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spk08: earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Leah Brady.
spk07: Good morning. Thank you for joining us today for Federal Realty's third quarter 2021 earnings conference call. Joining me on the call are Don Wood, Dan Gee, Jeff Berkus, Wendy Sear, Dawn Becker, and Melissa Sullivan. They will be available to take your questions at the conclusion of our prepared remarks. A reminder that certain matters discussed on this call may be deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include any annualized or projected information, as well as statements referring to expected or anticipated events or results including guidance. Although Federal Realty believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, Federal Realty's future operations and its actual performance may differ materially from the information in our forward-looking statements, and we can give no assurance that these expectations can be attained. The earnings release and supplemental reporting package that we issued yesterday, our annual report filed on Form 10-K, and our other financial disclosure documents provide a more in-depth discussion of risk factors that may affect our financial condition and results of operations. We've also provided some additional information for you in our investor presentation, which is available on our website. Given the number of participants on the call, we kindly ask that you limit your questions to one or two per person, and feel free to jump back in the queue if you have additional questions. With that, I will turn the call over to Don Wood to begin the discussion of our first quarter results. Don?
spk03: Thanks, Leah. Good afternoon, everybody. Good morning. What a difference a couple of months make. You know, the natural positive annual sentiment of spring, fall, and winter, coupled with a productive vaccine rollout, stimulus money, and end-in-sight mentality, it's really gone a long way in validating our optimism for a strong 2022 and 2023. First quarter FFO per share of $1.17 was sequentially better than the 2024 quarter of $1.14. positive surprise for us and the result of far fewer tenant failures than anticipated during the quarter and far better cash recoveries than anticipated. As a result, we're confident enough to update our 2022 earnings guidance and provide some clarity on the next three quarters of 2021. Dan will cover that in a few minutes. Pent-up consumer demand is real. We see it in virtually all of our properties in all of our markets despite government-imposed restrictions that still persists in our market. And when coupled with government stimulus cash is really powerful. PPP and other COVID-related programs that many of our tenants have taken advantage of have served an important role in buying time and getting both current and deferred rent paid. The $29 billion Restaurant Revitalization Fund, earmarked specifically for restaurants in similar places of business, as part of the massive COVID relief bill, will undoubtedly also create a strong tailwind for that retail category. So will the GINS Act that, if authorized, will allow the Small Business Administration to make COVID-related grants to privately owned fitness facilities. These programs, among others, are particularly good news for federal lifestyle-oriented properties, which are recovering very nicely. It's quickly become a very optimistic time in our business. Now, as you would expect from me, a warning about over-exuberance this year is in order, as many retailers, particularly small owners, along with theaters and gyms, are in a weakened state, and while buoyed by temporary stimulus, need more growth in their sales than they're currently generating to be viable long-term businesses. Having said that, they'll certainly get the opportunity to succeed because traffic is back in large numbers across the board. Perhaps the greatest indication of a bright future is the continuation of exceptionally strong leasing volumes, including first quarter deals for over a half a million square feet of comparable space. 35% more deals than last year's largely pre-COVID first quarter for 9% more GLA. Actually, 24% more GLA than the average of our first quarter production over the last five years. By any measure, we're doing a lot of leasing. The fact that it was also done at 9% higher rents than the previous tenants were paying for the same space goes extremely well for 2022 and beyond when those deals are earnings contributors. The rate and volume of new deals, as opposed to renewals, was particularly impressive. 54 new deals for more than 220,000 square feet at 18% more rent than the previous tenant was paying. What's particularly encouraging to me is how broad-based our leasing continues to be. In the first quarter, we did grocery and drugstore deals with Giant, Whole Foods, and CVS. We did box deals with Dick's and Bed Bath. We did fitness deals with Crunch and Planet Fitness. We did lifestyle deals with CD2, American Eagle, Madewell, Athleta, Blue Model Cafe Coffee, and a couple of dozen restaurant and specialty service-oriented retailers. Strong demand all across the board, particularly in California. In fact, let me take some time today to focus in on California, because it really is a microcosm of our portfolio, particularly our nonessential lifestyle product and, in my opinion, a leading indicator into the future of the Bethesda Rose, the Pike and Roses, the Assembly Rose in our portfolio. Whether good or bad, things always seem to come first to this huge and complex market. First, the governor there has previously announced that all COVID restrictions will be removed next month. This is great news. We did 50% more new deals in California in the first quarter than we did in the fourth quarter, which itself was strong. As you know, we're heavily invested in and around Silicon Valley in the north and in the greater Los Angeles area in the south and are fully committed to investing in California in the future. Tenant demand and consumer traffic are among the strongest anywhere in our portfolio, and 2021 should be an all-time record for us in terms of the number of new retail leases we expect to do there. It's really hard to short great real estate in California despite the hesitancy. Let me start with San Jose and Silicon Valley, which has become a beneficiary of urban to suburban migration from San Francisco to the north. Centennial car traffic, as measured by our parking systems, rose 69% in April compared with January and is fast approaching pre-COVID levels. Residential occupancy is back up over 95% after dipping to a COVID low point of 91% in the middle of last year. And as you may have seen late last month, Santana Row was the recipient of the first large Silicon Valley COVID-era office lease sign. As Fortune 500 cloud-led software company NetApp decided to relocate their headquarters to Santana Row in 700 Santana Row, the 300,000-square-foot building not yet populated but previously leased to Splunk. Their stated reason? To better facilitate a winning employee experience in a more connected space. In other words, state-of-the-art facilities in a fully amenitized environment that makes retaining employees and hiring great talent easier. No lost economics to us versus the Splunk deal, but two more years of term and a better diversified tenant base. By the way, another candidate for additional office space at Santana as their Silicon Valley footprint grows. Splunk, of course, remains fully committed to Santana Row at 500 Santana. Now, across the street at Santana West, our 375,000-square-foot back office building under construction remains unleased and has certainly been set back in terms of timing of lease-up with the pause in overall office leasing during COVID. But we remain, in fact, more optimistic about its leasing prospects than we've been since COVID hit and are encouraged by the office-centric back-to-work comments made by the Silicon Valley tone setters like Google, Amazon, Apple, Netflix, etc. These and others are all hiring in the South Bay and are showing a heightened desire for newly constructed office space with walkable amenities and ample parking. In Southern California, our Prime Store portfolio, which caters to a largely Latino population in Los Angeles, remains among the top performing group of shopping centers among all federal centers nationwide in terms of rent collection, property operating income compared with pre-COVID levels. Big assets like Plaza El Segundo and The Point are recovering nicely and serve the beach cities of Manhattan, Hermosa, and Redondo beaches, places which are even more attractive to live in than they were pre-COVID. So I guess the somewhat obvious conclusion here is that California is as big and complex an economy as any region can be, actually bigger and more complex than most countries. And as with every major market, varies greatly within the submarkets where the supply and demand characteristics of the specific real estate dictate performance. We've got some great real estate there. All right. A few other proactive comments before turning it over to Dan. While always a key part of our business plan, we've turned up the heat on the number and the scope of shopping center redevelopments and repositionings that are or are about to be underway. Combined capital budget in excess of $75 million over 17 projects aimed at ensuring relevant, best-in-class, community-centric centers in a post-COVID environment. More gathering areas, more outdoor seating, more designated curbside pickup spots, better landscaping, covered walkways. You get the idea. Everything aimed at ensuring our properties are the consolidators in their given sub-market. In terms of our developments, We're really looking forward to showing off the new Cocoa Walk when investors are back to traveling regularly. Today, tenants continue to open where the retail space is 98% and office space 82% under lease or executed LOI. The initial market acceptance of this revitalized center at Coconet Grove has been phenomenal. It should only get better over the next 12 months as more and more retailers open their doors. Heading north to Darien, Connecticut, We're very bullish about our mixed-use neighborhood that's well under construction here, especially given its perfect location for a hybrid New York City work model. For those of you who live near or are familiar with our project, you should start to be able to get a sense of what that mixed-use development is going to feel like as construction and leasing move forward as anticipated. Office leasing activity has picked up markedly this past quarter at 909 Roads, Viking Roads. where 75% of both POI and GLA and a 219,000-square-foot office building is either under lease or executed LOI. Not only activity, but deal-making feels so much more productive than it did just a few weeks ago. In an assembly row, Puma is just a couple of months away from opening their new U.S. headquarters and welcoming employees back to work and will begin to market our residential project there in earnest. THIS MONTH. LIKE IN POKE AND ROSE, OFFICE LEASING ACTIVITY IS PICKED UP HERE TOO, NOT TO THE SAME EXTENT. THE BOSTON METROPOLITAN AREA IS POISED FOR RECOVERY BUT CLEARLY LAGGED BEHIND WHAT FEELS THE OTHERS BY WHAT FEELS LIKE SEVERAL WEEKS OR A MONTH. OKAY. FROM DEVELOPMENTS AND REDEVELOPMENT TO ACQUISITIONS. CLOSED ON OUR FIRST ACQUISITION IN 2021 LAST WEEK IN THE FORM OF CHESTERBOOK SHOPPING CENTER in the affluent first-ring D.C. suburb of McLean, Virginia. We paid $26 million in initial 5-cap for an 80% controlling interest in this 83% leased Safeway Anchorage Center, and with a market repositioning plan and up-under market in-place rents, we expect strong short-term growth and significant value add. We're also under contract, in our due diligence period, several other acquisitions that, absent negative surprises, will close later in the year. not ready to talk further about them at this point but more to come here over the next few months okay that's about all i have for my prepared remarks today let me turn it over to dan and we'll be happy to entertain your questions after that thank you don and good morning everyone good afternoon everyone good evening to echo don's initial comments we have been the beneficiary of the broad-based recovery that the entire open-air retail real estate industry has experienced in the first quarter. We significantly outperformed the quarter, reporting FFO per share of $1.17, up 3% sequentially from 4Q, and well ahead of our internal expectations. We went from the dark days of December and January, where government-mandated shutdowns in our markets impacted over 90% of the federal's assets, and we experienced weaker consumer traffic and collections than prior months. To 90 days later, where after another round of PPP supporting our tenants, successful vaccine rollout, and reopening of our markets, all make things seem somewhat sustainable. Given this increased stability, we were able to beat our internal forecast by higher revenues and POI broadly from higher collections than forecast, both in the current period and from higher periods as well. Less fallout from small shop tenants than expected, higher term fees and percentage rent than forecast, offset by higher property level expenses, primarily due to snow. The positive trend in COVID-19 collectability reserves continues as we had just 14.8 million in the quarter, down 20% sequentially versus 4Q. We expect that progress to continue over the course of the year. $10 million of that amount is driven by our strategic decision to be more accommodative with our tenants. More on that in a moment. We continue to improve on collections, achieving 90% for the quarter, steady progress despite weakness in January due to the aforementioned shutdowns. Our strategic decision to be more accommodative to our tenants differentiates us from many of our peers. In our disclosure, you'll see negotiated abatements in the form of temporary percentage rent and other arrangements totaling $10 million or about 5% of billed rent for the court. That accounts for roughly 50% of our uncollected rent. Those agreements are scheduled to burn off over the balance of the year and into 2022. Combined collections, deferrals, and abatements total 96%. leaving about 4% of our billed monthly rents unresolved relative to the steady state pre-COVID 1% to 2% level. Another area where we outperformed our forecast is occupancy. Our tenants have demonstrated surprising resiliency for a combination of better-than-expected renewal activity and fewer tenant failures. Our least occupancy metric stands at 91.8% at quarter end, and our occupied metric dipped below 90% to 89.5%. both stronger levels than we predicted to start the year. Our lease-to-occupied spread has increased to 230 basis points and represents roughly $20 million of ER upside in the future. Given the strong pace of leasing activity, my gut tells me that spread should grow in the coming quarters. While we still expect continued pressure on our occupancy over the next quarter or two, we do not expect the trough to be as deep as previously feared as continued leasing activity at volumes we have achieved over the last three quarters plus our strong forward leasing pipeline should set us up for a more pronounced growth in 22. Now to the balance sheet and an update on liquidity. We ended the first quarter with $1.8 billion of total available capital comprised of $780 million of cash and an undrawn $1 billion revolving. We amended our term loan in April, pushing the maturity out to 2024, with the option to extend through 2026. We reduced the spread from 135 to 80 basis points over LIBOR and paid down the loan balance to leave $300 million at stand. We completed the sale for $20 million of our Graham Park Plaza land parcel for a regionally-based townhome developer. Please note that we do have a participation interest here, which could provide some additional upside given the strength of the Surveillance D.C. housing market. We have further solidified our well-laddered maturity schedule with only $125 million of debt maturing between now and mid-2023, all which is secured and is year-marked for repayment from cash on hand. This will increase our unencumbered pool to 92% of U.S. dollars. And lastly, as we have done programmatically every year since 2011, we sold common equity through our APM program. 124 million at a blended share price of 105 start the year. Our remaining to spend on our $1.2 billion in process development pipeline stands at just over 360 million. As we have throughout the past year, we sit with significant dry pattern. Now onto guidance for 21 and 22. Now please keep in mind before I start that there is still a high degree of uncertainty in our forecast, given the continued impact of the pandemic on our business. But with that being said, we are providing 2021 guidance in the range of $4.54 to $4.70 per share. Despite a strong first quarter, some of that outperformance is not expected to be recurring. Let me be a bit more helpful. Think of two Q roughly flat to one Q at 115 to 120 per share. Now the second half of the year will be negatively impacted primarily from the delivery of our large residential project at assembly row due to the negative POI during lease up as well as reduced capitalized interest. As a result, figure the third quarter at roughly 110 to 115 and the fourth quarter back towards the first half's run rate of 115 to 120, which gets you to the midpoint of our range at 462 per share, a 10-cent increase to the 2021 guidepost we provided on last quarter's call. Assumptions behind this guidance, comparable growth of roughly 2%, as we expect some choppiness over the next quarter or two, but we do not expect to have term fees in 2021 at the same levels of 2020 or 2019, which were both north of 14 million. Please note that comparable growth as a metric continues to have limited utility in this environment. Collectability metrics should improve over the course of the year, but will not return to COVID levels until sometime in 22. As discussed, we expect lower occupancy levels in the next quarter or two before stabilizing later in the year, but remain optimistic that it will not be as bad as previously viewed, targeting a trough in the 88% range for our occupied percentage, with the least percentage remaining above 90%. G&A will average roughly $11 to $12 million per quarter. On the capital side, we project spend on development and redevelopment of roughly $350 to $400 million. And contributions from our large development projects will be modestly negative in 2021, as POI from Cocoa Walks Lisa will be more than offset by bringing online the base threes of both Pike and Rose and Assembly Row, including the aforementioned Resi Building, which, as I mentioned, are initially diluted during Lisa. We project another $150 million of opportunistic equity issuance on our ATM over the course of the year, and it is our custom that guidance assumes no acquisitions or dispositions over the balance of 21. We will adjust those as we go. However, a recently acquired Chesterbrook Shopping Center, demographically strong with Lane, Virginia, is included in these numbers. For 2022, we are providing a range of $5.05 to $5.25, which represents explicit double-digit FFO growth in 2022. This is being driven by lower COVID-19 collection challenges as deferrals are repaid and abatement agreements turn off, the expectation of growing occupancy levels back into the low 90s, and stronger contributions from our development pipeline as leasing activity more meaningfully translates to POI. More detail on 2022 as we get further into the year. And with that, operator, please open up the line for questions.
spk08: At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. Our first question is with Sameer, no, with Evercore ISI. Please proceed with your question.
spk04: Hey, good afternoon, everyone. Hey, Dan, can you provide some color on the guidance for the year? I mean, mainly what are you assuming to get to the low end here, you know, the 454?
spk03: Well, I think there's a fair amount of uncertainty still as for, you know, I think relying upon, I think, better performance from PPP money and so forth. Let's wait and see how well our tenants do later in the year to see how well they perform without PPP money and so forth. I think that the expectations of that cash collection generally kind of are consistent with where we are. We have more weakness in occupancy where we're probably at the lower end of the range. Close to the 88% is a driver there. And then it's also, you know, how does continued lease up perform over the course of the year?
spk04: Okay, got it. And I guess, Don, for my second question is on transaction. How do you think about your acquisition strategy today You're sort of on the other side of COVID. I mean, do you find yourself targeting kind of the non-gateway markets, given the migration trends we've been seeing, or it's sort of the same as what you've done? Are you targeting sort of coastal markets at this point?
spk03: Yeah, no, Samir, it's a great question. You know, there's a number of things that have become really clear during COVID from my perspective, and that is the migration that is so talked about is largely from the city, So the first-ranked suburbs. And so when I see what is happening in the places that we're at, I know that we're going to continue to invest in those places for all the reasons that we felt good about them for all those years. So the first thing is you should understand that Federal is very committed to the markets that we're in for future acquisitions. The second is it's an interesting concept. I've talked in the past about Arizona. I've talked in the past about south and west acquisitions. But you know what that's mostly about? It's the reality that, you know, for stuff that we want, and that will not change, it is the high-quality stuff that has releasing and redevelopment potential. We need a few more ponds to fish in, if you will. Because we are in just seven or eight markets. And it is pretty clear that markets like Phoenix and Scottsdale, markets potentially like Dallas, maybe Atlanta, we'll see, certainly South Florida, have the similar characteristics to those markets that have worked real well for us. So, you know, the stuff that we've got tied up that I can't give you too much on, I can tell you that... one of those assets are are in the existing market that we're in one of those markets uh is a new one uh in terms of the southwest as you might imagine so i hope we get both of them over to the you know over the uh the transom there but but really what that's about is when you invested in federal you invest in federal to to look for those markets with high barriers to entry lots of jobs great education that includes the ones we're in, and yeah, it includes a few new ones, potentially, over the next several years. So, kind of think about it that way.
spk04: Thanks so much.
spk08: Our next question is with Derek Johnson from Deutsche Bank. Please proceed with your question.
spk05: Hi, everyone. Thank you. Look, it's no secret that you have the highest ABR among your property type or peers. Would rent rolling a bit lower actually be that bad of a thing, given the significant spread to peers and, of course, acknowledging the quality? So I guess the question is, how do you look at balancing occupancy and rent growth in this emerging post-COVID environment?
spk03: Well, it's a great question, Derek. And, you know, as you think about it, the conversation about rents has to be talked about in the same conversation as productivity. When you think about what the occupancy cost is for a particular retailer, that retailer is looking to make money and create value. And that's going to be very dependent upon what it is that they do uh in top line uh either on site or in in their total business as well as the cost structure throughout the whole business so i know what i just said is obvious but it feels like we sometimes so focus on the absolute rent number we don't focus on the business that effectively is there that is creating value for that particular company's owners and shareholders so from a from a rent perspective i I can tell you, I feel pretty darn good that we will actually have enhanced demand. We have seen enhanced demand at our properties. Now, you know, that doesn't mean you won't, you know, make accommodations, if you will, during COVID. We certainly will and have demonstrated that we'll do that probably to a greater extent than others are willing to do that. But that's only because we have great, you know, faith in in our properties going forward so we're always going to try to get the best economic deal that we can that works for that particular tenant the key is to find the right tenants to find those tenants that are those that that can do the volumes and then those that can not just pay the highest rents that can do the volumes to create the synergies within a shopping center that make make you know the the whole effectively impacted by each of the parts So, you know, that's not a – I don't know how to answer your question in terms of is it so bad if rents roll down. I don't think about it that way. We think about it as from a shopping center perspective, how do we make the overall total sales of that shopping center go up? And because if that happens, whether, again, it's online or a combination of online or in-store, if that happens, rent's a byproduct. of that. It's not the leading indicator. So when you go for it for the leading indicator, it feels to me like you're competing in a business based on being the cheapest guy. That's not a business I want to have anything to do with running. That's no fun. I've got to be able to be the guy that you want to come to because you can make the most money. And if all you're looking at is cheap rent to be able to do that, I think it's pretty myopic.
spk05: Thanks, Don. Very helpful. Hey, I'll pass the baton. Thank you.
spk07: Maria, are you there?
spk08: Our next question is with Alexander Goldfarb. Please proceed with your question.
spk18: Hey, good evening. So two questions. First, Don, there have been, you know, a number of stories, articles, et cetera, on labor shortages caused by, you know, basically, you know, people who would, I guess, staff restaurants are paid more to sit at home with the extended unemployment than actually taking jobs. Across your portfolio, are any of your, you know, sort of lifestyle tenants, your experience with tenants who would, you know, are heavy on the labor front as part of their offering, are any of those tenants expressing to you an issue with the ability to hire labor, or across your tenants, they're not having, they're not seeing that impact?
spk03: Oh, no. Well, first of all, there's two questions there. Alex, versus are they expressing it to us? No, not particularly. But I don't know why they would. And that's not the same question. Are they experiencing problems in getting labor? And the answer to that is obviously yes. But I don't need to know that as a, you know, as a landlord, because it's not, you know, particularly germane to me as a landlord in this short period during COVID. But it's absolutely impacting. I bet you most people who've either been to a restaurant, not even a restaurant, to a store, and kind of seen the understaffing that persists right now, and in some cases, quality of labor for us, it's a problem. I would not candy coat that one bit. Now, it's good to be the landlord, effectively, because we're talking about commitments for the long term, and I do not expect this to be a persistent problem in terms of being able to find it, but right now, with unemployment, where it is, with the state of mind that kind of the country has been in during this, I absolutely believe that there are numerous businesses, not just restaurants, that are struggling to find qualified.
spk18: Okay. And then the second question is, you know, you laid out guidance for this year and guidance for next year. So, you know, I don't think we're expecting the 2022, but Don, knowing you over the years, you don't lay out anything unless you're absolutely certain that you could achieve it, which then suggests that your real 2022 number is above the 525 that you laid out at the top end. So just help us walk through why we shouldn't believe the real number is better than the range that you laid out.
spk03: Well, I guess the basic reason is your logic is flawed. I mean, number one, I'm certainly not laying something out because whatever your words were, they are absolutely positive. Seriously, dude? I mean, here's where we are. We've got lots of accommodative deals that will be burning off. We know that when they burn off, they will return to rent. Now, hopefully those tenants will be able to pay that full rent and continue to do that. We know that certainly we've got you know, development projects that are being delivered. Of course, when you deliver a big residential building, there's dilution associated with it. I mean, we all know that. That's how it works on your way to creating a bunch of value there. We know that the volume of leasing that we've already done and rolling into what income stream that's going to produce is pretty predictable. And so kind of like I said on the last call, Alex, 22 for us is in many respects more predictable than it is in 21 for any particular period. And I think that still hangs out there. Now, again, here comes the bridge from those comments to, and therefore we need to blow through the numbers of 2022 that we've laid out. I don't know how to get there. I mean, there is, we tried to put out a range there as best we see it today. based on those things, you know, going away, the accommodations going away, the developments coming on, their impacts, positive or negative, associated with it, and the leasing that is being done, those three primary things. And we get comfortable that for that period of time, we should be in that range. Lots of things can go wrong from there, and a few things could go right. So you're right. I mean, let me tell you, we're going to be doing all we can to blow through those numbers. But please don't take that as a de facto, you know, given that that can happen because I don't have that much of a crystal ball. And I don't know if that's helpful or not, but just the way you characterized it didn't suggest the way I feel.
spk18: Well, no, I mean, it's a positive for you, right? You guys tend in pre-COVID had a tendency to beat and raise, and that was the hallmark of you guys. And, you know, it's based over time of your track record, which, is kudos to you, right?
spk03: Look, I appreciate that. And you can bet that that's what we will try to do all the way through. But I just didn't want you to take it as far as you did with respect to the undoubtedly this is what's going to happen because you'd be a whole lot better than I am or any of us are if you could be able to be that precise.
spk18: Okay. Thank you.
spk03: Thank you.
spk08: Our next question is with Katie McConnell from City. Please proceed with your question.
spk11: Great, thank you. Well, first of all, we really appreciate the added disclosure on both 2021 and 2022 items. So just digging into the drivers a little more, you provide some goalposts around how much development completion and lease up is contributing to the range each year. And I assume you've got one of the main drivers of the wider range in 2022 in particular.
spk03: Do you focus on 2022 or 2021? 2021, the contributions from development are going to be actually negative, as we had highlighted. It's actually going to be, what we're focused on is on 22. We've got primary drivers being the two big buildings at assembly. They will begin to contribute in 2022, but will not fully contribute until 2023. Cocoa Walk should begin to stabilize in 2022 and hit a full run rate at some point over the course of the year, as should at some point the building here at Pike and Rose. I think that there should be probably contribution in and around an additional $10 million of additional incremental relative to 21 contribution over the course of the year. But, you know, Katie, your question is dead right. If you think about us delivering assemblies, an easy one to understand, right, we're going to deliver this year a big residential building. The pace of lease-up, How you get through 500 units is going to determine, in some respect, how quickly the dilution burns off when you start being accretive, what kind of rents we're getting, et cetera. And there's a lot of question around how that's going to work. I don't know that we're going to be doing 20 to 30 units a month, or we're going to be able to do 40 or 45 units a month. And at what rent? So if you kind of roll that through a model, you've got to, just from that big project, you know, you've certainly got range. But our range for 2022 is way beyond that. It really has to include some basic assumptions on lease up of the portfolio. As you know, as Dan said, we'll be at 88% or 89%. Later this year, we've got to get that back up to 92 or 93. The pace by which that happens is going to very much determine that. But I do feel great, frankly, about not only the direction that we're headed, but because of the volume that we're doing and because of the progress we're making on the development, that while we can't be precise with respect to exactly how that income stream is going to come on, we certainly know what the direction of it is. And within a range that I actually think is pretty tight, given the fact that we're nine to 18 months out, I think it's pretty tight. And so all of those things considering, I think we got a pretty good, they give you more visibility than we've been able to give you since the beginning of the pandemic.
spk17: Hey, Don. It's Michael Bellarmine. I, too, wanted to thank you for giving us a lot of the details on the guidance and the actual numbers. You can jump down my throat if I ask you to put that in supplemental each quarter.
spk03: Michael, that's a bait and switch. You had Katie start and ask a question, and then you jumped right in there. If I knew that, we would have put you at the end of the line for a few things.
spk13: Oh, geez. I thought we were friends. Mike, I'm just kidding, for Pete's sake.
spk03: So you can certainly ask that, and that is certainly something that Dan G. and Melissa Solis and the financial side of this company will certainly come to a conclusion with the help of our general counsel as to what should go in there. So I don't have anything to say with respect to that today, Michael.
spk17: Well, it would be great that way there's no confusion over the numbers. You know, in these conference calls, a 10 could quickly be heard of as a 15 or something. But my question was, you talked on the call earlier, and you focused on California, and you spent a lot of time talking about Santana Row and Prime Store. Was the focus more so on what you have today, or do you want to highlight California as an area, as a country, that you want to deploy incremental capital outside of Santana Row and Prime Store? I just wanted to know sort of the background to it.
spk03: No, that's very fair. And the short answer is both. And so I hope we are making incrementally new investments in California. But you know why we brought that up? And I spent so much time on that. So Berkus and I have been going back and forth on, you know, I'll send out an article to him that I read. He'll say, it's only telling half the story and yell at me. We sit there and debate how important California is as a market today and where it's going to be tomorrow. What are we really seeing with respect to leasing demand? Is that changing? Is everybody moving to Texas? How is this all really playing out? And we really came down to this very good understanding that the headlines are far more exaggerated than effectively the supply and demand characteristics of the markets that we're in that we can certainly talk about with knowledge because we're out there doing those things. And as a result, the ability to find other places where we would like it. to continue to invest. We do have another one that we're looking at really, really closely in Southern California that I hope we can get over to pull over the transom because I think the long-term opportunity is amazing. So I wanted to go through that really as a headline buster, if you will. And I do think it's a great microcosm and a predictor of what you will see as the Massachusetts economy opens back up. It is interesting. If you look at weather, as you head north, you can say, okay, you know, Pike and Rose is behind Florida, but ahead of Boston. Boston is, you know, behind Pike and Rose, but we can see where it's going relative to California. The warmer it gets, the nicer the weather. By far, it seems to be the biggest predictor of traffic levels and sales.
spk17: Okay, thanks for the cover, Don.
spk03: Thank you, Michael, and we are friends.
spk17: I know. Take care.
spk08: Our next question is with Greg McGinnis with Scotiabank. Please proceed with your question.
spk14: Hey, good evening. First, Don, on development and maybe residential more specifically, I understand there's some uncertainties on the speed of residential lease up at Assembly Row. Just curious what the expected stabilized yield is there. And then also, how do you feel about starting additional residential development at this time? And when might you break ground on future development?
spk03: So, Greg, that's fair. The stabilized yield, I don't feel differently about. Might it take another year to get there? Sure. You know, I mean, the best part of residential, and I'm sure you hear it on every residential call, is that it's the same thing as the worst part of residential. They're one-year leases. A little bit less, a little bit more. So it's not like you build something in a great market but at the wrong time, and you're stuck in purgatory forever, as happens on the retail side and certainly happens on the office side. And so, see, I know today, It is, as we've talked about and as you've intimated here, it is our toughest market from a residential perspective to be able to make progress. And that is where we're opening up a new project. So there is less predictability in terms of that timing where we go. I do believe we'll be where we said we'd be as upon stabilization, even if that stabilization is later than, you know, obviously than it would have been pre-COVID. We'll have to see. We'll have to play that out. In terms of investing in residential in other places, sure we will. I still feel, I feel very good about that at our mixed-use property. Again, not standalone, but where they are at our mixed-use property. The real question there is, what are we going to do? Are we going to be able to make the numbers work with construction prices, which are absolutely, at this point in time, out of control? And whether that is a long-term... phenomena or short-term phenomena is, you know, to be seen. Clearly, supply chain of materials has been completely disrupted in the last year globally, and that impacts prices. So we have to see where that will go. But at Ballot Kinwood, for example, in our shopping center there outside of Philadelphia, Lower Merion Township, we're leasing up our small project and we really wanted to do our small project there as a precursor to see what kind of demand we would have for a larger project that would include residential uh on the lord and taylor site that is there one of the best pieces of land in all you know in the whole federal portfolio and i am extremely uh bullish on on what has the initial demand on even during covid of the small project that we did there and on the township and the design process of what we're building. So it comes down, you know, we're an economic company. It comes down to can we make money and can we add value? To the extent we can with, you know, with residential or existing properties, we will still do that.
spk14: Okay, one for Dan here. On the accommodative tenant agreements that you were talking about, Just curious what the total magnitude and cadence of those agreements are going to be as they burn off, I guess, later this year and into 22. And what types of tenants were those provided to?
spk03: Primarily, we've talked about this on calls before. I mean, we've made accommodative with a fair amount of restaurants, you know, operating during COVID time, kind of doing a greater of, you know, fixed rent that's less than their contractual rent for a temporary period of time or a percentage of sales. Look, we'll see how well they burn off, in particular because it depends on how, you know, whether or not we get the upside of the percentage rent. And then it should burn off over time, gradably. It's not, you know, those accommodative agreements are not all $10 million of abatements that we had during the quarter. But that should burn off ratably probably over the next, I would say, 12 to 18 months.
spk14: Okay, so these are not new agreements. It's just continuation of ones that were already in place.
spk17: Yes, correct.
spk14: Okay, thank you. Thanks for the time.
spk08: Our next question is with Juan Senebria with BMO Capital Markets. Please proceed with your question.
spk13: Hi, thanks for the time. I'm just hoping if you could give us a little color on the leased versus occupancy spread. You kind of talked about a $20 million number and how much of that is truly additive versus kind of musical chairs in between tenants or space and how you think the timing of that in terms of coming online.
spk03: It's primarily, you know, it's additive. Not a lot of musical chairs, not a lot of moving around attendance. It's additive.
spk13: Great. I'm going to take the question. Could you say that one more time, sir?
spk03: Yeah, Ron, just I think, you know, you'll see that starting in the second half of 21 and 22 in terms of the time.
spk13: Great. Thank you. And then on the leasing side, you had a huge number on the leasing spread for new deals, 18%. Anything unusual in the numbers in the quarter that kind of skewed that, or is that kind of how you're thinking about future volumes for the balance of the year, maybe?
spk03: No, I don't know how it'll come out from the rest of the year, but I can tell you there's always a few deals in there that are especially good, including a couple that we had this time up at Family Roads. But I think that's kind of what you see with us. There's always a couple of good ones in there, and there might be a quarter where we got a couple of bad ones in there. But overall, I kind of like the trajectory that you see.
spk13: Thank you.
spk08: Our next question is with Craig Schmidt with Bank of America. Please proceed with your question.
spk12: Yeah, thank you. I wanted to talk, I mean, The increase in the leasing volume, you know, I know you talk to a lot of new leads, but are they more essential or are they more discretionary? And are you seeing new names in your portfolio? Are these people that have properties and are looking to expand in your portfolio?
spk03: Yeah, let me start on that. I'd love either Jeff or Wendy to add on to my point or to my comments. But a couple of things, Craig. The thing that keeps striking me throughout this process is how broad-based the leasing has been. I've been looking for places to say, okay, here's a category that is very active right now, and this other category is not doing deals. I'm not seeing that. I'm seeing this broad-based. Now, what I know is the number of deals that you're seeing at some of the essential, sorry, the non-essential, the lifestyle type projects are particularly good. And I think that's a factor or a notion of, I believe there is a groundswell that is becoming more and more accepted that these first tier suburbs with places that are, you know, that can be more than just your shopping center, that are effectively an integral part of your life, are the place to be. So what we're really trying to do and seeing some really good success there is getting new leases from tenants that have been, not are new to market. And we've seen that in a large way at Santana. I know Jeff can talk more about that, we've seen that in a huge way on the Pike and Rose, Village of Shirlington, first row suburbs outside of Washington, D.C. for new food concepts, certainly for some gym concepts that have been newly capitalized along the way, and even apparel. This is about as broad as it's been. We certainly have grocery deals in there, a CVS deal in there, you know, along the way. But it's, I'm most excited to tell you the truth, not about the boxes. The boxes are fine, and they've got a lot of leverage, and they're the national companies that'll pay the rent. And isn't that exciting? You know, it's really exciting when you're killed by COVID. Not particularly exciting going forward. And there's not a lot of growth in it. It is kind of what it is. I'm excited by these small shop potentials at consolidating places that are either mixed use or dominant in the dominant shopping centers in their markets. Because that's where I think there'll be value to add significantly over the next few years. Jeff or Wendy, Craig always asks the best questions.
spk01: I know, and Craig, Craig, I appreciate the question because, truth be told, with the amount of activity that we've had this quarter and what's bubbling up, I was a little eager to jump in in terms of leasing, so I appreciate it. Very true, broad-based is what certainly we're seeing all over the east, not just the lifestyle centers certainly, but our community centers, our neighborhood centers, our power centers. As Don says, we maintain a strong, steady, and healthy level of anchor activity, which has been very good and supportive and kind of continuous. The spike has been on the smaller shops, all the way from the mom and pops, from Taco Bamba, which is a coveted taco player in Northern Virginia that just signed a deal with us in Congressional in Rockville, to Athleta, to Room and Board, to American Eagle, to Gregory Coffrey, who's joining us in Long Island. So new names. In addition, we have strong tenants like a Starbucks. We're doing several deals with them where they're taking their focus on these first ring suburbs. and they're investing and we're investing in creating some opportunities for them that would also maintain and provide a drive-through. So that's kind of what we've done for the quarter. In conjunction with that, what I'm also pretty excited about is what I see in the pipeline. And that is, again, broad-based, all the way across our property formats, and robust. So not just in in renewals, but in net new deals. So I'm very encouraged by what I'm seeing lately.
spk10: Yeah, and Craig, really, you know, same on the West Coast, whether it's up at Santana within the Prime Store portfolio or some of our other Southern California properties, both on the new deal and renewal side. And then, you know, both in what's called the more traditional neighborhood and community center type small shop, like Wendy's talking about, or, you know, the more let's call it lifestyle-oriented tenant like we'll see at the point where we did an EverU deal or up at Santana where we've done a number of new-to-market clothing retailer deals, which we've mentioned on prior calls, and restaurants. We have a restaurant under construction, first unit out of San Francisco. We have another restaurant under construction that's new to market, Notable Chef. It's the fourth restaurant that he's opening, first one in California. So, yeah, really encouraged, you know, not only by what we've accomplished so far in, you know, let's call it the last three quarters or so coming, you know, as we started to come out of COVID. But if you look at the pipeline of deals that are being negotiated right now, It's very strong. Yeah, couldn't be happier about that.
spk12: Great. Thanks for the detail on that. And then I guess just one other thing. The big difference for me between fourth quarter and first quarter has been the change on the impact from government restrictions. I think January was described earlier in the call as a dark day, and then we look at your ADR open at 98% in April 30th. How much of February and March were closer to that April performance versus the January performance?
spk03: That's a great question. And overall, it's a pretty straight line. You know, and again, I kind of think the straight line that took you from January to April is heavily weather dependent, too. You know, I mean, look, the issue is, if you say, what do I worry about? The government stimulus has clearly been helpful. There will be more to come. That's clearly helpful. But for businesses to be long-term viable, those government restrictions have to go away, and those businesses have to see if they can, you know, survive long-term. That, to me, is still a question mark, right? You can't have a business that's 25% open paying rent because the stimulus is allowing them to pay rent. But the stimulus goes away, you can't make any money at 25 or 50%. So it's really, that's what is yet to be seen. The encouraging side of that, Craig, and it's happened all the way through, is the traffic that has come out has been impressive. And so these people have the opportunity to buy and to eat and to spend I believe they will. At least those retailers will not have much of an excuse if those folks are there and the government restrictions are gone to be able to make money in their business.
spk12: Okay, there's one quick one. You know, just given the acceleration of the business, when might federal be able to cover their dividend with operating cash flow?
spk03: You should expect 2022. I'm not sure which quarter yet in 2022, the third or the fourth quarter, but later in 2022 is where we hope to be there.
spk12: Great. Thank you.
spk08: Our next question is with Handel St. Jude with Mizzou. Please proceed with your question.
spk02: Hey, thank you. Good evening out there. So... First one's a bit of a follow-up on the question on leasing. The blended rents in the quarter were up 9%. I'm curious how that compares to your mixed-use versus more first-ranked. And also, what's your sense of how that plays out, that dynamic, that spread, perhaps, given the demand and pricing trend you're seeing in the mixed-use and first-ranked portfolios? Thanks.
spk03: Handel, you may have to do the second part first. So in the first part of your question, we did better in the mixed-use properties in terms of the new deals moving forward than we did in the more basic shopping centers, the essential stuff. And that's kind of in line with what I was talking about a few minutes ago. But the second part of your question I just didn't get. I don't think Dan did either.
spk02: Sure. No, I was getting at sort of what you were seeing within those two segments today comparatively to the 9% overall for the portfolio. Then What's your sense of how that plays out over the near term given the demand and pricing trends you're seeing in each piece of the company?
spk03: I do have a point of view on that. When you say near term, I'm not sure if we're talking about the next three quarters or so because the answer from my perspective then is I don't know. You'll see it'll depend, as I said earlier on the call, to the particular deals that got done in a particular quarter as it kind of always does that. But longer term, I would expect to see better growth from the 25% non-essential part of the company than I would the 75%. But the 75% is critical to not only the stability of the company, but some level of growth so that the remaining 25% kind of takes that and builds on it. That's how we look at it and see it. over the next, let's say, three years. I don't know, Jeff or Wendy, if you want to add anything to that.
spk10: No, I think you've got it, Don.
spk02: Okay, fair enough. A question then maybe for you, Dan. Can you talk about the restaurant and movie theater rents, how they trended in April, and what that implies for your full-year 21 guy? And then maybe also remind us what percent of the outstanding reserves are tied to those two industries? Okay.
spk03: I didn't quite get your question. You're a little low.
spk02: I asked if you could talk about restaurant and movie theater rent, how they trend in April, and what that implies for the full year 21 guide. And then also if you could remind us what percent of the outstanding reserves are tied to those two industries.
spk15: I would say our reserves, probably about 40% of the reserves are
spk03: I'm just, again, this is a specific number. I don't have it on my fingertips. You may want to do that. We may need to take this offline. I'm happy to answer it and call for the phone call. That's a detail we just didn't prepare for.
spk02: Got it. Maybe I can substitute in a different second question. I don't know if I missed it, but did you guys close the cap rate on the grocery center you acquired in Virginia? And maybe some thoughts on the long-term opportunity and returns there. Thanks.
spk03: If I'm going in, you should expect that to be at least a six and three quarters and maybe a seven within just a few years.
spk02: Got it. Is that some occupancy or occupancy plus rent?
spk03: Yes and yes. Primarily rent. To the extent we get to re-merchandise this shopping center, which we very much expect to do to be able to provide McLean, Virginia with the kind of product that we'd like it to, it should be a great addition. You've been to Wildwood in Bethesda, right? Yeah. McLean needs one.
spk02: Got it. All right. All right, wonderful. That's it for me. Thank you.
spk08: Our next question is with Mike Mueller with J.P. Morton. Please proceed with your question.
spk15: Yeah, hi. First, Dan, I think you talked about prior period grant collections that were in the number of benefit this quarter. Can you throw out what that number was? And then also, I know you don't put acquisitions in guidance for 21 or 22, but can you help us think about the cash on hand? You're raising incremental equity. You talked about $350 to $400 to develop and spend this year. How significant could acquisitions be and you know, to the extent they're not, I mean, what could development then look like in 2022? Just thinking about burning through the cash.
spk03: Yeah, sure. Two questions together. I'll take the first one quickly. We had about $8 million of prior period rent. We had projected some prior period rents to be paid. That was a bit more than we expected. We've had prior period rents in the second quarter and the third quarter, the third quarter and fourth quarter of last year and so forth. It's hard to predict kind of what that level will be on a go-forward basis this year. So that's a little bit also some of the variability, what we're expecting, how much prior period rent we had to do collecting. And on the second piece, you know, with regards to the cash, look, we're trying to keep a, you know, we've got spend that we're expecting this year We've got some opportunities from an acquisition perspective in the quarter. We had $800 million and an undrawn line of credit. I mean, we have plenty of dry powder, and I think we really can be pretty tactical with regards to how we deploy that capital. And we've got, you know, that's not a concern for us at the moment in terms of, you know, how we pay for the opportunities that we'll see over the course of the next 12 to 18 months. Mike, we got about $170 million left after this year on the existing developments that are underway now. And I think, you know, I don't know, it's about $250 million or so left for this year. I think maybe $300 million. So if you think about $450 million or some kind of number like that to finish up the existing developments that we have, Again, $800 million of cash on the balance sheet. And so the acquisitions that we're looking at, I'm not ducking this. I simply don't really want to give you a size of that right now because I don't want people to know which assets we're looking at right now. Got it. So effectively, in two different markets, nothing crazy big.
spk15: Yeah, no, that's good. That's helpful. Thanks.
spk03: Yep.
spk08: Our next question is with Tybin Kim. Please proceed with your question.
spk06: Thanks, Sophie. I'll be quick here. You already discussed some of the tenant demand you're seeing and how it's broad-based, but I'm just curious, like high-level, are you getting the types of tenants that you want, the credit quality that you want, and how high on the pedestal is merchandising mix in an environment like this when you have inventory to sell?
spk03: See, Ben, I mean, that is the secret sauce of a business, right, our business, how we balance occupancy with merchandising mix, you know, with the credit of that particular tenant. So the way we look at it, first of all, gosh, you're never going to convince me that, Merchandising is not among the most important things to do in a retail environment. We all know that even after the pandemic, there's too many choices for places to shop out there. We've got to be the one of choice if we're going to have any possibility of pushing rents, which we want to do. And so just like the $75 million that we're spending on redevelopment projects, which are all about much more than new rooms and parking lots. These are about places to hang so that you can be there in the morning, at night, for long-term periods, for short-term periods, to use this as part of your life. If you do that, then the biggest part of that is getting the right tenants that let you have that type of lifestyle. What we've seen isn't. great demand from a very broad wide variety of tenants like that i think jeff burke has talked about them now when you're talking about restaurants is the credit great in a restaurant no it's the it's the fact that 110 000 restaurants in the country went away during covet a positive yes because supply and demand is is reaching a much better balance in that very important category for the type of assets that we have. And frankly, we're doubling down on restaurants. I love it. I love the idea of being the consolidator to have a place where those key gathering places have those choices. And when you go out and spend your time, I think you would agree. You may worry about who's going to fill a few spots if that business doesn't work three years from now, five years from now. But I think we've proven, I think the country's proven that restaurants, Outdoor dining is here to stay and effectively making – we've got the places for that particular group. We also have the places, and we've been seeing it in terms of those digitally native brands that want only a few places to make sure that their brand is appropriately reflected. We've gotten more than our fair share of that, certainly at the Rove properties. So I think it's, you know, going back to where we started, there's a lot of, it's not that there's a lot of choice, if you will, for any particular tenant. It is that the best tenants do seem to be coming, and we get a shot at them. And if we get a shot at them, we get a shot at creating the best place, and that's how we can push rents and create value. So, you know, from my perspective, very encouraged. by what we've seen over the last nine months, frankly, in terms of our places and demand at our places.
spk10: And keep in it, Jeff, and just to kind of add on to what Don's saying, you know, one thing that we've discussed this on past calls, I think, one thing that's different about this crisis than, you know, 2009, 2010, or even, you know, if you dial back to the tech bubble bursting in Silicon Valley right when we were delivering the first phase of Santana Row, is there is a ridiculous amount of capital on the sidelines. And, you know, whether it's money to fund new restaurants or new restaurant concepts, it certainly wasn't around, you know, when we delivered Santana Row back in the day, which is why we had to invest in those restaurants ourselves. We're We're seeing this time just completely different availability of capital for new business and new business formation, particularly in the restaurant category. We're also seeing it in the fitness, and I would call it the health care and wellness segment, where we've seen a few new concepts come that are very well backed, very well financially backed. and a couple fitness operators that, you know, didn't have legacy issues for whatever reason that have invested a ridiculous amount of equity capital in the fitness sector and, you know, really a lot different from that perspective than, you know, prior downturns. And we're not relaxing our credit quality standards at all. And, you know, quite frankly, we haven't needed to.
spk06: Thanks for that very colorful answer. Just one quick one. Are there any changes to some of the leasing language that gives tenants more out? Whether that be sales-based?
spk01: So, in terms of our contracts, I mean, It depends. So if we're talking about tenants that we have that have a proven history with us and strong sales and we see them as a key fundamental of the places and the environments that we want to continue to build upon with that foundation, we, as Dan had said, we had mentioned that we can be creative provided that it's going to benefit the tenant and that we're going to be able to share in that upside as well. As it relates to other tenants going forward, new coming in, it depends on the center, and it depends on the concept. We sometimes don't mind, depending upon the capital allocation, if it's very limited or zero, where we can make an opportunity for a tenant. They can try us. We can try them and see how that works. marriage works and we maintain controls over the shopping center. So that can oftentimes be a win-win. So it really depends, I'm sounding like I'm not answering you, but it really depends on the operator and it also depends, what we're seeing more today than we've seen in the past is if we had choices, right? If we had choices between two great operators and that happens and it's happening more often than not now, So all those factors come into play as we continue to kind of emerge post-COVID.
spk18: Okay, thank you.
spk08: Our next question is with Linda Tsai with Jesse's. Please proceed with your question.
spk09: Hi, just to clarify, 8 million of prior period rents in 1Q, were those from both deferrals and cash basis tenants paying back?
spk03: It's cash basis. Okay. Staying back.
spk09: Got it. And then so within guidance, there's some assumption, some level of that baked in as well?
spk03: Exactly. Exactly. So, you know, a low range for the lower end, yeah. And maybe we continue on. We've seen in the third, fourth, and this quarter, you know, reasonable prior period rent collection. We don't expect that to continue at the pace that we've had. We expect that certainly to burn off. And so we have different assumptions in there. But yeah, we don't expect $8 million every quarter for the balance of the year. That should shrink to a much smaller number by the fourth quarter.
spk09: Thanks. And then your comment on Balakinwood as a precursor to gauge demand for larger residential projects. How is progress at Balakinwood versus expectations?
spk03: There in terms of, so let me answer that, Linda, really the right way. Everything stopped in terms of demand between April of 2020 and November, December of 2020. So from that perspective, we're behind as you would expect us to be. What I'm referring, what I was talking about is now you look at this spring and what's happening there. in february in march and april better than we expect so clearly a trough and now like the rest of the country i guess this renewed uh ability to come out and make decisions including living decisions uh and so we should be leased up fully there within the next few months thanks
spk08: Our next question is from Flores Van Friesen with Compass Point. Please proceed with your question.
spk16: Thanks, guys, for taking my question. I hope David Simon was listening to your comments earlier, Don, about productive real estate generating high rents. I think that's part of his spiel as well. Wanted to... You asked about the past-due rent collection, $8 million. It's an 11-cent impact this quarter. Obviously, again, you've baked in some of that going down the road. Could you quantify all of the past-due rent from existing tenants that you have in your portfolio and how much potential there is of that that you haven't collected?
spk03: Well, we've got, you know, a receivable of how big? About $80 million. We certainly do not expect to collect $80 million, but, you know, that's what the receivable is. The gross receivable. So, I mean, you know, it could be, you know, that's not in our forecast, of course.
spk16: Yeah, it's just a portion of that. It's a small portion, so it's like 20% of that. Is that sort of the ballpark of what I'm hearing? Is it the right assumption for past due rents to be collected?
spk03: Or is it higher? No. I don't have that number kind of offhand. What I guess I could do is... It's follow-up with you offline.
spk16: Okay, okay. And a follow-up question maybe. So, obviously, the APM issuance, I think you did $87 million during the quarter and some post the quarter. I think you mentioned on the call $124 million in total. Maybe talk about the average price and, you know, maybe the implications for where your share price is relative to your NAV as well.
spk03: Within my comments, we transacted sold stock at 105. 88 million of that was in the cash market. About 36 million of that was in the forward market. And honestly, I think we're in and around kind of our estimate for NAV. not too far off where kind of, but hey, look, that's a moving target for us. Hey, Floris, you know, the one thing about us that I guess you probably, I know you know about us, but I hope you appreciate that about us, is that we try to do some every year. And effectively, you know, obviously we're not going to do it down at levels that are significantly dilutive. But in every year, as a reef, We want to stay very active in acquisitions, development, and property improvement plans. We want to stay very active at being able to lease to the best tenants. We want to stay very active in making sure that the dividend gets paid. This company believes in the future and a long-term future. And when you do that, you want to issue equity in modest amounts, but each year, in each period as you can. And so, you know, doing it at $105, I think we're worth more than that. I think you think we're worth more than that. I think everybody thinks we're worth more than that. But effectively, in being in that range to be able to utilize the ATM to create some level of equity inclusion, we think is prudent and is, you know, on balance an important part of the overall capital plan.
spk16: Thanks, Tom. Appreciate it.
spk08: Our next question is with Chris Lucas with Capital One Securities. Please proceed with your question.
spk17: Good evening, everybody. Sorry for the long call, but I do have a couple quick questions. Don, first, congratulations on Chesterbook. Hard to find an asset that actually improves your demographics, but you did it. And the other comment I would make is that that could have used the federal touch when I was in high school.
spk03: Exactly. That's why I think you should be really happy or you will be really happy when you see the growth that we generate from it. I think it's a low bar. I would agree. The one thing that I did want to talk a little bit about is just on the apartment lease rate, nice improvement since the fourth quarter. Just curious, was that just snapback in demand, or did you have to do any significant incentivizing to drive that improved activity? Significant incentivizing up in Boston. Very little activity at all in California, which is snapping back beautifully. And the same here at Pike and Rose. In fact, the leader, by the way, among those three in terms of – in terms of rent growth or lack of rent divination is Pike and Rose.
spk17: Okay. And then, Dan, two quick ones for you. I'd be remiss if I didn't ask what these term fees were for the quarter.
spk03: They were flat until last year, about $2.8 million in each of those first quarter of 2020 and first quarter of 2021. And that was above what we had forecast.
spk17: Right, I was going to say, so have you, in your guidance for this year, have you upped your expectations for lease term fees?
spk03: No, I mean, look, I think that we've got a range at the high end of the range, and at the low end of the range, it's kind of our average over the last 10, 15 years. So, you know, figure that. We won't, we're not anticipating getting to $14 million. in any of those cases.
spk17: Okay, and then last question for me. Can you kind of give us a little more color on sort of the ins and outs of what Splunk is, you know, the sort of timing of Splunk sort of, I guess, at least on fee versus or how they're making up the difference between, you know, sort of when that app starts paying you rent or however that works. Can you kind of go through some of the timing issues and what, I'm assuming it's the net neutral, but just can you kind of walk through the timing of the transaction there?
spk03: You bet. Jeff, can you take that? Yeah.
spk10: Yeah, Chris, I think Don said this in his opening comments, but, you know, we're made whole, and there's no lapse in rent payment between when the Splunk stops and NetApp starts. So made whole from that perspective.
spk03: Jeff, I appreciate it. Yeah, go ahead. You know, I was just going to say, basically, the make-all was in a cash payment effectively, or now, and that, you know, we had a straight-line receivable that we had to write off, so those things kind of netted effectively, but we added two years of term and a big number.
spk17: Okay, so that's the second core transaction, so less straight-line, more cash. That's not a bad thing.
spk03: Can I say that one more time to make sure I got that?
spk17: Absolutely. So it's a second quarter event, right?
spk03: Yes, true.
spk17: Yeah, and so, but the net is, you know, less straight lines but more cash, which is a good thing. Yes, correct. Yeah, and 2Q is correct. Okay, thank you. That's all I had. Appreciate it.
spk08: Thanks, Chris. Ladies and gentlemen, we have reached the end of the question and answer session. I would like to turn the call back to Leah Brady for closing remarks.
spk07: Thank you, everyone, for joining us today. We look forward to seeing you at NAREIT, and please reach out to schedule a meeting. Thanks.
spk08: This concludes today's conference. We disconnect your lines at this time. Thank you for your participation.
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