WPG - Earnings call transcript Q2 2019 | Washington Prime Group Inc.

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Operator

Good day, ladies and gentlemen and welcome to the Second Quarter 2019 Washington Prime Group Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today’s program is being recorded.

And now I’d like to introduce your host for today’s program Lisa Indest, Executive Vice President and Chief Accounting Officer. ahead. go Please

Lisa Indest

welcome and second XXXX quarter Good to call. earnings morning, WPG’s

expectations, certain we laws. as to are and subject call, uncertainties historical today’s risks might are forward-looking matters These projections, that other will relate to security During results. and federal affect make statements future not or plans the defined statements and the beliefs, that by events

of earnings detailed description these release various a refer our risks, For to filings. and SEC please

of supplemental discuss each comparable which also non-GAAP and Investor certain of website. the to included measures, reconciliations Relations SEC on financial may the our non-GAAP Management GAAP in financial measure our information filings, are measure available section press are release, packet

CFO; VP Head Scott, Josh and Dan Members Development. of Leasing; Lindimore, Lou management of us Yale, today of Senior with are Mark Conforti, CEO;

Now, over I’ll Lou. turn call to the

Lou Conforti

Lisa, everybody. hey Thanks, and

excluding sheet to X increased to diluted Open X.X XX%; income turned we’re guidance Tier growth X.X%, NOI and new very flat; Let’s Dan his year Air executed schedule XX year occupancy $XXX is and held to four kudos and to date; least bps per the team; we was costs leasing $X loan Tier basically or mortgage reaffirming XXX to out lifestyle events bringing closed running stores, sales when and leased X points our we’re Open foot for was Lakes; of forecast spreads Tier XX% Waterford X%; during addressed NOI of Air vacant from XX.X% and the X out XX.X%; Open and with under which we XXX and we’ve to ahead rent X,XXX XXXX tally we was a occupancy interest of negative announced quarter; for square XX Enclosed at loan, for loss square-feet for definitive totaling to sale $XX growth and more rental installations second mortgage we right, department decreased NOI basis combined; for XX bankruptcies, comp albeit XX% we million four tendency increased $XX of FFO per we with year-over-year both our $XXX; quarter a recap of agreement X.X% be Four term X outparcels is equating resulting and Trust; Air rate dividend to a asset X.X%. sale ground comp cotenancy maintaining million whereby XXXX at collateralized of initial Open Tier Air announced which X%; share quarter. an increase for to million assets, we’ll additional $XXX for Corners and All accounting date, comp our buddies pay XX million for a million Property what respectively; $X.XX leaseback the busy by

valuation taking certainly mall the and age. WPG the Hawkins, much fictional the of during Admittedly, captivated certain covert place revolves million replete become exploding set Midwesterner appeals I a is Berman. town also I science-fiction regional attraction it U.S. operatives right, and around is that the pretty the within enjoy Russian Well, by XX with a Things Stranger Netflix households. All have stranger thing. sensation to personal of storyline XXXX Indiana,

or would the XX places. these find a another heading cool in Fullerton west four City, night way going all lifestyle, entered Duran King, feeling hop could Chess regional and out I gathering Chicago, Back of Austin omni-channel, industry such as ages. for Johnson I side walk on into west vernacular years sporting they Well, Growing the There or the you up in some so. into Tampa. really bus, of was wouldn’t I blocks which north guests Instead, experiential, was right on if evident the This whether then miles there stuff newness about cool my a a lived Missoula words few from of delighted recall the latest was malls, stuff as Avenue, Mall. to step a many Duran Avenue video. on Brickyard

often I’d she pick Hickory up basement. more proceed lot, her would or which fill up definitely in was at at make Farms I’d I Myself while Addicted end date not would the other not County after Bette my usually point stare date early evening Love. shift told an Seat side Unfortunately the the Merry-Go-Round it her into with Eyes. parking usually to wind clear Dancing Instead, last Egyptian, sat to was And on as Davis my blank. than I Like or my we to perfectly Walk in

it’s forward passive to and landlords Fast and the both years. plain tenants see intervening became during

introduced Herein Gang something the & generally lies were resonates Fresh, as with Kool within and the it experience our million so XXX we recognized time and opportunity, Fresh, our every guests. town we or visitors annual catchments. And still it a center

While the the Today’s reuse centered asset curation adaptive of stores. department has be the events serving as to and draw XXXX of attraction. physical the newness the tendency, of around itself and installations

and me, upon tiger science. of quantification sales the rocket by which of continued And profitability. the mean as and comes occupancy in right the it objectives tenant these costs, working. per believe when have such more best it’s experience sales eye The to operating square customers More a we It’s increase not focusing illustrated dynamic ahead both improving can metrics direction. foot of

share by Open assets, Turning prepared Tier at analysis, financial the the Tier to constant. X did setting Air, other for our effect current of in portfolio this our a value recently We rate We solved and joint ventures of company’s which price. valuation. X cap

assets based other to solve factor and methodology valuation. widely accepted Okay, the X assign valuation was research Tier i.e., those third-party upon remaining for

the it cap assets. for Tier heck placed XX% Just upon of X rate we

I ridiculous the XX% have-not going at to rate, even The when we the surprise relish who’s moment current cap goofy Hawkins, the into prove placed assets assets stupidly the just Tier and share category. the our company a plain residents result X would of colleagues pundits wrong, At my Indiana. and are if price, trade and

have So lease capital, energize also tenancy questioned assets. the our you naysayers ability heck to and our access space, out diversify of know,

we’ve accessed leased as store and We capital redevelopment, space, ahead relates to all what while and it inline transparency disclosure department of have guess schedule best So class done? vacancy for other we’ve addressed providing supplemental information. in

a dimensional to Starcourt never Mall any for no So Demogorgon out no you, Scoops our leases Ahoy at evidence in closing, albeit gain been Down as I has of Josh, signature. I to Upside there’s the can as owned we assure assets well of have whatsoever attempt Last, presence. access few think

dual third I’d for business the party than us strongly binge other Things of can back. watching that to mullet remind suggest the in Stranger and serve reason a season no a upfront purpose; how other

Mark, gear up.

Mark Yale

and of Lou, $XXX considering hand Thanks, good and to credit liquidity cash on with quarter facility. morning on million available We approximately when our everyone. finished capacity the

announced quarter remaining from and during We’re million of of million outparcel proceeds Waterford the million the third also nearly, another $XX a Lakes from associated over approximately next still the the recently $XX from million the the $XX announced year expecting Four with potential of sale Corners. Four Corners XXXX transaction in release transactions, the $XXX proceeds second recently lender from alone, of reserves transaction. leaseback Over

centers the maturity This fully associated April matures refinancing CMBS proceeds puts position our sheet a term and by maturity XXXX Air term is through our with both leaving for And of at well pipeline. us of address the of to the four executed $XXX our only upcoming even available mortgage related October. bonds, to over million our Also, when before considering strong loan Open due. redevelopment the to stack the in our credit this anticipated of loans our this $XX secured excess million end come commit continue XXXX, we which million is that unsecured debt secondly, facility liquidity $XXX

as the really In of like the the this all XX more associated transaction, retaining during able ability in involved of raise exercise the the maturity redemption properties initial term mid-X% to capital factoring the terms year in when the sale long-tenured of the implied future. range we debt with an attractive improvements Thus, to the as We finance in capital. capital important debt while out and believe the four the profile the company, cost mid-X% rate leaseback the yield today, debt. equates extend to in in long-term range, we’re treat of

the far financial Bottom this important of $XXX robust line, year. we we circled additional to so providing our over also marketplace, in additional still capital representing assets access when continues be a the to It’s have are out us our to flexibility. pool raise have NOI, unencumbered liquidity of XX% of future that total point to million with questioned pleased nearly

to enhance opportunities we to will liquidity continue further explore Finally, our position.

the we transition servicer Mall our continue million mortgage the portfolio, the of debt. to along of improve Square $XX we to West on X of July year, related this did As with quality our Town back

We our also of way $XX digit assets very delever. together non-core a of million secured us the of and year Ridge these to the debt. back have us for expect mortgage with West transition debt encumbered with to efficient end by Plaza providing Properties, Mall single yield Each thereby

those so be addressing time. Air need Lou believe As store, Tier with making XX leases boxes portfolios, considering currently department solid XX% are the we in mentioned, boxes, department which XX XX the by portfolio. to signed respect when vacant to via currently negotiated Open boxes and space Sears X we progress over and store of the our Of this within will repositioned operating the or seven occupied LOIs, address represents nearly are open store

progress to led and happen. great our legal is and team by appreciate the groups this development construction This we truly make approach,

We spend the million our additional estimate confident years. three locations over projected years next of to capital of transition also to around five in $XXX originally necessary all XX remain

XX spend owned If you pipeline currently full Remember, $XXX around on drops the boxes just XX non retailers projected Seritage. excludes the including to the focus by boxes vacant, million. the

to turn me our let financial results. Now quarterly

end going towards guidance into the period, outparcel Our FFO for quarter than of driven was range the landing the per $X.XX the larger gains. expected upper diluted by primarily share, second

it of with terms last expectedly year’s generally was this bankruptcies tenant in liquidations. by and and NOI, anchor forecasts in line challenged primarily year’s comp In line

from fact, negative the our In quarter for would’ve the in first Toys and reported. of Sears, performance R for NOI we quarter neutralizing flat versus bankruptcies, line and seen X.X% to core closer Us, the impact that portfolio when Bon-Ton we the

our cotenancy. rents half discussed the last to performance, improvement growth already as expecting terms last were of year comp second the we should against seeing start in we most second anchor loss of but to earnings difficult and As was by the burdened quarter that be began during call, we

second the to for XXXX, only year. our fourth for and Air the growth Tier X% performance expect third result and comp half from for the year overall X% X This XXXX. this of of negative we NOI in of and of quarters in X% full comp should negative deliver on Open portfolios Accordingly, NOI to improve trends with average around

In the major changes our of our assumptions outlook, guidance diluted did our terms $X.XX previous by share. of supported This no guides. XXXX range reaffirm is per to $X.XX the we within FFO driving to significant

While continue over been to operating growth when repositioning tangible see several a state have and next do pressured we last store years, progress on meaningful the factoring results being the made department year, for of especially front. roadmap

replace confident beyond, to these at to only in closings, to loss As but make looked we rents XXXX better. from related and address our cotenancy not remain we our and ability properties the

at $XX and bankruptcies from comp our million leasing tenant portfolios. our NOI with anticipate generating year in meaningful when vacant and factoring space X to stabilization continue some of growth Open department along over store estimated least of next in in from activity, additional major other experienced we redevelopment we X% of NOI Tier combined XXXX Assuming, Air

now your With Thank to open the of that, we questions. call you. any will

Operator

Ki first Bin the SunTrust. Instructions] comes from Our [Operator of line from question Kim

please. question, Your

Ki Bin Kim

ratio things requirements good guys. deals, capital for any like end like ratios we on anything the reserve the Can your talk ground if other about rates, things for base that? economics morning rent contractual like cap and lease Hey, or coverage are there

Mark Yale

starts NOI really mid-X%, the interest X.X%. ground, around pricing necessarily it the it’s ground year. coverage But modest of remember, I improvements. fee be as per collateralized Yes. at on in mentioned, mean, is Ki times terms the the lease the place. X.X% will The Bin, will probably escalate mean, four Lou not in at I the to the just just by It X.X%, that’s

challenging would to a that be on do future So we continue more capital, assets been to that. to Those own traditional improvements. we probably the the if raise choose a would have for in very it way us And manner. thought was financeable it creative raise to we just in

are when And as perspective, the that’s cost of redemption think our mid-X%s. the attractively you implied us. maturity from the evaluated in right think to And capital, debt for we to the of at So today we going rates importance the where now, out we be that’s for that profile. extend debt, priced of it’s capital in look if We place. the really XX-year capital

Ki Bin Kim

any of leases? are you ground do opportunities And looking in to terms other

Mark Yale

think a have transaction. levers to not opportunities. of done probably I good We liquidity. could chose our in we’ll continue always thought evaluate raise size was We to. to have various terms We this that we larger

sure not to plans we going now I’m right type transaction look any So of this forward. have at

Ki Bin Kim

debt treated asset be debt? covenant transaction to is ratio, this will And secured your about talking total which XX%. as I’m

part have And that much room how be You’re if equation? up inching would curious XX%. of towards you that’s That’s left.

Mark Yale

to we as debt. ample While relates secure capacity our have

overall that because neutral I just out this’ll talking for think about you’re swapping debt. to our be it’s debt And leverage.

improvements the you remember remained bulk of value If though, the where has the unencumbered.

not other X and the the we West. happened it as That June stand think expected to transfer specifically and July does servicer transition the XX. reflect of Ridge our keep back I Town the covenants in of of to West properties. thing on where our That to mind, relates as

books. million from covenants. that’s off the And that come the continued $XX sales. certainly collectively our of helps So Along outparcel will debt with proceeds that

that So with are we with comfortable feel covenants. perspective, our from we where

Ki Bin Kim

lot, have talked flow for ground paying Okay. of And out in million about I cash – lease $XXX you a the million, you’re we’ve $XX dividends. that this know but

we that to you appealing? cash you to in allow that start spoke dividends I IRS more When think out time decision pay to become of flow. form the still last That when rules allow is your does the would retain stock?

Lou Conforti

Cash versus cash… versus – stock

Ki Bin Kim

dividend? the cutting just Or

Lou Conforti

an same this didn’t giving undervalued giving our shareholders. Well, would conviction company away the remains other we the have we to unequivocally dividend and impairment – away if policy surely our share – be permanent a a is that are incremental

we’re second we board and answers it out and done and And the there anything and in question maintaining all, So is our board are we always with XXXX, nor the said ever we Lou evaluating myself we the what will imprudent part. do – And first figure best, will Mark haven’t and the conjunction dividend. anything. is

– would you portfolio this in dividend discussed, Smart so building, question the capital in land deconstruct Bin. what and debt long from our property raise term the growth – is, I Mark it’s you, I congratulatory commentary term have long and All We if right, have on land on effect. capital Ki thought answered as productive, – mark or I question. be a

Ki Bin Kim

your right? we flow the like Yes. maybe still could you $XXX its seems easy asked I why that, right? of mean, that mean, of on in but tough cash retain, mean, short I capital, source price I term, stock million it

Lou Conforti

love respect thoughtfulness. to did, But you. share upon would I I not this? I conjecture to I’m – with up a am going not to a going cut. our appreciate I price. – impact share We going I’m on for go but Can conjecture I’m with and dividend hang second do to conjecture. price think your

not are with here to We share around play price.

and we’ll our here under are wherewithal. is class dividend are kind build operational review is go dividends infrastructure obviously company operationally our always We review from and there. to financially financial under And world and always that has policy and a of

Ki Bin Kim

All right.

Just down year-to-date, X.X%. you’re saying, last question, is about NOI

a up does Your half. basically pretty year the X% in significant is – it around guidance for X% there, ramp negative the imply second

confidence that Or that what the that for items events and seeing number leasing expecting can gives guess, you guidance or I hit that pipeline? full are you’re your you in year? you So

Mark Yale

Bin. Yes, Ki

I think experienced and As cotenancy. in remarks, this anchor start already third of the about talked going year quarters I we’re we biggest comping periods against we started to prepared up where the where lost factor the is had rents fourth in

seeing of self, driver impact a second that in us what’s is about when two those to probably really start really really year to So relates we down of than to foundation laying to down going combination drove the but top of negative the those flat we that and of lead and still we’re where in half you closer On go boxes. the going could replacing the the better it the coming just as the R what department the we’re online, stores that, of a to performance really think it get quarter. still first through And Us that But you list for Toys start cotenancy, long in we’re XXXX. half biggest much working factors, it’s through. really growth will because we’re second to got in the that and confident were factor

Lou Conforti

about sequentially. Think it

this space lease line spaces. Dan obviously, We of line And various They have a respect dealt are If mean, and and sales, XX did rented estimated team doing. are transparency times. – absolute XX like cotenancy. and in with continue quite of those some come goddamn expectations with disconnect an Josh at It frankly the there’s their is it to provided entire visibility and seems to it’s we rental vacant always with beating of iterative that and out our extend online come replaces on Dan cotenancy. our respect our addresses leasing I income. that our and to process

being the forecast you you space, same-store that lease you get with growth. said, X%, So resolved NOI boxes,

Ki Bin Kim

cotenancy flow, cure addressed boxes XX how the you’ve cash itself? that once those And the much losses of

Mark Yale

Air going not to to incremental going we But Well, is certainly get our Even the is of chunk plus cure million the with cotenancy million cotenancy. does mean, of million growth talked also $X about we incremental a in all mean, in Open that It’s XXXX X benefits. all $XX the talked in and impact XXXX. roughly you’re I $XX of cotenancy. Tier happen. that I about not

continue benefits see third. and forward if a I as we the move that maybe So to had number that’s something XXXX, on but we’ll to put in a

Ki Bin Kim

you. Thank Okay.

Lou Conforti

buddy. Thanks

Operator

Thank you.

from question the Goldman next Our of Sachs. from comes Burrows Caitlin line

question, please. Your

Caitlin Burrows

say good past? to the than that but expensive would in assets sale done Hi, and to I financing which covenant leaseback, back to and requirement you morning closer you’ve topic total total of why XX%. the guys. getting chose the you the some it the guess is Maybe do unique debt is to non-traditional other things was more that

Lou Conforti

first. Mark, to We both want answer. you

Mark Yale

it. loan covenant treated debt come I our covenants proceeds of we not it’s through quarter, have as when evaluating, of $XX at to you’re between second and And we it’s be I No, of plus reserves that went million really It’s we you at I $XX where a look were I because driven mean Four mentioned, we’re debt from and perspective, the from off some make that’s covenant back. debt. get to sure the going to to Corners want that going going versus the end another as just million had

on covenants. we’re comfortable we’re So where with the

we’re we we’re talked also we’ve longer want about in going bring And where on we’re the to of working to and look we want raise And leverage to to that every day. fact be with So that for term. on. capital an line our keeping eye back ways to continue

Caitlin Burrows

just recently? stated guess what on that have is term leverage that I long target, you

Mark Yale

to over the years. X It’s changed X.X in not It’s times. the

Caitlin Burrows

then… And it. Got

Lou Conforti

sector? best we sector. great number our Third are Tanger then SPG or now, one, in I best in who’s and us. third best, The number third Right the two, second think the

Caitlin Burrows

at XX months are next guys something that look when or trailing Or guess, I EBITDA XX metric, months EBITDA? you looking you at else?

Mark Yale

time, kind yes. at are we mean, place looking where in the I of on we’re

Caitlin Burrows

Got it.

year three in the – Okay. just know of income. includes XXXX And to in lenders create the one then this properties can so transition to and we this taxable of guidance terms

much just XXXX? you’re wondering, taxable a tell how income could So you us give or if expecting color any on in net

Mark Yale

Right.

our when our for that record here talked at look dividend estimated the about our this need nothing the have of we taxable share going of has changed year. a I good think that proposition per to various income we dollar and transactions we’re portion cover on to been we’ve

Caitlin Burrows

I guess the a way any Or dollar? portion it? quantify of to just further good

Mark Yale

I and where no had would of dollar of we’re look means framework good think the capital bulk that at I we per within chunk share. and so return the range, last year

Caitlin Burrows

of then, how in million about phrase is that guess Okay. because option, is perhaps I’m concern like I’m year. dispositions a guys cash redevelopment not best And or adjusting you through this, currently it the you may at but Waterford the that different XXXX, company of maybe also thinking needs fund know, interest think in I annual XXXX dividend those I $XXX of kind with to ask leaseback, the lender remaining in way. debt Lakes of when kind mix dividends, not an outparcel keeping Can the it be use going but happening. the sale per go transitions, perhaps of

Lou Conforti

sense just share the prudency. we Again, Miller all, dividend outlier debt board. We terms evoke our policy prudent portfolio. always, continue is we’ve we in of it I want Lisa we’ll I versus And be leverage is those whether dividend and and the and always better, less And everything, it make whether that option. much something doesn’t we’ve grow under will energize while and financial cash to our pool, companies unencumbered XXXX have Mark the is down, we why and review discussed get be an balance seen it were didn’t structure. we of really policy Modigliani to to – general, but would consider our optionality, be debt if doesn’t and great tremendous the that just maintained use capital same. by our in but but

Caitlin Burrows

guess, the needs? on consider maybe in order then would factors you right XXXX, your redevelopment determining in for dividend then sustain CapEx And what Okay. I to

Lou Conforti

It’s a Again, of board. function capital. on return function return of it’s a versus our of

Mark Yale

cover… dividend – cut our mean, I

Lou Conforti

single every Then at think a that common – kind waking the about moment. of we things

cost foot, of as valuation the with framework of making our we’re absolute all occupancy While bullshit such sales doing profitable and increasing company. our tenants on per kind under square things

Caitlin Burrows

FFO dividend what that When think though you as and you dividend, Do then CapEx the – that not like or about maintenance is what guess. guess is? if of… the numerator development and denominator CapEx that takeout of part I I redevelopment is the coverage, think

Mark Yale

we’re starts what Absolutely, close we board with are you’re dividend distribution the our it one setting in part back and the available we the to comprehensive believe of distribution. what look routine pretty what decision basis. think out FFO, XXXX look that’ll funds in But available at you arrive funds into dividend maintenance covering whatever of that’s for at And we at the our through of and CapEx or are making. policy on goes the terms and quarter-to-quarter a We goes the kind leasing. factors be review for that of that non-cash

Caitlin Burrows

any about in redevelopment boxes So that. like that the a what redevelopment the other kind is then and addition But needs? of anchor cash need to

Mark Yale

things raising short $XXX it’s satisfies very time. equal, of about. liquidity that and of million $XXX talked to as as frankly, a cash function million all in $XXX bucks that we’ve mean million flow I well period surplus being Quite a are

Caitlin Burrows

have go more, queue. I I’ll in but couple thanks. a the Okay, back

Lou Conforti

Hey, keep going.

Caitlin Burrows

the Then terms the Okay. of was one other boxes. Sears in

guys out it open today good know Penney. J. though there C. people. they’re And have through. I’m I If whether properties definitely on been refilling you’re concern that have progress you guessing portion at Sears, from working hear guys on what it those. you your J. hear of we too. C. Penney, I or ones still making enclosed there’s So look

If Sears could did go the on So sensitivity sort C. give wondering of XX%, I NOI. Penney you dark. was or of J. locations or if XX%, those your impact to any detail currently open XX%

Lou Conforti

to seven second. Mark it we While a – have over I’ll turn in

Sears, many how seven? remaining So

Lisa Indest

Seven.

Lou Conforti

And that cow, of but Sears. really take XX vacant, to guys Bin, want have again, saying, the you side. Seven just other thought out I hit instead, like Ki XX would I let’s be – people holy

seven, So where of there’s not don’t box I one would back those want that yesterday. instance we think

– it Mark. I’m sorry As relate

Mark Yale

Sears relates down one $X in that to this little think with a very relates to half first excited of Sears, million, portfolio, and location road. I connection it say, I The the our just back it be we I going to staying about over think get the was quarter. talked ultimately as impact would we of the in location,

we a share and terms what not are the J. And think C. of they significant relevant that’s So, your impact. in Penney, you fact I maybe just Dan in portfolio heading direction it that the in as to right like now. thoughts Penney’s, our relates can of they’re

Dan Scott

the Obviously, – But, fact. future. for Penney the well. we retenant a opportunities the do that have I I of us C. think know That can now, that in think to J. will years don’t said, be Yes. still future, but the some don’t will around. as boxes closing of stores Penney J. J. five we I any from future C. predict I think think C. Penney in they the be some

as probably low rent. they does end, next very the And what does have all lease one our J. two years C. on except XX% portfolio than – renewals goes, Penney complete that pay As far the have the for we we and more typical a one. for

So C. the near we risk much in term Penney. don’t we with J. have think

Lou Conforti

Caitlin. All right,

Caitlin Burrows

Yes.

Lou Conforti

As one impact it and relates are goofy, C. the lots let’s done the Penney’s J. every if visibility, a case, to C. But income the of look They lots goes handbasket. always single think of us draconian you What The C. world than most – I’ll team is is a the away. most J. better what which cotenancy the a make is? statement – in and Penney’s, heck actually providing well impact good preparatory which J. darn Penney good. job. merchandising that from to C. do generally goes – pretty number if merchandise. darn calculated, CEO that in job, has Penney a play total good we our our I actually, and the standpoint, including J. have think

And let thing. other me one mention

crap We and said, And JCP But approached interesting interesting the about know always all unsolicitedly why, we’ve – rid being that the you larger box we’ve all of number? been about with crap. are we because the have what’s – space. being sold gotten

Caitlin Burrows

don’t $XX know, I million.

Lou Conforti

dominant probably we million. And have than the our a the more under analysis of right. is by the a that velocity now dominant $XXX which X, you’re town town leased That’s leased fact we’re million, $XX line. all XX% Little $XX again, which we’ve in we departments. center, center And rate. with look the cotenancy at is we at rid portfolio which Tier generally crap. velocity, gotten cap at the interesting the trades at that our because the is But as Look

Mark Yale

just to of that Penney number, XX may the the C. in the satisfy there we It And because on is clear, we’re very the be releasing no fact assume could there. department also overlap assumes announced cotenancy that working store not well that not repositions space. does J. any

see I going our this. Penney’s for navigate within we prove even if work town us. in we through. centers. They’re confident important to our through don’t One, would can this to there’s can So, C. demand just And know don’t J. more do portfolio. industry. They’re important navigate what even we transpire, to are this that something we But that

Caitlin Burrows

it? or them of way? it max about upper be it like so potential doesn’t XXX% it is of it if if work this million about was irrelevant thinking that just of Like think $XX closed, that $XX correct if guess I impact, like million would And or XX% them closed, to

Lou Conforti

not exactly or pretty It’s culinary good. linear. It’s

Caitlin Burrows

that. like something But

Lou Conforti

green really Dan it the one and that, puts takes to our I idiosyncratic by to just understand – co-part on because and kind of shade completely calculates and say cotenancy every and tenant. asset of there didn’t goes one, and least eye it’s the this at let’s the Because

Caitlin Burrows

it. Got

the in outlook, XXXX up that terms NOI talking you I could maybe be X% next to Okay. guys know, same-store were And of just about originally maybe then X% year.

Now pretty I which at changed least was it’s anything X%, is similar. with announcements by and wondering, like... the if has

Lou Conforti

mean, a manage you you threshold you said over and I and No, delever. minimum expectations

Caitlin Burrows

Okay.

Lou Conforti

but get say I’m to at our to I attorneys, not goal to have over-delever hollered to going or is yes. by

Caitlin Burrows

you do one your closing what I terms potentially as how the going there, shrinking and in your was your news in presence last terms of have stores. expectation June forward in portfolio? in Then many XX footprint their or Forever for in is guess some of

Josh Lindimore

Josh. it’s Caitlin, Hey,

size XX got feet of portfolio. inside Their XX,XXX our square we’ve in So average the is portfolio.

several the sized, We have healthy. to XX,XXX, XX,XXX large any So took years right boxes XX,XXX, they that square don’t exposure they’re foot ago. their

Lou Conforti

reorg they’re the fare can to versus the I I closed, located, as call it’s not couple be well if given of historically, there we we – they the certainly, there’s within happened would catchments what and stores – quite, this assume evidenced characterize quite again, liquidation. are – anything not which of bastardization. that If And we’ve the kind

Josh Lindimore

agree. would I

Lou Conforti

Yes.

it good a Let make content.

work we before us stronger because we at to square us it them burdened per crap. at with we assets and to those that foot sales look He as we’re Let t-shirt. continue with make but XX. Forever speak. we aren’t Josh looking going rid with We’ve cute everything Midriff solve do is leasing, assets, set gotten and XX, FXX our our XX of wears wearing very

Caitlin Burrows

everyone. Okay. Thanks. Thanks,

Operator

of line question next comes Our Sullivan BTIG. Jim Instructions] the [Operator from from you. Thank

Your please. question

Jim Sullivan

morning, Good guys. you. Thank

all, a on of guide I question First have XXXX. for the just

X% down kind the You you kept of same property was per guide. the something the your I down end. X%. did just top curious outlook Yet out FFO from down change I take guess leads there take share of range you FFO same-store that guide find to NOI why that down outlook a didn’t if of not and to And same also you the – to range end offsetting top that was for weaker

Mark Yale

Yes. Jim, it’s Mark. Good question.

talked and we at bottom range. back we the looked went the the were you focused had on about very of if we quarter, first of end think what out said I coming

focused we as we first down really being X%. coming quarter, on the been guidance So, after had provided

in there. was the And that. really change basis XXX of when we there impact comp no of offset at growth, points look much take overall it terms doesn’t So our to NOI

we comfortable guidance. So original our with still feel

Jim Sullivan

in during like closings And Dress about, they now wonder just quarter that but called Barn. critical that But if watchlist we’ve the kind do any moved tenants been that have QX part there’s thinking on. far early Okay. are of terms watchlist, tenants maybe tenants some of immaterial heightened aware on of I maybe, in of significant we’re And as all the to QX. the of then pill in that, kind second a have focus tenants your concerned are obviously, you’re announced the there and as ones that other

Mark Yale

watchlist is mean, about can has question just moved we All publicly. share I one onto don’t that tell tenants asked you our somebody watchlist. typically that certainly the I a of the

Jim Sullivan

And shifting announced. to focus the Okay. then the transaction ground lease you that

a about coverage You NOI talked for time. here

the lease. make just is something to understand, subject assets not $XX are the assuming, by this a that transaction. ground NOI that’s like I’m to And sure, So a four million I taxable generated

of as You’re it to not because advising taxable trading guess It’s treat kind the I debt. a it that’s Number have the so debt, one… option buyback. transaction. to you as us

Mark Yale

perspective, accounting correct. an that’s From

differently. be I tax a could think treated bit little the

Jim Sullivan

about the of Okay. unencumbered balance think NOI. And then we

associated that four nature unencumbered, the treated right? So not with assets as of transactions. of NOI Is is these the because the

Mark Yale

deduct look I not look I’m because is, you almost payment, at at is unencumbered the way lease it’s that, asked but that the can quite we you sure ground financeable. it remaining NOI

Jim Sullivan

Okay.

you is just best million, it here the about same way prepared mentioned remains the given unencumbered. therefore, – for segment it’s a financeable. would asset, that talk is you the number financing – that personal the for comments available think kind the to the property asset of of adjusted that So what NOI non-land NOI number? be property when like in $X Can balance about ballpark $XX unless the you talked about the And million

Lou Conforti

is pretty they Union, seriousness, Yes. my the ubiquitous. that all in lease – And by It’s real is Baptist surprised since own Chicago, in XXXX. owned the of how in dirt you’d hometown much Theological because estate the still ground good previous of land be

Josh Lindimore

ground a we million financing. have Well, I that’s long-term mean, over on lease Pearlridge $XXX we and of have

it today’s that’s way gets found it markets, where – be traditional So, in a to some And we I think financing, tap today be challenge. creative back get properties capital. into a could it can you that to these CMBS with

Lou Conforti

for same just debt by or service going us an not little take it’s tiny. divided content and going upon there cover that’s the to we issue be still be But ask into massing we’re – so it’s is premium, account, debt of ever, for And proceeds a a not us. predicated bit – don’t a service covers to by divided

brilliant think a this was I financing.

Mark Yale

not we’re financial. plan And also that we and it we’re part point want our necessarily be assuming put just capital of we and to trying would is financing clear, to make the that

Lou Conforti

Correct, correct.

Jim Sullivan

so, put the the description financings. NOI And that of more whether of not? kind future through for in or expect Number financing preserve indicate just one, with that this is you and Can you kind assets a looking think said number duration to carrying to, example, the to look other here. likelihood financing to that the as I for not unencumbered assets from financing NOI ground remaining opposed on the what subject two, you’re But don’t lease? majority get brilliant you of of purposes your these and you is you’ll you mass financing just a you do these to putting thought on that of that some four

Mark Yale

unencumbered forward mean, specific we tell not plan, do our assets encumber this assumptions capital right at Jim, now, any I in look can what have you I as we point. to further

raise, were we transaction. level up I think a We a certain it. that’s lease have probably done So, mentioned larger how with of could I targeting came we ground

remainder these no have properties of today. the to We encumber plans

gives to where I our as of we is unencumbered navigate business. this we gives our think that our have point. point us a flexibility is through NOI at And XX% over we continue us still in are lever and

Lou Conforti

about access unencumbered towards spoke creative long pulled have well date. we that million XX a Sears Capital We we are stuff love other you pull. which we’ve dated And the And done of go. capital, $XXX doing may redevelopment very And as long we’ve have going of capital. the $XXX is We that what exactly getting lots spend one I redevelopment all them, million weak of think and of say was to year dated $XXX as million to delevering, between to pool. and don’t pull fungible. said. leavers that But think we’ve

Jim Sullivan

Okay.

assumptions So and on costs ground XX% about just deducting so were this right, to make that changed have lease. that what from the then financing prior haven’t unencumbered you’re when simply NOI, very taking sure the much the the you I talk

Mark Yale

we would be That’s it. the at way looking

Jim Sullivan

Okay. Perfect. guys. Thanks

Operator

Thank you.

of Our next Goldman question the from Caitlin is Burrows from a line Sachs. follow-up

Your please. question

Caitlin Burrows

Hi Guys.

Sorry.

back follow again, the up the to the one numerator total that’s Does total leaseback the that going debt? get total make that confirm for transaction. the actually – wanted do debt with you’re by go Just get impacted it sale the one the number $XX or on by down is transitions it this up the just going to leaseback sale assets by it call ratios debt does but not other it million. are go to to million, make $XXX I

Mark Yale

have or impact Sale no on leaseback the will denominator. numerator

Caitlin Burrows

it. Got Okay.

Okay. That’s all.

Lou Conforti

Thanks.

Operator

Thank participation. conclude conclude question. question-and-answer Thank this you. have And Thank does Everyone [Operator you this your session well as everyone And day. the for does Instructions] you. great program. as the today’s a

Lou Conforti

you. Thank

Washington Prime (WPGGQ) 25 Jul 192019 Q2 Earnings call transcript