Q4 2024 InvenTrust Properties Corp Earnings Call
Okay.
Thank you standing by and welcome to inbound trusts fourth quarter and full year 2024 earnings conference call.
My name is there'll be a conference call operator today.
Before we begin I would like to remind all listeners that today's presentation is being recorded and a replay will be available on the investors section of the company's website.
Suntrust properties dotcom.
If you'd like to register your questions Jen stage events. Please press star one on your telephone keypad.
Speaker Change: Now I'd like to hand over to Mr. Tom Rather Vice President Investor Relations. Please go ahead Sir.
Tom Rather: Thank you operator, and good morning, everyone and thank you for attending our call today.
Speaker Change: Joining me from the <unk> team is D J Busch, President and Chief Executive Officer, Mike Phillips, Chief Financial Officer, Christy, David Chief Operating Officer, and Dave Hayne broker Chief investment officer. Following the team's prepared remarks, the lines will be opened for questions. As a reminder, some of today's comments may contain.
Speaker Change: Forward looking statements about the company's use and the future of our business and financial performance, including forward looking earnings guidance and future market conditions.
Speaker Change: These are based on management's current beliefs and expectations and are subject to various risks and uncertainties.
Speaker Change: Any forward looking statements speak only as of today's date and we assume no obligation to update any forward looking statements made on today's call are that are in the quarterly financial supplemental our press release.
Speaker Change: In addition, we will also reference certain non-GAAP financial measures.
Speaker Change: Comparable GAAP financial measures are included in this quarter's earnings materials, which are posted on our Investor relations website with that I will turn the call over to D. J.
Speaker Change: Thank you Dan and good morning, everyone and welcome I appreciate everyone joining us this morning.
Speaker Change: I'm going to start the call with some high level commentary regarding the fourth quarter and full year 2024 accomplishments as well as key strategic objectives for 2025 after that Mike will provide more detail on our financial results and expectations for the year ahead. Finally, Christie I'll share highlights of our operational successes and offer additional color on market performance and leasing activity.
Speaker Change: We're pleased to report strong results for the fourth quarter and full year 2024, driven by robust demand for our properties and inventor is highly effective capital deployment.
Speaker Change: Core <unk> per share grew by 5% both in the fourth quarter and for the full year, which marks the third consecutive year of cash flow per share growth above 4% increased occupancy solid leasing spreads expense management and strategic capital allocation continue to be the underpinning factors of our consistent above sector average cash flow growth.
Speaker Change: Healthy economic growth perpetual migration tailwind and favorable business conditions continue to drive demand across our markets. As we've consistently emphasized sunbelt cities are experiencing significant population inflows, particularly from higher cost coastal areas, which is driving demand for our retail real estate.
Speaker Change: Recent forecast project that but somehow it's population will grow by approximately 7% over the next decade outpacing the national growth rate of less than 1%.
Speaker Change: Beyond these demographic trends the region's expanding tech health care and logistics sectors create a solid foundation for sustained long term job growth.
Speaker Change: We're especially optimistic about opportunities in these markets, where we believe demand will outpace supply further enhancing the strength and resilience of our portfolio.
Speaker Change: Supporting this dynamic retail development starts across the U S fell to the lowest level since the first quarter of 2015, underscoring the constrained pipeline for retail strip centers.
Speaker Change: Leasing activity and portfolio operations remain impressive despite some well documented retail disruptions in late 2024, and early 2025, and <unk> has minimal exposure to headline bankruptcies and store closures and we fully expect to maintain significant leasing leverage across our properties and upcoming negotiations. We ended the year with leased occupancy at 92.
Speaker Change: Seven 4% and economic occupancy at 95, 3%, a 210 basis point spread representing approximately $6 $3 million in incremental annualized base rent expected to come online over the next several quarters. If you take into consideration an all time high occupancy at the built in leasing pipeline and the high retention.
Speaker Change: Rate of our existing tenants the recipe for accelerated <unk> and free cash flow growth is quite promising.
Speaker Change: Due to a relatively favorable capital markets backdrop, and little late summer and early fall 'twenty four coupled with a compelling mix of high quality and accretive acquisition opportunities, we issued approximately $250 million of extra equity to accelerate growth.
Speaker Change: This meaningfully expanded our acquisition activity, while also taking the opportunity to pay off expensive variable rate debt.
Speaker Change: In the fourth quarter, we acquired for high quality assets in Charleston, a new market for <unk> <unk> Trust, we added marketed Mill Creek, and 80000 square foot center anchored by a high performing Lowes Foods. We also acquired in Exton Square, a 134000 square foot open Air lifestyle Center, featuring a strong mix of high performing restaurants and load.
Speaker Change: <unk> retailers.
Speaker Change: And Fort Myers, one of the fastest growing cities in the U S. According to the U S census, we secured the forum.
Speaker Change: 186000 square foot center, with 96% occupancy shadow anchored by target.
Speaker Change: And as mentioned on our last call in October we grow our presence in the Richmond market with Stonehenge village.
Speaker Change: In total for 'twenty four we acquired eight properties for $282 million and Opportunistically disposed of two properties for $68 million.
Speaker Change: As we move into 2025, we are highly confident in our ability to continue executing on our strategy and believe the future holds even greater promise for <unk> Trust, we will remain focused on creating value through property acquisitions portfolio optimization operational excellence and leveraging our in place established platform.
Speaker Change: I'll now turn the call over to Mike for a detailed review of our financial results and to discuss our expectations for 2025, Mike.
Mike Phillips: Thanks, T J and Ventura Closeout 2024 on a strong note as our team and portfolio continue to perform at a high level as reflected in our results. The company's full year same property NOI reached $162 6 million growing 5% over 2023. This represents our fourth consecutive year of same property NOI growth exceeding 4%.
The year over year increase was primarily driven by 270 basis points and base rent with 150 basis points attributed to embedded rent bumps. Additionally, net expense reimbursement contributed approximately 170 basis points with better collections from revenues deem uncollectible, adding 50 basis points.
Mike Phillips: In the fourth quarter same property NOI grew seven 1% compared to Q4 of 2023.
Mike Phillips: For the full year, NAREIT <unk> totaled $126 7 million.
Mike Phillips: Or $1 78 per diluted share, reflecting an increase of four 7% over 2023 <unk>.
Mike Phillips: <unk> rose four 8% to $1 73 per share year over year growth was primarily driven by same property NOI that acquisitions and slightly offset by G&A and interest expense.
Mike Phillips: The balance sheet remains in excellent shape, providing of interest with the liquidity and flexibility needed to execute our long term growth strategy at year end and the trust net leverage ratio stood at 23% with our net debt to adjusted EBITDA at four one times on a trailing 12 month basis.
Mike Phillips: Our entire debt structure is now 100% fixed our weighted average interest rate was 4% with a weighted average maturity of three three years. Finally, the board of directors approved an increase of 5% and the company's cash dividend for 2025, the new annualized rate of 95 will be reflected in the April dividend payment.
Mike Phillips: Moving to guidance, we expect our performance momentum to carry forward into the new year, our full year same property NOI growth guidance is in the range of three 5% to four 5% incorporating our bad debt reserve of 75 to 100 basis points of total revenue. This reserve accounts for the recent tenant bankruptcy assumptions as well as ordinary bad debt levels, we expect in any given.
Mike Phillips: Here.
Mike Phillips: For <unk>, we are providing guidance in the range of $1 83 to $1 89 per share representing a four 5% increase at the midpoint over 2024.
Mike Phillips: <unk> guidance is $1 79 to $1 83 per share, reflecting a four 6% increase at the midpoint over last year.
Mike Phillips: With expectations for acquisitions and dispositions, our net acquisition assumption is $100 million for 2025.
Mike Phillips: Further details on our guidance assumptions are available in our supplemental disclosure filed yesterday.
Mike Phillips: That I will turn the call over to Christie to discuss our portfolio activity Christy.
Christie: Thanks, Mike.
Speaker Change: Remain confident that Suntrust is well position to achieve near and long term growth targets, our sundial portfolio of necessity based retail assets supported by our experienced leasing and property management team continues to deliver strong above average results.
Speaker Change: We remain focused on maximizing cash flow by optimizing rank enhancing occupancy in refining the merchandising mix across our centers.
Speaker Change: With 87% of our NOI coming from grocery anchored assets, we recognized the vital role of these tenants play in driving foot traffic to a thriving retail center.
Speaker Change: Dynamic strengthens our leasing leverage and brings additional value to our portfolio.
Speaker Change: At the time of our listing in 2021, our total portfolio leased occupancy stood at 93, 5%.
Speaker Change: By the end of 2024, we achieved 97, 4% at 390 basis point increase highlighting the exceptional quality of our centers and the appeal of our sunbelt market anchor.
Speaker Change: Tanker space leased occupancy ended the year at 99, 8% matching our all time high achieved last quarter small shop leased occupancy finished the quarter at 93, 3% also an all time high for our portfolio.
Speaker Change: Even at these unprecedented levels, our leasing team remains committed to further increasing occupancy, especially in the small shop category and.
Speaker Change: In 2024, we think 210 leases totaling one 3 million square feet.
Speaker Change: Notable tenants signed in the fourth quarter include Skechers.
Speaker Change: And AAM eatery and Mendocino farms.
Speaker Change: Beyond simply increasing occupancy we believe it curating the right mix of national regional and local retailers is essential to creating a dynamic environment that drives tenant sales growth and maximizes leasing spreads for both new and renewal leases.
By strategically assembling the best combination of necessity based retailers for each market, we cultivate an atmosphere, where tenants can prosper fueling their success, while enhancing our ability to grow right.
And then trust total portfolio ABR ended 2024 at $20 seven per square foot, reflecting an increase of 3% compared to 2023.
Speaker Change: For the year, we delivered blended comparable leasing spreads of 11, 3% with new lease spreads at 16, 6% and renewals at 10, 6%.
Speaker Change: Our retention rate stood at 94% in 2024.
Speaker Change: Tenant retention remains a key element of our portfolio. This dynamic translates to better economics, reducing downtime and significantly lowering tenant improvement costs.
Speaker Change: Additionally, we have successfully embedded rent escalators of 3% or higher than 90% of renewals supporting long term NOI growth.
Speaker Change: Moving to retail news I want to briefly address the recent store closings and bankruptcies at.
Speaker Change: Zen Trust, we view this as part of the natural lifecycle of retail disruption is store closures following the new year, our predictable and expected while store.
Speaker Change: Store closures remain below historical averages they may be returning to more normalized levels compared to the last few years.
Speaker Change: As a reminder, our portfolio has one Julian location in Austin, Texas, and three party city location that contribute collectively approximately 60 basis points of ABR.
Speaker Change: We have no exposure to big lots or the container store.
Speaker Change: As Mike mentioned earlier, any expected disruptions or assume vacancies within our portfolio from distressed retailers are fully accounted for in our guidance.
Speaker Change: Despite these headlines demand for high quality retail space remains strong supply is still constrained and many retailers are increasing their long term store opening targets in our markets recognizing the traffic and sales growth. These locations can generate.
Speaker Change: We remain confident that any space recapture it presents an opportunity to drive rent growth and further enhance our tenant mix.
Speaker Change: Before concluding I want to take a moment to acknowledge the devastating wildfires in southern California, the widespread destruction and loss are truly heartbreaking.
Speaker Change: Thankfully all invent trust employees are safe and at this time our properties remain unaffected.
Speaker Change: Continue to closely monitor the situation and his entrust is ready to provide support to our communities and tenants wherever it is needed.
Speaker Change: Greater that concludes our prepared remarks, and you can open the line for questions.
Speaker Change: Thank you if you would like to ask a question. Please press star followed by one on your telephone keypad.
Speaker Change: Withdraw your question. Please press star followed by two.
Speaker Change: When preparing to ask a question. Please ensure that device is unmated lightly.
Speaker Change: Our first question comes from Dori Kesten with Wells Fargo. Your line is open. Please go ahead.
Dori Kesten: Thanks, Good morning.
Speaker Change: Based on what you've said previously about the likely trajectory of acquisitions. This year, the $100 million net investment figure seems a bit conservative.
Dori Kesten: Is this meant to be.
Dori Kesten: Well you are close to closing I guess does it assume an acceleration in dispositions.
Speaker Change: Hey, good morning, no. It's a great question.
Speaker Change: So when we think about 2025 I think we've said this in the past when we were thinking about our initial acquisition guidance. What we really are trying to message is that we're going to continue being.
Speaker Change: Net acquire over over the course of the year the.
Speaker Change: The pace and acceleration of that relates to plan on our cost of capital you did mentioned dispositions we are.
Speaker Change: Going through a kind of capital recycling in Denver in 2025, with some of our properties in California, depending on what those pricing comes in.
Speaker Change: We take our California portfolio is probably our most attractive kind of.
Speaker Change: Use of our cost of capital to redeploy those proceeds into some of the other markets that we've been a little bit more excited about and we've been recently more active it so.
Speaker Change: So within that $100 million.
Speaker Change: The gross number to be materially higher than that depending on.
Speaker Change: The success of our disposition activity in our in our California markets.
Speaker Change: Okay.
Speaker Change: And then your retention rate I think it was about 90, 495%. This year up from 90% last year can you can you talk through your expectations for this measure in 'twenty five and then kind of somewhat related when do you expect re leasing spreads this year to be comparable to the low teens that you were able to achieve in 2004.
Speaker Change: Yeah.
Speaker Change: Yeah, maybe I'll just touch quickly on the retention rate and then I'll ask Chris to give a little more color on.
Speaker Change: What we're expecting from a spread standpoint, the 94% is probably a little bit higher than what we're expecting in 'twenty two because of the known.
Chris: Exit so we may have this year as it relates to party city and to a lower probability that joann fabrics.
Speaker Change: Other than that.
Speaker Change: When we think about 'twenty five and beyond 90% retention rate is kind of the bogey for us and that allows us to push spreads and then while also keeping capital cost.
Speaker Change: Well.
Speaker Change: I mean.
Speaker Change: Up on that and say that with respect to the leasing spreads I think that our current run rate that you've seen over the past year have Brian similar into 2025, and we should be releasing team is focused on continued to deliver at that rate.
Okay. Thank you.
You May now turn to Jeff Spector with Bank of America. Your line is open. Please go ahead.
Jeff Spector: Great. Thank you.
Speaker Change: Congratulations on a great 2004.
Jeff Spector: Just thinking about some of the comments in this.
Jeff Spector: Discussion around your best use of capital.
Jeff Spector: Positions, California, what about the balance sheet I mean, you are under leveraged.
Jeff Spector: I guess, how are you thinking about the balance sheet.
Jeff Spector: Sure.
Jeff Spector: Using that to grow even faster.
Jeff Spector: No Jeff that's a great comment obviously coming off the equity raise last year.
Jeff Spector: Which we found to be pretty opportunistic bolt.
Jeff Spector: As it relates to what the cost our cost of equity capital was at the time, but most importantly, our ability to go and acquire quickly and Accretively.
Jeff Spector: To use those proceeds and show transparency and quick visibility to the market Gordon Thats. The same recipe that we're planning on using this year now as you can appreciate California.
Jeff Spector: As it relates to our property and we have a phenomenal California portfolio.
Jeff Spector: It's a strategic decision for Ventura, California retail is core for most <unk>.
Jeff Spector: Shopping center Reits, both public and private.
Jeff Spector: We just found that we have an opportunity set.
Jeff Spector: Some of our other core markets that are going to look more attractive to us overtime.
Jeff Spector: And because of that we can make a nice little spread on that kind of capital recycling.
Jeff Spector: Or b.
Jeff Spector: Very very high quality trophy properties in those markets that we otherwise probably wouldn't be able to go after.
Jeff Spector: Given where our cost of debt and cost of equity capital as if we were at it is to use the balance sheet, but we are in a position with the capacity on the balance sheet to lever up if the opportunities and the opportunity that presents itself, we will do that.
Jeff Spector: As you saw.
Jeff Spector: What we did in the back half of last year.
Jeff Spector: Okay sure. Thank you.
Jeff Spector: And then as the company has gotten more aggressive let's say an acquisition.
Jeff Spector: Is that changing the conversation, let's say with owners are sellers like.
Jeff Spector: I assume that there is there's a lot of competition to buy sunbelt grocery anchor centers like how do you think.
Jeff Spector: This is let's say IV profile or the ability to do deals versus others.
Jeff Spector: No. It's a great question I think what I would say is if you look.
Jeff Spector: It is an extremely competitive environment and we've been successful on marketed deals off marketed deals and everything in between.
Jeff Spector: And I think thats been kind of our recipe for success.
Jeff Spector: Success and Thats. The reason why I think we feel more comfortable and confident continuing to divest all of our invest all of our energy and some of them.
Jeff Spector: In the markets, where you've seen us.
Jeff Spector: Active.
Jeff Spector: I would say.
Jeff Spector: Because of our cost of capital both with our capital recycling program and then obviously, where our multiple is I think we have an ability to be.
Jeff Spector: Appropriately aggressive and opportunistic but it is a competitive environment and we try to fully contemplate that as we think about our ability to be successful over the course of the year.
Speaker Change: Okay. Thank you and then just to confirm on the same store NOI range of three five to four 5% I guess is it just safe to assume that at the high end, you're assuming let's say can you continue to move occupancy higher or leasing spreads or even stronger.
Speaker Change: Versus the bottom end, let's say that that the bad debt reserve, let's say the 7500 bps is hot is more towards the 100 bps is that fair to say or is there anything else to point out.
Speaker Change: On the range of the same store NOI. Thank you.
Mike Phillips: Yes, Yes. This is Mike I think I think <unk> got it.
Speaker Change: Range from the top to bottom really what can move it as uncollectible lease had come to bad debt throughout the year and then just getting tenants.
Speaker Change: And in the operating on time, but the big driver would be the uncollectible lease until.
Speaker Change: Okay.
Speaker Change: Okay, great. Thank you.
Speaker Change: As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad now.
Speaker Change: We now centered Linda Tsai with Jefferies. Your line is open. Please go ahead.
Linda Tsai: Hi, Thanks for taking my question.
Speaker Change: What is the appetite like for your California assets, who are the potential buyers.
Speaker Change: Kind of cap rate.
Linda Tsai: Slide to those centers.
Linda Tsai: Yes.
It's a good question Linda I would say, California is always had.
Linda Tsai: Great.
Speaker Change: Wide canvas of buyers public private smaller.
Speaker Change: And then certainly some of this larger international sovereign bonds.
Speaker Change: Yes.
Speaker Change: So the good and bad thing about California.
Speaker Change: Extremely competitive because of the dynamics of that market. So.
Speaker Change: We sold one California asset last year, we're in market with several assets currently.
Speaker Change: The demand has been.
Speaker Change: Very very strong, thus far, but nothing signed or executed yet and we'll watch those.
Speaker Change: The important thing to note as well.
Speaker Change: We don't have to sell anything in California, if we don't feel like we can.
Speaker Change: Redeploy those proceeds accretively. So if we're not satisfied with the price or the opportunistic opportunities.
Speaker Change: On the buy side.
Speaker Change: As robust as we would hope.
Speaker Change: We have the ability to kind of slow or accelerate that pace. Accordingly, because the most important thing is that we're moving cash flow forward for that trust.
Speaker Change: As it relates to pricing, it's too early it would be too early to kind of comment on what that pricing looks like but I would say that our goal is to.
Speaker Change: We're expecting pricing it would allow us to be like I said earlier appropriately aggressive on trophy properties in markets, where we've been more active and <unk>.
Speaker Change: And that had a positive spread.
Thanks for that and then my second question is for your acquisitions, how do you think about the mark to market opportunities in those assets.
Speaker Change: No I mean look I think the one thing that we love about our portfolio in the sunbelt as that market.
Speaker Change: Rents are outpacing.
Speaker Change: Our current growth profile and maybe it will maybe to give you a little context of that.
Speaker Change: For instance.
Speaker Change: In any given quarter, we'll have tenants.
Speaker Change: Is this an option.
Speaker Change: Notice date in which case, they we get them to renegotiate the lease rate so and I think the most recent corridor in 2024, we had about 23 tenants that missed their option period in which case that would have probably had an increase in rent between call. It in the high single digits.
Speaker Change: We were able to renegotiate those rents at closer to 30% spread.
Speaker Change: It just it gives us confidence that we're at.
Speaker Change: Perpetually below market in many of our in most of the portfolio.
Speaker Change: And that allows us to.
Speaker Change: Build a sustainable cash flow model, even if there is a slowdown in the economy, we still feel like we're in a good spot and that's what we look for in our new acquisitions as well as the acquisitions that we tend to buy it.
Speaker Change: It's market rate driven as opposed to any type of.
Speaker Change: Significant occupancy your value add upside I would say.
Speaker Change: Really helpful. Thank you.
Speaker Change: Okay.
Speaker Change: We now turn to Floris van <unk> with Compass point. Your line is open. Please go ahead.
Speaker Change: Hey, thanks.
Speaker Change: Interesting 20 tenants last quarter, Mr option periods.
Speaker Change: Presumably that.
Speaker Change: Was that in your in your budget.
Speaker Change: And it's not in your guidance either.
Speaker Change: Does that seem normal.
Speaker Change: Yes, Floris, let me clarify it was it was 23 tenants for the year. So when you think about all the activity throughout the year, it's not that much but it is it is a nice surprise when it happens.
Speaker Change: But it would be very hard for us.
Speaker Change: To forecast.
Speaker Change: A.
Speaker Change: Subset of tenants missing their option date.
Speaker Change: If you were to do the percentage. It is certainly on the lower end, but it does give you an indication of.
Speaker Change: Where market rents are relative to.
Speaker Change: Where people are re signing two door due to option.
Speaker Change: So my my my question that I that I had.
Speaker Change: Before you mentioned the missing the option, which prompted another.
Speaker Change: The cap rates on new acquisitions and.
Speaker Change: One of the things that I find interesting is that I think you're.
Speaker Change: Really the only REIT right now that's playing in the town of southern charm Charleston.
Speaker Change: You've got two assets there, presumably that means you're the.
Speaker Change: The returns that you're getting on those assets should be a little bit higher than more heavily trafficked markets like Houston like Tampa, where a lot of the other Reits are active in a lot of that.
Speaker Change: Obviously, the pool of private buyers is bigger as well maybe you can talk a little bit about the the cap rates and.
Speaker Change: <unk>.
Speaker Change: If you see more opportunities in markets like.
Speaker Change: Like Charleston, enrichment, which are not as heavily trafficked.
Speaker Change: No that's actually.
It's a good observation first I would say, yes on a risk adjusted basis, we think markets like Charleston, like her Richmond.
Speaker Change: Have are equally as attractive and it's a great complement to the event trust portfolio, which tends to be anchored around those larger cities right. So we have spent more time in.
Speaker Change: Canvassing, the Charleston markets, our market excuse me or even markets like Asheville.
Speaker Change: Certainly Nashville.
Speaker Change: It would be on the larger but Knoxville. Some of these cities that are very complementary to the markets in which we already operate and we can be very efficient in those markets now I will tell you that.
Speaker Change: Criteria in those markets is much more stringent right.
Speaker Change: In Houston, we can own tenant 10 assets in Austin, we can own 10 assets were not there yet but.
Speaker Change: The point being in these smaller markets, we may only get two three or four but then what we want to make sure that they are in the top quartile of assets our retail centers in those markets. So I think the bar is a little bit higher but the risk adjusted returns and the ones that we've identified are equally if not more compelling than what we've seen in some of those larger markets where.
Speaker Change: To your point can be a little bit more competitive.
Speaker Change: And the cap rates would be.
Speaker Change: The risk adjusted returns with a 50 to 100 basis points higher.
Speaker Change: I wouldn't say I would say.
Speaker Change: Former.
Speaker Change: There is some of the highest quality assets in those markets with great growth profile. So.
Speaker Change: The initial yields are still going to be in.
Speaker Change: This success, but we're still buying everything that we look at.
Speaker Change: As to make sense and that tends to be anywhere in the low to mid single low to mid sevens from Unlevered.
Speaker Change: Return perspective.
Speaker Change: <unk>.
Speaker Change: And then my last question, maybe and I apologize if you.
Speaker Change: Using up my question here, but.
Speaker Change: One or two.
Speaker Change: Your cost of equity I mean, you did raise a little bit of equity last quarter.
Speaker Change: Your stock continues to trade at.
Speaker Change: Where consensus has your NAV.
Speaker Change: I know you have a pretty.
Speaker Change: Good balance sheet as it is but.
Speaker Change: How do you if you see deals that you like and presumably you're scouring the markets why not raise more equity.
Speaker Change: To fund some of those transactions or maybe talk about your thinking on that.
Speaker Change: I think it's a.
Speaker Change: It's a good point.
Speaker Change: Obviously, we're very very.
Speaker Change: Our equity is precious.
Speaker Change: We want to make sure we're doing it at the right time and if anything.
Speaker Change: Anything we're doing is value accretive for both current and prospective shareholders.
Speaker Change: But the opportunities to have to match it as well and that's why we're so.
Speaker Change: Fortuitous in the back half of last year as the pipeline.
Speaker Change: We had deals that were.
Speaker Change: Very close to under contract or under contract and had an immediate use of proceeds now I'm not saying it has to be matched perfectly like that but if our cost of equity capital continues to be attractive or get more attractive and we can put those proceeds to use in an accretive manner and leverage our platform SaaS service.
Speaker Change: The whole goal is to use this platform to grow cash flow faster than.
Speaker Change: And other options within the sector, we're going to absolutely do that but we've got to make sure that we can that we can find opportunities and uses for that capital.
Jay: Thank you Jay.
Jay: Thank you.
Speaker Change: You May now turn to Paulina Roadhouse with Green Street. Your line is open. Please go ahead.
Paulina Roadhouse: Good morning.
Speaker Change: And I think good morning from square.
Paulina Roadhouse: Hi.
Paulina Roadhouse: I think we're an interesting property and anchored and closer to a lifestyle center.
Speaker Change: How is that pricing for a property like this compares to a traditional grocery anchored center.
Paulina Roadhouse: In terms of cap rate.
Paulina Roadhouse: And how do you think about the growth profile.
Paulina Roadhouse: A relative basis and the risk as well.
Pollyanna: Good morning, Pollyanna, but great questions.
Speaker Change: Youre absolutely right. This is more of a lifestyle type of center and the reason I say, it's unencumbered it doesn't have any traditional grocer or large box spaces.
Speaker Change: So you can imagine when we look at that that's certainly things we owned things like this but they tend to have some sort of shadow brochure or some box components.
Speaker Change: What made this.
Speaker Change: Particularly attractive to us was the market.
Speaker Change: <unk>, which is in next 10, which is up near Summerville.
Speaker Change: The market is growing very very quickly and this asset is <unk>.
Speaker Change: <unk> that market and will continue to serve that market as it relates to a lot of the.
Speaker Change: Dining options at local retail options that it has and we found the market the in place rents very attractive to us.
Speaker Change: Obviously, there is a different risk profile when you remove some sort of grocery but it's it's really good.
Speaker Change: Great complement for our portfolio.
Speaker Change: Because I think we've discussed with you and many in the past.
Speaker Change: Inventrix anchors towards.
Speaker Change: Grocery anchored centers, mostly necessity based but where are we or format agnostic that we find the.
Speaker Change: The risk adjusted.
Speaker Change: Returns attractive.
Speaker Change: This is a market.
Speaker Change: Driven strategy not a asset specific strategy of our retail asset specific strategies that you can say so you could see us do things like.
Speaker Change: Next is clear and you can see us do some things like the forum, which tends to have a little bit more box, but it's in a market that we really really like and we got very comfortable with those rents as well. So we're always going to anchor to those necessity based centers, but these are nice complements with different growth profile than risk profile, but I think.
Speaker Change: Kaufman and fill out the portfolio nicely.
Speaker Change: And in terms of pricing.
Speaker Change: The cap rate for something like this compares to a traditional high quality grocery anchored.
Speaker Change: I would say.
Speaker Change: Yeah.
Speaker Change: Let's put a cap rate is high but when you think about the risk adjusted returns you can think of it kind of falling in between what.
Speaker Change: You would consider core grocery anchored.
Speaker Change: And on the low end and then power center, it would be somewhere in between and obviously.
Speaker Change: The underwritten rents are going to are going to move that but when you. That's that's kind of where some of these types of centers, Paul and I will mention it is on the smaller size have a lifestyle center, which which obviously was attractive to us as well, so 130000 or so square feet.
Speaker Change: We got comfortable with.
Speaker Change: The tenant mix.
Speaker Change: The current our current in place rents.
Speaker Change: Thank you.
Speaker Change: Pardon me.
Speaker Change: We have no further questions I'll now hand back to T. J Busch for any final remarks.
Speaker Change: Thank you to all for the questions and for joining us today.
Speaker Change: We look forward to seeing many of you in the months to come enjoy the rest of the week.
Speaker Change: Ladies and gentlemen, today's call is now concluded I would like to thank you for your participation you may now disconnect your lines.
Speaker Change: [music].
Speaker Change: Yeah.
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