WHLRL

Key Points

• Bruce thanked the team and board, noted board expansion, and highlighted sale of Camp Hill Mall for ~$90M at 6.5% cap rate. Mentioned strong leasing pipeline, joint venture with Goldman Sachs and Asland for DGS office building in DC, and progress on redevelopment projects.
• Robin discussed 97% build rent collected, 40 leases executed totaling 209,100 sq ft, leasing volume increase, occupancy trends (leased occupancy 88.7% as of end Q2, up 0.9% from prior quarter), and progress on value-add redevelopment projects at various centers.
• Phil highlighted operating results, balance sheet updates including $114M non-recourse mortgage loan refinancing, repayment of $50M term loan, and reduction of revolving credit facility from $179M to $12M.

Forward-Looking Statements

• Leasing pipeline is robust, with expectation of growing NOI and occupancy as leases in pipeline are finalized. Anticipates occupancy to creep up into low to mid 90s as value-add redevelopments and leasing pipeline are executed. Construction of DGS joint venture first phase underway with anticipated delivery in December 2022.

For the second quarter, operating FFO was $8.5 million or $0.61 per share and property NOI was $20.8 million. Operating expenses included $0.2 million of demolition costs at Norwood Shopping Center. Excluding redevelopment properties, same-property NOI increased 8.2% over the comparable period in 2020 and 10.2% including redevelopment. The portfolio has substantially recovered from COVID-19 pandemic effects.

Risks

• Potential resurgence of COVID-19 could impact retailers and leasing activity. Uncertainties in real estate market dynamics, including cap rate trends relative to other asset classes like industrial and multi-family, which could affect valuations of grocery-anchored assets.

Q: Hi, good afternoon. First question, Robin, the leased rate improved sequentially by about 80 basis points, that’s a solid move. Do you feel that that momentum should continue? Do you see leasing trending higher from here? And then can you also talk about the pricing power you commented on the new lease spreads in the quarter?

A: Yes, thank you, Todd. So related to volume, we definitely are seeing kind of increased volume, I would say in the last couple of months, some of which are at the tail end of Q2 and going into this next quarter. So, I would expect that we are starting to see retailers look at expanding their operations, opening new stores, opening new restaurants, etcetera. So, we are seeing good momentum there. Related to spreads equally, as I mentioned many of the deals that – or several of the deals that were closed during the second quarter were started during the height of the pandemic as far as the economic terms. And so I do expect to see an improvement in those terms relative to spreads as we go through the coming month.

Q: Hi, good afternoon, or good evening, guys. Thanks for taking my question. Just a little bit of more information on the leasing pipeline, if you will. How robust do you see or how much demand do you see? Obviously, one way to look at it is looking at your lease to occupied spread, but if you can also maybe give us a little bit of an update in terms of your total pipeline as it stands right now and the mix of that pipeline?

A: Let me do this. Robin, why don’t you maybe take a first step at it, and then I will just amplify to the extent necessary? Robin Zeigler: Sure. So, thanks Floris for the question. I would say kind of, I guess, starting at the end and going to the beginning of your question. The types of deals that we are seeing in the pipeline are everything from anchor deals to national smalls or national anchor deals to national small shops to the local retailers. So, we are seeing a wide breadth there, the types of deals coming through. And a lot of the activity that we talked about, at first, retailers were kind of dealing with their low hanging fruit and the things that were already in process pre-pandemic, are now focused on growth and expansion. And so we are seeing the benefit of that both in fellow wise coming through that are executed the deals that are just in negotiations that are in the pipeline. So, I think, as we had said before, I think we do expect over the coming quarters to get back to kind of that pre-pandemic, low-90%ish occupancy related to really add to that on the leased occupancy side. And then related to just deal structure, again, we are seeing better spreads. And then we did kind of during this quarter, we are seeing deals that are – that represent better spreads based on what we have seen thus far. So, we are expecting that activity to continue.