SITC - Earnings call transcript Q3 2017

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Operator

Good morning, and welcome to the DDR Corp.

Third Quarter 2017 Earnings Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. Instructions]. [Operator event this being is note recorded. Please now Brandon Day-Anderson. would like to to over conference the turn I Please go ahead.

Brandon Day-Anderson

and Executive and that be us. Officer, Financial you today President Officer, On statements morning Michael certain today's David Good thank Vice be Matthew may call, of will you Makinen; and and hear our President, Chief Treasurer, President aware and Vice for Executive joining CEO, forward-looking. Operating Lukes; Chief from Please Ostrower.

you are actual statements these based materially such should believe assumptions, risks and understand are reasonable uncertainties from we results to subject Although statements upon differ forward-looking and statements. may

we Additional to with our including XX-K and differ risks press the uncertainties for results found Form December XX, the be cause that in the actual and information XXXX. filed about may today release SEC, that such issued year-ended could documents the

discussing to today. will operating Reconciliations measures In and earnings measures financial FFO, be at issued directly found available press can in website release our same-store our release be today's FFO, www.ddr.com. of net on and addition, non-GAAP supplement operating income. are comparable GAAP financial the call, our non-GAAP including quarterly measures This financial we most these on

introduce who For At this Investor time, during Event those Section President the call webcast. you Relations Chief into our earnings to would and David on Lukes. of Page please it visit like phone, my of to along our presentation Executive follow the today's the and Officer, pleasure sign is

David Lukes

time our of thoughts to you to quite I'm belongings. day-to-day team bit during and a time. the XXXX got in their team incredibly start struggling content little very homes adversity, with this to and call circumstances accomplished would Many morning. to challenging Rico Brandon, and to grateful the We've enormous gratitude and this them. amount conference has third this welcome Despite our our damage review call. expressing are you, to I Puerto difficult with quarter Thank our in by like and

in I over I'll hand an delusion progress. of the expectations assets First of review current a expiration Then the it will provide sheet includes results, then transaction activity. FFO Rico. summarize million our XQ our To our overview operating $X.X I'll $X.XX of recap line including at lease internal in was Puerto of share of ground our per a an with state decline from our NOI will quarter including commentary and some FFO detailed statements operating updated benefit Rico. share Riverdale of Matt, and the on Sears will lesser in more de-leveraging balance and comment Mike on Village. primarily a comments The operating to decline side. And extent financial who close per year-over-year guidance finally, our to from a for in product on with was Puerto the from

operating Continental was FFO U.S. within While expected. budget, than better results were we originally our

our later. Continental Specifically the portfolio budget NOI of tax an lower real increase speak same-store which results U.S. than NOI for expected and of bad The performed better in impact incentives. expense growth our of estate ahead largely X.X%, of debt the will because Continental in U.S. to Matt guidance negative

the our Maria, line in Rico Excluding impact our expectations. with of performance in Hurricane Puerto was

second occupancy of to a was decline XX.X% guidance XQ Our roughly quarter represents put I'd this percentage our current with Both our call. benefited context efforts quarter was on review our from and we compared from in sequential the results which of metric ongoing like and of basis leasing concluded discussed XX.X%. to lease XX rate leasing last progress. ahead the portfolio of point prior flat

durable. that quarter Much viewed the leasing was this of our coming as NOI we we properties a third group had within completed assets. reminder, of As our categorized of XX% from during

by replacing cases, at with introducing to assets steady progress trade expansions make prior rents rent, to in above footprint the slightly continue offerings We vacated discount maintaining credit. our retailer tenants from most strong of tenants these new with on area dominance and the tenants

is are will and most XX per feet. between income areas accurate. current and to is we respect plan still opportunity also why gave were next anchor last XX above our in of XX the square NOI. wide tenant initially the time spending general, facilitate our we where ones more box $XX,XXX demand. vacancies the foot higher about working detail gains our group to therefore we range the long-term backfill, smaller What relies vacancy months XX result that trade the economic the represents an on available size important trigger financially, over center When that is unit markets that's change site changes XX% demographics The real be quarter stable tenant vacant to that the make assets properties XX,XXX is note our of have wide feet. superior with discussing that But tenant potential, quarters. rent a and we GLA vacancies beneficial respect to our is a we average the fit both second fully to within demand which we a The to This growth bucket square on cases to be it's with property, for in to XX,XXX considerable believe landlord of dominant and we a but If In also the see household. that with to mix. are ability from for of our compelling team properties outlined It's the these opinion found to square the in will chance leasing that which a ranging to is statement per tenant the opportunity growth our few entitled.

vacancies spaces first be to lease box duration to to longer and backfill, exact the tend The reconfigurations. be tend

realizes by of and our Outside development number and leasing pleased assets. on team we've headed of demand in help growing last great sell find to and two the team, to match Our been I'm value. progress one active that mix is very accounts retailers capture a entitled we've those executives tenant in Kern space our job national made properties. quarters to Long-term operations, property Bill best have with the space continuing helping with assembled

assets third average sold $XXX this on $XXX the the million $XXX we second once in dispositions and the rate quarter Specifically, of again in top of million weighted for quarter, quarter, million quarter. in The was sub-X%. first cap

reach million quarter. target quarter $XXX additional we an put in $XXX million us under sold leaves as to also $XXX proceeds after end, which needed just shortly DDR our sales share last out million We

dispositions a variety later markets capital but our Finally, quickly of balance transform allowed us transactions have Matt, more and will to comment sheet.

liquidity to assets. closing of over expanded process and to like With new of sell months. we've some our operations focus coming our completed deleveraging as Puerto on line loans, the assets the leaving I'd and term we extension on to maturity commentary the now us substantially and continue increased and provide credit Rico

for priorities first foremost well employees have for account to Our provide their and our been being. there to and

Second, we've physically been were working to tight. ensure all water safe properties and

supplies. Puerto we areas stores possible we generator ensure so people as living Rico that work of access have as common open basic power, debris to Third, to to and soon and can the get provide remove

to arrange insurance company assets. business with make Finally, repairs on we've advances to damage, to and working permanent interruption assess been our begin for insurance

and/or installations XX We today? generators of nine outdoor including have now power assets through either centers. do the malls where through we of So four and at stand enclosed grid five our

cost damage that is of are an In are for Rico some reimbursement and attributable assets. our $XXX our and power addition, costs completed and insured to of power due GLA grid open that will depends properties as interruption anchor and business. restored. take shop of changes million All remain It power. difficult doesn't Real, this mall potential so also the to XX of associated property This over repair these longer excludes anchors who received restoration damages open and have be operating labor today, we of period to to at grid separately provide individual now our are means include of the to Other Real, tenants. business for spaces Palma opening of specifically expect estimated stores supply generator Roughly open-air Puerto pricing including $XXX on It's damage in repaired XX our on closed of million. estimate those business. in a XX% million which stores, to to small initial with one-third account Palma that or estimate are We've those by time generator generally excluding into spaces that leased closed $XX and water shortages.

to source professionals pre-storm all the scoping we have the specific necessary permanent restore these to commenced assets and of process repair properties formally and contractors to the condition. work at Finally,

have are the We so. tenant properties possible reopened employees right on do the quickly and to getting focused as on resources partners as and our the island and

their SVP of real whom Rico, of Our They professionals in for Management among for are the Lopez, Lead Xavier efforts. Executive ultimately Joe Puerto Gonzalez, thank enormous diligent, estate our Property I most Construction, and Joe are these Chura, I've Operations, undertakings. them and Property and SVP responsible thoughtful, effective our ever with worked

environment provide the course generally. our effort you Mike And to as with additional on provide business of call every Rico I to color information will with have to and over will our we the hand you Puerto make that additional it. leasing operations We Makinen on some

Michael Makinen

for David. same-store growth growth U.S. debts. negative Puerto by in NOI Hurricane Total in Continental related the growth X.X% the fueled modestly when in X.X% bad adjusting you, Thank quarter and positive negative was Rico third including Puerto including Rico, costs hurricane and

TJX's offset store As due leasing combination commenced pleased have our and David to rates Hanover, no and roughly rate primarily Jersey. decline to Shoppers sequential mentioned, two partially by and ahead move-outs. Massachusetts, the flat by the Framingham, expectation rate steady was openings caused furnishings of was lease aforementioned a new in ground particularly The our concept country's lease our stores We're of sequentially East was World in lease opened homes first Sears exploration. and in home at New

This our end significant of store XX.XX% closings bankruptcy in rate ahead U.S. lease Continental related to assumes We no XX.XX% year year-end. to expect the range. range

As vacant environment expect steady to To the we that said made XX achieve or negotiations. have spaces end, to be filling we continue Sports from continues it Golfsmith spaces LOI have rent for the leasing recent tenants month be quarters, two by the process XX for to a anchor XX of that for now and will XX Authority, demand last to in hhgregg, space. characterized We former bankruptcies. new released commencements

new about activity the of end leasing or quarter. was levels nearly square feel our given in square under XXX,XXX leases of feet of feet. volume we the XXX,XXX LOI quarter new have as good We Third process

Blended small required to Matt by shop CapEx this result new and I'd historically leasing who Ostrower in Importantly, renewal renewal of and activity to $X.XX increase will to generally XXXX of the generate review this is rent, trends, anchor been intensive, refresh focus year-to-date net of $XX.XX our leasing less small this portfolio. volumes. spreads an leases and volatile with and to quarter, like activity and financial of hand consistent quarter by our while primarily greater significantly capital shop guidance. a With the has from our leasing higher This overall were second metric economics from land for by that, over affected improved quarter. our better portion has X.X% effect in rents offset continued call

Matthew Ostrower

on our reviewing Maria I'd impact Irma XQ start to the by Mike. like of Thanks statements. and financial Hurricanes

hurricane of million reimbursed be $X.X which Hurricane income $X impairment this Approximately removal on thus statement. relates will recorded to is not primarily we of and our insurance. and debris deductible by Irma the casualty million costs First, within

damaged historical to and of property which a Rico. from million The second million a Hurricane be balance Maria difference write-off component of of million value to casualty in we deductible of and the This damages a book $XX the a is $X of capital receivable by related reimbursed. Maria expect cost $XX cost for costs the on portion between item sheet Puerto $X million capital property this representing line is Hurricane basis for damages

of actual write-off historical the our higher is repair be the mentioned, estimates David than to likely for value this As and cost damages quarter. book of

Both will of difficulties bad of were the $XXX,XXX reserves million, revenues greater to be to an million loss approximately Hurricanes Puerto $X.X the tenant revenues loss excluded anticipated increase insurance policies calculation attributable net income. financial of from Puerto $XXX,XXX of of roughly Rico. debt and same-store and million Maria bad in Separately attributable Second, Irma during Puerto recorded exclusively and which in is operating Rico third debt we from the Rico reserves our deductible $X.X $X on our not reimbursed. quarter were

$X loss company the the business related advance shortly of Third, interruption third quarter. the of to close received after revenues quarter million payment a

the income do to the unable the to Given in revenue but on timing record so expect were we statement this fourth quarter.

working We are record to net interruption the would impact short-term payment those income of we income storm the forward, advances on FFO. regular business of and and hope Going limiting to damage of generally a casualty, ensure statement interruption million to the business make carry habitable covers to insurance insurance $X time property, limits and interruption $XXX Business including million it plus one year. with deductible. tenant space takes

affect quarter and carry progress terms sheet, and the over improving liquidity. to actual Our traditional could we insurance insurance gears reimbursements. this contingencies the months policies last Switching maturities extending balance significant and that made six

portion the as and complete. restructuring this With recapping expansion the bond our of balance term now our seven-year and credit loans, of of well as a believe $XXX placement of sheet we is line million offering

maturity X.X when longest preferred the the REIT average now years including as perpetual ranks one of weighted shopping Our Group. of center in securities

almost of billion have well schedule. availability We laddered liquidity our asset as $X after recap accounting October well of maturity for line as a under sales credit full with

a capital Just additional total in two quarters or billion we in we and undertook $X.X with an billion significant $X and debt before XXXX wall XXXX. of the markets maturities XXXX faced of of maturing ago transactions, maturing XX% almost these

and a of Going would million additional deleveraging. improvements Successful profile, will $XXX forward, focus previously better on program extension comprehensive in we announced several primarily additional maturities, leverage XXXX. maturities XXXX improving until completion and the average further secured size including result disposition the repaid maturities our of of and We unsecured increasing our quality remaining pool. no our weighted asset yesterday unencumbered

several product the quarter. our joint the the sales reduced that we in a $XX.X reserve than expected the have are prices of reduction closed first investment third is million This higher assets Blackstone under quarter. for larger that on reported we preferred Finally, in or ventures contract in

in discussed reserve basis security could in the sales related the the accounting As again rules quarterly third future the prices a to adjust we first our other One sales item, fall Blackstone threshold expectations. venture us means Blackstone to the we below GAAP reached quarter. market III on require in increase quarter, which if joint

our As processing a $XX.X related believe Subsequent and preferred Center that to sales we a $XX proceeds sale in now all that venture. result, to XX% the year-to-date interest quarter will further to with Whittwood of repayment we to used power end, Town received preferred be repay up of million total repayments now million.

disposition interchangeable last to As like now I'd we and Blackstone we some proceeds changes sales target. XXXX million view of to to preferred our stated pursuit quarter, in guidance. $XXX proceeds as turn our

of mid-point the down budget six The same-store of performance the positive from months. in the U.S. had This we to result for guidance the of range. same-store to a negative that from First, U.S. above portfolio the increased X.X% positive our is to the X.X% negative X% X.X% modestly over NOI previously. should U.S. guidance last now better implies XQ trough NOI guidance portfolio

for lease rates As our expectation U.S. Mike remains year-end unchanged. mentioned, Continental

Second, Puerto XXXX performance are we guidance NOI withdrawing in same-store for Rico.

XX% we're roughly in of of mentioned, and this power which represents now time of stores in business optimistic all pace David to our progress and major a of Real The GLA predict. anchor for Palma lease weeks. is over As about is difficult coming to continuing centers part period the progress including spaces. open reopen on to restoration significant This short outside grid centers depend will certain

Palma the spaces time of and reopen selective for Real repairs. majority not of some addition, in in will necessary all vast because In centers space

under will insurance be interruption the covered but loss We business our often these which to attributable revenues of timing policies, a lag the with payments occurs impacts hurricane expect comparability.

but payments David? So in these of closing some to decline quarter. couple in a back hope we face later hand but and will with in this comments. ultimately quarter. to advances believe quarter to a received we expect stores to progress that, revenue the of summarize, I'd significant reopening be like of offset make to With David we insurance decline some interruption for business a still may the fourth recorded call the We

David Lukes

takeaway Thanks steady Matt. quarter is My this progress.

balance even We ago. than did sheet have a a significantly few we better months

for our the leasing be Our opportunity on produce effective, focus be of focus box as our starting our portfolio annual We value continued stewardship take to efforts. portfolio produce is we results, accurate phase the I on risk we is shop the of reacted And helpful like our with leasing We budget we to and proving to is focus evaluate renewed the of can and that, to where your create in would process to to Even back knowledge quickly culture results. to know a so deepening. is which operator, and to own going solutions. call and questions. use hand the shareholders hurricane, need we immediate this our to

Operator

Thank you.

now will the begin Instructions]. question-and-answer [Operator session. We

Our with comes go McElroy ahead. Please Citi. Christy question from first

Christy McElroy

Good everyone. morning

the is on have sounds given Just that's been there you reflected juice doing, LOI what you've under that lease following not in the there leasing like up rates. it in more

sort You be big can about? the lease that’s around in XX sort sense our talked of know should time thinking but of kind I talking how reconfiguration maybe about we you for can about we just terms that XX of arms commencements, wrap a of commencements, maybe timeline, along this give period us a about months downtime that space talked lot we're you pretty a so window to of

Michael Makinen

is this Christy, Mike. Hey

that that came tenant is to backfilling the is of is getting best But feel some pretty back there's generally spaces easy answer the getting there's months the the working are the We via generally an we've XX lease-up conformance that in recent bankruptcies. the because precise way tenants that's and that space quick that appropriate phase to early to happens prototype the their us in be. is available it's that that space vacant what strong to way window those the some so for to think window of the XX who I you're and what pretty way back, interested with going still identified.

as end to the ends the the needs up upfront the happening feel working which we takes an things progression and as and spaces time time really far have and the month that of overall spaces end leasing so we configuration junior in bit we a why That to it as tenant leases when far As moment majority taking is feet and work. to feet XX,XXX on, we as goes a over make -- is of have box pretty through now progress. what up filling going at is share spaces that square time thing quite tenants XX up this XXX% as confident right XX,XXX multiple out in a but and we're window as ends talking to feet great we reconfigure conform XXX,XXX with up have of our long of

feel good also we're deal and we're pretty expectations feel making we sync and norms that that progress in So our we much with historical our in flow.

David Lukes

XX get Hey months point bankruptcy clarification of just right Sears post one after post is to or departure. Christy, back we XX the

to it's today. not statement from be meant So a

Christy McElroy

given of are are your how stock Okay. your the right thinking thinking And in around exposure just about movie closing. in know there? theater decision insights about the maybe all changes making And Mike terms how Tresoros you what exposure some timing then you just you now, industry then into about

Michael Makinen

in others, general certainly we're at working that's have some we'll in work-in-progress cases, favorably and with and but report right in I'll that favorably start now less Tresoros now in Tresoros. likely quarter. and more us with are a looking to next They most on with conversations right

movie as and pretty pretty pretty the pretty happen feel far centers in to industry, and the general As that AMC and have movie that we good in our regard with leases got we're in and confident shape good industry our with centers. to in we're we've good relationships Regal locations finding we

Operator

with KeyBanc question comes Todd Capital. ahead. from Thomas go next Please Our

Todd Thomas

Good thanks. morning. Hi

in is? rates asset on in in on for So in what just maybe those better terms expected market which the characterized on you than bit about general a little talk color saying sales. sub-X% a also the demand just provide you're comments and of pricing you're assets the the with quarter how disposition cap Blackstone Can more the and the that and now pricing you

David Lukes

quarter. you but good morning number from a to been because the most been I assets is data assets access that be so Todd. which the been we're was I simply close kind the cap during sub-X% depends nine, pool of debt Sure, on say has prior range that Their and rate pool for that big enough would was to the fairly consistent something the on process closing has mortgage it buyer steady reason selling the with wish tell fairly the we that really part the to steady. has say able to five credible years.

noting. So markets worthy we seen of in haven't that's great really the change a transaction

Michael Makinen

Blackstone the visibility on not we to on right, whole partial think And process, we're running process. that have only that comment, I pieces

certain really So the had had of an in out process first put there sense then. the the begun a end sales and at just estimate quarter we to

fine things as early, obviously happen. limited we continues process to and was process we tune and visibility more are able So transactions the had actually that as

change about market in less on the our actual about So increasing it's and values. overall visibility some more massive

Todd Thomas

box? a the boxes assets versus is square recapture incremental have those that the then reconfigured extent when the going about would per to are anticipating you forward just generally the are backfilled the of much additional vacancies, how to you And Okay. of anchor following and thinking you there foot up vacancies here majority average cost on be that some the from might reconfigure

David Lukes

I over mean up footage credit work that we'll trying layer, of need, out their analytics we're one return what and how all an splitting that easy a For it on much we can figure we're is. I the square the because the conference out a that's depends really safe they kind like, to most put would do box figuring it's looks tenant get capital because is what we intense investment map. how when financial say

Michael Makinen

As the is as get different, same really depends it's it's to determined. different, back be far it every split, what be many is every a on space so of will breakout that's how prototype the proportion really we tenants answer,

David Lukes

asset we relative I'll also with in that one-storey a don't it's it part open-air the to you’ve normal it's small were the configurations sector add a prototypes so there of of years something have saw build why and other not I to out this for of classes and changed is a prototype a built process and purpose relatively and the with are norm surprising. that's process you cost later normal seen XX it’s spaces think that find Mervyns, strip so it center KMart, box part

Matthew Ostrower

term initial through we into CapEx boxes can got I the areas. will to several we’re be somebody money. shelving not is actually highlight money renewals highlight, very for We're be it's Matt. extremely going posters on with there just for spending who people is the not just to particularly that right it's intensive just important we just credit lease I'll but make economics thoughtful so think these more about here thereafter,

Operator

from question next Stanley. ahead. Rich comes Morgan Hill go Our with Please

Rich Hill

comments that previously properties seeing made higher point, are progress you've point? pretty you what like active earlier expected want at that I sales for you so made are in than it transaction taking your they’re looks morning given announced, good rates disposition market to tightening, buying a thinking about market some this the plan U.S. this prices, and about bit chat guys, call. $XXX in cap my just for little you some house good thanks light million the widening, about demand you you’re Hey they’re at what maybe of stable,

David Lukes

hard market be of transaction entire the kind Richard spokesperson like. it’s for looks the what to

disposing think risk to an are back other think what perspective now you the DDR just I are value, there had that is asset If of property I means five on that deleveraging of that finding disposed desirable our I over debt property are receive types assets less argument pull that primarily that and and and that the make returns say of good for years of amount in and are characterize submarkets has can own kind getting to certain purpose very mortgage and because get of the certainly not which from from certain understand institutions. it, company's of substantial a kind buyers type, they we're of last could the the very outsized cap I buyers would that and they’re we're fair. able rates this there maybe so

And so bit I the private institutional. be would more less a buyer a pool bit tends bit more, little to a and little say little

Rich Hill

Got it.

sold missed sorry it quarter? in so this, disclose And did rates I if I'm you cap that you on the call $XXX the plus million

Matthew Ostrower

is of there said process. our simply script kind the we normal in sub-X% said We

Rich Hill

that And and then to comparable at release one but relative just guidance comparable? was portfolio impact it the press Or some so increased, to there XX.X% previously bit great. I this is is the obviously question to press release says prior occupancy the press it XX% U.S. on curious silent Rico? I'm that, is just was Okay, on Puerto quick looking prior release the

David Lukes

right You're question Rich. asking the

Just to gave be totally U.S. clear, it's the kind of we comparable, before. would occupancy number we never not say

very think Puerto where it's made up to going know given difficult comments I So to the Rico, end is there. I about occupancy

on internal would table, I new based occupancy is previously tell for So that we’re number off taking that you you our U.S. a numbers unchanged. number that giving we're the the

Rich Hill

more Got very it, Thank questions. with you much. okay. separately I and will in follow-up any jump

Matthew Ostrower

you. Thank

David Lukes

Thanks, Rich.

Operator

Schmidt comes Craig go question from America. ahead. Our Bank with of next Please

Craig Schmidt

the about what fourth in think loss wondering quarter. we Rico I'm for should Thanks. revenue Puerto

Matthew Ostrower

think I'm sorry do it? about we what

Craig Schmidt

on lose the No, What we year, as to what relative be think for number do XQ? think the we gave we to budget we might you no. turn -- analyst should

Matthew Ostrower

Yes, we're think -- problem a in to predict. very very, right; that's where there's there I situation obviously a think difficult it's I

where depend try part as XX you about for I know but to it. difficult those would kind like just we we have found I about can transparent would Craig only grid a don't and assets, obviously we back on some -- extremely I'm an a given our really It right ourselves position you will it's only expectations operations clear be a as I so we exactly it's it's significant assets. our that there, number able forecast XX think you yet we we don't estimate. to things otherwise really think revenue on. power sorry tell come base be make to to it our in find not we of of really ourselves It's

Craig Schmidt

Okay. about watch with And are ago, big-box anchors better you just your same, on closings tenant and then in think do of year XXXX. things potential list focus junior terms worse to or relative real in thinking the

Matthew Ostrower

months. so the list things changed has the do I is is some of whom that the to some in throughout want different and much financial last I relatively XXXX. view obviously to given guess some that down XXXX news companies larger extend outs decide credit, exactly watch to question that's than bankruptcies you XX to we of as list of more happen watch for statements on the list just we to our come result our X which but the XXXX. actual we've than extend out not put on unchanged in of ins What longer come comment see the what's yes, going is to capital can exposure on dramatically requires analysis were some number to some on obviously a been watch in We Well, a there's want our then and do whom use a declared obviously

Operator

ahead. O'Neill. comes Please Sandler Goldfarb from with Alexander go question next Our

Alexander Goldfarb

questions. Two morning. Good

First obviously Simon currently of way rent? assets, Kimco Rico Craig's maybe us you are tell view you is tenants a their what down question from paying of Puerto can view guys paying, what different in tenants of just currently booking, so percent your are from gave percent they're what their gave what their

David Lukes

of had to long really enough that question, haven't Well we the Alex. answer know

providing may or five is unfortunate more know we -- lot lot would uncertainty right have clarity close it's able right have but we the relatively fluid as -- flows -- have to uncertain a some end the of for quarter. about lot environment, just are Real. on that pay days certainly a pay time this horizon What tenants business their say is another things a tenants timing the call. flows. relates to to what XX% cash it ex-Palma abate, leased of level a there's it's they to to six We and rents, of their rent, lack expect the said that may going was not you those in others happened these open We really guidance -- another to We to now on pay of of GLA cash think if predicting there's will our exactly of which the here in like, look that those there's a be

I prediction cetera. So actual The think we're got point we is this which know telling you really et at who difficult. time where power revenue quite open in everything is and is we've that

Alexander Goldfarb

but the those some of mix the then part Okay. also or Nationals? national some it's the credit of that that's of it are of is just tenants but a is closed, or stuff super or tenants type U.S. not it's primarily shop XX% small And

David Lukes

a It’s any are tend -- XX bias or have wouldn't to would we section said you -- obviously anchors we be I certainly say cross that there that number, higher can’t huge open, national to really credit. certainly say I anchors real XX is now right, to

to you Puerto but in then have a I have and in shop you to the So we tell in thing we exposure that part portfolio. moving about small GLA small the as think you well do other do BI, U.S. up shop can right. of other our it's a bigger -- open take fair of some get lot just is also XX% the comfort here, Alex, one which would we about a it is is than of obviously focus, asking piece Rico you're revenues can

doesn't tenants, these degree we to get the degree be we off in of get more from open, some the the to will certain collecting areas, them can't turn degree on of we turns power to that. So BI on or don't rent

exactly just door. come will think I to that know peers have BI will in said you difficult our when very some to of the as it's

that’s happen earlier going we've I think the we but on of to arranging statement. and job some able a to done get work-in-progress record them exactly payments and still it income when are be when to know good a we'll don't the

Alexander Goldfarb

once get Correct. that the closed? but not or BI the portfolio you do Right whether covers the whole is or asset open

David Lukes

but if by is of missing view missing we BI to are depend is because to revenues on it's individual if that going the our claim a going it's part. on we're hurricane that our Yes, tenant tenant, circumstances be the

Alexander Goldfarb

on be we just rents because end space second though that you fair systems And system that what's it all in the rent, you in quarter amount of cost and view economic and Okay. better of guys duplicate on incurred higher small most out, HVAC, positive fire do as or more bit a sort then is there redundant up your even you about up that question rents think were space will the of space a of economically sort safety, the the dividing get said they will services you just cutting but or did stuff, you shop being that the that? because nets anticipate neutral combining be may but of

Matthew Ostrower

you're just a for compelled are make very investment that There It's situations few a not creation. value just all to negative common. where big it's

David Lukes

and up through today. center by is continues still boxes large of practice the landlords shopping boxes as cutting like It's from in I out the the Ward age old is as it that would were thing gets space. process One to it common received when days to Montgomery point an

are and deals these great really of of some less. really them profitable some and are So

things a we doing merchandise always because the or credit and/or material we're there think there in So increase our there's is because good if because mix center. in

Matthew Ostrower

same. three square the The leasing shop space there's it’s the feet, very shop as is so up which I portfolio one when XX,XXX and reconfiguration make over not a all we other still that anchors and financial are a of Junior tenant relates effort often split is smaller generally would point the shop return. with Shop effort the applies across positive Box, to it to

Operator

next Wells Jeff Fargo. question with from Donnelly ahead. go comes Our Please

Jeff Donnelly

curious breakdown there? trying fair you would just a how if and your that Rico, to and you Are national local guys some might shop fair provide for have those then it's revenues a on in -- or anchors I sort thanks Puerto to between both pre-storm down call clarity to situation rough Rico. of fair space Puerto Matt break sense morning if and in I'm able even would NOI Good one to

Matthew Ostrower

can on back about, will I Jeff call Meanwhile that. I you call give have on follow-up that, don't I some give back and you you a you color number more exact ticking the and

Jeff Donnelly

That’s rate in there's beyond begin with it earlier but then I a expect fair could of here perhaps is on the is rate spreads running continue this occupancy slightly store XXXX portfolio? the lease leasing spreads your to maybe is mid early good. I an to as decelerate an And assuming in to off leasing we higher just in that lot maybe or guess in move say in building to big there's your you see fair know question closings, building inflection reported to because portfolio rebuild should it you we a no to relates bottoming inflection vacancy, lease just into it and say change to as as

Michael Makinen

to sense think realm. entire and of that's or they tenant fairly sometimes most can lease metrics quarters of overall up other in we to rent volatile shift down, that consistent over one be run going general, one several But leasing you think have last the sometimes rates I spreads a tend major leasing a don't low we've picture, seen I replace the a our the in in the direction. of the where really of have all that go I the deal can shift areas

I in to it's goes. far don’t the area it pretty So going really down. as But feel that it as see I going strong be up where

Matthew Ostrower

I a occupancy any in it's at that unequivocal think current think I if [indiscernible] as I think follow don't to we up, really rate rebound what vacancy way, the or bankruptcy structural stop, think going we I not our it’s occupancy believe see point. to would just happens bankruptcy picture depend this our is on yes as its Mike which an

David Lukes

place look of the rents. of age one important on that and is things of spread which to went the the I because at add discussion tenant Jeff, in that, their it's the could bankrupt lease therefore likely

year is and the for be and related situations high a about rents to talking tend with therefore babies, the supply it’s At lot so has the which bit not talking demand is to because is do mark-to-market a this Mike the would a near not, a volatility likelihood much older, a less large a little to have today simply built because mark-to-market. little lease different rent about have lethal in period rents nearly you be relatively is to not five inflated six and of they're the can where expect rent. that of the so very spread, loss you as spread most hhgregg or great over toys or company you're history if So for the

Jeff Donnelly

guess deals, seen past guys your think you the of about guess to actually been do you your you have exercising you that, and easier kind to think you've how percentage are as And in how expirations on two-part years, maybe XXXX sort for point how it? about they compare you rents any expirations, doing do hurdle a this tenants an maybe Understood. the where of of it thinking I and provide about the related would same normally in somewhat is think at I seen it’s we've mean signing question, how options I that be change

David Lukes

probability a question their how of of and shop the options. must right on benefits is the that's But trigger it, you're and no as about at. much doing not I is percentage new leasing that far expirations time, say has property easy to of simply that because barometer look tenants something And renewals the a a having really on performance there's single There’s you're do real an eye we're wise of to where the dialogue keeping tenant we're changed that of box of dramatically. as lot so larger negotiating banking seems one unlike that is renewal be every probability

high Just last but I been growth be the sales their paying a seems is all tenants the be lot for for that pay not rent to the same. five to of the same they've continue to decent, think years ability

Michael Makinen

mean spreads. in uptick the consistent I think renewal quarter this I Yes, look a quarters you of previous in very activities certainly of last Jeff, at by saw putting nice their, few we the terms comment

go spread future So sit we we where today I so pretty spreads there's but far are the think would fine, uncertainty about it yes higher but some good. still the Where we that so looks in a consistent. like

Operator

question from Christy McElroy with We ahead. go have a follow-up Citi. Please

Michael Bilerman

asset Michael whole Bilerman does it's these balance an assets to affect buyer I'm Puerto the thinking to portfolio or your effectively Christy. about your Hey be here thing your now insurance curious transferability wanted of we the and other Rico, hive sheet to potential how off transfer for any whether on if I'm should foreseeable try there's sell all expect for at this just ability just you future? to on

Michael Makinen

an view transferability to insurance isn’t David our that you want of it’s add? issue. question; insurance the take just I'll

David Lukes

great low. we before say would question would Rico said engaged bit I in since trying we're the transactions just months on Puerto we at be tell. your I tenants very to open now a you too know about on different little in so the very I for a to But a lots early would it think that now is back. still types that, is actively said few understand is Puerto Rico, well of right conversations to say we to idea buyers power reality executed and grid that it's a them properties couple transactions open active probably Brexit of be Michael which right business, of prices Having they’re we're do of

Michael Bilerman

market valued the some know rings of about acting look the was to some this didn't the of a of that Rico portfolio more split so is public more the that of on isolate so market in the access of starting I public hive-off terms or think some at and entire have company Puerto somewhat rest company, of table Just be portions potentially that the their cleanly? arguably tence used drag companies would if in company to difficult

David Lukes

question. Good

quarters ideas is shareholder I but or is consider few this the there create quarter. at that protect considered value. that And anything considered even we've of always team last willing types think be of in would management could any what lot said to are that a should be

that assure off table credible. is something seems you certainly rest when laser the we're nothing making decisive like So can and focused on a actions

Michael Bilerman

know anything just late buying through and to was million if very X.X just then with? vein clearly basically would the lastly June auto anything there begin $XX that has precluding his their his shares from or today below shares what from him million stock from $X been and probably a active, and have that's stock focus would or lower unfortunately to that in levels, there shareholder in been and between arguably buying then stock was position has that's accumulating I early May if And anything additional your another be precluded the don’t say April just I just last shares buying he entire prices of majority November there's almost family those much fallen

David Lukes

Michael, I to perfectly good be It's question a honest don't know.

board a all the of that reality board is members, open question and bad our attention their than fact more it's on we're concerned to I bit focused I'm very to acquisitions I the anything think But back on about the attention little operations sure get stock, not much trying have paid else. been this properties personal quarter get a you to paid more of our it. to I little we and members our can

Michael Bilerman

selling don't if half mass generating interest of and lot that program you and you great at ever of asset instead creating at buying so guess a own of that fund done I at this guys a would your the I pushing schedule, can know you their stock entertain stock And also in deleveraging? point [indiscernible] opportunistic an job be core to place, buying having maturity at in would debt looked a least and liquidity proceeds using

David Lukes

Okay. is certainly think of to of looks reverse at primary existing right now, at interesting focus the the is our reality it attractive. I on we towards this engage our point risk price amount Well the right that point is company way course is primary which around I I that allocation the now debt. certainly The but stock deleveraging more this so entirely some would low our and capital keep easiest is agree we that, through think buying in and if deleveraging risk at stock stewardship process becomes

Michael Bilerman

wood cap you sale say Well portfolio a as a of [ph] rate low our to much low the sitting was maybe other five assets we the own on in got type we've lot entice does Woodworth wholly long-term of the in that which pretty those assets what that we tap better for us, are increase market the sell put standard to should your trying maybe a those trading be at able position to stock to think was to and about today buy you levels. to as liquidity

David Lukes

growth we're that months we prospects that set high at deserves pretty is to I selling achieve company whopping exactly the out I don't we getting on think in to by really think you're what been a goal assets the here what and we've on the balance sheet fast, goal think that have we're that the been up track say eight as accomplishments going do to-date would speed have to I think when by to keep. and we

Matthew Ostrower

think would we here the focused right that topic I right. and on asking that is lot a very we're value I question discussed trying this reiterate just you're a create to

is absolutely table. So everything on the

our from and take of decisive much here isn’t in and important to is question of very a we're there about program to where terms kind not which that some we the initial languish. incredibly creative capital, that go and to value stock While very further finish it's be trying much longer we think important and going adding letting

Operator

Our Kim next Ki go with question ahead. Please from comes Bin SunTrust.

Ki Bin Kim

in might year all Puerto next yield Rico what maybe source with pipeline isn’t worse, which almost obviously rightsizing a dividend those of things light second your all is especially towards to level the possibly capital your today of guys. Good round in our stocks at Hi depletion a some combining commitment disruption get for dividend morning that the your and lines, just along your same trading needs? XX%

Matthew Ostrower

Ki morning, we're of without at assets access whole see and issue, plenty happening good I really being very Right Good an the selling of a Bin. we’re are now, don’t bidders lot getting closings prices, hit. capital to

interesting. So much of much, think I think from the in capital, where we find the what down dividend is further the we much, terms list is

every valuated don't would assets. that is interesting this than by dividend selling see at quarter board mean the that I became the anything point, dividend and Our more certainly

Ki Bin Kim

help their And the little tenants help what their runs guess and you to better of Okay. tenants percent how Puerto their own there Rico, insurance be that I had on had the own understand longer-term me demand could your longer-term insurance? and actually kind the how risk business sustain risk and what what is would after given your or insurance of interruption much businesses off,

Matthew Ostrower

of important visibility the risks landlord fairly I are think relatively questions a little it's simple. that unfortunately The really series has into.

great quite impressed dominance there you'll We They fundamentals, have large were that high. recognize right after you the locations, say we properties that yourself great business paying be the will now of will of REIT in have many previously our I that I Rico. risk Puerto the in is have how is don't and a and know. year had a for future open great year properties was anchors, rent toured to we locations and mean primary just think we you've the and of previously insurance paying lasts their that if open number that very rent the I for be business with tenants and

how So the about population but far good through perspective it do the yesterday opening I XX to signs coming level all emails think now a with think of we the even again, infrastructure and power I XX increased has year store so a just lot were island dramatically from tenant up can't and had maybe that responds has a a guess. and I and you're and or business openings are from talking

Operator

comes next Floris van go Our question Please Boenning. Dijkum from ahead. with

Floris van Dijkum

guys. thanks Great,

clearly made feel two you you like the your price you of look have Just spend more on plan terms of you work it terms that the that like but guys years? you question, do following something you up board something the telling need or in continue obviously in if to going since came tremendous guys takes restructuring strides Michael's of share and that is does on speed make a and upon even guys up some to of another potential execute or to it you pace favorably

David Lukes

Well thought. add responded the to that I than another so enough. originally level a at we they've lower have of then but we be and assets and and We fast a lot say would I they've size think group a specifically you’re selling named far back been not step was cap selling years. don't The rates always be two business selling Michael conversation when we that that were we the to target more named that are at with. whole would the the want and leverage you faster we right happy to as so is been reality plan far and moving to We

can that team and to and when which is management decisive idea everything makes different to action to I see question on types to an think all what of than unwilling we're I'll is the table moving do me certainly things that So Michael we I to other a a the sense. not seems things that’s along, say take be said

Floris van Dijkum

also your of talk maybe if in portfolio increasing initiatives Okay, guess obviously thanks. is maybe your making And are with portfolio you and talked the can fixed upon going you about fixed on making with on the the bumps? rent we attractive more about bumps terms that, how touch other the -- progress but the question forward spreads on I

Matthew Ostrower

bumps You're leases? into talking about getting more fixed

Floris van Dijkum

Yes, and into fixed getting leases. bumps higher yes

Matthew Ostrower

try strategy I obviously at addressed point. something that directly for that this but Yes, think cornerstone something don't mean don't that call do can saying, we’re we our would that's of I I we to we think where I

Michael Makinen

those, strive of fixed bumps have nationals and the shop that. for five-year particularly don't and and get favorable be terms We're is fixed the lease every, every what with can obviously the generally bumps we aggressive we time we single have obviously budge a to trying as as can they from tenants annual we and as we're having anchors rent most tenant step every can generally

Floris van Dijkum

Right.

going interest seeing perhaps real you're in or forward a So not --? you that have change

David Lukes

We mean local I the there's able haven't when why to general, smaller to are much growth. rent good situations high or change the higher tends it’s you're receive really tend seen a to bumps, negative be tenants the that properties more that's to higher the GDP where I in certain in mean growth there percentage positive. are at have times shop it economy

properties fixed the with tend be when because Our more the anchors larger on by tenants, protected their to respected lot downside they the options. been bumps exercise have generally

a on that. change been really don't think great So I there's

We're we that through, anchors they’re making progress great is better and with to in our striking quarter-after-quarter-after in through come the than number quarter to than leasing, investors on of that lot have in that quarter. incremental to type more I we steps the on confidence think will prior this we’re give out economically a them product have space choose to one what something positive we're that's focused general of getting a tenants. of rents delivery

by it page certainly it's be front so news step very And positive. but may not step

Operator

Lucas question next Please comes from go ahead. The Chris CapitalOne. with

Chris Lucas

Hey morning guys. good

conversations on would you Mike their guess toys focused reduction as rent talked you small more characterize you could of that? if about or end maybe those change had couple how a Just questions. the you their characterize with conversations I footprint, in on them, a on earlier

Michael Makinen

I give very and I would say more should probably conversations material. think you are we become updates the they generally early as more

Chris Lucas

and Okay. that that earlier And market renewal of the about accounting those renewal issues fixed renewals, couple then include on talked you spreads at are I you related of post, are guys those both do rates? those that guess the

Michael Makinen

yes. so, think I

Chris Lucas

to Okay. And -- relates then as it

David Lukes

It’s contractual negotiated. and

Chris Lucas

yes? and negotiated, contractual It's

Matthew Ostrower

Correct, yes.

Michael Makinen

forecast. the into That's blended

Chris Lucas

not then relates base building cost essentially the the all numbers guys costs to some costs, you it up reconfiguration to in the do end or -- of of as allocated and that in cost? And included GI that reported Okay. the are tenant-driven post those

Michael Makinen

the lease pretty about Chris. that, the It's attributable careful TI be to to it's in try we numbers;

Chris Lucas

in the reconfiguration? all all So it’s there, related so costs to

Michael Makinen

I can’t vast, taken say that with XXX% majority loading we anything number. certainty that never vast we’ve if out fully but it’s a are

Chris Lucas

retention I of focus you Okay. And I rate about kind That’s have probability what running just guess of tenant the then mentioned that on guys David been was you story lastly at? looking has all for. been renewals, of

David Lukes

the over the for historic or the historic the eight months mean You last years? company

Chris Lucas

like Whichever give to would you me.

David Lukes

it It’s so the calculate We last that been usually the a it, dramatically on pretty and years should it's for the anchors we’re and concerned a bit haven't as years. been I and of can for look in generally in in much a whole on we change mid-XXs has seen dispositions. has high based shops portfolio. about five, in changed good higher say existing last my little with six, so seven likelihood just question, a notable portfolio renewals lower in company the really of even five industry the career the what back and was

Chris Lucas

appreciate Thanks. Okay great, it. I

David Lukes

landlord store, move is of a capital street be option it's new to a) always that rents in either been the a a or two. in choices I business change to have certainly b) tenant where of to an or part lot indicator other don't to put would can willing the That their but seen build across support year a dramatic we've any last think the

Chris Lucas

morning. Excellent, Appreciate time thank you. the this

Operator

question ahead. Khanal Please go Samir from Evercore with comes ISI. next Our

Samir Khanal

Good morning guys.

maybe probably of of stable in it's pretty looking know it’s shopping X%, the leasing mid-single-digits a it’s know but just XX%. So your I the the the of for I at kind group peer whether center sort X%, kind area been spreads, decelerated in from of lot folks high-single-digits

feel maintain here? just that X% trying on of spreads XXXX, still I as of know sort kind can sort provided Do about of we guidance you think renewal formulate haven't X% figure confident So that sort but as you numbers to of you pretty we XXXX to same-store.

Matthew Ostrower

able yes. maintain It feels reasonable that, that would to we be

Operator

This would to like any Lukes turn session. remarks. concludes back to David for closing our question-and-answer I the conference over

David Lukes

for all appreciate and you questions. Thank joining the

you We will next to talk quarter.

Operator

attending The today's conference is for you Thank now presentation. concluded.

may You disconnect. now

SITE Centers (SITC) 2 Nov 172017 Q3 Earnings call transcript