00:00I feel like a few years ago I was told that the mall was dead, retail brick-and-mortar was
00:04dead,
00:04but we are seeing a bit of a revival, and it seems to be driven by not, you know, our
00:09generation,
00:10I was going to say older people, but our generation, but Gen Z and some of the younger folks.
00:14No, absolutely. You know, in the United States right now, there are a thousand,
00:18roughly a little bit over a thousand super regional centers, and about 230 are ranked
00:22class A-minus or higher. Luckily for our company, over 90% of our property NOI comes from class
00:29A-minus plus centers. And what's happening right now is they're reconfiguring anchors right now.
00:37So our strategy is, at our company, we're leasing a thousand new units in our portfolio out of a base
00:44of 4,300. So if you think about that, 25% of our portfolio is going to have new stores,
00:50new Zaras,
00:51new Viore's, new Allo's, new Dick's House of Sport, and customers are definitely coming back in.
00:57And, you know, what we focus on is making sure there's a great experience when a shopper comes
01:03to our center. So it's all about product. Retailer has to have great service. Inventory. Inventory is
01:09critical. How do you sort of determine, I mean, when trying to create these longer-term partnerships?
01:13I mean, in the old days, you know, you've got that gigantic department store to kind of anchor,
01:17but now you're talking about a lot of stores that are a little bit more niche in that regard here.
01:21So how do you determine, you know, that you've sort of hit yourself to a winning horse, so to speak?
01:26You know, the omni-travel strategy of most of the better retailers, they want to be in the class
01:32A, the high-trafficked center. So, you know, they're not trying to blanket a trade area or blanket a
01:38market. They want to be in the best center because they know that that enhances their sales, website,
01:44and just overall brand and profitability. So whether it's apparel, food, anchors, we basically
01:52try to come up with a merchandising plan to add value. So, like, we love Dun Typhoon. We love
01:58Edicted for the Gen Z. We love Viore. We love Apple. We love everything. There's many. I don't want to
02:04offend some of our other customers, but we're really trying to understand what the trade area wants
02:09and what we need to draw in. You know, we had over 270 visitors to our portfolio last year,
02:16just to give you some sense. And the average customers that come in are anywhere from 8 million
02:21to 15 million customers at each of our better centers. Wow. Well, I know you don't want to
02:26offend anyone, so I'll ask this next question delicately. But, you know, that turnover that
02:30you're seeing, you mentioned Avour, you mentioned an Allo, my ears perk up. I have to imagine,
02:35though, that they're taking space from someone else. So what kind of brands, what kind of stores
02:40are you maybe sort of gravitating away from? Well, you know, the whole regional mall business sort of
02:45almost came under itself, you know, with the department store closure, the Amazon effect,
02:51global financial crisis, COVID. So right now, for these centers that are almost a million and a half
02:57to two million square feet, we've largely tried to basically block and tackle refilling anchors.
03:03Once the anchors are refilled, then you go into the inline. There are many tenants without naming
03:08names that were kept on temporary tenant basis, short term, low rent, basically not as productive
03:15as we put 30 new anchors into our portfolio. We found demand to come from the newer generation of
03:23retailers. And that also like older generation, like we talked about Coach, not that they're older,
03:29but they've reinvented themselves. Yeah. Gap, Abercrombie and Fitch, you know, they're just
03:35going through trying to approach that Gen Z customer, which I'm sure we'll talk about in a
03:39minute. Well, I do want to talk a little bit about your physical footprint first, because, you know,
03:44you own about three dozen malls, but you have been offloading some of your property in the last year
03:50and a half or so. I know that you're currently under contract to offload a mall in coastal Santa Barbara
03:55as well. So, I mean, when you think about, you know, the map of the country, what areas
03:59are you emphasizing versus might you pull back from a little bit here?
04:04So when I joined two years ago, I realized that we had to put a lot of capital into our
04:09existing
04:09portfolio. And so over $2 billion is going into our current portfolio. Couldn't spread that out
04:15across the entire number of assets. So we made a decision to as part of our plan to sell $2
04:20billion
04:20of our existing real estate. We focused on trade area. We focused on competition within that kind
04:28of the regulatory framework in those marketplaces. So we could get convinced that if we're going to
04:33put that capital into those centers, those customers will come. In effect, I talk about
04:38a lot of our company transform and elevate. We're transforming this elevator, transforming
04:43these centers and elevating our tenancy. I am curious, though, about the geographic mix. And
04:48obviously, you have a big concentration on the coast here. But is there a difference between,
04:51say, you know, say a Tyson's Corner in Virginia, which is a little bit more of a high end versus
04:56a mall in, say, Evansville, Indiana? Or are they or do you kind of take the same approach?
05:02They're very different. They're very different for the retailers. You know, going back to their
05:05omni channel strategy, retailers say they want to be in high traffic, high income, high, you know,
05:14really robust trade areas. And so Tyson's is going to be that place, that marketplace. It's growing
05:21trade area. Evansville is not growing. I'd say it's more static, flat, you know, in terms of growth.
05:28And so I think retailers are really prioritizing those fast growing major markets to expand.
05:34Once again, supporting their online sales strategy and brand.
