Q3 2024 The Macerich Co Earnings Call
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Speaker Change: Ladies and gentlemen, thank you for standing by. Welcome to the third quarter 2020 4 Mays Rich earnings conference call. At this time, all participants are in a list and only mode.
Speaker Change: 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 automated message advising your hand is raised.
To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Samantha Greening, Director of Investor Relations. Please go ahead.
Samantha Greening: Thank you for joining us on our third quarter 2024 earnings call.
Samantha Greening: During the course of this call, we will be making certain statements that may be deemed forward-looking within the meaning of the safe harbor of the Private Security Litigation Reform Act of 1995, including statements regarding projections, plans, or future expectations.
Samantha Greening: Actual results may differ materially due to a variety of risks and uncertainties set forth in today's press release and our SEC filings.
Speaker Change: Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the earnings release and supplemental filed on Form 8K with SEC, which are posted on the investor section of the company's website at naserdge.com.
Speaker Change: Joining us today are Jack Hsieh, President and Chief Executive Officer, Scott Kingsmore, Senior Executive Vice President and Chief Financial Officer, and Doug Healey, Senior Executive Vice President of Leasing. With that, I'd like to turn the call over to Jack.
Jack Hsieh: Thanks, Samantha, and good day, everyone.
Before commenting on the third quarter, I would like to briefly discuss the change in Scott Kingsmore's role at Mace Ridge.
Jack Hsieh: Scott has been with Mace Rich for 29 years and has provided valued service across a variety of roles within the company.
I'd like to thank Scott for those many contributions to Mace Rich over the years and for helping in my transition.
Scott was invaluable to me in designing our path forward plan. He will be missed by all of us.
Speaker Change: Thank you for watching. Please like, comment, and subscribe. See you next time.
Speaker Change: Dan Swanstrom, who I have worked with for many years when we were both former investment bankers in Morgan Stanley's real estate group, will be joining Mace Rich as our new EVP and CFO.
Dan's banking experience and two CFO roles will bring valued perspective to Mace Rich as we continue to execute on our path forward strategy.
Speaker Change: Thank you for watching. Please subscribe to our channel. See you next time.
Speaker Change: We will be incurring severance charges in the fourth quarter related to Scott and two other senior executives that will result in a two-cent reduction to our fourth quarter earnings.
Speaker Change: Our third quarter saw continued improvement in operational results, a testament to our outstanding team and quality shopping centers.
Speaker Change: are occupancy, leasing activity.
and Fame Store NOI improved over the previous quarter.
excluding the Eddy assets, our sales per square foot was $910.
Speaker Change: Our occupancy rate was 95.4%.
Speaker Change: Same store NOI was 2.8%.
and traffic was up 1.6 percent.
Speaker Change: Thanks for watching. Bye.
Speaker Change: I'm excited about the progress we are making on our Path Forward initiative.
Speaker Change: On the debt initiative, we are targeting a $2 billion reduction in long-term debt
Speaker Change: as part of that aspect of our plan.
Speaker Change: Based on closed dispositions, progress with the lenders on potential loan givebacks
Samantha Greening: a binding $157 million purchase and sale agreement for the Oaks.
Samantha Greening: and other signed asset agreements.
Speaker Change: We have approximately 60% of the $2 billion target, or $1.17 billion, either completed and currently in play.
Speaker Change: The balance of effort to reduce the remaining debt will be sales or givebacks on a few remaining Eddie properties.
Speaker Change: and a focused disposition effort on freestanding retail assets.
Speaker Change: vacant land sales, and smaller open-air centers around our regional shopping centers.
Speaker Change: Thank you.
Speaker Change: We will be embarking on that sales process in early 2025.
Speaker Change: All of us. Thank you. Thank you.
Speaker Change: We're making solid progress on achieving the NOI gap that we are solving for in our Path Forward Plan.
Speaker Change: Based upon expected lease renewals,
Samantha Greening: signed but not open leases.
Samantha Greening: and releasing opportunities, we are very encouraged with the ability to meet our internal target of incremental NOI that is necessary for our plan.
Speaker Change: Thanks for tuning in.
Speaker Change: The next 24 months will be critical for us as we target leasing of select current vacant temporary lease spaces.
Speaker Change: and our Fortress and Steady Eddie portfolio.
Speaker Change: We will share more information on an NOI bridge early next year.
Speaker Change: Thank you.
Speaker Change: A core aspect of our path forward is simplifying the business.
Speaker Change: The announced acquisition of our partner's interest in Pacific Premier Retail Trust.
Speaker Change: goes a long way towards helping us meet that objective.
Speaker Change: The overall deal is long-term accretive to FFO per share.
Speaker Change: We will be able to refinance high-cost debt at Washington Square.
Speaker Change: and aggressively pursue redevelopment plans for Los Ritos.
Speaker Change: Both of these centers are outstanding properties and fit in our fortress and fortress potential categories.
Speaker Change: We will immediately begin exploring sale options for Lakewood Center and Eddy Property.
Speaker Change: With that, I'll turn the call over to Doug for more Leasing Color. Thanks, Jack. We had another solid quarter, both in terms of leasing volumes and metrics.
Speaker Change: Sales per square foot at the end of the third quarter were $834. This is down a dollar compared to last quarter. Sales per square foot, excluding our Eddie properties, were $910.
Speaker Change: Comparative sales in the third quarter were down about 1% from the third quarter 2023.
Speaker Change: Year-to-date sales are also down about a percent when compared to the same period last year.
Speaker Change: The macroeconomic environment is still in play.
Speaker Change: And except for the super-rich, consumers remain cautious.
Speaker Change: Essentials are the primary focus.
Speaker Change: However, there's been a pickup in discretionary sales of innovative and differentiated products. Retailers that can provide newness are being rewarded.
Speaker Change: As I stated in the past, we have yet to see a correlation between sales and retail or demand as evidenced by our deal flow, which in terms of square footage is 40% greater when compared to the same period last year.
Speaker Change: Regarding holiday, all indications are increases will be in the three to three-and-a-half percent range versus last year.
Speaker Change: given the shortened season between Thanksgiving and Christmas.
Speaker Change: We expect holiday shopping to begin early and retailers to be more promotional than they were in the last couple of years, which is more in line with pre-COVID behavior.
Speaker Change: Traffic in the third quarter was up 2.4% versus the third quarter last year. Year-to-date traffic is up 1.6% from the same period in 2023, with 70% of our centers experiencing positive trends.
Speaker Change: Most importantly, throughout the portfolio, traffic is back to our 2019 pre-COVID levels.
Speaker Change: Thank you. Bye.
Speaker Change: Portfolio occupancy excluding our Eddie properties was 95.4 percent.
Speaker Change: Trailing 12-month base leasing spreads remain positive at 11.9% as of June 30, 2023, and this now represents three years of positive leasing spreads.
Speaker Change: In the second quarter we opened 225,000 square feet of new stores. This brings our year-to-date total to 1 million square feet of new store openings.
Speaker Change: The most notable opening in the third quarter was Primark at Tyson's Corner Center.
Speaker Change: This finalizes the remix of the 70,000 square foot L.L. Bean box.
Speaker Change: Specifically, we replaced L.L. Bean with Primark, Lululemon, Old Navy, and Kendra Scott. And not only is traffic in the wing increased by 40 percent, but we expect combined sales of these four replacement tenants to be at least five times what L.L. Bean's sales were.
Speaker Change: Thank you.
Speaker Change: Now let's take a look at the new and renewal leases we signed in the third quarter. In the third quarter, we signed 220 leases for 830,000 square feet. Year-to-date, we've signed leases for 2.6 million square feet.
Speaker Change: We're thrilled to announce the signing of a 50,000 square foot restoration hardware design gallery in the former Neiman Marcus box at Broadway Plaza in Walnut Creek.
Speaker Change: This is just another great example of transformational leasing and the repurposing of a vacant anchor store within our portfolio.
Speaker Change: RH Gallery will be an inspiring integration of food, wine, art, and design with an immersive retail experience.
Speaker Change: The deal is being finalized, the design is being finalized, but will include six contemporary Venetian plastered Mediterranean buildings.
Speaker Change: These buildings will be connected by four gated courtyards leading to a 30-foot high glass trinium garden restaurant surrounded by fireplaces, fountains, and an outdoor wine experience.
Speaker Change: RH Gallery at Broadway Plaza is expected to open in 2026.
Speaker Change: Another key signing was Chanel at Scottsdale Fashion Square. Chanel will be opening an 11,000 square foot
Speaker Change: flagship retail boutique in phase two of our luxury development which is currently underway in the Nordstrom Wing.
Speaker Change: The store will be the first to market in Arizona, and will offer a full range of Chanel's collections, including ready-to-wear, handbags, shoes, accessories, jewelry, watches, fragrance, and beauty.
Speaker Change: Chanel joins the likes of Hermes, Celine, Tiffany, Van Cleef, Burberry, and several other global luxury brands.
Speaker Change: Opening is scheduled for 2027.
Speaker Change: Looking at our 2024 lease expirations, we now have commitments on 84% of our 2023 expiring square footage of space that is expected to renew and not close, with another 13% in the letter of intent stage.
Speaker Change: So between commitments and LOIs, we're basically done with our 2024 expiring square footage and now well into 2025.
Speaker Change: In fact, regarding our 2025 expiring square footage, we're about 25% committed with another 35% in the letter of intent stage.
Speaker Change: In the third quarter, only one tenant in our portfolio filed bankruptcy.
Speaker Change: This tenant had only two locations for a total of just 6,000 square feet. And as I mentioned last quarter, except for Express in our portfolio, there's only been approximately 100,000 square feet of space subject to bankruptcy filing this year.
Speaker Change: Journey to our Signed, Not Open Pipeline.
Speaker Change: At the end of the third quarter, we had 133 leases signed for 1.7 million square feet of new stores, which we expect to open between now and into early 2027.
Speaker Change: In addition to these signed leases, we're currently negotiating leases for new stores totaling just under 750,000 square feet, which will open during the remainder of 2024 and into 2025, 2026.
Speaker Change: and Early 2027. So in total, that's almost 2.5 million square feet of new store openings throughout the remainder of this year and beyond.
Speaker Change: And this leasing pipeline of new stores now accounts for $80 million of incremental rent in aggregate, which will be realized during the remainder of this year and into early 2027.
Speaker Change: And with that, I'll turn the call over to Scott to go through our third quarter results and recent transactional activity. Well, thank you, Doug. FFO per share for the third quarter was $86 million, or 38 cents per share.
Speaker Change: which was consistent with our expectations. This was $14 million less than the third quarter of 2023, which is $100 million or 45 cents per share.
Speaker Change: The primary factors contributing to the quarterly FFO trends are as follows. One, a 7 million dollar unfavorable trend in land sale gains, which are primarily driven by a large single sale of land in Scottsdale during the third quarter of 2023.
Speaker Change: 2. A $5 million increase in interest expense due to rising rates.
Speaker Change: Three
Speaker Change: The $4 million increase in net corporate overhead due mainly to a relative quarterly change due to a decrease in incentive-based compensation last year in the third quarter of 2023.
Speaker Change: and then also due to increased leasing expenses and reduced fee income from the acquisition of joint venture interest during the past few quarters.
Speaker Change: And four, a $2 million net decrease in other income, mainly from a large non-recurring adjustment last year in the third quarter of 2023. Offsetting these negative factors were a $3 million increase in rental revenue per share.
Speaker Change: Since the end of the second quarter, from an acquisition and disposition standpoint, as we reported on our last earnings call on July 31, we sold our 50% interest in Biltmore Fashion Park in Phoenix for $110 million at an implied 6.5% cap rate.
Speaker Change: On October 24th, we closed on the acquisition of our partner's 40% interest in the Pacific Premier Retail Trust portfolio, also known as PPRT.
Speaker Change: PPRT owns Fortress Asset Los Cerritos, Fortress Potential Asset Washington Square, and Eddy Asset Lakewood Center. The acquisition price was $122 million and the implied weighted average cap rate was 7.4%. This transaction was funded by proceeds raised from our ATM facility.
Speaker Change: As you will recall, this PPRT acquisition follows the acquisition in May of our partner's 40% interest in both Arrowhead Town Center and South Plains Mall.
Speaker Change: We paid $37 million for Arrowhead Town Center in May at a 7.2% cap rate.
Speaker Change: We are under contract now to sell the oaks for $157 million and expect to close during the fourth quarter subject to customary closing conditions.
Speaker Change: During the third quarter, we sold $9.4 million of common equity shares for $152 million through our ATM facility at an average share price of $16.14.
Speaker Change: These proceeds were used to fund the PPRT acquisition and to reduce leverage on Queen's Center.
Speaker Change: Now I'd like to dive into the financial impacts of the PPRT acquisition to assist in modeling this deal. Bear with me, there's a few steps here to go through. On day one, this transaction is accretive to FFO by one cent per share on an annualized basis.
Speaker Change: Note that the secretive impact does not include the temporary dilutive impact of marking the PPRT debt to market.
Speaker Change: This FFO impact is then adjusted for the following items. Again, we start with one set.
Speaker Change: We do expect soon to refinance Washington Square early next year at an estimated approximate 6% interest rate. We expect that refinance transaction to be FFO accretive by approximately 6 cents per share.
Speaker Change: Thanks for joining us. I'm Douglas Healey. Be safe out there. Thanks for being a part of the conversation. Be well. Be well. Be well.
Speaker Change: if that recap is done with all cash. And as a result, the PPRT transaction is then seven cents accretive as a baseline FFO measure after considering the Washington Square refinancing.
Speaker Change: Then, as I mentioned, marking the debt to market, the incremental non-cash interest expense that we expect to incur from marking the PPRT debt to market will vary by year since the three underlying loans mature in the near term over the next few years.
Speaker Change: I'll kind of call out the impacts here year by year. In 2024.
Speaker Change: for the STEB period this year, the estimated incremental impact of marking debt-to-market is roughly 1 cent FFO dilutive. In 2025, the estimated incremental impact of marking the debt-to-market is roughly 9 cents dilutive. Reminder, in 2025, Washington Square's debt will be refinanced.
Speaker Change: In 2026, the estimated incremental impact is reduced to 6 cents of dilution. Reminder that in 2026, Lakewood's debt matures.
Speaker Change: in 2027.
Speaker Change: The estimated incremental impact is further reduced to only two cents dilutive.
Speaker Change: and a reminder that in 2027, Los Cerritos' debt matures.
Speaker Change: Then, finally, in 2028, since all three loans will have then matured, there is no further impact
Speaker Change: from Marking the Debt to Market, and again, referring back to my prior comment, taking into account the Washington Square refinance, the transaction is otherwise 7 cents accretive to FFO.
Speaker Change: On the refinancing front, oh, and then, I'm sorry, lastly, we, as Jack noted, we do consider Lakewood Center to be an eddy asset, and this property will likely be disposed of in the near term as part of our path forward plan and strategy.
Speaker Change: on the refinancing front.
Speaker Change: On August 22nd, we closed an $85 million 10-year refinance to the loan on the mall at Victor Valley.
Speaker Change: The loan bears interest at a fixed rate of 6.72% and is interest only during the entire loan term.
Speaker Change: On October 28th, we closed a $525 million five-year refinance of the loan on Queen's Center.
Speaker Change: The new loan, which replaced the existing $600 million loan, bears interest at a very attractive fixed rate of 5.37% and is interest only during the entire loan term.
Speaker Change: The debt capital markets remain very strong and welcoming for Class A mall retail and are frankly the most accommodative we've seen in the past five years. We're extremely pleased with the execution and the interest rate achieved on the Queen's Center refinance.
Speaker Change: Keeping track of our year-to-date loan activity in 2024, we have closed 1.3 billion dollars of loan refinancings or extensions or roughly 1.15 billion at Maysearch's share.
Speaker Change: This year we have closed or actively engaged in 10 dispositions totaling approximately 1.17 billion dollars. These transactions include asset sales, lender givebacks, or potentially loan modifications.
Speaker Change: These dispositions include Country Club Plaza and Biltmore Fashion Park, both of which have closed.
Speaker Change: four in-process transactions including Santa Monica Place, the Oaks, shops at Atlas Park and South Ridge Mall, as well as four other assets for which we're either in discussions with the lender or negotiating a potential sale transaction.
Speaker Change: https://www.kensington.edu.au
Speaker Change: We currently have approximately $667 million of available liquidity, which takes into account both the recent PPRT acquisition closing and the Queen's Center refinance.
Speaker Change: As reflected on page 27 of our AK SEP, we have reduced our leverage to 8.22 times at the end of the quarter, which is an over 50 basis point reduction compared to 8.76 times at year-end 2023.
Speaker Change: Lastly, it is with tremendous pride that I leave Mace Rich after nearly 29 years of service with the company. I enjoyed working with so many of you on this call today and as I look back on the last nearly three decades it is the relationships that I will cherish the most.
Speaker Change: The relationships with our investors, our analysts, our bankers, our lenders, our partners, attorneys, and various service providers.
Speaker Change: Trust me, the list is long and I will soon be reaching out to many of you. But most of all, it is the relationships with my current and former colleagues at Mace Rich that I will miss the most.
Speaker Change: My teammates and my friends, I wish you all the best as we forge on through the path forward.
Speaker Change: Thank you for your friendship
Speaker Change: Thank you for your loyalty and support. Thank you for your professionalism. Thank you for your tenacity and your competitiveness. And thank you for the vast and many great memories over the years. I will truly, truly treasure these as I move on to my next chapter.
Speaker Change: But in the meantime, I do look forward to handing the reins over to Dan and a very orderly and smooth transition
Speaker Change: So now let's get back to the business at hand. I'll turn it over to the operator to open up the call for Q&A.
Speaker Change: Thank you. As a reminder to ask a question please press star 1 1 on your telephone and wait for your name to be announced.
Speaker Change: To withdraw your question, please press star 11 again, and we also ask that you please limit to one question and to one follow-up.
Speaker Change: And our first question will come from Jeffrey Spector with Bank of America Securities. Your line is open.
Jeffrey Spector: Great, thank you and first Scott
Jeffrey Spector: feel the same way. Thanks for all your help over the years and best of luck.
Jeffrey Spector: on your next steps, and Dan, we look forward to working with you.
Speaker Change: My first question for Jack is just with the market today, you know, pricing in higher rates, I guess assume a slower Fed cut cutting cycle, do you think that impacts any of the plans, the disposition plans or any of the other plans over the coming months?
Jack Hsieh: Thanks, Jeff. Look.
Jack Hsieh: rates going up or I'd rather have them going down. So we'll have to see, you know, as the new transition occurs, you know, in our government, kind of what the long-term direction of rates will be. But, you know, we're still actually ahead of plan in terms of positive plan at the current rate level.
Jack Hsieh: If you think about the deals that we just talked about, that $1.17 billion,
Jack Hsieh: Those are well in progress, feel very confident about those, and really the remainder of what we have left is obviously the Lakewood Center, which has $325 million in debt on it.
Jack Hsieh: And we've got a portfolio.
Jack Hsieh: of really, in my opinion, pretty compelling net lease properties.
Jack Hsieh: that we believe can execute well in the mid-sevenths.
Jack Hsieh: It's not better. And we're just in the process of kind of getting those assets organized, ready to go to market. You know, some are being blended and extended, you know, some require, you know, discussion with lenders.
Jack Hsieh: But the team is, you know, the team that I brought up from Spirit are kind of really ready and poised.
Jack Hsieh: to move forward for that. So I feel really good about just dealing with the $2 billion. And really, to me, all eyes are focused on that incremental leasing objective that's really, I've challenged the team and
Jack Hsieh: and Brian, we're getting after it right now. So to answer your question, yeah, the current rates are not a concern to me right now. And we've got Washington Square that'll go into the market and the rate on that debt is 9%. So I know we'll do better than that, so.
Brian: Thank you, that's helpful. And then my second question, a follow-up, I think Doug talked about the consumer a bit, that, you know, strength at the high end, but alluding to maybe some weakness at the low end. I guess
Speaker Change: Can you elaborate on what you're seeing from the consumer? Is it certain markets? Is it certain types of assets according to your various buckets? Is it certain categories? Thank you.
Speaker Change: Hey Jeff, it's Doug. Now we're seeing it across the board. I think our sales have been flat for
Jack Hsieh: the last two or three quarters. But again, we're up against some extremely high comps in the past couple of years. And as I mentioned in my remarks,
Jack Hsieh: Essentials are the key right now, but we are seeing discretionary start to move.
Jack Hsieh: to those retailers that are providing newness and innovation. So that's a challenge for all of them out there.
Speaker Change: I think that a holiday, hopefully, between three and three, three and a half percent will be solid. We expect the retailers to be a little bit more promotional. As I said, that's consistent with pre COVID behavior.
Speaker Change: So that's where we are right now, John.
Speaker Change: Great. Thank you.
John: Thanks, Jeff.
Speaker Change: And our next question comes from Flores Van Ditchcombe with Compass Point. Your line is open.
Speaker Change: Thanks for taking my question. Scott, you know, wish you best of luck in your new ventures.
Speaker Change: Thanks for your help so far. Jack, or Scott, for that matter, as we look at, you know, the equity that was raised, again, you know, low price, but, you know, our calculation is around a 7.2% implied cap rate. You put that to work at a 7.4% cap rate.
Speaker Change: comments so far, just, you know, on a simple basis.
Jack Hsieh: Maybe could you talk about what this does to your growth rate because two of these assets in particular Washington Square and Los Cerritos are two of your top, you know top assets in our view How does how should we think about this for your growth? What kind of impact does this have on your growth going forward?
Speaker Change: Maybe I'll try to.
Speaker Change: take that on for us. I mean we and I don't want to get too much into growth rates because obviously we're working through that right now on our five-year models that I'll talk about that later in the call but
Speaker Change: To me, the biggest opportunity for us, for Mace Rich,
Speaker Change: The way our partnership agreement was set up with our partner on PPRT, I mean, it had equal kind of control rights on refinancing. It had equal control rights on CapEx, leasing commitments.
Speaker Change: and, you know, in the case of Washington Square and Los Cerritos, you know, we own the Sears anchor location, you know, 100% versus the JV.
Speaker Change: So, when I looked at that situation, I knew we had great assets, I knew this was going to be really positive once we can kind of get our partner to move with us.
Speaker Change: And to be honest with you, now that we were able to, you know, buy them out, we're just going to be able to accelerate our business plans, which we have on those two properties. And we're going to get after it very quickly with the leasing and development teams. Those are fantastic properties.
Speaker Change: We've got some great
Speaker Change: Anchor
Speaker Change: Solutions up at Washington Square, which we think is going to help unlock that property. We're evaluating
Speaker Change: the possibility of attracting more luxury into that center, given just what's going on in that Portland market.
Speaker Change: And, you know, Los Doritos, as you know, we've talked about, that's a gem. And we're excited about...
Speaker Change: the entitlements that we have on the multifamily and we're just trying to lock in you know the final retail solution that's going to anchor that Sears location.
Speaker Change: and we're going to continue to upgrade that tenancy. It's a fantastic...
Speaker Change: And so I would just say, like, it's going to help our growth rate just because we have the ability to execute, to refinance 9% debt on Washington Square, move forward on some of these development initiatives and just lease, lease, lease.
Speaker Change: without having to be constrained with, you know, maybe partners don't have the same ideas, you know, given a long-term interest in those properties.
Speaker Change: Thanks, Jack. That's helpful. So, in other words, it's going to help our growth rate. Yeah. It's going to help our growth rate. Yeah. Yeah. Yeah.
Speaker Change: My follow-up question is...
Speaker Change: Again, that your ethanol pipeline
Speaker Change: has increased. I mean, is it around 300 basis points? And can you maybe talk about the timing of how much of that
Speaker Change: is going to hit in
Speaker Change: You talked a little bit about the $24 million potentially hitting before year ends, but how much of that is going to impact $25 earnings and how much is beyond $25 and $26?
Speaker Change: Thank you for watching. Please subscribe to my channel. I hope to see you again soon.
Speaker Change: Yeah, Flores, again, the incremental pipeline is $80 million. You know, we're now looking out into 2027 that we're
Speaker Change: We're doing, you know, 2026 door openings. In fact, we just announced a
Speaker Change: Chanel deal a few minutes ago, which will open up next year. So, in terms of the cadence, we expect some of that $80 million is hitting this year, currently, as stores open and as stores' anniversary that have been recently opened.
Speaker Change: about $25 million impact in 2024.
Speaker Change: about a $34 million impact in 2025 and the balance into 2026 and 2027.
Speaker Change: You know, the good news is we've found that that pipeline has only continued to increase, which means...
Speaker Change: You know, the pace of new signings is outpacing the store openings.
Speaker Change: You know, we do have a pretty robust pipeline. So, you know, I would think the fourth quarter, you know, may tick down a little bit because we do have a fair amount of openings, exciting openings coming in the fourth quarter. But the environment is great, so the bucket keeps refilling.
Speaker Change: Lastly, one comment, you asked about the spread. Yeah, it's roughly a little over 3% between fiscal and lease occupancy.
Speaker Change: Thank you.
Speaker Change: Thanks, Scott.
Speaker Change: Sure. Thank you, Plarce.
Speaker Change: and the next question comes from Craig Mailman with City, Your Line is Open
Craig Mailman: Hey, good afternoon. Just want to follow up on the leasing side. Demand continues to be good, spreads continue to head in the right way. How is CapEx trending relative to the expectations in the strategic plan?
Speaker Change: I would say there's really no substantive differences, Craig. We do disclose.
Craig Mailman: I don't have the page number handy, but we do disclose period over period.
Speaker Change: CapEx, both from an operating CapEx and of course from a leasing standpoint, and I think you'll find that there's really no substantive differences across periods. In fact, look at
Speaker Change: Look at page 17 in the SUP and you'll see that. I don't think there's really anything atypical about the environment. I'd say one thing to note is, as we made a lot of progress this year and last year and prior years,
Speaker Change: As we look at our GoForward portfolio, excluding our Eddie assets, we have leased the lion's share of any available anchor stores. In fact, I think we only have six that are uncommitted today.
Speaker Change: So, a lot of those uses are sitting in our pipeline. We can't wait to get them open and see the traffic and sales energy and energy boost to the properties. But, you know, from a CapEx standpoint, the amount of that large space is certainly narrowing and we've got a good handle on it.
Speaker Change: Yeah, I'll just say one more thing about on leasing. On the last call, we talked about some of the lease improvement processes that we put in place.
Speaker Change: you know, aka like a CRM system that enables the leasing team to put in active comments on what's happening with different space within the portfolio. We've now
Speaker Change: begun the process of actually ranking space A through F throughout the entire portfolio.
Speaker Change: Across that A-F are square footage prices based on where we believe current COO, you know, current lease rate should be able to be achieved.
Speaker Change: and that's been a project between asset management and leasing.
Speaker Change: We're taking that information, the A through F, with very specific targets I referenced out of my comments, either vacant space opportunities or temporary lease opportunities. And we've kind of overlaid that with our five-year operating plans.
Speaker Change: So, you know, basically, you know, to cut through it, you get your most value on signing new leases. That's where the highest pickup.
Speaker Change: in cost of occupancy contribution comes from ACE Rich. So it's just going to be ABC, always be closing. We know what has to close. It has to happen in the next 24 months. And there's very specific space and strategies and accountability on the teams.
Speaker Change: leasing teams specifically to get after that. And, you know, our asset management team now has the tools in place to actually monitor, evaluate how we're benchmarking, you know, across these five-year plans. And we've kind of done full asset reviews and
Speaker Change: I would just tell you it's a much more targeted and really focused approach in order for us to hit that NOI bridge, which is so critical.
Speaker Change: Thank you for watching. Please subscribe to my channel. I hope to see you again soon.
Speaker Change: Thank you for watching. I'm Douglas Kingsmore. Have a great day.
Speaker Change: That's helpful. Then just on the follow-up, equity has always been part of the strategic plan, you guys.
Speaker Change: pulled the trigger on a bit this quarter to fund some near-term uses. Can you just talk a little bit about, I know you went through the PPRT and the 7 cents of FFO, but could you help us kind of think through
Speaker Change: the time it takes to...
Speaker Change: maybe recoup the dilution on the NAV side of issuing, well at least our NAV, I don't know what you guys are internally, but between that and the uses in PPRT and then just more broadly as you think about equity as a source and part of the
Speaker Change: The funding in the strategic plan, kind of how you're thinking about that going forward, kind of matching it up and minimizing dilution.
Speaker Change: I mean, I'll take a start and then you guys follow up, but first of all, you know, when you look at PPRT, if you, if you look at the allocation of cap rates,
Speaker Change: Washington Square and Los Cerritos were acquired at a 6.8% cap rate.
Speaker Change: And Lakewood, in our view, has implied 9.6% cap rate for the blended 7.4%.
Speaker Change: So that's one aspect of how you might think about NAV dilution.
Speaker Change: The other aspect I would say is.
Speaker Change: I actually believe that if you did an NAB analysis of our entire portfolio, including JV interests and assets like Fashion Square and Tysons, you know, by consolidating
Speaker Change: NAV and those two centers, which we believe have a lot of growth embedded, not only in NOI, but in cap rate compression, you know, as this asset sector continues to stabilize, we think we'll be able to exceed
Speaker Change: You know what any kind of initial NAV dilution that that might be a play
Speaker Change: and then plus the other piece is, you know, the 9% interest rate on Washington Square. I mean, you've got an over levered asset with a high coupon, kind of everyone, you know, us and our former partner are kind of looking at each other, trying to figure out what to do and can't move forward. So, I would say that.
Speaker Change: Just by virtue of getting off the clock, it's going to enable us to actually drive more growth and sort of be able to capture that NAV accretion, you know, by virtue of being able to
Speaker Change: put the investment in the assets so we can actually take market share.
Speaker Change: I'm
Speaker Change: I don't know, it's got a peep-peep.
Speaker Change: Jack, great commentary. I have nothing to add. And in terms of like other equity, we were very specific about use of proceeds. So, look, we're going to reload our ATM because it's it's all finished. So don't be surprised about that later next week or something. And, you know, I think.
Speaker Change: Look, we're always open to continue to consolidate. That's a long-term strategy of simplifying the business.
Speaker Change: I don't have anything really to report on active discussions with our partners at the moment. And of course, we'll always kind of evaluate the equity market. It's part of the plan. There's no gun to our head on when we have to do it. But.
Speaker Change: The various aspects of our plan, you know, the sales, the givebacks, the NOI pieces, so everything's just kind of going well.
Speaker Change: in that regard.
Speaker Change: Thank you for watching. Please subscribe to my channel. I'm your host, Samantha Greening. We'll see you next time.
Speaker Change: And our next question comes from Samir Kunal with Evercore. Your line is open.
Samir Kunal: Good morning, everybody. I guess, Jack, I mean, I know you talked about focusing on incremental leasing here.
Speaker Change: Just looking at sales, and I know you guys talked about it being flat, but give us an idea of your ability to continue to push rents here. I know leasing spreads have been pretty good, but it's sort of backward-looking.
Speaker Change: you know, what you're seeing under the negotiations that you're having with tenants. I mean, kind of what are they saying as you kind of, you know, negotiate these leases. Thanks.
Speaker Change: Hey, Samir, it's Doug. I can take that one, and I think I alluded to it in my commentary.
Speaker Change: You know, there really hasn't been correlation between flat sales and retailer demand. And as I mentioned, you know, compared to last year, again, we've had three quarters of flat sales, but compared to last year,
Speaker Change: In our executive leasing committee, we've reviewed more than 40 percent.
Speaker Change: more square footage than we did at this time last year.
Speaker Change: And keep in mind, last year was a record leasing year for us.
Speaker Change: You know I think it's a couple of things. I think it's a testament to our portfolio.
Speaker Change: And I think that the retailers have become very sophisticated. You know, a quarter, two, three quarters really don't affect...
Speaker Change: their long-term vision. Again, they're signing new leases for 10 years, so they're able to see they're able to see past that. With regard to your other part of your question about
Speaker Change: And I think I've talked about this before.
Speaker Change: You know, as we continue to take, as occupancy continues to go up, we take supply off the table.
Speaker Change: We have this unprecedented retailer demand.
Speaker Change: almost by definition, we're going to have a better, we're going to have a better opportunity.
Speaker Change: to press rate. But we need to balance that with merchandising, the shopping centers. And, you know, the rate is the science and the merchandising is the art. And you need to have both of them. So as we continue to drive rate,
Speaker Change: as Jack alluded to earlier, all eyes are going to be on merchandising as well. If we create a center or centers that are merchandised well, that our shoppers want to come to, the rent's going to take care of itself over time.
Speaker Change: Thank you very much.
Speaker Change: And I guess as a follow-up, when you're talking about flat sales, I mean, what's sort of driving that? Is it, you know, is it luxury that's kind of slowing a little bit, maybe just provide a bit of color on categories? Thanks.
Speaker Change: Thanks for watching!
Speaker Change: Yeah, all categories basically are flat. We don't have a lot of luxury, Samir, with the exception of Scottsdale, so that's not really a factor for us. Again, we've had some huge comps in 2022 and 2023.
Speaker Change: So, you know, it's tough to comp against them, but there's been, you know, a change in spending as I, as I said, really, you know, essentials are in play. I think I talked about this on the last call discretionary spending really.
Speaker Change: for example, or services or entertainment.
Speaker Change: You know, we're starting to see people spend more money on vacations, on entertainment, on leisure activities, et cetera, et cetera, because they haven't been able to do that for a very long time. And I think that's just a temporary play, and everything will come back full circle. We expect that to happen the beginning of 2025.
Speaker Change: Thank you.
Speaker Change: Thank you. Yes, I think if you're looking at Q3-24 versus Q3-23.
Speaker Change: You know, the home furnishings were kind of the worst performer, you know, of our categories, major categories. Fast food was actually slightly positive.
Speaker Change: And if you look at the broader other categories like jewelry, general shoes, restaurants.
Speaker Change: They were all just slightly, you know, 1% or so negative. And within those, if you went into the detail of those, you'd see some up 3%, some down. So all sort of within that kind of plus-minus band.
Speaker Change: with the exception of like home furnishings which had a larger. Yeah and that's that's no surprise. I mean if you think about coming out of COVID, what did people do? They renovated their homes, they spent money in their homes, that's all they could do and for two solid years
Speaker Change: Home furnishings led all categories in terms of sales comps, so it's not really a surprise to see that flatten out a little bit.
Speaker Change: Got it. And did you guys provide any cap rate? Also, I was going to say too, as you look at this, I know you're struggling, how does releasing go up if you're doing 900 a square foot, but if you kind of listen to what I said about A, B, C, you've got
Speaker Change: really 50-yard line space where we know that that current tenant is kind of under what that space should generate. So it's kind of on the leasing team, hey, how do we emerge that opportunity to put in a tenant that can perform, you know, from a cost of occupancy standpoint? And that's
Speaker Change: That kind of nuanced difference of what we're talking about here. It's not just like, hey, sales are flat. We're just going to ask everybody for more rent. It's very specifically going into what I call premium zone space in our best centers and figuring out, hey, that person needs to go somewhere else.
Speaker Change: Now, the negative to that is there's downtime. And so that is part of why we put together this plan that sort of does not rely on quarterly
Speaker Change: pressure because we're trying to.
Speaker Change: We've got a target NOI that we know we need to achieve, and we believe we've got the roadmap to do that. The other piece that's happening here is
Speaker Change: We don't have any subsidization.
Speaker Change: of Leasing for Occupancy at Eddie Properties for National Portfolio Deals. And that's something that day one when I got here, we started that. So we're going to get the best.
Speaker Change: possible outcome, you know, for our non-ETI properties and for the ETI properties, you know, just maintain occupancy as best we can without capital. And the team's doing that.
Speaker Change: Thanks Jack. Did you, one last thing, did you provide a cap rate on the oaks? Sorry if I missed that.
Speaker Change: No, we didn't, but I'll just say it's a 13 gap.
Speaker Change: Okay, great. Okay, thank you. Yeah, it's like, you know, it's 150 of debt on it, and it's a 157 purchase price.
Speaker Change: Thank you. Thank you.
Speaker Change: And our next question comes from Alexander Goldfarb with Viper Sandler. Your line is open.
Alexander Goldfarb: Oh hey, thank you and good morning out there. Scott, I wish you the best. It's been great working with you and certainly appreciate, you know, the interactions over the years.
Speaker Change: and welcome Dan aboard.
Speaker Change: I guess the first question, Scott, maybe just going back to the Pacific JV buyout. Just on the numbers, you mentioned 7 cents accretive, but you also mentioned some dilutive marks.
Speaker Change: over the next few years due to the debt mark to market. So holistically, is it $0.07 total accretive inclusive of those dilution marks or it's $0.07 initially and then it's going to have dilution against that over the next few years?
Scott Kingsmore: Yeah, it's seven cents excluding the impact of the debt mark-to-market, and then I provided the incremental impact of that debt mark-to-market year by year, just so you could see the burn-off of that as we move forward. So it's seven cents after the Washington taking into account.
Speaker Change: The accretive impact of the Washington Square refinance is the baseline measure. You'll just then tack on the incremental mark-to-market each year as I outline.
Speaker Change: Okay, and then Jackson, you know, you've been in there a while, you've announced some new malls that are for sale like the Oaks.
Speaker Change: As you look at the portfolio now, are you finding more malls that are, I guess, more Eddies, if you will, or how are you shaking out as far as the portfolio that you ultimately want versus...
Speaker Change: the eddies that you plan to sell. I'm just trying to understand if there are more eddies that you're finding or the other way around.
Speaker Change: I'd say it's sort of like there might be one or two more kind of on the cusp that are kind of in between that bottom steady Eddie and Eddie and kind of a lot of it is going to determine.
Speaker Change: Do we have a plan to get that asset to be more thriving?
Speaker Change: kind of make economic sense, you know, in terms of investment and things like that. So I would say like, you know, there's two on the cusp that sort of hold or kind of drop down. We'll continue to evaluate it. But, you know, look, we're trying to
Speaker Change: tighten up this company where we have effectively really powerful centers that can kind of drive demand and
Speaker Change: and NOI growth like we're seeing at you know Tyson's and fashion school you keep reinventing those properties and they just keep doing more and and those are just great examples of
Speaker Change: properties and we have other properties like that where as we're going through these redevelopment plans and releasing plans and putting capital in where we think we can really drive share because the traders are there and sort of the competition around some of them are sort of fading.
Speaker Change: I'd say like Washington Square is a great example. We're really excited about that opportunity to take that asset up another level in terms of NOI contribution and just overall productivity.
Speaker Change: So the $2 billion that you referenced as the target, you could exceed that if you find these two assets and maybe others, or that $2 billion is inclusive of what you're contemplating?
Speaker Change: The $2 billion is inclusive of the remaining Eddies that are left, and like I said, we've just got 40% of the way to go, and we've got pretty good confidence on being able to get that done. So we feel like we'll get that $2 billion out of the way.
Speaker Change: in a relatively short period of time, and we'll start focusing on the NOI bridge, because that's really what you all should be thinking about once we give you the information.
Speaker Change: Okay. Thank you. Yeah, we're very confident about the $2 billion at this point.
Speaker Change: Thank you. Bye. Bye.
Speaker Change: And the next question comes from Michael Mueller with JP Morgan. Your line is open.
Michael Mueller: Yeah, I guess for Scott, I really appreciate having worked with you for the past 25 years or so as well, so I look forward to staying in touch going forward.
Speaker Change: In terms of the question, Jack, just a high-level one, have you seen any notable changes in third-party capital's interest in traditional regional models since you started this process earlier in the year?
Jack Hsieh: I think what I found was interesting is, you know, look, the oaks.
Jack Hsieh: We made a decision to sell the yokes. That was one that was in our backyard. There were major redevelopment initiatives that we had studied in order to move forward.
Jack Hsieh: And we obviously made a decision to have that, you know, it's not it was ranked in any
Speaker Change: I think what's encouraging to me is that the buyer of that asset has been able to secure debt, you know, for an asset like that, which is
Speaker Change: You know, it's an asset that needs to sort of be re-engineered, especially the retail. It's got a development opportunity that, you know, has entitlement, but there's still some moves that are required.
Speaker Change: But that buyer seems to have been able to secure financing, which I think is a really
Speaker Change: compelling opportunity for us as we look to monetize some of these other assets.
Speaker Change: You know, they clearly that this buyer has the equity, you know, they're at risk at this point. So that to me was encouraging. You know, look, pricing, you know, there haven't been a lot of trades on enclosed centers.
Speaker Change: You know, I'm excited about the two centers that long-term we're going to keep at Washington Square and Lakewood You know, those are and I'm sorry Cerritos
Speaker Change: So I think there's more to come. I don't think there's a lot of transparency. There hasn't been a huge amount of A plus centers sold, but the fact that lenders are coming into what I call
Speaker Change: B opportunities or, you know, maybe properties that could become A's but need a lot of reconstruction. That to me is kind of encouraging. That wasn't really the, that wasn't as evident in when I first started the company in March of this year.
Speaker Change: Got it. Okay, that was it. Thank you.
Speaker Change: And our next question comes from Lynda Tsai with Jeffries. Your line is open.
Lynda Tsai: Thank you, Scott. Thank you as well and I wish you the best. The acquisition cap rate of 7.2 to 7.4 for buying the centers that you want to own in their entirety, does that cap rate stay in that zip code as you continue to buy out your better assets or would you expect it to compress as stabilization you referred to continues?
Speaker Change: Thank you. Thank you.
Speaker Change: I think it's probably going to compress, you know, just look, the business is really good, so it's sort of a
Speaker Change: You know why why open-air center trades, you know
Speaker Change: way inside of an enclosed mall when there's so much, you know, leasing and demand for.
Speaker Change: for space and NLI growth.
Speaker Change: sort of surprises me. But yeah, I would say as we kind of look forward and new deals, my guess is they're going to continue to compress over time just because the growth rate is there, you know, as we look at IRRs for these kinds of investments, so
Speaker Change: Thank you.
Speaker Change: Bye.
Speaker Change: And then, Jack, when you look at your portfolio today, what does the future portfolio have to look like? And what are the market conditions you're looking for that would make you effectuate a sale of Mace Rich?
Speaker Change: Thanks for watching!
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Speaker Change: I didn't want to sell, I just got here. Well, look, I think it's incredible to go sell masonry. I mean, and of course, look, we as a public executive board, you know, we all have to, you know.
Speaker Change: Evaluating.
Speaker Change: those kinds of
Speaker Change: scenarios or strategies. But I believe that one of the things that was so attractive about this opportunity, you know, there's not many competitors in the public lease sector that do what we do. And what we do is pretty unique. Not everyone can do it well, in terms of being able to lease and operate these type of properties on a national basis.
Speaker Change: I'm actually quite
Speaker Change: optimistic about, I think about some of the properties that are going to go back to our lenders. You know, what's going to happen to those? Are they going to sit with the servicer for a while? You know, eventually these are going to come back around and be really interesting opportunities if you can enter in at a much lower basis.
Speaker Change: And I believe that that is going to be an opportunity for those that can do this type of business. And so...
Speaker Change: My plan is to try to position them to take advantage of that opportunity, and so, yeah, we're going to continue to tighten this portfolio up, clean it up, clean up the balance sheet, clean up our processes.
Speaker Change: Yeah, so that's...
Speaker Change: That's all done.
Speaker Change: Thanks.
Speaker Change: And the next question comes from Caitlin Burrows with Goldman Sachs. Your line is open.
Caitlin Burrows: Hi. Good morning. Good afternoon, everyone. I guess maybe the answer might be that you're not so worried about specific quarters right now. But with leasing as strong as it has been for multiple years now, I guess it is somewhat surprising that occupancy hasn't been increasing more. So I was wondering if you could talk through what you think some of the reasons why that upside has been limited, like occupancy was up 30 basis points year over year. So do you think that can accelerate or might there be other headwinds from Forever 21, like you mentioned, that kind of keep it in that range?
Speaker Change: I mean take Forever 21 out I would just say kind of as a new person coming in you know we were probably very
Speaker Change: focused on quarter-to-quarter annual budgeting kind of strategy.
Speaker Change: I will tell you that our occupancy rate will go up as part of what we're doing. If we're successful in the execution of our ABC, we've kind of got the spaces, we know where they are. There's an acute focus on getting that stuff done. The byproduct of that...
Speaker Change: And Douglas talked to you about renewals. We're way, way ahead of renewals. If we do what we just said, our permanent occupancy will go up.
Speaker Change: Okay, it just will. And I think that I could see if you were sort of focusing on annual budgets, quarter to quarter, you're maybe not as focused on really attacking what I call those opportunities to really drive permanent occupancy.
Speaker Change: and so we know everyone on the team knows what it is and that this is not the first time my company has served 24 months and they know what to do and we're going to get after it every day.
Speaker Change: So you'll see it go up. That's how you make permanent occupancy go up.
Speaker Change: Thank you for watching. Please like and subscribe. See you next time.
Speaker Change: Got it. Okay, and then maybe kind of along the lines on what's today like a quarterly focus versus a long-term focus. I realize FFO and AFFO per share are not the near-term focus, but given the direction they've been going, and I know the dividend's a board decision, wondering if you could talk about the dividend, how your payout ratio today compares to where you want it to be, and if you think the dividend is at a good spot.
Speaker Change: Uh, well, I mean, look, I think I've said before we're not. We're not going to.
Speaker Change: you know put guidance out for next year either. We're going to probably the board I think is comfortable keeping the payout the dividend at its current level because that's our best.
Speaker Change: source of cash flow as we reinvest, you know, kind of back into the portfolio, especially on this leasing initiative I just talked about.
Speaker Change: steady basis, not having sort of overload of balance sheet or pressure and things like that. So, we will do that in time, but probably for the next period of time as we go through this, you know,
Speaker Change: Execution.
Speaker Change: My guess is, and that's a board decision, it'll probably stay kind of in its current position.
Speaker Change: Thanks.
Speaker Change: Thank you. Thank you. Thank you.
Speaker Change: And our next question comes from Handel St. Just with Mizzou. Your line is open.
Speaker Change: Thanks for watching!
Speaker Change: Hey there. Good morning. Scott, it's been a pleasure. All the best. And Ben, look forward to working with you again.
Speaker Change: So, Jackson, Jack, you previously outlined a four-year timeline, getting to FFO, $1.80 by year four, getting your leverage down, but it certainly seems like things are moving at a far quicker pace.
Speaker Change: As you've indicated several times on this call, you're moving at a breakneck speed. I think, you know, we're all curious.
Speaker Change: Is this still a four-year process? Can you, in fact, get there sooner, as it seems? Is it more of a three-year process? And I might have misheard, but it sounds like you don't expect to provide an FFO guide next year. When should we expect that? Is that, you know, maybe a year after next? So some color of context there. Thanks.
Speaker Change: I'd say probably the year after that would be kind of a reasonable period. I think this NOI bridge that we provide you all, as I said, it's going to be very, very valuable. We have it internally.
Speaker Change: I think that's going to be very valuable because you can benchmark what we're doing.
Speaker Change: I would say that as we start to be able to give disclosure, like Scott went through, I know it's pretty painful as we went through it, you know, the Washington, you know, the PPRT accretion and dilution because of the mark-to-market debt.
Speaker Change: And then we've got this.
Speaker Change: issue of being able to give properties back, you know, like Santa Monica, we're still on title, you know, we're still managing the asset, you know, still going to be there probably until later next year. So there are some just structural things that will take.
Speaker Change: the next one to two years, we may well be finished with the plan.
Speaker Change: you know, in the following year where we, you'll see, yeah, they're finished based on the NOI bridges that we show you.
Speaker Change: It just will take those several months for things to kind of clean up your earnings. But my hope is we're able to kind of, through Select Disclosure, provide you the tools to be able to give you confidence that we're
Speaker Change: contractually there, if that makes sense. You know, once we start to outline more assets, more Eddies, which we plan to do, more NOI bridge, more progress on this ABC stuff, you're going to see it and you'll say, okay, absent some major
Speaker Change: credit loss, these guys are getting there, and it's just a question of at what period.
Speaker Change: That's helpful. That's helpful. And then within that, just thinking about kind of this
Speaker Change: the broader, you know, the bridge over the next couple of years with FFO. I think a lot of us were, you know, through our modeling process, assuming that, you know, FFO would bottom somewhere perhaps in the $1.50 range. Is that next year or the year after? Who knows? But curious if that's a reasonable expectation and, in fact, if that could be something that is perhaps, you know, in that year three of this plan as well. Thanks.
Speaker Change: Yeah, Ron, I'll just say, by the way, yeah, thank you for the, or excuse me, Handel, sorry, thank you for the commentary, Ron, and thank you everybody for the commentary up front. You know, we've very deliberately provided a kind of a four-year vision, again, because of all these various factors. It's very hard to predict when some of these assets are going to be rolling off the portfolio as we give assets back to lenders.
Speaker Change: you know, things like acquiring JV interest where you've got this interim disruption to earnings from the non-cash marks. You know, those are all elements that...
Speaker Change: why we pulled guidance and why we gave you a four-year vision that we think we can hit.
Speaker Change: So I really don't want to box us in. I don't think that would...
Speaker Change: do our plan justice to provide, you know, an estimate, an interim estimate for you. But, you know, at this point in time, we do feel that we're ahead of pace on refinancings, which gives us a little bit of room and a little bit of latitude to make other decisions in the plan. We think we're tracking very well in terms of our NOI execution. Details to follow soon.
Speaker Change: and the disposition plan is shaping up, and the pricing estimates that we had in the disposition plan are on target. So all those levers seem to be moving in the right direction, and in fact, I think we've got a little bit of latitude there.
Speaker Change: But, you know, interim marks, it's just not going to do us justice to give that to you. It's going to be, frankly, relatively hard to predict.
Speaker Change: Fair enough. Had to try. Thank you.
Handel: Yeah, thanks, Handel.
Speaker Change: I would now like to turn it back over to Jack Hsieh for closing remarks.
Jack Hsieh: Great, thank you. So, you know, at NARIT, Dan will be out at NARIT, so you all get a chance to visit with him. And I just want to go ahead and, once again, thank Scott. He's been an outstanding professional as it relates to dealing with this transition, and we all owe him a debt of gratitude. So thank you very much. Thank you, Jim.
Speaker Change: Thank you, everybody.
Speaker Change: This concludes today's conference call. Thank you for participating. You may now disconnect.