Regency Centers Corporation (REG) Q2 2018 Earnings Report, Transcript and Summary

Greetings, and welcome to Regency Centers’ Second Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Laura Clark, Vice President, Capital Markets. Thank you. You may begin.

Good morning, and welcome to Regency’s second quarter 2018 earnings conference call. Joining me today are Hap Stein, our Chairman and CEO; Lisa Palmer, our President and CFO; Mac Chandler, EVP of Investments; Jim Thompson, EVP of Operations; Mike Mas, Managing Director of Finance; and Chris Leavitt, SVP and Treasurer. I would like to begin by stating that we may discuss forward-looking statements on this call. Such statements involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements. Please refer to our filings with the SEC, which identify important risk factors that could cause actual results to differ from those contained in forward-looking statements. On today’s call, we will also reference certain non-GAAP financial measures. We provided a reconciliation of these measures to their comparable GAAP measures in our earnings release and financial supplement, which can be found on our Investor Relations website. Hap?

Thanks, Laura. Good morning, everyone. Fundamentals in shopping center business continue to be healthy, demonstrated by another quarter of solid results from our preeminent national portfolio. That said, we remain keenly aware of the changes occurring across today’s retail landscape. Retailers have always faced constant need to remain relevant, through experience, through merchandise, through service, and through value. The current environment is no different, and the best grocers and retailers are not standing still. They are focused on meeting the evolving needs of today’s consumer by allowing customers to choose how, where, and when they will shop. A physical store presence remains a critically important channel, where retailers connect and service to customers. Best-in-class operators are looking for stores in high-quality shopping centers that are located close to their customers. Regency’s top grocers and retailers, including Publix, Kroger, Whole Foods, T.J.Maxx, Ulta, Panera and Orangetheory Fitness, to name a few, are addressing the evolving landscape through significant investments in technology, in experience, in price and in many cases, significant store expansions. Regency’s strategic advantages position the company to not only meet the changes occurring in today’s retail environment that will enable us to consistently grow shareholder value in the future. These unequaled advantages include: a national portfolio that is distinguished in terms of its size, it’s breadth and its quality; well merchandised and well-conceived shopping centers located in dense infiltrated areas, in neighborhoods with substantial purchasing power, that are must have shopping centers for successful and expanding retailers; a best-in-class national platform of teams located in our target markets throughout the country, bringing market knowledge and expertise for value creation, from asset management, development and redevelopment; a fortress balance sheet and disciplined capital allocation strategy; and most important of all, a deep and talented team that is guided by Regency’s special culture. This proven formula will allow us to sustain same property NOI growth by 3%, and earnings and dividend growth by an average of 5% to 7%. And these should generate sector leading shareholder returns over the long term. Jim?

Thanks, Hap. Core fundamentals were gratifying, with second quarter same property NOI growth of 4.2%, and occupancy at 95.5%. It is important to note that base rent was the lion’s share of this, contributing 3.5% growth for the quarter. Retailers continue to behave rationally and deliberately, and are focused on leasing space in well-located centers. We think this constructive behavior is a positive for our business, and while recognizing today’s changing landscape, our teams continue to have success as we focus on merchandising with best-in-class tenants, maximizing net effect of rent over the term, and minimizing downtime. Our superior portfolio of quality is evidenced in the recent outcomes of the Toys "R" Us bankruptcy. As you may recall, we had minimal exposure to toys, with only five leased spaces. To date, one of the centers has been sold, one box was assumed by another retailer at auction, where we experienced zero downtime, one has already been released, and we are actively engaged in discussion with multiple tenants, including HomeGoods, Trader Joe’s and Publix, for the two boxes we acquired at auction. Overall, retail bankruptcies have been lower than anticipated today, leading to solid performance and our raise in same property NOI growth expectations for the year, which Lisa will discuss in more detail. Turning to operating performance. Year-to-date rent spreads, while still healthy, are moderating a bit due to a couple of factors. First, we have a robust redevelopment pipeline, which Mac will talk more about next, where we are proactively creating flexibility to execute on accretive investments to drive future NOI growth and value creation. This means that sometimes, we will execute flat or negative growth renewal deals in return for shorter-lease terms or termination and relocation rights, which gives us the ability to control our real estate for development in the future. Second, renewing or replacing below-market anchor leases after expiration can often have significant impact on lease spreads. In the first half of the year we had a lack of legacy anchor leases come back to us, but as we look to the second half we have several opportunities to bring these valuable spaces to market rents. More importantly, we’ve had great success including embedded annual rent increases in our leases, and over the last four years, have averaged 2.5% contractual increases on nearly 90% of our shop deals we’ve executed. This effort is certainly reflected in our strong same property NOI and cash flow growth over the last several years. Mac?

Thank you, Jim. The investment environment for institutional-grade shopping centers is stable and there continues to be solid demand, particularly for the highest quality properties where a diverse array of buyers continues to drive pricing. On the selling side, we’ve seen an adequate buyer pool for our commodity centers. These buyers are seeking solid growth and have access to debt financing. To date, we have closed on $143 million of dispositions at an average cap rate of 7.9%. Pricing in these transactions has met expectations, and we have a visible pipeline to achieve our disposition plan of $275 million for 2018. Consistent with past years, we typically sell 1% to 2% of our asset base annually. The proceeds, combined with free cash flow, are reinvested into value-add developments and redevelopments, premier acquisitions with superior growth prospects, or our own stock, when pricing is compelling and tax gains are manageable. We believe this perpetual enhancement to our portfolio uniquely fortifies our NOI growth rate. Turning to development and redevelopment. We are making impressive progress with our in-process pipeline. Leasing velocity is strong, and rents our meeting or exceeding the expectations. Case in point, we recently completed our chimney lock development located in affluent Somerset County, New Jersey. This $71 million investment is anchored by Whole Foods, Nordstrom Rack and Zacks Outfit. We are pleased to report that the center is 97% leased, with retail sales exceeding tenant expectations. As we’ve discussed previously, new groundup development opportunities that meet our high standards and disciplined strategy, remain challenging to source. Fortunately, Regency’s preeminent portfolio is full of redevelopment opportunities that are being mined by our talented development team. The following is an update on just a few of our near-term prospects. The Abbot, a true iconic property located in the heart of Harvard Square, should start by year-end. All approvals have been obtained to allow the transformation of our three historic buildings into one integrated retail office flagship. Next is that the redevelopment of our midrise building, at Market Common Clarendon in Arlington. We intend to modernize and expand this 1960s era building into a new state-of-the-art four-level structure, with dynamic ground floor retail fronting Whole Foods. Preleasing interest has been strong, including the execution of a full four lease with a luxury fitness club, which will serve as another exciting draw for the entire project. Located in Bethesda, Westwood Shopping Center is another exciting infill redevelopment opportunity. The first phase will consist of approximately 150,000 square feet of neighborhood retail, anchored by a top-performing giant, 200 units of apartments and 75 for-sale townhomes. We have strong interest in the residential components, where Regency plans to partner with best-in-class codevelopers, to create an integrated project that will draw from this affluent trade area. These three redevelopments are all projected to start within the next 12 months, with an aggregate cost of approximately $170 million, and will generate an average incremental return of 8%. These are just a few examples of the kinds of compelling value add opportunities which our portfolio and platform reports. Our experienced team is excited by the many opportunities in the pipeline, and we have visibility to exceed $1 billion of development and redevelopment starts and deliveries over the next five years. Lisa?

Thank you, Mac, and good morning, everyone. We had another impressive quarter of same property NOI growth that was primarily driven by base rents. As Jim said, base rent growth contributed 3.5% for the quarter, and 3.7% year-to-date, a reflection of the strength of the portfolio, with healthy embedded rent steps as well as the result of accretive asset management in redevelopments. This strong performance during the first half of the year, combined with less tenant fallout than we originally projected, allowed us to raise our expectations around same property NOI growth. We have removed the potential for finishing in the bottom half of our previous range, and now expect to finish the year at 2.75% to 3.25%. As we’ve communicated previously, we will experience a deceleration in the back half of the year, with some property growth in the low 2% range for both the third and fourth quarters. Timing and the lumpiness of certain NOI line items are the primary factors, as our guidance range does include very healthy base rent growth of 3%-plus through the remainder of the year. I think it would be helpful to take a minute and walk you through the primary drivers of this deceleration. First, we expect recovery rates to normalize through the back half of the year, and end the year in line with 2017 levels. Second, as Jim mentioned, while we are making great progress on the toys boxes that we acquired out of bankruptcy, we will experience downtime in the third and fourth quarters. Third, we’re going up against tough comps as we completed the major redevelopment of Serramonte, in the fourth quarter of last year. And finally, the timing of other income was front end loaded this year versus last. As we look through these timing impacts, the growth in the second half of 2018, I’d like to reiterate that base rent growth is on track to remain above 3%, in both the third and fourth quarters. Turning to earnings, we have modestly increased our Nareit FFO and operating FFO guidance ranges, incorporating the better performance through the second quarter, driven by same property NOI growth. And as a reminder, operating FFO eliminates non-comparable onetime items as well as certain non-cash accounting items, like straight line rent and above-below market rent amortization. And I also think it’s important to remind you, that these non-cash items are expected to total $54 million this year, which at the midpoint – it’s $54 million at the midpoint, which is $0.32 per share. Before turning the call over for questions, I would like to quickly touch on the new lease accounting rule that will go into effect in 2019. Many of you are aware that this accounting change will impact that way REITs will recognize certain internal leasing costs. Some of these costs have been capitalized with leasing activity, but after adopting the new standard next year, these internal costs will need to be expensed. We anticipate the impact to be in the range of $0.06 to $0.07 per share, on 2019 earnings. And while this will impact reported earnings, it does not impact AFFO, or cash flow, and we do not have any intention of allowing this accounting change, which doesn’t have a true economic impact on the business, to influence our structure or compensation strategies. That concludes our prepared remarks, and we now welcome your questions.

Thank you. [Operator Instructions] Our first question is from Jeremy Metz with BMO Capital Markets. Please proceed with your question.

Hey good morning. A question for Mac here, just in terms of what you’ve been selling and you’ve sold post quarter. Are you seeing any shifts in pricing or bidding pools? Maybe a little color on the market. And then including the stuff you’ve sold out through the quarter, you’re at around $150 million of sale, this leaves you another $125 million, $130 million to go, to reach your guidance. You still assume a mid-7.5% cap rate, you’ve sold at about an 8% here. So that implies this next level would be closer to 7% cap, is that fair? And maybe, you can just give some color on those assets and what’s driving that better pricing; maybe it’s just simply better assets.

Sure. Thanks, Jeremy. On the first half, I think the one change we have noticed is it does appear, within our personal assets we’re selling and in the marketplace that once buyers and sellers are agreeing a price, that transactions are closing. There’s certainly a higher degree and a higher level of certainty that, that is improved, really in the last 60, 90 days. So it seems like assets are clearing, and we’ve found that to be the case. Your question on what’s remained to be sold, we feel confident that we’ll meet our objectives for the year, $275 million. We’ve got about $60 million in contracts that we’re negotiating. And for the remainder of that, some properties are on the market and some we’re preparing to take to market. But we feel, overall, on that blended number is still in line with that plus-or-minus 7.5%. So what’s to be sold, it’s a mix some smaller properties and some bigger properties. But in general, it meets that same strategy of typically non-strategic assets, often those have lower growth profiles, but they’re good assets, and we found a lot of activity there. And probably, more buyers who are putting forth credible offers than we’ve seen recently. So we’re confident in seeing that.

Great. Thanks. And have – following on your remarks, at the start of the call about the best grocers not standing still. Can you talk a little bit about what you’re seeing here in terms of grocers thinking more creatively about future space needs and formats, and your discussion? And then, you’ve obviously, done a number of deals at Whole Foods. Are you seeing any sort of increased activity or interest from them to expand further or try a new formats post-merger?

I’ll start, and then Mac will probably add. Whole Foods has been much more active since the closing with Amazon on – their store formats are very similar to what they’ve been in the past. From a size standpoint, I mean, we’re still seeing typical public store in the 50,000-square-foot range, Kroger in the 100,000 square-foot range. The Wegmans that we’re opening up in Raleigh and in Washington, D.C. are 100,000-plus. We are seeing a number of the grocers that are trying to fit into more dense infill locations, they’ll show more flexibility. But as far as any major changes to their formats, we’re not seeing that. Obviously, we’ve read a lot about some of the moves that we all have – that Kroger has made as far as their partnership with Ocado et cetera. So there’s a lot of investment in technology, investment in click and collect. And I think they are attacking the business on all fronts, and once again, in many case, that also involves adding some new bricks and mortar stores. Mac, do you want to add anything?

No. I think there’s a premium placed on location as opposed to prototype. And it appears that grocers are being slightly more flexible than before, in terms of size, sort of plus-or-minus 5,000 to 10,000 feet. But they really value that location that leads to customers. And there are many opportunities that they’re looking at, and we like what we see.

And we want to make sure that we have adequate space to provide experience, which I think is a – they feel is a key differentiating factor.

Okay. And last one for me, just to spread it around here. Jim, you talked about some shorter term deals are giving more rights here. As I look at your renewals in the quarter, activity-wise, it was pretty consistent. But if I look at the leasing spreads, it was out a little lower. And then, if you look at the TIs, those are almost double your more or less, normal spend. So is this simply a reflection of what you’re alluding to? Or maybe there’s a few larger driving these metrics? Any color there?

Jeremy, I think as far as the capital spend goes, I think it’s mostly timing issue. And I think if you look at the year-end annualized basis, we’re going to be in the 10% to 11% of total NOI on total CapEx spend, which is where we’ve been. I think as to growth, we did have a – we had a smaller pool of anchor opportunity. We think, in the second half, we will have more opportunity to recapture some of those legacy anchor deals and bring them to market. One example of that is we just executed a lease with Publix, down in Tampa, to backfill a Wal-Mart store. And that we took that rent from $4 to $16 per square foot deal. So again, I think, at the end of the day we think we will be on the spread side in the high single-digit, which is consistent with our strategic plan.

And our net effective rents are mid-double digits like 15-plus percent. And I’d also say, and I don’t want to come across as being defensive here, but it is interesting to note, that over the last five years, Regency’s rent growth appears to be middle of sector. However, last five years, our NOI growth is at the top of the sector. And things like embedded rent growth that is getting us there, and less exposure to some of the bankruptcies and tenant failures, so you got to add it, altogether. And it is hard comparing comparability both internally, year-to-year, on what space may come up, what we consider for rent growth and what others in the sector may. So we feel really good, as Jim said it, about our increase in net effective rents. As Lisa indicated, the base rent should increase by over 3% in the second half of the year, we’re on track to do that, and continuing to achieve 3% NOI growth, for this foreseeable future.

Hap said that so well. I hate adding something – a little bit more on detail and granular. But I don’t – but, Jeremy, if you’re referring to Page 19 disclosure, in our sup, where we have our TIs, I just want to remind you, we have the new disclosure last quarter. And we did disclose it, we told you it was an abnormally low level. So I believe, for new leases, our total spend is in the $16 foot range. And I just wanted to even remind you then that, that would not be – that was abnormal. And that wouldn’t be the case going forward, and it we’d be more in the $30 to $40 per square foot range, which is where we were this quarter.

I appreciate it.

Our next question comes from Christy McElroy with Citigroup. Please proceed with your question.

Good morning. This is Katy McConnell on for Christy. Since one of your recent dispositions had a former toys box, can you talk about how buyers are underwriting box vacancies? Or even just at-risk tenant exposure when evaluating specific centers today?

Sure. I’d be happy to. For the particular asset, this was pretty unusual. So what we did is we actually gave this buyer some time to actually find a replacement tenant and they did. And it allowed us to maximize our price, allowed them to pay more for it, and they were actually able to get a tenant, get a real estate committee approval and get a lease in hand. And we thought that was a win-win in both sides. So they backfilled it with the Burlington. And in every case, it is different – different, case-by-case, as to how acquirers are backfilling boxes, but we thought that was a smart strategy, so it worked out well for us. But that that’s how that happened there.

And it is indicative though, that the buyers today are more discerning, they are more risk-averse, but I think this is also indicative that even though we’re selling based upon non-strategic, lower growth profile, these are still pretty decent assets that we’re targeting for sale. And they’re not out of the middle or the top part of our portfolio.

Okay. Great, thank you.

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

Hi, good morning. Is the higher construction costs impacting the future redevelopment yields – some of the things that you addressed happening going forward?

I would say that the current projects that we have and the imminent projects, we have priced in the construction increases that we are all seeing out there. And this isn’t a new phenomena, this has been going on for last couple of years. As you get further out, two, three years, it is harder to project construction costs. But most industry think that the last two years are abnormally high and construction costs are going to start to moderate at some point, and go back to traditional levels of inflation. But I wouldn’t say that is a reason for our yields, it’s a summation of incoming costs, it’s everything. And I think we’ve done a good job of managing that. You can tell by our in-process projects outlay, that are coming in as underwritten. And I think we do a lot of work and accurately forecast what our costs are.

The – but the deals are still penciling out in – on the basis that make compelling sense.

Great. And then, I believe, in your presentation, it says that nearly 20% of your tenant base is restaurants. Is that where you’d like to be? Or would you like to take it higher, or possibly, even lower?

20%, we’ve been kind of in the high 15% to 20% for a long time. And that feels like – that feels like that right space to be. I think it is a bit self-governing between anchor requirements and parking – reality and the ability to park to the customer. So we think that’s kind of the sweet spot, and we like the place we are right there.

Perfect. Okay, thank you.

Thanks, Craig.

Our next question comes from Rich Hill with Morgan Stanley. Please proceed with your question.

Hi, good morning guys. I want to come back to, maybe, some of your prepared remarks. Maybe talk about the slowdown that is being implied by your same-store NOI guide. You guys have generally done a pretty good job of being cautious. So if you could just give me, maybe, a little bit more color around how you’re thinking about that. Is there anything specifically driving that? Or is it just you wanting to be a little bit more cautious, and make sure that you’re really seeing signs of infection before moving things even higher?

Sure. And I will go right back to my prepared remarks and reference those. But first, I want to start with, because this is also in my prepared remarks, that we are seeing really solid base rent growth, which is the primary driver of our same property NOI growth. And that, for the year, is at 3.7%, year-to-date. We will see that come down slightly as a result of, again, in my prepared remarks, I mentioned the tougher comps on the completed redevelopments in the latter half of last year, but still north of 3% for the second – for both – in both the third quarter and the fourth quarter. The fourth quarter we’re going to see more of a slow down because we have the major redevelopment at Serramonte coming online with rent commenced by then. So we feel really good about the fact that we’re going to have a full year with base rent growth north of 3%. The other items there are some timing issues involved with those, and a big one is recovery income. So the timing for cam recovery is really related more to last year. So this year was much more typical. Last year we had a major merger that we were integrating, and the reconciliation timing was a little bit unusual for the year. So we’re seeing a little bit of a drag in the third quarter for that reason. And then in the fourth quarter of this year, we will see a drag from real estate tax recoveries, if you will, and assessments and the recovery for the income for that. As we expected, when we merged with Equity One, we knew that our properties, and specifically, in certain states, like California, would be reassessed. And those are coming in. And they also go back to the date of the merger, so it’s a little bit of a double hit. So in the fourth quarter, we’re going to have a significant impact on same property NOI as a result of that. We recover a lot of it, but we can’t recover all of it. And then, we have other income – was more front end loaded in 2018 versus 2017, and they’re really the main drivers.

And that – from a narrative standpoint and from an anecdotal what’s really happening with the underlying fundamentals, this does not reflect that we’re seeing a moderation fundamentals between the first half of the year and the second half of the year. It’s just the items that Lisa articulated.

Got it. That’s very, very helpful. And maybe one question, follow-up question, maybe expanding up on their risk return on invested capital. Have you guys thought about – I’m sure you have – have you done an analysis on densification opportunities across the portfolio? Obviously, there’s a lot of talk about this, particularly, with autonomous over the next five to 10 years. But I’m curious if you think there is specific, or even, general densification opportunity that could help you drive growth even further.

I think that Mac articulated three major redevelopments that are underway. And you can kind of summary review those again, we’re – very, very exciting redevelopments. And I think three of them involve some sort densification, or they’re in infill – dense infill locations. Plus, a couple of more that were backed behind those.

Yes, that’s exactly right. We, as part of our day-to-day business, we’re constantly evaluating our portfolio for densification opportunities. And in many cases, we’ve seen actually, really just prescribe to us, additional entitlements, even [indiscernible] and they’re doing that to encourage housing, and as part of their general planned update. You can’t access them all right away. Oftentimes, it takes the expiration of an anchor lease. And so we note that when that happens, and we start to plan ahead of that. So we’ve done that with quite a few people, but they’ll – there will be a sort of our methodological approach to it which will happen over time. But we definitely think there are some opportunities. And our teams are keenly focused on that.

And as we stated in the past, we have hired a Senior Vice President of Mixed-use that works directly with Mac, who has extensive experience in the multifamily sector. And I will say that we’ve got great properties, some with great potential. But these , especially, vertical mixed-use projects are complicated, they’re challenging, they’re easier to talk about that to make happen, they take years to create and bring fruition. We try to rightsize and have a very practical approach. We’re making very good progress on a number of these, but to underestimate what’s involved, and making them successful – anybody doing that, it would be mistake, because there’s not a [indiscernible]

Thank you, guys. I appreciate all the different color.

Thank you.

[Operator Instructions] Our next question comes from Mike Mueller with JPMorgan. Please proceed with your question.

A couple of questions here. First of all, on the extra lease accounting items for the expense. Where – what’s the geography of where that’s going to shop in the income statement, going forward, in 2018?

That will be in G&A.

Okay. And then it was touched on before with the rent spreads, and I know there was a high single-digit number that was thrown out there. If you go through and you strip out the impact of the repositionings that you were talking about, and just look at the spreads minus that, would they be in the upper single-digit, close to the double-digit level?

I’m not sure we fully understand what you’re asking.

So your rent spreads are mid-single digits.

Right.

And you went through – there was a bunch of caveats as to they moderated. If you would take the repositioning aspect of that out that was weighing on it, would that, all of a sudden, if you had no redev in there, would your spreads be closer to that double-digit level?

Mike, This is Mike. I’ll jump in here. There’s really, in this particular quarter it really is a mix issue. We are seeing some active leases that we’re signing in anticipation of potential repositioning. Oftentimes, these are happening two to three maybe, four years in advance of when we start a redevelopment. That’s how long it takes to position some properties for redevelopment. So to answer your direct question, in the math this particular quarter, not seeing a lot of material change in how you slice and dice that particular population. But we are seeing an impact of lease spreads metric when we make some of these decisions. And on trailing a 12-month basis, what’s important is we are posting a lease metric number that is in excess of what we did this quarter. And as Hap mentioned earlier, our net effective rent spreads are in the 15% range, which we feel really good about.

Got it, okay. That was it. Thank you.

Thanks, Mike.

Thanks, Mike.

[Operator Instructions]. Our next question comes from Chris Lucas with Capital One Securities. Please proceed with your question.

Good morning everybody. Just a quick question on the – follow-up on the same-store NOI guidance for the back half of the year question. You mentioned a number of items that are contributing to the expected deceleration. But I guess, more – the question I have is really more about rent commencement and timing. You have a pretty good handle of that. There’s been a number of your peers that talked about permitting issues that they’ve experienced and the timing issues that are going into the uncertainty they have with the back half of the year. What are you guys seeing?

We do have a pretty good handle. And trust me, Chris, I ask that question pretty frequently. On what – really, the main drivers are the anchor rent commencements that are expected to happen in the back half of the year. And we feel really confident and good in our projections to when those will happen.

Not that…

Okay. And then just a quick follow-up…

Not that there’s some risks that it could flip, but we…

Or it’s not taking a while to happen, but we feel pretty good of the timing that we’re projecting.

Okay, thanks. And just a quick one, I missed the earliest – or the beginning of the call. So, I don’t know if you touched on this, but the number of the projects either delivered with a slightly higher – well, a couple of projects, either delivered with slightly higher than previously sort of projected yields, or are trending towards higher yields. Anything particular that’s driving that, other than just better rents?

In one case, it was actually a reduction in costs. We were able to get back some contingency that was then spent. And the other piece, slightly better rents, so. It isn’t as parts in there, those were specific, and we were glad to see those results.

That is an example, where we were able to take money from contingencies, where we are planning for these significant increases that are occurring in the construction costs.

I mean, if I may, no pressure on Mac or the rest of the team, but we report to our board, quarterly, on the performance of our developments, and have been for the entire time that I’ve been here. And we’ve developed, probably, $2 billion-plus worth of properties. And our actual returns on that $2 billion are pretty darn close to our underwritten return, which is pretty exceptional. So we have – a lot of the assessment to the team and how we underwrite and manage, and actually, execute on the build of those projects.

Great, thank you. That’s all I have.

Thanks, Chris.

There are no further questions at this time. I’d like to turn the call back to Hap Stein for closing comments.

We appreciate your time. Have a good weekend. And if you get to spend some time with your families over the rest of the summer, good luck and enjoy. Thank you so much for your time and interest in Regency.

This concludes today’s conference. You may disconnect your lines at this time, and we thank you for your participation.