PEI - Earnings call transcript Q4 2018 | Pennsylvania Real Estate Investment Trust

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Operator

Good day. My name is Jack and I will be your conference operator for the call today. At this time, I'd like to welcome everyone to the PREIT Fourth Quarter 2018 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator Vice conference. Strategy Senior may Communications, begin your President Crowell, and of you Heather

Heather Crowell

Jack. morning earnings you, for Thank Good PREIT's joining all fourth us for quarter XXXX call. and thank you

be make February facts any During included this reconciliations discussed. of securities only today and XXth, matters comparable as the the update Coradino, and of projections, These laws. earnings that and such or forward-looking beliefs, within GAAP undertaking are such relate documents expectations, to and measures PREIT the federal today risks of be to the uncertainties SEC certain in SEC. statements certain and makes trends, the call, meaning Chairman to Also results. of McCadden, statements are will filed to set CFO. PREIT's we other will are of PREIT Bob not subject no statements. and has XXXX, affect might events that with other measures that call are future measures Statements management risks and Descriptions these forth our on its Members Joe release today PREIT historical in CEO; company's filings. might non-GAAP makes accurate

the gap bridging over, guidance. our community Before into and have assist consensus incorporated in in out our supplemental company I new better XXXX the the earnings turn point analyst call to FFO I to order disclosure the understanding want that we between release and and

our We will disclosures. best-in-class enhance to continue look to

in our properties which for three previously two included NOI guidance same-store Our pool. of XXXX excludes same-store were

of special anchors currently we vacant services. in with out discussions Valley Wyoming is as expected the two are to with portfolio First, the transition

end this of occurs toward quarter. Our guidance assumes second the the

an is Mall non-recourse anchor debt. with and asset View three vacancies Valley Second

transition the of point. will at this expect portfolio some asset We out

a multifamily of a redevelopment Foods developer Exton effort. at to Square our of sale land and opening of the I part with we Phase Whole densification completed the parcel Mall, the Third have of as

seek maintaining flexibility we are We as future redevelopments. partners for

tenant for included assumptions, specific guidance. the In reserve we addition low $X million a at have to end of our bankruptcies

$X million $XX gains to non-operating our are in parcels densification We land as to initiative. in we of value expecting sale harvest continue million

that charges. stabilization will in be XXXX. tenant in XXXX million we significantly We as with nominal termination million after of District year late lease This to assumed to expect forecasted $X have and factoring in range is improve revenue Fashion towards building the FFO grand continue opening the opening in contribution openings $X

a million or are incremental repositionings $X.X to NOI anchor set approximately XXXX in deliver Our $X.XX share.

Joe Coradino

Heather thank per you anchor and core for square sales we A-mall the us, repositioning roadmap everybody. to an core mall With at company. and a outlining Valentine's Day XX.X% $XXX per XXXX square at mall completed transition behind space have the foot to and foot leased strong Happy

XXXX FFO While forward to board maintain already the perspective, complete following to as FFO we $XX Last strengthening a is for of in our FAD dividend executed XXXth deliver pairing from plan, and approved and the to of improvements which portfolio. future have looking business presentation our our openings. for expect we the million we our still beyond, and beyond. to multiyear and significant year we a week, transition expect due in factors a consecutive This XXXX outlook XXXX

stabilization. and Capital Malls and a anchor Meeting, District City stores have we our marching and towards XXXX, we components will full opening the Fashion Magnolia, Woodland In We this Moorestown, at add Valley year repositioned of impact will have throughout and Plymouth next year Mall year's portfolio.

advantage have capitalize which the position us on momentum created. and we first-mover quickly moving established we been to we've has the in industry the know, put you has As believe a

diversification tenant proactive sales, asset with densification our in a has opportunities. efforts Our disciplined low-productivity portfolio to approach store resulted department with quality coupled reposition,

let Now reports even of company XX, We've different. our clearly XX to XX, many us more to peer makes citing listened what vacant me point department stores.

We our unleashed have portfolio. department core no stores in

Let me repeat that.

we've our in is XXXX a portfolio JCPenney on This JCPenney dozen replaced none. coming already anticipate point, Further don't on in our we revenue stores don't because with over and this we to conversations, closings; closings. anticipate have any We based XXXX. any

in We the lowest have the among Sears exposure sector.

of a We growth XX size. portfolio small for also have no top feat Macy's of is stores our which two

as stay multifamily XXXX in and at of $XXX we're season, a traffic were dining, We off price was XX% addition portfolio the the to landscape. notably of like where core co-working demonstrate At arts we located had approach per well goods, to definition this results success and us. our not average. and signed new on have diverse The uses, holiday sales prior in the have sales of changed in differentiate Uses we for to with anchors of and malls. historically forefront at agile mall entertainment, hotel and achievement. help Over sporting units. the over square enough the evolving to grown leases breakthrough replaced properties fitness, this foot, Comp X% up crafts,

headwinds just department North traffic Apple, City we in we The debt. of opportunities incorporating forward Mall are premier Woodland leasers our also for committed, same-store is Von available land and redevelopment the Ulta Philadelphia, Valley than to we a cases will portfolio, for navigated we've truly Woodland tenants Gymboree, retailers years, repositionings. beginning If file drive of Sporting uses into XX% Altar'd Maur, a curating two the retained Russe will property. tenants be from to open Winery, of we the Its the our our to we've Yes, on exciting We've an and space destination Edge on environment or to This Tilt, filed created. the opening and destination filed clearly Lush diverse to Michael's we've Mall, year. story our In back leasing that for mentioned of generating H&M robust others. of assets re-leased quality to coming from conservative portfolio, few. three and will Urban in name we're X% speaks project. the we sale a incorporated space. and many mark opening challenging, addition We've at core the mixed-use the agreement Since department end Plymouth At we two the first and tenants new spaces. are marquee five add House. uses complete with first reserve create to add the an tenancy Exton, grand same Outfitters, power our that position Belk's really upgraded experience offering closed And guidance reducing through and Goods, in X% the this multifamily entertainment DICK'S hotel year, and with a Things high we've to incorporated range with at store XXXX. NOI This our look point, task. we'll creation retained we'll time, of REI hometown, X/XX/XXXX of at tirelessly two challenges three but or with manageable overburdened also department store in is the the a of years. have there where of State, Charlotte that's that and with signed At traffic increased spaces. fitness have the BlackRock the Onelife are former the underway work sales taken many exposure of that XX% X, the Fitness, up bankruptcy A-mall for as We'll facility; our Remembered anchor Ale to in Face, uses and XX% multifamily the strengths. AMC, environments. In units the executed peer we The our an This have move portfolio. Fashion our for our less mall deliver of first opening built sale four will core transition is with past continue store is the we a looking including solidifying and We're and been cement our hotels Furthermore, underway we've some significant and still of guidance portfolio portfolio, project, in store horizon. project joining and a unbelievable At and really density throughout the Mall full group. Our Without at the reopening we and The service identified to two in former protection. But been as has our bankruptcy approach company Meeting, pipeline question, the key mature XXXX, of the District our tenants it's from in bankruptcies. sales mall years. in of lineup Again, unique in our and potential over diversity Nike, are re-leased have to in Along for space milestone Grand in future have to a a Round Fitness, DICK'S power Miller's Goods the is on that region. project for over bankruptcy Burlington, have differentiated years and online. Rapids. we've past noteworthy, properties, Sporting underscores we're exciting former to spite box. is the

having path to on the and we're FFO reducing Looking liquidity, focused defined to get a growth, future, leverage there. managing

our the liquidity have We pipeline. redevelopment to complete

with on We and online densification mission. relentless with risk of opportunities have high-quality new team credit professionals a with quality coming focused anchor improved have tenants the mitigated

turned have over With move. Bob. I'll We it to the company we're and that turn on this around

Bob McCadden

Thanks, Joe.

vacant Looking quarter progress that our managing retail for the year. XXXX and back performance the department during bankruptcies significant made impacted back stores selling on and full in through we've

fundamental spreads our have that pleased with leases. the created and leasing reflect traffic, pipeline growth, of business future sales are strong We a portfolio improving metrics we

that Let FFO the same-store will our provide NOI malls our in the dilution prior factors as reflecting the adjusted to capital quarter, details growth the of me after XXXX. including at was We accounting review plan asset the in in touch Same-store additional from X.X% from on down in to core guidance. our on impact $X.XX be sales. reported earnings our declined removed $X.XX, portfolio two and operating performance quarter results, for compared several some the period

since would the the quarter, Total year. year-to-date leased third improvement for had and the total space results for replacements $X.X basis We basis Excluding properties, full these points points million XXX improved for XX.X% the points contributions in XX million. malls was by quarter. bringing our $X.X of basis have XXX the anchor to from quarter core sequential

XXX,XXX of much We in $XX.X square annualized in the will in our same-store executed over have will of the at future P&L square with pipeline leases half opening toward the back openings this XXXX, in our [Audio year, feet revenue XX%. for of portfolio our this contribute open the incremental feet of contributing XXX,XXX quarter an which will hit year balance Gap] revenues, and million

During Square gain Exton to the sale on $X.X quarter, parcel the million announced of we the recorded mall. previously the multifamily

Let on me capital our some plan. updates share

projects. than those more these first We will liquidity initiatives During spent total million announced to XXXX liquidity store pipeline the million generate for $XX approximately the we available and In on million the XXXX, with million and ended additional of to sufficient $XX to we projects. on an replacements, and year. million in quarter, half fund the year expect department and our the the we into in $XXX bringing spend $XXX year. of underway, Based redevelopments $XXX of completed

million completed the credit million XXXX, and a During This asset we and recast over unsecured of loan. $XXX from activity. facility million $XXX transactions term includes sales our of $X.X refinancing unsecured

redevelopment bank-leverage increased closer anticipated to as as marginally XX% we [ph] of to the we ratio previously the completion spending. move Our outlined

we through XX-month our as basis, period and net to debt XX.X% and On X.X or rising our continue a payout debt of XX.X%. XXXX, rolling to payout either adjusted the be maturities material our rates. XX, FAD With swapped Our debt a well-positioned EBITDA times. of ratio fixed XX% approximately to of end manage interest no potentially at ratio year FFO was was is the until

night to this our Last and Joe we through move back revenue to As last levels, we assumptions and XXXX. ratios expect underlying as bring payout detailed discussed associated for guidance we redevelopment our the online. phase XXXX furnished year, normalize

expected assumed between We expect our X% declining is lease and Wholly-owned between adjusted and FFO to to grow mid-point. between share We've Same-store and to reduce between million, capitalized. The be at $X.X now are X.X%. as share with new FFO we the previously venture leasing $X.XX. as X.X% fees $X.XX the impact $X properties X.X%. lease or per million grow NOI, by between $X will to per of were termination expense to and X.X%, $X.XX expected revenues, joint costs properties accounting are million termination X.X% standard $X lease the excluding that million required

land initiatives. our million densification assumed gains to $XX from have sale We $X of million

tax We loan from City expect XXXX the the facility. our under to and in un-encumber $X.X that million opening Mall the XXXX. the open sale up which corporate other of with on revenues capacity closed of rate Capital this intend of end replacement cessation yesterday by quarter transaction, for Dave Goods at City the In revenues with Sporting incur before of among Dick's creating Mall we'll the defeasance We credit lower Wiregrass has the & due questions. $X.X the cost benefited million of be we'll borrowing connection And note, Buster's Capital and historic million. additional to with of mortgage Sears items. credit it we $X.X to first defeasing

Operator

Your Street Instructions] of comes question line the DJ Green with first from [Operator Certainly. Busch Advisors.

line Your is open.

Spenser Allaway

for Spenser overall to land DJ. on of hard divestments. on realize execute your parcels? an you pool But you. just of demand Exton? on aim maybe commentary some can peg obviously the to I the these Thank it's timing then maybe parcels, And update provide with outside on just the

Joe Coradino

to referring the multifamily land, land the or ...? the You're

Spenser Allaway

of yes, so, and prospects raise that for $XXX proceeds the because kind kind Yeah, pegged identified proportion have to large land million you've over of that you a communicated believe of from then I parcels. is

Joe Coradino

moving Yeah, the the at already. second in interest robust sold point, the on and I one to land mean, near-term. parcels. We're agreement this we We've in third one have

agreement, We have a hotel under hotel an deal. agreement on negotiating are a second

in relatively outside the bringing parcels robust. land mean that of in one to outside of I in the we Florida County be the Chester the see pace Gainesville, we near-term. two Pennsylvania, So, closure have, Philadelphia one We're and also of

in year. terms million of expecting deliver about land we $XX in the we're will the half that the So first sales, of

Spenser Allaway

mixed and Okay. understanding like correctly, kind That's the I'm is of use good demand a sounds kind portion if helpful. And buyers of you it from developers? of coming

Joe Coradino

ask again? could you question Sorry, that

Spenser Allaway

Yeah.

for good hotel like demand portion traditional So the the – as concepts? from parcels far land it like as mixed-used is a of sounds coming versus going pool that like is developers those either said you retail

Joe Coradino

multifamily Retail and not on retail might Yeah, would uses. floor be that clearly use those of ground primarily on the question the to sort, be would out retail correct. – second not would be but primary or be land would to more retail. ancillary It's the something not hotels while ground that. the It be might that floor for – of

Spenser Allaway

Thank you.

Operator

McElroy Your line Christy Citi. next of question from the comes with

open. is line Your

Katy McConnell

Wondering, timing you the fall? with expecting us District Fashion on where and Christy. stabilization given at committed once progress reach project the opens on McConnell to can now in if XX% you are Katy with later is occupancy update the This it the just

Joe Coradino

Well, we're out the off et very cetera. first District. it and expecting build – away excited three to Fashion have begun relates blocks about the tenant we to benefit as have of we spaces being We're

– the entire in take reach quarter be quarter they feet And occupied Round we and X the the to the is probably of approaches And be in up project would continue project a in it'll the XXXX. major in up retailers XX%. two – grand around would year of there's be of theater movie time We're which those level should will we buzz open expecting number space first out, on of X/XX combination the that top total space to which it. that the So a another then, including XX% XXX,XXX and before very day square open exciting about it's of for great then the until opening a deal project. will second

Katy McConnell

Thanks. Great. Okay.

Operator

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

line is open. Your

Caitlin Burrows

with will guys. color in so but you planned just of Fashion Hi. Maybe September you us terms about District talking it, over you're to September since does it impacts all – were open that could NOI away in go some on it any comes Good time in online. take over as sticking the interest come away give or just morning, capitalized to go How time does NOI time?

Joe Coradino

that. to to Thanks Bob the ask Caitlin. question, going respond I'm for to

Bob McCadden

online in similar interest Hi, will come leasing online. trajectory to Caitlin. comes the a Capitalized way

in based actually So if stop occupied. will are and the that's commissioned GLA on we'll as spaces use capitalizing of percentage interest you

Caitlin Burrows

And okay. guess, comment about, -- I are growth, there it anything than investments how growth that kind plan made then reducing I remarks, -- joint FFO any you on liquidity. talked natural prepared path other you there? far? good long-term to the any guys know focused any having past other Got ventures so in you've based further do on is you you guess of potential or leverage I in there about to the talked get kind of on is the

Joe Coradino

clearly, is -- million of land our is that. for our think we liquidity a The the about initiatives and approach $XXX for sales us. potential are the maximizing Well We reducing piece that. key certainly that talked leverage

hand we've announced. sit here from perspective, in As liquidity today the in million we to we remaining $XXX a have do pay capital projects

liquidity. continue perspective, both this improve debt leverage And off We have liquidity we the time. to $XXX sheet Any perspective, EBITDA balance about aren't to our at table. options opportunity ventures all to explore in exploring look million we're joint a from

Caitlin Burrows

XQ, activity relatively in also the lower maybe then versus is looks leasing Looks low. leased like And one was but other. generally occupied Okay. seasonally like

your being Or function should kind pick through anchor volume leasing replacements of of to back points up of we to go one So before? wondering expect we as that's done just XXXX? a if

Bob McCadden

in we're on Caitlin XX% we're think approaching, at leased and look the approaching malls, I basis if at core we -- the -- not we're XX.X%.

out really So almost to out. you we're some if think will. sold borne that's And extent, I

we about leases tenants. which that key tenants. that the looking of kind X.X% occupancy I is short-term replacing of X.X% fact year think had we're now think I actually reflects our to one the last permanent temporary things the down That's with at we're of core with

I I the But continue we'll core portfolio, level and tenants. now to we're bring tenants think looking the improve activity. we're approaching in to in see So underperforming a of tenancy and rollover really the point think strong where better-performing leasing

Caitlin Burrows

Okay. Got Thanks. it.

Operator

Your Karin of question the next from line comes with Ford Securities. MUFG

open. Your line is

Karin Ford

Hi.

First same-store of question Sears. talk on through just is impact the there XQ Sears any you Sears? us What XXXX guidance NOI have from you reserve type bankruptcy impact XXXX and a was growth? What Can bankruptcy related? the all for into what for modeled if on

Joe Coradino

And No, named the actually, a not. all store ESL we again, it's Sears has our of will assumed have that open. all of our stores -- remain has stores. basically really

-- have cases, And at is our a Sears will We this a understanding in but I at significant it this of tenants operate not number we point, continue to mentioned. stores. point spaces, those for count a have very as those that Sears

Karin Ford

it. got Okay,

Bob McCadden

prepetition to fourth a real Karin something primarily let unbilled thousand couple hit quarter. related to of in that. hundred taxes take add the receivables estate just dollar me did related We

So that our impact did results.

Karin Ford

Okay.

is question XXXX on just the Next guidance.

was same-store your year? are you than of I expectations Was your anything differently properties this different deteriorated that that for end And the else the guidance doing guidance? than longer in little are You no versus a said the drove in your miss you you technique forecasting low anything expected. mentioned think more that that two there

Bob McCadden

that area a portfolio. we unbilled straight-line items unfortunately at not we stores of bankruptcies. on Sears Charlotte for for we about that the thought for those lot Russe, miss wrote-off -- the the the to at close of we back -- of also we tends a of the have our some So decisions a things. common our rent impact had we that, some and our of big obviously they've did they're to able one we year-end to but we we made of if big identified receivables going charge very take revenues. one a of reserved had XXXX's had And We $XXXXXX closing misses, repeat a that post-December the in be of are of the couple strong had look late that anticipated. is in be -- amounts driver we're on transactions and could XXXX. end couple cycle that also We the to a That's

for -- that they're third miss the So factors guidance. basically versus key was the quarter the

Joe Coradino

done differently ways. relates doing things to of can as just in we differently, we hard common a years And number based that actually area we've on at it what had outperform believe and approaching look taken previous revenue a our it in of

marketing, So this at specialty deliberate for numbers our that our year. deliver partnership the comfort guidance -- been we've we very our we've a outlined. can looked and it leasing have leasing putting that our about in level And we

Karin Ford

properties? on at the Okay. Westside the hotel. doing as your is conversion last disclosure Pavilion Macerich multifamily office, there Thanks opportunities is any My of you and mall what additional any and uses talked other you've that a think creative I for just uses at for into about love alternative are question Do well.

Joe Coradino

co-working I think because office leased. Bob Hill actually on at an there's Cherry portfolio thing. Well facility facility a XXXX portfolio, several opportunity done That's other similar we good core as we're in lease are entire a tenant our working co-working an out transactions. with pointed or to XX% will with have a to our -- and an don't mall

Karin Ford

thanks much. very it, Got

Operator

Michael comes question line with Mueller of Your from the JPMorgan. next

Your line open. is

Michael Mueller

Hi, thanks.

or mean, flattens items leasing one-time high like diffusions talking out, were the $X.XX the So the about everything you the have NOI growth you're for is may But and a earnings picture just bit shoring that years? stuff. x were I next delevering else. mean, balance line number one-teens thinking within be if about a bottom? the we cost, this the Or as and know two I strip just deceleration I little more, is just numbers about gain and smaller not you line you up I when momentum the bottom which curious do and talking the FFO positive number of there same-store sheet, and in one-teens some are outlook so, stops over know big how you think earnings should they out. bottom that that think gains

Bob McCadden

-- the Michael replacement expectations, Yes. we signed did provide feel disruption we actually it the certainly strong that supplemental, most that is Joe of some of of behind our have as on anchor we of And on given from in our basically redevelopments very as us. additional the based we for have of we leases, committed percentage year. the which mentioned what of have the the revenue pipeline this of each commitments end terms that's disclosure that

in spring So all expect quarter fourth XXXX replacements Fashion further really third of trough growth and in and -- the and to be built anchor we the this really the and the XXXX. growth providing board as year the on openings District XXXX for that really with in

Michael Mueller

And would actually reflect that the...

Joe Coradino

Michael. -- that's Sorry. go think a I I'm ahead,

Michael Mueller

comment? to which could the you're I I a number, little should asset on? was just more dilutive idea little in well? sales kind thinking it our NOI reflect of of the the we going bit more as comes Or where side, delevering be -- So mean, take reflect in about a how naturally bit No. does would delevering as delevering say the that is comment

Joe Coradino

was I at those land would about have our sales, which where -- that residential comment, build are in have generating, amount that properties. Well, which think not of are significant And hotel a thing could major the in the or a value you -- effect. dilutive we properties spoke again, we income not delevering

I release hear terms in think bottoming when that growth out also forward of our I things like of the things you think the renewal retain you and we in you we've from sales And the spreads XX% terms -- either experienced. portfolio. things here, tenants, in of bankrupt one kind you that or of When hear moving the of when this achieving. we're hear

degree meaning of we've speaks a we've lot I portfolio. assets remains, impressive out talked and traffic, remains we're where high pretty our of properties we've is located better What in that for -- the say the trade that sales And created. look result our up fact interest that securing et and from lower-quality assets taken credit, couple a of it better I think think those. are of to I about better headed quality all the the they're of hits get areas, as cetera, makes as mean, north what here. disposition of tenants plan to drive a of dense that we're

Michael Mueller

out it Yes. I well? minus there's seems aside about those same-store mean, leakage is number know that, like Does it You lot is the positive it non-same $X.XX headwinds this which year. as noise does putting some a there subside feel will that I to a down it XXXX? taking feel of those just good just feel in don't that headwinds, is guide, like the after -- pick that NOI I pretty store the the of see same-store seems like is it whatever like numbers down from

Joe Coradino

very we perspective our terms for of scale an first before NOI quality queue everything size Yes in $XX FDP. were mean deliver I million asset, we of I a about sold it, of we'll we about be XX our we'll property FDP stabilize company difference going feel it, of huge when mean sort good make plus right? we that what, will forward. from of to And in our going move both of the leases properties FDP into that's the Plus that first the that the the sold. we

look we to grow think as from So optimistic we're we we optimistic ability have forward, highly here. the and

Michael Mueller

That you. was Okay. Thank it.

Operator

of next Bin with question comes Ki SunTrust. from the Your Kim line

Your line is open.

Ki Bin Kim

moving guys XXXX? from get job you So a reversal we can $XX million to What portion or did you XXXX into temporary expect this about of guidance. of that There's parts we FFO delta. the as outlining a good XXXX do think is

Bob McCadden

-- of some normalcy, laid that million probably at this kind had. kind state but the in Ki was about size $X of of So the to some terminations was of of level. XXXX we That the kind look historical if lease kind to we return in think you range back of a Bin, million on year the of based we're special of of you way we $X terms out

at would that the $X.XX for change about a of the driver, account $X.XX right. to from probably $X.XX which midpoint So is biggest the

the accounting to in lease reflective of at think salaries, when I XXXX we've a it's reported. is it's how probably leasing of a just guiding more those in is, we So is that look our matter change one-timer rate. we're paid run Obviously what always ongoing

So that's our will the it's and reflect change. be in ability use or about Again permanent, change. but flow cash fact to only our of -- doesn't accounting cash flow $X.XX generate additional we an It credits, we we it's revenues. incremental revenue sales. of piece The one conjuncture sold in with to tax the mortgage off the took that that -- historic back corporate burned property the

of than back ago. the some land kind you're simplifying parcels I mean more level again the So cleaning extent of We're business. is to operations. us really selling are of seeing of those were a to and decade acquired more a what getting normalized that here up

fewer so. -- going distractions a noncore of of decade the last going forward to really we're the the that our noise performance we a had not cleaner and business in or lot I PREIT XXXX see of the over have fewer operating you'll presentation that think reestablish, of may kind So with lot

Joe Coradino

out at to all years I as of look go. it, now been these and we're sort fit working ready we've

Ki Bin Kim

pool? Exton what same-store was removed right. Mall maybe was at why but All I And from missed and the this, drag Square that the

Joe Coradino

submitted brought Whole bid. of We deal market the deal. think in important other sale. of competitive And something Foods Prussia to a that's addition I that that it, had and an property we've was We a intersection interest XXX fastest-growing great believe and XX Exton a in over in County, King Chester sits the it's of a -- that it's Route we've And phenomenal piece At the the of the by it's real at Route always state. impacted XX been years in Exton, did for estate. assets. the people we're, Square, county

did out longer think property the mall, And at doesn't our the be of and include which a to want include a joint in going could options asset forward, venture. of also at the sort the company, We to Hanover. we're this I point, that multi-family could trying probably sale a it it's term the through moving the parcel

So, ought we'll to options our of be with property didn't sitting get a core number that assets. like in And that. seem it a

Ki Bin Kim

The question. I may probably I'm or Mall actually Okay. see year back View, a booking. savings ask are you full there payments understand booking on it as the, interest And back versus lender an accounting being give to it's covered? Valley is if benefit be is expense that that lenders, I the is but and trying going a a currently the to reason interest Wyoming once to the those not

A –Bob McCadden

of are service payments. assets interest their cash Both these currently to generating flow

Ki Bin Kim

we I'm levels in curious resetting Okay. is just that more or expense a basically recovery the is, model one REIT, temporary we a nature recovery something for expectations the just, year where from are ago. ratio? question reimbursement on expense And fell XX.X% should there Pen in It XX% for reimbursements. to

Bob McCadden

for that things A reimbursements are is the we couple of have quarter XXXX. included that our kind purchased utilities central properties fourth system. a And pay. we've distribution One certain our of effectively of our reimbursement where tenants impacting of

at well as margins resell through combination quarter. That Utilities year this we the we about up saw overall and lag In to rate get time our a to it from Commission tends of tenants, and fourth so cost was the when decrease. part a consumption is buy kind the and electricity less you a of compression There to of get, rates passed $X.X by our published fact, million both not be as those increase of of the in that's by energy Public with rates what cost. see keeping a tenants

was in only second is period. XXXX at Springfield successful the quarter, appeal for completed in we The Town it actually a estate thing tax XXXX fourth Center, real

to saw experiencing impact of lot comping negative you year So in you're that. and prior a through the XXXX, benefit again XXXX roll when that we're

probably in of So, in items. between rate, ongoing one-time somewhere you of terms of those once factor you're those numbers two kind run

Ki Bin Kim

and one-time reimbursement negotiations it's in so, the a you're more about the in XQ rates? bear the decrease bit little I the willingness a nature lease to saying really statement not see, tenants' of kind

Bob McCadden

a, all reflection much. of hasn't a Not that of world correct. The at the world new negotiating. changed That's

Ki Bin Kim

Thank right. All Okay. you.

Bob McCadden

Thank you.

Operator

Okay.

of Your the Incorporated. Boenning line next Ross question comes with Merrill from

Your line is open.

Merrill Boenning

I July tenant have that by They're indicated But rent of to XXXX. two them Retail's or for relatively questions. you other concessions – to they One's In Ascena lease were any looking $XX million last X.X%. relatively minor are call minor. tenant? most quarter in recent conceiving they conference

Joe Coradino

Who tenant? you sorry I'm could the was repeat that?

Merrill Ross

Ann Taylor. Ascena. it's And

Joe Coradino

– Okay. with any we rollovers. have negotiations Ascena is and through Ascena transaction and won't and the Sure. with discussions we won't I did XXXX have we until XX it our mean complete

Merrill Ross

Excellent.

it's as question eliminating Sears to repositioning But great case there no cetera you et that other it closings were JCPenney they're does with you be in in make says proactive your is footprint. appliances sense and fails? The to

Joe Coradino

– Well, am mall the like JCPenney convinced a department I'm not environment. in there I room in convinced fact that that for is there store

that pleased the I before the we in And appliance/furniture pleased not a someone suggesting I has experience. the -- a think were questioning parallel last. I there to am they inclusion are at I actually is they're know who outcome store. the helm down but week I'm am them talking that that questioning

and time right? proactive back, given performance they And feel think all JCPenney's. given have so begin customer of I gotten don't that think I to don't I in replacing their fact our it's the the to JCPenney seem properties And being

Merrill Ross

thank large exposure. makes works Well, pretty its you. sense, That hope – I right. it a

productive use. higher better are it So this and have – stores certainly a that

Operator

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

Your open. line is

Caitlin Burrows

few follow-ups. had Hi, again. a just I

that. First, you you're was unencumber just you on talk City think again if I planning to I Capital could said wondering

So wondering I there? what's and just is what know guess the source the source well, is I – these

Bob McCadden

that we're and capacity borrowing So has yield balance a under we create above our debt additional By – will credit million paying the paying have of off, higher your much XX% current Capital facility. because be we will un-encumbering than City the that Capital facility. it under the debt $XX effectively effectively our debt source credit roughly off borrowings existing mortgage City the

than than and So repay again un-encumbering loan enough effectively provide the capacity by to additional – again repay additional to enough to the additional capacity borrowing -- loan borrowing borrowing additional additional and create more more we'll provide capacity it us.

Caitlin Burrows

you XX what Got it year that it Was X.X was or EBITDA. XXXX wondering clarify to year-end okay. I you you if at calendar And that months? XX before mentioned could next on? times debt months EBITDA last were was at just then

Bob McCadden

months. XX Last

Caitlin Burrows

as Got to it. ratio. and dividend ratio just XX.X% then on wanted the And a coverage the one The payout last of shows of XXXX. ask supplement the FAD

good the guided XXX%. XXXX above with like for just decline will it seems So go earnings

to So gap is the just plan bridge and you land that wondering, how sales? do it

Bob McCadden

I it goes modestly XXX% and expect to XXXX. high-XX% -- we XXXX in that to were XXXX above XXXX it'll we comparable where Yes, the think are levels to get in in in But probably range. back

Joe Coradino

have the we comfort dividend. so a Yes, level with

Caitlin Burrows

Okay. Got Thank you. it.

Operator

Your the of McElroy Christy comes from next line question with Citi.

line open. Your is

Michael Bilerman

from mean, your gone XXXX. up I It's has $X.XX FFO in speaking. Bilerman

Why in have probably back your year XXXX flow to with this all ratio the to you $X.XXs to rightsize mid-XXs, that you dividend your from probably You're the a do $X.XX gone sense. $X.XX cash the comfort actual to range. somewhere in means Why dividend? wouldn't $X.XX AFFO's made which right payout

Or I is the happening. too can flows have a but optimism, Put sense the level literally what in -- that's years environment whether this guidance your stock. pay in $X.XX from FFO dividend mid-$X.XX happen could is I three has enough conservative cash makes it. mean, other to alone and let cash that Like gone relative the your retail for why to high, you understand all? bleed may retain issues And Your you that leverage dividend that come at at about.

Joe Coradino

there in there? So is question a

Michael Bilerman

mean, our I was had You XXXX I conversations some to payout why? that XXXX and go the right? was in if flow free there. cash ratio back Yes, lower,

dividend flow year. a in not take to gone wouldn't stock like... highly rightsize be You're not getting has your dividend you it's cash Why cash, by environment. going that way you're today, the the Why this retail overpaying to conserve credit uncertain your the still down opportunity

Joe Coradino

Tell you're done when me question. the

Michael Bilerman

I'm done. I'm done.

Joe Coradino

rightsize in is going the to dividend Okay. the term. near naturally think We

I answer the comfortable why its think think want in that's So with. and to do don't -- I right we now it that feel we something and

Michael Bilerman

to is I payout XXXX just expectations. XXX% zip Joe, okay? code, are $X.XX, this dividend ratio. by But FAD is Your go be up in FFO probably the right? You elevated to to going get mean, in need $X.XX, pretty your $X.XX year would $X.XX those to

end rate or it is us hangover, to going be can understand a going unless time. help of run extended the going coming FFO be to dividend or be, overfunding your of out run the an to where year rate So this you where maybe for just quarterly is either the at the needing is period XXXX of

Bob McCadden

think I was by someone else. Mike, question the raised

think that of sales. proceeds from that some I will through bridged be land

Michael Bilerman

Okay, thank you.

Operator

line SunTrust. next Bin question comes the Ki Kim from with of Your

is line open. Your

Ki Bin Kim

Thanks.

Because couple you industry $X the supplemental, or Did I million $X year-over-year? ones. was a your but might that of reserve BK million be Just just million? say quick -- do as reserve see delta $X

Joe Coradino

low midpoint million $X.XX $X million the and million, $X end. the at Its at

Ki Bin Kim

Okay.

tenants look all of consider risk is did that you top number points number? with basis at not how XX reserve curious, like curious -- that over if tenants, come is your I Just AVR. I'm we up at if there I abnormal mean of enough. XXX just what

Bob McCadden

sales if to I our set we're budget BK costs tenant-relationship kick an other forth appropriately occupancy have we upcoming -- come appropriate at factor expirations down it we at part up we our process, to typically level. them the those as look we reserve at adjustments to mean with an ongoing tenant If make cycle, we're any relates assumptions bring outs as we or it. or in relative usually -- of individual occupancy or looking sales costs properties. And make always to performance unrelated adjust management, our as

it's outside really if that -- BK that we think the reserve you pretty ultimately about and is right, in about covers restructure. things control. need where it. of performing really with irrespective we And to they management are the BK that portfolio of good almost reserve for our feel for really how decides are A they're tenant our liquidations, So portfolio

lose assumptions then until to his have we've is some in of relet we that that potential the space. and that So liquidates can downside only leasing tenant revenue risk basically already that portfolio we the we incorporated our the

Ki Bin Kim

And knowing -- downside is JCPenney looking on exposure immediate conversations with have plans? at the your store fundamentals Or and their based exposure closing just that JCPenney? on that said Joe, stores to risk to Okay. closure when about existing no you they're the based operating and that you of stores, positive is them NPV

Joe Coradino

Both.

Ki Bin Kim

Okay, all you. thank right,

Joe Coradino

welcome. You’re

Operator

further questions Joe back remarks. Cordi closing like for at call I to turn no this are the now over would time. There to

Joe Coradino

Well call for thank today. on being our you

troubled have credit these calls new House, Capital tenants Factory, we out that Urban Maur, with Von we tenants The Yard HomeSense, on there. Outfitters. like Nordstrom, HomeGoods, Altar'd you our Bloomingdale's, small A-mall tenants is, of REI, populate to handful and improved expanding sit go, Winery, I'd coming & and list Dave discuss we Grille, portfolio. Before of Cheesecake But read Sephora another City Belk, State, we Buster’s, point Peloton, quality. online Apple,

this we on densification of company risk around a Thank much. mitigated you We'll and of weeks. in high-quality have for the a move. opportunity are and some see We we've have very couple and turned you anchor

Operator

This concludes conference today's you We participation. call. thank for your

You disconnect. may now

Pennsylvania Real Estate Investment Trust (PRET) 14 Feb 192018 Q4 Earnings call transcript