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SITE Centers Corp. (NYSE:SITC)
Q3 2019 Earnings Call
Oct 30, 2019, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good morning and welcome to the SITE Centers third-quarter 2019 operating results conference call. [Operator instructions] Please note this event is being recorded. I would now like to turn the conference over to Brandon Day, investor relations. Please go ahead.

Brandon Day -- Investor Relations

Good morning, and thank you for joining us. On today's call, you will hear from Chief Executive Officer David Lukes; Chief Operating Officer Michael Makinen; and Chief Financial Officer Matthew Ostrower. Please be aware that certain of our statements may contain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are subject to risks and uncertainties, and actual results may differ materially from our forward-looking statements.

Additional information about these risks and uncertainties may be found in our earnings press release issued this morning, and in the documents that we filed with the SEC, including our most recent forms on Form 10-K and 10-Q. In addition, we will be discussing non-GAAP financial measures on today's call, including FFO, operating FFO, and same-store net operating income. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in today's press release. This release and our quarterly financial supplement are available on our website at www.sitecenters.com.

For those of you on the phone who would like to follow along during today's presentation, please visit the Events section of our Investor Relations page and sign in to the earnings call webcast. At this time, it is my pleasure to introduce our Chief Executive Officer David Lukes.

David Lukes -- Chief Executive Officer

Good morning. Thank you for joining our third-quarter earnings call. I'm extremely pleased with our performance of over the last three months, which was measurably above our expectations due largely to better-than-expected property NOI and lower G&A. Our ongoing operating momentum is leading us to once again increase our same-store NOI growth and OFFO guidance.

I'd like to first comment on how our quarterly results tie into the three major components of our five-year business plan: leasing, redevelopment, and acquisitions, before discussing a couple of key capital transactions, and then, I'll hand the call over to Mike to discuss our operations in greater detail. Matt will conclude with some comments on the balance sheet, quarterly results, and our guidance increase. First, same-store NOI growth over the largest component of our business plan was 1.6%, marking the trough we forecasted preceding a number of anchor openings expected in the fourth quarter. The midpoint of our new 2019 guidance range is now ahead of our five-year average we laid out at Investor Day, helping validate the most important part of our growth.

In terms of future growth, we continue to advance the lease-up of our 60-anchor opportunities identified at Investor Day. Given that there are 48 now leased or in advanced negotiations, at a blended 36% leasing spread, and that several of the remaining spaces are held for redevelopment, we are nearing the end of our work on these spaces. We also continue to advance our investment program. As a reminder, our five-year plan calls for $75 million of annual investments funded via capital recycling, a goal we achieved this year through share buybacks and the acquisitions of three joint venture assets.

As I mentioned last quarter, we have begun working on additional acquisitions, one of which closed in October. Vintage Plaza, in Austin, is a small transaction in terms of dollars, but it's a good case study as to how we're looking at deploying capital. First, we expect the property's vacancy and below-market leases to produce NOI growth well in excess of our portfolio average. Second, the adjacency to Dell's headquarter campus represents a natural anchor drawing thousands of consumers commuting to and from work and allowing the center itself to be more focused on smaller service-oriented shop space.

And finally, analysis of the trade area demonstrates that centers actual customers are a mix of Dell and other office employees who were both much more affluent and draws from a much wider trade area than the traditional three-mile demographic analysis would suggest. We hope to have a few other investments to discuss in the upcoming quarter, all of which will highlight our bottom-up format-diagnostic approach to finding investment that generates compelling returns above our cost of capital. Finally, we are continuing to make progress on our redevelopment plans, which represents the third component of our five-year growth strategy. Three new anchors opened in September at Nassau Park in Princeton, New Jersey, a quarterly early, and we'll continue to work on the other three active projects.

We're also advancing the pre-leasing and entitlement of our pipeline of larger-scale projects in Atlanta, Washington, D.C., and Boston. Like the sale of Duvall Village in Prince George's County discussed last quarter, we remain focused on realizing value on these projects, whether it means capturing profits early through a sale, mitigating risk through a joint venture or executing projects on our own. I'd like to now touch on two transactions, since our last call, both of which materially improves SITE's future growth capacity. First, on October 1st, we announced an agreement to unwind that the existing $1.1 billion joint venture relationship with TIAA-CREF.

This venture began in 2007, and the portfolio had underperformed our core for quite some time now, especially post-spend. The end of the venture improves our growth rate and provides us with $170 million of gross capital to redeploy in assets with much more compelling returns. The second transaction is the $195 million common equity offering we completed last week in order to repay our outstanding 6.5% Series J preferred stock. This deal was a product of our consistently articulated desire to continue to deleverage without inflicting meaningful earning's dilution.

The replacement of the preferred with common accomplishes this goal: lowering our leverage without materially impacting OFFO, AFFO or NAV per share. These two transactions add to the list of decisive steps we have taken over the last two-plus years to position the company for outperformance. In summary, SITE closed the third quarter extremely well-positioned for the future. We have a great team of focused portfolio poised to benefit from occupancy uplift driven by solid tenant demand, and now, an even better balance sheet that provides enormous flexibility to invest opportunistically.

We have made great progress on our five-year business plan. And with that, I'll hand the call over to Mike Makinen to discuss our operating results.

Mike Makinen -- Chief Operating Officer

Thank you, David. I'm very pleased with our reported core operations this quarter, which were ahead of plan due to lower-than-expected tenant bankruptcies, earlier-than-expected anchor rent commencements, and higher-than-expected ancillary and other income. We feel great about the momentum in our core operations, both in terms of anchor and shop-leasing volumes. We opened 13-consolidated anchor tenants in the third quarter, the majority of them earlier than expected.

And we plan to open an additional four in the fourth quarter. As David mentioned, 48 of the 60 original anchor opportunities we identified at Investor Day have now been leased or are in advanced discussions with commencements expected in the fourth quarter 2020 and 2021, providing a multi-year tailwind. Shop-leasing activity was especially robust in the quarter. The 51 shop leases we signed marks a three-year high for this portfolio, and we achieved a new lease tenant per square foot of over $30 a foot for the first time in our company's history, especially impressive given the high volumes.

All of this leasing carries strong economics with new and renewal spread, as well as, net effective rents right in line with our historical averages. It's hard work getting such high volumes and rents, but our job is made easier by today's stronger, wholly owned portfolio, and a great operations team. Strong leasing activity and modest bankruptcy in the quarter generated a 30-basis-point increase in a pro-rata leased rate to 94.2%. And while commenced rate increased by 110 basis points to 91.1%, the gap between the two numbers, which is the best indicator of low-risk future growth is still a healthy 310 basis points.

This spread provides us added confidence in our ability to achieve our five-year, 2.75%, same-store NOI growth target even with a 1.5% annual NOI reserve for tenant bankruptcies. We are especially focused as well on our shop lease rate, which fell 90 basis points sequentially this quarter to 88% despite the activity I just described. The decline was entirely attributable to the fact that the tenant bankruptcies in the quarter were concentrated in our small shop portfolio with 9 Avenue and 7 Charming Charlie closures since the end of June. We are already in conversations with tenants for each of these locations and feel great about the backfill prospects.

With that, I'll hand the call over to Matt.

Matt Ostrower -- Chief Financial Officer

Thanks, Mike. I'll comment first on our balance sheet then touch on some earnings matters, and I'll close with some thoughts on guidance. First on the balance sheet. Our position remains strong with pro-rata debt to EBITDA in the quarter at 5.8 times, compared to 6.5 times in 3Q '18.

Beyond improved leverage, our maturities are also in great shape with a weighted average consolidated term of 5.5 years. Last week's equity offerings will generate further improvement, lowering pro forma net debt plus preferred to EBITDA by almost half a turn. In addition to the deleveraging impact of the recent offering and EBITDA growth, we have two other sources of future capital. First, is the $160 million remaining preferred investment in our liquidating Blackstone joint venture.

We did increase the valuation reserve against the remaining preferred investment by $6 million to $85 million, which compares the original $76 million reserve we originally established in 2017. However, the increase this quarter was due largely to the loss of an anchor tenant at one of the Blackstone assets rather than a change in market conditions for these shopping centers. A second additional source of deleveraging is the $217 million of capital we eventually expect to receive through the ultimate liquidation of RVI, and related repayment of our receivable and preferred investment. We received 107 -- we received the $17 million payment from RVI this quarter, representing a receipt of half of the $34 million original receivables.

All of these factors, growing EBITDA, the Blackstone preferred, and the return of capital from RVI means we continue to see 6 times debt to EBITDA as a long-term average maximum. I'd like to now turn to some earnings-related items. First, while bankruptcies has had a much smaller impact so far in 2019 than we anticipated, something which is helping fuel our guidance increase, we did recognize $169,000 of revenues in the third quarter from Avenue and Charming Charlie stores that have since closed, and will, therefore, not recur in the fourth quarter. There'll be significantly less capital and downtime associated with these non-anchor closures, and we are excited about the backfill, and mark-to-market opportunities though they will still act as a drag on the 2020 growth.

We also recognized 484 -- $481,000 of revenue from Dressbarn and Forever 21, and we expect all of these locations to close in the fourth quarter. I'll turn now to our increased guidance. Given the greater clarity we have at this point in the year, as well as, significant outperformance in the first three quarters, we are increasing our OFFO and same-store NOI growth estimates. Specifically, we have increased our OFFO guidance by $0.01 at the midpoint despite short-term dilution from our equity offering.

We have also increased the expected same-store NOI growth rate that underpins our OFFO guidance to a new 3% midpoint to reflect better year-to-date operations and expected increases in anchor openings in the fourth quarter. These openings will be partially offset by the $650,000 of total quarterly revenues from bankrupt tenants, which we expect to continue into the first half of 2020. We also made a number of smaller guidance weeks for the JV fee income, RVI fees, and interest income with the change in JV fees related to better-than-expected performance and clarity on the timing of the DDRTC wind down. We provided guidance for 2020 JV fees with the DDRTC announcement, and remain comfortable with the $16 million to $20 million range we provided at that time.

In terms of our RVI fees, based on assets completed to date, RVI fees will be at most $20 million in 2020, assuming no other assets are sold through the -- though the company continues to execute on its business plan to realize value, so, I expect the lower full-year figure. Finally, we typically don't discuss quarterly changes in OFFO, but I wanted to call out two specific items that will impact our fourth quarter. First, the equity offering closed last Thursday, but the preferred redemption won't take place until the end of November. As such, we will be sitting on the proceeds for over a month, which will be short-term diluted.

Second, our G&A expense assumption for the year is unchanged, reflecting our expectation that this line item, which nets out mark-to-market of the PRSUs, will increase in the fourth quarter, and be higher than any other quarter this year. With that, I will hand the call back to David for some closing comments.

David Lukes -- Chief Executive Officer

Thank you, Matt. In conclusion, the last nine months provide increasing evidence of this organization's ability to pivot to growth. We are now demonstrably ahead of schedule in executing on the operational, redevelopment and opportunistic investing goals that underlie our plan to produce compelling growth over the next five years. And with that, we'll be happy to take questions.

Questions & Answers:


Operator

[Operator instructions] Our first question comes from Todd Thomas with KeyBanc Capital Markets. Please go ahead.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Hi, thanks. Good morning. David, you touched on investments a bit, which was part of the rationale behind the common equity offering. I was just wondering if you could provide a little more detail on investments, talk about what you're seeing and what the appetite's like moving forward?

David Lukes -- Chief Executive Officer

Sure. I'd be happy to, Todd. I mean, first of all, I guess I would mention that the equity offering was really earmarked to replace the preferred equity stack. But it does obviously, give us a bit more flexibility.

We continue to recycle assets and have been in the market looking for properties. I hate to give too much insight, other than the fact that, we're heavily focused on convenience-oriented properties. I think we got a very good window now into what's available in the market. And we're heavily focused on return.

I think we recognized that our cost of capital has a hurdle to it, and I think, that we're able to find properties that can meet that hurdle.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Can you talk about what that hurdle is, a little bit more? And then, in terms of types of properties so you mentioned the small shops and the convenience, which you highlighted for the property in Austin, you know, wouldn't new investments, I guess, have a greater skew toward small shops than the current portfolio today?

David Lukes -- Chief Executive Officer

Well, for this particular quarter, with one asset purchased that happened to be entirely shops. I can see that's a reasonable question. The reality is for us to make investments in retail real estate and make money that has double-digit IRRs, we need to format agnostic. I don't think that there is a tailwind for the industry that is guiding us into a certain property type or even certain submarkets.

We're really looking for return and the older the asset classes get, the more there's mark-to-market opportunities or kind of a tenant roster changes that we think can drive value. And that's why we're less focused on format and we're more concerned about rent roll.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

OK. And then, just one question for Matt. As we see the anchor leasing kick in here over the next few quarters, a lot of that was for vacant space. The same-store expense recovery rate was just over 86% in the quarter.

How much more NOI margin expansion should we expect over the next several quarters here as expense recoveries pick up?

Matt Ostrower -- Chief Financial Officer

Hey, Todd, I don't have a specific forecast for that. I mean, we do get anchors, in particular, you do see a real improvement in terms of leakage of operating expenses. So, I would expect some margin improvement. I don't think it's going to be monumental.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

OK. Thank you.

Operator

Our next question comes from Christy McElroy with Citi. Please go ahead.

Katy McConnell -- Citi -- Analyst

Good morning. This is Katy McConnell for Christy. Can you talk about what drove the earlier-than-expected timing of the anchor openings this quarter? And maybe talk about how much of an impact that had on the improvement in same-store guidance versus the lighter-than-expected tenant fallout?

David Lukes -- Chief Executive Officer

Sure, Katy. Good morning. I can give you a preamble by saying that our five-year business plan was heavily front-loaded by anchor leasing. You know a year ago, at Investor Day, we talked about 60 anchor opportunities.

I think Mike did a great job of assembling, not only a great team of leasing experts that really can handle the box leasing but on the legal and construction side, which is really the majority of the work once the dealmaking happens with a handshake. And we're quite a bit ahead of our schedule that we laid out a year ago, and it was entirely due to a much faster-permitting process, a focused effort on construction and legal teams to get the spaces opened. And frankly, the retailers, themselves, were very aggressive in wanting to get opened in '19. And so, we ended up with a bunch of retailers opening a couple of earlier than anticipated.

Matt Ostrower -- Chief Financial Officer

On your variance question, I would say the less-than-expected tenant fallout tends to outweigh most things. We had a pretty -- as we've discussed from the very beginning of the year all the way through now, we've had pretty conservative assumptions about tenant fallout. So, you know, 150-plus basis points in your numbers kind of being able to eliminate that gradually throughout the year or most of that throughout the year, obviously, has an outsized impact.

Katy McConnell -- Citi -- Analyst

OK. Great. And then, can you also just touch on how releasing spread have trended on the box progress you've made today? And how does this compare to what you'd expect with the remaining stage, based on the level, and quality of backfill demand you're seeing today?

Mike Makinen -- Chief Operating Officer

This is Mike. I think, in general, we have been very pleased with the leasing spreads that we have seen on the anchor backfills, and we were expecting those to be pretty impressive simply because of the mark-to-market that we anticipated. And we anticipate to seeing positive leasing spreads on the anchors as we go forward as well.

Katy McConnell -- Citi -- Analyst

OK, thanks.

Operator

Our next question comes from Daniel Santos with Sandler O'Neill. Please go ahead.

Daniel Santos -- Sandler O'Neill + Partners, L.P. -- Analyst

Good morning. Thanks for taking my questions. The first one is, I was wondering if you could give us just a little bit more color on how you're thinking about the capital markets and raising the equity in the future?

David Lukes -- Chief Executive Officer

Sure, Daniel. Good morning. We were a pretty price-sensitive group. I think that we recognize that shareholders should look to us to be good stewards of their capital.

And I think, over the last course of this year, we've kind of proven that to be the case. Remember, we bought back stock at a price of $11.73 back in January, and we issued last week at $15.28. So, I think for us the price sensitivity is an important feature. But if we take action going forward, it really has to be for a specific purpose.

And in this case, the purpose of taking out the preferreds with really no dilution to the common shareholders was a great feature for us.

Daniel Santos -- Sandler O'Neill + Partners, L.P. -- Analyst

OK. Should we expect to see more buybacks in the future?

David Lukes -- Chief Executive Officer

Well, like I said, we are price-sensitive. I would find it strange to discuss buybacks a week after we issued. But in the future, I think we're always going to be looking at the price of the stock. And we're going to be looking at uses of capital that we think are important.

So, unless the price and the use are tied together, I wouldn't expect us to be announcing anything.

Daniel Santos -- Sandler O'Neill + Partners, L.P. -- Analyst

OK. And just one last question. Some of your peers have noted some increased liquidity for shopping centers. Are you seeing similar trends for [Inaudible] centers?

David Lukes -- Chief Executive Officer

Well, we haven't sold any properties that would fit that category out of SITE Centers.

Daniel Santos -- Sandler O'Neill + Partners, L.P. -- Analyst

OK. Thank you.

Operator

Our next question comes from Wes Golladay with RBC Capital Markets. Please go ahead.

Wes Golladay -- RBC Capital Markets -- Analyst

Hey, good morning, guys. Can you comment on how the local shop tenants are doing, the -- more so the franchise source?

David Lukes -- Chief Executive Officer

I'm sorry, what say -- one more time. It's hard to hear you.

Wes Golladay -- RBC Capital Markets -- Analyst

Oh, sorry. Can you comment on how the local shop tenants are doing more like the sandwich shops and more of the franchise source?

Mike Makinen -- Chief Operating Officer

This is Mike. I think, in general, the answer is, they're doing very well. And a lot of it just really stems from the additional traffic we are being -- experiencing from an anchor lease-up. The anchor tenants are really driving heavy traffic, and that translates well to the shop tenants doing well, and we have seen that really helped drive our increased shop leasing as well.

Wes Golladay -- RBC Capital Markets -- Analyst

OK. And then, looking at your, I guess, five-year plan, if we are to do a refresh today, what would be the biggest change based on you are able to access the capital markets, you unwounded JV? I guess, my assumption would be the $75 million investment would probably be a little conservative at the moment. Is that a fair statement?

David Lukes -- Chief Executive Officer

I mean, I would say that the biggest change from our Investor Day a year ago is simply the pace. We've just been able to execute a lot faster than we anticipated. Remember that the plan was front-end loaded by NOI growth that then seeds into FFO growth. And at this point, we're ahead of schedule on the NOI growth section.

Matt Ostrower -- Chief Financial Officer

I would also say, you saw us sell Duvall Village this quarter. We announced it last quarter. I would say on the margin when you look at our kind of internal capital planning, you're seeing some movement from spending money on redevelopment into -- instead, using that -- harvesting capital and then recycling that capital into acquisition.

OK. Thanks, guys.

Operator

Our next question comes from Han Sang with J.P. Morgan. Please go ahead.

Unknown speaker

Yeah. Hi, guys. I guess, in your Investor Day last year, you touched on potentially funding your redevelopment pipline through the sale of next year's development rights? Is that still expected to occur?

David Lukes -- Chief Executive Officer

Hey, good morning, Han. We have a number of projects that are undergoing municipal entitlements. Remember that's the -- kind of first the leg of the stool that you need to prepare a project just to get the permitting for it. Several of those projects has moved along pretty quickly, namely Fairfax outside of D.C., and then, a project up in Boston, and one down at Atlanta.

How we execute on those? Whether we put capital that work in a joint venture, whether we sell the air rights or whether we do a project kind of around? It really hasn't been decided. I think we'll make the decision the closer we get to having a project that's shovel ready.

Unknown speaker

Thank you.

Operator

Our next question comes from Richard Hill with Morgan Stanley. Please go ahead.

Richard Hill -- Morgan Stanley -- Analyst

Hey, guys. I just jumped on a little bit late, yeah, given another earnings call. But I'm sorry if this has been repeated. But one of the things that struck me was slower-than-anticipated bankruptcies.

So, I am wondering if that's transitory, and something has fundamentally changed in the strip market? Or if you're still cautious? Because I hark back to what -- your Analyst Day a year ago, and you were pretty cautious. So, I'm just wondering if things have been pushed out? Or there has been a fundamental change over the past 12 months that makes you more bullish on the store closure environment over the medium to long-term?

David Lukes -- Chief Executive Officer

Rich, that is a great question. I think we've wrestled with that subject for the entirety of this year. You know, there's a dilemma, and one is that we have curated a portfolio through a spin-off down to less than 70 wholly owned assets. And the land location of the 70 wholly owned assets have made them really desirable from tenants.

So, if you think about 60 vacancies we announced last year, we've leased or getting close to completing the leases about 48 of them. The demand is really strong, and when you combine that with the fact that the bankruptcies and liquidations of the retailer world, simply haven't happened to the extent that we would have thought a year ago. You're right. We have to consider whether it's going to simply roll forward into '20 or whether the new normal has fewer bankruptcies.

My personal opinion is that retail is still in transition. There are disruptive forces going on in a lot of tenants throughout this sector. And the best defense you can have is really strong property. What we would hope is that even as retailers are repositioning their store fleets, they are doubling down on their best locations, and those are the ones that we think we owned.

Matt Ostrower -- Chief Financial Officer

The only thing I would add is just from a budgeting standpoint, you know, if you sort of think about 2020, I mean, we can have this debate about whether we're seeing a wholesale improvement in fundamentals. You should expect that we will remain conservative in terms of how we guide and how we do our budgets. Somewhat -- some tenants are really question marks. They're trying really hard to turn their businesses around, and we've seen businesses do that before and turned themselves around.

But then there are some that we think really are -- especially more of a question of when not if. And so, you can assume that we'll build a fair amount of that into our forecast. So, conservatism will definitely be -- given these uncertainties, well, conservatism will be the theme for our budgeting and guidance process.

Richard Hill -- Morgan Stanley -- Analyst

Yeah. Sure. That's helpful. And the reason I focused on it is -- look, from an investor standpoint, there has been a pretty significant differentiator between strips and your cousin, the mall sector.

Are you seeing a different demand from tenants from maybe more convenience-located strip centers than maybe you saw previously? And as -- that maybe some of the change that, at least, the markets are pricing in over the past 12 months?

David Lukes -- Chief Executive Officer

I think, Rich, the change has simply been an increase in aggregate demand across a lot of different product types. If you look at the last quarter's earnings call, we lifted the number of tenants that have leased those 48 boxes, and it's pretty staggering. And there is a very wide range of tenant demand, including services, clubs, and traditional retail. So, I don't really see a fundamental shift in the type of demand.

But we certainly, have had much more demand than we anticipated last year.

Richard Hill -- Morgan Stanley -- Analyst

Got it. That's it for me. Thanks, guys.

David Lukes -- Chief Executive Officer

Thanks, Rich.

Operator

Our next question comes from Floris Gerbrand Van Dijkum from Compass Point. Please go ahead.

Floris Gerbrand Van Dijkum -- Compass Point Research -- Analyst

Great. Good morning, guys. Thanks for taking my question. Just a follow-up on the cost of capital discussion.

Obviously, you issued equity at a slight discount to NAV, but have paid down the preferreds with that. Is that right to assume that you are thinking about your cost of capital as being at or below your cost of preferreds that you're paying that down?

David Lukes -- Chief Executive Officer

I think, Floris, what we said is that there is a very specific use of capital, and at that price, we were willing to transfer the capital stack from preferred to common, at that specific moment, at that specific price.

Matt Ostrower -- Chief Financial Officer

And I -- the only thing I would add is, NAV is a movable feast, right? At the moment, I think our band -- for example -- just looking at consensus numbers, our band goes from like $11 all the way up to $18, right? And that's not because the analysts aren't doing their job that's because there's a lot of uncertainty about what asset values really are. So, there is potentially a false precision involved in the NAV exercise. Even if we take the consensus NAV as a given, whatever small amount of dilution, we think it was less than 1% versus consensus NAV. There is a value-add to improving our capital structure that we thing far outweighs whatever minimal amount of NAV dilution there might have been based on a consensus number, which we're not necessary blessing.

But there is -- at this point of cycle, in particular, we think, there's real value to be added by being smart in deleveraging in a way that has very low cost associated with it.

Floris Gerbrand Van Dijkum -- Compass Point Research -- Analyst

Fair enough, fair enough. The other question I have is maybe if you can give some comments on where you view right now your mark-to-market in your portfolio? You guys have done a very good job in terms of leasing. And I'm just curious how much more can you squeeze out of the portfolio.

David Lukes -- Chief Executive Officer

Yeah. Floris, that's a great question. I think you know that we have not published a mark-to-market. We really haven't commented on it.

And frankly, it moves significantly when you're leasing a lot of anchor space. But I will remind you that when we did the spin-off of RVI, one of the primary reasons was to curate for mark-to-market. And when you combine a high mark-to-market with great underlying land that means that over time, you should capture rent growth in addition to redevelopment opportunities. And in some cases, bankruptcies of tenants allow you to unlock the land value that you couldn't previously or otherwise do.

So, mark-to-market is a really important feature of this portfolio, but we really haven't been specific with marking a specific dollar number.

Floris Gerbrand Van Dijkum -- Compass Point Research -- Analyst

Can you guys comment on the mark-to-market opportunity for your Dressbarn and Charming Charlie exposure?

David Lukes -- Chief Executive Officer

We have not commented specifically on the exposure for those. I would simply say that they are a positive mark.

Floris Gerbrand Van Dijkum -- Compass Point Research -- Analyst

Great. Thanks.

Operator

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

David Lukes -- Chief Executive Officer

Thank you all very much for taking the time to join, and we will speak with you next quarter.

Operator

[Operator signoff]

Duration: 34 minutes

Call participants:

Brandon Day -- Investor Relations

David Lukes -- Chief Executive Officer

Mike Makinen -- Chief Operating Officer

Matt Ostrower -- Chief Financial Officer

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Katy McConnell -- Citi -- Analyst

Daniel Santos -- Sandler O'Neill + Partners, L.P. -- Analyst

Wes Golladay -- RBC Capital Markets -- Analyst

Unknown speaker

Richard Hill -- Morgan Stanley -- Analyst

Floris Gerbrand Van Dijkum -- Compass Point Research -- Analyst

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