Greetings. Welcome to Federal Realty Investment Trust Fourth Quarter 2020 Earnings 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 first press star zero from your telephone keypad. Please note that today's conference is being recorded. I will now turn the conference over to Leah Brady. Leah, please go ahead. Hi, everyone. Thanks for joining us today for Federal Realty's fourth quarter 2020 earnings conference call. Joining me on the call are Don Wood, Dan G., Jeff Berkes, Wendy Seher, Dawn Becker, and Melissa Solis. They'll be available to take your questions at the conclusion of our prepared remarks. A reminder that certain matters discussed on this call may be deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include any annualized or projected information, as well as statements referring to expected or anticipated events or results. Although Federal Realty believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, Federal Realty's future operations and its actual performance may differ materially from the information in our forward-looking statements, and we can give no assurance that these expectations can be attained. The earnings release and supplemental reporting package that we issued yesterday, our annual report filed on Form 10-K, and our other financial disclosure documents provide a more in-depth discussion of risk factors that may affect our financial condition and results of operations. We do ask that given the number of participants, that you limit your questions to one or two per person during the Q&A portion of the call. Feel free to jump back in the queue if you have additional questions. With that, I will turn the call over to Don Wood to begin the discussion of our fourth quarter results. Don? Thanks, Leah, good evening, everyone. We closed out 2020 just about as we thought we would, with fourth quarter FFO per share of $1.14 and the total year at $4.52, or roughly 29% off 2019's record results. The fourth quarter and total year numbers exclude the debt repayment charge that we took when early retiring our 22 bonds. As miserable as 2020 was, and it was pretty miserable, we're very clear as to our priorities and can see our path forward. There's no doubt that the second wave of government shutdowns in our coastal markets that ramped up around Thanksgiving last year, and largely continue through today, though there are at least some encouraging signs of some loosening of late, have and continue to hurt us in terms of rent collection and the likely business failures that will come from them. Despite that, our growth prospects are really strong when the following three things happen. One, vaccinations are delivered to a large segment of the population in our markets. Number two, our coastal markets actually reopen. Number three, that consumer behavior reverts to uninhibited freedom and the spending that goes with it. Behavior that we are supremely confident will happen. While that's certainly not the environment that we're living through or operating in yet, the sheer volume of leasing and other transactions that we executed at the end of last year, 103 retail deals for 469,000 sq ft, coupled with the strong leasing demand environment that is evident by the many substantive discussions we're having today, and some very important management promotions and alignments that we just announced, set us up extremely well for a strong post-COVID recovery as those conditions prevail. All right. Where do we go from here? Well, as previously announced, the sale of Sunset Place and two other shopping centers in December effectively generated $170 million of proceeds and debt relief. We put out a press release in January that you should check out for more detail if you haven't seen it. Using that capital, along with cash on the balance sheet, we repaid $500 million of senior unsecured notes, half of which were retired early. The result of which means that we have no public bonds maturing until June of 2023. With little debt due in the next two and a half years, along with nearly $800 million in cash remaining on the balance sheet, and a completely untapped billion-dollar credit facility, we've got something of a war chest on hand should we find retail opportunities that fit our business model in 2021 and 2022. Make no mistake, we're actively looking, including in markets with hot job and income growth where we haven't looked before. A little more geographic diversity in our income stream, carefully considered, is an objective of ours. Today, with a day trader's mentality so prevalent in so many corners of the investor and analyst worlds, it's hard to look past short-term results, particularly those of higher multiple companies who are far from immune from the economically devastating effects of government-imposed shutdowns, most notably seen in the heavily populated coastal markets. Heck, 85% of Federal's property operating income comes from California, Massachusetts, particularly Somerville, New York, New Jersey, metropolitan Philadelphia, Maryland, and Northern Virginia. These markets have the most restrictive government-imposed COVID laws in the country by far, and they make 2021 more uncertain than at some of our peers. Nothing we can do about that. The Serenity Prayer comes to mind every day that I grapple with that. Those restrictions sure don't diminish the quality of the real estate that we own in these first-rate suburbs of major metropolitan areas, nor the tenant demand for a spot in these properties in the future, as evidenced by the leasing volume we're doing, along with the conversations we're having with many retailers about their future real estate plans. Here's an interesting fact. When you bifurcate our entire portfolio between the 75% or so of essential service type shopping centers that we own and the retail component of the 25% or so of our properties that are mixed use or lifestyle oriented, performance varies greatly as far as percentage of rent collected or percentage of operating income diminution from last year, pre-COVID. Predictably, it's what you would think. The mixed use and lifestyle tenancy, heavy in restaurants, theaters, gyms, and the like, has been disproportionately hurt by the shutdowns. There's no real news there, y ou all know that but t he irony is that those assets represent not only some of the best real estate that Federal Realty owns, but arguably some of the best, most desirable retail real estate in the country. That's not changing. In a nutshell, 75% of our properties, the necessity-based ones, are performing in line or arguably better than other necessity-based REITs, despite being in government-restricted coastal markets. Think about that. In and of itself, that's pretty impressive to us. The remaining 25% of our properties, the mixed use and lifestyle ones, have been disproportionately hurt because of their merchandising mix, but represent our best, most desirable real estate and therefore naturally have superior growth prospects, particularly from the beaten down levels they're currently performing at. That cash flow growth formula feels like a winning one to us when vaccinations are delivered to a large segment of the population in our markets, when our coastal markets reopen, and when consumer behavior reverts to uninhibited freedom and the spending that goes with it. Everything we see suggests that it should be a strong 2022. We'll talk more about that in Dan's comments. On a celebratory note, I hope you'll join me in congratulating Jeff Berkes and our other executives who've been promoted effective with our board meeting earlier this week. I hope you saw the press release that we just put out. Many of you have gotten to know Jeff over the years, I'm sure you share my appreciation for his intelligence, for his real estate savvy, without question for his unimpeachable integrity. Jeff and I have been close partners for over 20 years now. This elevation in responsibility comes at a crucial time, given the expected post-COVID retail real estate environment. We need to be as tight and productive as humanly possible. Now, to head off the inevitable speculation, let me get it out there by saying that forming the position of company President and Chief Operating Officer shouldn't be construed to mean that I have plans of going anywhere anytime soon. I don't. As I've continually talked about and acted upon, career development and succession planning are always top of mind at every level in our company. This new position is a great training ground. I'm sure there'll be lots of questions following our prepared remarks, I'll cut it short today. End mine there, turn it over to Dan for his comments on the quarter before we open the lines to your questions. Thank you, Don, and hello, everyone. We are generally pleased with the progress we see in our portfolio as we close down a difficult year. While all of our centers remain open, with 98% of our retail tenants open and operating in some capacity as of February 1st, COVID-19 induced government restrictions continues to provide challenges to their businesses. We reported FFO per share of $1.14, up a couple of cents from third quarter. Trying to assess what specifically is the direct negative impact of COVID-19 is difficult. Let me walk you through some of the drivers of our results during the quarter. On the positive side, we continue to see and be encouraged by the resiliency of our tenant base overall, as collectibility adjustments continue to shrink from $55 million in the second quarter, to $29 million in the third quarter, to just $19 million in the most recent. From a sequential perspective, this progress was offset by a number of items, many of which were one-timers. $0.04 of impact from several non-recurring items hitting G&A, $0.03 of drag from higher property level expenses that were primarily seasonal in nature, as well as $0.03 of headwinds due to the timing of fourth quarter debt capital transactions that we executed. As a result, headline progress versus the third quarter was muted. Year-over-year, relative to the fourth quarter of 2019, we saw a direct negative net impact of COVID-19 for the quarter of $0.37 per share. Continued improvement over the second and third quarter's direct negative COVID impact of $0.83 and $0.48 respectively. Collections continue to improve from the 72% and 85% levels previously reported for 2Q and 3Q respectively, and are now up to 89% for the fourth quarter. Solid progress despite weakness in December and January due to the second wave of government-mandated restrictions in place in the majority of our markets. As a reminder, our approach to reporting collections is very transparent and in our view, the appropriate approach. The denominator is comprised of all monthly billed base rent plus charges for CAM and real estate taxes and is not adjusted for deferrals and abatements. In our numerator, all deferrals and abatements are classified as uncollected. Also note that our denominator remained fairly consistent throughout 2020 at roughly $70 million-$71 million per month. During the fourth quarter, we continued to take a tactical approach as we negotiate and work with our tenants through this unprecedented impact on our businesses. $36 million of deferrals were executed in total for 2020. Of that amount, $22 million is with higher credit accrual basis tenants. Abatement agreements now total $37 million, as additional rent concessions were provided as government restrictions impacted our tenants' ability to operate at full capacity. Abatements will continue in 2021, primarily the result of temporary percentage rent arrangements as we have made the decision to partner with many of our tenants to get to the other side of the pandemic together with the objective of longer-term benefits and stronger, sustainable growth. As we did in the first six months of the pandemic, we took advantage of these negotiations to improve many qualitative lease provisions in exchange for that rent flexibility. Incremental percentage rent upside where we have abated rent, removal of development, parking, and use restrictions, eliminating tenant lease termination and co-tenancy rights, and the deletion of below-market tenant extension options all enhance the long-term value of our assets in exchange for these near-term concessions. Following the surge of productivity during the third quarter, we had another solid quarter of leasing. With almost 470,000 square feet of total retail deals, add in 33,000 square feet of office leasing, bringing our total to over a half a million square feet of fourth quarter deals signed. Combined with the third quarter, that's over 1 million sq ft of leasing to close out the second half of the year. We are also very encouraged by the level of activity in the leasing pipeline. As a result, our occupancy metrics have demonstrated surprising resiliency, with our leased metrics standing at 92.2% at year-end, flat versus the third quarter statistic. Our occupied metric remaining in the 90s at 90.2%. These levels are off 200 and 230 basis points respectively versus year-end 2019 levels. While we still expect continued pressure on our occupancy over the next few quarters and expect to dip into the upper 80s at the trough, as we have previously discussed, continued leasing activity at the volumes we achieved in the second half of 2020 will set us up for more pronounced growth in 2022. We continue to see strength from the same leasing demand drivers we've talked about on prior calls. First, urban and CBD tenants migrating to top-tier first ring suburban assets. Top-tier tenants upgrading their real estate to the best in market open-air locations. Third, new to market lifestyle and digitally native tenants targeting our best-in-class open-air mixed-use and lifestyle properties. As Don highlighted, while our lifestyle and mixed-use oriented assets have underperformed in the COVID environment, new demand from these best-in-class lifestyle tenants has been strong, as evidenced by lease deals and openings during the pandemic with brands such as Nike Live, Athleta, Sephora, Warby Parker, Room & Board, Serena & Lily, Arc'teryx, Vuori, Lovesac, Farrow, Bluemercury, NIC+ZOE, Shake Shack, Sweetgreen, Levain Bakery, Salt & Straw, and anchor restaurants such as Telefèric Barcelona, Nighthawk Pizza, CHIKO, Stellina, Spanish Diner, and Planta with two openings to name more than just a few. Plus many more under negotiation. Needless to say, our best-in-class mixed-use and lifestyle real estate is poised for a significant rebound in 2022. Our residential portfolio has held up reasonably well during the pandemic with collection levels up towards 98%. The only exception being our 450 units at Assembly Row, where the Montage has felt some weakness as expected. Average comparable lease occupancy for our 2,700 comparable residential units stood at 95.1%, down only 60 basis points from year-end 2019. Our existing office portfolio has performed solidly during the pandemic as well, with collections averaging 97% and occupancy remaining stable. As we've discussed previously, however, lease-up of office space in our development pipeline will be slower than we had expected pre-Covid, as corporate decision makers postpone space planning needs by at least a year to 18 months. That being said, pre-leasing at CocoWalk stands at 75%, with South Florida office demand remaining strong. At Assembly, Puma is building out its new headquarters space in 55% of Block 5B on Grand Union Boulevard. Puma, at this point, plans to move all of their employees in this summer. Pike & Rose has 63% of 909 Rose Avenue spoken for. The One Santana West lease-up remains speculative, however, openings are not expected until 2022. To a quick discussion of the balance sheet and an update on our further enhanced liquidity position. The fourth quarter was an active one on the capital markets front. Early October, we raised $400 million of unsecured notes in a green bond. Second half of December, we replayed $500 million of unsecured notes. December, we sold $170 million in assets at a blended in-place yield inside of 4%. This left us with $800 million of cash available and an undrawn $1 billion credit facility providing $1.8 billion of total liquidity at year-end with no bonds maturing until 2023. With our $1.2 billion in-process development pipeline continuing to be executed upon, we have just over $400 million left of that to spend. As Don mentioned, we find ourselves today sitting with significant dry powder. Now with Don's and my remarks today, we hope we have conveyed to you the optimism that we have for the future of our business and the strength of our portfolio to truly thrive on the other side of the pandemic. Our ability to generate outsized cash flow growth is fairly clear when, as Don said, vaccinations are delivered to a large segment of the population in our markets, those coastal markets reopen, and consumer behavior reverts to uninhibited freedom and spending. But the timing for those three things to occur is far from clear, and certainly not clear in 2021. As a result, for 2021, we are not providing formal guidance at this time. The best we can do for you, if you need a stake in the ground, is that it's roughly going to be flat to 2020. With the first quarter of 2021 at roughly a dollar per share and build each quarter from there. We do ironically feel significantly more confident in providing an outlook for 2022 than we do for the current year. Based upon the leasing activity and demand we see for our real estate, the strength of our essential retail portfolio, the significant upside in our mixed use and lifestyle retail assets, the resiliency and stability of our existing residential and office, and the phasing in of POI from our $1.2 billion development pipeline in 2022, 2023, and into 2024, we expect 2022 FFO per share will be in the low $5 range, representing double-digit FFO growth year-over-year. Stay tuned. With that, operator, please open the line for questions. Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you would like to move your question from the queue. For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Thank you. Our first question will be coming from the line of Alexander Goldfarb with Piper Sandler. Please proceed with your questions. Oh, hey, good evening. First, Jeff, congratulations. Awesome for you to get the new titles, business cards, and all the fun stuff. Then congrats to Barry and the rest of the folks who've gotten promotions. Two questions here. Don, just thinking big picture, you're not alone in traditional coastal REITs who are now exploring other markets, presumably down south, the Sun Belt. It's interesting because for the past two decades, there's been this whole coastal. Suddenly with COVID, everyone's looking elsewhere. My question is it really COVID, or you guys have been thinking for several years now about expanding to new markets, maybe they are down the Sun Belt, but the COVID and what's happened was just sort of the catalyst, the expediter? Yeah. Alex, that's a great question, and i t really is. First of all, I don't want my comments to be construed as not being positive with respect to the coastal markets. At the end of the day, it's jobs, good paying jobs at that. When you sit and you think about where we are in those markets, in those first-tier suburbs, that looks really strong. When you go forward, you say, okay, where would you like to put incremental capital? Doesn't mean we still won't look in the markets that we're in that we know, it does mean that through COVID, it's pretty darn clear that there will be other job-centered growth places that were starting pre-COVID, like almost everything, have accelerated as a result of it. When you think about markets like Phoenix, when you think about markets more like Florida and what's happening in South Florida and a couple of others, I do think it would be wrong of us to not effectively understand the dynamics in them and to be able to act on it to the extent we'd get comfortable with the highest quality stuff in those markets. You'll never see us going down quality, Alex, and that's a really important point. Okay. The second question is, it also seems like recently, there's a lot of demand from entrepreneurs, people starting up, whether it's new restaurants or new concepts, and yet at the same time, there's still tenants who are struggling. I don't just mean like movie theater or gym, but some others. Can you just sort of walk through what's happening? Why is it or how is it that we're seeing these spurts of new tenants forming at the same time that you're still seeing a bunch of people struggle? It just seems to be this odd paradox, and just want to better understand, is it purely just the categories themselves and that's it, or are there other dynamics at work that are driving some of these new leases that you're seeing? Well, first of all, there are certainly lots of dynamics. One of the single most important things to remember is companies that are struggling at this point and continue to struggle on here. I cannot say enough about the impact of the government restrictions. We're a business of contracts, and when government steps in and effectively doesn't allow the contract to be performed, it's the weirdest time I've ever been involved in. Absent that, you do have new businesses being formed with new bases. Legacy costs of old businesses and having to be able to figure out how they're going to make money going forward with all those legacy costs is sometimes much harder than a new business coming in. If you take a look at what's happening in the gym space, for example, you'll see new purchasers of gyms, with packages of gyms at a fraction of the cost that you thought that that gym company was worth or that gym company was worth 12 months ago. Now, when you come in with a new low basis, you've got a completely different P&L. You got a completely different business plan, different balance sheet, and the ability to afford and to pay what you need to do to get some of that high-quality real estate. It's a natural cleansing that won't just be a 2021. This is a phenomena that will take a number of years to work through. You will see the single biggest thing from my perspective is businesses coming in with a lower cost basis to start versus their existing legacy competitors. Okay. Thank you, Don. Our next question is from the line of Steve Sakwa with Evercore. Please proceed with your questions. Thanks. Good afternoon, everybody. Don, I guess on the leasing, I was just wondering if you could provide a little bit more color. I appreciate what you and Dan talked about in terms of the activity in Q3 and Q4. I'm just curious if the strength is concentrated by region, if it's concentrated more by product type or price point within the portfolio. I'm just trying to get a sense for maybe where you're seeing. Yeah The greatest demand and areas where you're maybe seeing less demand. Let me start out this way. On the call, Steve, are Wendy Seher, who as you know has the biggest part of our portfolio, and a lot of that is essential-based assets and some boxes, and let her speak to that. Berkes is also on the call. That can give you a much better idea on the mixed use kind of stuff, if you will, and that. Listen to those two, and then I'll try to put it all together. Wendy? Steve, thank you. On the Eastern region, I've been looking at our pipeline. If you look at our pipeline in January of this year versus January of last year before the pandemic happened, we actually have more activity on the East and more in our pipeline. When I say pipeline, I mean new deals. I'm very encouraged by what I'm seeing. I talk to retailers all the time. I continue to see a interest in a flight to quality. When you think about it's very logical, right? A lot of the retailers coming into 2021, maybe into 2022, maybe they're going to make less new deals than they made before. The deals that they make are important from a risk mitigation standpoint, that they go for properties that they know and have a history of strong sales, whether they're highly amenitized, whether they're general essential properties, because I have both on the East Coast. They want to mitigate that risk. They want to make the right choice. Where we're going to have the advantage is the history pre-COVID of a very strong sales, high-quality real estate, and people believe that high-quality real estate is not forever changed because of COVID. I'm very encouraged by what I'm seeing. Yeah, and Steve, I'd add onto that by saying it's really no different here on the West Coast. The demand is very broad-based, whether it be in our more traditional essential centers, including the prime store portfolio or Santana Row, or quite frankly, our other lifestyle and mixed-use projects on the East Coast, which I've had some involvement in over the last couple of years as well. The list of tenants that Dan read off, that's from our entire lifestyle mixed-use portfolio, and all of those properties have active leasing and active negotiations going on right now. We've got two retailers under construction at Santana, third to start shortly, three restaurants under construction at the moment. We're about to sign a lease with a noteworthy operator out of San Francisco that's doing their first restaurant outside of San Francisco. We're very encouraged by what we're seeing. To key a little bit off of Alex's prior question, and thank you, Alex, by the way, for the congratulations. We're not in necessarily a financial crisis this time around, there seems to be plenty of capital for some of these newer concepts to get capitalized. We're seeing that very specifically in the restaurant business right now. There doesn't seem to be a shortage of capital. Like Wendy said, everybody wants the best real estate. Whether you're kind of new and somewhat starting up, or you've been around for a while and you can open fewer stores now than you could a few years ago, a lot of focus on our real estate, and it is very broad based. Great, t hanks. Good color. Maybe second question, Don, it sounds like you've got a lot of capacity on the balance sheet. What are you seeing in the transaction market? What's happening in terms of distress, and how are you sort of weighing that against potential developments down the road, in your mixed use assets that you've got phase 3s and 4s? Well, listen, first of all, the last part of your question first, Steve, we got plenty of development to do. First of all, you are years away in terms of development product coming online. Let me now take it to the acquisition side. We learned a real good lesson in 2008, 2009, 2010. Jeff and I were just talking about it and lamenting about it last time. That was how in the end of the great financial crisis, there are not going to be a ton of distressed assets for us to acquire. There weren't. There weren't at all because great assets are often not distressed, and not distressed in terms of price. It wasn't about us going down quality and getting a lot of stuff, which is kind of why at this point in time, we're looking for the best stuff around. There are people willing to talk to us about that. Prices do seem to be firm, but a little bit better than they were, certainly pre-COVID. Those prices are not cap rate prices because what NOI are you capping as you're looking? They're really great real estate prices. That's kind of how we're looking at potentially using some of that. The cash that's on our balance sheet is insurance. The reason there's so much of it is insurance. That's why we did it that way. We believe going forward, given what we just told you, we need less insurance. Accordingly, I don't have a treasure trove of transactional information on deals that have just happened that we could really talk to you about in terms of where we're trying to go. Suffice it to say, I do believe we'll find some opportunities in the markets we want to be in, including our existing markets and one or two new ones that effectively let us get deals done in a way that will be accretive now and certainly accretive to value with more development opportunities associated with them going forward. Great, t hanks. That's it for me. The next question comes from the line of Derek Johnson with Deutsche Bank. Please proceed with your question. Hi, everyone, g ood evening. Thank you. How have development yield expectations changed for the current projects or even the entitled projects? Can we get an update on some of the key inputs like land prices, maybe construction, labor, materials, and of course, importantly, rents? Do you expect a compression in yield of, say, 100-125 basis points possibly? Derek, we don't see it as that much. There will be some compression, and I think if you look at the 8-K that we put out, we did get more conservative on a couple of those assumptions. There's still a lot to figure out yet. Again, it depends on the product. It's certainly hard to figure out on the office side today, but it's not in construction costs. It's certainly in a holding period. Your carry, you can certainly expect it to add to a longer period of time. It's most likely in build-out costs from a TI perspective, if you will, for office space there. In terms of rents, man, I got to tell you, it's anybody's guess to some extent, but our office and residential development, which is most of what our development is, are all in mixed use properties that are well established and effectively are the best product that is available coming out of COVID. You shouldn't expect us dropping rents in any significant way because I don't think we'll need to do that. There may be some. There'll be some extra carry costs associated with it, maybe a little bit more TI. Everything we still see says that the developments that we are completing will be accretive to value and accretive to earnings. Okay, t hank you. That's pretty helpful. I guess changing from office over to maybe the watch list. How does it stand today post the pandemic? To me, it seems like a lot of companies previously on watch lists have gone dark. The question is the watch list pretty washed out at this point? If so, are we a couple of quarters away, maybe third or fourth quarter this year of trough occupancy and then, of course, growing, albeit from a lower base? Well, let me go first, then anybody else who's got a perspective, please add into this here. I do think there's truth to the way you phrased that question with a couple of exceptions. The biggest exception really is in terms of small business. When you look at small shop and small business, you'll never talk to anybody more frustrated than I am with respect to some of the restrictions that are extremely severe on our properties. It's not only restaurants, it's other uses also from government entities. To the extent that I don't know when they'll be lifted, I don't know how long those businesses can last. I suspect stimulus is coming soon, but it's February, whatever it is, the 11th or something, and been talking about it for months and months and months. On the small business side, those are the people who are being hurt the most. That's different than the big companies that are national chains. Frankly, we make our money on the small businesses that effectively turn over, become successful, and can pay more rent. I do see that being a very positive catalyst as we look out going forward. I just don't think it's right now, and t hat's where maybe it's a good time for me to say the silly thing that we put out there today, and that is, in all my years, I've never been able to say that I'm more comfortable with a forecast, with a view to the future one year out than I am today. I am, which is why we're not giving 2021 guidance, which is why we're effectively talking about 2022 with more specificity. That's kind of crazy in my history of doing this job, but it is the way it is today. We thought we'd get out there and try to get both the sell side and the buy side to realistically start looking, at least from Federal Realty's perspective, at our growth profile, which to us inside, to our board of directors, looks extremely positive, but certainly not in February of 2021. Good stuff, Don. Thank you. Our next question is from the line of Nick Yulico with Scotiabank. Please proceed with your questions. Hi, this is Greg McGinniss. I'm with Nick. Dan, I just wanted to confirm your comment on the not actually guidance numbers. Did you say around $1 flat for Q1 2021? Seems like a fairly significant drop versus Q4, so just wanted to get some clarity there. Yeah. No, I think that's fair. You heard me right, roughly a dollar. I think that, look, the government restrictions, that second wave that came on in December has impacted kind of our momentum on collections and so forth, we expect to impact our business of our tenants in the first quarter. Heck, Nick, I just gave this whole big impassioned speech about 2022, and you took me back to February of 2021. Go ahead, Danny. Yeah. I think we will likely take a bit of a step back, but I think you can build off of that and get back to where we. Look, we don't have a lot of visibility, and that's why we're not providing guidance on 2021. Okay. That's fair. I'll let you be a little more impassioned about 2022 here on the next question. I accept. Rent collection right now is trending near the bottom of the peer group, which as you've mentioned, is kind of a product of portfolio geography. As we have the vaccine gets disseminated and restrictions are lifted, is there any reason that by the end of the year, rent collection shouldn't be in line with everyone else? Assuming those three things that I talked about, no. Again, if you kind of go back to the conversation, 75% of the company's right there now. Go back to the comments I'm making. Understand that certainly the same thing or better with respect to the residential and the office. It leaves the retail of 25% of the company, which is the mixed use and lifestyle stuff. That is really dependent upon stuff that is out of our control. As an investor, an investor's going to decide whether he believes in that real estate and that growth is coming or not, dependent not on me, but dependent on what he believes about vaccinations, what he believes about openings from government restrictions, and what he believes about the consumer. That's kind of where I would leave it. Yeah. Our essential based assets basically are at or better than our peers. 92% collection levels, only down basically at about 92%-93% of last year's numbers. They have performed as well in worse and more restricted markets. We feel as though their performance is at or as good as anyone out there. It's really the lifestyle mixed use where we've felt that impact. Great. Thank you. Our next question comes from the line of Michael Bilerman with Citigroup. Please proceed with your question. Hey, it's me. I want to come back to the guidance as much as you don't want to talk about guidance. Who is this? It's Michael Bilerman, Don. I mean, we're not on Zoom. Hi, Michael. You said my name. I guess I'm having a real hard time trying to put your pieces together because you sound, Don, confident, and you can make assumptions for what things could be this year. You don't have that much of a complicated business. Your balance sheet's in good shape. You've locked all these things away. You have confidence on the leasing front. I guess I'd like you guys to be a little bit more specific. You have almost an 11 million FFO drop that you're communicating between the quarter that just ended, and we're a month and a half into the first quarter. Can you detail if there were things in the fourth quarter that are not recurring that would cause that variance? What else is happening to drop from $1.14 to $1? I get it what you're saying, Don, like you have more confidence in 2022. A lot of 2022 is where you're coming from in 2021. You're embarking on a $5 number. That's almost $40 million of FFO. What are the components of that? How much of it is NOI? How much of it is investment? How much of it is development? How much of it is G&A? How much of it is interest expense? Give us the pieces. Michael That give you the confidence. Michael to get there. Yes. Michael. We're not providing formal guidance. Okay. Typically, on our November call, we provide preliminary goalposts, okay? Where we don't provide any assumptions behind it. Even today, we've provided a goalpost, okay, for 2021. That's what we've provided to you. We're not providing assumptions. I think in light of COVID, I think that we're comfortable providing what we're providing, and the assumptions will hopefully come at some point later this year, in 2021, when we have better clarity on kind of the environment and when those things are going to happen that will allow us to have the visibility to provide the level of detail and assumptions that you're asking for. You know, Mike, let me just say something to Dan. What I don't want to do is go down the rabbit hole you want me to go. Let me be very specific about that. When you go line item by line item, as you do, you put a specific amount of exactness or credibility or false understanding that that's actually what's going to happen. We don't know that, Mike. You know the components of this business. You know the development that is underway that we give updates on every single call. You know the amount of rent that we're collecting. Effectively, we just broke it out between 75% of the company, the essential component, and the lifestyle component of the company. The notion of how we grow earnings and what we've been able to do is definitely a question for an investor to decide, do you believe in this business plan to be able to get there? If I do it your way, Mike, what I'm winding up with are billions of questions on individual line-by-line items that suggest that they are more accurate than we are able to provide at this point. We're not going to do that. I respect that, Don, but at the same time, every one of your competitors is taking their best shot at numbers. That's up to them, Mike. The reality is, no, I get that. That's up to them. My view is you teased people by saying, "We're going to get to $5 in 2022, and it's going to be a buck in the first quarter of 2021," without giving the context of how you get there. Right? I'd rather talk about. I disagree. How you're going to get there. I think we've given you tons of context on it, Mike. I think we've given you tons of context. To the extent it's not enough, certainly buy another stock or recommend another stock. That's what's been happening anyway. When you sit and you think about the quality of this real estate and where it's going, I think our investors understand how they're going to get there because everybody, including you, has a model and can certainly figure out and make assumptions in that model in terms of how that would happen. It's not so crazy to do. Takes some work, but it's not so crazy to do. I know we can. We know where the street is. The street's at a $1.14 for the first quarter. You did a $1.14 this quarter. You're saying it's a dollar. I have that. in a narrowly focused way. Michael, on that, the broad assumptions behind the dollar relative to the $1.14 in the fourth quarter, we've started collections in January are down and behind December's collections. December collections were a little bit weaker. We had $3.5 million of term fees in the fourth quarter, another strong year of term fees. We're not projecting that. Our occupancy is projected to go down in the first quarter. Like I had indicated, we expect it to head into the 80s. Percentage rent is down, and plus we sold a number of assets, and we're sitting with significant cash on the balance sheet relative to where we're putting those proceeds to work immediately. We're building capacity and financial capacity and flexibility, but it will be dilutive in the quarter before we deploy that cash. That is the rough roadmap from $1.14 to roughly a dollar. That's what I'd like. Thank you very much. Our next question is from the line of Juan Sanabria with BMO Capital Markets. Please share with your questions. Hi. Thanks for the time. I enjoyed listening to that prior exchange. Just on the acquisition front, I was curious on the target of assets you're looking at, if it's more the essential grocery-anchored type of assets or more the lifestyle mixed-use type of assets, and if those assets that you're looking at to acquire are more stabilized or maybe redevelopment opportunities where you could see some value. Just curious on kind of the target of what you're looking at and maybe any sense of how you're looking to remix or reshift the portfolio as part of that discussion or thought. Yeah, that's a fair question. I hope with a little bit of luck, you see both. Because to us, and this is kind of the way we really believe in it's not about a particular format or a particular type of shopping center. It's about the growth prospects. If we think the growth prospects are in a more stabilized asset that has rent upside because it should be remerchandised and kind of, I don't want to say federalized, but federalized effectively, then we like that a lot. If it's one that's been mishandled and mismanaged and could be redeveloped, and maybe there's some vertical investment there, we like that too. It depends. The first thing we're aiming for is the right markets with the right barriers to entry, with the right demographics, and job growth, that we can get comfortable that we've got a pretty good chance with doing what we do of creating overall higher sales from the tenants and higher rents, therefore. You'll see, I hope you'll see, well, who knows what gets done, what can't get done. We're looking at both opportunities for mixed-use development with some kind of a stabilized piece there first, and then a development down the road, and a more stabilized asset where we think there's some rent growth possibilities and other ways to create value. I hope that's helpful. Thank you. Our next question is from the line of Craig Schmidt with Bank of America. Please proceed with your questions. Great. First, I just want to congratulate Jeff and Jan and the others that got promotions. Congratulations. Thanks a lot, Craig. I wanted to just talk about occupancy and where it might cross. I'm assuming that the fourth to first quarter includes the seasonality that would usually come with a lower occupancy number. It seems like there may be an impact from this second wave of government mandating closings, which could also weigh on the occupancy number, maybe extending into the second quarter. I just wondered if you had any thoughts on that. Craig, that's right. First of all, the first point is exactly right. The first quarter is seasonally always toughest for our business. The other point, again, kind of goes back to the small business comment. Yeah, the longer the government closures are mandated, the harder it is for those small businesses to continue because they're depleting resources day by day as it goes through here. While I don't have an exact number, I cannot give you a line for the model with respect to how many businesses go out and what that means to the overall occupancy perspective. It is reasonable to assume that there'll be a hit. I don't know if you want to put a number out there at all of what it is, but we always thought, frankly, for a year now, which I think is pretty cool, we thought that our first quarter, and maybe into the second quarter, we'll see, will be in the high 80s%. Certainly on the small shop space it will be. The anchors are hanging real tough. Great. What are the retailers telling you about your assets? They're definitely unique. What are the ones that saying to you that are kind of struggling to get by and get to the other side of COVID? What are the new tenants saying about your properties? Wendy, could I hand that to you? Yeah. I think that in terms of the existing tenants that we have there in our centers, what they love so two things. Let me back up. When we have restaurants, for example, that have multiple locations, what we're seeing is because of our highly amenitized projects and our focus on not only the curbside pickup and outdoor dining and a controlled environment that we can help with, they're focusing more on getting up and operating in our centers versus other choices that they may have. From the existing tenant standpoint, we were seeing, frankly, a big uptick in the restaurants until we had that second wave of shutdowns again. Our highly amenitized projects where we can influence what's happening to help their businesses has been critical. On new tenants coming in, what we're seeing, one of the things that I want to mention is we have ability to have a reset button, right? The retailers are going, hey, I have the ability to look potentially at some other opportunities that I never could get into before, because historically, we've never had the vacancy, where now we have some opportunities. On the flip side, I don't want to lose this point is that we're Federal Realty, having the ability to reset as well and look at how we want to upgrade our real estate. When I was saying that we have a disproportionate activity on those higher-end lifestyle projects from new deal standpoint, which shows the strength of, oh my gosh, we now have vacancy in these centers that we never had vacancy in before, and we have a host of relevant tenants that want to get in an opportunity in these centers. It's been positive. Yeah. I'd tag onto that, Craig, by saying, I think this was true coming out of the GFC as well, it's never been more important to be a good landlord, the good tenants know that. By that I mean somebody that's going to invest in the property, somebody that's going to be there, to pay the leasing commission and the tenant improvement check when it's due. Somebody that is going to continue to operate and invest in the asset and merchandise it the way that particular retailer needs it to be merchandised and managed to maximize their business. That's never been more important. Not having a secured loan or lender to deal with, that dictates some of those decisions. The savvy tenants are very aware of all that, I think all of that plays to our strength. Great, t hank you for that. Our next question is from the line of Mike Mueller with JPMorgan. Please proceed with your questions. Yeah. Hi. First of all, quick clarification. When you talked about occupancy going into the high 80s, were you talking about the 92% lease level or the 90% occupied level? The 90% occupied level. Got it. Okay. For the new restaurant deals you're talking about, is it primarily sit-down full service? I guess, where do you see the dining mix going a couple of years down the road versus where it was pre-pandemic? Yeah, it's interesting. We're all over the place on the restaurant alternatives that we like to offer in any particular property. One of the things that we're really doing a bunch of is trying to reconfigure outdoor space and create more of it. We're using, as part of our property improvement plans, as part of the stuff that we're doing, we're using more pergola, we're using more furniture and areas and landscaping to create those places which restaurants are asking for. Maybe we put you in touch, Mike, because it's a long and complicated answer, actually, to kind of the business plans of new food uses. Put you in touch with like a Stuart Biel, in our shop who's got a lot of these type of properties. While the quick service stuff, that we're still doing and will continue to do is pretty much as it was, but again, even there, looking for outside seating, wherever possible in either common areas or specific to them. It is also the sit-down restaurants. The sit-down restaurants that have the ability to be inside/outside. I see that not to the extent it is today, but some piece of that comfort with eating outside to continue. That was happening in a bigger way for us pre-COVID, and like everything else, was accelerated through the COVID process. Big variety, in terms of what's going on, but definitely more of a focus of outside. Got it, o kay. Thank you. You bet, Mike. Our next question comes from the line of Chris Lucas with Capital One Securities. Please proceed with your questions. Hey, good afternoon, everybody. Hey, Don, just a simple question. Your board's been committed to the dividend through this whole process. Looks like so they're going to continue to be. Do you have a sense as to when you might be able to cover the dividend with just your operating cash flow? Yes. Hopefully by the second part of 2022, we'd be there, and then all of 2023. Okay, t hank you. That's all I had. Our next question is from the line of Linda Tsai with Jefferies. Please proceed with your questions. Hi. For these younger retailers seeking space, what parameters do they have in terms of occupancy costs? Is it different from legacy retailers? What flexibility do you provide to help them in their path to sustainable growth? Well, what we're doing, Linda, to start, is a lot of these deals have a low fixed rent and a high percentage to effectively figure out the question that you're asking. While there are lower bases going in, the question of how much volume they're going to be able to do and where their price points are going to be able to be two years from now are different than what they will be in the first 12 months when they open up. I love your question, and I spend a lot of time thinking about that and talking about how those business models are going to work. The bottom line is, there's uncertainty with it. In sharing that risk with them from a percentage rent basis, but to the extent they work, being able to actually earn more rent than we used to earn on it is our objective. Whether we get there or not will depend upon the first 12 to 18 months of the openings of restaurants like that. That makes sense. Then the 4Q blended leasing spread of +1% versus -1% in 3Q is an improvement, but not where you want to be. In the vein of expecting clarity next year, what sort of average blended leasing spreads are possible in 2022? Yeah. That's a good question. I hope to be in the high single digits at that point. Again, with us always, it'll depend upon the mix of a big deal here versus smaller deals, et cetera. That's where I hope to be. Also, the one thing about what I did just say on the restaurant side, every deal we do, there's a landlord right to terminate after two or three years, depending on sales level. We're kind of going in this with you, but you don't have 10 years to figure it out, if you know what I mean. It's a pretty good balance, if you will, of sharing the risk. Thank you. Our next question comes from the line of Paulina Rojas Schmidt with Green Street. Please proceed with your questions. Hello. As you think about expanding your geographic footprint, how would you describe your appetite for lifestyle centers, community centers, or even power centers? I think you have mostly talked about lifestyle centers, but I wanted to have a general idea if you have at all thought about the other sub-property types. Yeah. Well, what we should do, I think you're new to the retail side of Green Street is covering or no? I'd like to spend more time with you offline to kind of go through what our business plan, because we are pretty agnostic, if you will, in terms of the retail format. For everything from a community-based grocery anchor shopping centers, to more of a power center, to more of a lifestyle center, and obviously the mixed-use component. Really what we're open to is, we're real estate people first and foremost, looking at the format of the center is not the first thing we're looking at since we're open to all of it. The first thing we're looking at is the ability with that piece of land and that shopping environment that they have for us to be able to create value either through raising rents or through redevelopment or even then further going vertical. That makes sense. Do you give any credit at all to the idea that the rise of work from home will facilitate Americans' migration from expensive cities to more affordable cities, potentially harming at the margin cities like San Jose in California and some of your assets? You think that you will not suffer at all from this potential trend? Oh, no. I very much believe in those trends will change the office environment dramatically in the country. I think the most important thing is the product you have, wherever that product is the best in the market. There's always going to be demand in the markets in which we do business in, certainly, or office. It just better be what employers want. If you look at where our office product is in terms of the mixed-use communities that we are in with being fully amenitized, with being brand-new buildings, which is really important with respect to air and HVAC movement, et cetera, I think we're in the right places with the right product. Office is not generic. That's what has to be viewed very carefully post-COVID. You believe in the trend, but your assets will do just okay. Yes, that's our business plan. That's what we believe in. Okay, p erfect. Thank you. The next question is from the line of Floris van Dijkum with Compass Point. Please proceed with your questions. Thanks for taking the questions. I'll be brief. By the way, Jeff, congrats on the promotion. It's great. Don, I sense a little bit of frustration on your part about these questions about guidance, et cetera. You do have a pretty big development pipeline that should produce, call it $60 million of NOI over the next couple of years. You have done it in the past, how about putting out an NOI bridge three years hence or something like that to get people more comfortable. Is that something that you would consider doing? Certainly take it under consideration, Floris. Just to respond to the frustration, the frustration is with the bullying of the line by line, this is what you should do. You're right, I don't take that well at all. Because we're running the company the best way we can, communicating the best way that we can. Certainly we'll take suggestions, but we won't be bullied. Maybe a follow-up, a little bit about some of the newer markets. Aren't you already in one of those markets that is seeing some heady growth as people go to warmer climates? I'm particularly referring to Miami. I know you just walked away from an asset there or sold an asset, but do you see yourself re-upping in that market over the next 12 to 24 months? Very possibly. Very possibly, Floris. Yeah, no, look, we made a bad deal with that one, but i t doesn't change the fact that job growth, migration, business-friendly environment could be good for us going forward. I think you're going to love CocoWalk when you see that completed. I know you love Tower Shops, which is completed. Those are going to be two of our best assets in the company. Yeah, you bet you we're open to more. Great, t hanks. That's it for me, guys. Thank you. At this time, we've reached the end of our question and answer session. I'll turn the call over to Leah Brady for closing remarks. Thanks for joining us today, and w e look forward to speaking with you over the coming weeks. Thanks. Thank you. This does conclude today's conference, y ou may disconnect your lines at this time. Thank you for your participation.