Q2 2024 Acadia Realty Trust Earnings Call

Operator: Good day, and thank you for standing by. Welcome to the Acadia Realty Trust's second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode.

Unknown Attendee: Good day, and thank you for standing by. Welcome to the Acadia Realty Trust, 2nd quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode.

Good day, and thank you for standing by.

Speaker Change: Welcome to the JDM Realty Trust's second quarter 2024 earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automatic message advising your hand is raised. Please note that today's conference may be recorded. I will now hand the conference over to our speaker host. If you have any comments, please go ahead.

Unknown Attendee: After the speech presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automatic message advising your hand is raised. Please note that today's conference may be recorded.

And the answer session. Just a question during the session you will need.

One one on your telephone you will then hear an automatic message advising yohanan suite.

Speaker Change: Please note that today's conference maybe recorded I would now.

Unknown Attendee: I will now hand a conference over to Speaker House, Ethan Gomez. Please go ahead.

And the conference.

Speaker Change: He took on this please go ahead.

Ethan Gomez: Good morning, and thank you for joining us for the 2nd quarter 2024 Acadia Realty Trust earnings conference call.

Ethan Gomez: Morning, and thank you for joining us for the second quarter 2024 Acadia Realty Trust Earnings Conference. My name is Ethan Gomez, and I'm an intern in our Acquisitions Department. Before we begin, please be aware that statements made during the call that are not historical may be deemed forward-looking statements within the meaning of the Securities and Exchange Act of 1934, and actual results may differ materially from those indicated by such forward-looking statements.

Ethan Gomez: Good morning, and thank you for joining us for the second quarter of 2020 for Acadia Realty Trust Earnings Conference call. My name is Ethan Gomez.

Ethan Gomez: My name is Ethan Gomez, and I'm an intern in our acquisitions department. Before we begin, please be aware that statements made during the call that are not historical may be deemed forward-looking statements within the meaning of the Securities and Exchange Act of 1934. An actual result may differ materially from those indicated by such forward-looking statements. Due to a variety of risks and uncertainties, including those disclosed in the company's most recent Form 10-K and other periodic findings with the SEC, forward-looking statements speak only as of the date of this call, July 31, 2024, and the company undertakes no duty to update them.

Speaker Change: Many of our acquisitions Department.

Ethan Gomez: Due to a variety of risks and uncertainties, including those disclosed in the company's most recent form 10-K and other periodic filings with the SEC, forward-looking statements speak only as of the date of this call, July 31, 2024, and the company undertakes no duty to update them.

Speaker Change: Before we begin please be aware that statements made during the call that are not historical maybe deemed forward looking statements within the meaning of the Securities and Exchange Act of 1934.

Speaker Change: And actual results may differ materially from those indicated by such forward looking statements.

Due to a variety of risks and uncertainties, including those disclosed in the company's most recent Form 10-K and.

Speaker Change: And other periodic filings with the SEC.

Speaker Change: Forward looking statements speak only as of the date of this call July 31 2024.

Undertakes no duty to update them.

Ethan Gomez: During this call, management may refer to certain non-GAAP financial measures, including funds from operations and net operating income. Please see Acadia's earnings press release posted on its website for reconciliation of these non-GAAP financial measures with the most directly comparable GAAP financial measures.

Ethan Gomez: During this call, management may refer to certain non-GAAP financial measures, such as funds from operations and net operating income. Please see Acadia's earnings press release posted on its website for reconciliations of these non-GAAP financial measures with the most directly comparable GAAP financial measures. Once the call becomes open for questions, we ask that you limit your first round to two questions per caller to give everyone the opportunity to participate.

Speaker Change: During this call management may refer to certain non-GAAP financial measures.

Funds from operations and net operating income.

Please see Acadia is earning earnings press release posted on its website for reconciliations of these non-GAAP financial measures with the most directly comparable GAAP financial measures.

Ethan Gomez: Once the call becomes open for questions, we ask that you limit your first round to two questions per caller to give everyone the opportunity to participate. You may ask further questions by reinserting yourself into the queue, and we will answer as time permits.

Speaker Change: Once the call becomes open for questions. We ask that you limit your first round to two questions per caller to give everyone the opportunity to participate.

Speaker Change: May ask further questions by Reinsert yourself into the queue and we will answer as time permits.

Ken Bernstein: Now, it is my pleasure to turn the call over to Ken Bernstein, President and Chief Executive Officer, who will begin today's management remarks.

Ethan Gomez: You may ask further questions by reinserting yourself into the queue, and we will answer as time permits. Now, it is my pleasure to turn the call over to Ken Bernstein. The President and Chief Executive Officer will begin today's management remarks. Great job, Ethan.

Now it is my pleasure to turn the call over to Ken Bernstein.

Kenneth F. Bernstein: And Chief Executive Officer, who will begin today's management remarks.

Ken Bernstein: Great job, Ethan. Thank you to you and the rest of the summer in turns for bringing some great energy here this summer.

Kenneth F. Bernstein: Thank you to you and the rest of the summer interns for bringing some great energy here this summer. Welcome, everyone. I'm here with John Gottfried and AJ Levine.

Speaker Change: Great job.

Speaker Change: To you and the rest of the summer interns for bringing some great energy here. This summer welcome everyone.

Ken Bernstein: Welcome, everyone. I'm here with John Godfried and AJ Levine. I'll give a few comments before handing their marks over to AJ.

Kenneth F. Bernstein: I'm here with John Gottfried.

Kenneth F. Bernstein: I'll give a few comments before handing the remarks over to AJ, then John will discuss our earnings guidance, our balance sheet metrics, and after that, we'll take some questions. As you can see from our earnings release, our strong second quarter performance is reflective of both the operational tailwinds that our sector is experiencing, as well as the successful execution by our team of several important initiatives. In light of this strong performance, we've increased our full-year earnings guidance and increased our quarterly dividends. More importantly,

Speaker Change: I'll give a few comments before handing the remarks over to AJ, then John will discuss our earnings guidance, our balance sheet metrics and after that we'll take some questions.

Ken Bernstein: Then, John will discuss our earnings guidance, our balance sheet metric, and after that, we'll take some questions. As you can see from our earnings release, our strong second quarter performance is reflective of both the operational tailwinds that our sector is experiencing, as well as the successful execution by our team of several important initiatives. In light of this strong performance, we've increased our full-year earnings guidance and increased our quarterly dividend. More importantly, we see this momentum continuing.

AJ: As you can see from our earnings release, our strong second quarter performance is reflective of both the operational tailwind is that our sector is experiencing.

AJ: As well as the successful execution by our team of several important initiatives.

Speaker Change: In light of the strong performance, we've increased our full year earnings guidance and increased our quarterly dividend.

AJ: More importantly.

Kenneth F. Bernstein: See, this momentum continues. While there are always multiple drivers of our growth, there are effectively three critical areas of focus for our business. The first is driving strong internal growth, most significantly coming from our street retail portfolio, is maintaining a solid balance, and then third, is the incremental earnings growth beginning to hit the bottom line from our highly differentiated investment activity. So, first, with respect to internal growth, our same-store NOI growth has averaged over 6% for the last two years, and we see this multi-year growth trajectory continue. A.J.

AJ: We see this momentum continuing.

Ken Bernstein: While there's always multiple drivers of our growth, there are effectively three critical areas of focus for our business. The first is driving strong internal growth most significantly, coming from our street retail portfolio. The second is maintaining a solid balance sheet. And then third is the incremental earnings growth, beginning to hit the bottom line from our highly differentiated investment activities. So first, with respect to internal growth, our same store NOI growth is averaged over 6% for the last two years, and we see this multi-year growth trajectory continuing.

Alexander J. Levine: I will walk through the details of this progress, but all of this activity supports our goal of Generating Superior Top-Line Growth and then having that growth hit the bottom line. Our second key area of focus comes from maintaining a strong and flexible balance sheet. John will elaborate on our balance sheet metrics further. But in short, we are now positioned with a well-hedged balance sheet, strong liquidity to fuel growth, limited maturity exposure, and solid access to attractive desks. Our third and increasingly important driver comes from contributions from external growth.

AJ: While there's always multiple drivers of our growth there are effectively three critical areas of focus for our business.

AJ: The first is driving strong internal growth most significantly coming from our street retail portfolio.

AJ: The second.

AJ: Is maintaining a solid balance sheet.

AJ: And then third.

AJ: Is the incremental earnings growth beginning to hit the bottom line from our highly differentiated investment activity. So.

AJ: So first with respect to internal growth our same store NOI growth has averaged over 6%.

AJ: For the last two years and we see this multiyear growth trajectory continuing.

Speaker Change: A J I'll walk through the details of this progress.

Speaker Change: All of this activity supports our goal.

Speaker Change: Of generating superior top line growth.

J: And then having back growth hit the Bottomline.

Ken Bernstein: Area focus comes from maintaining a strong and flexible balance sheet. John will elaborate on our balance sheet metrics further, but in short, we are now positioned with a well-hedged balance sheet, strong liquidity to fuel growth, limited maturity exposure, and solid access to attractive debt. Our third and increasingly important driver comes from contributions from external growth. This includes both our on-balance-sheet acquisitions for our core portfolio, as well as growth through our investment management platform. Our focus for on balance sheet investment activity is to grow the street retail segment of our core portfolio. It's our view that this segment will produce the highest risk-adjusted returns in the open air sector.

J: Our second key area of focus comes from maintaining a strong and flexible balance sheet, John will elaborate on our balance sheet metrics further.

John Gottfried: But in short we are now positioned with a well hedged balance sheet strong liquidity to fuel growth.

John Gottfried: Limited maturity exposure and solid access to attractive debt.

John: Our third an increasingly important driver.

John: Comes from contribution from external growth. This includes both our on balance sheet acquisitions for our core portfolio.

Kenneth F. Bernstein: This includes both our on-balance sheet acquisitions for our core portfolio, as well as growth through our investment management platform. Our focus for on-balance sheet investment activity is to grow the street retail segment of our core portfolio. It's our view that this segment will produce the highest risk-adjusted returns in the open air sector.

John: As well as growth through our investment management platform.

John: Our focus for on balance sheet investment activity is to grow the street retail segment of our core portfolio.

John: It's our view.

AJ: This segment will produce the highest risk adjusted returns in the open air sector.

Ken Bernstein: We are focusing our street retail acquisition efforts on properties in key carters that are creative to earnings, creative to NAV, as well as the creative to our long-term internal growth trajectory. We believe that there is still a capital market dislocation with respect to the pricing of street retail investment opportunities, and this dislocation is providing going in yields that do not account for the superior growth rate when compared to other open air formats. As the capital markets begin to normalize, sellers are beginning to emerge, and opportunities are beginning to pencil out.

Kenneth F. Bernstein: We are focusing our street retail acquisition efforts on properties in key corridors that are creative to earning, or Creative 10AV, as well as conducive to our long-term internal growth trajectory. We believe that there is still a capital market dislocation with respect to the pricing of street retail investment opportunities, and this dislocation is providing yields that do not account for the superior growth rate when compared to other open-air formats as the capital markets begin to normalize.

AJ: We are focusing our street retail acquisition efforts on properties in key cargos that are accretive to earnings.

AJ: Accretive to NAV.

AJ: As well as accretive to our long term internal growth trajectory. We believe that there is still a capital market dislocation with respect to the pricing of street retail investment opportunities and this dislocation is providing going in yields that do not account for the superior growth rate.

AJ: When compared to other open air formats.

AJ: As the capital markets begin to normalize.

Kenneth F. Bernstein: Sellers are beginning to emerge, and opportunities are beginning to pencil out. We are finalizing our diligence on high-quality street retail assets in key shopping corridors, both in Manhattan and Brooklyn, for approximately $75 million. And in addition to that, we have funded what positions us to add an additional 11% interest in the Georgetown Renaissance Collection, a portfolio in M Street, Georgetown, where we already own a 20% stake and where we hope to add even further to this. For those of you less familiar with the recovery we're experiencing in Georgia,

AJ: Sellers are beginning to emerge.

AJ: And opportunities are beginning to pencil out.

Ken Bernstein: Along these lines, last quarter we made progress on several transactions. We are finalizing our diligence for high quality street retail assets in key shopping carters, both in Manhattan and Brooklyn, for approximately $75 million. In addition to that, we have funded what positions us to add an additional 11% interest in the Georgetown Renaissance collection, a portfolio in M Street Georgetown where we already own a 20% stake, and where we hope to add even further to this position.

AJ: Along these lines last quarter, we made progress on several transactions, we are finalizing our diligence for high quality Street retail assets in key shopping Carter's both in Manhattan, and Brooklyn for approximately $75 million and in addition to that we have funded what positions us to add an additional <unk>.

AJ: 7% interest in the Georgetown Renaissance collection, a portfolio in M Street, Georgetown, where we already own a 20% stake.

AJ: And where we hope to add even further to this position.

Ken Bernstein: For those of you less familiar with the recovery we are experiencing in Georgetown. Over the last several years, this iconic carter has seen a meaningful improvement in merchandising, in tenant demand, in tenant performance, the addition of new tenants, including Eritrea, Alloyoga, Faraday, Veronica Beard, and Skins, just to name a few. It has triggered strong growth on a street that had previously suffered from outdated merchandising and underperforming tenants. We have seen many of our retailers. Post-sales growth of over 40 percent since 2019 and tenant sales growth is a great indicator of future rent growth.

AJ: For those of you less familiar with the recovery we are experiencing in Georgetown over the last several years.

Kenneth F. Bernstein: Over the last several years, this iconic corridor has seen meaningful improvement. Merchandising, Tenant Demand, Tenant Performance, the addition of new tenants including Aritzia, Alloyoga, Farity, Veronica Beard, and Skims, just to name a few, has triggered strong growth on a street that had previously suffered from outdated merchandising and underperformed. We have seen many of our retailers post sales growth of over 40% since 2019, and tenant sales growth is a great indicator of Futurama.

AJ: Connick Carter has seen a meaningful improvement.

AJ: In merchandising and tenant demand and tenant performance.

AJ: The addition of new tenants, including a ritzy allo yoga Ferity, Veronica beard and skins, just to name a few.

AJ: Has triggered strong growth on a street that had previously suffered from outdated merchandising and underperforming tenants.

AJ: We have seen many of our retailers.

AJ: Post sales growth of over 40% since 2019 and tenant sales growth.

AJ: Is a great indicator.

AJ: Future rent growth.

Ken Bernstein: Then behind these acquisitions I just mentioned, we have a growing pipeline of properties that also meet our acquisition criteria for our core portfolio. Now, deals are not done until they're done, and we are going to remain disciplined, but it feels as though the stars are beginning to line.

Kenneth F. Bernstein: And then, behind these acquisitions I just mentioned, we have a growing pipeline of properties that also meet our acquisition criteria for our core portfolio. Now, deals are not done until they're done, and we're going to remain distant, but it feels as though the stars are beginning to align.

AJ: Then behind these acquisitions I just mentioned, we have a growing pipeline of properties that also meet our acquisition criteria for our core portfolio.

AJ: Now if deals are not done until they're done and we're going to remain disciplined but it feels as though the stars are beginning to align.

Ken Bernstein: Then complementing our on-balance investments, we're continuing to see opportunities to grow our investment management platform, where we are generally focused on open-air, suburban shopping centers, where we are going to leverage our institutional capital relationships. There are a few initiatives in progress here. First, as we had previously announced, we formed a strategic partnership for our property, the Shops at Grant, with JP Morgan, where we retain a 5 percent interest in the investment, plus retain the management as well as potential upside. This transaction is an example of our intention to migrate some of our stable but lower growth assets out of our core portfolio and into the investment management platform.

Kenneth F. Bernstein: Complementing our on balance sheet investments, we're continuing to see opportunities to grow our investment management platform, where we are generally focused on open air, suburban shopping centers where we are going to leverage our institutional capital relationship. There are a few initiatives in progress here. First, as we had previously announced... We formed a strategic partnership for our property, the Shops at Grand, with J.P. Morgan where we've retained a 5% interest in the investment, plus retained the management as well as potential.

AJ: Then complementing our on balance sheet investments, we're continuing to see opportunities to grow our investment management platform, where we are generally focused on open air suburban shopping centers.

AJ: Where we are going to leverage our institutional capital relationships.

AJ: There are a few initiatives in progress here.

AJ: First as we previously announced.

AJ: We formed a strategic partnership for our property the shops at grant with J P. Morgan, where we've retained a 5% interest in the investment plus retained the management as well as potential upside.

Kenneth F. Bernstein: This transaction is an example of our intention to migrate some of our stable but lower-growth assets out of our core portfolio and into the investment management platform. Last quarter, we also completed a new acquisition in Tampa, Florida, of an open-air community center for $31 million designated for our investment management platform. Given the strong demographics of the walks at Highwood Preserve and the value-add upside, we have strong institutional interest from investors in this area, but most importantly, as it relates to external groups.

AJ: This transaction is an example of our intention to migrate some of our stable, but lower growth assets out of our core portfolio and into the investment management platform.

Ken Bernstein: Last quarter, we also completed a new acquisition in Tampa, Florida, of an open-air community center for $31 million designated for our investment management platform. Given the strong demographics of the walks at Highwood Preserve and the value add upside, we have strong institutional interest from investors in this asset.

AJ: Last quarter, we also completed a new acquisition in Tampa, Florida of an open air community Centre for $31 million designated for our investment management platform.

AJ: Given the strong demographics of the walks at Highwood preserve and the value add upside we have strong institutional interest from investors in this asset.

Ken Bernstein: But most importantly, as it relates to external growth, keep in mind that for a company of our size, it doesn't take much volume to move the needle. While every transaction is going to differ in terms of long-term accretion, we are currently targeting about 1 percent earnings accretion for every $200 million of gross investment. And keep in mind we are historically used to doing multiples of that in value. So looking ahead, we remain very bullish on our ability to continue to add value by driving internal growth, by maintaining a strong and flexible balance sheet, and by adding additional growth through our strategic new investments.

AJ: But most importantly.

AJ: As it relates to external growth.

AJ: Keep in mind.

Kenneth F. Bernstein: Keep in mind that for a company of our size, it doesn't take much volume to move the needle, while every transaction is going to differ in terms of long-term accretion. We are currently targeting about 1% earnings accretion for every $200 million of gross investment. And keep in mind, we are historically used to doing multiples of that in volume.

AJ: For a company of our size it doesn't take much volume to move the needle.

AJ: While every transaction is going to differ in terms of long term accretion.

AJ: We are currently targeting targeting about 1% earnings accretion for every $200 million.

AJ: Of gross investment.

AJ: And keep in mind, we are historically used to doing multiples of that in volume.

Kenneth F. Bernstein: So looking ahead, we remain very bullish on our ability to continue to add value by driving internal growth, by maintaining a strong and flexible balance sheet, and by adding additional growth through our strategic new investment. And with that, I'd like to thank the team for their hard work last quarter, and I'll turn the call over to Abe. Great. Thank you, Ken. Good morning, everyone.

AJ: So looking ahead.

AJ: We remain very bullish on our ability to continue to add value by driving internal growth by maintaining a strong and flexible balance sheet and buy.

AJ: Adding additional growth through our strategic new investments.

Ken Bernstein: And with that, I'd like to thank their hard work last quarter, and I'll turn the call over to Day.

Asia: And with that I'd like to thank the team for their hard work last quarter and I'll turn the call over to Asia.

AJ Levine: Great, thank you, Ken. Good morning, everyone. So another highly productive quarter in the books, and the trends that we've been seeing play out over the last several years appear to be sticking. We're seeing no signs of a slowdown. Our leasing pipeline is the largest it's ever been, and the team continues to post double-digit spreads throughout our high-growth streets.

Asia: Great. Thank you Ken good morning, everyone.

Alexander J. Levine: So another highly productive quarter in the books, and the trends that we've been seeing play out over the last several years appear to be... We're seeing no signs of a slowdown. Our leasing pipeline is the largest it's ever been. Our team continues to post double-digit growth throughout our high-growth... So to help understand why we continue to see this high level of productivity, Let's touch on two of the critical factors that drive the market: Supply Demand and Rent-to-Sale.

Asia: So another highly productive quarter in the books and the trends that we've been seeing play out over the last several years appear to be sticky.

Asia: We're seeing no signs of a slowdown our leasing pipeline is the largest it's ever been and the team continues to post double digit spreads throughout our high growth streets.

AJ Levine: So to help understand why we continue to see this high level of productivity, let's touch on two of the critical factors that drive market rents: supply demand and rent to sales. So, as it relates to supply demand, as you can see from our results, tenant demand continues unabated. and there has been no new supply added to our streets. And driving that demand, amongst other factors including strong performance, is a continued focus on DTC and the tenant's desire to better control the interaction with the consumer. And all this has resulted in a historically favorable supply-demand dynamic for landlords.

Asia: So to help understand why do we continue to see this high level of productivity, let's touch on two of the critical factors that drive market rents supply demand and rent to sales.

Alexander J. Levine: So as it relates to supply and demand, as you can see from our results, tenant demand continues unabated, and there has been no new supply aided to our... And driving that demand, amongst other factors including strong performance, is a continued focus on DTC and the tenants' desire to better control the interaction. All this has resulted in a historically favorable supply-demand dynamic for Lambert. In terms of rent-to-sale, along with strong and consistent sales growth in markets like M Street and Madison Avenue and SoHo, amongst others.

Asia: So as it relates to supply demand as you can see from our results tenant demand continues unabated.

Asia: And there has been no new supply added to our streets and driving that demand amongst other factors, including strong performance is our continued focus on DTC and the tenants' desire to better control the interaction with the consumer.

Asia: And all of this has resulted in a historically favorable supply demand dynamic for landlords.

AJ Levine: In terms of rent to sales, along with strong and consistent sales growth in markets like M Street and Madison Avenue and Soho and most others, tenants remain disciplined. And rent-to-sales ratios sit well within a healthy acceptable range. A lot of that sales growth comes from strong consumer demand, but let's not forget about the impact of inflation on sales and rents. Inflation alone is driven sales over 20 percent since the start of 2020. And strong retailer performance is driving it even further. And as Ken mentioned in relation to M Street, as well as other areas, where we see strong sales growth, strong rent growth inevitably follows.

Asia: In terms of rent to sales.

AJ: Along with strong and consistent sales growth and markets like M Street in Madison Avenue, and Soho amongst others.

AJ: Tenants remain disciplined.

Alexander J. Levine: And rent-to-sales ratios sit well within a healthy, acceptable range. A lot of that sales growth comes from strong consumer demand, but let's not forget about the impact of inflation on sales and rents. Inflation alone has driven sales over 20% since the start of 2020, and strong retailer performance is driving it even further.

AJ: And rent to sales ratios sit well within a healthy acceptable range.

Speaker Change: A lot of that sales growth comes from strong consumer demand, but let's not forget about the impact of inflation on sales and rents inflation alone has driven sales over 20% since the start of 2020 and strong retailer performance is driving it even further.

Alexander J. Levine: And as Ken mentioned in relation to M Street, as well as other areas. Where we see strong sales growth, strong rent growth inevitably follows. In the background of all these trends, the team continues to work hard to increase occupancy and drive NOI across the board. In the second quarter, we saw a significant pickup in leasing velocity, signing approximately $2.8 million of new core ABR at Acadia Share, which is a nearly 150% increase over the activity from Q1. So, there will be no slowdown here.

Speaker Change: And as Ken mentioned in relation to M Street.

Kenneth F. Bernstein: As well as other areas.

Kenneth F. Bernstein: Where we see strong sales growth strong rent growth inevitably follows.

AJ Levine: In the background of all these trends, the team continues to work hard to increase occupancy and drive NLI across the portfolio. In the second quarter, we saw a significant pickup in leasing velocity, signing approximately $2.8 million of new core ABR and Acadia share, which is a nearly 150 percent increase over the activity from Q1. So no slow down here. Year to date, within just our core portfolio, we have signed approximately $4.3 million of ABR again at Acadia share. And, as I mentioned, the pipeline remains robust. In addition to the $8 million of executed leases in our signed but not yet open pipeline as of June 30th, we are also in advance negotiations for an additional $10 million of ABR of core leases, with substantially all of it coming from our street and urban markets, including Soho, Armada Javanue, the Gold Coast, and Chicago and Henderson Avenue in Dallas, each of which are markets where we will see the highest annual contractual growth at 3 percent per annum, along with more frequent opportunities to market through FNV resets.

Speaker Change: In the background of all these trends the team continues to work hard to increase occupancy and drive NOI across the portfolio in the second quarter, we saw a significant pickup in leasing velocity, signing approximately $2 $8 million of new core ABR at Acadia share, which is a nearly 150% increase over the.

Speaker Change: From Q1, so no slowdown here.

Alexander J. Levine: Year-to-date, within just our core portfolio, we have signed approximately $4.3 million of ABR, again at Acadia Share, and as I mentioned, the pipeline remains robust. In addition to the $8 million of executed transactions in our signed but not yet open pipeline as of June 30, we are also in advanced negotiations for an additional $10 million of ABR of court.

Speaker Change: Year to date within just our core portfolio, we have signed approximately $4 $3 million of ABR again at Acadia share and as I mentioned the pipeline remains robust. In addition to the $8 million of executed leases in our signed but not yet opened pilot pipeline as of June 30th.

Speaker Change: We are also in advanced negotiations for an additional $10 million of ABR of core leases with substantially all of it coming from our street and urban markets, including Soho Armitage Avenue, the gold coast in Chicago, and Henderson Avenue, and Dallas, each of which are markets, where we will see the highest annual.

Alexander J. Levine: Substantially all of it is coming from our street and urban markets, including Soho, Armitage Avenue, the Gold Coast in Chicago, and Henderson Avenue in Dallas. Each of which are markets where we will see the highest annual contractual growth at 3% per annum, along with more frequent opportunities to mark-to-market through FFA. Additionally, we are incredibly excited about the momentum we've seen in Chicago as recently as the last 24 hours, not just on the Gold Coast, but also in the surrounding areas, and we expect to share some very positive news in the coming weeks, if not sooner.

Speaker Change: Contractual growth at 3% per annum.

Speaker Change: Along with more frequent opportunities to mark to market through F&B resets.

AJ Levine: Additionally, we are incredibly excited about the moment that we've seen in Chicago as recently at the last 24 hours, not just on the Gold Coast, but also the surrounding areas, and we expect to share some very positive news in the coming weeks, if not sooner. So stay tuned.

Speaker Change: Additionally, we are incredibly excited about the momentum we've seen in Chicago as recently at the last 24 hours not just on the gold coast, but also the surrounding areas and we expect to share some very positive news in the coming weeks, if not sooner so stay tuned.

AJ Levine: Circling back to Armada Javanue, last quarter I told you about the market dynamics that make a street like Armada J right for outsized growth. Strong tenant performance, healthy rent to sales, barriers to entry, high tenant demand and very low levels of supply, and the prevalence of FNV resets that provide leverage to pry loose space and more frequently marked to market. And since the end of the first quarter, we've signed two new leases in the market and have another two in active negotiation at very strong double-digit spreads. And again, those rents will all grow at the contractual 3 percent per annum, which is the historical contractual standard for street retail, and are all subject to FNV reset at the end of their initial term.

Speaker Change: Circling back to Armitage Avenue.

Alexander J. Levine: Last quarter, I told you about the market dynamics that make a street like Armitage ripe for outsized... Strong tenant performance, healthy rent-to-sales, barriers to entry, high tenant demand and very low levels of supply, and the prevalence of FMV resets that provide leverage to pry loose space and more frequently mark-to-mark. At the end of the first quarter, we've signed two new leases in the market and have another two in active negotiation at very strong double-digit spreads.

Speaker Change: Last quarter I told you about the market dynamics that make street like Armitage right for outsized growth.

Speaker Change: Strong tenant performance healthy rent to sales barriers to entry high tenant demand and very low levels of supply and.

Speaker Change: And the prevalence of F&B resets that provide leverage to pry loose space and more frequently mark to market and.

Speaker Change: And since the end of the first quarter, we signed two new leases in the market and have another two in active negotiation at very strong double digit spreads and again those rents will all grow at the contractual 3% per annum, which is the historical contractual standard for street retail and are all subject to F&B reset at the end of their.

Alexander J. Levine: And again, those rents will all grow at the contractual 3% per annum, which is the historical contractual standard for street retail, and are all subject to FMV reset at the end of their initial quarter. I also mentioned that these dynamics were not unique to... Over the last year, we've seen the same dynamic, similar results play out in Soho and Williamsburg and Melrose Place, and we expect to see this story play out across most of our high-growth. Some of the activity will come from organic lease-up of vacancy and expiring. We also continue to accelerate positive mark-to-market spreads through our Prilu strategy. So let's touch on the Prilu strategy first, in addition to driving NOI.

AJ Levine: I also mentioned that these dynamics were not unique to us. We've seen the same dynamic, similar results play out in Soho, and Williamsburg and Melrose Place, and we expect to see this story play out across most of our high-growth streets. Some of the activity will come from organic lease up of vacancy and expiring leases, but we also continue to accelerate positive mark-to-market spreads through our Pryloose strategy.

Speaker Change: Short term.

Speaker Change: I also mentioned that these dynamics were not unique to armitage.

Speaker Change: Over the last year, we've seen the same dynamic similar results play out in Soho, and Williamsburg, and Melrose place and we expect to see this story play out across most of our high growth streets.

Speaker Change: Some of the activity will come from organic lease up of vacancy and expiring leases, but we also continue to accelerate positive mark to market spreads through our private strategy. So let's touch on the pricing strategy for a second.

AJ Levine: So let's touch on the Pryloose strategy for a second. In addition to driving NOI, the frequency of FMV resets and the impact that has on our ability to pry loose space allows us to better curate our streets and create the best ecosystem to promote strong sales growth and long-term market performance. Striking that balance is just one of the areas where we truly excel.

Speaker Change: In addition to driving NOI.

Alexander J. Levine: Frequency of FMV resets and the impact that has on our ability to pry loose space allows us to better curate our content to create the best ecosystem to promote strong sales growth and long-term market performance. Striking that balance is just one of the areas where we truly excel. Now all of these factors, all of this momentum applies to CityPoint as well, where the wind is firmly at our backs. In terms of that curation, Fora is now open and exceeding projections, adding a noticeable increase in traffic to Prince Charles. In the first quarter, we saw the same effect on the opposite end of Prince Street when FOGO opened up.

Speaker Change: The frequency of F&B resets and the impact that has on our ability to pry loose space allows us to better cure rate our streets.

Speaker Change: And create the best ecosystem to promote strong sales growth and long term market performance striking that balance is just one of the areas, where we truly excel.

AJ Levine: Now all of these factors, all of this momentum applies to City Point as well, where the wind is firmly at our backs. In terms of that curation, Sephora is now open and exceeding projection, adding a noticeable increase in traffic to Prince Street. In the first quarter, we saw the same effect on the opposite end of Prince Street when Fogo opened its doors. The park is open as well and is packed with young families, eager to shop Prince Street and Primark and Trader Joe's, and dine at our food hall, which continues to post record sales each month.

Speaker Change: Now all of these factors all of this momentum apply to city point as well, where the wind is firmly at our backs.

Speaker Change: In terms of that curation Sephora has now opened and exceeding projections, adding a noticeable increase in traffic to Prince Street.

Speaker Change: In the first quarter, we saw the same effect on the opposite end of Prince Street, when Fogel opened its stores.

Alexander J. Levine: The park is open as well and is packed with young families eager to shop Prince Street and Primark and Trader Joe's and dine at our food hall, which continues to post record sales each month, and Alamo Drafthouse, which was recently acquired by Sony, has completed its expansion into five additional... This is all being reflected in strong quarter-over-quarter and year-over-year sales growth, which we anticipate will only accelerate. Fora and these other factors drive additional traffic, and the market continues to mature around it.

Speaker Change: The park is open as well and is packed with young families eager to shop, Prince Street in Prime market and trader Joe's and dine at our food Hall, which continues to post record sales each month and Alamo Drafthouse, which was recently acquired by Sony has completed their expansion into five additional theaters. This is all being reflected in strong core.

AJ Levine: And Alamo Drafthouse, which was recently acquired by Sony, has completed their expansion into five additional theaters. This is all being reflected in strong quarter-over-quarter and year-over-year sales growth, which we anticipate will only accelerate. As Sephora and these other factors drive additional traffic, and the market continues to mature around us. In the meantime, the leasing team at City Point is taking advantage of this momentum and unlocking those spaces on Prince Street and fronting the park that we've been strategically waiting to bring to market. Ten in interest at City Point has never been stronger.

Speaker Change: Over quarter and year over year sales growth, which we anticipate will only accelerate as sephora and these other factors drive additional traffic and the market continues to mature around us.

Alexander J. Levine: In the meantime, the leasing team at CityPoint is taking advantage of this momentum and unlocking those spaces on Prince Street and fronting the park that we've been strategically waiting to bring to market. Tenant interest at CityPoint has never been stronger.

Speaker Change: In the meantime, the leasing team at city point is taking advantage of this momentum and unlocking those spaces on Prince Street in fronting the park that we have been strategically waiting to bring to market tenant interest at city point has never been stronger.

AJ Levine: So, in summation, landlord-friendly supply demand dynamic, healthy tenants posting consistent sales growth and significant room to run on rents.

Alexander J. Levine: So, information... Landlord-Friendly Supply-Demand Dynamic, Healthy Tenants Posting Consistent Sales Growth, Significant room to run on. And with that, I will turn things over to you. Thanks, Adrienne. Good morning.

Speaker Change: So information.

Speaker Change: Landlord friendly supply demand dynamic healthy.

Speaker Change: Healthy tenants posting consistent sales growth and significant room to run on rents.

John Gottfried: And with that, I will turn things over to John.

Speaker Change: With that I will turn things over to John.

John Gottfried: Thanks, AJ, and good morning. We are pleased to report another strong quarter, with our operating results and key metrics coming in ahead of our expectations, along with an active and productive few months on the capital markets front. Through our refinancing and interest rate management, we have a core balance sheet with virtually no debt maturities or exposure to base rates for the next several years, which means that the five plus percent of internal growth that we are projecting will continue to show up in our bottom line. Additionally, during the quarter, we got our core debt to EBITDA back into the fives on a non-dilutive basis, reading the goal that we have set for ourselves.

John Gottfried: Thanks, a J and good morning.

John Gottfried: We are pleased to report another strong quarter, with our operating results and key metrics coming in ahead of our expectations, along with an active and productive few months on the capital market. Through our refinancings and interest rate management, we have a core balance sheet with virtually no debt maturities or exposure to base rates for the next several years. This means that the 5 plus percent of internal growth that we are projecting... will continue to show up in our bottom line. Additionally, during the quarter, we got our core debt to EBITDA back into the fives on a non-diluted basis, beating the goal that we had set.

John Gottfried: We are pleased to report another strong quarter with our operating results and key metrics coming out ahead of our expectations along with an active and productive few months on the capital markets front through our refinancings and interest rate management, we have a core balance sheet with virtually no debt maturities or exposure to base rates for the next several years.

Speaker Change: Which means that the five plus percent of internal growth that we're projecting will continue to show up in our bottom line.

Speaker Change: Additionally, during the quarter, we got our core debt to EBITDA back into the fives on a non dilutive basis, beating the goal that we have set for ourselves.

John Gottfried: And lastly, we doubled our liquidity through the expansion of our credit facility, along with the execution of our inaugural $100 million unsecured private placement bond.

John Gottfried: And lastly, we doubled our liquidity through the expansion of our credit facility, along with the execution of our inaugural $100 million unsecured private placement. And putting this all together, our balance sheet is now poised with both the liquidity and flexibility to pursue the accretive external growth opportunities that we need. I will now provide some further coverage, starting with our second quarter.

Speaker Change: And lastly, we doubled our liquidity through the expansion of our credit facility, along with the execution of our inaugural $100 million unsecured private placement bond.

John Gottfried: So, in putting this all together, our balance sheet is now poised with both the liquidity and flexibility to pursue the accretive external growth opportunities that we are seeing. I will now provide some further cover. Starting with our second quarter results, consistent with the quarterly run rate that we laid out a few calls ago, we reported FFO with 31 cents a share, which on a sequential basis isn't a penny ahead of the first quarter after adjusting for the three cents of one-time items that we discussed. on the last call. And as we look towards the second half of the year, our base case model has us adding about a penny a quarter as our sign not yet open pipeline continues to come online, with a projected range of 31 to 33 cents for Q3 and 32 to 34 cents for Q4.

Speaker Change: So I'm, putting this all together our balance sheet is now poised with both the liquidity and flexibility to pursue the accretive external growth opportunities that we are seeing.

Speaker Change: I will now provide some further color.

Speaker Change: Starting with our second quarter results consistent.

John Gottfried: Consistent with the quarterly run rate that we laid out a few calls ago, we reported FFO of 31 cents a share, which on a sequential basis is a penny ahead of the first quarter after adjusting for the three cents of one-time items that we discussed. And as we look towards the second half of the year, our base case model has us adding about a penny a quarter as our signed, not yet open pipeline continues to come unlocked, projected range of $0.31 to $0.33 for Q3 and $0.32 to $0.34 for Q4. In terms of our core leasing methods,

Speaker Change: Consistent with the quarterly run rate that we laid out a few calls ago, we reported <unk> 31 cents a share.

Speaker Change: On a sequential basis is a penny ahead of the first quarter after adjusting for the <unk> of one time items that we discussed on our last call.

Speaker Change: And as we look towards the second half of the year.

Speaker Change: Our base case model has us, adding about a penny a quarter as our signed not yet opened pipeline continues to come online.

Speaker Change: With our projected range of 31% to 33 for Q3 and 32 to 34 for Q4.

John Gottfried: In terms of our core leasing metrics, we increase both our physical and least occupancy rates during the quarter. I want to quickly highlight that our sequential occupancy statistics were impacted by a mix issue, given the second quarter sale of shops at Grand, which was a 100,000 square foot fully occupied asset. When adjusting for the sale, our total core occupancy increased 20 basis points during the quarter, with our street and urban sequentially increasing 40 basis points. I also want to remind everyone that, given our portfolio mix, not all occupancy is created equal. So while our overall core occupancy is nearly 95% least, we still have upside as our street and urban occupancy is only 86.9% occupied in 89.7% least at June 30th, which given the higher rents and lower CAPX loaders of percentage of NOI adds further tailwinds to our ongoing growth, particularly in light of the trends that AJ and his team are seeing.

Speaker Change: In terms of our core leasing metrics, we increased both our physical and leased occupancy rates during the quarter.

John Gottfried: We increased both our physical and leased occupancy rates during the quarter. I want to quickly highlight that our sequential... We're impacted by a mix issue, given the second quarter sale of shops at grand, a 100,000 square foot fully occupied asset. When adjusting for the sale, our total core occupancy increased 20 basis points during the quarter, with our street and urban sequentially increasing 40%.

Speaker Change: I wanted to quickly highlight that our sequential occupancy statistics were impacted by a mix issue given the second quarter sale of shops, a grant, which was 100000 square foot fully occupied asset when adjusting for the sale. Our total core occupancy increased 20 basis points during the quarter with our street and urban sequentially.

Speaker Change: Increasing 40 basis points.

John Gottfried: I also wanted to remind everyone that given our portfolio mix... Not all occupancy is created equal. So while our overall core occupancy is nearly 95%... We still have upside as our street and urban is only 86.9% occupied and 89.7% leased as of June 30th. Given the higher rents and lower capex load as a percentage of NOI, adds further tailwinds to our ongoing growth, particularly in light of the trends that AJ and his team are seeing.

Speaker Change: Also wanted to remind everyone that given our portfolio mix.

Speaker Change: Not all occupancy is created equal.

Speaker Change: So while our overall core occupancy is nearly 95% leased we still have upside as our street and urban occupancy is only 86, 9% occupied and 89, 7% leased at June 30th, which given the higher rents and lower capex load as a percentage of NOI. That's further tailwind to our ongoing.

Speaker Change: Growth, particularly in light of the trends that AJ and his team are seeing.

John Gottfried: Additionally, we have further increased our signed but not yet open pipeline to $8.1 million, which represents about 6% of our ABR at our pro rata share. In terms of timing, approximately one-third of the signed, not-yet-open pipeline is anticipated to commence during each of the third and fourth quarters of 2024, with the balance anticipated in 2035. Keep in mind, the $8.1 million is at our ProRata share and represents core same-store ownership, meaning it excludes any leases signed in our core redevelopment pipeline, as well as with our investment management platform, including... Additionally, the entire $8.1 million is incremental ABR, meaning it excludes any leases that we have executed on space that is currently occupied.

John Gottfried: Additionally, we have further increased our sign but not yet open pipeline to $8.1 million, which represents about 6% of our ABR at our pro rata share. In terms of timing, approximately one third of the sign not yet open pipeline is anticipated to commence during each of the third and fourth quarters of 2024, with a balance anticipated in 2025. Keep in mind, the $8.1 million is at our pro rata share and represents core same store only, meaning it excludes any leases signed in our core redevelopment pipeline as well as within our investment management platform, including City Point.

AJ: Additionally, we have further increased our signed but not yet open pipeline to $8 1 million, which represents about 6% of our ABR at our pro rata share.

AJ: In terms of timing approximately one third of the signed not yet open portfolio pipeline is anticipated to commence during each of the third and fourth quarters of 2024 with a balanced anticipated in 2025.

Speaker Change: Keep in mind, the $8 $1 million is at our pro rata share and represents core same store omi, meaning it.

Speaker Change: Excludes any leases signed in our core redevelopment pipeline as well as without our investment management platform, including city point.

John Gottfried: Additionally, the entire $8.1 million is incremental ABR, meaning it excludes any leases that we have executed on space that is currently occupied.

Speaker Change: Additionally, the entire $8 $1 million is incremental ABR, meaning it excludes any leases that we have executed on space that is currently occupied.

John Gottfried: Moving on to our guidance. As outlined in our release, we have also raised our full-year earnings guidance. It's worth reminding that, consistent with our past practice, we don't include accretion from external growth in our guidance until the transactions close. Thus, our guidance doesn't factor in the accretion from the investments currently under agreement, but, as Ken mentioned, we are targeting about 1% FFO accretion for every $200 million of investments. Now moving on to same store NOI. As outlined in our release, we reported 5.5% of the same store growth for the quarter, which was driven by growth of 12% coming from our street portfolio.

John Gottfried: Moving on to our guidance, as outlined in our release, we have also raised our four-year earnings guidance. It's worth reminding that consistent with our past practice, we don't include accretion from external growth in our guidance until the transaction. That is, our guidance doesn't factor in the accretion from the investments currently under agreement, but as Ken mentioned, we're targeting about 1% FFO accretion for every $200 million. Now moving on to Same Store and All.

Speaker Change: Moving on to our guidance as outlined in our release, we have also raised our full year earnings guidance.

Kenneth F. Bernstein: Worth reminding that consistent with our past practice, we don't include accretion from external growth and our guidance until the transaction's close thus our guidance doesn't factor in the accretion from the investments currently under agreement, but as Ken mentioned, we are targeting about 1% <unk> accretion for every $200 million of investments.

Speaker Change: Now moving on to same store NOI.

John Gottfried: As outlined in our release, we reported 5.5% same-store growth for the quarter, which was driven by growth of 12% coming from our street portfolio. And we saw this throughout all of our key street markets, reflecting the powerful combination of lease up, and fair value reset. Mark to Market on new leases, along with the 3% contractual growth built into our... and when looking forward into 2025 and beyond, we are seeing a continuation of these trends with our street portfolio continuing to outperform our suburban assets by about three to four hundred... Additionally, as reported in our release, we have also increased our dividend by 5.6%. The decision to increase our payout was based upon consideration of our continued growth, along with our taxable income projections.

Speaker Change: As outlined in our release, we reported five 5% same store growth for the quarter, which was driven by growth of 12% coming from our street portfolio and we saw this throughout all of our key street markets, reflecting the powerful combination of lease up fair value resets mark to market on new leases, along with a 3% contractual growth builder.

John Gottfried: And we saw this throughout all of our key street markets, reflecting the powerful combination of lease-up, fair value resets, marked to market on new leases, along with the 3% contractual growth built into our street leases. And when looking forward into 2025 and beyond, we are seeing a continuation of these trends, with our street portfolio continuing to outperform our suburban assets by about three to four hundred basis points. Additionally, as reported in our release, we have also increased our dividend by 5.6%. Act. The decision to increase our payout was based upon consideration of our continued growth, along with our tax full income projections.

Kenneth F. Bernstein: Our street leases.

Kenneth F. Bernstein: And when looking forward into 2025 and beyond we are seeing a continuation of these trends with our street portfolio continuing to outperform our suburban assets by about three to 400 basis points.

Kenneth F. Bernstein: Additionally, as reported in our release, we have also increased our dividend by five 6%.

Kenneth F. Bernstein: The decision to increase our payout was based upon consideration of our continued growth along with our taxable income projections and following the increase we are projecting that we will maintain our conservative <unk> payout ratio in the 65% to 70% range.

John Gottfried: And following the increase, we are projecting that we will maintain our conservative AFO AFO payout ratio in the 65 to 70% range. Now moving on to our balance sheet. We have no meaningful core debt maturities, along with a fully hedge balance sheet for the next several years, which means that the internal growth has and will continue dropping to our bottom line. And we have been incredibly active over the past several months, with our focus being on reducing our overall leverage on a non-diluted basis, getting our debt metrics, primarily our debt to GAV and debt to EBITDA, back to our target levels, and expanding both our liquidity and availability of capital.

John Gottfried: And following the increase, we are projecting that we will maintain our conservative AFFO payout ratio in the 65 to 75 percent range. Now moving on to our balance, we have no meaningful core debt maturities, along with a fully hedged balance sheet for the next subweek.

Kenneth F. Bernstein: Now moving onto our balance sheet.

Kenneth F. Bernstein: We have no meaningful core debt maturities, along with a fully hedged balance sheet for the next several years, which means that the internal growth has and will continue dropping to our bottom line.

John Gottfried: Which means that internal growth has and will continue falling to our bottom line. And we have been incredibly active over the past several months with our focus being on reducing our overall leverage on a non-dilutive basis, getting our debt metrics, primarily our debt to GAV, and debt-to-EBITDA back to our target levels, and expanding both our liquidity and availability accounts. We have made significant progress on all these important initiatives.

Kenneth F. Bernstein: We have been incredibly active over the past several months with our focus being on reducing our overall leverage on a non dilutive basis getting our debt metrics, primarily our debt to JV and debt to EBITDA back to our target levels and expanding both our liquidity and availability of capital.

John Gottfried: And we have made significant progress on all these important initiatives. In terms of reducing our leverage, we have delivered on a non-diluted basis by approximate $150 million or about 10% of our pro-rated debt during 2024. And through the combination of this lower leveraged and increased EBITDA, we have reduced our net debt to EBITDA by nearly a full turn with our core portfolio back into the vibes. This has enabled us to get our leverage metrics about where we want them, with even further improvement of our ratios as the internal growth continues to show up in our results.

Kenneth F. Bernstein: And we have made significant progress on all these important initiatives.

John Gottfried: In terms of reducing our leverage, we have delevered on a non-dilutive basis by approximately $150 million, or about 10% of our pro-rata debt during 2008. And through the combination of this lower leverage and increased EBITDA, we have reduced our net debt to EBITDA by nearly a full turn with our core portfolio back into the... This has enabled us to get our leverage metrics about where we want them, with even further improvement in our ratios as internal growth continues to show up in our results.

Kenneth F. Bernstein: In terms of reducing our leverage we have de levered on a non dilutive basis by approximately $150 million or about 10% of our pro rata debt during 2024.

Kenneth F. Bernstein: And through the combination of this lower leveraged and increased EBITDA, we have reduced our net debt to EBITDA by nearly a full turn with our core portfolio back into the fives.

Kenneth F. Bernstein: This has enabled us to get our leverage back metrics about where we want them with even further improvement of our ratios.

Kenneth F. Bernstein: The internal growth continues to show up in our results.

John Gottfried: And while debt to EBITDA is certainly an important metric, we are equally, if not more focused on our overall leverage levels. With our core debt as a percentage of gross asset value, currently residing in the mid 30% range. And it's worth reminding that when assessing relative balance sheet strength at comparable leverage levels, a lower cap rate portfolio such as ours can afford to operate at a higher debt to EBITDA ratio as compared to a higher cap rate portfolio. Additionally, it's also worth pointing out that we have financed, refinanced, and or extended nearly 80% of our outstanding debt, or nearly a billion dollars, over the past few quarters.

John Gottfried: And while debt to EBIT is certainly an important metric, we are equally, if not more, focused on our overall leverage, with our core debt as a percentage of gross asset value currently residing in the mid-30 percent.

Kenneth F. Bernstein: And while debt to EBITDA is certainly an important metric we are equally if not more focused on our overall leverage levels with our core debt as a percentage of gross asset value currently residing in the mid 30% range.

John Gottfried: It's worth reminding you that when assessing relative balance sheet strength, at comparable leverage levels, a lower cap rate portfolio, such as ours, can afford to operate at a higher debt to EBITDA ratio as compared to a higher cap rate portfolio. Additionally, it's also worth pointing out that we have financed, refinanced, and or extended nearly 80% of our outstanding debt, or nearly a billion dollars, over the past few And we achieve this volume of capital markets activity without increasing our borrowing costs or diluting our... Lastly, through the expansion of our corporate revolver, capital recycling, and strategically sourcing a new avenue of capital, we have achieved one of our important balance sheet initiatives of increasing our liquidity and expanding our access to capital. As outlined in our release, we completed our inaugural unsecured private placement.

Kenneth F. Bernstein: It's worth reminding that when assessing relative balanced balance sheet strength.

Kenneth F. Bernstein: Our comparable comparable leverage levels, a lower cap rate portfolios, such as ours can afford to operate and operate at a higher debt to EBITDA ratio as compared to a higher cap rate portfolio.

Kenneth F. Bernstein: Additionally, it is also worth pointing out that we have financed refinanced <unk> extended nearly 80% of our outstanding debt.

Kenneth F. Bernstein: One $1 billion over the past few quarters.

John Gottfried: And we achieved this volume of capital market activity without increasing our borrowing cost or deluding our earnings. Lastly, through the expansion of our corporate revolver, capital recycling, and strategically sourcing a new avenue of capital, we have achieved one of our important balance sheet initiatives of increasing our liquidity and expanding our access to capital. As outlined in our release, we completed our inaugural, unsecured private placement bond. We are very pleased with the execution and pricing of the $100 million bond, which was done with a single top-tier investor and is slated to close in mid August. And upon closing, the $100 million proceeds will be non-deludent, if not slightly accretive.

Kenneth F. Bernstein: And we achieved this volume of capital markets activity without increasing our borrowing costs are diluting earnings.

Kenneth F. Bernstein: Lastly, through the expansion of our corporate revolver capital recycling and strategically sourcing a new Avenue of capital. We have achieved one of our important balance sheet initiatives of increasing our liquidity and expanding our access to capital.

Kenneth F. Bernstein: As outlined in our release, we completed our inaugural unsecured private placement bond. We are very pleased with the execution and pricing of the $100 million bond, which was done with a single top tier investor and is slated to close in mid August and upon closing the $100 million of proceeds will be non dilutive if not slightly accretive.

John Gottfried: We are very pleased with the execution and pricing of the $100 million bond, which was done with a single top-tier investor and is slated to close in mid-August. And upon closing, the $100 million in proceeds will be non-diluted, if not slightly... The private placement market is something we have been strategically targeting for a while. Not only does this market provide us with an additional source of liquidity, but it enables us to extend debt duration beyond what currently exists in the bank markets, all of which improves our overall cost-effectiveness.

John Gottfried: The private placement market is something we have been strategically targeting for a while. Not only does this market provide us with an additional source of liquidity, it enables us to extend that duration beyond what currently exists in the bank markets, all of which improves our overall cost of capital.

Kenneth F. Bernstein: The private placement market is something we have been strategically targeting for a while not only does this market provide us with an additional source of liquidity and enables us to extend declaration beyond what currently exist in the bank markets all of which improves our overall cost of capital.

John Gottfried: Our balance sheet is one of our key drivers of our business, and it's ready for the accretive external growth that can be discussed. And we will accretively fund this growth on a leverage neutral basis, whether it be through the issuance of our equity and our capital recycling within our core and investment management platforms. Before turning the call over to questions, I want to share a quick housekeeping item related to our third quarter earnings. Call. Due to a scheduling conflict, we are currently planning on releasing our earnings in the morning and doing the call later that same day.

John Gottfried: Our balance sheet is one of the key drivers of our business, and it's ready for the accretive external growth that can happen. And we will accretively fund this growth on a leverage-neutral basis, whether it be through the issuance of our equity and our capital recycling within our core and investment management. Before turning the call over to questions, I wanted to share a quick housekeeping item related to our third quarter earnings. Due to a scheduling conflict, we are currently planning on releasing our earnings in the morning and having the call later that same day.

Kenneth F. Bernstein: Our balance sheet is one of our key drivers of our business and it's ready for the accretive external growth that Ken discussed.

Kenneth F. Bernstein: And we will Accretively fund this growth on a leverage neutral basis, whether it be through the issuance of our equity and capital recycling within our core investment management platforms.

Speaker Change: Before turning the call over to questions I wanted to share a quick housekeeping item related to our third quarter earnings call due.

Speaker Change: Due to a scheduling conflict. We are currently planning on releasing our earnings in the morning and doing the call later that same day. This is a onetime event and we expect to go back to a regular scheduled releasing our earnings the night before our call, but just wanted to give everyone a heads up.

John Gottfried: This is a one-time event, and we expect to go back to our regular schedule of releasing our earnings the night before our call, but just wanted to give everyone a heads up. And with that, we will now open up the call. Thank you. Ladies and gentlemen, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced.

John Gottfried: This is a one-time event, and we expect to go back to our regular schedule, releasing our earnings the night before our call, but just want to give everyone a heads up.

Unknown Attendee: And with that, we will now open up the call for questions. Thank you. Ladies and gentlemen, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. As a reminder, please limit yourself to one question and one follow-up. If you have any additional question, you may re-entered a cute time permits.

Speaker Change: And with that we will now open up the call for questions.

Speaker Change: Thank you, ladies and gentlemen to ask a question you will need the westar one one on your telephone and wait for your name to be announced as a reminder, please limit yourself to one question and one follow up if you have any additional questions. You may re enter the queue time permits. Please stand by while we compile the Q&A roster.

Unknown Attendee: Please stand by while the compiler can airoster.

Andrew Real: Not first question, coming from the line-up, Jeffrey Spector with Bank of America, you want us open. Hi, this is Andrew Real on for Jeff. Thanks for taking our questions. We've spoken previously about the fact that SOHO rents are called a half to two-thirds of their peak levels in 2015 or so, where its sales are well. Where they were at the time, just given where sales are today, is it realistic to believe that SOHO rents can return to these prior peaks? And if not, where do you think SOHO rents top out relative to the previous highs?

Operator: As a reminder, please limit yourself to one question and one follow-up. If you have any additional questions, you may re-enter the queue if time permits. Please stand by while we compile the Q&A roster. Our first question comes from the line of Jeffrey Spector with Bank of America. Your line is open. Hi, this is Andrew Real on behalf of Jeff.

Speaker Change: Our first question coming from the lineup Jeffrey Spector with Bank of America. Your line is open.

Alexander J. Levine: Thanks for taking our questions. We've spoken previously about the fact that SoHo rents are called a half to two thirds of their peak levels in 2015 or so, whereas sales are well above where they were at the time. Just given where sales are today, is it realistic to believe that SoHo rents can return to these prior peaks? And if not, where do you think SoHo rents will top out relative to the previous high? A.J., why don't you take that one?

Andrew <unk>: Hi, This is Andrew <unk> on for Geoff Thanks for taking our questions.

Speaker Change: Spoken previously about the fact that Soho rents are call. It a half to two thirds of their peak levels in 2015, or so whereas sales are well above where they were at the time, just given where sales are today is it realistic to believe that Soho rents can return to these prior peaks and if not where do you think soho rents top out relative to the previous highs.

AJ Levine: Hey, Jay, why don't you take that one? Yeah, look, I think this somewhat goes back to the idea of the SMB resets, which we talk about, right? And the ability to unlock a lot of those rents that are sub-peak and marked to market based on sales performance, right? If we didn't have the ability to do that, then it can take advantage of the strong sales. I do think there is a lot of room to run to continue to approach prior peak, again, just based on the performance that we continue to see. Yeah, the tenant sales would indicate when we think about healthy rent-to-sales ratios, would indicate that there are a variety of retailers that will be prepared to approach prior peaks as that space turns, as it becomes available.

Alexander J. Levine: Yeah, look, I think this somewhat goes back to the idea of the F&B resets, which we talk about, right? And the ability to unlock a lot of those rents that are sub-P and Mark to Market based on sales. Right, if we didn't have the ability to do that, then we could take advantage of the strong sales. I do think there is a lot of room to run. Again, just based on the performance that we had.

Jay: Hey, Jay why don't you take that one yeah look I think there's somewhat goes back to the idea of the F&B resets, which we talk about right and the ability to unlock a lot of those rents that are sub peak and mark to market based on sales performance right. If we didn't have the ability to do that then we can take advantage of the strong sales I do.

Speaker Change: I think there is a lot of room to run to continue to approach. Prior peak again, just based on the performance that we continue to see.

Alexander J. Levine: Yeah, the tenant sale would indicate that when we think about healthy rent to sales ratios, they would indicate that there are a variety of retailers that will be prepared to approach prior peak as that space turns as it becomes available. We're also encouraged by the fact that our retailers have been very thoughtful and disciplined. So it doesn't feel like rents are growing in excess of what retailers are paying. Okay, thanks. Can you quantify how rent sales compare today versus where it was prior peak in Soho?

Kenneth F. Bernstein: The tenant sales.

Speaker Change: Would indicate when we think about healthy.

Speaker Change: Rent to sales ratios would indicate that there are a variety of retailers.

Speaker Change: That will be prepared to approach prior peaks.

Speaker Change: That space turns as it becomes available. We're also encouraged by the fact that our retailers have been very thoughtful and disciplined.

AJ Levine: We're also encouraged by the fact that our retailers have been very thoughtful and disciplined. So it doesn't feel like rents are growing in excess of what retailers can afford.

Speaker Change: So it doesn't feel like rents are growing in excess of what retailers can afford.

Unknown Attendee: Okay, thanks.

AJ Levine: Can you quantify how rent sales compares to Davis, where it was at prior peaks and SOHO? Yeah, I mean, like rents and SOHO. I mean, it's a very nuanced market, and it's a relatively large market, and you're going to see some variation there. I think prior peak rents were, I say occupancy costs were pushing well north of 20%. When you look at our portfolio specifically, as well as anecdotally from talking with our tenants, those occupancy costs are living in the mid-teens range at this point. But again, given the sales growth that we've seen, even if those occupancy costs continue to creep up, we still have a lot of room to run in terms of rents.

Speaker Change: Okay. Thanks, and can you quantify how rent sales compares today versus where it was at prior peaks in Soho.

Alexander J. Levine: Yeah, I mean, rents in SoHo, I mean, it's a very nuanced market, and there is, or I say, a relatively, you know, large market variation there. I think, prior to the prior peak, rents were, or I say occupancy costs were pushing well north of $20,000. When you look at our portfolio, our portfolio specifically, as well as anecdotally from talking with our tenants, those occupancy costs are living in the mid-teens range.

Speaker Change: Yes.

Speaker Change: Like rents and so it's a very nuanced market and it's a relatively large market and youre going to see some variation there.

Speaker Change: I think prior prior peak rents, where I say occupancy costs were pushing well north of 20%. When you look at our portfolio our portfolio, specifically as well as anecdotally from talking with our tenants those occupancy costs.

Speaker Change: Our living in the mid teens range at this point.

Alexander J. Levine: But again, given the sales growth that we've seen, even if those costs continue to creep up, we still have a lot of room to run it. Okay, thank you.

Speaker Change: But again given the sales growth that we've seen even if those occupancy costs continue to creep up we still have a lot of room to run in terms of rents.

Unknown Attendee: Okay, thank you.

Kenneth F. Bernstein: And then just any more color on your expectations for the volume of external opportunities heading into the back half? Heard some chatter that potential sellers might be sitting idle in anticipation of rate cuts, but the 75 million you have in advanced negotiation may suggest otherwise? Well, I think that what you saw over the last several months until relatively recently was sellers sitting on the sidelines with some amount of FOMO, Fear of Missing Out, because they thought, geez, I've waited this long, maybe I should wait a little bit longer. I think there's much more clarity now.

Ken Bernstein: And then just any more color on your expectations for the volume of external opportunities heading into the back half. I heard some chatter that potential sellers might be sitting idle in anticipation of rate cuts, but the 75 million you have in advanced negotiation maybe suggests otherwise. Well. I think that what you saw over the last several months, until relatively recently, was sellers sitting on the sidelines with some amount of phomo fear of missing out because, geez, I've waited this long, maybe I should wait a little bit longer. I think there's much more clarity, perhaps not for bond traders, but clarity over the 12 to 24 months, what the landing looks like, and when cuts might occur. So we're starting to see sellers say, "Okay, I do need liquidity, it is time to transact," and we're very encouraged by that cadence.

Speaker Change: Okay. Thank you and then just any more color on your expectations for the volume of external opportunities heading into the back half.

Speaker Change: I heard some chatter that potential sellers might be sitting idle in anticipation of rate cuts, but the $75 million you have in advanced negotiation maybe suggests otherwise.

Kenneth F. Bernstein: Well.

Speaker Change: I think that what you saw over the last several months until relatively recently was sellers sitting on the sidelines.

Speaker Change: With some amount of fomo fear of missing out because geez I waited this long maybe I should wait a little bit longer I think theres much more clarity.

Kenneth F. Bernstein: Perhaps not for bond traders, but clarity over the next 12 to 24 months of what the landing looks like, when cuts might occur. So we're starting to see sellers say, okay, I do need liquidity. It is time to transact. And we're very encouraged by that cadence, and how that translates through into specific volume states.

Kenneth F. Bernstein: Perhaps not for bond traders, but clarity over the next 12 to 24 months.

Kenneth F. Bernstein: What the landing looks like in <unk>.

Kenneth F. Bernstein: When cuts might occur so we're starting to see sellers say okay.

Speaker Change: I do need liquidity. It is time to transact and we're very encouraged by that cadence how that translates through into specific volume.

Ken Bernstein: How that translates through into specific volume stateship.

Speaker Change: Stay tuned.

Unknown Attendee: Okay, thanks for the time.

Kenneth F. Bernstein: Great. Thanks for the time. Thank you. And our next question coming from the line of Linda Tsai with Jeffrey Thielen is open. Yes, hi.

Speaker Change: Great. Thanks for the time.

Linda Tsai: Thank you, and on the next question, coming from the line up, Linda Tsai, would Jeffrey feel on his dolphin? Yes, hi, a question for AJ, just in regards to Ken's comments about post-pandemic retailer sales growth of over 40%. Are these mostly digitally native, or are there any traits that you would highlight that these retailers possess collectively? Yeah, I mean, frankly, I think we're seeing fear, and fear really digitally native in general as we see to continue to shift the way from digital exclusive or digitally native forward towards C, but no, it's not unique to digitally native.

Alexander J. Levine: Question for AJ. Just in regards to Ken's comments about post-pandemic retailer sales growth of over 40 percent, are these mostly digitally native, or are there any traits that you would highlight that these retailers, you know, possess collectively? Yeah, I mean, frankly, I think we're seeing fewer and fewer really digitally native in general, as we see the continual shift away from digital exclusive or digitally native more toward C, but no, it's not it's not unique to digitally native. We're seeing it across the board from more traditional retailers to, you know, emerging brands that are exclusively focused on brick and mortar. To add to that, Linda.

Speaker Change: Thank you.

Speaker Change: Next question coming from the line of Layne.

Speaker Change: Linda Tsai with Jefferies. Your line is now open.

Linda Tsai: Yes, hi.

Linda Tsai: A question for HHS.

Linda Tsai: Regard in regards to Ken's comments about.

Linda Tsai: Pandemic retailer sales growth of over 40% are these mostly digitally native or are there any trade.

Speaker Change: That you would highlight.

Speaker Change: These retailers.

Speaker Change: Does that collectively.

Speaker Change: Yeah, I mean, frankly, I think we're seeing fewer and fewer really digitally native in general as we see the continued shift away from digital exclusive or digitally native more towards C. But no. It's not it's not unique to digitally native we're seeing it across the board from some of our more traditional retailers to emerge.

AJ Levine: We're seeing it across the board from some of our traditional retailers to emerging brands that are exclusively focused on brick-and-mortar DTC. To add to that, Linda, first of all, almost across the board, wherever price inflation has been since 2019, most retailers have been able to pass that through to the consumer. Obviously, at the lower end, that's been a little bit tougher for some of our retailers, but the majority of our assets are attracting a more affluent shopper, and their ability to pass inflation through has been pretty straightforward. On top of that, though, in what AJ was pointing to, whether it's at leisure, advanced contemporary, some luxury, and then retailers across the board, they've been able to do better than just passing inflation through.

Speaker Change: <unk> brands that are exclusively focused on brick and mortar DTC.

Linda Tsai: To add to that Linda.

Kenneth F. Bernstein: First of all, almost across the board, wherever price inflation has been since 2019, most retailers have been able to pass that through to the consumer. Obviously, at the lower end, that's been a little bit tougher for some of our retailers, but the majority of our assets are attracting a more affluent shopper, and there, the ability to pass inflation through has been pretty straightforward. On top of that, though, and what A.

Linda Tsai: First of all almost across the board wherever price inflation has been since 2019.

Linda Tsai: Most retailers have been able to pass that through to the consumer obviously.

Speaker Change: The lower end.

Speaker Change: Been a little bit tougher for some of our retailers, but the majority of our assets.

Speaker Change: Are attracting a more affluent shopper and there the ability to pass inflation through.

Speaker Change: <unk> has been pretty straightforward on top of that though and what a J was pointing to.

Kenneth F. Bernstein: was pointing out, whether it's athleisure, advanced contemporary, some luxury, and then retailers across the board. They've been able to do better than just passing inflation through. They've been able to capture sales in their stores, as you've seen a migration out of Hostdale, out of department stores, and into the individual. As you've seen the consumer come back to these key corridors, and that's where, in corridors like M Street, but it's true for the vast, vast majority of our portfolio, we're seeing a broad variety of retailers achieving very strong sales growth. And then our goal, and AJ touched on this, is to make sure as those sales grow that we are sooner rather than later able to capture them in our rent. Thanks.

Speaker Change: Whether it's athleisure advanced contemporary.

Speaker Change: Some luxury and then retailers across the board.

Speaker Change: <unk> been able to do better than just passing inflation through they've been able to capture sales in their stores.

Ken Bernstein: They've been able to capture sales in their stores, as you've seen a migration out of wholesale, out of the department stores, and into the individual stores. As you've seen, the consumer come back to these key corridors, and that's where, in corridors like M Street, but it's true for the vast, vast majority of our portfolio, we're seeing a broad variety of retailers achieving very strong sales growth. And then our goal, and AJ touched on this, is to make sure that those sales grow, that we, sooner rather than later, are able to capture it in our rent.

Speaker Change: As you've seen a migration out of wholesale out of the department stores.

Speaker Change: And into the individual stores as you've seen the consumer come back to these key corridors and that's where in Carter's like M Street, but it's true for the vast vast majority of our portfolio, we're seeing a broad variety of retailers.

Speaker Change: <unk> very strong sales growth and then our goal and AJ touched on this.

AJ: To make sure as those sales grow that we sooner rather than later are able to capture it in our rental growth.

Unknown Attendee: Actual Graph.

Ken Bernstein: Thanks. And then just on external growth in terms of the 75 million of Manhattan and Brooklyn portfolios, is this an opportunity you've been working on for a while, or did it come up more out of the blue? Just wondering if this was indicative of some of the capitulation you had spoken of earlier?

Kenneth F. Bernstein: And then just on external growth in terms of the 75 million dollar portfolios in Manhattan and Brooklyn, is this an opportunity you've been working on for a while, or did it come up more out of the blue? Just wondering if this was indicative of some of the capitulation you had spoken of earlier. Yeah, and let me be clear, I wouldn't define this as capitulation by the seller. Some of these fields we've been working on for a while. And some are coming up more quickly. What you have is an environment of three, four, five months.

Speaker Change: Thanks, and then just on external growth in terms of the $75 million of Manhattan, and Brooklyn portfolios is this is an opportunity you've been working on for a while or did it come up more out of the Blue just wondering if this is indicative of some of the capitulation U.

Speaker Change: Had spoken of earlier.

Ken Bernstein: Yeah, and let me be clear, I wouldn't define this as capitulation by sellers. Some of these fields have we've been working on for a while, and some are coming up more quickly. What you have is an environment three, four, five months ago, where buyers wanted sellers to believe that the 10-year Treasury was going to 5%, that there was a hard landing in front of us and pricing accordingly. And sellers, well, like geez, there was a sub 4% 10-year treasury not too long ago; we want you to price that way. And there was a pretty meaningful standoff.

Speaker Change: Yeah, and let me be clear I wouldn't define this as capitulation by sellers.

Speaker Change: Yeah.

Speaker Change: Some of these deals that we've been working on for awhile.

Speaker Change: And some are coming up more quickly.

Speaker Change: What you have is an environment 345 months ago.

Kenneth F. Bernstein: We're buyers, and we wanted sellers to believe that the 10-year Treasury was going to 5%. There was a hard landing in front of us, and prices accordingly. And sellers were like, geez, there was a sub-4% 10-year Treasury not too long ago. We want you to price that way. And there was a pretty meaningful standoff.

Speaker Change: Where buyers wanted sellers to believe that the 10 year treasury was going to 5%.

Speaker Change: That there was a hard landing in front of us and pricing accordingly and sellers.

Speaker Change: <unk> there was a sub 4% 10 year treasury not too long ago, we want you to price that way and there was a pretty meaningful standoff.

Ken Bernstein: And where sellers of cash flowing assets or sellers that didn't have an immediate reason to have to liquidate, those sellers went to the sidelines. I think right now there's much more clarity. Much more clarity is to what boron spreads are like, and as John indicated, at least for high-quality borrower, spreads are back, liquidity is back, and fundamentals remain strong. So this isn't seller capitulation as much as buyers and sellers coming much closer to an understanding of what the next five years should look like. And when we look at those choices, we think that the street retail that we're focused on is looking very attractive, and sellers need to move on, and so they're agreeing with us.

Kenneth F. Bernstein: And where sellers of cash-flowing assets or sellers that didn't have an immediate reason to have to liquidate, those sellers went to the sidelines. I think right now there's much more clarity, much more clarity as to what borrowing spreads are like, and as John indicated, at least for high-quality borrowers, spreads are back. Liquidity is, and Fundamentals will remain strong. So this isn't seller capitulation as much as buyers and sellers coming much closer to an understanding of what the next five years should look like. And when we look at those choices, we think that the street retail that we're focused on is looking very attractive, and sellers need to move on. And so they're agreeing. Thanks.

Speaker Change: We're sellers of cash flowing assets or sellers that didn't have a an immediate reason to have to liquidate those sellers went to the sidelines.

Speaker Change: Think right now there's much more clarity.

Speaker Change: Much more clarity as to what borrowing spreads are like and as John indicated at least for high quality borrowers spreads are back.

John Gottfried: Liquidity is back.

John Gottfried: And fundamentals remained strong so this isn't seller capitulation as much as buyers and sellers coming much closer.

Speaker Change: To an understanding of what the next five years should look like and when we look at those choices. We think that the street retail that we're focused on is looking very attractive and sellers need to move on and so their agreement with us.

John Gottfried: Thanks, and then just the last one that I could sneak us in for John. Just from where you're sitting today, and without giving guidance, how are you thinking about the level of gains and promotes in 25 versus 24? Yeah, so again, and I will repeat your caveat without giving guidance, but I would say Linda, we are seeing a consistent level of activity, and 25 as we're sitting in 24, and we affirm that with a balance sheet that's fully hedge, that 5 plus percent of internal growth, we see that continuing for our bottom line into 25.

Kenneth F. Bernstein: And then just the last one, if I could sneak this in for John, just from where you're sitting today and without giving guidance, how are you thinking about the level of gains and promotions in 25 versus 24? Yeah, so again, and I will repeat your caveat without giving guidance, but I would say Linda, we are seeing a consistent level of activity in 25. We reaffirm that with a balance sheet that's fully hedged, that 5 plus percent of internal growth. See that continuum for our bottom line at the 25. Thank you. Our next question comes from the lineup, Todd Thomas with Keep Ankylones Open. Hi, thanks. Good morning.

Jon: Thanks, and then just last one if I could sneak this in for Jon just from where you're sitting today and without giving guidance. How are you thinking about the level of gains and promotes 25 versus <unk> 24.

Jon: Yes, so again it all I will repeat your caveat without giving guidance, but I would say Linda we are seeing a consistent level.

Jon: Of activity in 'twenty five as we're seeing in 'twenty, four and we reaffirm that with a balance sheet. That's fully hedged the five plus percent of internal growth, we see that continuing for bottomline into 'twenty one.

Unknown Attendee: Thanks.

Jon: Thanks.

Jon: Yes.

Unknown Attendee: Thank you.

Todd Thomas: Now, next question, coming from the line-up, Todd Thomas with KeyBank, you're on open. Hi, thanks. Good morning.

Speaker Change: Thank you and our next question coming from the lineup Todd Thomas with Keybanc. Your line is open.

John Gottfried: First question, John, just as it pertains to the guidance, can you just talk about the guidance increase a little bit more at the low end? It sounds like there's no pending or future investments embedded in the guidance that have not closed. So, just curious if you could shed a little bit more light on what drove the increase. Yes, I think Todd for near term, we're going to have any further guidance adjustments are going to be based off of the closing of the external growth that Ken mentioned internally. What so drove the guidance increase this quarter was that we are seeing rents coming in or leases commencing quicker than we anticipated. We have a large sign that says that you open the pipeline.

Todd Michael Thomas: Hi, Thanks. Good morning first question, John just as it pertains to the guidance can you just talk about the guidance increase a little bit more at the low end. It sounds like there is no pending or future investments.

John Gottfried: First question, John, just as it pertains to the guidance, can you just talk about the guidance increase a little bit more at the low end? Sounds like there's no pending or future investments embedded in the guide instead of not close, so just curious if you could shed a little bit more light on what drove the increase? Yeah, so I think Todd, for near term, we're going to have any further guidance adjustments are going to be based off of the closing of the external growth that that that can mention internally. What drove the guidance increase this quarter was we are seeing rents coming in or leases commencing quicker than we anticipated.

Speaker Change: Embedded in the guidance that have not closed so just curious if you could shed.

Speaker Change: Shed a little bit more light on what what drove the increase.

Speaker Change: Yes, I think Todd for near term, we're going to have any further guidance adjustments are going to be based off of the closing of the external growth at that Ken mentioned internally, what what so what drove the guidance increase this quarter was we are seeing rents coming in our leases commencing quicker than we anticipated we have had.

John Gottfried: That's a piece of it and tenant health. So we think we have a we're continuing to see strength in our retailers. A.J.

John Gottfried: We have a large side not yet open pipeline that's a piece of it and intended out, so we think we have a we're continuing to see strength of our retailers. with AJ saying on his side is that our reserves that we had set up, we are not needing the reserves that we had embedded in our guidance. So, really, really improving your both internally, getting our stores open. And we did have a handful of acquisitions that did close that helped feed it.

Speaker Change: Large side that you're open pipeline, that's a piece of it and tenant health. So we think we have a.

Speaker Change: We're continuing to see strength of our retailers is consist with what HSA on his side is that our reserves that we had set up we are not needing the reserves that we had embedded in our guidance, so really really improving both internally getting our our stores opened.

John Gottfried: He's saying on his side that our reserves that we had set up, we are not needing the reserves that we had embedded in our guidance. So really improving both internally, getting our stores opened, and we did have a handful of acquisitions that did close that helped feed it. So a combination of those is what brought our guidance up, the penny at the middle. Okay, that's helpful.

Speaker Change: And the we did have a handful of acquisitions that did close that that help feed so combination of those is what brought our guidance up the depending at the midpoint.

John Gottfried: So, the combination of those is what brought our guidance up depending at the midpoint.

John Gottfried: Okay, that's helpful. How much more reserves are embedded in the guidance for the balance of the year? Yeah, so we had in our four-year guidance side, we had about three cents as the way to think about it. So, we had about three cents when we put our guidance out in February.

John Gottfried: How much more reserves are embedded in the guidance for the balance of the year? Yeah, so we had in our four-year guidance, Todd, we had about three cents as a way to think about it. So we had about three cents when we put our guidance out in February, and I would say that, you know, for the balance of the year, another penny or so of reserves is what we are looking at, continuing to see very positive trends on the tenant market. Okay, that's helpful.

Speaker Change: Okay. That's helpful and how much more reserves are embedded in the guidance for the balance of the year.

Speaker Change: So we had in our full year guidance had we had about <unk> as a way to think about it. So we had about <unk> when we put our guidance out in February.

John Gottfried: And I would say that, you know, the balance of the year called another penny or so of our reserves is what we are projecting. But continuing to see very positive trends on the on the ten inside.

Speaker Change: And I would say that for the balance of the year call. It another penny or so of our reserves is what we are projecting but continuing to see.

Speaker Change: A very positive trends on the on the tenant side.

Unknown Attendee: Okay, that's helpful.

Kenneth F. Bernstein: And then just shifting over to investments and the investment management platform, sounds like you're certainly seeing an increase in transaction activity. With regard to the strategic relationship with JP Morgan, with their real estate income trust, it sounds like there are additional asset contributions being contemplated from the Acadia core portfolio. Can you just talk about how much volume you're eyeing for contributions and whether assets have been identified already from the core portfolio, and maybe the timeline to complete additional contribution transactions?

John Gottfried: And then just shifting over to investments, and the investment management platform sounds like you're certainly seeing an increase in transaction activity with regard to the strategic relationship with JP Morgan with their Real Estate Income Trust. Sounds like there are additional asset contributions being contemplated from the Acadia Core portfolio. Can you just talk about how much volume you're eyeing for contributions and whether assets have been identified already from the core portfolio and maybe the timeline. To complete additional contribution transactions. And then are you also looking at third-party deals as well?

Speaker Change: Okay. That's helpful. And then just shifting over to investment and the investment management platform. It sounds like you're certainly seeing.

Speaker Change: An increase in transaction activity with regard to the strategic relationship with with JP Morgan.

Speaker Change: Real estate income Trust.

Speaker Change: Sounds like there are additional asset contributions being contemplated from the Acadia core portfolio could you just talk about how much volume you're eyeing for contributions and weather.

Speaker Change: <unk> been identified already.

Speaker Change: From the core portfolio and maybe the timeline to complete additional contribution transactions and then are you also looking at third party deals as well.

Kenneth F. Bernstein: And then are you also looking at third-party deals as well? Unknown Attendee: Yeah, in fact, I would emphasize the third-party deals more. We may migrate some more of our suburban assets over from the core portfolio, but we don't feel the urgency.

Ken Bernstein: Yeah, in fact, I would emphasize the third-party deals more so we may migrate some more of our suburban assets over from the core portfolio. But we don't feel the urgency. We like that portfolio fine.

Speaker Change #114: Yes in fact, I would emphasize the third party deals more so.

Speaker Change: We may migrate some more of our suburban assets over from the core portfolio.

Speaker Change: But we don't feel the urgency we like that portfolio fine. Some of this was a move towards non dilutive deleveraging and as John walk through from a balance sheet perspective, we're getting where we want to from that perspective, if we think we can migrate core assets.

Kenneth F. Bernstein: We like that portfolio fine. Some of this was a move towards non-dilutive deleveraging. And as John walked through from a balance sheet perspective, we're getting where we want to from that perspective. If we think we can, migrate core assets accretively. We'll do it. But, we're also very confident in our ability to identify, as we have done for a billion and a half of transactions in Fund 5, a variety of third-party transactions, as we did recently down in Tampa, and as we'll continue to do. It's a good core competency of ours. It's a good way to add incremental accretion.

Ken Bernstein: Some of this was a move towards non-deludive de-leveraging, and as John walked through from a balance sheet perspective, we're getting where we want to from that perspective. If we think we can migrate core assets accretively, we'll do it. But we're also very confident in our ability to identify, as we had done for a billion and a half of transactions in fund five, a variety of third party transactions. As we did recently down in Tampa and as we'll continue to do with a good core competency of ours, it's a good way to add incremental accretion.

Speaker Change: Accretively.

John Gottfried: We will do it.

John Gottfried: But we're also very confident in our ability to identify as we had done for 1 billion and a half of transactions in fund five a variety of third party transactions.

John Gottfried: As we did recently down in Tampa and as we'll continue to do what's a good core competency of ours. It's a.

John Gottfried: Good way to add incremental accretion.

Ken Bernstein: But the final point of all of this talk is expect the majority of our external growth. To come from the additions of street retail, that's the area that we're most excited about. And we think we have the most differentiation and the ability to move the needle in ways different than perhaps the more traditional open air retail.

Kenneth F. Bernstein: But the final point of all of this, Todd, is that we expect the majority of our external growth to come from the additions of street retail. That's the area that we're most excited about, and we think we have the most differentiation and the ability to move the needle in ways different than perhaps the more traditional open-air retail. Okay.

Speaker Change: But the final point of all of this Todd is expect the majority of our external growth.

Speaker Change: To come from the additions of Street retail that's the area that we're most excited about and we think we have the most differentiation and the ability to move the needle in ways different than perhaps the more traditional open air retail.

Ken Bernstein: Okay, got it. And with JP Morgan, though, any future deals, whether they're contributions from your portfolio or third party deals, are they all likely to be structured in a similar format 95-5 and, you know, with similar terms, or will each deal be different within that structure? Um. They might be different, but, and I guess I would say I'll let JPMorgan speak for JPMorgan. For the non-traded REAP that we transacted with, they'll probably look very similar, but they would point out that they have multiple different buckets of capital. Neither of us are on any form of exclusive relationship, but it's a good relationship, and we're constantly comparing notes about different opportunities.

Kenneth F. Bernstein: And with J.P. Morgan, though, any future deals, whether they're contributions from your portfolio or third-party deals, are they all likely to be structured in a similar format, 95-5 and, you know, with similar terms? Or will each deal be different within that structure? They might be different, but, and I guess I'll let JPMorgan speak for JPMorgan. For the non-traded REIT that we transacted with, they'll probably look very similar. But they would point out that they have multiple different... buckets of capital. Neither of us are in any form of an exclusive relationship, but... Good relationship, and we're constantly comparing notes about different opportunities.

Todd Michael Thomas: Okay got it.

Speaker Change: With J P Morgan, though.

Speaker Change: Any future deals whether theyre contributions from your portfolio or our third party deals are they all likely to be structured in a similar format 95 five in.

Speaker Change: With similar terms or will each deal be different within within that structure.

Speaker Change: They might be different but and I guess I would say I'll, let J P. Morgan speak with J P. Morgan.

Speaker Change: For the non traded REIT that we transact transacted with they'll probably look very similar but they would point out that they have multiple different.

Speaker Change: Buckets of capital.

Speaker Change: Neither of US are on any form of exclusive relationship but it's.

Speaker Change: Good relationship and we're constantly comparing notes about different opportunities I would say.

Ken Bernstein: I would say both sides are relatively agnostic as to whether it's a new transaction or an existing asset. I'm glad we got the relationship kicked off with an existing asset, but look forward to do many more with them. Irrespective based on the investment opportunities we see, and we're encouraged kind of by deal flow we're seeing, so hopefully that works out great.

Kenneth F. Bernstein: I would say both sides are relatively agnostic as to whether it's a new transaction or an existing asset. Glad we got the relationship kicked off with an existing asset, but look forward to doing many more with them, irrespective based on the investment opportunities we see. We're encouraged kind of by the deal flow we're seeing, so hopefully that works out great. Okay, great.

Speaker Change: Both sides are relatively agnostic as to whether it's a new transaction or an existing asset.

Speaker Change: Glad we got the relationship kicked off with an existing asset, but look forward to do many more with them.

Speaker Change: Irrespective based on the.

Speaker Change: <unk> opportunities we see.

Speaker Change: And.

Todd Michael Thomas: We're encouraged by deal flow, we're seeing so hopefully that works out great.

Unknown Attendee: Okay, great. Thank you.

Todd Michael Thomas: Okay.

Speaker Change: Thank you.

Kenneth F. Bernstein: Thank you. Thank you. And our next question coming from the lineup, Craig Mailman with Citi, your line is open. Hey, good morning.

Craig Mailman: Now, next question coming from the line up, Craig Mellon with City, Yelena Sulton. Hey, good morning. Can I just want to go back to pricing on street retail. You know, we've seen a couple more trades. You guys are getting more active; we saw one of the other public peers get more active than Williamsburg.

Todd Michael Thomas: Thank you.

Todd Michael Thomas: Next question coming from the line of Craig Melman with Citi. Your line is now open.

Craig Mailman: Um, Ken, just want to go back to pricing on street retail. You know, we've seen a couple more trades; you guys are getting more active. We saw one of the other public peers get more active in Williamsburg.

Craig Mailman: Hey, good morning.

Craig Mailman: Ken I just want to go back to pricing on street retail.

Craig Mailman: We've seen a couple of more trades you guys are getting more active we saw one of the other public peers get more active in Williamsburg.

Kenneth F. Bernstein: Where can you kind of give us a range of where street retail pricing is in Manhattan versus Brooklyn versus maybe kind of what you're contemplating on M Street if you can collapse that structure a little bit more, just to give us a sense of return expectations in your different market, and I apologize up front for being perhaps broad and vague, but going in yield is just one component. And then what do you see as the total growth?

Ken Bernstein: Can you kind of give us a range of where street retail pricing is in Manhattan versus Brooklyn versus maybe kind of what you're contemplating on M Street if you can collapse that structure a little bit more, just to give us a sense of return expectations in your different markets. Yeah, and I apologize up front of being perhaps broad and vague, but going in yield is just one component, and then what do you see as the total growth? There are still leases out there from prior peak, and we touched on this before. Is related to question and so how prior peak.

Speaker Change: Can you kind of give us a range of where street retail pricing is in Manhattan versus Brooklyn versus maybe kind of what youre contemplating on M Street. If you can collapse that structure, a little bit more just to give us a sense of return expectations and.

Speaker Change: In your different markets.

Kenneth F. Bernstein: Yes, and I apologize upfront.

Speaker Change #100: Being perhaps broad and vague.

Speaker Change: But boeing going in yield is just one component.

Speaker Change: And then what do you see as the total growth.

Kenneth F. Bernstein: There are still leases out there from prior peak, and we touched on this before, which is related to a question in Soho Prior peak, we're still not back to, so there are leases that are above market. Those are going to trade at a very different cap rate, going in yield than leases that were done, let's say, during COVID that perhaps are at half of what we're seeing now. To try to simplify this a bit, leases that were relatively recently signed, have 3% contractual growth, and to the extent that they have fair market value resets that A.J. was talking about.

Speaker Change: There are still leases out there from prior peak and we touched on this before is it related to a question and Soho prior peak.

Ken Bernstein: We're still not active, so there are leases that are above market. Those are going to trade at a very different cap rate, going-in yield, than leases that were done, let's say during COVID, that perhaps are at half of market. What we're seeing now to try to simplify this a bit, leases that were relatively recently signed, have 3% contractual growth, and to the extent that they have fair market value reset that AJ was talking about, those feel pretty darn compelling in the, and I'm going to use a broad going in yield, but in the 5 to 7% range. And I'd say the way we're thinking about this is if we can start in the 6s and have conviction that we're getting into the upper 6s or unlevered 7s in relatively due course, that feels pretty compelling to us, given the long term trajectory.

Speaker Change #106: We're still not back to so there are leases that are above market those are going to trade at a very different cap rate.

Speaker Change: And yield than leases that were done let's say during COVID-19 that perhaps are at half of market.

Todd Michael Thomas: What we're seeing now to try to simplify this a bit leases that were relatively recently signed.

Todd Michael Thomas: Have 3% contractual growth.

Todd Michael Thomas: And to the extent that they have fair market value resets that Ajay was talking about.

Todd Michael Thomas: Those feel pretty darn compelling.

Kenneth F. Bernstein: Those feel pretty darn compelling, in the, and I'm gonna use a broad term for yield, but in the 5% to 7% range. And I'd say the way we're thinking about this is if we can start in the sixes and have conviction that we're getting into the upper sixes or unleveraged sevens in relatively due course, that feels pretty compelling to us, given the long-term trajectory. How do we get there in the thinking of that?

Speaker Change #105: In the us up.

Speaker Change: Rod going in yield.

Speaker Change: But in the 5% to 7% range and I'd say the way we're thinking about this.

Speaker Change: Is if we can start in the sixes and have conviction that we're getting into the upper sixes or unlevered sevens in relatively due course does that feels pretty compelling to us.

Speaker Change: Given the long term trajectory, how do we get there in the thinking of that well in open air retail in general.

Ken Bernstein: How do we get there in the thinking of that? Well, in open air retail in general, the best supermarket anchor shopping centers are probably trading in that range, with a growth rate of about 2%. and the street retail that we're talking about has a growth rate that should be double that, and the way we get there is 3% contractual growth plus upside that feels pretty compelling if our going in yields are the same. Based on the sales growth we're seeing based on the tenant demand based on the shift out of wholesale and into these corridors.

Kenneth F. Bernstein: Well, in open-air retail in general, the best supermarket-anchored shopping centers are probably trading in that range with a growth rate of about 2%. And the street retail that we're talking about has a growth rate that should be doubled. And the way we get there is 3% contractual growth plus upside. That feels pretty compelling if our going in yields are the same. Now I appreciate that supermarket-anchored retail is more defensive.

Speaker Change: That's supermarket anchored shopping centers are probably trained trading in that range with a growth rate of about 2%.

Speaker Change: And the street retail that we're talking about has a growth rate that should be double that.

Speaker Change: And the way we get there is 3% contractual growth plus upside does that feels pretty compelling.

Speaker Change: Our going in yields are the same now I appreciate that supermarket anchored retail.

Speaker Change: Is more defensive.

Kenneth F. Bernstein: Certainly, its necessity profile did great during COVID, but based on the sales growth we're seeing, based on the tenant demand, based on the shift out of wholesale and into these corridors, both tenant performance and tenant demand make us very bullish on this opportunity set as long as, as I said in my prepared remarks, as long as we can acquire accretive to earnings, accretive to NAV, and accretive to We're starting to see those opportunities, but this is a specialized skill set.

Kenneth F. Bernstein: Certainly it's necessity profiled the great during COVID-19, but based on the sales growth we're seeing there.

Kenneth F. Bernstein: Just on the tenant demand based on the shift out of wholesale and into these car doors, both tenant performance and tenant demand make us very bullish on this opportunity set as long as what I said in my prepared remarks as long as we can acquire accretive.

Ken Bernstein: Both tenant performance and tenant demand make us very bullish on this opportunity set, as long as what I said in my prepared remarks. As long as we can acquire a creative to earnings, a creative to NAV, and a creative to our long-term growth.

To earnings accretive to NAV.

Kenneth Bernstein: And accretive to our long term growth, we're starting to see those opportunities. This is a specialized skill set so while there is competition.

Ken Bernstein: We're starting to see those opportunities. This is a specialized skill set. So, while there is competition, there's a lot less competition in this arena than in other components of open air. So we're pretty excited about it.

Kenneth F. Bernstein: So while there is competition, there's a lot less competition in this arena than in other components of open air, so we're pretty excited about it. I realize this is a very vague answer. Could be a 10 cap, could be a four cap, but what we're seeing is trade. Occasionally in the low 5s, not us, and occasionally in the high 6s, those probably have some hair on them, and everything else is falling apart

Speaker Change: There is a lot less competition in this arena.

Speaker Change: Then in other components of open air So we're pretty excited about it.

Ken Bernstein: I realize very vague answer could be a 10 cap, could be a 4 cap, but what we're seeing trades occasionally in the low five, not us. And occasionally in the high sixes, those probably have some hair on them, and everything else is falling in between.

Speaker Change #116: I realized very vague answer it could be a 10 cap could be a forecast but.

Speaker Change: What were seeing trades.

Speaker Change: Occasionally in the low fives not us.

Speaker Change: And occasionally in the high sixes.

Speaker Change: Those probably have some hair on them and everything else has fallen in between.

Kenneth F. Bernstein: So from an unlevered IR perspective, I think you said around seven plus percent is kind of the target. Is that a better way to think about than the cap rate? I think it'll be higher than that. That's just the yield that it grows to.

Ken Bernstein: So from an unlimited hour perspective, I think you said one around a seven plus percent that's kind of the target is how it's better way to take out the cap. I think it'll be higher than that. That's just the yield that it grows to. So if you buy a yield at a six and over the five years through contractual growth and fair market value reset, the unleivered yield grows to a seven. That probably equates more to an eight or nine unlevered and then obviously higher on a levered iron. Yeah, that's helpful.

Speaker Change #110: So from an Unlevered IRR perspective, I think you said what around a seven plus percent is kind of the target.

Speaker Change: I think cap rate.

Speaker Change: I think it will be higher than that that's just the yield that it grows too.

Kenneth F. Bernstein: So if you buy a deal at a six, and over the five years through contractual growth and fair market value reset, the unlevered yield grows to a seven. That probably equates more to an eight or nine unlevered and then obviously higher on a levered deal. Gotcha.

Speaker Change: So if you buy a deal at a six.

Speaker Change: And over the five years through contractual growth and fair market value reset the unlevered yield gross two seven is that probably equates more to a eight or nine unlevered and then obviously higher on a levered IRR.

Speaker Change: Gotcha.

Speaker Change: That's helpful.

Ken Bernstein: And I guess the other kind of question I have just kind of long term as you're underwriting rents right for street, you've clearly seen the ability to raise rents. Part of that is, you know, the 20% cumulative inflation. If that kind of normalizes here, what do you think is, you know, better long-term market rent growth. Figure beyond, you know, the 3% annual bumps. What do you think is a blended kind of market rent growth over a couple of year period for street and a normalized, you know, period of time versus the post COVID environment.

Kenneth F. Bernstein: That's helpful. And I guess the other kind of question I have just kind of long term is you're underwriting rents, right, for street. You've clearly seen the ability to raise rents, part of that is, you know, the 20% cube of inflation. If that kind of normalizes here, what do you think is a better long-term market rent growth figure beyond, you know, the 3% annual bumps? Like, what do you think is a blended kind of market rent growth over a couple of years on street and a normalized period of time versus the post COVID environment? Yeah, so let's make a distinction between market rent growth and our internal growth because, as hard as A.J. and his team will try.

Speaker Change:

Speaker Change: And I guess the other.

Kenneth F. Bernstein: Question I have just kind of a long term measure underwriting rents right first street, you've clearly seen.

Speaker Change #107: The ability to raise rents part of that is 20% cumulative inflation.

Speaker Change: Is that kind of normalizes here.

Speaker Change #104: What do you think is.

Speaker Change: Better long term market rent growth.

Todd Michael Thomas: Figure.

Kenneth F. Bernstein: Do you have a 3% annual bumps like what do you think is a blended kind of market rent growth over a couple year period for Sri and the normalized.

Todd Michael Thomas: Period of time versus the post Covid environment.

Ken Bernstein: Yeah, so, and let's make a distinction between market rent growth. And our internal growth because, as hard as AJ and his team will try, they're not in a successfully mark all of our assets to market in 12 to 24 months. Retailers enjoy below-market leases for a long time. I'll be at in straight retail for a much shorter time period. We have more fair market value recess, recess more market market opportunities than we do in our suburban. but there's a distinction between fair market value rents and existing portfolio. With that caveat, if we approach what we'll define as normalized rents and normalized rents to sales, and that could happen in the next few years, then I guess what I would tell you is our expectation within a range is that market rents should only grow consistent with tenant sales growth, because if tenants want, if we were to pick the events contemporary and if they want to be at less than 20% rent to sales, then market rents should at that point going forward grow only consistent with sales.

Speaker Change #115: Yes, so and let's make a distinction between market rent growth.

AJ: And our internal growth because it's hardest AJ and his team will try they're not in a successfully mark all of our assets to market in 12 months to 24 months retailers enjoy below market leases for a long time, albeit in street retail for a much shorter time period, we have more.

Kenneth F. Bernstein: They're not going to successfully mark all of our assets to market in 12 to 24 months. Retailers enjoy below-market leases for a long time, albeit in street retail, for a much shorter time period. We have more fair market value resets, more mark-to-market opportunities than we do in our suburban locations. But there's a distinction between them.

Todd Michael Thomas: <unk> fair market value resets resets more mark to market opportunities than we do in our suburban.

But there is a distinction between.

Kenneth F. Bernstein: Fair Market Value Rents and Existing Portfolios, with that caveat. If we approach what we'll define as normalized rents and normalized Rent-to-Sale, and that could happen in the next few years, then I guess what I would tell you is our expectation..., within a range, is that market rent should only grow. If we were to pick the advanced contemporary, and if they wanted to be at less than 20%, rent to sale.

Kenneth F. Bernstein: Fair market value rents.

Kenneth F. Bernstein: And existing portfolio with that caveat.

Todd Michael Thomas: If we approach what we'll define as normalized.

Todd Michael Thomas: Rents and normalized rent to sales and that could happen in the next few years.

Speaker Change #107: Then I guess, what I would tell you is our expectation within a range is that market rent should only grow consistent with tenant sales growth because of tenants want.

Todd Michael Thomas: If we were to pick the advanced contemporary and if they want to be at less than 20% rent to sales.

Todd Michael Thomas: Then.

Kenneth F. Bernstein: Market rents should, at that point, and going forward, grow only consistent with sales. Take a step back for a second and don't lose sight of the 2010 to 2020 period, which I defined as a decade of deflation. It was probably more disinflation. But for that time period, a variety of our retailers were in price wars, and were in migration to e-commerce, and so sales declined.

Todd Michael Thomas: Market rents should at that point going forward.

Todd Michael Thomas: Grow only consistent with sales.

Ken Bernstein: But take a step back for a second and don't lose sight of the 2010 to 2020 period, which I defined as a decade of deflation. It was probably more disinflation, but for that time period of variety of our retailers, we're in price wars, we're in migration to e-commerce, and so sales declined. During that period, certainly the 2015 to 2020 period, it was part to see rents go off at all. So we are now in a point where it feels like inflation will be a tailwind for us, tenant performance will be a tailwind for us, and the ability to see retailer sales grow, not every quarter, but over time makes us bullish that it will be 3% plus for the foreseeable future.

Todd Michael Thomas: But.

Speaker Change: Take a step back for a second and don't lose sight of the 2010 to 2020 period, which I defined as a decade of deflation. It was probably more disinflation, but for that time period, a variety of our retailers, we're in price wars, where in migration too.

Speaker Change: E Commerce, and so sales declined during that period, certainly the 2015 to 2020 period. It was hard to see rents go up at all so we are now.

Kenneth F. Bernstein: During that period, certainly the 2015 to 2020 period, it was hard to see rents go up at all. So we are now at a point where it feels like inflation will be a tailwind for us. Tenant performance will be a tailwind for us, and the ability to see retailer sales grow, not every quarter, but over time, makes us bullish that it'll be 3% plus for the foreseeable future. Stay tuned if we change that. Great, thank you. Thank you. And our next question comes from the line up. Michael Mueller with J.P. Morgan, your line is open.

Kenneth F. Bernstein: In a point, where it feels like inflation will be a tailwind for us.

Speaker Change: Tenant performance will be a tailwind for us and the ability to see retailer sales grow not every quarter, but over time makes us bullish that it will be 3% plus.

Speaker Change: For the foreseeable future.

Unknown Attendee: Stay tuned if we change that too.

Todd Michael Thomas: Stay tuned if.

Kenneth F. Bernstein: If we change that to.

Unknown Attendee: Great, thank you. Thank you.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you.

Michael Mueller: And our next question coming from the line-up, Michael Mueller with JP Morgan, you're on his open. Hi, two questions. First, for the Manhattan Brooklyn portfolio acquisition, just curious if you can share what's prompting the seller to sell today. And for the second question, you talked about the upside of the street urban portfolio.

Speaker Change: And our next question coming from the line of Michael.

Kenneth F. Bernstein: Michael Mueller with Jpmorgan Your line is open.

Michael William Mueller: Yeah, hi, two questions. First, for the Manhattan Brooklyn portfolio acquisition, just curious, if you know, if you can share what's prompting the seller to sell today. And for the second question, you talked about, you know, the upside in the street urban portfolio. So if you look at the snow NOI coming online by year end, where would that push your street occupancy to by year end, which I think is 84.7, if I'm not mistaken? John, why don't you take the snow piece of this?

Michael William Mueller: Yes, hi.

Michael William Mueller: Two questions.

Michael William Mueller: First for the Manhattan, Brooklyn portfolio acquisition, just curious if.

Michael William Mueller: If you can share what's prompting the seller to sell today and for the second question talked about.

Speaker Change #102: The upside the street urban portfolio. So if you look at the snow NOI coming online by year end, where would that push your street occupancy two by year end, which I think is $84 seven not mistaken.

John Gottfried: So if you look at the Snow NOI coming online by year-end, where would that push your street occupancy to by year-end, which I think is 84-7, is that mistaken?

John Gottfried: John, why don't you take the snow piece of this first? Yeah, so like in terms of dollars, it's start there because that's probably the more impactful of our sign not yet open. There's within the street piece is about five and a half million dollars of the eight, so it's a significant portion of our yet to open is coming from there. So I think we're still, I think more in terms of dollars than percentages, but I think we are, we will get fairly close to the 90% mark by the end of the year. Is our gas in terms of overall occupancy percentage, but still room to round on that given we're getting to 90 and we have our street we think we get to 95 plus given just the activity that agent.

Tom: Tom why don't you take the snow piece of this first yes, so Mike in terms of dollars. It start there because that's probably the more impactful of our signed not yet opened.

John Gottfried: Yeah, so Mike, in terms of dollars, let's start there because that's probably the most impactful of our sign not yet open. There's within the street piece is about five and a half million dollars of the eight. So it's a significant portion of our business yet to open. So I think we're still, you know, that's, I think more in terms of dollars than percentages, but I think we will get fairly close to the 90% mark by the end of the year, is our guess in terms of overall. But still room to run on that given, you know, we're getting to 90 and we have our street. We think we could get to 95 plus, given just the activity that A.J.

John Gottfried: There is within the street piece is about $5 $5 million of the eight so it's a significant portion of our yet to open is coming from there. So I think we're still yeah. That's why I think more in terms of dollars and percentages, but I think we are.

John Gottfried: We will get fairly close to the 90% Mark by the end of the year.

Michael William Mueller: As our guests in terms of overall occupancy percentage, but still room to run on that given we're getting to 90 and we have our street, we think we get to 95 plus.

John Gottfried: Given just the activity that AJ and his team are seeing but I would say within by the end of the year and projected openings I think probably the 90% range is a good target.

John Gottfried: Team or RC, but I would say within, you know, by the end of the year and projected openings, I think probably the 90% range is a good target.

John Gottfried: But I would say within, you know, by the end of the year and projected openings, I think probably 90%... And then, in terms of seller motivation, realize there's a lot of finite life funds, there's a lot of debt coming due, and there's a lot of capex needed to restabilize assets. So every seller has different motivations, but compared to three, four months ago, sellers are saying, you know what? I've waited this long, I need to do some transacting, and we're starting to see that and be encouraged by it. Okay, thank you. Thank you. And our next question comes from the line of... Ki Bin Kim withdrew his seal on his girlfriend.

Ken Bernstein: Craig Mailman, and then in terms of seller motivation, realize there's a lot of finite life funds, there's a lot of debt coming due, there's a lot of cat facts needed to restabilize assets. So every seller has different motivations, but compared to three, four months ago, sellers are saying, you know what, I've waited this long; I need to do some transacting, and we're starting to see that and be encouraged by it.

John Gottfried: Great and then just.

Speaker Change #117: In terms of seller motivation realize theres a lot of finite life life funds, there's a lot of debt coming due there is a lot of capex needed to re stabilized assets. So every seller has different motivations, but.

John Gottfried: Compared to three four months ago sellers are saying you know what.

Michael William Mueller: Waited this long I need to do some transacting and we're starting to see that and be encouraged by it.

Michael Mueller: Craig Mailman. Okay, thank you.

Speaker Change #111: Okay. Thank you.

Unknown Attendee: Thank you.

Speaker Change #109: Thank you.

Paulina Rojas: And our next question coming from the line up, keep in, Kim, with Drew, a sealant of shopping.

Speaker Change: And our next question coming from the line of.

Speaker Change: <unk> bin Kim with <unk> Your line is open.

Ken Bernstein: Craig Mailman, thank you. Just a couple of follow-ups here on the New York City pending acquisition. You can just talk about some of the long-term outside. Is this something that you have to kind of re-merchant nice over time to get to those higher yields? There's, it's going to be a combination.

Ki Bin Kim: Thank you. Just a couple of follow-up questions here. On the New York City pending acquisition, can you just talk about some of the longer-term upside? Is this something that you have to kind of re-merchandise over time to get to those higher yields?

Speaker Change: Thank you I guess a couple of follow ups here on the New York City pending acquisition can you just talk about.

Speaker Change: Some of the longer term upside is this something that you have to kind of re merchandise overtime to get to those higher yields.

Kenneth F. Bernstein: It's going to be a combination, and I certainly don't want to get to the point where when we close these deals, we're all bored by what we're talking about, but I would say that AJ and his team look forward to... Retaining wherever there's a tenant that's either underperforming or a chance to bring in that roster of tenants that you see us work with, whether it's on Armitage It will be a combination of attractive yields in some cases, lease up in others, or try to find that right.

Speaker Change #100: It is going to be a combination.

Ken Bernstein: And I certainly don't want to get to the point where, when we close these deals, we're all bored by what we're talking about. But I would say that AJ and his team look forward to re-tenanting wherever there's a tenant that's either underperforming or a chance to bring in that roster of tenants that you see us work with, whether it's on Armitage Avenue or Melrose Place, or elsewhere. So it will be a combination of attractive going-in yields in some cases, lease-up in others, or try to find that right blend.

Speaker Change: And I, certainly don't want to get to the point, where when we close these deals were all board by what we're talking about.

Speaker Change #100: But I would say that AJ and his team look forward to.

Kenneth F. Bernstein: Re tenant being wherever there is a tenant that either underperforming or a chance to bring in that roster of tenants that you see us work with whether it's on Armitage Avenue, our Melrose place or elsewhere.

Michael William Mueller: So.

Kenneth F. Bernstein: It will be a combination of attractive going in yields in some cases.

Kenneth F. Bernstein: Lease up and others were try to find that right blend.

Ken Bernstein: And going back to your comments about 3B sales being up 40%, I wasn't sure if you meant if that was referring to the whole portfolio or the M-suprofolio. But my question is, in your M-suprofolio, when I look back at 2019 or 2020, the ABR hasn't really changed over the time frame; certainly, your tenants have. So I'm just trying to better gauge where that mark-to-marker opportunity is. And just given that the rents haven't really changed, maybe you can help me better understand how much more dynamic that mark might be today versus, you know, four or five years ago.

Kenneth F. Bernstein: And going back to your comments about street retail sales being up 40%, I wasn't sure if you meant if that was referring to the whole portfolio or the M Street portfolio. But my question is, in your M Street portfolio, when I look back at 2019 or 2020, the ABR hasn't really changed over that timeframe. Certainly, your tenants have. So I'm just trying to better gauge where that mark-to-mark opportunity is. And just given that the rents haven't really changed.

Speaker Change: And going back to your comments about three retail sales being up 40% I wasn't sure. If you meant if that was referring to the whole portfolio or the MCU portfolio.

Kenneth F. Bernstein: But my question is in your MCU portfolio, when I look back at 2019 or 2020, the ABR hasn't really changed over that timeframe.

Speaker Change #103: Certainly your tenants have so I'm, just trying to better gauge where that mark to market opportunity is.

Kenneth F. Bernstein: And.

Kenneth F. Bernstein: Just given that that rents haven't really changed.

Kenneth F. Bernstein: Maybe you could help me better understand how much more dynamic that market might be today versus four or five years ago. Yeah, and so the answer is much more dynamic. I wish that every time a retailer called me and said, Wow, my sales are up 40%, I was able to say, great, pay us 40% more. But leases are leases. So I think what you are seeing is a delay, a lag between SalesGrowth and Rancroft.

Speaker Change: Maybe you can help me better understand how how much more dynamic that market might be today versus five years ago.

Ken Bernstein: Yeah, and so the answer is much more dynamic. I wish that every time a retailer called me and said, "Wow, my sales are up 40%." I was able to say, "Great, pay us 40% more, but leases are leases." So I think what you are seeing is a delay, a lag between sales growth and rent growth. And that'll play out. Again, the 40% I was mentioning was related to M-street, although we, again, we don't get great sales data across the board, but we're seeing that in many of our dynamic markets. And it can take somewhere between two and five years for us to catch up, even with aggressive pry loose and fair market value reset.

Speaker Change #108: And so the answer is much more dynamic.

Kenneth F. Bernstein: Wish that every time, a retailer called me and said Wow. My sales are up 40% I was able to say great pay us 40% more.

Speaker Change: But our leases are leases. So I think what you are seeing is a delay a lag between sales growth.

Speaker Change: And rent growth.

Kenneth F. Bernstein: And that'll play out. Again, the 40% I was mentioning was related to M Street, although... Again, we don't get great sales data across the board, but we're seeing that in many of our dynamic markets. And it can take somewhere between two and five years for us to catch up, even with aggressive price-loose and fair market value.

Kenneth F. Bernstein: And that will play out again, the 40% I was mentioning was related to M Street although.

Kenneth F. Bernstein: Again, we don't get great sales data across the board.

Kenneth F. Bernstein: We're seeing that in many of our dynamic markets and it can take somewhere between two and five years for us to catch up.

Kenneth F. Bernstein: Even with aggressive probably lose.

Kenneth F. Bernstein: And fair market value resets.

Unknown Attendee: Okay, thank you.

Speaker Change #119: Okay. Thank you.

Unknown Attendee: Thank you.

Speaker Change: Sure.

Kenneth F. Bernstein: Okay.

Paulina Rojas: And our next question coming from the line-up, Paulina Rajasmit with Green Stradial on his open. Good morning, and I see Walgreens is an important tenon for you. I know they are evaluating potential store closures. Have you talked to them at all about how they are thinking about exposing your portfolio? What was the retail again for store closures? Got it. We have no indication at this point that Walgreens is closing any of their stores that are portfolio. Several of them, and we don't have a ton in terms of just total number of Walgreens, have recently extended leases.

Speaker Change: Thank you.

Ki Bin Kim: Okay, thank you. Thank you. And our next question comes from the line of Paulina Rojas-Schmidt with Green Street. Your line is open. Good morning.

Speaker Change: And our next question coming from the line of.

Paulina Alejandra Rojas: Paulina Rod Smith with Green Street Your line is open.

Paulina Alejandra Rojas: I see Walgreens is an important tenant for you. I know they are evaluating potential store closures. Have you talked to them at all about how they are thinking about the stores in your portfolio? Hey Pauly, what was the retail reason again for store closures? Was it one?

Speaker Change #113: Good morning, and Walgreens is an important channel for you I know we are evaluating potential for closures have you talked to them about how they are thinking about as far as in your portfolio.

Speaker Change #112: It probably what was the retail again for store closures.

Alexander J. Levine: Oh, got it. Got it. Yeah, we have, I mean, we have no indication at this point that Walgreens is closing any of their stores within our portfolio. Several of them, and we don't have a ton in terms of just the total number of stores, have reached out to us.

Paulina Alejandra Rojas: Okay.

Speaker Change: Got it sorry.

Alexander J. Levine: Yes.

Alexander J. Levine: We have no indication at this point that Walgreens is closing any of their stores within our portfolio.

Speaker Change #118: Several of them and we don't have a ton in terms of just total number of Walgreens.

Speaker Change: We have recently extended leases.

Alexander J. Levine: So, yeah, I mean, the simple answer to the question is, you know, they seem to be well-performing locations and there's no indication that the... Thank you. And then, if I remember correctly, you're mostly on variable cam, right?

Ken Bernstein: The simple answer to the question is they seem to be well-performing locations, and there is no indication that they will be closing any of them.

Speaker Change: So yes, I mean, so the simple answer the question is they seem to be well performing locations and theres no indication that they'll be closing any of them.

Ken Bernstein: Thank you. If I remember well, you are mostly on variable. I think that's the case, but correct me if I'm wrong. My question is, I have seen other reads benefit in this cycle from six come. So my question is, is that where the case, if you were mostly variable, is do you think differently about the NAICS because of your streak with their exposure perhaps? Yeah, so Paulian, I would say the vast majority of our leases are variable. We pass through the actual expenses to the tenon. I think there are pros and cons of each. I mean, operationally that certainly reduces disputes if it's a fixed cam.

Speaker Change: Thank you and then if I remember well you you're mostly on variable comp right.

Speaker Change: And.

John Gottfried: And, I think that's the case, but correct me if I'm wrong. And my question is, I have seen other articles, will benefit in this cycle from fixed income? And so my question is, is that where the case if you were mostly variable? Do you think differently about the mix because of your strict retail exposure, perhaps? Yeah, so Pauline, I would say the vast majority of our leases are there, but we pass through the actual expenses to the tenant. I think there's pros and cons of each. I mean, operationally, that certainly reduces disputes if it's a fixed can.

Speaker Change: I think thats the case, but correct me if im wrong and my question is I have seen other Reits.

Speaker Change: Yes.

Speaker Change: In this cycle from fixed come.

John Gottfried: And.

Speaker Change: So my question here.

Speaker Change #101: Is that where the cases you are mostly variable is.

Pauline: Do you think differently about the mix because of your street retail exposure perhaps.

John Gottfried: Yeah, So Paul and I would say the vast majority of our leases are variable when we pass through the actual expenses to that to the tenant.

Paul: I think theres pros and cons of each I mean operationally that certainly reduces disputes if if it's a fixed cam, but I think for just operationally and aligning interest I think our preference is to do on a is on variable but.

John Gottfried: But I think for just operationally and aligning interests, I think our preference is to do on a, is, is on a variable, but, you know, we evaluate that all the time. Tenants have different views of it, but at this point, our preference is to stay with a variable, and particularly at times of inflation, certainly is something we would, we would like to do. Okay, and the last one, can you remind me how frequent percentage rents are in your portfolio?

Ken Bernstein: But I think for just operationally and aligning interest, I think our preference is to do on a is on variable, but you know, we evaluate that all the time. Tenons have different views of it. But at this point, our preference is to stay with a variable, and particularly in times of inflation, certainly is something we would like to keep as variable. Okay, and the network, can you remind me how frequent our percentage and rents in your portfolio? It's a relatively small amount, so not a big piece of what we did. I think during COVID on a couple of leases that to get to get the basis activated.

John Gottfried: We evaluate that all the time tenants have have different views of it but at this point our preference is to stay with with a variable and particularly in times of inflation.

John Gottfried: Certainly is something we would we would like to keep as that's variable.

Paul: Okay and the last one.

Speaker Change: Can you remind me how frequent are percentage and rents in your portfolio.

John Gottfried: A relatively small amount. So, not a big piece of what we did. I think during COVID on a couple of leases that to get to get spaces activated, we saw a slight tick up in it, but not a big piece of what we do. It's well under and much more common, of course, in the street portfolio than in shopping centers.

Speaker Change: The relatively small amount so not a big piece of what we did I think during COVID-19 on it on a couple of leases that to get to get space is activated we saw a slight tick up in it but not a not a big piece of what we do it's well under 1%.

Ken Bernstein: We saw a slight tick up in it, but not a big piece of what we do that's well under one percent. I mean, much more common, of course, in the street portfolio than in shopping centers. And just to be clear, that's an addition to a market base rent. So it's upside. It's not, you know, sort of an exchange for a market rent.

John Gottfried: Much more common of course in the street portfolio than in shopping centers and just to be clear. That's in addition to a market base rent. So it's upside it's not.

John Gottfried: And just to be clear, that's in addition to a market. So it's the upside. It's not, is not, you know, sort of an exchange for a market.

Paul: It's not sort of in exchange for for a market rent.

Unknown Attendee: Thank you very much.

John Gottfried: Thank you very much. Thank you. And as a reminder, to ask a question, please press star 11. And I see we have no further questions in the queue at this time. I will now turn the call back over to Mr. Bernstein for any closing remarks. Okay. Thank you all for joining us. We look forward to speaking to you next quarter. Enjoy the rest of the summer. Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect. Thank you for watching!

Speaker Change: Thank you very much.

Unknown Attendee: Thank you. And, as reminded to ask a question, please press star 11.

John Gottfried: Yeah.

John Gottfried: Thank you and as a reminder to ask a question. Please press star one.

Unknown Attendee: And I see we have no further questions in the key at this time.

Paul: And I see we have no further questions in the queue. At this time I will now turn the call back over to Mr. Bernstein for any closing remarks.

Ken Bernstein: I will mount in the call back over to Mr. Bernstein for any closing remarks. Great. Thank you all for joining us.

Kenneth F. Bernstein: Thank you all for joining US we look forward to speaking to you next quarter enjoy the rest of the summer.

Ken Bernstein: We look forward to speaking to you next quarter and enjoy the rest of the summer.

John Gottfried: Ladies and gentlemen that does conclude our conference for today. Thank you for your participation you may now disconnect.

Unknown Attendee: Thank you for your participation. You may now disconnect.

Paul: Okay.

John Gottfried: Yeah.

John Gottfried: Okay.

John Gottfried: [music].

John Gottfried: Okay.

John Gottfried: [music].