Regency Centers Corp (REG) 2013 Q4 法說會逐字稿

Greetings and welcome to the Regency Centers' fourth quarter earnings results conference call. At this time all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation.

(Operator Instructions)

I would like to turn the conference over to your host, Mike Mas. Thank you, and you may now begin.

Good morning, everyone, and thank you for joining us. With me on today's call are Hap Stein, our Chairman and CEO; Brian Smith, our President and COO; Lisa Palmer, our Chief Financial Officer; and Chris Leavitt, Senior Vice President and Treasurer.

Before we start, I would like to address forward-looking statements that may be discussed on the call. Forward-looking statements involve risks and uncertainties. Actual future performance, outcomes, and results may differ materially from those expressed in forward-looking statements. Please refer to the documents filed by Regency Centers Corporation with the SEC, specifically the most recent reports on forms 10K and 10Q, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements.

I will now turn the call over to Hap.

Thanks, Mike. Good morning, everyone. Thank you for joining us.

In 2013 we reached two crucial landmarks. First, we increased the percent leased in the operating portfolio to 95.2%. Second, same property NOI growth was 4% for the second consecutive year, while those accomplishments stand out most in my mind, we also attained gratifying results in other critical facets of our business.

We completed the development of three terrific shopping centers that are already 96% leased, representing an investment of $160 million and generating an 8.6% return on incremental capital. And we started nearly $150 million of new round-up developments where pre leasing is already ahead of expectations. As well as more than $50 million of redevelopment's.

We also generated $350 million from a sale of non strategic assets and $100 million from ATM equity issuances, at an average price [above] $53 per share. This activity allowed us to invest in the develop and redevelopment projects that I just mentioned, to acquire exceptional shopping centers in key markets that will be accretive from our long-term NOI growth profile, and to further strengthen what was already a very strong balance sheet.

At the heart of these positive results is the intense focus from our top-notch team of professionals, to drive growth in core earnings, NAV and shareholder value, by fully employing Regency's three inherent strengths: our portfolio; our development program; and our balance sheet. When I look at Regency I see a portfolio that compares positively to our peers, by all team metrics. A Company with unique and core competency to create value to the development and redevelopment of exceptional shopping centers in the country's top markets, and a balance sheet that clearly measures up to other bluechip companies across the REIT landscape.

As we discussed during our guidance call in December, the current health of the portfolio and balance sheet enables us to pivot from being a net seller towards placing more emphasis on growing core earnings. While we will continue to sell lower growth assets, the primary rationale will be as a source to fund investments. Any future acquisitions will continue to be at the highest quality, and have superior growth and/or upside prospects.

It will be funded with additional dispositions of identified properties with low growth rates and cap rates that are roughly comparable to those we are buying. Equity could be an alternative source to fund acquisitions and developments if the price becomes sufficiently favorable in relationship to our view of NAV to justify the high bar that will continue to be set through issuances. The end result of this net investment activity will be an even higher quality portfolio with an enhanced future NOI growth rate. Lisa?

Thank you, Hap. Good morning, everyone. Core FFO for the year was $2.63 per share, which is at the upper end of the most recent guidance provided in the December. FFO per share was $0.03 ahead of guidance, due to the delayed closing of our Fairfield, Connecticut properties, which pushes related transaction costs into 2014. As Hap said, in 2013 we made significant process towards the achievement of our strategic objectives. Not the least of which was reaching and exceeding 95% leased and achieving same property NOI growth of 4%.

In addition, in terms of the balance sheet, we ended the year with $90 million of cash on hand, and no outstanding balance on our $800 million line of credit. Our net debt to core EBITDA ratio now stands at less than six times. We are comfortably on a path to achieve our targeted ratios through organic growth in core earnings over the next few years.

We also strived for a well laddered maturity profile, and manage interest rate risk when appropriate by locking in long-term rates. We'd hope to capitalize on what continues to be a buyers market as we address our April unsecured bond maturities.

Included in our current projections is a $250 million bond issuance, on which we have already hedged our base rate exposure. Even if there is a modest expansion from today's credit spreads, we would still be looking at an all-in effective rate of less than 4%. We are also hedged for $250 million of 2015 maturities at just 30 basis points higher.

Looking at 2014, our guidance for operating metrics and financial results remains unchanged from what we presented in December. Core FFO per share is expected to be in the range of $2.66 to $2.72 per share, and should be relatively evenly distributed throughout the year.

I would like to remind everyone that the $100 million of equity issued combined with net property sales in 2013, impacts this year's growth by roughly 5%. In terms of occupancy, with the possibility of a few identified junior anchor and seasonal move outs, we could see a dip in the first quarter, but we expect to end the year at the high end of our same property percent leased guidance range.

You will notice changes to both acquisitions and dispositions guidance. The majority of this change is to account for the timing of the closing of the Fairfield, Connecticut properties, which Brian will discuss later. As discussed during our December call, we simply rolled the acquisition from 2013 into 2014.

The loan assumption process is almost complete, and we anticipate closing on this portfolio in the very near future. We also increased acquisition and disposition guidance each by $25 million on the upper end, as we have recently gained control of another high NOI growth acquisition opportunity in Austin. We plan to fund that purchase with additional property sales. As Hap said, the cap rates should be roughly comparable for the dispositions that will fund our acquisitions.

Lastly, but importantly, we announced an increase to our quarterly cash dividend. Many factors go into the decision to raise the dividend, the most important of which is our view of the positive prospects for future increases in earnings and operating cash flows. Balanced by your intent to maintain conservative financial metrics including the payout ratio. Brian?

Thank you, Lisa; and good morning, everyone. As Hap and Lisa both stated, the results for 2013 were strong. The teams have been dogged in their execution of our strategy and the result has been steady and marked improvement in nearly every operating metric. Same property percent leased climbed to 95.1% at the end of the fourth quarter. Small shops were nearly 90% leased at year end, representing 150 basis point improvement over 2012.

The team drove percent leased by signing five million square feet of new and renewal leases during the year. In addition we continue to see a positive trend in move-outs compared to prior years. Combined move-outs in the third and fourth quarters total less than 600,000 square feet, [make it] the first time since 2006 we have seen two quarters with move-outs that low.

Rent growth for new leases was positive 10.7% in the fourth quarter, and even stronger 17.7% for the year. These accomplishments result in 4% same property NOI growth, excluding term fees, for the second year in a row. With our high quality portfolio now above 95% leased, same property NOI will benefit as pre leasing converts to rent paying, but in general, occupancy gains will play a lesser role. Therefore the operation team's emphasis is on taking rent growth back to historic level of 10% or more.

In addition, the team continues to successfully execute leases that include higher and more frequent contractual rents steps. Rent growth in [embedded steps] are key components of our formula to meet our objective for future NOI growth.

Moving to development, we completed three projects in the fourth quarter, combined they are more than 96% leased within an 8.6% return on incremental capital. What's more, the projects took on average only 21 months to stabilize from start of construction.

While each of these projects is exceptional I can't help but continue to spotlight the teams hard work and success at our Grand Ridge Plaza project, a 325,000 square foot center that celebrated its grand opening at 99% leased, and took only 18 months from commencement of construction to complete. The community response following the opening has been overwhelmingly positive. In my 30 years in the development business, it is one of the best projects I have seen.

Our in process developments are also performing extremely well. The six projects including two that have not yet started vertical construction, are 82% leased and committed. During our third-quarter call we discussed our fourth-quarter starts, the Fresh Market anchored shops on Riverside in Jacksonville and the Mariano's anchored Glen Gate in Chicago. These new starts along with our other projects are progressing nicely and are tracking best in class operators, including a new Whole Foods that will be added at our Shop on Main project, in suburban Chicago.

We also started six redevelopment's during the fourth quarter with total costs of $16 million and a projected return approaching 10%. This brings our total in-process redevelopment pipeline to $53 million across 13 active projects.

Turning to the fourth-quarter transactions, we acquired two properties, Fellsway Plaza in Boston, which we introduced in the third-quarter call and Holly Park. Holly Park is 160,000 square foot center, with a prime location within Raleigh's inter-beltline. The center benefits from a strong daytime population, and has several anchors including the highly productive Trader Joe's.

As Lisa mentioned, we are also under contract on a portfolio of three properties totaling 315,000 square feet, in partnership with the current owner of the centers. The portfolio is located in Fairfield, Connecticut, an affluent community with extraordinary [trade barriers], and 96% market occupancy rate. They are dominant centers with the two downtown properties representing the heart and soul of the town. Regency is acquiring an 80% interest in the portfolio for $120 million.

Similar to Fellsway, the Fairfield partner is a little sharp shooter, and we really like the potential to work together on future opportunities. Across the board from leasing to development to portfolio enhancement, 2013 was certainly a successful year and I look forward to that trend continuing into 2014. Hap?

Thank you, Brian and Lisa.

I want to close by mentioning two remarkable milestones that we celebrated last year. 2013 was Regency's 50th year in business, and its 20th year as a public Company. We've grown by a good bit since then -- since the Company was founded and went public. And we are only one of only 18 REITs out of the 45 in the class of 1993 that are still around. Most important of all, we are proud of Regency's total annual shareholder return of nearly 12% since our initial public offering, which has outpaced both the REIT and shopping center indices.

In the 50 years since the Company was founded and the 20 years since we went public, we have made monumental strides in building Regency. Learning as we grow, adapting to change, sharpening our strategy, delivering value, and doing what is right. We have done so by always keeping the best interest of our four constituencies in mind. Our people, our communities, our retail customers and our shareholders. By staying true to these values, I am confident that our Company will flourish for another 50 years.

We thank you for your time and now welcome your questions.

(Operator Instructions)

Ki Bin Kim, SunTrust.

Thanks. Could you talk a little bit about your big markets: Florida, California and Texas and how those individual markets are performing relative to your portfolio?

Sure. Let's start with California. California really continues to be a tale of two states. You have coastal California, and then you have got non-coastal. Coastal California, which is where virtually all of our assets are, is really on fire.

And if you look at Northern California in particular, I think we are 97% leased there. Very strong and I would say it's pretty much true in Southern California as well. When you get into non-coastal California, it is improving, but right now Sacramento and the Central Valley would remain weaker markets, although they have significantly improved.

Texas is a large market. Texas -- all of the markets in Texas are outstanding markets. Austin, Houston leading the way, but Dallas also strong. And then Florida, which has lagged, has really started coming on of late. Northern Florida is a little bit weaker than the rest, but all of Florida overall has made great strides over the last several quarters.

Just tied to that, given your commentary about how strong the market is in your occupancy levels, how far do you think the industry is from development really coming back into the picture?

I think we are getting close. We are starting to run into competition like we haven't done before. We competed for example -- well, I would say that the developments we are starting to see competition on are pretty limited to California, Texas, Washington DC. But even in those markets, there has been good competition.

We went after, participated in an RFP in Northern California, and there were 12 respondents to it. Now, a lot of those were small and I think we fair real well in those types of things. But we have lost some properties, some opportunities lately.

You are starting to see developers again for the really good assets, take on risks that they hadn't been willing to do before. We are seeing a lot of hard money put up on day one of a contract execution. We are seeing returns in some cases spread over what people perceive the exit cap rate to be, so it could be sub-sevens. And you are seeing particularly in Texas in the really hot market like Houston people not only settling for low returns but being willing to close on 30 days without entitlements and anchors.

So, you're starting to see it. Overall the construction industry is forecasting 10% increase in starts. I don't know if that is true or not. But we are seeing more activity.

A couple of follow-up comments in that regard. Number one, in spite of the additional competition, both comments relate, we still think that we can get our fair share, we're well-positioned to do that in the range of the 8% returns that we are projecting. Not all are going to be -- achieve that, but we think we can get pretty close to that.

Secondly, from a supply standpoint, which I think is equally as important, even though we would expect -- supply right now is less than 1% of the historic -- of the stock. That is about one third of historic standards; and even though supply may increase and development may increase, I think it will still be, continue to be well, well below historic standards.

I would add, I think one of the things that is governing that, and we recently met with one of our banks, who's a very large lender in the real estate industry; and they are still requiring quite a bit of equity from developers. Regency obviously is very well-positioned and has a competitive advantage versus some of the private smaller guys, they are looking -- they are loaning to cost not to value and requiring 25% to 50% of equity depending on that developer's balance sheet.

Thanks for that color.

Jay Carlington, Green Street Advisors.

Thanks. You mentioned your occupancies trending towards the top into where you are comfortable with, and I guess there is going to be an increased focus on rent growth. Can you talk about the releasing spreads going forward, and the blended releasing spreads and how we should be thinking about that type of growth; are we looking at mid-single digits or is there more upside there?

If you look at it on a quarter by quarter basis, it can be fairly choppy but it shows a continual increasing trend over the last many quarters. So, we think the environment is very positive to continue that positive trend. And as I said, there maybe some choppy quarters both above and below the trend line, really based on anchor tenants.

But I think it is driven by strong fundamentals, not only are we greater than 95% leased with a lot stronger portfolio than we used to have. But as Hap pointed out, the supply growth remains almost nonexistent, and the retailers are getting more aggressive, so it is broad-based. We're seeing it in almost all of our leases, the rent growth.

I think we've only got one target market that experienced negative growth this past year and it was less than 1%. And in the weaker markets, as I mentioned also Florida is starting to pick up. So we believe we can get to our historic level of double digits and continue this positive trend.

Okay, great. Maybe just quick follow-up. Can you give us a quick update on what is going on in Chicago with Dominick's? It looks like Whole Foods picked up one of your spots, so what's the outlook look for the rest of the -- the remaining locations you have?

It turned out to be really good for us. We've had -- because you know there's six operating Dominick's that we have up there, four of the leases were purchased and one is very, very close to being finalized. Five of the six will have replacement grocers.

Whole Foods, as you mentioned, bought one and then Mariano's bought three. The other one -- we are pretty certain who it is, I'd rather not say until we know for sure. What we will do is Whole Foods and one of the Dominick's -- I am sorry one of the Mariano's will be redevelopments.

And the Dominick's will take -- I am sorry the Mariano's is taking the Dominick's will be about 90,000 square feet, and we will take that rent up significantly. The other one with the Whole Foods redevelopment, Whole Foods rent will stay flat for the remaining of term that was still in that lease, the Dominick's lease, which is about 12 years or so. And then it will jump up probably 2x.

But in the meantime, as part of the redevelopment, Whole Foods will use all of its money to mize the existing store, build themselves a brand new one, do a facade renovation, and create a 12,000 square foot junior anchor next door to them, but we should be able to release that at a significantly higher rent than the underlying Dominick's lease.

Great. Thank you.

Jonathan Pong, Robert W. Baird & Co.

Good morning. I know this is looking a little further out. But can you shed some light as to how you think about the non-core disposition spigot beyond 2014? I guess what I am trying to get at is, how we should think about the sources of long-term funding for the bulk of your development and redevelopment activity?

We will always plan to sell properties to fund our developments. I do not think -- it is not prudent to have a business model that depends on issuance of equity. So our business model -- our dispositions, it will be lower growth properties, which are the non-core.

And as the quality of those lower growth, non-core properties improves, the spread between what we are selling and what we are developing will actually widen. So instead of selling properties at a 7% cap rate and developing at an 8%, we should get closer to selling to a 6% and developing at a -- or at least a 200 basis point spread, even if cap rates move one way or the other.

So that is how you should think about it beyond 2014, as a source of funding for our developments. And then to the extent that we have opportunity for great acquisitions; again, we would look first to our pool of properties that we could sell at a comparable cap rate but at a lower growth. So that we're in essence enhancing our future growth rate of the portfolio.

Got it. Thanks.

Christine McElroy, Citi.

Good morning. This Katy McConnell on for Christie. Could you talk a little bit about how you see the food component in your centers trending over time? And to what extent you are leasing to more restaurant users, both national, regional, as well as the local operators?

Sure. We are seeing a lot of leasing with the grocers. And a lot of that is going on with your specialty grocers. If you look at just our development and redevelopment work that we're doing right now plus some retenanting, we're working with 37 new grocers.

So we are seeing a lot of that. The restaurants we have got, it looks like 113,000 square feet net add this past quarter from the restaurants. What is going on there is the restaurants in many ways are becoming the new anchors, which you will hear; and they are not all doing well, but fast casual is white hot right now.

And the reason for that really is just that time has become such a precious commodity, and so those restaurants are doing well. On the other hand, the traditional family dining, the Macaroni Grill, the Ruby Tuesday's, and all those, they are not faring very well and I think you are going to see some closures in that sector. Anything that has healthy living associated with it in the food group is also hot.

So overall, I think you're going to see continued amount of restaurant strength, particularly among the fast casual and the healthy lines. And then the strength in the grocery sector remains to specialty grocers.

Great. Thank you.

Craig Schmidt, Bank of America.

Good morning. This is actually [Juan Senabor] here with Craig. Just wanted to ask on the acquisition that seemed like it slipped from the fourth quarter into early this year. Can you tell us a little bit about that asset and the valuation or cap rate you are targeting?

You made a comment that going forward the acquisition and disposition comp rates would be closer in terms of spreads. If I look at your guidance, you are targeting disposition cap rates of 7% to 7.5%. Should we think that the acquisitions going forward would be at that sort of level or did I misunderstand?

I will that Brian talk about the assets. I will answer the latter part of your question first. My response to J is similar.

You have to think about, our dispositions are funding our developments. So the disposition cap rate of 7% to 7.5% is funding developments of approximately 8%.

To the extent that we -- Fairfield was really in the guidance a 2013 acquisition, so that was already pre-funded. We have cash sitting on the balance sheet ready to deploy to buy that asset. For 2014, any acquisition that we identify, we will then increase the dispositions guidance; and again, as we had our in our prepared remarks, in this case we identified an asset in Austin, Texas for approximately $25 million, so we increased our acquisitions guidance by $25 million on top of Fairfield and then our dispositions guidance by $25 million.

The assets we will identify for that additional $25 million will have a cap rate comparable to what we will pay for the asset in Austin. That acquisition guidance is in the 5% range.

It would either in effect be the same cap rate, maybe 50 to 100 basis points higher, but that's very comparable.

Comparable. Zero.

Zero.

Zero. The goal is to identify assets with lower growth that are at comparable cap rates.

Okay, great.

We will not have dilution from acquiring assets. It should be accretive. It should be neutral to the current year and accretive to future years because of the higher growth rate.

Okay, that is great. Thank you.

Did you want me to follow up and tell you about the portfolio?

Yes, please.

We talked about 315,000 square feet, consists of three properties in Fairfield. Two of the properties are on the main drag right in the middle of the city. And it truly is a live/work/play environment where the entire town congregates around those properties.

The portfolio is almost 100% leased, it is 99.6%. Great market. Extraordinary trade barriers. High occupancy rate. And what we like about this is that it lines up with exactly the kind of properties we want to buy.

Dominant infill retail to have unique competitive advantages, and the ability to merchandise to best in class retailers and restaurants and this one has some truly great restaurants and retailers where people -- it connects very strongly with the community.

The one thing I think that makes this particularly special here is that even though it is downtown, urban retail, it has plenty of self-contained parking. Actually if you look at the downtown properties, 5.2 spaces per thousand, which is better than a lot of retail that you would get, even in the suburbs. So, a lot to like about it.

Good, thank you very much.

Yasmine Kamaruddin, JPMorgan.

You had a really nice small shop occupancy gain from the third quarter and also year over year. Where do you think you'll end up in 2014 on this metric?

If you look at our percent leased -- same property percent leased guidance of 94.5% to 95.5%, we did lose some of the junior anchor space. So some of the pickup from occupancy from here has come from there. But I would say for the most part, it is going to be about 75% of the occupancy pickup is going to be coming from small shop space.

The 90% to 92% (technical difficulty).

Okay great. And also for your budget, what are you assuming happens to bad debt?

What was the question?

Bad debt assumption.

We've been (inaudible) approximately 40 bips of our revenues, and the health of the portfolio is really strong, and we would expect it to be consistent.

Okay. Got it. Thank you.

Rich Moore, RBC capital.

Hello. Good morning. Following up on that last question. You've always been good at getting the mom-and-pop sort of tenant into the small shops. And I'm curious, is that changing?

Are you heading more toward the national and maybe the regional type tenant as the most likely one to take up small-shop space? And also are you seeing -- I've seen some of these Urgent Care Centers and dental offices, medical office, that kind of stuff, does that play a role at all as well in the small-shop leasing?

It does, Rich. I am not sure our data is perfect on this, but if you look at the statistics, what it would tell you is since 2009 -- 2007, I'm sorry, the amount of nationals and regionals is -- in the portfolio, is a lot higher and that today we are doing probably 20% to 25%, it would say, local tenants.

But the problem with the local tenants designation is you can have a restaurant like we have here in Jacksonville, Mellow Mushroom, which may have three very successful locations and is considered local. If you talk to the field, what you would hear is that almost never will we -- and it may not even have an almost in that -- we do not take flyers on start-up businesses where somebody doesn't have experience. Any local is going to have at least one other store and likely a whole lot more.

What was the second part, Rich?

The Urgent Care and the dental offices, medical office, that kind of stuff?

That has been a trend for the last few years is you are seeing more and more of that -- I think the demographic shift in the country is demanding it. And the dentist, the chiropractors, all of those things, they want the same things that you have in the shopping centers: the good visibility, the convenient parking, have traffic at your front door as you're going to the grocery store. They are representing a good amount of leasing in our portfolio to date.

And they're merchandising their space much better than they have in the past, more sophisticated operators.

So what do you think, just to follow-up on that, what do you think of the credit quality of that group, that medical sort of group? Is it easy to get comfortable -- how good one is over the other?

I think it is harder to differentiate which one is a better operator, one dentist versus another; whereas in the retail and restaurant world, we have a real good idea on that. But what we do like about those uses is they put a lot of money into those spaces, which we think is going to result in longer leases and reduced downtime and turnover.

(Operator Instructions)

Jeremy Metz, UBS.

Good morning. I was just looking at your same-store NOI growth trend in the back half of 2013 was trending towards the low end of your 2.5% to 3.5% guidance in 2014. And with occupancy gains likely limited, just wondering what do you think will drive a reacceleration of that growth back to the mid or even high point? Is that just the expected leasing spreads or is there some development baked into that?

First of all, I think if you look at 2013, you have to be careful in concluding that there was a deceleration of the second half of the year. I think unlike most prior years, you have to look at the full year number as opposed to the discrete quarters. And the reason for that is there were some timing differences in the first two quarters, which elevated those numbers at the expense of the second half of the year. So 4% is really how you have to look at it.

But going forward, we've said all along that our goal is 3% same property NOI growth, and we still feel very comfortable with the components. The rent growth we've talked about, we think we can take that from the high single digits into the double digits.

And the rent steps, we're getting the embedded steps of about 1.3% or so. So the two of those combined get us to about 2.5% of the 3% we are looking for.

In terms of occupancy, I think we mentioned in the initial remarks, maybe less lift but we still have all the pre-leasing that has to move into occupancy. And right now we are doing a lot more leasing of the space that has been vacant for more than 12 months, so we're going to get some lift from that.

And then after that, there is miscellaneous income, other ways we can grow. We feel pretty good that we should be able to get to the same 3% that we strived -- that's been our target and it's not deceleration going on.

And just the space that's been vacant greater than 12 months, you've been talking about the rent spreads getting back to double digit. It seems like outside of a few abnormality, it's been closer to cash spreads around 3% to 5%. I'm just wondering where the double-digit is? Does that just have to do with some of -- a function of what you have coming due in some of those vacant spaces greater than 12 months that you feel confident on that you can get that higher bump up to that double-digit level?

I don't think the rent growth is going to be high from the things that have been vacant for a long time. But we're going from zero rent to rent so that is what's going to drive a lot of the same property NOI growth there. In terms of the spreads, it is all a function of what comes vacant. I can tell you right now we have 36 Radio Shacks, and I think you've heard that there's going to be 500 store closings, and we've looked at every one of those 36, and we see only one rolling back.

We have got rent growth in there as high as 70%, 75% on some of them. Overall probably 15% higher. But that Mariano's that I told you about, we're talking about taking rents on a very large space from mid-single digits well in to double digits. So those kind of things provide plenty of rent growth and really the benefit of leasing the stuff that's been vacant for over 12 months is more same property NOI growth.

And just to be clear, the double digit is a cash basis spread, correct?

Right.

Thank you.

Thank you.

Chris Lucas, Capital One Securities.

Good morning. Lisa, you'd mentioned that there's a risk to first quarter profit and occupancy. Brian, I was wondering if you could provide a quick assessment of what tenant fallout looks like so far this quarter compared to the year ago period at this point.

When we look at the historical change in occupancy quarter by quarter, and first quarter is always the worst. And it averages about 25 basis points drop in occupancy whereas the other three quarters are all positive. So I think as we get our budget to the end of last year and our guidance, you have to take into consideration that seasonal factor.

What I would say is that last year, that negative 25 basis points never materialized. We were actually positive 10 basis points. What we have seen so far this quarter and it doesn't mean it will continue, but what we've seen so far this quarter is that a lot of the move outs are not materializing, and we're tracking much better than expected.

Great. Thank you.

Thank you, Chris.

Thank you. At this time we have no further questions. I would like to turn the call back over to Hap Stein for closing comments.

We thank you for your interest, your participation, and hope you guys that are in snow affected areas be safe and take care. Have a great day.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.