Stuart Tanz: But we’re modeling around about a 6.5 cash yield, typically.
Craig Mailman: On the acquisitions or at the cost of capital?
Stuart Tanz: No on the acquisitions.
Craig Mailman: Okay. And what would be the cost of kind of the capital you’re putting in there?
Michael Haines: Last thing on a blend depending on where the equity price is, again, if we’re going to, the acquisition guidance is going to have to come down if the market doesn’t become more favorable for us. So it just depends. We kept the guidance in place because as Stuart mentioned earlier in the prepared remarks, like things can change very quickly in the markets, as you know. So we’re just kind of keeping guidance as it is for now. We’ll have to revisit that on the next call.
Stuart Tanz: Yes, Craig. I mean, the most important thing is, as we are buying is to make sure that it’s accretive to our current cost of capital. That’s the critical point from a modeling perspective. So the good news is the acquisition that we made in the fourth quarter of last year, as well as in what we’ve just bought, we believe is being done accretively day one.
Craig Mailman: Okay. I was just trying to get at if there’s enough things operationally that may be going better than expected, either bad debt or lease commencement timings that could offset if you have to lower the acquisition guidance or if that lowered acquisition guidance will be a net negative for the range, I guess is an easier way to put it?
Michael Haines: Yes. I mean, obviously we can’t predict the future as we’re sitting here this morning, but we feel pretty comfortable on both sides of that equation. I’ll leave it at that, Craig.
Craig Mailman: Great. Thank you.
Operator: Thank you. One moment for our next question. And our next question comes from Wes Golladay with Baird. Your line is open.
Stuart Tanz: Good morning, Wes.
Michael Haines: Good morning.
Wes Golladay: Hey. Good morning, everyone. Just going back to the same-store guidance, it looks like a lot of items went favorable. Occupancy, the lease rate was down quite a bit, but the basements were up. Is there anything one-time related, such as the term income and where’s the percent rent income now?
Stuart Tanz: Percentage rent, because it’s such an insignificant number in the grand scheme, we roll it up into rental revenue. It’s kind of in base rent. It’s just it wasn’t meaningful enough to continue breaking it out relative to the total revenue number. So that’s where that sits now. And as far as the guidance, like I mentioned earlier, it moves around from quarter-to-quarter. There was nothing in terms of the quarter that was unusual. I think there’s just a number of positive effects; base rent was up, bad debt was down, but other income was relatively flat to up, so there was no one-time drivers on a cash basis that I can think off.
Wes Golladay: Okay. And then where could you borrow today if you had issued debt? And does the cost of debt increase your willingness to do something strategic before the year-end, if it were to stay at current levels?
Stuart Tanz: Based on where the ten-year treasury sits today and current market spreads it’s going to be somewhere around 6%, 6.5%. And we’ll have to see where the market goes for the balance of the year. The eyes are all on the Fed and as far as the timing of our first rate cut or indication of rate cut, that’s going to drive some of its decision making in that regard.
Wes Golladay: Okay. And if it were to stay at that 6.5% level though, how would you approach that? Would you issue long-term debt? Would you maybe look to do a joint venture, more dispositions? What would the thought process be?
Stuart Tanz: We’re looking at all alternatives from that perspective, Wes. So the good news is we have some flexibility. We’ve been focused on these alternatives, obviously but nothing to talk about on this call today.
Wes Golladay: Okay. And then can we get your latest thoughts on the Albertsons Kroger merger? If they were to have to sell more assets, any negative benefits or potential positives, would they have to pay you fees? Or maybe if they had to sell some of your assets or sell some of the groceries that were part of your portfolio?
Stuart Tanz: Well, I mean, look, we continue to communicate with Kroger and Albertsons and conduct business as usual, including renewing one of their leases in the current quarter or in the first quarter of the year. Obviously, the discussions with the government are still ongoing, and they’re not yet in a position to disclose what specific stores are going to be sold as part of the merger. I think that’s still moving around. So we haven’t spoken with CNS, but it’s tough today to sort of tell you whether it’s a negative or positive. What I can tell you is this, last time we went through this in 2015 with Hagan, it turned out to be a very positive step for the company. So we’ll see what happens as we get through the summer here, and that’s sort of where things sit as of the merger, on our call having our call today.
Wes Golladay: Okay. Thanks for the time, everyone.
Stuart Tanz: Thanks.
Operator: Thank you. One moment for our next question. Our next question comes from Cesar Bracho with Wells Fargo Securities. Your line is open.
Stuart Tanz: Good morning, Cesar.
Cesar Bracho: Hey, good morning, guys. Thanks for taking our questions. Very good questions asked earlier. But I guess going back to the anchors that vacated, as we think about your occupancy going forward, like would you expect some more anchor turnover, sort of like the one that happened this quarter? Or would you expect more stability going forward?
Stuart Tanz: So, for the balance of 2024, there’s two anchor leases remaining that will expire this year. One of those is a Rite Aid where we have reached an agreement to extend it for another five years. The other is a 17,000 square foot space that matures in the fall. And that tenant has notified us they’re leaving. So we’re in the process of retending that space and hope to have a tenant lined up before they vacate.
