic.

The operating environment remains as strong as we've seen it in our 30 years in the business.

Collections are at pre pandemic levels, we enjoyed continued high demand for retail space in our well located small format centers.

Speaker 4: We enjoyed continued high demand for retail space in our well-located small-format centers. We realized strong internal growth.

We realized strong internal growth leased.

Leased occupancy.

Speaker 19: reached an all-time high of 96.3%. Comparable new and renewal rent spreads were healthy at 18.3% and 7.8% respectively. On average, our new and renewal inline leases executed in the fourth quarter had annual contractual rent bumps of 2.4%. We also realized.

<unk> reached an all time high of 96, 3% comp.

Comparable new and renewal rent spreads were healthy at 18, 3% and seven 8% respectively.

On average, our new and renewal in line leases executed in the fourth quarter had annual contractual rent bumps of two 4%.

We also realized strong external growth.

Speaker 4: We continue to execute our goal of acquiring a billion dollars of real estate by June of 2024. Since our IPO in July , we acquired $350 million of assets, which we believe meet our internal return requirement of an 8% unlevered IRR.

We continued to execute our goal of acquiring $1 billion of real estate by June of 2024.

Since our IPO in July we acquired $350 million of assets, which we believe meet our internal return requirement of about 8% Unlevered IRR.

Speaker 20: Looking forward, we believe the strong operating environment enhances our ability to execute our internal and external growth plans. It positions us for meaningful long-term growth. John will provide more details on our outlook in a few moments during our 2020 meeting.

Looking forward, we believe the strong operating environment enhances our ability to execute our internal and external growth plans.

It positions us for meaningful long term growth.

John will provide more details on our outlook in a few moments.

During our 2020 guidance discussion.

Speaker 4: Now I'd like to turn it over to Devin who will speak in more detail about our operating results for the quarter. Devin?

Now I'd like to turn it over to Debbie who will speak in more detail about our operating results for the quarter Devon.

Speaker 5: Thank you Jeff, good afternoon everyone, and thank you for joining us today.

Thank you Jeff.

Afternoon, everyone and thank you for joining us today.

Speaker 5: Our differentiated strategy of owning and operating small format centers anchored by the number one or number two grocer continues to generate strong results and resulted in positive results for the fourth quarter.

Our differentiated strategy of owning and operating small format centers anchored by the number one or number two grocer.

She needs to generate strong results and resulted in positive results for the fourth quarter.

Speaker 5: At the end of the fourth quarter, lease portfolio occupancy totaled 96.3% compared to 94.7% at December 31, 2020.

At the end of the fourth quarter lease portfolio occupancy totaled 96, 3%.

Impaired to 94, 7% at December 31, 2020.

Speaker 21: Occupancy reached an all-time high in the quarter.

Occupancy reached an all time high in the quarter.

Speaker 22: Anchor lease occupancy increased to 98.1%.

Anchor occupancy increased to 98, 1%.

Speaker 5: In line, lease occupancy increased to 92.7%.

In line, we back you can see increased to 92, 7%.

Speaker 23: Our least occupancy to economic occupancy spread was 100 basis points for the quarter.

Our lease occupancy.

Economic occupancy spread was 100 basis points for the quarter.

Speaker 5: primarily as a result of our anchor leasing activity.

Primarily as a result of our anchor leasing activity.

Speaker 5: our inline spread compressed to 80 basis points this quarter.

Our in line spread compress to 80 basis points this quarter.

Speaker 5: We believe that we can increase in-line occupancy to 95% over time, which will add approximately 70 basis points to our total occupancy rate.

We believe that we can increase in line occupancy to 95% overtime, which.

Which will add approximately 70 basis points to our total occupancy rate.

Speaker 5: During the quarter, we executed 121 new leases.

During the quarter, we executed 121, new leases.

Speaker 5: and 132 renewal and option leases totaling 1.4 million square feet of space.

And 132 renewal and option leases.

Totaling one 4 million square feet space.

Speaker 5: We have leased approximately 1.4 million square feet now for four consecutive quarters.

We have reached approximately one 4 million square feet now for four consecutive quarters.

Speaker 5: illustrating the continued strong demand from retailers for space at our center.

Illustrating the continued strong demand from retailers for <unk>.

At our centers.

Comparable new lease rent spreads were 18, 3%.

Speaker 5: Comparable new lease rent spreads were 18.3%.

Speaker 5: and comparable renewal lease rent spreads were 7.8%.

And comparable renewal lease rent spreads were seven 8%.

Speaker 5: Our in-house leasing team has been busy executing new in-line leases with neighbors including Sports Clips, Dunkin' Donuts, and retailers from many different lines of necessity retail.

Our in house leasing team has been busy executing new in line leases with neighbors, including sports clips.

Don't ask.

And retailer for many different lines of necessity retail.

Speaker 5: Demand for our retail space is coming from retailers in many different businesses.

Demand for our retail space is coming for retailers and many different businesses.

Speaker 5: A growing trend that we have seen is national retailers, such as Chipotle, Starbucks, and Humana, looking to expand their footprints in our suburban market.

Growing trend that we have seen national retailers, such as Chipotle, Starbucks and Humana looking to expand their footprint in our suburban markets.

Additionally, we have a dedicated renewables team focused exclusively on keeping our gifting neighbors in our centers.

Speaker 5: Additionally, we have a dedicated renewals team focused exclusively on keeping our existing neighbors in our center.

Speaker 5: We enjoyed a retention rate of 86% for the quarter, which is just shy of our full year retention rate of 88%.

We enjoyed your retention rate of 86% for the quarter.

Which is just shy of our full year retention rate of 88%.

Speaker 5: and in line with our 2017 to 2020 average retention rate of 87 percent. We believe our retention rate...

And in line with our 2017 to 2020 average retention rate of 87%.

We believe our retention rates are market leading.

Speaker 5: These high retention rates are important because we suffer no downtime and have to invest less tenant improvement dollars into the state.

These high retention rates are important because we suffer no downtime and have to invest less tenant improvement dollars into the space.

Speaker 24: In Q4, our average PI for renewals was only $1.29 per square foot, and for the year averaged 95 cents per square foot.

In Q4, our average Ti for renewals with only $1 29 per square foot.

And for the year averaged 95 per square foot.

Speaker 5: No downtime and lower TI results in better cash flow growth.

No downtime and lower Ti results and better cash flow growth.

Speaker 5: These solid retention rates are evidence that our retail space is a great place for our neighbors to successfully operate their business.

These solid retention rates are evidence that our retail space is a great place for our neighbors to successfully operate their businesses.

Speaker 25: An important part of our internal growth story is redevelopment.

An important part of our internal growth story is redevelopment.

Speaker 5: During the quarter, we stabilized two ground up Alparsa developments, one at Plaza 23 in the Newark, New Jersey MSA, and one at Alameda Crossing in the Phoenix MSA.

During the quarter, we stabilized two ground up out parts of developments, one at 5% to 23 and in Newark, New Jersey, MSA and one at Alameda crossing in the Phoenix MSA.

Speaker 5: This additional GLA of 7,300 square feet is fully leased and the neighbors took possession of this space during the quarter.

If additional GLA of 7300 square feet is fully leased and the neighbors took possession of the space during the quarter.

Speaker 26: We have 17 additional redevelopment projects that we began during 2021.

We have 17 additional redevelopment project that we began during 2021.

Speaker 5: The total projected cost for these ground-up redevelopment projects is $45 million.

The total projected cost for these ground up redevelopment.

Redevelopment project with $45 million.

Speaker 5: We currently expect incremental underwritten yields on these projects to be between 10% and 12% on Weber.

We currently expect incremental underwritten yields on these projects to be between 10 and 12% Unlevered.

Speaker 27: Our pipeline currently includes 8 additional projects in 2022, which represents an additional $23 million of investment.

Our pipeline currently includes eight additional project in 2022.

Which represents an additional $23 million of investment.

Speaker 5: We expect this pipeline of redevelopment opportunities to grow throughout the year.

We expect this pipeline of redevelopment opportunity to grow throughout the year.

Speaker 5: For full year 2022, we expect to invest approximately $45 to $50 million in ground up and redevelopment opportunities.

For full year 2022, we expect to invest approximately $45 million to $50 million in ground up and redevelopment opportunity.

Speaker 5: In addition, we expect to spend $50 to $55 million on capital improvements, tenant improvements, and leasing commissions at our center.

In addition, we expect to spend $50 million to $55 million on capital improvements.

<unk> improvements and leasing commissions at our centers.

Speaker 28: The results that I just reviewed exhibit the strong operating environment that we currently enjoy and believe will continue to enjoy through 2022.

The results that I just reviewed exhibit strong operating environment that we currently enjoy and believe we'll continue to enjoy through 2022.

Speaker 5: I will now turn the call over to John for a discussion of our financial results, our recent capital markets activity, and our 2022 financial guidance. John ? Thank you, Devin.

I will now turn the call over to John for a discussion.

<unk> of our financial results, our recent capital markets activity and our 2022 financial guidance John .

Thank you Devin and good afternoon, everyone.

Speaker 12: Fourth quarter 2021, Nareed FFO increased 7.3% to $49.4 million, or $0.39 per diluted share.

Fourth quarter 2021, NAREIT <unk> increased seven 3% to $49 4 million or <unk> 39 per diluted share.

Speaker 12: fourth quarter core FFO increased 24.5% to $60.8 million or $0.47 per diluted share.

Fourth quarter core <unk> increased 24, 5% to $68 million or <unk> 47 per diluted share.

Speaker 12: The increase in both NAREIT and CORE FFO for the fourth quarter of 2021 was driven by increased revenue at our properties and improved collection.

The increase in both NAREIT and core <unk> for the fourth quarter of 2021 was driven by increased revenue at our properties and improved collections.

Speaker 12: further driving the increase was a reduction in interest expense versus the fourth quarter of 2020.

Further driving the increase was a reduction in interest expense versus the fourth quarter of 2020.

Speaker 29: We had a non-cash charge of $7.4 million for our earn-out liability in Q4 2021, impacting our NARIT FFO, and we expect an additional charge in the first quarter of 2022, totaling $1.8 million, to cover the final settlement of the earn-out in January 2022.

We had a noncash charge of $7 4 million for earn out liability in Q4, 2021 impacting our NAREIT SSO and we expect an additional charge in the first quarter of 2022 totaling $1 $8 million to cover the final settlement of the earn out in January 2022.

Speaker 30: Approximately 1.6 million operating partnership units were delivered in January , marking the end of the earn-out period.

Approximately $1 6 million operating partnership units were delivered in January marking the end of the earn out period.

Speaker 12: As we look at the fourth quarter, our general and administrative expenses were higher than other quarters primarily due to performance-based compensation on our short and long-term incentive programs realized in the quarter.

As we look at the fourth quarter, our general and administrative expenses were higher than other quarters, primarily due to performance based compensation on our short and long term incentive program is realized in the quarter.

Speaker 12: We anticipate our full year 2022 GNA to be in line with our full year 2021 GNA which was $48.8 million.

We anticipate our full year 2022, G&A to be in line with our full year, 2021, G&A, which was $48 $8 million.

Speaker 12: Also in the quarter, our capital expenditures were higher on a run rate basis than other quarters due to timing and increased tenant improvement dollars spent in the quarter driven by the high volume of leasing activity.

Also in the quarter, our capital expenditures were higher on a run rate basis than other quarters due to timing and increased tenant improvement dollars spent in the quarter driven by the high volume of leasing activity.

Speaker 12: Compared to 2020, our NARIT and Core FFO per share results were impacted by a 15% increase in our weighted average share count as a result of issuing 19.55 million shares during our July 2021 IPO.

Compared to 2020, our NAREIT and core <unk> per share results were impacted by a 15% increase in our weighted average share count as a result of issuing $19 five 5 million shares during our July 2021 IPO.

Speaker 12: For the full year, our core FFO per share of $2.19 exceeded the high end of our guidance of $2.14 to $2.18.

For the full year, our core <unk> per share of $2 19 exceeded.

We exceeded the high end of our guidance of $2 <unk> to $2 18.

Speaker 12: several things lined up for us during the quarter, which pushed our results above the top end of our guidance.

Several things lined up for us during the quarter, which pushed our results.

Above the top end of our guidance.

Speaker 31: We had a number of acquisitions in the pipeline that we were able to close before the end of the year. Our occupancy increased, exceeded expectations. Our neighbors began paying rent more quickly than anticipated and our prior period collections were higher than expected.

We had a number of acquisitions in the pipeline that we were able to close before the end of the year, our occupancy increased exceeded expectations. Our neighbors began paying rent more quickly than anticipated and our prior period collections were higher than expected.

Speaker 32: We still have a little over $3 million outstanding on payment plans with our neighbors. We will continue to be conservative in our estimates for collections at the midpoint of our guidance range for 2022, which I will get to shortly.

We still have a little over $3 million outstanding on payment plans with our neighbours, we will continue to be conservative interestingly for collections at the midpoint of our guidance range for 2022, which I will get to shortly.

Speaker 33: Our fourth quarter 2021 Same Center NOI improved to $88.8 million, up 15.2% from a year ago.

Our fourth quarter 2021, same center NOI improved to $88 $8 million.

Up 15, 2% from a year ago.

Speaker 34: This improvement was primarily driven by a 2.4% increase in average base rent per square foot, stronger collections compared to 2020, and out-of-period collections for the quarter of $2.3 million.

This improvement was primarily driven by a two 4% increase in average base rent per square foot stronger collections compared to 2020 and out of period collections for the quarter of $2 $3 million.

Speaker 35: When comparing our results to the quarter ended December 31st, 2009.

When comparing our results for the quarter ended December 31, 2019, our same center NOI increased three 9%. We believe this is a true indicator that we are experiencing growth in our same center portfolio above and beyond the COVID-19 recovery.

Speaker 12: our same center NOI increased 3.9 percent. We believe this is a true indicator that we are experiencing growth in our same center portfolio above and beyond the COVID recovery.

Speaker 12: As of December 31, 2021, we had approximately $604 million of total liquidity, comprised of $116 million of cash, cash equivalents and restricted cash, plus $489 million of borrowing capacity available on our $500 million credit fund.

As of December 31, 2021, we had approximately $604 million of total liquidity comprised of $116 million of cash cash equivalents and restricted cash plus $489 million of borrowing capacity available on our $500 million credit facility.

Speaker 36: As of December 31st, 2021, our net debt to adjusted EBITDAR was 5.6 times compared to 7.3 times at December 31st, 2021.

As of December 31, 2021, our net debt to adjusted EBITDAR was five six times compared to seven three times at December 31 2020.

Speaker 12: At December 31, 2021, our debt had a weighted average interest rate of 3.3% and a weighted average maturity of 5.2 years. Approximately 99% of our debt is fixed rate.

At December 31, 2021, our debt had a weighted average interest rate of three 3% and a weighted average maturity of five two years approximately 99% of our debt is fixed rate.

Speaker 12: Our debt ratios and maturities have improved as a result of our IPO in July and debut public debt offering that closed in the fourth quarter.

Our debt ratios and maturities have improved as a result of our IPO in July and debut public debt offering that closed in the fourth quarter.

Speaker 37: The $350 million 2.625% coupon 10-year notes significantly extended our debt maturity profile while also diversifying our capital.

The $350 million to six 5% coupon 10 year notes significantly extended our debt maturity profile, while also diversifying our capital sources.

Speaker 38: Given our growth plans and maturity profile, we believe we can become a serial issuer in this market.

Given our growth plans and maturity profile, we believe we can become a serial issuer in this market.

On February 10th we filed a shelf registration statement and a $250 million ATM equity offering program.

Speaker 39: On February 10th, we filed a shelf registration statement and a $250 million ATM equity offering program.

Speaker 12: Following our July IPO, this is the logical next step for us and allows us to efficiently access the capital markets as opportunities arise. We have no immediate plans to utilize the ATM program, but wanted to have this option available to us as we continue to evaluate market conditions and capital needs.

Following our July IPO. This is the logical next step for us and allows us to efficiently access to capital markets as opportunities arise. We have no immediate plans to utilize the ATM program, but wanted to have this option available to us as we continue to evaluate market conditions and capital needs.

Speaker 40: Yesterday, on February 10th, 2022, we issued our 2022 full year guidance in our earnings report.

Yesterday on February 10th 2022, we issued our 2022 full year guidance in our earnings release.

Speaker 12: For 2022, our same-center NOI growth guidance is between 3% and 4%. This is consistent with the growth we have delivered on a historical basis and what we believe we can continue to deliver going forward.

For 2022, our same center NOI growth guidance is between 3% and 4%. This is consistent with the growth we have delivered on a historical basis and what we believe we can continue to deliver going forward.

Speaker 12: Our NOI growth will be one of the core drivers for our core FFO growth. Additionally, we expect to see a reduction in interest expense due to less debt on our balance sheet.

Our NOI growth will be one of the core drivers for our core <unk> growth. Additionally, we expect to see a reduction in interest expense due to less debt on our balance sheet.

Speaker 12: For 2022, our core FFO guidance range is between $2.16 and $2.24. When compared to 2021, we expect total core FFO to increase by approximately 11% to $282 million using the midpoint of our guidance.

For 2022, our core <unk> guidance range is between $2 16, and $2 24.

When compared to 2021, we expect total core <unk> increased by approximately 11% to $282 million using the midpoint of our guidance.

Speaker 41: With that, I would like to turn the call back over to Jeff to discuss our recent portfolio activity, provide our 2022 acquisition guidance, and recap our long-term growth strategy.

With that I would like to turn the call back over to Jeff to discuss our recent portfolio activity provide our 2022 acquisition guidance and recap our long term growth strategy Jeff.

Thanks, John .

Speaker 42: Following our IPO in July of 2021 through December 31st of 2021, we acquired seven gross ranker centers and two out parcels for $267.4 million. This was at the high end of our guidance range.

Following our IPO in July of 2021 through December 31, 2021, we acquired seven grocery anchored centers and two out parcels for 267 $4 million. This was at the high end of our guidance range.

Speaker 4: So far, in 2022, we've acquired two additional grocery anchor shopping centers for $82.9 million and have an additional center under contract for $17.5 million.

So far in 2022, we've acquired two additional grocery anchored shopping centers for $82 $9 million and have an additional set of under contract for $17 5 million.

Speaker 4: Our 2022 acquisitions included Cascades Overlook in Arlington, Virginia, a suburb of Washington, D.C. This 151,000 square foot center is anchored by Harris Teeter, a Kroger banner.

Our 2022 acquisitions included Cascades overlook in Arlington, Virginia, a suburb of Washington D. C. This 151000 square foot center is anchored by Harris Teeter, a Kroger banner.

Speaker 43: and Oak Meadows Marketplace in Georgetown, Texas, which is an Austin suburb. The 79,000 square foot center is anchored by Randall's and Albertson's banner.

And.

Oak metals marketplace in Georgetown, Texas, which is in Austin suburb this.

79000 square foot center is anchored by Randalls and Albertsons banner.

Speaker 44: We believe the centers we have acquired since our IPL will meet or exceed our unlevered IRR target of 8%.

We believe the centers, we have acquired since our IPO, we will meet or exceed our unlevered IRR target of 8%.

Speaker 45: Our acquisition pipeline is healthy. For 2022, we are guiding to acquire between $300 and $400 million of assets, net of disposition activity.

Our acquisition pipeline is healthy for 2022, we are guiding to acquire between 300 and $400 million of assets net of disposition activity.

Speaker 4: As we have discussed in the past, we identified 5,800 grocery-anchored shopping centers in the United States that fit our strategy. These centers are all anchored by the number one or two grocer in their respective markets and meet our demographic requirements.

As we have discussed in the past, we identified 5800 grocery anchored shopping centers in the United States that fit our strategy. These centers are all anchored by the number one or two grocer in their respective markets and meet our demographic requirements.

Speaker 4: We are focused on the three-mile area around each center. We believe this strategy presents a wider and deeper pool of assets to choose from versus a strategy strictly focused on a limited number of markets.

We are focused on the three mile area around each center. We believe this strategy presents a wider and deeper pool of assets to choose from versus a strategy strictly focused on a limited number of markets to meet our stated goal of a $1 billion of net acquisitions by June of 2024, we need to acquire approximately 15 assets per year.

Speaker 4: To meet our stated goal of a billion dollars of net acquisitions by June of 2024, we need to acquire approximately 15 assets per year. This represents approximately 2% of our targeted shopping centers that trade each year. We are well on our way to meeting our billion dollar goal.

This represents approximately 2% of our targeted shopping centers that trade each year, we are well on our way to meeting our $1 billion goal.

To optimize our internal growth, we will continue to selectively recycle assets. These proceeds will be deployed into higher quality higher growth assets.

Speaker 4: To optimize our internal growth, we will continue to selectively recycle assets. These proceeds will be deployed into higher quality, higher growth assets.

Speaker 4: Since our IPO, we have disposed of 11 wholly-owned centers, two out parcels, and one land parcel, totaling approximately 1.1 million square feet for $91.7 million. This was slightly below the low end of the guidance range of $95 to $105 million, which we gave on our third quarter earnings call.

Since our IPO, we have disposed of 11 wholly owned centers to out parcels and one land parcel totaling approximately $1 1 million square feet for $91 $7 million. This was slightly below the low end of the guidance range of $95 million to $105 million, which we gave on our <unk>.

Third quarter earnings call.

Speaker 4: Now, before we get to the Q&A section, I would like to quickly recap our quarter.

Now before we get to the Q&A section I would like to quickly recap our quarter.

Speaker 46: The operating environment remains strong. We realize strong internal growth. We also realize strong external growth. Our differentiated strategy produced strong results for the quarter and has set high expectations for 2022.

The operating environment remains strong we realized strong internal growth.

We also realized strong external growth.

Our differentiated strategy produced strong results for the quarter and have set high expectations for 2022.

Speaker 4: With that, we'll begin the Q&A portion of our call. Operator? Thank you.

With that we will begin the Q&A portion of our call.

Operator.

Thank you.

And to maintain an efficient Q&A session. You may ask a question with an additional follow up if you will.

Speaker 1: you may ask a question with an additional follow-up. If you have additional questions, you're more than welcome to rejoin the queue. To ask a question, simply press star one on your telephone. To withdraw the question, press the hash key or the pound key. Please stand by while we compile the.

Have additional questions you're more than welcome to rejoin the queue.

To ask a question simply press star one on your telephone to withdraw that question Presta Husky or Japan, Keith Please standby, while we compile the Q&A roster.

Your first question comes from Rich Hill at Morgan Stanley . Your line is open.

Speaker 8: Hey guys, first of all, congrats on a really nice quarter. I wanted to talk through the guide. It is very strong on an absolute and relative basis compared to your peers.

Hey, guys first of all congrats on a really nice quarter.

I wanted to talk through the guide.

It is very strong on an absolute and relative basis compared to your peers.

Speaker 8: And, you know, I want to maybe just understand and unpack a little bit more if there's something differentiated about your portfolio. Many of your peers talked about bad debt being a headwind in 2022, and I think back to your portfolio already being above 2019 levels on a same story on a wide basis.

I wanted to maybe just understand and unpack a little bit more if theres something differentiated about your portfolio. Many.

Many of your peers talked about bad debt being a headwind in 2022.

I think back to your portfolio are already being above 2019 levels on a same store NOI basis. So I guess, that's a long way of saying is there something different about your portfolio do you not have as much bad debt or is this really about your portfolio, just holding up and bouncing back a little bit better than peers, which is leading to a guy that looks real.

Speaker 8: So I guess that's a long way of saying, is there something different about your portfolio? Do you not have as much bad debt? Or is this really about your portfolio just holding up and bouncing back a little bit better than peers, which is leading to a guy that looks really strong.

Strong.

Speaker 47: Rich, thanks for the for the question and being on today. You know, we, we, we do, as you know, we really do believe that our

Rich thanks for the question being on today.

We.

We do as you know, we really do believe that our.

Speaker 48: the format drives results, and we do think that our format of having the grocery store with the necessity-based goods

Format drives results and we do think that our format of having the grocery store with the necessity based goods does perform has performed well during the pandemic and we will continue to do.

Speaker 4: does perform, has performed well during the pandemic and will continue to do that going forward. So I would say that we are optimistic about the year, but we also, you know, we've taken a really hard look and we think these are achievable goals for us and we wouldn't have them there if we didn't believe that. So I would say that, you know, overall it is, you know, the format that we've got that I think is driving these results. But John , do you want to give our Devin a little more detail on that? Sure.

Do that going forward. So I would say that we are optimistic about the year.

But we also we've taken a really hard look and we think these are these are achievable goals for us and.

We wouldn't have there we didnt believe that so.

I would say that overall it is the format that we've got that I think is driving these results, but John do you want to give our Devon did a little more detail on that.

Sure Thanks, Jeff and thanks for the question rich so as we look at it the biggest component to the core <unk> growth is really the NOI growth and so our peers have talked about the <unk>.

Speaker 49: So as we look at it, the biggest component to the core for full growth is really the NOI growth. And so our peers have talked about the bad debt impact and ultimately because our impact in 21 was not as significant, as we go to 22, we've got a base of stability. So we've been communicating and our properties have been operating in a new world of post COVID world. And ultimately it's a combination of the organic growth that we're driving.

Bad debt impact and ultimately because our impact in 'twenty, one was not a significant.

As we go into 'twenty, two we've got a basis stability. So we've been communicating in our properties have been operating in the new World Post Covid World and then ultimately it is a combination of organic growth that we're driving as well as the acquisitions that we've been able to to make and that were projected to me.

Speaker 6: as well as the acquisitions that we've been able to make and that we're projected to make. And so just to get ahead of the question that I'm sure I'll be asked.

And so just to get ahead of the question that I'm sure I'll be asked the impact in the quarter specifically of out of period collections is it only is about $2 3 million.

Speaker 6: The impact on the quarter specifically of out-of-period collections is about 2.3 million.

Speaker 6: So that's the quarter that was, you know, kind of the bad debt reversal in the quarter. And as we look to the next year, we only have $3 million of payment plans outstanding left. And so as we looked at our guidance on the same store basis and on an FFO, we do anticipate collecting that and it is kind of, it is accounted for in the upper end of our guidance.

So thats the quarter that was kind.

The bad debt reversal.

In the quarter and as we look to the next year, we only have $3 million of payment plans outstanding left and so as we looked at our guidance on a same store basis and so we do anticipate collecting that and it is kind of it is accounted for in the upper end of our guidance.

Speaker 50: Got it. Thank you. And if I may, just one more question. I know you guys focus on levered IRRs when you're acquiring properties. So forgive a sell-side question here, but could you maybe give a little bit of guidance on what the cap rates for your acquisitions would be in 2022? Sure. Sure.

Got it thank you.

If I may just one more question I know you guys focus on Unlevered IRR is when youre acquiring properties. So forgive a sell side question here, but could you maybe give a little bit of.

Guidance on what the cap rates for your acquisitions would be in 2022.

Sure.

Go ahead, yes go ahead, Jeff.

Speaker 51: Hey, Rich. Thanks for being on the call this morning. Where we are acquiring assets, Rich, today in the market is between a low of 5 and 3 quarters and up to 6 and 3 quarters. So it's in that range that we are acquiring assets. And you'll note that for full year 21, the average, the weighted average cap.

Hey, rich.

For being on the call this morning.

Where we are acquiring assets rich today in the market is between a low of five and three quarters.

And up to six and three quarters. So it's in that range.

That we are acquiring assets and Youll note that for full year 'twenty, one, but the average the weighted average cap ex foreign acquisitions and in the in the first quarter.

Speaker 52: 6.4 on acquisitions, and in the first quarter, the cap rate was almost 6, just under 6.

Cap rate was.

Almost six just under six so it's in that range and Thats, where we expect it to stay on a go forward.

Speaker 53: So it's in that range and that's where we expect it to stay on a go forward.

Speaker 8: Okay, so somewhere between six and six four for 2022, maybe as tight as 575. Okay, I got it. Thank you guys. Congrats on a good voter again.

Okay, so somewhere between six and six four.

For 2022, maybe maybe its tightest 575, okay I got it. Thank you guys. Congrats on a good quarter again.

Thanks, Craig.

Speaker 1: Your next question comes from Caitlin Burrows with Goldman Sachs. Your question...

Your next question comes from Caitlin Burrows with Goldman Sachs. Your question. Please.

Speaker 54: Hi, good afternoon, everyone. Maybe one on occupancy, you guys had some meaningful increases in occupancy in the third quarter and again in the fourth quarter. Devin, I think you mentioned that you think inline occupancy could get to 95% increasing occupancy, 70 basis points overall. So, I was just wondering if you could give some more detail on your expectations for 2022 and given the strong operating environment, how much additional increase is realistic?

Okay.

Hi, Good afternoon, everyone. Maybe one on occupancy you guys had some meaningful increases in occupancy in the third quarter and again in the fourth quarter. Devin I think you mentioned that you think inline occupancy could get to 95% increasing occupancy 70 basis point overall.

Wondering if you could give some more detail on your expectations for 2022, and given the challenging operating environment, how much additional increases realistic near term.

Yes.

Speaker 5: Thanks, Caitlin. As you saw both in the fourth quarter and through full year 21, we were successful in increasing our occupancy to the level that we're currently reporting. We guided on that occupancy increase to occur over the next two years.

Thanks Caitlin.

So both in the fourth quarter and through full year 'twenty. One we were successful in increasing our occupancy.

To the left that we're currently reporting.

We guided on that occupancy increase to occur over the next two years.

Speaker 5: So we believe that we will get that in-line occupancy up to 95% over the next 24 months.

So we believe that we will get that in line occupancy up to 95% over the next 24 months.

Speaker 55: And how much of that we're going to get in 22 is hard to know. But based on how strong the pipeline is currently, we will probably get a meaningful component of that in calendar year 22.

And how much of that we're going to get in 'twenty two.

Is it is it's hard to know, but based on how strong the pipeline is currently.

We will probably get a meaningful component of that in calendar year 'twenty two.

Speaker 56: Got it, okay. And then maybe just one on development. You guys have a number of development and redevelopment projects and it looks like a few had either the stabilization quarter pushed out a little or a little change in cost. So, just wondering if you could give some detail or background on the trends you're seeing in time to complete projects and also on the cost side and the impact that has on PICO.

Got it Okay and then maybe just one on development you guys have a number of development and redevelopment projects and it looks like a few had either this stabilization quarter pushed out a little or a little change in costs. So just wondering if you could give some detail or background on the trends youre seeing in time to complete projects.

Also on the cost side and the impact that has on pickup.

Sure.

Speaker 57: So, on our redevelopment, Caitlin, you know that they are smaller redevelopments and therefore they have shorter cycle times. And so, that makes it a little bit easier for us to anticipate when they're going to come online.

So on a redevelopment Kate.

<unk> you know that they are smaller redevelopments and Eric for they have shorter cycle times, and so that makes that a little bit easier for us to anticipate when theyre going to come online.

Speaker 58: We have seen increases in costs, and we have included those increases in costs in our budgeted numbers, and the returns that we've articulated include the increases that we're seeing on costs.

We have seen increases in costs and we have included those increases in costs in our budgeted numbers and the returns that we've articulated include the increases that we're seeing on costs, where we're seeing delays in the permitting process and then in some instances in terms of the availability.

Speaker 59: Where we're seeing delays is in the permitting process and then in some instances in terms of the availability of the necessary goods. But all of that is built into our expectations and therefore the numbers that we gave in our earnings release we're confident we will deliver on and we continue to be very happy with the kind of returns we're able to generate on this activity.

<unk>.

The the necessary goods, but all of that is built into our expectations and therefore the numbers that we gave in our earnings release, we're confident we will deliver on and we continue to be very happy with the kind of returns we're able to generate on this activity.

Speaker 4: And Kaitlin, we continue to see really strong demand for these particular outlots, so

And we are seeing we continue to see really strong demand.

For these particular.

So we are I would say we are optimistic that we will continue to to have that strong demand from the retailers looking looking to expand into these locations. So we're not seeing any anything on the leasing side. There is some stuff on the permitting side as you pointed out.

Speaker 4: You know, we are, I would say we're optimistic that we will continue to have that strong demand from the retailers looking to expand into these locations. So we're, and we're not seeing any.

Speaker 60: anything on the leasing side, you know, there is some stuff on the permitting side, and as you point out, the cost side, but in terms of tenant demand, it is extremely high for these locations, and they do, you know, they do have drive-thrus, and they do have the conveniences that a lot of the retailers are focused on right now. Yeah, that makes sense. Thank you.

The cost side, but but in terms of.

Tenant demand.

Is extremely high for these locations and they do they do have drive throughs and they do have the conveniences that.

A lot of the retailers are focused on right now.

Yes that makes sense. Thank you.

Yeah.

Our next question comes from Craig Schmidt with Bank of America. Please go ahead.

Speaker 61: Yes, thank you. I guess, you know, throughout the fourth quarter earnings, we've been hearing about a transaction market that's getting much more competitive and seeing cap, compressing cap rates. I'm just wondering, given your, you know, different approach to servicing your acquisitions, are you seeing that same challenge, or are you able to circumvent it?

Yes. Thank you.

I guess throughout the fourth quarter earnings we've been hearing about a transaction market that's getting much more competitive.

<unk> seen <unk>.

Compressing cap rates I'm, just wondering given yours.

Different approach.

Two servicing your acquisitions are you seeing that.

The same challenge.

Are you able to circumvent that.

Okay.

Speaker 4: Craig, it's a great question, and the answer is, yeah, we are seeing more competition for the properties that we're buying than we have historically. We are starting to see, we think, a fairly significant increase in volume of product that's coming onto the market. It's early days, but it does look like we are starting to see a lot more product on the market.

Great. That's a great question and the answer is yes. We are we are seeing more competition.

For our for the properties that we're buying than we have historically.

We are starting to see we think a fairly significant increase in volume.

Product that's coming onto the market. It's early days, but it does look like we are starting to see a lot more product on the market.

Speaker 62: The major competitions coming on the portfolio side, as you know, I mean, there's some really aggressive pricing happening on the portfolio side on the individual asset, you know, which is what we're buying, you know, in that, you know,

The major competitions coming out on the portfolio side as you know.

There is some really aggressive pricing happening on the portfolio side on the individual asset where we are.

Which is what we're buying.

That.

Speaker 4: smaller bite size, we are, again, we are seeing increased competition, but in terms of dramatic pricing changes, no, certainly not what we're seeing on the portfolio side. I think there's been probably 50 basis points of compression in our markets.

Smaller size.

Sort of.

All are bite size.

We are again, we are seeing increased competition, but in terms of dramatic pricing changes no certainly not what we're seeing on both.

On the portfolio side.

There has been.

Probably 50 basis points of compression.

In our markets.

Speaker 63: $25 to $50, and we think that will continue. As we said earlier with Rich's question, we are seeing that $5.75 to $6.25 as the range on the cap rates, but again, we continue to selectively find the assets where we can get that 8% on levered IRR, and that part we continue to be optimistic about.

5% to 50, and we think that will continue.

We we as we said earlier with Richard's question.

We're seeing that five and three quarters to six and a quarter as the range on the cap rates.

But again, we continue to selectively find the assets, where we can get that 8% Unlevered IRR.

That part.

We.

Continue to be optimistic about.

Speaker 61: Great. And then just as a follow-up, store closings were unusually low at 21, and they have remained so, heading into 22. What are your expectations for store closings the rest of the year, and what is your watch?

Great and then just as a follow up.

Store closings were unusually low in 'twenty, one and they have remained so heading into 'twenty two.

What are your expectations for store closings and the rest of the year and what is your watch list look like.

Yeah.

Speaker 64: Um, so the, um, uh,

So the.

Yes.

Speaker 65: We're, we are, I would say we're optimistic this year about store closures. We don't, we don't think there's gonna be a spike. We're not hearing anything that would give us a spike.

We're we are I would say we are optimistic this year about store closures, we don't we.

We don't think theres going to be a spike we're not hearing anything that would give us a spike.

Speaker 66: in store closures in the second half of this year. You know, we did have, we've had a lot of fallout over the last couple of years.

In store closures in the second half of this year.

We did have we've had a lot of fallout over the last couple of years.

Speaker 4: And we think a lot of our retailers are on pretty stable ground right now and the ones that we have been most concerned about have stabilized to a big degree. We are fortunate in not having...

We think a lot of our retailers are pretty stable ground right now and the ones that we were had been most concerned about.

Stabilized to a big degree we are fortunate not having.

Speaker 67: much exposure to that second anchor and our grocers who make up 34% of our income, they're doing really well. They're working through the inflation and slide chain issues in a way that we think is really positive and certainly are seeing really good results on the ground in terms of their sales.

Much exposure to.

Second anchor.

And our grocers, who are who make up 34% of our income.

They're doing really well and they.

They are working through the inflation and supply chain issues in a way that we think is really positive and certainly are seeing.

Really good.

<unk> on the ground in terms of.

There their sales.

Speaker 68: The other areas, the non-grocery, non-necessity-based...

The other areas.

<unk>.

Non non grocery now necessity based.

Speaker 4: You're always watching those and how the consumer is going to be affected by that.

Youre always watching those and how the consumers going to be affected by that.

Speaker 5: Jeff, the only thing I would add to that is, Craig, on our watch list, you know, the largest tenants on our watch list are in fitness.

Jeff the only the only thing I would add to that is Craig on our watch list.

Largest tenants on our watch list are in fitness.

Speaker 69: pet supplies, office supplies, those categories. But the top five tenants on our watch list represent less than 2.5% of our total ABR. So it's not a meaningful exposure. And

Pet supplies office supplies.

Those category.

But the top five tenants on our watch list represent less than two 5% of our total ADR. So it's not a meaningful exposure and.

Speaker 70: As we come out of the pandemic, a lot of these retailers, businesses are improving, particularly fitness.

As we come out of the pandemic.

A lot of the retailers businesses are improving particularly fitness.

Speaker 71: So, again, it's something we watch closely, but the beauty of our business model is we are highly diversified in terms of our exposure to tenants, and therefore, the watch list exposure is well diversified.

So again, it's something we watch closely but the beauty of our business model is we are highly diversified in terms of our exposure to tenants and therefore.

The watch list exposure is well diversified.

Okay.

Thank you.

Speaker 72: Thank you. Our next question comes from Juan Sanabria with BMO Capital Markets. Your line is open. Hi. Thanks for the time.

Thank you. Our next question comes from <unk> <unk> with BMO.

BMO capital markets. Your line is open.

Hi, Thanks for the time.

Just.

Big Picture question for me.

Speaker 73: Do you have a sense of the latest trends across?

Do you have a census of the latest trends across your portfolio from a consumer perspective, just given some of the inflationary pressures we have.

Speaker 74: your portfolio from a consumer perspective, just given some of the inflationary pressures. We had a headline consumer confidence today, take a ding. People are clearly feeling a little worse off given the rise in prices, but just curious what you guys are seeing on the ground from your portfolio.

Headline consumer confidence today ticket than people are currently feeling a little more soft given the rise in prices, but just curious what you guys are seeing on the ground.

Premier Premier.

From your pockets of consumers.

Speaker 4: It's a great question, and we are watching it in real time. We continue to see strong use of our centers, and if you look at the stats, we have more customers visiting our centers today than 19, and that continues happening in real time, so we are optimistic about that.

It's a great question and we are.

Watching it in real time.

We continue to see.

Strong use of our centers and if you look at the.

The stats, we have more customers visiting our centers today, the 19th so that part and that continues.

And happening in real time, so we're optimistic about that.

Speaker 75: and looking at it sort of closely for any kind of potential changes in that. But certainly you're hearing a lot about inflation and it is affecting specific retailers more than others.

And looking at it sort of closely.

Any kind of potential changes in that.

The.

But.

Certainly youre hearing a lot about inflation.

And it is affecting specific retailers more than others.

And.

Speaker 4: But I would say overall, our view of the consumer is that, and again, you know, we're in the Sesame part of the business, so we're not as variable to some of retail as others are. In our space, you know, we would say that...

But I would say overall, our view of the consumer is that and again.

We're in the necessity part of the business. So we're not as variable too.

Some of the some.

Some of retail as others are.

In our in our space.

We would say that.

Speaker 4: We're very positive about the environment that we're in right now. And we're not seeing the consumer really pulling back, particularly on the necessity side. If anything, we're seeing really solid growth and our retailers are seeing solid growth as well. I don't know, Devin, if you have any other thoughts on that, but that's been our.

We're very positive about the environment that we're in right now.

And we're not seeing the consumer really pulling back, particularly on the necessity side if anything.

There, we're seeing really solid growth in are our retailers are seeing solid growth.

As well I don't know Devin if you have any other thoughts on that but that's been on that.

Speaker 5: I think you nailed it, Jeff. I mean, the thing that protects us to a degree is the fact that 73% of our rents are coming from necessity-based goods, necessity.

I think you nailed it Jeff I mean, the thing that protects us two and to a degree is the fact that 73% of our rents are coming from necessity based goods.

Necessity retailers and obviously the consumer had less discretion.

Speaker 5: And obviously, the consumer has less discretion in terms of necessity goods than they do in non-necessity goods. And so, we have not seen the current environment.

In terms of necessity goods than they do in non necessity goods and so.

We have not seen the current environment.

Speaker 76: yet become a meaningful headwind, but again, it's something that we're concerned about and are watching closely.

Yet he come a meaningful headwind.

But again, it's something that we're concerned about and are watching closely.

Okay.

Speaker 10: Thanks, and then just a follow-up on the balance sheet.

Thanks, and then just a follow up on the balance sheet.

Speaker 10: Recognizing the ATM is maybe more just best practice and gives you optionality, but any rethinking of leverage targets to maybe keep it lower for longer and use your strong cost of capital, you guys have performed well since the IPO.

Recognizing the ATM.

Maybe more just best practices and gives you optionality, but any.

Rethinking of leverage targets to maybe keep that lower for longer.

Use your strong cost of capital you guys have performed well since the IPO.

Speaker 10: to kind of match on an equity perspective rather than using up the dry powder over the, with the billion dollar target for acquisitions.

To kind of match fund and equity perspective, rather than using up that dry powder.

$1 billion target for acquisitions.

Speaker 77: We continue to be committed to the fact that if we can find projects that we can get an 8% unlevered IRR on a consistent basis with our strict underwriting criteria, and we're buying the number one or two grosser in a market that has really strong potential.

Yes.

We continue to be committed to the fact that if we can find projects that we can get a 8% unlevered IRR on a consistent basis with our strict underwriting criteria and we're buying the number one or two grocer in the market.

That has really strong potential.

Speaker 78: If we can do that, we're going to continue on our acquisition strategy. The market will drive us to reduce that, but again, as we made the big jump at the IPO, we are committed to keeping our balance sheet at investment grade. Could we get up to the low sixes in terms of debt to EBITDA? Yes.

So.

If we can do that we're going to continue on our acquisition.

Our strategy.

The market will drive us to reduce that.

We will but again we are.

As we've made the big jump on the at the IPO, we are committed to keeping our balance sheet.

At investment grade.

Could we get up to the low sixes in terms of debt to EBITDA, yes.

Speaker 79: that's a possibility that the market will drive us to.

That is that's a possibility.

That we will that the market will drive us to.

But the so.

Speaker 80: That's our strategy. We continue to believe there are strong opportunities to buy selectively. And at that pace of 350 million, we're at a very, you know,

That's our that's our strategy. We continue to believe there are strong opportunities to buy selectively.

And at that pace of $350 million were not.

We're at a very.

Speaker 81: cadenced acquisition pace that's not putting pressure on us to get money out, but giving us the opportunity to get the right amount out. And we'll stay disciplined on it, but if we're getting 8% on levered IRRs with our criteria for the grocery, we think that's going to give us really strong returns and be able to outpace our peers, we hope, in terms of results.

Cadenced.

Acquisition pace.

That's not putting pressure on us to get money out, but giving us the opportunity.

To get the right amount out and we will stay disciplined on it and that will.

But if we're getting 8% unlevered IRR with the with our criteria for the grocery we think that's a really strong.

I'm going to give us really strong returns and be able to outpace our peers. We hope in terms of result.

Thank you.

Thanks.

Speaker 1: Your next question comes from Hendelson, just with Missoula, your line.

Your next question comes from Henderson Juste with Mizuho. Your line is open.

Speaker 82: Hey, good afternoon, I suppose. First question.

Hey, good good afternoon.

First question.

Speaker 83: First question is on the lease price. I know they can be lumpy, especially on the new side. But with that in mind, I guess, can you discuss the jump in new lease rates in the fourth quarter? Is that more an anomaly, maybe perhaps due to mix? And then how would you assess the near term outlook for spreads if you look at your expiring rents here over the next year or two versus market rents?

First question is on the leasing side I.

I know they can be lumpy, especially on the new side.

But with that in mind I guess can you discuss the jump in new lease rates in the fourth quarter is that more an anomaly may be perhaps due to mix and then how would you assess the near term outlook for spreads. If you look at your expiring rents here over the next year versus market rent.

Speaker 84: Yeah, Hendel, if you look at our leasing spreads over time, and you take the pandemic year of 2020 out of the picture, and you go back to 2017 and look at 2017, 2018, 2019, and 2021,

Yes, and Allen if you look at our leasing spreads over time and you take the pandemic year of 2020 out of the picture and you go back to 2017 and look at 2017, 2018, 2019 and 2021, the average re leasing spread for US was <unk> 14.

Speaker 5: The average new leasing spread for us was 14.9%.

9%.

Speaker 5: And so, you know, the metric that we put up in 2021 of 15.7 is in line with what we've been able to do historically.

So the metric that we put up in 2021 at $15 seven.

It is in line with what we've been able to do historically.

Speaker 5: So, we don't tend to see the volatility in leasing spread. I mean, if you look at that four-year window, you know, the low was 13.3 and 19 and the high was 15.9 and 17 with an average of 14.9.

So we don't we don't tend to see the volatility in leasing spreads I mean.

If you look at that four year window, the LOE with 13, 3% and 19.

And the high was 15, 9% and 17 with an average of $14 nine.

Speaker 85: That's helpful, Devin. I suppose that's perhaps more due to having less big box space in the mix? Is that part of the consensus? Yes. I mean, again, it's no hand out. One of the things that, you know, we think really differentiates us is the fact that our average center is 115,000 square feet, and that extra gross or our average tenant is less than 2,500 square feet, and we have less exposure to the B box.

That's helpful. David I suppose.

Perhaps more due to having less big box space and the mix is that part of the year.

I mean again it no handout one of the things that we think really differentiates US is the fact that our average center is 115000 square feet and that X. The grocer. Our average tenant is less than 2500 square feet and we have less exposure to the B box.

Speaker 5: retailer, and that's one of the reasons why there's less volatility in our leasing spreads than there may be in others.

Retailer.

And that's one of the reasons why there is less volatility in our leasing spread then there may be in others.

Speaker 86: Fair, got it, got it. I think I heard, maybe it was John who mentioned this in his comments, that TI dollars for leasing in the fourth quarter were higher. Can you talk about that a bit more? Was that a bit of an anomaly, something to do with some specific space that might have been, I don't know, for some reason perhaps more difficult to lease? And how we should think about those, that level of spend into 2022, thanks.

Got it got it I think I heard maybe you as John mentioned in his comments that.

Ti dollars.

For leasing in the fourth quarter were higher can you talk about that a bit more was that a bit of an anomaly something to do with some specific space that might have been I don't know if for some reason, perhaps more difficult to lease and how we should think about those.

That level of spend into.

2022.

Sure.

Yeah. So.

Speaker 87: Yeah, so Hendo, you did hear that. So in the fourth quarter, they were higher dollars. And I wouldn't say it was any space in particular, absolutely.

You did hear here that so in the fourth quarter, they were higher dollars and I wouldn't say it was any space in particular, absolutely the kind of cost per space does vary by the Houston the size, but I would say in terms of the timing. It was higher when you look at the quarter individually on both the Ti and the capital side that just the capital improvements if you.

Speaker 6: kind of cost per space does vary by the use and the size.

Speaker 6: But I would say in terms of the timing, it was higher when you look at the quarter individually on both the TI and the capital side, just the capital improvements. If you look at the supplement, you know, almost two-thirds of our capital improvements were spent in the fourth quarter.

Looking at the supplement that almost two thirds of our capital improvements were spent in the fourth quarter.

Speaker 6: So TI is really a function of we've had increased leasing volumes. And I would say that that is, um, you know, that will carry into 2022. I believe it was in Devin's remarks. We, um, we provided some.

So ti is really a function of we've had increase leasing volumes and I would say that that is.

That will carry into 2022 and leaders in Kevin's remarks, we.

You provided some comments that it would be approximately $50 million to $55 million for that lump sum for the full year is what we're expecting and that would be.

Speaker 6: comments that it would be approximately $50 to $55 million for that lump sum for the full year is what we're expecting. And that would be CI, TI, as well as losing commission.

Ti as well as leasing commissions.

Speaker 88: Got it. Got it. Very helpful. And then if I could just one follow up on an earlier comment, I think it was Craig was asking about redevelopment. I know your project is a bit more bite-sized, but I guess I'm curious how you're thinking about the sizing of the overall pipeline here. Obviously, cap rates are compressing. There's strong demand for space.

Got it got it very helpful. And then if I could just one follow up on an earlier comment I think it was Craig was asking about redevelopment.

I know your practice is a bit more bite size, but I guess I'm curious, how you're thinking about the sizing of the overall pipeline here, obviously cap rates are compressing the strong demand for space I guess, how much of a capacity or maybe a desire to make this a more meaningful contributor to earnings I know you are adding a few more projects this year, but.

Speaker 11: How much of a capacity or maybe a desire to make this a more meaningful contributor to earnings? I know you're adding a few more projects this year, but not moving the needle too dramatically, so I guess I'm curious, in light of what's going on around it, why not?

Moving to needle too dramatically. So I guess I'm curious in light of what's going on around why not.

Speaker 4: And Dale, it's a great question, and the answer is we'd do more if we could. We are working really hard to build that up. We have a really disciplined view of what we want to do on the development side, and it's primarily single-tenant and small multi-tenant spaces.

Expanded more.

And it's a great. It's a great question and the answer is we do more if we could.

We are working really hard to build that up we have a really disciplined.

<unk>, what we want to do on the development side, and it's primarily single tenant and small multi tenant spaces.

Speaker 89: adjacent to our to our centers and then some of the teardown and rebuilds we do for the the grocers That we get good economics on if we could do a bigger volume we would we just don't you know given the the the the timing it takes to get these up and running and the You know the volume they're in you know, they're a million to three million kind of bites You you know

Adjacent to our to our centers and then some of the teardown of rebuilds, we do for the grocers.

We get good economic side, if we could do a bigger volume we would.

Don't given the.

The timing it takes to get these up and running and the.

The volume there in the 1 million to $3 million kind of bites.

You just.

Speaker 4: It just takes a lot of time and effort to get those in, and that's why we do it. But at the kind of returns that we're getting, you know, in that nine to ten,

It just takes a lot of it takes a lot of time and effort to get those in and that's why we do it but at the kind of returns that we're getting.

And that nine to 10.

Speaker 90: return on that investment, it is a great vehicle and if we could get it bigger, we would. We will continue to work on ways to do that, but for the foreseeable future, I think looking at it as about a $50 million a year business, I think that is a good way of looking at it.

The return on that investment it's a really.

It is a great vehicle and if we could get a bigger we would and we will continue to work on ways to do that but for the foreseeable future I think looking at it as about a 50 $50 million.

A year business I think thats, a good way of looking at.

That's great color and good luck to the Bengals.

Speaker 91: Yeah, good. Hootay. Hootay. Thank you.

Yes.

Good day.

Thank you.

Yes.

Speaker 1: Our next question comes from Mike Mueller with JPMorgan, please go ahead.

Our next question comes from Mike Mueller with Jpmorgan. Please go ahead.

Speaker 92: Yeah, hi. So 47 cents in the fourth quarter, if we back out the couple of cents of prior period, you're at 45, annualizes to about 180.

Yes, hi.

So <unk> 47 in the fourth quarter, if we back out the couple of cents of prior period, you're at 45 annualized is still about 180.

Speaker 93: The, I guess, you know, the average annual, the average quarterly number to get 220 is about 55 cents. Can you help us bridge the gap in terms of the ramp from 45 to that average of 55 or, you know, the higher at the end of the year?

I guess the average annual average quarterly number to get to 20 is about 55.

Can you help us bridge the gap in terms of the ramp from 45 to that average of 55% or.

The higher at the end of the year.

Yes, because it seems like you've got a couple of cents from or a few cents from core growth and is the rest just acquisitions.

Speaker 8: Because it seems like you get a couple of cents from or a few cents from core growth and if the rest just acquisitions.

Speaker 6: So, hey, Mike, thanks for the question. On the quarter, the $0.47, one thing I would say is that, yes, there was the prior period collections, but we did have higher expenses going through, that goes through that NOI number because of the corporate, kind of what we call corporate property operating. We mentioned that on the G&A side that we had higher performance.

So hey, Mike Thanks for the question.

On the quarter, the 47, and one thing I would say is that yes. There was the prior carrier collections, but we did have higher expenses going through that goes through that NOI number because of the corporate kind of what we call corporate property operating we mentioned that on the G&A side that we had higher performance <unk>.

Speaker 6: competition and that also is true for those that run our properties because they had an amazing year as well. So I think those two kind of neutralize, they kind of offset each other.

Nation and that also is true for those that run our properties because they had an amazing year as well. So I think those two kind of neutralize they kind of offset each other and then so when you take that you add in the same center growth the acquisitions that we made in 2021 and then the net acquisitions that we are looking at for two.

Speaker 94: And then, so when you take that, you add in the same center growth, the acquisitions that we made in 2021 and then the net acquisitions that we are looking at for 2022.

'twenty two.

Speaker 95: It's really, when you look at the jump, the core is at NOI. I also, in my prepared remarks, I have mentioned that on a cost level, GNA actually will be pretty constant. It'll be in line at about that number.

It's really when you look at the jump.

The core is that NOI I also in my prepared remarks, I mentioned that.

On a cost level G&A actually it will be pretty pretty constant will be in line at about that number.

Speaker 96: And then interest will be a little less than it was in 2021 because of the lower debt load.

And then interest will be a little less than it was in 2021 because of the lower debt load.

Speaker 97: Got it. Okay. And then just thinking about your escalators, can you talk about what you were getting on 2021 leases in terms of bumps versus the in place for the portfolio?

Got it Okay and then.

Just thinking about your escalators can you talk about what you were getting on 2021 leases in terms of bumps versus the in place for the portfolio.

Okay.

Certainly not.

Yes.

Speaker 98: John , go ahead. I wasn't sure if Mike's question, if he was asking about what the built-in rent CAGR is on new leases. Was that your question, Mike? Yeah, yeah. Basically, you know, what's your average in place today? And in terms of the 2021 lease signings, how did those bumps on the new leases compare to what's in place?

John go ahead.

Sure. It's Mike question, if he was asking about what the built in rent CAGR is on new leases was that your question.

Yes, basically whats your average in place today and in terms of the 2021 lease signings how did those bumps on new leases compared to what's in place.

Speaker 99: Sean, go ahead. Sure. Okay. Yeah, I'll go ahead and take that. So, you know, we continue to...

Sean go ahead sure. Okay, Yes, I'll go ahead and take that so we continue to.

Speaker 100: Our new leasing and our renewal leasing, we continue to push and add, you know, embedded rent bumps that I would say are in the 2 to 2.5% range. I would say in the embedded base in the portfolio today, that comes through in NOI at about 60 to 70 basis points. And again, that's because the 2% is primarily on our inline neighbors. And then when you consider that's about half.

Our new leasing and renewal leasing we continue to push and add embedded rent bumps that I wouldn't say are in the two to two 5% range I would say in the embedded base in the portfolio today that comes through in NOI at about 60 to 70 basis points and again, that's because the the 2% is primary.

<unk> on our in line Nabors and then when you consider that's about half of our rent that would be a 100 basis points, but then it's in our portfolio.

Speaker 101: That would be 100 basis points, but then it's.

Speaker 6: you know, in our portfolio, it weighs to about, you know, 70 basis points. Got it.

Rates to about 70 basis points.

Got it okay that was it thank you.

Great. Thanks, Mike.

Our next question comes from Tammi <unk> with Wells Fargo Securities. Your line is open.

Speaker 1: comes from Tammy Fick with Wells Fargo Securities. Your line is open.

Great. Thank you.

Speaker 14: Great, thank you. Just a question on guidance. I'm just wondering if you can maybe help us and you answered this a little bit just a moment ago about the 70 basis points of contractual bonds embedded in the portfolio, but you know, what are the other components of 2022 same-store NOI growth guidance to just maybe help us frame that up beyond the 70 basis points from the

Quick question on guidance and I'm, just wondering if you can maybe help us.

This a little bit just a moment ago about the 70 basis points.

Contractual bumps embedded in our portfolio, but.

What are the other components.

2022 same store NOI growth.

Guidance, just maybe help us frame that up beyond the 70 basis points from.

The rent pumps. Thank you.

Speaker 12: Sure. I'll go ahead and take that one. Thanks, Tammy. So, in our 3 to 4% things for NOI guidance, I did just mention that the rent bumps piece, we would say is, you know, 60 to 70 basis points from the embedded portfolio. I would say new leasing spreads are, you know, and again, this is for 22, 70 to 80 basis points.

Sure I'll go ahead and take that one thank you Tony.

So in our 3% to 4% same store NOI guidance I did just mention that the rent bumps piece. We would say is 60 to 70 basis points from the embedded portfolio I would say new leasing spreads are and again this is for 'twenty two.

70 to 80 basis points I would also say that redevelopment of 70 to 80 basis points.

Speaker 102: I would also say that redevelopment is 70-80 basis points. That's the out-parcel projects that we've been discussing previously. The big lift is in occupancy. You know, we, you know, have meaningfully increased occupancy and that will continue to carry income into 2022 as well as our projections. And so that's 200 to 250 basis points of our growth.

The out parcel projects that we've been discussing previously the big lift in occupancy we have meaningfully increased occupancy and that will continue to carry income into 2022 as well as our projections and so that's 200 to 250 basis points.

Our growth in.

Speaker 103: And then the math is actually similar to what it is that we have about, you know, call it 80 basis points assumed of a loss in same-center related to bad debt. So in the 2022 year, we are anticipating that our bad debt will return to historical levels.

And then the math is actually similar to what it is that we have about call. It 80 basis points assumed as a loss in same center NOI related to bad debt.

So in the in the 2022 year, we are anticipating that our bad debt will return to historical levels, which is between 60 and 80 basis points of revenue and that range is where it's giving us 3% to 4%.

Speaker 104: and 80 basis points of revenue and and that range you know is what's giving us the three to four

Speaker 105: perfect. That's really helpful. And then I appreciate the comments around the consistency in releasing spread. But given, you know, currently high occupancy and expectations for continued growth there. I mean, should we be thinking about

Perfect that's very helpful.

And then I appreciate the comments around the consistency and the leasing spread.

But given currently high occupancy and expectations for continued growth there I mean should we be thinking about.

Speaker 106: bigger releasing spreads going forward? If you can sustain that occupancy level, or do you feel like you're putting tenants up against kind of higher occupancy costs?

Bigger releasing spread going forward.

Can sustain that that occupancy level or do you feel like you're putting up.

Yes.

Kind of higher occupancy cost at that point.

Kevin It's a great question and it's one that we.

Speaker 107: Tim, it's a great question and it's one that we, you know, you're balancing as we get to the, you know, to improve the occupancy and your levels where you have more pricing power that you have, that we've had historically. Can we, can we realize that in higher rent spreads?

Youre balancing as we get to the.

The occupancy and Youre at levels, where you have more pricing power that you have that we've had historically.

Can we can we realize that in higher rent spreads.

Speaker 108: The answer is we have not assumed that in our assumptions, but we do think that there is that opportunity.

The answer is we have not assumed that in our assumptions, but we do think that there is that opportunity.

Sure.

Speaker 4: And we're going to be, you know, we're going to be testing that this year to see if we can do that. That's, I think it's early in terms of whether we're going to be able to go above those numbers on a go-forward basis, but we are, you know, we are in about as good of an operating environment as we've ever been, so we're hopeful that we can push those a bit.

And we're going to be we're going to be testing that this year to see if we can.

We can do that.

That's.

I'd say, it's early in terms of whether we're going to be able to go above those numbers on a go forward basis, but we are we are in about as good of an operating environment as we've ever been so we're hopeful that we can we can push those a bit.

Speaker 12: And Jeff, just to add on to that, Timmy, the second part of your question was whether, you know, the pressure that we're putting on our neighbors.

And Jeff just to add onto that came in the second part of your question was whether the pressure that we're putting on our neighbors.

Speaker 12: You know, I would first say that, you know, our grocery health ratio we reported was 2.4%. And really, those are very long.

I'd first say that our gross your health ratio. We reported was two 4% and really those are very long leases. So that's not really where the pressure will be applied when we look at our in line Nabors from May.

Speaker 12: So that's not really where the pressure would be applied. When we look at our inline neighbors, from a ratio standpoint, our estimates are we're about 10% of their cost. And that varies based on the usage. And so as we look at the growth that they're realizing, given the necessity-based nature and their ability to push those costs.

Ratio standpoint, where our estimates are we're about 10% of their of their cost and that varies based on the usage and so as we look at the growth that they're realizing given the necessity based nature and their ability to push those costs.

Speaker 6: you know, we believe we can achieve these and maintain that relationship without putting excess pressure on our neighbors.

We believe we can achieve these and maintain that relationship without putting excess pressure on our neighbors.

Speaker 109: And Tammy... And Tammy, I... Oh. Go ahead, Jim.

And can you hear me.

Good.

Speaker 110: The last piece is we don't believe that our in-line tenants are feeling pressure because as you note in our retention rate at 88%, nine out of every 10 tenants are renewing and they're renewing at these kind of spreads that we've been talking about. So the evidence is clear that the tenants do not feel pressured, you know, their businesses are.

The last piece is.

We don't believe that our inline tenants are feeling pressure because as you note in our retention rate at 88% nine out of every 10 tenants are renewing and they are renewing at these kind of spreads that we've been talking about so the evidence is clear that the tenants do not feel.

Pressure.

Their businesses are.

Speaker 5: thriving in our centers, and therefore they want to stay in our centers, and the retention rate is reflective of that.

<unk> in our centers and therefore, they want to stay in our centers and the retention rate is reflective of that.

Dynamic.

Speaker 111: Yeah. And, Tammy, one thing that I would add in as well is when you think about inflation, I mean, we've been getting these kind of spreads in a 2% inflation environment. If we were to move to 3 to 5% inflation, that would also, we believe that would give us additional impetus to be able to grow our rental spreads. So, but we'll see. I mean, again, that is to, you know, to be seen as we progress through the year.

Yes, Tammy one thing that I would add in as well as when you think about the inflation I mean, we've been getting these kind of spreads too.

2% inflation environment.

If we if we were to move to 3% to 5% inflation that would also we believe that would give us additional impetus to to be able to grow our.

Our rental spreads so, but we'll see I mean again that.

Is too.

To be seen as the as we progress through the year.

Speaker 14: I appreciate that. And then maybe just one last question. Just as we think about dispositions in 2022, I'm curious if you have anything teed up there and maybe what you're expecting for the year in total and just if you can give us a sense for cap rates on the pool of assets that you're looking to sell.

Okay I appreciate that and then maybe just one last question just ask when you think about dispositions in 2022 curious if you have anything teed up there and maybe what youre expecting for the year in total and just if you can give us a sense for cap rates on the pool of assets that youre looking to sell.

Speaker 4: So as we talked about, we do know like we are, the $350 million is a net number, so our dispos will be on top of that, so our acquisitions would be higher by whatever that number is. And that range we've given of $300 to $400, we think there will be, you know, I don't

So as we as we talked about we do know like we are.

The $350 million is a net number so our dispose will be on top of that so our acquisitions would be higher by whatever that number is.

And that that range, we've given of 300 to 400.

We think there'll be.

In a.

Speaker 112: We haven't given guidance in terms of what our dispos are. I mean, historically, they've been $100 to $125 million a year, and I think, as we think about it, we're probably thinking in that kind of a frame, but again, we're really focused on making sure that we get the incremental growth from the net acquisitions.

We haven't given guidance in terms of what our dispose or.

I mean, historically, they've been $100 million to $125 million a year.

And I think.

As we think about it.

We're probably thinking in that kind of a frame, but but again.

We're really focused on making sure that we get the incremental growth from the <unk>.

Net.

Acquisitions.

Great. Thank you.

Speaker 113: This question comes from Todd Thomas with KeyBank.

Our next question comes from Todd Thomas with Keybanc. Your line is open.

Speaker 16: First question, I just wanted to follow up on investments and the strategy. There does seem to be a bit of product coming to the market. Is there any appetite for sort of a small or mid-sized portfolio, or should we generally expect the one-offs primarily? Would there be a scenario where it might make sense to grow the joint venture and asset management platform?

Hi, Thanks.

Just first question I, just wanted to follow up on investments and the strategy.

There does seem to be a bit of product coming to the market is there is there any appetite for sort of a small or mid sized portfolio or should we generally expect the one offs, primarily in and would there be a scenario where it might make sense.

To grow the joint venture an asset management platform.

Speaker 114: Todd, thanks for being on. It's a great question. Yes, there is additional product coming on the market. Yes, we are looking at every portfolio that is for sale and have obviously looked at all the ones that have either transacted or been committed to date.

Todd Thanks for being on its great question.

Yes, there is additional product coming on the market.

Yes, we are looking at every portfolio that is for.

Sale.

And have looked at obviously looked at all of the ones that have either transacted or been committed to date.

We I would not anticipate us getting involved in the portfolio in the current environment, where there is a large premium.

Speaker 115: I would not anticipate us getting involved in a portfolio in the current environment where there is a large premium paid. We believe there's a portfolio premium paid.

We believe there is a portfolio premium paid.

Speaker 116: If that continues to be the case, then we would anticipate, you know, continuing to grow through individual acquisitions. But again, you know, if we can find something that meets our eight unlevered IRR in a portfolio basis that we think we're getting market, not a, you know, a premium to market, we obviously, we would be very, we'd love to look at that, and we'd love to, you know, to buy that if that.

If that continues to be the case that we would anticipate continuing to grow through individual acquisitions.

But again, if we can find something that meets our eight unlevered IRR portfolio basis that we think we're we think we're getting market not.

A premium.

Premium to market.

We obviously, we would be very we'd love to look at that and we'd love to.

So by that if that if we can.

Speaker 117: if we can. But again, it's going to be driven by can we underwrite it to an 8 on levered IRR and do we think we're buying it at more of a market rate than a portfolio premium type of rate. So that's how we're kind of thinking about it.

Can.

So it's.

But again, it's going to be driven by.

Can we underwrite it to an eight unlevered IRR and do we think we're buying it at a.

At more of a market rate than that.

Portfolio premium type of rates. So that's how that's how we're kind of.

Thinking about it.

Speaker 4: We look at basically everything that comes on the market because we've been doing this for a long time. We have the relationships and we're on the top of the list of anybody who's selling.

We do.

We look at basically everything that comes on the market because we've been doing this for a long time, we have the relationships and we are on the top of the list of anybody who is selling.

Speaker 118: of open-air centers to talk to us and so we will continue to review those and try to find the best opportunity. I don't know if you have any other thoughts on that.

Open air centers to talk to us and so we.

We will continue to review those and try to find the best opportunities.

Any other thoughts on that.

Speaker 5: Yeah, the only thing I would add, Todd, is, as you know, we built this portfolio over time, asset by asset, and, you know, the reason we haven't been successful in buying a lot of portfolios is because we believe that there is a portfolio premium that's typically paid, and that makes it more difficult for us to hit our return objectives.

Yes, the only thing I would add Todd as you know we built this portfolio over time asset by asset and the reason we haven't been successful in buying a lot of portfolios is because we believe that there is a portfolio premium that typically paid.

That makes it more difficult for us to hit our return objectives.

Speaker 5: And that would be the answer on that part of your question. And then on the second part of your question regarding the asset management business.

And that would be the answer on that key part of your question and then on the second part of your question regarding the asset management business.

Speaker 5: You know, we are constantly approached by institutional investors to partner with them so that they can get the benefit of our operating platform for their investment dollars. You know, it's something that we will continue to look closely at, and if we can find, you know, the right partner that allows us to meet our objectives for our on balance sheet growth, et cetera, we would entertain.

We are constantly approached by institutional investors to partner with them. So that they can get the benefit of our operating platform.

For their investment dollars.

Something that we will continue to look closely at and if we can find.

Right partner that.

Allows us to meet our objectives for our on balance sheet growth et cetera, we would entertain it.

Speaker 16: OK, and then in terms of some of the acquisitions that you completed.

Okay and then.

In terms of some of the acquisitions that you completed here.

Speaker 119: I was wondering if you could speak to both Arapahoe and maybe in town and country, about 200,000 square feet or a little bit more, not out of bounds. You have a number of centers that are a little bit larger in size, but they are typically larger than what the company owns today with a bunch more boxes. Should we expect to see some...

Here in the quarter and also what's in the pipeline.

I was wondering if you could speak to arapahoe.

Both arapahoe and maybe in town and country about 200000 square feet or a little bit more not not out of bounds you have.

There are centers that are.

A little bit larger in size, but they are typically larger than what the company owns today.

We have a bunch more boxes.

We expect to see some.

Speaker 120: You know, investments going forward be a little bit larger, a little bit boxier in nature or is it just, you know, sort of mix in the quarter?

Investments going forward would be a little bit larger a little bit box here in nature or is it just sort of mix in the quarter.

Speaker 121: I would say it's mixed in the quarter and the two centers, Arapahoe and Town and Country. Town and Country is a very specific case, which it is larger, but it does have two gross rankers. It operates as two different centers and it's a physical issue you got to look at, but it's almost like we bought two different centers. In that case, it's not a large property acquisition when you think of it as two centers. Arapahoe was a very unique situation where we felt.

I would say it's mix in the quarter.

And the two I mean.

The two centers Arapahoe in town and country counted.

Town and country is a very specific case, which it does it is it is larger but it does have two grocery anchors. It operates as two different different centers.

It's a physical issue you got to look at but it's almost like we bought two different centers and.

In that case, they aren't they're not large.

It's not a large property acquisition when you think of it as two centers.

<unk> was a very unique situation, where we felt a part of the center operated as.

Speaker 122: part of the center operated as a grocery anchored shopping center and the majority of that. And we had two boxes that we had to buy in order to get that, and those two boxes were long-term. Thank you.

Our grocery anchored shopping center and the majority of that and we had two boxes that we had to buy in order to get that.

Two boxes were long term.

But.

Speaker 4: good credit properties that we felt like, okay, we will take that in order to get what we really wanted, which was the grocery anchor shopping center part of the center, and unfortunately, it's

Good credit.

Properties that we felt like okay, well, we will we will.

Take that in order to get what we really wanted which was the grocery anchored shopping center part of the center and.

Fortunately it's.

Speaker 123: To date, it's worked out extremely well, both of them, from a new leasing and our ability to grow rents at both of those locations really early on, obviously, in our ownership process. We're very happy with the progress we've made on those centers in a very short time.

It's worked out extremely well both both of them.

From a new leasing.

And our ability to grow rents at both of those locations really early on obviously in their acquisition.

Ownership process.

We're we're very happy with sort of the progress we've made on on those centers in a very short time.

Speaker 124: Okay, and then if I could, real quick, John , two questions.

Okay, and then if I could real quick John .

Two questions.

Speaker 125: uh... related to the to the guidance and and and the quarter here uh... you know first was was there any uh... benefit to straight line

Related to the to the guidance in the quarter here.

First was there any.

Benefits of straight line rent realized in the quarter.

Speaker 126: realized in the quarter that we should think about moving forward, or is the roughly $2 million of straight-line rent in the quarter, is that a good run rate to think about for 2022? And then also, in the core FFO reconciliation, I think there's the $0.07 to $0.08.

That we should think about moving forward or is the roughly $2 million.

Our straight line rent in the quarter or is that is that a good run rate to think about for 'twenty. Two and then also in the core <unk> reconciliation I think there is the <unk>.

100, <unk> for transaction costs and other.

Speaker 16: for transaction costs and other, what is that exactly and where does that show up in the income statement?

Is that exactly and where does that show up in the income statement.

Sure.

Speaker 6: Sure. So in terms of straight line rent, I would say that for the quarter, I would think that as I looked at 2022, the fourth quarter is a little higher. I would say, you know, kind of two to two and a half million dollars is a good estimate for straight line rent specifically.

In terms of straight line rent I would say that for the quarter I would think that as I look to 2020 to the fourth quarter was a little higher.

Say kind of two to $2 $5 million.

Is it good estimate for straight line rent specifically.

Speaker 127: And then to your question on transaction costs and transaction activity, at this time I believe those are actually going to go through on our income statement. I think we have a caption right now and I'm pulling it up. That actually is, it's going to be in the other expense and income net line on our income statement and then in our reconciliations they'll come through as that transaction and acquisition expense.

And then.

To your question on transaction costs and transaction activity.

At this time I believe those are actually going to go through on our income statement I think we have a caption right now and I'm pulling it up.

That actually is it's going to be any other expense and income net line on our income statement and then in our reconciliations now come through is that transaction and acquisition expenses.

Speaker 128: which we have as an ad back to chlorofluvobudy does impact NARES FSO.

Which we have as an add back to <unk>, but it does impact NAREIT absent cell.

Speaker 129: Right, and so what is that exactly, the transaction, how much of it is related to, you know, sort of abandoned or, you know, I guess acquisition costs versus...

Right and so what is that exactly the transaction how much of it is related to.

Sort of abandoned or or.

I guess acquisition costs versus versus other.

Speaker 130: So those are, it's more transaction over on the corporate side. So it would be, some of it is failed to transaction, or failed acquisitions, but other components are just expenses that we had related to the IPO that we are paying. And it's actually, some of it is non-cash expenses that we're recording.

So those are it's.

More transaction over on the corporate side. So it would be some of it has failed to transaction car failed acquisitions, but other components are just expenses that we had related to the to the IPO that we are paying and it's actually some of it is noncash expenses that were recording.

Yes.

Going forward, so I would expect it to be at this level.

Speaker 16: going forward. So, I would expect it to be at this level in 2022 and then kind of tapering from there. Okay. All right. Great. Thank you.

2022, and then kind of tapering from there.

Okay Alright.

Alright, great. Thank you.

Yeah.

Thanks Scott.

And this concludes our Q&A.

Answer session I would like to turn it back to Mr. Edison for some closing comments.

Speaker 131: Thank you. Thanks, everybody, for being on the call and for your questions. We had a really nice quarter. We enter 2022, I think, in a really good position. We're excited about some of the opportunities it's going to create for us. Again, we appreciate

Thank you.

Thanks, everybody for being on the call and for your questions.

It's.

We had a really nice quarter.

We enter two.

2022, I think in a really good position.

Sure.

Cited about some of the opportunities it's going to.

Great for Us and again, we appreciate your questions and obviously, we are here to answer them as we as we go forward.

Speaker 132: your questions and obviously we're here to answer them as we go forward. We'll root for the Bengals this weekend because we have to, because we got our Cincinnati base. But for you guys, we thank you for your time today and look forward to hopefully having a really good 2022. It's certainly starting off really well. So let's keep our fingers crossed. Thanks, guys.

We will look for the bangles this weekend.

Because we have to because there we got our Cincinnati base.

Sure.

But but for you guys. We thank you for your time today.

Look forward to hopefully having a really good.

'twenty two.

Certainly starting off really well so let's keep our fingers crossed thanks, guys I appreciate it.

And you may now disconnect.

Speaker 133: And you may now