00:00On the earnings call, you gave some commentary.
00:02Talk to us, though, a little bit about the business you're seeing, the environment, the
00:05macro, the mall environment, but the macro as well.
00:08Well, first off, thanks for having me.
00:10Yeah.
00:10We do have a good insight into the consumer.
00:12We had 236 million visits to our portfolio in the second quarter.
00:17That's up over 3.3% from last year.
00:20Is that a typical percentage increase or a little bit more?
00:23It's a little bit more.
00:24If you were to track our traffic versus the rest of the shopping center industry, we've
00:29been up around 10% since pre-COVID, and so we've had pretty consistent traffic growth
00:33year over year.
00:34For us, that's visibility into how our tenants are performing, and I think if you look at
00:39those core tenants who you all mentioned, whether it's the grocers, off-price operators,
00:44health and wellness operators, we continue to see pretty good resilience, and I think
00:48we continue to see that from both traffic trends and the performance of the tenants.
00:51What is it about your properties?
00:52Is it the tenants that are bringing people?
00:54Is it the way the properties are designed?
00:55What makes it outperform other properties in the sector?
00:58I think it's a bit of both.
01:00We've invested about a billion five into our portfolio over the past eight years in
01:06reinvestment, so that's a mix of expanding our boxes to make sure we can bring in grocers,
01:12put them in the right footprint, developing out-parcel buildings out front, whether those
01:16are Chick-fil-A, Starbucks, Chipotle, and really putting our centers in the best position
01:21to succeed.
01:22So when you do that, when you put a great anchor in, they're driving a lot of traffic,
01:25and ultimately, in our business, it matters who your neighbor is.
01:29Wait, can we talk about Chick-fil-A?
01:30We can.
01:31This is like a unique property in terms of any retail experience.
01:38And I say that as somebody who grew up going to different fast food establishments.
01:43My dad was in the industry.
01:45He's not anymore.
01:45But you walk into a Chick-fil-A, and it's like, the line is huge.
01:51It's moving quickly.
01:52There are totally enough people there to serve you.
01:56When your family gets up from the seat, somebody comes over and cleans the entire table.
02:02Like, the bathrooms are clean.
02:03The children's play areas are clean.
02:05What is it about Chick-fil-A?
02:06I mean, I know there's a unique ownership structure with the Cathy family, but what is
02:10it about Chick-fil-A that brings people in?
02:12Well, I think they've done a fantastic job, like a lot of great retailers have, of connecting
02:17with the consumer, creating that experience.
02:19Even what they've done with their drive-throughs over time.
02:21You see how the stacking, when you drive by a Chick-fil-A, it looks like there's cars out
02:26to the street.
02:27Well, they move pretty quickly because of how they've been able to design that over time.
02:32Some of the technology that they've put in to really look at what peak hours are.
02:36So, I think they've obviously, they have a huge following as they open stores in new
02:42markets, people connect with them, and I think they've continued that over time.
02:46Is the rent they pay to you a percentage of sales?
02:48Generally not.
02:49I mean, some tenants do pay percentage rent in our portfolio.
02:53Generally, some of our grocers, some of our restaurants, we generally don't get it
02:59from the likes of Chick-fil-A.
02:59What's a great anchor tenant today?
03:02A great anchor is like the ones that you mentioned.
03:04We've been growing a lot with Publix.
03:06We've got half a dozen Publix projects underway across the portfolio.
03:10We're one of their largest landlords.
03:12Kroger's a great anchor as well.
03:14Walmart as well.
03:15Target.
03:16And then those junior anchors in that off-price value category, we're one of TJX's largest
03:22landlords, Ross's largest landlord, Burlington.
03:24They're driving a ton of traffic as well and really connecting with consumers across the
03:28income spectrum.
03:29We began our conversation by just mentioning Mondeley's earnings and also Visa earnings.
03:33You made the comment to me earlier that you watch those companies closely because they're
03:37reflections of the consumer.
03:39Visa says the consumer and the business, they're both spending is strong.
03:43How would you say the consumer is doing?
03:45Well, for us, our visibility through the consumer is also through the retailer.
03:50And what we hear from our retailers in terms of both traffic and spending habits.
03:54But if you hear from a lot of the banks, spending continues to be strong.
03:59Credit balances continue to be healthy.
04:01So overall, it's something that we look at very carefully.
04:04But thus far, the consumer remains pretty resilient.
04:06How would you say that in terms of your properties?
04:10Are you catering to a certain consumer?
04:12Yeah, generally, our properties are in demographics that are income levels 30% above the U.S. average.
04:19So we're primarily middle to higher income demographics.
04:23Think of great suburbs here in metro New York or around Atlanta.
04:27We're one of the largest landlords in the Philadelphia market.
04:30Dallas, Texas, Houston.
04:31So many of those first and second-ranked suburbs around core markets.
04:35Where are you growing?
04:36Those similar markets?
04:37That's where you focus on?
04:38So we've been growing in markets where we do have a huge presence.
04:40We announced four acquisitions during the quarter.
04:43Yeah.
04:43Houston, Texas, out in Long Island.
04:47College Station, Texas.
04:48We have a great college town portfolio.
04:50Yeah.
04:50Whether that's Ann Arbor, Michigan or Manhattan, Kansas.
04:53We've done fantastic in college towns.
04:55And an asset like in Panama City where we own two assets across the street.
04:59We like to cluster our assets closer together.
05:02That way, when retailers are coming into the market, they're coming to us in order to open stores.
05:07And we have a good sense of what's happening in the market.
05:09What is investor appetite for shopping centers?
05:12Are deals still attractive right now?
05:15Investor appetite is about the best it's ever been.
05:17Because in our sector, there's really no new supply.
05:20If you think about it, supply is at historic lows.
05:23But sometimes you drive by abandoned malls.
05:25Yeah.
05:25Like in some places.
05:26So we own open-air shopping centers.
05:28So just our asset class is all open-air, right?
05:31We don't own any malls.
05:33Right.
05:33And I think the flexibility of that format, right?
05:36And I also think-
05:37These are called not strips.
05:38Did we kind of-
05:38Well, some people say strips.
05:40But explain what the distinction is for people who might hear some of the tenants you have.
05:45Like these are places where the parking lot is all facing one way.
05:47Like how do you describe what the asset looks like?
05:49Yeah, I think how I would describe what's happening today in our sector is consumers are demanding
05:54more of the suburbs in terms of the level of restaurants, the types of services, the quality
06:00of grocers.
06:01And if you think about a development that we're doing in Philadelphia right now, we've got a
06:04Whole Foods at Barnes & Noble.
06:06We've also got Pottery Barn in Williams-Sonoma.
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