The payout ratio in the first quarter was 54%. That payout ratio should trend a little bit higher just based on the timing of CapEx relative to the first quarter. And then we’ll continue to evaluate how we can share in that cash flow growth over time.
Greg McGinniss: Okay. [Multiple Speakers]
Michael Bilerman: And provide the potential to return to shareholders.
Greg McGinniss: Okay. But the expectation is to kind of maintain as much free cash flow as you can. Understood. Could you provide more…
Michael Bilerman: We’re balancing REIT regulations and free cash flow, right. Those are the two variables that we think about.
Greg McGinniss: Okay. Could you provide a bit more color on what you saw regarding the increasing strength in consumers through quarter end? Has that trend continued into April? And is this a situation where trailing 12 month tenant sales may see greater sequential growth in Q2?
Stephen Yalof: We’re optimistic about the sales growth. A lot of the strategies that we’re employing that we talked about, replacing some older brands that with sales that are deteriorating with what we think are newer concepts that have great productivity ahead of them, I think is going to contribute to our sales growth. We’re also doing a wonderful job from marketing point of view. We’ve balanced our marketing approach to both touristic as well as localized marketing. We’ve been continue to invest in local marketing in a lot of the centers that paradigm has shifted. We talk about the suburbanization of America, where a lot of folks are moving to the geographies where our centers currently exist and because of that we’re going after a whole new catchment.
We’re also merchandising our shopping centers to attract that catchment as well. So that’s why we’re optimistic about sales going forward. As far as the April run rate versus the March run rate, the Easter was in March this year, typically what retailers and developers do is, we blend our March and April sales to make those two comps a fair fight.
Greg McGinniss: Okay. And I guess with regards to some of those new concepts, are you seeing higher average tenant sales from those new offerings? And is there any categories in particular that are doing well?
Stephen Yalof: Yeah. Health and beauty is really doing great. We’re really very pleasantly surprised with apparel, mostly family apparel, American Eagle and those brands just doing exceptionally well. I also think discipline on our part to make sure that these stores are right sized. The old narrative outlets were to give the retailer as much space as they wanted, but as we’re learning now with more efficient with faster delivery, with more efficient floor sets, a lot of our retailers could be far more productive on a per square foot basis in far smaller footprint and that works out great for everybody. It gives us an opportunity to have far more productive stores in a shopping center and provides a lot more variety to shopper.
Greg McGinniss: Thanks, Steve. At the risk of being chastised for asking too many questions, I do have one more. Given the strength of the balance sheet, the level of retailer demand with most assets in the high 90s occupancy, are there opportunities to add square footage to any of the centers? And is there any other redevelopment being considered at this time?
Stephen Yalof: There are. Well, there’s a couple of ways that we’re adding square footage to our shopping centers. I mean, there are Phase 2 locations in a number of our centers. In others, we’ve got peripheral land and our peripheral land strategy has been one that we’ve really uncovered a couple of years ago. It takes a bit to ultimately see those spaces cash flow. But we signed a number of deals. Arizona is a good example. We’ve got a Texas Roadhouse that should be opening shortly. That’s on a piece of peripheral land that’s immediately adjacent to the shopping center. So we’re finding demand for peripheral land close to our centers has heightened by virtue of the fact that, again, we are the regional draw in the markets that we serve and brands if they can’t be in line want to be adjacent to where the car — where most of the cars in that geography are being parked and that’s in our tenure centers.
Greg McGinniss: All right. Thanks again.
Operator: Thank you. Our next question has come from the line of Samir Khanal with Evercore ISI. Please proceed with your questions.
Samir Khanal: Hey, Michael. Just most of my questions have been answered. But on the — just on the modeling side here, the other revenues in the income statement, I think that’s ancillary income sponsorships that you’ve done. I know that you’ve tried to sort of touch many of the assets and that line has actually grown over time. And I think in the quarter, it was maybe down year-over-year. I’m just trying to understand how much there is more to do on that from ancillary income, sponsorships, etc.? Thanks.
Michael Bilerman: Sure. So step back just in the first quarter, first quarter last year, our center in Westgate in Phoenix, Glendale is right beside where the Super Bowl is placed and we did a significant amount of marketing last year in first quarter. So that’s what’s affecting the year-over-year comp. Now if we step back and go to the full year, driving other incremental revenues at our centers continues to be a top priority and we think we’ll continue to have higher growth in the overall core portfolio and that’s what you’ll see trend through the year as we continue to activate, drive our marketing partnerships and a lot of the other income sources that we’re able to do at our centers just driving off of what Steve was talking about the cars being regional draws. There’s a fair amount of tenants that want to get in front of those consumers each and every day.
Samir Khanal: Okay. So it seems like you can still grow that line. I think last year you’re up like 12%. So that’s sort of the double-digit growth. Is it still the right sort of number to think about?
Leslie Swanson: Absolutely. This is Leslie Swanson, Chief Operating Officer. We see a lot of potential. As we’ve outlined over the last several years, we’re very, very keenly focused on incremental revenue, which not only needs marketing partnerships from a sponsorship and media perspective, but we’re very committed to operational ancillary revenue streams as well and we see a lot of that ROI come from our solar, from our EV charging. So what you’re looking at in that line item is a culmination of all of those strategic efforts made by our teams across the country.
