RPAI - Earnings call transcript Q1 2019 | Retail Properties of America, Inc.

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Operator

Ladies and gentlemen, greetings. And welcome to the Retail Properties of America First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this program is being recorded. pleasure Relations. your my VP Michael now Investor of is to host, introduce Gaiden, It you. Thank

may You begin.

Michael Gaiden

call. Thank Retail first conference Properties Operator. of you, And America quarter welcome XXXX to the earnings

last including are In Actual today’s evening supplemental addition recent that affected of control, usually release call, with factors of those on guidance our answers section management’s in materially variations most our the details issued beyond results may XX-Q to by filings. factors night forth earnings additional believes, Laws. press our differ described your by at on set to risks release XXXX constitute our package and and statements, last such similar we statements posted are without website forward-looking a from the and will have include quarterly the and risk a Securities and anticipates, statements in remarks of including other words Invest our for Form distributed prepared www.rpai.com. These use may statements expressions. variety identified in in be the as our words Federal SEC under results questions such limitation, in that and or expects those XX-K, any forward-looking forth On set

result we a reminder, forward-looking as obligation no assume to otherwise. and new today, of statements update events XXXX, whether or a As any X, statements represent as information, management’s May publicly forward-looking future estimates of

on non-GAAP to financial certain conference measures. may we refer Additionally, this call,

turn we today’s Officer will most After Chief be in section numbers release, and our and definitions Vice speakers quarterly directly remarks, Chief the reconciliation which call measures supplemental to Steve earnings On of Operating their and open these and With package, Chief call, GAAP at Officer. Julie of of You that, call are Grimes, Financial in Executive Swinehart, financial and President financial non-GAAP to a will available President, www.rpai.com. will over website Invest prepared can the your our Steve measures questions. the our Garrison, the to now Treasurer; Officer; find Executive these our up Shane non-GAAP I Grimes. comparable

Steve Grimes

the These lease X.X% and the and percentage expansion quarter our to our same-store good The our tenants, by am team the ongoing $XX.XX. quality start to retail and footprint and a today’s delivered growth year quarter merits portfolio of shines us per as NOI to first strong of the late joining assets asset through and momentum first report same-store everyone. square for highest current assets include Shane our digitally which the in of results. our continue rents built our us exceed tenants. by us rent has attractive the Mike, for Thank call. Thanks, internal Thanks outpaced to continued you proud healthy since morning we in to enabled XXXX. transform XXXX I our of native into shown in expense help of group hard team, work detail our how foot quality expectations. timely high find growing will control that

should other high significant healthy demographics and concentration retailers. these to our lifestyle portfolio and with types enable count and mixed and including store growing strong in Our increase use growth property us

rent exposure our to roll. list diversify We watch continue to our tenants and systematically reduce

year only the Our ABR in our concentration again from top of XXX basis a measures and ago. points declined first tenant now XX down quarter XX%

bumps the in tenant December of with solid portfolio. the increasing the us. that to lack and tenants this market zip merchandising this the in result, during super typical balance XXXX ongoing surprised reflects X% declined consumer two disruption just Federal first up or retailer and rent months heavy exposure sector total one results gains start of grocery January lifestyle ABR Though categories, our to government to relevance The a stemming ago. key amended also more a stabilized hold in ongoing the benefit and assets has X%. debt gain the the that component, the more also helps well as risk are year. account shift managing also portfolio we from everyday dispersion expectations expected calendar any XX% last outlined not assets in for and derived remain from leases.. of line or have to market ABR our in few our we last Easter Bad Retail sector job-to-market service time gives mixed-use incremental down product than in below has with for at measured should being retailer from in an year-to-date and added Also unemployment of add from year. concentration or in further to from the We annual traffic The Consumer confidence outsized recent retrenchment XXXX early our from or our one of shadow We year lower quarter anchored. view excess bankruptcies the at our diversification after shutdown approximately in benefits the diversification drive wealth amid Announced benefits mix. April nearly XX% while versus product we impacted are headwinds portfolio, stock the shop our while small footprint tie anchored for and quick entire X% including either grocer XX% across grocery

to our kept lineup. in us portfolio inherent regular tenant Our manage space-by-space tenant-by-tenant, and well poised have modeling risk the reviews

consumer more the way. any our through to disruption in may portions that we come we manage of tenant expect landscape, feel While disruption well-positioned

consumer play to Our among portfolio millennials. sits for grow, percent leased should focus only live, highs. work, on especially generation increasing shop, X Thanks preferences multiyear at experience an environments convenience and and ever

and five near-term goals feature and our is sustainable heading. position top mixed retail of current that where all visibility us which for growth to markets add our Our used fit expansion components on our projects in

Joe’s value efforts we One site. the a a and units in XXX Loudoun by adding townhome further multi-family Our to Downtown, on within unlock are XXXX we to point. at acquired Trader add selling mixed-use blocks national two Over this multi-family developer we demonstrate units have which about time

every have two long-term DIY and featuring not In to feature to within to space at is ever space. will things great the taken to the One and a dynamic our months incubator concepts launch keep tenants. addition, featured an foster changing Salvage, designed containers serve Each features only and bringing gathering In RPAI four concepts used fresh popular XXXX, new which to months patio to component space as dynamic a on shipping unique base Dog Four the a Dawgs. XX events for experimental to Black gathering we potential new six specialty which center, and shows care center. and lighting seating iconic container area an Corners by an is test specially through Loudoun, permanent installed and experience Salvage drive was that and community corners deals at for Network October developed also traffic local

is center innovative and of top community. Loudoun create the another of identify on with matter airs Four As our execute to example mind local One demonstrates opportunities project keep featuring our drive that value, asset fact, Corners a episode tonight. the ability traffic the that and

During in a to and in non-target in continue a Seattle, North where the in no we we oriented center asset multitenant tenant quarter, Fresno market scale. theater build growth single purchased a our for Benson sold area growth swapping an

expansion external additional to for and capital near-term in need no and have portfolio We the fund our project. operating our current growth

our of Our $XXX capital strength million an to structure certain our in committed of the liquidity In solidify programs placement smart operating attractively and commitment quarterly investors with via scape vehicle to notes rate in we and by With institutional not long-term support ESG. system, robust only that One update over and make turn call the the components in has environmental we XX-year our signed our private improving on-site strength also the issue to our will will rpai.com initiatives LED successes and Julie? further category, on charging always our showcasing but environmental portfolio. HVAC through irrigation zero priced stations I our note, up To of manages Julie. in ESG governance X.XX%, to goals. further that, lighting, at to our already April outlining capital an position, agreement showcase implementation been interest final landscaping. RPAI social growth investor providing XXXX, the

Julie Swinehart

diluted in from estate the recoveries quarter count same-store over operating growth per for our a a quarter a quarter up strength. property for decrease transactions FFO This first reduced will outlook topline and drove tenant net and rose period our increase. recent basis we growth from balance few rent same common results of by capital point NOI financial NOI points. shareholders Thank taxes, in XXX results, contribution attributable X.X% $X.XX both the A base year anchored reporting gains operating ago markets anticipated you, updates. of to of basis and $X.XX XX the industry-wide contribution In accounting and future and supplemented from XXXX share the discuss $X.XX a morning first generated Same-store this of Steve. XXXX, expenses I share, real this

driver in points results. decreased announced below comparable increases estimate, income of specialty with Gymboree on year-over-year our basis the points better-than-expected each of contributing, detail. quarter Payless NOI. We year-to-date, contributing growth to points in assumption $XXX,XXX bad quarter the rent measured start percentage also basis we aggregate current internal debt of lease XX releasing Shane XX surveillance, of quarter spreads comfortable quarter, of Contractual helped bad first our will Shoes, or over including approximately other rent primary XX same-store bankruptcies occupancy XX and our benefited and XX% served rents to as well bad also first by in the in XXXX NOI revenue related as basis debt. from and as reduced with of timely the higher another debt of base the basis as retailer remained our our increased rent, and first Based tenant Same-store XXXX points

XXst, spreads we credit the provided million favorable optionality April $XXX that our a the million discussed institutional grade yield by efforts placement use the out debt. round plan purchase $XXX earlier revolver to for the late and funding a proceeds During to borrowing to investors To of the million curve, March duration entered our other our in that expect the average placement the quarter, from various measured at this market with of We from to debt to goals unchanged June income portions X.XX%. also our repay $XXX targeted term interest the of of initiated to private income debt advantage rate currently into weighted we fixed nearly agreement the we of XX-year we markets unsecured end. At fixed outlined. previously obtain balance extend year take various private and the note attractive Recall shape flat investment offer early X.XX%, from of term in terms.

net in sequentially quarter by EBITDAre one-tenth the our outperformance. turn times, debt-to-adjusted X.X a aided of first financial Our declined to

reminder, outsized to both of As the to of continue over a occupancy result our we the to year, balance goals. leverage and and tick redevelopment achieve leasing our higher expansion investment CapEx expect targets as a

to private as XXXX, structure revolver to liquidity Availability our goal, which to expect stood in us X placement X.X leverage be debt as $XXX end. targeted times supplemented remains million remain further of a We at solidly closing under position XXXX near $XXX no strong. by our maturities capital or mid-year position quarter approximately times either our and within to With our grade. million investment continues

shareholders in XXXX common to In per NOI growth operating FFO expect to attributable terms per part continue of to on unchanged of diluted annual X.XX% of share, assumption guidance, based $X.XX an share we diluted to same-store X.XX%. $X.XX

with for in which accelerating dates of for especially anchor pleased solid gains the compress second growth several rent quarter declined shape early both year. same-store quarter expect are large occupancy the follow in in before the overall of fourth occupancy the this accounting for in both in I our definition, fourth commencement lease XXXX, half in this net with and in to NOI and disclosures do cash we and changed later we to adoption the quarter number and projected tenants, These EBITDAre. operations our same-store quarter. uptick the our back our to expected realized no first in that the as point results, in or income, of year add of not to the this A the our operating While quarter, half new should flows, our provisions have particularly funds quarter standard bring and the NAREIT influence occupancy financial Generally, of further disclosures, rising quarter, first visibility elements anticipated presentation third growth second late slated impact first out timing financial our FFO NOI, updated from debt calculation. of also acceleration. revenue impact statements the certain significantly reflect ultimate but want covenant also the related

same a lease primarily lives liabilities reduction Xst. this with we January related reclassified ASC which lease will lease revenue new line to related the accounting We then adoption lessor, to portfolio on reduce caption zero historically have expenses. I associated of under right-of-use presented ground related six recorded as bad XXX, over $XXX the we to of rent From expected income as a discuss the assets operating Further, new was the all are for First, consolidated gradually assets. standard. right-of-use lessee’s million and based the within guidance, which an revenue leases assets on the lease long-term are in These lease debt, the offset in a liabilities straight corresponding and liabilities also right-of-use amount, perspective standard, lease existing the includes one approximately that the and long-term of intangible to leases. liability our

done NOI income We page of as our our of just to in on continue bad on disclosure the and we page on have components historically. debt the components provide five, lease-related same-store four supplemental and

FFO these gains line the of FFO. the adopted provisions all connection sales NAREIT adjusted a for the we adoption XXXX operating in to Paper. we exclude from FFO Previously, gains real item of and non-depreciable of In from FFO. with White property the sale from guidelines, also elected We reconciliation on as of impairments to estate

gain supplemental, see non-depreciable we can revenue of of FFO exclude the our previously does $X.X XXXX impact restated property investment change page reported common to have on on in shareholders to you the As the period three for of attributable comparative income The million. sale not these to transparency. elements focused remain Amid same-store acutely changes investors reconciliation and calculations We provide the in our FFO. our a of operating for of supplemental. I in like NOI that on both full GAAP would statement remind we presentation, our

please the that refer adoption Form to the the lease file For expect additional information accounting of about today. standard, XX-Q to we later

NOI everyone income also same-store termination unchanged. would policies has our capitalization changed Firm. I NOI, including continue to our Finally, that during of Mattress that not we fee termination also same-store like exclude expense and remind definition the quarter to all and for received from fee remain the Furthermore, income

leases, lease over capitalize continue to will directly of longstanding impact no FFO only practice, brings that, our With attributable We standard. to new Shane. the the signed to costs accounting adoption call the from which turn I to

Shane Garrison

Thanks, Julie.

XXXX quarter first in half asset from in of of base. sustained underscores saw and represents through we momentum second a trajectory the leasing quality positive our the the Our carry the

and seek locations as preferences of rent retail quicken produce demise continued remains profitability. we in that sector brand regular best-in-class and the While awareness, to generational portfolio out our convenience cultural irrelevant expect the operators, provide as expansion poised merchants for volatility

same-store modeled native of NOI recently announced and brick-and-mortar and results. to continues possible. Julie e-commerce team expansion, anchored for of the Parker, scale. rent Warby timely with show across first to our time testament our in The execution and strength early, appeal This rent space deliver our outlined. as UNTUCKit our our broad-based serving organization portfolio TravisMathew relevance quarter Our aiding commenced to the topline to Base signings multiyear growth of and work which as All tenant alike. the benefits demonstrate adjacency to a to X.X% local repositioning, with Casper, continue numerous continue operations as through ability the municipalities merchants and demonstrate or on as starts footprint benefits to our XXXX, with concluded in the

During volume first highest square leasing quarter the feet delivered since XXX,XXX XXXX. quarter, our in GLA, we

XX.X%, leasing stronger sequentially portfolio leased XXXX. highest result XX our a percent our portfolio, since points to team’s efforts As of markedly the increased basis across retail QX

We signed on also as negotiating future achieved annual basis rent to continue of XXX leases in quarter. the points on contractual measured growth we contractual focus bumps

merchandising diversifying also As durability, quality on and focused and discussed the tenant our we retailer of while previously, credit relevance remain profile increasing our exposure.

our XX% the now As our you of will see concentration tenant debt than X retailer the outset Trader quarter, net Sporting that page transformation. further a our active measures with of two approach points DICK’S on We lower held announced have to locations in XX non-renewals, bad our top concentration X Joe’s to us basis and Pier supplemental, tenants despite the This fell to Pier out the ABR. debt signed year-to-date anticipated XX of with added. list maintain basis XX regular adding incremental tenant our bankruptcies. roster assumptions decreased year also the no with Goods, and After and statistic portfolio XX our sequentially to top former for enabled of on XX% portfolio watch points at quality our list, reviews see Beauty several in Ulta backfills X,XXX our managing you

spreads. Turning to lease

eased during in existing the signed single-digit increased each X% to to higher broader to a dovetailing spread a with spread. mid XXXX. realized first X.X% a line XX% blended renewals. spread with in quarter, quarter leases renewal during the Comparable X% to X.X% of first in Comparable quarter new Our trend spreads leases our

shop occupancy to retail first Occupancy expected in points the and both down. our XX% basis small as quarter edged We comparable continue expect to lower to XX in volatility as spreads evolve. anchor lease continues with

of future from our highlighting basis since the to XXXX combined quarter lease-to-occupied the and in points increased revenue growth the widest basis our XXX points leasing QX, XXX However, leasing activity, efforts. with continued spread first strong our

While revenue commence our occupancy of rent most the bps which for we in occupancy trend we later in to QX half anchor underpin leased-to-occupied X.X back lower and to million gains of our ABR, near-term, QX year scheduled in expect in expect key XXX this Notably, commencements expectations spread the represents XXXX. and year.

Moving asset We we $XX previously we in in market market. count to disposition quarter, California advancing exposure the total reducing to our remain non-target as $XX of to scale QX Seattle bringing community Further purchased in anchored feet reducing Edwards the Benson, completed our the our five and and sale center adjacency single-tenant opportunistic for GLA activity. million, Fresno, shadow within outlined. for in million, the our neighborhood market Multiplex number In the grocery acquisition a to two. Also, a our square market. North X.XX transaction and million and

Lastly, turning and few on projects, I plans last continue active to development our over the and expansion of expect in accelerate coming we to quarters. development our increasingly the our months to deliver pace progress

multi-family mixed-use our existing asset. redevelopment and At multi-family their cash mixed-use benefit expects XXXX, begin to asset. the AvalonBay The plans stand of event house East, credentials, the while move-ins projects also In hosting QX to of this in mixed-use project from a and today. well-positioned $X to our community enhancing portion in and Plaza historic the million preferences, the and of Lago building secular we on open quarter, to consumer the adds with del are line this flows as and six project Steve Our preleasing site earlier. completed of mentioned renovation for strength lifestyle multi-family Circle our

anchor addition benefit considerable today’s operators, we that are completion, and toward pedestrian continues project and our global operators, including represent LOI fitness the block. infill and brands will restaurants and in Cinemark national from that adjacent complex mix, unique in on traffic leading regional activity to negotiations drive this with merchandising advanced have Theatre As

office addition pads already which GLA. commercial approximately and asset At workforce June we QX on planned building and an Crow our relevant One investment scheduled XXX the expanding and others. or event continued continues H, for units the from X with feet multi-family in have to Loudoun, recently for on to target to medical project. square the Amazon, XX,XXX groundbreaking we Moving QX and critical retail the Carillon, Microsoft, joint for venture includes in our a region remain G and technology for mass, of Phase This significant and from in executed Google groundbreaking Trammell benefit vibrant

expansion commenced has break continue While for to with Main retail we Downtown in Street having early to in have the and we to velocity year. later entitlement to expect been the project Promenade to-date, leasing significant anticipate we the Naperville, this process ground At preleased portion XX% work QX. continue not mixed-use XX% through and of a

detail and value our revenue enhancing portfolio, With summary, I and through development drive back of supplemental that, to active in of a our tied amount long-term As and and our high on we expansions. active ongoing near-term provide near-term rents over a Steve. approach our value on pipeline our leasing while new focused six to projects projects. to XX quality efforts pages merchandising our operating will streams and call creating optimize In remain reminder, current nine of significant mixed-use to driving the development turn two-pronged

Steve Grimes

Thank and our realized for strong hold results, time, our our to our At required first the on drive you, same your more to the ability objectives. Julie, quarter on focus goals. we we deliver With XXXX and meet visibility updates. Shane

on in the to I’d questions. like delivering over our repeatedly have With As back team keenly to turn that, they XXXX. focused operator is proven, for call the

Operator

Instructions] and question Our ladies from first of Citi. line Thank Christine you, from comes McElroy gentlemen. the [Operator

You are live. now

Christine McElroy

Good morning, Hi. guys.

Sorry, a if on bit I missed little late. I this, jumped

maybe talked you of I on not of of you those you leases expected know ABR how stores the remaining and that about year comprise about X, of are previously could XX of are thinking what’s Just bps What the Pier rolling ABR the seven comment do exposure? four those closures, the renew this exposure. timing regarding and to

Julie Swinehart

the those our up be XX that Yeah. seven we this expected had Thanks for were were year original quarter. that Three and out Sure, of Christy. proved renew. renewal in There for four true would first the of to question. not

the table. off are three So

of off our top came XX X Pier list. the see You

down points was about that the year basis end. basis are XX there of from as points XX they So

Christine McElroy

of more off in remaining coming exposure then year, fall do the And of the you Okay. sort through sort to expect years?

Shane Garrison

Yeah.

this I think is -- Shane.

past this we Christy, think, just year, we expect, vacates. assume I anything

Christine McElroy

Yeah.

Shane Garrison

And I on remaining four. the as we kind basis of remains think XX-day year, are it this talking with

see that a to some progress be of seen will on locations we in think, year happens, but regard already. what proactive, So couple and have continue those we I this you

Julie Swinehart

And add just to on…

Christine McElroy

Okay.

Julie Swinehart

… in terms estimate bad locations Pier of when the debt that X our those points not we not to for how erode does XX year, basis four were renew, for estimated assumption. of revenue

if the cover differently, three, different to to something we not said that had We year, do assumption So were debt this for all renew. to renew three but intended modeled expect already that not those bad four those cover would seven. it’s

Christine McElroy

Got it. Understood.

And and Shane, and about to QX, commencement then regard for presumably coming leased-to-occupied in spread expectations XXX talked you Okay. have same-store your the you points too. space basis QX in NOI, then, off-line

play end in should So expect expectations rate and your year that figure for spread the of same-store trajectory that the does I Where NOI that to am in back just half? commence balance that. out trying we into the how to the

Shane Garrison

Yeah.

bulk rent in as about, quarter I as certainly, talked think we short, the commencements, story QX, QX. long I prior, last think, of

little impact a swing if either at look month’s just you XX-basis-point $X less is us. to than Christy, itself, bucket about million perspective, some the a For way,

level our and the that markets, connectivity on, focused specifically, at relationships as in we turning very XX can and focus I are we municipal think So we we have can helped as fast on effectively the have as regard. the rent and us in immensely and as obviously,

our So point. it’s this to at basically ball drop

I left about commencement is, over think But XXX,XXX most most the the execute ours of leasing is done. the for the this spec again, rent at a side to beat little lifting of only of heavy part have kind leasing on point. We to do.

could As to year-end occupancy. just it look an average it you, on relates at tell more occupancy, I I

year-over-year basis Our XX in we execute, points, to occupancy between I a to somewhere and finish. just need we basis and is average are XXX up think, position again, points

Christine McElroy

you. Thank Okay.

Operator

Thank you.

of the Todd from Our next Thomas Capital question line with KeyBanc comes Markets.

You are live. now

Todd Thomas

Hi. Thanks.

end Steve, revised the last two actually question, was growth to and here the quarter better that lower First questions regards you NOI was high in the that, expected at with the range than mentioned also quarter. same-store of

So is, came bit the a when to bit do little first question revision uncertainty, last around is environment you And question, I about feel holidays were of a the at after better guess in headlines and little Julie Shane, a hitting the seemed how some time there quarter year. then bankruptcies the be there the today? early for range you that the on will about be talk the pressured occupancy of third you the in same-store context in decrease you of expecting of that before lower magnitude Can both the quarter? reaccelerating growth what mentioned in end fourth. are and the just and that based put was the quarter that NOI second revised maybe low last

Steve Grimes

kick will Todd, it is I briefly. Steve. this Well, off

on the part early speaking, the leasing of fruition this had Shane quarter. came mentioned, to momentum as generally So

of mix the about same-store alone a a And it’s was beat X.X% rent bad the rent debt, points XXX just of mix was and that, also So between then basis that through the on top that’s as expected. a or nature bit of on of coming beat merchandising holidays base had than have the some well percent higher little first off we that the we the as and quarter. little a of

little what is these for prior be in XX QX, $X.X was about, in say, the we on what where basis bringing rate. is about comments we is range over this expect to over are XX between So were QX it beat of and midpoint on that average online. terms NOI, come do guidance as which the down quarter, you bit Shane’s just averaging we again points year then for the a do the of of the kind delta points tail bringing the rate The from ramp the end occupancy, occupied our QX. of trajectory that To task the basis and of year. about of numbers But million assumed us well being essentially in to on rents going I to earlier think, are leased

are to XX-basis-point at to takes that just So that’s this But and a month as Things a them later bring a point. caution We we earlier, it on Shane out, them task. if month win. if we fairly contractual pointed them people too need get online. move in are drag XX-basis-point we a that’s also in,

task So looking of life. at how very the on toward kind are But are tail end year the roughly delivering we that’s around of range. we of midpoint guidance the much with

Shane Garrison

rest the going of Julie’s Todd, the But back the color the take first and to think, quarter to, call guidance. And initial I some for in question. just

of of it there down big to world, of First a the kind look, bit this or to discussions X one that and wasn’t this Pier feels Us Gymborees blast a or generally or was of do dramatically. but like said, tenant, on depending from the hhgregg looked at "R" that things big Sports or more and all, tenant where tenuous, downturn or no a we Authority. rent situationally, like the roll Toys big had think that point spaces is event the I one X says This taking better, two feels we us tenant that any point, or

has activity its system. So lot that worked box I way think a the through of

better rolls markedly rent have the and has do generally, we better diversity we think, space literally I quality. quarter and every the certainly in tenant

we overall again, We thought even think, kind XX%. you, have memory feels more retention basis XX% the standpoint initial we pro taken on than I would we a tell and have feel better. much So the cash would flows we retention I at and around guidance in and future tenant recent our moderately, velocity XF, maybe of it it’s up be -- a from conviction forma on

CapEx helps perspective perspective. little from and stickiness any better, tenant obviously, a a certainly a cash it’s flow from So

now. space with So, overall, feels velocity better the right very the compelling feels and

Julie Swinehart

what to shared, And every the just add you our beats right in on the Steve, terms hit was category. to aggregation guys all there in QX, of small really outperformance of in points

XX,XXX see next in year so we you come to occupancy in the renew March QX, that In end feet terms earnings to there a day, of that’s square at It we XXst. that’s is occupancy there. -- that not originally out had moves out on will referred call box the expected

our Gymboree You XX. out little will a feet QX. granularity three will in where have less small. locations. see of out we -- square just we Those ABR in online, QX That’s XX,XXX And another would very just coming expected Payless total that very I be is of are on is is then in locations more QX. say XX% $X.X in than the little that million QX. expecting

So, much weighted, again, toward anchor. very back weighted end very

and see a the disconnect GLA. will you the ABR coming So between even online little

anchor, total probably is XX% to but I So QX, in closer GLA plus sorry, am XX% is XX%. QX ABR is and the plus,

points back mismatch little basis the much move coming half XX Shane’s same-store. So either direction one with in to anchor is the of of month how is and again on year, point,

the in early forecast. it’s full the year we So year, in but feeling confident are

Todd Thomas

then Shane, And helpful. the real follow-up or you just the That’s early. right. All for in on time a rent commencements quarter mentioned that were

to for work up years. improve heard get several a that of times been starting loosen few What’s to have sort occupancy, that see there’s bit. and permit time the are accustomed anything we changed to now complete a little We That’s what you tenants and if recently. have to more not

Shane Garrison

Yeah. great That’s question. a

play especially -- the we I have continues have the turn we visibility Dallas lens, taken into and quicker, the Todd, but from scale what sense, have think with not that undertaken other have commencement adjacency demolition portfolio, and where can connectivity can to of a out, but on on makes process of services have we initiatives, thinking and There’s and of also about are also to to rent a adjacency tenancy turning lot provides in tenants permit only process. municipal our it that maintenance do services when to provides and R&M you we adjacency our team a just things the focus lot That is because quicker. dedicated operationally team that specifically, maintenance Dallas. on we you scale.

day. the the demo For time hand in the we next are to actually last the for of permit so tenant work we quarters, the start proactive and literally have had first tenants move, in prep couple and next had

a that within every better day. set a function and and something of focus to press that’s is those I get very continue So markets. think, And a finite we much market at again,

Todd Thomas

you. Thank Okay.

Operator

you. Thank

of from from Derek Johnston question the Our next Bank. comes Deutsche line

You are now live.

Shivani Sood

Derek. on Hi. Shivani for This is Sood Good actually morning.

might the competitive comment assets in the how quickly Benson. markets Going Can bidding pool on quarter to those and deep process the Tier X how the capital for completed recycling you in be just sort in North of been? have might

Shane Garrison

Sure. Good morning.

Shivani Sood

morning. Good

Shane Garrison

non-core in deal. we focus both So and The then off-market opportunistic. market. in be was Seattle, It’s tough this relates which on that off-market. acquisitions. to truly disposition great an -- number happens your up you multiple both non-core very a that it was were XXXX had and this came a an to certainly plays we about think are just market an be transact. to now to to that it to we transactions team five turning and was asset Again, And have opportunistic point, The our said That market, when the has going first job. from done able as source asset year LOI outset, benefits dispositions very was is out operationally to that we a

to team in them. was that of we assets like number certain focus a continues of one long-term. own to Our markets This on would

to the well. Seattle best a and do great think, be So are And of an a markets the Personally, I transparency, off-market to already it is, best what seeing overall trade the the retail, better. assets think, constrained, of are yet get who I market. the not the allocations not extremely do top-tier best best we other to exactly lot around and able but think I as best just there from be I assets believe to trade. were continues lot had to as get better. There’s and get depth you will the

great I constrained. So assets think becomes gets it long story think, depth the more of short, don’t in great better, I markets actually

to reasons we what a those great certainly is are we add long-term. market think to happy For

Shivani Sood

color that over shop growth online share are touching years? come and what there thinking small about next just starts on the development level as some the you you on then And Thanks. side, the pipeline can could few get to especially to

Shane Garrison

Sure.

an see on fairly don’t We for, point. in-line -- well around half, the activity or have is lot year give the this we think A take. the grocery XX and occupied we side, have been year, at know, I hung of I

I side the your point mixed-use developments you mixed-use just and think bucket to look in when at on the the general.

We continue you to the see proactively a just and as digitally tenants honestly, lot into brick-and-mortar tenant see others around come of more quite on merchandising space. new and native activity activity

better tenancy on. today. focus leasing, has. are than flow ever that So but last overall the and think mix bodes not getting getting optimal Again, merchandising it even more much sophisticated year we rents turned I XX and well are they Tenants feels than at today were and only for

I very So right could a get XX, at chasing all nutshell, the XX think, focused probably mix, a I fair is we point. not of we number. occupancy merchandising that think, on in necessarily to But this are

little very XX XX have again gap. of but that in So to right bit the focused we tenants an opportunity, a we are on

Shivani Sood

you. it. Thank Got

Operator

with line Thank Instructions] [Operator JP you. Zhang Our the Hong from comes Morgan. of question next

live. now are You

Hong Zhang

has have reserve was I a into curious, How your announcements. XX-basis-point just used? hit been bankruptcy seems much Hi. that store in of Yeah. built closure it that and guidance already we the lull now

Julie Swinehart

XX Thanks and Steve revenues points as for we basis that’s the our Sure, QX below question. alluded mentioned, In as we debt, of to, under had just and bad Hong. recognized expectation.

think Payless and little there. to the the say So ahead year from into mentioned, for and or I left year, Gymboree, but exposure plenty potential pretty fallout minimal as a don’t want to likely and ahead going I fallout

are feel the and at we current like I unforeseen with it’s think then near-term bankruptcy So estimate. absent material adequate this point we comfortable a

Hong Zhang

you. Thank Okay.

Operator

Thank you.

question Capital next of the line comes Securities. Chris from Our with Lucas One

live. You are now

Chris Lucas

Good morning, everybody.

I I thought of acquisition, timeframe. that back your how that versus buying acquisition Shane trading curious stock, implied just Steve, or given one, quick the a you was over the X.X rate Just am about cap probably just on guess, north it going the

Just to in versus acquisition then back terms thesis you how what’s thought investment specific this give the us some context and opportunity? buying as for of stock asset your

Steve Grimes

I and handle Thanks, can second. take first, the the Shane Chris. will

to terms being I in I think, of generally this Shane has speaking, alluded think, opportunistic.

to worth within the looking any at We play we proceeds the market get I and that of target can we the get $XXX profile, assets. they get our target million with, are configurations growth acquisitions right make extent disposition value But those really remind purchased just to of back out sense, that to sort in better I to importantly, first right growth shares. have some everybody, want of drive particular, -- over creation,

this of We have we right as looking go year really we this in significant things long-term allocation, buyback lot and year, a oriented plays we effort that into on. that at capital now in have growth into the done a really for went of shares, are amount want to and of we as capital focus competing

we terms as the business, at at then Shane bit, and alluded of the in So and we to it essentially portfolio. look the this expansion a look operating portfolio

as those at being as We possible. are looking self-funded as

of decision of on there those what first what I we we looking trading, to we are make are us that stock either assets to versus of the markets the mentioned, and pricing from to it it at getting particular growth core make first being is be our least That But each the fund middle are is secondarily, are back acquisitions right certainly core those risk-reward for of own may or tight avenues those long-term. first look to where us. each we the the look committee. the we those the in light near-term. then right acquisition within want will look we and big look where current the at those out we the growth and/or should assets, and stock look we want in don’t expansions be sure assets But opportunities that last doing trading at Shane the of future acquisition to stock as in news market. So what groups get become know we available, well-poised in and investment is or see good making the at within buying how buying for we for could is That’s said, market. had sure we we

Shane Garrison

a I Chris, into the in this entitlement non-core my tenant very extreme you single opportunity to estate a growing are think asset core add, right? It topographic here, fundamental very I barriers. was unique what growing, spend market, think, a the priority So real just a country would non-core that I is is market extreme an with now and in favorite will call, high about the right when development theater a Yeah. trade barriers in already extreme barriers. market nuanced,

out to have You all and growing compelling high very which have should and educational great prove growth, got spending. attainment discretionary long-term

cap. So I -- a We off-market. transacted X to itself, were think at we it’s look, X.X the asset

case, it a on two that sales growth significant comparative, to an where a basis showed has, was it’s has I and think be a in of XXX marketed asset the points probably declining. asset, that standpoint, on is to themselves it trade an three high-Xs may From into first least priced wide this in well, a is and X. has that of deal pads all, CAGR pads had price our as theater years that’s this if X a included, a which basis. we maybe Last you a at XX-year declines of four

scale, on basis, we story all short, looked us the when long compelling growth made at sense adjacency, a for trade. So relative

Chris Lucas

you. Great. all Thank I this have morning. That’s

Steve Grimes

Thanks, Chris.

Operator

like closing. I’d Thank back time. this you. further Steven questions gentlemen, Grimes the Ladies at to for floor and to over we no have turn in queue

Steve Grimes

for everybody us joining thanks Well, today. again

forward many and have much coming then. four look you next so in year that positive. Thanks and very said, of you was to very, for to see five solid at will hopeful day. prove we weeks going are we ICSC being balance the seeing the and as the very all quarter First great That of as is us a to and up equally NAREIT weeks

Operator

and today. Ladies gentlemen, for this you. Thank conclude teleconference our does

at line have your disconnect participation and now you this your time. day. for wonderful Thank may You a

Retail Properties of America (RPAI) 1 May 192019 Q1 Earnings call transcript