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Item 2. Properties

2021-03-12 compared with 2020-03-12 · 103 added, 33 removed, 18 unchanged (88% of the section changed)

Real Estate Investments —As of December 31, 2019 , we wholly-owned 287 properties throughout the United States.

In addition, we also have an ownership interest in 28 properties through three separate joint ventures.

Real Estate Investments —The following table details information for our wholly-owned properties and those owned through our joint ventures as of December 31, 2020, which is the basis for determining the prorated information included in the subsequent tables (dollars and square feet in thousands):

Ownership Percentage Number of Properties ABR GLA

Wholly-owned properties 100% 283 $ 386,516 31,709

Necessity Retail Partners 20% 5 $ 7,879 507

Grocery Retail Partners I (1)

14% 20 28,596 2,218

(1) On October 1, 2020, GRP I acquired GRP II, an additional joint venture in which we owned an equity interest.

Our ownership in the combined entity was adjusted upon consummation of the transaction.

The following table presents information regarding the geographic location of our properties, including wholly-owned and the prorated portion of those owned through our joint ventures, by ABR as of December 31, 2020.

For additional portfolio information, refer to Schedule III - Real Estate Assets and Accumulated Depreciation (dollars and square feet in thousands):

ABR/Leased Square Foot

Number of Properties

State ABR (1)

% ABR ABR/Leased Square Foot GLA (2)

% GLA % Leased Number of Properties

Florida $ 49,082 12.5 % $ 12.78 4,116 12.8 % 93.3 % 53

California 40,612 10.4 % 18.48 2,321 7.2 % 94.7 % 25

Georgia 34,863 8.9 % 12.22 2,925 9.1 % 97.6 % 30

Texas 30,878 7.9 % 15.56 2,167 6.7 % 91.6 % 18

Ohio 28,324 7.2 % 9.98 2,980 9.3 % 95.3 % 26

Illinois 22,810 5.8 % 14.77 1,647 5.1 % 93.8 % 15

Virginia 18,030 4.6 % 13.84 1,351 4.2 % 96.4 % 13

Colorado 17,693 4.5 % 15.79 1,162 3.6 % 96.4 % 10

Massachusetts 15,770 4.0 % 14.07 1,170 3.6 % 95.8 % 10

Pennsylvania 11,676 3.0 % 11.35 1,086 3.4 % 94.7 % 7

Minnesota 11,189 2.9 % 12.51 924 2.9 % 96.7 % 10

South Carolina 10,458 2.7 % 9.16 1,302 4.1 % 87.7 % 11

Arizona 9,824 2.5 % 12.51 845 2.6 % 92.9 % 7

Wisconsin 9,324 2.4 % 10.08 944 2.9 % 98.0 % 8

North Carolina 8,966 2.3 % 11.86 810 2.5 % 93.3 % 13

Maryland 8,895 2.3 % 19.81 464 1.4 % 96.8 % 4

Indiana 6,663 1.7 % 8.14 832 2.6 % 98.4 % 5

Michigan 6,478 1.7 % 9.26 724 2.3 % 96.6 % 5

Tennessee 6,118 1.6 % 8.57 777 2.4 % 91.9 % 6

Connecticut 5,411 1.4 % 13.88 419 1.3 % 93.1 % 4

New Mexico 5,360 1.4 % 13.70 404 1.3 % 96.9 % 3

Oregon 5,195 1.3 % 14.56 374 1.2 % 95.5 % 5

Kentucky 4,836 1.2 % 9.84 502 1.6 % 98.0 % 3

New Jersey 4,659 1.2 % 17.32 276 0.9 % 97.3 % 2

Kansas 4,554 1.2 % 11.12 452 1.4 % 90.6 % 4

Nevada 4,317 1.1 % 20.01 217 0.7 % 99.4 % 2

Iowa 2,726 0.7 % 8.83 360 1.1 % 85.9 % 3

Washington 2,604 0.6 % 15.47 170 0.5 % 98.8 % 2

Missouri 2,528 0.5 % 11.48 222 0.7 % 99.4 % 2

New York 1,801 0.4 % 11.26 163 0.5 % 97.9 % 1

Utah 451 0.1 % 30.97 15 0.1 % 100.0 % 1

Total $ 392,095 100.0 % $ 12.89 32,121 100.0 % 94.7 % 308

(1) We calculate ABR as monthly contractual rent as of December 31, 2020, multiplied by 12 months.

Gross leasable area (“GLA”) is defined as the portion of the total square feet of a building that is available for tenant leasing.

Additionally, the following table details information for our joint ventures, which is the basis for determining the prorated information included in the preceding and subsequent tables (dollars and square feet in thousands):

Joint Venture

Ownership Percentage

Number of Properties

Necessity Retail Partners

Grocery Retail Partners I

Grocery Retail Partners II

Lease Expirations —The following chart shows, on an aggregate basis, all of the scheduled lease expirations after December 31, 2019 , for each of the next ten years and thereafter for our wholly-owned properties and the prorated portion of those owned through our joint ventures:

Our ability to create rental rate growth generally depends on our leverage during new and renewal lease negotiations with prospective and existing tenants, which typically occurs when occupancy at our centers is high or during periods of economic growth and recovery.

Conversely, we may experience rental rate decline when occupancy at our centers is low or during periods of economic recession, as the leverage during new and renewal lease negotiations may shift to prospective and existing tenants.

Based on our high occupancy rate as of December 31, 2019 , as well as the current economic outlook, we expect to meet or exceed average rental rates on expiring leases in 2020 .

However, economic circumstances may arise that can impact certain national, regional, and local leasing markets which may result in executing leases at rents that are equal to or lower than current amounts, which could cause actual trends to change from our current expectations.

(2) GLA is defined as the total occupied and unoccupied square footage of a building that is available for Neighbors to lease.

Lease Expirations —The following chart shows the aggregate scheduled lease expirations, excluding our Neighbors who are occupying space on a temporary basis, after December 31, 2020 for each of the next ten years and thereafter for our wholly-owned properties and the prorated portion of those owned through our joint ventures:

Our ability to create rental rate growth generally depends on our leverage during new and renewal lease negotiations with prospective and existing Neighbors, which typically occurs when occupancy at our centers is high or during periods of economic growth and recovery.

Most of our grocery Neighbors have remained open throughout the COVID-19 pandemic, though their sales may have been impacted by social distancing and “stay-at-home” mandates.

The number of our Neighbor spaces that temporarily closed as a result of the COVID-19 pandemic peaked in April 2020 and has significantly decreased as states began to lift in full or in part “stay-at-home” mandates in May 2020.

Certain Neighbors remain temporarily closed, have since closed after reopening, are limiting the number of customers allowed in their stores, or have modified their operations in other ways that may impact their profitability, either as a result of government mandates or self-elected efforts to reduce the spread of COVID-19.

These actions could result in increased permanent store closings and could reduce the demand for leasing space in our shopping centers and result in a decline in average rental rates on expiring leases.

For our wholly-owned properties, our average rental rates on new and renewal leases have exceeded the average rental rates on comparable expiring leases as of December 31, 2020;

however, our occupancy declined 0.7% to 94.7% as compared to December 31, 2019, owing largely to the economic impact of COVID-19, and we anticipate our occupancy may decline further in early 2021 .

We will likely continue to experience pressure in new and renewal rental rates until the business environment becomes more stable, but new leasing volume in early 2021 remains strong.

For our wholly-owned portfolio, during the 2021 fiscal year, we have a total of 585 leases expiring, representing 2.7 million square feet of GLA.

These expiring leases have an ABR of $12.43 per square foot.

The ABR of new leases signed during 2019 was $14.95 per square foot.

While we cannot predict what rental rates we will achieve in 2021 as we renew or replace these expiring leases, the comparable rent spread of new leases signed during 2020 was 8.2%, and the comparable rent spread for lease renewals and options executed in 2020 was 6.7%.

Subsequent to December 31, 2020, we renewed approximately 0.3 million total square feet and $5.5 million of total ABR of future expiring leases.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - Overview - Leasing Activity, for further discussion of leasing activity.

Portfolio Tenancy —Prior to the acquisition of a property, we assess the suitability of the grocery-anchor tenant and other tenants in light of our investment objectives, namely, future NOI growth potential, opportunities for development and redevelopment, and providing stable cash flows for distributions.

Generally, we assess the strength of the anchor tenant through consideration of company factors, such as its financial strength and market share in the geographic area of the property, as well as location-specific factors, such as the store’s sales, local competition, and demographics.

When assessing the tenancy of the non-anchor space at the property, we consider the tenant mix in light of our portfolio, the proportion of national and national-franchise tenants, the creditworthiness of specific tenants, and the timing of lease expirations.

When evaluating non-national tenancy, we attempt to obtain credit enhancements to leases, which typically come in the form of deposits and/or guarantees from one or more individuals.

We define national tenants as those tenants that operate in at least three states.

Regional tenants are defined as those tenants that have at least three locations in fewer than three states.

The following charts present the composition of our portfolio, including our wholly-owned properties and the prorated portion of those owned through our joint ventures, by tenant type as of December 31, 2019 :

The following charts present the composition of our portfolio by tenant industry as of December 31, 2019 :

The following table presents our top twenty tenants by ABR, including our wholly-owned properties and the prorated portion of those owned through our joint ventures, as of December 31, 2019 (dollars and square feet in thousands):

% of Leased Square Feet

Number of Locations (2)

This includes seven anchor lease renewals, five of which were pursuant to the exercise of an option to extend the lease.

See “Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - Overview - Leasing Activity” of this filing on Form 10-K for further discussion of leasing activity.

Portfolio Tenancy —We define national Neighbors as those Neighbors that operate in at least three states.

Regional Neighbors are defined as those Neighbors that have at least three locations in fewer than three states.

The following charts present the composition of our portfolio, including our wholly-owned properties and the prorated portion of those owned through our joint ventures, by Neighbor type as of December 31, 2020:

The following charts present the composition of our portfolio by neighbor industry as of December 31, 2020:

We estimate that approximately 51% of our ABR, including the pro rata portion attributable to our properties owned through our joint ventures, is from retail and service businesses generally deemed essential under most state and local mandates issued in response to the COVID-19 pandemic.

The composition of our portfolio as a percentage of ABR is as follows:

December 31, 2020

Essential Retail and Services:

Grocery 35.9 %

Dollar stores 2.2 %

Pet supply 2.1 %

Medical 1.8 %

Hardware/automotive 1.7 %

Wine, beer, and liquor 1.4 %

Pharmacy 1.0 %

Other essential 2.8 %

Total essential retail and services (1)

Quick service 9.6 %

Full service 6.0 %

Total restaurants 15.6 %

Other Retail and Services:

Services 16.3 %

Soft goods 12.3 %

Fitness 3.2 %

Entertainment 1.3 %

Total other retail and services 33.1 %

Total ABR 100.0 %

(1) Includes Neighbors that we believe are considered to be essential retail and service businesses but that may have temporarily closed due to decreases in foot traffic and customer patronage as a result of “stay-at-home” mandates and social distancing guidelines implemented in response to the COVID-19 pandemic.

The following table presents our top twenty Neighbors by ABR, including our wholly-owned properties and the prorated portion of those owned through our joint ventures, as of December 31, 2020 (dollars and square feet in thousands):

ABR % of ABR Leased

Square Feet % of Leased Square Feet Number of Locations (2)

Kroger $ 27,130 6.9 % 3,447 11.3 % 64

Publix 22,003 5.6 % 2,240 7.4 % 56

Ahold Delhaize 17,514 4.5 % 1,264 4.2 % 24

Albertsons-Safeway 16,866 4.3 % 1,637 5.4 % 31

Walmart 8,933 2.3 % 1,770 5.8 % 13

Giant Eagle 8,183 2.1 % 822 2.7 % 12

TJX Companies 4,984 1.3 % 428 1.4 % 15

Sprouts Farmers Market 4,885 1.2 % 334 1.1 % 11

Southeastern Grocers

Dollar Tree 4,048 1.0 % 423 1.4 % 44

Raley's 3,884 1.0 % 253 0.8 % 4

SUPERVALU 3,467 0.9 % 376 1.2 % 7

Subway Group 3,048 0.8 % 125 0.4 % 90

Schnuck's 3,025 0.8 % 329 1.1 % 5

Anytime Fitness, Inc.

2,740 0.7 % 180 0.6 % 38

Southeastern Grocers 2,626 0.7 % 291 1.0 % 8

Save Mart 2,619 0.7 % 309 1.0 % 6

Lowe's 2,469 0.6 % 369 1.2 % 4

Kohl's Corporation 2,255 0.6 % 365 1.2 % 4

1 unchanged sentence

Petco Animal Supplies, Inc.

Tenants are grouped by parent company and may represent multiple subsidiaries and banners.

2,103 0.5 % 127 0.4 % 11

Total $ 144,997 37.1 % 15,207 50.0 % 449

(1) Neighbors are grouped by parent company and may represent multiple subsidiaries and banners.

(2) Number of locations excludes auxiliary leases with grocery anchors such as fuel stations, pharmacies, and liquor stores.

Additionally, in the event that a parent company has multiple subsidiaries or banners serving as tenants in a shopping center, those subsidiaries are included as one location.

Additionally, in the event that a parent company has multiple subsidiaries or banners serving as Neighbors in a shopping center, those subsidiaries are included as one location.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 2. Properties