Michael Bilerman: Yeah. Thanks, Craig. As you noted, we were ahead of this. We talked about it on last quarter call. We contemplated a range of outcomes in our guidance, sort of, what we know today, we continue to believe will be in that range and it’s a fluid process. I think you step back from it overall, the outlet business overall when you go through different processes are usually the last stores to close. And they also benefit from having generally low OCRs and pretty high productivity. And so I think the outlet channel during this process has demonstrated a lot of the talking points that we’ve been communicating and certainly over the 40 year history of this company.
Craig Mailman: What do you think the OCRs are for that target (ph) roughly?
Michael Bilerman: You’re now into overtime and like four questions at this point.
Craig Mailman: I know, I know.
Michael Bilerman: We’re not going to talk about specific tenant OCRs. Our OCR for the entire portfolio is at 9.3%. As you’ve seen, we’ve been able to lift that OCRs as we’ve been driving our rents. So I think gives you an indication overall in our portfolio that we continue to believe that our rents are below market and we get the extra tailwind as tenant sales continue to move forward.
Craig Mailman: Great. Thank you.
Operator: Thank you. Our next question has come from the line of Todd Thomas with KeyBanc Capital Markets. Please proceed with your questions.
Todd Thomas: Hi, thanks. Good morning. Steve, I just wanted to go back to your comments around tenant retention and some of the potential re-tenanting activity that you anticipate being a headwind to same store growth this year. What was the renewal rate in the first quarter and any sense on how 2Q is trending? I would imagine that you have better line of sight four or five months into the year, particularly after the holiday season with regard to some of that tenant churn that you’re talking about and the potential headwind that it might have on same store growth this year. I’m just curious, if you can provide a little more detail.
Stephen Yalof: Well, I don’t think it’s a headwind. I mean, again, it’s a strategy. So it’s easy to renew existing tenants. It’s a great strategy. You maintain your occupancy. The tenants continue to pay rent and we’ve been consistently getting nice growth. However, for our portfolio, if you have a 10,000 square foot tenant whose sales performance on a per square foot basis continues to slowly deteriorate, it’s incumbent on us as merchandisers of shopping centers to make sure that we put a more productive retailer in that particular location. And even more importantly, have that retailer who is the incumbent retailer reposition inside our center in a right sized box that also drives additional rent growth for us, but also more productivity for that retailer.
So the narrative is merchandiser centers for the future, make sure we’re putting in the most productive retailers that we can, making sure that the customer comes to shop with us has a complement of product to buy that they want, so they keep coming back, make sure that we’re constantly reinventing the footprint of our mall, but more importantly, reinventing the footprint of the store and forcing those retailers to really reinvent and upgrade their store build outs as well. I think we’ve been satisfied with that strategy of renewal for the past few years, as we exited COVID. I think our rent spreads particularly on the re-tenanting side have given us the courage and our conviction that we can command far more money for our space than we have.
We’ve grown our OCRs now over the last year by 100 basis points. We still think there’s room to grow and we’re a leasing company, that’s what we do and we’re going to continue to do so and the retailers are responding. We’re adding those new tenants that we’re talking about, new uses that we’re talking about. Couple of examples of which Huntsville, Alabama, we’re thrilled to welcome Warby Parker to the center. That’s our first deal that we’ve done with Warby Parker, thanks to our partnership with Centennial (ph) who’s done the leasing at that project for some time, great partnership. But again, these are new brands that we’re bringing into our portfolio and looking forward to expanding those brands throughout the portfolio. And that’s what I think our customer wants, that’s what they’re shopping for, that’s what’s going to keep them coming back.
Todd Thomas: Okay. Has the renewal rate started to normalize a little bit from 95% or so down towards kind of the mid to low-80s, where it has been historically?
Stephen Yalof: That’s how we’re thinking about it and that’s how we planned it.
Todd Thomas: Okay. And then, I just wanted to follow-up on, I guess, Express and maybe the range of outcomes for certain events here during the year. Just I think last quarter you indicated that you had about 50 basis points of bad debt reserves embedded in the 2% to 4% same store range, which I realized was lifted this quarter, 25 basis points, it sounds like due to expense refunds. But is there anything else on top of that for unexpected move outs or bankruptcies, because Michael, you mentioned some of — sometimes these restructurings are fluid, they can take a sudden turn. And I’m just curious whether you can provide a little bit more detail around what’s budgeted and what degree of confidence you have that they will emerge from bankruptcy just given they’re a top 10 and 170 basis points of ABR?
Michael Bilerman: Sure, Todd. When we talked on the 4Q call and provided that 2% to 4% range, we did reference where our bad debt had been historically, we can see the numbers from last year around 35 basis points, but the range in bad debt, when you have a 2% to 4% range, it contemplates different levels. What we’ve been trying to communicate is effectively our 2% to 4% original guidance which we have increased by 25 basis points due to the expense refunds that we did get in the quarter. It’s still — we still feel comfortable with that range as we sit here today and contemplate the variety of outcomes that could come about. We don’t want to get into different alternatives, Chapter 7, Chapter 11, how a Chapter 11 process will go.
What we know today, that’s been public. Express came out with a store closure list. On that store closure list there was one tender store out of the 30 stores that we have. And overall, there was only three outlet stores, open air outlet stores on that list, which demonstrates to us the value of the outlet channel, the outlet platform for brands and retailers.
Todd Thomas: Okay. Thank you.
Operator: Thank you. Our next questions come from the line of Caitlin Burrows with Goldman Sachs. Please proceed with your questions.
Caitlin Burrows: Hi, everyone. Good morning. Steve, I think earlier you commented on the volume of leasing you did in the last year, your 2.3 million square feet, which is pretty impressive. So, as you guys consider your pipeline today, the activity, the conversations, do you think that volume of leasing activity can be sustained? And I guess, why or why not?
