Q1 2024 Retail Opportunity Investments Corp Earnings Call

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Operator: Welcome to Retail Opportunity Investments' 2024 First Quarter Conference. Participants are currently in a listen-only mode. Following the company's prepared remarks, the call will be opened up for questions. Now, I would like to introduce Lauren Silveira, the company's Chief Accounting Officer.

Welcome to retail opportunity investments 2024 first quarter conference call.

Distance are currently in a listen only mode.

The company's prepared remarks, this call will be opened up for questions.

Now I would like to introduce Lauren Silberman, the Companys Chief Accounting officer.

Lauren N. Silveira: Thank you. Before we begin, please note that certain matters which we will discuss on today's call are forward-looking statements within the meaning of federal securities laws. These forward-looking statements involve risks and other factors that can cause actual results to differ significantly from future results that are expressed or implied by such forward-looking statements. Investors should refer to the company's filings with the SEC, including our most recent annual report on Form 10-K, to learn more about these risks and other factors.

Thank you.

Before we begin please note that certain matters, which we will discuss on today's call are forward looking statements within the meaning of federal securities laws.

Lauren N. Silveira: These forward looking statements involve risks and other factors, which can cause actual results to differ significantly from future results that are expressed or implied by such forward looking statements.

Lauren N. Silveira: Participants should refer to the company's filings with the SEC.

Lauren N. Silveira: Our most recent annual report on Form 10-K to learn more about these risks and other factors.

Lauren N. Silveira: In addition, we will be discussing certain non-GAAP financial results on today's call. Reconciliation of these non-GAAP financial results to GAAP results can be found in the company's quarterly supplemental, which is posted on our website. Now, I'll turn the call over to Stuart Tanz, the company's Chief Executive Officer. Stuart? Thank you, Laurie.

Lauren N. Silveira: In addition, we will be discussing certain non-GAAP financial results on today's call.

Lauren N. Silveira: Reconciliation of these non-GAAP financial results to GAAP results can be found in the company's quarterly supplemental which is posted on our website.

Lauren N. Silveira: Now I'll turn the call over to Stuart to have the company's Chief Executive Officer Stuart. Thank you Lorne and good morning, everyone.

Stuart A. Tanz: Thank you, Lauren, and good morning, everyone. Here with Lauren and me today is Michael Haines, our Chief Financial Officer, and Rich Schoebel, our Chief Operating Officer. We are pleased to report that we are off to a solid start thus far in 2024. We continue to make the most of the strong demand for space across our portfolio, especially as it relates to anchor space. At the start of the year, we had four anchor spaces that recently became available, an unusual occurrence for us, given that we have maintained our anchor space at 100% leased for the past seven years.

Stuart: Here with Lorne and me today is Michael Haines, our Chief Financial Officer, and Rick <unk>, Our Chief operating officer.

Stuart: We were pleased to report that we're off to a solid start thus far in 2024, we can really make the most of the strong demand for space across our portfolio, especially as it relates to anchor space.

Stuart: At the start of the year, we had four anchor spaces that recently became available.

Stuart: Usual occurrence for us given that we have maintained our anchor space at 100% leased for the past seven years.

Stuart A. Tanz: We are pleased to report that we currently have four terrific national tenants lined up to take all of the space and at higher rents. In fact, on a blended basis, we expect the increase in rent will be more than double the previous blended rent.

We are pleased to report that we currently have four terrific national tenants lined up to take all of the space and at higher rents in fact on a blended basis, we expect the increase in rent will be more than double the previous blended rent.

Stuart A. Tanz: Turning to acquisitions, we recently acquired a terrific grocery-anchored shopping center located here in the San Diego market. The property serves as the primary anchor anchoring a master plan community that is situated in one of the most sought-after affluent sub-markets in San Diego, truly irreplaceable real estate. Through a long-standing off-market relationship, the seller came to us directly seeking to execute a quick transaction. Given that the property is located literally in our backyard, we knew this center extremely well, and we were in a strong position to accommodate an efficient closing.

Stuart: Turning to acquisitions, we recently acquired a terrific grocery anchored shopping center located here in San Diego market.

Stuart: The property serves as the primary shopping center anchoring a master plan community that is situated in one of the most sought after affluent submarkets in San Diego.

Stuart: Truly irreplaceable real estate.

Stuart: Through our long standing off market relationship the seller came to us directly seeking to execute a quick transaction.

Stuart: Given that the property is located literally in our backyard. We knew this center extremely well and we're in a strong position to accommodate and efficient closing.

Stuart A. Tanz: The Center features not just one, but two supermarkets. Trader Joe's and Stater Brothers, both of which are generating strong sales numbers and have been thriving at the property for years. In the few short weeks that we've owned the property, we've already leased all of the available space at the center. Additionally, several of our longstanding tenants, including a grocery tenant, have reached out to us to express their interest in leasing space at the center. Safe to say, we're very excited to own this property. In terms of the numbers, we acquired the shopping center for $70 million, according to a six and three-quarter percent cash yield, which is north of 7% on a gap basis.

Stuart: The center features not just one but two supermarkets trader Joe's and Stater brothers, both of which are generating strong sales numbers and have been describing at the property for years.

Stuart: In the few short weeks that we've owned the property we've already leased the available space at the center. Additionally, several over a long standing tenants, including grocery tenant has reached out to us to express their interest in leasing space at the center safe to say, we're very excited to own this property.

Stuart: In terms of the numbers, we acquired the shopping center for $70 million equating to a six and three quarter.

Stuart: Percent cash yield, which is north of 7% on a GAAP basis.

Stuart A. Tanz: Additionally, going forward, over the next couple of years, there are opportunities to release below-market space and re-merchandise some inline space that should grow the yield notably. With respect to dispositions, we currently have two properties under contract to sell totaling $68 million, with a blended exit cap rate in the low $6 million range. From our perspective, selling these properties and effectively redeploying the capital accretively into an irreplaceable asset, such as our San Diego acquisition, enhances the underlying intrinsic value of our overall portfolio, as well as our ability to continue growing cash flow in the time ahead. Now, I'll turn the call over to Michael Haines, our CFO, to take you through our financial results for the first quarter. Mike?

Stuart: Surely going forward over the next couple of years, there are opportunities to release below market space and remerchandise, some inline space that should grow the yield notably.

Stuart: With respect to dispositions. We currently have two properties under contract to sell totaling $68 million with a blended excellent cap rate in the low sixes.

Stuart: From our perspective, selling these properties and effectively redeploying the capital Accretively into an irreplaceable asset such as our San Diego acquisition enhances the underlying intrinsic value of our overall portfolio as well as our ability to continue growing cash flow in the time ahead.

Stuart: Now I'll turn the call over to Michael Haines, our CFO to take you through our financial results for the first quarter Mike.

Michael B. Haines: Thanks, Stuart. During the first quarter, total revenues increased to $85.3 million, in part driven by base rents, which came in higher than our internal forecast, and also in part by higher-than-usual amortization of above-and-below. As we discussed in our last call, an anchor lease expired during the first quarter that was substantially below market, which accounted for the bulk of the increase and which we had taken into account with respect to our FFO guidance range for the

Michael B. Haines: Thanks, Stuart during the first quarter total revenues increased to $85 3 million in part driven by base rents, which came in higher than our internal forecast and also in part by higher than usual amortization of above and below market rent.

Michael B. Haines: As we discussed on our last call an anchor lease expired during the first quarter that was substantially below market, which accounted for the bulk of the increase and which we had taken into account with respect to our <unk> guidance range for the year.

Michael B. Haines: Gap net income attributable to common shareholders was $11 million for the first quarter of 2024, equating to $0.09 per diluted share, and FFO for the first quarter of 2024 totaled $37.9 million, equating to $0.28 per diluted share.

Michael B. Haines: GAAP net income attributable to common shareholders was $11 million for the first quarter of 2024, equating to nine cents per diluted share.

Michael B. Haines: And <unk> for the first quarter of 2024 totaled $37 9 million liquidity 28 cents per diluted share.

Michael B. Haines: In terms of same-center net operating income, during the first quarter, same-center cash NOI increased 5.7 percent, which was driven by a balance of base rent and recovery income, as well as an increase in other income in connection with their Lease Recapture Initiative. While the 5.7% increase is above our internal forecast for the first quarter, we remain cautious looking ahead, particularly given the anchor space releasing activity that Stuart's focused on. While we have all of the available anchor space currently spoken for, there will be some downtime between leases, which is reflected in our same center NOI guidance range for the full year.

Michael B. Haines: In terms of same center net operating income during the first quarter same center cash NOI increased five 7%, which was driven by a balance of base rent and recovery increases as well as an increase in other income in connection with their lease recapture initiatives.

Michael B. Haines: While the five 7% increase is above our internal forecast for the first quarter. We remain cautious looking ahead, particularly given the anchor space releasing activity that Stuart spoke of.

Michael B. Haines: While we have all of the available anchor space currently spoken forward there'll be some downtime between leases, which is reflected in our same store NOI guidance range for the full year.

Michael B. Haines: Turning to our financing activities, as Stuart indicated, we recently acquired a shopping center for $70 million. While we utilized the credit line to initially fund the acquisition, our objective is to effectively finance the transaction with the proceeds from the pending dispositions, which we expect to close in the next 60 to 90 days. In terms of our balance sheet and financial ratios, net debt to annualized EBITDA was 6.4 times for the first quarter, down from 6.7 times a year ago.

Michael B. Haines: Turning to our financing activities as Stuart indicated we recently acquired a shopping center for $70 million, while we'll utilize the credit line to initially fund the acquisition. Our objective is to effectively financed the transaction with the proceeds from the pending dispositions, which we expect to close in the next 60 to 90 days.

Michael B. Haines: In terms of our balance sheet and financial ratios net debt to annualized EBITDA was six four times for the first quarter down from six seven times a year ago.

Michael B. Haines: Here at the start of the second quarter, we retired in full a $26 million mortgage. As a result, we currently have only one mortgage loan remaining for $34 million, meaning that 93 of our 94 stocking centers are currently unencumbered. And this last mortgage matures in about 18 months.

Speaker Change: Here at the start of the second quarter. We retired in full a $26 million mortgage as a result, we currently have only one mortgage loan remaining for 34 million, meaning that 93 of our 94 shopping centers are currently unencumbered and.

Speaker Change: In this last mortgage matures in about 18 months from now.

Richard K. Schoebel: Looking ahead, with respect to refinancing the bonds that mature at the end of the year, we continue to watch the market closely and are in a position to move forward opportunistically when market conditions become more difficult than favorable. Now I'll turn the call over to Rich Schoebel, our COO.

Speaker Change: Looking ahead with respect to refinancing the bonds that mature at the end of the year. We continue to watch the market closely and are in a position to move forward opportunistically when market conditions become more subtle than favorable.

Speaker Change: Now I'll turn the call over to rich <unk>, our COO rich thanks, Mike.

Richard K. Schoebel: Thanks, Mike. As Stuart highlighted, demand for space across our portfolio continues to be strong. During the first quarter, we signed 87 leases totaling over 383,000 square feet, the bulk of which centered around renewing valued anchor tenants. Specifically, during the first quarter, we renewed seven anchor tenants totaling 207,000 square feet, three of which were actually not scheduled to mature until next year. All three of those tenants came to us early, with two of the tenants seeking to renew their lease for another five years, and one of them, a long-standing grocery tenant, seeking to renew their lease for another ten years.

Rich: As Stuart highlighted demand for space across our portfolio continues to be strong.

Rich: During the first quarter, we signed 87 leases totaling over 383000 square feet.

Rich: Bulk of which centered around renewing valued anchor tenants spur.

Rich: Specifically during the first quarter, we renewed seven anchor tenants totaling 207000 square feet three.

Rich: <unk> three of which were actually not scheduled to mature until next year.

Rich: All three of those tenants came to us early with two of the tenants seeking to renew their lease for another five years and one of them a longstanding grocery tenant seeking to renew their lease for another 10 years.

Richard K. Schoebel: As we noted on our last call, four anchor spaces recently became available, totaling 179,000 square feet, and as Stuart noted, we currently have new national tenants lined up to lease the spaces, all of which will be terrific new strong draws to our center. Additionally, all four leases will have 10-year initial lease terms and all at higher REM. We are currently in the process of finalizing the lease agreement, and once the leases are executed, we expect to deliver the spaces expeditiously as there is only a limited amount of prep work required on our part. With respect to non-anchor inline space, demand also continues to be strong.

Rich: As we noted on our last call for anchor spaces recently became available totaling a 179000 square feet and as Stuart noted. We currently have new national tenants lined up to lease the spaces, all of which will be a terrific new strong draws to our centers.

Rich: Additionally, all four leases, we will have 10 year initial lease terms and all at higher rents.

We are currently in the process of finalizing the lease agreements once the leases are executed we expect to deliver the spaces expeditiously as theres only a limited amount of prep work required on our part.

Rich: With respect to non anchor inline space demand also continues to be strong.

Richard K. Schoebel: During the first quarter, we signed non-anchor leases totaling 176,000 square feet. And, as with our anchor leasing activity, our inline leasing activity centered around tenant renewals, with a good number of them also coming to us early to renew. In terms of lease growth, we posted another solid quarter, achieving a 12% increase on new leases signed during the first quarter and a 7% increase on renewals. While our first quarter leasing volume was among one of our most active first quarters on record, we are poised to potentially have an even stronger second quarter.

Rich: During the first quarter, we signed non anchor leases totaling 176000 square feet and as with our anchor leasing activity are in line leasing activity centered around tenant renewals with a good number of Tim also coming to us early to renew.

Rich: In terms of re leasing rent growth, we posted another solid quarter, achieving a 12% increase on new leases signed during the first quarter and a 7% increase on renewals.

Rich: While our first quarter leasing volume was among one of our most active first quarters on record.

Rich: We are poised to potentially have an even stronger second quarter.

Richard K. Schoebel: In addition to the anchor leases that we are finalizing, our non-anchor leasing pipeline is very strong as well, being driven by a diverse mix of necessity, service, and destination tenants that are seeking to implement expansion plans across core West Coast markets. Lastly, in terms of getting new tenants open, we continue to make steady progress. During the first quarter, new tenants representing 1.4 million of incremental annual base rent on a cash basis opened and commenced paying rent.

Rich: In addition to the anchor leases that we are finalizing our non anchored leasing pipeline is very strong as well being driven by a diverse mix of necessity service and destination tenants that are seeking to implement expansion plans across our core west coast markets.

Lastly in terms of getting new tenants open we continue to make steady progress during the first quarter, new tenants, representing one 4 million of incremental annual base rent on a cash basis opened and commence paying rent. Additionally.

Richard K. Schoebel: Additionally, new leases signed during the first quarter added just over $1 million in incremental annual base rent. Accordingly, at March 31st, we had approximately $6.7 million in total of incremental annual base rent from new tenants not yet open, the bulk of which we expect will increase as we move through the year. Now, I'll turn the call back over to Stuart. Thanks, Rich.

Additionally, new leases signed during the first quarter added just over $1 million.

Rich: Of incremental annual base rent.

Rich: Accordingly at March 31, we had approximately $6 7 million in total of incremental annual base rent from new tenants not yet open the bulk of which we expect will do so as we move through the year.

Rich: Now I'll turn the call back over to Stuart.

Stuart A. Tanz: In terms of the acquisition market and the current state of play, the recent renewed concerns regarding inflation, along with the corresponding rise in interest, have yet again caused market activity to pause on the West Coast as a number of buyers have quickly moved back to the sidelines. We think that this could potentially work to our advantage as the year progresses, especially as it relates to off-market opportunities that could arise involving private owners facing looming mortgage maturity.

Stuart: Thanks Rich.

In terms of the acquisition market and the current state of play the recent renewed concerns regarding inflation along with a corresponding rise in interest rates as yet again cause market activity to pause on the West coast is a number of buyers have quickly moved back to the sidelines, we think that this could potentially work to our.

Stuart: Advantage as the year progresses, especially as it relates to off market opportunities that could arise involving private owners facing looming mortgage maturities.

Stuart A. Tanz: With this in mind, we continue to be proactively engaged and continue to have proactive discussions with our off-market source. Lastly, I would like to briefly expand on Rich's remarks regarding tenant renewal. From our perspective, tenants consistently come to us early, both anchor and non-anchor tenants, to renew their leases for another 5-10 years out in the face of an uncertain economy. We think this speaks volumes as to the continued growing appeal of the grocery-anchored sector in general and specifically speaks to the attributes of our portfolio.

Stuart: With this in mind, we continue to be proactively engaged and continue to have proactive discussions with our off market sources.

Stuart: Lastly, I would like to briefly expand on Rich's remarks regarding tenant renewals.

Stuart: From our perspective tenants consistently come to us early both anchor and non anchor tenants to renew their leases for another five to 10 years out in the face of uncertain economy. We think speaks volumes as to the continued growing appeal of the grocery anchored sector in general and specifically speak to the <unk>.

Stuart: Attributes of our portfolio.

Stuart A. Tanz: It's also indicative of the underlying strength and stability of our core tenant base and their business prospects going forward. Furthermore, following the pandemic, tenants have since shifted to being more cautious and carefully selecting the communities and shopping centers in which to expand their business. Needless to say, we've worked hard to capitalize on this shift, which is reflected in our consistently strong leasing results year after year and is what drives our disciplined acquisition strategy.

Stuart: It's also indicative of the underlying strength and stability of our core tenant base and their business prospects going forward.

Furthermore, following the pandemic tenants have since shifted to being more guarded and carefully selecting the communities and shopping centers in which to expand their businesses.

Stuart: Needless to say, we've worked hard to capitalize on this shift which is reflected in our consistently strong leasing results year after year and is what drives our disciplined acquisition strategy.

Stuart A. Tanz: Looking ahead, we believe that our properties are well positioned today with their location attributes, compelling demographics, and strong grocery daily necessity focus to continue being among the top sought-after shopping centers of choice on the West Coast by these valued, discerning tenants. Now we will open up the call to your questions. Operator.

Stuart: Looking ahead, we believe that our properties are well positioned today with their location attributes compelling demographics and strong grocery daily necessity focus to continue being among the top sought after shopping centers of choice on the west coast by these valued discerning tenants.

Speaker Change: Now we will open up the call for your questions.

Speaker Change: Operator.

Operator: Thank you. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. Our first question comes from Jeffrey Spector with Bank of America Securities. Your line is open.

Thank you to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Speaker Change: These standby, while we compile the Q&A roster.

Speaker Change: Our first question comes from Jeffrey Spector with Bank of America Securities. Your line is open.

Jeffrey Spector: Good morning. Thank you. Good morning, Stuart. Did you comment on your expectations for net acquisitions this year? Are you still in the range of $100 to $300 million?

Jeffrey Spector: Good morning. Thank you good morning, Stuart I am sorry, if I missed this did you comment on your expectations for the net acquisitions. This year are you still in the range of $100 million to $300 million.

Stuart A. Tanz: Um... Yes, we are. We are, you know, although the acquisition market is currently paused, things can change very quickly. But yes, the answer is yes, we're still on tap to look at external growth in that range.

Jeffrey Spector: Uh huh.

Stuart: Yes, we are we are.

Stuart: Although the acquisition market is.

Stuart: Currently pause things can change very quickly, but yes. The answer is yes, we are still on tap.

Speaker Change: To look at external growth in that range.

Jeffrey Spector: Okay, great, thank you. And then can you elaborate a bit more on the comments on 2Q. I think Mike commented on expectations for 2Q leasing being stronger. We're seeing in some other sectors where companies are slowing leasing decisions, so I found that remark to be very interesting.

Speaker Change: Okay, great. Thank you and then can you elaborate a bit more on the comments on <unk> and <unk>.

Speaker Change: Think the Mike commented on expectations on <unk>.

Speaker Change: <unk> leasing to be stronger.

Speaker Change: We're seeing in some other sectors, where companies are slowing leasing decisions I found that remark to be very interesting.

Richard K. Schoebel: Sure. This is Rich.

Rich: Sure this is rich.

Richard K. Schoebel: As we mentioned, we've got these tenants lined up for the anchor spaces, and the demand for the shop space continues to be very strong. We're receiving multiple LOIs on the shop space and on the anchor space. The leasing team, while it is still taking a touch longer to get to the signature, still has a lot of demand for all the available space.

Rich: As we mentioned we've got these tenants lined up for the anchor spaces and the demand for the shop space continues to be very strong. We are receiving multiple LOI is on the shelf space and on the anchor space.

Rich: The leasing team while it is still taking a touch longer to get to the signature still.

Rich: It still has a lot of demand for all of the available space.

Jeffrey Spector: Great, so no evidence of any slowdown in leasing discussions? No. And then, my last question, can you comment a little bit more on the senior notes coming due in December, the thinking there, and is there a certain trigger that, you know, would push you to execute sooner than later?

Speaker Change: Great. So no no evidence of any slowdown in leasing discussions.

Speaker Change: No.

Speaker Change: And then my last I guess can you comment a little bit more around.

Speaker Change: The senior notes coming due in December the thinking there.

Speaker Change: And is there a certain trigger that.

Speaker Change: Push you to execute sooner than later.

Michael B. Haines: I would just say Jeff, it's just basically market conditions, you know, I'm not, obviously, the 10 years ticked up quite a bit recently and that's obviously not favorable for us, but you know, it seems to move around quite a bit. So the good news is we've got a little bit of time before the end of the year, and we'll look to transact probably in the, obviously, the back half, probably in the third quarter like we did last year. Great Thank you.

Speaker Change: I would just say, Jeff, it's just basically market conditions.

Speaker Change: Obviously, the 10 year's ticked up quite a bit recently and Thats, obviously not favorable for us.

Speaker Change: Seems to move around quite a bit so the good news is we've got a little bit of time before the end of the year and we will look to transact probably.

Speaker Change: Obviously, the back half or in the third quarter like we did last year.

Jeffrey Spector: Thank you. Thank you. One moment for our next question. And our next question comes from Todd Thomas with KeyBank Capital Markets. Your line is open. Good. Good morning. Hi, Todd.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

One moment for our next question.

Speaker Change: And our next question comes from Todd Thomas with Keybanc Capital markets. Your line is open good morning.

Todd Thomas: Hi, good morning. Stuart, and maybe Mike too, you know, I just wanted to follow up first on the net investment guidance. So 100 to 300 million, you're, you know, roughly net neutral year to date, assuming that these positions close in the next 60 to 90 days. I mean, how would you, how should we think about funding future investments? I think the previous guidance assumed 60 to 180 million in equity issuance. You know, is that still on tap?

Todd Thomas: Hi, good morning.

Todd Thomas: Stuart maybe Mike I, just wanted to follow up first on the net investment guidance of $100 million to $300 million Youre roughly net neutral year to date, assuming the dispositions close in the next 60 to 90 days I mean, how would you how should we think about funding future investments I think the previous guidance assumed $60 million to $180 million of.

Todd Thomas: Equity issuance.

Todd Thomas: I'm just curious, sort of vis-a-vis your comments that buyers and sellers have moved back to the sidelines, and transaction activity may slow a bit, and sort of how you're thinking about, you know, the capital markets within all of that.

Is that still on tap I'm, just curious sort of vis vis your comments that buyers and sellers of move back to the sideline and transaction activity may may slow a bit and sort of how youre thinking about.

Todd Thomas: Capital markets within all of that.

Stuart A. Tanz: Sure. Well, I mean, look, we're certainly not issuing equity where our stock is currently trading. So we will accelerate, continue to look at accelerating the disposition side to help pay for more acquisitions or for more growth as we move through the year. And subject to market conditions, you know, if the stock does move up accordingly, and we can continue to buy it accretively, then, you know, we'll look to the equity market as well, but primarily funded through dispositions more than anything else, Todd.

Speaker Change: Sure well I mean look we're certainly not issuing equity where our stock is currently trading so we will accelerate.

We did look at accelerating the disposition side to help pay for more acquisitions or for more growth.

Speaker Change: As we move through the year and subject to market conditions.

Speaker Change: If the stock.

Speaker Change: It does move up accordingly, and we can continue to buy Accretively then.

Speaker Change: We will look to the equity market as well, but primarily being funded through dispositions more than anything else Todd.

Speaker Change: Okay.

Stuart A. Tanz: And then, Stuart, you mentioned roughly doubling the rent on the vacant anchor GLA. How much capex is estimated, you know, as it pertains to those leases? I wasn't sure if that was on a net effective basis. And then can you provide some sense of timing around when rent may commence, you know, assuming all the leases are executed as anticipated?

Todd Thomas: And then Stuart you mentioned.

Todd Thomas: Roughly doubling the rent on the vacant anchor GLA.

Todd Thomas: Capex is estimated.

Todd Thomas: As it pertains to those leases I wasn't sure if that was on a net effective basis and then can you provide some sense of timing around when rent may commence.

Todd Thomas: Assuming all the leases are executed as anticipated.

Stuart A. Tanz: Yeah, I mean, look, it's basically from a CapEx perspective on all the anchor leases, you're looking at $75 to $100. Our comment is around on a net basis in terms of doubling the rent. So as an example, the one big lease we're on is actually with an increase that's over 300%, but after CapEx, as you heard in the comments, it's double the rent. So we're expecting, again, as Rich touched on, all and actually one of the leases has already been executed, but the balance to be executed during the quarter, delivery should take place within, probably, depending on how much work, what Rich... Yeah, we're thinking it's probably nine months in terms of fit out.

Speaker Change: Yes, I mean look that.

Speaker Change: It's basically from a capex perspective on all of the anchor leases youre looking at $75 to $100 or comment is around.

Speaker Change: On a net basis in terms of doubling the rent. So as an example, the one big lease were on is actually with an increase that's over 300%, but after capex as you heard in the comments.

Speaker Change: It's a double the rate.

Speaker Change: So we're expecting.

Speaker Change: Again as rich touched on all of them will actually one of the leases has already been executed, but the balance to be executed during the quarter delivery should take place within probably depending on how much work what rich, yes, we're thinking it's probably nine months in terms of fit out as we mentioned in the comments.

Stuart A. Tanz: As we mentioned in the comments, the spaces are basically in deliverable condition, but obviously, the tenants will have to do some work to fit out the space for their needs. But I mean, from a rent investment, probably early 25, you may capture some of this late 24.

Speaker Change: The spaces are basically and deliverable condition.

Speaker Change: But obviously the tenants will have to do some work to fit out the space for their needs.

Speaker Change: But I mean, I think from a rent commencement probably early 'twenty five remainder Apture summit. This late 'twenty four but early 'twenty five correct.

Todd Thomas: Got it. And some of this will be, you know, same space, some of this will not. Is that right? It's all the same space, correct, got it. So we should see as leases are executed, you know, sort of next quarter, you know, perhaps, you know, third quarter, we'll see that reflected in the comp leasing activity. That is correct. Okay, and then last question, just on the same store in the quarter, Mike, you know, expenses were down, recovery income was higher, you know, I suspect that was, you know, that dynamic is what drove, you know, sort of the growth, the higher growth relative to budget in the quarter that I think you mentioned, you know, but I wasn't sure if that had something to do with, you know, either some of the anchor spaces that were recaptured that were maybe paying a lower share of their expenses, but you know, occupancy was down a little bit, just unsure what happened there, if you could maybe talk about that and what to expect in terms of the expense recovery rate going forward.

Speaker Change: Got it and some of this will be same space. Some of this well well not is that right.

Speaker Change: It will be I'll say, it's all small basis.

Speaker Change: All the same space.

Speaker Change: Got it so we should see as leases are executed sort of next quarter perhaps.

Third quarter, we'll see that reflected in the comp leasing activity.

Speaker Change: That is correct.

Speaker Change: And then last question just on the same store in the quarter, Mike expenses were down recovery income was higher I suspect that was.

Speaker Change: That dynamic is what drove sort of the growth the higher growth relative to budget in the quarter that I think you mentioned, but I wasn't sure if that had something to do with some of the anchor spaces that were recapture that were maybe paying a lower share of their expenses, but occupancy was down a little bit just just onshore what happened there if you could maybe talk.

Speaker Change: About that and what to expect in terms of the expense recovery rate going forward.

Todd Thomas: Actually, some of those names...

Michael B. Haines: Actually, you know, the same story I think was just a combination of a variety of things, lower bad debt this year, lower decreased operating expenses, and higher base rent. It was just a myriad of a number of things and variables. It came in stronger than we expected, obviously, you know, the same sort of moves around each quarter, sometimes fairly significantly. But, you know, again, looking at the full year, we're still being cautious about the 1 to 2%, hopefully at the higher end, particularly given the anchor spaces we just spoke of.

Speaker Change: Actually some of the same store I think it was just a combination of a variety of things as lower bad debt. This year lower decreased operating expenses higher base rent as if a myriad of.

Speaker Change: A number of things that variables.

Speaker Change: Came in stronger than we expected obviously same store moves around in each quarter, sometimes fairly significantly.

Speaker Change: But again looking at the full year, we're still being cautious about the 1% to 2% hopefully at the higher end.

Speaker Change: Particularly given the anchor spaces, we just spoke of.

Todd Thomas: Thank you. One moment for our next question. Our next question comes from Juan Sanabria with BMO Capital Markets. Your line is open. Good morning, Juan.

Speaker Change: Alright, thank you.

Thank you one moment for our next question.

Speaker Change: Okay.

Speaker Change: Our next question comes from.

Speaker Change: Juan Sanabria with BMO capital markets. Your line is open.

Juan Sanabria: Good morning. I'm just hoping you can talk a little bit about the latest thoughts on Rite Aid. I think they've increased their store closure count and maybe there are some delays or hesitation there and some back and forth in the market that they may pursue Chapter 7. So just curious on what the plan would be if that were to eventually be where it is.

Juan Sanabria: One one.

Juan Sanabria: Good morning.

Juan Sanabria: Just hoping you could talk a little bit about the latest thoughts on bright and I think they've increased their store closure count and maybe there is some.

Juan Sanabria: Maybe to laser hesitation there.

Yes.

Juan Sanabria: Back and forth in the markets that they may pursue chapter cyber so just curious on.

Juan Sanabria: What the plan would be if that were to eventuate with rite aid.

Stuart A. Tanz: Well, yeah, obviously, as you're touching on there, there's a bit of uncertainty about the final outcome of the Rite Aid situation. You know, we have reached agreements with Rite Aid on all the remaining locations, extending the terms on most of those, and we are hopeful that that plan will get approved. But, you know, in the event that it doesn't, the demand for our spaces continues to be very strong.

Juan Sanabria: Well, yes, obviously as youre touching on there there is a bit of uncertainty about the final outcome of the rite aid situation.

Juan Sanabria: We have reached agreements with rite aid on all the remaining locations extending the terms.

Juan Sanabria: Most of those.

Juan Sanabria: And we are hopeful that that plan will get approved.

Juan Sanabria: But in.

Juan Sanabria: In the event that it doesn't the demand for our space is continues to be very strong and as we touched on with the spaces, we did get back.

Stuart A. Tanz: And as we touched on with the spaces, we did get back, you know, they were spoken for very quickly. So, while we're hoping that the plan gets approved, we're also prepared to capitalize on the opportunity if it doesn't.

Juan Sanabria: They were spoken for very quickly.

Juan Sanabria: So while we're hoping that the plan gets approved we're also prepared to capitalize on the.

Juan Sanabria: Opportunity or if it doesn't.

Juan Sanabria: And what's the closure at this point, and what would the perspective be in terms of..., what you'd need to release once those stores close based on the current plan as it stands now?

Juan Sanabria: And what's the closure at this point.

Juan Sanabria: What would be prospective in terms of.

Juan Sanabria: What you would need to release once those stores close based on the current plan as it stands now.

Stuart A. Tanz: Well, if you look at what's in the pipeline in terms of leasing, those would be the current locations that they gave up. So, yeah, we started out with 15 Rite-Aids. Three of those were rejected.

Speaker Change: Well if you look at what's in the pipeline in terms of leasing that would be the current locations that they gave up so yes, we started out with 15 Rite Aid's three of those were rejected.

Stuart A. Tanz: We did sign agreements on the remaining 12. They recently announced some additional closures. One of our stores was on that list, but it's not an anchor space.

Speaker Change: We did sign agreements on the remaining 12.

Speaker Change: They recently announced some additional closures one of our stores was on that list, it's not an anchor space.

Stuart A. Tanz: And the day after it was listed, the adjacent grocer called us about expanding. So, again, you know, we feel that there's still a lot of demand for these spaces. And, you know, while we would rather not get them back, we're prepared to get them back. And we've already, you know, got our ducks in a row. And our leasing team is focused on, you know, talking to potential tenants in the event that that happens.

Speaker Change: And the day after it was lifted the adjacent grocer called us about expanding.

Speaker Change: So again, we feel that there's still a lot of demand for these spaces and.

Speaker Change: <unk>.

Speaker Change: While we would rather not get them back.

Speaker Change: We're prepared to get them back and we've already got our ducks in a row and our leasing team is focused on.

Talking to potential tenants in the event that that happens.

Juan Sanabria: Okay, and then how much NOI, I guess, would go away? temporarily on the anchor spaces that you've spoken for and released. But just thinking about the cadence of some signature NOI growth and what those anchor releases mean to your forecast for the rest of the year, just so, from a modeling perspective, we can capture that appropriately.

Speaker Change: Okay and then.

Speaker Change: Much NOI I guess would go away.

Speaker Change: Temporarily on the anchor spaces.

Speaker Change: You've spoken forward release, but just thinking about the.

Speaker Change: The cadence of same store NOI growth and what those anchor leases.

Speaker Change: To your forecast for the rest of the year just from a modeling perspective, we can capture it appropriately.

Michael B. Haines: Juan, are you referring to the three that we got back already and have released but not in a pane? Yeah, we didn't model anything for those spaces in the 24 same-story NOI or FFO, so there's nothing in the numbers for that. And Mike will come back just in terms of the number if that's what you're looking for.

Speaker Change: Okay.

Speaker Change: One are you referring to the three that we got back already and have released from that and in fact, we.

Speaker Change: We didn't model anything for those spaces.

Speaker Change: For same store NOI or <unk>. So there is nothing in the numbers for that.

Speaker Change: And Mike will get back in terms of the number if that's what you're looking for.

Juan Sanabria: Yeah, how much was in the first quarter, just to make sure that we're capturing whatever the sequential drop-off may or may not be, but we can follow up offline.

Mike: How much was in the first quarter just to make sure that we're capturing whatever that sequential drop off may or may not be but we can follow up offline.

Michael B. Haines: In Q1, there was nothing in our numbers for the three Rite Aid spaces.

Mike: In Q1, there was there was nothing in our numbers for the three credits basis.

Juan Sanabria: And then lastly, was there any sort of issue with regard to expenses, going back to Todd's question on the same store and a lot that may have positively impacted the year-over-year results there that we should kind of think about going forward?

Mike: Okay.

Mike: And then lastly was there any sort of calm.

Mike: Issue with regards to expenses.

Mike: Back to Todd's question on same.

Mike: Same store NOI that may have.

Mike: Positively impacted the year over year result, fair that we should kind of think about going forward.

Michael B. Haines: Nothing. I know last year we had some snow removal costs that were accelerated, but outside of that, there is nothing I can think of.

Mike: Nothing I know last year, we had some snow removal costs or accelerate a bit.

Mike: Outside of that.

Speaker Change: Nothing I can think of.

Juan Sanabria: Okay, thank you very much.

Speaker Change: No specific item.

Speaker Change: Okay. Thank you very much.

Craig Mailman: Thank you. One moment for our next question. Our next question comes from Craig Mailman with Citi. Your line is open.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Our next question.

Speaker Change: Comes from.

Speaker Change: Craig Millman with Citi. Your line is open.

Craig Mailman: Good morning, Craig.

Craig Mailman: How are you.

Craig Mailman: Just to follow up on the anchors, the leases, were you guys able to kind of start to put through any better escalators in these deals or as you guys get early renewals? Is that in the conversation now with some of these anchor tenants, or is it still kind of more of the minimum bumps relative to what you're getting in the shop?

Craig Mailman: Yes.

Craig Mailman: Yes.

Craig Mailman: Just to follow up on the.

Craig Mailman: Anchors to leases.

Craig Mailman: Are you guys able to kind of start to put through any better.

Craig Mailman: Escalators in these deals or as you guys get early renewals is that in the conversation now with some of these anchor tenants or is it still kind of more of the minimal bumps relative to what you get in and shop.

Stuart A. Tanz: Well, on one anchor, a big anchor, a vacancy, we were able to get more term than usual from the tenant and probably an even higher rent because this particular tenant needed the space extremely badly. It's a new concept and one that they need to get rolled out very quickly.

Craig Mailman: Well on the one anchor big anchor vacancy, we were able to get more term than usual.

Craig Mailman: The tenant.

Craig Mailman: And probably even higher rent because this particular tenant needed the space extremely badly.

Craig Mailman: It's a new concept and one that they need to get rolled out very quickly. So we sort of have the upper hand, there in terms of negotiation of.

Richard K. Schoebel: So we sort of have the upper hand there in terms of negotiation. The balance of those spaces, Rich, just in terms of the ordinary, you know, what you would ordinarily see from these tenants. Yeah, I think that, you know, the ongoing increases are, you know, sort of this historic average, which is, you know, for an anchor tenant, every five years, 10 to 12%. And, you know, for our shop space, we're still around 3% annual.

Craig Mailman: The balance of those spaces rich just in terms of the ordinary.

Craig Mailman: What you would ordinarily see from these tenants, yes, I think that the ongoing increases sort of historic which as you know for an anchor tenant every five years, 10% to 12% and for our shop space, we're still around 3% annually.

Craig Mailman: Okay.

Craig Mailman: And this new concept, is it kind of grocery? Is it new to the US or just new to your markets? What's the credit profile look like? very, very

Craig Mailman: This new concept as it kind of groceries that new to the U S or just new to your markets.

Craig Mailman: What kind of whats the credit profile look like.

Stuart A. Tanz: Very, very, very strong. They're already in the US in a pretty big way, but this is a brand new concept that has proven to be a lot more profitable than their current inventory of stores.

Speaker Change: Very very very strong.

Speaker Change: They're already in the us and a pretty big way, but this is a brand new concept that.

Speaker Change: Has proven to be a lot more profitable than their current inventory of stores.

Craig Mailman: And then just on the acquisition, I know you guys got a couple questions on this already, but just from what was an initial guidance from a timing and kind of spread perspective relative to your cost of capital, can you just give us a sense of what that was, you know, as a, contribution to the range and what and so how much sensitivity there is if the acquisition market remains a little bit stalled here and things get pushed out to year end like how much of guidance that risk just from the acquisition

Speaker Change: And then just on the acquisitions I know you guys got a couple of questions on this already but just from what was it the initial guidance from a timing and kind of spread perspective relative to your cost of capital can you just give us a sense of what that was.

Speaker Change: Contribution to the range and then what.

Speaker Change: So how much sensitivity there is.

Speaker Change: Acquisition market remains a little bit stalled here and things get pushed out to year end like how much of guidance that risk just from the acquisitions piece.

Michael B. Haines: So, Mike, we modeled, if I recall, I think it's $25 million out per quarter or a bit more than that. Well, our initial guidance was $1 to $300 million, so it's really going to depend on the equity market as far as availability of equity capital is concerned. And right now, we're turning our capital to support the acquisition side, so it's going to depend on how the market kind of evolves over the course of the year.

Speaker Change: So Mike we modeled if I recall, I think it's 25 million out per quarter or a bit more than that.

Our initial guidance was a one to 300 million. So it's really going to depend on the equity market as far as availability for equity capital right. Now, we are churning or capital or the acquisition side. So it's going to depend on how the market kind of evolves over the course of the year, obviously if rates make a change in favor then rates typically respond very positively so that.

Michael B. Haines: Obviously, if rates make a change in favor, then REITs typically respond very positively, so that could impact our stock price. It would make it more accretive to use that as a funding source. But we're modeling around about a six and a half cash yield, typically.

Speaker Change: Could impact our stock price, we would make it more accretive.

Speaker Change: Accretive to use that as a funding source.

Speaker Change: But we're modeling around.

Speaker Change: Six and a half cash yield typically.

Craig Mailman: on the acquisition or at the cost of capital.

Speaker Change: On the acquisition.

Michael B. Haines: No, on the acquisitions.

Speaker Change: Cost of capital.

Speaker Change: On the acquisitions.

Craig Mailman: And what would be the cost of the kind of capital you're putting in there?

Speaker Change: Okay, and what would be the cost of.

Speaker Change: The capital you're putting out there.

Michael B. Haines: I think I'm going to blend it depending on where the equity price is, and again, if we're going to... The acquisition guidance is going to have to come down if the market doesn't become more favorable for us. So it just depends.

Speaker Change: But I think on a on a blended depending where the equity prices of data we're going to do.

Speaker Change: The acquisition guidance was going to have to come down if the market isn't.

Speaker Change: It doesn't become more favorable for us so it just depends where we kept the guidance in place because of Assortments and earlier in the prepared remarks.

Craig Mailman: We kept the guidance in place because, as Stuart mentioned earlier in the prepared remarks, like, you know, things can change very, very quickly in the markets, as you know. So we're just kind of keeping the guidance as it is for now. We'll have to revisit that on the next call. Yeah, Craig, I mean, the most important thing is, as we are buying, to make sure that it's accretive to our current cost of capital.

Speaker Change: Yes things can change very very quickly.

Speaker Change: Mark as you know so we're just kind of keeping guidance as it is for now.

Speaker Change: Revisit that on our next call, yes, Craig I mean, the most important thing is as we are buying is to make sure that it's accretive to our current cost of capital. That's that's the critical point from a modeling perspective.

Craig Mailman: That's the critical point from a modeling perspective. So the good news is the acquisition that we made in the fourth quarter of last year, as well as what we've just bought, we believe is being done accretively day one.

Speaker Change: So the good news is the acquisition that we made in the fourth quarter of last year as well as in what we've just bought we believe is being done Accretively day one.

Craig Mailman: Okay, I was just trying to get at if there are enough things operationally that may be going better than expected, either bad debt or leased commencement timings, that could offset if you have to lower the acquisition guidance or if that lowered acquisition guidance will be a net negative for the rate. I guess that's an easier way to say it.

Craig: Okay. I was just trying to get at if there is enough things operationally that may be going better than expected either bad debt or lease commencement timing that could offset if you have to lower the acquisition guidance or if that lowered acquisition that you'll be a net negative for the range I guess easier way to put it.

Craig Mailman: Yeah, I mean, obviously, we can't predict the future as we're sitting here this morning, but we feel pretty comfortable on both sides of that equation. I'll leave it at that, Craig. Great, thank you.

Speaker Change: Yes, I mean, obviously, we can't predict the future as we're sitting here this morning.

Speaker Change: We feel pretty comfortable on both sides of that equation and I'll leave it I'll leave it at that Craig.

Craig: Great. Thank you.

Wesley Keith Golladay: Thank you. One moment for our next question, and our next question comes from Wes Golladay with Baird. Your line is open.

Craig: Okay.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question comes from Wes Golladay with Baird. Your line is open.

Wesley Keith Golladay: Good morning, everyone. It looks like a lot of items weren't favorable. Occupancy or the lease rate was down quite a bit, but the base rents were up. Is there anything one-time related, such as the term income? And where's the percent rent income now?

Wesley Keith Golladay: Good morning, Mark.

Wesley Keith Golladay: Hey, good morning to everyone just going back to the same store guidance. It looks like a lot of items when favorable occupancy or the lease rate was down quite a bit with the base rents were up is there anything one time related such as a term income and net.

Michael B. Haines: Percentage rent, because it's such an insignificant number in the grant scheme, we've rolled it up into rental revenue. It's kind of like base rent. It just wasn't meaningful enough to continue breaking it out relative to the total revenue number. So that's where that sits now.

Wesley Keith Golladay: Whereas the percent rent income now.

Wesley Keith Golladay: Percentage rent.

Speaker Change: That's a significant number in the Grand scheme, we roll it up into.

Speaker Change: Rental revenue.

Speaker Change: It's kind of in base rents, it's just it wasn't meaningful enough to continue breaking it out relative to the total revenue number so that's where that sits now.

Wesley Keith Golladay: And as far as the guidance, you know, like I mentioned earlier, it moves around from quarter to quarter. There was nothing in the terms of the quarter that was unusual. I think there were just a number of positive effects. Base rent was up. You know, bad debt was down, but other income was relatively flat to up. So there were no one-time drivers on a cash basis that I can think of.

Speaker Change: And as far as the guidance.

Speaker Change: I mentioned earlier that moves around from quarter to quarter there was nothing.

Speaker Change: In the terms of the quarter. There was unusual I think there's just a number of positive effects base rent was up bad debt was down but other income was relatively flat to up so there was no one time.

Wesley Keith Golladay: Okay, and then where could you borrow today if you had to issue debt, and does the cost of debt increase your willingness to do something strategic before the year-end? If it were to stay at current levels.

Speaker Change: Drivers on a cash basis, so that I can think of.

Speaker Change: Okay, and then where could your bar today, if you had to issue debt and does the cost of debt increase your willingness to do something strategic for the yearend.

Speaker Change: If it were to stay at current levels.

Michael B. Haines: But, you know, based on where the 10-year Treasury sits today and current market spreads, it's going to be somewhere around six to six and a half percent, and we'll have to see where that, the market goes for the balance of the year. The eyes are all on the Fed, and as far as the timing of the first rate cut or indication of a rate cut, that's going to drive some of the decision-making in that regard.

Speaker Change: Based on where the 10 year Treasury sits today in current market spreads, it's going to be somewhere around six to six 5%.

And we'll have to see where that where the market goes for the balance of the year. The eyes are all on the fed and as far as the timing of our first rate cut or indication of a rate cut that's going to drive decision, making in that regard.

Wesley Keith Golladay: Okay, and if it were to stay at that six and a half level, though, how would you approach that? Would you issue long-term debt? Would you maybe look to do a joint venture, more dispositions? What would the thought process be?

Speaker Change: Okay, and if it were to stay at that six and a half level, though how would you approach that would you issue long term debt would you maybe look to do a joint venture more dispositions.

Speaker Change: That process.

Stuart A. Tanz: We're looking at all alternatives from that perspective, Wes, so, you know, the good news is, you know, we have to some flexibility. We've been focused on these alternatives, obviously, but nothing to talk about on this call today.

Speaker Change: We're looking at all alternatives.

Speaker Change: From that perspective west so the good news is we have.

Speaker Change: Some flexibility we've been focused on these alternatives obviously.

But nothing to talk about on this call today.

Wesley Keith Golladay: Okay, and can we get your latest thoughts on the Albertsons Kroger merger, if they were to have to sell more assets, any negative benefits or potential positives, would they have to pay you fees, or if they had to sell some of your assets or sell some of the groceries that were part of your portfolio?

Okay, and then can we get your latest thoughts on the Albertsons Kroger merger, if they were to have to sell more assets any negative benefit or a potential positives would they have to pay you fees or if they had to sell some of your assets or.

Speaker Change: Some of the grocery that we're part of your portfolio.

Stuart A. Tanz: Well, I mean, look, we continue to communicate with Kroger and Albertsons and conduct business as usual, including, you know, renewing one of their leases in the current quarter, in the first quarter of the year. Obviously, the discussions with the government are still ongoing, and they're not yet in a position to disclose what specific stores are going to be sold as part of the merger. I think that's still in flux.

Speaker Change: Well I mean look we continue to communicate with Kroger albertsons and conduct business as usual.

Speaker Change: Including renewing one of their leases in the current quarter or in the first quarter of the year.

Speaker Change: Obviously, the discussions with the government are still ongoing.

Speaker Change: They are not yet in a position to disclose whats specific stores are going to be sold as part of the merger I think thats still moving around.

Wesley Keith Golladay: So we haven't spoken with CNS, but, you know, it's tough today to sort of, you know, tell you whether it's negative or positive. What I can tell you is this. Last time we went through this in 2015 with Hagen, it turned out to be a very positive step for the company. So, you know, we'll see what happens as we get through the summer here. And that's sort of where things sit as far as the merger is concerned on our call today, you know, having our call today.

Speaker Change: So.

Speaker Change: We haven't spoken with CNS, but.

Speaker Change: No.

Speaker Change: It's tough today do you sort of tell you, whether it's a negative or positive what I can tell you is this last time, we went through this in 2015 with Hagan it turned out to be a very positive step for the company.

Speaker Change: So.

Speaker Change: Well, we'll see what what happens as we get through the summer here.

Speaker Change: And thats sort of where things sit as of the merger on our call having our call today.

Wesley Keith Golladay: Okay, thanks for the time, everyone. Thank you. One moment for our next question.

Speaker Change: Okay. Thanks for the time everyone.

Speaker Change: Thanks.

Speaker Change: Thank you one moment for our next question.

Cesar Brocco: Our next question comes from Cesar Brocco with Wells Fargo Securities. Your line is open. Good morning, Cesar.

Speaker Change: Our next question comes from <unk> <unk> with Wells Fargo Securities. Your line is open.

Speaker Change: Good morning, Thank you Sir.

Speaker Change: Hey, good morning, guys.

Cesar Brocco: Hey, good morning, guys. Thanks for taking our questions. Very good questions asked earlier, but I guess going back to the anchor, the anchors that have vacated. As we think about your occupancy going forward, like, would you expect some more anchor turnover sort of like the one that happened this quarter? Or would you expect more stability going forward?

Speaker Change: For taking our questions.

Speaker Change: Very good questions asked earlier, but I guess going back to the.

Speaker Change: Two the anchor the anchors that vacated.

Speaker Change: As we think about your occupancy going forward like would you expect.

Speaker Change: Some more anchored to another sort of like the one that happened this quarter or would you expect more stability going forward.

Stuart A. Tanz: So for the balance of 2024, there are two anchor leases remaining that will expire this year. One of those is Rite Aid, where we have reached an agreement to extend it for another five years. The other is a 17,000 square foot space that matures in the fall. That tenant has notified us they're leaving, so we're in the process of re-tenanting that space and hope to have a tenant lined up before they leave.

Speaker Change: So for the balance of 2024, there is some.

Speaker Change: Two anchor leases remaining that will expire this year one of those is a rite aid where we have reached an agreement to extend it for another five years.

Speaker Change: The other is a 17000 square foot.

Speaker Change: Space that matures in the fall.

Speaker Change: That tenant has notified us they are leaving so we're in the process of re tending that space and hope to have.

Cesar Brocco: Got it. Thank you. And how would that be, you know, with respect to the small shop? Would you see any sort of potential move out that could impact your overall occupancy from the small shop?

Speaker Change: Tenant lined up before they vacate.

Speaker Change: Got it thank you.

Speaker Change: And how would that be.

Speaker Change: With respect to small shop would you see any sort of.

Speaker Change: But then show the move outs that will impact your overall occupancy from from the small shop.

Stuart A. Tanz: You know, small shop is sitting at about 96% right now. We expect that will, you know, be the range for the balance of the year.

Speaker Change: No small shop is sitting at about 96% right now we expect that will be the range for the balance of the year.

Cesar Brocco: Okay, I got it. Thanks.

Speaker Change: Okay got it thanks, and then quickly on the amortization of.

Cesar Brocco: And then quickly on the amortization of leases, like was that jump in this quarter? Was that related to, I will guess, the anchors that vacated during the quarter? Yeah, it was.

Speaker Change: Lisa it's like what's that jump in this quarter, what's that related to I would guess.

Speaker Change: <unk>.

Speaker Change: During the quarter.

Cesar Brocco: The one anchor in Q1, yeah, that left, that didn't, yeah, basically expired. It was just one anchor.

Speaker Change: Really.

But one anchor in Q1, yet left.

Lisa: Yes expired basically.

Cesar Brocco: probably will normalize sort of on a go-forward basis. Is that a fair assumption? Compare that to the prior year. That's more of the typical, like two and a half million is the typical quarterly run rate.

Lisa: We have one anchor.

Lisa: Yes, probably will normalize sort of on a go forward basis.

Lisa: Yes.

Lisa: The prior year, that's more of a typical <unk>.

Lisa: Typical quarterly run rate.

Cesar Brocco: Got it. Thanks. One more quick one. With respect to the other guidance items that you provided in your last call, like bad debt reserve, interest expense, GNA, etc., will there be any changes to those numbers? Or would you expect those to be the same? So I would expect.

Speaker Change: Got it thanks, one more quick one with respect to lead all other guidance item that you provided in last call like bad debt reserve interest expense G&A like.

Speaker Change: Well there are there any changes to those numbers or would you expect those to be the same.

Michael B. Haines: I would expect those to be the same. Yeah, as we move through the year. I mean, we just put that guidance out, you know, eight, nine weeks ago. That was kind of early and premature. I don't see any changes in those yet. But if there's anything that causes that to move, we'll, we'll provide updated guidance on the next call.

Speaker Change: So I would expect us to be the same as we move through the year. So we just put that guidance out.

Speaker Change: Nine weeks ago that was kind of an early premature I don't see any changes in those yet, but if there is anything that causes that to move we'll we'll provide updated guidance in the next call.

Cesar Brocco: Okay, got it. Thank you for taking our questions. Thank you.

Speaker Change: Okay got it.

Speaker Change: Thank you for taking my questions.

Paulina Alejandra Rojas: Thank you. One moment for our next question. Our next question comes from Paulina Rojas Schmidt with Green Street. Your line is open.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: One was for our next question.

Our next question comes from Paulina Rojas Schmidt with Green Street. Your line is open.

Paulina Alejandra Rojas: Good morning. Good morning, Paulina. Good morning.

Speaker Change: Good morning, good morning.

Speaker Change: Morning.

Stuart A. Tanz: You mentioned sellers moving back to the sidelines, and I was wondering if you could provide some color on how you have seen potential buyers behave. I'm thinking in particular about institutional investors, the shopping centers, and whether you have seen any pickups in interest in this cycle as a result of other property types, apartments, and offices, weakening fundamentally.

Speaker Change: You mentioned <unk> moving back to the sidelines and I was wondering if you could provide some color on how you have seen and potential buyers behavior.

Speaker Change: And I'm thinking in particular about institutional investors and shopping centers.

Speaker Change: If you have seen any peak.

Speaker Change: And interesting this cycle all sorts of other property types apartments office thinking weakening fundamentals.

Michael B. Haines: Yeah, I mean, look, I can't really comment on other property types because that's not our focus, nor our specialty. But in terms of shopping centers, you know, in the first quarter of the year, when interest rates were lower than they are today, it did look like there were a number of buyers coming back to the market. But as I said in my comments, over the last several weeks, as interest rates, you know, moved quite higher or moved higher quite rapidly, we have seen a number of these buyers, again, move to the sidelines.

Speaker Change: Yes, I mean look I can't really comment on other property types, because that's not our focus nor our specialty but in terms of shopping centers.

Speaker Change: In the first quarter of the year the buyers when interest rates were lower than they were today. It did look like there were number of buyers coming back to market, but as I said in my comments over the last several weeks as interest rates moved quite higher or moved higher.

Speaker Change: Quite rapidly.

Speaker Change: <unk> seen a number of these buyers again move to the sidelines.

Michael B. Haines: So, you know, going forward, it will just depend on interest rates and capital flows. I don't see many institutions coming back into the market yet. The 1031 market is active, and then there has been some shift from other sectors to retail from a buyer profile perspective. I think maybe that's really where your question was going. We have seen buyers that, you know, were very heavily invested in industrial multifamily certainly move, you know, to the retail side, where today they, you know, feel, I think that their investment is in a different place in terms of the cash flow and stability of the NOI. But more importantly, retail, given the strength that we're seeing out there, has attracted more of these other buyers.

Speaker Change: So going forward it will just depend on interest rates.

Speaker Change: Capital flows I don't see many institutional institutions coming back into the market yet.

Speaker Change: 31 market is active.

Speaker Change: And then there has been some shift from other sectors to retail.

Speaker Change: From a buyer profile perspective, I think maybe that's really where your question was going.

<unk> seen.

Speaker Change: Buyers that were very heavily invested in industrial multifamily certainly move to.

Speaker Change: To the retail side.

Speaker Change: Today, they feel I think that their investment is in a different place in terms of the cash flow and stability of the NOI, but more importantly, retail given the strength that we're seeing out there has attracted more of these other buyers.

Paulina Alejandra Rojas: Thank you. You got it. You got it, and then... A question about the balance sheet. Your average debt maturity is the shortest or the second shortest in the strip center space. So I was wondering if you have the goal to increase that average maturity and what level would make you comfortable, or if you're comfortable where you are.

Speaker Change: Thank you got it you got it and.

Speaker Change: Then our COO.

Speaker Change: Question about the balance sheet.

Speaker Change: Rich debt maturity is the shortest.

Speaker Change: Or the second shortly in the strip center space.

COO: And I was wondering if you have the goal to increase that and average maturity what level would make you comfortable or if youre comfortable where you are.

Michael B. Haines: Thanks, Mike. I think when we go back to the bond market, we'll look to do a 10-year deal. We did the deal last September on a five-year because we were everything, like everyone else, was expecting rates to start coming down. The market is where it is, and when we come back to the market later this year, the goal is to do a 10-year fixed-rate offering, which will push the maturity data or extend that maturity data out. And as we move through our debt refinancing stack, we'll be looking to do long-term fixed-rate bonds on a 10-year basis. OK.

Mike: Thanks, Ron its Mike.

Mike: I think when we go back to the bond market, we will look to do a 10 year deal. We did the deal last September on a five year because everything.

Mike: US like everyone else was expecting rates to start coming down.

Mike: It is the market is where it is and then when we come back to the market. Later this year. The goal is to do a tenured.

Mike: Fixed.

Mike: By offering which will push the maturity that or extend that mature data it out and as we move through our debt refinancing stack.

Mike: We will be looking to do long term fixed rate bonds on a 10 year basis.

Speaker Change: Okay. Thank you.

Paulina Alejandra Rojas: Okay, thank you. Thank you.

Speaker Change: Thank you.

Operator: As a reminder, to ask a question, please press star 11 on your telephone. Wait for your name to be announced.

Speaker Change: Thank you as.

Speaker Change: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Operator: To withdraw your question, please press star 11 again. One moment for our next question. Our next question comes from Michael Mueller with J.P. Morgan. Yeah, thanks. Hey, good morning. Hey, two quick ones here. I guess what made the two dispositions

Speaker Change: One moment for our next question.

Speaker Change: Our next question comes from Michael Mueller with JP Morgan Your line is open.

Michael Mueller: Yeah. Thanks, Hey, good morning, Hey, two quick ones here I guess, what made the two disposition properties properties that Werent long term holds and I may have missed it but did you mentioned the types of users that you have for those four new anchor leases.

Michael Mueller: Well, the anchor leases are national players, and in one location, we broke up the space to two regional players in terms of the dispositions. Yeah, I mean, primarily, one is a single-tenant property. And the other is a property that we've actually owned for quite some time; we've completed a lot of lease-up of the property, bringing in some really strong tenants. And, you know, it's just one that we don't see a lot of future growth in. So, from our perspective, it was time to sell it.

Michael Mueller: Well the anchor leases are national players.

Michael Mueller: And in one location, we broke up the space to two regional players.

Michael Mueller: In terms of the dispositions.

Michael Mueller: Yes, I mean, primarily there.

Michael Mueller: One is a single tenant property.

Michael Mueller: And the other is a property that we've actually owned for quite some time, we've completed a lot of.

Michael Mueller: Lease up of the property, bringing in some really strong tenants in.

Michael Mueller: It's just one that.

Michael Mueller: We don't see a lot of future growth.

Michael Mueller: So from our perspective, it was time to sell it.

Speaker Change: Got it okay.

Speaker Change: Okay. Thank you.

Speaker Change: Yes.

Speaker Change: Thank you Mike.

Stuart A. Tanz: I'm showing no further questions at this time. I would now like to turn it back to Stuart Tanz, Chief Executive Officer, for closing remarks.

Speaker Change: Thank you.

Speaker Change: Im showing no further questions at this time I would now like to turn it back to Stuart <unk>, Chief Executive Officer for closing remarks.

Stuart A. Tanz: Great. Well, in closing, thanks to all of you for joining us today. As always, we appreciate your interest in ROIC. If you have any additional questions, please contact Mike, Rich, or me directly. Also, you can find additional information in the company's quarterly supplemental package, which is posted on our website, as well as in our 10-Q.

Speaker Change: Great.

And thanks to all of you for joining us today as always we appreciate your interest in ROIC.

Stuart: If you have any additional questions. Please contact Mike Rich or me directly also you can find additional information in the company's quarterly supplemental package, which is posted on our website as well as our 10-Q lastly for those of you who are attending the upcoming annual ICSC Convention in Vegas, Please stop by our Booth.

Stuart A. Tanz: Lastly, for those of you who are attending the upcoming annual ICFC convention in Vegas, please stop by our booth, which will be in the South Hall on Level 1, specifically Booth 807. We hope to see you there. Thanks again, and have a great day, everyone.

Stuart: Which will be in the South hall on level, one specifically booth 807, we hope to see you there. Thanks again and have a great day everyone.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.

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