Welcome to Retail Opportunity Investments third quarter 2023 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 Lauren Silveira, the company's Chief Accounting Officer. Thank you. Before we begin, please note that certain matters which we will discuss on today's call are forward-looking statements within the meaning of federal securities laws. 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. Participants should refer to the company's filings with the SEC, including our most recent annual report on Form 10-K, to learn more about these risks and other factors. In addition, we will be discussing certain non-GAAP financial results on today's call. Reconciliation of these non-GAAP financial results to GAAP results can be found in the company's quarterly supplemental, which is posted on our website. Now, I'll turn the call over to Stuart Tanz, the company's Chief Executive Officer. Stuart? Thank you, Lauren, and good morning, everyone. Here with Lauren and me today is Michael Haines, our Chief Financial Officer, and Rich Schoebel, our Chief Operating Officer. We are pleased to report that our grocery-anchored portfolio continues to perform well. Notwithstanding our portfolio being essentially fully leased at over 98%, we continue to make the most of the ongoing strong demand for space. In fact, through the first nine months of 2023, we have leased a record amount of space thus far. Additionally, in step with capitalizing on the demand for space to achieve record leasing volume, we are also capitalizing on the demand to continue driving rents higher, posting our strongest quarter year to date in terms of re-leasing rent growth on both new leases and renewals. With respect to acquisitions, the West Coast has largely been idle this year, with only a limited number of grocery-anchored shopping centers trading. Interest rates continuing to rise throughout the year and the related uncertainty and difficulty in terms of obtaining reasonable debt financing has compelled many would-be buyers to stay on the sidelines. Notwithstanding buyers being on the sidelines, certain private owners are starting to become more active in seeking to transact. We view this as an opportunity. In fact, we currently have an acquisition that we are close to having under contract. It's an excellent grocery-anchored shopping center that we've had our eye on for some time. The property is located in the Los Angeles market in a densely populated, mature, diverse community. The center is anchored by a well-established natural food supermarket market that is a long-time national tenant of ours. The seller is a private owner who is seeking an efficient closing, which, given our knowledge of the market and the specific center and its tenant roster, we are in a position to facilitate their closing objective. Beyond this acquisition, we have several other opportunities that we currently have our sights on, each with seller circumstances that we are well positioned to capitalize on. Turning to our balance sheet, during the third quarter, we completed a public bond offering, raising $350 million in total. The offering drew considerable interest in the marketplace and was oversubscribed, attracting interest from 60 investors in total, which we think speaks to the long-term strength and stability of our grocery-anchored portfolio and business. Now, I'll turn the call over to Michael Haines to take you through the details of the offering and our third quarter results. Mike? Thanks, Stuart. Starting with our financial results, for the third quarter, GAAP net income attributable to common shareholders for the three months ended September 30th, 2023, was $8.4 million, equating to $0.07 per diluted share. In terms of funds from operations for the third quarter, FFO totaled $36 million, equating to $0.27 per diluted share. With respect to our financial results for the first nine months of 2023, GAAP net income attributable to common shareholders totaled $26.5 million, or $0.21 per diluted share. In terms of FFO, the company had $105.4 million in total FFO, or $0.79 per diluted share for the first nine months of 2023. In terms of net operating income, NOI, on a same-center cash basis, increased by 8.2% during the third quarter and increased by 3.6% for the first nine months of 2023. Our third quarter results were impacted by two items. First, other income increased notably, primarily as a result of recapturing three leases, which we have already lined up new tenants to take the bulk of the recaptured space at notably higher rents. Partially offsetting the increase in other income, GAAP rent amortization declined, primarily as a result of removing a buybuy BABY lease from our portfolio during the third quarter. The decline is a one-time non-cash GAAP adjustment. Just like the recaptured spaces, we already have several new tenants lined up for the buybuy BABY space, both at a higher rent and on a same-space cash basis, one of which is already open and operating. With respect to our balance sheet, as Stuart touched on, during the third quarter, we raised $350 million through a public bond offering of senior unsecured notes. It was our first time raising capital in the public bond market in nearly a decade. As such, we made a conservative effort to fully engage with the market, having discussions with a broad and diverse mix of investors, a number of which were new to the company. We intend to utilize the proceeds to retire the $250 million of senior notes that mature in December. Additionally, we paid down $100 million over $300 million term loan. Looking out over the next 5 years, our debt maturity schedule is well-laddered, with approximately $300 million maturing each year on average. Having now reestablished our IG in the public bond market, our objective is to be a more consistent annual issuer going forward. Taking into account the bond offering, as of September 30th, over 96% of our debt is effectively fixed rate, over 96% of our debt is unsecured, and over 96% of our portfolio is unencumbered. Additionally, for the third quarter, net debt to annualized EBITDA was 6.4x, down from 6.6x from a year ago. Lastly, with the year coming to a close, we have updated and narrowed our FFO guidance range for 2023. On the positive side, leasing activity this year has far exceeded our initial projections that we set back at the beginning of the year. However, the persistent rise in interest rates impacted our initial projected interest expense and our projected investment activity, both of which have been adjusted accordingly in our updated guidance range for the year. Now I'll turn the call over to Rich Schoebel, our COO, to discuss property operations. Rich? Thanks, Mike. As Stuart highlighted, we achieved another successful active quarter of leasing. Demand across our portfolio continues to be consistently strong, with a broad range of prospective new tenants actively seeking space. Given our property's location attributes, together with the strong draw of our longtime supermarket anchors and other core service and destination tenants, our centers continue to be sought out by prospective tenants as the shopping center of choice in their respective communities. Capitalizing on the demand, we continue to lease space at a record pace. Year to date, we have leased approximately 1.5 million sq ft, which is a new record for us in terms of leasing volume for the first nine months. In step with our record leasing activity, we again achieved a portfolio lease rate above 98%, finishing the third quarter at 98.2% leased. Breaking that down between anchor and non-anchor space, our anchor space continues to be 100% leased, and our shop space is close behind at 96% leased. During the third quarter, we executed 95 leases, totaling 465,000 sq ft. The bulk of our leasing activity continues to center around renewing long-standing, valued tenants, with a number of them continuing to come to us early to renew, particularly key anchor tenants. Specifically, during the third quarter, we renewed six anchor tenants, five of which were not scheduled to mature until next year. Additionally, as Stuart indicated, we continue to have good success in terms of re-leasing rent growth. Specifically, during the third quarter, we achieved a 36% increase in same-space cash base rents on new leases and a 7% increase on renewals. Underscoring our strong leasing activity and consistent performance is our proactive approach of seeking out, identifying, and capitalizing on opportunities to recapture space well in advance of lease maturities and re-leasing the space quickly, enhancing tenancies and driving rents higher in the process. Just to cite an example, during the third quarter, at two of our centers, we recaptured prime freestanding pads, each with a drive-thru. The pads have been leased to a regional tenant whose business was recently acquired. Anticipating the acquisition could bring about some consolidation, we reached out to the tenant and successfully recaptured their spaces and now have several new national quick-serve restaurant operators lined up with base rents that represent a 44% increase on average over the previous tenant's rent. In addition to the strong rent increase, the new restaurant operators will be a much stronger daily draw to our centers, which in turn will enhance future leasing demand at the properties. Along with our recapturing initiative, we also continue to have good success getting new tenants open and operating. Year to date, new tenants representing approximately $6 million of incremental base rent on a cash basis have opened and commenced paying rent, including $1.9 million opened in the third quarter. In terms of new tenants that haven't yet opened, including those that we just signed during the third quarter, the incremental amount stood at $7.3 million as of September thirtieth, the bulk of which we expect to commence over the next several quarters. With respect to Rite Aid and their recent announcement, at September 30th, we had 15 leases with Rite Aid across our portfolio, which altogether accounted for 1.7% of our total base rent. Three of the leases are on Rite Aid's closure list. The three together account for 0.3% of our total base rent. The average base rent for the three is 50% to as much as 80% below current market rents. In terms of the remaining 12 leases with Rite Aid, they all continue to perform well, and their rents are below market on average as well. Turning to lease maturities going forward, as of September 30th, we only had 141,000 sq ft maturing during the fourth quarter, including two anchor leases totaling 44,000 sq ft, both of which we expect to re-lease before year-end. Looking out further to next year, we have 7 anchor leases currently scheduled to mature in 2024, of which we currently expect that 6 of the 7 will renew. In terms of non-anchor space, we have about 500,000 sq ft of inline space scheduled to mature next year, which we expect to renew and re-lease consistent with our historical performance. Now I'll turn the call back over to Stuart. Thanks, Rich. Based on our leasing performance year to date and our leasing activity here early in the fourth quarter, we are on track to finish the year strong in terms of property operations and post another successful year of maintaining our high portfolio lease rate and achieving record leasing volume, while also achieving solid re-leasing rent growth and enhancing our tenant base. In terms of growing our portfolio, it's safe to say that 2023 has been a frustrating year as the market has been largely idle and slow to adjust to the higher interest rate environment, as I mentioned. Along with the market also adjusting to the ongoing challenges that certain commercial property sectors and certain prominent markets across the country are currently faced with. Fortunately, the long-term fundamentals of the grocery-anchored sector remain sound, especially as it relates to our specific portfolio and our highly protected markets. As we look towards 2024, the current expectation in the market is that acquisition activity could potentially accelerate as property-level, low interest rate debt begins to mature in earnest next year, and private owners could have limited viable refinancing options. In anticipation, we've been strategically tracking a number of potential off-market opportunities across our core markets, working to establish and maintain an ongoing, constructive dialogue with private owners. Over our team's nearly thirty-year history of specializing in the grocery-anchored sector on the West Coast, this strategy has proven instrumental time and again, in our ability to gain access to acquire exceptional properties that rarely ever hit the market. While it's early in terms of the acquisition market becoming fully active and favorable again, we are encouraged from what we are currently seeing and look forward to the opportunity to strategically grow our portfolio in 2024. Now, we will open up the call for your questions. Operator? Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. One moment. And our first question comes from Juan Sanabria of BMO Capital Markets. Please proceed. Good morning, Juan. Hi, good morning. Good morning, Stuart. Just hoping you could talk a little bit more about Rite Aid and the potential uses that you're looking at to backfill space, and, if you have any color on any incremental space they may look to give back. There's an article today that through the bankruptcy process, they might hand back more than the initial list of rejections, and divestitures that they were initially planning. So just curious what extra intel you may have? Yeah, so in terms of uses, you know, right now we are speaking to a broad range of potential new tenants, including fitness, grocery, automotive. There seems to be a lot of demand. I mean, what really has happened here is, you know, opportunities that we were unable to fulfill from tenants have now become possible. So I think, as you know, so far, they've only rejected one lease of ours. There's significant interest in that space. Yeah, Juan, the demand has been a bit overwhelming. Okay. And then a second question. Could you just talk a little bit about how blended occupancy was flat, but base rents were down quarter-over-quarter? Just seems a little incongruous. I'm just hoping for some color there. Hey, Juan, it's Mike. I think the-- without digging into the details, my, my hunch is it's probably a, I mentioned in my prepared remarks about the gap adjustment for the buybuy BABY lease, which had an above-market lease. So when we had to, when that lease was terminated, we had to, recognize that above-market rental revenue, which is a hit to revenue, it's probably the cause of the decrease. Great. And just one last one, if you don't mind. What's the expected cadence of the lease commencements for the $7.2 million of signed but not occupied? I think it's about, I think 60% of it or so is supposed to come online by March 31st and another 15% by June. So vast, vast majority of it by June. Thank you, guys. I appreciate it. Thanks, Juan. Thank you. One moment for our next question. Our next question comes from Craig Mailman of Citi. Please proceed. Hey, good morning. Good morning, Craig. How are you doing? Good. Just wanted to follow up on your commentary, Stuart, about the acquisition environment and potentially that it could reflect here as, you know, some refinancings are coming due next year. I'm just kind of curious, on the assets that you're tracking, at least, is it just that they can't get financing or the debt service coverages don't make sense? I'm just trying to kind of square the circles. You know, sellers looking to monetize here into a weak environment versus just kind of eating the higher interest expense, given the NOI growth that you're starting to see here in the retail space. So I guess, just commentary on that and then how, you know, what pricing you guys would need given where cost of capital is moving for you and just debt rates to make these work and accretive and interesting? Sure. Well, it's primarily a combination of the challenges in the financing market and the fact that they have to, in not all cases, but in a lot of cases, have to come out of pocket in terms of providing more equity in order to get new financing. In terms of our cost to capital, the goal with what we're looking at buying right now, as well as what's in the pipeline, is to try to find that sweet spot in that 6.5-7.5 cap range, with the ability to drive rents, through either vacancy or operating margin efficiencies, about 150 basis points within an 18-month period. That, that's the goal. And what we believe in terms of what we're seeing right now, that subject to doing due diligence on these, a couple of these deals, we will be able to close on these transactions accretively as it relates to our cost of capital. Okay. So you, you might, you know, have a little bit of dilution or a push relative to where you can finance these going in, but ultimately, you know, you're gonna be an 8-9 cap, if, if you can execute on that plan. You know, how, how do you finance that here? Debt, equity, OP units, asset sales, kind of what's the optimum mix look like? And, you know, in particular, for the asset that you're talking to, I know you're not in contract yet, but it sounds like you're, you're close. Kind of, is that in the realm of the returns that you just talked about? And again, how do you finance that? Well, the financing is done through a combination of OP Units, and we do have an OP unit transaction that I believe will come to fruition now, if not in the first quarter, in the second quarter of next year. Certainly at a stock price that will be higher than where our stock is currently trading. But it's a combination of both. That transaction, OP units, a combination of selling some more assets and our ATM. That's how we're gonna help finance the upcoming opportunities as we look into the end of this year and into next year. Okay. Just lastly, you know, I know you guys haven't given guidance yet, but just a thought here, you know, you guys kind of lowered 2023 guidance this quarter, partly as a result of, you know, the acquisitions coming out of it. As you guys think about presenting guidance next year, I mean, should we assume kind of no acquisitions baked in that aren't under contract? Kind of how are you going to approach that, just given the volatility in the macro and, and how that's kind of impacted the transaction market? Sure. Well, I mean, obviously, we'll be giving guidance on our year-end call in terms of filling in some of the questions that you're asking right now. But I think you'll see, again, as you've heard in our remarks, a bit more activity on external growth, a bit more activity on dispositions, along with potentially creating a bit more growth, or more growth, in terms of what we're seeing at the property level, because operations continue to be very strong, as you've heard in, you know, from our remarks today. Great. Thanks, guys. Yep. Thank you. One moment for our next question. Our next question comes from Jeffrey Spector of BofA Securities. Please proceed. Good morning, Jeff. Good morning. Good morning. This is actually Lizzie on for Jeff. So I was just wondering if you could provide more color on your confidence in the narrowed range for same-store NOI. Is that more so a function of, you know, greater visibility on the timing of store openings and commenced rent? What would kind of swing that to the lower end versus the higher end there? And just on to follow up on that, to confirm, is there any amount of rent fallout or lost occupancy that's assumed from Rite Aid or troubled retailers for the full year? Do you want to answer the question as it relates to fallout, though, Rich? Yeah. Right now, in terms of fallout, you know, only one lease has been rejected by Rite Aid. The other two leases are in their sale process. And, you know, as you know, they are required to pay the rent while they until they reject any leases. So we don't anticipate any financial fallout as it relates to Rite Aid or any other major tenant. Yeah, as far as same-store NOI for, you know, for the balance of the year, given that we're already at, three point six for the, you know, for the nine months, yeah, I feel pretty comfortable between three and four. Our, you know, the other income items kind of contribute to that in the third quarter, but fourth quarter should be back in line with kind of our, our normal historical. So the three to four percent range we feel pretty comfortable with. Okay. Thank you. And second, I was just curious if you could give, you know, the latest temperature check on small shop tenant health, just given, like, the 96% lease rate you spoke to, seems fairly consistent. If you could just give the latest on the health of tenants there. ... Sure. Yeah, I mean, the shop tenants continue to be very active, and, you know, our leasing team has been capitalizing on that. They are fielding multiple LOIs for the spaces that we do have available. And, you know, it is coming from a broad range of, you know, local, regional, and national tenants. Okay, great. Thank you. Thank you. One moment for our next question. Our next question comes from Wesley Golladay of Baird. Please proceed. Hey, yeah- Morning, Wes. Good morning, everyone. Hey, Stuart, could follow up to the funding question for acquisitions. I mean, can you give us your appetite for selling stock at today's level? It looks like you're at mid to high sevens, depending on where we open today. And then, where can you sell assets today? Well, in terms of selling shares, we don't have a set price in mind. You know, we consider a number of factors when contemplating raising equity to fund our investment activity, including our current stock price and the acquisition yields. In terms of cap rates, there's been, I think as you heard in my remarks, very few transactions for high-quality grocery anchored centers on the West Coast. What we have seen more recently has a couple of widely marketed deals in the 5s, one in the low 5s, one in the mid 5s. And, again, as we sit here today, a bit more activity over the last several weeks on the West Coast, primarily related to ICSC, which is occurring tomorrow and Friday in San Diego. You usually get a number of assets that come to market when you have this size of a gathering of retail experts. But, you know, cap rates today are still sitting in that, let's call it 6% range, give or take, you know, depending on the profile of the asset. Some are below the 6%, some are at the 6% or a bit above, but 6% on average, still. Got it. And then, maybe on the Rite Aid, I think you did a comprehensive review at ICSC with the management team over there. Overall, it sounds like you also feel pretty good about your portfolio. They are contemplating both, you know, asking for rent cuts and then also closing stores. Would it be safe to say that you have no appetite for rent cuts at the, with considering where your mark to market is on these assets? Absolutely. The demand has been a bit overwhelming, to tell you the truth. We've only been in the market with these locations probably a couple of weeks, Rich, and we've got a number of LOIs that have hit our table already, even on the locations that haven't been rejected. So we're pretty confident, certainly sitting here today, that we'll be able to create some good value over time in terms of what we see on the ground with the Rite Aid situation. And the mark to market, depending on the location, is quite, it's quite large, depending on, again, the location of the actual space. But very encouraging in terms of what we're seeing right now on the ground. I don't know if you want to add anything to that, Rich. No, I mean, I think as you know, you see from, you know, other bankruptcy situations, you know, normally we've been coming out ahead on those, whether the lease is accepted and there's no downtime or when we get the space back and we're able to, you know, bring that space up to market rent. So we would expect, you know, a very similar situation here with Rite Aid. Got it. Then can I just get one more on this other income line item? It looks like it's a combination of, you know, maybe, correct me if I'm wrong, about $2 million of term income, call it low $300,000 of interest income, just from the cash position you held. Does that seem correct? And it does—it also looks like you got about maybe one year's worth of rent for free or interim income. Is that a good way to look at it? The other income details of $3.5 million of other income in the third quarter, $2.5 of it, $2.5 million of it, I should say, was lease termination settlement income in connection with those leases that we recaptured that I mentioned, which we've already, as I also talked about, have already landed on new tenants at higher rents. The balance of it was just a mix of other miscellaneous income items and a touch of interest income on the cash from the bond offering that's sitting in the money market. Got it. Thanks, everyone. Yep. Thanks, Wes. Thank you. One moment for our next question. Our next question comes from Dori Kesten of Wells Fargo Securities. Please proceed. Good morning, Dori. Morning, guys. Given the improvement you've noted of late in the transaction environment, is it fair to assume that your prior disposition guidance could be pushed into 2024? We will probably increase that guidance in 2024, in terms of dispositions as we ramp up on the acquisition side. Although it's, I can't give you any specifics this second, we believe that the market is so tight as it relates to looking at high-quality, grocery-anchored assets, that we believe that there will be a nice window that will be opening up that will give us the ability to accelerate some of the disposition side of that equation, again, as we move into 2024. But again, we'll give you firm guidance in our next call. Okay. And then on the, with the 2023 maturities addressed, what are your initial thoughts on the timeline for addressing your 2024s? I know you mentioned, kind of annual offerings going forward. And I guess just part of that, can you give us an update on your views, regarding fixed versus floating exposure in this environment? In terms of expirations, I think- Debt too. Oh, sorry about that. Yeah, no. Yeah, the 2024s, I mean, obviously, you know, as we have in our filings, we've swapped out a good portion of our term loan to become unhedged in August of next year, which is about the same timeline that we, you know, addressed the 2023 maturities this year. It really depends on where the market's going to be with interest rates. Obviously, depending on whether rates continue going up or if they start trending back down, if they start trending back down, you do want to have some level of floating rate exposures to take advantage of that. So right now, we're pretty highly fixed, but at the end of the year, when we take out the 2023s, we'll be a little bit more floating, and we're comfortable with that level. We'll just have to kind of watch and see where the market goes on the interest rate side of things. Okay, thank you. Thank you. One moment for our next question. Our next question comes from Michael Mueller of JP Morgan. Please proceed. Good morning, Mike. Hey, Michael. Hey, good morning. Just a couple quick ones here. I may have missed it, but can you talk about just a rough dollar volume of the near-term transaction that you think could happen? It sounds like it would happen in 2024, but the one that's lined up. And from a higher level perspective, when we're thinking about 2024, should we be thinking of a base case of, you know, roughly equal levels of acquisitions and dispositions? I mean, again, we're going to give guidance in our next call, Mike. If you were to look out into 2024 at this point and look at the pipeline of what we have in front of us, including a potential OP transaction, you probably could be sitting in the $80 million-$100 million range right now. That could change, of course. On the disposition side, you know, we're probably ramping that up, you know, probably in the $50 million-$75 million initially, but that's where things sit as of this call. I don't know, Mike. Yeah, I was going to say, trim the portfolio around the edges of what we currently own and use those proceeds to buy some accretive acquisitions. Got it. Okay. And then, is there, is there any update on the, I guess, the land sales tied to the redevelopments? Just maybe an update there. We continue to track the market in terms of the, you know, the entitled land that we've got. We continue to speak with buyers. We continue to speak. We've had a lot of interest in strong operators coming to us to joint venture these assets or these opportunities. Once we see the market begin to get better, as you might say, we will push these assets to the market as well, and we're still expecting to get, if we were to sell two of the three, around $25 million-$30 million. But the market, again, has been very difficult and, but we continue to monitor it very closely, and we're in a very good position, you know, when things, we see things begin to change, to move these properties very quickly to the market. Got it. Thank you. Yep. Thank you. One moment for our next question. Our next question comes from Linda Tsai of Jefferies. Please proceed. Morning, Linda. Hey, Linda. Hello. Just to clarify, given the discount where your stock is trading and, you know, what you said about acquisition and disposition volumes for next year, you'll be more focused on dispositions near term rather than acquisitions? Combination of both. Okay. Then it sounds like Rite Aid has announced 150 rejections, but the Rite Aid article Juan referred to says more are coming. I just wanted to confirm that the three leases are on the list of identified, the 500 identified, or would you expect an announcement of more closures from Rite Aid, from which the remaining 12 stores would also be considered? Well, it's tough to look ahead in terms of that process. I think Rite Aid has had some time now to really evaluate their store count. I think that's one of the reasons why it took a bit longer to see the bankruptcy. We have one store, I think, that Rich mentioned, that is closing. The other two are up for sale. They're still operating. Tough to tell you anything beyond that. I mean, Rich, do you...? No, and I mean, I think, you know, they've also, you know, leading up to this, have exited a certain number of stores as well. Some of them, we've already reletted significant increases in rent. And so it's really hard to predict, you know, which ones may, in the future, come available. But as we touched on, the demand has, you know, given the fact that there's really no supply available, in our markets, the demand's been exceptional. ... And I mean, a number of these locations have drive-throughs, and they're located in what I would call the premier part of our shopping centers, which would be at the intersection of where the two, you know, roadways or arterials meet. So that's why we feel pretty confident that I don't. I'm not saying that we're we won't see more rejections, but I'd, I wouldn't be surprised if, you know, as Rite Aid moves to get out of bankruptcy, that, you know, what we have sitting there remains pretty well intact. Thanks. And then just, one last one. How, how do you, for next year, how do you think about the puts and takes of interest expense against the pricing power you're seeing with, you know, new spreads and releasing spreads? Well, we'll, we'll put out the guidance for next year. The maturities for 2024 don't come up until December, so unless we pull the trigger early, we can pretty much model where it's going to be for all of the year. You know, fourth quarter, we're going to have the interest expense from both the 2023s, which, which we've refinanced already. We also have the benefit of the interest income, all the cash is sitting there. So 2024, we'll be able to give pretty solid guidance on that in February when we give guidance for the year. Thanks. Thank you. One moment for our next question. Our next question comes from Paulina Rojas Schmidt of Green Street. Please proceed. It's early on the West Coast for you. How are you doing, Paulie? Here I am, awake and ready with my question. Exactly. I hope that's good enough. Yeah. So my question is, when you take a step back and look at the potential consequences of the current high interest rate environment on retailer balance sheet, how would you describe your level of concern besides what we're seeing today? It's more, I'm thinking about more the future. It doesn't seem like you're particularly worried, especially given your attitude towards acquisitions. Well, look, the situation in terms of, you know, the interest rate environment is something that none of us can control. So as we look into 2024, I think most economists have been wrong in 2023. I think interest rates are going to stay elevated for longer than what most are anticipating. However, as we look into 2024, you know, we had a very successful bond offering, so we have the ability and certainly to go back and deal with the financing. And more importantly, we do have some time now and some flexibility out there to really think about whether we want to, you know, accelerate some dispositions and use some of that to pay more debt down. And on top of that, potentially look at what might be out there to help alleviate the concern of high interest rates, without giving you specifics. So, you know, everyone in 2024 is really dealing with the same issue in terms of all our balance sheets. And we feel very good, very comfortable, given the strength of where our balance sheet sits today, that we'll be able to get through this, and hopefully lock in, you know, debt at an attractive rate. And, Mike, I don't know if you want to add to that. I agree with what you're saying. I think, you know, there's no shortage of opinions out there in the marketplace of what's happening in the overall economy and where rates might go. So we just have to be patient and wait and see how it kind of evolves and just work with the market as we see it. The good news is, you know, with the 2023s already refinanced, the 2024s, we've got full capacity on the credit line, so, you know, we've got some flexibility there on the timing of that as well. Thank you. My other question is, when I look at your implied cap rate, it is significantly higher than some of your grocery anchor peers, which is unusual from at least a historical perspective. What do you think the market is getting wrong or, is the market putting too much weight into Rite Aid? What is your interpretation of the current event? Yeah, I mean, look, I think the challenges for ROIC in 2023 have been the debt maturity, which has now been resolved, and the noise around Rite Aid. And, you know, right now it just looks like it's noise from our perspective. We feel very comfortable sitting here today that we will come out of this, you know, with some potentially some very strong rent growth. Remember, we have not had an anchor space available in this portfolio in 5 years. And more importantly, when we look at the market today on the West Coast, there's nothing available. There's nothing to lease from an anchor perspective. So the demand is, again, has been a bit overwhelming since we finally had an anchor space come available. We've got a series of LOIs from incredible grocery anchor tenants as well as others. So, you know, again, we feel pretty comfortable today with where we sit, and more importantly, you know, at some point, the noise is going to go away. You know, we think we'll be able to show the market pretty quickly that there's a lot of mark-to-market value that's going to be created through this process. I think you mentioned you have seen demand from grocers, right? For the space. Can you provide some color on what type of grocers have approached you? We've had the regional grocers, local grocers, and national grocers at the table, all at one time, approach us, Rich. I don't know if w e're not getting specific on names. It's a, it's a variety of all those types of- Very strong tenants. Okay, and the last one, are you thinking about single tenant users for the space, or you think it's likely that if you were to receive more space back, you would have to subdivide the space into smaller stores? Most of our Rite Aid spaces have already been right-sized, where we've taken back space and downsized them already. Our goal would be to re-tenant them with a single tenant, but we also would look at splitting them, which we've done in other circumstances. It really all depends on the users, the economics, and you know all the factors that we would consider when we lease a space. Thank you. Thank you. Thank you. One moment for our next question. Our next question comes from Todd Thomas of KeyBanc Capital Markets. Please proceed. Hey, Todd. Hey, Todd. Hi, good morning. A couple of follow-ups. First, I was wondering if you could tell us, you know, with regard to Rite Aid, how much term is left on average across the 14 leases in the portfolio, excluding the one that's been rejected? And can you talk about your interest or appetite in buying leases at auction, whether that's an option that you're contemplating? The answer is yes, in terms of behind the leases, especially if we see the pipeline of LOIs and grow as we're seeing right now. The answer is yes. We are currently looking at buying these leases as we're having this discussion. Rich, in terms of term? Yeah, I don't have the average term here, Todd, but, you know, we've been renewing Rite Aids, you know, throughout the year, and, you know, they range. The next expiration is not until 2026. And then we go all the way out to 2029, and, as far out as, twenty, you know, 2030. So there's a bit of term on, on many of these leases, and then, of course, options. Okay, and then just circling back to the dispositions. So I'm, you know, I'm curious if you can just talk a little bit more about, you know, the strategic rationale, I guess, behind those planned asset sales, you know, what, what you're hoping to accomplish with the dispositions, and whether the cap rate spread on dispositions relative to, you know, some of the acquisition yields that you're, you know, starting to see or underwrite today, would be accretive, or is it really more about the rate of NOI growth between the buys and sells? It's a combination of the NOI growth, a combination of the arbitrage in terms of cap rates. We believe that on some of these assets, we may get into the 5s, and then obviously buying with, you know, on the other side of that equation in the mid-6s or low-7s. So it's a combination really of those two things. And, you know, we have seen on the West Coast, a couple of transactions with 1031 buyers, where they have been paying up to buy these type of assets quite aggressively. So, hopefully, with a bit of luck and a bit of focus in terms of timing here, and more importantly, the fact that there's such little product on the market, I think will help drive this program of potentially accelerating selling some of these assets. Okay. And then, you know, I think I heard you mention joint ventures earlier, but, you know, I think that was specifically, you know, around some of the land sales that you were maybe discussing. But, you know, in thinking about acquisitions, you know, you own everything really on balance sheet today, no joint ventures, nothing complicated. Is everything that you're considering, you know, moving forward in terms of acquisitions also on balance sheet, or would you consider bringing in a partner or, you know, looking to do, you know, something a little bit more creative, perhaps, to make the deals pencil and be in a position to take, you know, greater advantage of opportunities that might surface? The focus, as you know, Todd, of this management team for the last 30 years, is to stay on balance sheet. We have been approached quite aggressively over the last 6 months by some of the biggest players in the business in terms of going off balance sheet. Nothing is in front of us today that would get us excited. However, you know, I'll never say never, if someone does walk in and gives us something that could be highly accretive to shareholders with a plan of, you know, what I would call getting these assets back on the balance sheet over time. But again, the focus continues to be on balance sheet in terms of growth as we look into the balance of this year and next year. Okay, that's helpful. And one last one, maybe for Mike, if I could, on the model here. You know, is the 4Q run rate, you know, you made some adjustments around straight-line rent, but, you know, as we think about the implied, you know, fourth quarter for both straight line and FAS 141, just with the updated guidance, is that the right level to consider heading into 2024? You know, if as we think about, I guess, you know, considerations around non-cash rent for the new year. I would say yes. The obviously had a little bit of a pull-down from the buybuy BABY lease that we had terminated in Q3, so that was a bit of a drag. But straight, you know, we because we haven't really acquired anything recently, our FAS 141 rent amortization is pretty static. So when the guidance comes out in February, it should be pretty solid for the whole year, barring any unknown terminations or acquisitions, if we do end up buying something. On the straight-line rent side, you know, I would say that the run rate was the nine-month number would be a good if you annualize that, that would be a good run rate, given our leasing activity. Okay, got it. So the fourth quarter, the implied fourth quarter straight-line rent should be a pretty clean run rate to think about moving forward? It should be. It'll all depend on the leasing activity we do in Q4. Yeah. Right. Okay. Got it. All right. Thank you. Okay. Thanks, Todd. Thank you. I'm showing no further questions at this time. I would now like to turn it back to Stuart Tanz for closing remarks. 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 Lauren, Mike, Rich, or me directly. Also, you can find additional information in the company's quarterly supplemental package, which is posted on our website, as well as our 10-Q. Lastly, for any of you that are attending the ICSC conference in San Diego, that starts today, we hope to see you there. For those of you that are planning to attend NAREIT's annual conference in a few weeks from now in Los Angeles, we look forward to seeing you there, too. Thanks again, and have a great day, everyone. This concludes today's conference call. Thank you for participating, and you may now disconnect.