Welcome to Retail Opportunity Investments 2021 Second Quarter Conference Call. Participants are currently in a listen-only mode. Following the company's prepared comments, the call will be opened up for questions. Please note that certain matters discussed in this call today constitute forward-looking statements within the meaning of federal securities laws. Although the company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, the company can give no assurance that these expectations will be achieved. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause actual results to differ materially from future results expressed or implied by such forward-looking statements and expectations. Information regarding such risks and factors is described in the company's filings with the Securities and Exchange Commission, including its most recent annual report on Form 10-K. Participants are encouraged to refer to the company's filings with the SEC regarding such risks and factors, as well as for more information regarding the company's financial and operational results. The company's filings can be found on its website. Now, I would like to introduce Stuart Tanz, the company's Chief Executive Officer. Thank you. Good morning, everyone. Here with me today is Michael Haines, our Chief Financial Officer, and Rich Schoebel, our Chief Operating Officer. We are very pleased to report that we had a highly productive second quarter, advancing each key aspect of our business. We leased over 338,000 sq ft of space, which is a new second quarter record for the company. We also achieved double-digit rent growth on new leases signed during the quarter. In terms of acquisitions, we are pleased to report that we are once again pursuing opportunities. We currently have lined up two terrific grocery-anchored shopping centers. One is located in Northern California. The center is located at the entrance of an affluent master-planned community that has an average household income of over $237,000. Shopping center is the only grocery-anchored center serving the community and features a very strong, growing regional grocer akin to Whole Foods in terms of market niche and is an excellent fit for the surrounding community. The grocer is an existing longtime tenant of ours, so we know them well. The second property that we have under contract is a well-established shopping center located in Southern California that is anchored by a national supermarket as well as a national drugstore. The two pending acquisitions together total about $61 million with a blended going-in yield in the low 6% range. Importantly, we are acquiring both properties debt-free and without any tenant account receivable issues stemming from the pandemic. Going forward, there are a number of releasing and re-merchandising opportunities such that we believe our team can increase the blended yield to potentially over 7% during the next 12- 24 months. Along with pursuing acquisitions again, we are also making good progress with dispositions. During the second quarter, we sold one property for $25.8 million. Additionally, we currently have our last two Sacramento properties lined up to sell in separate transactions that together will generate around $45 million in sales proceeds. Once these two sales are completed, we will have fully exited the Sacramento market. Lastly, in terms of enhancing our balance sheet, we recently raised approximately $46 million of common equity through our ATM program. We are utilizing the proceeds together with the proceeds from dispositions to pay down debt and to fund new acquisitions. Now I'll turn the call over to Michael Haines, our Chief Financial Officer, to take you through the details. Mike? Thanks, Stuart. With our leasing and investment activity returning in strength, our financial results are notably stepping up as well. For the three months ended June 30th, 2021, GAAP net income attributable to common stockholders was $16.5 million or $0.14 per diluted share as compared to GAAP net income attributable to common stockholders of $4.6 million or $0.04 per diluted share for the three months ended June 30th, 2020. Included in GAAP net income for the second quarter of 2021 was a $9.5 million gain on sale from our property disposition in April. Funds from operations for the second quarter of 2021 was $31.7 million or $0.25 per diluted share as compared to $29.2 million in FFO or $0.23 per diluted share for the second quarter of 2020. Same-center net operating income for the second quarter increased 9.6% as compared to a year ago. For the first six months of 2021, same-center NOI increased by 1.5%. As the second quarter progressed, our rent collection steadily increased such that we ended the second quarter having collected approximately 96% of our billed base rent. Looking ahead, we are on track to fully return to our historical collection rate as we move through the third quarter. In terms of bad debt, given that essentially all of our tenants have reopened, we now have much greater clarity and have reversed a number of prior bad debt reserves accordingly, such that for the second quarter, bad debt, on a net basis, was actually a positive $103,000. Turning to our balance sheet, as Stuart just touched on, we recently utilized our ATM program, raising approximately $46 million of equity. Specifically, during the second quarter, we issued approximately 1.9 million shares of common stock, and we also issued approximately 623,000 shares early in the third quarter. Year to date, between the ATM issuance and the property disposition in April, which was unencumbered, we have raised approximately $72 million of equity proceeds. Once we close the final two Sacramento property sales, which are both unencumbered, we will have raised in total approximately $117 million of equity proceeds. We utilized a portion of the proceeds to pay down the $14 million that was outstanding on our credit line at the end of the first quarter. With the pay down, we currently have nothing outstanding on our $600 million unsecured credit facility. The $14 million pay down, together with the debt pay down of $34 million in the first quarter, brings our total debt reduction for the year to approximately $48 million. Looking ahead at the second half of the year, we have no debt maturing, and with the current cash on our balance sheet, together with the pending dispositions and cash flow from operations, we expect our credit line balance will remain minimal, if not zero. Taking into account our capital raising and debt pay down initiatives, the company's net debt-to-EBITDA ratio was lowered notably from 7.9x a year ago at the height of the pandemic to now being below 7x, specifically at 6.9x for the second quarter. In terms of FFO guidance, taking into account our results for the second quarter, together with our ongoing acquisition and disposition activity, as well as the equity issuance, we now expect FFO for the full year 2021 to be between $0.98 and $1.02 per diluted share. The low end of the range assumes that bad debt remains a bit elevated during the second half of the year, whereas the high end of the range assumes bad debt in the second half of the year is more in line with our historical run rate. The high end of the range assumes that we complete a total of $100 million of acquisitions in the second half of the year, including the $61 million currently under contract. The funding of $100 million of acquisitions assumes that we utilize the equity proceeds that we've lined up to date. Additionally, our updated guidance assumes same center NOI increases between 2% and 4% for the full year. Now, I'll turn the call over to Rich Schoebel, our COO. Rich? Thanks, Mike. With our tenant base fully open again and shopping activity back to pre-pandemic levels, demand for space accelerated sharply across our portfolio during the second quarter and continues to ramp up here in the third quarter. While much of the demand is coming from businesses that performed exceptionally well during the pandemic and are looking to capitalize on their success by expanding, the demand is now also coming from many of the businesses that were largely shut down during the pandemic, who are now looking to relocate or expand into well-located, grocery-anchored centers. We are seeing this broad demand consistently in every one of our core markets from San Diego up to Seattle. Capitalizing on the accelerating demand, we achieved a new record for the company in terms of second quarter leasing activity. Specifically, we signed 118 leases totaling 338,000 sq ft. Breaking that down between new and renewed activity, we signed 59 new leases totaling 116,000 sq ft, all of which involve releasing in-line space to a broad range of local, regional, and national tenants. Not only were we successful in bringing a number of new, strong and diverse necessity and service-based tenants to our portfolio, we also achieved a double-digit increase in same space comparative cash base rent. Specifically, we achieved a 15.8% increase on average for the second quarter. In terms of our renewal activity, we also had a busy and productive quarter, renewing 59 leases in all, totaling approximately 222,000 sq ft. Our renewal activity involved a mix of anchor and in-line tenants, with many of these tenants coming to us early to exercise the renewal options. Additionally, for the second quarter, renewal cash rents increased by 3.3%. Our overall portfolio lease rate held firm during the second quarter at 96.9%, with our anchor space at 100% leased and our in-line space at 93.1% leased as of June 30th. With respect to the economic spread between leased and billed space, at the beginning of the second quarter, the spread stood at 4.1%, representing $9.6 million in additional incremental annual rent on a cash basis. As we commented last quarter, city officials have become more responsive in recent months, expediting the permitting process for new tenants, which has helped to propel getting new tenants open quicker. Accordingly, during the second quarter, tenants representing $1.9 million opened their stores and started paying rent, which is a notable increase as compared to our quarterly run rate over the past several years. Taking the $1.9 million into account, together with our record leasing activity during the second quarter, which totaled $2.8 million in new incremental rent, as of June 30th, the spread was at 4.5%, equating to $10.4 million of incremental cash rent, which once all the new tenants are open, will represent approximately 5% growth to our current total in-place annual cash base rent. Turning to our densification initiatives, we continue to make good progress. Specifically, at our Crossroads Shopping Center, during the second quarter, we received final approval from the city and officially recorded the definitive agreed-upon development plan. The plan includes 220 apartments as well as 15,000 sq ft of ground floor retail space. With the plan now recorded, the construction drawing and permitting phase is getting underway. Importantly, notwithstanding the pandemic, a growing number of companies, led by Amazon, continue to move forward with expanding their office holdings and workforce in Bellevue, so demand for housing continues to climb. In terms of our densification projects that are currently in the planning stages at two of our shopping centers in the San Francisco market, we continue to make steady progress on both projects. The local municipalities continue to be proactively engaged and highly interested in having our projects move forward expeditiously. Similar to Bellevue, demand for housing continues to accelerate, which is driving city officials to seek out and support multifamily densification projects like ours. Now I'll turn the call back over to Stuart. Thanks, Rich. Building on our solid performance and the momentum created in the second quarter, looking ahead, we are excited about the prospects of having a strong second half of 2021. As Rich touched on, demand for space is continuing to accelerate as more and more businesses are now moving forward again with expansion plans that essentially had been put on hold for the past year. Additionally, with respect to businesses that had been restricted over the past year, most notably full service restaurants, fitness and entertainment businesses, given that the customer activity has come back in force for these businesses since the West Coast fully reopened last month, many of these businesses are now looking to expand as well. We think all of this bodes very well for our portfolio and leasing prospects going forward. In terms of acquisitions, in addition to the $61 million that we currently have lined up, we continue to seek out additional opportunities. We are finding that a growing number of private owners are becoming increasingly interested in selling after struggling through a long year of dealing with all of the rent collection and operational challenges brought on by the pandemic, which in many cases has created significant cash flow and lender issues for smaller private owners. To our advantage, these private owners are keenly interested in transacting with a seasoned operator that has the market presence, knowledge, and wherewithal to execute with certainty and in a timely manner. While it's a bit early to know how this trend will play out ultimately, we are optimistic in our ability to continue sourcing attractive acquisition opportunities and growing our portfolio. Finally, reflecting back on this past year, having to confront, quickly adapt and overcome countless challenges, the likes of which we had never experienced before. Through it all, our portfolio performed consistently well, which we attribute to three important factors. First and foremost, being our grocery-anchored focus. Second, being our tenant base. With our necessity and service-based focus, the vast majority of our tenants remained open and operating, with many of them thriving during this past year. Additionally, our longstanding core strategy of always maintaining a diverse tenant base and always being careful to limit our exposure to big box and discretionary goods retailers proved instrumental during this past year. The third key factor is our team. Over the past year, under extraordinary circumstances, our team's unwavering commitment and dedication, together with their ability to quickly adapt and collaborate in newfound ways, truly kept our portfolio operating seamlessly. Going forward, these three distinctive factors will no doubt continue to be the fundamental driving force in our ability to consistently build value in the months ahead and years to come. Now we'll open up the call for your questions. Operator? All right. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Again, that is star one on your telephone. Please stand by while we compile the Q&A roster. First question comes from the line of Michael Bilerman from Citi. You are now live. Great. Good morning. Good morning, Stuart. Hope you are doing well. I just wanted to go a little bit deeper into sort of the acquisition pipeline. I was wondering if you can just give a little bit more color on sort of just size of opportunities that you're tracking, the two deals you announced today, going in at a 6% and being able to drive that up to a 7% in the next 12-24 months is pretty attractive. I'm just trying to get a sense of how many of those types of opportunities you think you can unlock. Within that, you've always had a strategy for some of these private owners of being able to offer them units. In many cases, you've offered those units at your NAV, which has typically been above where the market is trading. Can you just talk a little bit about the dynamics of those sellers willing to accept units and script today and also the size of your pipeline? Sure. Thanks for asking the question, Mike. Starting out with size. Typically, we are looking for centers that are pure grocery, drug anchored. If there's a third anchor, we'd prefer that to be a valued retailer, either like a TJ Maxx or a Ross. The primary focus is just drug, grocery, some in-line, and pads. The approximate size would be 100,000 sq ft to 125,000 sq ft. That's exactly what we have under contract right now. Right. I was thinking more so the size of the pipeline, not necessarily the assets that you're targeting. I think you have a pretty defined moat of what you're after. Yep. The pipeline is very strong right now, and it's building quite dramatically. I think, as you know, we've announced $61 million under contract. We probably have about another $50 million behind that. Those are one-off transactions. In terms of portfolios, we're also focused back on that side of the business. We are aggressively pursuing a number of those with private owners. Will those come to fruition over the next 12 months? Maybe. Then in terms of OP Units, we continue to work that side of the business in a very big way, as we always have. We do have a number of families that we're continuing to deal with. What we really need right now is for our stock to settle in at where it's been, so that these owners are comfortable taking, doing these deals at or above where our stock has been trading. We're excited about what we see ahead of us. We're excited to be back in the market. More importantly, we're excited to be buying assets where we can build value over a pretty short period of time. To answer the last part of your question in terms of building that value, it's really done three ways. It's done through re-merchandising the current tenant base. It's done through lifting the efficiency or the operating margin at the property level, given the organization and the professionalism that we bring as an organization. The last thing is, really filling vacancy. Bringing the centers from 92%, 93% to 100% very quickly. We're confident looking ahead with what we've purchased, that we can achieve those goals and those objectives. Then just following up just on funding. You obviously have capital commitments on the densification projects, but also some opportunities to sell off pads or part of the mixed-use component. That could be a source of capital. You have your common equity, which you started to issue during the quarter, in and around consensus NAV. You can sell assets, which you also have done. Where are you in terms of now that you know this acquisition pipeline is building, where are you in the process of being able to pull the levers to fund it, right? What is your appetite to issue more common equity on the ATM? What's your appetite to bring more assets to market to sell, where you've gotten some pretty attractive cap rates relative to what you're buying at? What's your sort of desire to start to hopefully monetize some of the densification to fund and not increase leverage from here? Primary funding will be through dispositions and potentially looking at selling off some densification. Equity will be really a function of the market in terms of where our stock is trading. If our stock trades back over NAV, then we'll look at doing more under the ATM, or depending on the pipeline, we may even go out to the market. The primary funding will come through potentially joint venturing or selling off densification and continuing to sell off more assets that don't have much internal growth going forward. Okay. Thanks for the color, Stuart. Thanks. Thank you. Next one on the queue is Juan Sanabria from BMO Capital Markets. You are now live. Good morning, Juan. Good morning. I just wanted to follow up on Michael's question about the acquisition. The stuff you have lined up, the $61 million with that juice to an expected 6% going in yield. Could you just give a little bit more background as to why you think that yield is pretty robust? Is there anything unusual with the circumstances, either with a lender that provided that opportunity? What are you looking to do to get to that 7%? Sure. Well, I will articulate or answer the question in terms of sourcing the transaction, and then I'll let Rich jump in and talk about what we're doing in terms of the yield. The circumstances were a bit unusual in that the owner of the asset in Northern California left the state and moved to Florida. In doing that, he certainly was under a lot of pressure in terms of the pandemic, and felt the need, given it was the only asset he owned in this part of the world, that he would needed to get out quickly. We tracked this asset since the beginning of the pandemic, and the good news is we executed this deal before things got a lot better. That's why we were able to get a much better pricing. This asset probably before the pandemic, would've gone in the $34 million-$35 million range. We're getting a very nice price and good discount. The new asset in Southern California is something we're very familiar with, actually. It's an asset that we owned at one time at an old company named Pan Pacific. No one knows this asset, I think, better than Rich and I and the team here at the company. We're very excited to get an asset, a Pan Pacific asset back into the fold. Rich, do you want to comment in terms of the yields? Sure. I think both properties have slightly different profiles Stuart just touched on. I think the one that is more of a local owner, single asset type of property, there's been a long history of ownership where the owner has great relationships with the tenants but probably hasn't pushed rents as much as they could have over the years. We will come in with a much more aggressive management style as it relates to renewing those leases and filling the vacancy out there. Then the property in Southern California, as Stuart touched on, again, we have intimate familiarity with the marketplace and the specific property. We know through our leasing team and hands-on management how we're going to be able to increase that yield going forward. Great. Then just on the actual results and guidance, could you give us a sense of what any sort of COVID related one-times may have been in terms of repayment of previous period amounts due or positives in terms of previous bad debt that was written off that is now being reversed? Well, I think, one, the one thing that did occur was, as you know, we didn't move anyone to cash basis. It's purely a function of the bad debt analysis that we do each quarter end. During the second quarter, based on a careful tenant-by-tenant analysis, we reversed approximately $1.5 million of previous bad debt reserves. We also booked about $1.4 million of new reserves based on the tenant-by-tenant analysis. The net resulted in about $103,000. That was the one thing that helped this quarter for the results. Is there anything else assumed in guidance for the remainder of the year of future reserves, or is it steady state from where you are at the end of June 30th? Well, I think I mentioned in my prepared remarks about the high and the low end of the range. If we get our bad debt reserve levels back to our historical norm, which is below 1%, that's going to go towards the high end of the range. There's still a little bit of uncertainty out there, so we're being cautious in the second half of the year. We could see some still a little bit of bad debt. We don't know yet. Thank you. Thanks. Thank you. Next one on the line is Todd Thomas from KeyBanc Capital Markets. Hi, Todd. Hey, Todd. Hi. Good morning out there. Just first question, just sticking with acquisitions, maybe asking about sort of the pipeline or your appetite a little bit differently here. As it's been a little while since the company's been active on the acquisition front, there's been more discussion around asset sales and deleveraging in recent years, even leading up to the pandemic. I'm just wondering if you feel that the company's at an inflection point of sorts where you exit Sacramento later this year and whether we might start to sort of revisit or see investment volumes like ROIC was accustomed to completing in prior years, sort of $200 million-$300 million or more of acquisitions. Is that sort of what you're targeting and looking at a bit? Yes. Okay. Then the assets that you've lined up at the 6% initial yield, again, it seems like sort of higher yields than what we've been hearing for grocery anchor products and good locations. What are the right cap rates to be thinking about for future investments? Well, it's tough to predict, obviously, cap rates, and where we're going to be buying. Obviously, there's a lot that goes into buying an asset as it relates to the NOI, and more importantly, as you know, Todd, our expertise over the years is really buying high-quality assets in great markets and really driving those yields through our management style. The current environment, there's not much product on the market in terms of high-quality grocery, drug anchored assets. The ones that have traded have been in the sub 5% range. Again, it's hard to predict right now where exactly those cap rates are going to roll. Some are going to be probably in the five area, the low 5s, mid 5s. Some maybe will be in the low 6s. It's all about the characteristics of both the market and the asset as it relates to the yield that we're willing to pay going in. Again, the key there is really driving that yield, and that's what this management team does so well. Okay. With regard to disposition, so you completed the San Diego asset sale earlier in the year and you're looking to exit Sacramento. Is that it in terms of asset sales and culling the portfolio, or do you see a little bit more work to do on that front? No. When I say no, I mean the answer is we will continue to look at those opportunities and potentially churn more capital on the disposition side. The key there is going to be internal growth as it relates to how much upside the asset has left over the next several years. The good news is that the market out there seems to be very active right now in terms of 1031 buyers, institutional capital, that are willing to step in and pay pricing that we have not seen in the last several years. I think that's just a function of the marketplace and how tight the market is in terms of product. Okay. All right. That's helpful. Thank you. Thank you. Next one on the queue is Craig Schmidt from Bank of America. You are now live. Thank you. Good morning, Craig. Good morning. I'm wondering how long will demand continue to result in the elevated leasing volumes that you're experiencing. How long can that run before you think it returns to a more normalized level? Hey, Craig, it's Rich. It's always hard to predict what's coming, but right now what we see in terms of the leasing team is that this demand is here for a while. I think that it's coming from, as we touched on in the prepared remarks, a lot of people that had saw how well the grocery-anchored portfolio performed and are trying to stake their claim in that product type. Yeah. The other thing, of course, is supply. The key here as well in terms of demand is there's been very little supply on the West Coast. In fact, virtually nothing has been built as it relates to the product type that we buy. I think that's also driving demand because there's very little space available in the dominant high-income areas or dense and high-income areas on the West Coast. That's driving demand as well. There's just nothing out there for tenants to go to. The last thing, and that is the health of the tenant base. I think the pandemic has really strengthened the health of the tenants that have gone through the pandemic. I think that's also driving. Their balance sheets are in good shape, and I think that's really driving also demand in a pretty big way, Craig. It's a combination of all of that we believe will continue to really drive demand in the next several years. Okay. I know you were just recently opened in California on June 15th. Has that already impacted demand, or is that something that needs to lag, as retailers see the greater activity and people eating, dining out and all the rest? I think as we've talked on prior calls, I think, we're fortunate in terms of the markets that we're at. Most of the tenant base had already pivoted to being able to offer either curbside or dining outside or the rest. The demand has been there leading up to the lifting of the restrictions. Really, once those restrictions were lifted, it was just sort of an overwhelming demand from the customer's perspective. Okay. Just, how much do you think you might raise in the ATM in the second half of the year? Well, that will depend on pricing more than anything else. We can't estimate right now what we'll raise through the ATM, but we're going to continue to watch the market and continue to watch our stock price. If the opportunity arises, we'll raise more equity. Yeah. Okay. Again, we're going to focus on stock price. Yeah. I think our guidance kind of indicates on the high end, if we do $100 million, that's already basically funded with asset sale proceeds and the ATM activity we've already completed. Okay. Fair enough. We watch the stock price. Okay. That's it for me. Thank you. Thanks, Craig. Thanks. Next one on the line is Wes Golladay from Baird. You are now live. Good morning, Wes. Good morning, Wes. Hey. Morning, everyone. Just a quick question on the commencement of the $10.4 million of ABR. It looks like you got about $2 million this quarter. How should we look at the second half of the year? It's always hard to predict because there's a lot of factors that go into that. We're obviously always adding to the number as well as commencing as well. We think that it will probably stay in our historic range, in terms of commencement. As I say, we're always putting more things into the bucket. Yeah. No, I get that. Okay. Also on the Sacramento asset disposition, did you guys give a cap rate on that? No, we didn't. The cap rate on the asset we sold in San Diego was in the low fives, and the cap rate for the Sacramento assets are in the low 7 range. Okay. I guess maybe in the future dispositions, sounds like they may be more opportunistic. Where do you think you could transact at? Probably more like the range that we got in San Diego, because Sacramento is just the weakest of all five markets that we're in or seven markets that we're in. We have nothing left there. As we turn to the primary markets in terms of sales, you're certainly going to get what you got here in San Diego. Got it. Thanks, everyone. Thank you. Next one on the line is Mike Mueller from JPMorgan. You are now live. Good morning, Michael. Hey, good morning. Hey, just a quick one on acquisition disposition timing. Can you give us a rough sense as to when the transactions you've talked about are expected to close? We're expecting to close both transactions in August. We're expecting to sell both assets in August as well. In the next 30 to 60 days. That may take a touch longer because of the estoppels on the sell side. Over the I would tell you at some point late August, all of this should transact. Got it. All Q3. That was it. I appreciate it. Thanks. Sure. Thanks, Mike. Next one on the line is Chris Lucas from Capital One Securities. You are now live. Good morning, Chris. Good morning, everybody. Good morning, Stuart. Hey, maybe changing a little bit, talk a little bit about the shop space demand. Can you maybe provide some color on sort of where you're seeing it relative to local shop, tenant demand versus the national chains? Are there new or lines of business that maybe were not big parts of your portfolio pre-pandemic that are gaining shares as it relates to the share of ABR that you're leasing because of some of the changes that have occurred because of the pandemic? Sure. In terms of the profile, it is coming from all sectors, local, regional, and national. I think, probably the strongest demand is more from the regional and national operators, a bit stronger than the local. Local guys are still out there looking for good opportunities for space. In terms of the uses, it's still that same broad category of uses that we were seeing heading into the pandemic. Still significant interest from restaurant for any second-generation restaurant space. Where still lot of demand from boutiquey type of fitness and medical and pet, and veterinarian, things like that. A lot of services. It's broad based and I think our biggest challenge is having space to lease to them. There's a lot of demand out there. Thanks for that, Rich. I guess one of the more interesting, at least for me, issues that landlords and tenants and municipalities are going to be facing is, what do you do about the outdoor dining that's been sort of the permitting has been broadened or very loosened. You've got restaurants that are on end caps that have been able to essentially expand their capacity beyond what they're paying for in rent. What are you guys seeing? How do you think that plays out over the next year or two? Well, it's certainly been a big asset to a lot of our operators and as you were touching on, people have taken over sort of ad hoc type of space. We are currently working with a lot of our restaurants, to make that more permanent and as part of that process, getting more rent out of the tenant, and making these little less construction barriers and a little bit more attractive than what you saw during the height of the pandemic. The municipalities are going along with that? They are. In fact, a number of the municipalities on the West Coast, have extended a year out now, the ability to continue to use that additional space or common area space. I think it's going to be more permanent in nature, because I think what people realize and what cities realize is it attracts a more of a tourist base and a more bigger customer base. More importantly, from an operator perspective, a lot more profitability because they get a lot more space to deal with in terms of volume and customers and where we are at, where it's sunny most of the year, do enjoy having the outdoor space in terms of the environment. Okay, great. Thank you, Stuart. That's all I have today. Thanks. Thank you. Next one on the queue is Michael Gorman from BTIG. You are now live. Good morning, Mike. Good morning. Stuart, I just wanted to follow up, in terms of now as things are reopening. Just saw it come across that it looks like President Biden is going to ask to extend the residential eviction moratorium. Have you seen anything, in your core markets, whether it's how the courts are behaving or from local governments about extending any of those eviction moratoriums? The good news is that, across the West Coast, most of those moratoriums have not been extended. From that perspective, that has helped accelerate collections, and it certainly has put us in a very strong position in terms of resolving the last minor or small set of tenants that are still in business doing well and has not paid us rent. The only market on the West Coast that is still shut down is Los Angeles. They did extend their moratorium, and couple of other very small municipalities in Northern California. In general, things have opened up. Now, the bigger issue, Mike, is really the time as it relates to getting through the system, because the system was closed down for so long. Now that it's open, there's a backlog of cases. We certainly aren't getting UDs processed as quick as we would like, but that's changing quickly. More importantly, it's really getting the tenant to the table and getting this resolved very quickly. At the end of the day, that's really the objective here, is to keep the tenant in business because they're a good tenant, and resolve the outstanding issues that go back to the time where the pandemic was at its highest, when the markets were closed down. That's helpful. On the acquisition market, I know there's been a lot of discussion on this. I think one of your peers mentioned this morning that fewer and fewer people are willing to sell vacancy, just given the amount of bounce back we've seen in the markets, and you mentioned how you got a much better deal on the Northern California asset. Can you just talk a minute about not only the assets that you're seeing, but how buyers are underwriting them right now in terms of what kind of growth they're willing to project? If there's vacancy in the asset, what kind of timelines they're looking at for filling those up, and basically just what kind of assumptions are being baked into some of the acquisitions market right now? Remember what we're buying is high quality grocery drug anchored assets. From a vacancy perspective, you really aren't getting what you've seen in other segments of retail. That's sort of where you start in terms of answering your question, where there is some fractional vacancy due to the pandemic, but you're not seeing the higher vacancy that you would see in other segments of retail. From a vacancy perspective, that's really when you're looking at buying today, again, there is additional vacancy, but it's just not that dramatic. Rich, do you want to comment on the growth side? Well, yeah. I think just continuing on with the vacancy, when we're underwriting these properties, we're looking at in-place rents. Obviously we're putting some value on that in our own minds about what we can do with the vacancy that is there. We always want to be comfortable with what's in place the day we close. As Stuart touched on, these grocery-anchored centers really don't have a significant amount of vacancy that we would have to put any value on. Okay, great. Maybe just last one from me also on the acquisitions market. You've been talking for a while now about a lot of the embedded value in the portfolio and in the markets, about densification and higher and best use, especially as some of the municipalities become more favorable to some of these developments. Has it gotten to the point where, when you're out in the acquisitions market, that you're starting to bump into more mixed-use developers or people that are underwriting development potential, when you're competing against them on assets, even if you're not necessarily underwriting that yourself? Yes. Of course, the other thing is there is a slew of buyers out there that are looking at, what I would call owned pads and the upside in terms of selling those off, which we don't do. The good news about our portfolio is we own most of the real estate. You are getting a slew of buyers that are looking at, because of where the triple net market has gone, that there's some nice embedded value in stripping out some of the outlying pads in our centers as it relates to paying low cap rates. That's one way of cushioning, paying that type of pricing. That's really helpful. Thanks, Stuart. Yep. We do have a follow-up question from Wes Golladay from Baird. Good morning again. Good morning again, Stuart. Just a quick one for you on the Crossroads residential development. Do you have a time when you expect to break ground, and do you know the size of the project at this moment? The answer is yes and yes. Size of the project is 226 units, 15,000 sq ft of retail. The breaking ground, of course, subject to getting through the permitting process, is probably going to be, let's call it first quarter of 2022, maybe the second quarter. That's conservative, but that's when we're expecting that project to break ground. Okay. Maybe what about the cost and incremental yield on investment? I know you have the land basis already for free. Cost is about $80 million. Unlevered yield is, even with the increase in construction costs, is now trending about 6.5%-7%. Great. Thanks a lot. Yep. Next one on the line is Linda Tsai from Jefferies. You are now live. Good morning, Linda. Good morning. I just had one question. Can you remind us what contractual rent increases look like in your portfolio? Is this changing much in the leases you're signing today? Yeah. Typically, for a shop tenant, you're going to see around 3% annually. An anchor tenant, you're probably getting 10% every five years, so 2% annually. That would be sort of the range. Yeah, on a blended basis, 2.5%-3.5%, Linda. Is this changing at all? No, it really hasn't changed. I think as we touched on last quarter, there have been some renewals where we've kept the rent flat from the expiring to the initial, but we're still getting the increases going forward. We expect that to get better as we continue to move throughout the year and back to more of our historic, getting a better lift out of the gate. Great. Thank you. Yep. Next one on the line is Tammi Fique from Wells Fargo. You are now live. Good morning, Tammi. Hey, Tammi. Hi, how are you? Good. Good. You saw in the second quarter some fall off in billed occupancy. I know you still have some tenants that aren't paying rent. I guess I'm just wondering if you think there's additional fallout, or is that too few, kind of the bottom, the trough in terms of billed occupancy? I think as Stuart touched on, there's really a very small set of tenants that are still playing the moratorium game with us and holding out on some rent. Those are very, very few at this point. I think as you say, we see this getting better going forward. As these markets continue to open up and these tenants have to come to the table and resolve their open balances with us. Okay, great. Then I'm sorry if I missed this, but did you discuss the breakdown in occupancy between small shop and anchor occupancy this quarter? Sure, yeah. Our anchor space remained at 100%, and our shop space was 93.1%. Great. Thank you. Then, Stuart, you mentioned potentially getting back to historical levels in terms of acquisitions at some point. I guess, is your plan, as you think about doing that, to pre-fund those acquisitions with permanent capital, or do you intend to use the credit facility to fund that activity initially? Credit facility and cash on hand. Okay, great. Then just maybe one last question on the leverage that obviously ticked down in the quarter to 6.9x. Can you just remind us of what your longer-term objective is in terms of leverage? Is there any intention to kind of continue to pay down some of the secure debt, which I know is limited, that's coming due next year? Or maybe the term loan, just to kind of get that down to a lower level. Well, the term loan is swapped through August of next year, so that's kind of off the table in the near term. We have two property mortgages, one that we can pay off on March 1st and another one on April 1st, and the plan is to take those out and pay them off. As far as the net debt to EBITDA, very happy that it's below 7x. The goal is to have it to mid to low 6s. Okay, great. Thank you so much. Thank you. There are no further questions at this time. I will now turn the call over back to the presenters. In closing, I would like to thank all of you for joining us today. As always, we appreciate your interest in ROIC. If you have any additional questions, please contact Mike, Rich, or me directly. Also, you can find additional information in the company's quarterly supplemental package, which is posted on our website, as well as our 10-Q. Thanks again, and have a great day, everyone.