FRT - Earnings call transcript Q4 2019 | Federal Realty Investment Trust

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Operator

Greetings, and welcome to Federal Realty Investment Trust Fourth Quarter 2019 Earnings Conference Call.

At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator instructions] Please note this conference is being recorded.

I will now turn the conference over to your host, Ms. Brady. Leah you. Thank

begin. You may

Leah Brady

everyone. Federal Thank us morning, for you fourth quarter for Realty’s call. today XXXX Good joining earnings conference

on to remarks. take Don are questions at Wendy and the our G, your Solis. me prepared of Melissa available Berkes, Becker, Seher, Wood, be They’ll conclusion Jeff Dawn Joining Dan call

be Securities certain the meaning within that this Litigation reminder statements Act discussed A XXXX. call may the Private forward-looking on matters be Reform of deemed to of

information, as statements as any include or projected anticipated results. Forward-looking to referring or or well expected annualized statements events

believes give forward-looking information actual from Realty Federal assurance can expectations no performance on Federal Realty’s that are assumptions, can materially differ in Although that expectations these our reflected such reasonable attained. its may be statements forward-looking in future statements and operations we based and

of release documents on earnings report a other on The we that our supplemental a and are affect package results provide website. are operations. more factors financial and issued These XX-K available of in yesterday discussion documents our financial our risk and disclosure that condition Form may filed reporting in-depth

per Given during of the on the two you limit Q&A call, the participants your questions number the one or kindly call. ask portion to we of that person

Don? to questions, Wood you begin that, the queue. the I to of If And additional please Don jump discussion have fourth with over call will free feel back results. quarter to in turn our the

Don Wood

morning, everyone. and good you, Thank Leah,

unforeseen about will purposes. income So, row, in quarter’s accounting as XXth of course estate last a to acquisition few the talk for And in real higher barring will XXXX for per excluding statement the minutes. year, year be previous than XXth in a Dan year the the was a FFO row, collapse, Kmart some share charge

grown continues morph other slowed expect that Yes, different. line the publicly traded into that We've again make But industry it's over here past year this do and bottom every let to there's to as year. strip growth single decade earnings, in. has claim. a and still earnings, growth single sink so that Please next can something not

in each have fact, XXX were share nearly surprisingly In nearly sector, those year. per able equity less combined X% Not grow XX to every average multiple FFO companies US than a times. of of REITs

One not of move growth power ago our strength Federal the way XXXX us following helpful relied with that skill immediate but forward sets years things the followed, that initiatives generating to on differentiated a with were with would that when earnings. decade in recession, which slowed and balance we the sheet broad the

aggressively rather and a outperform Row, like me. for We with initiatives and move long-term with & Assembly recession sentiment we than we broader Pike large were time, that a use because changing change able environment. to forward decade despite as far This were with plans planning preferences. the And This ahead. master feels challenging Rose, we're dealing oversupply consumer mixed result, a other long that dealing projects, to

communities construct Shopping and retailers, Darien tell and about Connecticut CocoWalk listening important a projects they at them. and less to risky communities doing on like things. additional established. mostly use already capitalize with We'll and on mixed Things we're down But the successful thinking communities in to midsized new Center restaurants like non-retail already what forward us the Miami that what's phases doubling equally serve we've

moving solidifying forward core sheet, our note and with and you'll for with better environments. making attractive well-located and shopping sustainable alternative the high using with the decade construction million haves if We're quality place and had We're by have proactively beefing aggressively long in nots look of next uses, we've more than and you incredibly among year-end acknowledging retailers By our environments. our with history. balance $XXX way, methods portfolio at the process, ever center tenancy, centers additional and up

opportunities For proceeds environment Free those New the office California, Shopping at And Pacoima, we're Hoboken, Brooklyn, on In Fairfax, that we're recycling business, nearly in Plaza naturally in York; of San in in matter reinvesting a far growth, words, million future like. Hermosa what Kohls worth the portion no Center. always opportunity per Beach, little better of Center, FFO and Jersey; Virginia. for the our New Antonio focused long-term State growing cyclical other $XXX with assets current retail building share looks

transactions So, that fourth what the We let's would point. closed said in the quarter did to do. the talk we about demonstrate we

Altos, through $XXX the the California Los in School we've months condemnation now. million from of the we San the for for portion been process First, District full XX-acre December received Center Antonio discussing

net our balance position than have a portion is value and year-end existing while those but amount little reflects a to obligation proceeds elevated cash time, the to the the those more sheet we us uncertain at pay on of And this. this is on to impressive. of The site, timing tenants the payments use

We anchored also plaza quarter Los in for in closed Angeles the million. deployment $XX [indiscernible] on

of with $XXX and these buildings capital was into of XX quarter. are New the the a of partnership the new on XX XXXX recycle fourth million bought based dispositions And quarter a Hermosa, cash earlier couple the mid-X year, fourth State When cap in of Free our when capital Jersey sales combined rate expected flows. smaller we raised parcels we in in Hoboken, closed that where at

closed The quarter. the month buildings -- closed this other fourth two in have

are month. closed this The two other buildings

we partnership IRR of given in were assets further generate $XXX an We January, to yield modestly strip be Brooklyn in to XXX able a properties, also million in that we're Shopping to expand holdings, the going basis Georgetowne And that's expect adjacent retail in Center sold, the Virginia. hope excess with points our previous that of a the opportunities closed and higher. on which seeing. invested in Fairfax, Basically in and

of square And we and XXX nearly per leases rents average $XX per foot, operationally, at year. signed million extremely ended Transactionally, than the fourth for rents quarter foot retail foot. more active, office was X.X residential We was leases a $XX average and $X.XX signed per two. having it X,XXX of XXXX feet

leases combined the created annual obligations seven-plus retail for and rent the Just million of next contractual growing years. $XX office

Our rental incredibly from retail, and diverse tenants. set office an stream of residential comes

On is and street the something just the Santana Row over complete on Northern to California. and incredibly next XXX $XXX including with yielding impressive. we’re should out check to you active Splunk and side, It’s development your end is Santana – building week. the turned North budget, on which at X.X%. Row million, really This of a and homerun last trip

in encouraging. of Santana at of spend spending $XXX income construction at million the XXXX. roughly million building, XXXX XXXX, XXXX, on million in residential $XXX street, budget, million Across blown early projects $XXX stage contribution building with the late the with at spend are the underway, on no in West, and is unabated. Assembly, office very construction income and significant in of continues until no until well interest Full was on this roughly both XXXX Both $XXX schedule Strong XXXX.

$XX August year that XXX This office this expected is headquarters change will one on as really building Row. in at & on new Rose big budget, North schedule Construction development XXXX. Pike in million there. Assembly in is office phase that the is PUMA’s the of spend Federal’s house flagship headquarters Rose, of of with the anchor roughly will American feel

executed square in moving under paper of with retail CocoWalk underwriting. LOI. trading than along other with currently and tenants fully for beautifully more feet line the our lease space XX,XXX or space of the signed for with We're office is XX% XX% spoken

this of million is $XX here later for and capital to Another begin they XXXX, programmed year. will be generated there

And adjacent XXX add banker, finally, say XX,XXX character we retail we grocery oriented demolition square to lifestyle that the now will at and parking in spaces shopping the center anchored our we apartments change feet the of will XXX directly space equinox Darien. Noroton complement Darien construction are train strong to can underway asset where where completely station and new of

of $XXX large most here that. million for the those year in and balance incremental reasons. projects incremental to of the status with spend I’d No just $XX an beyond next. and yield development XXXX or income go this X% obvious million

sheet reduce $XXX year Splunk rent-paying delivers while or turned $XXX in balance additional over million added $XXX Our And that. in Santana the projects progress. before XXXX to will an at tenants million be this construction in XXXX and year-end number, shows will million at that are so and after of building these

but Back different consumer as to future leading plans. in made bright remarks changing in of toward initially, I the we're a investing doing with projects edge retailer estate very a look business and demands we ton real markets

more the all share, that of expect forefront in per grow be We to slowly while FFO continuing to albeit, near term. the at change,

clear this at its mid- focus our the current certainly from of the up and of important. prepared to more real occupancy, relevancy it current in expectations long been understandable far uncertain long-term list my All about the earnings, growth that's path time and So, important. But company's is vacancies estate on have leased view it's and after short-term is remarks. and

the turn to addressing Dan over before questions. Dan? me Let it

Dan Guglielmone

and Don, good you, Thank morning, everyone.

as roughly the the of the for XXXX Assembly. same $X.XX FFO and the we quarter quarter period posted lease the uptick of adjusted record acquisition as at new An year in Kmart in XXXX, an remember, Another share per from faced of FFO standard. accounting we XXXX, with fourth G&A full for increase per versus for the $X.XX, year in in $X.XX

forecasted driven were quarter due forward level expenses and higher rental taxes and timing income non-recoverable primarily XXXX. shift year property real from on from term fourth higher a into in estate meaningful offset the to in was numbers both were property XXXX a than level by pushed The fees which last were pulled refund tax expenses,

that drag XXXX, to are but in these roughly issues of represented positively $X.XX quarter the back Both should of us come forecast. timing in versus primarily

by may quarterly we of successful really terms was FFO his results in primarily the driven activity seem highlighted in had all this quarter Don and timing this comments. muted, a While positive

the X.X% it came basically previously year and increased fourth for line metric POI comparable our guidance. for quarter with in X.X% annual the at Our

comparable an prior rollover, or XXX were average foot, quarter year $XX.XX rent. higher X% space XXX,XXX square per than full deals retail the comparable were Those on track retail results closely average X% of at rent written feet the at than replaced. XX% to respect With $XX.XX during which fourth the leases were higher the deals they the written XXXX

lower move at XXXX. to expect than leased though do the well remains portfolio that of Our half first we XX.X%

don’t the we guidance level metrics, our for expect the occupied. mid first for recent typically out, mid leasing of least of and will fall metrics XX% While we some range the aggressive occupancy retailer XX% XXXX level proactively given to our the in on the and provide trough occupancy half of

back our and into activity. see of XXXX latter of historic should we given to a up leasing rebound XXXX half pipeline However, steady the over levels strong

that and quarter reflected this A demonstrate in quarter we projects few disclosure XX, in amenitized is continued development reflecting further additional million $X.XX budget. note comments four add in of office strength like NOS $XX numbers. we not to highlight there. page offer that yield the rental in X-K, that time them directly XX, please the page closed business the X% out schedules I'd in another projected the raised sub-market our in we on growth for on and our on to on strength our And product our Form On on

Federal’s it's parts Now de-risked XX-year and mixed effectively we business why challenging record, meaningfully track these we I through execute and and redevelopment difficult of because model. this? do to our really mention use the It’s do have is development experience

XXXX to turn Now, guidance. we'll

most $X.XX the We prudent posture projected have the felt and some call; as that restructurings X share. a $X.XX cents We it represents late the occurred play prominent. range have in formal conservative of This to take since failures A.C. Pier into more to X.X% FFO at Moore, growth out. XQ formally tenant of consideration takes a This these provided XXXX range midpoint. Fairway guidance October per

executing last XXX this range will get in evidenced XXs. to week in some Santana mid facing returned XXXX, reflects Row discrete which all by headwinds our get Splunk diversified us guidance platform delivering to shortly, on I While the is as cylinders,

tenants Residential in of the start the year. Primestor XXXX Freedom assembly QX smaller at opening including beginning The Rose, a to in to projects & the over year. this the stabilization of delivery start CocoWalk of Xs delivering and of to expected aka Jordan the newly course delivery Cynwyd second half Pike phase Bala renovated in Downs, Plaza, JVs

none will meaningfully they be While to XXXX. additive XXXX, add projects these smaller in of will

in million the otherwise excluding failures X%, $XX which recent a the growth averaging of comparable stabilization and the have also We repositioning also redevelopment blended at X.X% range. of deliver would we headwinds by a have tenant term core yield to caused fees, incremental and portfolio X%

dispositions on new million note couple we non-core over meaningful and and the of a asset value $XXX $XXX growth provide accretive But cents will of more over XXXX. Also be XXXX roughly in which that creation executed during million investments longer-term.

REIT Whether These tell range accretive share in into growth recycling items if program can drive X% would other to together for disproportionate asset that's the FFO but not year retail some per discrete X% headwinds. to an FFO somewhat one.

additional Let color. me give some

we competitive gross with provides million over is headwinds time. in strength lease a and because fees, a our overall XXXX, business in us Whether term we fees of over earning $XX term provide had leverage metrics First, we it year can record the or our it fees. tailwinds, include our part of advantage in contracts

to back here. therefore strong expect XXXX’s in a again forecast not and drag meaningful levels we XXXX, While we getting do a forecast year

proactive last additional A will out opportunities, Late limited and runway drag. who and expense we retailers, replacing value be second beyond across Changing opportunities another continue we portfolio. longer-term tenants the remerchandising relevancy FFO. attractive, to XXXX in of evaluate headwind. drive which and will XXXX repositioning project of in struggling to of creation, but several at our thriving And identified we significant XXXX with source be have terms them long-term year,

X%, the us of growth which impact forecast announced those guidance, more respect to items expected And such previously headwinds at to assumptions in Dress we be to With of growth a other get comparable the identified failures retail the on XXXX. Add recently FFO top X% POI as highlighted. X% behind X% reflects in collectively to Barn. that to these range our just is

to The weakest will fee due first and be and be XXXX second quarters drag. of the term negative may even

note with been failures previously basis our reserve. XXX relief. bad and are roughly rent assume line This projected credit projected and guidance reserves the actuals. past tenant roughly of reserve lost in mentioned not this into is vacancy, years’ We have the revenues that Please points debt recently of and unexpected comprised from part expense, announced incorporated

$XX With respect per to rate. forecast up million roughly modestly we G&A, quarter, run XXXX’s from

the On redevelopment to million. side, and development of $XXX project we spend million $XXX capital roughly on

our custom, the this guidance or course the assumes over dispositions acquisitions is no of As year.

after guidance for roughly we and dividends million adjust flow maintenance as go. projecting will finally, We those of $XX million And capital. $XX to we’re free cash generation

exceptionally excess have year handle Realty value sheet, our over to of balance the million development $X positioned redevelopment become current the facility. We and and our onto newly a the nothing is Now, billion activity credit as extended or with creating wave Federal custom, we outstanding of structure company. capital on cash well expanded at the finished $XXX

effectively of times, maturity years, with steady our rate hold the fixed. As at weighted debt net interest fixed at average times, runs at X.X%, X.X top charge stands our the it EBITDA near a to the on debt all X.X average weighted now coverage ratio remains debt XX-plus at our our result, sector of and

a A-rated business with execute of anyone cost another meaningful of sources cost – plan derisk funding to we diversity the which our underway. than balance way meaningfully the activities sector is Our low lower development diversified sheet allows equipped have us we in a capital with

the plan game in place over both the Federal for XXXX FFO Our growth components NAV all has and for decade. outperformance sustainable next to in position

seeing to in open many in please my have for forward few line That's Florida weeks. Operator, a of all remarks look we for prepared questions. and I you the

Operator

proceed At Our time, question. Yulico Scotiabank. question-and-answer question [Operator from first with your we you. with will a Thank this session. comes conduct Nick Please Instructions]

Nick Yulico

Thanks.

question on guidance. the first Just

you see goal fairway that you more the mentioned a Was also versus any drag talk range I you look causing quarter? others, decision there and start out last things. last on think, affected about Is expected you also what FFO versus you If that the more some you post to call, put at the additional redevelopment?

Dan Guglielmone

No. No.

come that's ago. really come I -- of into, by it at the has the as X.X Good news look really didn't some October way. out was that was Really a – since additional Yeah. we the driver. primary the months morning. re think more late conservative – taking that redevelopments We just posture –

Nick Yulico

And Okay. think we to that affected question few outs the talked That's tenant helpful, about being second you is year bankruptcies. significant by a are I and just guess Dan. then this the earnings as about move unrelated growth

been, of, than of You’ve always in sort the more is ahead terms year this of clearly but curve a remerchandising year boxes, most. impacted

to – type is function risk of and be the going in new think So, of downturn what is, there of a about is in similar a impact it theme should wondering downtime XXXX? portfolio? environment the being I'm our a this How federal we vacancy retail

Don Wood

Yeah, to these trying And centers the and powerful that. We've place things – taken all important it's on start we it's we're be the where type in is co-tenancy an will believe and a is take really of notion making of to but that a XXXX a approach it's do Nick. me it's holistic terms much important we at let a more XXXX. in means place Well, more of what of including – part focus very look bigger a our and there. of always happening creating – what a that been

less different beauty; and stuff including including and will, type clothing, health food experiential you food Clearly, more of sources. if

in look is as communities And not XX populated in country of and their areas at around. we this and of middle money the including over So, staff with mixed retail coast the It's of Centers lots change in and a the know, generally. years. sitting next how the holistically as lots you major use serve our in centers people

just in will, terms of backfill you are And forward it's if that. not space. so, and we about thinking, And

in this are interacting it going I comes continue? when lives Yeah, think this it how change about a with retail. think major continues people do their because is does So, I to

do public but tell sustainability that that of we we of earnings great and well, important it's need going both a going be current on can't real And more the those to that great earnings thread. basis know things, that's to balance the than it are company to future. We down we along a with needle you, estate. But to nothing balanced there's as us our in the

Nick Yulico

All that makes right, sense. Don, make

Darien, progress on and Assembly, last Monica. question Third re-leasing at a the the Kmart, Republic on Shop, Stop is are drag spaces for Banana that & Just in Street XXXX, NOI, Santa on example,

Don Wood

Yeah.

are we may through The purpose Let up Assembly lease the big Assembly developed temporary because space. was Row. will Kmart go that me to those an that at of be continuation ones. and of those be a the But acquisition that’s

That we've couple Now, to takes of got do. years. entitlements

timing understand will, mitigation, the value long. so lost be of it's for The an rent. is you of That The why go has frankly. Kmart which planning acres is accounting will the the certainly P&L, not that driver. that don't all necessary I acquisition X is look that But on if driver and we'll created still kind to through is some the the the day

to Stop That under & going away. construction. Shop is not Come Darien, up are now we

so be And completely as a result on that use will parcel. different a that

won't We're not there. contributed so Shop. see it knock down. backfill & to the And Stop We'll income you trying

on piece a there of whole to notion land whole is the so create obsolete. And a of that was bunch how value

That station. train and wasn't acreage shopping needed center that shopping another center with as grocery

the coming So, years. to in that look forward

we're real progress much Jeff, rate. how I making on that know this at point, some Banana, of backfilling terms In an at to incremental want but you don't say

Jeff Berkes

point in lot tell we to Yeah. road where hopefully part Nick, down We're can of there quarter. negotiations. detail more we on really Thanks, next because the leasing a can the of give but we're us Don. not the And, you

the direction. more one, in right come So, that but trending on to

Nick Yulico

Okay. Thanks, everyone.

Operator

Christy question with question. Citi. next McElroy with your comes Please Our from proceed

Christy McElroy

morning, it. out Hey. guys, and conference Good for call on the our thanks for promoting

issuance million Don, raising – you just but $XXX have think sort of capital know we fund said additional you I Dan, additional also about million in you've for many free to is flow of about option, mix. to dispositions million, the terms as cash year got million $XXX how for In talked that, well? in but about how spend the as equity we XXXX. options of $XX an potential should should generally you $XX XXXX, this think

Dan Guglielmone

always You be plan, will of our know part that Christy.

the which So, all, start you're sheet that million at adds balance cash first of over of let's on looking with $XXX it.

sheet you can including as line. completely out is unutilized that, a as strong starting know, credit as So, balance with a be, billion-dollar about

recycle So, dispositions, not top that's of bad – but should that's we the a to the $XXX of I very million can’t and I'd say is that, no you it there's to or that doubt reality love still $XXX assume million start. On will portfolio depends. and opportunistic continue

but million the I part it's much did We $XXX that of will comfortable year it's part before. exactly we the in will to uses and than less reinvest. last of doing did is that where capital the of year. you have if know We just that the capitalization company, that don't be of the program, XXXX, we're of because

by So, with as flow of the covered than more think I past between sheet years. generated asset we're the in XX shown cash we've you along kind existing the balance business, sales, with capability along

Christy McElroy

pool come be amount fees, FFO behind like properties out $XX And then Okay. sort on if in And all you for to sort I'm comp could of I'm Dan sort of in XXXX of there's the drivers regard an are the how sounds through in have relatively the in is say any backend term entering the supposed that year. XXXX the loaded relative if it wondering to the that there. then the range. impact to absolute XXXX. wondering they'll million POI color thanks the

Dan Guglielmone

XX-year revenues. average annum, a at way Okay. per Well, $X roughly maybe years, annum. time the we've of year, it's is in typically per million term it look it's grown better to of $XX question. which over is million per over and total XX points because last I'll $X XX, million XX been Maybe about about with the start is our excess fee significantly basis

a is million of maybe kind range. bookend the currently of million level. in of fees $XX to expect creates the We term $X have what which we to get million don't to that back $X So

say wouldn't bit one big We'll I a the XXXX… have in quarter little we term from quarter had fees necessarily first a weighted. it's a in of headwind first tougher because of probably such the backend

Christy McElroy

it, Dan. Got

Dan Guglielmone

then could first …with repeat regard your you it? question, to And the lowest just term with fee at supply.

Christy McElroy

Yes, sir.

what’s Just entering pool might an in the have that XXXX there? impact

Dan Guglielmone

will things mean, I that moving there moving materially – kind be won't things. There some I around. we're think of but be

We residential phase moving are assembly Assembly Towson at comparable pool, Row as one Residential. the we'll to phase the the into going moving into well move as and pool. of the We're Rose be going probably roads be to two & and Pike also residential

those But stabilized. have all of

that And seasoning from boost comparable. so, you'll see there. that be They've of as material won't of part entering we the year a for one do stabilized pool. there methodology But in see you kind won't those a boost big

Operator

Our next with proceed question question. Evercore. Please with comes your from Samir Khanal

Samir Khanal

little front. on acquisition shifting I just guys. the here bit morning, a subjects Good guess Hey.

in You this guys the active of in at pipeline pretty time. were what's XXXX kind wondering

Dan Guglielmone

Samir, you and day, don't – no that pipeline Metropolitan heavily will does the want mean were time. change the in stay. that right? me all I the of York to New the question the on our There give is end that we the at focused XXXX got, for LOIs acquisitions Area we’ve you

else and – something Northern That to mean market. try to continue where by same that doesn't for just the will we those the our holdings way, in won't Virginia the pop doesn't we've that in thing increase that markets entered. those up. So, mean But

noticing One are more out all are of right that looking reasons are would who the sellers are clearly assume. things for get who the to we now you

That for in it's is we're center trick making that we even metrics. long assets two, in believe the a box the be a – the really or term in appropriate on depends for. that sure it up place us picking The could place but

So active, at growth. you this see throughout should is that point you if but future in will, areas anything XXXX particularly we targeted there that for the isn't imminent us

Samir Khanal

had kind know someone on you I disposition side? dispose about assets. what of sort Yeah. the the you guys to strategy And non-core of

– mean perspective? were that last how modeling little You possibly volume a active about the XXXX in year. sort be we I thinking bit disposition we of what from should

Dan Guglielmone

say assets don't would like I don't things the Nick. we know is for the the question, identified makes dispose how sense Yeah to out those – or capital spend because million market to I know will it million marketplace, and to But that should – the I we very what the I number did what tell Weather preparation than on. do first you much be. $XXX or too opportunistically. of $XXX on we've what have we – the that that packages in in figuring more

have. And so how model number, would dispositions there you that much budgeted the put is if just you we not can will, a in of

in XXXX we that should and dollars You the million way X done as anywhere have historically will that have over time. approach it assume from $XXX to same period or $XXX million of is what we

Samir Khanal

Okay. Thanks.

Operator

from Deutsche proceed with question comes Bank. Our with next Johnston Please Derek question. your

Derek Johnston

morning, Hi. everyone. Good

So, urban. we're going

Dress merchandising Below, they a Shopping at improvements, and to some Chipotle. So, Barn near-term mean, a GameStop, Brooklyn. stronger fair, Georgetowne you be planning, Hoboken through Five I buffet, they Carter's, a and Starbucks, have had a the Center? opportunity opportunities, now go Fairway, Can Mark-to-market your retailers,

plan? So, the is, and near where question XXX X-acre with parking It's going what's the parcel And are this longer-term? spaces. term actually there’s a you

Dan Guglielmone

I’ll jump going we the and we’re and population centers. after me So, build then Derek, density But, mean I in to around just the something Wendy urban, start ask that. there let

close then we’re New change those there CBDs. we suburbs, you of there’s or or – think Bethesda, York what is Santa is major Monica, in don't in I Brooklyn, So, if Maryland of Fairfax will, California or any are, County, That Virginia.

center Brooklyn that as truth. And, know we – you and shopping grocery-anchored a do still didn't got what obviously, that there. the hard in pass frankly, to weakness timing, think, part know, the don't up, we as the I process, underwriting that so, has And Fairway can of underwrote in at the price the that of to particular, we tell the at was with density

for know we there grocery strong. that ridiculously But demand is

shopping it previously shopping grocery-anchored prospectively compared based a be of and a center run will with how that rate on that upside that area, assume how run should in center. densely managed you very populated we will was so, middle the And with

shouldn't be you torn expect something there. down and to it So, else happening

You open that acre middle Brooklyn. run, better are better my of in higher lot view, hopefully the should parking expect in rent, park, they really

Derek Johnston

then Certainly, Antonio have to out fine. And Okay. San you've worked seems Center.

million $XX think you I paid guys around XXXX. in

it can works? from determined was portion how a you the and And to When million. the you out award sold that the combination So, $XXX proceeds? pay that's for have share under tenant will how

Don Wood

want to it take Jeff, carefully? you

Jeff Berkes

Yeah. the out but next tenants, with couple we've a and over start- mechanical relatively to It's And that. to not not of straightforward The going but tenants out to able going of is the on start the couple for years. going still things all to work play of most so process years. been

there's to don’t would want we know So, I Don, if add. that more much than that

Don Wood

Well, that estimation financial that point that is thing I you gain is of that helpful. obviously, is to so the statements expenses I gain where by paid in a maybe the have inherent And is an only conservative. out, to you point that’s design that and should very you know – are would to be there recorded hope

Derek Johnston

everyone. you, Thank

Don Wood

kind what conservative very we of of to of $XXX $XXX we excess payments net-net, after but million. And to It's $XX And kind million. in to it's proceeds folks of closer had guided expected. we're million net actually those

where So that’s conservative the – estimate. and

we we had result had good hoped. better a and obviously, than So,

Derek Johnston

Dan. Thanks,

Operator

from next Our Please with with question Bank question. America. your proceed Schmidt of Craig comes

Craig Schmidt

just temporary X%. recurring projects the out page mix XX, is or the new Thank X% if at projects the I which the you redevelopment this norm X% you. delivered On and delivering are which issue. are a at is active then wonder break

Dan Guglielmone

Yeah. both, Well, little bit Craig. a of

reality a high, are costs than it's question. is the the ago they projects. think result significantly they construction as I great other higher – a is The these were and of started are couple we years

it, don't So it's half of are of difference part it. that whatever whether there steps know certainly else. Call the or I

can has is complete piece see shopping of redevelopment half mix, certainly Darien you certainly a other The that. that mix. a center. in disproportionate a That's And

asset X% incremental putting a shopping be for Darien the that the the center believe is is the And income to like it where because years. that’s in where out one new or – willing the This the nature in is a we of the something same future that a at of XX where income, pad of we're an project goes. reasons and at out new of on will as front and do

of something not and side as with we’ll in too, lifestyle the do Darien it traction. residential incremental residential to we should rent expect like Darien the you center At X% component, Darien of the but a part big because on get, at gains say, of terms increases the too,

So as you’ve construction in also, a said, up. I’ve component big that mix are got but costs

Craig Schmidt

And that a of X, then event? XXXX all like of of before Great. end that Pier occur A.C. or the can any in re-leasing Moore terms or XXXX is

Dan Guglielmone

looking now me than love better and Seher at that nothing There's right asked Wendy that you question. because I Wendy?

Wendy Seher

we documents I be Thank do re-leasing get to that those able XXXX. you, do signed some in think Craig. will other and

more fair some it done that in in strong I a opening, in amount right think them which we get gives encouragement activity the that of see XXXX, of you'll XXXX. have we do now me terms will but pipeline In

Craig Schmidt

Thank Great. you.

Operator

Our next Metz with question Capital. question. BMO from your comes Jeremy with proceed Please

Jeremy Metz

to go just Hey. Don, back the I growth Good again. want to Dan, topic morning.

You this is the like game your through number little guys and opening a appreciating in detailed projects But which of will XXXX. be year, next loaded obviously growth year, this phased growth you're helpful. a income mentioned and backend more specifically sounds long for remarks clearly in possibly also

a the broadly year? number next for the should be the of for guys recognizing big temporary reacceleration point those any Obviously, growth some of and to any sort expectations bridge, just have of thinking about in moving this is pieces or pipeline reacceleration thinking you repositioning a we us about? at talked have fair So, it as

Dan Guglielmone

the Yeah. capital really we’re laid later a what XXXX. putting there. kind that out to There's of we’re of clearly Jeremy, you it business. what there's what in you’ve you terms work, lot be contribution will we’re in uncertainty well our said in love well understand – its I’d as and it – doing

for The retail big are many there unknown. this that’s what your space how is in to big the is space bottom question bucket. question and the of at – anybody answer And in holds the

we is – go this we should of the stuff, all and sure been X, as and number this doing all harder us be XXXXs. that. should think will it – something does growth or it better through XXXX making does we predict. to It be say, this it able toward so, make does it's looking May And relevant make on it harder is extremely okay, make like But to back portfolio to good as as go ever

to level balancing you. knowing tell will keep to you but what incremental we what’s bucket the to forward. the growth place growth unknown. in negative that of it that – so the the facts of to growth we're coming create would But got facts and the able capital when accelerate really just another everybody I $X end out difference no And of is not keep going it’s is matter incremental The definitely with billion today they bottom that tell

Jeremy Metz

Yeah, that’s fair. Dan, just a quick one.

You reserve. of basis mentioned XXX credit points that

Moore. You also AC mentioned the

XXX wondering those are on that’s Thanks. into that or and of that baked giving XXX those top the points are basis Just points basis you're separate? yourself

Dan Guglielmone

Yeah.

reflects guidance or XXXX. of what we with lost what be Our we’ll in revenue achieve should a projection hit

and it’s reflected gets of then a on that’s more that in guidance guidance. how project. deviate out So expectation then than of we kind covered play regards announced and things recently If failures retail our top reserve. those it the that’s worse with an in if reflected in the reserve we to will negative is of But

Operator

Goldfarb question Sandler. comes Alexander from your with next Please with Our question. Piper proceed

Alexander Goldfarb

Hey. Good morning.

end. questions got two Just our from

before at are you're do guys you guys spoken but apartments you’ve before a that core company. are do retail spoken Don, a your First, retail Dawn, that office, company, you’ve you First, you you

office been bright said, spot cycle. this definitely That has a

you're that on as Are guys having retail look going view or looking core. to involve company great, office, assets a we’re you has team is where on if pipeline could retail about you but focused think your development has at. more residential it your focus that office So, the assets is or spend more or our opportunities on you're retail, if it

Dan Guglielmone

I retail to come best can Alex, property able thing to say we be is me the to with the real get of to is do have. are estate people best that people. that we huge to guess, for And piece that way estate real we

a do always people there our estate So, we to how real to driver. is come get as the primary

involves Now, Absolutely estate what can it? with do other we real uses.

that. I we've proven think

retail then just I you've you and or will or properties play residential use of create actually or natural office retail. uses add incremental think past that is environment that the mixed where evolution seen what us years number for of That the that hotel off in continue.

a mean And have it and doesn't bread pure from Brooklyn previous in like question, and value and butter we won't how when we environment. we rents increasing so when we when do to to play a -- you answer not did the in tense create know our retail you

to when that we're But a going take which Hoboken as CocoWalk, one possible certainly for looking for broader other residential We of or in the I that it two us. just doing projects. are have or with component that And with but world. see own shopping that uses – is time include or think, center than long we Center real going every do has obviously to look estate it view we're you other it's back we don't we're large or what piece folks a Friend a or that with you Darien at it at, do

Alexander Goldfarb

it's be I to realize child. cycle the – this just it's seems golden funny that office

have you X Santana. the revision positive at yield So,

know leading the that you and So, office. try team I if to was But push more to don't second question is… your

Dan Guglielmone

we be don't we to estate to when back destinations. sustainable time office there, important and no cycles. better, It's is is this thing Alex. one don't This will say is are time for a do building long-term cycles. me good Let retail that and you We invest – real there

we with just make want are move because and us example. hot act going so, for to a And way. we no, I – industrial we you're don't And properties to that right company see it's focused along not long-term buying always sure now,

Alexander Goldfarb

general, productivity all about could are closings retailers you sort your good parent as are looked these meaning? pretty obviously stores, you at tenants Okay. in necessarily retailer or the generally And that like retail some are the question then liquidations is with of of to and which close, take logic closings otherwise wouldn't full your are some is calling feel follow some I’ve second retailers, or troubled that of you haphazard, portfolio do announced, are going but would

full these had announcements, this apart that pretty liquidation Are we or happened close you that yeah, feeling closing pretty a the have much of one all a were or some from they caught by you're offside to ones much one. like, going

Dan Guglielmone

the illustrative. or real good question, we store deal, a would not why a or to say the this a would whatever XX% as good to I'm need close and for or have putting kind of do – on that's percentage to and tenant would idea renegotiate obviously. a what's exactness, store going Well, on I so logically a XX% be but I of

But there that too some be because made so in are decisions of as closing today obvious a they there is, as made, to used your are and percentage, not is will, fit are what stores going point here, because good being of can performing broader they you being X percentage, are to that don't XX%, plan that forward. if company a be of that market business decisions some

There that are sure, other do by that occasionally. reasons take us they surprise

example got fill better be make alternatives or don't surprised more it we point mitigate categories the of a closed You the to to get know in not, able how structure, risk you have we've and than I that can decent like sure that certainly ownership know with with But, door. overall, see really of restaurant to got for some but where restaurants a estate. whether surprised backfills you that. performing great you And because is we've real here

Operator

question comes Kim SunTrust. Please your question. next Ki Bin from Our with proceed with

Ki Bin Kim

of that back rate expect the kind from picture to growth bigger and we the to can Federal. go Thanks.

we the should the way that you can like on have redevelopment XXXX to you how give is in on – looks expect you any maybe and So, NOI today there the ground from from and expect XXXX? just how some that known that projects much can you in development color from

Don Wood

of When you capital of good XX Well, X-K I it it out and our – let's go returns. I laying do pretty laying do to way. does out page a mean XX job, and that think, let's this the

can those projects going coming ultimately of new up contribute. to good get ones and You a what idea pretty are

way, the Now, on XXXX in much that doubt construction then producing forward. be on there's does not that big And They’re starting and will big by later projects. that those the timing pages no until numbers the two income of the have certainly of Assembly, an slight stuff more it impact the have with stuff. an of in of that there's because dump on but in does rest happening and case kind Pike it's impact trucks project the got Rose or &

there's XXX Dan assume should you way, on Row Santana XXXX as through, stuff a lot you're starts the the some of producing. is when in in pages more big later to that and Splunk, get you'll in XX went in And but when So, is big going one coming. XXXX by – including, XX a

to you'll back-weigh So, that. have

So, still we're we're growing, Bin, still Ki growing.

Ki Bin Kim

know trajectory. mean at the investing growth had and asked the of That's term, the on the to or near reason medium or we years figure right I decisions, growth for future a is trying those X% the to all when couple and is least questions. market that FFO out of get in but back it's that why you're low we've I I that I Yeah. asked X%

Don Wood

No. And as…

Ki Bin Kim

just… And

Don Wood

Go ahead.

Ki Bin Kim

you decrease that and tenant on of that already working to try trying a you anything to hand to on And which have I’m that out leaf are you perhaps when downtime when gap have moving downtime? know a

Don Wood

yes. Absolutely

that to rent our it In the time. discussion process, a first to company, not if all from the reduce the recorded the in for along that initiative objectives read first P&L tenant person’s fact, biggest of dollar that single the with could leasing thing, gets major and goals you is

would most how like things priced lease, out simpler a not that. things the includes agents And a the how in coordination some like companies it assume who and they assume, in you that of focus things like it the primary work materials assume, It terms assumes them. gets in of and some some suspect and XXXX. you marketing how all does space use tenant might would way it is And and that happens leasing use changes this and this it I through,

Ki Bin Kim

All right. Don. Thanks,

Operator

Please next proceed JPMorgan. your with Mueller Our with from Michael question. comes question

Michael Mueller

few things. Yeah. A Hi.

talking First, magnitude that wondering, I recently the about the about? bankruptcies the and you was of – you've can talk been that were the timing recent unanticipated

Don Wood

Yeah.

and your good – we estimate. like helping of answer forth an think of, will view so kind X. a a, these of, I restructuring you and taken Pier holistic with an terms a, back, don't made kind and what potential there’s processes. anticipate place we've that for a, estimate stay – in I look, in there's uncertainty taken think in a And we've kind getting specificity stores how you with – of of we that of stores like

where we're, mean good X, in Pier at them. I released pretty shape on we're one basically, think I of

an Another one trading in and tough is region But should three up one of and going out it stay it's out. of paper unpredictable end of performing the the is remaining have year. leased were bankruptcy by of because the top see their two stores to kind the process so we'll and through one them probably and plays go it's each of, to, how them

Michael Mueller

questions quarter? maybe And the fourth here. numbers it. lease a other was couple the What Got come in term

Don Wood

what quarter was expected. and $X.X about of million we of in with Lease roughly that term income was fees gross in had kind line the

Michael Mueller

it. Got

Don Wood

Got it.

dispositions FFO million spend, the And guidance into last no What's equity baked $XXX spend. assumption million of $XXX – think of to it the in question, I with guidance? XXX investment XXXX was and Thanks. Okay.

Dan Guglielmone

Yeah.

the we've of out kind guidance the with But equity, what’s balance our course consistent that and sheet terms year, in over reflected we year is we to of incremental have over in played that don't be $XXX it the the years your in use have Over of got what million would about that. range the done of models.

be been of insurance the leverage, will to neutral, issue the in cash that asset got free We've that other fill able sales, hand, kind in sources addition of the be flow. cash incremental the equity leverage box years. it to whether leverage fortunate gap over we've on tools got tool We've to opportunistic a lot

Michael Mueller

Got it.

it. was you. Thank That Okay.

Operator

Tibone next Street with comes Advisors. Vince question. Our with question from Green proceed Please your

Vince Tibone

you Are such adjacent impact clauses closes? immediately once lower it grocer morning. Fairway, curious, allow I'm shop tenants? co-tenancy the Good Hi. that small grocer when typically to a rent other lose does there just pay how as the them

Dan Guglielmone

lease be No, It didn't wouldn't that located place there – while impact that any no we not, are wouldn't is was that. strong in certainly be that such in And before particularly our write there. Vince, there lease. like

just just grocery, that So, box. the

the can and traffic that the grocer balance counting in impact of you would other side on of better putting – to the terms But the that have space, something on. a that balance that, of the imagine in the we're of what box

Vince Tibone

sense. Makes Right.

Let you five are of me just next kind how years, out let's there? how is like say general, bankruptcies by more the you expecting of of industry were kind Are as smaller occur surprised Fairway just bankruptcy? you [indiscernible] in just grocers worried the that, here? to the And about some the evolving over regional grocery

Don Wood

was surprised of one respect ways. me Frankly, the due most one due what knew – all for let they that One, most to there the that much what at not Fairway spent important time of it bankruptcy. with our parts two our did asset, of question Well, much out was of in the figuring diligence answer if diligence, at demand and buying would you how rent pay. on we and for was space

no, all. surprise at So no there

don't about terms not and of I up. shopping five the is best from be category, boxes bigger other goes mix places, just products about these and what now. centers, different really two grocery of of places retail of are these will any I we that back – to here. than part the talking this – properties to about to the filling we’re We bringing In years – very new question, kind beginning were the

pressure the particular to go extent grocers, which the the groceries way all sure. But more extent, And more niche, well-capitalized that – so, shopping they out, less have They're under to neighborhood are through. don't should smaller any margin if be opportunities grocers to that or backfill particular in got community. that. center sustainable with again, what so you've agree what a Completely

a is It's stuff and the grocery size a bigger anchored GLA, you example, traditional in on more average lot lot for more and average shopping regional as know\ than lot center average in a And than land. of markets. on doubled our a on

a to So, alternatives landlord’s disruption it's it's all about options, the hard there in business. more isn't and perspective, grocery from imagine

there will course, Of be.

better as retail every Just destinations. to there will other we forward. be prepared to in I sector we're as move use well that But think create

Vince Tibone

Don. Thanks, color. Very interesting

Operator

next Tsai with Our from Please question. with comes proceed your Jefferies. Linda question

Linda Tsai

Hi.

occupancy mid-XX% mid-XX% stronger XXXX? hoping in and of the in and XXXX, to then XXXX or troughing year end occupancy leased half the you terms occupied. for where terms second But to to of getting In are

Don Wood

I levels. that kind would say at kind of of current back

But XXXX. over of the the in targeting through We a what obviously, back kind way of of kind that kind course year course expect we'll the to that, year-end dip and work trough… over our of were levels getting our of

Linda Tsai

then… And

Don Wood

…and still line. grow bottom

Linda Tsai

reimbursement then see impact lower an this given occupancy? of Thanks. And do more year

Don Wood

losing Sure. pay those that I mean, got enough triple-net any talk effectively space, in tenant that about somebody’s With absolutely don't leases to it’s with bills. – we and right. us. And

hurts that doubt no there's So, too. earnings,

pretty think. I I speaks the think reduced pretty, project growth. understand That's here And balance – actually. incredible that with of we that's the portfolio, the expected, are the point occupancy balance of is really to though important projecting the as FFO

Linda Tsai

Lucky's topic do Fare any then or some have And Earth to Agree. grocers? you of

Don Wood

No.

neither. have We

Linda Tsai

Thanks. Okay.

Operator

question. question you’re proceed Dijkum your with from van next comes Floris Our Compass Point. Please

Floris van Dijkum

you Great. in, credit reserve realized X% credit Thanks, does The that five-year credit historical your question. to baked guys. have quick A losses? percent that compare how reserve

Don Wood

It's out consistent of – those history terms in and There's our has with with but not actually line results pretty actual. been XXX difference been of here. since material in actually with where line actual at reserves. are points roughly we in And least the five-year kind come very a much I've the basis

Floris van Dijkum

& been then year’s on at your departments? a going maybe And San is terms we newly-developed of kind quick Jose? Boston how increases than to is than on increases have a seen question What do the Or market rents. different rents about for think you of in first Pike the and or you increases after experience the on softer think you rental Rose at What Santana? think should little that Assembly has residential? Okay. residential be And

Don Wood

X.X%, is tell I been the get question. Floris, over long information that from have almost Yeah. time, can you great CAGR annual best that we strong. not every mean, we’ve those obviously, it's and period of population as as rents I been for because during year our residential a which X% Santana to about it open has but that

really of then that come good more is happening, started in a big even – And we couple which building. that's again, Assembly, during over Assembly a and interesting the supply. adding XXX-unit seen AvalonBay rental X%. phases first it's excess And all [indiscernible] growth we've now, only added remember, years are with Now, you because it to out we of residential. We if – is with of

real strong. that's So

for or three side the three been clearly flat. therefore the four County terms the of first County, rents Rose and Montgomery was years In four over on past or – Montgomery it’s essentially Pike weaker. residential &

in on piece. the traffic first from and very strength we're much is seeing line on surprisingly, the months seeing strength XX way, the signs that And that counts in the We perspective. that the sales are of not real now retail last XX with to by

So that up as is to doubt more no the become these that communities ignores top. residential mature, there

sustainable, to call X% the at So, over see very properties hopeful these long it, term.

Floris van Dijkum

Dan. Thanks, Great.

Don Wood

bet. You

Operator

would Leah At over Brady call you. closing time, for this back to turn like the to I Thank comments.

Leah Brady

of seeing of you. weeks. look you forward Thank to Thanks many for next We the in today. us couple joining

Operator

concludes This teleconference. today’s

your may for thank at lines You disconnect and your you time participation. this

Federal Realty Investment Trust (FRT) 11 Feb 202019 Q4 Earnings call transcript