Hello, and welcome to the Retail Opportunity Investments 2022 Third Quarter Conference Call. All 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 Silveira, the company's Chief Accounting Officer. You may begin. Thank you. Before we begin, please note that certain matters that will be discussed on today's call are 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 that are expressed or implied by such forward-looking statements. These risks and other factors are described in the company's filings with the SEC, 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 Chief 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. The strong demand for space across our portfolio and our ability to capitalize on the demand continues to be the main headline story this year for ROIC. We continue to lease space at a record pace. In fact, in just the first nine months, we have already leased 1.2 million sq ft of space, which is a new record for the company. In step with leasing space at a record pace, we continue to steadily increase our overall portfolio lease rate as we move through the year. Today, our portfolio stands at a very strong 97.8% leased. In terms of re-leasing rent growth, we are pleased to report that we had one of the best quarters on record for the company, achieving a 48% increase in cash base rents on new leases signed during the third quarter. With respect to renewal activity, existing tenants, especially core long-standing anchor tenants, are increasingly coming to us early to renew their leases, in some cases by as much as 9 months to a year in advance of their lease expirations. As a result, we are renewing space at a record pace. Turning to our investment activities, capitalizing on our long-standing off-market relationships, during the first 9 months of the year, we acquired 5 terrific, well-established, grocery-anchored shopping centers totaling $120 million, including two that we acquired during the third quarter for $60 million. All five of the centers are well situated in densely populated, affluent residential communities and feature strong grocery operators along with a diverse mix of in-line tenants. The blended going-in yield on $120 million is in the low-to-mid 6% range. There are a number of re-leasing, repositioning, and value-add opportunities that we are already aggressively pursuing. In fact, in just a few months' time today, we have already increased the blended lease rate on the five properties by approximately 200 basis points thus far. Additionally, the new acquisitions are located within our core markets, where we have an established presence, thereby enhancing our ability to maneuver tenants among our centers and continue capturing the strong demand for space. Looking ahead, while we continue to keep a close eye on the acquisition market, given the current economic uncertainty and the ongoing rise in interest rates, we believe that the prudent approach in this environment is to pause our investment activity for the time being and wait to see how the market evolves. Now I'll turn the call over to Michael Haines, our CFO. Mike? Thanks, Stuart. GAAP net income attributable to common shareholders for the three months ended September 30, 2022 was $18.5 million, equating to $0.15 per diluted share. In terms of funds from operations for the third quarter, FFO totaled $36.5 million, equating to $0.27 per diluted share, as compared to FFO of $32.6 million or $0.25 per diluted share for the three months ended September 30, 2021. With respect to our Financial results for the first nine months of 2022, GAAP net income attributable to common shareholders totaled $41.7 million or $0.33 per diluted share. In terms of FFO, the company had $109.4 million in total FFO or $0.83 per diluted share for the first nine months of 2022, as compared to FFO of $95.3 million or $0.74 per diluted share for the first nine months of 2021. In terms of the company's investment activities during the third quarter, we funded the acquisitions primarily through a combination of proceeds from a property sale and free cash flow from operations. Importantly, during the third quarter, while our gross real estate assets grew by $42 million, our total principal debt only increased by less than $6 million. As a result, our net debt to annualized EBITDA went from 6.7 times for the second quarter down to 6.6 times for the third quarter. While our shopping centers continued to perform well, in fact, ahead of our initial property level budgets thus far for 2022, at the corporate level, we are not immune to the Fed's ongoing initiative of raising interest rates to curb inflation. Specifically, during the third quarter, the company's interest expense increased by approximately $300,000. As of September 30th, approximately 26% of our total debt was floating rate. In terms of the 74% that is fixed rate debt, nothing is scheduled to mature between now and the end of 2023. Beyond that, our debt maturity schedule is well-laddered. In terms of our FFO guidance for the full year of 2022, we have narrowed our previous range of $1.08-$1.12 per share to now be a range of $1.09-$1.11 per share. In anticipation that the Fed will raise rates again during the fourth quarter, our new guidance range takes into account about the $1.2 million-$1.5 million of added interest expense on top of our Q3 interest expense. Our tighter guidance range also takes into account no additional acquisitions or dispositions between now and year-end, as Stuart noted. Lastly, our guidance range continues to assume that same center NOI growth will be in the 4%-5% range for the full year. For reference, during the first nine months of the year, same center NOI increased by 4.4%. Now I'll turn the call over to Rich Schoebel, our COO. Rich? Thanks, Mike. As Stuart highlighted, demand for space across our portfolio continues to be strong, and we continue to make the most of it to drive our leasing results to new heights. Specifically, the third quarter proved to be our most active year to date, leasing over 480,000 sq ft of space during the quarter, bringing our total leasing activity thus far for the year to 1.2 million sq ft, which, as Stuart indicated, is a new record for the company, surpassing our previous nine-month record that we achieved four years ago. Additionally, our strong leasing activity continues to drive our portfolio lease rate higher. You may recall that at the end of the first quarter, our portfolio stood at 97.2% leased, which we increased to 97.6% in the second quarter. Today, as of September 30, our portfolio lease rate has now increased to 97.8%, which is just shy of a record high 97.9% lease rate that we achieved in 2019. Notwithstanding being essentially fully leased, we continue to work hard at capturing the demand for space through finding creative ways to free up space within our portfolio, primarily through a combination of recapturing space early, shifting certain tenants, and right-sizing others to make way to not only accommodate key long-standing existing tenants who are seeking to expand, but also to create space within our portfolio to bring in more and more new destination tenants and enhance our overall tenant mix. Just to highlight a few examples, during the third quarter, at one of our shopping centers in the Pacific Northwest, a new tenant that had recently opened introduced us to a group that's looking to roll out a new cultural center concept on the West Coast and seeking to lease space at our property for their inaugural location. Notwithstanding our shopping center being 100% leased, we went to work and proactively recaptured a space early that wasn't scheduled to expire until next year. With the new lease, we are achieving a significant increase in rent, and equally important, we expect that the new tenant will become a terrific, unique draw to the center. We are currently in discussions with the group about rolling out their cultural center concept at a number of shopping centers across our portfolio. To cite another example, we were recently approached by a prominent, successful rock climbing gym operator on the West Coast who was seeking space specifically at one of our Southern California shopping centers. However, we didn't have enough available space at the center for their needs. Rather than turning them away, we quickly went to work maneuvering several inline tenants and combining their spaces with unused space at the back of the property to create the ideal space for the gym operator. Again, we achieved an increase in rent while also bringing a great new destination tenant to our center. Additionally, at another one of our Southern California shopping centers, we were recently approached by a national tenant seeking to lease a junior anchor space. Again, rather than turn them away, instead, we went to an existing anchor tenant and successfully recaptured a portion of their space, specifically space that they had been subletting to another tenant. The new lease with the new national tenant is at a significantly higher rent, and we're able to structure the deal such that there is effectively no downtime in terms of rent and only requires a minimal amount of TIs for the new tenant. Along with these new tenants seeking space, a growing number of our existing restaurant tenants continue to come to us seeking to expand their spaces to accommodate additional seating areas as well as new bar spaces, and they are looking to extend their lease terms. In addition to these traditional dine-in restaurants seeking to expand their spaces, a broad range of food service businesses continue to seek out our shopping centers looking to open new grab-and-go concepts, which are proving to be very popular and profitable. We continue to work creatively to bring these new tenants into our portfolio. In terms of renewal activity, as Stuart noted, we continue to have a very active, successful year. Specifically, year to date, we've already renewed 884,000 sq ft of space, including renewing 349,000 sq ft of space in the third quarter alone. As Stuart touched on, a growing number of existing tenants are coming to us early to take down their options, especially as it relates to key anchor tenants. In fact, of the 182,000 sq ft of anchor space that we renewed during the third quarter, over three-fourths of that were anchor tenants with leases not due to be renewed until next year. Lastly, in terms of lease versus build, during the third quarter, new tenants representing approximately $1.4 million in annual base rent opened and commenced paying rent, bringing our total thus far for the year to $6.1 million of annual base rent from newly opened tenants. In terms of additional new leases signed, given our strong leasing activity, during the third quarter, we signed new leases representing an aggregate $2.7 million of annual base rent. Taking this into account, as of September 30, we have approximately $9.1 million of annual base rent from new tenants that haven't yet taken occupancy and commenced paying rent. We continue to work diligently at getting these new tenants opened expeditiously. Now I'll turn the call back over to Stuart. Thanks, Rich. As the fourth quarter gets underway, thus far we are on track to post another solid quarter of leasing as the demand for space continues to be strong. In fact, at a recent West Coast ICSC conference in San Diego a few weeks ago, we had a number of very productive meetings with both existing and prospective new tenants, many of them focused and ready to strike deals considerably more so than what we've seen in the past few years. We think this bodes well both in terms of finishing 2022 strong on the leasing front and in terms of building good momentum heading into 2023. Finally, notwithstanding current REIT stock prices, the fundamental drivers, both near-term and long-term, of our West Coast grocery-anchored portfolio remain sound. Near term, we believe that the current demand for space will continue to provide a wealth of opportunities for our team to enhance value through our proactive hands-on approach of working our shopping centers and tenant base. We expect to continue driving rental rates and same center NOI steadily higher, while also working to further our tenant diversity, which is the cornerstone of our business. Long term, our core West Coast markets continue to be among the most demographically strong and diverse markets in the country. Also, our markets continue to be among the most protected, supply constrained in the country as well. We believe that these distinct attributes are what will continue to make our markets among the most sought after by a broad range of tenants and investors alike. Additionally, we believe these factors will continue to serve as the foundational strength and appeal of our West Coast grocery anchored portfolio, as well as enhance our ability to continue building value for years to come. Now, we'll open up the call for your questions. Operator? Thank you. Ladies and gentlemen, to ask the question, you will need to press star one one on your telephone. That's star one one to ask the question. Please stand by while we compile the Q&A roster. Our first question comes from the line of Juan Sanabria with BMO. Your line is open. Good morning, Juan. Hi. Good morning. I was just hoping to understand guidance a little bit better. You kept it the same, tightened the range, but yet you had a couple, I guess, different or opposing forces. One, you had higher rates as some of the swaps expired. I'm not sure what that impact is to the fourth quarter, and you had great leasing. I was just curious as well as higher non-cash rental income expectations for the year now. I'm just hoping maybe you could talk a little bit about guidance and the puts and takes and specifically what kind of occupancy or build, occupancy we should expect by year-end, just to think about how that $9 million comes online of build but not commenced, or leased but not commenced. Sorry. There was quite a few questions in that question. Let's address the gap of build versus lease. That $9.1 million, we expected the large majority of it to come online by June. A large chunk of it's supposed to actually start this quarter in Q4 2022. As far as the guidance goes, interest expense did go up obviously because the swaps matured, but we expect that revenue in the fourth quarter will increase as a result of owning the new acquisitions for a full quarter, along with the new tenants that we're expected to take occupancy during the quarter. That's kind of one of the drivers kind of offsetting the interest expense increase. If you look at the guidance table in the press release also, you'll note that FAS 141 revenue is up a little bit in the fourth quarter, and that's from the purchase price allocations from the assets we acquired in August. Our bad debt was lowered a little bit, kind of tracking where we are for the year. Our G&A, I think, came down on the higher end as well. A lot of small moving parts that kind of get you to a relatively stable fourth quarter. Okay, great. Just on the balance sheet, I guess, what is the plan at this point with you've got 26% floating, which you talked about, and you've got an expiration coming up at the end of 2023 and how we should think about those two pieces moving forward, and how you plan to manage the risk around that? Well, as far as the term loan goes, the term loan doesn't mature until 2025, so there's ample time for the market to kind of evolve and settle down. I'm not sure where it's all going right now, but ideally we'd like to refinance the term loan with public bonds, along with perhaps paying down a portion of the loan depending on market conditions. Then there's the bonds that are due December of next year. Again, we've got some time left on that. You have to remember that that's at a little over 5% coupon. I'm not sure what the rate environment will be next year, but it might be a push. Who knows? We'll have to kind of wait and see. Thank you very much. Thanks, Juan. Thank you. Please stand by for our next question. Our next question comes from the line of Todd Thomas with KeyBank. Your line is open. Good morning, Todd. Hi. Thanks. Good morning. Stuart, I just wanted to first ask, I realize guidance assumes nothing else during the year in terms of investments, but just wanted to get an update from you, on the current thinking around investments heading into 2023 with regard to, your appetite and ability to deploy capital, on an accretive basis in the current environment. Sure. Well, I mean, currently, you know, the market's really in what we would call a pause situation where, you know, there's really very little transactional activity going on at the present time. A lot of buyers and sellers are taking a wait and see approach in terms of the economic uncertainty and interest rates. As it relates to 2023, you know, we're obviously gonna keep our ear to the ground in terms of opportunities. If you know, cap rates haven't really moved up much for our product, but there's not much product on the market either. We'll continue to monitor the market and, obviously, you know, continue to look at some properties that are on the market in terms of dispositions to help fund some potential acquisitions. Right now, the view is to really be patient. As we head into 2023, we'll continue to monitor things very closely. If we do find a couple of opportunities here or there, you know, we'll look at those opportunities and decide how we'll fund them, you know, when that time comes. Okay. Are you anticipating an increase in cap rates or an increase in required returns as you know kind of talk to folks and you know think about you know the next several quarters moving forward? I'm anticipating some movement in cap rates, but for high-quality grocery-anchored shopping centers right now, cap rates really, you know, haven't moved much, and there's no real, you know, benchmark right now to look at as it relates to where those cap rates might go. Okay. Just a clarification. I think you said for the year-to-date acquisitions, about $120 million, I think you said, that the initial yield was in the low-to-mid 6% range. You know, I thought you mentioned after that you've already increased the yield on those acquisitions by 200 basis points. Can you just clarify that comment? Maybe I misunderstood, but just curious what the initial yield was and maybe what the current yield was on those acquisitions. Sounds like there was a little bit of lease up and value add that may have already materialized. Rich, do you want to take that? I mean, it's primarily around, as you touched on the lease up. We've, you know, found that in certain circumstances these properties have been undermanaged. Our team, you know, well in advance of closing, has gone out and secured tenants. You know, spaces that had sat for the prior owner were leased up, you know, almost immediately upon closing. That's what's driving that. You know, the impact of that 100 or, excuse me, 250 basis points really won't be felt obviously till the first and second quarter of next year, because that's when the income will come online from a rent perspective. Okay, got it. The low- to mid-6% cap rate, that was the initial yield, the NOI yield at closing. You're expecting about a 250 basis point uplift over the next couple quarters. Correct. Okay. Just lastly, Mike, on the swaps, I just wanna make sure I understand. Right now, there is no plan to implement any interest rate swaps or hedge the exposure at all on the $300 million of term loans. Is that right? That's correct. For right now, for the short term, we're gonna allow them to remain floating and kind of see how the rate environment evolves. Okay, got it. Thank you. Thank you. Thank you. Thank you. Please stand by for our next question. Our next question comes from the line of Craig Mailman with Citi. Your line is open. Hey, guys. Good morning. How's it going, Stuart? I just wanna circle back to the leasing side of things. You guys have clearly been pulling forward some renewals here with good rent spreads. I'm just kind of curious your just thought process on trying to delay that or to let rents continue to rise, or if you guys are more concerned about the leasing environment over the next six months and just wanna put this in the bag. I'm just trying to, you know, understand your broader macro framework in general. Sure. I'll comment on the anchor spaces first, Rich. I mean, we have a number of anchors coming due in 2023, and the focus from our perspective is to stay ahead of that curve. And when I say that, the focus has been to go to some of these anchor tenants that are doing extremely well at our centers and getting more term than just their typical 5-year option. So that's been one of our goals looking out over the last 60 to 90 days in terms of these anchor renewals. These tenants have come to us earlier than usual. But the goal is to really, you know, what I would say, stagger some of these leases, so 5 years from now we don't have the same impact. That's been one of our goals over the last 60-90 days from the anchor perspective. A number of those leases have fixed increases, of course, because they're, you know, contractual options. Do you wanna comment on the inline space? Sure. I mean, I think, you know, we understand the value of our real estate. You know, so when we're doing these leases, you know, while a tenant, you know, may be trying to, you know, get the best deal they can. We also know what the market is for the space. We're not leaving any dollars on the table, but you know, occupancy is an important factor for us. You know, as you see with our you know, historic occupancy, that's always a factor that we keep in mind. You know, I don't feel like we're leaving any money on the table. Are you guys? And there's- Oh, go ahead. There's been no sign of any weakness from our tenant base at all. That's the other thing to point out, Craig. No, that's helpful. I just wanted to first giving kind of the early option execution here. I mean, are you guys trying to put through or let me ask it this way. What are you guys trying to get out of it? Are you trying to push to higher bumps? Are you guys trying to get, you know, less restrictions that may be in some of these leases? You know, outside of just pure rent bumps, are you guys able to get anything on the concession side that is beneficial to you longer term? The answer is yes. When I say that, it's really depending on the situation. The reality is that, you know, we have a number of anchor leases that don't have much term left, and these tenants have come to us and wanted a lot more term. In doing so, we have approached them to do a number of other things, like deal with, you know, although we have very little co-tenancy, but things like, you know, ESG related, as well as, you know, exclusive and other things. The answer is absolutely yes. That has been part of our negotiation with these anchor tenants. Okay. Just, I noticed on the renewal side, TIs were up pretty markedly this quarter, on especially on the anchor side of things. Is that skewed by a lease or two, or is that, you know, what's going on there? I think that, you know, again, every deal is specific and, you know, sometimes it's driven by, you know, maybe we're recapturing a portion of a space, and so there's a bit higher cost relative to, you know, splitting utilities and that sort of thing. That's, you know, obviously offset by the increase in rent that we're going to receive. The return on those dollars is quite nice. It's Nick Joseph here with Craig. Just one more on the transaction market. Understand the pullback, but how wide is that bid-ask spread for high quality assets today? How wide is the bid-ask spread? Tough to answer the question because there's not much going on in the market at the present time as it relates to what that bid-ask spread might be. You know, I would tell you that certainly some of the deals that have been in the pipeline that have closed more recently have really had very little. We've seen very little impact from a cap rate perspective. But in terms of the bid-ask, it's just too early to tell, and there's very little transactional activity going on to give you an answer. You know, let's wait another quarter, and I think, you know, certainly we should have more clarity on that front. I guess, how much have you moved up your return hurdles if you were to do an acquisition today? It depends on the asset, and it depends on the growth of the NOI in terms of looking at the asset and what it might deliver longer term. Certainly, you know, given the cost of capital that has gone up for all of us, you know, our expectation has certainly gone up at least 100 basis points. Thank you very much. Thank you. Thank you. Please stand by for our next question. Our next question comes from the line of Craig Schmidt with Bank of America. Your line is open. Thank you. Good morning, Craig. Hey, how are you guys? Doing well. How about yourself? Yeah, hanging in there. You know, it sounds from your comments that the leasing still remains elevated, and the activity into the fourth quarter. I'm just wondering how much of 2023 leasing has already been completed. Well, a significant portion of the anchor leases that were scheduled to expire next year have been completed. We're making good progress on the shop tenant side as well. I don't have a specific, you know, percentage for you in front of me, but, you know, it's very similar to years past, where tenants are coming to us looking to renew and secure longer terms. Very healthy. Great. The run rate for property operating expenses has been double-digit. Are you expecting that to continue at that pace, or could it actually increase? On the expense side, he's asking. Understood. I think that's. It was up 10.2%. Yeah, it was up 10.2%. I think year to date, it's up 12.9%. I'm just wondering, you know, given inflationary pressures and whatnot, if that could hold at that lower double-digit range or could they increase? Well, I think costs in general have gone up across the board, primarily, Craig, as it relates to utility. Yeah. Security in some cases. That's what's driving some of that increase in the expense. Some of that, I believe, is gonna begin to level off from an inflation perspective. As we've wrapped up budgets for 2023, that number is certainly not as high as what you've seen to date as it relates to the budgeting process. Okay, great. Just finally, have you had any conversations with either Kroger or Albertsons since they announced their plans to merge? The answer is we haven't spoken to them in a couple of months now. I know why they're not returning our calls. The good news is, Rich and I are set to get on the phone with both of these tenants over the next week to two weeks, so we'll be able to reconnect with them with obviously the focus on the relationship and the stores we've got with them. No, we have not spoken with them recently, but we will be having conversations with them over the next week to two weeks. I don't think there's much they can say at this point. I would assume they're still in somewhat of a quiet period. I got you. Thank you. Thank you, now. Bye. Thanks, Craig Schmidt. Thank you. Please stand by for our next question. Our next question comes from the line of Michael Gorman with BTIG. Your line is open. Good morning, Michael Haines. Hi, Mike. Good morning, guys. Thank you. Most of my questions have been answered, but I just wanted to have a quick follow-up on the expense side, just as we were looking at the run rate. I understand inflation and everything, but it looks like recoveries have been lagging the actual expense growth. I'm just wondering, is it the specific categories that are growing on the expense side that aren't being reimbursed or recovered from tenants? Or any color on why there's the differential there between the recovery growth and the expense growth? I think there's been a few initiatives we've done this year as we've, you know, expanded some of our ESG initiatives, that, you know, we will recoup over time as those initiatives reduce expenses. But some of those initiatives do have, caps or other things where an anchor tenant may not participate. But, you know, we still see it as a positive for the long term because those overall expenses will come down as things like, LED conversions go in place, and solar and other things like that, water, efficiencies. There's a bit of a front-end cost on that's probably, you know, impacting that number. Got it. Thanks, Rich. That's helpful. Stuart, maybe just going back for a minute and talking a little bit more about the transaction environment. I know in recent quarters that there's been kind of a tailwind to demand not only from retail investment, but also from demand for housing developers and apartment communities and things like that. Can you talk about any impact that you're seeing from that side of things, any change in demand there because of what's going on in the capital markets or what's going on with kind of expectations for housing in your markets? Yeah, no, things continue to be strong on the housing front. Certainly, the housing market has slowed down. The one interesting point to probably tell you in terms of what I've learned more recently is that unentitled land seems to be gaining more value right now than entitled land because of the timetable out there as it relates to you know the economic you know environment. But from a housing perspective, things are extremely strong out west. We haven't really seen you know any real slowdown. Pricing has stabilized but really hasn't changed much. The demographics in terms of our assets continue to get better because as more density gets built it's certainly bringing a lot more customers to our centers. From a data perspective, traffic continues to gain good momentum. Great. That's helpful. Then maybe one other question as we're going through this pause. You certainly have a lot of connections in the marketplace and have your finger on the pulse. Any sense for any, I'll call it kind of pending stress or pending distress from some owners out there where maybe there's a big CapEx burden that's coming up or a big vacancy or re-leasing where, you know, maybe right now they're okay waiting to see where the market shakes out, but in the next 6-9 months, they're gonna have to hit the marketplace and may provide more opportunities? The answer is yes. I am beginning to get some calls, and some emails, from some owners that have some financing coming up from their perspective and/or CapEx issues. We're at the early stages of beginning to see some cracks out there, Mike. You know, nothing too dramatic right now, but the answer is yes. I am beginning to see a bit of friction out there as it relates to owners that are, you know, looking out late next year and have potentially some issues that they're looking at. It's beginning to show a bit, but nothing yet. Nothing like we've seen in 2008 or 2009, of course. The answer is yes. I am beginning to get some emails, some traffic, as you would say. Great. Thanks. Having lived through 2009, I'm glad to hear it's not looking like that yet. Appreciate the time, guys. Thank you. Yeah. Thank you. Please stand by for our next question. Our next question comes from the line of Wesley Golladay with Baird. Your line is open. Hey, good morning, everyone. Good morning, Wes. Hey. Hey, everyone. Can you just give us an update on the land sales? I know you had a pipeline that you're aggregating, and then you were gonna break ground on one project up north in Bellevue. With the cost of capital rising, any appetite to either pause that or just outright monetize the asset at this moment? Yeah, maybe I'll just quickly start out with Crossroads. I mean, certainly we're still in the permitting process. You know, we're expected to be in a position to start construction certainly as we move towards the first quarter. Given the current economic uncertainty, we are considering possibly holding off on breaking ground on that project. In terms of the other projects, the good news is that we did get final entitlements in Pinole last week, and Novato is also moving along quite well, and we're in the midst of beginning to move, you know, one of the two to the market over the next several weeks. You know, we think there's a pretty good chance of transacting there. As it relates to any other properties, like that are in the pipeline, we're just continuing to work those as it relates to entitlements. That's what's going on as it relates to both the Crossroads and the other two properties. Okay. You mentioned there was really no weakness in the tenant base. One of the companies we're watching is Rite Aid. I know it's a big tenant. You're actually taking on a little bit more exposure by the acquisitions this year. It seems to be more of a capital structure issue, but could you provide some, I guess, qualitative commentary of how you feel about the portfolio exposure there, whether it's below market rents, productive locations, just any kind of context for us? Sure. Rich, do you wanna- Sure. Yeah, I mean, you know, Rite Aid only accounts for about 1.7% of our total base rent. You know, it's derived from about 16 leases that are, you know, spread throughout our portfolio. You know, all the locations seem to be performing well. Many of these leases are significantly below market, so may present some opportunities for us, you know, as well. We're not concerned about Rite Aid. Great. Thanks, everyone. Thank you. Thanks. Thanks, Wes. Thank you. Please stand by for our next question. Our next question comes from the line of RJ Milligan with Raymond James. Your line is open. Good morning, RJ. Good morning. Good morning, guys. I just wanted to expand on the question of the signed but not opened in the cadence. You expect the bulk of that to come online by June, but you're also adding to that bucket with the leasing you're doing today. Obviously that's more rent coming online maybe in the back half of 2023 and into 2024. I guess I'm just trying to gauge how long the runway is for growth on what's been signed in 3Q, what will be signed in 4Q. Curious if that implies healthy growth in 2024, barring any major credit issues. Yeah, I mean, I think overall it's a positive story here. You know, as you touched on, you know, we commenced a significant amount of rent in the quarter, but we also added to the bucket. You know, so good news on some of the things we've added to the bucket, as we touched on the prepared remarks, is you know, some of this has got fixed rent commencement dates, so we're not at the mercy of permits and things like that. There's, you know, always going to be, you know, certain leases that take longer to get commenced because as I touched on earlier, you know, maybe we're recapturing a portion of an anchor space and you've now got to demise it, and that just takes a bit longer, you know, than just delivering a space as is. I guess, what I'm trying to get at is if the leasing stops, you know, today, given what's signed but not open, doesn't it imply pretty healthy growth over the course of 2023? Yeah. I mean, you're saying if we did no more leasing? Yeah, I suppose if it stopped today, the $9.1 million is the bulk of it that's supposed to start between now and June. As that, I mean, they start paying rent so that you'll get a full run rate all the way through 2023 in that regard. Of course, we're obviously gonna be doing more leasing activity this quarter and into the first quarter after the year ends. The bucket will always be being replenished. It just depends on what volume it's gonna be replenished depending on market conditions. We don't see any cracks or any signs of tenant weakness now. That's all I had, guys. Thank you. Great. Thank you, RJ. Thank you. Thank you. Please stand by for our next question. Our next question comes from the line of Mike Mueller with JP Morgan. Your line is open. Good morning, Mike. Hey, good morning. A couple of questions. The first one, you know, what was the average escalator baked into your leases that you signed year to date? The second question, you talked about, and granted spotty data out there, but your thought that grocery cap rates have been, I don't know, somewhat sticky with rates going up. Out of curiosity, I mean, do you think that grocery cap rates can be below the long-term financing cost over a multi-year period? I'll try to answer the second part of your question first in terms of cap rates. I think it depends. I think we're entering a different time right now where the grocery drug anchor format has become, you know, the most sought after in terms of capital, both private and institutional. Whether that has a long-term impact in terms of valuation or the stickiness, as you might say, the answer is yes. I think it's gonna have some impact. Certainly as it relates to where cap rates might move for other types of retail real estate. We could be in a different place right now looking into as interest rates do go up, where owners today, as I speak with them, seem very comfortable owning what they have. That's why the transactional market has slowed dramatically because the fundamentals. What's different this time around, Mike, is the fundamentals are so strong, and yet the cost of debt capital has gone up a lot. I think what you're going to see as we move into 2023 is an environment where there'll be a lot less transactions occurring for this product type, which will keep cap rates quite compressed. That's why, in trying to answer your question, I think we're in a different sort of secular change here. How dramatic that change is, I can't tell you at this moment. Certainly cap rates are gonna go up a bit, but I think you're not gonna see a one-to-one sort of change as you've seen in the past, just because the fundamentals are just so strong. In terms of the rent escalators, I mean, I think historically, as we've talked about, you know, for the shop tenants, it's been, you know, typically around 3% annually. For the anchors, you know, 10% or 12%, you know, every five years. We're cognizant of inflation. I think, you know, tenants are, you know, that's driving some of the demand, tenants wanting to come in and lock in rents. We're pushing more for, you know, 5% annually on the shop spaces and more like 15% every five years for the anchors. Got it. Okay. Thank you. Thanks. Thanks, Mike. Thank you. Please stand by for our next question. Our next question comes from the line of Christopher Lucas with Capital One. Your line is open. Good morning, Chris. Hi. Good morning. Morning, guys. I have a number of follow-ups, so let me just get through them pretty quickly. Stuart, just on the development site that you had mentioned, I guess Pinole had gotten its approvals for the zoning you needed. Is that a first half Of next year sort of event, do you think? In terms of, the sale of the asset, I think is your question. Yeah. The answer is, it could be. We don't know yet because we're just in the midst of bringing it to the market. I think we will transact, but this is probably a first quarter event versus a fourth quarter event. Okay. I guess, Rich, on the tenant fallout, just generally, how would you compare 2022 to sort of, you know, 2018 or 2019? Given what you've done so far in terms of getting ahead of the 2023 expirations, how does 2023 stack up relative to 2022? Yeah, I mean, I think that in terms of tenant fallout, it's sort of back to the pre-pandemic levels. You know, I think that, you know, the reality is that COVID created a shakeout that the weak tenants have fallen out. You know, we don't see any additional weakness beyond you know, what you might have seen prior to the pandemic. For any of the anchors for next year that haven't renewed, is that more of a timing process for you guys at this point, or do you think there's some risk there? No. I mean, I think of the anchors leases remaining for next year, there's about 17 of them scheduled to expire. You know, based on our early discussions with them, we're anticipating that at least 13 of those will be renewing. The majority of those are the grocery and drugstores. The remaining leases, you know, we're in discussions with them, but it's a little bit too early to say for sure that they're gonna renew. There may be an opportunity there where we actually don't want them to renew, and that's why we're discussing with them, you know, how much will they pay. Yeah, I mean, I think, Chris, this could be an opportunity for us because as you know, we've had no anchor vacancy for a period of time. Given the demand and how strong the demand is, I look at this potentially as an opportunity next year if one of these tenants do fall out. Okay, thanks for that, guys. I guess maybe just taking a step back as it relates to sort of that natural tension between landlords and tenants in terms of, you know, who's got more leverage. Is that changing at all from where it was, say, you know, end of last year or early part of this year? Well, the pendulum has certainly swung back to the landlord pretty quickly, coming out of the pandemic, that's for sure, Rich. Yeah. I mean, given you know, our West Coast focus and the fact that there's been virtually no new product brought to the market, and our grocery-drug-anchored focus, you know, our centers continue to be in very high demand. We have multiple you know, tenants vying for spaces as they come available, so we're not seeing any fall off in the demand side. Last question from me, I apologize if I missed if this was covered in the initial comments, but the large rent spread for the non-anchor for the quarter, the 60.6%, is that driven off of one specific lease, or was there a handful of leases that were that strong? It was a handful of leases. Some of them were quite significant, as we were bringing in, you know, much better tenants and re-releasing them. We've got more that's happening as we speak right now. There's still some significant leases that are significantly below market that we're recapturing and finding tenants that will pay a market rent for them. Great. I appreciate it. Thank you. Yep, thank you. Thanks, Chris. Thank you. Please stand by for our next question. We have a follow-up from the line of Juan Sanabria. One moment. Hi. Your line is open. Good morning again. Just curious on the same-store NOI guidance which was maintained. The growth understandably has slowed throughout the course of the year, but the midpoint would imply a re-acceleration in that growth, and maybe that's related to some of the leased deals commencing. Just curious if you can give us any sense of where within the range you feel most comfortable and how we should expect a trajectory relative to what you've reported to date for same-store NOI before the fourth quarter. Lease commencement. Yeah. We're 4.4% year to date through September. We maintain the goalpost of 4%-5%. That's largely because our Q4 budgeted same store is notably stronger than the first three quarters. If that comes to fruition, which we expect it to, we'll still be well within that 4%-5% range, probably like, I'm thinking midpoint or even higher than 4.5%, so we'll see. But we feel very comfortable given what we budgeted for Q4's same store NOI. Great, thanks. Just one quick follow-up. I mean, the Kroger-Albertsons deal, just curious on how you see the leasing dynamics changing with them. You may be in a position where you have a significantly larger, more powerful tenant and what that may mean to your ability to continue to drive some of the clauses to be more favorable to you. Or you just view it positively given you probably have a better capitalized tenant at the end of the day. Yeah. I mean, look, long term, we think the Kroger-Albertsons merger would potentially beneficial from our perspective. You know, we currently have 21 shopping centers with Albertsons and 11 centers with a Kroger store. You know, only 32 properties out of our 93 have any impact in terms of the Kroger-Albertsons transaction. But these 32 stores are diversified across three states, and within these states, these stores are diversified evenly in terms of ABR, and across multiple metro markets, including LA, Orange County, Portland and Seattle. Within these markets, you know, these stores are specifically located in distinct separate sub-market communities. You know, the other thing is that, you know, these stores operate under seven different banners. You know, we're, you know, as we look at this transaction, you know, a lot of these stores are solid performers. In fact, you know, on average, if you were to average sales of all of these stores, these 32 stores, these stores are doing on average in excess of $630 a sq ft in sales. And then lastly, you know, the 32 leases are certainly below market on average, with some of these significantly below market. You know, and again, shopping centers that are well located in highly desirable affluent communities. You know, strong demand for the space if something were to happen. And, you know, there's a lot of demand out there from, you know, value-oriented and specialty grocers in these locations. If Albertsons and Kroger divest of some of these locations, we view this as a potential opportunity. As you just touched on, the last thing is credit. This is certainly going to improve the overall credit in terms of owning these anchor tenants or this particular anchor tenant in our forward to. Thanks, Stuart. Thank you. Thank you. I'm showing no further questions in the queue. I would now like to turn the call back over to Stuart for closing remarks. Great. In closing, thanks to all of you for joining us today. As always, we appreciate your interest in ROIC. If you have any additional questions, please contact Lori, Mike, Rich, or myself. Also, you can find additional information in the company's quarterly supplemental package, which is posted on our website, as well as our Form 10-Q. Lastly, for those of you that are planning to attend NAREIT's conference in a few weeks from now in San Francisco, we certainly look forward to seeing all of you there. Thanks again, everyone, and have a great day. Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.