Federal Realty Investment Trust (FRT) Q2 2019 Earnings Call Transcript

FRT earnings call for the period ending June 30, 2019.

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Federal Realty Investment Trust (NYSE:FRT)
Q2 2019 Earnings Call
Aug 2, 2019, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, and welcome to the Federal Realty Investment Trust Second Quarter 2019 Earnings Conference Call [Operator Instructions]. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions].

I would now like to turn the conference over to your host, Ms. Leah Brady. Ma'am you may begin.

Leah Brady -- Investor Relations Manager

Good morning, everybody. Thank you for joining us today for Federal Realty's Second Quarter 2019 Earnings Conference Call. Joining me on the call are Don Wood, Dan Guglielmone, Jeff Berkes, Wendy Seher, Dawn Becker and Melissa Solis. They will be available to take your questions at the conclusion of our prepared remarks. A reminder that certain matters discussed on this call may be deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include any annualized or projected information, as well as statements referring to expected or anticipated events or results. Although Federal Realty believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, Federal Realty's future operations, and its actual performance may differ materially from the information in our forward-looking statements and we can give no assurance of these expectations can be attained. The earnings release and supplemental reporting package

that we issued yesterday, our annual report filed on Form 10-K and our other financial disclosure documents provide a more in-depth discussion of risk factors that may affect our financial condition and results of operations. These documents are available on our website.

And with that, I will turn the call over to Don Wood to begin our discussion of our second quarter results. Don?

Donald C. Wood -- President & Chief Executive Officer

Thank you, Leah. Good morning, everybody. Continuing to reliably grow bottom line results despite headwinds remains our focal point and the second quarter didn't disappoint. FFO per share of $1.60 compared favorably with our internal expectations. The street and $1.55 recorded in last year's quarter growth over last year's quarter was 3% the 30th consecutive quarter of increased FFO per share excluding of course a couple of debt prepayment charges over that time no excuses just bottom line growth.

Comparable property income grew at 3.5% largely leave the result of some big rent starts from proactive releasing initiatives like Anthropologie, Bethesda Row, Mudgee, Third Street Promenade and Bob's furniture and [Indecipherable] with a little help from lease termination fees. Lease termination fees are clearly increasing. It's not a number, then in amount as numerous retailers are reevaluating the business plans and in some cases negotiating out for a plethora of reasons.

When it's economically advantageous for us to engage, we do, when it's not, we don't. Lease termination fees were $2.2 million in the second quarter compared with $1.6 million in last year's second quarter and contributed 45 basis points to the comparable property income number. Sometimes the comparison, which includes all stores of the property-level cash flow in all periods presented is positive, sometimes it's negative, but it's always an integral part of our business plan and a clear demonstration of the strength of our contracts.

Lots of deals done in the second quarter. In fact, at 113 new and renewed leases for comparable space more than we've ever done in any three month period before. There is clearly pressure on pushing rent overall, but overall we're having pretty good success. Those 113 leases represented 379,000 square feet at an average rent of $42.68 a foot, 7% higher than the $39.75 being paid by the previous tenant. As you might expect, we've had the most success meaningfully increasing rents of those shopping centers that have been or are well along in being redeveloped and repositioned for sustaining their leading market position.

Properties like the Assembly Square Power Center with the success of the adjacent assembly row mixed use community has clearly increased its value, more to come on that power center in the coming quarters by the way. Our Coconut Grove in Miami, with the anticipation of a completely new CocoWalk is translating at the higher rents net of capital at both at redeveloped property and in the adjacent neighborhood. We've got other examples where will roll back rates in fact more examples and at any time since the '09-'10 timeframe but always for the solidification in the merchandising base to create long-term value at the shopping center overall.

Those examples serve as a pretty good microcosm of the shopping center leasing environment for us today. The bar has been raised on the product and place being offered. And the importance of a strong location has never been more critical to a retailer's decision. We hear that from retailer after retailer. The G&A spike in the quarter is substantial at about $3 million, roughly half of that $0.02 a share is due to the accounting change this year affecting the capitalization of leasing cost while the rest of it is attributable to strategic investments in our people and a better and more efficient computer systems.

So let's talk a bit about future growth generators and a quick update on CocoWalk, Assembly Row Phase 3, 700 Santana Row, Santana West and Pike & Rose Phase 3. First of all and importantly, all five remain on budget and on schedule, with the possibility of increasing scope and profitability at CocoWalk if we can find a way to get to the left side of the center earlier than we had anticipated. We'll know by next quarter. That's good news there.

All five are well under way with Santana West just recently sold and acquired nearly $1.2 billion in total capital over the next three years. [Indecipherable] will talk about how well the balance sheet is positioned to handle that in a few minutes. So the initial $80 million or so of annual incremental cash flow to come from those investments will break out roughly at $55 million from office tenants, $15 million from residential tenants and $10 million from retail tenants at these already established mixed use communities. Splunk's full building deal, Puma's North American headquarters, [Indecipherable] space concept owing capitals CocoWalk lease and even Federal Realty's new headquarters serve as a great foundation on the office side.

On the retail side, strong pre-leasing at all projects gives us confidence that we will be enhancing the places that we've created and nurtured and unabated demand for residential product at assembly all service confidence building indications of our continued success at these five A plus locations. By the way, and certainly worth recognizing that the boutique hotel that many of you state in during our Investor Day in May, the Row Hotel at Assembly Row was just named one of the best hotels in the world by travel and leisure, their ranking was based on a hotels location, service, facilities, food and overall value, pretty cool and representative of the type of quality that we aspire to.

Okay. But what else. What's new. Darien Connecticut, our investment committee and board approved moving forward with $115 million mixed use redevelopment to our dairy and shopping center. The plan calls for a newly merchandised 120,000 square foot ground floor retail environment with a 122 rental apartments above. Ground breaking is expected late this year with stabilization in 2023. We expect the yield at a better than 6% cash on cost and created hugely upgraded plates directly up in the Row and train station and this affluent suburb. As more than a few of you on this call are quite familiar with this location, we expect that you monitor our progress closely.

At San Antonio Center in Mountain View, California, some of you have seen from public documents, but we have an agreement to sell under the threat of condemnation to the loss out those California school district roughly 11.7 of our 33 acres San Antonio Shopping center for $155 million. That 11.7 acres will be the site of a new school that will be financed by the municipality primarily with public bonds. We paid $62 million for the entire 33 acres shopping center at about a six cap, four years ago. Please let that sink in. In terms of what that says about the implied land value in tech centric Silicon Valley.

We won't be able to keep the entire $155 million as it is our responsibility to use a portion to ultimately pay out existing tenants on the site, who will be displaced by the new school as we are in active negotiations with those tenants, we won't estimate that payment at this time, but it will be significant. Closing on the $155 million is expected late this year. In terms of acquisitions and dispositions, we're getting more active. During the second quarter, we closed on the sale of both Free State Shopping Center in Bowie Maryland to a private buyer and a 4-acre portion of Northeast shopping center in Philadelphia to grocer legal for combined proceeds of $80 million.

We also expect to close in the third quarter on the sales of two California assets for a combined proceeds nearly $70 million. So all told, that's about $150 million in disposition proceeds below a six cap being deployed in identifying acquisitions and developments with far better growth prospects. On the acquisition side, we've got a few deals tied up and in due diligence phase in our existing markets on both the East and West Coast for a combined $250 million, one of which is in the Primestor joint venture.

Closings on all are expected later this year, we'll be able to go through detail and rationale more completely assuming due diligence goes as expected. We're very excited about those opportunities. And that's about it for my prepared remarks today for the quarter. Let me now turn it over to Dan for some additional color and then open the line to your questions.

Dan Guglielmone -- Executive Vice President, Chief Financial Officer and Treasurer

Thank you, Don and good morning. I'm going to change up my usual order of things and start my remarks with Federal's dividend. At our Board meeting yesterday, we increased our dividend again by $0.03 to $1.5 per share per quarter or $4.20 per share annually roughly a 3% increase. That marks the 52nd consecutive year of increasing dividends at federal. Let that sink in. Federal has been increasing its dividend every year since 1967 at a compounded annual growth rate in excess of 7% over those 52 years. That's through economic cycles, the ebbs and flows of retail, recession, hyperinflation, I could keep going. This level of consistency in growth is exceptional and unparalleled in the REIT sector and points of the critical importance of driving bottom line growth year in and year out, no excuses.

But now let's move on to the balance sheet. From a capital structure perspective, we are extremely well positioned to fund our roughly $1.2 billion development pipeline as we move ahead to execute on the growth focused and diversified business plan that we outlined on our Investor Day in early May. Our credit and liquidity metrics are strong as they've been in years.

at quarter end, our net debt to EBITDA, stood at 5.1 times versus 5.4 at 1Q, our fixed charge coverage ratio is up to 4.4 times versus 4.2 with 1Q. We've extended our weighted average debt maturity to 11 years. We had nothing drawn on our credit facility at quarter end and we had over $100 million of cash on hand.

And I would like to note that we achieved these improved leverage levels without raising any common shares during the quarter. As we have outlined previously over the long term, we intend to keep our credit metrics in line with our A minus rating with net debt to EBITDA below 5.5 times over the long term and fixed charge coverage above 4 times. As you can see we have organically created meaningful excess financial capacity. We manage the balance sheet to position Federal to outperform throughout the cycles we inevitably face in our business.

As Don outlined, we successfully executed an $80 million of asset sales during the quarter, with another $70 million under contract blended at a cap rate in the high fives. Including the expected net proceeds from the San Antonio Center condemnation sale expected by year end and the balance of our condo sales at Assembly and Pike & Rose, we have the prospects for roughly another $100 million of net proceeds, which combined with the executed and under contract dispositions totals roughly $250 million in net asset sales for 2019, which will bring that blended cap rate down below 5%.

This activity meaningfully enhances our sector-leading cost of capital and materially derisks our roughly $1.2 billion development pipeline. As I just mentioned, we continue to successfully execute on the sale of condos at Assembly Row and Pike & Rose of the 221 total units, 210 have closed with another 700 contract leading just four units left to sell. Further demonstration of the strength of both of these signature mixed-use projects. We're also active on the debt capital markets front recently, opportunistically issuing $300 million of 10-year unsecured notes at 3.22% paying off our $275 million floating rate term loan that was coming due in November.

Further, in July we recast our unsecured revolving credit facility, increasing its size from $800 million to $1 billion, extending its ultimate maturity with options out until 2025 while also reducing the interest rate spread and lowering the cap rate on our borrowing base. Our capital structure could not be better positioned. A quick review of the numbers for the quarter highlights the record-setting $1.60 of reported FFO per share, which was a $0.01 above consensus. The numbers in the second quarter were driven primarily by continued benefit from our proactive leasing activity, lower real estate taxes in demo expense and another solid quarter for term fees offset by higher G&A and continued drag from our redevelopment and remerchandising initiatives at properties, both in the comparable and non-comparable pools.

As Don mentioned, our comparable POI metric came in at 3.5% for second quarter as well as for the entire first half of the year well ahead of our expectations. The net benefit from proactive releasing activity boosted the result by 135 basis points versus 2Q, 2018 and was better than we had forecast. With a modest boost from term fees of 45 basis points, we also had a tailwind from Mattress Firm bankruptcy payments of 40 basis points although, let me highlight that we also again faced headwinds of almost 85 basis points of drag from the repositioning programs at some of our larger assets like Plaza El Segundo in LA and Huntington on amount.

As a results of another strong quarter, we are increasing our forecast from about 2% to a range of 2% to 3%. With respect to FFO guidance, we are affirming our range of $6.30 to $6.46 per share. Let me add some commentary here. I just wanted to remind you all that the timing of the start of straight-lining rent at 700 Santana has been pushed back into the first quarter of 2020. We discussed this point on the last quarter's call. However, there is no change in the actual cash rent start, which remains in the third quarter of 2020. Given the additional opportunities on the west side of CocoWalk that Don alluded to, we expect additional drag versus our forecast at CocoWalk for the balance of the year.

Plus we will have some modest dilution from the $80 million of asset sales completed and the $70 million under contract, which we expect will close in 3Q. This will be roughly a $0.01 or $0.02 of dilution, which was not reflected in our initial guidance. Let me comment on G&A, which was up for the during the second quarter. However, there were some one-timers in there, we still expect G&A to run at $10 million to $11 million per quarter per our initial guidance in February. Before I turn the call to Q&A, let me build on one of the points alluded to earlier in the call. The fact that we have grown FFO per share for 30 consecutive quarters and the fact that our guidance reflects annual growth in FFO once again, which will give us 10 consecutive years of FFO growth. This consecutive consistent focus on bottom line growth by management is what drives Federal's performance to the top of our sector, specifically versus our peer group the Bloomberg shopping center index.

Over the last three years, FFO growth per share has exceeded our peers in the index by 8.2% per annum. Over the last five years that bottom line growth represents 6% per annum, outperformance over 10 years at 7.7% higher FFO growth. Over 15 years the numbers are similar. Other metrics while instructive simply shouldn't matter as much.

And with that operator, you can open the line for questions.


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Questions and Answers:

Operator

Thank you. [Operator Instructions] And our first question comes from the line of Alexander Goldfarb with Sandler O'Neill. Your line is open.

Alexander Goldfarb -- Sandler O'Neill -- Analyst

Hi, good morning. Good morning down [Phonetic] there. Just a few questions. First I certainly appreciate the leasing comments that you guys talked about, but maybe you could just address a few your tenants and how you're thinking about bad debt for the balance of the year, notably obviously [Indecipherable] in the news over the past few months and Ditech [Phonetic] has just come in the news recently for potential bankruptcy, so how are you guys thinking about bad debt year-to-date versus budget and what are you thinking about for the balance of the year?

Dan Guglielmone -- Executive Vice President, Chief Financial Officer and Treasurer

I think bad debt, kind of, is playing out consistent with what our guidance was at the beginning of the year. Alex, I think that we're probably getting hit a little bit less than I think that we had forecast, but look, there's a lot of news out there and we've got some caution outlined for the balance of the year just because some of those tenants that you alluded to, but I don't think we expect any near-term impact from a tenant like [Indecipherable] and beyond at this point for the balance of the year and even into next year.

Donald C. Wood -- President & Chief Executive Officer

I will tell you, Alex. So when you raise -- when you raise Ditech [Phonetic] it's obviously a name and since we're on around for months, we have had proactive other companies coming to us for that space. I don't think we'll have any issue there to the extent, it does happen, hope it does not [Phonetic], hope they work through it and all could I do think it's a great product, but again in that real estate, and I know you know that well, that won't be, if it is [Indecipherable] them, it won't be taken for long.

Alexander Goldfarb -- Sandler O'Neill -- Analyst

Okay. And then the second question, Don, is just on think about Fresh Meadows, you guys had talked about densifying that with mixed use residential clearly change of rent regulations here in New York, so I'm just thinking about how you guys are thinking about the residential, your residential plans if those have changed for that asset and then just more broadly speaking , you highlighted the Santana, I mean sorry, San Antonio condemnation is your view that some of these projects where you had sort of land bank may increasingly, others may look at those or your plans may change as municipalities change regulations or you guys feel pretty comfortable with residential Fresh Meadows or your longer-term redevelopment plans at San Antonio?

Donald C. Wood -- President & Chief Executive Officer

Yeah. Let's talk about both those things. They are very different obviously, first of all in Fresh Meadows Queens where we're not at all developed in terms of a plan, what that plan would be, how would be priced, how would be entitled to all of that. The point of all that discussion at or that piece of the discussion at the Investor Day was

was simply to identify something that we have identified and are looking at hard to be able to intensify the use on it, obviously it's an amazing piece of land to be able to do that. How specifically that will happen is in the early stages of development. So whatever happens with rent control or anything else in New York, will play into that conversation in the early stages, not something that has to be retrofitted later on. So more to come in time, but put that in the back at your head, if you wouldn't mind. In terms of San Antonio Center, look there are a few areas of this country where economic activity is simply off the charts. Obviously, Silicon Valley is one of them, obviously, Boston is another. Yeah, that's great. That two of our largest investments in total are in those two markets. Things happen on great land in markets where demand exceeds supply, and I'm not trying to give you the economics 101 course [Phonetic], but that's what that is. And with the amount of people that are moving but that need to be educated in the primary school system. [Indecipherable] needed a place. They couldn't find what they wanted. They went through effectively with their neighboring town of Mountain View, a threat of condemnation and that means market value, and market values are a whole lot more than what market value used to be. None of that stuff shows in any of Federal Realty's financial statements or cost basis company like every other company. But when you're in places like that, that -- well, that particular one is exceptional, the general concept of land being worth a whole lot more than what we paid for it is not unusual. And that's really what I'm pointing to. Whether that happens again, they're not anywhere else, I don't know, but it certainly factors into what it is that we, how it is that we feel about future investing on our properties.

Alexander Goldfarb -- Sandler O'Neill -- Analyst

Thank you, Don.

Operator

Thank you. And our next question on the line is going to be from Christy McElroy with Citi. Your line is open.

Christy McElroy -- Citi -- Analyst

Hey, good morning everyone. Don, just on Darien, I'm obviously one of those people that's going to be checking on it as the train passes. Well, we'll Stop & Shop be part of the new 122,000 square feet of retail or what do you envision for the retail there and maybe you could provide a little bit more color on what makes that redevelopment complex given the location adjacent to the Metro stuff? I thought I heard something about upgraded fleets.

Donald C. Wood -- President & Chief Executive Officer

Yeah. Let's start, I cannot tell you, hope so, we are about this Christy and particularly because they are trying to serve your neighbors in your community. They're basically what -- Stop & Shop will not be part of the long-term deal there. We were able to cut a deal with them to have them leave, which obviously pauses [Phonetic] our solution as that happens again, proactive releasing but I know I've shown you and walked you through wild with shopping center at the corner of Old Georgetown in Democracy here in Bethesda and I know I've talked to you about the economics, which are tremendous at Wildwood and that's because it is a community-oriented, high-end or higher-end lifestyle if you will type center that we see amazing similarities to in terms of demographics and other factors at Darien. So that equinox at Darien will remain there and it's in the middle right now being completely redone as part of our deal here. You'll see a Walgreens here, you'll see great restaurants here, I hope, you'll see some cool shops and you might see, will see if we get there or not a specialty grocer just like Wildwood. If that's the case, at a train station directly into a row and which by the way, it's going to be completely redone and rebuilt by the TAM of Darien which is just awesome in conjunction and along the same timing of what it is that we're doing. If you think about your community is going to feel a whole lot different. The 122 apartments above does make that different, then a Wildwood, those apartments will all be parked underground on -- a tray underneath so that the retail and that ground floor place will be all surface part, which is just as convenient as it gets in the suburban community like Darien. So I hope that's enough for now. I'll absolutely share the plans and some of the pictures of what this is going to look like as we go forward next few weeks, but we are really excited about getting under way late this year.

Christy McElroy -- Citi -- Analyst

That's helpful. Thanks, going forward to seeing the changes. And then Dan, I think you had originally expected closer to 1% same-store growth in Q2 and Q3, obviously, in light of the new range. How are you thinking about Q3? Are you still expecting somewhat of a dip there? And then just a follow up on Alex's question with regards to the bankruptcies and the credit loss, I think you had originally had an expectation for 50 to 60 basis points of known bankruptcy impact and then another 100 basis points of bad debt reserve, how has that changed with the new guidance?

Donald C. Wood -- President & Chief Executive Officer

Christy, before Dan talks, I just want to make sure that you're clear that it's not same-store growth, that this is comparable POI. It's a different concept that includes other stuff. I just wanted to know that I know you'd like to make it comparable to everybody else, it's not.

Christy McElroy -- Citi -- Analyst

Understood.

Donald C. Wood -- President & Chief Executive Officer

It's our metric. Dan, Please go ahead.

Christy McElroy -- Citi -- Analyst

Thank you, Don.

Dan Guglielmone -- Executive Vice President, Chief Financial Officer and Treasurer

I think just to give you a little bit of color on some of the components there. I think we did outperform, some of it is what was timing bringing forward, some of like demo expense was pushed out a quarter. We have other things that were pushed into the quarter. So you'll see a little bit of muting on our same-store growth over the course on a quarterly basis of the balance of the year, probably something with the one handle in the third quarter is what we have. I would try currently at my model and something in the kind of with a two handle, maybe a high two handle in the last quarter, fourth quarter of the year in terms of trajectory for the balance. I don't see really any difference in terms of the impact, I think on bad debt or what we had with regards to unexpected vacancy, rent relief and so forth. We did have the late impact in fourth quarter of last year from bankruptcies that remains with us. We're working to release some of those basis making progress, but it's slow and we're also, I think getting hit kind of the way we expected, bad debt is coming in, kind of as we forecast. So I don't think we'll see much difference in how we see that playing out for the balance of the year.

Christy McElroy -- Citi -- Analyst

Thanks guys. I appreciate the color.

Operator

Thank you. And our next question on the line is going to be from Craig Schmidt with Bank of America. Your line is open.

Craig Schmidt -- Bank of America -- Analyst

Thank you. I wonder if you guys have been in conversation with Hudson Bay and I'm thinking about Valley Kenwood [Phonetic], Lord & Taylor. And what is the opportunity if in fact the Lord & Taylor division gets shut down?

Donald C. Wood -- President & Chief Executive Officer

Thanks, Craig. It's Don. I don't want to go into the deals that we're talking about at that with Hudson Bay at this point. We are talking, we are working through that deal. It is that piece of land certainly is a wonderful place for us to do more then and there. There is no question about it. It's high up on our list. And we do need to make sure that we are squared away with the lease holder on that site before we talk about what it is that we're going to do. Rest assured in this portfolio, it is one of the most underutilized pieces of land in a very urban environment, if you will as it sits right in Lower Merion directly across in City Avenue or on City Avenue.

Craig Schmidt -- Bank of America -- Analyst

Okay, thank you.

Operator

Thank you. [Operator Instructions] Our next question comes from Vince Tibone with Green Street Advisors. Your line is open.

Vince Tibone -- Green Street Advisors -- Analyst

Hey, good morning. I have a few on the lease termination fees, were you expecting to receive this level of term fees at the beginning of the year or is there some unexpected tenant fallout? And then also to the extent you can discuss. Could you provide the retailers or merchandise categories, causing the fees?

Donald C. Wood -- President & Chief Executive Officer

Sure Vince. So let's talk about this in a couple of ways. First of all, the -- don't make the direct distinction that a lease termination fee is always a

tenants, there is a whole lot of reasons, particularly today and this is what I do see more than it used to be. There is a whole lot of reasons that companies are taking a pile of their money and effectively allocating it to use to reposition their businesses. So I've got it, there's a couple in here from of good signs [Phonetic] from a restaurant company that is getting out of the Washington D.C. market. And that I find now one particularly interesting, Vince because here's a case where a company grew and today, it seems to me, I don't know whether I'm right or wrong on this, but it seems to me companies are more willing to allocate money and pulled the plug out of regions or parts of their business that they want to change, whereas maybe few years ago they'd worked through it a little bit more, even if it wasn't working out as well as they can. There seems to be more of a feeling from my perspective, and that's really a subjective thought to be able to move some things out.

So yes, I do think we're seeing more of that now. Do we have to deal with them? Depends, mostly no, because mostly our contracts are really strong and if you sit and you look, let me give you a statistic that I think you'll find pretty interesting. Over the last 18 months of all the lease terminations that we've agreed to, and by the way, there are many that we have not agreed to, so we didn't do them, right? But of all that we agreed to, we've leased up, nearly three-quarters of them at this point, OK. It's that we're talking about, $9 million of lease termination fees and effectively given a pass to $4 million almost $5 million of rent out of that. Now we're replacing it with more rent and those termination fees, therefore, equate to more than 18-months of rent that's going away, more rent with capital, still makes sense incrementally going forward.

There are other lease termination fees where that wouldn't be the case and we won't engage in those conversations. So I hope that gives you a little more kind of color around what is not just about a failing tenants, it's really about changes the business plans that almost every retailer and restaurant company is going through today and more, in my view at least, more likelihood to be able to throw money at it to get out of contracts.

Vince Tibone -- Green Street Advisors -- Analyst

That's really helpful. Thank you. One follow-up on that is, I would just say, kind of, in general, when a tenant requests to leave early what percentage of the time, would you say, work with them and reaching agreements versus forcing them to carry out the lease?

Donald C. Wood -- President & Chief Executive Officer

Yeah, I don't have a percentage. I don't know the answer to that question. We don't have a policy. We have a how to create value in real estate merchant. So, effectively as we look through at each one of those, we consider what the choices are, where the backfills are, do -- are we able to now get it the spot. I mean Stop & Shop at Darien is really a great example. Certainly if all we cared about was comparable POI. We certainly wouldn't be taking out that Stop & Shop before the 2024 lease expiration. We can get out of it and do something about it where we [Indecipherable] have that conversation now.

So, every one of those is different and I kind of -- when I listen to sometimes the conversation, which makes it all sound simple and straightforward, I just don't think that's reality.

Vince Tibone -- Green Street Advisors -- Analyst

Great, thank you.

Donald C. Wood -- President & Chief Executive Officer

You bet.

Operator

And our next question comes from the line of Jeff Donnelly with Wells Fargo. Your line is open.

Jeff Donnelly -- Wells Fargo -- Analyst

Good morning, guys. First question actually on the specific asset, one is it's Kleman [Phonetic] Plaza actually near me, you guys have a chunk of excess land behind that property and I think it's been marketed for outparcel development, but I'm just wondering, is there an opportunity on that site to put residential behind the shopping center or is it really strictly zone to retail?

Donald C. Wood -- President & Chief Executive Officer

First of all, Jeff. Congratulations that is absolutely the first question in my 21 years I hear about Kleman [Phonetic] Plaza. Thank you for asking that. It's funny, that's you asking because we're looking and what is the numbers can work or not, we don't know yet, but there is excess land and importantly, there is a community there, a township there that would be very interested in us to incrementally invest. But again, it's got to make sense. It's got from a -- from an IRR perspective, it's got to work and I don't have an answer to you that, to that yet, but I love that you asked question.

Jeff Donnelly -- Wells Fargo -- Analyst

And it is a follow-up is more broadly is what's the reaction of municipalities and I know it's probably case by case, but what's the reaction of municipalities these days to redevelopment and densification. I know you don't have many centers facing the same issues that maybe some of your cousins say in the mall sector are facing, but nevertheless, you probably speaking to the same types of counterparties, have you found that planning and zoning boards have been more flexible or creative and see change is a way to protect and improve their tax base or are you finding that some of these municipalities are somewhat resistant to change?

Donald C. Wood -- President & Chief Executive Officer

Yes and yes. When I answered Vince at Green Street a few minutes ago about the standard answer on lease termination fees and I couldn't. It's even harder to give a standard answer with respect to municipalities and how things work out. I mean I can give you an example that you're well aware of in Somerville, Massachusetts, where it's been an incredible partnership and I can probably give you an example in Rockville, Maryland, where it's not been an incredible partnership during the same type of economies today, years ago and in between.

So it really does depend what I will say is, it is absolutely critical, that it was critical for us. I don't know about everybody else, but for us it really was critical for us to decentralized company to make sure that, yeah, we may be paying a little bit more in G&A, but effectively an answer to your question, unless you're local, unless you're right there, unless you've got those relationships that you can build on and you're not some big outside national company that is faceless, it's really hard, really hard to get -- to get what the entitlements that you need and the -- and the help that necessary from the community in which trying to [Indecipherable]. So I know it sounds like a little bit of a cop out as an answer, but it really is true, it is very dependent I mean, all you can do is make sure you're close to the real estate as you possibly can be.

Jeff Donnelly -- Wells Fargo -- Analyst

Great, thanks guys.

Operator

And our next question is from Jeremy Metz with BMO Capital Markets. Your line is open.

Jeremy Metz -- BMO Capital Markets -- Analyst

Hey, thanks. Hey, Don a big differentiator for the company is obviously the mixed-use centers in the various other source of the revenue you're driving. As we look at the comp POI, I think there was non-retail uses that are a little under 10% today. It's obviously growing the challenges, the headwinds in retail that well understood you talked about in your opening remarks. Thus, hoping you can maybe talk about the growth outlook for those other sources. We're seeing some solid recovery in the [Indecipherable]. So I think about your comp POI this year that 2% to 3% we can about 2020, it seems like those other revenue drivers can really increase in terms of impact on that comp POI figure, any color on this?

Donald C. Wood -- President & Chief Executive Officer

Yeah, well first of all, let's put it this way, Jeremy we spent a lot of time on exactly at this point during Investor Day. I really would love to sit and I don't think you were there, you might have been listening in, but I would love to spend time, I did to have you fully understand this. Absolutely on the big mixed-use projects, we happen to be in the phase in the decade or decade and a half long period of time that it does to do this stuff. We absolutely are in the phase where we are, where we've created the place on the ground floor, we've often started with residential above that ground floor for the first phase, and now it's about filling in around the place that we've created and it's likely that the filling in is in search of daytime population which means office.

And so if you look at Santana Row over the almost two decades period at Santana Row where we are today clearly is adding more office, particularly in that market. We're not adding office to run away from retail. We're adding office to supplement the place. The 24 x7 place that we have created and the same applies to Assembly, and the same applies to Pike & Rose. So sure there will be more of those uses, sure our comparable POI is about the entire company minus things that are in and out, that is acquisitions and dispositions and things that are specifically

being redeveloped. That's it. It includes all the rest of it, all of them-- all the company GAAP. We're not making selective decisions on what goes into that. So that will be what it will be, but I don't want you to think that we're running away from retail, to resi or office solely. Those are parts of our mixed-use developments and just where they are in the 15-year gestation period of us building them.

Jeremy Metz -- BMO Capital Markets -- Analyst

I appreciate that. Definitely wasn't suggesting that just more highlighting you think an important differentiation here for you guys. And so just anyways, as the second part for me, San Antonio, you did mention having to pay out some tenants it sounds like that will be going away here. So how should we think about that from an NOI perspective in terms of kind of the lost NOI from that center?

Donald C. Wood -- President & Chief Executive Officer

Yeah, clearly, when we get a term fee, we lose the income. So...

Jeremy Metz -- BMO Capital Markets -- Analyst

San Antonio Center.

Donald C. Wood -- President & Chief Executive Officer

San Antonio Center. Okay. Okay. San Antonio Center, will lose income from the tenants on the 11.7 acres that will be when we sell the asset.

Unidentified Speaker

So let's put it this way, Jeremy, $155 million, the lost income is below a two cap. As we pay out what we think we'll have to pay out, it will still be extremely accretive. I don't want to give you the numbers, because [Indecipherable] negotiate, but there will still be incredibly accretive. So great news in terms of the value but, yeah, there'll be NOI loss there, just like there will be Darien for Stop & Shop and some other things we're going to tell you about over the next couple of quarters. But that's OK.

Jeremy Metz -- BMO Capital Markets -- Analyst

Thanks.

Operator

Thank you. And our next question is from Michael Mueller with JP Morgan. Your line is open.

Michael Mueller -- JP Morgan -- Analyst

Yeah, hi, I was wondering, can you talk a little bit about the dispositions you've knocked out so far this year. What may be on the plate and what the interest has been, how big the buyer pools have been, have you've been getting multiple offers, Just kind of what it's like when you're selling the assets?

Donald C. Wood -- President & Chief Executive Officer

Yeah, I'll give you a basic and Jeff and Dan just jump in [Indecipherable] thought. Free State, for example, which was the most significant one that we've actually closed down and sold. The buyer pool was way shallower than we had hoped. And that's a Giant anchored shopping center in Bowie Maryland of some size, but it's not one of our best shopping centers and the interest at cap rates, which we would not sell that asset was very strong. Hey, the interest at cap rates that we would sell that asset was very thin and I do think that's somewhat of a change over the past couple of years. Similarly, on assets that are extremely well located, boy or boy there has not only been no deterioration, I actually think there has been some coming in a little bit. There is certainly one that just traded out in Santa Clara County, Campbell that traded at one big old number out there. So it really depends on the asset and the type of assets from my perspective, the smaller assets have some -- have more interest in them, they're more easily digestible, more easily financeable, etc. And so that -- that's kind of a third bucket, if you will, of differences. Jeff.

Jeff Donnelly -- Wells Fargo -- Analyst

Yeah, I think like I think pricing for us though despite kind of each process is very different. But I think we met our pricing expectations and we feel good about the prices in which we're executing these dispositions and relative to our underlying internal valuations. We feel good about and we think this is really attractively repriced capital for us to redeploy into higher yielding and higher long-term IRR assets. So we'll take this short-term dilution and look forward to kind of the growth creation that comes out of that.

Michael Mueller -- JP Morgan -- Analyst

Got it, OK. That's helpful. Thank you.

Donald C. Wood -- President & Chief Executive Officer

Thanks, Mike.

Operator

Thank you. And our next question is from Steve Sakwa with Evercore. Your line is open.

Steve Sakwa -- Evercore -- Analyst

Thanks, good morning , Don. I know you, you quite can't get into too many specifics, but if you sort of give us a little bit of the flavor to the type of assets that you're looking at to buy in terms of the upside potential, the redevelopment potential, the densification opportunities that you might have?

Donald C. Wood -- President & Chief Executive Officer

Yeah, they are all different Steve. There is a Primestor assets that we're looking at that similar. So what we have a more of that strategic plan that business plan. Here we have another one under contract that is adjacent to something that we already own that create a better piece of land, if you will for redevelopment on it. To the extent we can take that off the -- we can get that one over the transom and we have the street retail stuff that we really like that, that can serve as the beginning we hope of a business development on in one of our markets that we like a lot. So there are all three different and they're all three part of our stated business plan of how we create real estate value.

Steve Sakwa -- Evercore -- Analyst

And I guess just trying to think, I mean obviously these are probably highly sought after and competitive. I mean, does your stock come into play as a currency or what do you think I guess it's not to say how do you look at these differently to ultimately be the winning bidder. But still create value. Are there things that you think you see differently in these assets and others?

Donald C. Wood -- President & Chief Executive Officer

Well, again, so on the Primestor, we think we see internal growth of that particular asset that is within the Latino community that we hope we can get through that. That beats with Arturo and the Primestor group running it that -- that beats the local ownership, but you all that one of the adjacent property, it opened up redevelopment that couldn't happen without it. And on the street retail is type of stuff that we think we've got rent growth. They are and we're also hopeful that effect that we have turns into more product with IRRs that makes some sense because of the rent growth. In terms of paying for all of the, all of those you know us, we use every tool including assuming debt [Phonetic], that's on some of those assets that is attractive and we don't initially see any need to issue equity associated with it, so though, we're right in .

Steve Sakwa -- Evercore -- Analyst

Okay, great, thanks.

Donald C. Wood -- President & Chief Executive Officer

Yeah.

Operator

Thank you. And I'm not showing any further questions, I'll now turn the call back over to Ms. Leah Brady for closing remarks.

Leah Brady -- Investor Relations Manager

Thanks for joining us today. Have a great restful summer and we will see you this fall.

Operator

[Operator Closing Remarks]

Duration: 50 minutes

Call participants:

Leah Brady -- Investor Relations Manager

Donald C. Wood -- President & Chief Executive Officer

Dan Guglielmone -- Executive Vice President, Chief Financial Officer and Treasurer

Unidentified Speaker

Alexander Goldfarb -- Sandler O'Neill -- Analyst

Christy McElroy -- Citi -- Analyst

Craig Schmidt -- Bank of America -- Analyst

Vince Tibone -- Green Street Advisors -- Analyst

Jeff Donnelly -- Wells Fargo -- Analyst

Jeremy Metz -- BMO Capital Markets -- Analyst

Michael Mueller -- JP Morgan -- Analyst

Steve Sakwa -- Evercore -- Analyst

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