Q4 2021 Site Centers Corp Earnings Call

Speaker 1: Good day and welcome to the site centers reports fourth quarter 2021 operating results conference call. All participants will be in a listen only mode. Should you need assistance, please signal conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.

Good day and welcome to the site centers reports fourth quarter 2021 operating results conference call. All participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question you May press star.

Speaker 1: To ask a question, you may press star then one on your telephone keypad. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Ms. Monica Cacrazia. Please go ahead.

And then one on your telephone keypad and to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to MS. Monica <unk>. Please go ahead.

Speaker 2: Thank you, operator. Good morning and welcome to CITECENTER's fourth quarter 2021 earnings conference call.

Thank you operator, good morning, and welcome to the site centers fourth quarter 2021 earnings Conference call. Joining me today is Chief Executive Officer, David Lukes, Chief Financial Officer, Conor Saturday. In addition to the press release distributed this morning, we have posted our quarterly financial supplement and slide presentation on our website at Ww.

Speaker 2: Joining me today is Chief Executive Officer David Luke and Chief Financial Officer Connor Find romaine at the

Speaker 2: In addition to the press release distributed this morning, we have posted our quarterly financial supplement and slide presentation on our website at www.sitecenters.com, which is intended to support our prepared remarks during today's call.

W. Dot site centers dotcom, which is intended to support our prepared remarks during today's call. Please be aware that certain of our statements today may contain forward looking statements within the meaning of the federal securities laws.

Speaker 2: Please be aware that certain of our statements today may contain forward-looking statements within the meaning of the federal securities law. These forward-looking statements are subject to risks and uncertainties, and actual results may differ materially from our forward-looking statements.

Forward looking statements are subject to risks and uncertainties and actual results may differ materially from our forward looking statements.

Speaker 2: Additional information may be found in our earnings press release and in our filings with the SEC, including our most recent reports on Form 10-K and 10-Q.

Additional information may be found in our earnings press release and in our filings with the SEC.

Including our most recent reports on Form 10-K and 10-Q. In addition, we will be discussing non-GAAP financial measures on today's call, including F. F O operating <unk> and same store net operating income reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in todays quarterly.

Speaker 2: In addition, we will be discussing non-GAAP financial measures on today's call, including FFO, operating FFO, and same-store net operating income. Reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in today's quarterly financial supplement. At this time, it is my pleasure to introduce our Chief Executive Officer, David Luce.

Supplement at this time it is my pleasure to introduce our Chief Executive Officer, David Lukes.

Speaker 3: Thank you Monica. Good morning and thank you for joining our fourth quarter earnings call.

Thank you Monica good morning, and thank you for joining our fourth quarter earnings call.

Speaker 3: Quarterly results and investment activity capped what turned out to be a fantastic year for Side Center.

Quarterly results and investment activity cap, what turned out to be a fantastic year for site centers.

Speaker 3: OFFO with a head of plan really on all line items and new leasing volume was the highest in four years.

Paul was ahead of plan really on all line items and new leasing volume was the highest in four years.

Speaker 3: We utilized a portion of the $190 million distribution from RVI to acquire $143 million of real estate, beginning the transformation from RVI fees to property cash flow. And we repaid mortgage debt ahead of maturity.

We utilized a portion of the $190 million distribution from RBI to acquire $143 million of real estate beginning the transformation from RBI fees to property cash flow and we repaid mortgage debt ahead of maturity.

Speaker 3: Our balance sheet remains in great shape with debt to EBITDA in the low fives at year end. Thank you to the entire Sight Center's team for working so hard to get so much done in one quarter to position the company for growth in 2022 and onward.

Our balance sheet remains in great shape with debt to EBITDA in the low fives at year end.

Thank you to the entire site centers team for working so hard to get so much done in one quarter to position the company for growth in 2022 and onward.

Speaker 3: I'll start this morning discussing fourth quarter results, talk briefly about leasing and tenant demand, and then discuss our investments in capital allocation as we look to grow our portfolio of assets in wealthy suburban communities.

I'll start this morning discussing fourth quarter results talk briefly about leasing and tenant demand and then discuss our investments and capital allocation as we look to grow our portfolio of assets and wealthy suburban communities.

Speaker 3: As I mentioned, fourth quarter OFFO was a head of our budget on better operations which Connor will provide more details on later.

As I mentioned fourth quarter <unk> was ahead of our budget on better operations with Conner will provide more details on later.

Speaker 3: We collected 99% of our build rent for the fourth quarter and for the full year 2021 and are effectively back to pre-pandemic collection levels.

We collected 99% of our billed rent for the fourth quarter and for the full year 2021 and are effectively back to pre pandemic collection levels.

Speaker 3: Our tenant assistance program is essentially complete as well, which speaks to our credit quality and is a reflection of the fact that almost 90% of our base rent is from national tenants.

Our tenant assistance program is essentially complete as well, which speaks to our credit quality and is a reflection of the fact that almost 90% of our base rent is from national tenants.

Speaker 3: Moving to leasing, tenants are paying more to get into properties in the last mile of wealthy suburban zip codes, and renewing leases at a higher rate than pre-pandemic levels.

Moving to leasing tenants are paying more to get into properties and the last mile of wealthy suburban zip codes and renewing leases at a higher rate than pre pandemic levels.

Speaker 3: We had our highest level of new leasing in four years despite having a considerably more focused portfolio and signed more shop square footage in the quarter than as far back as the company has been tracking retailers as they expand their store fleet.

We had our highest level of new leasing in four years, despite having a considerably more focused portfolio and signed more shop square footage in the quarter than as far back as the company has been tracking retailers as they expand their store fleets.

Speaker 3: Over the course of the year, we find 900,000 square feet of new leases increasing our least rate by 110 basis points.

Over the course of the year, we signed 900000 square feet of new leases, increasing our leased rate by 110 basis points.

Speaker 3: More importantly, we signed deals with well capitalized national credit tenants, with 85% of our anchors signed with publicly traded companies, and 22% of the square footage signed from new concepts that were launched in the last 18 months, and are sponsored by investment-grade parent company.

More importantly, we signed deals with well capitalized national credit tenants with 85% of our anchors signed with publicly traded companies and 22% of the square footage signed from new concepts that were launched in the last 18 months and our sponsored by investment grade parent companies.

Speaker 3: Almost 10% of the new leasing activity by base rent was with grocers, and another 23% was with first to portfolio tenants.

Almost 10% of the new leasing activity by base rent was with grocers and another 23% was with first to portfolio tenants.

Speaker 3: Looking forward, we have a half million square feet at share in least negotiations which we expect to be completed in the next six months with similar characteristics to the deals we've signed in 2021.

Looking forward, we have a half a million square feet at share in lease negotiations, which we expect to be completed in the next six months with similar characteristics to the deals we've signed in 2021.

Speaker 3: We expected Lease's recently signed along with the current activity to be a material driver of our growth over the next several years.

We expect the leases recently signed along with the current activity to be a material driver of our growth over the next several years.

Speaker 3: Shifting to investments, we had a very active fourth quarter buying out partner interests and joint ventures in Arizona and Florida, acquiring peripheral land in Charlotte and Princeton, and adding another convenience property in Charlottesville.

Shifting to investments, we had a very active fourth quarter buying out partner interests and joint ventures in Arizona, and Florida, acquiring peripheral land in Charlotte and Princeton.

And adding another convenience property in Charlottesville.

Speaker 3: I'll start with our Florida Portfolio acquisition. We acquired five public-santered properties from our partner in key markets for us like Tampa and Miami. The grocerers generate unabridged, almost $800 per score put in sales, and the properties at year end were 87% least, offering a mix of leasing and tactical redevelopment upside with a five-year underwritten NOI-cager north of 5%.

I'll start with our Florida portfolio acquisition, we acquired five publics anchored properties from our partner in key markets for us like Tampa and Miami.

The grocers generate on average almost $800 per square foot in sales and the properties at year end were 87% leased offering a mix of leasing in tactical redevelopment upside with a five year underwritten NOI CAGR north of 5%.

Speaker 3: We have activity on every one of the vacant anchors in this portfolio and are seeing strong momentum on the shops as well.

We have activity on every one of the vacant anchors in this portfolio and are seeing strong momentum on the shops as well.

Speaker 3: Performa for this acquisition, Florida is now our largest state by base rent, which is under 20% of the company's ABR and growing.

Pro forma for this acquisition, Florida is now our largest state by base rent with just under 20% of the company's ABR and growing.

Speaker 3: In Phoenix, we bought out another partner in a property with average household incomes above $130,000, yet with occupancy rate of just 56%. We have activity on the vast majority that they can square footage with an exciting mix of new retailers and expect to double the properties on a Y over the next five years.

In Phoenix, we bought out another partner in a property with average household incomes above $130000, yet with occupancy rate up just 56% we have activity on the vast majority of the vacant square footage with an exciting mix of new retailers and expect to double the property's NOI over the next five years.

Speaker 3: For the year, we invested $223 million in assets, including four convenience properties, with an underwritten five-year NOI-Keg or over 5% and a blended cap rate of just under 6%.

For the year, we invested $223 million in assets, including four convenience properties with an underwritten by beer NOI CAGR over 5% and a blended cap rate of just under 6%.

Speaker 3: Each of these properties, all located in key markets for the company, including Delray Beach, Scottsdale, Atlanta, and Princeton, will be drivers of the company's future growth.

Each of these properties all located in key markets for the company, including Delray Beach, Scottsdale, Atlanta, and Princeton will be drivers of the company's future growth.

Speaker 3: Shifting to investments, I'd expect us to be active in both anchored and unanchored assets that fit our growth and our sub-market criteria.

Shifting to investments I would expect us to be active in both anchored and on anchored assets that fit our growth and our sub market criteria.

Speaker 3: We remain encouraged by our initial investments in convenience properties they do not have a traditional large format tenant, especially given the advancements in geolocation data.

We remain encouraged by our initial investments in convenience properties. They did not have a traditional large format tenant, especially given the advancements and geolocation data.

Speaker 3: As a result, this compelling subsector in Open Air Shopping Centers remains a key area of focus for the company.

As a result, this compelling sub sector in open air shopping centers remains a key area of focus for the company.

Speaker 3: The sub-sector stands to benefit from the pandemic-induced societal shifts like work from home and urban-disaburban.

The sub sector stands to benefit from the pandemic induced societal shifts like work from home and urban to suburban.

Speaker 3: Our property data aggregated over the past few years is showing a distinct rise in customer traffic, especially in wealthier suburbs, where retail GLA per capita is low, and driving outsized rent growth in those same markets as evident in our own results.

Our property data aggregated over the past few years is showing a distinct rise in customer traffic, especially in wealthier suburbs, where retail GLA per capita is low and driving outsized rent growth in those same markets as evidenced in our own results.

Speaker 3: We are hyper focused on acquiring properties that fit these characteristics within our top markets since our portfolio has a weighted average population growth rate that's doubled the national average.

We are hyper focused on acquiring properties that fit these characteristics within our top markets since our portfolio has a weighted average population growth rate, it's double the national average.

Speaker 3: All of us at Site Centers are incredibly proud of the work that generated our 2021 results and we're even more excited about our growth prospects in 2022 and beyond. And with that, I'll turn it over to Connor. Thanks, David. I'll comment first on fourth quarter results, then 2022 guidance and conclude with our vouchers.

All of US at site centers are incredibly proud of the work that generated our 2021 result, and we're even more excited about our growth prospects in 2022 and beyond and with that I'll turn it over to Conor. Thanks, David I'll comment first on fourth quarter results, then 2022 guidance and conclude with our balance sheet fourth quarter.

Speaker 4: Fourth quarter results were ahead of plan as David mentioned, on really all fronts. Total uncollectable revenue at site share included $1.4 million of income or one cent per share from payments and settlements related to prior periods.

Our results were ahead of plan as David mentioned on really all fronts total uncollectable revenue at site share included $1 $4 million of income or <unk> <unk> per share from payments and settlements related to prior periods and.

Speaker 4: Ancillary income, overdrand, and occupancy also, or well-dubbed plan, which an aggregate told about another penny relative to the budget, with the balance the outperformance due to a number of smaller land.

Ancillary income overdraft and occupancy also were well above plan, which in aggregate totaled another penny relative to budget with a balance of the outperformance due to a number of smaller line items.

Speaker 4: In terms of operating metrics, the least rate for the portfolio was up 40 basis points sequentially, which was on top of 50 basis points last quarter, and comes despite the negative impact from fourth quarter transaction activity.

In terms of operating metrics the lease rate for the portfolio was up 40 basis points sequentially, which was on top of 50 basis points last quarter and comes despite the negative impact from fourth quarter transaction activity.

Speaker 4: Based on our current leasing pipeline, the David outlined, we continue to see additional upsides to companies lease rate, given current activity and the level demand across our port goals.

Based on our current leasing pipeline that David outlined we continue to see additional upside the company's lease rate given current activity and the level of demand across our portfolio.

Speaker 4: Despite 111,000 square feet or $2.7 million of annualized base rent commencing in the fourth quarter, our SNO pipeline increased to $15 million from $12 million last quarter.

Despite a 111000 square feet or $2 $7 million of annualized base rent commencing in the fourth quarter, our ethanol pipeline increased to $15 million from $12 million last quarter.

Speaker 4: We provided an update scheduled on the expected ramp of the pipeline on page 9 of our earnings flight.

We provided an updated schedule and the expected ramp of the pipeline on page nine of our earnings slides.

Speaker 4: Yes, no pipeline now represents 4% of annualized fourth quarter-based rent, or over 5% if you also include leases in negotiation in our pipeline.

So no pipeline now represents 4% of annualized fourth quarter base rent or over 5%. If you also include leases in negotiation in our pipeline.

Speaker 4: Moving on to our outlook, we are introducing 2022 of the folk guidance with a range of $1 rate to $1.13 per share. Brent Commencements, Uncollectable Revenue and Transaction Timing are the largest swing factors expected to impact, fully your results, and where we end up in the rain.

Moving on to our outlook, we are introducing 2022 O four guidance with a range of $1 eight to $1 13 per share.

Rent Commencements uncollectable revenue and transaction timing or the largest swing factors expected to impact full year.

Your results and where we ended up in the range.

Speaker 4: We have also introduced same store NOI guidance with range of two and a quarter to four and a quarter adjusting for the roughly $14 million impact of 2021 uncollectable revenue.

We have also introduced same store NOI guidance with a range of two in a quarter to fourth quarter adjusting for roughly $14 million impact of 2021 uncollectible revenue.

Speaker 4: 2022 same-store guidance implies that comparable property and a Y will be ahead of 2019 levels highlighting the strength of the portfolio's recovery and recent and forecast for income

2022 same store guidance implies a comparable property NOI will be ahead of 2019 levels highlighting the strength of the portfolio is recovery and recent and forecast rent commencements.

Speaker 4: Details on James Drenel-Wire are in our press release and earnings wise.

He tells on same store NOI or in our press release and earnings slides.

Speaker 4: Additional assumptions for full year 22 guidance include net investment activity of $100 million. The settlement of the $35 million of forward ATM shares in the first half of the year. RBI fees of about $1 million.

Additional assumptions for full year 'twenty through 'twenty. Two guidance include net investment activity of $100 million the settlement of the $35 million afford ATM shares in the first half of the year.

Harvey I fees of about $1 million joint.

Speaker 4: Join Venture fees of $8 to $10 million, and Interest Expansed at TiteShare, roughly flat from 2021.

Entry fees of $8 million to $10 million and interest expense outside share roughly flat from 2021.

Speaker 4: Lastly, included in 21 results are 13.8 million or 7 cents per share of non-recurring reserve reversals related to prior periods. We have not budgeted additional reserve reversals in the bottom half of our guys.

Lastly included in 'twenty, one results are $13 8 million or seven cents per share of nonrecurring reserve reversals related to prior periods, we have not budgeted additional reserve reversals in the bottom half of our guidance range.

Speaker 4: In terms of the first quarter of 2022, there are a few moving pieces to consider from the fourth quarter of 21. First, as I previously mentioned, we had $1.4 million of non-recurring, uncollectable revenue in the fourth quarter.

In terms of the first quarter of 2022, there are a few moving pieces to consider from the fourth quarter of 'twenty one.

First as I previously mentioned, we had $1 $4 million of nonrecurring uncollectible revenue in the fourth quarter.

Speaker 4: Second, we had quite a bit of JV transactivity in the fourth quarter. The assets sold in the quarter contributed $580,000 at site share of unconsulted NLI, and $465,000 a fee.

Second we had quite a bit of JV transaction activity in the fourth quarter.

The assets sold in the quarter contributed $580000 its high chair of uncontrolled and NOI and $465000 of fees.

Speaker 4: Third, we expect RBI fees to be about $200,000 in the first quarter, which is down from $3.6 million in fourth quarter. A summary of these factors on page 11 of our earnings list.

Third we expect RBI fees to be about $200000 in the first quarter, which is down from $3 $6 million in the fourth quarter of <unk>.

Many of these factors on page 11 of our earnings slides.

Speaker 4: Turning to our balance sheet, our COVID deferral program is effectively fully repaid with only a few hundred thousand dollars of receivables on a balance sheet at EUR&T. In total, approximately twenty-two million dollars of deferrals have been repaid today, which represents 98% of total deferrals due to date. The rate of repayment, repaid dollars, and collections, all which have led the sector highly to strength of our national tenorah.

Turning to our balance sheet, our Covid deferral program is effectively fully repaid with only a few hundred thousand dollars of receivables on the balance sheet at year end.

In total approximately $22 million of deferrals have been repaid to date, which represents 98% of total deferrals do today the.

The rate of repayment repaid dollars and collections all of which allowed the sector highlight the strength of our national tenant roster.

Speaker 4: Finally, wrapping up with liquidity and sources and uses, we received a $190 million distribution from RVI in the fourth quarter, which was used to repay mortgage debt and acquire properties as David outlined. A year end, leverage was 5.4 times, fixed charges over four times, and our unsecured debt yield was over 21%. The company has just over $40 million cash on hand, $35 million of common equity from Ford ATM sales available for future settlement, and full availability on our lines of credit.

Finally, wrapping up with liquidity and sources and uses we received a $190 million distribution from RV I in the fourth quarter, which was used to repay mortgage debt and acquire properties as David outlined at year end leverage was five four times fixed charges over four times and our unsecured debt yield was over 21%.

The company has just over $40 million of cash on hand, $35 million of common equity from Ford ATM sales available for future settlement and full availability on our lines of credit.

Speaker 4: This capacity will allow us to take advantage of investment opportunities as they arise and to drive sustainable, OFO growth increased stakeholder value. With that, I'll turn it back to David. Thank you, Connor. Operator, we're now ready to take questions.

This capacity will allow us to take advantage of investment opportunities as they arise and to drive sustainable off a full growth increased stakeholder value with that I'll turn it back to David.

Thank you Connor operator, we're now ready to take questions.

Thank you we will now begin the question and answer session.

Speaker 1: To ask a question, you may press star than one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing the keys. And to withdraw your question, please press star than two. And at this time, we'll pause momentarily to assemble our Ross.

You ask a question you May press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys and to withdraw your question. Please press Star then two and at this time, we'll pause momentarily to assemble our roster.

Okay.

Speaker 1: And the first question will come from Rick Hill with Morgan Stanley . Please go ahead.

And the first question will come from Rich Hill with Morgan Stanley . Please go ahead hey.

Speaker 5: Hey, good morning guys. I wanted to maybe start off with some questions about acquisitions. Appreciate the net acquisition guidance of 100 million. I think I have that right.

Good morning, guys I wanted to maybe start off with some questions about acquisitions I. Appreciate the net acquisition guidance of $100 million I think I have that right.

Speaker 5: But could you maybe break down what that is between buys and sells and then maybe just talk about the acquisition market a little bit more? Our understanding is it's pretty fierce out there. You soon be doing a lot of JV's which is great.

Could you maybe breakdown what that is between buys and sells.

And then maybe just talk about the acquisition market a little bit more our understanding is it's pretty fierce out there you seem to be doing a lot of JV, which is great. So do you see those acquisitions coming from more JV buyouts or do you see opportunities to buy one off properties.

Speaker 5: So do you see those acquisitions coming from more JB buyouts or do you see opportunities to buy one off property?

Speaker 4: So, Richard's Conner, I'll let David take the second half of the question. In terms of the kind of a gross volume, you're right, it does imply additional JV transactions. If you look at our JV fees over the course of the year, you can see they are expected to climb year of a year, which implies additional activity. You know, we announced with the release the sale of the buy sale provision for the SAU portfolio, which will be selling our state to our partners. So, we haven't given the gross dollars, but the underlying activity really is additional JV sales. So, modest wholly owned sales as we continue to do annually over the last five plus years, and I'll defer to David on the state of the transaction.

Richards Conor I'll, let David take the second half of the question in terms of the kind of a gross volume you're right. It is a it does imply additional JV transactions. If you look at our JV fees over the course of the year you can see there they are expected to decline year over year, which implies additional activity, we announced with the release the sale of the the buy sell provision for the rest of your portfolio.

<unk> will be selling our stake to our partner. So we haven't given the gross dollars, but but the underlying activity really is additional JV sales. Some modest wholly owned sales as we continue to do annually over the last five plus years and I'll defer to David on the state of the transaction market, Yeah, Rich I'm sure. It's not lost on you that the transaction market has been.

Speaker 3: Yeah, Rich, I'm sure it's not lost on you that the transaction market has been, I think fierce was the word you used. If you look on our supplemental on page 18 and you see the transactions throughout the

I think fiercely was the word you used if you look on our supplemental on page 18, and you see the transactions throughout the.

Speaker 3: You know, the full year in 2021, the vast majority of our activity was off market.

The full year in 2021, the vast majority of our activity was off market and the off market activity was primarily joint ventures, but also.

Speaker 3: and the off-market activity was primarily to adventures but also a couple of unanchored strip properties that we bought off-market.

A couple of unanswered strip properties that we bought off market I would say in in our unanswered thesis. We are finding more products simply because I think theres less institutional capital chasing those size deals and those types of properties. It seems like most of the activity right now is still in the grocery.

Speaker 3: I would say in our unanchored thesis, we are finding more product simply because, I think there's less institutional capital chasing those size deals and those types of properties.

Speaker 3: It seems like most of the activity right now is still in the grocery sector. So I do feel pretty confident that we'll be able to acquire enough access to meet our budget. And then of course there's also just a larger question of capital allocation and you know, on our own stock price. So I do think we have options throughout the year and feel pretty good about the budget, despite the fact that the market's pretty hot.

Sector, So I do feel pretty confident that we'll be able to acquire.

Enough assets to meet our budget and then of course, there's also just the larger question of capital allocation and you on our own stock price. So I do think we have options throughout the year and feel pretty good about the budget. Despite the fact that the market is pretty hot.

Speaker 5: I was just channeling my nine year old daughter when I used to fear so sorry for using that term. Can you maybe talk through cap rates a little bit? You know when we talked about it in the past it seems like they're wretching tighter and tighter. Are you seeing any floor? What should we think about as we think through 2022?

Got it I was just channeling my nine year old daughter, when I used fear, so sorry for using that term.

Can you maybe talk through cap rates, a little bit when we've talked about it in the past it seems like they are rationing tighter and tighter are you seeing any floor, what what what should we what should we think about as we think through 2022.

Speaker 3: Well, I think that if you don't mind me pivoting a little bit, I think the larger question is, what's the unlevered IRR expectation? Because...

I think that the if you don't mind me pivoting a little bit I think the larger question is what's the what's the unlevered IRR expectation because we're seeing so much rent growth.

Speaker 3: We're seeing so much rent growth and market rent growth in a lot of submarkets that I think it's kind of a little bit of a head fake that cap rates are so low because the rent growth is actually there. So I think on an unlevered IRR, you can still buy really high quality assets at a 6% on lebered IRR.

And market rent growth in in a lot of Submarkets that I I think it's kind of a little bit of a head fake that cap rates are so low because the rent growth is actually there. So I think on an unlevered IRR.

You can still buy really high quality cap, a really high quality assets at a 6% Unlevered IRR.

Speaker 5: because there's so much growth, you know, some of the cap rates are in the fours for sure. Okay, that's that's that's exactly what I was looking for. Yeah. The Connor just one more question for me if I if I can, I appreciate the disclosure on the 1.4 million of unclutchable revenue and then the 14 million that that you disclosed in the guidance. Should we think about that 14 million as as the right number for 2021 and aggregate or is that a different number? Yeah, go ahead. Yeah. No, that's

Because theres so much growth you know some of the cap rates are in the fours for sure okay.

Exactly what I was looking for just one more question for me if I if I can I appreciate the disclosure disclosure on the $1 4 million of uncollectible revenue and then the $14 million.

That you disclosed in the guidance should we think about that $14 million as the right number for 2021 in aggregate or is that a different number.

Yeah go ahead, yeah, no. So I apologize for cutting you off there rich.

Speaker 4: In terms of what's on the balance sheet, you know, like I said, we've only got a couple hundred thousand left.

In terms of what's on the balance sheet, you know like I said, we've only got a couple of hundred thousand left on.

Speaker 4: on the balance sheet of receivables. There are fully reserved cash basis tenants that either have deferrals outstanding, taxes outstanding, or other reserves we take in outstanding.

On the balance sheet, our receivables there are fully reserved cash basis tenants that either have deferrals outstanding taxes outstanding or other reserves. We've taken outstanding. So the kind of total magnitude of that is probably closer to $10 million and $14 million now that won't all be recognized in 2022 and implicitly we don't expect it.

Speaker 4: So the kind of total magnitude of that is probably closer to $10 million and $14 million. Now that won't all be recognized in 2022 and implicitly we don't expect to recognize any of that.

Speaker 4: That thing said, our collections team has done a really, really good job. I'm optimistic we'll have more settlements over the course of the year, but I don't envision it'll be anywhere near the 13 point 8 million dollars we had in 2021. Got it. Thanks, guys. I'll jump back in.

And is any of that that being said our collections team has done a really really good job I'm optimistic well have more settlements over the course of the year, but I don't envision it will be anywhere near the $13.8 million, we had in 2021 .

Got it thanks, guys I'll jump back in the queue. Thanks rich.

Speaker 1: The next question will come from Samir Kunal. Whatever core ISI, please go ahead.

The next question will come from Sameer Kunal with Evercore ISI. Please go ahead.

Speaker 4: Hey, Connor, just a question here on GNA for the year. Maybe, maybe, what sort of run rate, run rate should we be thinking about? I know you've been doing a lot of acquisitions here. Just trying to get a little more view on the run rate. Hi, good morning, Samir. I mentioned last quarter that we were talking about $52 million and that estimates on change.

Hey.

Just a question here on G&A for the year, maybe what sort of run rate run rate should we be thinking about I know you've been doing a lot of acquisitions here.

Trying to get them on the run.

Run rate.

Hi, Good morning, Sameer I mentioned last quarter that we were talking about $52 million in it and that estimates unchanged.

Speaker 6: Okay, so that remains unchanged. And just remind me, I'm sorry I missed this, but what's the total bucket?

Okay. So that that remains unchanged and just remind me I'm sorry, I missed this but what's what's the total bucket.

Speaker 6: that you can still collect from a rent collection standpoint from past periods here.

You can still collect from from a rent collection standpoint from past periods here.

Speaker 4: Yeah, so I mean, one thing we're pretty excited about is we collected effectively all the rent from last year. So we were over 99% and if you look in our slides and we're up to 96% for the prior year. So in terms of just straight rent collections, the bucket shrinking, which is great. You know, I think it speaks to, as David and I both mentioned, the credit quality of our tenor roster, you know, coming back to Rich's question, it's probably closer to just under $10 million for kind of all outstanding kind of rent, whatever it might be, receive a rolls from frontendants. Just such a nice, extremely close document, marriage certificates. So, yes, we did want the full pay segment of college's revenue faculty that I talked to. So, yes, we did want the full pay segment of college's revenue faculty that I talked to.

Yeah. So I mean, one thing that we're pretty excited about as we collected effectively all of the run from last years, we were over 99% and if you look at our slides for me are we're up to 96% for the prior year. So in terms of just straight rent collections that the bucket shrinking which is great. You know I think it speaks to as David and I, both mentioned the credit quality of our tenant roster coming back.

Richards question, it's probably closer to just under $10 million for kind of all outstanding kind of rent whatever it might be receivables from from tenants, but again, I mean effectively 99% of that was fully reserved. So you know it each day, we move past COVID-19 , it's harder and harder to collect on that are implicitly there's a lower probability of.

Speaker 4: effectively 99% as fully reserved. So you know at each kind of day we move past COVID it's harder and harder to To collect on that or implicitly there's a lower probability of collection So look I'm optimistic. We'll have more collections of the course of the year But in terms of just straight rent, you know, we're running out because our collections have been so high which is great

Collection, So look I'm optimistic well have more collections over the course of the year, but in terms of just straight rent, we're running out because our collections have been so high which is great.

Speaker 6: Okay, got it. And then I guess my final question is, is on, I mean, you've highlighted, you're sort of looking at 19 additional anchors that you're in negotiation with today. I guess, and then you find about 27 and 21, right? From a leasing perspective, what are the differences you're seeing, you know, in terms of animal rent bombs, or is there anything that you wanna highlight?

Okay got it and then I guess my final question is on the you've highlighted that you're sort of looking at 19 additional anchors that you're in negotiation with today.

And then you signed about 27% in 'twenty, one right from a leasing perspective, what are the differences youre seeing.

In terms of annual rent bumps or is there anything that you want to highlight here.

Speaker 3: I wouldn't say there's any, you know, broad-based changes. I mean, you know, some of the reason is that you can get so much leasing done in one year is just the long-standing relationships with tenants. You know, a number of the leases we have been moving into fair market options as opposed to fixed options because it's a better inflation hedge. You know, other than that, I think annual increases on the non-anchor spaces are definitely moving up.

I wouldn't say, there's any broad based changes I mean, some of the reasons that you can get so much leasing done in one year is just a long standing relationships with tenants.

A number of the leases we have been moving into fair market options as opposed to fixed options, because it's a better inflation hedge.

Other than that I think annual increases on the non anchor spaces are definitely moving up but.

Speaker 3: But for right now, I think our story going forward is the amount of anchors that have been leased in the last year has been nothing short of shocking. And I would expect the next six months to continue, which means that our next big wave is going to be the shop leasing. And if you look on page 10 of our supplement, you can see...

But for right now I think our story going forward is the amount of anchors that have been leased in the last year has been nothing short of shocking and I would expect the next six months to continue which means that our next big wave is going to be the shop leasing and if you look on page 10 of our supplement you can see the commenced versus the leased rate on the shops and you'll you'll notice a widening.

Speaker 3: the commenced versus the least rate on the shops and you'll notice a widening spread between least and rent paying in the shop spaces that's I think going to be the story for this year is that you're going to start to see a lot of shop activity and that's where a lot of growth is going to come from in the second half of the year.

Spread between leased and and rent paying in the shop spaces. That's I think going to be the story for this year is that youre going to start to see a lot of shop activity and that's where a lot of growth is going to come from in the second half of the year.

Thanks, so much.

Thanks Amir.

Speaker 1: The next question will come from Tammy FeeQ with Wells Fargo. Please go ahead.

The next question will come from Tammy <unk> with Wells Fargo. Please go ahead.

Speaker 7: Thank you, good morning. I'm just wondering, the same story, N-O-I growth range for 2022, you know, two and a quarter to four and a quarter. Can you just talk about maybe the primary drivers of that growth, you know, how much of that is related to leasing that has already been completed and is just commencing in 22? And maybe what the swing factors are that get you to the low and high end of that.

Thank you good morning, I'm, just wondering on the same store NOI growth range for 2022 and acquired four in a quarter can you just talk about maybe the primary drivers of that growth.

How much of that is related to leasing that has already been completed and theres just commenting in 'twenty, two and maybe what the swing factors are they getting to the low and high end of that range. Thank you I'm sure. Thank you Tim and good morning.

Speaker 4: Sure, hey, Tammy, good morning. So there's a couple of things to say. So first off, just in turn, at 2020, we're coming off a really strong 2021. So we're...

So this is there's a couple of things I'd say, so so first off just in terms of 2022 we're coming off a really strong 'twenty 'twenty. One so we were a.

Speaker 4: positive 14.9% for 21, which I think will be up there in terms of the sector in terms of one of the not the highest growth rates That's one factor. The second one as we've alluded to or explicitly mentioned a number of times that 13.8 million dollar Headwind from Uncollectable Revenue as well as the fact that we collected all of our rent last year. So rent collections aren't a tailwind

Positive 14, 9% for 'twenty, one, which I think will be up there in terms of the sector in terms of one of if not the highest growth rates. So that's one factor. The second one as we've alluded to are explicitly mentioned a number of times as the $13.8 million.

A headwind from uncollectible revenue as well as the fact that we collected all of our rent last year. So it was a rent collections arent a tailwind so really the number one driver of next year is base rent growth and what's fascinating is you kind of unpack base rent growth over the course of the year, we start the year and kind of mid 200 call. It two 5% base rent growth year over year, and we ended up the.

Or at least based off of our projections today and the kind of mid fours almost four 5% and so what's driving that is this $15 million of Ethno pipeline and what's really interesting while 80% of it commences next year, we're only recognizing about half of the total dollars in terms of annualized dollar. So it sets us up really well in terms of the back half of the year and into 'twenty, three and something we're really excited.

Speaker 4: So it sets us up really well in terms of the back half of the year and into 23 and something we're really excited about. But that's really what the driver is for next year is all about leases commencing. And it's the kind of dollars coming on board in terms of dollars for share and total dollars is pretty staggering relative to our enterprise. Great, thanks. And then maybe just one more question. What are you hearing from your tenants in terms of new store demands? Just trying to get a sense of how leasing activity will look in 22 versus kind of the strengths you experienced in 2021, particularly given maybe the more volatile environment and supply chain issues and other sort of headwinds that we're seeing. Thank you. Well, at this point, I mean, I think that the desire to grow.

But that's really what the driver is for next year is all about leases commencing and it's you know the kind of dollars coming on board in terms of dollars per share in total dollars, it's pretty staggering relative to enterprise.

Speaker 7: Great, thanks. And then maybe just one more question. What are you hearing from your tenants in terms of new store demand? And just trying to get a sense of how leasing activity will look in 22 versus kind of the strength you experienced in 2021, particularly given. Maybe the more volatile environment and supply chain issues and other sort of headwinds that we're seeing. Thank you.

Great. Thanks, and then maybe just one more question what are you hearing from your tenants in terms of new store demand just trying to get a sense of how leasing activity will look in 'twenty two versus kind of the strength you experienced in 2021 , particularly given maybe the more volatile environment.

And as Susan and other sort of headwinds that we're seeing.

Yeah.

Well at this point.

Speaker 3: I mean, I think that the desire to grow footprint is pretty strong across almost every sector, you know, discount, grocery service tenant.

I mean, I think that the desire to grow our footprint is pretty strong across almost every sector.

Discount.

Grocery service tenants.

Speaker 3: um... there's just a tremendous amount of demand i mean if you think about the shop leasing is that is the highest in years and years and anchor leasing at ice and what over four years uh... idl see its slowing down tamiya

There's just a tremendous amount of demand I mean, if you think about the shop leasing is that is the highest in years and years on the anchor leasing at the highest in over four years.

I don't see it slowing down Tammy unless there is some macro event that causes an entire chain or a sector to kind of put the pause button on leasing for.

Speaker 3: There is some macro event that causes an entire chain or a sector to kind of put the pause button on leasing. For right now, I don't know what that would be, but the tenant sales are very strong. They seem to be not as concerned about supply and labor. I would say that both the tenants and the landlords are having conversations about construction costs because with labor and supply chain materials, that has been rising. And I think that the part of the reason why we're driving rents up.

Right now I don't know what that would be but the tenant sales are very strong they seem to be not as concerned about supply and labor I would say that both the tenants and the landlords are having conversations about construction costs, because with labor and supply chain and materials that has been rising and I think that's a part of the reason why we're driving rents up.

Speaker 3: But I think in general that the activity from the retailers is incredibly high right now.

But I think in general the activity from the retailers is incredibly high right now.

Okay, great. Thank you.

Speaker 1: The next question will come from Katie McConnell with the city. Please go ahead.

The next question will come from Katy Mcconnell with Citi. Please go ahead.

Speaker 2: Great, thanks for the morning. So she's given all the back-to-easing progress she's made. Can you update us on our expectations for total cat-back spend in 2022? And would you expect us to remain elevated at a similar pace in 2013?

Great. Thanks. Good morning, So just given all the box leasing progress you've made can you update us on your expectations for total Capex spend in 2022 and when do you expect it to remain elevated at tomorrow peaks in 'twenty three.

Speaker 8: Hey Katie, it's Connor. I think you have to destroy your very thing. I think you asked about cap expanding.

Hey, Katy it's Conor I think you asked sorry, you're very faint I think you asked about capex spending.

Speaker 8: and correct me if I'm wrong, I'm sorry, but we do expect your point, given all the activity, just in total leasing, whether it's shop thinkers.

And correct me, if I'm wrong, I'm, sorry, but but we do expect to your point given all the activity just in total leasing whether it's shops anchors in our redevelopment pipeline, which we added a couple Ah projects to this last quarter, we do expect capex to be up certainly over last year and definitely over 'twenty 'twenty, which was depressed just obviously given.

Speaker 8: and our redeveloped pipeline, which we added a couple projects to this last quarter, we do expect CapEx to be up.

Speaker 8: Certainly over last year and definitely over 2020, which is suppressed just obviously

Given initial COVID-19 impact we haven't given the total dollars, but I would just tell you based off our current budget at the midpoint, we expect about retain counsel around $35 million, which equates to kind of a mid seventies.

Payout ratio, which has been our target for the last couple of years. So we've got the capital and the operating cash flow to fund Capex and to your point you know as long as leasing activity remains elevated capex well as well that being said, we're running out of space I think they entertainments question to Paul.

Speaker 8: and the operating couch to fund CAPEX into your point. As long as lease activity remains elevated, CAPEX will as well. That being said, we're running out of space. I think the answer to Tammy's question to point back to Tammy's question, what could impact lease and volume is simply running out of space? So our excitation is it will be elevated for this year in the start of next year, and then it will fall off fairly dramatically as we reach peak lease rate peak occupancy. Hey Connor, it's Michael Billerman here at KV. Can you just outline a little bit of sort of a balance sheet moves and how they impact guidance this year? I think at least in the stuff you talked about, $35 million, a settlement the forward equity. I think you have the prep.

I went back to Jamie's question, what could impact leasing volume is simply running out of space. So our expectation is it will be elevated for this year and the start of next year and then it'll fall off.

Fairly dramatically as we reach kind of peak peak lease rate peak occupancy.

Speaker 8: Hey, Connor, it's Michael Billerman here with Katie. Can you just outline a little bit of sort of the balance sheet moves and how they impact guidance this year? I think at least in the stuff you talked about, 35 million dollars, settling the forward equity. I think you have the press mid-year, the carrier pretty high rate that can be redeemed. There's a bunch of JV mortgage debt that I would seem as to get refinanced.

Hey, Tyler.

Bilerman here with JD.

Can you just outline that a little bit of sort of the balance sheet moves and how the impact guidance this year at.

At least in the Sup you you talked about $35 million of settling the forward equity I think you have the crafts.

Mid year that carry a pretty high rate that can be redeemed theres, a bunch of JV mortgage debt.

We've seen it has to get refinanced by the end of the beginning of the first in.

Speaker 8: by the end of the beginning of first and the beginning of second and end of second quarter.

At the beginning of the second and ended the second quarter.

Speaker 6: So you're just talking a little bit about what you have planned and what's embedded from an accretion delusion standpoint.

Can you just talk a little bit about what what you have planned and what's embedded from an accretion dilution standpoint.

Speaker 8: Yeah, thanks Michael. There's not much embedded from a Crescent Delusion standpoint. I'll start there just because we expect.

Yeah, Thanks, Michael the World Theres not much embedded from an accretion dilution standpoint, I'll start there just because we expect.

Our share of interest expense to be effectively flat year over year, and you're right. There are a number of moving pieces and we have a number of options, which is really exciting you are correct that the class a preferred are redeemable without penalties starting in June of this year that is one option you know we've talked a lot about investment opportunities. We're excited about if we can't find them, we always have that which is to your point.

Speaker 8: We have a number of options which is really exciting. You are correct that the class A preferred are redeemable without penalties starting in June of this year. That is one option. We've talked a lot about investment opportunities we're excited about. If we can't find them, we always have that, which is your point, a high coupon piece of paper. You're right, there are some orgs that are due. They're also, I think, as Rich's question around transactions, the excitation, you'll see the monetization of a number of joint ventures as well, which will take down that. So from a refinancing perspective, I do think we'll have a couple mortgages refinance this year. Otherwise, I think you're going to see transaction activity, net proceeds from transactions, kind of satisfy those. But I would just say kind of a global answer to your question. Our capital marks activity will be totally

Coupon piece of paper, you're right. There are some mortgages that are due there also I think it was Richard's question around transactions the expectation you'll see the monetization of a number of joint ventures, as well, which will take down that so from a refinancing perspective I do think we'll have a couple of mortgages refinances here, otherwise I think you're going to see transaction activity net proceeds from transactions.

Kind of satisfy those but I would just say kind of a global answered your question or capital markets activity will be totally dependent on investment activity, meaning if we are able to find some opportunities that we like and think are accretive to the enterprise that will be more acquisitive, sorry, we expect to be more active on the debt and the equity side, obviously, depending on where we see the best.

The best source of best cost of capital. So, it's a very long way of saying, it's totally dependent on transaction activity, but you're right to point out there's some exciting things in some some higher.

Cost of paper out there that we can we can now look to address should we fail to find investment opportunities.

Speaker 8: Do you have nothing from a positive refinancing perspective even though you could argue that the market of your debt and preferred would be highly accretive to cash flow and FFO?

You have nothing from a positive refinancing perspective, even though you could argue that the mark to market of your debt and preferred would be highly accretive to cash flow and that's also.

Speaker 8: So I don't want to say we have nothing accretive from an opportunity perspective. I mean, as you pointed out, the press are carrying a low six handle coupon. So it just, I mean, it's a range, Michael, at the top and the range. You should assume that we're taking out some of the higher cost debt. We also, we could look at liability management as well. We've got some 23s and 24s that we could probably issue a reissue accretally today. So I would just say kind of on our base case budget, there's nothing in there, but you're right to point out that there's some opportunities we have across the capital structure, but it's totally dependent on investment activity. Okay. And then just lastly, just.

Speaker 8: I don't want to say we have nothing accretive from an opportunity perspective. I mean, as you pointed out, the press are carrying a low six handle coupon. So it just, I mean, it's a range, Michael, at the top in the range, you should assume that we're taking out some of the higher cost debt. You know, we also, we could look at liability management as well. We've got some 23s and 24s that we could probably issue, reissue a credulity today. So I would just say kind of on our base case budget, there's nothing in there, but you're right to point out that there's some opportunities we have across the capital structure, but it's totally dependent on investment activity.

I don't want to say, we have nothing are accretive from an opportunity perspective, I mean as you pointed out the price are carrying out a low six handle a coupon.

So it just I mean, it's a range Michael at the top end of the range you should assume that we're taking out some of the higher cost that we also we could look at liability management as well we've got some 20 threes in 24 hours that we could probably issue a reissue accretively today. So I would just say kind of on a base case budget, there's nothing in there, but you're right to point out that there's some opportunities we have across the capital structure.

But it's totally dependent on investment activity.

Speaker 8: And then just lastly, just finishing this topic is you have, I think twice, issued equity to redeem preferred and de-level of the balance sheet. How are you thinking about common equity? Because I do think that some of those historical, you know, when you've had a very high balance that prefers relative to your enterprise value, you had the choice of replacing it with a really cheap debt for more extensive equity and you chose the delveraging path.

And then just lastly, just finishing this topic is.

You have I think twice issued equity to redeem preferreds and Delever the balance sheet. How are you thinking about common equity because I do think that some of those historical.

When you've had a very high balance of preferreds relative to your enterprise value you had the choice of replacing it with a really cheap debt for more expensive equity and you.

Jos the deleveraging path.

Speaker 8: Where is your mic at now in terms of equitizing the balance sheet?

Where is your mindset now in terms of Echostar using the balance sheet.

Speaker 8: Yeah, it's a great question and I would point to simple changes in our leverage profile. You know, as I started my prepare remarks, Michael, we're 5, 4 debt to EBITDA 21% on uncommered debt yield over four times six charge.

Yeah, It's a great question and I would point to just a simple changes in our leverage profile you know as I start started my prepared remarks, Michael were five four debt to EBITDA, 21% on unencumbered debt yield over four times fixed charge. So I would tell you you're right. When we did those first few trades.

The preferred as a percentage of the total capital structure and our overall leverage was materially higher we are in a materially different place today from an overall leverage perspective, so the sensitivity around issuing equity to take out practice is extremely high it's not doesn't mean, we don't look at it and we don't consider it to be as you know, we consider everything I've ever seen.

Speaker 8: levered perspective. So the sensitivity around issuing equity to take out processes is extremely high. It doesn't mean we don't look at it, we don't consider it. As you know, we consider everything every single day in terms of every kind of one of the levers we can pull. I would just tell you that that sensitivity is materially higher today given how low we levered we are on an absolute and certainly on a relative basis relative to peer group. Great. Appreciate it. See you guys down in Florida. Thanks, Mark. Thanks, Mike. The next question will come from Todd Thomas with Keybank. Please go ahead.

In terms of every kind of one of the levers we can pull I would just tell you that that sensitivity is materially higher today, given how lowly levered. We are on an absolute and certainly on a relative basis relative to peer group.

Speaker 8: Great, appreciate it. See you guys down in Florida. Thanks Mark.

Great I appreciate it.

You guys are down in Florida.

Thanks, Mark Thanks, Mike.

Speaker 1: The next question will come from Ty Thomas with Keybank. Please go ahead.

The next question will come from call it Thomas with Keybanc. Please go ahead.

Speaker 9: Hi, thanks. Good morning. I wanted to first follow up on the joint venture commentary and the Madison or DDRM, you know, JV in particular. There were some bits and pieces, I think, in your comments, touching on this. But I wanted to ask about that joint venture and the latest thinking with regard to the remaining 24 assets there. Gross real estate on the books of $760 million. You know, what's in the guidance?

Hi, Thanks, Good morning, I wanted to first follow up on the joint venture commentary and in the Madison or DDR M. JV in particular, there were some bits and pieces I think in your comments touching on this but I wanted to ask about that joint venture.

The latest.

Thinking with regard to the remaining 24 assets there gross real estate on the books of $760 million you know what what's in the guidance for that JV throughout the year with $350 million of debt maturing in July .

Speaker 9: For that JV throughout the year with $350 million of debt maturing in July .

Speaker 3: Todd, let me start at David and then I can turn it over to Connor with respect to the budget. But the nice thing about having joined Ventures is that there are times when the partner would like to sell and we can find assets that we think match our growth profile.

Todd Let me, let me start David and then I can turn it over to Conor with respect to the budget, but.

The nice thing about having joint ventures is that there are times when the partner would like to sell and we can find assets that we think match our growth profile or.

Speaker 3: or exceed it. So if you look at what we bought from Madison already.

Or exceed it so if you look at what we bought for Madison already.

Speaker 3: The site centers Grocery Portfolio generates about $750 a square foot in Grocer sales, and this portfolio is almost 800. The demographics are in the top quartile in the US. There's a lot of similarities in the portfolio that we bought with our captive portfolio.

The site centers grocery portfolio generates about 500 $750 a square foot in grocery sales in this portfolio is almost 800.

The demographics are in the top quartile in the U S. There's just there's a lot of similarities in the portfolio that we bought with our with our captive portfolio.

Speaker 3: The amount of inventory left in the DDRM pool that is

The amount of inventory left in the DDR M pool that is.

Speaker 3: substantially similar to our core portfolio is shrinking so i think they likely to have to continue to buy from that jb uh... it's probably you know smaller transactions uh... and not not portfolios like we've done uh... of course in the past year

Similar to our core portfolio is shrinking so I think the likelihood that we will continue to buy from that JV.

It's probably smaller transactions and not not portfolios like we've done of course in the past year.

Speaker 8: As far as budget goes, I think Conorick can probably speak to that better. Yeah, I mean, we can't provide guidance on what our partners will do. Ultimately, it's a partnership decision pod. I would just say our assumption is over the next couple of years just given the life of that fund and the funds of some of the other partners involved. But you'll see continued asset sales and our budget reflects that. The total dollar amount could swing and that's why we have a range. So, you know, as Michael alluded to, there is some debt that comes up this year and at times when debtmatures that necessitates the end or a monetization of a fund. So, I think you'll see some of the assets get refinanced, some of the assets get sold and it will be kind of a range across really are doing ventures. Our guidance reflects as you just assume at the bottom end the most dilutive.

As far as budget goes I think Conor can probably speak to that better yeah. I mean, we we can't provide guidance on what our partners will do ultimate a partnership decision Todd I would just say our assumption is over the next couple of years, just given the life of that fund and the fund of some of the other partners involved with Youll see continued asset sales and our budget reflects the total dollar amount could swing and that's why we have a rate.

So you.

You know as Michael alluded to there is some debt that comes up this year and at times when that matures at that.

Necessitates the end or a monetization of a fun. So I think you'll see some of the assets get refinanced some of the assets get sold and it'll be kind of a range across really our joint ventures, our guidance reflects as you'd assume at the bottom and the most dilutive.

Speaker 8: kind of outcome of that transaction and the top end assumed plus transaction activity. I would just say to David's point, if we find an opportunity to acquire assets to have a growth rate, at least, a commensurate with our portfolio, we'll take advantage of it. And if we'll not, then by definition, we're improving our overall portfolio quality. So it's just an opportunity us for take some of our capital out of those joint ventures if we want, reinvested elsewhere, paid on debt, whatever we want to do. So again, we can't provide specifics on what each joint venture will be doing, but I would just say our range reflects what we think is a range of outcomes across the different partnerships.

Kind of outcome of that transaction and the top end assumes less transaction activity I would just say to David's point, if we find an opportunity to acquire assets to have a a growth rate at least commensurate with our portfolio will take advantage of it and if we're not then by definition, we're improving our overall portfolio quality. So it's just an opportunity for take take some capital out of those joint ventures, if we.

Reinvested elsewhere or pay down debt or whatever you want to do so again, we can't provide specifics on what each joint venture will be doing but I would just say our range reflects what we think is a range of outcomes across that across the different partnerships.

Speaker 9: okay got it and then i think david in the past you know there was some commentary suggesting that there's there's interest in utilizing joint venture capital uh... you know you're obviously you know talking about consolidating interest and and seeing a decrease in activity today uh... but on the other hand it seems like you're you're finding a lot of investment opportunities uh... anchored non-anchored product uh... you know what's the car view of

Okay got it and then I.

I think David in the past there was some commentary, suggesting that there was interest in utilizing joint venture capital.

You're obviously talking about consolidating interest in seeing a decrease in activity today.

But on the other hand, it seems like Youre, finding a lot of investment opportunities.

Or non anchored product whats.

What's the current view of.

Speaker 9: you know it meet either either uh... you know it sort of inking and a new joint venture uh... partnership or uh... you know utilizing uh... joint venture capital going for

Yeah.

They're either.

Sort of thinking and a new joint venture.

Partnership or.

Utilizing joint venture capital going forward.

Speaker 3: I think going forward, I would always like to have a joint venture arm of our business. I think we have a very, very long track record with some very large institutions. You know, we just recently did a look back on a number of the JVs we've had over the past five or six years. And I think we've been a very good partner to a lot of pre-sophisticated capital.

I think going forward I would always like to have a joint venture arm of our business I think we have a very very long track record with some very large institutions.

We just recently did a look back on a number of the JV as we've had over the past five or six years and I think we've been a very good partner to a lot of pretty sophisticated capital.

Speaker 3: And I think you're seeing the benefits of having a joint venture business now when it's hard to acquire assets and we've got kind of inside information and experience on captive portfolios that we can purchase when the time's right. So I'd like to see us rebound a little bit and grow that joint venture business. I'm not sure of this year is the time that that'll happen but long term I think it's always going to be a part of our enterprise.

And I think youre seeing the benefits of having a joint venture business now and it's hard to acquire assets and we've got kind of inside information and experience on captive portfolios that we can purchase when the time's right. So I'd like to see us.

Rebound, a little bit and grow that joint venture business I'm not sure. If this year is the time that that will happen, but long term I think it's always going to be a part of our enterprise.

Speaker 9: Okay, and then just lastly, Connor, you know, you said you see current upside to the portfolios least rate, you know, you and David talked about the 500,000 square feet of new least deals and negotiation and the sign not occupied pipeline. Can you just share what's in guidance for occupancy during the year, any color on, you know, maybe tenant moveouts or whether you expect to see a moderation?

Okay, and then just lastly, Conor you said you see.

Upside to the portfolios lease rate and you know you and David talked about the 500000 square feet of new lease deals in negotiation and the signed not occupied pipeline can you just share what's in guidance for occupancy during the year any any color on on maybe tenant move outs or whether you expect to see a moderation.

Speaker 9: and at least in occupancy rates to start the year as you might typically see on a seasonal basis or

In and leased and occupancy rates to start the year as you might typically see on a seasonal basis or.

Speaker 9: you know any space recaptures or anything like that or do you see the least in occupancy rate gains just carrying straight through the year

Any space Recaptures or anything like that or where do you see the eastern occupancy rate gains just carrying straight through the year.

Speaker 8: Todd, let David talk about the least rate and how the demand factors into that. I think kind of to your last point though, our agitations are gonna see a steady increase over the course of the year.

Todd I'll, let David talk about the lease rate and how the demand factors into that I think kind of your last point, though our expectation is you're going to see a steady increase over the course of the year, but definitely in terms of occupancy and certainly in terms of the lease rate as well so in terms of occupancy.

Speaker 8: definitely in terms of occupancy and certainly in terms of the least rate as well. So in terms of occupancy by the fourth quarter of this year, the fourth quarter of next year, excuse me, the expectation is to see a couple hundred base points of occupancy increase. I will tell you the percentages go is be misleading just based off rents and GLA, etc. But from an economic or rent adjusted occupancy, we expect it to be up over 200 bases points over the course of the year.

By the by the fourth quarter. This year in the fourth quarter of next year excuse me the.

The expectation is to see a couple of hundred basis points of occupancy increase I will tell you. The percentages can always be misleading just based off rent in GLA et cetera, but from a kind of an economic or a rent adjusted occupancy we expect it to be up over 200 basis points over the course of the year.

Speaker 3: Yes, hi, I would just say that we obviously don't guide to, or provide guidance on occupancy at year end, but from a least rate perspective, the demand right now is so strong to least space both in shops and anchors. If this pace continues, then I think we'll be stabilized from a least rate perspective by the end of the year, which I would say is 95, 96%.

Yeah, Todd I would just say that we obviously don't guide to I will provide guidance on occupancy at year end, but from a lease rate perspective. The demand right. Now is so strong to lease space both in shops and anchors. If this pace continues then I think we'll be stabilized from a lease rate perspective by the end of the year.

I would say, it's 90, 596% what can change that is what we purchased so last quarter, we purchased vacancy.

Speaker 3: What can change that is what we purchase. So last quarter we purchased vacancy.

Speaker 3: And that's part of a strategic move. So I think for the core portfolio today, we seem like we're trending pretty quickly to full stabilization. But I'd love to see us buy a little bit more.

And that's part of the strategic moves so I think for the core portfolio today, we seem like were trending pretty quickly to full stabilization.

But I'd love to see us buy a little bit more vacancy until there's nothing coming out I'm not sure I failed to mention that there's nothing coming offline in terms of anchors of readout or anything like that impacting the course of 2022 .

Speaker 8: And Tom, there's nothing coming on lost. I failed to mention the part. There's nothing coming offline in terms of anchors or redev, anything like that impacting the course of 2020, too.

Yeah.

Okay. Thank you Youre welcome.

Speaker 1: The next question will come from Alexander Goldfarb with Piper Sandler. Please go ahead.

The next question will come from Alexander Goldfarb with Piper Sandler. Please go ahead.

Speaker 10: Hey, good morning, good morning, Dumbass. So just a few questions and maybe continuing on the JB theme. You know, David, I appreciate your comments that on your book back, you know, you guys have done really well on the JB's, on the other hand.

Hey, good.

Good morning, good morning down there.

So just a few questions and maybe continuing.

On the JV theme.

Yeah, David I appreciate your comments about your look back you guys have done really well on the JV is on the other hand I think when you guys came in and took.

Speaker 10: I think when you guys came in and took over running outside centers.

And took over running.

Speaker 10: There was a big focus on simplifying a lot of legacy JVs and

Site centers.

There was a big focus on simplifying a lot of legacy JV then.

Speaker 10: getting rid of a lot of house cleaning to simplify the company, simplify the analyze structure. You did the China deal. I think that may have been two years ago, three years ago, I forget, but I don't know, that's been pretty quiet. So.

You know getting rid of a lot of housecleaning to simplify the company simplified the NOI structure.

Did the China deal.

That may have been two years ago, three years ago I forget I don't know if that's been pretty quiet. So maybe you can just talk a little bit more about what you're accused gazzam for joint ventures is now compared to the house cleaning you did over the past number of years and then two you know are there when you said.

Speaker 10: Maybe you can just talk a little bit more about what your enthusiasm for joint ventures is now compared to the house cleaning you did over the past number of years.

Speaker 10: And then two, you know, are there, you know, when you say you're excited about joint ventures with this?

We're excited about joint ventures, where you have more one offs or are you thinking about you know a thought like Boston properties.

Speaker 10: Yeah, more one-offs, or are you thinking about, you know, how fun my foster properties, you know, have dedicated joint venture partners that they use on, you know, deals, are you thinking something like that?

Vacated joint venture partners that they use on you know deals are you thinking something like that yeah.

Speaker 3: Yeah. It's a great question, Alex, because you're right. We spent a number of years simplifying the portfolio and to be perfectly frank, this is the year we're dealing with the final...

It's a great question, Alex because you're right. We spent a number of years simplifying the portfolio and to be perfectly. Frank. This is the year, we're dealing with the final.

Speaker 3: shift from fee income to property NOI. And there's a higher multiple on property NOI than there is fee income. My critique of the unwind of a lot of those legacy JVs was just simply that they were very very large joint ventures and our fees were so

Shift from fee income to property NOI.

And Theres a higher multiple on property NOI than there is fee income Mike Mike critique of the unwind of a lot of those legacy JV was just simply that they were very very large joint ventures, and our fees were somewhat low.

Speaker 3: And when they get too large, then the enterprise becomes, you know, a lot more about the JB business and less about the Holy Yone. And so I think it starts to...

And when they get too large than the enterprise becomes a lot more about the JV business and less about the wholly owned and so I think it starts to.

Speaker 3: impact how people view your portfolio. So I'm much happier with the simplicity we have today. When I talk about JB's in the future, I'm really not talking about anything imminent. I'm just saying that as part of an overall business plan, it's nice to have access to capital partners that have a similar viewpoint of yours and can probably provide capital for a strategy that you may not be able to put 100% into.

[noise] impact how people view of your portfolio.

So I'm much happier with the simplicity, we have today when I talk about JV in the future I'm really not talking about anything imminent I'm, just saying that as part of an overall.

Business plan, it's nice to have access to capital partners that have a similar viewpoint of yours and can probably provide capital for a strategy that you may not be able to put 100% into and and that could occur. If we found a portfolio. We liked but it was too large and we wanted to bring in a partner it could.

Speaker 3: And that could occur if we found a portfolio we liked, but it was too large and we wanted to bring in a partner.

Speaker 3: It could happen if we had a strategy that is maybe a long duration strategy and we wanted to find a partner that had that same viewpoint.

Happen, if we had a strategy that is maybe a long duration strategy and we wanted to find a partner that had that same viewpoint.

Speaker 3: But at the end of the day, what you're really trying to do is build up inventory that you might be purchasing 100% of in a number of years.

But at the end of the day, what you're really trying to do is build up inventory that you might be purchasing 100% of in a number of years and one of the ways to make sure you're always be able to access off market deals is to have long term joint ventures with institutions.

Speaker 3: And one of the ways to make sure you're always able to access off market deals is to have long-term joint ventures with institutions that you can access those investments at a later date. So I think it's just more of a long-term viewpoint. I see joint ventures that's been important part of our business. But I.

You can access those investments at a later date. So I think it's just more of a long term viewpoint I see joint ventures has been an important part of our business, but I really do think they need to serve a purpose and I think you need to get paid for that service, you're providing them yeah. The only other thing Alex if you remember the joint ventures that are to use your phrase we cleaned up a couple of years ago. There was a stark contrast in.

Speaker 8: really do think they need to serve a purpose uh... i think you need to get paid for that service you're providing them you know the only thing i'll see if you remember the joint ventures that that user phrasing we cleaned up uh... a couple years ago there was a stark contrast in terms of growth rates and quality versus the wholly unportually as well

With growth rates and quality versus the wholly owned portfolio as well as you remember Michael asked a question I think there's three or four years ago about why there was such a differential between same store NOI at 100% and our share and the truth of the matter was the JV is were a drag and we've talked about that when we unwound a couple of them. So that's another point to Davids commentary. The JV is today are consistent with our portfolio quality to grow.

Speaker 8: If you remember my question, I think it was three or four years ago, about why there was such a differential between same story and a wide 100% in our share. And the truth of the matter was the JVs were a drag and we talked about that when we unwound a couple of them. So that's another point to David's commentary. The JVs today are consistent with our portfolio quality. They're growing at a very similar rate. And today, if we could find answers that are also growing at a similar rate, then we'd add to them and add them to the enterprise.

It is very similar right and to David's point, if we can find assets that are also growing at a slower rate than we'd add to them and.

And Adam to the enterprise.

Speaker 10: Yeah, and then just under the other part of that question, are you guys looking to do like, you know, a strategic, you know, audio or some sort of, you know, GIC or something like that, like they're dedicated, you know, third party capital source, or if you're looking at these as just making sure that you have a role in that, so a lot of different TV partners who think the same way you do and as things come out, they would be sort of a one-off. The latter.

And then just the other part of that question are you guys looking to do like you know our strategic you know audio or some sort of you know GIC or something like that like a dedicated you know.

Third party capital source or David you're looking at these as just making sure that you have a rolodex of a lot of different JV partners, who thinks the same way you do and as.

Things come up it would be sort of a one off.

The latter.

Speaker 10: Okay, okay, and then second question is, on the, I hear your enthusiasm for, you know, the leasing demand has certainly, we've been holding that for quite a while now, but just curious, you know, there is a point of structural vacancy. You know, I think your portfolio is probably lower on that just because it's more big box, you know, left on the small shop, but still is there a, 35060 seconds, you're going to see that también, no matters... You know, you already know, but just curious on a realiseab, or, you know, it's often the model, cause it's actually- you know, the model looks strange.

Okay. Okay, and then second question is.

On all of the I hear your enthusiasm for you know the leasing demand and certainly we've been holding that for quite a while now but just curious you know there is a point of structural vacancy.

Yeah, I think your portfolio is probably lower on that just because it's more.

Big box, you know less on the small shop. It still is there a.

Speaker 10: point where you're like, hey, we could have all the demand that we want. But for the street, keep in mind that even getting to the 94, 95, maybe that in itself is really difficult, just given that school churn time it takes to open, etc. So what's sort of a realistic number that we can think about versus what an optimum level

A point, where you're like Hey, we could have all the demand that we want but for the street keep in mind that even getting to the 90 495, maybe that in itself is really difficult just given natural churn time. It takes to open et cetera, So what sort of a realistic number that we can think about versus what have you.

Optimum level is.

Speaker 3: Well, that's a tough question to answer. I see your point. I mean, historically, I would say that 95 to 96% is stabilized. And the reason is you've always got...

Yeah.

Well, that's a tough question to answer.

See your point I mean, historically I would say that 95%, 96% is stabilized and reason as you've you've always got a little bit of bankruptcy every year I'm, a little bit of move outs in and when you have a larger space move out the downtime does have an effect over the course of the year. So that's why I've always felt like 90.

Speaker 3: you know, a little bit of bankruptcy every year, a little bit of move outs and, you know, when you have a larger space move out, the downtime does have an effect over the course of a year.

Speaker 3: So that's why I've always felt like 95% to 96% is really a stabilized portfolio. I'm personally very curious to what happens in this cycle because I think that retail in wealthy suburbs are running out of space. And it's a little bit...

5%, 96% is really a stabilized portfolio I'm personally very curious to what happens in this cycle because.

I think that retail in wealthy suburbs are running out of space and it's a little bit.

Speaker 3: strange to say that given that we're still in COVID but demand is so high what's really happening Alex is that the tenants are renewing at a much higher rate than they used to

Strange to say that given that we're still in COVID-19 , but demand is so high what's really happening Alex is that the tenants are renewing at a much higher rate than they used to and they're hitting their options at a much higher rate than they used to even in the good times.

Speaker 3: and they're hitting their options at a much higher rate than they used to. Even in the good times, you know, six or seven years ago.

Speaker 3: So if the retention rate goes up, it means that by definition, you have fewer moveouts and fewer bankruptcies. And if this cycle has more of that, and if rents are growing, it means fewer tenants can move because the rents for new construction become higher, it could kind of test that cap of 95 to 96%.

Six or seven years ago. So if the retention rate goes up it means that by definition, you have fewer move outs and fewer bankruptcies and if this cycle has more of that and if rents are growing it means fewer tenants can move because the rents for new construction and become higher.

It could kind of test that that cap of 95%, 96%. The second piece of that puzzle I also think as the the middle sized spaces in other words junior anchors and small shops have a long history of maintaining high occupancy it's that kind of six to 10000 square foot space, it's always been a little bit difficult.

Speaker 3: The second piece of that puzzle I also think is the middle size spaces. In other words, junior anchors and then small shops have a long history of maintaining high occupancy. It's that kind of 6 to 10,000 square foot space. It's always been a little bit difficult. What's changed in the last years, you have some very, very large new concepts, particularly pop shelf and go puff.

Change in the last year as you have some very very large new concepts, particularly.

Pop shelf and go pop that are starting to really look hard at wealthy suburbs in that in that size range and that does change the dynamic if you can get credit tenants.

Speaker 3: in spaces that are that middle size, that could have a material impact on retention rates going forward.

In spaces that are there that middle size that could have a material impact on our retention rates going forward.

Okay. Thank you.

Yes.

Okay.

Speaker 1: The next question will come from Flores van Daikum with Compass Point. Please go ahead.

The next question will come from Floris Van <unk> with Compass point. Please go ahead.

Thanks, Scott good morning.

I had a question on your the rationale behind the convenience.

Speaker 10: And how should investors think about that? And how would you, are you the convenience either the non-anchored?

Investments and how should how should investors think about that.

And how would you.

Are you the convenience I E. The non.

Anchored space that youre buying how how does that compare to traditional street retail in your view in terms of the the throughput or the you know the people who go by there and you said you looked at some some close data for for cell phone usage et cetera, maybe if you can give us more insight.

Speaker 11: space that you're buying. How does that compare to traditional street retail on your view in terms of the throughput or the people who go by there? And you said you looked at some close data for cell phone usage, et cetera. Maybe if you can give us more insight in how you, why you feel so comfortable buying unanchored parts or retail right now in the convenience of that segment.

How you why you feel so comfortable buying on anchors.

Parts.

Or retail right now in the convenience segment, yes.

Speaker 3: Yeah, sure, Flores. It's probably a longer discussion than an earnings call, but I guess in the most simplistic form, I think before cell phone data allowed landlords and tenants to understand shopping traffic.

Sure Floris.

It's probably a longer discussion than an earnings call, but I guess in the most simplistic form.

I think before cell phone data allowed landlords and tenants to understand shopping traffic.

Speaker 3: You had to rely on one of two things. Either you're relying on an anchor traffic, like a grocery store or a mass merchant or a discounter or a department store, or you're relying on pedestrian activity, which tends to be street retail, high street retail. Those two things drove traffic, and so the assumption was that traffic was there, the tenants could measure their probable sales.

You had to rely on one of two things either you're relying on an anchor traffic like a grocery store or a mass merchant or a discounter or a department store or you relying on pedestrian activity, which tends to be street retail high Street retail those two things drove traffic and so the assumption was that traffic was there the tenants could measure their probable sales.

Speaker 3: What's changed with geolocation data is that you don't have to rely on the anchor anymore. You really can look at the current productivity of the existing tenants. You can measure where the customers are coming from and why. Are they coming from work? Are they going to work? Are they just coming from their homes? Are they coming from school? And the retailers have all figured this out. So if you look at the two properties that we bought in Charlottesville in the last couple of months, the tenants are Verizon, Kava, Starbucks, and Wells Fargo.

What's changed with Geo location data is that you don't have to rely on the anchor anymore. You really can look at the current productivity of the existing tenants you can measure where the customers are coming from and why are they coming from work are they going to work are they just coming from their homes are they coming from school and the retailers have all figure. This out so if you look at.

The two properties that we bought in Charlottesville in the last couple of months the tenants are Verizon Cava, Starbucks and the Wells Fargo.

Speaker 3: Those are sophisticated tenants. They have geolocation data themselves. We have the same data, and I think both of us agree that there's a reason why they're there. And so if we can buy that property and understand the rent growth and the lack of CAPX in that asset class.

Those are sophisticated tenants they have geo location data themselves. We have the same data and I think both of US agree that there is a reason why they are there and so if we can buy that property and understand the rent growth and the lack of capex in that asset class you don't really have to rely on a traditional anchor and that's why.

Speaker 3: You don't really have to rely on a traditional anchor. And that's why I think the thesis for us makes sense. You've got data understand that you know the cap X is low and you know the rent is more likely to keep up with marked a market because you can capture shorter term leases. Those are the input assumptions.

I think the thesis for US makes sense, you've got data understand it you know the Capex is low and you know the rent is more likely to keep up with mark to market. Because you can capture shorter term leases those are the input assumptions. The one thing I'll. Just remind you is that there is a big difference between convenience properties and street retail and it has everything to do with parking and convenience and.

Speaker 3: The one thing I'll just remind you is that there is a big difference between convenience properties and street retail and it has everything to do with parking and convenience. And we are all in the suburban parking convenience close to the curb. We're less interested in street retail where it's really pedestrian or it's daily office traffic. That's not the part of our thesis.

We are all in the suburban parking convenient close to the curb we're less interested in street retail, where it's really pedestrian or its daily office traffic that's not the part of our thesis.

Great. Thanks, Thanks, David that's a thing thanks, Laura Thanks Lars.

Speaker 1: The next question will come from Linda Tassie with Jeffries. Please go ahead.

The next question will come from Linda Tassie with Jefferies. Please go ahead.

Speaker 12: Hi, in terms of those space running out in wealthy suburbs and retailers signing on at higher

Yes.

Hi in terms of the space running out and wealthy suburbs and retailer signing on at higher rents how much would you attribute this to work from home hybrid working models pandemic induced migration or retailers coming out a little lower quality malls.

Speaker 12: How much would you attribute this to work from home, hybrid working models, pandemic induced migration or retailers coming out of lower quality malls? Does your traffic data help you parse out any of this data?

It does your traffic data help you parse out any of this data.

Speaker 3: Yeah, it's very interesting, Linda. I mean, a year ago, I think what we were saying was the balance sheets of the retailers got better and therefore they could grow their businesses. Right, that was the primary drivers. Balance sheets were significantly better coming out of that first year in COVID.

Yeah, it's very interesting Linda I mean, a year ago I think what we were saying was the balance sheets of the retailers got better and therefore, they could grow their businesses right that that was the primary driver as balance sheets were significantly better coming out of that first year and Covid I think what's changed my own personal view is.

Speaker 3: I think what's changed my own personal view is that the data is showing us and the tenants are telling us.

The data is showing us and the tenants are telling us that they're betting that.

Speaker 3: that their betting that hybrid work is going to be a long-term part of the US white color workforce.

Hybrid work is going to be a long term part of the U S white collar workforce and they're willing to make bets on on that given their sales are higher productivity. So that the hybrid work workforce is showing up in the data that doesn't surprise you on any given that people are still remote but the amount of customer traffic during the week day as opposed to the week.

Speaker 3: and they're willing to make bets on that, giving their sales a higher productivity. So the hybrid workforce is showing up in the data that doesn't surprise you any given that people are still remote, but the amount of customer traffic during the weekday as opposed to the weekend is substantially different than it was three years ago.

And is substantially different than it was three years ago I think the number of trips per week has gone up the duration that that a customer stays on the property has like gone slightly down why is that it's likely because people are doing more short trips and youre starting to see the impact of a lot of these ghost shoppers.

Speaker 3: I think the number of trips per week has gone up.

Speaker 3: the duration that a customer stays on the property has gone slightly down. Why is that? It's likely because people are doing more short trips and you're starting to see the impact of a lot of these ghost shoppers that are showing up at the properties to grab items that you purchase online and they're being fulfilled from the store fleet. So that's why you're seeing some of this data prove that the ghost shopping business is having a very positive effect on suburban strip center.

They're showing up at the properties to grab items that you purchase online and they're being fulfilled from the store fleet. So that's why you're seeing some of this data prove that the go shopping business is having a very positive effect on suburban strip centers.

Speaker 3: I think those are the primary reasons Linda. I wouldn't put a huge

I think those are the primary reasons, Linda I wouldn't put a huge.

Speaker 3: impact from all tenants moving to the strips. I think the much larger driver of this leasing volume is retailers just trying to get their fulfillment into the last mile of wealthy suburbs. Thanks.

Impact from mall tenants moving to the strips I think the much larger driver of this this leasing volume as retailers just trying to get their fulfillment.

Into the last mile of wealthy suburbs.

Thanks, and then some of your peers have discussed challenges in getting new tenants opened and operating on time is this something that you guys are seeing in your portfolio.

Speaker 12: been to operating on time. This is something that you guys are seeing in your portfolio.

Speaker 3: Last year, it was definitely challenging from a building permit standpoint. In other words, the local building permit counters were slow and they started to get a lot of building applications. They were still remote. I spoke to our head of construction and development yesterday. And what he's seeing is that the building permits are starting to get back to the pre-pandemic levels. They're getting a little bit faster. So I think permitting has gotten better. What's gotten worse is the procurement of some of the long lead items like insulation and roofing and HVAC equipment.

Last year there it was definitely challenging from a building permit standpoint in other words, the local building permit counters were slow and they started to get a lot of building applications. They were still remote.

I spoke to our head of construction and development yesterday and what he is seeing is that the building permits are starting to get back to the pre pandemic levels theyre getting a little bit faster. So I think permitting has gotten better what's gotten worse is the procurement of some of the long lead items like insulation and roofing and HVAC equipment. So I think most landlords and tenants.

Speaker 3: So I think most landlords and tenants, including us, are just starting to buy those long lead items earlier in the construction process. For instance, when the lease gets signed, we're ordering MEP units and roofing materials.

Including us are just starting to buy those long lead items earlier in the construction process for instance, when the lease gets signed we're ordering MEP units in roofing materials.

Speaker 3: Whereas in past years, we might have waited three or four months to get closer to permit. So a lot of that, I think, supply chain has just been solved by buying things earlier.

Whereas in past years, we might have waited three or four months just to get closer to permit. So a lot of that I think supply chain has just been solved by buying things earlier.

Speaker 3: We haven't had, I mean, I don't think we have any tenants last year missed their opening date because of either labor or materials or permanent.

We haven't had I mean, we had I don't think we have any tenants last year missed their opening date.

Cause of either labor or materials or permitting.

Thank you.

Speaker 1: The next question will come from Chris Lucas with Capital One. Please go ahead.

The next question.

<unk> will come from Chris Lucas with capital one. Please go ahead.

Speaker 6: Good morning, guys. Just a couple for me. On your same store and a wide guide, I guess maybe you could help us think about some of the drags on your outlook as it relates to how bad, that expects.

Hey, good morning, guys.

Just a couple from me on your same store NOI Guide I guess, maybe you could help us.

Think about some of the drags on your outlook as it relates to how bad bad debt expectations aren't in your current forecast versus say pre pandemic and same thing with tenant fallout.

Speaker 6: current forecast versus say pre pandemic and same thing with tenant fallout.

Speaker 6: David, you've commented a bit on TNA file. I just kind of want to understand how you're thinking about it relative to your same story.

David you commented a bit on south Paul I'm, just kind of one I understand how you are thinking about it relative to your same store NOI guide.

Speaker 8: Hey Chris, it's Connor. The biggest driver as we laid out in the guidance table is the uncluckful Rebnew. It should be to your point, an expense, not a source of income. And we expect it to be an expense in 222. So that's the number one driver in terms of the headwinds. There are some smaller paper cuts. Our answering income will be lower year-to-year because we have less.

Hey, Chris its corner the biggest drivers as we laid out in the guidance table is uncollectible revenue it should be to your point a expense not a source of income and we expect it to be an expense in 'twenty 'twenty. Two so that's the number one driver in terms of the headwinds there are some smaller paper cuts our ancillary income will be lower year over year, because we have less.

Speaker 8: vacancy to lease to mg 10

Vacancy to leased to temp tenants, that's another one but again, it's a paper cut the number one driver really is just uncollectible revenue shifting.

Speaker 8: That's another one, but again, it's a paper cut. The number one driver really is just uncollectable revenue shifting from a source of income to an expense.

Shifting from it from US a source of income to an expense in terms of bad debts. Your question I mean look our expectations around bankruptcies about move outs around you know anything that would be a drag and from an operational point of our materially lower today than they were pre COVID-19 . So you know I think we've if you recall from our Investor day, three or four years ago, we talked about 150 basis points annually.

Speaker 8: In terms of bad debt, your question, I mean look, our expectations around bankruptcies, about move outs around.

Speaker 8: you know anything that would be a drag and from an operation perspective are materially lower today than they were pre-COVID. So, you know, I think if you recall for our investor day three or four years ago, we talked about 150 base points annually of a bad dad bankruptcies, you know, kind of everything rolled in there. You know, today I think that number is much closer to 50 base points and our range includes

Bad dad bankruptcies kind of everything rolled in there you know today I think that number is much closer to 50 basis points in our range includes you know somewhere a little bit above that a little bit below that so it is a materially different operating environment Davids talked about our retention rates earlier are kind of known move outs or expected move outs was down dramatically as well, so really whats driving 2020.

Speaker 8: you know, somewhere, you know, a little bit above that, a little bit below that. So it is a materially different operating environment. Davis talked about a retention rate earlier. Our kind of known move outs are expected move outs is down dramatically as well. So really what's driving 2020 is unclutch for them.

Two as uncollectible revenue.

Speaker 6: Thanks for that. And then just quickly on the acquisitions for the fourth quarter, can you give me a sense as to what that cap rate was broadly at your share?

Okay. Thanks for that.

And then just quickly on the on the acquisitions for the fourth quarter.

Can you give me a sense as to what that cap rate was broadly it for sure.

Speaker 3: Well, Chris, I think in my prepared remarks, what I said was if you look at the blended overall cap rate for the activity in last year, it was just under 6%. But we haven't broken it down by transaction, and particularly from joint venture partners, I don't think we would ever release cap rates on a specific transaction.

Well Chris.

In my prepared remarks, what I said was if you look at the blended overall cap rate for the activity and last year. It was just under 6%, but we haven't broken it down by by transaction and particularly from joint venture partners that I don't think we would ever released cap rates on a specific transaction.

Speaker 6: And then David, the leasing volume, the GNL, GLO last year was 50, 50 on new leases. What are your expectations between shop and anger, leasing volume on new leases in 22? Any sense in terms of how that should play out? Chris, I'm sorry, I could barely.

And then David the leasing volume split GNL G. O M Wise last year was 50 50 on new leases.

What are your expectations between shop and anchor leasing volume on new leases and 22 any sense in terms of how that should play out.

Chris I'm, sorry, I can barely hear you can you can you say it again.

Speaker 6: Yeah, no, I'm sorry, David. So leasing volume for 21 between anchor and shop space was 50, 50 in terms of the geo.

Yeah, no what I'm sorry, David.

Leasing volume for 'twenty, one between anchor and shop space was.

50, 50 in terms of the G L a on new leases.

Speaker 4: What your expectations for 22 was that split between shops.

What what are your expectations for 'twenty, two was that split between shop and anchor.

Speaker 8: Hey Chris, it's Connor. I think in the first half of the year, it'll probably be consistent with 21 that kind of equals split. You know, as we talked about at your conference and at Mary, we are running out of boxes and so boxes will naturally fall off. And so I think, you know, based off our current forecast and this could obviously change tomorrow, it's probably that split would be even or consistent with 21 in the first half of the year. And then you'd see a higher percentage of shops in the back half of the year, but that's just, I mean, that's a guess.

Hey, Chris it's Conor.

In the first half of the year, it will probably be consistent with 21 that kind of equal split.

We've talked about at your conference and at married what we are running out of our boxes and so boxes will naturally fall off and so I think you know based off our current forecasts and this could obviously change tomorrow, it's probably that split would be even or consistent with 21 in the first half of the year and then you'd see a higher percentage of shops in the back half of the year, but that's just I mean, that's a.

Yes.

Speaker 6: And then last question for me, just specific to Paradise Village, interesting to buy vacancy out from a partner. Is there anything that you can chat about that gives some background on why that transaction work for you guys and not for your partner?

Okay and then last question for me just specific to Paradise village interesting to buy vacancy out from a from a partner or is there anything that you can chat about it.

Some background on why that transaction worked for you guys and not for your partners.

Speaker 3: Yeah, I think that's pretty simple. We, I mean, it's in a very wealthy sub market. Our vice president releasing for the West Coast lives a couple blocks away. So there's a personal agenda there to have 100% ownership.

Yeah, I think that's pretty simple, we I mean, it's in a very wealthy submarket, our vice president of leasing for the West Coast.

Lives a couple of blocks away so there's a personal agenda there.

To have a 100% ownership.

Speaker 3: And it was an old Albertsons anchored property where we were able to buy back the ground lease from Albertsons, which effectively created that vacancy at a pretty low cost. The challenge for our partner is that they're a private entity and it takes a lot of capital to reposition the property. And so we were able to negotiate a price at which we were happy with the growth and the cost of that growth. And they were happy with exiting the property and letting somebody else effectively redevelop the property.

And it was an old albertsons anchored property, where we were able to buyback the ground lease from Albertsons, which effectively created that vacancy at a pretty low cost the challenge for our partner is that they're a private entity and it takes a lot of capital to reposition the property and so we were able to negotiate a price at which we were happy with the <unk>.

And the cost of that growth and they were happy with with exiting the property and letting somebody else affectively redevelop the property.

Thank you I appreciate it.

Speaker 1: The next question will come from Mike Mueller with JP Morgan. Please go ahead.

The next question will come from Mike Mueller with Jpmorgan. Please go ahead.

Speaker 5: Yeah, hi, sorry for another JV question, but just a quick one here. Just curious, what's the trigger that prompted you to sell the JV for the Utah JVA, actually? So you're taking...

Yeah, Hi, sorry, sorry for another JV question, but just a quick one here just curious what was the trigger that.

Prompted you to sell the JV for the Utah J D I actually.

So you've taken it.

Speaker 3: Yeah, that's a good question. It comes down to what's most similar to our wholly owned portfolio and accretive and what is least similar and delutive. And from a DDRM.

Yeah, it's a good.

That's a good question it comes down to what's most similar to our wholly owned portfolio and accretive and what is lease similar and and dilutive and from a DRM Madison pool as I mentioned, we're buying groceries at $800 a square foot in our portfolio generate 750, its in the top quartile of demographic.

Speaker 3: Madison Pool, you know, as I mentioned, if we're buying brochures at $800 a square foot and our portfolio generates $750 in the top quartile of demographics nationwide. It has a lot of similarities in location in terms of being mostly in Florida. The SAU portfolio was different. It was much more rural. It's in the bottom quartile of demographics. The densities are much, much less. The household incomes are more kind of blue collar, whereas ours are more upper middle income and high income.

Nationwide and has a lot of similarities in location in terms of being mostly in Florida. The <unk> portfolio was different it was much more rural in the bottom quartile of demographics. The densities are much much less the household incomes are more kind of blue collar, whereas ours are more upper upper middle income and high income.

Speaker 3: And most of the grocery stores in that pool were doing less than 5, 5, 50 a foot. So it really just didn't have the growth and the durability that we look for in our own acquisitions. So we were happy to basically recycle our 20% out of that portfolio and reinvest it somewhere else. Got it.

And most of the grocery stores in that pool, we're doing less than five $5 50, a foot. So it really just didn't have the growth and the durability that we look for in our own acquisitions. So we were happy to basically recycle our 20% out of that portfolio and reinvested somewhere else.

Got it that was it.

Thank you thank.

Thank you.

Speaker 1: The next question will come from Kebyn Kim with truest. Please go ahead.

The next question will come from Keybanc, Kim with Truest. Please go ahead.

Speaker 6: Thanks on the morning. Just a couple of questions on leasing. Given that you're reaching mid 90% these rates, how do we think about your price and power and these spreads going forward?

Thanks, Good morning, just a couple of questions on leasing given that you're reaching mid 90% lease rates how.

How should we think about your pricing power and lease spreads going forward.

Speaker 3: Yeah, Keben, I think that's gonna be the, I mean, it's already started where,

Yes, Kevin I think that's gonna be the I mean, it's already started where.

Speaker 3: You know, the pricing power that the landlord has is much more than two years ago, three years ago. I mean, it is definitely tilted in the favor of the landlord. And I think you're starting to see that in spreads.

The pricing power that the landlord has as much more than two years ago three years ago. I mean, it is definitely tilted in favor of the landlord and I think youre starting to see that in spreads.

Speaker 3: I think that once we start to run out of box space, then the competition increases for the shops. I think we'll see the most growth in the shops in the back half of the year.

I think that once we start to run out of box space.

Then the competition increases for the shops, and so I think we will see the most growth in the shops in the back half of the year I also think that the longer the economy does well, particularly which is a little bit of inflation, which is good for retailers, you're going to see a lot more aggressive behavior from some of these tenants that really need to secure space.

Speaker 3: I also think that the longer the economy does well, particularly which is a little bit of inflation, which is good for retailers.

Speaker 3: you're going to see a lot more aggressive behavior from somebody's sentence that really need to secure space um... i mean it's been a half dozen very high quality restaurants that have gone public

It's been a half dozen very high quality restaurants that have gone public there's.

Speaker 3: There's a bunch of tenants that are being sponsored by investment grade tenants. I would point to pop shelf, which is a dollar general concept and they're doing fantastic. That type of tenant that's high credit and has to roll out because they've got an open to buy.

There's a bunch of tenants that are being sponsored by investment grade tenants I would point to pop shelf, which is a dollar general concept and if they're doing fantastic.

Type of tenant that is high credit and have to rollout because they've got an open to buy.

The space is getting more competitive and I like you I'm very curious to see how high the rents get but we've hit all time highs in shop rents in a number of our sub markets, including Miami, Cleveland, Portland and Boston.

Speaker 3: And I mean all time shop rents that are 50, 60, 70, 80, 90 dollars a foot.

And I mean, all time high shop rents that are 50, 60, 70, 80 $90 a foot.

And I hope that continues and I think as long as the.

Speaker 3: as the economy keeps humming along, we're gonna be very careful about leasing the credit as opposed to local, because I think that's gonna annure to the benefit of our stakeholders once the next recession comes.

As the economy keeps humming along we're going to be very careful about leasing to credit as opposed to local because I think that's going to inure to the benefit of our stakeholders. Once the next recession comes.

Speaker 6: And so couple of follow up there. I give you a lease expiration schedule and the options for pick boxes. How much are you actually getting to on a annual basis? Yeah.

And so a couple of follow ups there.

Giving you at least at current exploration schedule and the options for big boxes, how much are you actually getting to on an annual basis.

Yeah.

That one first.

Speaker 8: Yes, keep that a great point. So if you look historically, new leading activity has generally been about 10 to 15% of total leasing volume. So you're right. I mean, the negative is, you know, potentially you could have 10 attaining options. The great part about that is they've just alluded to a number of times. It means no downtime, no capital, in a five to 10% bump or even higher for some of the fair market value options we have. So it's a double-edged sword, but I would tell you from our perspective, it's a net positive.

Yeah excuse.

That's a great point. So if you look historically new leasing activity has generally been about 10% to 15% of total leasing volume. So you're right I mean, the negative as you know potentially you could have penetrating options. The great part about that as David alluded to a number of times. It means no downtime no capital and a 5% to 10% bump or even higher for some of the fair market value options, we have so.

It's a double edged sword, but I would tell you from our perspective, it's a net positive.

And what is implicit in your guidance for lease spreads.

Speaker 8: You know, we haven't guided to least spreads historically. If you remember from our, uh, investor day, Keeben, you know, our view is that renewals, which generally majority of which are options are gonna be in that two and a half.

We haven't guided to lease spreads historically, if you remember from our investor.

Investor day, keeping our our view is that renewals, which generally the majority of which are options are going to be about two and a half to seven 5% range and for new leases you know you're starting to see the reacceleration from from kind of a COVID-19 trough, we've done anywhere between 10 and 30% historically, so I wouldn't be surprised to see on a trailing 12 month numbers outside of those ranges but.

Speaker 8: to set the half percent range and for new leases, you know, you're starting to see the re-acceleration from kind of the COVID trough, you know, we've done anywhere between 10 and 30% historically. So I would be surprised to see on a trailing 12 month numbers outside those ranges, but given how focused we are from a portfolio wise, one least can really move the neal positively or negatively. So I think just historically, that trailing 12 numbers is the right one to use and you know, until we say otherwise, I think it's appropriate going forward.

Given how focused we are from a portfolio wise one leaves can really move the needle positively or negatively. So I think just historically that trailing 12 month number is the right one to use and.

So until we say otherwise I think it's appropriate going forward.

Okay. Thank you.

Thanks Steven.

Speaker 1: The next question will be a follow up from Katie McConnell with City. Please go ahead.

The next question will be a follow up from Katy Mcconnell with Citi. Please go ahead.

Speaker 4: It's like a building in just a quick follow up. David or Connor, the Madison JV, did you have any sort of promote featuring it that would have benefited your purchase price at all? No.

Hey, it's Michael Bilerman, just a quick follow up.

What are kind of the.

Madison JV did you have any sort of promote featuring it that would've benefited your purchase price at all.

Yeah.

Speaker 6: So it's at the clean by cell or it was a negotiated field.

So it's just a clean by fell or was a negotiated deal.

Speaker 3: A little bit of both. The one in Arizona was a negotiated unwind. SAU was a clean by-cell, and Madison was a little bit of a combination of the two.

A little bit of both the one in Arizona was a negotiated unwind.

S. A U is a clean by style and Madison was a little bit of a combination of the two.

Speaker 3: And Madison, who approached you? Was Madison approaching you to liquidate the assets and then you chose or you approached them to buy these assets? It's a little bit of both, Michael. I'm not trying to be evasive. It's just, you know, there's several different debt pools in that joint venture. It's a very sophisticated partner, Madison.

And Madison, who who approached two was Madison approaching you to liquidate the assets and the new chose or you approached them to buy these assets its a little bit of both Michael I'm not trying to be evasive. Its just you know there are several different debt pools in that joint venture, it's a very sophisticated partner Madison.

Speaker 3: You know, they have their own desires to when they want to exit portfolios or properties and we have certain ones we want and other ones that don't fit. So it's a little bit of both.

They have their own desires as to when they want to.

Exit portfolios of properties and we have certain ones, we want and other ones that don't fit.

It's a little bit of both.

Speaker 6: And then when you look back, if memory serves, this was the old Inwin portfolio from 2007. I know a bunch of those essence were probably developed in the early 2000s or bought. But effectively now you got like a 15 year performance history from when DDR originally acquired the asset, your 10 year recap with Madison, and now your 15 you've taken in, you know, call it the third of the portfolio.

And then when you look back if memory serves this was the old inland portfolio from 2007, and I know a bunch of the vessels probably developed in the early two thousands or bought.

But effectively now you've got like a 15 year performance history from when DDR originally acquired the asset.

Ken you recapped with Madison and now you're 15, you've taken in the you know call. It a third of the portfolio.

Speaker 6: How has NLI trended for this group of assets that you just bought over the last 15 years and sort of, you know, how do you look at relative value today versus when you did the deal in 17 and no seven? I'm just trying to get a picture of how these assets have performed over time.

Now how is NOI trended for this group of assets that you just bought over the last 10 15 years.

And sort of how do you look at relative value today versus when you did the deal in 17 and seven I'm just trying to get a picture of how these assets have performed over time.

Speaker 3: Well, as you know, we don't report segmentated NOI by portfolio. So that's a tough one to answer. I'd say from a value perspective.

Well.

As you know we don't.

We don't report segment segment aided.

NOI by portfolio. So that's a tough one to answer I would say from a value perspective.

Speaker 3: I mean, if grocery cap rates where they are today and where they were even five years ago, it's not hard to imagine that this portfolio has done pretty well from a value standpoint. But from an NLI standpoint, it's really tough to answer.

I mean, if grocery cap rates, where they are today and where they were even five years ago. It's not hard to imagine that this portfolio has done pretty well from a value standpoint, but from an NOI standpoint, it's really tough to answer.

Speaker 6: Yeah, I mean, 2007 was a peak queue in terms of pricing and there was a pretty robust level of NLI. And you could almost say the same thing about 17. So it's just interesting data points from transaction perspective, but I would also assume that from an NLI, you know,

Yeah, I mean look toward 2007 was the peak too in terms of pricing and there was a pretty robust level of NOI and you could almost like the same thing about 2017. So it's just interesting data points from a transaction perspective, but I would also assume that from an NOI.

Speaker 6: I would hope that you'd be able to at least comment on sort of here's the average base run of the portfolio and those drones and what, you know, just to give a little bit more color on how whether these have been good outperformers, have they been in line performers, have they been underperformers, just trying to get a rep of sense, but we can, it doesn't sound like you may have the data at your fingertips, so maybe we can follow up after. Sure.

I would hope that you'd be able to at least comment on sort of here's the average base rent of the portfolio that <unk> grown this as well.

Just to give a little bit more color on how whether these have been good outperformers have they been in line performers if they've been underperformers, just trying to get a relative sense, but we can it doesn't sound like you may have the data at your fingertips. So maybe we can follow up after.

Sure.

Thank you.

Thanks, Mike.

Speaker 1: This concludes our question and answer session. I would like to turn the conference back over to David Luke's for any closing remarks. Please go ahead, sir. Thank you for joining our call and we look forward to before we begin. km socially andfully

This concludes our question and answer session I would like to turn the conference back over to David Lukes for any closing remarks. Please go ahead sir thank.

Thank you for joining our call and we look forward to talking to you next quarter.

Okay.

Speaker 1: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Okay.

Speaker 13: Of.

Okay.

Yeah.

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Yeah.

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