Rithm Property Trust Inc.
Q4 2022 Earnings Call Transcript

Published: 16 Feb 2023

[Operator:]

[Starts Abruptly] Fourth Quarter 2022 Earnings Conference Call. At this time all participants’ are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Craig Benigno, Senior Analyst, Investor Relations. Thank you, sir. You may begin.

[Craig Benigno:]

Good morning and thank you for joining us for RPT's fourth quarter 2022 earnings conference call. At this time, management would like me to inform you that certain statements made during this conference call, which are not historical, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Additionally, statements made during the call are made as of the date of this call. Listeners to any replay should understand that the passage of time by itself will diminish the quality of the statements made. Although we believe that the expectations reflected in any forward-looking statements are based on reasonable assumptions, factors and risks could cause actual results to differ from expectations. Certain of these factors are described as risk factors in our annual report on Form 10-K for the fiscal year ended December 31, 2022, that will be filed later today and in our earnings release for the fourth quarter 2022. Certain of these statements made on today's call also involve non-GAAP financial measures. Listeners are directed to our fourth quarter 2022 press release, which includes definitions of those non-GAAP measures and reconciliations to the nearest GAAP measures and which are available on our website in the Investors section. I would now like to turn the call over to President and CEO, Brian Harper; and CFO, Mike Fitzmaurice, for their opening remarks, after which, we will open the call for questions.

[Brian Harper:]

Thank you, Craig. Good morning and thank you for joining our call today. The start of 2022, uncertainty around the economic environment, specifically inflation, began to take shape. It was only a matter of time before inflation took over the headlines. As I say often to the team

[Mike Fitzmaurice:]

Thanks, Brian, and good morning, everyone. Today, I'll discuss our fourth quarter 2022 operating and financial results in more detail, provide an overview of our financing activities completed during the year and end with commentary to help everyone understand the business expectations embedded in our 2023 earnings outlook. Fourth quarter operating FFO per share of $0.24 was ahead of our internal plan for the quarter, but down $0.03 from last quarter primarily due to the impact of contributions of our Shops on Lane and Troy Marketplace properties into our grocery-anchored joint venture and higher G&A expense. Same-property NOI growth for the quarter came in ahead of plan at 1.1%, driving full-year same-property NOI growth of 4.3%, just above the high end of our expected range. Our stronger-than-expected performance for the year was fueled by 2% base rent growth after adjusting for some offsetting accounting movements between base rent and bad debt as we regained occupancy, drove rent and pushed our annual escalators. Our signed not commenced backlog remains elevated at $11.2 million or about 7% of annualized fourth quarter NOI, providing us visibility on future earnings growth. We also continue to open tenants on time and on schedule despite the challenges facing the construction market. This quarter, we commenced leases covering over $4 million of rent. As a result of the high level of rent commencements during the fourth quarter, our occupancy rate increased 100 basis points sequentially as we continue to stabilize the portfolio toward our target of 95%-plus over the long-term. Our SNO backlog will continue to provide earnings tailwind through 2025 with the total incremental benefit to operating FFO expected to be about $0.12 per share. We expect the cadence to be $0.05 in 2023, $0.06 in 2024 and $0.01 in 2025. I was very pleased with our balance sheet management in 2022. We prudently and opportunistically accessed the debt, equity and derivative markets to keep leverage in check, improve duration and reduce floating rate risk. Ahead of the disruption in the capital markets, we refinanced and upsized our credit facility and paid off all near-term debt maturities. In December, after inflation started to show signs of easing, coupled with a highly inverted yield curve, we entered into forward-starting swaps that lock rate on all of our term loans through their respective maturities. And earlier this week, Fitch reaffirmed our BBB- investment credit-grade rating with a stable outlook. Today, we have over $470 million of liquidity, no debt maturing until 2025 and only 5% floating rate debt exposure. We entered the fourth quarter with net debt to annualized adjusted EBITDA of 6.9 times, down from 7.0 times last quarter. Including our signed not commenced backlog, our leverage would be 6.3 times, giving us confidence that we will be near our long-term target of 6.0 times in the next couple of years. Moving on to our initial 2023 outlook. We are establishing an operating FFO per diluted share guidance range of $0.97 to $1.01. Embedded in this range is an expectation of same-property NOI growth of 1.5% to 3.25%. With about 75% of our 2023 leasing plan already completed and a healthy SNO backlog, we start the year on great footing. The wildcard will be the impact of retail bankruptcies. The midpoint of our operating FFO guidance assumes lost rent totaling 300 basis points of NOI, which is comprised of our typical bad debt reserve of 75 basis points as well as an additional 225 basis points tied to Regal, Bed Bath & Beyond, Party City and Tuesday Morning, which covers the impact of both lost rent from recently recaptured spaces as well as additional forecasted lease rejections and rent reductions. To get to the high end of our operating FFO per diluted share range, we would need to have a more favorable outcome on lease rejections and rent reductions. The low end of the range assumes that we recapture all eight of our Bed Bath concepts, all five of our Party City leases and both Tuesday Morning locations in the second quarter of this year. As you think about the bridge from the $1.04 per share, we reported in 2022 to the $0.99 midpoint of our 2023 operating FFO per diluted share guidance, keep in mind the following timing and one-time headwinds. We realized a $0.01 benefit in 2022 from the reversal of straight-line rent reserves and termination income that we do not project in forward periods and $0.04 due to the timing of net investment activity in 2022 as we front-loaded acquisitions and backloaded dispositions. In addition, we have $0.03 from NOI coming offline from properties that are being prepared for redevelopment, notably Hunter Square in Oakland County, Michigan and Marketplace at Delray in the Miami market. These headwinds are partially offset by expected same-property NOI growth that adds about $0.03 despite the elevated levels of bad debt embedded in our outlook. G&A net of management fee income is expected to be roughly flat year-over-year as inflationary pressures on G&A are largely offset by rising management fee income from our joint ventures. And with that, I will turn the call back to the operator to open the line for questions.

[Operator:]

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Todd Thomas with KeyBanc Capital Markets. Please proceed with your question.

[Todd Thomas:]

Hi, thanks, good morning. First, appreciate the detail around the guidance and what's embedded in the guidance for the reserve. And I realize some of the potential disruption may impact occupancy. But Mike, Brian, you both mentioned the targeted occupancy rate of 95% for the portfolio. It's a little more than 500 basis points of upside. What's sort of embedded in the guidance for occupancy throughout the year? And where do you expect to maybe be at year-end just given the potential near-term disruption that you discussed? And if you could just share some details there, just trying to get a sense of that and maybe how long you would expect to achieve that occupancy rate.

[Mike Fitzmaurice:]

Sure. Good morning, Todd. And then thanks for the question. We have a very healthy signed not commenced pipeline of $11 million, which is coming online over the next couple of years, which is really going to push our occupancy towards that 95% over the long-term. But we ended the year just south of 90% at 89.9%. We do expect it to end the year right between 91.5% and 92.5% despite the potential disruption that we could experience for our at-risk tenants, three of which are in bankruptcy.

[Brian Harper:]

And Todd, I would just add, too, outside of the $11 million SNO, we have about $7 million in legal and more even in advanced negotiations behind that in NOI. And these are iconic, game-changing assets, more grocers, more wholesale, more off-price, more restaurants, more wellness, where really, they bring a halo effect. But they're occupying either vacant or underutilized space today. So that's going to help bring this occupancy up as well. And those pretty much are going to be hitting ‘24, ‘25.

[Mike Fitzmaurice:]

Yes. Then one additional comment, Todd, is around the small shop. We ended the year right around 83.5%. And half our -- about half are SNO of $11.2 million is tied to small shops. So we should expect small shop to rise over the course of the year between 86% and 87%.

[Todd Thomas:]

All right. That's helpful. And then what's driving, sort of, the relatively faster backfills? I realize leasing demand is strong. But for some of these larger boxes, 12 to 18 months seems relatively fast, 12 months in particular. There's obviously been sort of delays around permitting and equipment deliveries and things of that nature. I'm just wondering why you think sort of 12 months at the low-end of the range there is achievable. Again, seems a little bit fast for the cycle.

[Mike Fitzmaurice:]

So Todd, I think a couple of things. We've been treating all -- let's start with Bed Bath. We've been treating all these as vacant since pre-COVID, just like we did with GAAP, just like we did with Ascena, just like we did with Pier 1. And I think we were one of the fastest backfills of those three concepts. We have been negotiating leases even we didn't have occupancy of -- or control of that Bed Bath space. So right now, we have four of our eight Bed Bath stores are soon to be gone and are being placed with tenants with superior credit and sales per square foot profiles. I mentioned on my prepared remarks, the 43% re-leasing spread for an off-price tenant that is open later this year. So that leaves us with really four tenants. And we've been mining each of those tenants for each of these locations like I said forever. So we have got a quick jump start on this. That's what I hoped with the 12 months. We have tenants in lease and drawing plans. So this wasn't waiting for the recapture. This was proactive asset management.

[Todd Thomas:]

Okay. That's helpful. And then just lastly, Brian, and moving over to investments. I was just wondering if you could talk a little bit about what you're seeing out there if deal flow is starting to pick up, how we should think about investments during the year across the platform and also how we should think about funding investments in the current environment today?

[Brian Harper:]

Sure. So we really haven't given guidance on investments prior. What I will say on that note, over the last two years, we've bought almost $1 billion across our platforms. While their internal remerch, redevelopment deals serving up double-digit spreads, that's our best use of capital. We are still scouring our markets for all three platforms. Let me start with RGMZ. I expect to deploy a lot of capital this year. We have been very patient. There's not been much cap rate expansion in the triple-net sector. But what I can see us buying are these larger centers where we can chop up the triple-net components and seed them into the fund and then sell the remaining center at a later date. That's creating alpha for those investors. Our R2G, that's really straight down the fairway core grocery. Our partner gives us an edge, as well as an enhanced yield that we are looking for. With that being said, you saw what we did with Troy and Lane. Could there be more of that like an accordion feature, where we can deploy assets and buy accretively, potentially. And then RPT, I really see RPT really benefiting from all platforms working together similar to what we did up in Northborough in COVID, where we seeded four parcels and we're left with double-digit yields. And really after now, that's even expanded further just due to our leasing platform where we'd have now five TJX concepts at the center, only one in the country that has all five TJX brands. And essentially, that center serves as a TJX bond for our shareholders. So I see more Northboroughs for RPT, certainly, but we'll give more updated guidance at first quarter.

[Todd Thomas:]

Okay, alright. Thank you.

[Brian Harper:]

Thank you.

[Operator:]

Our next question is from Wes Golladay with Baird. Please proceed with your question.

[Wes Golladay:]

Oh, hey. Good morning to everyone. I mean, how do you balance playing offense in sites like Mary Brickell and Delray versus having to allocate resources and capital to backfilling the potential vacancies you cited with Bed Bath and Regal and Tuesday Morning?

[Brian Harper:]

It's a balance. It's returns. There's deals that we'll hopefully be announcing soon on at Delray that are very low CapEx, call it, very large ground lease numbers that will be minimal CapEx for us. Brickell, the power of Brickell is there's more demand than supply currently. That's just driving pricing. That's driving restaurant volumes, where three of the top restaurants in the U.S. next year will be in the Brickell neighborhood. So this is a deal, Wes, where it'll be less TA than we even underwrote and probably almost 2 times the rent of which we underwrote. Balancing that with the Bed Baths of the world, Bed Bath is -- we're getting very, very attractive yields. The four that I mentioned that we have control over, the average rent is $10.46. Our spreads on those are 43.3% blended. We have a deal in Michigan where there was a $7.25 gross deal. We are applying $14, $15 rent with a tenant and lease that will do several -- 20 times the sales volumes as the Bed Bath was doing. So this is all about capital allocation and driving as much return internally as we can possibly get.

[Mike Fitzmaurice:]

And Wes, I'll just add this, I mean to Brian's point earlier from Todd's question is we've been working on these Bed Bath recaptures and re-leasing for quite some time. So it's not really incremental work for the company. And then the second thing I would comment on is we hired a highly, highly talented individual in the Miami market to focus solely on Mary Brickell. So we have the right talent and the right focus on not only our new assets like Mary Brickell, but also the re-lease of our at-risk locations.

[Wes Golladay:]

Got it. And then looking at the -- like an example of the Marketplace of Delray, kind of, you're doing this in a lot of your centers, where you just replace the anchor and you kind of gone from one extreme to the other at that center. And it looks like the area is pretty vibrant, local centers around also redeveloping. And it seems like you could turn the shop base over the next, I don't know, is it a year, is it the next two years? Like how long does it take you, though, once you get the anchor in to activate the rest of the center?

[Brian Harper:]

It's about 12 months. Right now -- and I think some of it, especially in a place like Delray Beach, people are scouting for locations. That was a deal, I think it was $14 ABR in a $40 market, especially after a couple of anchor deals that we'll announce here soon. A lot of people want to be involved on the front and secure space even before those tenants open. It doesn't happen everywhere, but that will happen in Delray Beach. So we're very confident that we can lease simultaneously even before the anchors open.

[Wes Golladay:]

Got it. That makes sense. And then you talked about additional zoning at Mary Brickell. Do you think you have announcement this year? Or is it going to be a multiyear process? What are your expectations there?

[Brian Harper:]

We’re really focused on the western parcel, really, the Publix and up to Moxie and North. That’s kind of our – leaving that as iconic, trophy retail. We’re doing a lot of deals with wellness and F&B. But for the most part, that will be a modernization of what’s currently there. The eastern portion is really where we could maximize the GLA and really where the tenants have the least amount of WALT. So I think this is a multiyear approach, Wes. We’re laser-focused on making this a place where people flock in an oasis in the jungle, if you will, in the urban jungle. And just the demand, as I said in my prepared remarks, is unlike anything I’ve ever seen in my career.

[Wes Golladay:]

Got it. Thanks for the time, everyone.

[Brian Harper:]

Of course. Thank you.

[Operator:]

Our next question comes from Derek Johnston with Deutsche Bank. Please proceed with your question.

[Conor Peaks:]

Hi, thank you. This is Conor Peaks on with Derek. On the leasing environment and given 2022 was at record levels, since the new year, have you seen any change in tenant demand behavior? Any change in TI conversation or forward indicators? Thanks.

[Brian Harper:]

No. It's as healthy from what we've seen, and maybe that's due to a new portfolio. But we -- it's as healthy as ‘22. And in fact, some of the TA requests have come down just because we've had four tenants battling for one space. I'd like to say you got to create tension in the market to drive prices up and CapEx down, and that was where we've applied the proactive mindset and assuming these will be vacant one day and not waiting and being reactive but being proactive in driving rent when we have the controllables in our favor.

[Mike Fitzmaurice:]

And Conor, one of the metrics that we monitor very, very closely within our four walls here is retention, right? In ‘21, it was high 80s. In ‘22, it was high 80s. We expect the same result in ‘23, ‘24, ‘25 based on our projections today. And Brian -- as Brian said in his opening remarks, tenants are willing to pay the premium to stay where they're at within our portfolio because it's much more costly to move somewhere else given the rise in construction cost.

[Conor Peaks:]

Thank you. And then on private market liquidity, we touched on it a little bit earlier, but are you seeing any standout regional differences in either market depth or cap rate expansion? Thanks.

[Brian Harper:]

Not really. I mean the core grocery has been sticky. I talked about the triple-net sticky. I mean core power even has been sticky, especially if it's mostly cash flow from TJX, Ross, like the investment-grade tenants. It hasn't been much geographically. Obviously, Florida is in an anomaly by itself. And in some ways, you might even see compression. But outside that, it's been -- it hasn't really moved that we can see in any geographic concentration.

[Conor Peaks:]

Thank you.

[Operator:]

Our next question comes from R.J. Milligan with Raymond James. Please proceed with your question.

[R.J. Milligan:]

Hey, good morning, guys. In your prepared remarks, you mentioned you were in advanced discussions with Regal, and you expected those leases to get affirmed through bankruptcy. I'm just curious if there's any associated or anticipated rent cuts with those properties.

[Mike Fitzmaurice:]

Good morning, R.J. So we have three locations

[R.J. Milligan:]

And so one of the, three you expect to get assumed at full rent. And can you quantify that rent reduction on the two?

[Mike Fitzmaurice:]

In terms of the rent reduction on the two, you're looking at right around $500,000 on an annualized basis.

[R.J. Milligan:]

Okay. And then you guys increased the dividends. At a time when CapEx spend is pretty significant just given all the leasing that's been done and some of the repositioning, I'm curious where you anticipate your AFFO payout ratio ending the year.

[Mike Fitzmaurice:]

Yes. I think this year, it will be slightly elevated as most of the capital, R.J., is connected to our signed not commenced, a balance of about $11 million. So we're looking to spend approximately $40 million to $50 million on leasing CapEx. And that -- 75% of that is tied to our signed not commenced. So while it will be a bit outsized this year from an AFFO payout ratio, we do expect next year to be in the mid-80s. And then subsequent year in 2025, we expect to be in the mid-70s. So we have very high visibility given the signed not commenced signed leases that the AFFO payout ratio will come down. And that was the catalyst that went into the dividend raise that we announced last night.

[R.J. Milligan:]

That’s helpful. Thanks, guys.

[Brian Harper:]

Yes. Thank you.

[Operator:]

Our next question comes from Hong Zhang with JPMorgan. Please proceed with your question.

[Hong Zhang:]

Yes. Hey guys. I think you mentioned $0.03 of redevelopment drag when you take Hunter Square and Marketplace at Delray off-line. Roughly when in the year that would happen?

[Mike Fitzmaurice:]

Yes. It's early in the year. So we've recaptured a few locations at Hunter Square, and we've already recaptured the former grocer, Winn-Dixie, at Delray.

[Hong Zhang:]

Got it. And I guess out of curiosity, so if I think about the three categories where you make acquisitions, your wholly owned, your R2G and your RGMZ platforms, I guess, which one would you expect activity to pick up the fastest?

[Brian Harper:]

I think it's too early to say. I mean, I think we've been very patient buyers. We are scouring daily. And out of the kind of retail ecosystem of these three platforms where they reside, I can't answer which one is going to pick up. I mean the ball could bounce to R2G tomorrow, and that could pick up, but it could bump to RPT too. So I think the beauty of this is all three are complementary and all three give us a competitive edge in the marketplace.

[Hong Zhang:]

Got it. Thank you.

[Brian Harper:]

Thank you.

[Operator:]

Our next question comes from Floris Van Dijkum with Compass Point. Please proceed with your question.

[Floris Gerbrand van Dijkum:]

Thanks, guys. Question -- I guess two questions. Number one, you noted that your shop occupancy is 86.8%, your leased occupancy that is. And there's 330 basis points of SNO there. But what gives you confidence that you can increase that? And do you have a target for your shop occupancy?

[Mike Fitzmaurice:]

We do. We had -- the target long-term Floris, it's 91% to 92%. Given that half our signed not commenced pipeline, so roughly $5 million to $6 million is tied to our small shop space, so we ended the year right around at an occupied level, 83.5%. We do expect that to end the year between 86%, 87%, which kind of gives you a clear pathway to get closer to 91%, 92% over the long-term.

[Brian Harper:]

And then the $7 million that's in leases, I think it's like 30%, 35%, 40% the small shop. So add that in. And then there's another several million even of LOIs that we think will be in legal here in the next month and about 50% small shop.

[Floris Gerbrand van Dijkum:]

And then a couple -- one other thing I noticed, you touched upon this, certainly regarding Mary Brickell, saying that it was 83% leased. But if I look at your overall Miami exposure, it's 83% leased as well. What's driving -- which I think is the lowest in your overall portfolio and for any of the markets. Could you maybe go through what's going on in Miami in particular? And -- because I would imagine Mary Brickell is a big part of that, but maybe talk a little bit about where you see the upside there.

[Brian Harper:]

So Brickell is certainly 83%. Delray, we've been buying out tenants to effectuate our redevelopment with two iconic anchor tenants and new small shop space and potentially even some resi, which a partner would do or maybe that's a contribution like we did in Jacksonville, where we contributed our land and became a 50% owner of 375 units, and we're going through entitlements on that. But the large driver on that is Delray.

[Floris Gerbrand van Dijkum:]

Got it. And then in terms of Austin, I noticed -- I mean it's only one asset, but I noticed you had sub-90% leased occupancy. I know that you were pretty positive when you made that acquisition. I think it was 1.5 years ago or something like that. Maybe if you can talk a little bit about what's going on in Austin as well.

[Brian Harper:]

Yes. 2019, we made that acquisition, 5.5 cap. We've expanded it quite nicely. NOI has moved 30%, 40%. We've taken back a couple of tenants, have 2 times their rents. And so that's where you see some of the 89%, which should be 98% here at least in the next several -- next couple of quarters.

[Floris Gerbrand van Dijkum:]

Thanks, Brian.

[Brian Harper:]

Yes. Thank you.

[Operator:]

[Operator Instructions] Our next question comes from Linda Tsai with Jefferies. Please proceed with your question.

[Linda Tsai:]

Yes, hi. Is at-home part of your bad debt forecast?

[Mike Fitzmaurice:]

It is not. We don't assume any disruption there, and we only have two at-homes, Linda.

[Linda Tsai:]

Okay. And then just on the earlier comment, why would the buybuy BABYs take 12 to 18 months to backfill versus the Bed Bath taking less time?

[Brian Harper:]

Well, I think -- I mean a couple of things. I think every site is different. And so the buybuy BABYs have different components of complexities were those specific centers. Where one might be combining spaces, another one might be chopping up spaces. So it's not some of them are not all as is as opposed to Bed Bath are really taking up the deals, we cut are taking the space as is. So those nuances, Linda, I think that -- around the edges a few months more than the Bed Bath deals.

[Linda Tsai:]

Got it. And then just on the earlier comment that it's important to create tension in the market to get multiple parties interested in this space. Is your view that leasing CapEx or TIs goes down this year?

[Brian Harper:]

Certainly, on selective deals of -- you tell them previous box deals where we have 3 or 4 people vying for a space, for those deals, yes, it would go down. Where there's centers where we are combining spaces, that could be up. But this is all about getting that tension, driving rents and driving CapEx down.

[Linda Tsai:]

And then just the last one, just on the Bed Bath & Beyond boxes. Is your view that more of those go to single tenants or the space gets divided up?

[Brian Harper:]

Single tenants. Yes, the four we have recaptured. Every single one is going to a single tenant.

[Linda Tsai:]

Got it. Thank you.

[Brian Harper:]

Thank you.

[Operator:]

Our next question comes from Craig Schmidt with Bank of America. Please proceed with your question.

[Lizzy Doykan:]

Hi, good morning. This is Lizzy Doykan on for Craig. I kind of wanted to go back to the questions around small shops. And I totally understand the outlook and the target for 86%, 87% and then being online for 91%, 92% long-term. I was just hoping to get additional color around the decline in both the leased and occupied rates in the fourth quarter. Just seeing if there's specific markets or tenants that drove this, whereas most of your peers saw a gain in this. Thank you.

[Brian Harper:]

Yes. So we had -- in Lake Hills in Austin, we had a 10,000 square foot tenant that we proactively moved out and doubled the rent. So that's really what the mover was for this quarter.

[Mike Fitzmaurice:]

Yes. You got to remember the small denominator we have with the small shop, too, Lizzy. So when you have a deal like that upside of 9,000 to 10,000 square feet, it's going to move the number.

[Brian Harper:]

It's tough to focus on quarter-to-quarter.

[Lizzy Doykan:]

Got it. Thanks. And on your net debt to EBITDA of 6.9 times, that did tick down a bit from last quarter. Just wondering what the priorities are this year in terms of seeing this trend in line with your expectations given that you have no debt maturities until ’25, you fixed the several component on all outstanding term loan debt. They're really -- what are the priorities this year?

[Mike Fitzmaurice:]

Sure. We've done a wonderful job on the balance sheet, clearing up maturities for the next couple of years. So we can fully focus on growth in EBITDA, which is all tied to signed not commenced as we alluded to in our prepared remarks and a few questions today. So short answer is get net debt to EBITDA down. We want to get within our range of 5.5 times and 6.5 times. And based on our projections at the midpoint of our range, we're really pretty close to that top end of the range, around 6.5 times. And then from there, we do believe in ‘24 and ‘25, we'll be well within our range at the midpoint of 6.0 times. So it's a metric and a focus for the company, and we will get it down.

[Lizzy Doykan:]

Great. And just a quick one on Kroger, Albertsons, if there's any update or change in thoughts around this given the latest update on expected store closings. Like what -- if you can remind us what your overall is there.

[Mike Fitzmaurice:]

We have zero overlap at all. So it's really no point for RPT, thankfully.

[Lizzy Doykan:]

Okay, got it. Thanks.

[Brian Harper:]

Yes. Thank you.

[Operator:]

It appears that there are no further questions at this time. I would now like to turn the floor back over to Brian Harper for closing comments.

[Brian Harper:]

Thank you, operator. We relentlessly pursued excellence in 2022 and are ready to do the same in 2023. Although the current retail environment presents some near-term uncertainties, we enter the new year on very solid footing. Leasing momentum remains robust. Our balance sheet and liquidity are in great shape. Our investment platforms give us competitive advantages with regard to potential acquisition opportunities. It's times like these when we believe the significant improvements, we made to our portfolio over the past several years will prove themselves out as we continue to build more durable cash flows, and we expect to deliver very solid results. We look forward to seeing many of you at upcoming conferences and hope you all have a great day.

[Operator:]

This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time.