Welcome to Retail Opportunity Investments 2022 second quarter Conference Call. Participants are currently in a listen only mode. Following the company's prepared remarks, the call will be opened up for questions. Now I would like to introduce Laurie Sneve, the company's Chief Accounting Officer. Thank you. Before we begin, please note that certain matters which will be discussed on today's call constitute forward-looking statements within the meaning of federal securities laws. Although we believe that these forward-looking statements are based on reasonable assumptions, we can give no assurance that these assumptions will be achieved. These forward-looking statements involve risks and other factors which can cause actual results to differ significantly from future results expressed or implied by such forward-looking statements. These risks and other factors are described in the company's filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K. Participants should refer to the company's filings to learn more about these risks and other factors, as well as for more information regarding our financial and operational results. Now I'll turn the call over to Stuart Tanz, the company's executive officer. Stuart. Thank you, Lori, and good morning, everyone. Here with Lori and me today is Michael Haines, our Chief Financial Officer, and Rich Schoebel, our Chief Operating Officer. Building on the leasing activity and strong momentum that we generated in the first quarter, we continued to actively lease and renew space at a strong pace during the second quarter, achieving a new company record in terms of total square footage leased during the first six months of the year. As we sit here today, we've already leased more space thus far than what was originally scheduled to expire during the entire year. Additionally, our strong leasing activity drove our overall portfolio lease rate higher, reaching 97.6% as of June 13th, which is essentially on par with our record high portfolio lease rate prior to the pandemic. Our ongoing consistent success in leasing continues to be driven by the fundamental strong demand for space across our portfolio and markets, demand that continues to come from a growing broad range of necessity service and destination tenants. Along with leasing at a record pace during the first half of the year, we also had good success in growing our portfolio through our relationship driven acquisition program. Specifically, during this second quarter, we acquired three terrific grocery-anchored shopping centers for a total of $60 million. One center is located in the Seattle market, one in Portland, and one in the San Francisco East Bay market. All three are well situated in densely populated, affluent residential communities, and all three properties feature strong grocery operators along with a diverse mix of inline tenants. The blended going-in yield is just north of 6%, and we are already pursuing a number of re-leasing and repositioning opportunities that should enhance the underlying value going forward. We have already increased the blended occupancy on the three properties by 130 basis points. In addition to the $60 million that we acquired in the second quarter, we currently have a transaction under contract with a private developer that we've known for years. The transaction involves us selling one of our existing properties to developer while acquiring two of their shopping centers. In terms of the property that we are selling, it's a center that we acquired a number of years ago and implemented a value-add repositioning initiative. We've been contemplating selling the property for a while when the developer approached us. The developer owns an adjacent parcel and plans to integrate their parcel, our property, and several other adjacent properties to create a large mixed-use development. Our property is instrumental in development plan being able to move forward, which we're able to capitalize on to acquire as part of the transaction two terrific grocery-anchored shopping centers, both of which we have had our eye on for some time. The two shopping centers that we are acquiring both are located in the Seattle market. Just like the three centers that we acquired in the second quarter, both of these new acquisitions are also well situated in the heart of densely populated, affluent residential communities. One of the shopping centers is located just a few blocks from a new commuter train station that is currently under construction, along with a number of new multi-family developments. Additionally, each shopping center is anchored by longstanding strong performing supermarkets and pharmacies, as well as a great mix of inline tenants. In terms of the transaction pricing, we are selling our property for $37 million, which equates to a sub-5% exit cap rate. We are acquiring two shopping centers for a total purchase price of $60 million, which equates to a mid-6% blended cap rate going in. Looking ahead, there's the ability for us to quickly enhance value through leasing available space as well as re-leasing some near-term rollover. Additionally, there is a great redevelopment opportunity of a corner freestanding pad in one of the shopping centers. Once we close on this transaction, it will bring our total acquisition activity for the year thus far to $120 million, adding over 500,000 sq ft of grocery-anchored shopping centers to our portfolio. We are excited about these new acquisitions as they are an excellent strategic fit with our existing portfolio and offer numerous opportunities to enhance value going forward. Lastly, in light of our strong performance here today, the board has increased the company's quarterly dividend, raising it to $0.15 a share. Now I'll turn the call over to Michael Haines, our CFO. Mike. Thanks, Stuart. Starting with net income, for the three months ended June 30, 2022, the company had $11.5 million in GAAP net income attributable to common shareholders, equating to $0.09 per diluted share. For the first six months of 2022, GAAP net income was $23.1 million or $0.19 per diluted share. In terms of funds from operations, for the second quarter of 2022, FFO totaled $36.7 million, equating to $0.28 per diluted share. For the first six months of 2022, FFO totaled $72.9 million, equating to $0.55 per diluted share. With respect to same center net operating income for the second quarter, same center NOI on a cash basis increased 3.7% to $49.6 million and increased by 5.6% for the first six months of 2022. Turning to the company's financing activities, during the first half of the year, we raised approximately $25 million of equity through our ATM. We utilized the equity raised together with cash flow from operations and borrowings on our credit line to fund the $60 million of acquisitions in the second quarter. The acquisitions added $60 million of property assets to our balance sheet in the first half of 2022, while just $23 million of debt was added, which reflects our strategy of working to enhance our financial position in step with growing our portfolio. With respect to the company's debt outstanding, specifically mortgage debt, during the first half of the year, we retired two mortgage loans such that today we only have two mortgages remaining on our balance sheet. In other words, out of our entire 92 shopping center portfolio, we only have two properties that are encumbered. Additionally, with respect to the two properties currently under contract, we are acquiring both of them unencumbered. In terms of the company's overall debt profile, at June 30, 97% of our debt was effectively fixed rate, with the only floating rate debt being our credit line, which had $46 million outstanding at quarter end. Looking ahead, the $300 million of swaps that we put in place back in 2017 and 2019, effectively fixing the floating rate on our $300 million unsecured term loan. The swaps mature at the end of August. However, the actual term loan does not mature for another two and a half years. Given the recent rise in interest rates and the volatility in the debt market, we are currently planning to not replace the swaps for the time being. With the term loan not maturing until 2025, we have the flexibility and time for the market to settle back down, whereby we can make a prudent decision. The term loan bears interest of 100 basis points over LIBOR, which in today's market, the all-in rate is about on par with the swaps. Notwithstanding having the term loan float again, roughly 75% of our total debt will still be fixed rate, and we have no debt maturing for the next year and a half. Lastly, in terms of our FFO guidance, taking into account our leasing, acquisition, and financing activities year to date, we have raised our guidance range for 2022. We've raised the low end of our range to now be $1.08 per diluted share, which just as a point of reference, was actually the high end of our initial guidance that we set back at the beginning of the year. In terms of the new high end, we have now raised it to $1.12 per share. With respect to the underlying acquisition and disposition assumptions, the low end of the range assumes that we only acquire the two properties currently under contract during the second half of the year, meaning we acquire $120 million in total for the year while selling $70 million of properties, including the property under contract. The high end of the range assumes that we acquire another $80 million of properties in addition to the properties currently under contract, meaning acquiring $200 million in total for the year while selling $100 million of properties. Additionally, we've raised our same center NOI guidance range to 4%-5% growth for the full year. Now I'll turn the call over to Rich Schoebel, our COO. Rich? Thanks, Mike. As Stuart highlighted, the first six months of 2022 have been the most active on record for the company in terms of leasing. In total, we leased over 714,000 sq ft of space, surpassing our previous record that we achieved in 2019. Our record leasing activity helped to drive our portfolio lease rate higher during the second quarter. At June 30th, our portfolio stood at 97.6% leased, which is just shy of the all-time high portfolio lease rate that we achieved in 2019. Breaking our 97.6% portfolio lease rate down between anchor and non-anchor space, our anchor space continues to be 100% leased, and during the second quarter, we increased our shop space lease rate to 93.8%. Similar to what we experienced in the first quarter, our leasing activity in the second quarter centered around tenant renewals. Of the total 298,000 sq ft that we have leased during the second quarter, over two-thirds of that was renewal activity, with many tenants coming to us early. In fact, of the four anchor tenants that we renewed during the quarter, three were not scheduled to roll until next year. Additionally, capitalizing on the strong renewal demand, we continued to make the most of the opportunity to strengthen key lease terms and drive renewal rents higher. Specifically, for the second quarter, we achieved a 10.5% increase in renewal base rents, which is actually a bit higher than our historical average, which prior to the pandemic, was typically in the 8%-9% range on average. In terms of new leasing activity, we also continued to have good success. Given the strong demand for space, yet limited availability across our portfolio, we continue to be selective with the new tenants that we are signing, with the goal being to strategically enhance our tenant diversity and further our necessity and service focus with each new lease. During the second quarter, we signed 38 new leases, all of them being inline tenants, the bulk of which are in the health and wellness sector. Historically, shop tenants have typically looked to sign shorter- term leases, with five-year leases being the norm on average. However, today, an increasing number of shop tenants are seeking to sign leases with longer -terms, some as much as 10 years. We think this trend is another positive sign of the long-term fundamental strength and appeal of our portfolio, as well as the strength of the type of tenants that we are focused on. Additionally, just as we are doing with renewals, we are capitalizing on the shop space demand to achieve more advantageous lease terms while also achieving solid rent growth. Specifically for the second quarter, we achieved a 16.7% increase in same space cash base rent. Along with the actively leasing space, we continue to have good success in getting new tenants up and running, with the second quarter being the most active quarter on record for the company in terms of getting new tenants open. Specifically, at the start of the second quarter, we had $9.6 million of annualized base rent from new leases where the new tenants had not yet taken occupancy and commenced paying rent. During the second quarter, we were successful in getting over $2.7 million of the $9.6 million open and operating, which is the largest dollar amount to commence during any quarter on record for the company. Taking into account new leases that we signed during the second quarter, totaling roughly $1 million in incremental rent, at June 30, we had $7.9 million of annualized base rent that has not yet commenced. We currently expect the bulk of the $7.9 million will steadily come online as we move through the second half of the year. Now I'll turn the call back over to Stuart. Thanks, Rich. Given our strong performance year to date, we are well positioned today as we head into the second half of the year. Demand for space remains strong across our portfolio, and we are continuing to make the most of it. In terms of acquisitions, we continue to be actively engaged in seeking out additional off-market opportunities. That said, while the recent rise in interest rates haven't yet impacted pricing, anticipating that it could, we intend to be patient and cautious going forward, which could mean possibly slowing down our pace of acquisitions during the second half of the year, as is reflected in our latest guidance. In terms of dispositions, we are currently in the process of bringing two properties to market, both being redevelopment properties, which we think could generate in total around $30 million-$35 million in proceeds. Additionally, we are currently considering selling several other properties later this year that could generate another $30 million, give or take, in proceeds. Lastly, looking ahead, notwithstanding the macroeconomic environment, the long-term fundamentals in our markets remain sound, both in terms of demographics and our markets being highly protected and supply constrained. As such, we remain confident in our ability to continue building value. Our confidence is grounded in our decades-long singular focus on operating grocery-anchored shopping centers on the West Coast. Over the years, we have successfully operated and grown through numerous challenges, ranging from economic volatility to online retailing to most recently, the pandemic. Time and again, our grocery-anchored portfolio and diverse tenant base have proven to be resilient. Capitalizing on this resiliency and our nearly 30 years of operating experience, we've been successful in generating consistent results through it all and expect to continue to do so going forward. Now we will open up your call for questions. Thank you. At this time, participants, if you would like to ask questions, please press star one on your telephone keypad. We'll just compile the questions. Speakers, your first question comes from the line of Juan Sanabria. Please go ahead. Good morning, Juan. How are you? Hi. Good morning. Just wanted to ask about the guidance. It implies basically no growth off of the first half and the second quarter run rate, yet the fundamentals sound great. You've got some of the leased but not commenced to starting to or steadily coming online in the second half, and you've done accretive acquisitions. I'm just trying to get a sense of what to assume in there, if there were any one-timers in the second quarter that maybe won't repeat. If you could just give us a little extra color around the guidance and some of the assumptions, that'd be fantastic. This is for Juan, are you referring to, like, same store guidance? Nareit FFO. FFO. The answer, I don't think there's anything that a one-time event that's occurred that will not occur in the second half of the year. I think that's what he's asking, Mike. Yeah. I would think that, you know, Q3 and Q4 should be tracked along the same line. That's why we raised our guidance a bit. You know, we've got strong leasing activity that's driving cash base rents and straight line rent for that matter. Obviously FAS 141, which is in our numbers, which is reflected in the release too. Think it should be steady as she goes for FFO for the rest of the year. Okay. Just to confirm. Despite the leased but not commenced kinda coming online in the second half and the accretive acquisitions relative to some of the funding on the dispositions, no increase versus the second quarter run rate on an FFO basis assumed for the second half? It seems a little conservative, I guess. I think, you know, we're probably, you know, given the current economic environment, you know, we're remaining somewhat cautious and conservative because we don't know what's. You know, we'll find out more today and tomorrow when we hear about GDP and the Fed rate rise. You know, we're just being cautious about the second half of the year given the economic uncertainty out there right now. Okay. That makes sense. Then just on the disposition front, you mentioned a couple assets, kind of on the market and a couple others potentially coming. Any sense of how pricing may be changing given the change in capital costs that you mentioned on the prepared remarks? Just curious what you guys are thinking that how cap rates may change, given the moving rates. Well, certainly in terms of the acquisition market, I mean, thus far, we haven't seen any change in terms of pricing on cap rates for grocery-anchored assets. As it relates to selling these assets, we are anticipating in the sale of these assets that cap rates are probably gonna stay in a pretty tight range. You know, even if things change, you know, from the macro side, we still think we're gonna get some pretty compelling valuations in terms of selling these assets. Okay. Sort of five-ish cap rates in line with what you've been selling to date. Does that sound fair? I would expect it to be in that range, correct? Great. Thank you very much. Thank you. Thanks, Juan Sanabria. Thank you so much. Your next question comes from the line of Craig Smith from Bank of America. Please go ahead and ask your question. Good morning, Craig. Hi, Craig. Good morning to you. Listen, you know, given the broader pullback in consumer spending, do you see that having any impact on ROIC's 2022 full year results? Well, certainly in terms of the acquisition market, I mean, thus far, we haven't seen any change in terms of pricing on cap rates for grocery-anchored assets. As it relates to selling these assets, we are anticipating in the sale of these assets that cap rates are probably gonna stay in a pretty tight range. You know, even if things change, you know, from the macro side, we still think we're gonna get some pretty compelling valuations in terms of selling these assets. No. When I say that, obviously, you can't determine the depth of that pullback. Certainly what we have seen in the past in terms of operating grocery-anchored centers on the West Coast is that the impact. We haven't seen much impact. Depending on the severity of the impact, right now things continue to be very strong in terms of the momentum that we had in the second quarter. We haven't seen any impact on the ground. Leasing continues to be strong. Renewals continue to be strong. No impact so far, Craig. If something does occur, I don't think it's gonna have much impact from what we can see right now. This lack of impact, is it due to your grocery focus, essential-based tenancy, or is it due to the fact that your leases are already done and put to bed and, you know, a horrendous scenario in the second half of the year, you're still gonna see those increased activity in leasing? Yeah. I mean, look, I think the momentum is still there across the whole sector. More importantly, it's really owning that grocery-anchored shopping center. We've seen traffic pick up on the ground in terms of the number of visits. What we've also seen is that even as we've seen a very high inflation rate, most of those customers are redeploying their savings back to what we would call necessity retail. We've seen an actual increase in sales from the grocers and other tenants, as well as foot traffic. All in all, we're pretty confident right now that, you know, that grocery-anchored center format is gonna hold up pretty strong. Great. Just third quarter leasing volume activity, do you think it'll be above the 297 you achieved in second quarter? Well, the quarter started out very strong, I will tell you. Rich, I don't know if you wanna add to that. Yeah. It's always a bit hard to predict, Craig, you know, because, you know, being highly occupied like we are, you know, these opportunities, you know, in terms of replacing tenants and that sort of thing are not always easy to identify in advance. We would expect that the leasing activity, as Stuart said, has started out. The quarter started out very strong. The leasing team is very busy, you know, identifying new tenants to you know replace tenants that are leaving. We would expect it to be on par with what we've done historically. Okay. Thank you. Thanks, Craig. Thank you, Craig. Thank you so much. Your next question comes from the line of Todd Thomas from KeyBanc Capital Markets. Please go ahead and ask your question. Good morning, Todd. Hey, Todd. Hi. Thanks. Good morning. First question, Stuart, Rich, you know, the portfolio's performing well, and you talked about, you know, leasing activity in the quarter and bad debt expense was also, you know, at a minimal level during the period. As you look out, are you starting to see, you know, any pushback or response from tenants in the portfolio related to the inflationary pressures that they're seeing? You know, maybe I'm just curious if you can comment on the local tenants in the portfolio specifically. Sure. We're not seeing any pushback from the tenant base. I mean, I think obviously there's concern out there with certain users. Depending on the use. There has not been any pushback. Collections are going well. You know, I think that you know, coming out of the pandemic, the tenants that are still in the portfolio are very strong, have a very loyal following. You know, I think being highly occupied like we are, you know, these tenants are here for the long haul. You know, I think the demand for our type of product has increased. We are still seeing a broad demand from, you know, various types of tenants looking to get into the grocery- and drug-anchored shopping centers. Okay. For tenants that are looking to sign longer term leases, you know, Rich, you mentioned that you're seeing an increase in 10-year deals for shop tenants up from the more typical five-year term. How does that change the discussion, you know, around starting rents and escalators? Yeah, I mean, the typical scenario is someone will come to us. They have a five-year option, you know, that's probably at a fixed rate, but they now wanna, you know, lock in more term. In order to do that, we're gonna get more rent initially than would have been achieved if they just exercised their option as is. I think this is being driven by tenants understanding that, you know, there's been virtually no supply added in these markets. You know, if they have a good business on a great location, they really wanna secure it for as long as they possibly can. We take advantage of that, as mentioned in the prepared remarks, by, you know, driving the rents higher and also, you know, fixing any leakage that might be in the CAM numbers or whatever else, you know, existing restrictions that might be in the lease to, you know, allow us more flexibility down the road. So it's really been working out well for us. Okay. What% of tenants renewed in the quarter? You know, I know tenant retention's been elevated in the near- term. Or do you expect to see that moderate a little bit, you know, with tenants moving out? Or do you expect, you know, to see that remain at higher levels going forward? Yeah, I mean, I think our retention rate is probably a touch higher than it has been historically. You know, in fact, I think, you know, some of our, you know, challenge for the leasing team is getting a space back. You know, the options that are out there can sometimes, you know, prevent us from bringing in a new tenant. So if anyone, you know, shows any hesitancy to stay, you know, we have a few examples that we'll be seeing in the third quarter. We've been able to go out, find a replacement tenant ahead of the expiration, get them in for permitting so that when the tenant that's, you know, demonstrated any hesitancy when their lease is up, that we're able to deliver the space and get them open and reduce that downtime between the two tenants. You know, again, the demand's there. Anyone who shows any hesitancy, we've got a list of tenants ready to go. Okay, that's helpful. Just a last one. Stuart, just a question about the dividend increase. You know, it's about $10 million or $11 million for the year going forward, which isn't insignificant. Was that because of the improved outlook and the board having more confidence today, or was it mostly consistent with, you know, the increase in taxable net income that you're anticipating for the year? It's just a combination of the momentum that we're seeing coming out of the pandemic. Mike, from a tax viewpoint, I think that also played into it. It's really based on our projected taxable income. We're still trying to, you know, preserve as much free cash flow as we can, but still satisfying our redistribution requirements. Okay, great. All right. Thank you. Thank you. Thank you. Your next question comes from the line of Michael Miller from J.P. Morgan. Please go ahead. Good morning, Mike. Hi, Mike. Going back to the quarter's disposition and acquisition cap rates, I think you said it was about five or sub-five on the dispo, mid-6s on the acquisitions. Just curious, the mid-6s is, you know, higher than the about five you're talking about for upcoming asset sales. I guess, what was there anything unique to that transaction? I think you may have said it was value add, but typically when I think of value add stuff, it's always a lower going in yield, then it kind of goes to something higher down the road. Was it, you know, part of the overall transaction where the buyer really needed your project, so you got a better price on the acquisition because of it? Well, look, I think the sales valuation takes into account, Mike, not just the in-place income, but also the fact that our property, again, was key to the developer in terms of him moving forward with his mixed-use development. From the other side, it's, we got a better deal because there's some near-term rollover and some repositioning opportunities that was reflected in the pricing, which plays into our strength. You know, it was really a combination of finding a transaction that was a win-win for everyone. Got it. I think you said that the go forward disposition cap rates, you're hoping you're still gonna be in that roughly 5% range. If you end up coming toward the higher end of the acquisition range, based on what you're looking at now, are the cap rates closer to that 5% or just, you know, higher? Well, we'll see. You know, I think they're gonna stay pretty in that tight range. Remember, in a couple of these acquisitions are properties that, you know, that are valued based on the development opportunity, right? This is densification that we're selling. You know, it's hard to sort of quote an exit cap rate, because that would be misleading given the fact that, you know, this is entitled land. Got it. Okay. Just one other quick one. For the sequential base occupancy and leasing gains, what was any of that influenced by the quarter's acquisitions, or was it 100% kind of organic increase from leasing? Yeah, no, it was not impacted by the acquisitions. Got it. Okay. That was it. Thank you. Thank you. Bye. Thank you so much. Your next question comes from the line of Paulina Rojas Schmidt from Green Street. Please go ahead. Good morning from the West Coast. It's early for you. Very, very early. I am doing the best I can. I see operating expenses, net of tenant recovery have been a drag for you this year. Can you share what you're seeing here? What are the specific line items that we see in operating expenses driving this increase? Is it wages? What should we expect going forward? I mean, we don't see a big change in the recovery rate. In fact, you know, as we touched on, you know, we're getting a little bit better terms on some of these new leases we're doing and on the rollover, where we're trying to, you know, plug any, you know, leakage in the recovery rates. I think, you know, what you're seeing in the numbers there is just a, you know, a one-time anomaly, and the recovery rate will be consistent going forward, if not a touch better. In terms of local tenants, can you remind us how much of your current ABR comes from mom-and-pop tenants with only maybe a handful of stores instead of national or regional retailers with a large presence? Yeah. I mean, I think, you know, while the local tenant base is still a good, you know, component of our tenant base, you know, I think the changes in the industry over the years has really moved more to the regional and multi-unit operators, along with the national tenant base when we're talking about shop spaces here. While they're an important component of the tenant base, they've actually become a bit smaller, you know, as the years have progressed, where we're now seeing, you know, multi-unit operators really, you know, driving that shop space. Okay. Maybe the last question. Can you talk about the general terms and access you're seeing for the different sources of debt, CMBS, banks, life companies? I'm sorry. Paulina, can you say that again? You're looking for the sources of debt? How are you seeing terms and availability for the different sources of debt? Because I know you have one note expiring at the end of 2023. Yeah, how do you see availability from CMBS, banks, life companies in general? Yeah. Well, I think by and large, you know, you know, obviously we have our credit line, but to refinance the bonds coming up at the end of next year, we've got the options to go do a public offering or private placement notes. We've always tried to keep the properties unencumbered, so I don't know the way we would do any kind of CMBS or mortgage level debt. We keep it unencumbered at the corporate level. Primarily public and private bonds. Okay. Well, thank you. Thank you. Thanks, Paulina. Thank you. Thank you so much. Your next question comes from the line of Linda Tsai from Jefferies. Please go ahead. Thank you. Thanks, Paulina. Thank you. Thank you so much. Your next question comes from the line of Linda Tsai from Jefferies. Please go ahead. Good morning, Linda. Linda. You discussed small shop leasing strength. In terms of the 93.8 shop space occupancy, is your expectation this is higher by year-end? Yes. I mean, look, the momentum continues to be strong, Linda, from all aspects of the spectrum, you know, regional, national, and local. Obviously, we don't have much space left to lease in the portfolio. A lot of what we have is obviously in-line space, or all of it's in line. We are expecting that momentum to continue. I don't know if I would tell you it's all coming from the local tenant base. It probably will. You'll see, as Rich has articulated, a number of tenants that operate regionally take some of the space, but certainly the momentum in terms of filling that in-line space continues to be very strong. Thanks. In terms of small shops looking for longer lease terms, what's the trend like for anchor leases? I saw that the 4 renewals for anchors had a weighted average lease term of 4.3 years this quarter. Yeah, it's the same scenario. Obviously, it depends on the operator and the particular lease, but we are still working with several of our anchor tenants who, you know, maybe only have one or two options remaining. They wanna reset the lease, you know, maybe instead of having, you know, a fair market value option, you know, we're getting fixed option rents, but, you know, extending them instead of five years, 10 years with, you know, four or five-year options. Those discussions are still going on. You know, some of our anchor leases are now getting near the end of their term because they've been in place and operating successfully for so long. That's still an opportunity that we're working on with these anchor tenants. Thanks. Just last one. With some of the debt that you took on this quarter to fund acquisitions, your leverage ticked up a little bit higher. What level are you comfortable with going forward? That 6.5 range, we're comfortable at. Again, remember that, you know, we're dealing with a portfolio that is close to full occupancy. You know, we're comfortable where, you know, at that 6.5 range. It may tick up a bit, it may tick down a bit depending on growth, you know, selling assets. All in all, that's our comfort range. Thanks. Thank you so much. Again, if you would like to ask question, please press star one on your telephone keypad. We have our next question from the line of Craig Mailman from Citi. Please go ahead. Good morning, Craig. To circle back to guidance a bit with a few follow-ups. First off, you guys mentioned the swap burning off here. From a cost perspective and drag perspective, kind of what's the expectation in back half guidance related, I guess, mostly that $100 million term loan, from a cost and impact perspective? Well, Craig, based on the LIBOR forward curve, which I look at it every week, and it kind of, as you know, changes as the market changes. Based on that, we're currently assuming that there's a slight nominal amount of increase in terms of our overall interest expense that relates to the swaps for this year. Just keep in mind that 75% of our debt is still fixed rate even beyond that, so nominal amount of increase this year. What's the net impact if you just look at the swap rate versus what the LIBOR curve is telling you? Well, our swaps are just over 3%, so if I add 100 basis points to the current LIBOR, you're right in that range anyway. That's why I said it's kind of a nominal impact. I'm sure you keep an eye on the LIBOR curves as well. They've been coming down over the like last weeks. I think that's probably a reaction to the potential that the Fed won't be able to raise rates quite as high as they anticipated they could, given the potential recessionary factors. Okay. The second piece, on the $80 million of potential acquisitions, you know, versus the $30 million-$35 million dispositions. I know you guys may even throw a $30 million behind that. From a timing perspective, what are you guys assuming for the dispositions versus, you know, when you could actually land acquisitions if possible? Well, look, the pipeline is strong, Craig, right now, in terms of sourcing off market transactions. I don't think I've seen it, you know, this active in a little while, from our perspective. You probably will get some of the acquisitions done a bit earlier than the dispositions, because dispositions have, you know, you have to market properties. I think when you look at the acquisition disposition timetable here, I think you'll see acquisitions come in a touch quicker as we get through the year and dispositions following that right after. Everything could happen at the same time. It just depends on the transaction. Okay, that's helpful. Just one more from me, and then I know Michael has one. You know, you guys have reiterated that tenant credit is looking very strong here. I'm just curious, especially, you know, some of the non-discretionary retailers have just had some real margin problems around just product mix and other things. From a coverage perspective, I mean, has there been any material impact when you guys look at rent coverage ratios and, like, how much more these retailers would need to be stressed, especially as rents have risen here the last couple years? Occupancy costs continue to trend and have been trending in a very good place, you know, as sales have gone up. When you look at our tenant base, necessity-based retail, we're really not seeing much deterioration at all or very little right now. In fact, in a lot of cases it's been the opposite. Obviously, we're still a bit early in this game in terms of watching the market, Craig, but we are watching what's going on, obviously, on the ground. We're not seeing anything right now or any indication right now that we'll see a deterioration in terms of necessity-based retailing. on the other hand, you know, we are looking at, you know, a much broader spectrum of retail, and we are starting to see some cracks, you know, in other types of retailers. Most of those retailers we don't have in our portfolio, and if we do have them, our exposure is minimal in terms of any impact to ABR. Hey, Stuart, it's Bill Lenehan. Quick question. As you think about, you know, some of these projects that you've looked at from a redevelopment intensification perspective, it sounds like potentially two upcoming sales, you know, or projects that you know have that potential. Has your mind shifted a little bit in regards to those projects? You know, I think back a number of years ago, you know, you had someone underwrite the entire portfolio, and they came out and said, oh, you know, based on a review of these projects, we could see upside of $4 a share and, you know, all of those things. Is your mind shifted on that today? It's a great question, Mike. Mike, you've known me and this team for decades at this point. There is a reason why we're not in the development business. That reason is because of some of the experience we've had looking at densification and the process to get to the finish line. It's because the West Coast is so tough to entitle, because of the topography and more importantly, the entitlement process. What we've learned over the years and what we continue to see is that the process is long. Tons of roadblocks when you don't think you have any. Costs obviously have gone up in the current environment. To try to answer your question, if I look back at the 20 projects that we initially looked at, and we're still working on a number of those, our mind is certainly in the same place in that we're glad we're not in the development business. Right now the focus is to get these projects entitled, and as you've seen, sell them, except for The Crossroads. The Crossroads is such a unique project and brings so much value to the shareholders. We're still contemplating building that out and obviously, you know, using a third party to operate and manage. Right. I guess from your standpoint, being able to liquidate these assets at arguably lower cap rates than, you know, where they would sell for as operating assets, given that redevelop or densification opportunity and roll that capital into, you know, acquisitions that you've had your sights on. Thank you for reminding me we've known each other for decades. You know, assets in the marketplace that you've been looking at, and if you're able to grab those at, you know, an above average cap rate given the relationship, you know, the accretion will show up from a long-term perspective on that spread and future growth. Is that a fair way to think about it? Exactly. All right. Exactly. Okay. All right. Thanks for the time. Thank you. Thank you so much. Your next question comes from the line of Christopher Lucas from Capital One. Please go ahead. Morning, Chris. Hey, Chris. Good morning, guys. Good morning. Hey, couple of follow-up questions, I guess, maybe starting with you, Rich. Just as it relates to the leasing conditions, it doesn't sound like, but I'd like to make sure that I understand. You're not seeing anything change in terms of the tenant, you know, the sort of sales cycle of leasing, you know, new deals. There's no delays. You're not really finding that tenants are dragging their feet at all at this point in the macro environment. No, I think the demand is stronger than it has been. You know, I think it has taken me a touch longer on some of the negotiations, a little bit more back and forth. Beyond that, you know, there's still multiple tenants vying for the spaces that come available. You know, we're capitalizing on that, to, you know, get the best deal we can. I think, you know, time to execution is probably a touch longer, but demand is as strong as ever. Okay. Thank you. I just wanna make sure I understand what you were saying. As it relates to sort of the tenant buying or looking for 10-year deals versus say the typical five-year deal, are you saying that you're willing to give on the fair market value extension option and move to a fixed option in exchange for that 10 -year lease deal? Well, obviously every you know transaction has to stand on its own. There are certain you know leases where you know it's a you know potentially a fair market value with an appraisal concept and you know a cap on how high it can go. If we can change that into you know whether it's fixed annual increases or a large increase every five years with certainty you know we will look at that transaction lock up a tenant for 10 years versus five years give them a few more options at the back end and get more rent today than we would have if they'd just taken down their five-year option. Okay. We're basically trading, you know, rent for term. We're getting more rent for additional years of control. Okay. Appreciate that. I don't know if this is for you or for Mike, but on the signed to build spread, that's the $7.9 million, how much of that is expected to sort of begin or commence, you know, in 2022? Of that $7.9- We expect most of that will come online in 2022. Obviously, we'll be adding to it as we go throughout the remainder of the year. Of the $7.9 that's sitting there right now, we expect that most, the majority of that'll be online by the end of the year. Stuart, last question for you from me, which is, you know, just trying to understand how you're thinking about the markets you're in. You put a lot of capital, fresh capital into the Pacific Northwest, and I guess I'm just curious as to whether or not this was driven by opportunity or is this a conscious effort on your part to balance the portfolio with maybe a little bit more Pacific Northwest exposure? Well, historically, the Pacific Northwest has been a very hard market to penetrate in terms of gaining market share. If you go back the last 25 years in operating both companies, it's only been a few times. The only way we've been able to penetrate these markets is really during the height of a recession, the height of the credit crisis, where we've been able to get a hold of a very, you know, high quality, well-located assets in these markets. These markets are not like California in terms of size, geography, topography, and other things. They're very difficult markets to penetrate. We've done an amazing job over the last 12 years in gaining so much market share in these markets. The answer is, if I could buy and own more, I would love to do that and continue to do that. It's very difficult, Chris. I mean, it really comes in waves, and we've had the opportunity more recently to gain a foothold, a bigger foothold in these markets, which long- term is really gonna create a lot of value for shareholders. These are just historically been really good markets. These acquisitions really weren't a question of balancing what we have. It was really seeking out the opportunity when it arose. That, you know, we'll see how the balance, you know, the rest of the year holds in terms of acquiring other assets. We are certainly committed to the Pacific Northwest long- term, and it continues to deliver some really good value for shareholders. Great. Thank you. That's all I had this morning. Thank you. Thanks. Thank you so much. We don't have any questions. I would now like to turn the conference back to Stuart Tanz for closing remarks. In closing, I'd like to thank all of you for joining us today. If you have additional questions, please contact Lori, Mike, Rich, or me directly. Also, you can find additional information in the company's quarterly supplemental package in 10-Q, which are posted on our website, as well as our new ESG annual report. Thanks again, and have a great day, everyone.