Greetings, Welcome to Brixmor Property Group Inc.'s First Quarter 2021 Earnings Conference Call. At this time, all participants are on listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Stacy Slater, Senior Vice President of Investor Relations and Capital Markets. Thank you. You may begin. Thank you, operator, thank you all for joining Brixmor's first quarter conference call. With me on the call today are Jim Taylor, Chief Executive Officer and President, and Angela Aman, Executive Vice President and Chief Financial Officer, as well as Mark Horgan, Executive Vice President and Chief Investment Officer, and Brian Finnegan, Executive Vice President, Chief Revenue Officer, who will be available for Q&A. Before we begin, let me remind everyone that some of our comments today may contain forward-looking statements that are based on certain assumptions and are subject to inherent risks and uncertainties as described in our SEC filings, and actual future results may differ materially. We assume no obligation to update any forward-looking statements. We will refer today to certain non-GAAP financial measures. Further information regarding our use of these measures and reconciliations of these measures to our GAAP results are available in the earnings release and supplemental disclosure on the investor relations portion of our website. Given the number of participants on the call, we kindly ask that you limit your questions to one or two per person. If you have additional questions regarding the quarter, please re-queue. At this time, it's my pleasure to introduce Jim Taylor. Thank you, Stacy, and good morning, everyone. Thank you for joining our call. I'm extremely grateful for how this Brixmor team continues to deliver. Our performance prior to, during, and now emerging from the pandemic highlights not only the strength of our portfolio, but also the quality of our team, our value-added platform, and the disciplined execution of the business plan we implemented nearly five years ago. Don't just take my word for it. Simply look at our NOI performance in 2019, 2020, and now emerging from the pandemic in 2021. In each period, our performance stands apart, and when you stack that performance for the entire timeframe, the difference is even more striking. This pandemic has revealed several fundamental truths about the shopping center business, including the durability and resilience of our asset class, the importance of being within the last mile of the consumer, and the flexibility of our format. Among the most important truths is that if you are looking to drive value and growth in ROI, rent basis matters. For a retailer to be successful, you must not only have a location that is convenient to their customer, you must provide a cost of occupancy at which they can be profitable, continue to invest in their stores, grow sales, and thereby afford growing rents. If our job is to grow rents and ROI, we believe having a high rent basis is a potential liability, not an asset. We further believe having an attractive rent basis enhances the cap rate or multiple that should be applied to our centers. Said differently, it's not where ABR is, but where it's going. At Brixmor, our attractive rent basis and value-added execution position us to substantially outperform as the economy accelerates post-pandemic. The markers of that coming outperformance are evident in our sector-leading leasing volumes, our building forward leasing pipeline, our strong cash spreads on new and renewal leases, our continued delivery of accretive reinvestments, and importantly, the impact those reinvestments have on our asset value. During the quarter, the national and regional teams executed leasing at a blistering pace under Brian's leadership, signing 1.4 million sq ft of new and renewal leases with cash spreads on new leases of over 20%. With 140 new leases executed during the quarter, new lease productivity was on par with the peak in 2019. We will provide additional color in the question and answer session. Encouragingly, we are seeing demand across all of our core tenant categories, including specialty grocery, home, general merchandise, value apparel, pets, restaurants, and health and wellness. We're seeing a remarkable recovery in demand from small shop tenants, including national, regional, and local tenants, which allowed us to drive sequential growth of 40 basis points in our small shop lease occupancy during what is typically a seasonally slow quarter. This improvement in small shop demand, which in part reflects the fruits of our reinvestment program and enhanced operating discipline, will be yet another lever of growth as we move through the recovery. Our forward visibility on growth continued to improve this quarter as our productivity and executed leases drove over $40.4 million of signed but not yet commenced revenue, which is equally balanced between small shop and anchor spaces, and 70% of which is expected to commence before year-end. Our strong productivity is also reflected in our forward leasing pipeline, which currently stands at over 2.2 million sq ft and $41.2 million of ABR. We continue to execute under our reinvestment program under Bill and Haig's leadership, delivering another $28 million of value-enhancing investment at an incremental return of 11%, with another $400 million of projects underway at an average return of 9%. These projects not only drive great ROI while enhancing our centers. They also create value through reducing the cap rate that would be applied to the centers enhanced through that leasing and reinvestment. Since we've begun the program, we've delivered over $500 million of reinvestment at an average incremental return of nearly 10%. Just on the capital deployed, we've created huge value given those accretive yields. In fact, those investments have also reduced the applied cap rates on the impacted centers that comprise nearly 30% of our total NOI. That cap rate compression is a value multiplier. For those of you focused on growth in NAV, I would invite you to review the projects we have completed in our supplement or on our website to fully appreciate that follow-on value creation. We are also seeing positive momentum from an external growth perspective under Mark's leadership. We are pleased to announce subsequent to quarter end the $48.5 million acquisition of the Center of Bonita Springs, located on the prime corner of one of the busiest intersections in Southwest Florida. With an exceptionally highly productive grocer, this center, which is our 48th in the state, will generate tremendous upside as we execute the repositioning of an underperforming anchor currently paying only $2 a foot in rent, as well as lease up the small shop space, which is currently at 60% occupied. Mark and team continue to see their pipeline and build of target assets in our core markets that will yield great opportunities for us to continue to leverage our platform and generate growth. Under Angela's leadership, our balance sheet remains very strong, with more than ample liquidity to capitalize on what we believe will be a growing pipeline of attractive acquisition opportunities. Most importantly, regardless of what opportunities we deliver from an external growth perspective, I am particularly pleased with how the ongoing execution of our balanced business plan that we communicated over four years ago has demonstrated outperformance both through the pandemic and as we emerge in 2021, 2022, and beyond. With that, I'll turn the call over to Angela for a more detailed look at our results this quarter and our improved outlook. Angela? Thanks, Jim, and good morning. As Jim highlighted, the first quarter further demonstrated the resiliency of our portfolio and the strength of our tenancy as we leverage our platform to capitalize on the ongoing recovery. Nareit FFO was $0.44 per share in the first quarter, reflecting $3 million, or $0.01 per share of items that impact FFO comparability, including litigation and non-routine legal expenses and loss on debt extinguishment, in addition to $1.6 million or $0.01 per share of straight-line rental income reversals. Same property NOI growth was -1.5% in the first quarter as base rent and net recoveries detracted from growth and were offset by positive contributions from ancillary and other income, revenues deemed uncollectible, and percentage rents. While base rent and net recoveries were impacted by 150 basis points year-over-year decline in billed occupancy, base rent was also impacted by 120 basis points of lease modification deferral agreements and abatements, the majority of which were reserved for in 2020. For those previously reserved, the result is a geography change between base rent and revenues deemed uncollectible this quarter, with no net impact to same property NOI or FFO. Total revenues deemed uncollectible totaled $4 million in Q1, representing an $8 million sequential improvement. Revenues deemed uncollectible this quarter was comprised of approximately $11 million related to first quarter billed base rent, $2 million related to prior period base rent, and $1 million related to net recovery or reimbursement income, which were collectively offset by the $2 million of lease modification and abatement geography adjustments that I highlighted earlier, and nearly $8 million of cash collected on base rent amounts previously reserved. As we look forward, it remains challenging to predict the exact trajectory of revenues deemed uncollectible. That said, we are encouraged by the continued improvement we are experiencing in collections rates on our cash basis tenants, which account for 15% of our total portfolio ABR. As of March 31st, we had collected 66.2% of first quarter billed base rent from our cash basis tenants, which improved by 250 basis points to 68.7% as a result of cash collected subsequent to quarter end. The trend has continued to improve in April, where we have now collected over 72% of April billed base rent from our cash basis tenants. While there is still work to be done to return to full collection levels on this segment of our tenancy, we are making meaningful progress. As Jim highlighted in his remarks, we are also very encouraged by the strength of new leasing demand against a backdrop of significant rent commencements across the portfolio and moderate move-out activity. Build occupancy in the first quarter was flat sequentially, beating the typical seasonal trend of declines early in the year. During the quarter, we commenced over $9 million of annualized ABR and added over $12 million to the signed but not commenced pool. As a result, the spread between build and leased occupancy expanded to 300 basis points, representing over $40 million of contractually obligated rent, of which approximately $28 million is expected to come online ratably over the course of 2021. We have updated our 2021 FFO expectations to a range of $1.60-$1.70 per share based on an improved same property NOI growth range of 1%-3%. Our current expectations reflect our strong first quarter performance and the positive trends we are seeing across the portfolio, while also remaining appropriately balanced at this point in the recovery. As always, our guidance range does contemplate additional expected transaction activity during the remainder of the year, but does not contemplate any items that may impact FFO comparability in future periods, including litigation and non-routine legal expenses, loss on debt extinguishment, or any one-time items. In addition, I would underscore that this range does not contemplate the conversion of any tenant to or from cash basis accounting during the remainder of the year, either of which could result in significant volatility in GAAP straight-line rental income. Turning to the balance sheet, during the first quarter, we again accessed the unsecured bond market, raising $350 million that was utilized to repay our $350 million unsecured term loan maturing in 2023. This transaction was opportunistic and consistent with our broader goal of continuing to extend duration across the balance sheet. At quarter end, we had $1.6 billion of total liquidity, representing our undrawn $1.25 billion revolving credit facility and over $370 million of cash on hand. We have no debt maturities in 2021 and only $250 million of remaining maturities in 2022. In conclusion, I'd like to thank the entire Brixmor team for another outstanding quarter that spotlights the extent of the portfolio and platform transformation that has occurred at the company over the last five years. Through your efforts, we successfully navigated the pandemic and are well-positioned to drive growth and create intrinsic value throughout the recovery. With that, I'll turn the call over to the operator for Q&A. Thank you. Ladies and gentlemen, at this time, we will be conducting a question and answer session. If you'd like to ask a question, you may press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Todd Thomas with KeyBanc Capital Markets. Please proceed with your question. Hi, thanks. Good morning. First question around investments. Seems like the investment landscape's thawing out a little bit. What should we expect moving throughout the year in terms of deal flow? In terms of pricing, seems like there's been a greater appetite from REITs and institutional capital looking for value add deals. How competitive is the landscape today? Are you seeing that competition materialize for assets that you're looking at? It's always competitive, and we certainly see competition in some of the assets that we're looking for today. We are encouraged by the breadth of opportunity that we're seeing, and part of that is being driven by some of those very same institutional investors looking to reduce their exposure to retail. From a value-added perspective, we continue to see opportunities, importantly, to put our platform to work, where we can leverage our knowledge of tenant demand, our reinvestment and redevelopment capability to really drive IRRs. We're encouraged, Todd, by what we see. Obviously we're not going to be providing estimates of what we expect to do until we actually get it done. We're encouraged by the closing on the center of Bonita Springs that we talked a little bit about in our prepared remarks. That's certainly an asset that I think is emblematic of some of the opportunities that we're seeing in our core markets. Okay. Angela Aman, I think you commented that the guidance does contemplate additional transactions. Can you just elaborate on that a little bit? Can you also touch on the cash balance that's still north of $300 million. Do you expect to sit with an above-average balance for an extended period of time, or is that earmarked for something specific? Just curious if you could talk about the deployment of that cash and also what's embedded in the guidance from that standpoint. Sure. In terms of the transaction activity contemplated in guidance, as is typical for us, we bake in some expectations for additional activity as we move through the year. We'll update those as appropriate as time passes. At this point, when you consider the fact that we were a net seller in 2020, which has implications for 2021, and then our expectations for acquisition and disposition activity during 2021 itself, I would say the total dilution from both years is in the $0.04-$0.06 range embedded within our guidance. That contemplates, like I said, our current expectations of both amounts and potential timing. As it relates to the cash balance, I think about it this way. We have effectively pre-funded the 2022 maturity, which is early in 2022. We have repaid now our 2023 term loan. We'll continue to, as Jim sort of highlighted, look for opportunities in the market where we might be able to deploy some of that cash. I would say the guidance range at this point contemplates that we do carry a higher than average cash balance for the remainder of the year. Okay. Thank you. Thank you, Todd. Our next question comes from the line of Alexander Goldfarb with Piper Sandler. Please proceed with your question. Good morning. Good morning down there. Two questions. First, Angela Aman, just going to the credit side. Clearly the narrative on retail has done a 180, right? I mean, we haven't read a death of retail article in probably a year. Curbside, the retailer feedback, customer feedback to open-air has been clearly proven. You guys have sort of still been in the penalty box from the accounting stuff of years ago, while your bonds trade much better than where your rating is. In your view, what are the latest conversations with the agencies? Are they still skittish on moving, or do you think they'll finally recognize that the rating that you have now is not indicative of where your credit truly is? Yeah, Alex, I'd say, if you go back kind of pre-pandemic, we were on positive outlook from two of the three agencies that cover us. I do think that was an acknowledgment of the progress that had been made on the balance sheet, over those few preceding years. The fact that I think, sort of objectively speaking, the credit metrics here do line up with some more of our more highly rated peers. I think we were certainly on that path. I think that path was paused, and we were moved to kind of stable outlooks at the beginning of the pandemic. I really believe that as we've continued to demonstrate and execute over the course of the last year, our performance and the stability and resiliency of the cash flow stream here really, I think, speaks volumes about the quality of this portfolio and how the credit should be priced and how the credit should be rated. I certainly won't speak for the rating agencies, but we're very hopeful that the execution over the last year can address any concerns specifically related to the pandemic and I think more than that, really highlight that overall stability and resiliency of this cash flow stream. Okay. A question for Horgan. You guys made a pretty big acquisition. I think it's the first one in quite a number of years. Just curious, one, any comment around cap rate or how you guys underwrote it? Bigger picture, how have your acquisition thoughts underwriting the assets that you target, how has it changed now versus a few years ago? Maybe it hasn't changed, or maybe it has changed, but just curious. Well, we really haven't changed our strategy. We've spent years looking at the assets we want to buy. We do have a target asset list. It is updated, it is organic, but we haven't really changed why we want to buy assets. It's really assets where we can drive value through leveraging our platform. We're just seeing more of it today because the market's back open. We're seeing that there was a bit of a backlog through COVID of assets that wanted to come to market. We really are seeing a wider range of opportunities today than we've seen in the last couple of years. From a cap rate perspective, I think Bonita is a great example, and a great example of why we do have some advantages in the transactions market. We moved pretty quickly from agreeing to price to close because we're an all-cash buyer, which is great from a cap rate perspective. It was a mid to high six cap rate. We think it underwrites to that high single digit, low double digit unlevered IRR. We really see a bunch of value add opportunity here. It's actually pretty clear. We've got a really highly productive grocer. It's actually in line with the production we see down in Naples, but the inline occupancy, as Jim said, is around 60% versus high 90s down in Naples. We really do see great value add there. Jim mentioned the anchor box where we're paying low $2 per square foot. We think there's a five times rent spread there. Really excited about that one, and we think we can find more opportunities like that as we go through time here. [All right]. So just to be clear, the mid to high sixes reflects that the inline occupancy is at 60%. It's not really a stabilized cap rate. Correct. It's reflective of. That's in place. Okay. Yeah, in place and wide. Okay, cool. Thank you. Our next question comes from the line of Craig Schmidt with Bank of America. Please proceed with your question. Thank you. I was wondering where you expect leasing volume will be in 2021 versus 2020. Significantly higher. One of the interesting things when you look at 2020 is we saw a pretty significant pause in the second quarter as retailers, national retail or regional and local, took a pause to assess the timing of their pipelines and how they were responding. Encouragingly, Craig, we actually saw a pickup in the third quarter, albeit more weighted towards anchor-type transactions than in the fourth quarter. Now in this first quarter, we've seen very good volumes, and good balance between anchor and small shop leasing. As we look ahead, the strength of that forward leasing pipeline is about as strong as it's been. Brian, I don't know if you have other thoughts. Yeah, I would just add the new and renewal leasing volume, Craig, it's up 50% versus the height of the pandemic, and ABR per square foot is at an all-time high of close to $19. If you look at the productivity that we had during the first quarter, it was in line with the first quarter of 2019, where we had one of our most productive small shop years as a company. Jim mentioned the pipeline of $2.2 million sq ft. That's up 15% versus the end of the year, despite all those executions during the first quarter. We're very excited with the depth of the demand. Again, it speaks to the investments that we've made in our shopping centers. D As we continue to deliver those, we expect that activity to continue, but we're very encouraged by what we've seen at the start of the year. Great. I noted a number of your anchor retailers include fitness centers. Maybe can you tell how you got comfortable with those retailers or that category? Yeah. One of the biggest surprises for us coming through and out of the pandemic has been the strength of the fitness providers. Certainly, we saw some turbulence in the middle of 2020. When we look at traffic levels, when we talk to the fitness operators themselves, and we look at their cash flows and their overall credit, we've been quite encouraged by the strength of return of the consumer to utilizing gyms and other fitness uses. We remain pretty bullish on that segment, and continue to see a lot of demand from some very well-capitalized operators. Thanks. Our next question comes from the line of Katy McConnell with Citigroup. Please proceed with your question. Great. Thanks. Good morning. Could you provide some insight into the volume of acquisitions that you evaluated but screened out over the last quarter? Would you expect recent sector M&A to have a meaningful impact on pricing for one-off deals going forward? It's a great question. We screen a lot more assets than we transact on. Probably 4 times what we actually transact on, at least. The other thing Mark highlighted, Katy, which is important to appreciate, is that we target assets for acquisition before they become available, and we track them, such that when it does come a moment in time to trade, we're in a position to move quickly, as we did with Bonita Springs, which is a great example, and also points to the speed with which we were able to get that asset closed. The real interesting dynamic right now within the acquisition market is that assets that are smaller in size remain pretty liquid, and we see a lot of depth of competition. Larger, more complicated assets with more moving pieces, we see less competition. As we move forward, we do expect to see some compelling opportunities. I'm a little bit hesitant, Katy, to give you an estimate of what that pipeline might look like, because we aren't going to report on it until we're actually closed, but we're encouraged by the level of activity that we're seeing. [And] then I think you asked about a read-through from M&A to the property market. I think you'd be surprised that you really don't get a lot of When we seek BOVs, brokers don't really point to M&A in the REIT space as far as asset value. They really point to transactions and what's happening to the property market. Okay, thanks. Can you walk us through some of the key factors that are now assumed in the revised low end of your guidance range? What is the range contemplated for cash basis tenant collection improvements? Yeah. I would say as it relates specifically to cash basis collections, which does remain kind of one of the key pieces within the range, between the low end and the top end of guidance range, I would say at the bottom end of the range, we've effectively assumed trends in line with where they were in Q1 or towards the end of Q1. Really no significant additional improvement from this point going forward, and no additional recoveries of prior reserved amounts at the low end. As you get into the top end of the range, we have embedded some additional occupancy upside, an improving collections picture from cash basis tenants, and/or some modest recoveries of prior period amounts. Importantly, you can certainly get to the top end of the range without any prior recoveries of amounts that was reserved for in 2020 and without collections from cash basis tenants getting back to 100%. That's kind of how I'd frame up the two ends of the range. Okay, great. Thank you. Thank you, Katy. Our next question comes from the line of Paulina Rojas Schmidt with Green Street. Please proceed with your question. Good morning. Good morning. I'm curious, if you had to guess, how do you think market rents will evolve in the next year or couple of years, given on the one hand, how strong the economic recovery is shaping to be, and on the other hand, the higher levels of vacancies in the market? Well, we're encouraged by what we see as very broad-based tenant demand. And in fact, Paulina, we're hearing from several of our tenants, "Please show us your available space, your available boxes." So as we're working through the opportunity that is vacancy, we're not wondering how we're going to backfill space. And we're in a position where we're able to generate some pretty healthy competition, which is one of the key drivers to growth in underlying rent. One of the things, as I highlighted in my remarks, that I'm particularly encouraged by is that we're going into this recovery with very attractive rent bases. So even if the recovery is more modest, we're still going to be making money. We're still going to be driving growth. We're still going to be finding opportunities to accretively reinvest in our assets. If the recovery continues as strong as it appears to be, that's really like a turbocharger for us, because I think we'll see that inflation reading through into the underlying rents tenants are willing to pay and drive even better growth over the next couple of years. A more, let's say, philosophical question. We're seeing robust leasing volumes and what appears to be a broad-based tenant demand for space. How do you reconcile this retailer appetite for growth with the idea that there is too much retail GLA in the U.S.? Do you think there is the risk that some retailers are being maybe shortsighted and opening stores to take advantage of a recovery that could be short-term in nature? The retailers themselves have shown remarkable and ongoing discipline as it relates to new store openings. Their ability to project what the sales will be served by a particular location, given their access to data, has never been better. They have a very informed view as to what a new unit will produce. In our discussions and our coverage of these national and regional tenants, we're seeing that accuracy, if you will, in sales forecasts coming through. The other thing I'd say to you is, as it relates to the comment about GLA out there's really no new supply being created. You do have obsolescence that occurs every year in the base of product out there that's of an institutional quality acceptable to the tenants who are opening stores in this environment. We like how we're positioned to capitalize on those dynamics. The other thing I would say is, remember, we're a segment of the overall retail space in the country, I think what this pandemic has shown is the growing breadth of demand for retailers that previously weren't in open-air product to come into open-air product. Why? Because it's convenient to the customer. It's got great access, great visibility, and again, importantly, a reasonable cost of occupancy so that they can be profitable serving their customer with flexibility, by the way, to serve them in a multi-channel format, whether it's in the store, fulfilled from the store, fulfilled at the curb, et cetera. Retailers are seeing the real power of coming into these community and neighborhood centers, such as the ones that we own. Thank you. Our next question comes from the line of Ki Bin Kim with Truist Securities. Please proceed with your question. Thanks, Todd. Good morning, Ki Bin. How are you? Morning. Good. Hope you've been well. Good. I wanted to talk about the leasing activity that you guys have been posting, and not just for you guys, but I guess for the industry too. I'm curious, is the credit quality and the type of tenants composing that leasing activity, or has it changed on the margin? I could imagine a scenario, right, you have a lot of inventory to lease out, and maybe this isn't the time to be so picky and choosy about what types of retailers come in. I can imagine a scenario where on the margin, perhaps you or the industry can be leasing space to perhaps not the same type of credit quality as it was pre-COVID. We've actually been really encouraged by that trajectory in terms of the improvement of the quality of the tenants. Brian, maybe you can talk a little bit about the types of tenants that we're seeing big demand from and that improvement in quality. Yeah, sure. Jim, you're spot on in terms of the depth and the credit quality and just the overall quality of the tenant base that we've been doing deals with. Jim touched on a number of the categories keyed in. You look at specialty grocery, which has been one of the most active categories that we have. We signed three more grocery leases during the quarter. We have another 15 grocery leases either at lease or final LOI, and that's across a broad range of segments in the traditional ethnic and specialty, and all the very strong operators. As we look at value apparel, health and beauty, pet stores, general merchandise, and home, these are very strong tenants that we continue to attract to our shopping centers. I know you've highlighted the outparcel demand in the past. That's another one of our most active categories. During the quarter, we signed leases with Starbucks, Chipotle, and Chick-fil-A, and we have a depth of demand with them as well. We've really been pleased. To your point about the mom-and-pop or local tenants, we're seeing entrepreneurs, strong operators, multiple unit operators that are seeing an opportunity here with some businesses that may have failed during the pandemic. We're actually improving the credit quality for a number of those tenants that are coming in in, say, second-generation restaurant space or hair salons and nail salons. Overall, we've been extremely pleased with the depth of quality of our tenancy. Okay, great. A question for Angela. The $40 million of signed but not commenced leases. I was just wondering if you could provide some more color around it, because one common question I get is, does that really become additive, or is it replacing in-place tenants that are paying rent? When they expire, is it just kind of staying on the treadmill at the same speed? I was wondering if you could provide some commentary around that. Yeah. Almost all of it's really, truly additive. First of all, I guess I'd start by saying that nobody who's currently, there's a tenant that's currently paying today, you don't get to be counted in both kind of the build and lease side. We don't show them in that $40 million until the existing tenant has left, and it's truly additive. When you think about kind of how that $40 million might compare relative to just the broader lease expiration schedule, I would say based on kind of historical retention rates, I would expect something like 80% of it to truly be additive relative to just how the normal course of move-outs kind of trend. It really is a significant tailwind for us from a growth perspective as we move forward. I think if you look at the year-over-year occupancy decline we had throughout the pandemic, which was, I think, 130 basis points on build occupancy, a significant reason for that was the fact that we went into the pandemic with such a large signed but not commenced pool, and we continued to commence leases throughout the course of 2020 and the first quarter of 2021. It's certainly, you've seen it, I think, relative to the broader industry in terms of what's happened to our occupancy over the last year, just how additive that really can be. Thank you. Yeah, and Ki Bin, I would also just highlight that we've talked about our signed but not commenced for several quarters. We've delivered that growth for several quarters, right? We've delivered that outperformance in part because of the continued demand in that forward pipeline. Thank you again. You bet. Our next question comes from the line of Derek Johnston with Deutsche Bank. Please proceed with your question. Hi, everybody. Thinking pre-COVID to now, how have leasing contracts evolved, or what stipulations are now included or omitted that was normal practice before the shutdown? Are you doing more or less percentage rents? How have your omnichannel requirements or perhaps BOPUS asks from tenants evolved? Great. Do you want to handle that, Brian? Yeah, sure. I'll take it. Derek, what's been interesting to us as we look at our leases is many of the things that we're focused on in terms of embedded rent growth, sales reporting, conversion of tenants to recapture more from a CAM perspective, we've still been able to achieve that. In fact, our embedded rent growth over the course of our leases in 2020 was the best it had been since 2017. We don't have a tremendous amount of percentage rent-only leases. I think we might have done a handful over the past year. As it relates to omnichannel, we had spoken on prior calls for years talking about how accommodating we were being with our grocers in terms of rolling out click and collect. Jim talked about just the flexibility of our format. We've been able to do that with a number of national tenants, been able to accommodate a number of national tenants from a curbside pickup perspective. It really speaks to the platform where we're able to go to those tenants through our relationships, create one agreement, and get those deployed very quickly. We saw that during the third quarter. We wanted to have as many of those pickup spaces in place for the holidays for our tenants. That's certainly been a focus of ours. When we talk to our tenants, their number one asset is their stores. Everything they're doing around it, whether it's shipping from stores or whether it's curbside pickup, is to drive more traffic to the store. What we're seeing with a number of these initiatives is just more trips than otherwise would've been here. From a lease contract perspective, we've been very encouraged by what we've been able to continue to negotiate with our tenants. I would say the quality of those leases continues to hold. Certainly, some tenants were looking for future-type relief, and we were able to strike the right balance there and continue to make sure that our leases remain enforceable through whatever may happen in the future. Okay. Thank you. Yeah. Secondly, with leasing demand so strong, how patient are you planning to be with your cash basis tenants in both buckets? I mean, those that are paying and especially those that are challenged. It seems that sticking with these tenants may be somewhat of an opportunity cost versus taking space back and releasing, given the demand backdrop. Can you please weigh in? Yeah. We've tried to approach this on a tenant-by-tenant basis, looking at their productivity prior to the pandemic, what impact the pandemic has had on their business, and importantly, how they're emerging. We've worked with these tenants where we think it's appropriate to help them get to the other side. I think that's been a very positive approach as we've seen our outperformance now coming into the recovery. Certainly for tenants that have not engaged with us or who continue to struggle, we're being more and more assertive as it relates to resolving their occupancy and back rent. It's difficult to generalize, but that's the approach that we've taken, is really tenant by tenant. We're not trying to make high-level decisions when really it's what's happening at the real estate level at the center that determines how we're going to approach that particular tenant. Our next question comes from the line of Greg McGinniss with Scotiabank. Please proceed with your question. Hey, good morning. It was encouraging to see the stabilized occupancy this quarter, and especially the increase on the shop leasing side. Are you comfortable saying that you've turned the corner on declining occupancy and you can start to build from here? Are there still some pockets of tenant risk to navigate? If so, in what categories might you still see some elevated risk? We're very encouraged by what we're seeing generally within the small shop segment of the portfolio. As Brian alluded to earlier, the strength of some of these operators that they've shown through the pandemic, and frankly, the strength of demand that we're seeing for some of the second-generation space that we've recaptured. Could there be a quarter or two where you see some volatility? Certainly. I think most importantly, we're seeing great momentum and great demand out of these small shop tenants, really in all categories, national, regional, and local. Really in the last quarter and a half, we've been very pleased with the strength of demand that we're seeing from the mom-and-pop and local businesses as they position themselves for the recovery. Was there ever a shift in market rents for those mom and pops? As the economy starts to open up more and people are shopping, could we potentially start to see rent spreads expand from here? I think that the way this recovery is setting up is a strong positive for the direction of where rents go. I think we're particularly well-positioned to benefit from that, and to really outperform, whether it's a modest recovery or a strong recovery. I like how we're positioned. The pandemic itself didn't have direct impacts on market rents or the impacts were probably too transitory to talk about. We're seeing good recovery and demand. [And] importantly, we're creating competition for the space that we're leasing, which helps us push rents as well. Great. Thanks. If I could just sneak in one more here, just to touch on the cash basis tenants. If you knew in Q2 and Q3 of last year what you know now about how your tenants are doing, how much that have impacted your decision to shift those tenants to a cash basis? I'm trying to get a sense for maybe the unaccrued rent that you may now reasonably expect to collect without specifically asking for that number. Angela, I'll let you handle that one. Yeah, look, I think we made the right decisions at each point in the process, given the amount of uncertainty, given what we were seeing at different periods of time, from a collection standpoint and category exposure and a host of other considerations we took into account when we moved tenants to cash basis. We always knew, given sort of the unique dynamics of a pandemic, that to the extent we got through to recovery, there were going to be tenants that would likely be moved back to accrual at some point. I do think that's certainly a possibility as we get further into the recovery later in the year. We haven't moved anybody back to accrual yet, but we're watching a number of tenants where their businesses or categories have significantly improved. Maybe they've had a recapitalization event, something like that, and we'll continue to monitor that. I really think we went through a very robust process in each quarter of the pandemic, and think we made the right calls based on the information we had at each of those points in time, and we'll continue to evaluate it as we move into the second quarter and then the second half of this year. All right. Thanks, Angela. Thank you, Jim. Thank you. Our next question comes from the line of Juan Sanabria with BMO. Please proceed with your question. Hi, good morning and thanks for the time. Good morning. Just a question on cap rates, given all the redevelopments you've done and what's in the pipeline, where do you see stabilized cap rates for high-quality shopping center-backed assets and power centers? Mark? Hey, it's Mark. We're seeing trades for stabilized grocery-anchored centers trading into the low fives at this point, low to mid fives. A lot of it is dependent on scale when they're really just that grocery-anchored asset with some small shop, you get some pretty tight cap rates and really strong demand from local buyers who are putting some cheap debt on those assets. What's interesting and what we're seeing in the market in real-time is a bit of a thawing on the power center, more boxy side of the market. Some of the assets we've been looking to transact on, the liquidity we're seeing is allowing us to exit some assets, I think, at some pretty opportunistic pricing. You're starting to see some of those cap rates thaw and come back in line with what you were seeing pre-pandemic. I would say one of the other interesting characteristics about this environment is that because the marginal buyer typically is utilizing leverage, in particular asset level bank financing, that buyer is not able to put the same type of value on vacancy that we might given our visibility on how we're going to lease that vacancy up and drive returns. In that way, you're seeing a nice environment for integrated platforms such as ourselves to capitalize on real value add opportunities. Thanks. Just a quick follow-up. Has the increase in raw material costs, labor, steel, or what have you, impacted expected redevelopment yields? I noticed kind of the most recent additions being a bit below what's already in the pipeline. I'm not sure if that's specific to those opportunities or being impacted by what we're seeing on the cost side. We're watching it carefully. Fortunately, most of what we have in the pipeline has been pre-committed, pre-bought, and is under GMPs type contract. We're somewhat hedged there in terms of what we have underway, but we're watching it. Just on the issues of cost, but also the issues of availability of product, whether it's steel or lumber, and certain other equipment that we use in our redevelopment pipeline. Difficult to point to what its impact might be on future returns, because we're also seeing some nice demand and growth in terms of rent. We're watching it closely. I think at least in the near term, the thing we're most focused on is just timing, making sure that we continue to hit our timing and our dates. Thank you. Our next question comes from the line of Caitlin Burrows with Goldman Sachs. Please proceed with your question. Hi, good morning. Good morning. Maybe just as a follow-up to one of the prior questions on leasing spreads and pricing. Jim, you talked in the beginning even about how high leasing spreads have historically been a differentiator for Brixmor, but it does look like that spread on a trailing 12-month basis has come in somewhat on overall leasing and new leases. I was just wondering if you could talk through that. To what extent have those mark-to-markets been impacted by the pandemic, or do you expect the spreads to pick back up, or is this how you were always expecting that the trend would play out? Well, there's no doubt that, if you look at it on a trailing 12 basis, you really are picking up the height of the impact of the pandemic, and it did have some drag. What I'm particularly encouraged by is we're seeing those spreads, whether they be new leases or renewals, continue to accelerate into sort of that longer-term trajectory that we've been delivering over the last four to five years. Given the quality of what we're seeing in the pipeline, I think we feel pretty good about where those spreads will be on a rolling forward basis. You may see a quarter or two of volatility here and there, but we're particularly pleased with what we're seeing in the forward pipeline, both with respect to new and renewal deals. Okay. Just back to the redevelopments. You have a long list of current and future opportunities. I was wondering if you could go through to what extent the pandemic has changed this pipeline of projects at all or not. For example, have you changed any projects, return expectations, or different target tenants, or what you think will work now versus before? Has there been any change to many of those plans? One of the things that we've been most encouraged by through the pandemic is the beneficial impact it's had on grocers in terms of their cash flows, their willingness to invest in their existing stores, as well as their willingness and capacity to invest in new stores. I would say that, against the backdrop of both the pandemic and importantly, underlying food price inflation, we've been particularly encouraged by the depth and breadth of grocery demand. Also, though, we're seeing great demand from some of our other core categories of tenants in value apparel, general merchandise, fitness, services, et cetera. If anything, as we come into this recovery, we're even more encouraged by what we see in that forward shadow pipeline, if you will, that we talk about in the supplement. [And] you can see every quarter, we continue to add new projects to the pipeline that's underway while we're also delivering. This past quarter, for example, I believe we added $25 million or $35 million of new projects while we were also delivering $27 million or $28 million. That constant refreshment of the pipeline in deliveries, importantly. I talk about this a lot, but you see us delivering real time, and that's one of the benefits of the granularity of what we're doing. We're not taking long-lead risk. The projects themselves are substantially pre-leased. We have the costs in hand before we commit. That makes what we're doing from a reinvestment perspective, I think, particularly attractive, both through the pandemic but also as we recover and can benefit from where market rents are going versus longer-term, more complicated projects that may have been priced into a different environment. Got it. Okay, thanks. You bet. Our next question comes from the line of Mike Mueller with J.P. Morgan. Please proceed with your question. Good morning, Mike. Yeah. Hey, good morning. Going back to the prior question on cap rates, are you seeing any differences? I know you mentioned low fives for grocery anchored, but when you think about different markets, say like the major coastal markets versus Sun Belt and other areas, how are you seeing the cap rates differ by geography for similar product? Mark? You do certainly see some cap rate variance by market. Again, I think a lot of the cap rate is driven by what that future forward cash flow looks like. You do see assets where you see strong growth. People are definitely leaning into cap rate a bit. I'd say where you see a bit wider cap rates are markets like some of the Midwest markets generally have traded a bit wider than some of the coastal markets. One of the things I think we have seen in the past two years, if you kind of think through pre-COVID to we're seeing today, is that that spread between tertiary cap rates for grocery-anchored and coastal cap rates appears to be shrinking a bit. We're seeing some positive momentum there. You certainly see some cap rate difference across different markets. A market like Southern California always trades very tight. I guess that's how I try to answer your question. Got it. Okay. Just thinking about physical occupancy, do you have a sense as to where, just given the leasing that's in place, where physical occupancy could end a year? Angela? [Yes. I mean] I'd say there's still a relatively wide range embedded in our expectations for the course of this calendar year. We're still at a 200 basis points in the same property NOI guidance. We're certainly very encouraged by what we saw in the first quarter, and in particular, Brixmor occupancy remaining flat on a sequential basis. As I mentioned in my remarks, it's pretty unusual to see that in the first quarter, so that was certainly a positive indicator. We do have that $40 million of signed but not commenced to continue to provide support and hopefully growth as we move through the year. There are, as we talked about in previous questions, parts of the tenancy we continue to watch closely and watch how strong or how robust the recovery is in certain categories. I think it's too early to say, but there are certainly some pretty positive indicators based on how the first quarter shaped up. Got it. Okay. That was it. Thank you. Thank you, Mike. Our next question comes from the line of Tammi Fique with Wells Fargo Securities. Please proceed with your question. Good morning, Tammi. Good morning. Maybe just a question for Angela. I'm wondering how we should be thinking about the quarterly FFO throughout the year, just given kind of the implied drop-off in guidance from the $0.45 comparable FFO reported in the first quarter, and I guess what seems like really an improving and all the positive indicators that you guys are discussing today. I think there are kind of two factors to think about in terms of how it trends from here sequentially. The first is sort of the impact of potential transaction activity, which I mentioned earlier. The 2020 activity, 2021 activity should cost us a total of $0.04-$0.06 on a year-over-year basis. You're not seeing all of that impact yet in the first quarter. That's one factor. The biggest factor is really just revenues deemed uncollectible. We did, and it's highlighted for you, I think, on page 11 of our supplemental package pretty well. The first quarter definitely benefited from a significant amount of cash collected from amounts that we did reserve for in 2020. It was about $7.6 million just on the base rent piece. There was probably another $1 million or $1.2 million of recoveries as well that we collected in the first quarter. As I mentioned in my commentary, our guidance, particularly at the low end of the range, doesn't assume that we'd collect any additional amounts that we had reserved last year. That's probably the biggest factor in terms of how to think about, as we move through the year and what that might look like. Okay, great. Thanks. That's really helpful. Maybe just one question. Are you seeing any notable differences in demand kind of based upon geography, particularly given the migration trends that have been accelerated, or would you say demand is generally strong across the entire portfolio? Brian? Tammi, yeah. I'd say certainly in our south region, we've seen a significant amount of demand. What we've been encouraged by, it's been fairly broad-based. The Northeast last year, for much of the year at the height of the pandemic, was having as strong a year as they were having in 2019. We did see in the fourth quarter and early this year in California with the restrictions still in place and the level of those restrictions, a little bit tepid demand. That's really picked up as what's been interesting over the entire period is as these restrictions are lifted, we're often seeing tenants come back to the table. It's been fairly broad-based. We are seeing a significant amount in the south, but what we've been encouraged by what we've been seeing across the portfolio. Great. Thank you. Our next question comes from the line of Floris van Dijkum with Compass Point. Please proceed with your question. Thanks for taking my question, guys. Good morning. Morning. Angela, for you, just maybe if you can comment on bad debts and also generally, what are your expectations later on this year, presuming that all of your tenants at Watch are on a cash basis as well? What are you assuming going forward? Yeah, I would say at the low end of the range, we're assuming that cash basis tenant collections look pretty similar to the way they looked towards the end of the first quarter, kind of in the high 60% range, as I mentioned in my prepared remarks. That's kind of our expectations at the low end of the range. I would say the low end of the range also doesn't contemplate any additional recoveries of amounts that we reserved in 2020. I think page 11 of the supplemental does a good job at breaking out specifically how much we reserved in Q1, just related to Q1 builled based rent based on what was a lower cash collection number, kind of more in the mid-60s than the high 60s. We are assuming some incremental improvement. Again, at the low end of the range, no recoveries of previously reserved amounts. The higher end of the range, we certainly assume that cash basis collections improve. As I mentioned earlier, we can get to the top end of the range without needing cash basis collections to recover entirely. We don't need to see 100% collections from cash basis tenants to achieve that higher end of the range. Right. [And then] a gain, the range does not include any of the recapture of previous uncollected rents. Maybe my other question is to Jim. Jim, as you think about allocating capital and one of your peers just bought another one of your peers at a, call it a mid-five cap rate, what does that make you think about your appetite to do deals when you've got, call it $280 million right now of redevelopments at, call it nine caps and a $1 billion pipeline, presumably at something similar. How do you think about bigger deals versus just the slow but steady improvement in your own portfolio? I'm encouraged by what we're seeing in the environment today in terms of not only the continued growth in our own reinvestment pipeline and the yields that I think are, as you highlight, pretty compelling. We are seeing some external growth opportunities out there, at the asset level, where for us, I think we have a great opportunity to bring our fully integrated platform to bear and drive value and drive some pretty nice IRRs. As Mark alluded to, the Bonita Springs acquisition, I think, is a great example of that, where we're coming in at a pretty reasonable cap rate in the mid to upper sixes on an asset that's got significant vacancy and rents that are below market. We're able to assess what the national, regional, and local tenant demand is to be at that center and underwrite returns, without having to stretch much, that are in the high single digit, low double digit from an IRR perspective. I think, again, in this environment, the marginal buyer and the buyer that we tend to compete with is going to be somebody relying on leverage who's less able, given their capital stack and their capital source, to give value for vacancy or to underwrite how to address that vacancy. I'm excited by what we see both within our portfolio in terms of reinvestment opportunities, but also what we see from an external growth perspective as we capital recycle and as we identify assets in our core markets. Thanks, Jim. You bet. There are no further questions in the queue. I'd like to hand the call back over to Stacy Slater for closing remarks. Thanks everyone for joining us today. Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.