Earnings call transcript Q2 2023

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Operator

Greetings and welcome to RPT Realty's Second Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Craig Benigno, Senior Analyst, Investor Relations. Thank you. Mr. begin. may you Benigno,

Craig Benigno

made thank within earnings joining time, conference to Securities be Act certain like and are Reform call second historical Litigation meaning not management for of quarter me may statements that you XXXX call. forward-looking inform XXXX. this you morning conference us which statements for deemed RPT's would during the Good of At Private this the

date during made made call of this the the statements Additionally, as call. are of

should replay itself quality the any Listeners the by statements that to of time understand will passage diminish of the made.

as that December reflected from the factors on quarter differ earnings could XX, report annual Although ended the we XX-K in are and release our actual for statements cause any expectations. based Certain believe the our assumptions, risks risk factors fiscal Form expectations year described on XXXX, in of to forward-looking for second in these results and reasonable are factors XXXX.

made also these measures non-GAAP quarter are reconciliations on which our which of XXXX definitions Certain second the on of the section. in nearest includes Investors to today's website press our available financial these involve measures. measures are to call and statements release, directed Listeners GAAP non-GAAP and

our As highlight throughout which the quarter. a key relevant quarterly call messages we reminder, last we quarter, introduced to presentations, earnings will reference for the

presentation earnings in You section. XXXX the on our website can quarter second find the Investors

President over for for I call we CEO, would open their which, like after to Harper; and remarks, will and questions. to call the Mike opening turn Brian CFO, Fitzmaurice, now the

Brian Harper

today. for you joining and call you, Thank morning Craig. Good thank our

midpoint an results exceeded our from elevated the our of own I'm XXXX, As of financial despite very that operational impact bankruptcies. expectations and we proud pass

to NOI an million in operating expect bankrupt the the additional beyond rearview from million in same-property our signed not of growth set are mirror, $X our with now leasing backlog pipeline. up commenced as leading FFO in for we outsized benefit and sector largely we XXXX and disruption With $XX tenant

Starting fundamentals. with operating the

of over no We continue record for sight, way to quality. experience by million highlighted on a rent with second elevated year, quarter We row. XXX,XXX volumes, for well accomplishing putting enhanced our X had consecutive historically our to volume, leasing and of credit year of growth square in slowdown us in environment our fourth our goal strong feet the square leasing feet the a leasing

Our SNO months. commence million at full pipeline remains XX to the $X.X the vast expected next with majority over

which to teams near-term. the we categories grocers, remain As and comprised an fitness additional of these focused signing our of cylinders million is are leasing The I boutique on in million, quarter firing and pipeline legal earlier, incremental revenues. second totaling fast-casual, home improvement, mentioned all on of $X have deals tenants. Tenant off-price, and high-quality $XX deals service primarily are

our rent upside, it Regarding to embedded accelerate. continues

to about averaged Over the low rising on quarter XX% our on spreads, renewals the growth XX% been steadily last X years, digits re-leasing to print we in from early of single new over Rent by have XXXX impressive, mid the has XX%. equally second quarter. during highlighted

the ABR has While leasing our disciplined remain been credit leases basis. Since long-term the have strong signed on sustainable this on acquisition are The end grocers with critical and and leasing grow and many is high-credit grocer on a to XX% percentage front. bringing centers up growth tenant national from a added rent a ingredient of grocer We specifically important, we have tenants, through of from performance also to volumes of strong. activities, front XXXX, our earnings at XXXX. also XX%, XX with grocers

Notable enhanced by BJ's our foot square of reflecting grocery-anchored Wegmans, portfolio foot, Publix, the square per Aldi. grocers and XX% sales the centers. grocer average quality Foods, our Whole to portfolio improvement Trader Giant/Ahold, at Joe's, per XXXX, have Since and in include grown $XXX our traffic

strong location. at with quarter, lease signed regional assent a a grocer Tuesday Morning we Olentangy the that Plaza during Additionally, a will in backfill Columbus

while Please celebrated X% expanded the Miami grand additional remodeled new a return locking to the Publix grocers. that reopening we generating newly able Crossroads in deliver on XX a years incremental of on in high-quality, The for and tenant for cost In a high-credit at details in Slide anchor were our to prototype property July, come. the market. July, this will We see

with & Our Beyond is approach to Bed dividends. Bath pay beginning proactive

and that released top Cincinnati we This four of Marketplace have Center Winchester in HomeGoods Jacksonville signed City Deerfield at as in leading Center well We to assets locations in quarter. deal at last the Falls as Towne Bridgewater Detroit. on our retailers national River is

spread about locations deals on X in fourth opening quarter was the blended XX% The XXXX. these with

All our negotiations from beverage advanced high range categories Tenant wholesale are grocery, and of at LOI. remaining in credit national either locations lease or clubs outlets. off-price,

one single-user but all backfilled by be will We box tenants. expect that

this that's a Bath. an update ramp Bed our quarter's our in leasing Lane is Bath $XX Shops be that the expected and will to from of rents space replacing tenants are XX high-quality progress. Please site earnings to demand presentation more Bed on and at with that square only per the for $XX given X negotiations of divided details we on activity be that triple-net, see $XX Slide shop backfill The from on foot and

shopping We We our a Boston, concepts, will former their which is new at in this also brand in and continue to stores Crossing Barn become property, to their headquarters. country only X% Marshalls largest TJX, Sierra Pottery commitment demonstrating HomeGoods in miles tenant, only all from a recently few with of center the TJX X a outlet. opened store replacing this Northborough ABR. invest our remains When opens later representing Northborough which fall, the

robust earnings rent while our NOI by retention shop on XX demand additional of is acquisition, X.X%. The increased grown has experiencing success signed highlighted has leases, presentation. provided for since portfolio anchor our XX% Slide Northborough's by XX small are as on and We've driving we on Including our of Northborough's color earnings occupancy, also Slide presentation. occupancy our

year-over-year. north XX%, XXX up sits shop points basis of small lease rate Our now

blended re-leasing averaged retain XX regional tenants of to has Our last small of months, Most small which XX% XX% in shop exposure expecting small is tenants, X% on in and small XXXX. trailing shop of the towards shop account and our shop nearly we our nearly our total spaces for are national ABR. weighted spread

brands, shop XX such top our largely leading AT&T small Five Additionally, Dollar as of Tree. national and comprised Ulta, Below, are tenants

Turning to Mary Brickell.

the and progressing are the of Phase Our X Phase West actionable steadily. low-risk X side plans center for redevelopment clear and

square Tenant soft leases. brands. wellness, brands, first-to-state We food range which categories are international new are in beverage, feet active and negotiation on from and XX,XXX service goods of of approximately many

toward that range. space rents, Our goal to at square create while a maximizing the to truly unique environment, remain XX/X dynamic MBV is per in foot the which gathering caters $XXX $XXX

is with square merchandising several of over important. in-place a are Renewals equally of foot, we at material square we signed foot. being rent the curation mark-to-market to $XX With is want While next years. the tenants opportunity keep MBV per have rents important, $XXX per at

the to With Mike. over call that, I'll turn

Michael Fitzmaurice

morning, good and Brian, Thanks, everyone.

plan of of a year. last on report top exceeded XX and pleased another the of increase and of are our in growth line. the in both on ahead to NOI Same-property basis bottom that heels second expectations points quarter X.X% came quarter strong We the

bad other growth was performance debt net Our quarter fueled stronger and lower income. better-than-expected of by the abatements, expense property in

at Our double-digit have line of FFO top in quarter, high already which in expected operating released quarter Brian with performance second line rent several share per been despite many the $X.XX first drove of the as noted. spreads, move-outs,

rental growth rent our It not the on of for important achieved collection and second some XX over also movement presentation. is to base that probable highlighted base between Slide quarter adjusting of offsetting rent after we consecutive note accounting in earnings for income X%

XX Beyond As Brian our on quarter, this presentation. of Bed highlighted & Bath progress significant our we earnings backfilling locations, mentioned, Slide made

rent expect between million to few XX% and over to the expect which We XX%, continue next we contribute years. $X.X incremental spreads generate growth NOI an to to

City also sale Bridal, of retain expect and locations. core those amendments with now David's both And have we the approved both Regal keep well. our as negotiated We given remaining locations Party of to to

Tuesday second this assigned tenant us lease was to end troubled the Additionally, with Square Merchant subsequent exposure at of Dollar no with forward. leaving to the moving Tree, Morning to quarter, our

continues and on-time to demand down of only commencements. discount pipeline Our retailers, rent providers hold SNO steady, versus pipeline slightly to leasing levels sustained be last medical proven continues and given high-quality concepts. The grocers, quarter off-price regional of comprised

of incremental of translating benefit backlog expect share with per XXXX operating X% $X.XX in NOI the growth XXXX, $X.XX We in FFO same-property annualized contribution XXXX. to hitting into by add a will an SNO

has from fixed X.Xx. to no contained us earnings rising proactive out the our additional within of the Please when largely the related SNO the rates of Additionally, over balance debt insulated the our X our debt well target Slide upside. on the at management SNO headwinds markets. X.Xx, in until impact presentation pipeline, capital ticks trajectory range of is X.X RPT's of maturing uncertainty including XXXX, the of leverage see and XX% With the mid in sheet of near-term. for details to impact our our

million opportunities liquidity at well in in acquisition as quarter, the to our positioning reengage strong $XXX the remains Additionally, second arise. us front

to same-property We share X% of updating to X.X% $X.XX expectation to operating X.XX%. guidance NOI $X.XX diluted range are our our FFO per X.XX% and to from maintaining growth

FFO quarter of & and guidance impact the remaining by at well offset rent debt buybuy midpoint continues from Bath earlier-than-expected last was with points all recaptured of our lost July. to risk Bed Beyond. few primarily the tenants, at NOI, for as expectations slightly our assume The XXX operating includes an the bad BABY of bankruptcy & Our of basis Bed of Bath which end concepts, beat impact and unfavorable regarding the Beyond recapture of as the

to that, the for operator line with open to the And the call turn I'll questions. back

Operator

[Operator Haendel come from the you. Instructions] first Thank St. questions of line The

Mizuho. Please with go ahead. Juste

Ravi Vaidya

line now within the mark-to-market morning. what watch subset going is as a on This opportunity Haendel. Vaidya the good your list And Hope right percentage what is doing estimate you well. of that forward? Hi, are for you guys Can Ravi is embedded ABR?

Brian Harper

Yes.

So mean over can transformed on really that XX% movement Ravi. portfolio on there's I'm we've no of -- we the I list, watch I portfolio. the legacy this, from extremely are the confident say

as national to geared more our isn't up asset Additionally, small as anything keeping really you deck, see really management. given It our that's our local. just at opposed night is shop proactive towards me in

shadow obviously the and that Regal the years. to Bed But years. get enhanced we for Bath and thankful over X greatly portfolio are We the last pass over the have company back X last

square is XX%. And from $X.XX to grocery if up look foot, which it went per our at just sales you $X.XX,

there but lease, our environment, tenant, demand since lease, aggressively are each call. hasn't lease we much a is movement pent-up been every last And this and throughout So the portfolio. entire monitoring at-risk

Michael Fitzmaurice

I is indicator is of the what last mention, Ravi, new the eclipsed have one a And would re-leasing XX%, for of thing the at mark-to-market great opportunities over spreads get that couple we which years, achieve spaces we've of spreads some event we last the least And absolutely future had the of couple years. in out on double-digit there. believe re-leasing bankruptcies that other we'll any there's over do back our the

Brian Harper

lifespan, the center from average think keep to XX I years. was legacy thing the in portfolio is the mind particularly

ago. lot as were of of XX deals Beyond, years cut. Bed Bath these a were So & case the leases, cut Those

as So July, signed not tenants recaptured significant Bath Bed And well. only in with mark-to-market that a we've opportunity. throughout that we being but see years other leases ago XX that's

Ravi Vaidya

more one you. just Thank helpful. That's And here.

small mentioned color occupancy Morning bit this regarding the of and re-leasing [indiscernible]? growth for just impact a the and Bed is I synergies having your You rent remarks, maybe Bath what that in shop more and Tuesday the impact re-leasing, sort your ask to wanted merchandising, towards the prepared

Brian Harper

at look of Yes, are I mean as looked SNO, you've I and -- at XXX mean at the basis significant. points we you today.

million the top the $XX that's million. on million pipeline so $X You incremental, $X take of

Of $X So visible, that visible, incremental. million million, is of visible $X that is that growth.

tenants that that the lot effects. spoken Burlington, You grocers wholesale Nordstrom look these lines, effect of really, a have the I've huge and of, total halo is halo are clubs, the at Rack,

and that just I These 'XX that retailers the grade 'XX None and and that that of be is larger are into cash of enhancing that investment embedded halo late SNO will 'XX. in 'XX be effect would flows incorporated coming anchor greatly mentioned. deals, online

you replacing effect, me, a more Trader you're going a Bath drive a or Joe's halo rent. the Wine, to Total with Bed So tell

Michael Fitzmaurice

and that commentary, a the the a another leases, at Brian's million did Winchester, Total the Bath. Deerfield deals, And around back at locations rent one if of going centered here be four couple -- then could quarter, I'd in Incrementally, to those City, add Bed as item $X Burlington Falls. today, Rack recognize Nordstrom take the you Ravi, third years. from signed it's HomeGoods have we account Wine just at signed July to is And at a took that River We a remaining four incremental in X of next over incremental we're $XXX,XXX. we about that in Bridgewater in

we're roughly from all $X.XX growth we about that Bath happy locations very, back. So got of XX these incremental Bed very

Brian Harper

me SNO, And with let coming $X million online, just today so million in reemphasize, million $XX $X incremental total.

Ravi Vaidya

Got it. Thank you. it. Got That's helpful.

front? as of do more in Can what at large see deals discount portfolio the is to what and here. time? one your seeing commentary what acquisition Just you could on you're offer that to you any And potentially sort this appetite markets

Brian Harper

of us, cost internally, and are XX% large given million returns would Yes. we seeing SNO that say in really the most are capital. bucket. I driven mean of buying just And doing RGMZ we will current be our IRR I $X for

So obviously my X, attention opportunity. platforms could three XX% is unique gravitating returns create that where over X, have cap said, transactions. that is With we type X

has earnings, more accretively just tell whatsoever. the obviously Amy we debt. and if groceries, our there's we with looking. as from lack XX%, investments pool, our team. team. can in Sands particularly She's for million, She is all is call bringing buying cap north dislocation leading buyers. any the growth, of the quality scouring see under cash you joined If buy Anything the of, actively in $XX could still to markets aggressive rate there's I markets it, widens very less are demand

XX% So near-term, but returns. these we are for we focused deals, looking for opportunistic the internal on are very

Ravi Vaidya

guys. the color Got it. Appreciate

Brian Harper

Thank you.

Operator

Thank you.

from Next Please Mueller comes Mike go the ahead. question line with of J.P. Morgan.

Mike Mueller

Hi.

watermark? occupancy. to think where take get what timeframe one that sort to do from And can a think take the shop high you on I there? Just quick will do mean you of it you a

Brian Harper

transformation, -- have the the six we of with Of increase think grocers you really will XX%. coming mean we've XX% see I total our be grocers online. takes I bucket, ABR sales. up That done to Mike, in grocery other that SNO that

non-grocery are into anchored shop small those that So -- going centers.

pretty Trader these Meijer, So grade or Wines to see XX%, months, certainly, expeditiously, we really small that or XX halo be the Total buy. new Publix given Whole effectors and actually just want Foods given shop to XX XX-ish, the halo or Joe's next investment over or tenants effect, are

And they're shop catalysts for just so great small outsized growth.

Mike Mueller

it. Got

was That Okay. it. Thank you.

Brian Harper

Thank you.

Operator

Thank you.

go line Next Floris Point. question of ahead. Van comes Please Dijkum from the Compass with

Floris Van Dijkum

expand leasing good to And look seems you are guys. the costs the -- can high on I I on it's to getting $XX, average easy understand. Question spreads. in guys rents at of kind the Hey, if skeptic of your -- costs. together. like attractive justify Are one-offs is me new might way, that well, you to because your the A deck put if some part cost, you there it makes your and are say, it that? But return at Xx leasing your morning, they're XX-month really up enough By are that XX% investment? Xx maybe the average, $XX. -- It

Brian Harper

Yes.

tenants space can that there were intended. a increasing I were they're by landlord those adjacent on one-offs after originally tenants work But going more two investment rent that be. escalated announcing So to who bit those two one-offs, on on grade for needed say costs little are these already shop than XX%

I credit, analysis So effects. void co-tenancy, look the is one we rate cap look affected halo at really, also tenant market, in but at absolutely -- net factor, compression,

of yes, are on rents, in was is for one but So our are I next Bath on So square that if center. of driving small said putting $XX Bed shop? about grocer I've replace were Page But the would that on the foot for important, you that's that as invisible cost marquee deals. at throughout those replacement extremely Bed one rents, again, just it earlier, XX yield where two tenants think some going, it I I'm a my grocer, on, average, looking on with it's say, But factor. are Bath new a we investor rent door that's elevated. deck, these going

Floris Van Dijkum

Thanks. spaces probably what you're I helpful. intimating year. obviously, starting well. can That's maybe Bath -- is growth quarter little ask, dip from some sort another talk basis should new those probably as getting XXX could a clearly, your that going expect there Do think, up expense next on going based with nice your also rate spaces recovery get is to dipped, is bit think I about the picks points to we tenants? But little -- have reoccupied of spaces if And we occupancy you're what back. that Bed I dip to when third get before the we in the Maybe --

Michael Fitzmaurice

Hi. Good is do basis be -- and Bath. for took where your will there's credit have is the job locations a unfavorable quarter morning, It's X trough Thanks your to great about to That This really comments But point goes on the who disclosure. going presentation. all to yes, a rate. impact back third because the for -- occupancy that the on Craig, Floris. our to question, Vin answer earnings that's remaining XXX we Bed Mike.

it it finished of it to And so by accelerate closer will the XX%. at up there. from end the then to will That to commenced about the And And then bring XX%. end really bring of the year. XX% should not XX%, quarter, down we signed back the

bucket, year outsized next same-property Like north create from $X.XX is have remarks, in growth prepared signed my online X%. NOI the said do to pretty commenced of not going I about which coming a we

you rate. on the you're a driving finished the going to, about XX%. And same-store really as alluded recovery the top spike it recovery quarter, was our that, At So end rate. We of of to in factor. see our it's

expect that next finish the XXs XXs end of then the to by year. We closer year the the into to low and high

another will key another profile that to So our XXXX. of contribution and be NOI performance operational growth same-property driver for

Floris Van Dijkum

Appreciate it. Mike. Thanks,

Michael Fitzmaurice

You bet.

Operator

you. Thank

from of go question the Alec Feygin ahead. Baird. Next with comes line Please

Alec Feygin

TIs? Kind taking the renewals the leasing on of Hi. any are there the for question. specific the the Thank go my and theme lower elevated driving regions rates you to elevated renewal rate, of with

Brian Harper

Front and tell from to to seen recycling a back Alex, Collins. in it's can Midwest our Fort -- to lot geographic one XXXX growth to And all across the started of out of there, out growth Boston flows Southeast broad Austin regions, to new I I Range the of to our country. down in the It's of a we geographic our you, on areas. significant lot that our goes based. really remerchandising, that transformation has cash just with And think doing with asset

You grocers company. the been different it's at XX completely mix, have look to new a that added this

So as based. I But broad based at sold Certainly, this in rent XXXX. accretively. sell going look a there'll broad trades to what be is this we there and here We've it's asset were very discussion.

Michael Fitzmaurice

Another elevated options. point tenant I didn't is would the where have have make we did that here renewals

XX%, quarter, about leasing rent We feet. the about that square drove right During totaled around XX transactions XX,XXX we had XX%. there

questions years. I at over we what are my the are new earlier like leasing earlier answer, So the of couple spreads, experiencing where we XX% we And doing are the to a new we one said on in spreads seeing the of growth driving the double-digit have -- the last on leasing on renewals. table, you're seat

side leverage we the these and the at table, So seat in it have I you're but only like new said. renewal a tenants the where with side have not seeing

Alec Feygin

will be the you're the And the boxes XX%. higher? you'll targeting? back out helpful. Should what's invested kind to split to even I go That's are threw return and guys getting Bed specifically box it know Bath be on it. expect you we of approximate doing, Got that? the that Or capital you number

Brian Harper

be digits. -- double mean it's data. I more could Yes. will certainly we get It

that at You other. Bed to getting is take property Foods the back XX side $X,XXX of -- space. are and will on small probably There real Bath Whole shops tremendous $XX in estate, up a we we XX. anchors, that and you're the with one vacant do of Bed a that or that Bath But box a $X,XXX chopping

and quality, a this the in So think space. start tenants first-to-market asset, to leasing excited of are lot we that eager really

Alec Feygin

me. That’s for Thank that. you it for

Brian Harper

Thank you.

Operator

time. closing There no you. questions are further to floor would this comments. I turn the at like over back for Thank to Harper Brian

Brian Harper

Thank seeing locations by was quarter mark-to-market retailers RPT's spreads The & Bath spreads a enjoy on in of drive by opportunity in and us should and leasing record national you you continue to September. all second Bed to volumes. afforded of sign hope year. the tenancy the half and forward We us your Have to the day. elevated enhance Beyond rest enable second our summer great you, operator. the marked look conference and circuit strong to

Operator

Thank you. teleconference. This today's concludes

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

RPT Realty (KIM+N) 3 Aug 232023 Q2 Earnings call transcript