Operator: Next question is coming from Ron Kamdem from Morgan Stanley.
Ronald Kamdem : Just a couple of quick ones. Just staying on the development front, I see the $440 million, but in the presentation, you have another sort of $80 million at the midpoint in the next 12 to 18 months. Just on that $80 million, can you talk about are those pre-leased? Is there a sort of interest there? And what would it take to start those maybe sooner rather than later on your thinking?
Nicholas Wibbenmeyer : Appreciate the question, Ron. This is Nick. So you’re absolutely right. We are hyper-focused, as Lisa has said, and we’ve been vocal about it continuing to lean into our development and redevelopment pipeline. And so the teams are very active in doing exactly sort of what you laid out and what I laid out in my prepared remarks, which is derisking these as much as we possibly can before we put a shelf older ground. And so there is great tenant demand out there. So some of these deals we’re just finalizing leases to get them released appropriately. We are very thoughtful of making sure we have our arms around costs and some of these deals we’re finalizing cost. And then some of them are in our last legs of entitlements that we’re finalizing.
And so once we check those boxes is when we put a shovel on the ground, and we are excited about what we’re seeing in our pipeline of continued opportunities to use all of the tools in our tool belt to our advantage in these market conditions. And so do you expect to continue to talk about some great opportunities quarter in and quarter out.
Ronald Kamdem : Great. And then my last one is just on the 2024 considerations are just — are super, super helpful. If I could just ask just 2 more. So one is just on bad debt, how is it trending this year? And given the opening comments, it doesn’t seem like there’s any reason we should think that should be different in ’24. And then the last one is just on interest costs. Is there anything in ’24 debt maturities or anything that we should be mindful of?
Michael Mas : Ron, really, first, I appreciate the comments you made on the disclosure. The team did a phenomenal job with that and glad you appreciate it. Let me speak a little bit to those 2 line items from a ’24 outlook perspective. Happy to give some color. Also, I want to be sure to say there’s more to come when we put out our full suite of guidance and the full package as you’re accustomed to, which we’ll do in — when we guide in February. The — from a credit loss perspective, our outlook hasn’t changed for the balance of this year, right? So from a full year perspective, we’ve affirmed the 60 to 90 basis point impact for full credit loss, which includes both bad debt expense or uncollectible lease income, together with the lost rents associated with bankruptcies.
To your question on ULI or bad debt, our historical run rate is about 50 basis points. We will do better than that in ’23, largely due to the first quarter of the year, and we’ve talked about this on that call, where we had from a cash basis tenancy, we had an unusually high collection rate where they just were paying some very late billings in that quarter. All of that’s translating to a lower than average historical run rate. So — and when I think about the second half of the year, it’s actually kind of trending back to historical averages. So I would — our eyesight kind of looking into ’24 is going to probably start in that area of our historical averages of 50 basis points. I’m also happy you mentioned interest expense in my remarks, I did try to lay out what our plans include looking into next year, but let me just go through them again.
Roughly $400 million to $450 million of planned financing activity. We need to refinance the $250 million bond that matures in June. Recall that, that’s at a 3.75% interest rate today. We have some mortgages that are maturing next year. There’s one larger mortgage that’s roughly $80 million. So we’ll add that to our financing plan. And then recall that we have the transaction expenses from the merger with UPP that we will also fold into that transaction activity. All in all, that’s $400 million to $450 million of needs and we see where the treasury is running at the moment, which is running in our favor. And just to give you a sense of where we think our indicative spreads are, we’re probably in the mid-6s, plus or minus, and again, depending on where the base rates go from here and how our spreads have contract or expand from this point forward.
But we feel really good about our ability to execute really efficiently in the capital markets, and it will just be a matter of our timing selection and where rates end up.
Operator: Our next question today is coming from Samir Khanal from Evercore ISI.
Samir Khanal : So my question is more on the anchor side. You talked a lot of talk a lot about sort of limited supply, demand is still strong. But is there an opportunity to even push rents higher here upon renewals with anchors maybe from a mark-to-market opportunity or even higher rent bumps. Clearly, that’s not happening overnight. But I guess, how are those conversations going with anchors today?
Alan Roth : Samir, this is Alan. Thank you for the question. The answer is yes. Where we stand today, we have north of 50 anchor leases that do expire without options over the next 3 years. And so certainly, the team is hyper aware of for those that need to stay making sure that we’re getting the appropriate market rent for those and where we can upgrade tenancy, we will certainly do that. So there is that opportunity. Demand remains strong. I think that’s largely driven by a lack of supply. And as we look at our Bed Bath resolutions, as I said in my remarks, the speed to getting those executed was faster, frankly, than we anticipated, and it’s with some great retailers, REI, Restoration Hardware Outlet, Burlington, just to name a few, were some of the deals that we’ve already signed. And so there is a pretty deep pool right now with the supply and demand scenario is certainly working to our advantage.
Samir Khanal : Right. I mean, I usually think about — when you think about anchors, they usually pay lower rents, right? So I’m saying, is the industry ready to get to a point where they start to start to come up and start to pay market rents that are even higher than where they are today. That’s sort of my question. So I guess you’re starting to…
Alan Roth : Yes, Samir. The answer is yes. I would just take you back again using real-time the Bed-bath as an example, we’re exceeding 30% mark-to-market on the deals that we’ve signed. And so I think from that perspective, that would definitively tell you, yes, as we sit here today, we are able to drive those spaces to a much higher market rent than that of what’s in place.
Samir Khanal : Got it. And I guess on this — the rent spreads, the 30% you talked about, I mean, how should we think about the CapEx involvement to get that 30%, I guess?
Alan Roth : So Samir, I would say capitals in general relative to shop leasing have stayed pretty neutral. We’re not seeing much in the way of enhanced capital there. I will say on the anchor leasing front, you do find that capital tend to be a little bit more expensive. But as you noted, the 30% obviously is the GAAP rent spreads that we experienced. And I think the balance of that embedded rent steps as being a keen focus is the success we’re having right now.
Operator: Next question today is coming from Craig Mailman from Citi.
