Good day and thank you for standing by. Welcome to the Third Quarter 2021 Acadia Realty Trust Earnings Conference Call. At this time, all participants are in a listen-only mode. After the presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised, that today's conference maybe recorded. [Operator Instructions] I would now like to hand the conference over to Nicholas Tele [ph], Analyst.

Good morning and thank you for joining us for the third quarter 2021 Acadia Realty Trust Earnings Conference Call. My name is Nicolas Tele [ph] and I'm an Analyst in our Asset Management Department. Before we begin, please be aware that statements made during the call that are not historical may be deemed forward-looking statements within the meaning of the Securities and Exchange Act of 1934 and actual results may differ materially from those indicated by such forward-looking statements. Due to a variety of risks and uncertainties, including those disclosed in the company's most recent Form 10-K and other periodic filings with the SEC. Forward-looking statements speak only as of the date of this call, October 27, 2021 and the company undertakes no duty to update them. During this call, management may refer to certain non-GAAP financial measures, including funds from operations and net operating income. Please see Acadia's earnings press release posted on it's website for reconciliations of these non-GAAP financial measures with the most directly comparable GAAP financial measures. Once the call becomes open for questions, we ask that you limit your first round to two questions per caller to give everyone the opportunity to participate. You may ask further questions by reinserting yourself into the queue and we will answer as time permits. Now, it is my pleasure to turn the call over to Ken Bernstein, President and Chief Executive Officer, who will begin today's management remarks.

Thank you, Nicholas. Great job. Welcome, everyone. As you can see from our earnings release, we had another solid quarter and notwithstanding some macro concerns around Delta and supply chain disruption, tenant leasing activity remains brisk and tenant performance remains strong in all components of our portfolio. Additionally, transactional activity continues to pick up. So, before I turn over the call to John and Amy to delve into the details of the progress that we made last quarter, I want to reflect on an interesting inflection point that we find ourselves. Because after a couple of years of meaningful headwinds for retail real estate. First, from the so-called retail apocalypse and then from the impact of COVID, we're now at a point where not only are we seeing solid leasing fundamentals that should provide strong internal growth for the next several years but the other drivers of our business, most notably our external growth engines, both from our on-balance sheet investing as well as through our fund platform are in a position to add important growth as well. In short, we have the potential to be hitting on all cylinders in a way that we have not seen in a very long time. So, let me walk through the key drivers of this trajectory. First, there's internal growth. NOI growth is poised to be well above trend for the next several years. Now granted, some of this growth is from the rebound from the short-term setbacks from COVID. But we positioned ourselves to not just recapture past income but then to grow nicely past that benchmark. This growth is going to come from a few key components. First, we anticipate taking our occupancy back to approximately 95% from the current level of approximately 90%. Now occupancy for us is a…

Thanks, Ken. I will start off with a discussion of our third quarter results, followed by an update on our continued progress on the $25 million of anticipated internal core NOI growth and then closing with our balance sheet. Starting with the quarter. Our third quarter earnings of $0.27 a share exceeded our expectations, landing us in the upper end of the $0.25 to $0.27 range that we had guided toward on our most recent call. And this was driven by rent commencement on new leases, continuous improvements in our cash collections, along with some accretion from the approximately $140 million of external investments that we completed during the quarter. In terms of near-term FFO expectations, we continue to anticipate $0.25 to $0.27 of quarterly FFO, excluding any potential Albertson sales for the next few quarters. In terms of Albertsons, as I shared on the prior call, although a sale of shares before the end of the year is possible, we continue to believe that it's prudent to assume that the realized gains start showing up in 2022. And as a reminder, keep in mind that these gains are simply timing. So whether it's next quarter or next year, using Albertson's most recent share price, a sale of our position would result in a gain in excess of $30 million or in excess of $0.30 a share of FFO. As outlined in our press release, we maintained our guidance at $1.05 to $1.14. However, I think it's worth drilling into the components. As it actually represents a beat in excess of 10% off of our initial midpoint. As you'll recall, within our initial range of $0.98 to $1.14, we had incorporated $0.05 to $0.13 of core and fund transactional activity which, as we highlighted, was primarily attributable to the sale…

Thanks, John. Today, I'd like to provide a brief update on our fund platform, beginning with Fund V. First, we are pleased to report that fund deal flow is kicking in. During the third quarter and as detailed in our press release, we completed $96 million of new acquisitions comprised of two East Coast suburban shopping centers. Like the balance of our Fund V portfolio, these two properties were acquired at a substantial discount to replacement cost. Including land, our blended cost basis for these two centers is approximately $130 per square foot. In comparison, the cost to construct a new suburban shopping center is approximately $200 to $250 per square foot and that's excluding land cost. Additionally, both properties rank number one in their respective markets based on foot traffic, consistent with our best game in town acquisition strategy. The resiliency of Fund IV stems from our needle in a haystack approach to acquiring these types of centers. Due to our selectivity at acquisition, we've seen a Fund V collections rate that is now in the high 90s, consistent with our core portfolio and a stable mid-teens leverage return which we're able to achieve given our use of two-third leverage in our fund platform. Even during the pandemic, our cash-on-cash yields only dipped to approximately 13%. Looking ahead, we expect to be back to 15% relatively quickly. Similarly, on an unlevered basis, our 8% yield dipped to approximately 7% during the pandemic and is now on a projected path back to 8%. Over the life of our investment, we expect to generate most of our return from operating cash flow. That said, as previously discussed, there is a very tangible opportunity for outsized performance due to cap rate compression and thus property appreciation. Here are a couple of indicators…

[Operator Instructions] Our first question comes from Todd Thomas with KeyBanc.

Hi, thanks. Good morning. First question, John, I think you said in your remarks that you would expect around $0.25 to $0.27 per quarter, excluding Albertsons' gains over the next few quarters and you ran through some of the move-outs that are taking place this month and in January of next year, I think you said about $4 million of ABR there. And some of the leasing in the pipeline will begin to offset that later in '22 it sounds. Is that the right read there? I realize you're not providing '22 guidance but your comments around the $0.25 to $0.27 is that the right quarterly range to think about sort of through midyear '22, I guess is that right, is that what your comments were suggesting?

Yes. I think first half is, as we -- as I mentioned there, Todd, is going to be offset by the pipeline. So I think you're reading that correctly with really the growth starting to kick-in in the second half from leases that are already signed and really accelerating meaningfully in '23 and then continuing into '24.

Okay, that's helpful. And then, Ken, you talked about above-average growth in the near-term and sound very encouraged about internal growth. Previously, you discussed 5% to 10% same-store NOI growth per year through '24. How do you feel about that range today? Is that still intact or do you see any changes to that forecasted range at this time and then sort of alongside that, I guess, maybe for John, the net absorption of $10 million to $15 million that you included in the $25 million increase in core NOI that you anticipate by the end of '24. Does that imply getting back to the 95% occupancy rate? Are those sort of comments tied to that occupancy target and is that the right time frame to think about getting back to 95% core occupancy?

So things remain on track. But John, there's a lot there to unpack. So why don't you walk through this?

Yes. So I think on the same-store, Todd, I think for '22, that trend line that we put out before, continues to be in place. So keep in mind that the pieces that we put together was on the absorption but there's also the credit piece, there's also the contractual rent piece that grow that as well. So I think we're -- we remain on track for the -- which we highlighted before, 5% to 10% of growth each year with more tilted toward just given these expirations that are coming up in the first half, more second half growth with leases already signed. So we are on track for the 5% for next year.

And then in the following years is when you'll start seeing the uptick of occupancy and then the other longer-term drivers to provide this above trend NOI growth. And Todd, just keep in mind, NOI growth and FFO are related but distant cousins.

Okay. But to get back to 95% occupancy, do you anticipate that you could be there by the end of '24?

Yes, we do.

Absolutely. And then just keep in mind that our suburban occupancies can move with very little NOI shift and our urban square footage substantially less but really drives NOI. So that's why I said in the prepared remarks that occupancy is a rough measure but everything we are seeing put [indiscernible] aside, everything we are seeing is tenants stepping up with greater enthusiasm than we had projected.

Our next question comes from Ki Bin Kim with Truist.

Thanks and good morning. Just sticking with the same topic. Can you just talk about the trends and leasing momentum that you've seen across the portfolio? I know earlier this year, mid this year, there was a -- as you described, kind of a renewal of interest in tenants for street retail, especially. Has that kind of kept pace and if you can bracket that answer with any kind of stat that you're looking at, that suggests that things have accelerated or kind of stayed flat?

So tenant interest continues to grow and grow in areas that we thought might take longer or where we were just pure concern. But even -- let's take a step back from tenant interest which is always welcome, especially when they sign leases. What we're seeing now is tenant sales performance that has far exceeded our tenant's expectations and ours and this is before for street retail, for instance, this is before a full return to the office. This is before international tourism. And in ways that's frankly, both when I meet with our retailers and then just when we talk to various market participants, it's better than we expected. So we're seeing sales growth that then drives rental growth. If you think about the many different metrics, when we try to determine a tenant's interest and a tenant's viability and profitability, the big one is rent to sales and what we're seeing there are trends where retailers are coming to us, very pleased that they are already producing sales in excess of pre-COVID and that was not something that we could have responsively anticipated six months ago, especially in some of these markets that are still just reopening.

And for tenants that have been open more than a few months, how would you describe the durability of that sales trend that you're talking about? So I would imagine if you're kind of exciting new retailer opening a new space, there might be an initial surge and then maybe calm down a little bit but has that durability remained high?

So let me be clear, in many of the instances that I'm referring to are retailers, either in our portfolio or adjacent that had been open since pre-COVID. That being said, what we're all trying to figure out across the board is how much of this is a surge in pent-up demand, how much of is it due to strong government support and stimulus. Well, at some segments, I don't think at our street retail that's relevant. What I think has surprised to the upside and we've been talking about this for a while, the consumer, especially the affluent consumer is climbing out of this recession in such a different position than during the global financial crisis or other recessions. Their housing value up, their stock portfolio up, their job prospects strong and then there may also be pent-up demand. So it's really hard to know how much is revenge spending but what our retailers are telling us is -- and the way they're telling us this is they're signing long-term leases. What they're telling us is they are forecasting as best as they can, that this is a longer-term trend.

Our next question comes from Floris Van Dijkum with Compass Point.

Thanks. Good morning, guys. A question on the same-store NOI, John, if I could. Very interesting to note that, typically, people when they report lease spreads, your renewal leases are significantly below your new leases because new tenants tend to pay higher rents. Yet this past quarter, you had almost identical lease spreads and your same-store NOI number was solid at 7%. If you can just walk us through what was included and excluded because you mentioned the -- it was a relatively clean number. There was a little bit of fallback in there but not the bulk of it, if you can give us some more detail on that. And just to show that the underlying engine seems to be firing on all cylinders, that would be helpful.

Yes. No, absolutely, Floris. I think in terms of the pool and the out of period, I think is what you're referring to, cash collection we got, that was related to City Center which is the redevelopment we have in San Francisco. So there we received some cash from a past due rent, so that was never a part of -- that was not included in our same-store pool and thus did not get the benefit for it in the 7% prem [ph] we did. And then in terms of the spreads, let me think -- let me try to respond to your question. I think you see the gap narrowing between the GAAP spread and the cash spread. And I think part of -- and I think what I know part of that difference is, is that, as you may have seen in the past, there was a very wide difference between cash and GAAP coming out of COVID and that was really related to the few deals that we did in the street where we had rents that grew into a market. That is largely gone. And we're getting market, if not better than market now. So those -- that's tightening; so that's part of it as well. And in terms of the renewals, those were driven by our street and again, as I talked about in my remarks, we get a cut of the apple every five years or so in our street to reset it and that's exactly what happened and I highlighted in my remarks in L.A., in Melrose Place which was one that was a renewal that reset to market that drove a plus 20% spread. So I think it is all positive strong indicators. That's true, meaningful underlying NOI growth as part of that because occupancy remained fairly flat. So this was really driven by fundamentals.

Thanks. And then, going back to the -- you talk about $2 million next year from that $16 million pipeline and that's presumably the net number, the net $2 million is because of the move-outs. It looks like you're going to get to around 5% NOI growth. But you talked about the range of 5% to 10%. So presumably, as we get further into the recovery, your underlying same-store NOI potential goes up. Is that the right way to read that?

Absolutely. No, absolutely. So I think that's exactly what we're thinking, Floris. So I think as we -- the good chunk of -- and I had highlighted these expirations a few quarters ago. And I think it's exactly playing out as we expected. And I would say, as some of the rents we're seeing that are coming together are better than we anticipated. So stay tuned but we feel good about that range.

Last question, if I can. As you think about your exit strategies related to the fund and maybe this is for Amy, you've got about $1 billion of assets. Obviously, there are a lot of private equity players out there that would -- that are paying up to buy assets right now and to buy yielding assets because they want income some of these private REITS. Is there a scenario whereby you could sell a partial stake or a full stake in that and continue to manage that or keep an interest in that business to keep management fees going or do you think the best way to deal with that is a clean break going forward?

Hi, Floris. Who knows but we're certainly considering all options that would include kind of the couple of scenarios that you just referenced. It's a little early.

And while we at -- well, we wouldn't remember as opposed to other assets that may be low yielding, our investors are clipping a mid-teens return while we weigh the different ideal transactions. It's still a little early, we still have more money to put to work, there's still this arbitrage but the opportunity for partial sale as you've seen in other funds is certainly the case.

Thanks guys. That's it for me.

Sure.

Our next question comes from Linda Tsa with Jefferies.

Hi. In terms of the school that moved into City Point, what's the lease term and do they fall under the 3% contractual rent increase?

I don't actually know the exact rental increase but…

Term is long term.

It's long term, it's more than 10 years and this is an existing school within the Brooklyn submarket; so it's a nice addition for the property which will complement the other new anchor that I mentioned that will be moving in next summer.

And Linda, in Amy's defense, we tend not to break out individual leases. Both our tenants don't like us to and it's micro but this is a really important addition and thankfully the middle school which is -- who will be attending here is doing incredibly well.

Got it. And then, if you had to rank the comeback of your various urban markets, you discussed SoHo coming back pretty nicely. You highlighted LA, are Chicago and DC keeping up pace and what are some of the factors that might impact the pace of recoveries? Are there any specific factors?

Yes. And it's been fascinating, Linda because much of this is different than I might have predicted. And we spent time in SoHo during the early reopening days and you saw tenants beginning to show but you also saw -- and you still see a lot of dark stores. The difference in SoHo is most of those dark stores are already spoken for and they're spoken for with really exciting tenants. Let's talk about other cities. Chicago is slower to reopen overall, North Michigan Avenue being probably the example of that. But what we saw through the summer and now strongly reopening our areas like Armitage Avenue or our Gold Coast assets, Rush and Walton, where Celeron [ph] expanded by 50% during COVID because they saw the sales demand. So there, Rush and Walton is better positioned today than pre-COVID and that's Chicago. Similar story around Melrose Place, DC M Street is fascinating. Pre-COVID M Street really suffered from a host of lagging tenants and it did not have the new exciting retailers. Based on what we know, based on retailers that have signed leases, whether in our portfolio or adjacent, within the next 12 months, M Street will be more vibrant than it was pre-COVID. So that's fascinating, not necessarily predictable and not necessarily indicative of what you're seeing in DC overall because you're waiting for a return to the federal office workers, you're waiting for a return of domestic and international tourism. So it's not only a tale of different cities. It's within each city there's different submarkets that have reopened faster than others and thankfully, we're well positioned for the most part but there are other areas that I would say we're still in the earlier days of the reopening and so hopefully, that progresses over the next 12 to 24 months.

Thanks for that color. And then, just a quick one for John. On Albertsons, you have the $30 million of embedded gains in original guidance and given ACI has done well year-to-date in 2022 guidance, I assume this would be a bigger number and you'd continue to break out what you expect to realized?

Yes, absolutely. So in original guidance, Linda, we had $5 million to $12 million and that was based, as you just mentioned, a share price is about half of it at the time that we provided our guidance. So just as a reminder, we have about -- at our pro rata share, just over one million shares. Current share price is around $30 and you should think about us in winding that as I mentioned in my remarks, possibly in later this year but more likely '22 and probably spread out over a couple of years; so it's about $30 million.

Our next question comes from Craig Schmidt with Bank of America.

Thank you. I've been hearing commentary that the lower store closing pace that we witnessed in 2021 could very well continue into 2022. I know that you've been talking about the enthusiasm of the retailers. Do you think that the elevated new opening of space will continue in 2022 as well?

It looks like it, Craig. Now I guess what I would caution is you need to break it into multiple different segments and some of the retailers who had a nice COVID bump the necessity based, they probably -- or many of those retailers are telling us, they have the right number of stores and their expansion has occurred. The discretionary retailers, on a wide range, are continuing to be active and I'd expect them to continue for the next several years. And that ranges from luxury, where they have absolutely confirmed that the store, especially where they can control their own footprint. The luxury retailer has said, the store is essential to their direct-to-consumer initiatives. And then, the aspirational retailers, some of them are doing incredibly well. We see that rollout continuing. Some of this is as they transition out of department stores or out of less favorable and closed malls and others are just as they realize that the store is the most profitable channel in an omnichannel world. And then, you do have the single channel retailers, otherwise known as the off-price retailers otherwise known as Burlington Coat, T.J. Maxx, Ross Dress For Less. They're continuing to open stores, different format size, I don't see it slowing down. Some of them. T.J. has done an incredibly good job with other of their components, HomeGoods, HomeSense. So I feel pretty good on that side but that's the single channel and we'll watch that every year, great retailers and I would expect at least in the next 12 to 24 months, you'd see growth there.

Great. And then, it's clear that the supply chain disruption didn't impact your third quarter numbers. Is it your sense that it is not going to be an issue for holiday or later in 2022, or are you retailers saying that wait and see on that issue?

Well, so let's separate supply chain as it impacts us as landlords able to reopen or get open stores. And if you have an HVAC unit, you could lend our leasing team, they would be greatly appreciated because the supply chain certainly is something that we're all focused on so far. It has not had a material impact and we don't anticipate it does in our ability to open our locations but that's something that every landlord is watching and developers of new space are specialty watching. But put that aside, thankfully, the vast, vast majority of our NOI growth is coming from re-tenanting of existing stores and thus, not a big concern. Then on the retailer side, what our national retailers have told us, is they think they have made adequate adjustments in their supply chain. In the case of some large national retailers, you've seen them take the supply chain into their own control. But across the board, they're feeling that they can navigate through this, provided that this is a 2022 issue and doesn't bleed into multiple years. It's something that I think everyone has to watch. It is certainly something that we're not going to take for granted. However, keep in mind that the consumer continues to show a level of flexibility that is on the delivery date of their car or price at a restaurant, that the consumer seems to be showing a level of demand and a level of flexibility that retailers have been able to manage through this and keep their top line growing and in most instances, their bottom line as well.

Great. And then just, finally, can you describe the kind of interest you're seeing in the Nordstrom Rack space in San Francisco?

San Francisco has been a little slower to reopen but the interest is strong, thankfully. It was strong pre-COVID, it was strong during the dark days of COVID. That's one of those unique shopping centers with parking centrally located. So we feel good about that.

Our next question comes from Katy McConnell with Citi.

Great. Than you. Can you provide some more color on the increases you saw in leasing costs per square foot this quarter and how has that differed for suburban versus street deals in terms of what tenants are looking for from landlords today?

Yes, absolutely. So I think, Kate, as you look in our supplemental, our costs did tick up a bit and it is coming from the suburban deals that we did. So I think street has remained, there's just not a lot of work to put into the space so we're not seeing meaningful changes there. But in suburban is where the majority of the increase came from.

Do you look at that as a good run rate just as we think about the future leasing pipeline?

I think it all depends on the box that we're filling, when they're cutting up and doing it. So I don't know if that would apply the same per square foot cost to what we do forever and ever, just given the nuance nature of our portfolio, Katy. So I think it is one, probably each quarter, we'll have to work through it but we are certainly seeing a bit of an uptick and as Ken mentioned and cost to build out space, particularly in suburban.

Okay. Great. And then just one more quick one. If you could talk about the economics and timing around the 70,000 square foot box you signed for City Point, just in terms of splitting up the space and to the progress of remaining the balance?

Sure. The space is in good condition because it was previously leased to a retailer who is opened and operating there. So we just signed the lease. As I mentioned, construction is going to start soon and then we expect that the tenant will do their own work as well and open in the second half of next year. And in terms of economics, I mentioned that this one lease is able to replace almost all Century 21's rent. So a little bit of square footage left, 30,000 square feet, will put us into a nice profitability point on this re-tenanting.

Our next question comes from Paulina Rojas with Green Street.

Good morning. Can you please talk -- broadly talk about the structured financing you closed this quarter. It is interesting to me that in the current low interest rate environment, someone has to pay a high 5s or low six interest rate for financing. So any color about the counterparty and general circumstances of the transaction are appreciated.

Sure. And while every cycle is a little different, this is cycle consistent. And by that, I mean, when entrepreneurs start stepping up usually around this time and are looking to get deals done, often, they need capital, they need certainty of execution and they need it quickly and that was the case here, I won't get into the specifics of the counterparty but larger institutions, whether public or private, are so focused on every last basis point of cost of capital and entrepreneurs are often in a position where they say, you know what, over the next two years, I can do these great things if they can, great and then we're happy to assist in that, especially and this is the key for us, where we then can get the opportunity to convert our structured finance into long term ownership. We've done that successfully in the past and I'm hopeful we'll continue to.

Okay. And then the other question is, can you please elaborate on the sources for operational upside on the two properties you acquired this quarter, especially about [indiscernible] marketplace which I think is 99% leased currently.

Yes. So I'll take that but Amy chime in as well. The thesis behind the Fund V acquisitions has been clipping mid-teens leveraged yields by buying in the 7s and 8s and making sure that we are carefully underwriting through so that as any tenant role occurs, any -- what we call 'loose teeth' play out that we can hold on to those leverage deals and now for several years, we have proven that. There are instances of deals that we are acquiring, where there are value-add components. But in that case, our view is buy out of favor retail, do not expect any same-store NOI growth, do not expect positive lease spreads, do not expect a host of the metrics that the public markets are focused on but do expect mid- teens leveraged yield and potentially down the road cap rate compression that leads to the kind of returns that our funds are looking for.

Okay. Thank you.

Our next question comes from Mike Muller with JPMorgan.

Hi, I just have one quick one here. Of the $25 million of NOI growth that you expect by the end of '24, beginning in 2025, what's the ballpark split between the street portfolio and the suburban portfolio?

Yes. So Mike, we'll get more color as we get through it. But I would say and as we said in the past, a good portion of this is coming from our street and urban portfolio. So I think more than -- right now, the split is 60-40, with street and urban represent the 60 and it's going to contribute more than it's fair share to that.

Got it. And then on the transaction side, I think you just mentioned -- or Ken just mentioned 7's and 8's on the fund acquisitions just as a template so it's probably safe to assume those acquisitions had that sort of economics tied to them. But what about the structured finance investment on the core? Can you give us a rough going in yield on that?

Yes. And I will let Paulina take credit for it. She mentioned, it's in the high 5's, 6's. She had a pretty good educated guess. We don't break that out specifically but that was a relevant range.

[Operator Instructions] Our next question comes from Floris Van Dijkum with Compass Point.

Just a quick follow-up. Just maybe a little bit -- I know you said you don't want to talk about it too much yet, Ken but some of the other upsides you talked about is activating some of your redevelopments. As I'm thinking about it, two assets in particular come to mind, the former Sears box, I guess, Kmart or whatever it is in your Westchester Shopping Center and your large assets on Michigan Avenue. Are those -- is that the bulk of the redevelopment potential or are there other things within your portfolio that could be appealing for redevelopment capital as well?

Well, there are multiple others for us, some that are already redevelopments, certainly those are two that we're keenly focused on and I think what I said is we'll talk about it next quarter and so we will talk about it next quarter. And we hopefully have everything teed up by them.

No worries.

Our next question comes from Katy McConnell with Citi.

Hey, Ken [indiscernible]. And if you've covered this, I have to jump off. Just in terms of what you're hearing from your retailers in terms of their effective profit margins, you talked a little bit about sales growth and the retailers of sales, how are they preparing for the next few months in terms of not having enough product in their stores, not being able to get the labor in. So my favorite Starbucks now they are closing at 4:00 o'clock in New York because they can't get the staff and just how all of that will play into their store opening and profitability and their ability for them to pay rent and if you've addressed that, then we can talk offline.

Yes. So there is no doubt that both labor constraints and short-term, some supply constraints are impacting a variety of retailers differently. So far, what the retailers are telling us, Michael, is they're getting you to pay more for that cup of coffee and they're getting you to show up before 4:00 o'clock. So they're feeling pretty good at least for now but if this becomes prolonged, either in terms of the products on the shelf or in terms of your flexibility price and otherwise, then that could be an issue. But so far, the retailers are feeling pretty good about their ability to maintain top line and grow it and bottom line. Our hope is we get through the holiday season successfully, especially the national retailers and then we'll figure it out. For local retailers which primarily are showing up as our satellite tenants in our suburban supermarket-anchored centers, they may not have that same pricing power, they may not have the same ability to navigate the supply chain. So we're watching our satellite tenants closely. But again, so far, so good.

And then is there -- you've obviously seen a lot of the traditional e-commerce players that moved into bricks and mortar, a number of those companies have got public and listed. Have you sensed any change in their store opening or their willing to spend capital now that they're using public shareholder money versus private capital?

The change showed up actually before any of the steps to IPO because what they saw was, in many instances, when they opened a store, their online sales went up. When they opened a store that was the most profitable channel for them. And what I would tell you is the VC world and the private equity world are demanding that those retailers with interesting digital initiatives have a ground game, have physical stores as part of their outlook so we're seeing most of them say, we've got to have stores. It's now proven critical to our long-term success, whether we stay private or eventually go public. So this has been an ongoing question for years asked now and answered, the store is going to work.

Okay. And then, just lastly, in terms of -- I know you're trying to fill up the fund in terms of the remaining capital that's there to be spent. I guess are you -- are your institutional investors approaching you for side-car investments, just in terms of the aggressiveness of the initial capital to allocate capital either in suburbs or on the street, just to give us a little bit more flavor of what they're thinking about doing.

So they're waking up thankfully and saying, OK, we thought retail was in secular decline and now they recognize it's not. And especially when they compare it to other alternatives, the kind of yields we're providing are looking very attractive. So that's a positive. Here's the negative, if you will we are still picking needles from a haystack. The United States is still over retail, not every shopping center is going to get to the other side with stability. The ones we are buying are stable but we've been unable to piece together large portfolios that would justify the sidecars. We're trying. Maybe it happens. But every 10 or 20 property portfolio we look at we end up with two or three assets, not all 20 of them. So we're going to continue to be selective, we can afford to.

Showing no further questions in queue at this time. I'd like to turn the call back to Ken Bernstein for closing remarks.

Great. I appreciate everyone taking the time and I look forward to talking with all of you again next quarter. This concludes today's conference call. Thank you for participating. You may now disconnect.