Kimco Realty Corp (KIM) Q4 2020 Earnings Call Transcript

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Kimco Realty Corp (KIM -0.96%)
Q4 2020 Earnings Call
Feb 11, 2021, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning. Welcome to Kimco's Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]

I would now like to turn the conference over to David Bujnicki, Senior VP, Investor Relations & Strategy. Go ahead.

David F. Bujnicki -- Senior Vice President, Investor Relations & Strategy

Good morning, and thank you for joining Kimco's Fourth Quarter 2020 Earnings Call. The Kimco management team participating on the call today include Conor Flynn, Kimco's CEO; Ross Cooper, President and Chief Investment Officer; Glenn Cohen, our CFO; David Jamieson, Kimco's Chief Operating Officer; as well as other members of our executive team that are also available to answer questions during the call.

As a reminder, statements made during the course of this call may be deemed forward-looking. And it's important to note that the company's actual results could differ materially from those projected in such forward-looking statements due to a variety of risks, uncertainties and other factors. Please refer to the company's SEC filings that address such factors.

During this presentation, management may make reference to certain non-GAAP financial measures that we believe help investors better understand Kimco's operating results. Reconciliations of these non-GAAP measures can be found in the Investor Relations area of our website. Also, in the event our call was to incur technical difficulties, we'll try to resolve as quickly as possible. And if the need arises, we'll post additional information to our IR website.

And with that, I'll turn the call over to Conor.

Conor C. Flynn -- Chief Executive Officer

Thanks, Dave. Good morning, and thanks for joining us today. I'll begin by giving a quick overview of our accomplishments in 2020, and our strategic focus for 2021 and beyond. Ross will follow with updates on transactions, and Glenn will close with our key metrics and guidance for 2021.

For all of us, 2020 was a year that will not soon be forgotten. COVID, the political landscape, social unrest and the responses to these events; all converged in a way that will forever change our way of life. 2020 was also a year that demonstrated in volatile times the best companies are the ones that are able to withstand economic challenges, mitigate risk and take advantage of opportunities. In the shopping center sector, this requires a strong balance sheet; a resilient, well-located portfolio; and a superior management team. I'm happy to report that while we are not immune to the volatility of 2020, Kimco's open-air grocery-anchored shopping centers and mixed-use assets performed well. And we have stayed strong, confident and positive about the opportunity in the coming year.

Our portfolio withstood all that the pandemic threw at us, as our 2020 vision strategy to reposition our portfolio will validate. Our grocery-anchored essential services and mixed-used assets concentrated in the strongest markets in the U.S. proved resilient. In 2020, we saw continued improvement in both the percentage of ABR coming from essential retailers and grocery-anchored centers. Growing the portfolio from 77% of ABR from grocery-anchored properties to 85% plus remains a strategic focus across the organization. We are encouraged by the progress and the increasing level of opportunities in the pipeline we are currently evaluating. As part of these efforts, we are pleased to share today the upcoming opening of Amazon Fresh at our Marketplace at Factoria in Bellevue, Washington.

During the fourth quarter, we executed 92 new leases, totaling 406,000 square feet, which exceeded the amount achieved in the fourth quarter of 2019. The true test of a portfolio's quality and durability is leasing and the ability to drive rent. At that point, new leasing spreads remained positive, rising 6.8% during the fourth quarter. We anticipate that our range between economic and physical occupancy will continue to widen, as a precursor to future cash flow growth. With the help of our nationwide network of relationships, tenants, brokers and our in-house team, we are experiencing robust demand from our essential retailers, who continue to take advantage of the COVID surge that allows them to boost cash reserves, invest in existing stores and expand their store portfolio to better serve their customers. We are also laser-focused on keeping our existing tenants and continue to do everything we can to help them overcome the pandemic and to be positioned [Indecipherable].

Our tenant assistance program or TAP helps small businesses navigate the new round of PPP funding. After successfully helping our small shop tenants navigate the first round of PPP funding, we believe we have aligned with best-in-class partners to continue to aid our small business tenants in accessing capital at their most critical time of need. Our strong balance sheet, well-positioned portfolio and tenant initiatives are all the result of our best-in-class team and approach. Specifically, our leasing team is proactive in its efforts to work with current and prospective tenants. And our finance, planning, technology, investor relations and legal teams effectively navigated numerous obstacles and kept us focused without skipping a beat.

So, where do we go from here? First, our highest priority is leasing, leasing, leasing. The good news is we have visible growth in the portfolio and meaningful free cash flow to fund our leasing strategy. This has provided us the confidence to provide an outlook for 2021. We anticipate the first half of the year to remain challenging, especially for those categories dramatically impacted by the pandemic-induced shutdowns. It is worth highlighting that our team pushed this portfolio to all-time high occupancies pre-pandemic. And we are determined to get back to that level and exceed it. While anticipating the speed at which we will recover NOI is challenging, we do expect rents to hold up, especially in our well-located boxes that are in high demand from categories that include grocery, off price, home goods, home improvement, furniture, health, wellness, medical and beauty. Interesting to note, we are starting to experience a rebound in both restaurant demand and value fitness retailers.

Finally, on our long-term strategic focus. We continue to believe that streamlining the portfolio over the past five years will result in meaningful long-term value creation for our shareholders. We are focused on the highest and best use of our real estate and believe the 80-20 rule applies to our assets and gives us tremendous flexibility and adaptability to create value in the future through our entitlement initiatives. Specifically, 80% of our real estate consists of parking lots, that are not generating any revenue; and 20%, the single-storey buildings. With our focus on clustering our assets in dense areas with significant barriers to entry, our assets are in an ideal position for growth as the surrounding areas have gone vertical. Our entitlement team is sharing our ESG accomplishments with all local municipalities, as part of our efforts to show that we will be good stewards of their neighborhoods and that we want to work together to make sure our assets continue to evolve alongside the community. We believe it is important that our approach to real estate evolve with changing circumstances, because that is exactly what our tenants are doing. The best-in-class tenants are looking at their real estate differently. And in many cases, their real estate team is now integrated in the entire supply chain. Distribution, fulfillment, e-commerce and store decisions are all integrated on how to best service the customer. The store which is optimized for distribution and fulfillment continues to shine as the most economic way to get goods and services into customers' hands. Best Buy CEO, Corrie Barry, at the CES Conference, was very clear when she said, physical stores are expected to play a massive role in the company's fulfillment efforts. Target also stated that more than 95% of sales are fulfilled by the stores. I continue to share the words from our largest tenant; the role of the physical store is poised to become broader than ever with the location serving as fulfillment epicenters that quickly and easily get customers whenever they need. Put another way, the convergence of retail and industrial is accelerating and we are positioning the Kimco portfolio to take advantage of this new utilization by partnering with our retailers to ensure that Kimco assets are optimized to gain market share and to make the stores of Kimco even more valuable.

In closing, Kimco's open-air grocery-anchored portfolio provides consumers a safe and easily accessible destination for goods and services. Our diverse tenant mix and targeted geographic presence in the strongest growth markets, supported by our well-capitalized balance sheet and our entrepreneurial approach, positions us to unlock value for all stakeholders in the years to come.

With that, I turn the call over to Ross.

Ross Cooper -- President, Chief Investment Officer

Thank you, Conor, and good morning. As Conor discussed, 2020 was a challenging year. But there are signs of life in the transactions market with deal flow starting to pick back up. The overall transaction volumes from March through year-end were down close to 85%, but there were several late 2020 deals that showcased the general theme we have seen occurring. The majority of transactions have been with the essential-based retail anchors, notably grocery.

For the most part, size is good. But too big can result in the inability to finance the large or non-essential based tenancy, thus requiring a much bigger equity check to those deals. For the smaller grocery assets, the financing community has remained resilient. But again, rolling cash flow uncertainty for the chunkier assets have made those a bit more challenging. Multiple grocery-anchored deals have transacted at sub 6% cap rates in Denver, South Florida, California, Washington DC, North Carolina and throughout the major primary and secondary markets in the U.S. While we are bullish on that asset side, which represents the core products within our portfolio, there is no shortage of capital chasing those deals.

As we discussed on last quarter's earnings call, the limited supply of attractively priced high-quality assets versus our current cost of capital has led us to tailor our investment program.

As it relates to our structured investment program, we made two small investments on a pair of very high-quality shopping centers during the quarter. A $25 million mezzanine financing on a strong South Florida shopping center and a $10 million preferred equity investment on a densely located center in Queens, New York; both of which will generate an accretive return versus our cost of capital, with a chance to possibly acquire in the future. Additionally, as we have done many times, recently, we were able to leverage our strong tenant relationships, particularly with those that are real estate rich, to uncover another unique investment that represents significant dislocation in value. To that point, we completed a sale leaseback transaction in which we acquired two Rite Aid distribution centers in California for approximately $85 million. These distribution centers service all 540 plus stores for the pharmacy chain in the State of California. Rite Aid is releasing these back on a long-term basis with annual rent bumps and zero landlord obligation. This investment will provide an attractive return with an IRR well in excess of our cost of capital and enhance the NAV for the company.

We continue to evaluate new opportunities selectively and believe our tenant relationships, flexible structuring and conviction in our product type puts us in an enviable position to capture upside in a period of dislocation. This is an important long-term complement to our business with the one constant being our approach of owning high-quality assets at a positive spread to our current cost of capital, while mitigating potential downside risk. Furthermore, we believe this approach will create a future pipeline of opportunistic acquisitions with a right of first refusal or right of first offer when our cost of capital returns.

With that, I will pass it along to Glenn for the financial summary.

Glenn G. Cohen -- Executive Vice President, Chief Financial Officer & Treasurer

Thanks, Ross, and good morning. With our fourth quarter operating results, we delivered further improvement compared to the sequential third quarter, with higher rent collections and improvement in credit loss. For the fourth quarter 2020, NAREIT FFO was $133 million or $0.31 per diluted share as compared to $151.9 million or $0.36 per diluted share for the fourth quarter 2019. The reduction was mainly due to rent abatements and increased credit loss of $21.2 million and lower net recovery from a $5.7 million. This reduction was offset by lower preferred dividends of $3.1 million and a $7.2 million charge for the redemption of preferred stock in the fourth quarter of 2019.

Now, although not included in NAREIT FFO, during the fourth quarter 2020, we did record a $150.1 million unrealized gain on the mark-to-market of our marketable securities, which was primarily driven by the change in value of our $39.8 million shares of Albertsons stock. Our stake in Albertsons is valued in excess of $650 million today. For the full year 2020, NAREIT FFO was $503.7 million or $1.17 per diluted share as compared to $608.4 million or $1.44 per diluted share for the prior year. The change was primarily due to increases in rent abatements, credit loss and straight line reserves, aggregating $105.8 million and the NOI impact of disposition activity during 2019 and 2020 totaling $24.7 million. In addition, during 2020, we incurred a $7.5 million charge for the early extinguishment of debt. These reductions were offset by lower financing costs of $15.7 million and an $18.5 million charge for the redemption of $575 million of preferred stock during 2019.

Although we continue to be impacted by the effects of the pandemic, our operating portfolio was showing signs of improvement, as Conor discussed earlier. All our shopping centers remain open, and over 97% of our tenants are open and operating.

Collections have continued to improve. We collected 92% of fourth quarter base rents, and this compares to third quarter collections of 90%. The furloughs granted during the fourth quarter were just under 2%, down from 5% during the third quarter. At year-end 2020, 8.2% of our annual base rents were from tenants on a cash basis of accounting. And 50% of that has been collected. As of year-end, our total uncollectible reserve was $80.1 million or 46% of our total pro rata share of outstanding accounts receivable.

Now, turning to the balance sheet. We finished the fourth quarter with consolidated net debt to EBITDA of 7.1 times. And on a look-through basis, including pro rata share of JV debt and preferred stock outstanding, the level was 7.9 times. This represents further progress from the 7.6 times and 8.5 times levels reported last quarter, with the improvement attributable to lower credit loss. On a pro forma basis, if our Albertsons investment was converted to cash, these metrics would improve by a full turn to 6.1 times and 7 times respectively. Levels better than we began last year.

We ended 2020 with a strong liquidity position, comprised of over $290 million in cash and $2 billion available on our untapped revolving credit facility. We have only $140 million of consolidated mortgage debt maturing during 2021. And our next bond does not mature until November 2022. Our consolidated weighted average debt maturity profile stood at 10.9 years, one of the longest in the REIT industry. In addition, our unsecured bond credit spreads have improved significantly. By way of example, our 10-year green bond issued in July 2020 at 210 basis points over the 10-year treasury is currently trading in the area of 90 basis points over treasury. This spread is the lowest among all our peers.

Regarding our common dividend, we paid a fourth quarter 2020 common dividend of $0.16 per share. As such, we expect our Board of Directors to declare the common dividend during the first quarter of 2021, reflecting a more normalized level that at least equals our expected 2021 taxable income.

Now, to guidance. While the pandemic and its effects on certain of our tenants continues, we are comfortable establishing NAREIT FFO per share guidance for 2021. Our initial NAREIT FFO per share guidance range is $1.18 to $1.24. This is also a wider range than we have historically provided, taking into account the potential variability of credit loss levels due to the ongoing pandemic. Other assumptions include flat to modestly higher corporate financing costs and G&A expenses, as well as minimal net neutral acquisition and disposition activity. This 2021 guidance range assumes no transactional income or expense, no monetization of our Albertsons investment and no additional common equity issued.

Lastly, keep in mind that our 2021 first quarter results will be relative to a pre-COVID first quarter in 2020. Notwithstanding the expected optics of the first quarter results, our NAREIT FFO per share guidance range of $1.18 to $1.24 reflects growth over 2020 at both the low and high end of the range.

And with that, we'll be happy to take your questions.

David F. Bujnicki -- Senior Vice President, Investor Relations & Strategy

Before we start the Q&A, I just want to let you know that the line up for people in the queue is very deep. So, in order to make this efficient, again, just a reminder, that you may ask a question and then have one follow-up. And then you're more than welcome to rejoin the queue so we could get through this pretty efficiently.

With that, you can take the first caller.

Questions and Answers:

Operator

[Operator Instructions] We will now begin the question-and-answer session. [Operator Instructions] Okay. Our first question is from Rich Hill from Morgan Stanley. Go ahead.

Richard Hill -- Morgan Stanley -- Analyst

Hey, good morning, guys. Hey, Conor, I just wanted to talk through the guide a little bit. My perception is that you guys have a history of being conservative. And when I look at the guide, the high end of the range, it looks like it's just an annualization of 4Q. The low end of the range looks fairly low. Can you just maybe walk through that and how we're supposed to think about it? And again, I recognize, given the uncertainty in the world, why you want to be conservative. So, I'm not calling you out for it. I'm just trying to understand a little bit better and where the risk might be to the upside or the downside.

Conor C. Flynn -- Chief Executive Officer

Sure, Rich. Nice to hear from you. Look, we've never given guidance in a pandemic before. We think it was important to give guidance, really to showcase that we have a good handle on the portfolio and the cash flows. Clearly, there's a lot of unknowns that still can exist in the coming year. We're not out of the woods yet of the pandemic. If you think about the variants that are out there of the virus, if you think about the distribution of the vaccine, there's a lot of things that could really dramatically impact some of the returns that we're anticipating. And we thought that it's important to showcase growth and showcase that we believe that we are -- we have a defensive nature of portfolio that is now sort of up and running even in the midst of the pandemic. But clearly, there is a lot of unknowns that could impact the earnings potential for 2021.

Glenn G. Cohen -- Executive Vice President, Chief Financial Officer & Treasurer

Yeah. It's Glenn. Let me just add a couple of things that may help you also. The credit loss levels, obviously, are pretty wide ranging. And that's a big part of what's in those guidance numbers. So we had, as I mentioned, $106 million of credit loss between abatements and reserves and straight-line reserves. So, we are still -- we've baked into this guidance still another $80 million to $100 million for this year. So, that's a component of what's in there.

The other thing that I want to bring out also is we do have less interest capitalization because of the projects that have come online. And that interest capitalization will be $8 million to $10 million less for this year. And similarly, we're capping less construction payroll of another $4 million to $6 million. So, take those into account, those capitalization differences, when you're looking at the guidance as well.

Richard Hill -- Morgan Stanley -- Analyst

Got it. That's helpful. I'm going to not ask any more questions, because I don't want Bujnicki tracking me down and telling me I asked too many. So, thanks guys.

Operator

Our next question is from Caitlin Burrows from Goldman Sachs. Go ahead.

Caitlin Burrows -- Goldman Sachs -- Analyst

Hi, good morning. Maybe just in terms of the deferrals that you did grant in 2020 to the tenants that needed them. Could you go through the expected timing for receipt of those and to the extent that any have been paid or should have been paid by now, how that outlook for receiving the deferrals on time is going?

Glenn G. Cohen -- Executive Vice President, Chief Financial Officer & Treasurer

Yes. So, the deferrals that we've done. Most of the deferrals will get or are expected to get collected over the next 18-month period. So, a good portion during 2021 and some into 2022. Of the deferrals that we have built, mostly in the fourth quarter, over 90% of the ones that we have built have actually been collected. So, so far, it's going pretty well.

Caitlin Burrows -- Goldman Sachs -- Analyst

Okay. And then in terms of the sectors that look like they're weighing down the rent collections or services, which isn't surprising, but there are also collection rates under 100% for other categories including essential ones. So, just wondering if you could go through. Does it seem like rent collections are plateauing, or what's your outlook for when the essential tenants and those non-essential ones, but not directly impacted by capacity constraints, could improve to 100%?

Glenn G. Cohen -- Executive Vice President, Chief Financial Officer & Treasurer

Well, Caitlin, we've never really had a 100%. I think that's a starting point, right? For the most part, on a historic basis, normally we would collect around 95% during a given month. And then over the following months, we would collect the other 3% to 4%. And then you have your credit loss that comes into play. When you look at the collections, again, collections were 92% for the quarter. So, definitely starting -- we are seeing improvements. 91% collected so far for January. We don't think that we've hit the peak yet; we still have more to do. And again, we're still being impacted on the closures that have occurred certainly out on the West Coast, hitting restaurants and a lot of the non-essentials. But collections are continuing to improve.

Caitlin Burrows -- Goldman Sachs -- Analyst

Okay, thank you.

Operator

Our next question is from Samir Khanal from Evercore. Go ahead.

Samir Khanal -- Evercore ISI -- Analyst

Hi, good morning, Conor. I'm just trying to get a better feel for -- about -- of the recovery, how the recovery plays out over the next several quarters and sort of the pace of that recovery. If you're assuming -- If we're assuming occupancy troughs, let's say, in the second quarter or the third quarter, how quickly do you think you can get back to sort of pre-pandemic levels, right, let's say, an occupancy of mid 90s, given the amount of leasing and the robust demand you've been talking about?

Conor C. Flynn -- Chief Executive Officer

Yeah, it's a good question. I think a lot of it has to do with -- I think the demand is going to be there, first and foremost. We're seeing it now come back on the small shop side, because originally the box demand or the anchor demand never really subsided. So, clearly, it was heavily weighted toward the essential retailers through the past few quarters. And now, you're starting to see some of the non-essential to come back for any type of well-located anchor box that's available. So, I would anticipate that to come back first. But now, what's interesting is the small shops are starting to come back. And we're seeing a pretty wide spread of demand sources.

I'll have Dave Jamieson comment on some of the small shop demand that you're seeing.

David Jamieson -- Executive Vice Present, Chief Operating Officer

Yeah. No, I appreciate it. I mean, right now, we're seeing it on -- The restaurant and the service side is actually coming back in a surprising way and in a positive way. And I think what you're seeing is operators, entrepreneurs, restaurateurs seeing the vacancy within high-quality portfolios in the near term as a way in which to either expand their existing operation or get into market that they otherwise were challenged to do so. And so, we'll start to see that pick up. And when you look at the velocity in Q4 2020, I thought that was a really encouraging sign from a lease-up standpoint. And what we're currently seeing as we move through Q1 is that that momentum is continuing to build. So, I think the one good thing is that the vaccine has provided some endpoint. The idea that at some point in hopefully the not-too-distant future, we'll see this pandemic somewhat behind us. So people are starting to prepare, investors are starting to prepare for what that will look like and how do they set up their business accordingly.

And again, on the non-essential side. We say non-essential, but when you think of the performance, especially with the investment-grade retailers and how well they've done from a public standpoint through this pandemic from a stock share price, they're really on sound footing and see this opportunity to expand their market share and, again, enter into higher-quality portfolios knowing that that window will only be open for a limited time. So, we're cautiously optimistic about the future.

Samir Khanal -- Evercore ISI -- Analyst

And then, I guess, as a follow-up, I mean, has your view changed on NOI growth, let's say, not for '21, not so much focus on '21, but let's say, sort of this peak to trough, end of '19 to '21-'22? I mean, has your view -- do you feel like you can do better than down 10%? I mean, how are your views today? How do they compare to, let's say, end of 2Q last year and even into 3Q last year?

Conor C. Flynn -- Chief Executive Officer

Well, clearly, the demand side has changed since we talked about it in Q2, Q3 of last year. And I think that there is still a number of variables there on the NOI, because I think the biggest variable is on the most impacted categories and how they're going to weather through these next few quarters. Entertainment, restaurants, fitness services; those are really where there is a pretty wide spread of scenarios that could play out. We feel good about pent-up demand. We do feel like there's going to be a lot of revenge shopping and revenge spending. I can't tell you how many conversations I've had about what restaurants people are going to go to or what fitness club they're going to go back to or what trip they're going to take. So I think if we think that the vaccine plays out and there is not a variant of the virus that doesn't have another sort of wave of infections, we clearly have some visibility now that there are some green shoots on the horizon that we're cautiously optimistic about.

Samir Khanal -- Evercore ISI -- Analyst

Great, that's it for me. Thanks.

Operator

Our next question is from Haendel St. Juste from Mizuho. Go ahead.

Haendel E. St. Juste -- Mizuho -- Analyst

Thank you, operator. So hey, good morning out there, guys. Question on redevelopment. Pipeline here is about $220 million at year-end, including the new Pentagon Centre. That's up pretty meaningfully from last quarter. I guess -- Are we back in the redevelopment game here? How do you foresee the near-term prospects for the pipeline? What type of yield, how large? And will that we funded with disposition proceeds or perhaps some of the Albertsons stock, now that the window is open for some of that?

Conor C. Flynn -- Chief Executive Officer

Sure. I can start, and Dave can give some more color on it. Look, we have seen in our supplemental that we've added the entitlements that we've achieved over the past five years. And we believe there's a lot of value to be created on our asset base, just on the entitlement initiative. And then what we look through is the decision tree of how to activate those entitlements. And what we've done over the past five years is we've sold some entitlements, we've ground leased some entitlements and we have joint ventured some entitlements to unlock that value. And depending on our cost of capital, depending on the supply and demand in that trade area, we really look at the spread to our ROI, what the exit cap would be and try and have a 200 basis points spread there between what we believe we can deliver the project at and what we could sell the project at. And so, Pentagon obviously is the one where we feel like there is a pretty unique set of circumstances there. If you haven't seen the Amazon rendering of the Helix and what they're doing right across the street from our Pentagon Centre, it's going to be pretty dramatic. And with the success of the Whitmer and some of the cap rates that have traded in that trade area, we feel very comfortable with adding that to the pipeline in a joint venture. It's with CPP. We have a very solid multifamily expert that helped us with the first tower, that's also helping on the second tower. And we feel like that's the right project to add to the pipeline.

But going forward, we're going to be very selective. We do like the initiative of ground leasing a lot of our entitlements and we feel like that's the way to not have a significant amount of capital tied up into these larger-scale projects. But we love the smaller-scale projects that are double-digit type returns, where you're adding an outparcel or a pad with a drive through or expanding an existing tenant. Those are ones that typically run in the range of $75 million to $100 million a year and have that double-digit type return. So, you'll see that being consistent. But we will be mindful of how much we add to the pipeline going forward and be very selective on that.

Haendel E. St. Juste -- Mizuho -- Analyst

Okay. And then any comment on -- that you'll make on Albertsons? The window, I understand, opened earlier this year for a portion of the -- potentially [Indecipherable] sell from those shares. So, curious. Have you -- can you comment, and would that be to fund some redevelopment, debt pay down, some of these mezz investments you're looking at? Curious what the potential uses would be. Thanks.

Glenn G. Cohen -- Executive Vice President, Chief Financial Officer & Treasurer

Hi, Haendel. It's Glenn. As I mentioned in my prepared remarks, the guidance that we have has no Albertsons monetizations in 2021 in it. Again, we will monitor the investment obviously very closely and it's really geared toward debt reduction, more than anything else. That's what we've kind of earmarked those proceeds over time for. But again -- Cash is fungible. But again, we think of it more in terms of an ability for further debt reduction as we go forward.

Haendel E. St. Juste -- Mizuho -- Analyst

Yeah, got it. Thank you, guys.

Operator

Our next question is from Derek Johnston from Deutsche Bank. Go ahead.

Derek Johnston -- Deutsche Bank Securities Inc. -- Analyst

Hi, everybody. Thank you. So, omnichannel and Bovis trends have been very encouraging. And you actually pointed them out pretty well in the investor presentation. Now, what's the driver besides COVID? Is it that fulfillment is easier at the local store level? Are retailers using their store fleet now in lieu of possibly more expensive industrial or distribution facilities? So, as you talk to your retailer management teams, like, what are the key drivers that they speak to with the increase in this trend?

Conor C. Flynn -- Chief Executive Officer

Yeah, you're exactly right. I think when we have open dialog with our retailers, they are looking at their real estate differently. And they're seeing their store base as a distribution fulfillment point that can solve for the last mile. The last mile is something that's been tried to be cracked now for a number of years. And with Bovis, with curbside pickup, you have to have that amenity available to your customer to offer a suite of services. But what's being unlocked, I think, is the stores being optimized to service that last mile in more ways than one. And you're start -- you're seeing the changes being made primarily from the best-in-class retailers as they set the blueprint for others to follow. But it is very clear when you look at who the most successful retailers are, that the store is being utilized as that last mile fulfilling point. And I wouldn't be surprised if you start to see more incentives for customers to drive to the store because the margin is higher there and they can take advantage of that by incentivizing them with coupons or other offers that really can get people to take control over when they want the good, how they want the good and it does drive up margin for the retailers. So, they are looking at it very differently.

Derek Johnston -- Deutsche Bank Securities Inc. -- Analyst

Okay, thank you. Now, that's helpful. And then just a very quick follow-up. Clearly, a bright spot has been leasing. Where would you say your leasing pipeline is now versus pre-COVID levels? And thanks, guys.

David Jamieson -- Executive Vice Present, Chief Operating Officer

Yeah. No, our leasing pipeline is -- I mean, as I mentioned earlier, related to Q4 2020 performance and when you compare year-over-year, it basically is at that level of pre-pandemic. And when you look into '21, the '21 Q1 is usually historically a little bit lighter post holiday and you tend to see an increase in vacancies, which is normal. But what we've been seeing is extremely encouraging. So again, as people are seeing this opportunity of displacement, seeing new vacancies coming to market, they want to take advantage of it, knowing that that window will close shortly thereafter.

Operator

Our next question is from Mike Mueller from JPMorgan. Go ahead.

Michael W. Mueller -- J.P. Morgan Securities Inc. -- Analyst

Yeah, hi. A quick question, I guess, on the Rite Aid warehouse acquisitions. So, how should we think about that and what's on the table now to buy? How wide is the scope for which you put capital into?

Ross Cooper -- President, Chief Investment Officer

Sure, Mike. I'm happy to answer that. So when you look at the Rite Aid transaction, I would just point to sort of the history of our Plus business and the fact that we have taken advantage of sale leaseback opportunities many times in the past. Most recently, obviously, the Albertsons investment where a smaller component of that transaction that maybe doesn't get the same level of showcases. The bigger investment is that we were able to acquire several of their grocery stores within shopping centers that we controlled, where we didn't have the grocer. Dating a little bit further back, we had a very successful transaction with Winn-Dixie, where we acquired five of their freestanding locations and one shop that they owned. And subsequently, we sold off four of those at pretty significant profits and held on to the shopping center in the Florida Keys, which is a redevelopment asset, as well as a freestanding one in Miami, which is now slated for future redevelopment and potentially density.

So when we look at the specific to the Rite Aid transaction, we're in constant communication with our retailers, particularly those that are real estate rich, helping them provide, I would say, solutions for some of their liquidity needs or desires. And when this opportunity presented itself, well, I can't get too much into the economics of it because we're bound by confidentiality, I can tell you that directionally, the cap rate that we are able to negotiate is significantly higher than the core grocery products that we're seeing transact in this market. When we look at the cap rate here, it's substantially higher than the other distribution centers that we're seeing trading in the State of California. And lastly, I would just say that we are holding it in our TRS, which provides us sort of the maximum flexibility in terms of our hold period and our exit strategy.

So, I'm not suggesting that this is sort of a wide-ranging opportunity. But selectively, we do like to take advantage when those opportunities present themselves.

Michael W. Mueller -- J.P. Morgan Securities Inc. -- Analyst

Got it. So, it sounds like we should be thinking about this as some sort of sale leaseback transaction as opposed to an industrial transaction where you're harping a path out now and going to the retailers and trying to take down some of the industrial assets. Is that fair?

Ross Cooper -- President, Chief Investment Officer

Yeah, exactly. There's zero landlord obligation here. It is a sale leaseback that they've leased for an extended period of time. So, we don't anticipate that there will be any sort of operational involvement in those locations. This was really just an opportunistic investment at a point in time.

Michael W. Mueller -- J.P. Morgan Securities Inc. -- Analyst

Got it. Thank you.

Ross Cooper -- President, Chief Investment Officer

Sure.

Operator

Our next question is from Greg McGinniss from Scotiabank. Go ahead.

Greg McGinniss -- Scotiabank -- Analyst

Hey, good morning. So, it's nice to see that the new leasing volume was up compared to last year. But then it looks like the releasing volume was down compared to the 2019 average. Just curious what the drivers of that were, and how does the pace of 2021 renewals at this point compared to the historical average?

David Jamieson -- Executive Vice Present, Chief Operating Officer

Yeah, thanks. This is Dave. It's a great question. So, on the releasings. Obviously, some of the impact was for those tenants that vacated. So, that would drive down the average a little bit as a result of the pandemic. As we look forward into 2021, it's still early, obviously. We're only in the beginning of February, but we're continuing to see some good momentum both from options being exercised as well as renewals. But more importantly, I think, when you look at that sheet of the rollover schedule, the rent per square foot for '21 is the lowest relative to the coming years. And so when we see the mark-to-market opportunity on those, there is plenty of room to run on the spread side. So, that should give us some additional lift as we secure the renewals of the tenancy and/or they exercise options as we go forward.

Greg McGinniss -- Scotiabank -- Analyst

Okay, thank you. And just one more from me, maybe more modeling related. But the potentially uncollectible rent adjustment in Q4 was -- appeared to be a $3 million positive. Does this reflect primarily the cash-basis tenants paying that rent, or how should we be interpreting that number?

Kathleen Thayer -- Vice President, Corporate Accounting

Hey, Greg. It's Kathleen. I'll help you out there. So if you look at the page, you really almost need to take the three line items that are there together. So rent abatements, cash-basis tenant adjustments and then also that potentially uncollectible rent income adjustment together to come up with what the total P&L impact is. And the reason for the opposite sides of the income side in the adjustment line is really primarily to the way that we're presenting the rent abatements. So on tenants that -- if you're looking at the reserve and thinking there is a potential for future rent abatement, we would take a reserve on that; a general reserve. And then when the actual abatement does occur, you'll see it come through that rent abatement line, but that reserve that we had put up previously is flipping in that line of the uncollectible adjustments. So really, it's overall the three lines together.

Greg McGinniss -- Scotiabank -- Analyst

Okay, all right. So, it's not some cash-basis tenants paying back rent then. It's just reflecting the timing of the abatements?

Kathleen Thayer -- Vice President, Corporate Accounting

Exactly. The timing of the reserve versus [Phonetic] when the abatement actually happens. Yeah.

Greg McGinniss -- Scotiabank -- Analyst

Okay. Great, thanks so much.

Operator

Our next question is from Michael Bilerman from Citi. Go ahead.

Michael Bilerman -- Citi Investment Research -- Analyst

Hey, good morning. Conor, you talked about the occupancy in lease spread likely widening before it starts to narrow again. Can you talk a little bit about the cadence that you expect throughout the year between leased and occupied space?

Conor C. Flynn -- Chief Executive Officer

Sure, happy to. And Dave can comment as well. What we're seeing is the demand continuing, as David mentioned earlier. The anchor side of it never really have been slowed. It was pretty consistent through the pandemic, as most of our essential retailers saw a lot of market share up for grabs and improving their portfolio by locating in high-quality assets that weren't typically available to them before. I do think that the big change that we've experienced is on the small shop side and that's what's really I think going to continue to improve the spread between physical and economic occupancy as we go through the year. I think historically we were, what is it, Glenn, probably around 275 basis points wide between those two? I wouldn't be surprised if we eclipse that. I wouldn't be surprised if we hit 300 just because I think there's a lot of pent-up demand, a lot of market share up for grab. And when you look at how retailers are thinking about this, the deals they signing today are really more like six to 12 months out before they open. And so, they feel like now is the time to grab market share, so that when the reopening occurs, they are in the best position possible to soak up that market share. So we feel like with the transformed portfolio, we're in really good shape to have that spread widen out to potentially its all-time high.

Glenn G. Cohen -- Executive Vice President, Chief Financial Officer & Treasurer

Okay. And then, just to give you a little [Speech Overlap] -- I was going to say, if you want to, just a little perspective. At the end of the third quarter, the spread was 150 basis points. We ended the year at 190 basis points. On a historic basis, our peak, I think, was about 330 basis points. So as we continue, obviously, this lease up, you're seeing the leasing momentum to kind of this point, I would expect that we should exceed 300 basis points before it starts coming back down as those rents start flowing.

Michael Bilerman -- Citi Investment Research -- Analyst

All right. And Glenn, just sticking with you, as a follow-up. And it's related to the guidance. And I think you acknowledged it's wider and you sort of called out from impacts on questions. Is -- And I appreciate having the bottom line number. I think just given the amount of impacts that occurred in 2020 in 4Q and the likely that there are going to be significant impacts during 2021 relative to those numbers in 2020, can you provide just a very detailed, almost category, line by line sort of ranges, especially on the NOI side, given all the abatements and deferrals and bad debt. And I know there's a lot of uncertainty, but you did provide a bottom line number. I would say, for us, it's actually having all the components or the more interesting and important variables. And then we know how many shares outstanding you have. We can divide to figure it out, but it's sort of very opaque just having this bottom line number. And so, I don't know if you can do it after the call or if there is more detail that you can provide now in terms of those impacts, both on a GAAP and cash basis? And so, I don't know what -- I don't know why it wasn't provided. So, maybe you can provide a little bit more detail around that?

Glenn G. Cohen -- Executive Vice President, Chief Financial Officer & Treasurer

Again, I tried to give you a little bit of flavor on certainly what's happening in the reserve world. Again, baked into the guidance, there is $80 million to $100 million of potential credit loss. So, you have a pretty wide gap there. You do see what's happening on the financing costs. Again, financing costs are relatively stable except for we're going to have less capitalization, as I mentioned. So, there's about $8 million to $10 million less of capitalized interest in 2021 baked into the guidance versus 2020. G&A also was relatively stable. We did have our voluntary early retirement program, which we do expect would create savings of somewhere between $4 million and $5 million a year. That's being offset by lower capitalization of construction payroll of somewhere between $4 million and $6 million. So, you have those components. Those are the major drivers of what's sitting in there. Again, the NOI itself is really dependent on, again, further lease up, as well as just how much impact there is on the credit loss. But we'd be happy to provide you some further detail after the call.

Michael Bilerman -- Citi Investment Research -- Analyst

Yeah, I am not having a very clear summary of going from 4Q numbers and taking the 31 and breaking it out to its component parts and then matching that up to what the go-forward plan is, because it's very opaque. And even when you throw numbers out in the call, I think having it in a clear format. And I really appreciate the bottom line number, it's all the components so that there is no ambiguity about how numbers are being created.

David F. Bujnicki -- Senior Vice President, Investor Relations & Strategy

Yeah. Michael, it's Dave Bujnicki. Also in terms of the NOI, as Glenn mentioned. I mean, really the high end of our range is based on the fourth quarter annualization. And really looking at the credit loss, where it could be, obviously the high end of the range represents a continuation of the reserves of the $20 million reserves you took the fourth quarter or the low end is really a $100 million. And really, as Glenn mentioned, the lease-up, the timing and the width of the spread between the lease and the atmosphere just makes it a little bit difficult from that standpoint. And really as we haven't provided much difference than we have in the past in terms of the guidance, what we have here. So net neutral, but we'll see what we can do in terms of breaking it down further.

Michael Bilerman -- Citi Investment Research -- Analyst

We haven't been in a pandemic before, right? So, I think in the times where things are much more stable, there's just so many one time and impacts and some of them are buried in different line items that Gary just went through. Right? So, I think it's just having that income state presentation that used to have way back when of those line items and ranges, I think, would be very helpful for the analyst and the investor community.

David F. Bujnicki -- Senior Vice President, Investor Relations & Strategy

We will make sure to do that, Michael. We are always best in class in terms of disclosure. And obviously, there's a lot more variables at a pandemic. But we can walk you through how we came through with the guidance. And we think it's important to have guidance out there, just to show that we have confidence in the growth profile of the cash flow, so we can help you through the components.

Michael Bilerman -- Citi Investment Research -- Analyst

Yeah, I totally agree. And that's -- And I want them -- it is a positive to have the bottom line. I'm just trying to get the details, and who knows that there is mandated closures and your forward numbers are not at the low end. I'm just trying to get some of that detail around, it would be helpful. Thank you.

Operator

Our next question is from Alexander Goldfarb from Piper Sandler. Go ahead.

Alexander D. Goldfarb -- Piper Sandler & Co. -- Analyst

Hey, good morning. So, maybe I'll just take that just from a bigger picture perspective. Conor, now that you guys are -- we're in February. Hard to believe that we're almost a year into this. You talked a lot about improvement, especially restaurants, entrepreneurs. So as we look at it, you have 92% rent collections, you have deferrals at less than 2% in the fourth quarter. So, that's about, always Gary do math on a public call, but it sounds like about 6% remaining. How do you feel about that 6% remaining credit? Do you feel like basically, let's call it, half of those folks will pay and be good; the other half, so 3%, will go tapioca? Or do you feel -- like, where do you feel -- because ultimately that's the real question that we're all getting at, is you're sitting here. We know there's going to be residual. But it would also seem like right now you have a pretty good handle on which tenants are going to make and which tenants you've got your guys ready to go lock the store.

Conor C. Flynn -- Chief Executive Officer

Yeah, it's a good question, Alex. And I think it's one that changes almost weekly. I mean, if you look at what happened with AMC, that was pretty remarkable this year. The stock run up and have them take advantage of it. And so, I think that you have to go tenant by tenant, which we can do offline. But a lot of it comes down to the categories that were most impacted, that are still closed. Right? Or that still have significant capacity constraints and how quickly can they get reopened, how quickly can they come back to full capacity. Those are all questions that are really hard to answer, because it all depends on things that are outside of our control. And so when you look at how we've approached it, our mentality is if a retailer has kept their lights on through this pandemic to this point, it's our responsibility to try and help them make it through this last phase of it. And hopefully, this is the last phase of it. And so, that's the way we're approaching it. And we're trying to make sure we work with those tenants that have put their best foot forward to throw everything at staying afloat. And it's luckily that Kimco is a big partner with a lot of these retailers that can help them and navigate the PPP funding round, can structure leases to give them the breathing room to hopefully make it through. But it is a tenant-by-tenant approach that we have done that really takes into account the category that they're in, the capacity constraints that they're facing, potentially the product that they are waiting to get, if it's blockbuster movies. So, all these things are really components that make up the assumptions that come to our guidance range that we feel comfortable disclosing and feel like it's our job to exceed it.

Alexander D. Goldfarb -- Piper Sandler & Co. -- Analyst

But I mean, are you -- is it basically, Conor, the 6% outstanding, are all those people's lights on or half of their lights are off? So just -- I mean, just a big picture. You must have some big picture views on that 6% remain?

David Jamieson -- Executive Vice Present, Chief Operating Officer

Yeah. I can add in a little bit here, Alex. Thanks, it's Dave. Yes. So it does vary, as Conor mentioned. But it's not to say that, just in terms of the uncollectibles, the tenants themselves are dark or they vacated. We should be working out a deal where we cut a deferment early on in the pandemic and had their collection start date in January, but say they're on the West Coast and they had to go through a second closing, which impacted their business more so than originally expected, we probably work with them on extending out that deferment start date. And that could be in process now and just not yet papered. So, that's not uncommon in some of these situations. While in others, we're working out what would make a reasonable agreement between both parties where we get some additional flexibility within their existing lease to reposition redevelopment parts of the center and we're still negotiating that. So I wouldn't, by any means, take that 6% and assume that they are dark or they vacated. It's not that; it is just an ongoing dialog with the tenants there.

Alexander D. Goldfarb -- Piper Sandler & Co. -- Analyst

Okay. And then just second question is, SPACs are all the rage. You guys are obviously having success with the plus business. So, are your -- how are your views of raising a SPAC similar to what Simon is doing? Is that something where you would see a positive because you could raise outside capital, therefore free of Kimco capital? Or that's not something that you're really actively pursuing?

Conor C. Flynn -- Chief Executive Officer

So, Alex, it's a good question, I think, obviously, there is a crazy amount of SPACs every day. If you remember, back in June, which seems like an eternity ago, we did do a press release that we were exploring an investment vehicle, when you can extrapolate from there. What we elected to do was really focus on the core business. We felt like there was a lot of blocking and tackling that we needed to focus our time and effort on. And when you look at what's going to drive earnings growth, what's going to drive outperformance for Kimco and their shareholders, we believed it was focusing on the core business. And then continuing to look for opportunities, focusing on retailers that are real estate rich, looking to take advantage of dislocation in our sector because of our balance sheet strength, because of our liquidity position and then provide that upside to our shareholders versus a separate entity.

Alexander D. Goldfarb -- Piper Sandler & Co. -- Analyst

Okay. Thanks, Conor.

Operator

Our next question is from Craig Schmidt from Bank of America. Go ahead.

Craig Schmidt -- Bank of America / Merrill Lynch -- Analyst

Thank you. On previous calls, you've mentioned having over 10 grocer opportunities that were currently in negotiations. Thanks for the mention on Amazon Fresh. I wonder if you could update us where those other opportunities stand?

David Jamieson -- Executive Vice Present, Chief Operating Officer

Sure, Craig. It's Dave. We executed three over the quarter in Q4. And the balance of the opportunities are in various forms of discussion. Could be early LOI stage to negotiating a lease. And that population does vary. As the negotiations progress, some fallout, some new opportunities come on. But I'd say this, our regional teams are hyper-focused on exploring every opportunity with the grocers at all of our locations, either back-filling existing grocery or conversion to -- of non-grocery to grocery. And we're seeing the demand drivers from really all of -- all sectors, whether it's the value-oriented grocers of Aldi and Lidl to the specialties of Sprouts, Trader Joe's and others to the more mainstream. And it is really an overall effort. And also the ethnic-oriented grocers. Whether it be 99 Ranch, H Mart, they are all actively expanding to increase our market share in each of these markets. So, we're encouraged by that focus and by the conversations we've been having with each of these operators. So, we see this as -- our goal long term is really to convert more than we currently have today at grocery.

Craig Schmidt -- Bank of America / Merrill Lynch -- Analyst

Great. And then just looking at Boulevard, I see that it's 88%. Do you know what percent is open and what is the scheduling of those openings? And then just finally, how are retailers looking at new projects versus the existing projects regarding leasing?

David Jamieson -- Executive Vice Present, Chief Operating Officer

Sure. The Boulevard [Indecipherable] to ShopRite open. They opened in, I believe, October of 2020. They had an incredible opening. It was actually the biggest in their fleet history. So, that was a great first sign of what we see as the long-term success of the Boulevard. The balance of the junior box tenants are scheduled to open in the second half of this year, going in summer and then into the fall of '21. And then that will be complemented by the small shops on the first floor that will go through '21 into '22 as well. So, that's what was planned and we're currently on track for that.

And as it relates to the demand between new projects and existing, obviously, for us, the focus is on our existing portfolio, the core portfolio. We've been very encouraged by the activity we've seen both at Dania and the Boulevard through -- as we're coming through the pandemic and leasing starts to accelerate. And when you look at the quality of real estate and the quality of the projects, fortunately they speak for themselves and drive the demand there.

Craig Schmidt -- Bank of America / Merrill Lynch -- Analyst

Thank you.

Operator

Our next question is from Ki Bin Kim from Truist. Go ahead.

Ki Bin Kim -- Truist -- Analyst

Thanks and good morning. So, you guys talked about some of the cadence that we should expect in 2021. But I also was curious, we're almost done with the first quarter, what kind of impact do you think you will see from kind of seasonal bankruptcies?

Conor C. Flynn -- Chief Executive Officer

So far, we haven't experienced a whole lot of bankruptcies this quarter. Ray can comment on the detail, but really the last bankruptcy that was of any sort of significance was back in, I think, it was actually November.

David F. Bujnicki -- Senior Vice President, Investor Relations & Strategy

Middle of November. Middle of November, Conor.

Conor C. Flynn -- Chief Executive Officer

Yeah, November. [Speech Overlap] Bujnicki is right.

David F. Bujnicki -- Senior Vice President, Investor Relations & Strategy

[Indecipherable] filed on November 15th and actually came out by the middle of December. And we've had no major bankruptcies for basically three months now. And obviously, AMC was on our radar. But with all the craziness up in the market, they have gotten themselves some breathing room. So, we just keep monitoring the movie theaters and some of the gyms. But they seem to be coming out of this right now.

Ki Bin Kim -- Truist -- Analyst

Okay. And I know this is not only a mutually exclusive situation, but I was just curious if there is two competing spaces. I'm sure you have some high-quality centers with high rent and you have some others that are maybe lower quality with lower rent. Theoretically speaking, is a retailer more inclined to go after your higher quality, higher rent location or the lower quality one? And I know those aren't mutually exclusive and each retailer has a different target zone. But I was just curious to just high level.

David Jamieson -- Executive Vice Present, Chief Operating Officer

Yeah, it's -- there are so many variables they get factored into a retailer's decision to take any particular space. Sometimes, there's a retailer that has significant demand in one of their existing locations and so they're looking for a pressure valve to release some of that demand at one store. So they'll look at, say, for a grocery, they'll maybe take a smaller format in our center if that was available. Some people look at book and in a trade area, while others look to saturate it with multiple stores. Ross has a double-down strategy where they will, in their higher productive markets, still look to put stores almost across the street from one another. So, it really just depends on where they are in terms of their fleet strategy and how it complements how they view trade areas and grabbing market share. And with the pandemic, what it's really done is accelerate, I think, a lot of the discussions that have been ongoing, whether it's curbside, Bovis, distribution, last mile. And so, those conversations are ongoing and ever-changing within the retailer world. And so, it's incumbent upon us to stay very, very close to them, knowing that month to month their view of the market or a site may vary and may change to our benefits. We want to make sure that we're always out in front.

So, long story short, it's really hard to peg it toward just one element. It's a number of attributes and variables that get factored in.

Ki Bin Kim -- Truist -- Analyst

Got it.

Conor C. Flynn -- Chief Executive Officer

I would say that the retailers also are very focused on the curb appeal and the accessibility as well as the convenience factor. So, the four-wall EBITDA is usually very profitable for our major retailers and so, they're really focused on making sure they get the right real estate. And right now, they have been taking advantage of, I think, some of the market share that's up for grabs, where some of the weaker players are not necessarily defending their flank and they're coming in and being able to upgrade their portfolio quality.

David Jamieson -- Executive Vice Present, Chief Operating Officer

Yeah. And I would actually -- Sorry, I'd just add one more thing to Conor's point. Retailers are also looking at well-capitalized landlords and into this idea of curb appeal. I mean, we've invested a tremendous amount making sure that our centers show extremely well and are the highest class in any given market, which we represent. But it's really long term making sure that the landlord themselves can continue to make those investments to make it as appealing as possible to service their customers, which are the same as our customers. And that does factor in as well.

Operator

Our next question is from Juan Sanabria from BMO Capital. Go ahead.

Juan Sanabria -- BMO Capital Markets -- Analyst

Thank you. And excellent pronunciation, operator. Just curious if you guys could give a little bit more flavor with regards to AFFO or FAD relative to your NAREIT FFO guidance. And as part of that, how to think about taxable income, given your comments on how your, at least as a kind of a worst case, and correct me if I'm wrong, if the dividend, going forward if it's readjusted?

Glenn G. Cohen -- Executive Vice President, Chief Financial Officer & Treasurer

Well, we are targeting the dividend, at least, to be really right at around taxable income. And for the most part, that should bring us to a level where our AFFO would probably be in the mid 70s, as a payout ratio. So, that's kind of where the target is. Again, you have the difference of the capital that's spent on TIs and leasing commissions in capex. Obviously, that are the reconciliation between FFO and the AFFO. But that's kind of where we see it. Taxable income, we continue to look for all sorts of tax strategies to manage it and keep it in check. But again, I think you'll get a better flavor once we meet again with our Board and we declare our first quarter dividend.

Juan Sanabria -- BMO Capital Markets -- Analyst

Great, thank you. That's it from me.

Operator

Our next question is from Linda Tsai from Jefferies. Go ahead.

Linda Tsai -- Jefferies -- Analyst

Hi. In terms of staying opportunistic during this time of disruption, are there specific markets where you're seeing better opportunities, like maybe regions where lock-down restrictions were stricter? Or is it not so black and white?

David Jamieson -- Executive Vice Present, Chief Operating Officer

Yeah, it really hasn't been geographic in nature. I think it's very specific to individual circumstances. So as we talked about a little bit previously, we have started to see some additional opportunities from owners that have specific capital needs for their assets, whether it's repositionings or debt maturities. So, I wouldn't necessarily break it down in terms of a trend; in terms of location, geographics or property type. It is sort of a specific circumstance of that individual owner or investor.

Linda Tsai -- Jefferies -- Analyst

Thanks. And then I think earlier, you guys said that you're seeing more demand for space from fitness operators. Is this from existing ones or new entrants?

David Jamieson -- Executive Vice Present, Chief Operating Officer

We're seeing demand from a lot of value-oriented fitness operators that plan at the crunches of the world, where I think they see the opportunity here again to enter markets or centers that otherwise weren't previously available. And I also think the price point that they're servicing and providing is probably appropriate coming out of the pandemic, to start. That's usually where they see the quickest expansion opportunity. With that, I'm sure we'll see variants of boutique fitness that emerge. It always is the case. Obviously, the at-home, the online app trends that have been developed through the pandemic; I'm sure forms of that will transfer over into brick and mortar in the four walls and then we'll see a combination of all those come together.

Linda Tsai -- Jefferies -- Analyst

Thanks.

Operator

Our next question is from Floris van Dijkum from Compass Point. Go ahead.

Floris van Dijkum -- Compass Point -- Analyst

Thank you. Van Dijkum. Thanks for taking my question. Conor, you guys had some interesting comments about your land value and about the -- obviously, you have indicated you're looking at doing more grocery-anchored deals, obviously grocery-anchor -- adding to your existing centers but also may be looking at buying grocery-anchored centers. What is the -- How do you think about the relative value of grocery-anchored versus lifestyle centers? No one seems to talk about lifestyle centers these days. And also, maybe talk about the opportunity that you have within your ground rent portfolio. And is that being undervalued, and how do you look at all those components?

Conor C. Flynn -- Chief Executive Officer

It's a good question, Floris. When we see the grocery opportunity, it's first and foremost being led by the demand we're seeing from all the different grocery categories that Dave outlined. It's interesting, there's a big cap rate difference when you have a grocery anchor versus when you don't. And we have a lot of product that lends itself to just leasing up boxes to grocery stores, which in my opinion is the best risk-adjusted return we can find today. And so, that's where our focus is. And we have deep relationships with these retailers that are looking to expand. And so we have, I think, a deep pipeline of opportunity there that we want to take advantage of. And that may lend itself to acquisitions as well in the future where we can buy assets that don't necessarily have a grocery component, but we have the connections and we have the wherewithal to sort of line up that grocer before we even close on that asset, because it does compress the cap rate. It does start to generate some additional traffic flow, some cross-shopping that usually leads to higher rents in the surrounding spaces. And that's the secret stash. We want to sort of get that lift without paying for it. So, we are encouraged by what we're seeing so far. We have a lot of work to do, but we feel like the strategy and the focus is there across the organization.

On your second question, between lifestyle and grocery-anchored. Like, lifestyle is sort of the dynamic that got hit hardest from the pandemic, right? If you think about Lifestyle, it's usually heavily loaded with restaurants and entertainment. And most of those leases are percentage rent driven. And so, you sort of live and breathe with the success of your retails. And so on the best days, you're killing it; and the worst days, you're taking it on the chin, just like they are. So, it's one of those product types that I think is very volatile. It's not very essential and defensive. But there is opportunity there, if you can underwrite it correctly. I'm not sure we're going to be playing in the pool of lifestyle centers, but we'd like to underwrite everything, just to get a sense of where we think we can add value. And maybe lifestyle -- portions of lifestyle centers lend themselves to or repositioning to a grocery-anchored center, or maybe some of them can be unlocked for future densification through entitlement work. So, that's where our platform really comes in and has value. As we feel like we can look at the real estate and not necessarily just judge it on the way it's today, but try and envision what should be there with a blank slate and then have our team go and unlock that highest and best use net value for our shareholders. And so, that's the way we look at real estate.

Floris van Dijkum -- Compass Point -- Analyst

Thanks. Thanks, Conor, for that. And in terms of your ground rents portfolio. And Ross, maybe you can comment on this. I think you have something like $100 million of ground rents. I mean, the cap rates on those things are really tight these days and probably under-appreciated by the market. What about doing a larger scale transaction to realize some of that value?

Ross Cooper -- President, Chief Investment Officer

Yeah. No, you're exactly right. I mean, I think the value is under-appreciated for that product. The challenge that we would have in terms of unlocking that is that a significant amount of that is contained within some of our best assets. So, it's one thing to have a freestanding ground lease with a high-credit investment-grade tenancy; it's another when that ground rent is contained within the heart of some of our best assets. So, we obviously want to retain control. There's much of the GLA and the acreage of our best assets to enhance and create future opportunity. So, we've certainly been approached and we know that there is underlying value in a lot of those leases, but our objective is to retain that and to continue to turn that into future value because those, in many cases, are the lowest-rent large parcels that one day could be something significantly greater.

Conor C. Flynn -- Chief Executive Officer

Yeah. The other initiative we have, as I mentioned, is on the entitlement side. I think we've done a number of apartment complexes on ground leases, and I think that bodes well for our future to do more of that to help unlock the value, also control the real estate and start to continue to expand that percentage of ABR coming from ground leases, which I think is now over 11%.

Floris van Dijkum -- Compass Point -- Analyst

Is there any sort of -- can you quantify what the future potential of something like ground rents under apartment complexes could be?

Conor C. Flynn -- Chief Executive Officer

We did start to disclose the entitlements on the supplemental, and you can start to extrapolate valuations there on a per unit basis and we can help you on some of the ground lease deals that we've done so far that we feel like is a good barometer for the future.

Floris van Dijkum -- Compass Point -- Analyst

Thanks, guys. Appreciate it.

Operator

Our next question is from Chris Lucas from Capital One. Go ahead.

Christopher Lucas -- Capital One Securities, Inc. -- Analyst

Hey, good morning, guys. I just wanted to go back to the dividend policy, if I could. Normally, at this point, you guys would have declared the first quarter dividend. Just kind of curious as to whether you're going to be paying quarterly dividends. Should we interpret much in sort of the first dividend announcement as it relates to future run rate, or is the focus going to really be on getting to sort of year-end and just paying out the taxable minimum? So, it could be a little lumpy.

Glenn G. Cohen -- Executive Vice President, Chief Financial Officer & Treasurer

No. Hi, Chris. Now, we are planning to do quarterly dividends as we always have. And we did even -- we did quarterly dividends even during 2020. So, we temporarily suspended it and we shifted the timing. So, we'll meet with our Board later this month and declare the dividend for the first quarter and it will be paid in the first quarter. And we do plan to have, as I mentioned, a more normalized dividend level that will reflect closer to taxable income. So, I think you'll see a normalized level and something that over time we should be able to grow from.

Conor C. Flynn -- Chief Executive Officer

Yeah, Chris, the dialog with the Board was focused on, really since we're in the midst of the pandemic still, why don't we see what we collect, why don't we see what the rent is that's coming through the door for the first quarter before we announce the dividend. And I think that's logical. I think that's the way we -- in terms of understanding what we really have before we elect a dividend amount.

Christopher Lucas -- Capital One Securities, Inc. -- Analyst

Okay, thank you.

Operator

Our next question is from Paulina Rojas-Schmidt from Green Street. Go ahead.

Paulina Rojas-Schmidt -- Green Street Advisors -- Analyst

Good morning. Could you please provide an update on the performance of your tenant assistance program, particularly as it relates to the last round of PPP loans? Are your tenants taking advantage of these resources in a meaningful way in your opinion? Also more broadly speaking, what is your assessment of the health of your local small tenants? Are you worried? Not so much?

Conor C. Flynn -- Chief Executive Officer

We have seen good engagement on the tenant assistance program. Really, the partners that we align with are best in class in terms of navigating the PPP funding round. The details are, we have a couple of hundred already engaged with that program. I think it was... Dave, correct me if I'm wrong, was it 300 or 400?

David Jamieson -- Executive Vice Present, Chief Operating Officer

I think it is around 300.

Conor C. Flynn -- Chief Executive Officer

300. So, we -- it's been so far so good. But we're waiting to see obviously how much funding they are able to process. And again, I think at this point in time in the cycle, there's people that need the access to capital and it was our mission to make sure that we give them the fastest path possible to get access to that capital.

And then Dave, you want to comment a little bit about our small shops?

David Jamieson -- Executive Vice Present, Chief Operating Officer

Yeah, with the small shops. We're actively speaking to each of them on a regular basis. Some have done fairly well through this, while others have continued to struggle. That's no surprise, I think, to anyone. But the small shops are the lifeblood that we want to continue to hold close to ourselves to make sure that we provide all the resources and the tools that they need to get through the pandemic and that they are in the best position -- on the best footing to really thrive on the back end of the pandemic. So, we continue to work very closely with them. And TAP is a great example of one of those tools that we deployed early on and we redeployed when the second round of assistance came. And we'll continue to modify and provide additional resources as needed to help build their business back.

Paulina Rojas-Schmidt -- Green Street Advisors -- Analyst

And then a second question. Do you think there are tenant categories that will emerge from this pandemic more permanently damaged, and do you see any structural changes? I'm trying to think beyond the temporary impact of social distancing measures and such, and know your opinion about tenant categories that you think will take longer to heal.

David Jamieson -- Executive Vice Present, Chief Operating Officer

Well, I think -- In terms of structural changes, again, I think COVID and the pandemic were catalyst to trends that were already emerging; whether it's Bovis, curbside etc. These are conversations that we've had for several years prior to the pandemic. It just pulled all those efforts forward. And essentially overnight, we are required to deploy and build out the infrastructure to support that. So, I'd expect just the efficiency of how consumers and retailers engage with each other will continue to improve. And with that, we'll create new opportunities. Whether it's wholesale modifications or changes to business strategy, it's hard to tell. It really is case by case. But I think it just does give retailers more opportunities to create touch points with their end customer. And for us, it's important that, as a landlord, we invest the time and the resources necessary to make sure that where the desired location for those retailer is and get built into the social fabric and behavior of the customers to make sure that they always return back to our centers. And that's where the engagement both to the shopper as well as the retailer is really important for us, just to best understand how these trends are emerging.

Paulina Rojas-Schmidt -- Green Street Advisors -- Analyst

Thank you.

Operator

This concludes our question-and-answer session. I would now like to turn the conference back over to David Bujnicki for closing remarks.

David F. Bujnicki -- Senior Vice President, Investor Relations & Strategy

Just want to thank everybody that participated on our call today. Please continue to be safe, and I wish you the best during this earning season. Thanks so much, and take care.

Operator

[Operator Closing Remarks]

Duration: 79 minutes

Call participants:

David F. Bujnicki -- Senior Vice President, Investor Relations & Strategy

Conor C. Flynn -- Chief Executive Officer

Ross Cooper -- President, Chief Investment Officer

Glenn G. Cohen -- Executive Vice President, Chief Financial Officer & Treasurer

David Jamieson -- Executive Vice Present, Chief Operating Officer

Kathleen Thayer -- Vice President, Corporate Accounting

Richard Hill -- Morgan Stanley -- Analyst

Caitlin Burrows -- Goldman Sachs -- Analyst

Samir Khanal -- Evercore ISI -- Analyst

Haendel E. St. Juste -- Mizuho -- Analyst

Derek Johnston -- Deutsche Bank Securities Inc. -- Analyst

Michael W. Mueller -- J.P. Morgan Securities Inc. -- Analyst

Greg McGinniss -- Scotiabank -- Analyst

Michael Bilerman -- Citi Investment Research -- Analyst

Alexander D. Goldfarb -- Piper Sandler & Co. -- Analyst

Craig Schmidt -- Bank of America / Merrill Lynch -- Analyst

Ki Bin Kim -- Truist -- Analyst

Juan Sanabria -- BMO Capital Markets -- Analyst

Linda Tsai -- Jefferies -- Analyst

Floris van Dijkum -- Compass Point -- Analyst

Christopher Lucas -- Capital One Securities, Inc. -- Analyst

Paulina Rojas-Schmidt -- Green Street Advisors -- Analyst

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