Good day and thank you for standing by. Welcome to the Fourth 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 today's conference is being recorded. I would now like to hand the conference over to Romero Reyes.

Good morning and thank you for joining us for the fourth quarter 2022 Acadia Realty Trust earnings conference call. My name is Romero Reyes, and I am a Property Accountant in our Accounting 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, February 15, 2023, 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.

Thank you, Ramiro. I bet, we didn't tell you about having to do this when you joined us, and you did a great job. Welcome everyone. As you can see in our release, our fourth quarter results represented another strong quarter with operating fundamentals coming in above our expectations and same-store NOI for the year exceeding our guidance. Looking back, our leasing activity for the year was strong in terms of both volume and rent levels achieved, and this momentum continues. In the fourth quarter, we increased physical occupancy by 150 basis points, and this occupancy gain is worth noting because over the last year, due to supply chain issues, getting tenants open on time and on budget has been a significant industry challenge, and our team rose to the occasion. Notwithstanding this progress, we are certainly keeping an eye on the macro data, which has been recently sending mixed signals about the consumer, and the retail environment for the next year. In a world where good news is bad news and bad news is often well bad news also, landlords and tenants alike are trying to prepare for the most anticipated consumer recession in a generation, while reconciling this with the strongest job market in a lifetime. And while we'll let the economist in the financial markets debate whether this is the best of times or the worst of times, in the interim, we're staying busy leasing space. In fact, when looking at our current leasing pipeline, activity remains on track with our prior forecast, and we haven't yet seen any fallout and tenant demand. Now, this does not mean that retailers are ignoring the potential macroeconomic challenges over the next year and nor are we. And while we are expecting that there will be a higher level of…

Thank you.

And as significantly, we had almost -promotion of rising stars throughout the organizations. Congratulations to all of you. Watching team members advances by far the best part of my job. So to conclude, while we recognize that macro news headlines are not all positive, our leasing fundamentals remain strong and internal growth intact. While we wait for exciting external growth opportunities, which we are confident will eventually arrive, our leasing team will continue to provide record levels of internal growth making any future external growth that much more additive. And with that, I'd like to thank the team for their hard work this quarter and turn the call over to John.

Thanks, Ken, and good morning. Before diving into the results, I want to reflect on a few of our team's key accomplishments during 2022. First, we grew our FFO in excess to 7% in 2022, raising our guidance three times over the course of the year as the rebound in our street and urban portfolio began to take hold. Secondly, we increased the physical occupancy in our core portfolio by 270 basis points with solid rent cash rent spreads, resulting in 6.3% same store ROI growth, which exceeded the upper end of our guidance. Lastly, and in a turbulent capital markets environment, we completed both profitably and accretively over $800 million of transaction volume comprised of over $0.5 billion of new core and fund investments along with nearly $300 million at dispositions. As I'll touch on later in my remarks, we see these trends continuing in 2023 and beyond. Now, starting with the quarter, we had another strong quarter with earnings of $0.27 a share coming in above our internal expectations. In terms of same store NOI, we reported growth of 5.7% for the quarter and 6.3% for the year with our annual growth exceeding the upper end of our initial 4% to 6% range. And we achieved the 5% fourth quarter growth despite over 200 basis points of headwinds from prior period cash collections. If we were to exclude these headwinds, our same store growth for the quarter would've exceeded 8%, and this fourth quarter growth was driven by both occupancy and market rent increases. During the fourth quarter, we increased our core physical occupancy by 150 basis points to 92.7% at December 31st, as compared to 91.2% at September 30th. The 150 basis points of occupancy gains represented $3.3 million of incremental pro rata ABR net of expiring…

[Operator Instructions] Our first question comes from the line of Floris van Dijkum with Compass Point.

Thanks for the information, guys. A lot of details to us to shift through, but just want to make sure that I understand this correctly, so your same store guidance for '23 of 5% to 6% incorporates275 basis points of credit loss. Is that the right way to think about it?

Of course, I would say the 275 apply that to FFO, right, because some of for example, 555 9th is not in there.

Got it. Okay. But the 150 base points, presumably is part of your same store?

Correct. As is the Brandywine location. So, it's somewhere in between those two. So, it's somewhere in between those two because the Brandywine, Wilmington that downtime is reflected in the same store pole. So call it roughly 200 basis points and same store.

And then, obviously, you talk a little bit about your 89% street and urban occupancy and the potential to lease that space. Wanted to get maybe a little bit more granular on that detail from you guys, where is your remaining vacancy? How much of that is at City Point relative to some of your other properties? And where -- and how much of that is in Chicago and San Francisco? And when can we expect, I guess the timing of that is that dependent on the market improvements or some redevelopment that are taking place?

So, you've mentioned a bunch of different buckets and John, I'll have you add some color to this, but first of all, Floris, you should understand that the 89% is within our on balance sheet core portfolio. So City Point for instance is not in that number. So while there is significant lease up in City Point, that'll start showing up in '24. The embedded lease up of our physical occupancy for our core portfolio, about half of that is with leases already signed. So there, we just got to get those stores open as we did with 150 basis points before. Final point before I hand the details to John is physical occupancy is not a great metric for us NOI growth because some of these smaller stores can be much more impactful than are larger. So, it's one data point and the upside in NOI is pretty significant. John, any color or data you want to add?

Yes, I think you hit most of it and maybe add some more about what we're seeing in SoHo, but, but Floris said Sprinkle throughout, but we have some opportunities where that are currently already leased. So for example, in SoHo, we have some spaces that leased that are ready to get commenced that's not yet started. And we have some as well that we have opportunities to lease that will drive attractive rents. Chicago, we have some opportunities, well in prime locations. So we have a location in the Gold Coast, which is booming, as well as some in Lincoln Park. So Sprinkle in Chicago, and then Ken, maybe talk about DC because we have some room to grow in DC and we're seeing rents recover there and we have some occupancy uplift opportunities in DC.

So one of the final areas is the M Street Georgetown corridor and DC as got hit hard during COVID, but even pre COVID M Street was suffering from getting a little stale. Last year or so, we've had several new retailers showing up and the shopping experience has improved dramatically and now other retailers are following suit. So we should be able to drive both rents and occupancy there over the next couple years as that early stage reopening place out.

Our next question comes from the line of Linda Tsai with Jefferies.

Where do you think occupancy could end year end 23? And then maybe just stepping back like how far do you think we are in the urban recovery from versus pre-COVID for New York versus say like Chicago or San Francisco or DC?

John, why don't you take the first part, and then I'll add some of that color.

Yes. So, Linda, I'm going to go back to the caveat that Ken just mentioned, is that not occupancy is created equal given the street we have to lease up. But having said that, I would expect that our occupancy is going to further increase physically, net of expirations probably 50 to 100 basis points off where we are today. But at the same point we have to look at what we actually do. But I would say I would target. I'm targeting about 50 to 100 basis points of an increase.

Now for where are we in the recovery for our various cities, what we have seen over the last year, is probably the easiest metric for you to look at, to gauge where we are in recovery, is where residential rents and occupancy is. Because what we found was New York recovered faster because even though return to work, return to Midtown has been very slow return to downtown, and residential rents around there rebounded quickly and sure enough we saw that rebound in SoHo. We certainly saw that rebound in Williamsburg, Brooklyn. So, New York was earlier from that perspective, notwithstanding return to work. Chicago, somewhere in between and they certainly have their challenges. We've been clear about North Michigan Avenue on that front, but then the other components of our Chicago portfolio, the Gold Coast, Lincoln Park, where they've had a stronger residential rebound there we've seen it in terms of sales. You mentioned San Francisco, and it's slower there. I think, we are seeing, I know we are finally seeing improvement there, but different type of workforce. They are only beginning to come back now, but they're coming back, and with that you will see an improvement but that would be then in the earliest stages. Some of our other markets are then on the beneficiary side, Greenwich, Connecticut absolutely got a COVID lift. And what was a downward trajectory of rents on Greenwich Avenue for the five years prior to COVID got a COVID lift. Then down in Dallas, Henderson Avenue, continued population growth, there we're seeing a lift there as well. So if at different levels of trajectory, some are going to post very strong growth off a low point, others are going to show consistent growth, because they got a COVID lift. What our retailers are telling us is they really want and need to be in all of these locations over the next five years, because these are mission critical locations for their customers.

Thanks. And then the activity in your fund business this quarter, is this a byproduct of financing distress, and just indicative of greater opportunities for your fund business going forward?

Probably, it's a very confusing time for investors. In terms of activities so far, things quieted down, and they have quieted down in ways that we probably didn't anticipate prior to the fed's move, meaning lower cap rate, higher growth assets in many instances got hit harder than higher yielding assets. And on a portion of value that reset is playing out. I think, we have better clarity as to where long-term borrowing costs could be. And I think you're going to start to see now sellers come back to the market either because they're being forced by their lenders being forced by their partners, fatigue, but we're just starting to see that kick in after a period of a couple quarters of relatively quiet activity.

Our next question comes from Todd Thomas with KeyBanc Capital Markets.

Ken, first question, I just wanted to go back to your comments about acquisitions. Sounds like your cost of capitals not where you needed to be to make core investments pencil today. You have dry powder in Fund V, but you also mentioned exploring additional sleeves of capital. Can you just elaborate on that comment a bit, whether you're talking about the funds platform or if you're contemplating sort of joint ventures or some other strategic capital that would allow for investments in the core?

Sure. And I'm glad you picked up on that, Todd, because the world has been evolving. If you think about that, five years ago when we launched Fund V, best practice standard operating procedure, whether you were larger platforms or certainly smaller focused vertically integrated fund platforms, was to have one vehicle. And I say over the last several years, you have seen that evolution, whether it's the large folks or the other fund managers, where investors have a higher level of tolerance and expectation for multiple vehicles at the same time. Now our first responsibility is to put Fund V dollars to work profitably. And since our unlevered yield, and we've bragged about this on prior calls on Fund V is quite good because we were buying out of favor retail at very attractive yields, clipping a very attractive coupon. Our responsibility is to continue that and get the balance of those dollars to work. So no one should think we are distracted from that. But as we think about the best way for Acadia Realty Trust to both serve the needs of outside investors, but most importantly create value for our shareholders. Every time we get to this juncture between one fund and the next, we say, has anything changed? And this time it has. And so maybe there will be multiple vehicles, multiple sleeves so that we don't have a one size fits all. And those are conversations that we are undergoing. Some of this is driven by the fact that we acknowledge the fund business creates lumpiness. It can create complexity because we have to fully consolidate all our ownership. Sometimes it causes people on the shareholder investor side to get confused about our exposures. One of our goals will be to simplify that but also continue to be able to be entrepreneurial and profitable because Todd, as you started this conversation, I think it is fair to assume that wholly owned rates, cost of capital may be higher than alternative structures over time. And we want to make sure, and we always have wanted to make sure we are not simply beholden to one source of capital to public markets if and when we see great buying opportunities. Good news, right now, there have not been great buying opportunities within our core competencies for the last one or two quarters. It's going to change. And then we will make sure we have the powder available. We do right now in Fund V, and then we'll continue to work that in terms of what that might look going forward and we'll keep it posted.

Okay. I guess, similarly, along those lines a little bit you've been working with DLC and Fund V, seems like a 90:10, sort of JV format, within Fund V. Is that relationship just asset by asset or is there something more programmatic in Fund V with DLC? And can you talk about that relationship a little bit there, and sort of the terms who's sourcing deals, asset management responsibilities and so forth?

I can get into some level of detail. It's a multi-decade relationship and many of those assets were embedded into DLC, and we were able to work with them to successfully recapitalize them. I'm not going to get into the economics and structure. They're a very competent team. And we work very well together and the deals are meeting and beating our pro forma. So put everything else aside, meeting and beating pro forma is always a great way to keep a strong venture stronger. So, there is nothing uniquely -- there's nothing that we have that we are beholden to them, but when they have assets, whether it's ones that they currently own or for other reasons, we are thrilled to do business with them.

Okay. And John, just a quick question for you. Appreciate some of the detail of the 5 points, the sign not occupied pipeline, I think you said 5.6 million of ABR, 6.5 million of NOI. Is that all generally in the same store? Is that's only for the portfolio, if I'm not mistaken, is that right? Or is there something else in that?

No, Todd. That's all same-store, that's our core portfolio same store.

Okay. And then, I guess, so you talked about some of your assumptions around Bed Bath, and Regal at some assets that are outside of the same store. But what else is there any NOI or sign not occupied pipeline that's discussing at all in terms of assets that are in there development pipeline? Anything significant there that's sort of outside of that same store SNO pipeline that you provided?

No, for sure Todd. So, I think, we have in redevelopment, we have city center in San Francisco, which is the target anchor with the whole foods that's going through its approval process. So there is a several million dollars of signed, but not open in our redevelopment related to city center as well as 555 9th. So, 555 9th with the signing the container store lease is also in redevelopment, so, there's call it a couple million dollars that is not in that sign, but not open, but is part of our redevelopment sign, but not open.

Okay. And what's kind of the -- is there -- are you able to share some details around the timing of those rank commencements, and I guess the capitalization around those assets in general? Is everything sort of being capitalized? Or is it on sort of a sweep by suite basis?

Yes. So, I mean, they both have in terms of commencements, so we'll start with City Center. They're going through the lengthy, there's -- it's called a CUP process in San Francisco. We're in the midst of that. So there will not be a rent. I wouldn't highly doubtful. There will be a rent commencement of hope groups there won't in 2023. So, I think that's more likely later, 2024. Do they get through the process and hopefully moved towards an approval. And the cost have already in bid incur. So in terms of the funding costs, the build out of city center, we've incurred the cost and are just waiting for the approval. There is a bit of capitalized interest that we're doing related to the whole food space itself, not the entire building. But the whole food space itself, there is a bit of capitalized interest, but not overly material. 555 9th, we are not capitalizing any material costs at this point until we start the large largest scale redevelopment.

Our next question comes from the line of Craig Schmidt with Bank of America.

And I first just wanted to congratulate Stuart on joining the Acadia team. And then in terms of your small shop occupancy, it's now higher than it was pre-COVID. I'm wondering, what it was driving that and what is the room for growth on that small shop occupancy number?

Yes, so I think Craig, we are seeing, as Ken talked about the, just the really, the recovery that we saw in the street and urban markets. So, I think that's a big, big piece of it. And then Sprinkle throughout including our suburban, we're seeing that filling up nicely as well, so kind of if you have any room, but we're seeing in a small shop, but that is an element where we do see further growth coming from there.

Yes. Without getting into the particulars of how we define small shop vis-à-vis our street and our suburban. The two things I already mentioned in our prepared remarks that I think it's important that the investment community understand is, first of all, the secular shift that online shopping as opposed to physical stores is continuing to drive tenant demand, especially for important admission critical locations. And so, it may show up in the small shop data, it's going to show up in the junior anchor and the anchor data as well. And I think you should expect to see that notwithstanding whatever speed bumps in the economy are existing. And the second point then is, in terms of good news being bad news, from our retailer's perspective, when they see strong January sales, they're not complaining much. So, far the consumer showing up, not perfectly, not everywhere, but the consumer's still showing up and tenants are still shining leases. And my sense is that's going to continue in less things unless the data gets consistently worse than what we're seeing right now. So whether it's small shop or otherwise expect to see that momentum. Final point though is if we hit a hard recession, what we've historically seen is our small shop is the first two weaken. So, that's certainly an area we should continue to watch because our smaller mom and pop retailers are often more fragile. But so far we're not seeing any signs of that.

And then in terms of the transaction market, how long do you think it's going to take before we see the new normal and a meeting of good and ask on retail assets?

So I think we're getting closer. And again, let's start with the secular shifts. Retail was an out of favor asset class heading into COVID due to the retail Armageddon and investors had other areas of focus, and what we're beginning to see is the investment community saying, you know what, there's other asset classes we're now more worried about, and retail has actually proven itself getting through the COVID storm through some other recession. Physical bricks-and-mortar retail feels like a better investment. So that's a positive. And then just as you saw that momentum starting there was the huge shock to the capital markets in terms of interest rates. What I would argue is for more stable asset classes in retail now is heading back to that, we should stay more focused on 5 and 10 year borrowing costs, then short term. There will remain very limited new development which is dependent on short-term interest rates and much more will be stabilized retail with superior growth to other asset classes. So I expect institutional capital to start gravitating towards that. Now, Craig, I'll defer to you and Economist as to where borrowing costs will end up over a 5 or 10 year fixed rate period. But we're starting to see spreads come in. I think, you can have some level of confidence that once we get through whatever 2023 has in store, you will see a normalization of spread. And then there are a lot of smart people who are debating weather. The 10-year treasury is going to be with a three handle or a four handle. Again, I'll let them defer or I'll defer to them on that. But I think you will see the bid and as spread narrow, once there's better clarity as to what 5 and 10 year borrowing costs will be and remind everyone, if we are in an environment, we're borrowing costs for two-thirds mortgage financing, which drives the majority of retail investment. If two-thirds financing is at 5% or even 6%, that's not the end of our industry. So capital will start coming back, bit frozen now, some buyers owners have been hesitant, but my guess is in the next few months there will be much better clarity and then better deals well.

Our next question comes from the line of Ki Bin Kim with Truist.

Just had a couple of development questions. Going back to the 555 9th Street, can you just talk a little bit more about the redevelopment plans for that asset? When you look at Google Street View, it is probably hard to appreciate what the ultimate outcome could be.

Yes. And we'll post some better rendering shortly, because it is hard to describe, but I appreciate you asking the question, and I will take as tab at it. Right now, all of the access to the retailers is at the street level, whether you're going into a Bed Bath &Beyond or a Trader Joe's. Part of our vision is to have a very dynamic street level, retail shopping experience, but then have that somewhat separate from the second level, which has historically just been overflow parking. People would park up there and then walk downstairs. With the addition, first and foremost of Container Store as the first anchor, on the upper level, open air parking, pedestrian access, people will be able to drive up there and walk into all of the second floor stores. That is predicated on us getting back at least half of the Bed Bath & Beyond. And what we have explained over the years is we've tried desperately to get back one of the two levels, if not both of that very important Bed Bath & Beyond to them and they were unwilling to do so. I think they're much more open minded now to say the least. So if we can then add that second anchor on the upper level plus shops in between, it will be and feel like a more typical open air community center. And on further calls, we'll get into how we're going to curate that. It'll be pedestrian friendly, it will make all the sense for where San Francisco is going. Then on the street level, we have a very strong, recently expanded Trader Joe's. We will lease the street level retail off of that. Think of it almost as two connected, but different shopping centers. And I think that will much better serve the needs of those shoppers. The final point though, is our Bed Bath & Beyond rent is cheap enough that we get to make money in this process.

And on 717 North Michigan Avenue, you guys sign signed can you just help us understand what the lease and demand pipeline might look like for that asset? And your supplemental 116 million of incurred costs, is that just your kind of building basis or what does that represent?

Yes, so that's building basis, the demand, thankfully, is starting to come back on North Michigan Avenue. And I don't want to pretend that it's easy or mission accomplished, but we're having retailers now show up that a year ago we wouldn't have thought of. So Aritzia was probably the first mover, not with us, but just down the street. And now with Alo who has been pursuing North Michigan Avenue for the last six to 12 months. We were able to get the space available for them and in relatively short order, signed a lease with them. Their business is booming. They wanted a flagship location. And not withstanding all of the challenges that Chicago has gone through, it is still one of those Midwestern Meccas and North Michigan Avenue, while it's going to take some work is starting to attract those tenants again. So good positive sign, step in the right direction, plenty more work to do on North Michigan Avenue to get it back to where it needs to be. But then equally surprising, one block away on Rush Walton, Gold Coast, Oak Street, those businesses, those tenant sales are already stronger than pre COVID. So while everyone is bitching and moaning about Chicago, a bunch of our retailers are pretty happy. And when they're happy, we tend to be happy.

And just high level, I know lot the projects are still not completely finalized and lot TBDs, but how should we think about the yield expectations from your redevelopment development pipeline?

John?

Yes, it's going to depend asset by asset for sure. But I think if we look at a city center in a 555 9th, I would say it's going to be in the upper single digits.

Upper single digits there, some of the others are going to be much higher. That's something it's worth us compiling as we get a little bit further along. But thankfully they feel as I'm running through in my head the list of them. The vast majority feel accretive.

Our next question comes from the line of Michael Mueller with JP Morgan.

John, I think you talked about a 6.5 million NOI FFO ramp. I think that's a cash comment. So how much isn't already straight-lined into FFO, and what does the ramp on that remaining piece look like?

So the 6.4 is cash, Mike, and then in terms of, I want to make sure I understand your -- so how much of that has been already straight-lined? Is that your question?

Yes. Like from an FFO standpoint, how much is in the current FFO run rate already or is that all incremental?

Pausing to think through the question. So, I think here it's, I would say not a big chunk of that is already commenced. So I would say Mike, maybe 25%, if not less than that, but let me compute that. But it's not as big as a number as it was last year given some of the bigger chunkier higher dollar leases. So I don't think it's going to be the same phenomena this year.

Got it. Okay. And then Ken, I think in your opening comments you talked about, you said, retailers for the most part were looking past the environment, and I guess, what's an example of a retailer that's not looking past it and is maybe pausing?

So, and we had to benefit a couple weeks ago of getting together with a big chunk of our retailers for meetings in the west coast. There's some retailers that got a huge COVID boost and probably are pausing think of some of the online home furnishing retailers and others. But for the most part, retailers in terms of their long-term expansion plans are full speed ahead. The struggles for the retailers is getting stores open, getting HVAC units dealing with supply chain issues. And that was really more of their concern than slowing down openings. But if I were to guess where you might see some of that slow down, it could be in home furnishings, possibly electronics, but then there's a lot of other folks showing up.

Our next question comes from the line of Craig Mailman with Citi.

John, I just want to confirm a couple things. So you said 125 basis points for Bed Bath and Regal, right above and beyond the 150. And if Regal was already kind of money good, it seems like, and you already released Wilmington, so basically that 125 relates to just the 555 9th location. Is that a fair way to think about it?

Yes. SoHo, Craig, what I would say is that when we look through all of our, and I wanted to make it simple. If we look at all known exposures, we look at inclusive with the 555 9th saying known exposures throughout our entire portfolio would make up that 125 on top of just the general reserve, so inclusive of the 555 9th plus those when we go through 10510 n in our portfolio. For instance, Wilmington, Delaware, John still will have, even though we have a signed lease, Greg, we're going to have downtime. And that's part of that number.

Because I thought that was a bad debt, I guess I wouldn't consider that bad debt. So you're including downtime in that as well, not just credit risk. So that's right. If I think about 2.2% of ABR is -- and the portfolio at the end of the year, kind of, what's the breakout between 555 9th in Wilmington?

And just to be clear, and to make things a bit foggier, it's not just Bed Bath & Beyond. We have a de minimus amount, but it adds up of Circuit City and there are others. So, I don't think it would be productive, John. You can take a stab at it, but I don't think it's productive to point to just one or two of the properties. It's spread, it's managed, and we're thankfully, as evidenced by Brandywine, we have backup leases into it.

Well, I guess I'm just getting that Ken, what's the breakout? Is it like 70:30, 60:40 between the 2.2 of ADR in those, the two leases for Bed Bath specifically?

John, if you want, I don't know that we want to get into that level of color bigger than a bread box. How do you…

Yes, no, and I think Craig, not just being elusive, I would just say that within the 275, we view that as very conservative between the two because we really don't know in terms of when we're getting it back. But as we've said, if we get it back, we will not be adjusting our guidance forward. I think, we'll, rather getting into lease by lease. I think we're very comfortable at the 275 all in.

You should assume we have a conservative outlook, meaning we're going to recapture Brandywine as soon as we can. We are going to recapture the upper level, if not the entirety of 555 9th is that those are in our forecast. If there are unforeseen bankruptcies, different story, but there we have 150 basis points, whether it's mom and pops or otherwise. So, we think we're prepared for whatever the next few quarters has in store.

And not to be the dead horse, I guess I'm just trying to come out from a different angle, in same store, right? Just trying to think of the headwind from bad debt, the 4,150 generic is baked in. And then you said kind of think about 200 totals. So that means 50 basis points in for the balance, right? Of the above and beyond, which you would think is mostly Wilmington, but I guess not 100%. But I'm just trying to think of if you get it through the first half of the year, you're losing the back half 50 basis points. Can we assume the majority of that is Wilmington?

I think as I highlight on the Floris' question roughly 275 total is everything, and about 200 same store with a current expectation that Bed Bath, Wilmington, we get that back in end of June. But again, that's a guesstimate, but that's our current expectation. So, I think, call that about 50 basis points for Bed Bath. So I think you're thinking about it correct.

And so, total though, between that and the prior period of collections, the 5.5 would've been 9.5 essentially.

Correct. Yes, I mean, I was a little bit more conservative than that, but yes, I mean, I think again would've had very strong. That 5% to 6% would've been significantly stronger.

That's helpful. I didn't mean to get too in the weeds there. Okay. Then just separately on the leasing in front, Ken, you talked about some of these urban markets coming back, but I guess just higher level, as you think about the ease of backfilling, Wilmington versus San Francisco, right? Moves two polar opposites terms, the San Francisco being where it is today, but as retailers sit there today, right, like what's the depth of the demand pool for some of those not quite recovered urban areas versus first ring suburbs or like a Greenwich you highlighted a couple times that's more of a suburban kind of street retail kind of can you just go through the difference in the depth of demand for those two types of product?

Yes. And I think it's also worth not ignoring what we'll call second ring suburbs. There's markets that pre COVID, we really weren't sure and our retailers weren't -- really weren't sure that they wanted to be, and they got a COVID lift because of work remote. Now how long that holds, we'll have to see, but there still seems to be decent demand even in secondary, tertiary. So, let's not even ignore that. And you've seen that in other companies, prince. You see that to the extent that some of our Fund V assets fall into that category. There's no doubt that the Greenwich's of the world benefited. And I'd say right now, this week, it's a bit easier probably to lease space if there's any worthwhile vacancy in Greenwich, than it is in San Francisco, because San Francisco is still in the earlier stages of that recovery. And my guess is, you will see more stabilization in some of those assets that have done well. But I’m encouraged whether it's North Michigan Avenue with Alo Yoga or 555 9th or elsewhere that our retailers are saying, you know what? We are seeing our shopper coming back. And retailers have to think one, three, five years ahead, not necessarily where they are right now. Final point is, I think we need to be prepared for the Midtown Manhattans of the world, for the places that do not have a strong residential footprint short-term, that those are going to be the hardest selves, because it's going to take a while for people to get back in the office. They will, New York especially the neighborhood is doing just fine. But those pieces then when we think about how to get retailers excited, if it is really just a 9 to 5, Tuesday to Thursday environment, those are going to be the toughest. Thankfully, that is an insignificant amount of our portfolio and the pluses outweigh the minuses. So, each of those different markets will rebound differently. As I said, secondary, tertiary got a nice COVID lift. The primary suburbs certainly did well, and I think could hold on. Final point that everyone needs to keep in mind though, the cost of putting tenants in business, what we talk about is net effective rent, impacts properties very differently. And so, you might like those secondary, tertiary markets and our retailers do, but if the rents in those markets are $12, $14, the payback period could be much longer than in some of these street retail markets where the rents are 10x and 20x that and so the payback period is shorter. We're going to have to watch carefully at where net effective rents are, and that would lead us to be more encouraged by our high rent, earlier recovery, property's not withstanding everything I just said, so that's amount. Craig, but…

That concludes today's question and answer session. I'd like to turn the call back to Ken Bernstein for closing remarks.

Great. Thank you all for joining us. We look forward to seeing you in the not distant future and hope everyone stays well.

This concludes today's conference call. Thank you for participating. You may now disconnect.