Good day, and welcome to the Federal Realty Investment Trust Fourth Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star, then one on your telephone keypad. To withdraw your question, please press Star, then two. We do ask that you limit yourselves to one question per trip to the queue. Please also note, today's event is being recorded. I would now like to turn the conference over to Leah Brady, Vice President, Investor Relations. Please go ahead. Good afternoon. Thank you for joining us today for Federal Realty's Fourth Quarter 2023 Earnings Conference Call. Joining me on the call are Don Wood, Federal's Chief Executive Officer; Jeff Berkes, President and Chief Operating Officer; Dan Guglielmone, Executive Vice President, Chief Financial Officer, and Treasurer; Jan Sweetnam, Executive Vice President, Chief Investment Officer; and Wendy Seher, Executive Vice President, Eastern Region President, as well as other members of our executive team that are 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, including guidance. 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 these expectations can be attained. The earnings release and supplemental reporting package that we issued tonight, 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. Given the number of participants on the call, we kindly ask that you limit yourself to one question during the Q&A portion of our call. If you have additional questions, please requeue. And with that, I will turn this call over to Don Wood to begin our discussion of our fourth quarter results. Don? Thanks, Leah, and good afternoon, everybody. Well, 2023 is in the books, with a strong $1.64 recorded in the fourth quarter to finish off what is an all-time record earnings year at $6.55 of FFO per share. That's happening despite over $600 million of construction in progress, not yet contributing, and higher interest expense that cost the trust an additional $0.27 per share when compared with the average rate in 2022. Yep, with comparable money costs between 2022 and 2023, FFO growth per share would have been 8%, right up there with our best pre-COVID years. That says a lot in terms of the power of the portfolio that has grown bottom line FFO per share at a compound annual growth rate of 4.5% over the last 20 years, in addition to an average uninterrupted dividend yield of roughly 3% or better. That includes the great financial crisis, it includes the global pandemic, it includes everything. So better portfolio to own for long-term investors, in our opinion. It also feels like we're getting closer to a time where accelerated acquisition activity, coupled with our redevelopment and remerchandising expertise on new acquisitions, could boost that growth rate over the next few years. As far as today's environment, demand continues to exceed supply for the highest quality assets in the close-in suburbs, and with the impacts of the pandemic in the rearview mirror and lack of new supply coming on, I don't see this positive supply-demand dynamic changing anytime soon. Our average in-place rents portfolio-wide are $31.60 per foot, and the comparable retail deals we did in the fourth quarter were at $44.57 a foot, and we're at $36.75 for the entire year. I've been hearing that our rents are high and can't be pushed further for the better part of the last 20 years. And I guess on a relative basis, they are. Better properties have higher rents. Better properties have higher tenant sales and profitability, too. Frankly, it's obvious. Percentage rents are an interesting barometer on this topic. While we push for a strong fixed rent in nearly every lease, tenant sales above a threshold level equates to additional rent. Percentage rent and overage rent totaled $6 million in the fourth quarter and $19.3 million for the year, an all-time record, which broke the $18.8 million record from a year earlier. Fourth quarter retail leasing continued to crank with another 100 comparable retail deals done at 12% rollover on a cash basis, 23% on a straight line basis. These comparable retail deals account for virtually all, 98%, of the total retail deals done in the quarter, making them representative of the entire portfolio, not just a fraction. It was a great leasing year, the third in a row where we exceeded 2 million sq ft, roughly 25% more than the 5-year average between 2015 and 2019. Just to pound the point home, those cash basis rollover increases come on top of leases that have had what I believe to be the highest contractual rent bumps throughout their term in the sector, making their rollover all the more impressive. Contractual rent bumps for the deals done in the fourth quarter were roughly 2.5% blended, anchor and small shop, with new and renewal small shop at approximately 3%. The weighted average contractual rent bumps for the entire retail portfolio, anchor and small shop, not just one quarter fourth, but the whole thing, approximates, approximates 2.25%. Best in the business as far as we can tell. The sustained leasing volume and related economics bode well for the future, especially the contractual rent bumps. We ended the year with overall portfolio leased at 94.2, pretty strong, but with room to grow. That breaks down between anchors at 96% leased and shop space at 90.7. When you look at occupancy possibilities going forward by looking at our past, it's reasonable to expect another 100 basis points of small shop occupancy and another 200 basis points of anchor anchor occupancy improvement in the coming 12-18 months, depending, of course, on the extent of future bankruptcies that we are not seeing today. They're not at all obvious. The residential and office product at our mixed-use properties continues to outperform competing supply in non-mixed use environments and stood at 96% leased for both our comparable resi and comparable mixed-use office product at year-end, while commanding premium rents. Progress leasing up our mixed-use office under development, 915 Meeting Street at Pike & Rose and Santana West, has been measurably stronger, with 215,000 sq ft newly leased or in the final stages of the LOI to sign the lease process. That includes the first signed deal at Santana West with Acrisure, the global fintech leader to the insurance sector. With those deals complete, 915 Meeting Street at Pike & Rose will be 80% leased, and Santana West will be nearly half leased up. I go through all this to really try to hammer home the obvious health of a business centered around leasing high-quality, retail-centric properties in the close-in suburbs of America's greatest cities. While bottom line results are and will continue to be muted by the higher, but certainly historically reasonable cost of capital, that is stabilizing. Rents will likely continue to adjust upward over time to that reality. This is especially true for tenants and locations in affluent areas where customers can absorb higher costs. I hope that higher interest rates don't cloud investors' appreciation, the strong underlying business fundamentals that exist today and likely tomorrow. With that backdrop, we're also really excited to add a substantial expansion to the 87-unit, first phase of residential product that we built at Bala Cynwyd Shopping Center in suburban Philadelphia a few years back. The first phase opened strong and remains fully leased with growing rents. Strong supply and demand dynamics in this close-in part of Philadelphia's Main Line, along with construction costs moderating, means that we're able to build an additional 217 residential units, 16,000 sq ft of additional retail, and the covered parking spaces to service it all on the former Lord & Taylor site at Bala Cynwyd. The shopping center features an expansive tenant roster, including an LA Fitness gym, a full-service grocer, restaurants, and necessary services, which are often cited as the reason residents are choosing it. Projects should get underway later this year, beginning with demo of the old Lord & Taylor building. It should yield a 7% cash on cost return when stabilized, drive a double-digit unlevered IRR based on the rent growth we've seen and expect, and be funded from free cash flow. Okay, on to 2024, where we certainly expect another record earnings year with an energized team and a strong sense of optimism. Dan will go into a bunch more detail, and I'll turn it over to him and then open it up to your questions. Dan? Thank you, Don. Hello, everyone. Our reported FFO per share of $1.64 for the fourth quarter and $6.55 for the year were up 3.8% and 3.6%, respectively, versus 2022. POI was up 6.5% in fourth quarter and a more impressive 7.2% for the year. Primary drivers for the strong performance in 2023. First, POI growth in our comparable portfolio, up almost 5% on a cash basis, excluding prior period rents and term fees, driven by both higher rents and higher average occupancy over the course of the year. Driven by continued strength in consumer traffic and tenant sales, particularly at our mixed-use assets, driving parking revenues and overage percentage rent higher. Effectively, controlling property-level expenses and having a lower credit reserve than we originally forecast. Second, contributions from our redevelopment and expansion pipeline, which came in at the upper end of our forecast. Lastly, continued focus on overall expense controls. The G&A came in below expectations. This was offset primarily by higher interest rate headwinds, totaling $0.27. To reiterate Don's point earlier, with a consistent cost of debt versus 2022, FFO per share growth year-over-year would have been 8% in 2023, reflecting an exceptionally strong year of growth at the property level. GAAP-based comparable POI growth came in at 4% for the fourth quarter and 3.2% for the year. On a comparable cash basis, excluding the impact of prior period rent and term fees, growth was 5.2% in the fourth quarter and 4.7% for the year. As a reminder, this information, including the components of prior period rent, term fees, and GAAP to cash adjustments, can be found on page 12 of our quarterly 8-K supplement. Our residential portfolio continues to be a source of strength despite headwinds in the broader residential sector. Same-store residential POI growth was 5.8% in 4Q, along with revenue growth for the quarter at 6%.... And we expect this strength to continue into 2024. The value proposition of providing a premium residential offering on top of an attractive retail amenity base is driving outperformance across our targeted residential portfolio. Also, a big driver of our growth in 2023 was the continued stabilization of a large portion of our redevelopment and expansion pipeline, as $18 million of incremental POI came online from our $750 million in-process pipeline. We expect that to be the case moving forward as well, as we add new projects to the lineup and maintain that part of our business as a continued driver of growth. The scale and skill set of our redevelopment program is a key differentiator for Federal. Notable updates to our in-process pipeline, which will contribute an additional $9-$12 million of POI in 2024, include a $115 million Darien Commons project in Connecticut, where the residential is fully stabilized, 98.4% occupancy, with rents above $4 per sq ft per month, well above underwriting. Tenant retention rates remain above 90%, and the retail component approaches 90% leased. A testament to what a strong retail amenity base can bring to a residential project. At the $190 million, 915 Meeting Street at Pike & Rose. Choice Hotels has fully moved in as they opened in Q4, plus they've taken additional space. Sodexo's U.S. headquarters is next on deck to open, with multiple other tenants actively negotiating leases. At Huntington Shopping Center on Long Island, this $85 million Whole Foods anchored redevelopment is over 90% leased, with new anchor REI opening during the fourth quarter, in addition to a number of small shops. We feel very good about the yield on this project, approaching the top end of our 7%-8% return range. For those of you in the New York area, it's worth a trip out to central Long Island later this year after Whole Foods opens to check it out, as well as the Melville asset, a mile further south. Both are exceptional retail redevelopments, which truly highlight Federal's skill set. Additionally, in 2023, we incrementally invested over $120 million in properties we only partially owned previously at an effective 8.1% cap rate. No better risk-adjusted investment than deploying capital creatively into assets we know extremely well. Unlevered IRRs on these investments are in the double digits. Now to the balance sheet and an update on our liquidity position. As you all saw, we refinanced our $600 million bond maturity, which came due on January 15, for a combination of a $200 million secured loan on our Bethesda Row property at an effective 5% fixed rate for the first 2 years of the loan, plus two 1-year extensions at our option, effectively a 4-year loan, and a $485 million, 3.25% exchangeable notes, offering due 2029, raised in early January at an effective 3.9% interest rate all in. As part of that transaction, we purchased a call spread to increase the effective strike price on the convert of 40%, up above $143 per share. So no incremental economic dilution, unless the common stock trades above that level as adjusted. Pro forma, for the most recent financings and dividends paid, our liquidity stands above $1.3 billion, with an undrawn $1.25 billion credit facility and available cash on hand. Plus, we have no maturities remaining in 2024, and no material maturities until 2026. Our leverage metrics continue to be strong as fourth quarter annualized net debt to EBITDA stands at 5.9x, and that metric should improve over the course of 2024 and hit our target of 5.5x in 2025. Fixed charge coverage was 3.6x at year-end, and that metric should continue to improve as incremental EBITDA comes online and interest rates fall over the second half of 2024. Now on to guidance. For 2024, we are introducing an FFO per share forecast, $6.65-$6.87 per share. This represents over 3% growth at the midpoint of $6.76, and roughly 5% at the high end of the range. This is driven by comparable growth of 2.5%-4% when excluding prior period rents and term fees, 3.25% at the midpoint. This assumes occupancy levels will increase from 92.2% at 12/31, up to roughly 93% by year-end 2024. Although, expect a step back in the first quarter due to expected seasonality post-holidays. Then add in additional contributions from our redevelopment and expansion pipeline of $9 million-$12 million. For those modeling, let me direct you to our 10-K on page 16, where we provide our forecast of stabilized POI and timing by project. Now, this will be offset by modestly lower prior period collections, expected to be roughly $3 million in 2024 versus $5 million in 2023. M odestly lower net term fees forecasted in the $4 million-$7 million range in 2024, versus $7 million in 2023, and continued drag from higher money costs. The recent $600 million of notes that we repaid last month had an effective rate of 3.7%, versus the new blended cost on our two most recent refinancing of 4.3%. Other assumptions include $100 million-$150 million of spend this year on redevelopment and expansions at our existing properties. G&A is forecast in the $48 million-$52 million range for the year, and capitalized interest for 2024 is estimated at $18 million-$21 million. We've assumed a total credit reserve consisting of bad debt expense, unexpected vacancy, and tenant rent relief of 70-90 basis points for 2024, more in line with pre-pandemic historical averages. As is our custom, this guidance does not reflect any acquisitions or dispositions in 2024. We will adjust, likely upwards, as we go, given our opportunistic, opportunistic approach to both. Quarterly FFO cadence for 2024 is forecast to have the first quarter being roughly in line with the fourth quarter of 2023, at a range of $1.60-$1.65, with sequential growth each quarter thereafter. Please see the detailed summary of this guidance in our 8-K on page 28 and in our press release. With that, operator, please open the line for questions. Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys. If at any time your question has been addressed, and you'd like to withdraw your question, please press star then two. We ask that you limit yourself to one question. At this time, we will pause momentarily to assemble our roster. Today's first question comes from Juan Sanabria with BMO Capital Markets. Please go ahead. I was just hoping you guys could talk a little bit more about the office leasing. It sounded like it was the fintech lease at Santana. Was there anything else? And curious as to the momentum or prospects for signing other tenants there and how you think that evolves in 2024. Yeah. No, Juan, I tried to, without mentioning a name or getting myself in trouble, I tried to indicate that there is a large tenant there that we are very close to lease signing on. The LOI is done. We're in the last stages of lease signing. I'm not going to name the tenant today, but you certainly will know them, and we would expect that lease, unless something dramatic goes wrong, done very, very shortly from here on. That, along with that, for sure, and a couple of other smaller things is what gets us to about half done on that building in Santana West. And similarly, very close to signing on a couple of deals here at Pike & Rose for 915 Meeting Street, which would get that building to 80% leased. So been a very different last few months in terms of of not just tours, but productivity, in terms of turning LOIs into leases. Thank you. Our next question today comes from Alexander Goldfarb with Piper Sandler. Please go ahead. Hey, thank you for taking the question. Don, just, you know, going through the, your tenancy, you know, overall it's, it's pretty good list, you know, in the top tenants, but obviously there's some not rated, some not investment grade. But holistically, as you push the portfolio occupancy and really upgrade tenancy, are there types of tenants that you're saying no to? Like, yeah, for example, the classic private equity, highly levered tenants. Even if they're a great performer, you're saying, look, you know, historically, these type of levered tenants are the ones that cause issues, you know, in the next, downturn, and therefore, even though they may be promising, let's try to limit exposure. Just trying to think what ways that, you know, as the portfolio becomes increasingly in demand, that you may be gaining leverage to sort of push back on the types of tenants, even if they're a great performer, but just going, "You know what? Great performer, but not great balance sheet, we're gonna pass. Yeah, Alex, it's really a good question. I mean, the bottom line is, when you're trying to improve your portfolio, what you're effectively doing is taking all of that into consideration, for not just next year, or the year after that, but the term of the lease. So it includes the capital decisions that have to be made in terms of what's going in. I will tell you that to the extent a tenant, and this just, I think, makes sense to you, a tenant that we like a lot, but that has a riskier profile, to the extent we're limiting significantly the capital we'll give to them, we'll give them a shot. To the extent we're investing in that, piece of real estate, that particular space in there, then there better be credit, there better be comfort, if you will, that, that, we're gonna get paid, we're very likely to get paid through the entire term, of the lease. So, you know, as I, as I started out, I mean, this, this is a very good time for supply and demand dynamics. And, and what that means, in the better properties is choice. And to the extent you have, that choice, you absolutely consider things like leverage level, like what the owners are planning to do with the asset or, or with their, their retailer, et cetera. So it's a good time to, to be able to continue to upgrade the portfolio. Thank you. Our next question comes from Steve Sakwa with Evercore. Please go ahead. Thanks. Good afternoon. Don, I guess just maybe following up on Alex's line of questioning, just wanted to talk a little bit about pricing power and given where the portfolio is and the potential uptick in occupancy, I guess, how are you and Wendy and the team thinking about being able to push rents? And do you expect that to materially change in 2024, or, you know, is that a little bit longer-term kind of runway, just given, you know, that there's been no supply in the space, and demand seems to be very tight at good centers? It does. It does, Steve. And look, at the end of the day, it's still a very local business, and you're having this conversation based on what the potential choices are for that particular piece of real estate. Where I love it, where I think the, I and I just believe this is the most important thing, it is in the contract itself. And so the leverage, generally, whether it comes out in better bumps, I mean, it, you know how I feel about the bumps. That's a contractual increase in cash flow for a long period of time. Nothing beats that to me. That's the first thing. The second thing is making sure that we have control of the space because the tenant wants control of the rest of that shopping center, not just the space, but the shopping center. So I do think we're making... I've always kind of focused on this as a big thing for us, to make sure that contract is as landlord-friendly as it could be. But those are places where we have made pretty strong strides in the last 18 months, in particular, for you know, strong leases with big bumps. So that's where I'd look for it, that's where I'd look for it most. And that's an insurance policy to know that the foundation of this company, the basic, you know, shopping centers throughout this company are really strong, with rents that, whether you believe it or not, are under market, as proven by each by each quarter that we go through. Now, you take that, and you supplement that with things like the redevelopments that we're doing at places like Huntington, with a new residential project that we're doing at Bala Cynwyd, with potential stronger acquisition market as we move forward. That's where I get very excited and very positive about the future growth of the company. Thank you. And our next question today comes from Jeff Spector with Bank of America. Please go ahead. Great. Thank you. Don, can you elaborate on your opening remark comment on accretive acquisitions and opportunities? Seems like you're a bit more optimistic or maybe excited at some of the opportunities you're seeing. Is that correct? And if yes, you know, is it certain regions, again, type of centers? I know we talk about this all the time, but I think it seemed like you specifically highlighted that in the opening remarks. Hey, Jeff. First of all, thanks for listening to the opening remarks. I appreciate that a ton. And yes, you are dead right, in terms of the way I see it. But let's—let me, let me turn it over to Jeff Berkes or Jan. Give us, guys, give us your thoughts on, on that question. Yeah, sure, Don. Hey, Jeff, it's Jeff Berkes. I'm here with Jan. He'll jump in in a minute on what he's seeing kind of day-to-day in the market. But yeah, you're right. We are looking forward to a good year in 2024 for acquisitions. We didn't really see anything in 2023 that excited us that much other than the opportunities we had to invest within our own portfolio at very accretive rates. But we think the market's starting to heal and, you know, we expect 2024 to be a better year, or certainly a good year for us for acquisitions. You know, I know you know as well, and you probably know what I'm going to say, but you know, keep in mind that, look, we've got a very compelling cost to capital. We are not constrained by any one sub-product type within retail. You know, we'll, we'll, we're format agnostic. We're more focused on location and opportunity with a piece of dirt than exactly the improvements that sit on it today. We have a really well-developed team here that looks at highest and best use and ways to add value through releasing, remerchandising, and improving the existing improvements, as well as, you know, knocking parts of the property down and going vertical and doing things like we're doing at Bala and other shopping centers in our portfolio, where we add residential. We've got great relationships in the market. We're known as, as a closer, both with the sellers and the brokers. So I, I think we've got a lot of advantages, and a really sort of clear eye towards, you know, growing the company through accretive, acquisitions that are going to deliver long-term growth, to the company. And, you know, we hope the markets respond, and I think they will. But let me, let me turn it over to Jan and kind of let him give you his thoughts on where we're sitting in the market today. Hi, Jeff, Jan. So, a lot of sellers have really been sitting on the sidelines waiting for, you know, the cost of capital and cost of debt and their situation to kind of settle itself out. And I think 2023 was a record year for, you know, sellers asking brokers for their broker opinion of values, and it's just a massive BOV year. A nd the super majority of those sellers chose not to put their, their properties on the marketplace. And so now that cost of capital and cost of debt has started to settle in a lot, we're hearing a lot of, rumbling about sellers now putting their, their, you know, properties on the market. And in areas, and sometimes in some new markets that are of interest to us, that we think we're gonna see. And so far, as we're looking through here in, in early February, it seems like there's gonna be a lot more interesting product for us to look at and, try to acquire. So to me, I think 2024 is gonna be a big year for us. Yeah, and Jeff, you know, you've heard us talk about this in the past. We are very creative in how we structure deals. We have been for a very long time, and good at figuring out ways to solve sellers' issues, particularly private sellers and older sellers that have owned the properties for a long time. So a lot of tools in the toolbox here at Federal, and we expect to be putting them to good use this year. Thank you. Our next question today comes from Greg McGinnis with Scotiabank. Please go ahead. Hey, good evening. So it was a great year overall for retail leasing, but Q4 leasing volumes fell about 25% compared to the first three quarters in 2023, and resi occupancy fell 190 basis points quarter over quarter. Could you just provide some details on the trends you're seeing in retail tenant demand, as well as what happened on the resi side, and expectations built into 2024 guidance for resi occupancy and rent growth? I have to ask you to go, Jeff, Dan, or somebody, on resi occupancy for a second. Before you do, though, on the retail occupancy in the fourth quarter, Greg, that's just timing. There's nothing in there from a trends perspective that we feel any different about. I know we had a couple of particular anchors that are re-leased, that went out in the fourth quarter and, you know, again, re-leased at good spreads going forward, but just timing in the quarter there. I don't know, Wendy, if there's more to say about that for Greg? No, I think if you look at, you know, it's just timing is number one, and number two is our pipeline still remains strong. And when I look at where we are, specifically in small shop leasing, I do feel like there we have a runway there, of probably another 100 basis points to grow off of. And also, some of the timing is also attributed to several of the deals that we're doing are on spaces that are already occupied, so there's some overlap there. Yeah. Let me. Yeah, let me, Dan, go ahead on resi if you want, but my comment, Greg, would be, you know, we have a couple of markets that are very seasonal, primarily out here in California and New England. So we do try and ramp up occupancy going into the slower winter season, so we can ride through, you know, first quarter of a little bit slower leasing in those seasonal markets and be in a position, you know, where we're not giving up a lot when the leasing season heats up again. So some of that's strategic in the way we build occupancy up in the prior quarter. But Dan, if you got more to add, please do so. Yeah. No, that's exactly right. On the residential portfolio, seasonality is really what's driving that move. I mean, we're up year-over-year from an occupancy perspective, and we fully expect, you know, occupancy to pull back in the fourth quarter relative to due to that exact reason. And we have a small portfolio. I think that, you know, it only takes, you know, a handful of units to kind of move things a little bit, so I would not read anything into that at all. Thank you. Our next question today comes from Craig Mailman with Citi. Please go ahead. Thank you. I just want to go back to the question about acquisitions, and it sounded like, maybe there could be some more OP unit deals in there. But could you just give us a sense of, you know, magnitude at this point? Is it at the level where you would need to tap some of the equity in some of your, your trophy, mixed-use projects, or can you guys fund this with, kind of current liquidity? Oh, I think that's a good question, Craig. The funding with the trophy assets at some point is something for the future. It's not something for today, given where the market stands and the appetite and the kind of still the uncertainty on that stuff overseas in particular. With respect to boosting the acquisition portfolio now, that's what that line's for. So there's, you know, there's short-term financing, and then there'll be long-term financing. But there's a reason that powder is dry, and we'd like to use it. Thank you. And our next question comes from Ki Bin Kim with Truist. Please go ahead. Thank you. Don, can you just go back to some of the comments you made about the office leasing demand you're seeing at Santana West and 915 Meeting Street? Just curious if there's been any kind of commonalities for why some of these tenants, I'm guessing it's relocations, moving to these centers? For 915 Meeting Street, the NOI contribution, is it reasonable to expect that 50% contribution to be back-end weighted or more pro ratable? Go ahead on that, on the- Yeah, pro rata, I would say, you know, effectively, in terms of contribution over the course of the year. And I gotta tell you, man, the common thread through all of this is either, it's funny, either relocations from downtowns to these mixed-use properties in both of them, basically in the first-rank suburb or out further and coming in, looking for the full amenities that these properties provide. And that's been so darn consistent over the past 3, 3.5, 4 years with respect to what's happening there. I don't see that stopping. It's the demands of these tenants, who are generally taking less space than they had, you know, wherever they were. West Coast, some kind of campus, the East Coast. The East Coast, same type of thing, potentially. But they are taking less space, but they demand more in terms of the amenity base. And, and that is so consistent in basically the three places, the three big projects, whether same in Boston, with respect to Assembly. So that's, that's the common thread. Thank you. Our next question today comes from Mike Mueller with J.P. Morgan. Please go ahead. Yeah, hi. I just have two quick development questions, I guess, first for Bala Cynwyd. Is there any meaningful NOI that's coming out of the run rate, you know, your 4Q NOI run rate? And then, do you have a ballpark estimate of timing for the Santana office rent commencement? I'm going to let you. Can you do that? Yeah, on Bala, you know, I don't think there's any material- It's an empty Lord & Taylor- An empty Lord & Taylor. which has not been paying rent. So no impact. Then, the timing, we'll let you know on the timing. You know, we'll start on Acrisure, recognizing some revenue this year, 2024. And we'll let you know when we sign the leases, the timing of the leases that we have in the pipeline, kind of, when those will look to come online. Thank you. Our next question comes from Floris van Dijkum with Compass Point. Please go ahead. Hey, good evening, guys. Thanks for taking my question. Following up a little bit on the office activity. Obviously, congrats on, you know, obviously, you haven't gotten it over the line yet, but certainly got the first leases going there, both Santana West as well as in Pike & Rose. Are those leases in your guidance? And maybe you can talk about what is happening to the negotiations in terms of the rents there. And, Jeff, maybe I'd love to you because you're on the grounds at Santana West. Are you getting pushback from office tenants on rents or other things? Or is it just, you know... Talk a little bit about the competitive situation, you know, and the balance between landlord and tenant, because clearly, it's different in office than it is in retail. Go ahead, Jeff. Yeah, I'm actually going to pass it to Jan, Floris. Jan handles all of our large office leasing, so let me turn it over to him. Hey, Floris. I think what just in terms of the rents, I would say two things. One of which is, you know, both at Pike & Rose and at Santana West here and also at Assembly. Really, the tenants are looking for something, as Don said, they're looking for the amenities, they're looking for a better building, they're looking to upgrade their their location. And so they have tended to be less price sensitive on rent, so rents feel like they're holding pretty well. But the tenant improvement packages have in fact gone up. So that's really the change that we've seen, and that's where the competitive piece comes in. But the rents have been really rock solid. Just, Floris, to remind you, and I think we've talked about this before, and Don alluded to it in his earlier comments. You know, most of the tenants that are moving into our state-of-the-art buildings in those three locations are coming from inferior buildings where they take more space, and they're downsizing. So while they may be paying a higher rent per foot in our buildings than they were paying, because they're taking less square footage, their overall occupancy costs are less, which, again, goes to them not being as sensitive about rent. I think that's important to understand. Thank you. Our next question today comes from Dori Kesten with Wells Fargo. Please go ahead. Thanks. Good evening. Can you walk through your thought process behind the mortgage on Bethesda Row? And just, maybe loan to value, why, why Bethesda specifically? Look, I think the debt markets have been extremely volatile. You know, interest rates have lacked direction to say the least. I think back in October, when we committed to doing that transaction, the 10-year was at 5%. Our stock was at $85, and we saw this as a unique opportunity for us to lock in a spread on a secured loan on one of our best properties and get attractive financing. You know, the leverage is lower than we typically would. It's a little bit structured. But you know, today, mortgage rates on retail product today at normalized leverage levels are probably 200 basis points over the Treasury. Probably 175-200 basis points on a floating rate basis above SOFR. We were able to get 95 basis points through the structuring that we did with our lender. We felt like that was a really, really attractive credit spread. It was certainly more attractive than the 150-160 basis points we're looking at back in October to do a five-year loan. And so it was just a, you know, I think a unique, opportunistic financing that really demonstrates Federal's historic ability to access different parts of the capital markets at more difficult times in the cycle. And, you know, I think that our access to the convertible market is another example of that. Don, did you want to add anything? No, I wanted to ask you, Dan, too. I mean, from a tax perspective, a tax basis perspective- Yeah. - putting $200 million on, on Bethesda Row, frees up some flexibility with respect to- For tax planning. And so, you know, I think having the leverage on there and having debt on Bethesda, where we've created significant value over our ownership, created a ton of value above where, you know, if we do want to bring in a joint venture partner, this brings and gives us that optionality and that flexibility from to do it tax efficient. Thank you. Our next question today comes from Linda Tsai with Jefferies. Please go ahead. Hi, thank you. I think you said earnings growth in 2023 within 8%, absent higher money costs. What level of earnings growth does this mean for 2024, if you look at it the same way? Well, you know, 8%, you know, we had significant headwinds, 2027. We have less headwinds heading into 2024, although they're still there. I haven't done the calculation, but it's probably a couple hundred basis points of incremental, you know, if you back out the cost of that. So the, you know, the 3% probably goes up to something north of 5%, less money costs, at least, from my perspective. I haven't done the exact calculation, Linda, but that's roughly where I would see it. Thank you. Our next question today comes from Anthony Powell with Barclays. Please go ahead. Hi, thank you. I think in the prepared remarks, you talked about how construction costs were going lower, which helped with your decision to do the Philadelphia residential. Can you maybe expand more on what's going on with construction costs and do more of your projects and your future redevelopment pipeline look attractive, given lower construction costs? That's a good question. You know, when... It's not dramatic in terms of a reduction in construction costs. I mean, when you think about the components of it, particularly the labor component of it, when business slows down, as it obviously has in the past couple of years, you've got better leverage to get labor rates that, that, you know, make some more sense. And when you compare that to, really, gosh, the last five or six years in particular before that, it's a dramatic difference in terms of being able to forecast. And that's really the most important thing here, is anytime you want to do a redevelopment or development itself, it's about predictability of costs, in addition to, to growth in the rent. So what's happening now is we're finding much better predictability in construction costs, primarily on the labor side. We're going to tie these things down to GMPs, you know, maximum price contracts. And so when you're able to do that, then you can focus more on, you know, what the rent growth is, the timing, does it make sense to do? In the case of Bala, it was really a case where supply and demand finally made some sense without new product being added in that particular section of the Main Line, which is very attractive. So we really liked that. Now, we couldn't make sense of that a year ago or 2 years ago or 3 years ago, but we can make sense of it now. I would hope to see more of those possibilities going forward. And remember, this is land that Federal's owned for a very long time, and that gives you a huge advantage, because the land costs, there aren't incremental land costs, associated with it. So that's why, that's why that makes sense. So when you look at construction, I wouldn't look at it as, you know, costs are going to be dramatically lower than they were, but they've certainly stabilized and coming down a few percentage points because of the labor side. It's an important consideration when you're deciding whether to go or not. Thank you. And our next question today comes from Paulina Rojas Schmidt with Green Street. Please go ahead. Hello, everyone. My question is related to the prior one, and you reported for the Bala project an ROI of 7. And I think you mentioned in your prepared remarks that unlevered IRR as well. But just being more broadly speaking, what kind of profit margin do you need to see when thinking about these projects to compensate you for the risk, whether it's cost or leasing? I'm not quite following your question, Paulina. Are you asking kind of what kind of yield premium we need to get to kind of have those to have the IRRs get up into the double digits? Yeah. When you think about comparing your cap rates, or- Look, I think that developing this to a seven is clearly higher than it would be in today's market. And as interest rates come down and stabilize. Obviously, you know, what the spread is, you know, well north of 100 basis points, 150, 200 basis points. And look, we are going to expect to be able to grow rents residentially, in line with kind of what we've done. And our residential portfolio, you know, is amenitized. It's adjacent to great retail, and we've been able to grow rents very attractively over time. So as we grow rents, obviously, the POI is gonna be a big driver of those unlevered returns as well. So, you know, those are the, those are the inputs that go in there, and again, it's very comfortable, but a double-digit IRR unlevered, something that's achievable, you know, developing this to a 7 initially and having it grow from there. Hey, Dan, if I can just add on. Paulina, it's, it's Jeff. One thing to think about, too, as it relates to Federal and the residential that we develop, and we've got about $900 million pipeline of projects in the design and entitlement phase right now, is almost all of those are, are at places where we already operate residential property. That's the case at Bala, the case if we do anything at Bethesda Row, Santana Row, Pike & Rose, Assembly Row, other places in Montgomery County, Maryland, where we own real estate. So the risk-adjusted return for us is really, really strong. We, we understand the rental market very well. We operate units where we're adding units, so we understand the operating costs very well. As Don mentioned, in the prior question, when we contract for the construction, we're doing that with full construction drawings, great bid coverage, and a guaranteed maximum price contract. So the risk-adjusted returns for us are exceptionally strong when we add residential to our portfolio. Thank you. And our next question today is a follow-up from Alexander Goldfarb from Piper Sandler. Please go ahead. Hey, evening. Just going back to the Bethesda Row. I think you guys had spoken previously about possibly joint venturing that asset, or maybe there was institutional interest. But I guess bigger picture, you know, historically, Federal hasn't been a JV, you know, platform, but, you know, you talked about it with the potential on, on Bethesda. So in your view, Don, as you guys talk to joint venture capital, what's their appetite for shopping centers, and do they believe that truly this, you know, burgeoning growth that we all talk about will actually come to fruition? Or is there a view that the leases are so locked and in favor of the tenant that, yes, at some point, you know, they can get good economics, but, you know, it may be a longer timeline than they actually are willing to, to underwrite and invest? Just sort of curious, you know, what's going on in the private side as you talk to possible partners. Well, a couple of things, Alex, and Jeff, I'd love you to add after this if you need to. But first of all, don't use me as a proxy for what's happening among the private side in terms of their appetite, because we have not seriously gone down the road with any of them in terms of serious negotiations. Because we don't believe this is the right time to effectively do a deal like that on the mixed-use assets. When we look at our stuff and where we see the growth in the portfolio, I think I've said this for the last four or five quarters, our mixed-use stuff is outperforming the other stuff, and it's growing, and it's growing fast. So we'd like to get this stuff, you know, to have that trajectory continue. We'd like to see over the next year or two or three, the capital markets solidify themselves. Obviously, we're just in the very early stages of figuring out what the, what, what that means in terms of capital markets in the country. And so, you know, I don't have much more to add with respect to any specific, you know, group of private joint venture investors because we really haven't had in-depth conversations with them at this point. I don't know, Jeff, anything? Yeah, Don, I don't really have anything meaningful to add to that. Sorry. Oh, all good. Thank you. And our next question today comes from Steve Sakwa at Evercore. Please go ahead. Yeah, thanks. Just wanted a quick follow-up, maybe with Dan G. on the guidance. You know, when you kind of look through the building blocks, you know, just maybe help us think through which ones have kind of the most leverage, maybe to the upside and the downside, and maybe just a little bit more color on the, the POI growth, you know, X prior period rents and term fees. You know, it's about 100 basis points slower, around 3.25 versus the 4.3. So maybe just kind of walk us through there. Is, is that really all kind of bad debt-driven, or is there something else kind of pulling that growth rate down? Thanks. Yeah. Hey, look, it's, it is guidance, and I think there are a lot of things that go into, you know, in particular, that, go into, the FFO guidance. I mean, as it relates to, specifically the comparable POI growth, which is 2.5%-4%. You know, occupancy levels and how aggressively and how quickly we can push levels up towards 93%. I think how much percentage rent can we continue to collect, parking revenues? Can we control property-level expenses the way we have? Which has been a big help. Term fees, you know, I guess don't apply to, you know, the, that metric, but that's gonna drive FFO, although it won't necessarily drive the, you know, the, the POI metric, excluding that. How quickly and how we can get development POI up. And I think one of the things that's gonna be a big driver is, you know, look, we purposely have $600 million of floating rate debt, how quickly SOFR comes down. I think we're being pretty conservative in terms of our assumptions for where interest rates will go, and so that's that will have an impact. And then I think what we've done an exceptional job at, which probably drives some of the POI growth, is just getting tenants open sooner, keeping tenants in possession, you know, longer, keeping tenants in that we expected to leave. I think that's another driver. I think they all contribute throughout the range. Thank you. This concludes our question and answer session. I'd like to turn the conference back over to Leah Brady for closing remarks. We look forward to seeing many of you in the next few weeks. Thanks for joining us today. Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.