Good day and thank you for standing by. Welcome to the Third Quarter 2022 Acadia Realty Trust Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that your conference is being recorded. I would now like to hand the conference over to your speaker today, Max Kohl. Please go ahead.

Good morning and thank you for joining us for the third quarter 2022 Acadia Realty Trust earnings conference call. My name is Max Kohl and I'm an analyst in our acquisitions department. Before we begin, please be aware that statements made during the call that are not historical may be deemed forward-looking statements within the meaning of the Securities and Exchange Act of 1934 and actual results may differ materially from those indicated by such forward-looking statements. Due to a variety of risks and uncertainties, including those disclosed in the company's most recent Form 10-K and other periodic filings with the SEC, forward-looking statements speak only as of the date of this call, November 2, 2022, and the company undertakes no duty to update them. During this call, management may refer to certain non-GAAP financial measures, including funds from operations and net operating income. Please see Acadia's earnings press release posted on its website for reconciliations of these non-GAAP financial measures with the most directly comparable GAAP financial measures. Once the call becomes open for questions, we ask that you limit your first round to two questions per caller to give everyone the opportunity to participate. You may ask further questions by reinserting yourself into the queue and we will answer them as time permits. Now it is my pleasure to turn the call over to Ken Bernstein, President and Chief Executive Officer, who will begin today's management remarks.

Great job, Max. Welcome everyone. As you can see in our quarterly release, we had another strong quarter led by the outperformance of our street retail portfolio, fundamentals remain strong and at the upper end of our forecast. Same-store NOI growth for the quarter came in stronger than forecasted at 5.4%. Leasing activity was robust with both an increase in physical and leased occupancy. Leasing spreads also reflected this momentum with cash leasing spreads in excess of 20%. Looking forward in our pipeline, we see continued strong leasing momentum. This is true both in our street retail portfolio, which is earlier in its recovery and growth trajectory and that's poised for higher long term growth, but also in our suburban assets, while at a more mature stage of growth, still posting solid performance. This momentum should continue to drive strong NOI growth over the next few years, even after taking into account the potential headwinds from those tenants on our watch-list or in our forecasted tenant role. Now questions remain, how might macro headwinds from Fed tightening impact this leasing momentum? Well, as we look forward, in our leasing pipeline we are not seeing declining demand for space by tenants. Some of this stability may be due to the quality of our locations or the affluence of our shoppers. But from where we sit, demand seems strong. In the markets we're active in such as SoHo or Gold Coast of Chicago or Melrose Place in LA, we are seeing luxury retailers double down. These luxury retailers are not only experiencing incredibly strong sales, they're also increasingly seeing demand and shopper interest for those retailers that surround them. We're also seeing increased demand and markets experience strong demographic growth. An example of this is our recent acquisition in Dallas on Henderson…

Thanks, Ken and good morning. I will start off with some comments on our most recent quarter along with an update on our multiyear core internal growth and then closing with our balance sheet. Starting with the quarter, we had another strong quarter with earnings of $0.28 coming in ahead of our expectations. And our third quarter results were clean with about a penny of FFO from prior period collections and no promote or fund transactional income. Amy will provide an update on our profitable Albertson's investment in her remarks. In terms of same-store NOI, our core portfolio grew 5.4% for the quarter and 6.6% year-to-date. And we are on track to exceed our initial 4% to 6% full year same-store guidance. And keep in mind, we are achieving the same-store growth even with the headwinds from prior period cash collections, which would have further increased our reported metrics by another 200 basis points. And driving this strength was a combination of the sheer volume of leases signed, along with signing leases, primarily within our street portfolio at rents in excess of our expectations. And both of these are showing up in our third quarter core leasing metrics. Starting with occupancy, sequential physical occupancy grew by 70 basis points during the quarter, resulting in rent commencements of approximately $1.2 million of pro rata ABR net of expiring leases. In term of leased occupancy, our leased occupancy increased to 94.3% at September 30, up from 94.1% as of the second quarter. And this positive momentum is being driven by our street leasing with approximately 70% of the leases executed or renewed this quarter coming from our street portfolio, resulting in a 150 basis point increase in sequential leased occupancy to 92% at September 30 with leased occupancy gains of 210 basis…

Thanks, John. Today, I'll share updates on the key moving pieces within our profitable fund platform. Beginning with Fund V. First, we were pleased to receive unanimous support from our investors to extend Fund V's investment period by one year to August 2023. We still have about $300 million of buying power. And if the pace of compelling transaction opportunities accelerates because of current market turmoil, then we will look to expand this buying power through co-investment structures. In the meantime, here's what we're seeing on the ground. Over the past few months, the gap between buyers and sellers has widened due to the uncertain impact of rising base rates and widening spreads on returns and pricing. So far this year, we've been able to shake loose a couple of interesting opportunities where debt maturities were a catalyst or value-add activities are a more meaningful driver of total return, putting our decades of real estate expertise to good use. To that point, in August, we completed the acquisition of the shops at South Hills and Poughkeepsie, New York in partnership with DLC. This shopping center totals about 0.5 million square feet and was 74% occupied at acquisition. The property was acquired at a 7.5% cap rate. So even in a rising interest rate environment, we're still achieving positive leverage going in before we execute on our value-add activities. These include converting a vacant retail big box representing about 15% of the center's current square footage to self-storage use and monetizing excess land where we think best and highest use is residential. We're pleased to report that we're making strong progress. With respect to Fund V overall, we're currently at a 13% leverage deal done invested equity and project that the portfolio remains at about 12% over the next several quarters…

Thank you. [Operator Instructions] One moment for our first question. It comes from the line of Todd Thomas with KeyBanc. Please proceed.

Hi, thanks. Good morning. Ken, first question. I just wanted to ask about the $30 million to $40 million of core NOI that you expect to come online over the next three to five years. You've outlined future growth previously. I realize it's a little bit of a moving target at times. And I think, John, you outlined that there's a little less than $10 million of NOI currently in the signed-on occupied pipeline today. Can you just provide a little bit of additional color, I guess, around the breakout of that $30 million to $40 million between lease-up of vacant space in the portfolio, sort of mark-to-market and ongoing leasing activity and escalators? Just to give us a sense for what you're sort of expecting around that growth.

Sure. So let me put some of the parameters and updates on that, and then John, fill in the blanks. But first of all, to be clear, even though the world is evolving, the targets that we forecasted remain absolutely on track, if not stronger. And that $30 million to $40 million is before you add in any additional NOI from our more recent acquisitions investments ranging from City Point to Henderson, et cetera. So the lease-up is going exactly as we had planned, and John will fill in how much of that $30 million to $40 million is from net lease up. But on top of lease-up, Todd, what we have seen is market rents growing faster than we had originally forecasted. It will take a couple of years for us to get those mark-to-markets, but that piece feels good. And then keep in mind, because of our street retail, where we have generally 3% contractual growth, there is also just simply the contractual growth. So John, why don't you fill in the different pieces that get us to that 30% to 40% over the next three to five years?

Yes, absolutely. And Todd, a couple of things to keep in mind. So one, in terms of lease-up, you mentioned that we have just under $10 million in the signed but not open that's already leased. And I think further driving that is going to be what we're going to see on our street portfolio. So we are about 92% leased. Today, 87.5% occupied. So it's going to be the continued leasing of our streets. And over this period, we think our street portfolio grows about 15%, inclusive of everything, entire streets, North Michigan grows 15%. So I think the leasing, I would say, is about probably half of that, roughly half of the $30 million to $40 million. And another probably $10 million to $15 million of that is going to be the contractual growth. And as a reminder, we get within our streets 3% contractual growth. So strong contractual growth, so call that another $10 million to $12 million. And the balance of that is going to be on mark-to-market. And I think that's the differential between the $30 million to $40 million is do we continue to see the rent growth that we clearly saw this quarter, and we'll see what's in front of us. But I think that's how we get to the upper end of that is through the continued mark-to-market of our street.

Okay, that's helpful. And then, Ken, just to clarify. So you mentioned that that does not include recent acquisitions and that does not include any incremental growth from City Point, which should transition into the core in 2024. Is that right?

Yes, Todd, I'll clarify that. So it does not include City Point and it does not include any potential future acquisitions, right? So it's what we own today.

And so as best we can, Todd, we are trying to make sure that we are comparing things on an apples-to-apples basis. And so far, things look very positive on that side. Obviously, in the next year or 2, we will be including – John mentioned that City Point comes online. It's expected to in 2024. But we will try to measure that $30 million to $40 million over time, so we can see what we're seeing and what our tenants are telling them, which is business is good, and they want to be back in SoHo, they desperately want to be on Melrose Place or Armitage, et cetera. And it's showing up in rents, it will show up in NOI.

Okay. That's helpful. And then, Ken, so you talked about the luxury retailers doubling down and how retailers are looking past the current cycle potentially and what you're seeing in sort of the street retail and some of the retail corridors. There was a little hesitancy by retailers to lock in long-term leases during the pandemic. I think both tenants and landlords were looking for a little bit more flexibility, so not to lock in terms during some of those volatile periods. How are those conversations today around how retailers are thinking about these higher profile, more expensive stores, their commitment to sign long-term leases and invest in the build-out of those stores, how are those conversations evolving?

Well, so there's a few things playing out. One is the notion and thought that once we get through this current storm, that we may have a higher level of inflation certainly than we've seen over the last 10-20 years. What that generally means is that rents grow faster. And so retailers are more inclined to lock in long term, some mission-critical locations than they were in a period where everything felt deflationary and what the heck, if you wait a few years, everything will be less. That sentiment has shifted. So for those locations, that retailers believe in long term. And remember, some retailers are buying their locations. So that's about as long-term a commitment as you can measure. And a lot of the corridors we're involved with, that's the case. But where retailers are committing long term to a location, the issue then is much less about the ability to leave in two years. Additionally, what we're seeing, especially at the luxury side, but this is true across the board, shoppers are coming back into the stores for a variety of reasons we talked about. They don't want a pop-up experience. They want a store that speaks to who the retailer is in multiple ways. And so the notion that you can do something inexpensively and short term, there'll be some of that. But for the type of retailers that show up on Green Street and SoHo, show up in Melrose Place, show up on Armitage Avenue in Chicago or the Gold Coast of Chicago, they're investing heavily into the stores with their money. They want to know they have the lease term for that as well.

Okay, great. All right, thank you.

Thank you. And one moment for our next question, please. And it comes from the line of Ki Bin Kim with Truist. Please proceed.

Thanks, John. Good morning. I guess we can start off with just kind of bigger picture thoughts on longer term how you want to finance some of the fund investments. Obviously, you guys have been using a lot more variable rate debt. Any changes to that going forward?

Well, in a few different ways, and it's a critical conversation that Amy, John and I have on a constant basis. So first of all, the fund business is, in general, a buy-fix-sell business. And while occasionally one can benefit by putting long-term debt on a long term – on a short-term asset, more often than not, and we've been at this for a while, that doesn't work. So if we are buying assets with a view that we are going to dispose off, monetize in the next few years, we're somewhat limited on our hedging within that, and that's fine because we better be buying them, right? And Amy walked through for Fund V over the last several years, we've been buying out of favor retail financing it, commensurate with our expected hold, and so far, so good, very good. But we're at a unique point in time in terms of the debt markets, and we need to think through – and for reasons I'll get into later – what's the best way to buy, what's the best way to finance. The debt markets are backed up right now. That's causing the acquisition markets to be backed up right now. And thus, the way we finance our next deal probably will look different than the way we financed a few years ago, but that's very dependent on, in fact, what the kind of opportunities are. That's a long way of saying we can afford to be flexible in the fund business in terms of floating rate financing. It may cause some headwinds to John's earnings on any one quarter. But as long as we invest profitably, flexibly, successfully, it ultimately comes out in transaction, promotes fees otherwise.

Okay. And sorry if I missed this, but in your 717 North Michigan Avenue project, it looks like the development project went to TBD. You guys have already spent $116 million on it. I'm just curious from an economic standpoint, so not the write-offs, but from an economic standpoint, how much of that $116 million is still usable for whatever life that project takes and how that all shakes out?

Yes, we are in the middle of a potential transaction. So I'm not going to get into the details right now, but hopefully, over the next quarter that will become clearer on what our vision and planned execution for that is.

Okay, thank you.

Thank you. And one moment for our next question. It comes from the line of Seth Bergey with Citi. Please go ahead.

It's actually [indiscernible] here with Seth. Just kind of curious on the commentary around Bed Bath & Beyond in San Francisco. Just curious how receptive the company has been or the tenant has been to any approaches there to try to get the space back early.

So I would call the situation fluid defined as for the last five years. We have tried with different administrations, different paths to rightsize that store because it – and hopefully, some of you get a chance to visit it. It's on two levels with parking on both levels. It is oversized, but very productive for Bed Bath, and we have tried to convince them to operate out of one level. And historically, they have said interesting idea, but we kind of like the status quo. Their rent is low, and they're the tenants, so they get to make that decision. Fast forward to the last 6 to 12 months, they've seen more open-minded receptive and we are in the middle of negotiations. So stay tuned. We tend not to like to conduct our negotiations over quarterly conference calls. But I have every reason to think that on the conversations we're having, they're being very rational. There's strong demand there. Even though, again, it's San Francisco, we're signing leases. So I am more confident today. However, I've been confident at different points in the past, then been unable to get the space back. Again, the marketplaces worry is what if we get the space back; my concern is what if we don't. I've been through this before, you all watched us go through this with Kmart in Westchester. It took us forever to get that back. Thankfully, we did. BJ's just opened last week and they're crushing it. So sometimes it takes a little patience, but this is valuable space and a valuable property. I believe we will get to a profitable and rational conclusion for us and Bed Bath.

Okay, that's helpful. And then I think – and I don't want to presume, but clearly, the stock is off a bit here today. I don't know how much the impairments have to do with that. And not necessarily those specific assets, but just kind of concerns about asset values here in the absence of transactions. And if you kind of try to square that with your commentary on rent growth, it seems to be a little bit of a disconnect between where your stock is trading from applied cap rate basis versus where maybe these assets would transact in a more normal time. I know, again, this is more of an academic exercise at this point. But just from your standpoint, from either an underwriting or any kind of angle you could give us a sense of the kind of movements in cap rates with the underlying rent growth you're seeing and how that compares maybe to where the stock is being valued in the public market?

Yes. And you're spot on in terms of some of this disconnect. And it is hard, unless you're walking the various different streets and hopefully, many of you have that opportunity to do that to understand the disconnects between certain streets and others. The most glaring contrast is one block away from North Michigan Avenue we own on Rush & Walton, but Rush & Walton is doing better today than pre-COVID, not only in terms of rents and sales, but also in terms of the quality of tenants. You have luxury doubling down there. For instance, we expanded Saint Laurent a couple of years ago. Dior just expanded and the list goes on. So it's not like, oh, this is a Chicago problem. This is a North Michigan Avenue micro climate issue, but it's a real issue. And because we have to moment-in-time account for it, that's what we've got to do. North Michigan Avenue is suffering headwinds that other parts of Chicago are already rebounding from. Why? Well, unique to that major corridor, it is saddled with three enclosed malls. Right across the street from us is Water Tower, which was once upon a time an iconic asset and it needs to be reinvented. I am highly confident it will. But that may take some time. And for a moment in time accounting, we need to recognize that shift. So in the longer run, I am confident that you will see a rebound on North Michigan Avenue. But I don't want to hitch our trailer to count on just a recovery in North Michigan Avenue. What we have said is we've got enough growth, whether it's down the block or across the country to net out the net negatives of North Michigan Avenue for us. So let's move past that. We've got some interesting ideas in terms of how this gets redeveloped, perhaps gets redeveloped by others. But if you walked Rush-Oak Walton and then headed over to North Mish, you'd understand the distinction. If you want to predict that North Mish rebounds quickly, great. If you think it's going to take time, so do we, one way or another, the balance of our portfolio more than counterbalances that. And that's where the disconnect is, is right now the marketplace has got to figure out where do they see rebound long term and what feels like a melting ice cube. Thankfully, we see this growth on a net basis and that's what we're focused on.

Okay. I guess...

Do you have a follow-up?

Yes, sorry. My phone just cut out there for a second. I guess I was trying to get more broad thoughts about just investment returns kind of where the market could go versus your implied 773, particularly as you guys are talking about this could spur some opportunities here. So how you're thinking about kind of the values that you think the portfolio is worth, yet you want to be opportunistic on the acquisition side. And so you're going to have to adjust your underwriting for that. I guess I'm just trying to kind of get a holistic view on in that environment, everyone wants to be opportunistic, but no one wants their assets to be revalued in the interim.

Yes, yes. So I was talking rents, you were talking values and cap rates. I get it. Here's what I'd say. Right now the dislocation on value, the spread between buyers and sellers and bid and ask is fundamentally debt-driven and it's a double whammy issue. Double whammy meaning that not only are base rates going up, but spreads are gapping out. In order for opportunistic dollars to come in, we need to see some normalization of that. And that could take weeks, it could take months. But my guess is spreads normalize. You tell me where base rates are and then a normalization of spreads will give opportunistic buyers and opportunities show up. Where and what cap rates do they show up to? A lot of that will depend on one's view of growth and inflation and thus exit caps. And that's what everyone's scratching their head around now. Right now you've seen a pivot towards everyone still want positive cash flow. And so actually higher cap rate assets are holding up better than the more valuable assets. Over any extended cycle, we've seen it go the other way. Meaning location matters, value matters, and lower cap rates return. What does that mean for North Michigan Avenue? Well, my guess is it remains iconic over an extended period of time and cap rates remain lower there than they do just somewhere in America. Where do rent settle? That's what we were talking about before. And that could take a year or two in terms of value. I wish I could tell you it should be a 5 cap versus a 4 cap versus a 7 cap. It's just not that simple because a lot of what we're talking about is what do these redevelopments look like. And that's where the marketplace is trying to figure all this out. So that's a long way of saying, I would expect high-quality leased assets in places like SoHo or Melrose Place or Rush & Walton, with strong embedded growth to hold on to much of the cap break valuations that they previously had. And I would expect that heavy lifting redevelopments requiring debt, requiring a lot of uncertainty, probably gap out. It's going to take a while for that to sort through, but that's my best guess.

Great, thanks.

One moment for our next question, please. It comes from the line of Linda Tsai with Jefferies. Please proceed.

Hi. Ken, can you discuss luxury retailer store opening plans and maybe how that plays out in your street retail portfolio?

Sure. And I don't want to make it seem like we are dependent on that one anchor, but luxury retail in SoHo in Rush & Walton, Oak Corridor, in Melrose Place, in the Knox-Henderson corridor longer term, it's pretty clear. I don't have specific names. And if I did, I'm not allowed to say them, and I don't have specific numbers. But you can glance and see it's about twice the square footage that existed there pre-COVID. Why? Because those brands are gravitating towards direct-to-consumer, which a few years ago, we confused to think that meant online. And now what we realize is that direct-to-consumer for a lot of our luxury is their own store. It doesn't mean that department stores go away, doesn't mean that online disappears, but it's really about the store that they can connect. So what you should expect is about half of our markets are going to have luxury. Williamsburg, Brooklyn is getting luxury. The other half, equally exciting are some of the newer, younger names. Aritzia is crushing it on M Street in Georgetown. M Street in Georgetown is not going to be luxury, but it's got so much more energy today than it did pre-COVID. So look for luxury to be a piece of this. I don't have specific data, but then expect other exciting shopping experiences. And so far, we're seeing it show up in tenant sales, those carters that have activated are working.

Thanks. And then maybe just as a follow-up. There's a discussion on another earnings call about how a lot of retailers experienced a pandemic-related lift to margins. And now we're seeing greater normalization given cost pressures. Do you think the same dynamic is playing out in luxury retail or are they better protected?

Well, they're better protected in the sense that their cost of goods relative to what they're selling for, they are – they have a better margin. But this is going to be an issue that will play through for a variety of our retailers. And what our retailers are telling us when I speak to them is those pressures that feel more short term, more supply chain inventory management oriented, and they're confident they can work through those. Some that feel like they're longer lasting, wage growth, they're going to have to price in. At the luxury level, you see high levels of pricing elasticity. The consumer is willing to show up. We're seeing that elsewhere as well. So what our retailers are concluding is, there will be some margin pressure depending on who their shopper is in the short run. But over any extended period of time, it probably will come back to the age-old discussion negotiation, which is top line sales. And most of our retailers are forecasting solid top line sales growth. Perhaps the COVID lift become a flattening, but compared to pre-COVID, we're seeing very encouraging numbers. It will be about top line once bottom line normalize, and they think they will. They won't normalize for all retailers, all segments. The lower end shopper is perhaps going to feel more headwinds, and thus, their retailer might. But it's going to come back to top line sales growth and supply and demand. And because of the shift from the end of the retail Armageddon, the supply and demand metrics on most of the corridors that we're involved with have shifted significantly over the last 12 months, and our retailers are stepping up thinking past any of these short-term margin issues and thinking about what the next 5 or 10 years will look like.

Got it. Thank you.

Thank you. One moment for our next question, please. It comes from the line from Jeff Spector with Bank of America. Please proceed.

Great, good morning. Ken, my first question just ties to the opening remarks. Just I guess the skeptical view on retailers and their historically, I guess, let's say, the lack of discipline in terms of store openings. I know you have a lot of experience. And clearly, you laid out a lot of the reasons why they're still pursuing store openings. Are you saying at this point that you would normally see retailers start to pull back on future concerns? Or is it still too early to say that? It sounds like you have a lot of confidence in the demand will be resilient over the coming months.

So the short answer, Jeff, is I would have thought we would have started to see a slowdown if our retailers were hyperventilating over the current economic conditions. So far, they are not. Now that does not – retailers, by their nature, need to be somewhat optimistic, and the industry is very Darwinian. The difference this time, my sense is talking to our retailers compared to other cycles, call it, before the global financial crisis, there used to be a lot more pressure from Wall Street on our retailers to open stores to meet plan. Period, full stop. And that caused open to buys at time periods where it felt a little more like a head scratcher. So retailers were opening stores in anticipation of population showing up somewhere in America. The housing crisis occurred and they got caught in a bad spot. We are seeing retailers now again, they're optimists, but they're opening in places where shopping demand exists today. And when you're talking about some of the markets we're involved with like New York City, starting today before international tourism has kicked in, before full return to office, before a whole bunch of other factors. So they're looking at their sales. They're looking at sales 2019, not 2021, and they're saying, how do I forecast over the next several years, and things are screening attractive. So a hard recession will absolutely have an impact, but it does not feel like this is a bunch of overly optimistic, undisciplined tenants. This feels like software retailers recognizing the shift away from online, the importance of these iconic locations and the attractive rents that they're coming in at.

Thank you. Appreciate the comments. And then my second question on opportunities. I guess when you look back through the last, I don't know, call it, a couple of years through the pandemic, as you said, things have really changed for brick-and-mortar. Are there new opportunity sets for Acadia that when you think about the five-year plan, let's say, a particular product type, I mean is there any change in what you would desire to own versus the current portfolio or regions?

Yes. So without having our annual strategy session on this quarterly call, I would tell you there are shifts that we are either open minded to or executing on. Think about our recent addition down in Dallas. That would fall into regions or demographic shift. And it's not an either/or or win/lose. SoHo can do great, Williamsburg can do great and so can the Knox-Henderson corridor, and that's how our retailers view it. They're not saying, oh, maybe I should not open in SoHo and instead open in Austin. They're saying we now have other markets that we can serve that extends our brand. And we want to do that with responsible landlords who are capable. We have a proven track record of that. So there are a host of new regions. If our retailers want to show up, can do the business and pay the rent, then you should expect us to consider that. That's one small piece when we think about things from a region perspective. Then there are pricing dislocations. We touched on our Mervyns and Albertsons involvement. Times like this will create dislocations and we will spend a certain portion of our time thinking about where those opportunities show up. But to be crystal clear, that will not be at the cost of us laser-focused on our leasing, laser-focused on getting that $30 million to $40 million plus City Point plus or everything else in online. So we can do both at the same time and it's going to be an interesting five years, as you say, in terms of where this shakes out. Bottom line though is retailer strength will get us, I think, through the next five years in ways that the retail Armageddon was just headwinds.

Great, thank you.

Thank you. [Operator Instructions] Our next question comes from the line of Mike Mueller with JPMorgan. Please proceed.

Yes, hi. It's Seung Yeon [ph] on for Mike. I think in the past, you've talked about expecting a certain level of tenant rollover next year. I was wondering if you could give us an update around that. I think you specifically mentioned the H&M lease of Michigan not renewing middle of next year, for example?

Yes. So Yeon, I think, as we said, we're on track for the 5% to 10% growth next year, inclusive of with the largest being what you referred to in North Michigan. So on track with that, nothing meaningful beyond those, which has and continues to be baked into our expectations for 2023.

Got it. And could you remind us what your traditional credit reserve is? And where do you think it could trend for next year given where you sit today?

Yes. So I think traditional defined over the last three years would be tough, but I think pre-pandemic normal times, we were 50 to 100 basis points. And as I sit here today, our watch-list is pretty nominal. We've talked about the couple of credit issues between Regal and Bed Bath. But we're – and we think we have those well-controlled. We have a pretty slim watch-list. So I would say, just in light of just the uncertainty in front of us that we may revert back to – and we've had virtually no credit loss besides cash basis noise throughout the year for the past – throughout these results. But I think next year, I would preliminary target maybe a return to normalization in the 50 to 100 basis points, I think, is right. But I'll know more as we get into – we issue guidance, but not seeing the distress in our quarterly results and our monthly cash collections we don't have a big small shop local tenant exposure, which is where I think there could be fallout, but I think we could revert back to a more normalized.

Got it. Thanks.

Thank you. I am not showing any further questions. And with that I will pass it back to Kenneth Bernstein for his final remarks.

Great, thank you all for joining us. We look forward to see – to 100 basis points and…

Everyone thank you for participating in today's conference. You may now disconnect at this time. Good day.