Q4 2023 Brixmor Property Group Inc Earnings Call
Operator: Greetings and welcome to Brixmor Property Group Inc.'s fourth quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode.
Greetings and welcome to bricks more property Group, Inc. Fourth quarter 2023 earnings Conference call.
At this time all participants are in a listen only mode.
Operator: A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Stacy Slater, Senior Vice President, Investor Relations and Capital Markets. Thank you. You may begin.
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 Stacy Slater Senior Vice President Investor Relations and capital markets. Thank you you may begin. Thank you operator, and thank you all for joining break Smart fourth quarter Conference call with me on the call today are Jim Taylor, Chief Executive Officer, Brian Finnegan Junior Executive Vice President and Chief.
Stacy Slater: Thank you, Operator. And thank you all for joining Brixmor's fourth quarter conference call. With me on the call today are Jim Taylor, Chief Executive Officer; Brian Finnegan, Senior Executive Vice President and Chief Operating Officer; and Steve Gallagher, Senior Vice President, Chief Accounting Officer and Interim Chief Financial Officer and Treasurer. Mark Horgan, Executive Vice President and Chief Investment Officer, will also be available for Q&A. 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 uncertainty, as described in our SEC filings, and actual future results may differ materially. We assume no obligation to update any forward.
Stacy Slater: Operating officer, and Steve Gallagher, Senior Vice President and Chief Accounting Officer, and interim Chief Financial Officer, and Treasurer, Mark Horgan Executive Vice President and Chief Investment Officer will also be available for Q&A.
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.
Stacy Slater: Also, we will refer today to certain non-GAAP financial measures. Further information regarding our use of these measures and reconciliations of these measures to our GAAP results is 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.
Stacy Slater: Also we will refer today to certain non-GAAP financial measures further information regarding our 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.
Stacy Slater: 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. We are very pleased to report yet another strong quarter and year, reflecting not.
James M. Taylor: Thanks, Stacy, and good morning, everyone. We are very pleased to report yet another strong quarter and year, reflecting not only the strength of our value-added execution but the depth of tenant demand for our transformed portfolio. That transformation is evident in every observable stat, from our record occupancy, to record rate, to sector-leading new and renewal spreads, to outperformance and growth. During the quarter, as Brian will discuss, we signed 800,000 feet of new leases at an average cash spread of 37%, bringing our total new ABR signed for the year to a record $65 million. We also achieved record retention of 86% and renewal spreads of 13.3% for the year, once again demonstrating the market opportunity within our portfolio. Our current signed but not commenced pool of leases represents another $64 million of ABR, another record that will commence over the next several quarters, as Steve will detail. For the year, we drove same-star NOI growth of 4% despite headwinds from bed, bath, Tuesday morning, and others of 120 basis points.
James M. Taylor: Only the strength of our value added execution, but the depth of tenant demand to be in our transformed portfolio that transformation is evident in every observer will start from a record occupancy at a record rate the sector, leading new and renewal spreads to outperformance in growth during the quarter as Brian will discuss we signed 800000 feet of new leases.
At an average cash spread of 37%, bringing our total new ABR signed for the year to a record 65 million. We also achieved record retention of 86% and renewal spreads of 13, 3% for the year once again, demonstrating the market market opportunity within our portfolio, our current signed but not <unk>.
James M. Taylor: Men's pool of leases represents another 64 million of ABR. Another record that will commence over the next several quarters as Steve will detail in a moment for the year. We drove same store NOI growth of 4% despite headwinds from bed Bath Tuesday morning, and others of 120 basis points.
James M. Taylor: FFO per share increased from $1.95 to $2.04, or 4.1% when excluding the gain on debt exceeding. With our all-weather strategy for growth, we once again demonstrated an ability to deliver consistent growth in an always dynamic retail industry. We have proven, given our attractive rent basis, that tenant disruption is an opportunity to create value. Speaking of value creation, during the year, we stabilized $157 million in reinvestment projects at an average incremental return of 9%. Our pipeline now stands at $429 million at an average incremental return of also 9%.
James M. Taylor: <unk> per share increase from $1 95 to 204 or four 1% when excluding the gain on debt extinguishment with our all weather strategy for growth. We once again demonstrated an ability to deliver consistent growth and then always dynamic retail industry, we have proven given our attractive rent basis there.
James M. Taylor: Tenant disruption is an opportunity to create value speaking of value creation. During the year, we stabilized 157 million of reinvestment projects at an average incremental return of 9% our pipeline now stands at 429 million at an average incremental return also a 9% importantly.
James M. Taylor: Importantly, in projects that are pre-leased, and nearly half of which we expect to deliver this year. That's the power of our value-added program. It has lower risk, shorter duration, and attractive incremental return.
James M. Taylor: And projects that are pre leased and nearly half of which we expect to deliver this year. That's the power of our value added program, it's lower risk shorter duration and attractive incremental returns. We've now impacted 40% of the portfolio also creating tremendous value not only on delivery, but follow on value down the road as we.
James M. Taylor: We have now impacted 40% of the portfolio, also creating tremendous value not only on delivery but follow-on value down the road as we benefit from higher rates in occupancy and also highly creative future phases. I'm pleased to report, thanks to Bill Brown and the California team's effort, we moved the Davis Collection in Northern California into the active pipeline in the fourth quarter. Located literally on the front step of one of the nation's fastest growing universities with 41,000 students, we will completely transform this Trader Joe's Anchorage Center with the addition of Nordstrom Rack, PetSmart, Ulta, Urban Plates, The Melt, Mendocino Farms, and more to serve this vibrant collegiate community. We continue to be opportunistic, but disciplined from a capital recycling perspective, harvesting $190 This activity provides us with ample dry powder.
James M. Taylor: Benefits from higher rates and occupancy and also highly accretive future phases I'm pleased to report thanks to Bill Brown and the California team's effort, we moved the data collection and northern California into the active pipeline in the fourth quarter located literally on the front step of one of the nation's fastest growing universities.
James M. Taylor: With 41000 students, we will completely transform that's trader Joe's anchored center with the addition of Nordstrom rack Petsmart Ulta urban place, then Mel Mendocino farms and more to serve this vibrant collegiate community.
We continue to be opportunistic, but disciplined from a capital recycling perspective harvesting 190 million in proceeds through the sale of lower non growth assets.
James M. Taylor: This activity provides us ample dry powder.
James M. Taylor: 24 Deploy Capital into External Growth that fits with her value-add strategy. We also maintain a strong, flexible balance sheet in 2023, ending the year with our debt dividend at six times and over $1.2 billion of undrawn capacity. We also received an upgrade to BBB from S&P, reflecting the transformation of our portfolio and improvements made to our balance sheet. Before turning the call over, I wanted to provide an update on our CFO search process. We are well underway in narrowing down our list of candidates and are pleased with both the quality and the interest in joining our team. We expect to announce our decision by the end of March or early April. With that, I'll turn the call over to Brian. Thanks, Jim. And good morning, everyone.
James M. Taylor: 24 to deploy capital into external growth opportunities that fit with our value add strategy.
Speaker Change: Excuse me.
Speaker Change: We also maintain a strong flexible balance sheet and twenty-three ending the year with our debt to EBITDA at six times and over $1 2 billion of Undrawn capacity.
Speaker Change: We also received an upgrade to triple B from S&P, reflecting the transformation of our portfolio and improvements made to our balance sheet.
Speaker Change: Before turning the call over I wanted to provide an update on our CFO search process, we are well underway and narrowing down our list of candidates and are pleased with both the quality and the interest to join our team we expect to announce our decision by the end of March or early April with that I'll turn the call over to Brian.
Brian T. Finnegan: Thanks, Jim and good morning, everyone as Jim highlighted in his remarks, our team ended 2023 with another outstanding quarter on the leasing front as demand for space to be in our centers remains incredibly robust. The work our team has done in transforming our portfolio is enabling us to capitalize on that demand leading to record occupancy rate and Rick.
Brian T. Finnegan: As Jim highlighted in his remarks, our team ended 2023 with another outstanding quarter on the leasing front, as demand for space to be in our centers remains incredibly robust. The work our team has done in transforming our portfolio is enabling us to capitalize on that demand, leading to record occupancy, rate, and retention, while upgrading the underlying retail mix and credit profile of our tenants. This quarter, we executed on 357 new and renewal leases totaling 1.7 million square feet at a combined blended cash spread of 19.6% as our team continues to capture the upside embedded in our below-market leases. Included within this activity were new leases with core open-air retailers such as Ross Dress for Less, Sierra Trading Post, Planet Fitness, and Five Below, in addition to first-of-portfolio leases with Connor Steak and Seafood, Honeygro, Tate Bakery, and a new 60,000-square-foot Tony's Fresh Market location in suburban Chicago.
Jim while upgrading the underlying merchandising mix and credit profile of our tenancy.
Brian T. Finnegan: This quarter, we executed on 357, new and renewal leases totaling one 7 million square feet at a combined blended cash spread of 19, 6% as our team continues to capture the upside embedded in our below market leases include.
Brian T. Finnegan: Included within this activity with new leases with core open air retailers, such as Ross dress for less Sierra trading post planet fitness five below in addition to first the portfolio leases with Connor steak and seafood honey grow Tata bakery, and a new 60000 square foot Tony's fresh market location in suburban Chicago.
Brian T. Finnegan: This activity led to record occupancy of 94.7%, a record 80 basis point sequential gain, and a 90 basis point year-over-year gain, despite a drag of 120 basis points from space we recaptured during the year due to tenant disruption. The strength of the Brixmor portfolio and the broader leasing environment is not only evident in the speed in which our team is addressing this space, but the rents we have been able to achieve. Bankruptcy is proving to be an opportunity across our portfolio, as our team delivered rent growth of 60% on the recaptured space we executed leases on in 2020. And while we don't expect the bulk of this income to come online until late 2024 or later, we are encouraged by the quality of the retailers we have been able to quickly re-merchandise these spaces.
Brian T. Finnegan: This activity led to record occupancy of 94, 7% a record 80 basis points sequential gain and a 90 basis point year over year gain despite a drag of about 120 basis points from space, we recaptured during the year due to tenant disruption the strength of the bricks more portfolio and the broader leasing environment is not only.
Evident in the speed in which our team is addressing this space, but the rents we have been able to achieve.
Brian T. Finnegan: Bankruptcy is proving to be an opportunity across our portfolio as our team delivered rent growth of 60% on the recaptured space, we executed leases on in 2020 three.
Brian T. Finnegan: And while we don't expect the bulk of this income to come online until late 2024. Later, we are encouraged by the quality of the retailers, we have been able to quickly remerchandise these spaces with.
Brian T. Finnegan: In addition, even with the record overall occupancy results during the year, we still have more room to run, with a strong pipeline of reinvestment projects projected to open over the next several quarters, including a new Whole Foods opening in suburban Philadelphia, a new Sprouts Farmers Market outside of Los Angeles, and a new Trader Joe's in the New York metro area.
Brian T. Finnegan: In addition, even with the record overall and small shop occupancy results. During the year, we still have more room to run with a strong pipeline of reinvestment projects projected to open over the next several quarters, including a new whole foods opening in suburban Philadelphia, our new sprouts farmers market outside of Los Angeles, and a new trader Joes in the New York Metro edge.
Brian T. Finnegan: These projects are just a small sample of the dramatic reinvestment upgrades our team is making across the Brixmor portfolio. As we look forward this year, we remain encouraged by the overall strength of the retail environment and the demand from great operators to be in our centers. We're grateful for the efforts of the entire Brixmor team to position our portfolio to take advantage of this environment and to continue to find the opportunity and disruption to make our centers the centers of the communities we serve. With that, I'll hand the call over to Steve for a more detailed review of our financial results. Steve, thanks. Thanks, Brian.
Brian T. Finnegan: These projects are just a small sample of the dramatic reinvestment upgrades, our team is making across the bricks more portfolio.
Brian T. Finnegan: As we look forward. This year, we remain encouraged by the overall strength of the retail environment and the demand from great operators to be in our centers. We're grateful for the efforts of the entire bricks more team to position our portfolio to take advantage of this environment and to continue to find the opportunity in disruption to make our centers the centers of the communities we serve with that at all.
Brian T. Finnegan: Hand, the call over to Steve for a more detailed review of our financial results Steve. Thanks.
Steve Gallagher: I'm pleased to report on a strong 2023 as we continue to deliver on our value-added business plan and set the stage for long-term growth. Nary FFO was $0.51 per share in the fourth quarter, driven by same property NOI growth of 3.1%. Base rent growth contributed 280 basis points to same-property NOI growth this quarter, overcoming a top-line revenue drag of approximately 150 basis points related to recent bankruptcies. For the year, same property NOI growth was 4%, which resulted in near-read FFO per share of $2.04, which represented a 4.1% increase from the prior year when adjusting for the gain on debt extinguished. As Brian highlighted The spread between lease and build occupancy ended the period at 410 basis points and the signed-but-not-yet-commissible total of $64 million, which includes $56 million of net new rent. The size of the pool is up approximately 9 million since last year.
Thanks, Brian I'm pleased to report on our strong 2023, as we continued to deliver on our value added business plan and set the stage for long term growth.
NAREIT <unk> was 51 cents per share in the fourth quarter, driven by same property NOI growth of three 1% base.
Brian T. Finnegan: Base rent growth contributed 280 basis points of same property NOI growth this quarter overcoming a topline revenue drag of approximately 150 basis points related to recent bankruptcies for the year same property NOI growth was 4%, which resulted in NAREIT <unk> per share of $2.04, which represented a four 1% increase from the prior year when adjusting for the gain on that.
Extinguishment.
Brian T. Finnegan: As Brian highlighted our operational metrics continue to reflect robust broad based leasing demand as well as the momentum generated by our successful portfolio transformation initiatives.
Brian T. Finnegan: The spread between leased and build occupancy ended the period at 410 basis points and assigned but not yet commenced full totaled $64 million, which includes 56 million of net new rent.
Brian T. Finnegan: The size of the pool is up approximately $9 million since last year end.
Steve Gallagher: Despite commencing approximately 58 million of annualized base rent this year, in addition, the blended annualized rate rent per square foot on the signed but not yet commenced pool is currently $21.16, approximately 25% above our portfolio average. We expect approximately 44 million, or 60% of ABR in the signed but not commenced pool, to commence routably in 2024. These tailwinds set us up for healthy growth in 2024. We have introduced guidance for same property NOI growth of 2.5 to 3.5%, comprised of a 350 to 400 basis point contribution from base rent. Our same property NOI range reflects capacity to absorb tenant disruption and includes approximately 100 basis points of drag as a midpoint related to potential 2024 national tenant disruption. As mentioned on our third quarter call, we expect revenues deemed uncollectible to return to our historical run rate of 75 to 110 basis points of total revenue as we move beyond the benefits of prior period collection.
Brian T. Finnegan: Despite commencing approximately $58 million of annualized base rent. This year. In addition to blended annualized rate rent per square foot on the signed but not yet commenced pool is currently $21 16, approximately 25% above our portfolio average, we expect approximately $44 million or 60% of ABR in the signed but not commenced four to commence ratably in 2020.
Sure.
Brian T. Finnegan: These tailwind set us up for a healthy growth in 'twenty 'twenty four it we've introduced guidance for same property NOI growth of two 5% to three 5% comprised of a 350 to 400 basis point contribution from base rent.
Brian T. Finnegan: Our same property NOI range reflects capacity to absorb tenant disruption and includes approximately 100 basis points of drag at the mid point related to potential 'twenty 'twenty four national tenant disruption.
Brian T. Finnegan: As mentioned on our third.
Brian T. Finnegan: Third quarter call, we expect revenues deemed uncollectible to return to our historical run rate of 75 to 110 basis points of total revenue as we can.
Brian T. Finnegan: Beyond the benefits of prior period collections.
Brian T. Finnegan: Brian highlighted our ability to accretively recapture space, coupled with our significant time, but not mess pool sets up the portfolio to deliver strong rent growth in 'twenty four and beyond we have also introduced guidance for 'twenty 'twenty four NAREIT episodes at a range of $2 six to $2 10 per share.
Steve Gallagher: As Brian highlighted, our ability to creatively recapture spaces, coupled with our significant time but not yet commenced pool, sets up the portfolio to deliver strong rent growth in 2024 and beyond. We have also introduced guidance for 2024 NAVREAD FFO at a range of $2.06 to $2.10 per share. Our FFO guidance reflects strong same-property NOI growth in the portfolio despite an interest expense headwind of $0.03 due to higher interest rates on the bonds we issued in January and the replacement swaps for the $300 million term loan. We expect the proceeds from our $400 million, 5.5% bonds will repay $300 million of our 3.65% bonds when they mature in June.
Brian T. Finnegan: So our guidance reflects the strong same property NOI growth from the portfolio. Despite an interest expense headwind of three cents due to higher interest rates on the bonds. We issued in January and the replacement swaps for the 300 million term loan.
Brian T. Finnegan: We expect the proceeds from our 400 million five 5% bonds will repay at $300 million of our $3 six 5% bonds when they mature in June in the interim we are holding excess cash and stable high yielding accounts as of December 31st we had total liquidity of $1 2 billion and debt to EBITDA at six times, which leaves us well positioned to execute on our bid.
Brian T. Finnegan: This plan.
Speaker Change: And with that I'll turn the call over to the operator for Q&A.
Brian T. Finnegan: Yes.
Thank you, ladies and gentlemen at this time well be conducting a question and answer session.
Brian T. Finnegan: If you'd like to ask a question you May press star one on your telephone keypad.
Operator: In the interim, we are holding excess cash in stable, high-yielding accounts. As of December 31st, we had total liquidity of $1.2 billion and debt to EBITDA of six times, which leaves us well-positioned to execute on our business plan. And with that, I turn the call over to the operator for Q&A. Thank you. Ladies and gentlemen, at this time, we will be conducting a question and answer session. If you'd like to ask a question, you may press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.
Speaker Change: Information total indicate your line is in the question queue.
Speaker Change: You May press Star two if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the starkey.
Speaker Change: Our first question comes from the line of one Santa Maria with BMO Capital markets. Please proceed with your question.
Good morning.
Santa Maria: Good morning, Hi, I was just hoping you could talk a little bit about the bad debt assumptions in our forecast and any timing around that.
Santa Maria: Big lots one of your tenants I know, it's a bit smaller but in the news you just curious if there's anything you could share with regards to timing and specific.
Santa Maria: Bankruptcies and how that may evolve throughout the year and how we should think about that yeah, Steve talked about in his remarks, we really think about that tenant credit exposure in two places as we've consistently done one is at the top line, which at the midpoint of the range, we've assumed about 100 basis points of potential tenant disruption.
Juan Cenabria: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Juan Cenabria with BMO Capital Markets. Please proceed with your question. Good morning.
Santa Maria: And then the second is in our allowance for doubtful accounts, where we assume 75 to 110 basis points of potential credit loss.
Brian T. Finnegan: Hi, I was just hoping you could talk a little bit about the bad debt assumptions in the forecast and any timing around that. Big Lots, one of your tenants, I know it's a bit smaller, but in the news, just curious if there's anything you could share with regard to timing and specific bankruptcies and how that may evolve throughout the year and how we should think about that. Yeah, as Steve talked about in his remarks, we really think about that tenant credit exposure in two places, as we've consistently done. One is at the top line, which...
Santa Maria: One hey, this is Brian as it relates to just tenant disruption as a whole we continue to monitor our watch list. Thank our team has demonstrated the ability to quickly capitalize on any tenant disruption and as Steve and Jim touched on we feel as though were accounted for a range of opportunities and are for a range of <unk>.
Santa Maria: And our forecast this year from tenant disruption, we don't typically like to get in to tenant names I would say big lots has been a good partner I will comment on the real estate, though the real estate is the rents on those spaces are less than eight bucks, we've been signing anchors at a record last year of over 15, we're opening a sprouts location and a former big lots outside of.
Brian T. Finnegan: At the midpoint of the range, we've assumed about 100 basis points of potential tenant disruption. And then the second is in our allowance for doubtful accounts, where we assume 75 to 110. Juan, hey, this is Brian. As it relates to just tenant disruption as a whole, we continue to monitor our watch list. I think our team has demonstrated the ability to quickly capitalize on any tenant disruption. And as Steve and Jim touched on, we feel as though we've accounted for a range of opportunities, a range of outcomes in our forecast this year from tenant disruption. We don't typically like to get into tenant names.
Los Angeles, we leased the big lot space in the fourth quarter, and Naples that close to double the rent. So we feel as though we're well positioned for additional for sunset tenant disruption this year, which is in our forecast and well positioned to backfill it accretively at much higher rents.
Speaker Change: Great. Thank you and then just on the occupancy how should we think about that over the course of the year is there an assumed gift for seasonality in the first quarter I'm not sure. If you can provide kind of a year end rankings of occupancy.
Brian T. Finnegan: I would say Big Lots has been a good partner. I will comment on the real estate, though. The real estate is that the rents on those spaces are less than $8. We've been signing anchors at a record last year of over $15. We're opening a Sprouts location in a former Big Lots outside of Los Angeles.
Speaker Change: Sorry, no no.
Speaker Change: Oh, sorry, one yes, you're correct in that typically you see a dip both in building lease occupancy.
Speaker Change: Due to seasonal move outs, even though normal course move outs remained at historic lows off historic lows in 'twenty, one and 'twenty two when we do have those move outs. They typically happen at the beginning of the year and then it starts to ramp up in terms of build occupancy at year end, we expect a true ups.
Brian T. Finnegan: We leased the Big Lots space in the fourth quarter in Naples at close to double the rent. So we feel as though we're well positioned for some tenant disruption this year, which is in our forecast, and well positioned to backfill it accretively at much higher rents. Great, thank you. And then just on occupancy, how should we think about that over the course of the year? Is there an assumed dip for seasonality in the first quarter? I'm not sure if you can provide any kind of year-end range of occupancy. Sorry. No, no, no. Sorry, Juan.
Speaker Change: A typical trajectory. This year you may see some fluctuations with that due to tenant disruption as we saw last year as well, but the interesting thing. If you look at last year. Despite the drag that we took back from bankruptcy, we were able to grow build occupancy year over year. So normal course trajectory you're spot on and you'll see a small dip at the beginning of the year.
Brian T. Finnegan: Yes. You're correct in that typically, you see a dip both in build and lease occupancy due to seasonal move-outs. Even though normal course move-outs remained at historic lows, off-historic lows in 21 and 22, when we do have those move-outs, they typically happen at the beginning of the year, and then it starts to ramp up in terms of build occupancy at year-end. We expect a typical trajectory this year.
Speaker Change: And that growing towards year end.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Todd Thomas with Keybanc. Please proceed with your question.
Todd M. Thomas: Good morning, Hi.
Todd M. Thomas: Hi, Good morning, just first question I guess, just following up a little bit there on on big lots, perhaps Brian you know are there any lease expirations during the year.
Brian T. Finnegan: You may see some fluctuations with that due to tenant disruption, as we saw last year as well. But the interesting thing, if you look at last year, despite the drag that we took back from bankruptcy, we were able to grow build occupancy year over year. So on the normal course trajectory, you're spot on.
Todd M. Thomas: In that portfolio and if so any expected changes to that exposure.
Brian T. Finnegan: Just in the property level budgeting throughout the course of the year sure I did mention the one location that we proactively took back it was an expiration coming up in January I think we have one or two more in the first quarter. If you look at overall that big lots exposure, it's down 20% from where we were pre pandemic and again those.
Todd M. Thomas: You'll see a small dip at the beginning of the year and that grow towards year-end. Thank you. Our next question comes from the line of Todd Thomas with KeyBank. Please proceed with your question. Good morning. Hi, good morning. Just first question, I guess, just following up a little bit on the big lots, perhaps Brian, you know, are there any lease expirations during the year in that portfolio? And if so, any expected changes to that exposure?
Brian T. Finnegan: Rents are below a box, we feel really good about our ability to backfill that space Accretively should we get a handful of boxes back, but we only had a handful of normal course expirations, which have already happened in the first quarter.
Speaker Change: Okay, how would you compare and contrast.
Brian T. Finnegan: You know, just in your property level budgeting throughout the course of the year? Sure, I did mention the one location that we proactively took back, it was an expiration coming up in January. I think we have one or two more in the first quarter. If you look at overall, that big lots exposure, it's down 20% from where we were pre-pandemic. And again, those rents are below eight bucks, so we feel really good about our ability to backfill that space aggressively should we get a handful of boxes back. But we only had a handful of normal course expirations, which have already happened in the first. Okay, how would you compare and contrast that real estate relative to Bed Bath? You mentioned the rents, which were, I think, meaningfully lower than the Bed Bath rents, but the average box size is larger. Can you just help us understand how much more valuable that real estate may be relative to Bed Bath and beyond and, you know, implications for leasing that space to the Sure.
Speaker Change: That real estate relative to bed Bath, you mentioned that the rents you know they they were I think meaningfully lower than the bed bath rents, but the average box size is as large or can you just help us understand.
Speaker Change: The real estate, maybe relative to bed Bath, <unk> beyond and implications for leasing that space. Yeah. The extent that you do recapture some of it.
Speaker Change: Sure. So I just talked to think about the overall box supply environment right. I mean, we're at the lowest box vacancy that we've ever had in the portfolio I think a data point again for the supply dynamic is how aggressive retailers, we're in bidding on that bed bath and beyond space last year.
Speaker Change: Yeah as you look at the.
Speaker Change: Or big lots portfolio. In addition to this space as I mentioned in Naples in Los Angeles, We've got boxes in Dallas in the Philadelphia area as well so I'd say generally we feel pretty good about the real estate feel pretty good about the overall demand from box tenants in our core re.
Brian T. Finnegan: So I just talked to you about the overall box supply environment, right? I mean, we're at the lowest box vacancy that we've ever had in the portfolio. I think a data point, again, for the supply dynamic is how aggressive retailers were in bidding on that Bath & Beyond space last year. You know, as you look at our big lots portfolio, in addition to the spaces I mentioned in Naples and Los Angeles, we've got boxes in Dallas and the Philadelphia area as well.
Speaker Change: Taylor's that had been looking to expand whether that's in the off price category, whether that's in specialty grocery home. So the depth of demand from a box standpoint remains very strong and again, we feel pretty good about the upside in those spaces.
Speaker Change: Okay, and just a clarification just around the reserve itself is there any portion of the credit reserve.
Brian T. Finnegan: So I'd say generally, we feel pretty good about the real estate, feel pretty good about the overall demand from box tenants in our core retailers that have been looking to expand, whether that's in the off-price category, whether that's in specialty grocery, or home. So the depth of demand from a box standpoint remains very strong. And again, we feel pretty good about the upside in those. Okay, and just a clarification, just around the reserve itself, is there any portion of the credit reserve that amounts to known events today, whether lease rejections or otherwise, or should we think about that reserve as a cushion against anything that may happen, you know, just going forward in the remaining 10 months of the year. Hey, it's Steve.
Speaker Change: That amounts to known events today, whether lease rejections or otherwise or should we think about that reserve as a cushion against and anything that may happen. You know just going forward in the remaining 10 months of the year.
Speaker Change: Hey, Steve Yeah, it's about 100 basis points I referenced is really thinking about 2020 for disruption I need disruption associated with prior bankruptcies is already sort of reflected in the results.
Steve Gallagher: Okay. So it's just a cushion against anything unknown at this time going forward.
Steve Gallagher: Correct.
Speaker Change: Okay. Thank you.
Steve Gallagher: Yeah, the 100 basis points I reference is really thinking about 2024 disruption. Any disruption associated with prior bankruptcies is already sort of reflected in the report. Okay, so it's just a cushion against anything unknown at this time going forward. (?
Steve Gallagher: <unk>.
Steve Gallagher: Our next question comes from the line of Alexander Goldberg with Piper Sandler. Please proceed with your question.
Alexander Goldfarb: Hey, it's.
Alexander Goldfarb: It's Alex Goldfarb on for my cousin, So just I'll I'll do the one question thing I'll help Stacy out.
Alexander Goldfarb: ). Okay, thank you. Our next question comes from the line of Alexander Goldberg with Piper Sandler. Please proceed with your question. Hey, it's Alex Goldfarb on for my cousin.
Alexander Goldfarb: Jim or Brian can you just talk about what you've been able to do since you know as you guys are beginning leasing leverage basically there's a view that hey, there's a lot of great stuff going on in retail, but it's not really showing up in the bottom line, but when we look at your leasing you're pulling back on renewables you're pulling back on.
Brian T. Finnegan: So I'll just do the one question thing. I'll help Stacy out. Jim or Brian, can you just talk about what you've been able to do since, you know, as you guys are beginning leasing levels? Basically, there's a view that, hey, there's a lot of great stuff going on in retail, but it's not really showing up in the bottom line. But when we look at your leasing, you know, you're pulling back on renewables, you're pulling back on use restrictions, co-tenancy, you know, so some of those things won't be realized until the end of leases, but some are immediate, where you can affect change today. So can you just talk, Brian, about, you know, some of the NOI that you've been able to add, you know, last year, this year, because you've been able to gain more leverage with the tenants in terms of what they used to command in lease, you know, leverage versus you guys versus now, you're able to pull those terms back, just want to be able to quantify an actual NOI benefit to Brick Well, Alex, I think I'd start with what Jim did in his opening remarks.
Alexander Goldfarb: Restrictions co tenancy.
Alexander Goldfarb: So some of those things won't be realized until the end of leases, but some are immediate where you can effect change today. So can you just talk Brian about some of the NOI that you'd been able to add you know last year. This year, because you've been able to gain more leverage with the tenants in terms of what they used to come in.
Brian T. Finnegan: In lease you know leverage versus you guys versus now you're able to pull those terms back just want to be able to quantify it in actual NOI benefit to the two breaks more.
Brian T. Finnegan: Alex I think I'd start with where Jim did in his opening remarks. So you can see it in every observable metric in terms of our our rent growth our retention and then in terms of the intrinsic lease terms that you're mentioning we have been able to push rent bumps higher you know, we're getting two three to close.
Brian T. Finnegan: So you can see it in every observable metric, in terms of our rent growth and our retention. And then in terms of the intrinsic lease terms that you're mentioning, we have been able to push rent bumps higher, you know, we're getting to three to close to 4% in some parts of the country with small shop tenants broadly across the board; we're over 2% when you have growth rates in the portfolio of low to mid ones. So we're improving there; you look at our margins; you're seeing an immediate impact there as our team has been able to lift capital expenditures to be able to get paid for the investments that we're making across the portfolio. And then the other big thing that our team's laser focused on is flexibility. You look at the redevelopments that we've been able to bring forward; many of those need consents, many of those consents were freed up during the pandemic.
Brian T. Finnegan: 4% in some parts of the country with small shop tenants broadly across the board, where we're over 2% when you have growth rates in the portfolio of low to mid ones. So we're improving there you look at our margins you're seeing an immediate impact there is our team has been able to lift cam caps to be able.
Brian T. Finnegan: To get paid for the investments that we're making across the portfolio and then the other big thing that our team is laser focused on is flexibility you look at the Redevelopments that we've been able to bring forward many of those need consents. Many of those consents, we freed up during the pandemic, but we're also freeing up in renewal discussions today. If you look at the great work.
Brian T. Finnegan: Our team's done and the out parcel segment right, we've been freeing up a lot more out parcels across the portfolio as well. So you're seeing this you are seeing it come through in the reinvestment pipeline, you're seeing it come through in our operating results, but you're also seeing it come through in those intrinsic lease terms, which we're making a ton of improvement on.
Brian T. Finnegan: But we're also freeing up in renewal discussions today; you look at the great work our team has done in the out parcel segment, right? We've been freeing up a lot more out parcels across the portfolio as well. So you're seeing this, you're seeing it come through in the reinvestment pipeline, you're seeing it come through in our operating results, but you're also seeing it come through in those intrinsic lease terms, which we're making a ton of improvements on. Okay, thank you.
Speaker Change: Okay. Thank you.
Speaker Change: Our next question comes from the line of Samir Khanal with Evercore. Please proceed with your question good morning Samir.
Speaker Change: Okay.
Samir Khanal: Gabel kind of what you're seeing in terms of.
Samir Khanal: Our next question comes from the line of Samir Khanal with Evercore. Please proceed with your question. Good morning, Samir, about kind of what you're seeing in terms of acquisitions and opportunities. I mean, you were net sellers last year. How should we think about sort of that strategy in 24?
Samir Khanal: You know acquisitions opportunities I mean, you were net sellers last year.
Samir Khanal: How should we think about sort of that strategy and 24 things you bet. So as always we remain very disciplined.
Samir Khanal: And we capitalized on liquidity that we found for smaller assets during the past year, raising about $190 million of proceeds at a pretty attractive valuation.
James M. Taylor: Thanks. You bet. So, as always, we remain very disciplined. And we capitalized on liquidity that we found for smaller assets during the past year, raising about 190 million dollars in proceeds at a pretty attractive valuation, which also puts us in a position to be more acquisitive as we look at the months and quarters ahead. But again, expect us to be disciplined.
Samir Khanal: Which also puts us in a position to be more acquisitive as we look at the months and quarters ahead, but again expect us to be disciplined Maher.
Maher: Yeah look as we look at that transactions market for 'twenty four I mean, the first thing I'd say is that we continue to have very compelling opportunities to allocate capital at very high incremental yields into our existing assets, but as Jim mentioned, we do expect to be a net acquirer of assets as we try to use that liquidity that we raised over the last year or so and we're at.
James M. Taylor: Yeah, look, as we look at that transactions market for 24 hours, I mean, the first thing I'd say is that we continue to have very compelling opportunities to allocate capital at very high incremental yields to our existing assets. As Jim mentioned, we do expect to be a net acquirer of assets as we try to use that liquidity that we raised over the last year or so, and we're definitely starting to see a building pipeline in markets where we've been putting capital to work, like Texas, Florida, and other parts of the Southeast.
Maher: Definitely starting to see a building pipeline in markets, where he's been putting capital work like coupled to work like Texas.
Maher: In Florida, and other parts of the South East and I do think as as we've seen the market move here will be rewarded with our discipline here by finding assets that are slightly higher going in yields than we would've seen say a year ago.
Maher: The other thing I'd say as you think about our disposition program. We're always very opportunistic when we look to sell assets. For example in January we just closed an asset in Detroit other mid fixed cap and we continue to mine adjacent land like we did back in 'twenty two in college park for for land, where a very favorable zoning.
James M. Taylor: And I do think... We've seen the market move here; we'll be rewarded for our discipline here by finding assets at a slightly higher going-in yield than we would have seen, say, a year ago. The other thing I'd say, if you think about our disposition program, we're always very opportunistic when we look to sell assets. For example, in January, we just closed an asset in Detroit at a mid-six cap, and we continue to mine adjacent land, like we did back in 2002 in College Park, for land we're at very favorable zoning to achieve very low-cost capital to drive the business forward. In fact, we are working on a large parcel currently in Southern California for that exact purpose. Thank you. Our next question comes from the line of Greg McGinniss with Scotiabank. Please distribute your question. Good morning. Hey, good morning.
Maher: To achieve very low cost of capital to drive the business forward in fact, working on a large parcel currently in southern California for that exact strategy.
Speaker Change: Thank you.
Our next question comes from the line of Greg Mcginniss with Scotiabank. Please proceed with your question.
Greg Mcginniss: Good morning.
Greg Mcginniss: Hey, good morning.
Greg Mcginniss: So congrats on the new highs and shop occupancy I'm, just curious where you're expecting that to continue pushing those as leasing has remained strong we continue to get new records on occupancy each quarter, but obviously as you fill up space, there's less space to fill so how should we think about.
Greg Mcginniss: Um, congrats on the new highs in shop occupancy. I'm just curious where you're expecting this. Please see the complete disclaimer at https://sites.google.com/terms/namaste, that.
Greg Mcginniss: Now where that where that number could go and how does that a balance against the kind of 100 basis points of topline are there.
Greg Mcginniss: You were talking about this year in terms of that risk.
James M. Taylor: Well, you know, one of the things that we've really enjoyed as a result of our value-added plan is a continued improvement in our small shop tenancy, from a credit perspective, traffic, and overall vibrancy. And, you know, as we think about how these assets move, as we reinvest in them, we get substantial follow-on benefits in terms of terms, both occupancy and rate in the small shop. So we've talked about it for some time and have anticipated another couple hundred basis points of run in terms of where small shop occupancy is. Okay, thanks.
Speaker Change: Well you know one of the things that we've really enjoyed as a result of our value added plan is a continued improvement in our small shop tenancy from a credit perspective traffic and overall vibrancy and you know as we think about how these assets move as we reinvest in them we get.
Speaker Change: Substantial follow on benefit in terms of both occupancy and rate in the small shops. So we've talked about it for some time and have anticipated. Another couple of hundred basis points of Ron in terms of where small shop occupancy can go.
Brian T. Finnegan: And just to follow up there, you know, we've heard about some of the backfills for the larger... The Bulletproof Executive 2013, Did you talk about some of the smaller in-line tenants or tenant categories where you've been having... Subs, Yeah, Greg, it's a great question. And it really speaks to what Jim highlighted in terms of the credit quality of our small shop tenants. So it's great QSR operators, whether those are national public companies or multi-unit franchisees; it's tenants in the wellness category, whether that's boutique fitness or Medtel, which we're doing a lot of business with. And there are some really cool new concepts that we've been able to take from different parts of the country. You look at Dave's Hot Chicken, which started off as a truck in Los Angeles, that's now expanding nationwide, and Torchy's Tacos out of Austin, Texas.
Speaker Change: Okay. Thanks, and just a follow up there you know we've heard about some of the backfill for the larger tenants.
Speaker Change: It might be filling a bed bath, but could you talk about some of the smaller inline tenants a tenant categories, where you've been having a success.
Speaker Change: Greg It's a great question and it really speaks to what Jim highlighted in terms of the credit quality of our small shop tenants. So it's great to us our operators, whether those are national public companies or multiunit franchisees its tenants in the wellness category, whether that's boutique fitness or med tail.
Speaker Change: <unk>, which we're doing a lot of business with and there's some really cool new concepts that we've been able to go from a take from different parts of the country. You look at of Daves Hot Chicken. It started off at a truck in Los Angeles, that's now expanding nationwide toward cheese tacos out of Austin, Texas. So, we're bringing a lot of cool concepts into the <unk>.
Brian T. Finnegan: So we're bringing a lot of cool concepts into the portfolio; the Tate Bakery that we added this quarter is another one. And I think it really speaks to just the asset class and how great restaurant tenants and great operators are looking at open-air retail. We opened it, and we signed a lease with a Capitol Grill that will open later this year in a former Pier One space at one of our redevelopments.
Speaker Change: Portfolio, the Tata bakery that we added this quarter.
Speaker Change: There's another one and I think it really speaks to just the asset class and how great restaurant tenants and great operators are looking at open air retail we opened up we signed a lease with a capital grille that will open later this year and our former pier one space at one of our redevelopment so the depth of that small shop tenancy.
Brian T. Finnegan: So the depth of that small shop tenancy continues to be very strong, the credit quality continues to be incredibly strong, and they're driving a ton of traffic to our center. So we remain really pleased with what we're doing. Are you possibly able to quantify the... Credit Quality Upgrade, 2019, 2018, some time frame. Yeah, I'd say local tenancy represents about 18% of our portfolio today, that's down from where we were pre-pandemic; I can get the exact number, but it's gonna be down from where we were. I would just say broadly, and we talked about it on prior calls, we instituted some things coming out of the pandemic in terms of our credit underwriting of our business, our leasing team, partnering with our financial And then the competition for space has really allowed us to be selective with the best operators to come in.
Speaker Change: To be very strong credit quality continues to be incredibly strong and they're driving a ton of traffic to our centers. So we remain really pleased with what we're saying.
Speaker Change: Or are you, possibly able to quantify the.
Speaker Change:
Speaker Change: Credit quality upgrade versus 2019 2018, some timeframe.
Speaker Change: I'd say local local tenancy represents about 18% of our portfolio today, that's down from where we were pre pandemic I can get the exact number but it's going to be down from where we were I would just say broadly and we talked about it on prior calls we instituted some things coming out of the pandemic in terms of.
Speaker Change: Our credit underwriting of our business, our leasing team partnering with our financial asset management group really getting an understanding of small shop tenant business plans really get an understanding of the capital that we're putting to work and then the competition for space has really allowed us to be selective with the best operators to come in.
Craig Schmidt: So in terms of the overall local tenancy, as I mentioned, it's in the high teens, but we continue to see that improve, and we see it improve in terms of what's coming into the leasing committee every day. We also see it improve in terms of collections and overall performance, and, as Brian alluded to, we've really raised the bar across the portfolio in terms of credit underwriting and security and so forth. So we're really encouraged by how this portfolio is positioned to weather any type, uh... economic downturn. Our next question comes from the line of Craig Mailman with Citigroup. Please proceed with your question. Hey, good morning.
Speaker Change: In terms of the overall local Tennessee as I mentioned, it's in the high teens, but we continue to see that improve and we see it improve in terms of what's coming out of the leasing Committee every week.
Speaker Change: Thank you you also see it in terms of collections and overall performance and as Brian alluded to we've really raise the bar across the portfolio in terms of credit underwriting and security and so forth. So we're really encouraged by how this portfolio is positioned to weather any type of.
Speaker Change: Economic cycle.
Speaker Change: Thanks, guys.
Speaker Change: Yeah.
Speaker Change: Our next question comes from the line of Craig Mailman with Citigroup. Please proceed with your question.
Craig Schmidt: Hey, good morning.
Brian T. Finnegan: I just want to go back to the acquisition topic here and just get a sense of, kind of, the Spread Differential on Acquisition Cap Rates or Yields versus what you guys are redeveloping. How do you think about the appropriate spread on sort of a risk-adjusted basis and maybe a time-loaded basis to mix in some acquisitions here versus the redevelopment program? Well, I think, as you're alluding to, what acquisitions that we're focused on provide good current income, but also importantly, good growth and ROI as we think about ways to reinvest, reposition, and densify those assets. So we're more of a value-add type investor, so as we think about acquisition opportunities, they've got to underwrite those higher hurdle rates driven really by the growth in ROI that we Redev, et cetera.
Craig Schmidt: Just wanted to go back to the acquisition topic here and just get a sense of.
Craig Schmidt: Kind of what the.
Craig Schmidt: The spread differential on acquisition cap rates or yields versus where you guys didn't read the walls and kind of how you think about the appropriate spread on sort of a risk adjusted basis or maybe on a timely basis to mixing.
Craig Schmidt: Some acquisitions here versus the redevelopment program, but I think as you're alluding to what acquisitions that we're focused on provide us. Good current income, but also importantly, good growth in our lives, we think about ways to reinvest reposition and densify those assets. So you know, we're we're more of a value add type of inverse.
Craig Schmidt: So as we think about acquisition opportunities they've got to underwrite those higher hurdle rates driven really by the growth in ROI that we see through below market rents pad sites readout et cetera, and that's how we think about it obviously the best marginal use of our capital is in the reinvestment pipeline.
James M. Taylor: And that's how we think about it. Obviously, the best marginal use of our capital is in the reinvestment pipeline, where we're getting very attractive incremental returns, and we think about our capital in that order. First, for reinvestment and redevelopment, then for external growth. That's helpful.
Craig Schmidt: We're we're getting very attractive incremental returns and we think about our capital and in that order you know first to the reinvestment and redevelopment then to external growth.
Speaker Change: That's helpful. And then maybe a follow up here separately and I. Appreciate the fact you guys. Just go 24 guidance.
Brian T. Finnegan: And maybe a follow-up here separately. And I appreciate the fact you guys just gave me 24 guidance, so I understand that with this question. But you know, a lot of the commentary this quarter on the strips has been sort of looking to 25, given some of the drag from Bed Bath and some other tenant issues that happened in 23 that created some downside. I guess as you guys kind of look at the timely commencement of the snow pipeline, maybe the burn-off of some drag related to backfilling, some of those tenancies, what could be sort of a pick-up in 25 relative to 24 from just Craig, hey, this is Brian.
Speaker Change: I I I get that with this question, but you know a lot of the commentary this quarter on the scripts have been sort of looking at the 25, given some of the drag for bed Bath and some other kind of issues that happened in 'twenty three that created some downside I guess have you guys kind of look at the time we commenced.
Speaker Change: There's no pipeline, maybe the burn off of some drag related to backfill.
Speaker Change: Some of those tenants and why.
Speaker Change: What could be sort of a pickup.
Five relative to 'twenty four from just that the commencement of things that are already kind of done and known them relative to some of the headwind burning off on timing.
Speaker Change: Craig This is Brian I think you know without giving twenty-five guidance because we just gave 24 I think as you look at what we talked about in terms of the bed Bath space coming online late 2020 for the backfill is late 'twenty 'twenty four into 2025 as we continue just to capitalize on the demand environment.
Brian T. Finnegan: I think, you know, without giving you 25 guidance, because we just gave 24, I think, as you look at what we talked about, in terms of the bed bath space coming online late 2024, the backfill is late 2024 into 2025. As we continue just to capitalize on the demand environment, we think about New York ICSC, we were talking to tenants about store opening plans for 2025, right? If you think about national tenant plans today, they're mostly baked for 2024. So it's really accelerating what we're doing across the portfolio from an execution standpoint, getting those tenants open and quickly addressing the space that we took back last year and may potentially take back. Okay, great. Thank you.
Speaker Change: We think about New York ICSC, we were talking to tenants about store opening plans for 2025, right. If you think about national tenant plants today, they're mostly baked for 2024. So it is really accelerating what we're doing across the portfolio from an execution standpoint, getting those tenants open and quickly addressing the space that we took back.
Speaker Change: Last year in and May potentially take back this year.
Speaker Change: Okay, great. Thank you.
Speaker Change: Yes.
Speaker Change: Yeah.
Jeff Spector: Our next question comes from the line of Jeff Spector with Bank of America. Please proceed with your questions. Great, thank you.
Speaker Change: Our next question comes from the line of Jeff Spector with Bank of America. Please proceed with this call. Please proceed with your question.
Jeff Spector: Great. Thank you.
James M. Taylor: First question, just to put the 100 Ips top line impact into context, how does that compare to 23 actual? And how does that compare to what you would normally, you know, put into guidance at the onset of each year? You know, I think it's interesting because if you think about the timing of Bed Bath and Others, we had much higher visibility on that during the year, and we had a similar amount of cushion, if you will, in the top line assumption going into that year.
Jeff Spector: First question just to put the 100 bps topline impact into context, how does that compare to 23 actual and how does that compare to what you would normally.
Jeff Spector: Put into guidance at the onset of the cars each year.
Speaker Change: I think it's you know it's interesting because if you think about the timing of bed Bath and others, we had much higher visibility on that during the year and we had a similar amount of cushion. If you will on the top line assumption going into the out years, we look at 'twenty 'twenty four we believe we're adequately provisioned to handle a wide.
Brian T. Finnegan: As we look at 2024, we believe we're adequately provisioned to handle a wide variety of outcomes and continue to deliver what we think is pretty compelling growth, 2.5 to 3.5%. So that kind of gives you a little bit of perspective and puts us in a position, I think, to continue to innovate. Thank you. And then the second question is on the 60% of ABR from S&O to commence rateably in 24; can you talk a little bit more about the store opening process today? Are you still seeing delays?
Speaker Change: Variety of outcomes and.
Speaker Change: We continue to deliver what we think is pretty compelling growth, 2.5% to 3.5%. So.
Speaker Change: That kind of gives you a little bit of perspective and puts us in a position I think to continue to outperform.
Speaker Change: Thank you and then the second question is on the 60% of ABR from S. Denoting commence ratably in 24 can you talk a little bit more about the store opening process today.
Speaker Change: Still seeing delays are the waste.
Brian T. Finnegan: Are there ways to improve that process, like meeting with any new vendors or anything to help with the store opening process? Thank you. Yeah, it's a great question.
Speaker Change: Prove that process like you're meeting with any new vendors or anything to help with the store opening process. Thank you yeah. It's a great question I think one of the things.
Brian T. Finnegan: I think one of the things that've come out from a best practice standpoint the last few years, and we've talked about it, is tenants' flexibility in utilizing existing conditions, right? Whether there were supply chain delays a few years ago, tenants really had to hit that store opening pipeline, so whether that was keeping the bathrooms in place, not making dramatic changes to the facade, or using existing HVAC. And we've seen that, and in terms of what we've been doing, our operating teams have been partnering with their counterparts, with national retailers, seeing how we can get ahead of plans, moving forward quickly after tenants approve things in their committees, and then ultimately, seeing how they can utilize existing conditions. And you could definitely see that, Jeff, in the deals that were purchased at auction last year, how quickly those stores opened. So as we're in discussions with tenants, we really have a great understanding of our existing conditions. We can talk to them about that.
Speaker Change: That's come out from a best practice standpoint, the last few years and we've talked about it is tenants flexibility and usually and utilizing existing conditions right.
Speaker Change: Whether there were supply chain delays a few years ago tenants really had to hit that opening store opening pipeline. So whether that was keeping the bathrooms in place not making dramatic changes to the facade utilizing existing HVAC and we've seen that in in terms of what we've been doing our operating teams have been partnering with their counterparts.
Speaker Change: With national retailers seeing how we can get ahead of plans are moving forward quickly after tenants approve things in their committee and then ultimately seeing how they can utilize existing conditions and you could definitely see that Jeff and the in the deals that were purchased at the auctions last year how quickly those.
Speaker Change: Stores opened so as we're in discussions with tenants, where we really have a great understanding.
Speaker Change: Of our existing conditions, we can talk to them about that we can negotiate that upfront and get ahead of those so that's really helping to accelerate time frames are across the portfolio and then from a lease negotiation standpoint, as well we've got conforming leases with all of these tenants are legal team does a great job in terms of establishing relationships on the.
Brian T. Finnegan: We can negotiate that up front and get ahead of them, so that's really helping to accelerate timeframes across the portfolio. And then from a lease negotiation standpoint as well, we've got conforming leases with all these tenants. Our legal team does a great job in terms of establishing relationships on the legal side with their partners at retailers, and we call it owning the relationship, right? Our national account team isn't just connecting with their business partners; we're connecting on the legal side. We're connecting on the operating side.
Speaker Change: Legal side with their partners at retailers and we call. It owning the relationship right. Our national account team isn't just connecting with their business partner, we're connecting on the legal side, we're connecting on the operating side, we're connecting on the management side from a go forward perspective as well. So all these things are really paying off and that's sort of the environment too in terms of.
Brian T. Finnegan: We're connecting on the management side from a go-forward perspective as well. So all these things are really paying off, and also the environment, too, in terms of tenants wanting to get stores open quickly, allowing them to take more of those existing conditions. So it's really all those things.
Speaker Change: Tenants wanting to get stores open quickly, allowing them to take more of those existing conditions. So it's really all those things combined.
Dory Kessin: Thank you. Our next question comes from the line of Dory Kessin with Wells Fargo. Please distribute your question. Thanks, good morning.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Dori Kesten with Wells Fargo. Please proceed with your question.
Dori Kesten: Hi, Thanks. Good morning, I know you mentioned the March April timeframe for the CFO announcement, but that's typically what's needed.
James M. Taylor: I know you mentioned a March-April timeframe for the CFO announcement, but specifically, what's needed in a CFO for 2024 Brixmor versus 2016 Brixmor? You know, we need somebody who's a good strategic partner, somebody who has some experience across the capital markets and potentially in the seat. We also need somebody who's a good cultural fit.
Dori Kesten: In 2024 back Tomorrow.
Dori Kesten: <unk> thousand 16.
Dori Kesten: You know we need somebody who is a good strategic partner somebody who had some experience across the capital markets and potentially in the seat. We also need somebody who's a good cultural fit and you know as I mentioned in my opening remarks, we're very encouraged by.
Brian T. Finnegan: And you know, as I mentioned in my opening remarks, we're very encouraged by both the breadth and depth of demand and interest we've had for the role. And I think we're going to have a great candidate. And your retention rate is around 86%, which I think is up slightly from last year. Will you expect this to continue to move up over time? And what would you view as a normalized level of retention for your portfolio over the medium term? Hey, this is Brian.
Dori Kesten: Both the breadth and depth of demand and interest we've had in the role and I think we're gonna have a great candidate.
Dori Kesten: And your retention rate.
Dori Kesten: It was around 86% and I think up slightly from last year. When do you expect this to continue to move up over time, and what would you view as a normalized level of attention for yard portfolio over the medium term.
This is Bryan again, we were encouraged by the retention rate trends last year, we continue to be that hit a record for US is as Jim mentioned, you would expect that to continue to trend higher.
Brian T. Finnegan: Again, we were encouraged by the retention rate trends last year, and we continue to be. That hit a record for us, as Jim mentioned.
Brian T. Finnegan: You would expect that to continue to trend higher with the improvements that we've made across the portfolio with the anchors that we've brought in. Tenants want to stay, great tenants want to stay, and they're staying at higher rents. It's not going to prevent us, though, from being opportunistic to take space back.
Bryan: Tenet with the improvements that we've made across the portfolio with the anchors that we brought in tenants want to stay great tenants once a day and they're staying at higher rents it's.
Bryan: It's not going to prevent us from being opportunistic to take space back if we see the ability to upgrade our portfolio and we want to take space back from tenants. We're not just doing it from an occupancy perspective, but I think you can expect those trends to to go higher you may see some fluctuation in a given quarter, but.
Brian T. Finnegan: If we see the ability to upgrade our portfolio and we want to take space back from tenants, we're not just doing it from an occupancy perspective, but I think you can expect those trends to go higher. You may see some fluctuation in a given quarter, but everything we've done around the portfolio, as well as what you're seeing in the macro environment, would lend us to expect those trends to continue. Okay, thank you. Thank you, Dora. Our next question comes from the line of Floris Van Dijkum on Compass Point.
Bryan: Everything we've done around the portfolio as well as what you're seeing in the macro environment, what led us to expect those trends to continue to grow.
Okay. Thank you.
Speaker Change: Thank you Dori.
Speaker Change: Our next question comes from the line of Floris Van <unk> with Compass point. Please proceed with your question.
Floris van Dijkum: Please take your question. Morning, guys. Thanks for taking the question. So, actually, I have two questions. Number one, the size of your S&O pipeline is one of the highest in the space. It's impressive. The critique we sometimes hear is that your S&O pipeline is always large, and is there leaking that happens when you fill stuff up?
Floris van Dijkum: Good morning, guys.
Floris van Dijkum: Thanks for taking my.
Floris van Dijkum: Thanks for taking the question.
Floris van Dijkum: So I should add it to two questions I guess number one.
Floris van Dijkum: The size of the or ethanol pipeline again, it's it's one of the highest in the space. It's it's impressive.
Floris van Dijkum: You know the critique we sometimes hear is that your pipeline is always large.
Floris van Dijkum: And is there leaking.
Floris van Dijkum: That happens when you fill stuff up or maybe if you can touch a little bit upon.
James M. Taylor: Or maybe you can touch a little bit on the outlook for that pipeline, and can it continue at this scale going forward? Well, I think the important thing to think about is where that build occupancy is going, which is also moving up. So, we're maintaining that great spread between build and lease through the great marginal activity that we're leasing. The strength of that pipeline demonstrates itself in terms of how we derive outperformance and growth, and how we deliver more revenue per quarter successively. And it really gives pretty darn good visibility on how we're going to grow, not only through 24, but 25 and beyond. Yeah, Floris, I would just add, again, we are now three consecutive years of normal course move outs being at historic lows. Our team addressed the 2023 bankruptcies very quickly with better tenants, higher rents, and compelling accretive returns.
Floris van Dijkum: The outlook for the for that pipeline and can it continue in this in this scale.
Floris van Dijkum: Going forward well I think the important thing to think about is where that build occupancy is going which is also moving up so we're maintaining that great spread between build and leased through the great marginal activity that we're we're leasing so you know the strength of that pipeline down.
Floris van Dijkum: Constraints itself in terms of how we drive the outperformance and growth how we deliver more revenue per quarter successively and you know it really gives a pretty darn good visibility on how we're going to grow not only through 'twenty four 'twenty five and beyond yes for so I would just add again, we're now three.
Floris van Dijkum: Consecutive years of normal course move outs being at historic lows.
Floris van Dijkum: Our team addressed the 2023 bankruptcies very quickly with better tenants at higher rents compelling accretive returns. So we're making those upgrades for the spaces that we do get back and I think as Jim highlighted we're growing build occupancy despite taking some of that space back. So we're actually pretty pleased with.
Brian T. Finnegan: So, we're making those upgrades for the spaces that we do get back, and I think, as Jim highlighted, we're growing build occupancy despite taking some of that space back. So, we're actually pretty pleased with how that pipeline continues to grow. It's a good indicator in terms of the overall leasing environment. It's a good look through in terms of our team's ability to capitalize. Right, maybe my follow-up here is, in terms of ABR, I mean, Remind us what, you know, Jim, when you started at Brixmor, what was your average ABR?
Floris van Dijkum: That pipeline continues to grow it's a good look through in terms of the overall leasing environment. It's a good look through in terms of our team's ability to capitalize on it.
Speaker Change: Great maybe my follow up here is a in terms of a b R. I mean.
Speaker Change: Remind us what Jim when you started at bricks more what was your average ABR what has been the growth in that ABR since your since your tenure.
James M. Taylor: What has been the growth in that ABR, you know, since your, you know, tenure? And, obviously, with the outlook on, because part of that is, I think, oftentimes viewed as a reflection of portfolio quality. What was the spread been relative to your peers when you started in terms of ABR?
Speaker Change: Tenure, and and clearly I mean, obviously with the outlook on because part of that is I think is.
Speaker Change: Oftentimes viewed as a reflection of portfolio quality, what's the spread been relative to your peers. When you started in terms of a ABR and where do you see that heading over the next couple of years.
James M. Taylor: And where do you see that heading over the next couple of years? I really appreciate the question. So when we started, it was in the $12 range. And today, it's approaching 17 bucks.
Speaker Change: Really appreciate the question. So when we started it was in the $12 range and today its approaching 17 box, but if you look also at the marginal rate at which we're signing it's in the low twenties. So we're really marching very steadily to a pretty compelling average ABR just that speaks to not only the quality of the centers, but also the <unk>.
James M. Taylor: But if you look also at the marginal rate at which we're signing, it's in the low 20s. So we're really marching very steadily to a pretty compelling average ABR that speaks to not only the quality of the centers but also the demand for tenants to be in our centers. So thank you for highlighting that it's something, it's a trend and a track record that we're very proud of. Thanks, Jim. You bet. Our next question comes from the line of Haendel St. Just with Mizzouho. Please issue us with your question. Hey, good morning out there. Good morning, Haendel.
Speaker Change: And for our tenants to be in our centers. So thank you for highlighting that it's something that's a trend and a track record that we're very proud of.
Speaker Change: Thank you you bet.
Speaker Change: Our next question comes from the line of Handel St. Juste with Mizuho. Please proceed with your question.
Speaker Change: Hey, good morning out there.
Speaker Change: Hinsdale.
Haendel Emmanuel St. Juste: So, first question, on redevelopment. Just to go back to your pipeline here, you're up to about $430 million, which I think is up about 30% from this time last year. So, my question is, how large would you like to grow that to, and what's the limiting factor in the near term? Is it funding?
Speaker Change: So our first.
Speaker Change: First question on the redevelopment is to go back to your pipeline here you were up to about $430 million, which is up about 30% from this time last year. So my question is.
Speaker Change: How large would you like to grow that to one what's the limiting factor in near term is it funding is it perhaps a lower yields.
James M. Taylor: Is it perhaps lower yields or potentially returns not meeting your expectations? And then what proportion of that pipeline over time would you like to have in the form of mixed-use densification versus traditional repositioning? You know, we're going to remain disciplined, as we always have, on retail projects that really benefit from a really nice velocity where you're not committing any significant capital until you've got your leases signed and in place. And in terms of pace and velocity, we're going to continue to be between that $150 to $200 million of annual spend and delivery, albeit this year we do expect to deliver closer to $200 million. And what that pipeline shows you, Haendel, is visibility on a couple of years of forward growth. So, I think we're at a good level.
Speaker Change: Or potentially if it turns out meeting your expectations and then what proportion of that pipeline over time would you like to have.
Speaker Change: Form of mixed use densification versus traditional repositioning.
Speaker Change: We're going to remain disciplined as we always have on retail projects that really benefit from a really nice velocity, where you're you're not committing any significant capital until you've got your leases signed and in place and in terms of pace and velocity, we're going to continue to be between $950 million to $200 million of annual spending.
Speaker Change: Delivery, albeit this year, we do expect to deliver at closer to $200 million.
Speaker Change: And what that pipeline shows you hen Dal has visibility on a couple of years of forward growth.
Speaker Change: So I think we're at a good level I think it's balanced in terms of you know.
James M. Taylor: I think it's balanced in terms of.., you know, out parcels, redevelopments, anchor repositioning. And again, we're really benefiting from the velocity with which that income delivers. Great, I appreciate that.
Speaker Change: Our parcels redevelopments are anchor repositioning and again, where we're really benefited by the velocity with which that income delivers.
Speaker Change: Great appreciate that and then a follow up.
Steve Gallagher: And a follow-up question, can you talk a little bit more about the 100 basic points of tenant disruptions embedded in your top line? And maybe put that maybe into context versus more normal years where you have more non-renewals and churns, maybe comparing that to 23 actuals and what you'd actually do in a more normal year? Thanks.
Speaker Change: Can you talk a little bit more about the 100 basis points of tenant disruptions embedded in your top line and put that maybe into context versus more normal years, where you have more non renewals and churn.
Speaker Change: Maybe comparing that to 23 actuals and what you would actually do in a more normal year.
Anthony Franklin Powell: Yeah, when you think about, you know, outside of the bankruptcy period, right? We normally are building our budget from the ground up, starting with individual tenants and have very specific assumptions as to who we expect to renew and ultimately move out. Over the last couple of years with some of the bankruptcy activity, we have embedded an expectation within that line. I think when you look at the 100 basis points this year as compared to what we would have seen through last year, I think it would have been a little bit higher in 2023, and we'll ultimately see how it plays out in 2024. Our next question comes from Anthony Powell with Barclays. Please proceed with your question. Good morning.
Speaker Change: Yeah. When you think about outside of the bankruptcy period right. We normally are building our budget from from ground up starting at the individual tenants and have very specific assumptions as to who we expect to renew and ultimately move out.
Speaker Change: Over the last couple of years with some of the bankruptcy activity, we have embedded an expectation within that line I think when you look at the 100 basis points. This year as compared to what we would've seen through last year I think it would have been a little bit higher.
Speaker Change: In 2023 and will ultimately see how it plays out in 2024.
Speaker Change: Yeah.
Speaker Change: Our next question comes from a lot of Anthony Powell with Barclays. Please proceed with your question.
Anthony Franklin Powell: Hi, Good morning, just a question on renewal lease spreads.
Brian T. Finnegan: It's a question on renewal, and spreads, you know. You guys are at record occupancy, both on the entrance shop side; things are going well in the industry. At what point do you think you'll have more pricing power to drive those renewal lease spreads from the 30% range to something higher, kind of given what we're seeing across the industry? Yeah. Anthony, hey, this is Brian.
Anthony Franklin Powell: You guys are at record occupancy both on the engine shop side things are going well in the industry at what point do you think you'll have more pricing power to drive those renewal lease spreads on the 30% range for something higher kind of given what we're seeing across the industry, yet and say Hey, This is Brian its a great question look we're proud of what the team's been able to do as you mentioned, we were over 13% last.
Brian T. Finnegan: It's a great question. Look, we're proud of what the team has been able to do. As you mentioned, we were over 13% last year. That's now eight consecutive quarters of renewal growth over 10%. As we continue to make improvements across the portfolio, as we continue to, as the environment continues to be strong, we expect to be able to drive renewals higher. But as I mentioned earlier on the call, it's not just that initial renewal growth that we're getting. We're also renegotiating the CAM clauses.
Brian T. Finnegan: Year, that's now eight consecutive quarters of renewal growth over 10% as we continue to make improvements across the portfolio as we continue to as the environment continues to be strong we expect to be able to drive renewals higher but as I mentioned earlier on the call. It's not just that initial renewal.
Brian T. Finnegan: Growth that we're getting we're also renegotiating cam clauses, we're getting annual growth in those renewals were getting flexibility are in those renewals as well. So I think as you look on the whole we continue to make improvements, but if you look at where we've been I mean, we've continued to drive those renewal rates higher you may see some.
Brian T. Finnegan: We're getting annual growth in those renewals, and we're getting flexibility in those renewals as well. I think as you look on the whole, we continue to make improvements. But if you look at where we've been, we've continued to drive those renewal rates higher. You may see some fluctuations in a given quarter, but long-term, we're pretty encouraged by what we're seeing overall, just in the rent growth space, but particularly in renewal. Thanks.
Brian T. Finnegan: Fluctuations in a given quarter, but long term.
Brian T. Finnegan: We're pretty encouraged by what we're seeing overall just in the rent growth space, but particularly on renewals.
Speaker Change: Okay, Thanks, and one more maybe on anchor contractual rent bumps on another call I think one of the other companies said that they are still trying to make progress. They are getting more interest in green those bumps kind of where are you kind of in that process. It is its incremental progress right. It's not maybe youre not getting the 3% annual increases on everyday although we're getting it with some with.
Anthony Franklin Powell: One more, maybe on anchor contractual rent bumps. On another call, I think one of the other companies said that they're still trying to make progress there and getting more anchors to agree to those bumps. Where are you in that process?
Brian T. Finnegan: It's incremental progress, right? Maybe you're not getting the 3% annual increases on every deal, although we're getting them with some, with national tenants that we may not have gotten with before. But if tenants are used to that 10% initial increase, maybe you're pushing that to 12.5%, maybe you're pushing that to 15%. And the competition for space is allowing us to make those improvements outside of the very strong initial rate that we're getting with our anchors, right? We signed anchor leases last year at the highest rates that we ever have.
Speaker Change: National tenants that we may not have gotten with before but as tenants. We're used to that 10% initial increase maybe you're pushing that to 12 and a half maybe you're pushing that to 15% and the competition for space is allowing us to make those improvements outside of the very strong initial rate that we're getting with our anchors right, we signed anchor leases a year ago.
Speaker Change: Last year at the highest rates that we ever have that rate continues to trend higher. So we are making marginal improvements and I would again I would hit to those kind of non rent lease terms that we're able to get in in our in our leases with anchor tenants whether that is freeing up out parcels whether that is freeing up restrictions to allow more of that.
Brian T. Finnegan: That rate continues to trend higher, so we are making marginal improvements. And again, I would point to those kind of non-rent lease terms that we're able to get in our leases with anchor tenants, whether that is freeing up our parcels, whether that is freeing up restrictions to allow more of the fitness uses or medical uses into the space. So I think we continue to make marginal improvements, and the environment is allowing us to do so. Okay, thank you. Our next question comes from the line of Kim and Tim with Truist.
Speaker Change: Fitness uses or medical uses into the space. So I think we continue to make marginal improvement in the environment is allowing us to do that.
Speaker Change: Okay. Thank you.
Ki Bin Kim: Our next question comes from the line of Keybanc Kim with Truest. Please proceed with your question.
Ki Bin Kim: Please may I receive your question. Thanks. Good morning.
Ki Bin Kim: Thanks, Good morning.
Brian T. Finnegan: You know, when I look at your 24 lease expirations, the average rent is a little bit lower than other years. Is that just a mix, or should we think the lease price could be a little bit better in 24 than normal? Yeah, it's somewhat of a mix issue.
Ki Bin Kim: Hi.
Ki Bin Kim: When I look at your 24 lease expirations. The average rent is a little bit lower than other years is that type of mix or do you or should we think the lease spreads could be a little bit better in 'twenty four than that than normal.
Ki Bin Kim: It's somewhat of a mix issue, but if you look keeping out the next few years, we have leases expiring, particularly for anchors in the high single digits around eight to nine Bucks, we've been signing those deals at $15 a square foot. So that gives us really good visibility in terms of our ability in terms of our ability to continue to drive rate.
Brian T. Finnegan: But if you look out the next few years, we have leases expiring, particularly for anchors, in the high single digits, around eight to nine bucks. We've been signing those deals at $15 a square foot. So that gives us really good visibility in terms of our ability to continue to grow.
Ki Bin Kim: Okay. And just not to, you know, beat a dead horse here, but going back to the credit loss reserves of 100 basis points, I think, you know, in general, people just want to understand if some of these more high-profile at-risk tenants, like a big loss or Joann's, if they end up going bankrupt, if there is further downside to FSO. I think that's ultimately what we're trying to gauge. Do you think you can provide any commentary on that?
Ki Bin Kim: Okay, and just not to beat a dead horse here, but going back to the credit loss reserves up a 100 basis points I think in general people just want to understand if some of these more high profile at risk kind of like a big loss or Joanna if they end up going bankrupt if there is.
Ki Bin Kim: The downside to that is helpful.
Ki Bin Kim: I think that's ultimately what we're trying to gauge if you could provide any commentary on that yeah. As I mentioned before just as we've always done we believe we're adequately provisioned for a wide variety of outcomes. So as Steve talked about we do a space by space buildup and make certain assumptions as to non renewal and move outs et cetera, and then on top.
James M. Taylor: Yeah. As I mentioned before, you know, just as we've always done, we believe we're adequately provisioned for a wide variety of outcomes. So, as Steve talked about, we do a space-by-space build-up and make certain assumptions as to non-renewal, move-outs, et cetera. Now, on top of that, we look across the portfolio and the industry to assess tenant risk and make educated decisions about where to set those reserve levels.
Ki Bin Kim: Of that we look across the portfolio in the industry to assess tenant risk and make educated decisions about where to set those reserve levels again, all with a point of view that.
Michael Mueller: Again, all with the point of view that what we're delivering is still incredibly strong with that top line. Okay, thank you. Our next question comes from Mike Mueller with J.P. Morgan. Please proceed with your question. Thanks. Looks like you had about a little over $160 million in leasing CapEx and maintenance CapEx in 2022 and 2023. Just curious where you see that trending in 2024 and 2025, given the snow pipeline.
Ki Bin Kim: What we're delivering is still incredibly strong.
Ki Bin Kim: With that topline provision.
Speaker Change: Okay. Thank you.
Speaker Change: Our next question comes from the line of Mike Mueller with Jpmorgan. Please proceed with your question.
Michael Mueller: Thanks, It looks like he had about little over 160 million in leasing Capex and maintenance Capex in 'twenty, two and 23, just curious where you see that trending in 'twenty four 'twenty five given the snow pipeline.
Brian T. Finnegan: Yeah, just I'd say in CapEx overall, we've talked about, Mike, that we expected maintenance CapEx to trend down over time. You started to see that last year, and we expect to continue to see that as the improvements in our portfolio are continuing to pay off. As Jim mentioned, we do expect about $150 to $200 million a year in consistent reinvestment CapEx.
Speaker Change: Yeah, just I would say in Capex overall.
Michael Mueller: Talked about Mike that we expected maintenance capex to trend down over time, you started to see that last year and we expect to continue to see that as the improvements in our portfolio are continuing to pay off as Jim mentioned, we do expect about $150 million to $200 million a year in consistent reinvestment capex.
Brian T. Finnegan: And then from a leasing CapEx perspective, just expect us to be at a similar level as we were a year ago, but our team is being incredibly disciplined. We're using the competition for space to, as I mentioned, get tenants to take on more existing conditions to keep those scope levels down. But I would expect that to trend at a similar level with the maintenance CapEx number ultimately trending down.
Michael Mueller: And then from a leasing Capex perspective, just expect us to be amongst similar level as we were a year ago, but our team is being incredibly disciplined we're using the competition for space to as I mentioned get tenants to take on more existing conditions to keep those scope levels down, but I would expect that to trend at a similar level with the maintenance.
Michael Mueller: Opex number ultimately trending down.
Speaker Change: Got it okay. Thank you.
Linda Tsai: Okay. Thank you. Our next question comes from the line of Linda Tsai with Jeffries. Please proceed with your question.
Speaker Change: Our next question comes from the line of Linda Tsai with Jefferies. Please proceed with your question.
Brian T. Finnegan: Hi, thanks for taking my question. I realize there is retailer demand for open air across the board, but could you maybe just talk about what you broke up there, Linda? I'm sorry.
Linda Tsai: Hi, Thanks for taking my question I realized there is retailer demand for open air across the board, but could you maybe just talk about.
Linda Tsai: You broke up there I'm sorry.
Linda Tsai: Oh, sorry. I said I realized there is retailer demand for open air across the board. But could you just talk about individual spaces, like what sizes you're seeing the greatest demand for? Yeah, we had talked about box sizes earlier in the call, Linda, and you know, we have our lowest box availability that we ever have. So I think in that kind of mid-20s box size range, whether those are tenants in the value apparel, specialty, grocery, home, and wellness segments, we're definitely seeing strong demand there. You look at that 10,000 square foot, kind of that junior anchor range, and whether that's the five belows of the world, the footwear tenants, the Sephoras, Ultas, in that size range, there's a lot of demand there as well
Linda Tsai: Oh, sorry, I said I realize there is retailer demand for open air across the board, but could you just talk about for individual cases like what sizes, you're seeing the greatest demand for yeah. Just we had talked about box sizes earlier in the call Linda and you look we have our lowest box availability that we ever have so.
Linda Tsai: I think in that kind of mid Twenty's box size range, whether those are tenants in the value of apparel specialty grocery home a wellness segments, where we're definitely seeing strong demand there you're looking at 10000 square foot kind of that junior anchor range and whether that's the five below is of the world the footwear tenants.
Linda Tsai: So for us all to in that size range, there's a lot of demand there as well and then the third one I would point to is in the out parcel space. We have a tremendous amount of competition for available out parcels from just really really strong tenants whether its the cabos of the world. The Chipotle is that are expanding.
Linda Tsai: And then the third one I'd point to is in the out parcel space. We have a tremendous amount of competition for available out parcels from just really, really strong tenants, whether it's the Cabas of the world, the Chipotles that are expanding, bank branches like Chase, which is still looking at new opportunities in existing and new markets. So I think there's a wide range of spaces. I gave you a few there, but those are the three I'd say we see the most.
Linda Tsai: Bank branches like Chase, which is still looking at new opportunities in existing and new markets. So I think theres a wide range of spaces I gave a few there but those are the three I would say where we're seeing.
Linda Tsai: The most demand.
Brian T. Finnegan: And then my second question is just on the transaction market, you mentioned the mid-six cap rate for recent transactions, you know, how do cap rates vary across the format for the assets you would be considering to buy? Yeah, what I think the most important part about that cap rate question is really size. So as you go down in size, cap rates are tighter. So if you look at that $15, $20 million, $30 million range, you're certainly seeing tighter cap rates for open air retail as you expand out to that. The Bulletproof Executive 2013, Our next question comes from the line of Keo Afusada with Deutsche Bank. Please give me the question.
Linda Tsai: And then my second question is just on the transaction market you mentioned the mid six cap rate for our recent transaction.
Linda Tsai: How have your cap rates vary across format for the assets you would be considering to buy.
Speaker Change: Yeah, what I'd add.
Speaker Change: I think the most important part about that cap rate question is really size. So as you go down in size cap rates are tighter. So if you look at that $15 million to $20 million $30 million range or certainly seeing tighter cap rates for open air retail as you expand out to that 50 to 100 and higher that's where we're seeing higher cap rates that could be more opportunity for us.
Speaker Change: Our next question comes from the line of Tayo Okusanya with Deutsche Bank. Please proceed with your question.
Keo Afusada: Yes, good morning. Good morning. In regards to dispositions, could you talk a little bit about, you know, you kind of talked about some of your lower group assets, that kind of what you're targeting. And you also provided commentary around if there are particular markets you're trying to get out of, whether in one or two places where you may not have scale, that it makes sense to just kind of exit the market. Yeah, I mean, our strategy has been pretty consistent, and it's one of clustering as we exit some of those single asset markets where we fix the asset and have an opportunity to harvest real value. That's where you see us exiting. And, you know, we'll always be balanced, evaluating that whole IRR against our cost of capital and looking for opportunities to monetize assets opportunistically. With that said, we're going to be balanced, and we're always going to look to what we can do on the other side.
Tayo Okusanya: Hi, yes.
Tayo Okusanya: Good morning.
Tayo Okusanya: Good morning.
Tayo Okusanya: In regards to dispositions could you talk a little bit about you know what kind of talking about somebody can look with that that's kind of what you're targeting.
Can you just provide any commentary around just that particular market you're trying to get out.
Tayo Okusanya: And one or two places where you may not have scale that it makes sense to just kind of exit the market.
Tayo Okusanya: Yeah, I mean, our strategy has been pretty consistent and it's one of clustering as we exit some of those single asset markets, where we fix the asset and have an opportunity to harvest real value, that's where you see us exiting.
Tayo Okusanya: And we will always be balanced evaluating that hold IRR against our cost of capital and looking for opportunities to monetize assets Opportunistically with that said, we're gonna be balanced and we're always going to look to what we can do on the other side.
James M. Taylor: That's. Thank you. Thank you. This concludes our question and answer session. I'd like to hand it back to Stacy Slater for closing remarks. Thank you, everyone, for joining us today. Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.
Speaker Change: That's very helpful. Thank you you bet.
Speaker Change: This concludes our question and answer session I'd like to hand, it back to.
Speaker Change: Stacy Slater for closing remarks.
Stacy Slater: Everyone for joining us today.
Stacy Slater: Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.