SITC - Earnings call transcript Q2 2022

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Operator

Good day, and welcome to the SITE Centers' reports Second Quarter 2022 Operating Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Ms. Monica Kukreja, Head of Investor Relations. Please go ahead ma’am.

Monica Kukreja

operator. you, Thank welcome conference and Centers’ quarter second Good to earnings call. XXXX morning, SITE

today Officer, Joining Chief Chief is me Executive Conor Financial David Fennerty. Officer, and Lukes;

may posted distributed In Please presentation slide be today's support our These which constitute the that statements morning, press forward-looking within our to www.sitecenters.com our to aware financial release at statements certain intended addition we risks and of laws. the our forward-looking the on actual differ have to federal subject call. is today our website a securities prepared and quarterly results forward-looking supplement of are during meaning statements. uncertainties, this materially statements and may to from remarks

and report with most information including our Form SEC, on our filings Additional found press be may recent the and in XX-K XX-Q. our release earnings

to addition, it on will non-GAAP same-store operating measures, pleasure supplement. income. In Reconciliation FFO time, today’s Officer, At GAAP quarterly found today’s to financial in my call, measures most discussing financial David these and be Chief FFO, operating measures Executive can our net the Lukes. this we of introduce be is directly comparable non-GAAP including financial

David Lukes

the same point portfolio in strength our expanding suburban resulted sequential new The We service competing second markets space. of our you and a thank key morning. rate. of into from for execution with existing lease increase continued tenants strong earnings both Leasing Good quarter productive basis leasing retailers to And second from demand quarter along of XXX a very with call. budget. results for ahead joining had team our well be very concepts

this morning duration, the lastly, the key group we capital which transaction recycling continue assets talk few results, activity, in debt-to-EBITDA thesis. our discussing invest then months, while well briefly the start last couple financings low adds of overall. keeping Additionally, of the second improving and the fives and about sheet a of with sector great remains our I'll which convenience end, investments closed balance peer to we communities. shape completed leasing quarter suburban we in to ahead and in quarter as significant our And at discuss wealthy in portfolio

As OFFO our which better detail Conor was I quarter mentioned, primarily on second on of provide budget ahead will operations, later. more

Our getting tenants for business property a drove job, of and of guidance. improved operations ahead quarter schedule, continued to team performance our great do part this which our open

upon and momentum record six leasing to remained years our our to of progress with elevated processes, our quality two across and activity people, volume in focused testament estate of another last tenant over quarter one years. recapture at the we There and this no the Moving anchors demand the LA, of a last built available the portfolio relative ground releasing deals units, restaurant four including the of including two shortage quarter, leased in XXX% volume of all key number retenanting the of to of portfolio multiple up and first lease portfolio our submarkets. of shop the continued and Charlotte and real of our on a in suburban shopping centers across a different mark-to-market, assets is to the at of true pipeline. tactical a leasing The quality deals redevelopment positive our our key were

credit similar we've deals be in have feet publicly with we lease characteristics we the to a traded, with signed negotiations, began, share at national, to XXX,XXX tenants. end completed by concentration square on the pandemic since year forward, Looking which another expect

capacity a to four of million. commencement Town DC. of for Net and reinvested were portfolio the transaction the $XXX A in leases Houston, the the expect active San to driver in Francisco, balance material combined Washington be to activity last highlighted a sheet Atlanta, recycling years. our by Pool continue signed very Lennox with Madison capital several assets next of convenience over our months, with Center the and Shifting sale We growth proceeds the along

and offer on excellent of area that home Mercantile are pleased simple, wide The over La to entry, and Area. the lease investment in ability convenience attributes We of of $XXX,XXX that deals parking offer which national Lafayette, all from household including the of Square the California, know regionals of and the a properties, this submarket of FedEx. properties. of the time the mix reallocate is liquid, these properties really in access plans capital in with Fiesta Starbucks, barriers largest execution acquisition and shops quarter well both Bluemercury, we local targeting was trade prices incomes in including and tenants, and I living site are Bay convenience $X two my demographics a variety average a to with convenient and million, to Lafayette

in a users. over from and key Center MSA, to opportunities our miles convenience Towne tenant property of a suburban While ahead us rents to and of assets XX%. with own dominant our convenience the customer the of between have CapEx these bought leased a portfolio compelling providing of prospects. rates In limited data lease more we the ground. portfolio periods confident underwritten acquired are are market Bay on mix the we excellent And bought just our properties five-year find Lafayette can X% With up roster our in and to mark-to-market properties Area this market largely with at grow almost adjusted convenience around capital of given has no Atlanta, tenant These $XXX,XXX utilization Washington X% running on two benefits we our CBD asset, three-property providing the incomes and Fairfax Metro, XXXX CAGR an average comparable D.C. presence moving service our and growth. located visibility NOI more two newly and national had headlines largest traffic properties, highlights of office and QSR shortage properties

average now this encouraged key remain Miami, XX forward, Going minimal weighted the income TAP of with a air with in a shopping CapEx. average five-year underwritten located properties properties household properties markets the these $XXX,XXX, Scottsdale, and for in including drivers all and open assembled subsector remains company's company the an company. center for an XX D.C., San of convenience focus key Each we of and will NOI portfolio by CAGR scores area and long-term of almost investments of growth. in be X% compelling our of of Francisco We've Atlanta

repositioning excellent been the by The able rise shifts work recent hard acquire. creating is few in The and our also And first clearly Centers the Conor. showing We've data property construction with benefiting half costs in to that is low is time sub-sector work past societal done in retail us and year. even addressable of I'll the look some select focus construction about recent years this for at favoring convenient is it in local SITE building market team to the you forward fantastic rise relationships hybrid and Our entire core into excited and in opportunities Cattonar of is for the this format over convenience new deploying capital The that our our Thank rising portfolio. from to remain transactions turn the to company aggregated large distinct department led for face quite growth to we scarcity such outperform rents. we're source market customer sub-sector to continuing sector. a John traffic. as of this our has a markets job within progress an over right

Conor Fennerty

pieces Thanks into comment the heading and guidance David. I'll first then the XXXX of quarterly quarter third discuss results, the conclude sheet. with moving our on revised balance and some

of Second of unbudgeted than Both from factors almost relative budget. higher The also earlier conversion these budget. budgeted basis cash items plan over payments quarter of per share non-recurring the retention occupancy relative due per from commencements, line and overage of prior and $X.X to totaled related higher These included quarter results to rent periods. as to operational another tenants rent David mentioned, a were to and settlements $X.XX ahead number million share rates totaled higher including of factors rent. operational due straight $X.XX $XXX,XXX to

the store expect NOI ramp expected increased XXXX. leases million in now XXX rate negotiation quarter provided pre-COVID XX.X%. of points activity company's this SNO represent our Same pipeline XXXX. you of year-end rent quarter. metrics, assigned above slides back Page on our include XX% the the was basis at operating last in X% for Leasing We elevated by quarter leased for Adjusted if the on this in annualized lease rate of our commence driven over XXX of leasing portfolio headwind schedule and million reversals now X.X% watermark up of second also across in The X% $X.X points an of now of million prior over rate quarter quarter leased store X.X%. the by Highlighting the XXXX. of same leases backlog, with and almost would the period second with high the $XX the was or from our $XX earning terms in year-over-year is decline sequentially down and basis our of and base X updated pipeline. almost was In second all in the NOI have pipeline leases XX.X% entirely sizes to increased the volume to unit

XXXX up OFFO per a we expected release ROI results the for Moving XXXX end X.XX% are revised same store guidance $XX press largest to range $X.XX on outlook. earning are to of factors Rent the and swing our NOI roughly and on raising impact our range also the slides. revenue. a to and share. of to We're raising $X.XX commencements impact million Details full uncollectible store on year revenue our in where range. guidance in of to uncollectible We're same X.X% to adjusting

expense XXXX assumptions and XXXX. year ranges additional of terms with assumption at for full along our JV roughly for remain interest guidance share versus In fee unchanged RVI flat site guidance

of the million full net In terms investments, roughly for of activity year. to continue $XXX expect we investment

transaction assuming $XXX year-end. investment Given activity year-to-date activity net of fairly we through million are minimal

of third few the second to there XXXX. were the pieces quarter a of moving consider For quarter from XXXX

had I unable quarter. First, previously mentioned $X.X rent straight in we of the second line as non-recurring of non-recurring and revenue million $XXX,XXX

A the closed the portfolio Pool on and Center of Lennox the of on subsequent sale quarter we last Madison to Second, end. quarter Town day second the

these million third which NOI, to about $X.X quarter million. addition fees $X annual an assets JV in of excuse total me, on generated, JV In fees basis, implies almost

the $X is Ending quarter million with recast two-year charge earning average. times, over summary our X Page included we fixed line trailing the was A roughly which X company's quarter the our of In and slides. of facility and of on second income, yield our loan the times X.X extending debt lease credit is at higher Lastly, of sheet credit second leverages these factors XXXX. than the of unsecured upsized end quarterly remained termination maturity term million balance our to about $X.X XX%. quarter,

We on to stakeholder Madison and back credit. the of debt recast assets. also forma arise, and subsequent extended the just David. quarter substantial drive as with availability our potential turn and I'll create and has future month debt This the unsecured Pool advantage maturing with capacity of end liquidity to million $XXX take With A sale the to financings, provides $XX growth maturing repaid portion company investment it of these this allows through of of line opportunities that the year the of Pro XXXX sustainable us for value. newly to million they debt end

David Lukes

Thank to questions. take Operator, now we're ready you, Conor.

Operator

you. the Adam from come And Please Morgan Kramer Thank will ahead. go Instructions] question Stanley. first [Operator with

Adam Kramer

thanks question. taking Hey and the guys. for morning Good

activity was dollar the So kind wanted, pretty looks significant acquisitions of kind similar generated like from and it on it portfolio of as in dispositions. quarter was looking at spent

marks of and just can't amount thinking much So probably a pushed going think should time occupancy of of forward, kind recognizing of – as strip the that of all business you broadly, larger increased kind we of asset can't [indiscernible] trades about business I kind here. part kind to nearing as be be kind more of going

kind the going an kind forward? business of of So model asset just, to our of increased going part trades be

David Lukes

Hey, good Adam. morning,

I year be them think of quarters from last as once expect few not a we to you'd dispositions. bit we all the the achieved transactions, that quite although mentioned budget the for sourced funds our that of from in transactions

terms that lot renewals occupancy of leasing from some the ways kind assets that's ones submarkets, it our have becoming compelling or move to sell capital of leasing that at assume a recapturing we the given renewals. from other a stable obvious are amount think take do is left to in it's into from reasonable and demand price significantly and for us that I NOI of the and it's so uplift. to that that think of one I baked growth to really company think can NOI grow to growth, And the in kind space properties do and properties of through fully or we either recycle

Conor Fennerty

Yes. activity by wholly year is occur have unique kind per something joint we that's was able owned this your And ventures, say a was would quarter around was question, of Adam reoccur normal. targeted properties excuse selling to I larger which have We not than, of to the a going year. impacted Obviously this forward. and million of or – little me obviously did it's answer It quarter. typically this lot $XX than

plan point it's wholly own been recycle handful a year. side part business of each So there's assets David's our outside always I do of on to but the to activity, think

Adam Kramer

things That's how rates again, kind call it in dispositions, returns rates kind kind mean, acquisitions helpful how may it – thanks. be and or and six be unlevered really changed? of be provide than terms of cap it. or cap any that that three can IRR I of may months [indiscernible] different maybe Got and the just And guys, there ago, have color and on you of

David Lukes

you Adam, data cap a there's I tell that's know have let rates out come to, wish us could lot I of gone. where that been

expecting up. are two, agreed there as go happened much look it expectations means four, this just you that activity. months I not I expecting But will up has go think were the certainly at three, costs that we're borrowing when mean, in five been transactions people and ago. that return that industry, deals quarter

an spread and From so do the there little asset are wouldn't just again I yet. it's between assets So growth and perspective expect that I hedge a think a that data buy I that out is a would that a to point much a for to I current can favored. asset of but is if growth mean, much say asset anything you – us asset also widening growth inflation all our hasn't that very stable data. bit, it been growth

Adam Kramer

guys. great for That's again and time chat soon. Thanks the

David Lukes

Thanks Adam.

Operator

ahead. Todd Please The question with from come next will Thomas KeyBanc Markets. Capital go

Todd Thomas

morning. Good thanks. Hi,

mean, forward your guess, portfolio. recycling on of just in capital investments we Just whole within first, it should follow-up, wanted like sounds to I to continue expect I based terms the going and comments, I owned

seeing spread cap difference maybe you're these between the IRRs sell? that with You to yield initial on assets, between I with the like mentioned NOI the you're a centers sounds the lot if strong the what it sales. CAGRs realize be funded sort then spread read looking and the what's what of what more asset so, of buy convenience that sort you're of and right would looking oriented rate stabilized is but between and on to delta Is versus the

Conor Fennerty

come traditionally each it's to for phrase year; each the me, a plus Adam. it million sold owned quarter response Conor. wholly would and my Todd, little differently or maybe We or back portfolio. from minus I $XX Hey, excuse

I think assume it's forward. going fair that to

et do our have to EBITDA cetera. growth and be net can balance of of which leverage we're net the $XXX because we look We acquirer capacity year-to-date million acquirer, if profile, sheet so a a you

to So be every assume I don't spend that funded think it's dollar fair we to dispositions. needs with

leveraged we're We X.X mentioned, EBITDA. Like capacity. have at times I

million free flow. of We a have $XX cash year

– pipeline. have EBITDA our we and SNO given significant So growth

match that net unique opportunities, to quarter, the fair we be we in mentioned if I what assume last consistent with So quarter this we we acquirers think it's was will find to of match is don't the need that, going that we forward don't to company. fund and expectation to David, I but that. anything this have grow know not you'd funded, if

David Lukes

can't I your Okay. Todd, sorry. I'm sorry, second of question. the part recall I'm

Todd Thomas

pricing terms between well, curious of the stabilized No, and those general the spread in assets? the like the just maybe transactions, was that's – convenience I oriented on of in what some centers looks

David Lukes

different and higher. you a you an that one question, buy on Todd, that is the – brought IRR recycle would think it us for I your asset to property, probably we is up believe which assume

But cap going it's think back we have it would little bring I also are relevant. to stable large that not like a to I'll the we in that Conor's like rates bit of point less a recycle of. out assets

it's think little I been bit a bit a – more little opportunistic.

acquisitions. now smaller doing at think of looking spin-of away a because can assets we're flat took kind and recycle the our we be and of we I RBI are much think on higher is that group properties we so the might of IRR what most

Conor Fennerty

we And year-to-date acquired going dispositions of about consistent the think for X.X yield Todd under with the specifics, for was it that's mid-five kind are was for and for for XXX quarter a year I last we and just acquisitions mentioned a this for blended year.

Todd Thomas

leasing, wanted and larger And I do and Okay. square much for ask availability plus, helpful. the that's feet you then for curious higher, square how boxes, what the demands That's have about you're spaces? XX,XXX but leased and realize to today XX,XXX larger I like XX,XXX, XX% anchor foot tenants from say today

David Lukes

XX pretty the mean, more square boxes, months. is last feet XX than is We've Well, leased in they, I the the getting challenge XX,XXX inventory low.

tells is And is. the so on anchor clearly demand The you that side. where demand the

it today. released it's stellar just two [indiscernible] Leasing an is think boxes creating tenants. is and one renewing pandemic and of to credit the box during she not with of She's control of the in deals in as this get with the Vice anchor Southeast the was the of much it two quarter subdivisions was sitting through property able that Charlotte a North don't [Indiscernible] is is room tenants. I sometimes So opportunities President it available is as the

up. entire up over the the and NOI spreads post-COVID. versus The quality XXX% properties went So XX% were credit pre-COVID went

that that indicator that higher is and certain pre pandemic. they were a that happening think box was an were So than to was was box probably with It vacant. in what's not recapture we one They're I significantly just rents. able submarkets

on that are that tenants. running better some extent our recapture tenants term, the credit ability the to So and got find space VPs have a you've of that older the regions of various

Todd Thomas

are mix quarter Okay. the little one down rent the issue was last I on came in maybe more just that's And of quickly one the in re-tenant leases. up given then vacant effort of demand if just a an bit wondering in net you quarter new lock-in a on strength space, a button and effective the sort space just today? seeing fundamentals little or the, trying or in to to strategically deals bit you're

Conor Fennerty

it's a It's Todd, mix Hey, issue. Conor. purely

look side to right you in percent a anchors. If on signed this hand larger net have rent. a page, they're Obviously effective the GLA that by the is going lower was of randomness as going

would next trailing I that XX-month the purely it the this quarter with trailing XX-month expect a issue. consistent to is So numbers be denominator numbers quarter.

Todd Thomas

you. Okay. All right. Thank

Operator

go The next will Mailman from question come Citi. ahead. Please with Craig

Craig Mailman

wanted commentary drive morning good back commencements kind XQ guys. results. circle to the helping I earlier just about of Hey, to

in commencements the to looking definitely it the down presentation, looks the compare know but was to relative what I are was XQ I presentation. As in probably little changes, it's and with XQ a XQ quarter-to-quarter like harder bit

earlier how was of the XQ guys result per in bump guidance you just of Was and was curious, share the commencement? benefit basis. just can run a much how through much of number So that that on I the

Conor Fennerty

Conor. morning. it's Hey Good Craig,

open. absolutely right. some quarter third tennis able we because to get the is reason came The quarter fourth were and down You're the

– a through the per that's over with rent. kind along In terms over of operationally operationally I of commencements share, mentioned it penny be rent driven specifics,

million been as permanent to but just team, the the have my challenging over So so is half throughout guess open getting And thanks earlier, great which continue given breakdown, exciting and we issues supply don't probably success, so, $X David have have our I penny. kind to really how of tenants mentioned, is the or country. a operational exact

Craig Mailman

Great.

I think question a Michael has too.

Unidentified Analyst

question. a quick just Hello. kind of Yes,

think to you're a with the as opportunity future just Just space this splitting smaller sort portfolio talked about does growth those some two tenants anchor to that terms in these offer are think that and of do opportunity? of demand. of don't about you're overall and you building side convenience it and do that sort mentioned obviously knowing think the I size, you're a about about of that, back you we you lot assets these into generally that opportunity? that these and from and that present up factors rate un-anchored X% the in talked same convenience smaller How opportunities providing David, You long-term lots that, assets. just convenience do see and assets marketplace internal going in see these How that of providing if risk and driving you getting that targeting,

David Lukes

your the a Okay. assets. point, those raise recycle with to about densification as it you well properties know kind you there's to larger the larger Well chances happens decade opportunities be in think of if significantly, of and benefits to rent once box larger also

time really expensive. secondly, particularly a the small years and of a bumps for relatively takes we've and And I in air larger it lease that's has getting just be what it open difficult. So zoning very lot rent you over at puzzle, I can large CapEx right? piece of capital, been seen the don't so tenant think amount densification a look or that as properties, of NOI and is entitlements also significant the allow structures recycling doing the last are because of percentage out a if think boxes XX

relative have large to So there's feet a un-anchored a it's value. big with XX square the a that'll of or is size. parking, tend unlike properties there's be What space and the leasing no that where you're average is space. fascinated to convenience surface street been not by impossible, retail that I'm X,XXX or but the you take on it's pretty driver ubiquitous that XX footage and not tenants square X,XXX lot the to There're

easier capital much at to to market much spaces. recycling, than a growth be that's rent less So way cost a larger it just tends capture

has buying because rent is supply whole just everything which do me I so And a superior. doesn't cost doing much the it to an a that perspective, thesis, and lot, with, with from so hedging so inflation way in not think But into growth there's for it's and growth. AFFO really that happening

Unidentified Analyst

investors transformation think a terms is sort at the how portfolio What three about Is portfolio geographically five the assets? a looking terms should of to Is build and to target that you're a you're of there properties? of towards goal out. And ultimate not in mix collection in a just David years it focused? that of of sort of driving trying

David Lukes

AFFO rent hold easiest have is been properties the format, you there the that and retail is it don't there, there largest Well buy I some Yes. to I which submarket. is it that in in but growth would way asset you've second But the a our it's of growth dramatic I if property, Miami, if type forever. should Michael, similar same look properties that rent also type financially. put company love what of generate mean, can't – our one that so onto to you Midtown love say to at that's the would that growth I the in doesn't smaller convenience mean think company is mean, could I us see see I we'd selling. growth ever

will of into lowest growth At selling at every expect the should the handful couple growth. has So I'm a five-year earlier, thesis to seems do have a this that something we a properties, question a and period concerned cost. format over the year convenience little you recycling less be think them I to point best about the but

Conor Fennerty

markets. kind tell no which felt base XX% concentrated I XX, likely enter geographically, Top And or of is our it's comfortable you rent see and we there's of in and value, just on really with to markets. you'll investments us exit Michael those would new plan our XX%,

Unidentified Analyst

color guys. Helpful

David Lukes

Michael. Thanks,

Operator

will next from St. question The come Haendel

Mizuho. Juste with go Please ahead.

Unidentified Analyst

morning. This is for good Haendel St. line the [indiscernible] Hi, on

well. all Juste. Hope you're doing

for up shops? What's XX%. the on underwriting for leasing credit environment XX% verse target shop you're occupancy an XX your tenant Over Can was months stores? comment the small rate specifically last in you volume inflationary how Mom-and-Pop

Conor Fennerty

Conor here. target question. for the Thanks occupancy. It's have a don't We

rate we're XX. running high in our I mentioned, lease this kind portfolios As watermark now is of above

but So think macro referenced. be that kind target. we inflation the no environment We higher, to environment, obviously in there's could of the assumption you

we're of opposed you credit of more kind exposure. franchisee just to disappeared, I national. but a not Mom-and-Pops. even GFC tenant or We terms local local much I material I of XX% In would that tenant as seeing would national growth kind or kind don't of has think have point the to; Mom-and-Pop say you're the post it's the

be So for deals largest us to national easier. the all because credit the a underwriting's easy the publicly either restaurants lot or which largest service with which quick underwriting happen in country, we're or doing users service traded, makes the

we that service of has local underwriting QSR kind and So vast small but you traded and shop small don't have tenants. away. publicly the steer with exposure, tenants not vast, been again, national the of majority I activity It's shop would lease

Unidentified Analyst

Thank you.

store has large closure recently? How concerns or Are of your Just one more list here. there amounts about any bankruptcies? incremental watch trend

Conor Fennerty

I mean... No.

Unidentified Analyst

quarter a Sorry. two ago? or Say

Conor Fennerty

has sorry we would if had to space when to implies so quarter, the The benefit really Yes, the say, that back line cash relative list I that pre-COVID continued you today. levels There importantly don't names it's space that cut I But just list shrunk that I'm implicitly watch from we And relative about. say basis good straight off last rent get look be. of some we're for to we we is converting watch and there. our rent shrink. they quarter-over-quarter. to surprised tenants feel demand would worried or obviously from who think to straight I that overall, more higher have And David's point,

feel worried better It's be we're which we backfill would tenants. those that But So again, in incomes that all really and even XX will more household no certainly our about over good productive there XXX,XXX the fact tenants some tenants about. is surprise. assets have average

Unidentified Analyst

Thank you. I appreciate the color.

Operator

Goldfarb Alexander from ahead. with question Sandler. will Piper next come Please go The

Alexander Goldfarb

XX:XX morning. good Apologies, a.m. it's Hey guess I

So for you. two questions

big totally is to The faster going small the that the [indiscernible] of question than shop anchored like across shop. a or street on seems the not better small you down growth road. these first it's and of site lighter CapEx a acquire, the some buying NOI unanchored agree, And to back is dominant and centers. you contiguous, question it But the guys are is are CapEx, parcels

in makes efficient growth an center more So as that's the and centers. Are connected. to up of of if trying un-anchored get infield for get one those assets that's you that street? not more that can you down you parking just and it's I'm un-anchored around or look amount all and all same that sense versus necessarily a literally the is efficient the lot something get center, same some guys there sort

Conor Fennerty

efficiency mean so you and Yes, Alex, from property terms of cost growth a efficiency operating do you mean or forth? and rent dealing in with management tenants standpoint,

Alexander Goldfarb

the in you the much it's Both, I of near wants or is, the operating mean, whatever whatever the cool Like efficiency co-tenancy two, QSRs have be everyone there is cool, is it all gym one, day cool right. cool all a if there row, the tenant. tenants Whereas easier. the or the then to and the

other, some side maybe the of tenants on street, some on lose some efficiency. that have You the you one of

curious. of sort just So

Conor Fennerty

Yes. Well, one operations. of the challenges is

focused standpoint, one you from property property you large a management asset. are one and buy on If leasing

property in they and have efficiency in that presence, ten already we that same I buy acquiring submarket seen leasing markets you are you you've But still particularly operations. of all them basically management things us in have community, presence. think a If in the of

lot and is particularly are ones you and his if side buy some assets that I million you've some say connected be and at of easier million Buying like longer John $XX becomes or to transactions be to million have end operations portfolio, ones you for it's that's laborious do build to Boca little and – California, the $X to you million, bit $XX together I $XX of but With a tenant remember been the the tend time, Delray reasonable why think to work. focus tenants like us much it's each a process if think on Atlanta I to more and wise, group and caps. $XXX mean, respect space wanting and a the middle adjacency Northern rents higher, they million strip to seen have team successful with. and Beach, a that to leasing, are the other, is and them deal So, and it where more to kind a chunkier there is properties.

of these two assets we're have from that what growth. have two become that middle the finding end the that have cap, sometimes drive-throughs particularly the end caps the so in smaller some rent So is and drive-throughs shops maybe highest desirable tenants the to actually

by a to So comes down it underwriting. property property really

Alexander Goldfarb

the core I the core interest maybe second and this And card and of Okay. the expense are rule, consumer. centers think from fuel rate asked credit all you shopping or other stuff the question that are shoppers this the seeing And all the you on really if overall, rising about as costs, is then question about of demand thinking some seeing the fall XX-XX your shoppers shoppers is vigilant look call, the at you remaining I'm that's same shoppers, rising other affecting off? Kimco you level while it

what's if remain active a you're shoppers shoppers just if in at get the total sense as as to seeing trying the the of ever there, Just core really centers? hanging or

David Lukes

data exactly retailers know are a per sales would customer question. Yes. that's I interesting have. do can it's interesting think that specific mean question. come imagine a But as the really sharing really I answer. the you it. not that they don't I And from

is is coming our have couple seven One than less amount traffic to of properties Uber forth. fast. And the and of from we've store and anecdotes that's staying that things We delivery minutes going learned. of of that's not a services that the from I think a coming from surprising lot fulfillment and some so click-and-collect also Eats, of these that's like up

many or or customers. product to close they whether like becoming have figure is the not, final that feels proximate is the to they because forth of back resulting time. is that a little is bit is But to lot of do service small one out, leasing a the and and are there to going durations difficult a easy partly properties more who there because it for higher So that the services so the lot what's in coming of tenants have demand that And I or be that's recession driving believe a a in decided really, demand. decided a have customer

Alexander Goldfarb

you. Thank

David Lukes

Alex. Thanks

Operator

from Truist. will Please go The come with next Kim question ahead. Bin Ki

Ki Bin Kim

specific, cost work expense Thanks. certain recovered said, that, tenants I'm more are just beyond some stop would will and expenses provide usually the Can in and imagine, by borne general? a not if I'm some that's where I curious inflationary landlord. of the level fully if is More around recoveries you case, color it at you your in above and discuss sure and the of leases how whatever mechanics point was

David Lukes

a is CAM On pass-throughs. Bin. leases, do lease. do full a don't general Ki We leases, Sure we sense, like triple fixed our net goal our

the CAM, a So landlord. if insurance fees expenses, to recovery percent the you look at plus tenant, a hundred is shop of and administration taxes

does but power the on there cap property they it the be the tenants rate recovery or fascinated landlord. negotiating rarely larger exclude the insurance, certain and the a CAM CAM tax square convenience also thesis, certain on The have. the of That more outs more reimbursements we're or between have carve if because somewhere larger more can mean are So XXX% to in small are, and a a in they paying north XXX%. footage, expenses fees. are by they maintenance rates and The they CAM the shop items tends this dominant recovery tenant, why follows expenses that the they certain sometimes XXX%, because be that's

it up, of XX%, passed that's kind of are together, when rate. wrap hundred recovery you tenants triple a reimbursed, of and to at through to of it's is net up, hundred landlord go at lease larger bit larger when vacancy because look of tenant percent nets some paying our smaller the going of the taxes some still in the the a the structure, than So supplemental, where leases. you because that CAM which our rates, of less is the be come question you national tenants little conclusion the some your a hover go see that are all percent. around can can with same can CAM to recovery But caps within And

So that basis, that I don't is see is paying does maintaining space. any gross what it more recovery on occupy Unfortunately, us a the tenant issue rates. our with to mean cost

up or lot there to recovery is with our just because taxes a a recovery, growth they is more CAM or insurance. expense going have to be inflation, headwind of rent And if are it rate moving but so fine, will against capital allocating

Ki Bin Kim

you for that. Thank

of curious guidance CapEx Just I'm trend but on your your you AFFO than that your couple just bit AFFO, little have is pennies. have by you because guidance, quick if to just well, share per quarter, question increased increased, this thought? FFO cash least a guidance, a seem also we if at increasing don't more

Conor Fennerty

Thank that color. you for

Ki Bin Kim

just curious. But

Conor Fennerty

Ki short The Hi answer Connor. it's Yes. yes. Bin is

early or related beat effectively quarter, issues operational should the et commencements, benefits, to As rents, cetera. half I rents, second was operational I the say, mentioned, over rent

fall to line. those clearly So the through bottom

CapEx we holidays. is flow months our get the versus if kind there answer ahead course seasonality of of ago, today short some would like will cash to So year. is to over open that, of forecast continue the higher. retained tenants at to the looked it One, three be the increase right

higher response, back initial of than So the in was back months should is it course the to you the again, it assume over half had good it kind because coming year. my the of ago of year. three the of higher we've operational But guys will be

Ki Bin Kim

Thank Okay. you.

Conor Fennerty

welcome. You're

Operator

The ahead. Van Point, will go please next question with Floris come from Compass Dijkum

Floris Van Dijkum

– presumably, maybe your And expectations, bit your up gone with you as costs just since appear perhaps increased mean, borrowing see expectations, Thanks upon some and would you're perspective IRR had return have talk to little if the how your guys. Hey slightly for in obviously I'm for it earlier, more but also and much convenience, be David, touched as I property aspect inflation inflation have of the gone well? about taking I types. beginning that of where playing they a your a targets, a an up increased to that my protected interest year, question. But IRR thesis the into have curious on for of it other business. lot rates

David Lukes

markets. have and been very difficult a question in to days last XX of so volatile answer It's because credit terms the the rates particularly

target also our give be higher move it our other rates to bit, because witnessing could higher be answer that renewal safe higher say and we're that that convenience from little to to two. question fact rents? return are come rents come and wish I in more And are going blend underwriting rates expectations buyers. you sector than to a tend we're we a competition specific will does cap to acquisition, the them. market private cap assuming is I And from higher market of seems going say that that or given the rates is a think higher. levered to I it's the And the it up

to that is the benefit going get So hope both. we're our of

Floris Van Dijkum

to fascinated than to see follow-up, this curious could at I'm information. anything your looked And of in top but percentage the how that now, pick have in I'm in your this they stuff, Miami. traffic like MSA? your community. near some for year or a see What markets portfolio? in with sharing you're rank if willing share your And by data of Miami guys in But I investment the to rank I I you of cell the rest if center. percentage the ask I you as you your relevant – one buying be mean, that but with would phone would centers Obviously were their more Uber imagine they how view, your because tenants. whether And widespread rightly obviously up that a And Downtown XX% obviously to top center not of is curious is alluded in the data, Eats drivers, are I'm local for what their would to

data, to presumably. you a you of So, have know, go, there that is through lot parsing

David Lukes

are is, ever had really information been years now we've very, phone can becoming that it mean, cell I And to I it's had similar data. think lot of because fascinating absolutely four a we And since credit retailers since cards. access have data. intrigued is very have it the companies Yes,

has of facts. It it dive so into Floris, And in customer U.S. assets at difficult and on study understand And area so it because trade specifically deep landlords We'll of conferences global information. some been forth that's a does to part like XX,XXX lot interesting been trying the show benefit to anecdotal NAREIT we've property and we a patterns. to a give a the assumptions. to XX turn do more little give own out

in explain customer is a tell came on Tuesday. them three and ages college can changed shop percentage us customers times have pandemic frequency customer. because of to of as a trips can and a linger a do say there during cross ask so stores something helpful come? it's been children some weekend? are? of in in us to of if are global come this and week a very visit? anecdotes, time, what's points I how the that of that it's the tenant, they XX, the exactly think, between just where data two any hard much really been we And out sector other percentages turn store? versus one And the been my your than is have for into XX to those long thought, What's for are that of assumption. who they But in those between of and of is for data site we many All to us trade a kind bigger even points those And daily customer How woman the many What how areas with the terms very at point a interesting that investors leasing, the hard large people than, they versus

So, I rent it [indiscernible]. leasing. tenants really more leases made it's think the helped signing has with confident with And a tenure lot

Floris Van Dijkum

appreciate it. David I Thanks

David Lukes

Floris. Thanks

Operator

Mike question J.P. Please with next come Miller ahead. from go The will Morgan.

Mike Miller

two Hi questions. quick Yes.

coming? you from? And And buying are to pace it bid First product convenience spreads. is has pricing question coming the you ask still the typically is just the second market are of or assets who slowed prevalent more seeing

David Lukes

[Indiscernible]

Conor Fennerty

product pay assets Mike like for a coming market? mean to you

Mike Miller

Yes.

David Lukes

you meaning, of furniture. thought product, I lawn meant pace Mike,

Okay, definitely surprising. is that's market assets of right has sitting I XX pace not mean, John It's slowed. slowed of days And definitely here. to market from ago. coming

longevity standoff. think months a hoping I It's Cap is Cap little are there buyers for rates for six not months from the are bit sellers a at and looking of rates the so different non-existent, six last and but next market to where with before. Cap are I than smaller rates, is to confusion assets the are a debt inflation markets they do the over of coming and of bit kind of think that and the it was little amount

Mike Miller

typical Got you're it. buying from? And assets, as convenience the it relates that are who sellers to the

David Lukes

and tend regional They be local sellers, private. families, to

Mike Miller

it. Got

it. was Thank That Okay. you.

Conor Fennerty

Thanks Mike.

Operator

ahead. will question from come Tsai Linda Please go Jefferies. with next The

Linda Tsai

morning. Hi, good

the with focusing in are trading looking that the more with small and – with on off associated stability the Bin bit conversation that shops for the maybe a anchors. downside? that sounds you on the shops with carefully also trading the yourself at are it protect on small to the you little terms credits margin Just like assume of we Ki Should of reimbursements,

Conor Fennerty

the feel Hey, would I say, we of Linda, really who can't it's we're about I question, good Conor. but just what asked buying. recall quality credit the

disclose top that service for the institutions, number at the of public. tenants a financial all convenience look banks, restaurants If assets, are it's you quick we that

say in thesis, kind our of whatever we we're they be. might couple where on margin, the These we are quality. centers, there are point shopping thesis. the is credit second in [indiscernible] just things. don't the curve aren't existing grocery, tenants of I And risk terms would operate going out So focused convenience think we a power, lifestyle, One, we're saying the

flow the of a just part like It's of a free that from NOIs cash looking to as flow allude of on again, investment the responses, not ours. at we're it's the bottom focus a couple David of that we So kind factor but line through thesis.

Linda Tsai

Got it. Thanks.

David Lukes

You are welcome.

Operator

I sir. Lukes for Please conference our to And to the remarks. closing question-and-answer would David ahead, like Mr. back this session. go turn concludes over any

David Lukes

We'll for quarter. our Thank you speak joining to next everyone call. you

Operator

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

may disconnect. now You

SITE Centers (SITC) 28 Jul 222022 Q2 Earnings call transcript