Q3 2023 Brixmor Property Group Inc Earnings Call

Greetings and welcome to the bricks more property group's third quarter 2023 earnings conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce your host Stacy Slater Senior Vice President of Investor Relations and capital markets. Thank you you may begin. Thank you operator, and thank you all for joining Brink's Morris.

Third quarter conference call with me on the call today are Jim Taylor, Chief Executive Officer, Angela Aman, President and Chief Financial Officer, and Brian Finnegan Senior Executive Vice President and Chief Operating Officer, Mark Horgan Executive Vice President and Chief Investment Officer will also be available for Q&A.

Operator: Greetings and welcome to the Brixmor Property Group's third quarter 2023 earnings conference call. At this time, while participants aren't a listen-only mode, a brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

Before we begin let me remind everyone that some of our comments today may contain forward looking statements that are based on certain assumptions and are subject to inherent risks and uncertainties as described in our SEC filings and actual future results may differ materially we assume no obligation to update any forward looking statements.

Stacy Slater: It is now my pleasure to introduce your host, Stacy Slater, Senior Vice President of Investor Relations and Capital Markets. Thank you, you may begin. Thank you operator and thank you all for joining Brixmor's third quarter conference call. With me on the call today are Jim Taylor, Chief Executive Officer, Angela Aman, President and Chief Financial Officer, and Brian Finnegan, Senior Executive Vice President and Chief Operating Officer. Mark Horgan, Executive Vice President and Chief Investment Officer will also be available for Q&A.

So we will refer today to certain non-GAAP financial measures further information regarding the use of these measures and reconciliations of these measures to our GAAP results are available in the earnings release and supplemental disclosure on the Investor relations portion of our website.

Given the number of participants on the call. We kindly ask that you limit your questions to one or two per person. If you have additional questions regarding the quarter. Please re queue. At this time, it's my pleasure to introduce Jim Taylor.

Thanks, Stacy and good morning, everyone I'm very pleased to report another quarter of outperformance across every front, it's a quarter that once again demonstrates the cumulative momentum of our transformative value added plan at <unk>.

Stacy Slater: Before we begin, let me remind everyone that some of our comments today may contain forward-looking statements that are based on certain assumptions and are subject to inherent risks and uncertainties, as described in our SEC filings and actual future results may differ materially. We assume no obligation to update any forward-looking statements. Also, we will refer today to certain non-GAF financial measures. Further information regarding you to these measures and recommendations of these measures, your GAF results are available in the earnings release and supplemental disclosure on the investor relations portion of our website. Given the number of participants on the call, we kindly ask that you limit your questions to one or two per person. If you have additional questions regarding the quarter, please read Q.

Selling returns in cat and growth in cash flows that plan continues to produce.

The outsized demand from vibrant retailers to be in our transformed centers and most importantly, the strength of our team.

As always that outperformance begins with leasing where we signed over 780000 feet of new leases at an average comparable spread of 52, 7%.

Post IPO record for this company.

Likely once again, well above the sector importantly, as Brian will discuss further we sign these new leases with tenants like trader Joe's Lulu Lemon Alta and other leading retailers that demand to be in our well located portfolio.

Jim Taylor: At this time, it's my pleasure to introduce Jim Taylor. Thanks Stacy and good morning everyone. I'm very pleased to report another quarter of our performance across every front. It's a quarter that once again demonstrates the cumulative momentum of our transformative value added plan. The compelling returns and growth and cash flows that plan continues to produce, the outsides demand from vibrant retailers to be in our transform centers, and most importantly, the strength of our team.

Recent bankruptcies of weaker retailers have proven to be opportunities for us to bring in better tenants at better rents as demonstrated by the spreads and rapid progress on leasing recaptured space.

The strength of proven tenant demand to be in our centers allows us to not only drive better intrinsic lease terms, but also additional flexibility to drive even more value through reinvestment.

Jim Taylor: As always, that outperformance begins with leasing where we signed over 780,000 feet of new leases at an average comparable spread of 52.7%. A post IPO record for this company and likely once again, well above the sector. Importantly, as Brian will discuss further, we signed these new leases with tenants like Trader Joe's, Lulu Lemon, Ulta, and other leading retailers that demand to be in our well-located portfolio. Recent bankruptcies of weaker retailers have proven to be opportunities for us to bring in better tenants at better rents, as demonstrated by the spreads and rapid progress on leasing recaptured space.

As we renewed existing tenants and signed up new tenants at higher rents, we drove our average in place ABR of $16 77, a foot another record for the company, but one which leaves us plenty of room to continue to run.

As we often say rent bases matters, if you want to drive growth in ROI and create value, particularly in a rising rate environment.

Our small shop results. This quarter also demonstrate the cumulative impact of our portfolio transformation as our small shop occupancy grew to a record 89, 8% at an average rent achieved on new and renewal leases of $29 12 songs.

Jim Taylor: The strength of proven tenant demand to be in our centers allows us to not only drive better intrinsic lease terms, but also additional flexibility to drive even more value through reinvestment. As we renewed existing tenants and signed up new tenants at higher rents, we drove our average in-place ABR to $16.77 of foot. Another record for the company, but one which leads us plenty of room to continue to run. As we often say, rent basis matters if you want to drive growth and ROI and create value, particularly in a rising rate environment.

Given the momentum from Reinvestments underway, we have great visibility on growing small shop occupancy into the low ninety's as we deliver those projects, which will have an outsized impact on our forward growth and cash flow.

From an operation standpoint, we commenced another $13 million of new AVR during the quarter well ahead of our expectations as high and our regional teams worked to get rents commenced earlier.

We grew our NOI margin of 74, 4% and achieved same store NOI growth of four 8% for the year as Angela will detail in a moment, we now expect to deliver same store growth of 3.5% to 4% despite year over year headwinds of declining prior period run collections. In addition, we've raised our <unk>.

Jim Taylor: Our small shop results this quarter also demonstrate the cumulative impact of our portfolio transformation as our small shop occupancy grew to a record 89.8% and an average rent achieved on new and renewal leases of $29.12. Given the momentum from reinvestments underway, we have great visibility on growing small shop occupancy into the low 90s as we deliver those projects, which will have an outsized impact on our forward growth and cash flow. From an operations standpoint, we commence another 13 million of new ABR during the quarter.

So outlook to $2.03 at the midpoint and have raised our dividend by four 8% all while maintaining a conservative payout ratio.

Looking forward into 'twenty, four and beyond we expect continued NOI outperformance, even as we expect tenant disruption to continue at more normalized levels, our confidence and visibility are driven by our cumulative leasing activity, which drove our signed but not commenced pipeline to a record $62 million of ABR that will commence.

Jim Taylor: Well ahead of our expectations is high and our regional teams work to get rents commenced earlier. We grew our ROI margin to 74.4% and achieved same store and a wide growth of 4.8%. For the year, as Angela will detail in a moment, we now expect to deliver same store growth of 3.5% to 4%, despite year-over-year headwinds of declining prior period rent collections. In addition, we've raised our FFO outlook to $2.3% at the midpoint, and it raised our dividend by 4.8%, all along maintaining a conservative payout ratio.

Over the next several quarters as well as our robust forward leasing pipeline.

From a reinvestment perspective, bill and team continued to deliver transformative projects at very attractive returns even in a higher rate environment. This year, we expect to exceed $160 million of reinvestment deliveries at a 9% incremental return.

From an external growth perspective, Mark and team have largely been on hold the past several quarters as cap rates have begun to adjust to reflect a higher rate environment, particularly for larger opportunities importantly, we've continued to hold capital recycled from dispositions as we expect opportunities will soon begin to hurdle or higher return.

Jim Taylor: Looking forward into 24 and beyond, we expect continued NOI outperformance, even as we expect tenant disruption to continue at more normalized levels. Our confidence and visibility are driven by our cumulative leasing activity, which drove our sign but not commence pipeline to a record 62 million of ABR that will commence over the next several quarters, as well as our robust forward leasing pipeline. From a reinvestment perspective, Bill and team continue to deliver transformative projects at very attractive returns, even in a higher rate environment.

<unk>, it's private owners and operators face near term maturities and other capital events of course, given the high level of growth we have embedded in the assets, we own and control today, we can remain patient.

In summary, we are pleased with how our disciplined value added execution continues to deliver we are proud of how our results. This quarter. Once again demonstrates not only our outperformance across every observable metrics, but also our fundamental portfolio transformation.

Jim Taylor: This year we expect to exceed 160 million of reinvestment deliveries at a 9% incremental return. From an external growth perspective, Mark and team have wisely been on hold to past several quarters, as cap rates have begun to adjust to reflect the higher rate environment, particularly for larger opportunities. Importantly, we've continued to hold capital recycle from dispositions, as we expect opportunities will soon begin to hurtle our higher return expectations, as private owners and operators face near-term maturities and other capital events. Of course, given the high level of growth we have embedded in the assets we own in control today, we can remain patient.

And we are excited by our unparalleled visibility on continued growth and outperformance in the future.

Before turning the call over allow me to congratulate Angela and Brian on their well deserved promotion demonstrating the amazing depth of talent bricks more enjoys as well as our commitment to growing our talent.

With that I'll turn the call over to Brian for a more detailed discussion of our leasing results, Brian Thanks, Jim and good morning, everyone as our results demonstrate during the quarter. Our team continues to capitalize on a favorable retail leasing environment, attracting great tenants to our portfolio while quickly addressing recently recaptured bankrupt tenants space at much higher rents.

Jim Taylor: In summary, we are pleased with how our discipline value added execution continues to deliver. We are proud of how our results this quarter once again demonstrate not only our outperformance across every observable metric, but also our fundamental portfolio transformation. And we are excited by our unparalleled visibility on continued growth and outperformance in the future.

During the quarter, we executed on 368, new and renewal leases totaling one 7 million square feet.

<unk>, our most productive quarterly new leasing output of the year the depth of demand was evident in the tenants we added to the portfolio during the quarter with new leases executed with the likes of trader Joe's Bj's wholesale club T. J Maxx Ross dress for less Burlington Barnes <unk> noble five below Ulta and Lulu Lemon in addition.

Jim Taylor: Before turning the call over, allow me to congratulate Angela and Brian on their well-deserved promotion. Demonstrating the amazing depth of talent bricks more enjoys, as well as our commitment to growing our talent.

Our team is adding great restaurant tenants that are focused on growing their suburban footprint as demonstrated by the first the portfolio leases we added during the quarter with Cabo towards these tacos and urban place.

Brian Finnegan: With that, I'll turn the call over to Brian for a more detailed discussion of our leasing results. Brian? Thanks Jim and good morning everyone. As our results demonstrate during the quarter, our team continues to capitalize on a favorable retail leasing environment, attracting great tenants to our portfolio while quickly addressing, recently recaptured bankrupt tenant space at much higher levels. During the quarter, we executed on 368 new and renewal leases, totally 1.7 million square feet, including our most productive, quarterly, new leasing output of the year.

This activity led to a 40 basis point sequential increase in small shop occupancy our 11th consecutive quarter of sequential small shop occupancy growth achieving another record of 89, 8% with more room to run as we continue to deliver our accretive reinvestments and while we did see a drop in overall leased occupancy of 20 basis points.

The 93, 9% our robust leasing activity during the quarter offset a significant portion of the 70 basis points of occupancy drag we had from the recapture of the remaining bed Bath Tuesday morning, David's bridal and Christmas tree shop locations are.

Brian Finnegan: The depth of demand was evident in the tenants we added to the portfolio during the quarter, with new leases executed with the likes of Trader Joes, DJs Whole Top Club, DJX, raw stress for less, Burlington, Barnes and Noble, 5 below, Ulta, and Lulu Lemon. In addition, our team is adding great restaurants, that are focused on growing their suburban footprint, as demonstrated by the first of portfolio leases we added during the quarter, with Kava, Tortillas Tacos and Urban Plates.

Our team is quickly addressing these spaces with better tenants at higher rents as our company record new lease spreads of 53% included a 76% increase on recaptured 2023 bankrupt tenant space as Jim highlighted our results demonstrate that this retailer disruption is creating an excellent opportunity to upgrade our tenancy capture.

Brian Finnegan: This activity led to a 40 basis point sequential increase in small shop occupancy, our 11th consecutive quarter of sequential small shop occupancy growth, achieving another record of 89.8%, with more room to run as we continue to deliver our creative re-investments. And while we did see a drop in overall lease occupancy of 20 basis points to 93.9%, our robust leasing activity during the quarter, offset a significant portion of the 70 basis points of occupancy drag we had from the recapture of the remaining bedbath, Tuesday morning, David's Bridal and Christmas tree shop locations.

The embedded upside in the below market rents of these leases and free up compelling opportunities for additional Reinvestments. We expect the bulk of the income from these new tenants to start to come online in late 2024 and be fully realized in 2025.

Looking forward, we remain confident in the underlying fundamentals of our business plan to drive continued growth. Our centers are located where retailers want to be new supply in our markets remains almost nonexistent and we continue to add great tenants to our forward leasing pipeline as retailers are recognizing the success. Our team has had and completely transforming this port.

Brian Finnegan: Our team is quickly addressing these spaces with better tenants at higher rents, as our company record newly spreads of 53% included a 76% increase on recaptured 2023 bankrupt tenant space. As Jim highlighted, our results demonstrate that this retailer disruption is creating an excellent opportunity to upgrade our tenancy, capture the embedded upside in the below market rents of these leases, and free up compelling opportunities for additional re-investment. We expect the bulk of the income from these new tenants to start to come online in late 2024 and be fully realized in 2025. Looking forward, we remain confident in the underlying fundamentals of our business plan to drive continued growth. Our centers are located where retailers want to be.

Folio with that I'll hand, the call over to Angela for a more detailed review of our financial results Angela. Thanks.

Thanks, Brian and good morning, I'm pleased to report another quarter another quarter of strong execution and an improved forward outlook as we leverage our ongoing portfolio transformation to capitalize on the robust retailer demand environment.

NAREIT <unk> was <unk> 50 per diluted share in the third quarter driven by same property NOI growth of four 8% base.

Base rent growth contributed 400 basis points to same property NOI growth this quarter. Despite a drag of approximately 120 basis points related to recent tenant bankruptcies.

And that expense reimbursements ancillary and other income and percentage rents contributed 70 basis points on a combined basis, while revenue streams uncollectible contributed 10 basis points. This quarter, primarily due to two large settlements received during the period.

Brian Finnegan: New supply in our markets remains almost nonexistent, and we continue to add great tenants to our forward leasing pipeline as retailers are recognizing the success our team has had in completely transforming this portfolio.

Totaling approximately $1 million.

Angela Aman: With that, I'll hand the call over to Angela for a more detailed review of our financial results. Angela? Thanks, Brian, and good morning. I'm pleased to report another quarter of strong execution and then improve forward outlook as we leverage our ongoing portfolio transformation to capitalize on the robust retailer demand environment. May read FFO with 50 cents per duly to chair in the third quarter to have my same property and a wide growth of 4.8%.

As Jim highlighted are signed but not yet commenced pool now totaled $2 8 million square, two 8 million square feet at a record $62 million of annualized base rent.

The increase in the size of the pool. This quarter was primarily due to exceptionally strong leasing activity, which added approximately $18 million of new leases to the pool, well outpacing significant rent commencements during the quarter of approximately $13 million.

Angela Aman: Base rent growth contributed 400 basis points to same property and a wide growth this quarter, despite the drag of approximately 120 basis points related to recent tenant bankruptcy. Net expense reimbursements, ancillary and other income and percentage rents contributed 70 basis points on a combined basis. While revenue is deemed uncollectible, contributed 10 basis points to this quarter, primarily due to two large settlements received during the period, totaling approximately $1 million. As Jim highlighted, our signed but not yet commenced pool now totaled 2.8 million square feet at a record $62 million of annualized base rent.

We now expect another $13 million of leases to commence in the fourth quarter of this year and.

$36 million to commence during 2024 slightly weighted towards the first half of the year.

In terms of our forward outlook, we have increased our 2023 guidance for same property NOI growth to a range of three 5% to 4% a 75 basis point increase at the midpoint.

The improved outlook has been driven by strong rent commencement minimal additional tenant bankruptcy in the third and early fourth quarters and the significant bad debt settlements that occurred during the period.

We now expect revenue assumed uncollectible to represent 40 to 60 basis points of same property total revenues for the full year versus the prior range of 75 to 85 basis points.

Angela Aman: The increase in the size of the pool this quarter was primarily due to exceptionally strongly- and Lacing Activity, which added approximately $18 million of new leases to the pool, well outpacing significant rent commencements during the quarter of approximately $13 million. We now expect another $13 million of leases to commence in the fourth quarter of this year, and $36 million to commence during 2024, slightly weighted towards the first half of the year.

We've also increased our guidance for 2023, NAREIT <unk> to a range of $2 <unk> to $2.04 per diluted share, reflecting the change in same property NOI growth guidance and revised assumptions across the variety of other line items, including noncash GAAP rental adjustment.

Looking forward, we're encouraged by the magnitude of the signed but not yet commenced pool, which at $62 million is $9 million or 17% larger than it was at the same time last year, and we expect that $49 million or nearly 80% of the total pool will commence over the next five quarters, providing a very strong foundation for growth.

Angela Aman: In terms of our forward outlook, we have increased our 2023 guidance for same property and a wide growth to a range of 3.5 to 4%, a 75 basis point and increased at the midpoint. The improved outlook has been driven by strong rent commencements, minimal additional tenant bankruptcy in the third and early fourth quarters, and the significant bad debt settlements that occurred during the period. We now expect revenue seemed uncollectable to represent 40 to 60 basis points of same property total revenues for the full year versus the prior range of 75 to 85 basis points.

And that's that filed for bankruptcy in late 2022 and throughout 2023 are expected to detract just over 100 basis points of same property NOI growth this year.

Given our progress in releasing recaptured space as Brian highlighted we expect that space impacted by 2023 bankruptcy activity will detract approximately 50 basis points from growth in 2024, we.

Angela Aman: We've also increased our guidance for 2023 NayriFFO to a range of $2.02 to $2.04 per diluted share, reflecting the change in same property and a wide growth guidance, and revised assumptions across the variety of other line items, including non-cash gap rental adjustments. Looking forward, we're encouraged by the magnitude of the sign but not yet commence pool, which at $62 million is $9 million or 17% larger than it was at the same time last year.

We will establish our expectations around anticipated 2024 bankruptcy activity when we provide guidance in February.

As noted earlier, our 2023 guidance for revenues deemed uncollectible is now 40 to 60 basis points of total revenues.

Our long term historical run rate of 75 to 110 basis points as.

As a result, we do anticipate that revenues deemed uncollectible will likely be a negative contributor to growth next year as we continue to return to our historical run rate.

Angela Aman: And we expect that $49 million or nearly 80% of the total pool will commence over the next five quarters, providing a very strong foundation for growth. And this at file for bankruptcy in late 2022 and throughout 2023 are expected to track just over 100 basis points of same property and a wide growth this year. Given our progress in releasing recaptured space as Brian highlighted, we expect that space impacted by 2023 bankruptcy activity will detract approximately 50 basis points from growth in 2024.

Our fully unencumbered balance sheet remains well positioned to support our balanced business plan with debt to EBITDA of $6, one times and total liquidity of $1 3 billion.

We're pleased that our proactive efforts over the last several years to extend the duration of our balance sheet have resulted in a well lettered debt maturity schedule with only $300 million of debt maturing through year end 2024.

In addition, as previously disclosed $300 million of interest rate swaps.

Angela Aman: We will establish our expectations around anticipated 2024 bankruptcy activity when we provide guidance in February. As noted earlier, our 2023 guidance for revenue deemed uncollectible is now 40 to 60 basis points of total revenue versus our long term historical run rate of 75 to 110 basis points. As a result, we do anticipate that revenue deemed uncollectible will likely be a negative contributor to growth next year as we continue to return to our historical run rate.

Related to a portion of our term loan that will expire in late July 2024.

As always we'll be opportunistic, but given expectations that higher rates will persist through next year. We do anticipate that these items will have a meaningful impact on 2020 for interest expense.

Although the macro environment is likely to remain extremely dynamic the success of our value enhancing reinvestment efforts at compelling returns even in a higher rate environment, our outsized leasing productivity over the last several quarters and our strong forward leasing pipeline.

Angela Aman: Our fully unencumbered balance sheet remains well positioned to support our balance business plan with debt to EBITDAV 6.1 times and total liquidity of $1.3 billion. We're pleased that our proactive efforts over the last several years to extend the duration of our balance sheet have resulted in a well-latter debt maturity schedule with only $300 million of debt maturing through year end 2024. In addition, as previously disclosed, $300 million of interest rate swaps related to a portion of our term loan debt will expire in late July 2024.

So we're in a strong position to navigate the months ahead, and we look forward to continuing to share details of our ongoing portfolio transformation with you and with that I'll turn the call over to the operator for Q&A.

Sure.

Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

Confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.

Angela Aman: As always, we'll be opportunistic that given expectations that higher rates will persist through next year, we do anticipate that these items will have a meaningful impact on 2024 interest expense. Although the macro environment is likely to remain extremely dynamic, the success of our value enhancing reinvestment efforts at compelling returns, even in a higher rate environment, our outsizing productivity over the last several quarters, and our strong forward leasing pipeline.

First question comes from Dori Kesten with Wells Fargo. Please go ahead.

Hi, Thanks, good morning.

On your new and renewal lease spread there are certain markets, where you've been surprised.

In light of late or would you more broadly say you're benefiting from the general strongly from Diamond jewelry, Hey, This is Brian what's been really encouraging for us as this is incredibly broad base, whether that's within anchor small shops or regions across the country and we particularly saw that with our banker space during the quarter driving strong renewal growth across the <unk>.

Angela Aman: It put bricks more in a strong position to navigate the months ahead, and we look forward to continuing to share details of our ongoing portfolio trends. Information with you.

Operator: And with that, I'll turn the call over to the operator for Q&A. Thank you.

Operator: We will now be conducting a question-and-answer session. If you would like to ask a question, please press star-1 on your telephone keypad. A confirmation tone will indicate your line is in the question Q. You may press star-2 if you would like to remove your question from the Q. For participants, you think speak of equipment and maybe necessary to pick up your hands up before pressing the star keys.

Portfolio as well.

As we continue to invest in our centers retailers are certainly recognizing that they're recognizing the anchors that we put in which are driving a significant amount of traffic and the competition for space has really allowed us to drive rate higher. So we've been encouraged is that the trend has been fairly broad based.

Dori Kesten: First question, comes from Dori Kesten with Wells Fargo. Please go ahead. Thanks, Good Morning.

Okay and wonder.

I'm wondering what do you what are your expectations for.

Brian Finnegan: On your new and renewal lease breads, there are certain markets where you've been surprised to be outside of late, or would you more broadly say you're benefiting from the general strong needs environment? Dori, this is Brian, what's been really encouraging for us is this is incredibly broad-based, whether that's within anchor, small shops, or regions across the country. And we've been doing this for a long time. We've particularly saw that with our banker space during the quarter.

This holiday season and.

If you think that there could be any sort of shift in the strength of the leasing environment looking into 'twenty four kind of based on that yes. It's a good question the consumer remains incredibly resilient.

You've heard Walmart talked about their expectations being strong for holiday kids retail spending was again up year over year. So we remain very encouraged but thinking about retailer store opening plans I mean, theyre planning for 2024 at our ICSC meetings in 2023, we're talking to them about 2025 deals today. So.

Brian Finnegan: We're driving strong renewal growth across the portfolio as well. And as we continue to invest in our centers, retailers are certainly recognizing it. They're recognizing the anchors that we put in, which are driving a significant amount of traffic. And the competition for space is really allowing us to drive right higher. So we've been encouraged that the trends have been fairly broad-based.

Our leasing pipeline is not dependent on how holiday goes certainly its something that retailers are focused on but as we think about the pipeline. We've been encouraged just broadly and we don't expect a major impact from what we're seeing from a from a Christmas holiday season, and I would just add that you know that.

Brian Finnegan: Okay. And I'm wondering, what are your expectations for this holiday season? And if you think that there could be any sort of shift in the strength of the leasing environment looking into 24 kind of based on that? Yeah, so it's a good question. The consumer remains incredibly resilient. I think you've heard Walmart talk about their expectations being strong for holiday. They could retail spending was again up year over year. So we remain very encouraged.

Has been proven to be very durable demand given that the stores are profitable channel these retailers and they see white space for them to continue to grow their footprint. So we've been very encouraged.

Okay. Thank you.

Next question, Todd Thomas with Keybanc capital markets. Please go ahead.

Hi, Thanks, good morning.

Brian Finnegan: But thinking about retailers store opening plans. I mean, they're planning for 2024 at our ICS meetings in 2023. We're talking to them about 2025 deals today. So our leasing pipeline is not dependent on how holiday goes. Certainly, it's something that retailers are focused on. But as we think about the pipeline, we've been encouraged just broadly. And we don't expect a major impact from what we're seeing. We're seeing from a Christmas holiday season.

Jim I just wanted to touch on investments I think last quarter, you talked about seeing some investment opportunities beginning to surface may be deals that were on the market coming back at more favorable pricing and since last quarter. The 10 years up quite a bit. So borrowing costs are up has there been any further change.

In.

Sellers' willingness to accept either lower prices today.

Brian Finnegan: And I would just add that that has proven to be very durable demand given that the stores, the profitable channel, these retailers, and they see white space for them to continue to grow their footprint. So we've been very encouraged.

Are there more price adjustments required.

Before we start to see.

The company begin to get a little bit more opportunistic with regard to investments and are you raising your return hurdles further for new acquisitions, Yeah, I mean, clearly, it's a higher cost of capital environment. So we have a higher higher hurdle as we evaluate external growth opportunities and look as I.

Dori Kesten: Okay. Thank you.

Todd Thomas: Next question, Todd Thomas with Keybank Capital Markets. Please go ahead. Hi, thanks.

Jim Taylor: Good morning. Jim, I just wanted to touch on investments. I think last quarter, you talked about seeing some investment opportunities beginning to surface, maybe deals that were on the market coming back at more favorable pricing. And since last quarter, you know, the 10 years up quite a bit. So borrowing costs are up. Has there been any further change in, you know, sellers, willingness to accept either lower prices today? You know, are there more price adjustments required before we start to see, you know, the company begin to get a little bit more opportunistic with regard to investments.

Imagine what I find particularly compelling about our strategy is that we can drive top of the sector growth without relying on external growth with that said I think we're still seeing the market adjusts to what's happened with rates <unk> seen several deals get pulled as sellers have not been able to achieve expected pricing and in the <unk>.

Crown you have coming debt maturities and capital requirements that we think are going to bring folks to the table.

So.

We're encouraged by some of what we see from an opportunity perspective, but we're patient.

Jim Taylor: And are you raising your return hurdles further for new acquisitions? Yeah, I mean, clearly, it's a higher cost to capital environment. So we have a higher hurdle is we evaluate external growth opportunities. Jason, you know, look, as I mentioned, what I find particularly compelling about our strategy is that we can drive top of the sector growth without relying on external growth. With that said, I think we're still seeing the market adjust to what's happened with rates.

Okay.

Okay and.

Yeah.

Recycling capital.

Over the years and sort of pruning the portfolio over time.

Is there is there an opportunity at all to maybe accelerate that.

Dispositions today, if there's sort of an opportunity to take advantage of.

Somewhat favorable pricing.

On a one off basis for assets in the market today, while we continue to prune the portfolio as we fix the assets and stabilize them.

Jim Taylor: You've seen several deals get pulled as sellers have not been able to achieve expected pricing. And in the background, you have coming de maturities and capital requirements that we think are going to bring folks to the table. So, you know, we're encouraged by some of what we see from an opportunity perspective, but we're patient. Okay, and, you know, you've recycled capital, you know, over the years and sort of pruned the portfolio over time.

To maximize value, we sold over $2 5 billion over the last few years and we've done it one asset at a time, which is.

Harder to execute but we think much much more value accretive given the pricing and execution you got on single asset and sometimes partial asset transactions versus large portfolios.

So having sold a substantial part of what we consider to be noncore.

Some that remains but it's relatively modest in the context of our overall portfolio and we'll be opportunistic and harvesting that value as we've as we've maximized.

Jim Taylor: You know, is there is there an opportunity at all to maybe accelerate, you know, dispositions today if there's, you know, sort of an opportunity to take advantage of, you know, somewhat favorable pricing on a one off basis for assets in the market today. Well, we continue to prune the portfolio as we fix the assets and stabilize them to maximize value. You know, we've sold over two and a half billion over the last few years, and we've done it one asset at a time, which is harder to execute, but we think much, much more value, a creative given the pricing and execution you get on single asset and sometimes partial asset transactions versus large portfolios.

Okay Alright. Thank you you bet. Thank you Todd.

Next question, Greg Mcginniss with Scotiabank. Please go ahead.

Hey, good morning.

Could you just talk about a bed bath and anchor leasing in general whether these are all direct back fills or.

The types of tenants how much is left to work through from the bankruptcies or is in progress and finally.

The level of tea is and what that means for net effective rent growth versus the 76% rent spreads mentioned.

Jim Taylor: So, having sold a substantial part of what we consider to be an encore, there's some that remains, but it's relatively modest in the context of our overall portfolio and will be opportunistic and harvesting that value as we've, as we've maximized it. Okay. All right. Thank you. Thank you, Todd.

Great Hey, this is Brian we've been encouraged by the demand for really all our bankruptcy spaces, particularly on the bed Bath, we're down to a handful of boxes remaining we signed another one yesterday all but two have been single tenant back fills with operators that are in the specialty specialty grocery home accessory off price.

Space, we expect that income as I mentioned to start to come back online late next year and from a cost perspective, youre going to see those costs in line with where we've been leasing anchor boxes over the last few quarters I would highlight that our net effective rents we set another record this quarter at over $20 a foot thinking about anchor leasing in general.

Greg McGinnis: Next question, Greg McGinnis, with Scotia Bank, please go ahead. Hey, good morning.

Brian Finnegan: Could you just talk about bedbath and anchor leasing in general, whether these are all direct backfills or the types of tenants, how much is left to work through from the bankruptcies or is in progress? And finally, the level of TI's and what that means for net effective rent growth versus the 76% rent spreads mentioned. Yeah. Great. Hey, that's the Brian. We've been encouraged by the demand for really all of bankruptcy spaces, particularly on the bedbath.

<unk> remains a significant amount of competition for box space, considering we took 70 basis points back of banker of GLA and only lost 20 basis points in occupancy we're continuing to see great demand for these boxes and then in terms of the rents we're signing those leases at $15 a foot we've got anchor spaces rolling in.

Brian Finnegan: We're down to a handful of boxes remaining. Okay. All the two have been single tenant backfills with operators that are in the specialty grocery, home accessory, off-price space. We expect that income, as I mentioned, to start to come back online late next year. And from a cost perspective, you're going to see those costs in line with where we've been leasing anchor boxes over the last few quarters. I'd highlight that our net effective rents, we set another record this quarter at over $20 a foot.

Under nine Bucks for the next three years. So we feel really confident in the team's ability to drive rate with better tenants and bring those spaces to market.

Okay. Thank you.

And then.

Could you give us some of the background on your rite aid exposure or expected loss, so far through the bankruptcies, maybe what you anticipate being rejected in the future.

And then the size of those boxes and types of tenants, you're looking to backfill with yes sure. It's another great example of our team really getting ahead of these spaces. We werent, obviously surprised by the announcement in fact, we took back some rite aid space recently that we backfill pull to end with trader Joe's in regards to the bankruptcy announcement.

Brian Finnegan: Thinking about anchor leasing in general, there remains a significant amount of competition for box space. Considering we took 70 basis points back of bankrupt GLA and only lost 20 basis points in occupancy. We're continuing to see great demand for these boxes. And in terms of the rents, we're signing those leases at $15 a foot. We've got anchor spaces rolling at under $9 in the next three years. So we feel really confident in the team's ability to drive rate with better tenants and bring those spaces.

Greg McGinnis: Thank you.

Five of our locations were rejected immediately we have a new two more that are expected to close all but one are that in line kind of former eckerd vintage. So we've got good rent basis on those we expect to drive over 30% Mark to market upside we've got four of them already spoke.

Brian Finnegan: And then could you give us some of the background on your right aid exposure, expected loss so far through the bank upstairs, maybe what you anticipate, being rejected in the future. And then sides of those boxes and types of tenets you're looking to backfill with. Yeah, sure. It's another great example of our team really getting ahead of these spaces. We weren't obviously surprised by the announcement. In fact, we took back some right aid spaces recently that we backfill and with Trader Joe's.

For with operators in the off price general merchandise home accessories space. So we've been pretty pleased with what we've seen thus far but again. It's another great example of our team getting ahead of these boxes. So we can capitalize on them pretty quickly.

In total the exposure as of 930 was only 20 basis points of GLA or ABR. So overall. This is just a very small exposure for us.

Okay. Thanks, and just sorry quick follow up what were the commonalities on those rite aid boxes that.

Brian Finnegan: In regards to the bankruptcy announcement, five of our locations were rejected. Immediately, we have a new two more that are expected to close. All but one or that in line kind of former record vintage. So we've got good rent basis on those. We expect to drive over 30% marked market upside. We've got four of them already spoken for with operators in the off-premise price general merchandise home accessory space. So we've been pretty pleased with what we've seen thus far.

Caused those to be the selected wants to close.

If you look at that business.

Not exactly real estate dependent I think they are heavily dependent on how the scripts do in those markets. So I think that's a big.

A big consideration as you look at Rite aid versus some other businesses. Our understanding is they are not going through a lease auction process like you saw with bed Bath Theyre looking at marketing both the go forward business as well as a recapitalization of the existing plan. So as we look at it we didn't really.

Brian Finnegan: But again, it's another great example of our team getting ahead of these boxes so we can capitalize on them pretty quickly. Yeah, I just, you know, in total, the exposure as of 930 was only 20 basis points of GLA or ABR. So overall, this is just a very small exposure for us.

I think anything of it in terms of the strength of real estate. In fact, we're happy we got them back because we're already seeing some great demand on those spaces out of the gate.

Brian Finnegan: Okay, thanks and just sorry quick follow up. What were the commonalities on those right aid boxes that, you know, caused those to be the selected ones to close? Hey, you look at that business. It's not exactly real estate dependent. I think they're heavily dependent on how the scripts do in those markets. So I think that's a big, a big consideration as you look at right aid versus some other businesses. Our understanding is they're not going through a we saw in process like you saw with that bath.

Alright, thanks, guys.

Thank you.

Next question, Jeff Spector with Bank of America. Please go ahead.

Great. Thank you good morning, two part question Jim.

Jim If you can clarify your comment from the opening remarks.

Your latest same store NOI guidance, I think you lifted out to three and a half to four.

And what did you say about <unk>.

What you could achieve in 2024, and then I guess the second part would be yes.

As we start to focus on 24, I guess Angela are there any one time benefits or are there any benefits in 'twenty three we should be thinking about in our models for 'twenty for that may not reoccur. Thank you.

Brian Finnegan: They're looking at marketing both the go forward business as well as a recapitalization of the existing plan. So as we look at it, we didn't really think anything of it in terms of the strength of real estate. In fact, we're happy we got it back because we're already seeing some great demand on those spaces out of the gate.

Jeff I didn't comment on specific guidance for 'twenty four but just look at the momentum that we continue to build and deliver look at that signed but not commenced pipeline look.

Greg McGinnis: All right, thank you.

Jeff Spector: Thank you.

Jeff Spector: Next question, Jeff Spector with Bank of America, please go ahead. Great. Thank you.

Look at how much we're commencing a quarter and how much we're signing.

Jim Taylor: Good morning. Two-part question. Jim, if you can clarify your comment from the opening remarks on, you know, your latest same store NOI guidance. I think you lifted that to three and a half to four. And what did you say about, you know, what you could achieve in 2024? And then I guess the second part would be, you know, as we start to focus on 24, I guess, Angela, are there any, you know, one time benefits or are there any benefits in 23?

We feel very confident in our ability to continue to outperform given not only that signed but not commenced pipeline, but also what we have in legal in LOI. So that activity continues and all the while we're setting records as the spreads we're setting records as to rate.

We're being disciplined with capital so we like how the plan sets us up to continue to outperform and you know it comes back to Jeff as you know rent basis matters.

Jim Taylor: We should be thinking about in our models, you know, for 24 that may not reoccur. Thank you. Jeff, I didn't comment on specific guidance for 24, but just look at the momentum that we continue to build and deliver. Look at that sign but not commence pipeline. Look at how much we're commencing a quarter and how much we're signing. We feel very confident in our ability to continue to outperform given not only that sign but not commence pipeline, but also what we have in legal and L.O.I.

If you want to drive good fundamental growth and so you know as Brian was alluding to is we've recaptured these bankrupt tenants, it's given us a remarkable ability to bring in a better tenant at a better rent not only drive growth through that but drive better follow on shop leasing and you can see in our shop leasing the Aki.

<unk> Records and the rate records that we're setting so we feel pretty confident in our ability to continue to outperform but we're not giving guidance yet.

Jim Taylor: So that activity continues. And all the while, we're setting records as to spreads, we're setting records as to rate, we're being disciplined with capital. So we like how the plan sets us up to continue to outperform. And you know, it comes back to Jeff, as you know, rent basis matters. If you want to drive good, fundamental growth. And so, you know, as Brian was alluding to as we've recaptured these bankrupt tenants, it's given us a remarkable ability to bring in a better tenant at a better rent, not only drive growth through that, but drive better fall on shop leasing.

And I'll, let Angela answer the second half.

I mean, I think Tim did a really good job of laying it out and I tried to cover some of this in my prepared remarks, I Wouldnt say that theres anything.

One time or nonrecurring in nature, but the things, we really pointed to where as Jim just highlighted again, the signed but not commenced pool and how significant that is obviously, it's a record high for the company right now, but it is substantially larger than it was at the same time last year and that provides a really good foundation for growth as we get into 2024.

The things we did note that the 2023 bankruptcies, obviously have a continued impact in 2024 and I quantified that as about 50 basis points related to the space specifically associated with the 2023 bankruptcies 2024, we do expect there's going to be some of ongoing tenant disruption and I mentioned that will sort of quantify our expectations for 2024.

Jim Taylor: And you can see in our shop leasing the occupancy records and the rate records that we're setting. So we feel pretty confident in our ability to continue to outperform but we're not giving guidance yet. And I'll let Angela answer the second.

<unk> bankruptcy on our February call when we provide full year guidance. The other thing I noted in my remarks is that revenue is deemed uncollectible is detracting from growth in 2023, but not to the degree or the magnitude. We had originally expected it to.

Angela Aman: Yeah, I mean, I think Jim did a really good job of laying it out, and I tried to cover some of this in my prepared remarks. I wouldn't say that there's anything, you know, sort of one time or non-recurring in nature, but the things we really pointed to were, as Jim just highlighted again, the sign but not commenced pool and how significant that is. Obviously it's a record high for the company right now, but it's substantially larger than it was at the same time last year, and that provides a really good foundation for growth as we get into 2024.

When we do we are our guidance for 2023 at this point is 40 to 60 basis points of total revenue, which is well below kind of our historical run rate of 75 to 110 basis points. So we do think that that will be a negative contributor to growth as we get into 2024.

Angela Aman: The things we did know, or that the 2023 bankruptcy, obviously, have a continued impact in 2024, and I quantified that as about 50 basis points related to the space specifically associated with the 2023 bankruptcy. 2024, we do expect there's going to be some ongoing tenant disruption, and I mentioned that we'll sort of quantify our expectations for 2024 bankruptcy on our February call when we provide full year guidance. The other thing I noted in my remarks is that, you know, revenues deemed uncollectible is detracting from growth in 2023, but not to the degree or the magnitude we had originally expected it to.

Just as we sort of revert to normalized levels nothing unusual occurring there just a reversion to where we've been historically.

So I think that mostly cover same property you know on the <unk> side.

Did note.

You know obviously a debt maturity next year also our swaps that'll be burning off in late July of 2024, and that's going to create some additional pressure from an interest expense perspective, and the only other thing I would note that was a little bit more recurring or onetime in <unk> with just a gain on debt extinguishment. This year of right around a penny and a half almost two cents a share.

Angela Aman: We do, our guidance for 2023 at this point is 40 to 60 basis points of total revenues, which is well below, kind of the historical run rate of 75 to 110 basis points, so we do think that that will be a negative contributor to growth as we get into 2024, just as we sort of revert to normalized levels. Nothing unusual occurring there, just a reverse into where we've been historically. So I think that mostly covers the same property.

But that really covers that.

Great. Thank you.

Thank you Jeff.

Next question comes from hard gel St Juste with Mizuho. Please go ahead.

Hey, guys. Thanks for all the color on the call great.

Oh, good I have a question on the same store growth in the quarter to four 8% I'm curious if there's anything.

If you can help us maybe quantify the impacts of potential below market lease adjustments.

Angela Aman: You know, on the FFO side, you know, we did note just, you know, obviously, a debt maturity next year, also a swap that will be burning off in late July of 2024, that's going to create some additional pressure from an interest expense perspective, and the only other thing I would note that was a little bit more recurring one time in FFO was just again on debt extinguishment this year of right around a penny and a half, almost two cents a share, but that really covers it. Great. Thank you. Thank you, Jeff.

Or earnings from terminated bed Bath leases.

And we're.

We're there.

Assets are added to the same store pool in the third quarter.

Yeah.

A reconciliation of the pool.

In the glossary and there were some of the acquisitions that did come in through 2020.

I think it would be 2022 acquisitions, our 2021 acquisitions that came in I'm, sorry, 2022 acquisitions that came in to the quarterly pool for this year, but wont come into the annual pool until 2024.

Hendel St. Just: Next question comes from Condole St. Just with Mizzouha, please go ahead. Hey, guys, thanks for having a color on the call. Great. I could have a question on the answer of growth in the core of the 4.8%. I'm curious, Angela, if there's anything. If you can help us maybe quantify the impact of potential below market lease adjustments or earnings from terminated bedbath leases, and where there are a few assets that were added to the same for a pool of their core.

As it relates to below market I would just highlight again, obviously straight lining and <unk> 141, it does not impact same property or the same property growth calculation of four 8% was not.

Impacted at all by any either of the straight line rent reversals in the quarter.

Or are any below market.

Sort of acceleration from a fad perspective.

Nothing significant to note on a fast acceleration side.

Hendel St. Just: Yeah, you know, we give a reconciliation of the pool in the glossary and there were some of the acquisitions that did come into 2020. I guess it would be 2022 acquisitions or 2021 acquisitions that came in, I'm sorry, 2022 acquisitions that came into the quarterly pool for this year, but won't come into the annual pool until 2024. As it relates to below market, I would just highlight, again, obviously straight line and and FAS 141 does not impact same property or the same property growth calculation.

Continued us.

There are small balances as you move through the year, but actually on a net basis I think it was it was pretty minimal during the quarter.

Got it got it.

Do you have the impact of the six assets. So I think there were two the third quarter.

Results and then maybe from an earnings perspective was there an impact from the SaaS 141. Thanks.

I mean, it was it was well less than half a penny a share on the Fas acceleration side, So I mean really pretty de minimus during.

During the quarter I don't have broken out separately.

Hendel St. Just: So the 4.8% was not impacted at all by any either the straight line rent reversals in the quarter or any below market sort of acceleration from a FAS perspective. Nothing significant to note on the FAS acceleration side. You know, we continue to. There are small balances as you move through the year, but actually on a net basis, I think it was pretty minimal during the quarter. Got it, got it. Do you have the impact of the six assets?

Hello active just the acquisition.

Sorry can you hear me handoff.

And they all can you hear us.

Hello.

Yeah and allocation.

Operator can you hear us.

Hi, Ken.

And now I think the problem might be on your line, but to answer. Your question. The addition of the acquisition assets did not materially move our same store wasn't big enough.

Hendel St. Just: I think there were to the third quarter results, and then maybe from an earnings perspective, was there an impact from the FAS 141? Thanks. I mean, it was well less than half a penny a share on the FAS acceleration side, so I mean, really pretty diminished during the quarter. I don't have broken out separately. Hello. Active just the acquisition. Sorry, can you hear me, Hendel? Hendel, can you hear us? Hello. Yeah, Hendel, can you hear us?

Next question, Mike Mueller with Jpmorgan. Please go ahead.

Yeah, Hi, I guess looking at.

The reinvestment pipeline you have it was strong in place expected yields on that when you're thinking about the starts that you're kind of looking at.

Kicking off in say 2024.

Yields yield expectations compared to what we see in the supplemental for what's in process today.

They continue to remain strong and their enhanced frankly by the growth in rent.

We expect as we execute these projects so.

Hendel St. Just: Operator, can you hear us? I can. Hendel, I think the problem might be on your line, but to answer your question, the addition of the acquisition assets did not materially move our same store. It wasn't big enough.

We obviously work really hard to lease and price out and get a project ready to be launched and in that way.

Mike we greatly mitigate our risk right, we're not committing substantial capital until we understand what our growth and incremental returns are so I like what we're seeing in that forward pipeline and it's it's driven by the same factors that youre seeing driving the existing portfolio in terms.

Mike Mueller: Next question, Mike Mueller with JP Morgan, please go ahead. Yeah, hi. I guess looking at the reinvestment pipeline, you have strong, in-place expected yields on that.

Mike Mueller: When you're thinking about the starts that you're kind of looking at kicking off in, say, 2024, how do the yields yield expectations compare to what we see in supplemental for what's in process today? You know, they continue to remain strong, and they're enhanced, frankly, by the growth and rent that we expect as we execute these projects. So, you know, we obviously work really hard to lease and price out and get a project ready to be launched.

Of growth.

Got it okay. Thank you you bet.

Next question Anthony Powell with Barclays. Please go ahead.

Hi, good morning in terms of a tenant demand are you seeing any new types of tenants.

New categories, just categories of tenants increase their activity in the portfolio or is it kind of a similar trend to what we've seen in the past few quarters.

Anthony This is Brian it's something that we continue to be encouraged by I noted in my opening remarks, the depths of the new operators that we're seeing in the restaurant space real quality operators that have been focused on expanding their suburban footprint operators like Mendocino farms urban plates Carver. So we've seen a lot of depth of demand.

Mike Mueller: And in that way, Mike, we greatly mitigate our risk. Right? We're not committing substantial capital until we understand what our growth and incremental returns are. So, I like what we're seeing in that forward pipeline, and it's driven by the same factors that you're seeing driving the existing portfolio in terms of growth. Got it.

Anthony Powell: Okay, thank you.

There the mall side, we continue to see a significant number of tenants looking for off mall Sephora is upping their off mall program JD sports, who we sign this quarter and a former Tuesday morning space Lulu Lemon is expanding as well. So we've been pretty encouraged in terms of the new tenant pipelines that were.

Brian Finnegan: Next question, Anthony Powell with Barclays, please go ahead. Good morning. In terms of a tenant demand, are you seeing any new types of tenants or new categories of tenants increase their activity in the portfolio, or is it kind of the summer trend that we've seen the past you quarters?

Seeing overall as well as our core tenants, which continue to add significant store counts like those in the off price general merchandise home accessories sector. So the demand overall, it's been fairly broad based but we've been encouraged by what we're seeing on the new tenant front.

Brian Finnegan: Yeah, Anthony, this is Brian. It's something that we continue to be encouraged by. I noted in my opening remarks, the depth of the new operators that we're seeing in the restaurant space, real quality operators that have been focused on expanding their suburban footprint. Operators like Mendocino Farms or have been played to Cava. So we've seen a lot of depth at the man there. The mall side, we continue to see a significant number of tenants looking for off mall support is up in their off mall program.

Okay. Thanks, So maybe on revenues deemed uncollectible.

It was lower than expected this year.

Why can't it be below that.

Thanks.

100 basis points next year, given kind of a strong environment, we're seeing.

Yeah, I mean, you know look I, we're incredibly encouraged by what we're seeing as it relates to collections across the portfolio. I think we are cognizant as we go into 2024 of them are very healthy as Brian pointed out earlier very healthy and resilient consumer.

Brian Finnegan: JD Sports, who we signed this quarter in a former Tuesday morning space, Lulu Lemon is expanding as well. So we've been pretty encouraged in terms of the new tenant pipeline that we're seeing overall as well as our core tenants, which continue to add significant store counts like those in the off price general merchandise home accessory sector. So the demand overall has been fairly broad based, but we've been encouraged by what we're seeing on.

But there are lots of pressures in the current environment, including interest expense and capital availability and other things that tell us next year, probably looks pretty similar to a normalized run rate and that's probably where we're going to start the year from an expectation perspective.

Okay got it thank you.

Next question Ari Klein with BMO capital markets. Please go ahead.

Angela Aman: I'm going to do Ted in front. Thanks, and maybe on revenues deemed uncollectible, as you noted, it was lower than expected this year. Why can't it be below that 70 points to 100 basis points next year, given kind of the strong environment we're seeing? Yeah, I mean, you know, look, we're incredibly encouraged by what we're seeing as it relates to collections across the portfolio. I think we are cognizant as we go into 2024 of a very healthy as Brian pointed out earlier, very healthy and resilient consumer, but there are lots of pressures in the current environment, including interest expense and capital availability and other things that tell us next year, probably looks pretty similar to a normalized run rate, and that's probably where we're going to start the year from an expectation perspective. Thank you.

Hi, it's one not Ari how are you.

Just a question on yields and.

What you'd be looking to underwrite for stabilized yields for grocery anchored or power centers in light of the increase in capital costs.

You know, it's a great question and I think it's really a two part question, it's not only the going in yields, but what you see as the growth in upside in those yields so thinking about it from an IRR perspective, you really need to see IRR on an unlevered basis with great visibility on growth with concern.

A bit of assumptions as it relates to reversion cap rates and values you need to see those in the high single low double digit to clear, we think where the cost of capital is.

Ari Klein: Next question, Ari Klein with BMO Capital Markets, please go ahead.

Jim Taylor: Hi, Juan, not Ari, how are you? Just a question on yields in what you'd be looking to underwrite for stabilized yields for grocery anchored or power centers in light of the increase in capital costs. You know, it's a great question, and I think it's really a two-part question. It's not only the going in yields, but what you see is the growth and upside in those yields. So thinking about it from an IRR perspective, you really need to see IRRs on an unlearned basis with great visibility on growth, with conservative assumptions as it relates to reversion, cap rates, and values. You need to see those in the high single low double digit to clear, we think, where the cost of capital is.

And then just a quick follow up where do you think small shop occupancy can.

Gravitates towards in your portfolio.

What's the drag there.

The redevelopment since having on kind of the latest Scott for the third quarter.

Yeah, you know the redevelopment has a drag of 10 20 basis points overall on the portfolio we think.

That as you deliver those reinvestment projects that you will get higher.

Small shop occupancy than where the portfolio averages. So we have a pretty clear view that that small shop occupancy can go well into the low ninety's.

Thank you you bet.

Yeah.

Next question, Craig Melman with Citi. Please go ahead.

Brian Finnegan: And then just a quick follow-up, where do you think small shop occupancy can gravitate towards in your portfolio, and what's the drag that the redevelopment is having on the latest stats for the third quarter? Yeah, you know, the redevelopment has a drag of 10, 20 basis points overall on the portfolio. We think that as you deliver those reinvestment projects, that you will get higher small shop occupancy than where the portfolio averages. So we have a pretty clear view that that small shop occupancy can go well into the low 90s.

Hey, guys I just want to go back to the acquisition commentary.

One of your peers and sold a significant amount of assets under contract and what they say is a six five it seems like.

Whats in the market today, it's kind of Sellable. So I'm just kind of curious from your standpoint, what do you think timing is going to be a win some of these assets kind of break loose that youll pricing starts to adjust to where maybe the public market is pricing market cap rates versus where the private market is kind of stuck out.

Craig Malman: Thank you. See that.

Maybe some of the better quality deals that can be sold today.

Mark.

Yeah.

Well.

I think I'd start with we continue to believe that our patience and discipline here has been the right call because we're certainly seeing the market adjust almost real time in the last quarter or two to really react to where the cost of capital is on a prospective basis, we have seen over the years that the Reits do lead the private market.

Mark Horgan: Next question, Craig. Malmond with city, please go ahead. Yeah, I sort of go back to the acquisition commentary. You know, one of your peers has sold a significant amount of assets in their contract, and what they say is a 65. It seems like, you know, what's in the market today is kind of what's sellable. From this kind of curious, from your standpoint, what do you think time is going to be on when some of these assets kind of break loose that pricing starts to adjust to where maybe the public market is pricing market cap rates versus with private market to kind of stuck at on.

So we think from a timing perspective, thats, usually six months, where we've been in a very.

Turbulent capital market environment.

Quarter. So we saw rates rise 100 basis points in the market is still digesting what that means for pricing and where sellers are saying their expectations.

You know what I, what I would say is youre kind of seeing a bit of a bifurcated market we've seen some very tight.

Mark Horgan: Maybe some of the better quality deals that can be sold today. Mark? Well, you know, I think I start with, we continue to believe that our patient, and this one here has been the right call because we are certainly seeing the market adjust almost real time in the last quarter to really react to where the capital is on a perspective basis. We have seen over the years that the breeds do lead the private market.

Grocery anchored simple grocery anchor trade in southeast, Texas, California.

But where you are clearly seeing that the market adjust as the bigger deal market say about $100 million their owners there have been more realistic as to where they would need a price assets to trade and we think that's probably where the initial opportunities will come from a pricing perspective.

That's helpful.

And then just on the leasing front spreadsheets.

Spreads have been good just looking at our capital you guys are putting out some pretty tight I'm just kind of curious the conversations going forward, where the rates are in the cost of tenants to build out new space and by inventory kind of whats the push and pull between kind of you guys funding capital versus but then maybe paying for it with.

Mark Horgan: We think from a time of perspective that's usually six months where we've been in a very turbulent capital market in the last quarter or so we saw a raise for either 100 basis points and the market still is digesting. What that means for pricing and where sellers are saying their expectations. You know what I would say is you're kind of seeing a bit of a bifurcated market. We've seen some very tight grocery anchor, simple grocery trade in Southeast Texas, California.

Mark Horgan: But where you're clearly seeing the market adjust is the bigger deal market, say about 100 million sellers there, owners there have been more realistic as to where they would need to price off the trade and we think that's probably where the initial opportunities will come from a pricing perspective.

Rent spreads looked better in the near term or is it just.

Net effective rents.

Largely been unchanged and they're just continuing to be strong yes, we've always been cognizant of the capital that we're putting into spaces and it's one of the best practices that really came out of the pandemic. When we were up against supply chain issues. Our operating teams led by high give really partnered with tenants.

Construction teams to really be a lot more efficient in the space and a lot of these tenants weren't necessarily doing this all the goodness of their heart rate. They wanted to get stores open. So they figured out how to use the existing bathroom. They figured out how to use the existing facades and so as we've seen more tenants be aggressive, saying the pearl in the bed Bath and beyond in Tuesday morning.

Jim Taylor: That's helpful. And then just on the reaching front, you know, spread to the good, just looking at capital. You guys are putting out pretty tight. I'm just kind of curious to conversations going forward with rates are in the cost of 10 to build out the space and buy inventory kind of what's the push and pull between kind of you guys funding capital versus, you know, then maybe paying for it with higher rents and just spreads look better in the near term was it just.

Auctions, they've been able to utilize more existing spaces and be more efficient. So that has helped certainly on the cost side and then on the rent side. The competition for space is really driving that ran higher than we have had instances certainly we have been impacted by costs in certain circumstances, we have been able to push that back in line tenants or ulta.

Jim Taylor: You know, that effect is have largely been unchanged and they're just continuing to be strong. Yeah, we've always been cognizant of the capital that we're putting into spaces and it's one of the best practices that really came out of the pandemic when we were up against supply chain issues are operating teams led by high give really partnered with tenants construction teams to really be a lot more efficient in the space. And a lot of these tenants weren't necessarily doing this other goodness of their heart rate.

Minutely revise some of those scope. So it's something that our operating teams have really partnered with our leasing teams to focus on well and be as efficient as we can be but costs are certainly always a consideration when we're looking at deals one of the benefits of a larger platform like ours is that we're doing several deals.

Jim Taylor: They wanted to get stores open. So they figured out how to use the existing bathrooms they figured out how to use the existing facade. And so as we've seen more tenants be aggressive saying the burl in the that bath and beyond and Tuesday morning auctions they've been able to utilize more existing spaces and be more efficient. So that's helped certainly on the cost side and then on the rent side the competition for space is really driving that rent higher.

A year with these tenants. So there's trust in terms of what we're going to deliver and that goes a long way in the negotiation of how much capital will be required.

Maybe if I could slip one more in for Angela do you anticipate.

We up into swaps who's going to burn off and let it slip it in.

Jim Taylor: And we have had instances certainly we have been impacted by costs in certain circumstances we've been able to push that back on tenants or ultimately revise some of those scope. So it's something that our operating teams are really partnered with our leasing teams to focus on well and be as efficient as we can be but costs are certainly always a consideration when we're looking at deals. You know one of the benefits of a larger platform like ours is that we're doing several deals a year with these tenants so there's trust in terms of what we're going to deliver. And that goes a long way and the negotiation of how much capital will be required.

We're evaluating the market opportunistically continuing to keep an eye on where things are moving and we're obviously in an environment, where there's been a fair amount of volatility. So we are hopeful that there'll be an opportunistic window, where we can execute but we will continue to evaluate as we move forward.

Great. Thanks.

Next question comes from Caitlin Burrows with Goldman Sachs. Please go ahead.

Hi, Good morning, everyone, maybe just on tenant decision timing, we definitely hear in industrial and office set uncertainties, causing companies to slow their decision, making so I was just wondering if youre seeing that at all like all your tenants, taking a little bit longer to decide what they need and signed deals.

We really haven't seen any deterioration in terms of demand or timing of demand or timing to execute.

Angela Aman: Native Americans for one more for Angela if you anticipate we up in the swap she's going to burn off and let it slow. We're evaluating the market opportunistically continue to keep an eye on where things are moving we're obviously an environment where there's been a fair amount of volatility. So we are hopeful that there'll be an opportunistic window where we can execute but we'll continue to evaluate it.

One of the things to appreciate about this retail retailer demand is it stability.

I think everybody is expecting some type of economic disruption, we've been expecting it for the last couple of years and yet the retailers continue as Brian was alluding to to remain committed to their forward pipeline and they're actually making commitments now out into 'twenty five and beyond so.

Caitlin Burrows: Next question comes from Caitlin Burrows with Goldman Sachs. Please go ahead. Hi, good morning everyone.

Jim Taylor: Maybe just on tenant decision timing. We definitely hear an industrial in office that uncertainties causing companies to slow their decision making. So it's just wondering if you're seeing that at all, like are your tenants taking a little bit longer to decide what they need and sign deals. We really haven't seen any deterioration in terms of demand or timing of demand or timing to execute. You know, one of the things to appreciate about this retailer demand is its durability.

The other thing I would comment on about that demand is that retailers are using data as never before to really assess what the productivity of our new unit will be what it will cannibalize in terms of other competing stores and so they are making us an informed decision as possible in terms of that decision to open a new.

Store and they see the white space and if anything is the recent bankruptcies have pointed out there's not enough supply for them to achieve their new store opening plans, which we're leveraging from a competition standpoint.

Jim Taylor: You know, I think everybody's expecting some type of economic disruption. We've been expecting it for the last couple of years. And yet the retailers continue as Brian was alluding to to remain committed to their forward pipeline. And they're actually making commitments now out into 25 and beyond. So the other thing I would comment on about that demand is that retailers are using data as never before to really assess what the productivity of a new unit will be what it will cannibalize in terms of other competing stores.

Jim Taylor: And so they're making as an informed decision as possible in terms of that decision to open a new store. And they see the white space. And if anything is the recent bankruptcies have pointed out there's not enough supply for them to achieve their new store opening plans, which we're leveraging from a competition standpoint. Got it. Okay.

Got it Okay, and then maybe just on along the.

Following up on the swap discussion, we just had I know separately you guys have in June bond maturity. So wondering just how soon you might look to get ahead of that or wait until closer and do you think it would be of a similar size.

Yeah, Thanks, Kaitlin and like I said, we are evaluating the market both for the slop and for the 2024 bond maturity Opportunistically.

We will look to as we usually do we're hoping there'll be an opportunistic window for us to execute ahead of that I would point out though given that that maturity is in June of next year timing here is really important in terms of the impact ultimately on 2024 interest expense as well. So we'll continue to watch the market and like I said, hopefully find a good window to execute.

Earlier, rather than later, but we'll continue to evaluate.

Okay. Thanks.

Angela Aman: And then maybe just along the following up on the swap discussion, we just had I know separately you guys have in June bond maturity, so wondering just how soon you might look to get ahead of that or wait until closer and do you think it would be of a similar size. Thanks. Yeah, thanks, Caitlin. Like I said, we're evaluating the market both for the swap and for the 2024 bond maturity opportunistically, you know, we'll look to as we usually do, you know, we're hoping there'll be an opportunistic window for us to execute ahead of that.

Next question Cotter Mitchell with Piper Sandler. Please go ahead.

Hey, its actually Alex Goldfarb.

Good morning, good morning down there.

Hey, how are you Jim two quick questions first obviously stopped you know.

It's been a big.

Industry wide issue the retailers both spoken about it.

<unk>.

Sort of thinking about the relationship between the landlord and the tenant are.

Angela Aman: I would point out though, given that that maturity is in June of next year, timing here is really important in terms of the impact ultimately on 2024 interest expense as well. So we'll continue to watch the market. And like I said, hopefully find a good window to execute earlier rather than later, but we'll continue to evaluate. Okay. Thanks.

Are they asking you guys to help them more in trying to address this or.

Apart from obviously parking lot safety are there other initiatives that you guys are undertaking to help the tenants or are the tenants trying to really do this on their own.

And yes, the tenant landlord relationship is more about the general asset versus what's going on inside the stores.

Jim Taylor: Next question, Connor Mitchell with Piper Sandler, please go ahead. Hey, it's actually out to go far. So morning, morning down there. So to pay, how are you Jim? Two quick questions. First, obviously, theft, you know, has been a big industry wide issue, the retailers have all spoken about it. You know, sort of thinking about the relationship between the landlord and the tenant, you know, are they asking you guys to help them more in trying to address this or, you know, apart from obviously parking lot safety.

That's an important aspect of the landlord tenant relationship the tenant needs to know that they have a good counterparty and the landlord is keeping the center well lit secure safe.

For their customers and that partnership is critical I think it's a benefit Alex of a larger platform such as ours, where we have.

Great relationships with our retailers and we can be responsive to what their needs might be.

It's a highly recoverable expense so its surprising to some degree that certain landlords, particularly smaller private landlords may not be as responsive.

Jim Taylor: Are there other initiatives that you guys are undertaking to help the tenants or are the tenants trying to really do this on their own. And, you know, the tenant landlord relationship is more about, you know, the general asset versus, you know, what's going on inside the stores. You know, that's an important aspect of the landlord, tenant relationship. The tenant needs to know that they have a good counterparty in the landlord. He's keeping the center well-lit, secure, safe for their customers.

We see it as an opportunity for competitive differentiation and it is a concern of the tenants. We're fortunate Alex and that we don't have a lot of high crime urban locations that are impacting retailers to the degree you've been reading about in the press.

But it is important to be in front of it and to be a good partner with the tenant.

Okay and the next question is for babies for Oregon.

Jim Taylor: And that partnership is critical. I think it's a benefit, Alex, of a larger platform, such as ours, where we have great relationships with the retailers, and we can be responsive to what their needs might be. It's a highly recoverable expense. So it's surprising to some degree that certain landlords, particularly smaller private landlords, may not be as responsive. We see it as an opportunity for competitive differentiation. And it is a concern of the tenants.

A number of years ago, you guys were buying a number of assets in the Carolinas along the coast.

Hadn't seen yeah that seems to be a little quiet so I don't know if.

The strategy didn't pan out maybe the way you thought or it's just given the dearth of transactions, you're still hungry hungry to expand in that area or other similar sort of.

Yes, nobody type areas, but maybe the transaction market has just been top so not as much activity. So just looking for an update there.

Jim Taylor: We're fortunate, Alex, in that we don't have a lot of high crime, urban locations that are impacting retailers to the degree you've been reading about in the press. But it is important to be in front of it, and to be a good partner with the tenant.

Look we've been really pleased with how the acquisition acquisitions that we bought it performed we've outperformed underwriting I think on every deal that we've purchased so.

I'd say to answer your question, it's been more of where the transaction market is.

We did make a.

Jim Taylor: Okay, and the next question is for babies for Oregon. A number of years ago, you guys were buying a number of assets in the Carolina along the coast. It hadn't seen, you know, that seems to be a little quiet. So I don't know if the strategy didn't pan out maybe the way you saw it, or it's just given the birth of transactions, you know, you're still hungry to expand in that area, or other similar sort of, you know, snow bird type areas. But maybe the transaction market has just been, you know, tough, so not as much activity.

The choice a year and a half ago to pause acquisitions, because we believe better opportunities will be coming from a IRR and yield perspective, and we think thats being proven out well today. So we're going to continue to find deals in the markets that we like.

As a as time moves on here, but the market has been slow and no. One wants to do deals more than me Alex So we're going to continue to find them as as.

As we can but those are very attractive markets to us as mark alluded to our acquisitions that have done well.

We think we can build upon the critical mass that we have in the coastal Carolinas and throughout Florida and the southeast.

Jim Taylor: So just looking for an update there. Look, we've been really pleased with how the acquisition that we've bought has performed. We've outperformed underwriting. I think I'm on every deal that we've purchased. So I'd say the answer to your question has been more of where the transaction market is. You know, we did make a choice a year and a half ago to pop acquisitions because we believe better opportunities will be coming from a IRR and yield perspective.

And they've.

Been great performers for us so well.

We will continue to mine those markets for opportunity.

Okay. Thank you.

You bet.

Once again, if he would like to ask a question. Please press star one on your telephone Keypad next question comes from Paulina Rojas with Green Street. Please go ahead.

Jim Taylor: And we think that's being proven out well today. So we're going to continue to find deals in the markets that we like as time moves on here. But, you know, the market has been slow and no one wants to do deals more than me, Alex. So we're going to continue to find them as we can. But those are very attractive markets to us. As Mark alluded to, our acquisitions are done well.

Good morning.

Good morning.

Yes.

I haven't seen stronger demand for certain score cyclists over others.

Yes.

Today in the market.

I'm sorry, Paul I know you broke up there a little bit.

You mean, how does that raise relative to psi size ranges Paulina in terms of where we're seeing the most demand.

Jim Taylor: We think we can build upon the critical mass that we have in the coastal Carolinas and throughout Florida and the Southeast. And they've been great performers for us. So we'll continue to mine those markets for opportunity.

Yeah.

Jim Taylor: Okay. Thank you. You're welcome.

Yeah, I'd point to a few of them, particularly in the kind of junior anchor space.

That kind of 8% to 12000 square foot range Youre seeing a lot of competition from the likes of five below and Skechers in foot locker and Ulta Pops.

Operator: Once again, if you would like to ask a question, please press star one on your telephone keypad.

Top shelf boot barn, and another tenant that size range has been an extremely competitive and we saw that competition really play out in our Tuesday morning spaces, and then I'd just say from a from a category overall would be that I'll parcel space. We continue to have a significant amount of demand from our parcel tenants you look at cava entering the fray.

Paulina Rojas: Next question comes from Paulina Rohan. It's green street. Please go ahead.

Paulina Rojas: Good morning. And I was thinking stronger than I was certain for sizes over others. There's sort of a sweet spot today in the market. I'm sorry, Paulina. You broke up there a little bit. Are we? You mean how does it raise relative to size ranges Paulina in terms of where we're seeing the most demand? Exactly. Yes. Yeah. I point to a few of them, particularly in the kind of junior anchor space, that kind of eight to 12,000 square foot range.

It is now competing against Starbucks and Chipotle medical uses that are filling out some multi tenant out parcels. So I think within that space.

We are seeing a lot of competition and the benefits of some of what we're doing in terms of being aggressive on recapturing space earlier, we're freeing up a lot of those opportunities. So we've been encouraged on that front, but if you are.

Paulina Rojas: You're seeing a lot of competition from the likes of five below and sketchers and footlocker and and ultra pop shell boot barn and other tenants. So that size range has been extremely competitive and we saw that competition really play out in our Tuesday morning spaces. And then I just say from a from a category overall would be that out parcel space. We continue to have a significant amount of demand from out parcel tenants.

Calling out two size ranges those would be the two that I'd highlight.

To amplify what Brian, saying the demand in that eight to 12000 square foot range lines up really well with the size of the rite aid boxes.

Thanks, and then the other question is Angela I think you mentioned minimal and bankruptcy culinary for Q.

Just to make sure nobody calling of my waiter is there any retailer they're afraid of Rite aid.

Paulina Rojas: You look at Kava entering the fray is now competing against Starbucks and Chipotle medical uses that are filling out some multi tenant out parcels. So big within that space we are seeing a lot of competition and the benefits of some of what we're doing in terms of, with being aggressive on recapturing space earlier, we're freeing up a lot of those opportunities, so we've been encouraged on that front. But if you're calling out two size ranges, those would be the two that I'd highlight. Yeah, I just, you know, to amplify what Brian's saying, the demand in that each to 12,000 square foot range lines up really well with the size of the right aid boxes.

No. It was really just rite aid and impacts from Rite aid given that our total exposure is only 20 basis points on an annualized basis.

It's probably.

Less than five basis points of impact to us in 2023.

Yeah.

Thank you.

Next question <unk> St Juste with Mizuho. Please go ahead.

Hey, guys, sorry, I had some technical difficulties earlier I'm not sure if you heard or answer the second part of my question. So I'll try again. So apologies. This is redundant, but I wanted to know if there were any below market lease adjustments in your earnings or same store NOI from the terminated bed bath leases right.

Angela Aman: Thank you. And then the other question is, Angela, I think you mentioned minimal bankruptcy in 3Q and early 4Q. Just to make sure nobody's calling of my radar, is there any repeller there outside of right aid? No, no, it was really just right aid. And the impact from right aid, given that our total exposure is only 20 basis points on an annualized basis, you know, it's probably less than five basis points of impact to us in 2023. Thank you.

Again, that's a fas impacts on same store NOI from an <unk> perspective.

Hendel St. Just: Next question, Hans L. St. Just with the ZUHO, please go ahead.

The impact of bankruptcy really netted to zero and sort of accretion above below market leases and tenant inducements. So no impact during the quarter on a full year basis.

Did pick up about half a million dollars related to bankruptcies year to date.

And in fact in tenant inducements.

But that's really offset by about $1 million of <unk>.

Net reversals on straight line so between all of the noncash items together you know youre looking at.

Hendel St. Just: Hey guys, sorry, he had some technical difficulties earlier, not sure if you heard or answered the second part of my question, so I'm going to try again, so apologies is redundant. But I wanted to know if there were any below market these adjustments in your earnings or say, for a while from the term native bed bath leases. Yeah, again, that has impacts on same store and a lot from an FFO perspective.

A negative.

500000 dollar adjustment year to date.

Got it thank you for that.

If I could squeeze in a follow up so during your <unk>.

Commentary earlier I think you mentioned you expected cash flow from the bed Bath another bank.

Bankruptcy backfill boxes to hit primarily in the back half of next year early 'twenty five I guess I'm curious is that timeline being moved back a little bit maybe I'm splitting hairs, but I thought you had previously outlined expectations to be primarily a second half of extra benefit. Thanks.

Hendel St. Just: The impact of bankruptcy really netted to zero in sort of a creation above below market leases and tenant inducements, so no impact during the quarter on a full year basis. We did pick up about half a million dollars related to bankruptcy is year to date. In fact, in fact, in 10 and inducements, but that's really offset by about a million dollars of net reversals on straight line, so between all of the non cash items together, you know, you're looking at a negative about $500,000 a year to date.

Hey, This is Brian if you think about when retailers generally open their stores right there, they're hoping them earlier in the spring or in the fall, particularly for national tenants. So the timeline aligns with with where we expected it to be I mean, we've been signing those leases here consistently over the last few months and they're really lining up those store openings.

For for late next year, particularly when you're converting a bed bath box to say a sprouts grocer.

Hendel St. Just: Got it, thank you for that. And if I could squeeze in a follow up, so during your comment here earlier, I think you mentioned you expected cash loaf of the bed bath and other. Bank will be back so boxes to hit primarily in the back half of next year, early 25. I guess I'm curious, is that timeline being moved back a little bit maybe I'm splitting here, but I thought you'd prove the outline expectations to be this to be primarily a second half of next year, but thanks.

But it aligns with where we had been expecting that to come in and like we said, we would expect them to fully come online in 2025, but those openings to start to commence in the back half of the year.

Got it thank you.

Thanks <unk>.

Next question, Linda Tsai with Jefferies. Please go ahead.

Hi, Eddie.

Hendel St. Just: Yeah, I'm dying. This is Brian. You think about when retailers generally open their stores, right? They're opening them early in the spring or in the fall, particularly for national tenants. So the timeline aligns with where we expected it to be. I mean, we've been signing those leases here consistently over the last few months, and they're really lining up those store openings for late next year, particularly when you're converting a bed bath box to say a sprouts grocer.

Just general thoughts on how interest costs.

<unk> earnings next year.

Yeah. Thanks, Linda I would say a couple of things and just sort of echoing my comments from earlier, we do have the 300 million dollar bond maturity that the June maturity of next year the rate on that's about $3 six 5% and obviously with the 10 year today right around 5% and then a spread on top of that you're looking at a rate that probably almost double.

If we were to replace it today.

Hendel St. Just: But it aligns with where we have been expecting it to come in. And like we said, expecting the fully come online in 2025, but those openings to start the comments in the back half of the year. Got it. Thank you.

So not only does the ultimate greatly realized on that refinancing matter, but the timing in terms of when we.

Refinance that matters for 2020 for interest expenses, well and we're continuing to evaluate the market opportunistically, but don't have any firm view on when that refinancings likely to happen between now and Jim. The other thing I mentioned in my prepared remarks with the exploration of a 300 million dollar swap that happens in late July of 2024.

Hendel St. Just: Thanks, and out.

Linda Tsai: Next question, Linda Ty, which Frees, please go ahead. Hi, any general thoughts on how interest costs impact earnings next year? Yeah, thanks, Linda. You know, I would say a couple things and just sort of echoing my comments from earlier, we do have this $300 million bond maturity. That's a June maturity of next year. The rate on that's about 3.65%. And obviously with the 10 year today, right around 5% and then a spread on top of that, you're looking at a rate that probably almost doubles if we were to replace it today.

So far I'm not is swapped it to five 9% and our.

Current so far as spot so first well above that as you would expect so there was an impact with that too that's a little bit easier certainly from a timing perspective to understand but you know we as I mentioned earlier, we'll continue to evaluate the market as it relates to replacement not swap.

Ah you know over the course of the next nine months and look to Opportunistically lock in a rate when it makes sense to do so.

Linda Tsai: So not only does the ultimate rate, we realize on that refinancing matter, but the timing in terms of when we refinance that matters for 2024 interest expense as well. And, you know, we're continuing to evaluate the market opportunistically, but don't have any firm view on when that refinancing likely to happen, between now and June.

Linda we as always had tremendous flexibility so that we're not having to go into the market at any particular point in time. It was part of Angela and team strategy to refinance part of that 24 maturity last year. So we've got $1 billion three of liquidity under the line of credit.

Angela Aman: The other thing I mentioned in my prepared remarks is the expiration of a $300 million swap that happens in late July of 2024. So far on that is swapped at 2.59%. And, you know, current so-for, spot so-for, you know, well above that issue would expect. So there's an impact with that too. That's a little bit easier, certainly from a timing perspective to understand. But, you know, we, as I mentioned earlier, will continue to evaluate the market as it relates to replacing that swap, you know, over the course of the next nine months, and look to opportunistically lock in a rate when it makes sense to do so.

And as Angela mentioned, we will be opportunistic in terms of picking our window.

Great. Thank you you bet.

There are no further questions I would like to turn the floor over to Stacy for closing remarks. Thank you everyone for joining US today, we look forward to seeing many of you at NAREIT.

This.

Todays teleconference. You may disconnect your lines at this time and thank you for your participation.

Okay.

Angela Aman: You know, Linda, we, we as always have tremendous flexibility so that we're not having to go into the market at any particular point in time. It was part of Angela and team strategy to refinance part of that 24 maturity last year. So, you know, we've got a billion three of liquidity under the line of credit. And, as Angela mentioned, we'll be opportunistic in terms of picking our window. Great. Thank you. See you back.

[music].

Operator: There are no further questions.

Okay.

[music].

Okay.

Stacy Slater: I would like to turn the floor over to Stacy for closing remarks. Thank you, everyone, for joining us today. We look forward to seeing many of you at Nerea.

Hum.

Operator: This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.

Hum.

[music].

Hum.

[music].