Greetings, and welcome to Brixmor Property Group Inc. 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. 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 is now my pleasure to introduce your host, Stacy Slater, Senior Vice President, Investor Relations and Capital Markets. Thank you. You may begin. Thank you, operator, and thank you all for joining Brixmor's fourth 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. Also, 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. Thanks, Stacy, and good morning, everyone. Our results this quarter once again demonstrate the strength of our value add plan, the quality of our team and portfolio, and importantly, the transformative impact our execution continues to deliver. Consider, for example, that during the quarter, we signed another 954,000 sq ft of new leases at an average cash spread of 44%, bringing our total new ABR for the year to a record $62 million at an average spread of 37% and a record new lease average rent per foot of $19.08. We achieved a record total lease occupancy of 93.8% for the portfolio, which does reflect a 360 basis point spread to build occupancy and which also reflects a drag of 130 basis points associated with our reinvestment activity. Both of these reflect powerful tailwinds as we commence billing those leases and deliver those reinvestment projects. We also achieved a record small shop lease occupancy for the portfolio of 89.2%, which has more room to run as we execute our value add strategy. We drove our overall ABR per foot to a portfolio record of $16.19, demonstrating our continued progress, but also our continued opportunity for grow, for growth given that attractive basis. We continue to drive leading market share of new store openings throughout 2022 with core tenants like Burlington, HomeGoods, Ulta, Five Below, Fresh Market, Ross, Chipotle, and Starbucks, while also bringing new to the portfolio concepts that drive traffic to our centers like Bark Social, Yardbird, and Free People. From a revenue perspective, bottom line, our team once again delivered with top of the sector same-store NOI growth and FFO growth of 7.3% and 6.5% respectively. Simply phenomenal job by Brian and the leasing teams capitalizing on the strong tenant demand for our well-located centers. Importantly, we've also leveraged this tenant demand to recapture space from watch list tenants at accretive returns, where we can capitalize on our low rent basis to bring in better tenants at better rents. This is a critical point. Our low rent basis and the strong demand from thriving retailers to be in our well-located centers positions us to outperform in 2023 and beyond, while also delivering substantial value creation. Let me pause here. Am I coming through? Okay. For example, we expect eight Bed Bath anchor boxes and two Harmon small shop locations to close. We already have control of four of the eight Bed Bath anchor boxes and are at lease or LOI on all four with best-in-class specialty grocery, off-price, and home goods retailers at average spreads of close to 60%. Our remaining Bed Bath & buybuy BABY anchor boxes have an average in-place rent of $10.35 per ft, which compares very favorably to the mid-teens rents we expect to achieve as we take control of them. Looking forward, we have $54.7 million in signed ABR that will commence, as Angela will detail, over the next several quarters and an additional $34 million of annual base rent in our forward new leasing pipeline. These pipelines provide us tremendous visibility on robust revenue growth in 2023 and beyond, even after the assumed bankruptcy impacts embedded in our revenue guidance that Angela will discuss further. Importantly, this top-line momentum will allow us to continue to grow NOI and FFO at a strong pace for the sector, even with the headwinds of naturally declining collections of prior period rents, which topped $23 million in 2022, and more normalized levels of bad debt. Simply put, we're well-positioned to continue to be at the top of the sector from an NOI and FFO growth perspective, all while continuing to create long-term value as we recapture space. From a reinvestment standpoint, Bill Brown and our redev construction teams delivered another 12 projects during the quarter, bringing our total stabilizations during the year to $179 million at an average incremental return of 10%. We are creating tremendous value here with the additional follow-on benefits of higher rates and occupancy as we do follow-on leasing at the centers impacted. Importantly, we have another $343 million of reinvestment pre-leased and underway at an incremental return of 9%, creating value even in a higher rate environment, in a forward pipeline of over $1 billion in projects that importantly exist in assets that we own and control today. We are excited that this year we'll be bringing great projects online like the Shops at Palm Lakes outside of Miami, Marco Town Center in Naples, Florida, and Vail Ranch Center in Riverside, California. From a capital recycling standpoint, Mark and team continue to execute well even in a disrupted capital markets environment. Closing in 2022 on $287 million of dispositions at attractive cap rates, which included the highly profitable sale of Campus Village Shops in College Park to a student housing developer. We redeployed that capital into $411 million of acquisitions with upside in our core markets. In addition to upside in rents versus market, these acquisitions also feed our forward reinvestment pipeline as we execute our value add strategy and leverage the strength of our platform. Under Angela's leadership, we continue to enjoy maximum flexibility from a balance sheet perspective to continue to fund our growth strategy without reliance on the volatile capital markets, all while benefiting from our earlier decisions to prepay 2022 and 2023 maturities. From an external growth perspective, we do expect to see some attractive acquisition opportunities in our core markets as private owners face debt maturities and re-tenanting requirements. Expect us to remain disciplined, however, as we are able to continue to drive outperformance and growth and value creation for the next several years through opportunities that we own and control today. With that, I'll turn the call over to Angela for a more detailed discussion of our results, our balance sheet, and our outlook. Angela? Thanks, Jim, and good morning. I'm pleased to report on a very strong conclusion to 2022 as we continue to deliver on our value-enhancing reinvestment program and set the stage for long-term growth and value creation. Nareit FFO was $0.49 per share in the fourth quarter, driven by same property NOI growth of 7.3%. Base rent growth continues to accelerate, contributing 510 basis points to same property NOI growth this quarter. Excluding the impact of lease modifications and rent abatements, base rent growth contributed 490 basis points, representing a 50 basis point acceleration from last quarter, driven by growth in build occupancy and significant positive re-leasing spreads. Ancillary and other income and percentage rents contributed 80 basis points on a combined basis, while net expense reimbursements contributed 240 basis points due to improvements in build occupancy and the strong recoverability of certain fourth quarter expenses. Revenues deemed uncollectible detracted 100 basis points from same property NOI growth, primarily due to the ongoing moderation of out-of-period collections of previously reserved amounts. Our operational metrics continue to reflect the strength of the current leasing environment, despite macro headwinds and the continuing successful transformation of our portfolio. Build occupancy was up 60 basis points sequentially to 90.2%, while leased occupancy was up 50 basis points sequentially to 93.8%, a record high for our portfolio. The anchor lease rate was up 50 basis points sequentially to 95.9%, while the small shop lease rate was up 40 basis points sequentially or 250 basis points year-over-year to 89.2%, reflecting another new portfolio record. The spread between leased and build occupancy ended the period at 360 basis points, and the total signed but not yet commenced pool, which includes an additional 70 basis points of GLA related to space that will soon be vacated by existing tenants, totaled $55 million. The size of the pool is up approximately $2 million since last quarter, despite the commencement of leases representing approximately $16 million of annualized base rent this quarter. As we've highlighted in the past, one of the strongest indicators of forward growth is a persistently wide spread between leased and build occupancy, while both build and leased occupancy are increasing. In addition, the blended annualized base rent per square foot on the signed but not yet commenced pool remains above $19, approximately 20% above our portfolio average, reflecting the broad-based impact of our granular reinvestment initiative. In terms of our forward outlook, we have introduced guidance for 2023 same property NOI growth at a range of 1.5%-3.5%, comprised of a 350 - 450 basis point contribution from base rents, offset by a significant attraction from revenues deemed uncollectible. We estimate that the amount of revenues deemed uncollectible recognized during 2023 will total 75-110 basis points of total revenues, which is in line with our historical run rate. This assumption reflects the modest amount of out-of-period collections we expect to realize during the year. The normalization of this line item in 2023 will result in a 200 basis point detraction from same property NOI growth at the low end of the range. A 150 basis point detraction at the high end of the range. As the income associated with revenues deemed uncollectible in 2022 once again becomes expense in 2023. In addition to our assumptions for revenues deemed uncollectible, which primarily address normal course credit issues across the portfolio, the midpoint of our same-property guidance range also reflects approximately 150 basis points of drag related to recently announced or anticipated bankruptcy activity, which is reflected in our expectations for base rents and net expense reimbursement. Of this amount, 60 basis points relates to known events, including lease rejections that have occurred to date and the impact of locations that we are proactively recapturing from struggling re-retailers ahead of a likely filing. While the remaining 90 basis points relates to assumptions about potential future events, providing us with significant capacity to absorb additional tenant disruption within our range. Our ability to deliver a 350-450 basis point contribution from base rent growth in a year with over 100 basis points of base rent impact from bankruptcy activity underscores the success of our portfolio transformation and the importance of our signed but not yet commenced pipeline as a source of forward growth and momentum. We have also introduced guidance for 2023 Nareit FFO at a range of $1.95-$2.03 per diluted share. Our guidance assumes the utilization of our $200 million delay draw term loan at the end of April to continue to extend the duration of the balance sheet. In early February, we entered into a forward starting swap related to the delay draw term loan, which fixes SOFR at a rate of 3.59% from May 1, 2023 through July 26, 2027, the maturity of the term loan, resulting in a fixed rate for this loan of 4.88%. As of December 31, we had total liquidity of $1.3 billion, a weighted average maturity of 4.9 years, and no debt maturities until June 2024. With that, I'll turn the call over to the operator for Q&A. Thank you. We apologize for the issue with the webcast, and the replay will be available today. We will now conduct a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in a 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 keys. One moment while we poll for our first question. Our first question comes from Craig Schmidt with Bank of America. Please proceed. Yeah, thank you. Good morning. Good morning, Craig. Can you hear us? Yeah, we can. I can hear you. Good. Good. How are you? I'm doing fine. Hopefully everything's well at your office as well. Perfect. What are your expectations for transactions in 2023? I know you didn't acquire anything in the fourth quarter. How long do you think it's gonna take before we find what the new normal cap rates are for open-air centers? I think it's gonna take a while, and I think what's gonna increase transactional activity, as I mentioned in my remarks, are really two things. One is the disruption, and retenanting capital that will be an opportunity for platforms like ours and then, you know, refinancing requirements with higher interest rates. I think that that's gonna raise the level of overall transactional activity, certainly above what we saw at the end of 2022. We're gonna be opportunistic. You know, as I highlighted in my remarks, the great thing about our business plan is it doesn't require external growth to drive out performance. That allows us to remain very disciplined. We certainly have the flexibility and the capital capacity to be acquisitive, but we're gonna pick our spots. I am hopeful that as we move into this part of the cycle, there will be attractive value add opportunities for us. Great. Just as a follow-up question, I mean, your leasing activity actually picked up in the fourth quarter. How do you feel about that leasing activity as you head into 2023 relative to 2022? You know, any quarter can fluctuate a little bit, but I think we're continuing to see great strength and demand, and Brian and team capitalize on it. Brian? Yeah, Craig. We're really encouraged by what we saw in the fourth quarter. It was actually our most productive quarter of the year from a GLA perspective. We had a nice uptick in anchor activity, but also you continue to see small shops come through. As Jim mentioned, he highlighted a number of the retailers that we signed leases with during the quarter, which was pretty exciting. What's more encouraging is if you look at that pipeline at the end of the year from a legal perspective, leases that are out, it's actually up from where it was a year ago at the end of 2021. It gives us good visibility in terms of demand for this year, demand that we are seeing for some of that troubled tenant space, from core tenants and a lot of new ones that we've been able to attract to the portfolio because of all the work the team's done. We were really encouraged by what we saw in the fourth quarter and what we continue to see at the start of the year. Great. Thank you. You bet. Our next question comes from Todd Thomas with KeyBanc Capital. Please proceed. Good morning. Hi. Thanks. Hi, good morning. First, I just wanted to clarify with regard to the guidance, Angela. The 350-450 basis points of a base rent growth, that includes a 150 basis point drag that takes into account, I think you said 60 basis points from known events, so move outs, lease rejections, and an additional budgeting of 90 basis points, plus a normalized level of uncollectible revenue. That's the 75-110 basis points on top of that. Is that right, or am I double counting with the 75-110 basis points on top of the comment you made around the 150 basis point drag? No, you're right that the 75-110 basis points is separate and apart from the 150 basis points of bankruptcy impact I referenced in my prepared remarks. The only clarification I would make is that the 150 is on NOI. While the majority of that, the vast majority of that is in base rent, there is a small piece, probably about 35 basis points of it, which is embedded in our expectations for net expense reimbursement. Okay. Got it. That's helpful. Then, you know, in terms of the minimum rent growth that you're forecasting, again, the 350-450 basis points. You know, I'm just curious, I guess two things. You know, it's, you know, obviously, you know, it was elevated in the quarter at 4.9%. You know, is this quarter, sort of the peak, or do you see that maybe continuing to improve a little bit in the near term? Then can you break that out in terms of, you know, sort of the contribution or, what you're anticipating, you know, within that from, you know, occupancy, escalators and, sort of lease rollover throughout the year? Just a little bit more detail there would be helpful. Yeah, let me hit that generally, and I'll let Angela get more specific. It is not a peak. You know, the momentum in terms of top line growth continues. As Angela reflected, that assumption for 2023 is net of space we expect to and frankly hope to recapture during the year. That's coming in the top line expectation. Yeah. I think, you know, just to follow up on Jim's point. You know, sort of the range for the year, given what a significant amount of impact we've embedded within that base rent expectation of $3.50-$4.50 from bankruptcy activity. The timing of that bankruptcy activity and exactly kind of how that bankruptcy activity plays out over the course of the year is gonna matter a lot from a trajectory perspective. What I would very much emphasize, though, is if you step back and think about the pieces I gave, the guidance we gave is 400 basis points at the midpoint of the range. That number is in line with what we delivered in 2022, with an additional 100 basis points of bankruptcy impact. I think pulling that out, you can pretty clearly see we would've been, you know, sort of 5% or better, pretty much in line with the fourth quarter number you referenced. It is hard to give trajectory on that line item, I think, as we move through the year. You know, as I think both Jim Taylor and Brian Finnegan have highlighted, we feel really good about the space that we're recapturing and the ability to set 2024 and even 2025 up for even better long-term growth. Okay. What about some of the moving pieces there? Maybe if you could just, you know, in terms of like occupancy or, you know, tell us, you know, where sort of the average escalators are within the portfolio today. Yeah. Just to help us get a sense for the contributions. Sure. Yeah. The escalator piece is somewhere between 110 and 120 basis points today. The impact from positive re-leasing spreads is probably in and around 150 basis points, which leaves you know, with kind of 80-180 basis points for occupancy gain, you know, other impacts in the portfolio offset by that bankruptcy impact. The two pieces that are easiest to quantify for you today are the contractual bumps and the spreads. Okay, great. That's helpful. Thank you. Sure. Our next question comes from Juan Sanabria with BMO Capital. Please proceed. Hi. Thanks for the time. Just a little more details to Todd's kind of last question in terms of the occupancy cadence. Should we expect a seasonal decline in the first quarter? If you could just give us a sense of what's assumed in guidance. I'm not sure if you can hit on kind of the range of expectations for year-end 2023, but if you can, that would be helpful. It's really tough, I think, for us as we move into next year. We feel like we've more than adequately captured the impact of potential bankruptcy activity in the NOI guidance we've given, importantly in that base rent guidance we've given. Exactly how that plays out from a trajectory standpoint in terms of space recapture or other impacts of bankruptcy is a little bit harder to say. I do think it's fair to expect that there's some seasonal decline as we move into the fourth quarter. From some of the announced bankruptcy activity we've already had, there's likely a few spaces that we're recapturing, as well as the 4 Bed Bath & Beyond spaces that Jim mentioned in his remarks. I'll let Brian sort of touch on our enthusiasm about those recaptures. Yeah. As Jim mentioned in his opening remarks, we've been really encouraged by what we've seen so far, just from anchor demand in general, but particularly for these spaces. I mean, to have four of these effectively spoken for out of the gate at spreads of close to 60%, you're seeing in that size range just a significant amount of demand. If you think about just the store opening plans for tenants in that size range, you look at Burlington stores, Ross, TJX, all with over 100 store openings, the likes of ALDI, Sprouts, also with significant open divides. Even if you split some of that space with the Five Below, TopShelf, Skechers of the world, there's just a significant amount of demand for that space. To Angela's point, we may see some occupancy headwinds in the start of the year, but based off of what's already in the pipeline, plus the demand that we have for this space, we feel good about the long-term trajectory. Thanks. Just a more macro question. I mean, there's questions as to where the macro direction's headed and the strength of the consumer or not. I'm just curious if you've seen any diminution in any demand from any pockets of retailers. I'm not sure if it's more services or goods oriented or by geography to point to at all, or if everything is just kind of humming along and really nothing to report in terms of a potential slowdown looming for a year. We continue to be impressed by the strength and resilience of the open air format. You know, we continue to see growth in average weekly traffic levels both over the prior year as well, importantly, over the pre-pandemic levels. From a tenant demand perspective, the breadth of demand continues to grow. So much so that we actually have tenants anticipating space recapture from weaker tenants and willing to spec the time and the dollars to enter into LOIs and leases should we be able to recapture those spaces. You know, it remains a pretty healthy environment for us from a demand perspective. Real time, we continue to see good traffic, and as I mentioned, growing breadth of demand from categories of retailers. Thanks, Jim. You bet. The next question comes from Ki Bin Kim with Truist. Please proceed. Thanks. Good morning. Going to your guidance, are you able to provide interest expense guidance and G&A? Yeah. On interest expense, you know, again, I mentioned in my prepared remarks the utilization of the delayed draw term loan. With that, we believe, we're gonna probably be, from an interest expense perspective, somewhere between $199 million and call it $201 million for the full year based on sort of where curves sit today and our expectation for revolver utilization during the year. In terms of G&A, we believe, you know, we're being very disciplined about G&A spend across the platform, continuing to look for additional opportunities for efficiencies, and believe, you know, that we'll be able to, end 2023 with G&A relatively in line to where we were in 2022, plus or minus. Okay. Your development pipeline, as you've completed some projects, has come down a little bit. Can you just talk about the prospects for the next round and how you're thinking about the yield or upside characteristics as it compares to I mean, the existing development portfolio? Yeah. You know, Ki Bin Kim, it continues to be very robust and a good mix of projects, both smaller anchor repositions, which, you know, frankly, you should expect to see a pickup in as we recapture additional watch list tenant exposure, as well as larger projects that I'm fairly confident we're gonna remain in that $150 million-$200 million of annual deliveries and annual project starts that, you know, we see importantly for the next several years. In fact, I mentioned it in my remarks, but our shadow pipeline continues to grow. It sits at over $1 billion today, and the yields are, frankly, still very attractive because of where our rent basis is. You know, expect us to continue to deliver those projects in the high single digit, low double digit area. Thank you. You bet. Our next question comes from Greg McGinniss with Scotiabank. Please proceed. Hey, good morning. Angela, just curious which watch list tenants maybe we should be paying attention to in order to understand whether you'll be utilizing that potential 90 basis points of additional tenant disruption cushion? Yeah. You know, I'm hesitant to obviously call any tenants out specifically. I would say that this morning's announcement of bankruptcy by Tuesday Morning a good example of, you know, how the environment continues to evolve. That 60 basis points of known events, just to be very clear about it, relates to the bankruptcies that have already occurred and rejections that have taken place. That would include Regal and just a couple rejections we had out of Party City. Anything additional in terms of impact from those tenants that have already filed would be in the 90 basis points in addition to our expectations for Tuesday Morning, which filed this morning, and all of our expectations around some tenants that have been widely reported to be considering a filing such as Bed Bath & Beyond. Okay. The 90 basis points is gonna be names we've read about before. Nothing from like a small tenant expectation from maybe a more difficult economic environment to cause some closures on that side of things. The normal course bad debt expense, primarily for small shop tenants, is gonna be really embedded in that 75 - 110 basis points of revenue deemed uncollectible guidance we gave. The 150 basis point drag associated with anticipated or recently announced bankruptcy activity that's really hitting our base rent guidance and our net expense reimbursements guidance is entirely national tenant situation related. They are the names I just mentioned that have all been sort of widely in the news, in addition to, you know, and other impacts we've assumed for situations that may play out, you know, over the course of the year that I just wouldn't call out on today's call and that, you know, will continue to evolve as we move through the year. For the most part, it's names that we've all been talking about, and we've assumed a wide range of potential impact as we move through the year. I just really underscore what I said in my prepared remarks, which is that I think we've got significant capacity embedded within the range to absorb a wide range of tenant disruption in our current guidance range. At both ends. Okay. Great. Thank you. The next question comes from Anthony Powell at Barclays. Please proceed. Hi. Good morning. Question on dispositions. You did about $200 million last year. What's your idea for further pruning of the portfolio? If you don't acquire assets, what are the best uses of those proceeds? You know, the best use of proceeds in this business is reinvesting in well-located centers that have attractive rent basis, which is what drives a good part of our fundamental growth and value creation. You know, we'll continue to find opportunities like that, and I'm hopeful that we do find some opportunities from an external growth or acquisition standpoint that present the same reinvestment growth and value add. That's really our sweet spot, and it's really where we can leverage our national platform vis-à-vis private owners who typically don't have the visibility on tenant demand or the access to liquidity that we have in our core market. We'll see how that plays out. Expect us to be balanced, and by that I mean expect that the rate of disposition activity will roughly follow what we see from an external growth standpoint. The timing may be, you know, some more front-end loaded, some more back-end loaded. We'll see. I'm very optimistic about seeing some acquisition opportunities that help us continue to leverage our platform. Importantly, we don't have to, and that's the point I keep hammering, which is we have tremendous growth embedded in what we own and control today, which is a good position to be in and allows us to be disciplined as we continue to deliver growth at the top of the sector. Thanks. The lease spreads have been very strong. Any pushback from tenants as you discuss with them lease terms or lease spreads, escalators? Just how are tenants reacting to these conversations? That's the beauty of low rent basis. you know, and believe me, the tenants aren't gonna wanna pay any more rent than they have to for a space. They're also much more sophisticated, in recent years about what types of sales that they can model in a space, and we work with them very closely. It speaks to the both the transformation of the portfolio as well as the leasing environment, which is incredibly supply restricted. With all the work the team's done in this portfolio, you're seeing that come through in stronger rents. You're seeing it come through in the highest retention rate that we've had in the last five and a half years. Particularly as you look at those renewal spreads last year, we're really encouraged by spreads at close to 11%, which is up 480 basis points over it was a year ago. Then from a new lease perspective, we are seeing a significant amount of competition for space, which is driving rate higher. It's really a combination of a strong leasing environment, but also the work that the team's done to put the portfolio in a position to really drive rate with great tenants across the country. I appreciate the focus on those spreads. I don't think we get enough credit for them, particularly when you view them in the context of the sector overall, several hundred basis points of outperformance quarter in and quarter out, which just simply underscores the strength of the plan and the strength of the assets and how great a job Brian and team are doing capitalizing on tenant demand. Thank you. You bet. The next question is from Craig Mailman with Citi. Please proceed. Hey, good morning. Not to dwell on Bed Bath in particular, but just kinda curious on a couple of things here. Number one, you guys gave the 60 basis or the 60% kinda mark-to-market on the four. Could you just give sort of what you think the broader mark-to-market is on your total exposure? You know, I know there's some discussion out there whether, you know, they even file or what type of filing it is. Assuming maybe a restructuring or non-bankruptcy filing, as you guys kinda comb through your exposure to them, what percentage do you think is potentially at risk for them to give back versus kinda strong sales, good locations that you would consider them to keep? Well, let me just make this point, if I may. We want every box back we can get. We've got tremendous demand for these spaces, which have an average rent basis of $10.35. Now, we've embedded within guidance, what we expect with some cushion in terms of timing. I think the most important point is that when you look at our Bed Bath & Beyond exposure in its entirety, it represents a significant opportunity for us to drive real value, real growth and real value. When you think about that $10.35 of basis, we're signing replacement tenants in the mid-teens. Consistent with what, you know, we've already announced, on the existing boxes, but importantly, spreads that allow us to actually create value as we bring in better tenants into our centers. We get the follow-on benefit from there of additional small shop leasing and increase in rate. You know, in terms of the timing of when we recapture the space, I think Angela and team have done an excellent job of going through and handicapping that and making sure we have cushion in our growth numbers to handle a wide array of potential outcomes. Let's not lose sight of the more important point, which is it's gonna create an opportunity for us to drive real-time value, by the way, and still deliver growth in 2023. Right, which is something that can't be said by many in this sector. Bed Bath is just one example. You know, there are other tenants where we hope to get the space back. I can assure you we're leasing ahead, and by that I mean we're driving activity ahead of recapturing the space. No, no, that's helpful. I guess, you know, as we think about the SNO pipeline continues to kind of increase here, while from a timing perspective, taking back these boxes will obviously create some disruption. I mean, that SNO pipeline could continue to grow as a percent of ABR, which kind of sets you up for 2024 and beyond from a kind of... You know, do you think there's like a new normalized growth rate for the portfolio as you can kind of pull forward? Well, I think you're spot on, and hats off to the leasing and national accounts team for continuing to grow that pipeline and address early recaptures. I think you're kind of seeing hints of it in our top line numbers, right? That 4% which reflects a meaningful drag from anticipated space recapture during the year, but you saw it in the fourth quarter, and as we talked a little bit about, you see it in our numbers and expectations for 2023. You make a really good point, which is that SNO actually impacts us even more accretively in 2024, right, as we get the benefit of a full year of those deliveries. We're excited about how we're positioned. Just one more quick one. On the shop, you know, you guys are at kind of record leased occupancy there. How much more, given what's in the pipeline that you guys are seeing, you know, net of maybe some of the cushion from potential bad debt that you're kind of baking in, you know, what's the maybe year-end target on that small shop? From a dollar perspective, you know, I know those are more impactful, so how should we think about, you know, the longer term run rate of that portfolio versus maybe some of the near term impact of bad debt? We have more than a couple 100 basis points of room to run. We've got drag in our reinvestment pipeline. We currently sit at 89.2%. Over time, you can see that number grow into the low nineties, and you make the right point, Angela Aman will hit on in terms of what its impact is. That's part of the follow-on benefit of our reinvestment. As we deliver those new anchors, we get better rate and better occupancy in the small shops that the center has impacted. The reason I'm making that point is that we're not managing to an occupancy level. We're managing to drive fundamental growth and ROI. The small shop growth is a great lever for us to pull as the anchors and the broader reinvestment get delivered. You're right, there is a leverage impact on that number. Yeah. When you look at sort of where we've been signing new small shop leases over the trailing 12 months, it's over $25 per sq ft. That's over 50% above our portfolio average. Every 100 basis point gain in small shop occupancy translates into something a little over 150 basis points of same property NOI contribution. Thanks. Our next question comes from Alexander Goldfarb with Piper Sandler. Please proceed. Good morning, Alex. Our next question comes from Haendel St. Juste with Mizuho. Please proceed. Good morning, Jim. I'm present. How are you? I'm present, filling in for Alex. Good morning, guys. I guess first question, Jim, maybe some follow-up comments on the transaction market. Obviously things are still pretty frozen out there. Retail volumes are down, I think 60% in the fourth quarter, pretty wide bid-ask spreads. Maybe can you talk about the cap rates of the type of assets that you'd like to own, what you're seeing out there, and then given your cost of capital, what's, you know, kind of a new hurdle rate would need to be, or basically where assets would need to be priced for you to get more interested or more active here. Thanks. Our hurdle rate has absolutely gone up, you know, with the increase in the cost of capital. Handel, to the latter part of your question, we're remaining disciplined. Where we expect to find opportunities is where there's been disruption, and where we have the opportunity not only to get in at a good initial yield, but where we have great visibility on being able to grow that so that, you know, we can get to those unlevered IRRs in the high single-digit, low double-digit area. Maybe Mark, if you're on, you can comment a little bit on what we're seeing real time in the transaction market from a volume and pricing standpoint. Sure. Yeah. In terms of the current market, it's definitely started slow as buyers and sellers have continued to adjust to the new rate environment. Trades have been limited again in Q1, but I'd say over the last few weeks, we're starting to see some more assets come to market, both from some of those institutional sellers who may need some liquidity for redemption requests. Probably more interesting is seeing some private owners come to market who are struggling with that debt market. We do like to buy from some of those private owners. As Jim mentioned earlier, our platform just has more liquidity, has more access to tenants, and that's where we see opportunity to drive assets and get those higher unlevered IRRs that we seek. I'd say in terms of pricing, it's hard to exactly pinpoint where things are given the somewhat slower trading environment. What's clear is that what we're seeing on those low Where we're seeing the biggest price change, pardon me, is really on those lower cap rate assets where it's clear that cap rates have moved there from the low point 50 - 75 basis points. We do think we'll be seeing some better opportunities as the year progresses. I think as Jim mentioned, I do expect that to be a bit, a bit back weighted. I think I'd add just on the acquisitions as Jim and Angela and Brian mentioned, we focus on value-added deals where we can drive value and cash flow, and that's really well suited for this type of environment. I think you can see that in some of our past acquisitions, like Brea, where we bought last year, we've leased it up to 100% and we've got outparcels in progress. Ravinia, where we moved occupancy from low 80 to the low 90s in our first year of ownership. We're excited about opportunities we'll see this year, but do think it'll be a slow start to the year. Thanks. I appreciate that color. Certainly the latter half of your response addressed my follow-up question was gonna be on if your focus is gonna include more of these acquisitions with occupancy upside, more repositioning, if that's kind of more what you're inclined to do or perhaps see a greater opportunity. Sounds like that's what you're focused on. Maybe a question on the balance sheet, Angela. Leverage, you know, I understand there's no near term or very little near-term debt maturities, but you're sitting here, mid-sixes. I guess I'm curious on your thoughts on target leverage in this type of environment. I'm assuming the plan hasn't changed in terms of deleveraging. You're gonna as you realize your SNO rents, the leverage should come in. Help us understand kind of what the target leverage is, when do you think you'll get there, and maybe some timing for the SNO this year and next year. Thanks. Sure. Thanks, Haendel. Our expectations in terms of target leverage haven't changed. We're continuing to work our way to about 6x debt to EBITDA. A big reason why we feel like that's the right level for this company and this portfolio is due to the below-market rent basis in the portfolio. On a look-through basis, we're clearly well below that, well below 6x, once we achieve that level, and actually a touch below 6x now. You're right that continued contribution from the signed but not commenced pipeline and how that comes in over the course of the next year or two is a meaningful contributor to helping us get there. I would also sort of pull back from that a little bit and just note that we've got, you know, $115 million-$120 million a year of free cash flow that we're using to invest in the value enhancing reinvestment program. Funding it with free cash flow in that way is just fundamentally deleveraging as well. Just the continued execution of the strategy continues to set up well to the glide path well to meet those targets. In terms of the signed but not commenced timing, we do provide it in the supplemental on the NER page. You'll see when looking at that about 76% of that $55 million comes online by the end of 2023. I would just note that the contributions between first half and second half are roughly ratable as we move through 2023. Very helpful. Thank you. Sure. Thanks. Our next question comes from Alexander Goldfarb with Piper Sandler. Please proceed. Hey. Morning. Hopefully, I'm coming through this time. Yeah. Okay. Awesome. Awesome. Quickly, two questions. First, Angela, on the potential, you know, to the prior question where you didn't wanna talk about specific future tenant issues, I guess let me ask it from this perspective. The future potential tenant issues that you guys are contemplating in that generic bad debt guidance, do those tenants also have similar releasing upside that, you know, we're seeing from Bed Bath and some of the other tenants, you know, that 40%+ that we're seeing overall and 60% on Bed Bath, or that future potential pool have releasing spreads that would be lower than that? Alex, hey, this is Brian. just if you think about the Tuesday Morning today, which Angela highlighted, you look at what we signed during the quarter, we took a space back in suburban Cincinnati, we doubled the rent. We've been signing leases on that size space in the high teens with the likes of Five Below and Skechers and Boot Barn. for those, certainly, and I'd say across the board, we benefit from low rent basis, and we benefit from low rent basis in particular with these tenants. We feel pretty good overall about the upside. Is every space going to be 60%? No, but we do think that these spaces are gonna be in line with where we've been driving rents across the portfolio, and we've been pretty encouraged by it. Okay. The second question, Brian, you know, one of the big issues out there just seems to be it's not the demand to backfill, it's actually the time to reopen tenants. What are ways, you know, one, I guess, are any tenants willing to take space as is? If not, are there any ways to sort of accelerate the downtime to minimize that? It is what it is between getting the permits, building out the space, et cetera? I'm really glad you asked the question because our operating teams, led by Haig, which Jim mentioned, have done a fantastic job in terms of partnering with the operating teams on the tenant side. You know, I point to an example last year. We just opened two Ultas in Metro New York. We got those stores open in less than six months. We have seen tenants from when we signed the lease. We have seen tenants take space as is. I think as we've mentioned on prior calls, what's come out of the pandemic as a best practice has been retailers' utilization of more existing conditions, right? They're figuring out how to change their prototype so they can keep the bathrooms where they are. They're figuring out how they can utilize the existing HVAC units. They're doing that because we're radically aligned in terms of getting them opened as quickly as possible. We have done some work that has taken some time on the front end from a lease negotiation standpoint, but it's certainly cut down on the time from a build-out perspective. The other thing is a lot of these, particularly on the spaces that we've been in front of, I mean, we've had our folks in the space had tenant representatives in the space to be able to understand plans so that when we ultimately get those spaces back, we're already ahead of the game. The team's done a fantastic job really across the board in partnering with our tenants. I think some of the things that have come out of the last few years are going to remain going forward in terms of the flexibility of how they're able to utilize the spaces. Thanks, Brian. Thank you, Al. The next question comes from Floris van Dijkum with Compass Point. Please proceed. Thanks for taking my question, guys. Yeah. I just wanted to make sure I understand this correctly. I mean, Jim, capital allocation is how management, you know, provides value to shareholders, and you've done a very nice job in terms of self-funding your business and generating a significant amount of free cash. One of the things I'm curious to make sure I understand correctly here, one of the ancillary benefits of this reinvestment in your portfolio is that your small shop occupancy has increased quite sharply. There appears to be significant more room to go here. Am I correct that every 100 basis points of small shop occupancy is 150 basis points of NOI growth? Does that imply that if you get your small shop occupancy to, you know, another 300 basis points higher, which I think is where it's trending based on your redevelopments, is that another 600 basis points of upside potential? I think over time, right? I mean, I think when you just think about the what a powerful contributor the small shop occupancy pickup is when you're bringing that space online, not at portfolio average of 16, not even at sort of where the Signed But Not Commenced overall pool is today at over $19 per sq ft, but at $25 per sq ft, you can really sort of get your arms around how significant the upside and what an important driver that is of growth as we move forward. We still have some, you know, remaining upside opportunity in Anchor. We're about 100 basis points below kinda the record anchor occupancy for the portfolio, so there's still additional opportunity there. Most of the growth over time, over the next, call it, three, four, five years on the anchor side is gonna be from continuing to roll those rents to market, as we've talked about primarily through reinvestment program and recapture, proactive recapture of space like we've been talking about today from some of the struggling tenants. That's still a contributor to growth, but there's no question that the follow-on benefit and the momentum we're seeing in small shop occupancy and the outsized potential of those rents, is gonna be a very significant driver of growth over the next several years. Yeah, Floris, you're hitting on the flywheel effect we've talked about before, which is, you know, as we deliver these reinvestments at attractive returns, we're fully anticipating follow-on benefit in rate and occupancy, particularly in the small shops of the centers impacted. It's part of why we don't manage the business to a particular occupancy target. We manage the business for growth. Thanks. you know, one of the other things I presume that, you know, your fixed rent bumps in your small shop are higher as well, and they, you know, mark-to-market more often than your anchor rents. One of the other benefits of getting that occupancy up. Maybe if you can talk a little bit about, you know, one of the things that we've been hearing a lot more about in terms of tenant demand is this medtail or medical users in your in portfolios, and I think you mentioned something like that as well. You know, it's hard for us to, you know, to understand how do those tenants think about occupancy costs and their ability to pay rents. Can you guys provide a little bit more color into the demands that you're seeing there and and why you feel good about that portion of your of your portfolio? Well, I think that, and I'm wanting Brian to comment on this, but I think as I've mentioned many times, we're seeing that funnel of potential users continue to broaden really nicely. It includes medical users, it includes health and beauty, wellness, and many other categories that are basically realizing that there's a real benefit in having a storefront presence near where the customer lives. One that's convenient, one that gives them good visibility, and frankly, one that allows them to benefit from the other traffic daily needs that that center generates. We continue to be excited and impressed by the breadth of new users, and it's important to understand that that just creates more competition, which allows us to drive more rate. Yeah. Jim, you hit on it before. I'd also add this has become a really complementary use in our centers. If you think about the operators in the medtail space that have been really active, they often have very strong credit profiles backed by large insurance companies. We signed two leases this quarter in Southeast Florida backed by UnitedHealthcare. We're seeing really good activity on the dentist front. If you think about just the merchandising mix of our centers, right? Chiropractic, massage, acupuncture, that kind of wellness medtail goes very well with fitness users, with apparel operators that are selling fitness type apparel. We think it's very complementary. The other-Say is we've been freeing a lot of those type of uses up in our centers, go in our leases going forward. We do have some older leases, where you see that this has become kind of part of the normal tenant mix is our national tenants, where we have older leases where some of these uses are restricted, have been very accommodating to allowing them in because it does go with just another traffic driver. To Jim's point, just the range of uses that are looking for space in the center. Overall, we've been pleased with what's happening in that space. Again, it's just creating more competition for that shop space. Thanks, guys. Thank you, Floris. Our next question comes from Mike Mueller with JP Morgan. Please proceed. Yeah. Hi. I guess people always talk about the calendar shifting and things changing. I'm just curious, with this one that just happened, are you seeing anything different in terms of the volume of product coming to market or on the financing front, maybe the financing availability for smaller owners? You know, we do expect more product coming, Mark kind of alluded to it in terms of what we're hearing in the pre-pipelines of many of the brokers and others that represent these private owners. We do expect it to be my more back-end weighted. It takes a while for these processes to roll through. You know, it's really, you know, what we see driving the activity are two things. One, you know, the tenant disruption, right? As private landlords may not have the capital or the leasing wherewithal to backfill some of these spaces, as well as refinance requirements, as these private owners can still get financing, but the interest rate environment is much more different, which impacts their cash distributions to ownership. We do expect those two underlying market forces to drive more product. Got it. Okay. Thank you. You bet. The next question comes from Tayo Okusanya with Credit Suisse. Please proceed. Hi. Yes, good morning, everyone. just going back to the question around the watchlist tenants. While you're not specifically talking about any names, could you talk about any particular retail categories where maybe on the margin you may be expecting a little bit more activity versus last year? Entertainment. Just in regards to... Sorry. Entertainment? Okay. Yeah, certainly. There's no real surprises. You know, the weaker and struggling retailers are known to all. You can see their issues coming well in advance. Part of why Brian and the team are way ahead of that and working with tenants to pre-lease a lot of this space that we expect to get back. There's no kind of persistent categories. It's really more retailers who've had persistent problems. You know, the great merchants continue to thrive. Not only are they thriving, but they're putting more and more importance on the central role the store plays in a multi-channel format. You know, it's less category-driven other than perhaps movie theaters and much more participant driven. Gotcha. Thank you. You bet. The next question comes from Linda Tsai with Jefferies. Please proceed. Linda, your line is live. Sorry about that. What's your view on TIs in 2023 versus 2022? We're gonna stay disciplined. You know, I mean, look at our net effective rents. We're gonna use that tenant competition to not only drive rate, but to drive lower TIs. You know, that's been our approach. You know, we do actually disclose to you what the net effective rents have been, which some don't. I think that that's important. You can see there'll be a quarter or two of movement. Some look high, some look low, you know, when you look at it over several quarters, you can see that we're holding pretty firm there. Got it. On grocers, with Amazon closing some Fresh and Go stores, will you see any impact? To the extent Kroger and Albertsons sell, you know, 250, 300 stores, what's the read-through for your portfolio? Linda, hey, this is Brian. Just on Amazon Whole Foods, they've been a great partner of ours. We were really excited. In the fourth quarter, we were able to add or we announced our Whole Foods in suburban Philadelphia. We're seeing great leasing traction on the Whole Foods locations that we purchased in Houston and Chicago last year. They're a great operator. They drive a ton of traffic. On the fresh side, look, Amazon has publicly announced a pause, which we think is prudent for them to get it right. They did open this chain in the middle of a pandemic. Overall, we're really pleased with the partnership that we have with both Amazon and Whole Foods. Then as it relates to Kroger and Albertsons, look, there's not much new to report. I know there was a media report out there regarding a number of store closures. There was always going to be a certain number of divestitures as part of this. I would just remind everybody, as even Kroger and Albertsons have said, this is gonna be a long regulatory process. They said in the initial announcement, it's gonna be early 2024. We feel good about our fleet of stores no matter what the outcome is. If you look at our Kroger and Albertsons fleets across the portfolio, we've got great locations in places like Atlanta and Denver and Dallas, Southern California, Cincinnati. Just a great fleet. Both fleets have been significantly reinvested in over the years. We think a merger would be good for both companies. It'll allow them to continue to reinvest in those stores. Again, we feel pretty good about our fleet no matter what the outcome is. Thanks. Thank you. At this time, I would like to turn the floor back over to Stacy Slater for closing comments. Thank you, everyone. Have a great week. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.