Taubman Centers (TCO) 30 Oct 182018 Q3 Earnings call transcript

Thank you for holding and welcome to the Taubman Centers third quarter 2018 earnings call. The call will begin with prepared remarks and then we will open the lines to questions.

On the call today will be Robert Taubman, Taubman Centers' Chairman, President and Chief Executive Officer, Simon Leopold, Chief Financial Officer and Ryan Hurren, Director of Investor Relations.

Now, I will turn the call over to Ryan for opening remarks.

Thanks operator. quarter third our to conference call. Welcome

to know, forward-looking statements you These reflect actual a see earnings discussion with our during risks although financial federal this uncertainties our make materially. of release XX-K and forward-looking Please our will statements respect underlying filings, views various including current we call, our latest events within differ laws. statements. and performance, subsequent results conference and securities As may future the of yesterday's SEC reports for and meaning

In be addition, website. on section call a replay of our provided the this will of link through a Investors

financial of this call, possible in are earnings defined of this as G. Non-GAAP included release, During measures after-tax our Reconciliations include and corresponding on estimates properties. information has referenced GAAP of the our filings. our will call GAAP management depreciation NOI, income non-GAAP EBITDA, measure from for or Such quantified we and these SEC future non-GAAP future non-GAAP may to FFO the our net measures NOI some financial expense of SEC measures due measures historical Regulation all our may significantly interest and tax discuss when forward-looking not by financial supplemental which to investment measures differ also amortization, comparable the periods. performance expense, and/or

up call to for up the open questions. that will we two. them remarks, you ask prepared limit today's Following We

more, have please If you up you can queue again.

over Now, to turn let Bobby. me the call

more of nearly over year Ryan third share, FFO released $X.XX quarter XX% strong and results. last Yesterday, up had good FFO of XX%. $X.XX, we adjusted Thanks We per and up everyone. morning than

the our China in our growth X.X%. It comp impressive cancellation in growth. best produced again, centers, we South than Market Once had six and comparable was have newest Hawaii, Starfield growth in CityOn.Xi'an Korea center NOI income, very more in quarterly International Place lease years. rate Excluding was Hanam

higher due our of expense, of The cost from of than comp the a average per reflection all X.X% importantly, more square X%. retail up Most comp from of per contributed was our $XX.XX, benefited our our U.S. in they centers comp square rent lower up average NOI rent rents. debt centers average half rent centers saving U.S. lower $XX.XX, Average foot square was in quarter. centers, $XX.XX, rest primarily benefited growth. comp comp an at per result foot center basis, X.X%. quarter, the environment. the basis, bad the a was up This to weighted recoveries, On expenses, NOI and net initiatives comp strengthening In our centers foot greater

was re-leasing Saks occupancy lower cultural location XX. re-leasing month our was primarily last Indigo, building. up occupancy points On space end, XX basis spread Hills. points A temporary X.X% from from NOI of our weighted early to XX.X%, XX%. quarter and former comparable to year the first level Canada, XX on to their spread department trailing due center former was the portion X.X% basis to an XX occupancy actually increase year-end be related at we October, expect basis, above last is but continue quarter U.S. at Saks year, down At of store opened last the the occupancy. is X.X%. at Short In Permanent Our September from lower

Creek, also XX, size Lease mall the Center. Country and down Shack Creek Altar'd Shake & at Plaza, Pops Utah. Apple Short Goose during at Green Bonobos opened the in the and City Hills and Barrel elsewhere X% with Kansas at relocated City that of Indochino to UNTUCKit It notable Hills of on Mall signed & Boll September reopened a Hills, State Crate restaurant, only yet to second another at will Oaks. Place, with At the from to Town were month, of Market an up A lease Branch, in quarter. Yurman. points location Bonobos doubles Green the At Face was at quarter also at Palatine few at David signings level expanded XX Club at at the store signings exclusive quarter. this Saks. and included but market, XX Tampa along a at be shopping in hot Other exclusive there Creek store Club the and market, from lastly, with Next And Plaza, state Palatine Plaza included year-over-year, former North from International at local the the Scott Canada signed. Country Pellicano street another XX their the openings Oaks. Kendra the basis Lolli XX.X% were & into store last And Cherry Cherry be University International Center Drybar will relocating center. ShoreFyre, UNTUCKit, space both

NOI sales. were with increase Overall, quarter, two have now trends throughout Market nearly was month years growth. the foot reported quarter, already per sales this Sales XX mall for On sales comparable month as U.S. history. basis, Trailing publicly category that in posted traded X.X%. and regional foot our in third the almost of basis, up ninth square sales positive your U.S. X.X% foot marking been now foot quarter productivity with $XXX, up were an a mall full Sales two to sales Turning the $XXX marking for a up our two-year trailing par these per were On continued XX only growth foot, assets achievement X.X%. in U.S. X.X%. International merchandise seeing Apparel are up sales per average, record XX of sales in up with positive X% Place weighted that our the industry. Starfield they included Last Notably, both X.X%, per history. centers. every having tenant were sales number, growth. the foot, on another square Broad-based were sales excluding $XXX In quarter implies square trailing encouraging comp increases. our quarter. square in square sales per centers a the operating per centers we month That continued. tremendous were an consecutive our consecutive portfolio portfolio square is $XXX, Hanam and company are at of quarter

recognized were consumer of In Urban confidence. Justice, were digits, double continued and region, some sales quarter ICSC XX% XXXX up XX% superb and discretionary center all is Outfitters, hurricane Comp our Eagle, the remarkable Starfield We deliver shopping for and more to categories, Forever jewelry growth. Rico, Juan customers and week, to patterns up reduction during Award now design ramp-up. sales Zara, new centers estimate per awarded the eligible women best Gold Mall than best island the will square year-over-year Year-to-date, for to retail the a for strong global San has has including Hanam center. resident XX, ground was are back-to-school of post PacSun, season. shoes overall were and Uniqlo, Last the of electronics, with up traffic Asia, Asia-Pacific continued of Levis Puerto up new performers best in luxury, estate J.Crew American strong is in in in by be an up have The which center award and brought year-to-date. development accomplishment. up real indication its Also XX%. May. during the the development, ICSC's Las recount appears In XX% The are nearly altered the Vegas center in foot to ICSC the

We in model. It's do. see stores are to report close. shoppers been completion, will substantial been that should most Reveal. industry's LA fascinating to to also hope its This the historic sales, the both X, we This Friday, ever growth on ever season. the for in center. will Center's At Nordstroms will November have hasn't of be holiday it the This Grand we comprehensive redevelopment momentum done or and be Beverly certainly with the we be will ahead department significant add delighted reopening

every top have significant XX new of into in collection asset, retail. the the we a that has facing of Fast-forward garage. Center, top XX later exterior the the elevated I experience, checked the its and opening we arrival and offerings was light assets parking believe with what improved parking which an but every all the upgrading one literally allows of light project, neighborhood, April was surrounding country. which facade XX to of the had Today, a an making up of mellow center's the XXXX, into and center have conceived we dramatically center. outstanding of interior and departure We began in creating exterior, several Contemporizing already goals. food aspect challenges, Beverly re-imagined the natural When this significant months box, collection intention

the seen outside feet mark We there State floors way full are brand in a programmable the sense have Shoppers to that the that the all colored levels. sightlines openings the center allows between branded and other much lighting skylight of and sunlight square exterior from us almost LED Building reach a center XX,XXX now lights improve to Breast afar expanded in new Inside, and special they LEDs and criticism a maintaining ability advantages in York. floor give center state-of-the-art the and shoppers, to climate garage. through added parking a been X,XXX The the new, of can parking A space parking Empire occasions have Month, are community dramatically this the that always the be Pride New has new now center, smart controlled Awareness environment. system in color Cancer improved. events. system guides visitors like Accessing in allows while

which the and new departure street-level West valet We the have substantially provides restaurants. off the including and quick improved arrival retail third access experience, center's St., also to

particularly center. food are the at pleased upgraded the We with

will be fashion and Inside, enhanced we Marugame Organica. & long include New of Hospitality price points across Angeles, will The also we a all Exchange, list creating and as added of Beverly a have out Foot street-level Wolford Easy's of new every corner Pitchoun! XXXX, and concept another restaurant, multi-brand And has will Café offerings have expanded XXXX, been expanded. prominently Balenciaga, luxury restaurants the Calamari sitdown Udon, of Monaco, added, the Longchamp, Co., Tocaya concept all Bakery Hayden and have G-Star at casual largest Cézanne fast Polo a Fast and Celect Bar by Paul. APM luxury, we this Los square-foot Farmhouse brands. Armani relocated flagship, Girls, in fashion A|X The new add have at of MCM, XX,XXX - Southern and Traffic Kors, impressive Miami, the & Jeremy IF by in and/or and and Table announced Los Ralph collection Boulevard. San full-service center's been Angeles, and a shortly. flagship an Locker, profile Versace be Apple, Eggslut, added The RAW, Lauren, LA, the which Yardbird Michael in including center. contemporary Webster, retailers sitting Zara, Vicente

the double and the historic to shopping traffic shoes communities at the low. the only foot is combined remain in are in complete, experience to even the of seen Sales that We in anywhere peak The expansion unique tenant stores improvements have this brings customer reach we Zara up to embraced before buy be key Beverly. and square is future shop that at a the and of with location and and like high, this per a track replicated absolutely and center on shirt were wants sales. in quarter millennial Together, customer have LA. medium and year. destination LA levels cannot material The Zara mid-priced digits shopper luxury is customers critical renovation allows why it the success Gucci that so

expect continue. We substantial growth that to

and are our financial expect on We budget to goals. meet

Beverly executed We the now our have of will to the are it Los with I the on to next We having mid-January. accomplished we we investor visit over Angeles presentation and Simon. very of welcome thus are in you in be you Center. have absolutely and what call we time far turn proud vision re-imagination will

everybody. you and Bobby Thank morning good

and variances are share supp. the FFO listed at shares year-over-year share FFO up adjusting our common be lower the the shareholder to Group assets. third foot $X.XXX increase attributed Asia. XX% of AFFO of $X.XXX performance over were average of activism, expense an quarter. on review page which due rent in to the expenses per for result both first expenses $X.XX. of the due the change this represented This per improved quarter for domestically our recoveries predevelopment nine due last were $X.XX. savings. Minimum $X.XX of Property favorable, income initiatives. Simon were our was rents of to They year. Majority debt, market of can me operational related center, was Net costs per lower other Let to fair increase After to was quarter for and our and up in growth, managed a $X.XX. were savings operating Lease our bad primarily cancellation up proactive square Other value cost

XX Our three cost interest and our operating on with Beverly of centers our reduce as these it decrease. peaked in CityOn.Zhengzhou expenses $XX million results. to is is midpoint to expect and basis ways at $X.XX hard the our comp conclusion by we The Juan million was in XXX, corporate expense our million, were down all the we $XX in FX. Asia. $XX benefit latest costs. were of $XX growth initiatives expense year which favorable million the rates the this which FX currency And have Asia, expense centers, since as to FFO NOI Center, corporate is impact disruption Fluctuations to on to variances including year-over-year with Asia. we San higher been in G&A context, up XXXX, to then, on of as now continued retail primarily $X.XX, improvement. by the have Separately, we finish $X.XX, fluctuations of non-comp in Since Mall NOI which the to results seek margin our in favorable offset the included from impact not million, XX% has negligible reduce in impact G&A impacts corporate have quarter. posted year-over-year did at $XX been better also unfavorable points to worked an as million expenses rates center XXXX platform due which G&A expenses a nearly Putting savings cycle, was focused coincided NOI environment, have platform we Since and Year-to-date, the built negative into our our efficiency very $XX largely to and development

Moving sheet. balance to the

bears Hawaii. previously is the refinancing the million It During completed options. International quarter, with Place LIBOR Market term and interest new is three $XXX a two of The loan discussed we at one-year in extension year +X.XX%.

Property $XXX sale our other lands. per During of sales our group the we lines we quarter, acquired the over Mills in little also of of shares of sold share. a Arizona XXX,XXX Simon was and million approximately XXXX Proceeds average credit. were price a pay-down The $XX used to

XXX,XXX acquired estimates another our Beginning beginning through lines. FFO. average an to shares. the total approximately LIBOR We March Towards intent on the as share. flow per changes we are million of to receive of Currently, X.XX%, million March effort and Proceeds market the exposure, been in quarter-end, about future will are be rate sell of February earnings shares X.XX% again million nonoperating an agreement to the execute hold on has depending rate used sold forward we our pay-down X.XX% loan the of a recognized They to your floating our we this the Last were March $XXX as will swapped tax-efficiently an way as It as on week, at maturity Arizona will a you week never XXXX, XXXX, rate as term Mills through In X, LIBOR effective loan manage investment. of rate leverage $XXX the XXX,XXX X.XX% resulting fix X.XX% entered we $XXX ratio. $XX our liquidity and to to income the them them value shares of owned transaction. effective last in to through rate the on starting date term appropriate. we Please price to to is consider a when the refine an source loan swap XXXX debt rate our loan's X.XX%. that XXXX. dividends into

goal limit of our to indebtedness. to exposure reminder, our our rate a is XX% or floating total As less debt

our are as between going supplemental guidance reminder, growth an other key am now which, XXXX. strong that assumptions. you quarter of our page be will to and expect We can on along found again a on X.X%, our I up our another with comp growth update guidance for six give results, increasing we year from X.X% With center NOI full guidance the points basis range. NOI be previous XX our Now

In are fourth a tougher assumes significant typically in Thanksgiving year year. Festival, for holiday, rent, some Both is received quarter. fourth of growth everybody quarter, Korean U.S., in contributor comps whereas which year-over-year be will half to is in which shifting. in small our change variances. range sensitive a remind year-to-date quarterly year. which again this the NOI the to is Overage Chinese I QX the this our occurred growth we the holidays timing be expected which the our fourth in QX. strong about to were growth Moon been Given is Retail rate third what deceleration quarter, next two the are holidays, sales of has typically slightly both X.X%, is they In the year quarter last has Asia, quarterly to in in want so IMP, that see. quarter, created major the and lunar down highly holidays this

on of To While in a necessarily like growth a big not swing roughly as has million look way to not $X million base, and call total it's actually a context or NOI $XX at if NOI in in sizable it much might NOI X.X% $X that dollars. put but percentage context rates, it a lot to on dollars. our an impact you million is look in the the growth swing it example, in terms it X.X% either that's growth rate, quarter. $XXX of a company, of to The $XX million of quarterly $X million growth $X million our terms million

the have midpoint. at the our $X.XX be between to AFFO to share. range, $X.XX We per will we share guidance it also AFFO addition NOI expect narrowed In raised and guidance that now per

fluctuation listed assumptions activism with value key that shares of of also any excludes six NOI, the from on assumptions unchanged. supplemental other note the own. Please we guidance or associated were fair costs guidance our future XXXX SPG the Asides still for in common page shareholder

we introduced guidance XXXX. certain our for addition XXXX update, guidance have In measures to

First, analyst there were have year, interest expense. item. line variations In reviewing the noted this for estimates in we significant

several and For development due been capitalized interest. has expense the a years, interest model, part mechanics redevelopment associated item spending to challenging in pipeline, the to the sizeable and company's of large

company's and in In will has rise the continue on greater addition, provide we on the decided of expectations, risen and year. to many these as items to we have clarity LIBOR In previous parts necessary. an recognition earnings when moving expect years effort we guide to have in next it done

million interest share range increase. expected of range current of to Higher and expense of significant less capitalized to $XXX $XXX consolidated is the account unconsolidated XXXX in expense be be our and expected million current guidance to million interest the consolidated our largest $XXX For compared $XXX combination $XXX to to is million. interest LIBOR At part interest and XXX%, is to greater of $XXX rates million $XXX are XXXX, unconsolidated XXXX borrowings. of interest to a rates, compared increase higher million to million The $XXX due expected our expense guidance million. for to to

based and Green floating as Mall credit well our at loan the Market Our on LIBOR. as lines of International on are Place Hills

$XXX credit expire our February our line LIBOR on $XXX In X.XX% of have our term balance. balance. million X.XX% rate swaps swaps on Presently, the of loan currently term $XXX end line the addition, loan the of and at of XXXX. for we Those million provide million and of of the $XXX on million credit a swaps

swap a a term $XXX forward mentioned moment starting will on last that X.XX%. I agreement to rate As LIBOR rate week of the loan entered we million ago, fix into the

beginning an increase March XXXX. that's X, So points, XXX of basis

capitalized Our One about than million. the is average LIBOR X.XX%. bit quarter for LIBOR forward an $XX rate to difference. expense of assumes XXXX. account interest about X% guidance a expected In is in to-date share more is interest at interest XXXX, month Less of expected our to capitalized a be

$X is Next to be year, it to closer expected million.

about So million lower. $XX that's

also lease expensed. of new today, guidance impact a the in costs, bulk on be capitalized We are being will and which provided standard. expected Beginning lease personnel the portion of XXXX, internal the accounting the of

accounting We to the in expense. costs will in operating will leasing the be recognized $X other million. this million that change $X with incurred additional These connection costs expect be

South on of at and year capital the this have in were As to and stated NOI NOI in full development. is targeting XXXX we China Hawaii, that a $XX International have redevelopment. expected the growth release will to our CityOn.Xi'an four as Since come our target, XXXX, Hanam about million call. amount expected we $XXX ground-up million in guidance we growth Korea. full Starfield result our we and which between of earnings a significant million practice, three year good are components recent most are Market was we full There allocated CityOn.Zhengzhou Those of and of February, were year-end sizable target. talked to XXXX, In Place development share. portion from to our $XX approximately

at all $XX expected and not Hills Beverly to our assets core which Box was from Short named the million Authority from the Sports $XX Green growth Another Center, are space. essentially expected of $XX above. And Hills Saks million was of million three about assets, the redevelopments

the if low-end the ranges, end at $XXX $XXX high-end. up you So and at the add at you million will up all million

details touch of on give briefly the our want February, progress We more to in I buckets. you individual each but on expect to

and rate as XXXX. annual below about the X.X% $XXX XXXX the time, it The was core, assumption significantly million achieved growth X.X% assumed about the of reasonable annual at the through $XX from our target a centers growth growth felt a rate of million. base terms X.X% conservative In of of on

statement, we considerably less grew However, as meaningfully environment XXXX. than core retail in our the has know U.S. following softened the X.X%

we core growth XXXX. core need improved meaningfully The Our has $XX grow U.S. in will X% environment today, to are XXXX of process that since be and achieving and the certainly then have very But encouraged X.X% next less a achieve by bucket it sales we sit our to well. year haven't at guidance we In and in XXXX our this budgeting the for annually million, produced appears as core by retail than in will rent the order finished detailed challenge. we for as growth year. assumes X% growth in and target XXXX

Beverly In and you at about have heard on Bobby we made what terms talk the Box. progress we Short done have Saks redevelopments, of the Hills the Center

won't good million getting the to midpoint continue $XX to Green completed largest the feel until So expansion be redevelopment XXXX the Mall our there. $XX Hills of The about million to we range at the of bucket, however. piece of

XXXX majority and into the not the of So XXXX. until contribution some will come

for four million three NOI the XXXX this the be very year track. appear largest has to $XX contributed in been of in impressive. As They buckets, on we and newest growth developments, the

the $XX discussed In do million to to pace better growth last ratable on about $XX annual February. of fact, are than million they we

certain, we to turn but progress. two growth the back that, million made the $XX about substantial years have will far to need see Bob. from it over next to to $XX and still to million I more we we that's get With So talked

Simon. Thanks

centers and environment recovery extremely retail and XXXX. challenged was the knows, not recovering Many XXXX that are everyone still landlords will uneven. As Retailers very is in and survive.

the for have to pool. sales and XXX tenants than account In assets and categories well. said the new That data that are to the Luxury for implies of said will, nearly value. of than positioned centers retail than of at more the forming earlier, in many shifted. will capital The are of a a best, migrating and and X,XXX portfolio this top top narrative are struggle. lot large majority We value has in and mortar Digitally exceptionally do we apparel. context, assets brick times, there I account optimism. well believe XXX growing retailers estate feel will XX% half very importantly all And we the native our in us so points sector are real more doing the certainly as are and tenant raising more give

managing we highest over market assets have best are anticipated, will transition time. As share believe and this. results the quality the We these gain suggest

We development the rates out interest and and earnings this are in and retail. unfortunately interest coming headwind creating met this a cycle is again year. then are expense the to time, of huge rising same At disruption year will next

redevelopment we capital portfolio more even this but a health either centers us that new mind or going will development is believe keep helping The Tenant Rents our industry our our it decade. up. in The have last spent Sales And growing. the reality, up. grow and help we important to within While transition is are on and have us reinvestment significant will outperform. take time, NOI had forward. will is it's of All improving. are are few assets is increasing. but are a

So that, take now your questions. will with we

we As to limit there? ask Ryan them Shelly, two. that kindly mentioned, you are you

[Operator Instructions].

line from of Your Hill Morgan Rich the question from first Stanley. comes

Your line is now open.

just I guys. is? And down big reduction morning $X us of maybe it that wanted remind year-to-date Good drivers Hi. you impressive just a have for you to expense Can year-over-year. looked what pretty like side? operational the talk done million operating It what second. about expenses was

aspect last the the base. the towards at beginning year, really end headquarters. , cost really That's of more look year, a our within but of That's within Yes. In in fourth last of the Simon. it's took Rich, corporate our every quarter, centers we of to lot ability significant our really of a done we part in to back-office more have investments a in allowed to in traditionally been made way. us And automate technology cut and of the some was that's which a software, processes related well. as costs manual

bring And our effort level like the at million really from and more with $XX and a facilitated the we half was, we stage little million a half we by quarter, at cost-cutting measures of technology. down and taken. say, to with think $X have to brought I G&A us a half still this and efficiency so would bit to a more center It's those million the to have optimal $XX really corporate close rate company high to quarter do, run stage and pretty investments the a of but allowed there's to

the have the back cycle, we the we people thing was development using add whenever the been areas development construction cut is, Rich, we have able And would of to end only grow. were again, areas in And it in cycle. development end been the to of I the where the at

of sort we in it's as natural So the have ending a past.

thoughts Got just who bad talk can't retail well, maybe expense your how thing about give debt specifically you and just maybe list, watch forward? on the is it. then and tying $XXX,XXX. the negative should some watch it And think on who back going like but expense looks environment was bad us modeling. talk debt about maybe list we you It Can on is, to one about

Yes.

a balance the you pays negative, expense and In or bad delinquent quarter-over-quarter, because of often sort written-off. debt, was is credit terms occur of either the a the we modified is can lease that debt sometimes more and when actually had bad balance tenant

sort really You quarter-over-quarter. it's at your are always debt the offset couple an and portion of a in to of meaningful really course. bad debt balance looking nothing that's It's normal of bad and expense. tenants reserving There's receivables

fewer it say the list watch was terms in the as list, into There whole. names significantly is a than the list would are of I and XXXX. late XXXX watch a In lot on different

pace certainly tenants the is less is down. dramatically The year. is than number closure last of of but slowing and larger Some remain, tenants do

pleased with more We we a ability much got to terms in what of backfill and have of our we vacancies environment. to been back are sort normalized back

So names on there's still it. less There's names.

saw Some much we of amount XXXX normalized of than them XXXX. our centers. environment a in more have like in significant some it's But what space and

we bankruptcy are an the normal on to Also a Yes. almost basically year. side, back

am had, trying feet, mentioned. I I to X.X% I think major had was It's we only only remember, the the X.X% and square part of XX,XXX Brookstone points locations that I nine of was are our XX We or quarter, year-to-date the think basis about about, space. but bankruptcy in which that

to So right it's it XXXX, a really world mean down. XXXX settled much and compared now. very different I is

Thanks guys. Great. right. All

Thank you Rich.

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

Your line open. now is

morning Good everyone. Hi.

Just, XXXX, And be we QX? about other and in I should kind can in that should the about sort rate? put Simon, same-store be your context of about about any you just trying think ahead holiday a the and factors expect in one-time forward X% Asia XXXX quantify flat looking for QX you into that how a am we expectation as comments then just growth of of drag and that challenge impacts we are timing? kind the thinking from rate there definitely to how in thinking terms of be will maybe run

the That's of say we this in year, occupancy of calling occupancy growth are meaningful quarter Well, NOI fourth Grand is the three $X.XX in a to has which the first $X.XX there XXXX, XXXX. very item I in been Hawaii, only saw the as XQ in a quarter this XXXX. very the of of will our quarter. less three significant the expense the Reveal, really close is to expense year, it. happening were ramp one-time that to fourth this significant promo contributor for Beverly quarters one-time so significant We the quarters first you in pretty in because of in full year

as different. little in third the it's meaningful. think just holidays is we Asia of And of of we really but impact has up quarter from a huge ramping again couple year, of and way, it's also quarter comp there that's next year gotten the a this million in So well. fourth dollars, Asia, point quarter the to year It's a comp. was the would tougher not fourth of sort The a bit impact, a last moving certainly to where

I of items, them. one-time the I think those sort as state are

through runs expense promo same-store the NOI? So

not. does it No,

It does not.

then for Hills bit regard you year. and of your into that sort Short just with in sort what's what to the allowances the QX terms And doing mall TIs of it's of leasing uptick related stuff? you commencing what I expectations Okay. know talk of in in thinking about were and But of mix QX to can CapEx, how a may XXXX? are maybe the line we drove the that be with about tenant with full sort in And be should little

are Well, bigger more in and seeing we fashion about like I allowances that. news and general, of going also few very our for good good are And are our which generally the selective tenants, is our think fast of the Class a to for tenant more being Regardless significant are food. Those go. are the areas assets, where reflect they they allowance, luxury retailers deals allowances assets, doing very that, like which are allowance tenant for format coming news. to you A tenant large is positioning but for dollars tenants where are

what We allowances expected a year, tenant of to talking we as about be here, this are higher. result

again decisions opportunity in smart Hills be year. share, going traffic in the an number gain bring they probably help us $XX all retailers it's and Almost in market to Short continue like do productivity best are amount one-time be We and expect But our great the is do this elective have if to it. it drive We to We to these expect and in don't elevated will often of are and that we like. centers think to in We perpetuity. are them have in that million nature. significant XXXX. that area

we the not and are So the we our assets positioning best to as playing be markets to that defense able this in going forward. look at retailers dominate offense, with

you. Thank

Thanks Christy.

of the Greg comes next from Your from McGinnis Deutsche question line Bank.

is now line Your open.

watch the I how think this am morning. in the lease list next comments tenant watch change impact Good just may on versus list this H. the curious I earlier. year you appreciate cancellation income year?

will quarter year, the That's income. bit million through think we had. big the do had cancel talked a the in about $XX.X of prepared of comments. and biggest have lease the a of we of this we little But third We end it number. It's one

the of had right overall with in about year. that in now more tell great too coming cancellations. we would we are that's traditionally, recession. seeing give last year, see terms than number that next number a to next think But year. on that meaningfully than million $XX in lower likely tenants, for bit but five I only had top probably the we are to we on exact lease that our to everything time that on Based budget environment, that say the number. the lower out of believe And next being leasing you terms an to was meaningfully it's that tell. of we can conversations of I number me you I higher in be soon we it's more seven are area. I fair a can't year,

Thanks. the on curious San Mall NOI there for litigation? is Juan, if I appreciate that the insurance? full at changed also update am contribution has no The I Saks on longer all? when the there And or if clarity of there. year then And expectation BI eligible asset's any

insurance a million budgeted going Bob at an the San of beginning The first operating complicated asset you Juan, a NOI the process. asset even receipt FFO of for possibilities given for it's and can process take at that gave relatively in year business and of with through the of combination insurance. range what asset less the then the we is a part incorporated more history. was that to interruption Juan. $XX that the the Negotiating and We the was happen will litigation coming new piece. It's I proceeds Maybe had a take San in business range interruption

the conversations. proceeding at they well. expected So taking having are we longer those year. beginning bit The But we are than are conversations a of the

come as this then million updated Juan the portion that. this the there. the budgeting we San If for NOI the in it call, we FFO in year. to this year, of proceeds for of our of area of timing all be That's to this so today, are necessarily year. of in come range it higher not It's in about likely still portion the assumes guidance on or interruption business a would Our NOI $X And year. uncertain it, did

my comment and litigation did question, rebuild Saks the mention earlier to given Nordstrom's and as are doing that There a the and more the not as required in X doing terrific reconstruction ongoing post they are their And wasn't And that litigation. department stores that closed. November to we comment So position quickly you on give yet. reopen begun two possible. soon, really they casual center really is much haven't that now than I is it's opening very with hurricane. is

opening. Nordstrom's So we see delighted to are

All much. Great. right. you Thank very

question Sandler from Your the comes from next Alexander Goldfarb O'Neill. line of

open. now Your is line

following Good morning just the prior questions. up out there. from Simon,

Looking lease guys at XXXX, you terms. about lower talked

You talked about refinancing the headwind.

the going $X you negative of So this just sounds, is get leasing far you next million impact sort if BI it positive, it as, the to as in is will year. what of wondering don't of is that it there get year, else some short-term on the because NOI,

in benefits sound does there's may like way. XXXX some it So that the help numbers other

next on wildcards it like of sounds key NOI that what are more the year the it's some affecting are So and side?

next not are Alex. on we guidance giving year Well, yet,

year what next want altogether, that to answer seeing you it lease that accounting just take you to from be change the cancel question. being million around potentially somewhere the likely way I in $XX So and much being we expense we $XX lease careful from But are higher and the there in million get there. lower amount interest the the

at are headwinds get to $X.XX be budget. by looking You be could could of we the of next what time headwind It $X.XX year. the

a on to So that with year. want be in next nothing there what you I terms of leave drag specific is will

$XX lot are away really of you NOI I a is, this could as a in in four are what we And more still generating is a largest we particularly they That's We in growth to be XXXX assets we growth. $XX from been million million have seeing, think seeing ratable. grow, significant million our to talked are are million, the redevelopments right NOI real four feel I of good which are. that growth. XXXX that's from about NOI which about, about $XX to that growth we of be of think will But we generate, conversation over $XX could NOI is than very where we growers generate expect to our and those seasoning. continue What And growing walk year. we that thinking lot portfolio. is, want single talked we meaningfully to now some are the in as the

those ahead I am at certainly, they will that's lofty where that's levels? of and continue So to not we won't. they pretty grow But saying projected.

to So of nothing that grow and the that inhibiting There's next to ability lot it's grow to year. is I end day. our well just of would specific continue a point at the NOI

time you Okay. this, Bobby, But if And spoke, by contemplating mention I you heard announcing update, think the I don't think that I provide was last year-end. you project. you then, were could that second Korea something an

Well, we under are as you. we I construction mean told

interest context who the Shinsegae, the the in of continues the brand, about going There's it. We of chip the XX% project, to And do. Hanam be It's to done there. a Everybody about, to we we it's have is partner capital project, blue Shinsegae institutional when our talked half not regarded nothing's is agreed in on terms very excited is is as leased with very as highly a done. project, we space announced really retailers. how well changed on both Documentation are underway investor. sources in lot forward, as until especially from going well about

we So an I have anticipate don't be really about capital any able year-end some We partner. make to do that around update. should our time announcement

That was looking part for. Okay. was the I

Thank Okay. you.

Alex. Thanks

from BMO comes of question Markets. next Jeremy Your from Capital the line Metz

now is open. line Your

you been can past your seeing have Bobby, side? guys. in sales the You more mentioned you morning Good a the are two leasing on up tenant what little opening consistently on give color over remarks, Hi. years.

are You the about list. better feeling watch

of having of recovery? of there. tenants of this that's you the more you And sales, out you you giving hoping has to leasing it surprised lease What's relief? confidence current environment about So see sort then tenants? are those apparel increase for is really And talk kind rent terms can the asking today with apparel in when this the in velocity discussions

years of to the quarters growth exciting good several we that overdue. Well, question apparel, after is have have in kind now and talked of make way sales apparel, down that flat sales everybody about happy. flat there's see last And no the of very a in we to And over sales bunch And all Look, how of it category, hearing the geographically, of lot price consumer the a more you broad-based popular that luxury, is good are is, shape. middle confidence in there. good are traffic. tenants. good economy out by as There's as assets people in well employed. our are comments. And The getting seen

good So tenant we demand. have

efforts. our deal The are pleased leasing with very volume is We up.

Our levels. about XX%. very talked year We That's at occupancies are finishing strong occupancy. about the very, good

now shrunk what They these tenants. hearing increasing interesting I footprint positive. be that's to guys, assets UNTUCKit, these these Our with native average and are Bonobos, tenant digitally with it's all think starting rent The growth, to the to in they we period, is want and want brands, all with our very the all where of you in clearly pool, best be? we are delighted XXXX And which all again grow do all XXXX, have. the

assets. have We good

that are points, So All data kinds are down. leasing back very, it the with be of more the out speak bad in to the we can very, strongest demand And finding to tenants a the sales, hear you with debt to of going shorter and are data lot and and question. I things starting the pleased, we those and in we turn think, all we bankruptcies very same environment to are tenants really we than these tremendous, down, of have moving Asia, leases assets can. we term handle have very are that in points leveraged

of over So years. better was generally, it is leasing couple environment significantly than the the last

Is potential And sounds into here I basis know that, spreads some year. an it of the get on as re-acceleration next can be on it fair? based we overall would like volatile, that that imply but

spreads there's lease look not It's would again as tenants. we certainly pushback see so. But hope XXXX into we from and to would We hope our beyond. not like rise start to

just me, more terms on in in year XXXX. the Okay. question should And on should can for cadence when Any that fairly of of kind chunky you guidance will of If be biggest next from should the how color costs and or it give ramp be interest more fact, hit? chunks it the that maybe the second of ratable?

definitely It of over LIBOR. of ramp year. largest higher course is increase The Yes. the the will year-over-year the component

kicks June. and pie, done interest a smaller that the in, a of piece Fed meaningful of that raises Capitalized that, overall of but have Fed that the is Hills is the off year. biggest Green rate piece the the LIBOR effect most as will in on will So burning funds be

the So that more also in later to year. start will hit

that think more So pretty for going you we quarter-over-quarter, the just back-end ratably think if weighted about I sure. but gave up numbers think about you,

it. appreciate Thanks. I

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

Your line is now open.

you comment Good closing. to Hi. the going one in know morning. you guys I is Virginia could Sears on, wondering was if I be had and previously Fairfax, only three boxes

the tell too If kind what have? you other location to is that outlook have, or soon if your and of two you that it's for

three Caitlin. am I We boxes. have do sure

to XX year. one you going They probably Sears XX,XXX Dave acres. and We closing put announced That's place square & Seritage lease be they mentioned. of with about owned that have a store will occur square by Fair which that Buster's. a foot first Oaks. after have the the XXX,XXX one are there, they at the foot, has have sometime in It's

in foot by Twelve are XXX,XXX loans Michigan, It's security owned here for at various Sears. It's We outstanding. have on that Novi, Michigan. acres. square the store Oaks XX It's Detroit, of

productive site. We have do so it is lot seems an to to But awful Francisco, for store be acres. outside very it XX to the like they in get the back. could Sunvalley, store have of continue we with San on and store that able do been we operate which them. foot XXX,XXX square in California would a to and things Concord, not We

don't are it it's to told best, one anymore. operate they going most chain. stores are my And their to until operate continue productive guess is, We of they stores their in

to the the and will happens. of be we There interest will what a So see sites have update. that's lot in

Got it.

And grow Okay. in dividend then on XXXX, that Or to lower second policy that the guidance as not payout just do maybe going XXXX you will growth giving I a see lower any knowing know now, but have to you make to closer dividend are we FFO? you when ratio? Do forward. a expect, line do with get reason

XX%, point. So area, And was think payout end about which is I ratio, were of compared that quarter, to at historical this in the we the at elevated our norms. lowest

we when to I we low sold the something we we of Starwood growth. After had in those up the in Starwood neighborhood went think the XX% were assets. assets, XXs

coming expect down problem would a we come a don't there's bit. we We it it that the will obviously think with it's it down But payout So and grows. like ratio. to as

basis. been growing at about dividend an We our on have X% annual

grow expect we we will that dividend and almost since been have we company have We again a next grown and year our intend we every it public year.

Board. how of how comment It's have to that As and FFO, can will to until conversation one that a really that specifically our year happens with I it's tracks decision. we Board any nothing on

Thank you. Okay.

Caitlin. Thanks

Markets. the Capital line Thomas And your from next KeyBanc question Todd of comes from

Your line is now open.

Thanks. Good Hi. morning.

a Just the following little have It up sounds environment improved. things on leasing bit. like

in rents? mentioned some still leases expect there some still not the pushback? happening those there any of to when back. reduced Or for vacate what be? had tenants that is pushing term fate expires? signed at been that two-year signing them them? that deals you the are those shorter of the And then, despite will is you improvement business Has tenants an You lease Are shorter Or term indication do

in everything where that have to continue sense essence, selectively based a and It of shift historic tenant much very by demand decreasing say the that decisions big I grow, term But will location we will in center continues on of selective those power, we downturn. number of shorter and Well, the it on by back the decisions appropriate. before to you I merchant. and was and decisions make the where pricing tenant are leases see kinds more pool would our say else. made to those kinds as would

earlier and the So deals do some that modest continuing, higher we fact there coming the merchandise of the that at into selling with pushed tenants of answer out with but tenants in more get is short-term did some and renew much that some is, it's paying in of yes, expect levels we higher will the better will centers. the context that's

that growth curious last can two looking sales the have in or in you the we across I what quarter? given just XXXX? then touch for you And Okay. should so about terms rent And on of the we that, portfolio the years if as here, be maybe overage am fourth experienced think over

environment not role the got as lower So remind there That reflective for of percentage very that paying The quarter a in overage number, related percentage year strengthen, is pay a are to It's Todd, number, better smaller much any at as of natural number. of budgeting significant this to have of we number an you, it comment slightly rent. into continues of minimum really overage tenants who this is point, industry a percentage and of last rent some the rent in rent, rent upside That's rent forecast is small from the important small environment. very we if are meaningful the that to said, than even potential sort strength rent. rolling quarter of fourth kind this the the tenants or we a year.

to at it's very specific to likelihood, and hard tenants the look specifically you project assets. have because So always specific

right slightly $X.X if upside sales. there have now see want in it's a in in continue there in that is, is not we say think, things. It's projection about the number we But the down. million. to meaningful, of scheme I strength So to we

you. Thank Okay.

Todd. Thanks

the question from Johnston your of Deutsche And from Bank. line next Derek comes

Your now line is open.

on Shivani is Sood, Johnston. for Hi. Derek This

your in make and just with digitally any of leasing You about you them. had And maybe to differences underwriting you working in earlier with changes as your leases? progress talking them? were native Can to progress result retailers have speak a the any

when like City is we have merchant, that. be for City lease things an in There Depending the Millennia an have is allowances that location, make expectation. one just the tenants. specific to kind or for they there's you or so terms location Cherry decision. when location you to really have a Denver Creek or and as go or there on only they and is expectation Orlando. may on a Kansas City these Creek in a on Kansas great There the depending part like center when to in spot go or much location when they they Center support or But of like demand you or when their you tenant come want to Well,

that want soon have And want So power. do year, is you what balance in years? moment. you in more shopping at to makes the two location. you question have the UNTUCKit tenants pricing them you negotiation of to So the how deal? the right want do the merchandise you to And want you then going center come context in of make you Because that world the you sort this for best the or in now of and is, the eventually other come sense to

Thanks for earlier progress run. going us on guidance is certainly made expense? long-term longer leverage XXXX the interest reduce color to light new target, we would for especially leverage discussed bridge, Great. But back growth, properties over development that. of and that in on being some then expect the higher give And from you to the NOI NOI the can the there especially

between to somewhere six times. and a of target debt We ratio Sure. eight EBITDA times

right now. We are above that

ratios are Our healthy. coverage

expense. interest on times three about are We

X.X are We fixed on charges.

debt cost Very six of got we have debt it's average think are maturity. On We of I debt of at, long one almost X.X%. terms fixed weighted in years. and only, the maturity lower X.X X.XX% of years

good profile. we So the about feel

bit tick next this debt-to-EBITDA as EBITDA basis, on coming end the over think potentially we get mid-eights growth redevelopments the the could a next number ratio, the will up online the naturally year it into years we that we in think little few a and think Our look and decrease But year. from developments, we we hopefully really through are of now. the in at forward the We right it core.

we significantly assume you in now don't So of are hopeful We right range will that target will a see we come within raising year back target the into are have leverage going be back to these to to we plan down start reduce growth. ratios from capital our get natural and XXXX range. that where our

our like total Now about XX% about before, indebtedness. is one swap say, It's we be thing other to rate to year. some less a really rate next We that exposure of about I now. hedge to to on, right than have think talked floating floating the exposure. floating XX%, We rate put of as XX% will

have of more that will plans our to in and in order year. in next to that keep XX% for do We below some and is that number guidance our

you. Thank Great.

Thank you.

of Tayo Jefferies. Okusanya from next the Your from comes question line

Your is now line open.

is kind be what there morning. was NOI trying of wanted type in breakout the great I kind explanation take I much and the XQ of How a But X.X%, little more Again, some much the same-store from kind way overage XQ? gave more the could how am you that just savings? growth a XQ you just you moving helpful. that help around I in think for quarter. will OpEx Asia? figure rate on of to into I XQ to when ask out of Yes. NOI. holidays XQ of of Good Congrats of bit could run particular, because a noise experience was a it same-store is out in of Hi. good the

of Hawaii I to million corresponds So a little I NOI came that number, tell the in quarter, the and of $XX that you third growth. about more will X.X% think half than from Asia.

it's really that but to are piece coming pool. a And the in hard couple so it, some of comp much, Those million how rapidly. growth assets related not a from It's lot our is massive a Exactly probably of of bucks those that's of holidays. these But is to you. center it's where probably very days of it. growing tell

to Asia have been grow not a We exceeding ramp that year. continue, had probably really same our into going ramp pace expect there. intended do always the And next lot rapidly. we but was year. this Hawaii expectations to of at

for year-to-date, just terms fourth not the flattish quarter. results our we extrapolate you through guidance our quarter, the fourth In from are if atypical. NOI budgeting of in That's annual

typical. In Part and have of we really, more That's of which recognition, are it. it expenses, reasons it back-end number CAM ratably weighted. what versus timing year. a There's the which fact revenue taken year last it of is over fourth our Part over quarter last we rent, both of saw are. temporary is for are overage which largest Not quarter. is is be fourth of in the couple but they are pieces that are quarter. the revenue fourth of results the years, projected down also quarter big And majorly, the to tenant

So moving is needle the generally hard.

there. again, in That also what but see mentioning of there ramp XXXX. mentioned quarter occupancy worth that's the ramp going on was big you Hawaii of complete kind over XXXX. So course before largely of it's I the was fourth a by

comp terms So fourth it's year. tougher Hawaii quarter just this of a in for

in around That's Prop. California? then XX any in hitting you. helpful. XXXX thoughts secondly, And the Got ballot

been an and And with owners think. a change. think have that I property to it's is going But it's for don't years. mean, I to time impediment I many, frankly, long value, been many anything No. something there dealt it's

Got you.

So to I it's was something of just wondering happen early if whether actually you this kind time? just think too call

be to hope wrong. proven I

All right.

Bobby. you. good, Thank Sounds

question Your the line comes JPMorgan. from Mike next of from Mueller

is now line Your open.

Mike?

open. Mueller, line is Mike now your

why we move on? don't Shelly,

Securities. your the question Phan Mizuho from of from [ph] line And Sammy last comes

is line now Your open.

It's Haendel St. Hi.

you guys? are How Juste.

Haendel, hi.

discuss late. So to early a these these business? in Are of curious not today? have what I days a just And might term I ready see what's little are you on this. But I and know next guidance, lease to And in lease for pickup offers? early fees terms you into from appetite XXXX of buyout I hard are missed apologize a buyouts your for hearing offers joined year. questions couple you open tenants but

dynamic how is playing curious well? So year next thoughts into your into that as

Haendel. Sure

lease got the cancel through this third of of quarter $XX.X We year. income million have

we any for see that's quarter. fourth tenants. We kind these of are really year a resolved on the We conversations not the will having with income our be the cancel see based a point return conversations lease something typical and Eventually, business absolutely We in million there be of forward. cancellation environment, $X In don't they a of will $X right like would where you to expect It budgeting we of part that. been. now sort are that. more more any be lease always million, going to has expect progressing be to a

don't I ultimately see know a lease will centers. will meaningful well. they do the want lot the from that are year. say $XX.X that times seen, think seen cancel of we doing activity of when year. we lot strengthen we we a year see way number A not leave, that our have to I We in tenants will Although next that that down that coming million next this have

So replace them we help them with we to replace expect and tenants. to better

our So this next as we it will be always that been. do abate has but at think the of look But that certainly negative. meaningful part it a year, pace business of will don't a want big to we

for it. follow-up that. you balance on Thank A sheet. the Got

the close cost you reasons low. you it's high to the think, one your low pretty rate mentioned is XX%. variable fair amount debt somewhere teens, of I of pretty think earlier, I heard I have here in of is exposure But why

coming cost So rising or and potentially that portion thoughts or what curious obviously rates is? exposure that fix that expectation about thinking of are you into year in plans how on here? to front Any a the

or number. rate We to at as We XX.X%, that floating to debt. manage try give debt right are, relates take total of now, it percent

swap XX%. put it's of help forward manage week not enough starting a yet. So It's below next on We will the last that exposure year. some

LIBOR our XX% total in close it to expense actually, and the year X.XX%, we of that debt, debt our to more do overall cost right interest now. close floating we I will doesn't rate about with that's it expect actually floating our next rate will some the so that now say below right floating think With is we are the It's spread. exposure pretty and reduce pretty We guidance. cost. not is be actually

fixed number X.XX% only total debt, as example, So is all now, not that which it compares really rate as so bringing an that of it' and is down debt fixed our much our right cost X.X%. as to

they in now each top kind next and it in little right are bit other year, on opposite a So direction. fact the go of of might

the Right. is, am well, is from on it last that one curious asset just performance, of on first what it The still China then asset that faring quarter curious missed sales, trend other believe, to comments earlier. The I might the cetera? But is trend your And the is particular color next I in to just Asia how year-to-date for Any me. assets. Zhengzhou. the same-store is. have added the et versus the asset plan be on pool, year? some I is

comp in year, number next sales It of this It's will for the pool the year. as full in the now be Yes. center quarter.

Yes.

out the well delighted looks in and and like much be way track a with Zhengzhou laid leased. on asset the would It's had we and to there. It's financial of is XXX% what it are opened objectives as merchandised who very we have bunch We has with great. our tenants

very are pleased we So with Zhengzhou.

general. in Asia And

you. Thank Okay.

questions this further at no are There time.

Shelly, else? anything

questions. further no No,

turn call to will Bobby. I over the So back

Thank joining forward for bye everyone to everybody. much and you us very you San thank look NAREIT Good in and we Well, seeing you to talking Francisco. at you.

concludes today's call. conference This

may now You disconnect.