Devin Murphy: Jeff, we are very-focused on the health of the consumer and the volatility among retailers. And we stay focused on that. That being said, we believe we can grow our occupancy by — our inline occupancy by circa a 100 basis points, so to take it up from where it is today, which is just under 95% to 96%. And the reason we feel that is because when we look at our retention rates and we look at our spreads, the demand for our space continues to be very high. You are seeing our renewal spreads increase every quarter-over-quarter. So, our re-leasing spreads on renewals in the third quarter of last year were 15.5%, this quarter, they were 16.9%. So again, we are seeing the retailer who is obviously most aware of their conviction in their business model being willing to remain in our centers at higher rents, and they’re also signing up for higher rents at higher CAGRs. So, again, the environment as of the moment continues to be strong.
And our perspective is that it will continue to be so, based on what our leasing team tells us about our pipeline. And then, in terms of uses, again, our view is, Jeff, over 70% of our rents come from necessity retail. Our view is that necessity retail will continue to prove to be more resilient in a economic downturn. And there are certain components of retail where they’re thriving. And if you look at like foot traffic data for fitness, year-to-date, it’s up 7%, foot traffic for beauty, year-to-date, up 7%. So there are categories that are continuing to be strong and are enjoying increased tenant consumer traffic. And then lastly, our foot traffic remains consistent with what it’s been over the last year and a half. So all these things go into the mix and give us the confidence that we’ll continue to be able to grow our inline occupancy and continue to maintain our strong spreads.
Operator: We’ll go next to Mike Mueller at JP Morgan.
Mike Mueller: I guess following up on the prior acquisitions and balance sheet questions, should we think of the 4Q transactions as having a pretty healthy equity component in there as we saw in Q3?
Jeff Edison: Yes. I think, that’s fair, Mike. I mean, we — I’m not exactly sure how you’re sort of laying that out, but when we’re at sub 5 debt-to-EBITDA, we’ve got a strong equity component of the things we’re buying. And as you can see, we’re match funding with the ATM to make sure that we’re keeping a really strong balance sheet while we’re spurring our external growth through the acquisition model.
Mike Mueller: Yes. That’s what I was — maybe I phrased it the wrong way, thinking about utilizing the ATM in 4Q, as you did in Q3 to keep that up.
Jeff Edison: Yes, we’ll see. Again, we’ve kind of focused on the acquisition pipeline we have right now. A lot of that will be driven by the acquisition pipeline we have going into — that we find accumulating over the next couple months and then into January.
Mike Mueller: Got it. And then, I guess, on the portfolio side, I think the spread between your economic and leased occupancy is 20 bps. Where do you see the more normalized level? Because — is it 50, 60, 70, somewhere in that neighborhood?
Jeff Edison: John, do you want to take that?
John Caulfield: Sure. Hey Mike. Yes. It’s typically — historically, over a long period of time, it is 60 basis points. I think part of that is, is that as we get to these higher occupancies, I would imagine you will continue to see this compressed, but there will always be a gap of some sort just through the natural churn of neighbors until we get to a 100% retention. But 20 basis points is very strong. But I would say — on a more normalized basis and depending on the timing of deliveries, I would say 50 to 60 basis points is reasonable.
Operator: We’ll go next to Haendel St. Juste at Mizuho.
Haendel St. Juste: My first question, I guess, is on the updated same-center NOI guide 3.75% to 4.5% still seems pretty wide with where we are left in year and implies some decline in the fourth quarter here. So maybe some color on what’s going on there, maybe what the range kind of assumed at the top or bottom, and perhaps why it’s still so wide at this point in the year. Thanks.
Jeff Edison: John, do you want to take that one?
John Caulfield: Yes. So, really the guide is just a — as we’ve looked at it, I mean, in the third quarter I referenced, I mean, it was still very strong, but it was a little slower because of really more activity from ‘22 than anything in ‘23. And as we look at the fourth quarter, we continue to see strength from an operating standpoint, but we do have, I would say, more normalized bad debt. So, kind of bad debt or uncollectable is about 57 basis points in the quarter, but on a full year basis it’s only 48 basis points. And so, this portfolio is typically between 60 and 80 basis points. And so, I think that is weighing a little bit on the fourth quarter, but still projecting to be a good growth quarter year-over-year, but then also on a full year basis with that range. And we wanted to affirm at the kind of where we were from an overall guide, but would expect it certainly to be more towards a middle range in there around the midpoint.
Haendel St. Juste: Maybe a bit more then on potential bad debt or the watch list specifically. Can you talk a bit about maybe any neighbors or categories that you’re concerned about? And if you’re seeing anything that gives you any pause, like perhaps a delay in timing upfront payments? Thanks.
Jeff Edison: Devin, do you want to take the sort of the retailer point of it? And then John, if there are any on the specifics on the numbers, that that’d be great.
Devin Murphy: So Haendel, our watch list continues to be moderate. The top-10 neighbors that currently sit on our watch list represent 2.4% of our total ABR. As you know, given our strategy, we have very limited exposure to distressed retailers. The retailers that have filed bankruptcy year to date, Bed Bath, Party City, Tuesday Morning, they aggregated 40 basis points of ABR in our portfolio. So, again, given the strategy we have and the well diversified neighbor mix that we have, we do not have any meaningful concerns in the portfolio. We have zero Rite Aid. And so, our neighbor mix is extremely well diversified. We do not have exposure to the weaker retail categories. And so, we don’t have a concern, Haendel, in terms of fallout from distressed retailers.
Haendel St. Juste: And then one more if I could. One of your peers recently announced a spinoff with an emphasis on convenience assets. I’m curious if you guys have looked into this asset class. If so, do you think it can fit within your overall strategy of owning necessity based retail risk with — necessity owned retail with low anchor risk, and kind of curious high level thoughts you might have on it? Thank you.
