Craig Mailman : I want to go back to the transaction market. It’s helpful, the 10% or north of 10% IRR on the asset you bought in the quarter. But I’m just trying to see kind of where your return requirements have trended with rates going higher on something that’s more of a core asset versus a redevelopment opportunity like this? And your appetite for going into a lower initial cap rate knowing that there’s upside acknowledging the fact that you guys offer a good amount of free cash flow a year. So just thinking about your weighted average cost of capital and how you’re kind of putting that all in the pot and kind of thinking about it?
Lisa Palmer : Yes. And I’m just going to reiterate what I said before. We do look at our cost of capital and our cost of capital does inform and basically dictate what our required returns are. And to the extent that we can invest our capital and we look at something like Nohl Plaza, that is — it is a redevelopment. It is like our development pipelines. And yes, they take time to get to the total return, but we’re looking at the total return IRR and to the extent that we can invest our capital on an accretive basis and ensure that we are being paid appropriately for any risk reward, if you will, core versus ground-up development we look at all of it and accretive to our future growth rate, accretive to our quality and accretive to earnings. And if it checks those boxes, then we’re going to do it.
Craig Mailman : I mean do you guys have like a lower threshold than where unlevered returns need to be for the deal to kind of move forward investment to me? Or is it fuel by deal?
Lisa Palmer : Again, if it exceeds our cost of capital and especially for our core acquisition, that works for us.
Craig Mailman : Okay. And then just separately on the leasing, everyone is talking about really good demand across the board. And I’m just kind of curious from your viewpoint being going through cycles before. Are you feeling comfortable with the expansion plans of retailers? Do you think some of them are expanding too quickly or just the lack of availability is maybe amplifying how good things feel relative to kind of the activity going on in your portfolio? Just kind of thoughts around that versus sort of the normal cycle.
Lisa Palmer : I’ll take it from a higher level perspective and to the extent you would like to color it up at the end. I mean, generally speaking, there are higher borrowing costs for everyone, and that includes our tenants. And I don’t have a crystal ball. I’m not certain what the future holds. I can tell you, right now, we have not seen a slowdown in demand. Could higher borrowing costs and higher cost of capital for tenants slow their expansion plans? Possibly. But even if it does, we own high-quality real estate and some of the best real estate. Slowing it doesn’t mean it’s grinding to a halt and I am really confident that we will continue to capture new stores and expansion plans of retailers.
Alan Roth : Yes, Craig, the only thing I would add is whether in good times or bad times, we refer to our 3 pillars of merchandising, place making and connecting to the community, and we’re always taking an intentional approach to that, and always proactively and intensely managing these assets. And so we don’t just sign the leases to sign leases, right? We are diving into operating experience, creditworthiness, synergistic enhancement to the overall assets. So I think with that mindset, it works in good times are bad.
Craig Mailman : Okay. I guess I was coming up from the standpoint of — do you feel like there’s anyone that’s expanding too quickly given what’s going on in the macro? Or does it still feel people are appropriately kind of size of the opportunity for the long term?
Alan Roth : Let me kind of talk through some of the retailers that we’re doing business right now. As I think about off-price TJX, Burlington, Five Below, we’re doing a lot of business with them. They’re fantastic. If you think about QSRs, First Watch and Cava relatively new public companies, Mendocino Farms, Philz Coffee, phenomenal. And I think they’re very deliberate in their approach as well and great operators with strong sales performance. If you lean into the franchise concepts, we’re doing a lot of business with the likes of [Sam Hound] or the Stretch Zones of the world. Again, they’re putting really good operators in there, and we’re seeing great success at that level. So all I can do, Craig, is look at the retailers we’re doing business with, look at their volumes and sort of the productivity of where they are and look at the operators when it is a franchise concept.
And I can just tell you, as we sit here today, I think they’re making the right decisions. And I think our team is making the right decisions in partnering with those operators.
Operator: Your next question today is coming from Ki Bin Kim from Truist Securities.
Ki Bin Kim : So certain retailers have highlighted potential consumer weakness trend even the grocers. So just from your vantage point, I was wondering if you saw any discernible trends from your consumers however you want to slice and dice that.
Lisa Palmer : We have not seen anything to date. And again, do believe that our sector while not completely immune is more resistant, and I hear you from the grocers, but the grocers have been experiencing pretty strong comp sales across the board. And so instead of growing at 8%, they’re now growing at 3%. They’re still growing. So we are not seeing that yet and expect, again, given the property type, the necessity, the value the convenience we feel really well positioned and resistant to potential economic adverse impacts in addition to the trade areas in which we operate.
Ki Bin Kim : Okay. And a quick one for my…
Lisa Palmer : Tend to be — sorry, go ahead.
Ki Bin Kim : For Mike, you mentioned that the bond that you might raise next year would be in the mid-6s. I was curious, is that based on like last week’s treasury or this week?
Lisa Palmer : Based on yesterday’s.
Michael Mas : Our indicative spreads are 180. So 180, 185 plus or minus on where the treasury is and it’s been moving around pretty rapidly. So it’s looking better, Keith, maybe a little bit hesitant to declare victory here. But we’re actively and very acutely monitoring the markets. We’re going to execute when we see a really good opportunity for Regency to have a good execution. There’s no — we can be patient. We only have 20% of our overall debt maturing over the next 2 years. So to the comments we made upfront, we’re as well positioned as we can be even in a higher rate environment, given all the work we did over the last decade from how much debt we carry to when it matures. No one’s losing sleep here over this year’s execution and transaction activity, and we’re going to act when it’s — when the window is there.
