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Brixmor Property Group Inc (NYSE:BRX)
Q4 2019 Earnings Call
Feb 11, 2020, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to Brixmor Property Group Fourth Quarter 2019 Earnings Conference Call.

[Operator Instructions]

I would now like to turn the conference over to your host, Stacy Slater. Thank you. You may begin.

Stacy Slater -- Senior Vice President of Investor Relations

Thank you, operator, and thank you all for joining Brixmor's fourth quarter conference call. With me on the call today are Jim Taylor, Chief Executive Officer and President; and Angela Aman, Executive Vice President and Chief Financial Officer; as well as Mark Horgan, Executive Vice President and Chief Investment Officer; and Brian Finnegan, Executive Vice President, Leasing, who will be available for Q&A. Before we begin, let me remind everyone that some of our comments today may contain forward-looking statements that are based on certain assumptions and are subject to inherent risks and uncertainties as described in our SEC filings and actual future results may differ materially. We assume no obligation to update any forward-looking statements. Also, we will refer today to certain non-GAAP financial measures. Further information regarding our use of these measures and reconciliations of these measures to our GAAP results are available in the earnings release and supplemental disclosure on the Investor Relations portion of our website.

[Operator Instructions]

At this time, it's my pleasure to introduce Jim Taylor.

James M. Taylor Jr. -- Director, Chief Executive Officer and President

Thank you, Stacy. Good morning, everyone, and thank you for joining our call. This Brixmor team has again delivered both for the quarter and for the full year. Importantly, the acceleration that began last quarter by delivering sector-leading same-store NOI growth of 5.1%, and we brought the full year of 2019 to 3.4%. More importantly, the continued execution of our balanced plan generates significant momentum for us into 2020 and beyond, a period of time when some platforms may begin to struggle to deliver growth. In short, the results we are delivering now position us to continue to outperform on all fronts. Allow me to dig into the results and show you how. During the quarter, we signed an additional 1.7 million feet of new and renewal leases, continuing our blistering pace for the year. We achieved cash spreads of over 33% on those new leases and drove record small shop occupancy to 86.2%. We commenced $17 million of ABR in the quarter and importantly, have an additional $45 million of new ABR signed that will commence over the next several quarters.

I would also note that our anchor leases rolling over the next several years are nearly 40% below where we are signing leases today. We signed key leases with relevant thriving and growing tenants like Burlington, HomeGoods, ALDI, Ulta Beauty, Old Navy and LA Fitness, demonstrating both the continued strong demand for our older, well-located centers and our increasing market share with retailers who are relevant to today's consumer. We also leverage that demand to continue to reduce our watchlist tenancy, which is down over 10% for the year and as many of you have noted, one of the lowest in our sector. This robust leasing activity continued to drive our pre-leased reinvestment pipeline, which at year-end represents over $410 million of investment at an average incremental return of 10%. During the quarter, we delivered another $47 million of projects, bringing our year-to-date deliveries to over $160 million, also at a 10% incremental return. Those deliveries in 2019 created over $100 million of incremental value above our investment while also improving the appearance of our centers and importantly, the momentum of our small shop leasing.

As I've said before, our reinvestment program is a value multiplier, not only driving accretive returns but also increasing the intrinsic value and future growth of our centers. Allow me to pause and observe that the $410 million now under way is the equivalent of over $1.5 billion of ground-up development in terms of value creation, and we are creating that value at much, much lower risk in a much shorter time frame at sector-leading incremental returns. Simply put, the best way to deliver value in this environment is reinvesting in existing shopping centers where you have upside in rents and can realize double-digit growth both in ROI and in intrinsic value. That value multiplier simply does not exist where you have rents that are at above -- or above market or where you are developing ground-up. We also continue to drive operational enhancements at our shopping centers implementing solar power generation, efficient LED lighting and attractive low maintenance landscaping improvements that are not only environmentally responsible, they generate double-digit returns through expense savings. You can see some of the impact of these initiatives in our same-property operating margins, which improved 60 basis points to nearly 74% for the year.

I expect that we will continue to see enhancements in margin as we commence signed leases and continue to improve the operations of our assets. From a capital recycling standpoint, we closed an additional $52 million of dispositions during the quarter, finding attractively priced liquidity in some very tertiary markets while bringing our year-to-date activity to a little over $300 million. We also closed on approximately $78 million of acquisitions during the year. As discussed in prior quarters, we have pivoted in 2020 to be more balanced, and I am encouraged by the opportunities we have in our acquisition pipeline that fit with our thesis of driving growth in ROI through leveraging our platform strength. Stay tuned here. From a balance sheet perspective, we have virtually nothing drawn under our $1.2 billion credit facility as of year-end and no debt maturities until 2022. That, together with our free cash flow in excess of our dividend, provides us ample flexibility and capacity to fund our balanced business plan for the next several years. In short, the Brixmor team continues to deliver on plan, on time and as promised.

I'd like to turn the call over to Angela for a more detailed review of our results and guidance before providing some additional commentary on our outlook. Angela?

Angela Aman -- Executive Vice President and Chief Financial Officer

Thanks, Jim, and good morning. I'm pleased to report a successful conclusion to 2019 as we fully delivered on the expectations we shared with you at the beginning of the year and continued to set the stage for long-term growth and value creation. FFO in the fourth quarter was $0.47 per share or $0.48 per share excluding items that impact comparability, including litigation and other nonroutine legal expenses. For the full year, FFO was $1.91 per share or $1.93 per share, excluding items that impact comparability. Same-property NOI growth in the fourth quarter was 5.1% as the contribution from base rent further accelerated to 390 basis points due to significant rent commencement activity in the third and fourth quarters. We also experienced positive contributions across all other line items as our property management team worked to drive margin improvements through continued proactive opex management and capex deployment, and our specialty leasing team continued to expand on opportunities for ancillary income generation across our portfolio. On a full year basis, same-property NOI growth was 3.4%, 15 basis points in excess of the high end of our previous guidance range.

Our sector-leading growth was achieved despite approximately 20 basis points of year-over-year net drag associated with the Sears/Kmart bankruptcy. As of the end of January, we have taken back all 11 of the Sears/Kmart locations we had at the time of the filing. And already during the fourth quarter, we delivered the first two anchor repositioning projects related to these spaces. In addition, we have executed leases or are currently at LOI on all of our remaining boxes, indicating the strength of tenant demand for these locations and the ability of our team to quickly capitalize on disruption in the market to transform our asset base and create significant value within our portfolio. We have initiated 2020 FFO guidance of $1.90 to $1.97 per share, which reflects same-property NOI growth expectations of 3% to 3.5%. We have great confidence in our ability to again post same-property NOI growth at the top end of our sector as our balanced business plan to harvest the value embedded in our portfolio of well-located below-market assets delivers. On our fourth quarter call last year, we reported a spread between build and leased occupancy of 350 basis points representing approximately $47 million of contractually obligated but not yet commenced rent. These leases were a significant driver of our 3.4% same-property NOI growth in 2019.

But despite the fact that we hit our commencement dates in 2019 and delivered on the growth we had expected, the efforts of our leasing team have continued to refill the pipeline. And as we move into 2020, we have $45 million of signed but not yet commenced rent, again providing us with significant visibility into our forward growth profile. As Jim highlighted in his remarks, we have made significant progress over the last several years in improving the credit of our tenancy and the quality of our cash flow. That said, our 2020 same-property NOI range includes a bad debt expense assumption of 75 to 100 basis points, consistent with our historical experience. This assumption is in addition to specific property-level income assumptions for recently announced or anticipated store closures and a portfolio level assumption for unidentified or unanticipated closures we may experience during the year. We are cognizant of the retail environment and believe that we have appropriately addressed the associated risks in our forecast. As always, we would remind you that same-property NOI growth is an inherently volatile metric, and we do expect some quarterly variability in our results as we move through the year.

In terms of FFO, as we have discussed on many prior calls, we do expect continued deceleration from noncash GAAP rental adjustment, including straight-line rent and FAS 141 or below-market rent income. While these items have no impact on AFFO or other cash flow metrics, they are expected to detract $0.01 to $0.03 per share from NAREIT FFO growth in 2020. In addition, please remember that our guidance does not assume any litigation or other nonroutine legal expenses. While all legal proceedings related to the 2016 audit committee investigation are behind Brixmor, the company does remain obligated for certain expenses related to ongoing proceedings against the individual. Turning toward our balance sheet and overall financial flexibility. We were rewarded early in 2020 with a positive outlook from Moody's, which follows the positive outlook we received from Fitch in 2019, recognizing our financial stewardship, the significant improvements we have made to our balance sheet over the last four years and the successful execution of our portfolio transformation. During the quarter, we also reinstated both our share repurchase and ATM equity programs, ensuring that we retain our ability to capitalize on a wide range of equity market conditions.

And with that, I'll turn the call back to Jim for some final remarks.

James M. Taylor Jr. -- Director, Chief Executive Officer and President

Thanks, Angela. Whenever we look forward, we always expect ongoing disruption in the retail sector. It's a healthy, inevitable and recurring part of our business. And as Angela just discussed, I believe we've been appropriately conservative in our outlook and guidance for 2020. With that said, I know that many of you are focused on what retailer might be next or whether the pace of disruption will be greater this year than it was last. Those are important questions, but from a durability standpoint, I think the most critical question to consider as an investor is whether you can make money and create value as well as consider what you have risked during these inevitable periods of disruption. I'm excited that we've already begun to reveal in this environment how well positioned Brixmor is to not only continue to perform but significantly outperform, given the proven demand for our older, well-located shopping centers by tenants that are actually growing today, as demonstrated by our sector-leading leasing volumes and market share of new store openings; our leasing redev, construction and operation teams that have earned the trust of these key tenants to deliver on time and to prototype; our below-market in-place rents that not only drive growth on rollover but allow us to accretively reinvest in our shopping centers and drive growth in ROI; our $45 million pipeline of signed but not commenced ABR in the bank that will continue to deliver over the next several quarters; the diversity and credit strength of our top tenants; a watchlist that is one of the lowest as a percent of ABR in the sector; and finally, the incredible quality of our overall team, for whom I'm beyond grateful and who continue to exceed my expectations every day. Our best performance as a company lies ahead.

With that, operator, we'll turn the call over for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Christy McElroy with Citigroup. Please proceed with your question.

Christy McElroy -- Citigroup -- Analyst

Hi, good morning. And thank you. Just in regard to your dispositions completed in the fourth quarter but also as you look to do more deals in 2020, wondering if you could sort of give us a general sense for what you're seeing in terms of pricing and other trends in the transaction market and where the opportunities are, in your view, for both asset sales as well as acquisition.

James M. Taylor Jr. -- Director, Chief Executive Officer and President

Yes, let me start, and Mark, maybe you can chip in. I mean, first, as I alluded to in my remarks, we're pleased to still find attractively priced liquidity even in tertiary markets as we continue to consolidate our portfolio into our longer-term markets. And from an acquisition standpoint, I'm encouraged by what we're seeing as opportunities to really leverage our platform to drive ROI. We're not simply trying to find assets that are core, we're trying to identify those assets that are in the markets that we currently own and operate shopping centers in, where we're not relying on a third party to tell us what the rents are, but where we really have an opportunity to take our national account coverage team, our redevelopment team, construction team, operations team and assess whether or not we have the ability to not only earn a good current return but drive that growth and return over time. And I think that's an area where platforms like ours, we're certainly not the only one, have a pretty distinct advantage in this environment. So similar to what you saw us do this past year with Plymouth meeting, expect us to make some acquisitions that really fit with the context of our portfolio. It is competitive. The capital is out there chasing deals. But I think where there's opportunities for us to significantly upgrade tenancy, we're going to stand apart and have the ability to really create some value. So Mark, I don't know if you want to add anything?

Mark T. Horgan -- Executive Vice President and Chief Investment Officer

Well, Jimmy, I agree. And what I would say on the overall market is that for open-air retail, the market is very healthy and it's liquid. And what's occurring in the market today is that the whole business is benefiting from what we're seeing over in the mall space. So as those tenants are seeking to move out of malls into open-air retail, given the cost savings and ability to transfer sales, some of that capital that's traditionally looked at regional malls is also following. So we're seeing more interest in open-air retail today than we have over the last couple of years. As Jim said, we're not the only platform looking at it out there today. But our benefit is really our platform and our ability to see assets where we can take advantage of the ops team, the leasing team, the redevelopment team that we have to really drive value.

Christy McElroy -- Citigroup -- Analyst

Okay. And then just in the context of the remarks around capital allocation, but also just given the projection for cash EBITDA growth in 2020, maybe Angela, how should we be thinking about the leverage trajectory over the next year?

Angela Aman -- Executive Vice President and Chief Financial Officer

Yes, we're very committed to continuing to work our leverage level down to the 6x debt-to-EBITDA range, acknowledging that obviously, given how far below market the portfolio is, that, that number is going to -- we're going to continually trend toward that number as we mark the portfolio to market and execute on the redevelopment plan. Between now and getting there, you're going to see some quarterly volatility, I think, in the metric. And that's really going to speak to the pace of redevelopment spend and how much capital we have in redevelopment projects that are not yet fully stabilized or producing the EBITDA associated with those. But as those projects deliver and as we demonstrated, they delivered over the course of 2019, you're going to continue to see that metric work down toward the 6x number.

James M. Taylor Jr. -- Director, Chief Executive Officer and President

And that's really going to be the key driver from here is the delivery of that EBITDA that's in the $410 million of redevelopment that we have under way, much of which is pre-leased. We think it's low-risk and at very attractive incremental returns, much less gross returns, which are several 100 basis points higher than what we're showing as an incremental return, as those returns kick in, it really allows us to turbo-drive, if you will, that debt-to-EBITDA number.

Christy McElroy -- Citigroup -- Analyst

Okay, thank you all

James M. Taylor Jr. -- Director, Chief Executive Officer and President

You bet.

Operator

Our next question comes from Craig Schmidt with Bank of America. Please proceed with your question.

Craig Schmidt -- Bank of America -- Analyst

Yes. I guess my question is on leasing spreads. You guys have had better-than-average leasing spreads for the past 14 quarters. I wonder, is that expected to kind of trend down now that you're starting to take advantage of the lower rents? But I'm just curious what you think the run rate is on the strong performance in leasing spreads.

James M. Taylor Jr. -- Director, Chief Executive Officer and President

There are kind of two parts to that question and both of them are drivers for us. The first part is, what do we have rolling over the next three to four years? And as I alluded to in my remarks, the average rents of the anchors that we have rolling are in the $8 range, and we're signing new anchor deals, 40%, 50%, even 80% higher than where those in-place rents are. So as those rents roll, we have a lot to harvest. And I would say it's several years of rollover that remains for us to harvest. But there's another element that I'm equally focused and excited about, and that is, as we continue to improve our center, the market rate in those centers continues to improve. As you replace a tired old Kmart with a specialty grocer, a great fitness use, maybe a value retailer, you see an appreciable pickup in those small shop rents.

Craig, as we've talked about many times, that's not factored into our incremental returns where we're not touching the space. So the short answer is, it's a sustainable and durable plan, so that gives us many years of view on that outperformance, which I think if you're sitting on a portfolio that's got rents that are at or above market, you don't have the same levers to pull. You're certainly not going to drive growth in ROI as we've been doing. So what I'm most excited about honestly in this environment is we're starting to show the relative strength of this platform. Even in a year with some turmoil, I think we'll be at the top of the chart in terms of same-store NOI. And we've got great visibility on it, one. And two, we're not taking great risk to deliver that. Brian?

Brian T. Finnegan -- Executive Vice President, Leasing

No, Jim, I think you hit it on the head. The team has done a great job in taking advantage of the mark-to-market opportunity that we have in the portfolio and the visibility we have, to Jim's point, is several years out. So as we continue to make investments, as we continue to bring better anchors in to backfill the space that we're taking back, we're going to continue to see that upside in our base rents.

Craig Schmidt -- Bank of America -- Analyst

Okay. And then do you know what percent of the rents that are expiring in '20 have already been renegotiated?

Brian T. Finnegan -- Executive Vice President, Leasing

Craig, this is Brian. This time of year, in terms of the expirations that are coming up, if that's your question, we're usually about half of our expiries throughout the year. Many of our anchors typically have expirations at the beginning of the year, and we're addressing a lot of those and have addressed a lot of those in '19. But at this point in the year, I'd say we're around half of those that have been addressed.

Craig Schmidt -- Bank of America -- Analyst

Okay, thank you.

Brian T. Finnegan -- Executive Vice President, Leasing

Thank you.

Operator

Our next question comes from Todd Thomas with KeyBanc Capital Markets. Please proceed with your question.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Hi, thanks. Good morning. Just first, a quick follow-up question on the leverage. It did increase slightly in the quarter. Do you expect to see leverage rise further in the near term as you bring on more redevelopment spend? Maybe you could just talk about the base case for where leverage might be at year-end also.

James M. Taylor Jr. -- Director, Chief Executive Officer and President

On a trend basis, we expect it to continue to go down. In a particular quarter, remember, that metric is an annualized number for that particular quarter. So you can have timing of transactions in the quarter impacted, but importantly, we're going to continue to see that trend down. And also importantly, you've got -- remember, a lot of signed rent there that's not yet in that number. So it gives us tremendous visibility in delivering that growth in EBITDA as we move forward.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Okay. And then Angela, you talked about the bad debt reserve of 75 to 100 basis points, which is in addition to the property level, ground-up budgeting that you completed for 2020. And I think there was another assumption in there as well that you mentioned. Can you just run through the mechanics of that, the provision for doubtful accounts and sort of that more general assumption? It sounded like you've also embedded in the guidance. I'm just trying to understand that a bit further if you can clarify your comments there.

Angela Aman -- Executive Vice President and Chief Financial Officer

Sure, absolutely. So we -- and this has been consistent with the way we provided guidance over the last several years. We typically assume, from a bad debt expense perspective, about 75 to 100 basis points per year. 2019, that level was 89 basis points. 2018, it was about 80 basis points. So we've always been kind of right in the middle of that range and that feels like a good level going forward. Bad debt expense really captures revenue that's already been recognized in the income statement that may or may not be collectible, but it doesn't really pertain to future distress or disruption that might occur down the road. So 75 to 100 basis points is the bad debt assumption. But what I mentioned in my prepared remarks was that in addition to that, we obviously, property by property as we do our base budgeting process, account for any anticipated or known store closures or move-outs we expect to have during the course of the year, which obviously includes things like Dress Barn and assumption around something like an A.C. Moore. But in addition to that, after we're done with our space by space budgeting process, Jim and Brian and I sit down and look at the watchlist and really kind of probability weight our assumptions for anybody that might be an expected credit event in the course of 2020 as well. And so all of those roll up into our assumptions, which gets us to the 3% to 3.5% same-property NOI guide for 2020.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Okay, got it. That's helpful. And then as we think about some of the lines below the base rent, they have bounced around a bit in prior quarters. Are there any headwinds or is there any volatility, I guess, in tenant recoveries or ancillary and other income or anything else worth noting as we move into 2020?

James M. Taylor Jr. -- Director, Chief Executive Officer and President

Well, I think the first thing we'd note, as Angela referred to in her remarks, is that on a quarterly basis, all of these metrics are inherently volatile, right? They just are. A couple hundred grand of excess recoveries can help you one quarter, hurt you in the next. But importantly, from a trend perspective and what we see in the overall year, we feel very confident about that guidance range we've given you. And then what I'm honestly trying to highlight for folks and have people begin to focus on is look at the trends also in our NOI margins as we drive occupancy, as we continue to improve operations become more efficient with our spend. Importantly, from an ESG perspective, invest in making our centers more efficient as it relates to water, electricity, landscaping, etc. So those are all things that are small things individually but really, across the board, continue to drive better and better performance. And I'm really pleased with how the team has embraced that challenge and frankly, how -- what they're executing is already showing in the numbers. But Todd, one quarter, recoveries may be up, maybe slightly down and inevitably, on a quarterly basis, and I think that's why Angela sort of prefaced in her remarks, NOI will be volatile quarter-to-quarter.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Right. Okay, great. Thank you.

James M. Taylor Jr. -- Director, Chief Executive Officer and President

You bet.

Operator

Our next question comes from Alexander Goldfarb with Piper Sandler. Please proceed with your question.

Alexander Goldfarb -- Piper Sandler -- Analyst

Sure. Hi, good morning. Just two questions from us. First, great job obviously on starting to contract the build versus occupied and obviously, good to hear that you have better rents coming out of small shop. But just a question, right now, you guys are around 86%. When do you think that we could see this get toward 90%? Is that something that you think is achievable this year or next? Or this sort of 85%, 86%, maybe we get to 87% is sort of where small shop is because of whether it's churn or what have you?

James M. Taylor Jr. -- Director, Chief Executive Officer and President

Well, as I've talked about, it's a great question, Alex, and as I've talked about on prior calls, you will see that continue to trend. And we think over the next couple of years, three years or so, that will trend closer to 90%. But remember, part of what we're doing is reinvesting in these shopping centers. And if you look at our overall occupancy statistics, they're actually dragged by 190 to 200 basis points, if not more, by what we have actively in the reinvestment pipeline, some of which is delivering 18 to 24 months out. So as we continue to deliver that, we do expect small shop growth to accelerate. And then again, everything else that we're doing is making sure that we realize that growth responsibly. What do I mean by that? It's not a simple target of let's get to 89%. Let's get to 89% through bringing the best tenants, the growers, the ones who are going to be relevant to the community versus trying to manage for a particular statistic. So you won't see that metric move up and down in any given quarter, but you're going to see it continue to climb. And frankly, if we continue to deliver growth on an unlevered basis where we are, and we still have some gas in the tank on the small shops, I'm going to be very excited.

Alexander Goldfarb -- Piper Sandler -- Analyst

Okay. And then the second question is, if we just looked at your FFO growth versus NOI, obviously, NOI is very strong, FFO is muted. Part of that is from portfolio reposition. Jim, you just spoke about the small shop. But the other thing that keeps coming up is the IPO legacy, the FAS. So Angela, is this sort of -- are we getting toward the end of the burnoff? Or do you see several more years where we're going to have, at the upper end, $0.03 of drag as the FAS burns off?

James M. Taylor Jr. -- Director, Chief Executive Officer and President

One point that I just want to make on this, Alex, as you raise it is we're talking about a noncash item, right, the FAS 141 adjustment. Angela?

Angela Aman -- Executive Vice President and Chief Financial Officer

Sure. So if you look -- and we do have some disclosure on this in our 10-K as well, but the regular deceleration from FAS 141 income, which is really the IPO legacy item there is about $0.01 to $0.015 a year. So all else being equal, you should expect that over the next several years, four, five years, we continue to have $0.01 to $0.015 of FAS 141 deceleration. The impact is potentially more significant this year or as we move into 2020 because of the impact of deceleration of straight-line. I talked pretty extensively on the last call about the fact that straight-line had outperformed our expectations in 2019 as a result of how wide the gap between build and leased occupancy had grown to and how many tenants were in possession of space prior to rent commencement, and we began straight-lining at the possession date. That created sort of an outside straight-line impact in 2019 that we expect to decelerate as we move into 2020. I would expect that you see most of that deceleration between '19 and '20. But again, we'll have the $0.01 to $0.015 of FAS 141 deceleration on a longer-term basis.

Alexander Goldfarb -- Piper Sandler -- Analyst

Thank you, Angela.

Operator

Our next question comes from Greg McGinniss with Scotiabank. Please proceed with your question.

Greg McGinniss -- Scotiabank -- Analyst

Hi, Good morning. Jim, I appreciate the earlier commentary on the transaction market, and we know that Brixmor plans to take a more balanced approach to acquisitions and dispositions this year. But we're curious if this balance is going to be primarily based on transaction value to help match funding or on NOI contribution to minimize dilution. Any guidance you can provide on expected transaction volumes or cap rates on acquisitions and dispositions would be appreciated.

James M. Taylor Jr. -- Director, Chief Executive Officer and President

Well, we don't provide specific levels of transaction guidance. I think as an owner, you can appreciate that we're going to always be very disciplined and opportunistic about identifying investment opportunities. And the real bar for us, as I was alluding to before, is finding assets that are in our existing markets where we have the opportunity to apply our platform strengths to drive outperformance. So by necessity, we will be opportunistic. Importantly, we have liquidity to be opportunistic. We've got the balance sheet strength to be opportunistic. And we also have demonstrated through our disposition activity just how disciplined we've been. We've not been trying to hit specific targets, but rather, we've been selling assets one at a time where the valuations are the greatest. And when you look at the $1.6 billion over time that we've sold, I'd submit to you that we probably recaptured well over $100 million of additional proceeds by being patient and opportunistic. So the good news is, as we look forward, the balance sheet's strong. We've exited most of the markets that we want to exit. So now we can just shift to being a bit more opportunistic. And I'm particularly encouraged by what we have in the pipeline today. I can't promise that we'll execute on any of it, but I'm particularly encouraged by what we're seeing. Even with an environment and backdrop, as Mark was alluding to, there's no shortage of liquidity chasing shopping centers. I think our focus is going to be on those shopping centers where we have the ability to add value.

Greg McGinniss -- Scotiabank -- Analyst

Great. And then, Angela, I just wanted to talk about same-store NOI growth a little bit as well. Obviously, addressing tenant bankruptcies and other move-outs with effective leasing has been a fairly significant boost to same-store growth over the last couple of quarters. There's also the benefit from a healthy development pipeline. So I'm curious what that ultimately means for a more reasonable long-term same-store NOI growth expectation. Is 3% fair over the long term?

Angela Aman -- Executive Vice President and Chief Financial Officer

Yes. I mean, I think if you go back to the Investor Day we held at the end of 2017, as we really talked about our longer-term expectations for the portfolio, it certainly included strong core growth and an ongoing benefit of 50 to 100 basis points from redevelopment activity. And so I think certainly, the levels that we put up in 2019 and 2020, based on continued execution of the plan and continued progress on the redevelopment pipeline, should put up growth that's in and around these levels.

Greg McGinniss -- Scotiabank -- Analyst

Okay. Thanks. And then so 3% for -- over the next five years reasonable?

Angela Aman -- Executive Vice President and Chief Financial Officer

Well, obviously, we gave guidance for 2020. We're not giving guidance for '21 or any time after that. But we do feel like what you're seeing, what you saw in 2019 and what you're seeing in 2020 is representative of the plan and what this portfolio and this platform can deliver.

James M. Taylor Jr. -- Director, Chief Executive Officer and President

And I think what's also important to recognize is that opportunity and that growth is embedded in what we own and control today. And much of that growth is already in the bank, if you will, with respect to leases that are signed and reinvestment that's under way. And we're delivering that growth against the backdrop of ongoing tenant disruption. So I think really what it speaks to overall is I think we have better visibility than many platforms on how we're going to grow going forward. And it's not based on a hope or a premise that rents in certain markets will continue to inflate. It's based on what we have in place, the tenant demand to be in our centers and the leasing activity that we're generating, coupled with really the balance of better operations as well as really getting in better improvements to our shopping centers that -- it's what honestly excited me so much when we joined almost four years ago now, and it became what we set up at our Investor Day.

And I know that oftentimes, people have investor days and they make big promises about what's going to happen. We've delivered and I couldn't be prouder of how we've executed in this environment. And spot us an environment where there's no tenant disruption and then we're really cooking with gas. But what's interesting about this environment of tenant disruption is it's accelerating, if you will, the pace with which we can reinvest in assets. Angela alluded to this on prior calls, but Kmart turned into a huge opportunity for us. And remember that when we joined, we had 22 Kmart boxes. We've got none now. And we are at least -- or delivered on all 11 that we just recaptured in the bankruptcies. So yes, I think that really speaks to not only the opportunity embedded in the asset but a team that's all over it. And I'm convinced that as other inevitable disruptions occur, we're going to outperform.

Greg McGinniss -- Scotiabank -- Analyst

Thank you both for the perspective.

James M. Taylor Jr. -- Director, Chief Executive Officer and President

You bet.

Operator

Our next question comes from Jeremy Metz with BMO Capital Markets. Please proceed with your question.

Jeremy Metz -- BMO Capital Markets -- Analyst

Hi Angela, going back to the -- your last comments there, can you tell us exactly how much benefit redevelopment did have in 2019? What's in 2020 for comparison? And does that include the anchor repositioning work as well as the redevelopment activity?

Angela Aman -- Executive Vice President and Chief Financial Officer

Yes. I mean, if we look at just redevelopment, sort of a larger scale redevelopment projects on their own, as we talked about throughout the course of the year, and I go back to what I -- just in response to the last question, which was at the Investor Day, we talked about it being a 50 to 100 basis point impact on an annualized basis as we were at that kind of consistent spend and delivery level of $150 million to $200 million. As we moved into 2019 originally, I think I communicated that we thought it would be a little bit below the low end of that range really because we're incorporating all of the drag associated with Sears/Kmart into the impact in 2019. So I think it's fair to say redevelopment, again, the larger scale redevelopment projects probably had a 25 to 50 basis point impact on the 3.4% same-property NOI growth that we posted in 2019. As we look forward to 2020, I think it's fair to say that the redevelopment contribution embedded within the 3% to 3.5% guidance is at the higher end of that range, so call it 50 to 75 basis points contribution within the 3% to 3.5% same-property NOI growth numbers.

Jeremy Metz -- BMO Capital Markets -- Analyst

And is anchor repositioning on top of that or is that included?

Angela Aman -- Executive Vice President and Chief Financial Officer

Yes. No, those are just the larger scale redevelopment projects. Anchor repositioning is not included in the numbers I just quoted.

Jeremy Metz -- BMO Capital Markets -- Analyst

All right. And just sticking with the pipeline, a little over $400 million. Is this a comfortable level where you think you'll be at or do you think you'll ramp it further here? And just to confirm, it sounds like the $150 million to $200 million of spend is how we should be thinking about it again for this year?

James M. Taylor Jr. -- Director, Chief Executive Officer and President

I think that's right. We may be toward the higher end of that spend level, just given the opportunities that we have, and you should expect to see what we have under way. And that's active, it's generally pre-leased around that $400 million, perhaps $450 million. And what I'm proud of and we've highlighted in several quarters is we delivered $160 million of redevelopment last year in anchor repositioning. Our pipeline has actually grown a little bit from around $390 million to $410 million. As we continue to work hard on what's in the pipeline and deliver it to the active, we'll have additions while at the same time, we do expect our deliveries this year to be in that $150 million to $200 million of deliveries of investments. So you think about it in what was not an exceptionally long period of time, we've not only identified these reinvestment opportunities, leased them. We've executed and begun delivering so that we're now at a pretty steady run rate. We're not telling you, "Hey, wait," or, "Hey, we're really ramping up." We don't need to. And it's part of, I think, the benefit, if you will, of having relatively shorter duration type projects in a pipeline like this. So expect us to be kind of at a similar level this year and frankly, next year and the year that follows.

Jeremy Metz -- BMO Capital Markets -- Analyst

Thanks.

James M. Taylor Jr. -- Director, Chief Executive Officer and President

You bet.

Operator

Our next question comes from Ki Bin Kim with SunTrust Robinson Humphrey. Please proceed with your question.

Ki Bin Kim -- SunTrust Robinson Humphrey -- Analyst

Thanks. Just to follow up on Jeremy's question. How much are the anchor repositionings additive to your 2019 same-store NOI and through 2020 guidance?

James M. Taylor Jr. -- Director, Chief Executive Officer and President

We don't really provide specifics on that because when you think about the anchor repositioning, it's generally something that's just impacting the anchor box. So it's leasing. What I like about what we show though, is we actually show in our supplement all of what we're doing from a significant leasing standpoint through those anchor repositionings. So you can see my fundamental point, and my fundamental point is we're putting capital to work accretively as we get these boxes back and release them. But that's more part of our core growth.

Ki Bin Kim -- SunTrust Robinson Humphrey -- Analyst

And when you look at your shadow development pipeline, is the mix of assets that you're going to be working on in the future years, are they as attractive as the first batch because presumably, the lower-hanging fruit, the easier money, you go for those first?

James M. Taylor Jr. -- Director, Chief Executive Officer and President

You'd think that intuitively, but you've got these pesky things called leases in place that really govern when you can get to the opportunity. And some of our very best opportunities aren't even in our active pipeline yet. So I'd expect us to continue to be generating these types of nice incremental returns. We do have -- and we don't talk a lot about complementary uses that could increase density on some of our sites. But don't expect us to really talk about that for the next year or two and when we do expect us to be responsible about how we're putting capital to work to realize the highest and best use in some of these properties. But the good news is we've got plenty in the larder in our core competency, which is retail. And I'm actually even more excited about some of the opportunities that we have in the pipeline in terms of asset-level transformation and real value creation.

Ki Bin Kim -- SunTrust Robinson Humphrey -- Analyst

And if I could squeeze in a third one. You have a line item called Other Value-enhancing capex, is about $33.5 million in 2019 compared to almost $15 million in 2018, has been increasing. How do you differentiate what you call other value-enhancing capex, which, if you look at the footnote, it sounds like it's -- it includes things like LED lighting upgrades and things like that versus putting it in same-store expenses?

Angela Aman -- Executive Vice President and Chief Financial Officer

I guess, remember, taking a big step back, all of our activity is in the same-store pool. Our same-store pool represents 98% or 99% of our properties. So it really is all same-store. The distinction between a core expense versus a value-enhancing expense has no determination whether or not it's in the same-store pool. So just to clarify on that point. But what does show up in that line, like you mentioned, includes smaller scale projects, solar, LED lighting, some of the things that Jim called out in his remarks, other assets, beautification projects at specific assets that aren't keyed off of major leasing transactions but we think are driving improvement in rate across the balance of the center, projects or additional capital spend that really are justified by returns that are in line with what you're seeing on our other value-enhancing projects but are generally small dollar amount.

Ki Bin Kim -- SunTrust Robinson Humphrey -- Analyst

Okay, thank you.

James M. Taylor Jr. -- Director, Chief Executive Officer and President

You bet.

Operator

Our next question comes from Mike Mueller with JPMorgan. Please proceed with your question.

Mike Mueller -- JPMorgan -- Analyst

Yes. Hi. A couple of questions. First, I guess, where do you see the 89.3% occupancy trending by year-end? What's embedding guidance there? And then can you talk about rough ranges for cap rate expectations for what you're seeing on the acquisition side and disposition side?

Angela Aman -- Executive Vice President and Chief Financial Officer

Yes. I mean, I do think you're going to continue to see our build occupancy and leased occupancy trend higher as we move through the year. Obviously, you're going to see some fluctuations in that on a quarter-to-quarter basis. One thing I would note is that our occupancy numbers at 12/31 do still include the Dress Barn space. You're going to see that roll off in Q1 and some volatility early in the year associated with some of those known events. But we do expect, based on that $45 million of signed but not yet commenced rent in that 310 basis point spread between leased and build occupancy, that you will continue to see both numbers move higher over the course of the year.

James M. Taylor Jr. -- Director, Chief Executive Officer and President

And I just -- on your question about cap rates. Cap rates as always are only part of the equation, right? But in terms of where we think about asset sales, it's likely going to continue to be in that 7% to 8% range that we've been reporting all along. And then on the acquisition side, likely probably 100 to maybe 150 basis points inside of that. It's really going to be driven though, Mike, by what do we see as the growth in ROI. What's our ability to take that initial in place return and really grow it? And what kind of visibility do we have on growth? Again, not betting on market rate inflation but rather on known tenant demand from the tenants that we do a lot of business with, and we have a very kind of clear view in terms of how they might be allocating their capital, which is a really important benefit of a large-scale platform to understand as well as opportunities to reposition, add out parcels to kind of bring our whole toolbox, if you will, to bear to drive that ROI accretively. That's really where I think you make money in this environment. And so I just really want to highlight that because I appreciate, from a modeling perspective, the need to sort of have an idea of where cap rates are. But we're not focused on cap rates with blinders as it relates to the investment side.

Mike Mueller -- JPMorgan -- Analyst

Understood. Thank you.

James M. Taylor Jr. -- Director, Chief Executive Officer and President

You bet.

Operator

Our next question comes from Floris van Dijkum with Compass Point. Please proceed with your question.

Floris van Dijkum -- Compass Point -- Analyst

Thanks for taking my question. Morning guys.

James M. Taylor Jr. -- Director, Chief Executive Officer and President

Good morning.

Floris van Dijkum -- Compass Point -- Analyst

Just a question on -- as I look at your future development pipeline, I see Davis, I see Mira Mesa, Arborland, Mall 163rd Street, bigger projects. Some of them -- a couple of them, in fact, are mixed-use. Will -- what's the update on the entitlement process there? I guess, the first question. And number two, when you're doing mixed-use as you would be in Davis and Mira Mesa potentially in particular, will those get included in your same-store pool? Or would that be, because you're adding a new use, will that not fall into your same-store and thus not boost your same-store NOI growth?

James M. Taylor Jr. -- Director, Chief Executive Officer and President

Well, we take kind of a comprehensive view of what should be included in your same-store pool and we include reinvestment in that pool. As you think about where we are on entitlements on these projects, we're working really hard across the board, not just for the few that you've mentioned but frankly, all of our projects to make sure that we can bring additional uses to these sites because, honestly, Floris, where you create the most value is in getting those entitlements. That's -- you're -- almost all of your "development profit" then gets reflected in that land value. What we're going to be very careful about though is to be simple in our execution. In other words, leveraging others' capital to deliver some of those additional uses on our sites and sticking to our core competency, perhaps co-investing so that we can retain some control of what happens with the site. But I think we will generate the most value for our shareholders by sticking to our core competency which is retail and by getting the entitlements in places like UC Davis and Ann Arbor, Mall at 163rd, Wynnewood down in Dallas. I mean, there are lots of great sites that this company has, where we have the ability to create additional value beyond retail. But I think you should expect us to be smart and stick to our knitting of really retail first.

Floris van Dijkum -- Compass Point -- Analyst

And so -- but if you were to stick to your knitting, does that imply that you're going to find an operating partner to JV with you in those things? Or are you looking for institutional capital to partner with you on that or how should we think about that?

James M. Taylor Jr. -- Director, Chief Executive Officer and President

Best-in-class partners and whatever the product type might be. And we're in a position to have competition among those best-in-class platforms, whether it's market rate, multifamily, student housing, senior housing, limited service hotels. I mean, there are a lot of additional incremental and I think contributory uses at our properties that we don't need to stake the majority of the capital in to deliver, I think, real value to our shareholders.

Floris van Dijkum -- Compass Point -- Analyst

Right. Thanks Jim.

James M. Taylor Jr. -- Director, Chief Executive Officer and President

You bet.

Operator

Our next question comes from Samir Khanal with Evercore. Please proceed with your question.

Samir Khanal -- Evercore -- Analyst

Yes. Good morning Jim, when I look -- just getting back to same-store NOI growth. When I look at that sort of 3% to 3.5% same-store growth, seems like a pretty narrow range with all the sort of tenant disruptions we've talked about potential on the call. I mean, on the positive side, we got the visibility. So you've got $45 million that will commence over time. I guess, what gives you that confidence that using that sort of same similar credit loss reserves as you did last year, is going to be enough with sort of potentially more disruption this year versus the last year?

James M. Taylor Jr. -- Director, Chief Executive Officer and President

Well, we're not using the same reserve. I think Angela did a really nice job, and I'll let her answer this, kind of laying out for you the detailed steps we take as we assess what's going to happen over the next four to eight quarters.

Angela Aman -- Executive Vice President and Chief Financial Officer

Yes. I mean, just to reiterate, the 75 to 100 basis points, we have a lot of history with the portfolio and what the credit loss reserve relative to outstanding AR balances has been across this portfolio. And even in this environment, which we've been operating in over the last few years, that has continued to be the right level. And we have a lot of confidence, especially based on Jim's remarks, in his prepared comments, that all the improvements we've made to the watchlist allow us to keep the number in and around that band because we've made so many improvements in the quality of the tenancy. But in addition to that, we have known store closures that are already out of our forecast and reflected in the numbers. That represents between Dress Barn and what may happen on A.C. Moore basically 60 basis points of NOI that's already kind of addressed and out of the 3% to 3.5% outlook.

And then in addition to that, the third piece really reflects unanticipated store closures, bankruptcy activity, any other kind of disruption that we think might occur over the course of the year based on everything we're hearing directly from our tenants, everything we're hearing from other industry participants and probability weighted for what we think will happen or what the impact will be on this portfolio, in particular. But stepping back from all of that, I would really stress that, as Jim's comments sort of underlined, we expect the current environment of tenant disruption to continue and possibly even accelerate. And so you should expect that, that third bucket embedded in our 3% to 3.5% guidance related to unanticipated store closures or bankruptcy activity is higher than it was at the same point last year. And we still feel confident. Remember, going into 2019, we also had a 50 basis point range. We were 2.75% to 3.25% and ended up exceeding that expectation but felt comfortable in the narrowness of the range based on everything we know about this portfolio and our own execution.

Samir Khanal -- Evercore -- Analyst

Okay thanks for that.

James M. Taylor Jr. -- Director, Chief Executive Officer and President

You bet.

Operator

Our next question comes from Haendel St. Juste with Mizuho. Please proceed with your question. Good morning Jim. So first question for you. I guess, JVs, I know we've talked about it in the past and your preference is to keep the story simpler, cleaner, but I'm curious if your view on that might have evolved at all. We've seen some of your peers print some fairly advantageous pricing in some JVs over the last year or two. So I'm curious if that could play a role in your capital plans at all, if your view on that has changed.

James M. Taylor Jr. -- Director, Chief Executive Officer and President

The only time it ever would is if you actually get a value through the joint venture that's better than through a sale of the fee, and I still don't think the market has moved to that place. So as we look at being efficient in our capital recycling, of course, we'd love to set up joint ventures. But I would maybe quibble with the point that you're getting a better execution through the joint venture than you do through an absolute sale based on what we're seeing. So that, from a capital allocation standpoint, is somewhat how we think about it. We did mention joint ventures as it relates to additional uses on our properties, where you're bringing an operating partner in who might be a best-in-class student housing operator. That's not our business. We might roll our land value into the joint venture, but we would expect that partner to contribute the majority of the capital. And that would be another way that you might see joint ventures enter into our strategy. But big picture, a joint venture clouds the balance sheet. It also clouds your control over what to do with the asset. And I think people sometimes don't think about, from a capital allocation standpoint, that encumbrance that a joint venture, by necessity, places on the asset. And for that reason, we're just always going to be very measured as it relates to implementing joint venture strategies.

Haendel St. Juste -- Mizuho -- Analyst

Got it. Thanks for that. And then maybe a follow-up on the acquisitions. There's been some chatter over the last couple of months about institutions wanting to reduce retail exposure and not being able to sell malls. So I guess, I'm curious if you're seeing more evidence of that as maybe some of these guys look to sell perhaps shopping centers. And then how are you thinking about the underwriting? Are you more focused on IRRs or maybe the initial cap rate because there are some perhaps, some great growth assets out there that may require a lower day one yield but could ramp up fairly quickly.

James M. Taylor Jr. -- Director, Chief Executive Officer and President

We're always a total return investor. Nothing about the return is ever more certain than what you have in place today. So obviously, we are focused on where that going-in return is and importantly, where we can take that return over the intermediate time frame, say three to five years, which I believe is where you have the best visibility in terms of where the rents are versus market, what's rolling, what additional investment opportunities do you have. And importantly, as we think about being a total return investor, we always assume that cap rates at the end of the whole period are higher than where we're going in. So that puts additional focus, if you will, on how are we going to drive that return. Mark, I don't know if you're still on, but maybe you can address the first part of the question, which relates to what we're seeing in the market as institutional investors lighten up on retail.

Mark T. Horgan -- Executive Vice President and Chief Investment Officer

I'd say it's been a mix. Certainly, as I mentioned earlier, seeing institutional investors recycle out of malls to the extent they can, and that's definitely increased some interest from some investors into open air, while we've seen deals come to market from institutional investors who are saying that they just want to reduce retail exposure. And ultimately, having a platform like we do, that's really an advantage for us to find those assets where folks are saying, "I'm out" and we're saying, "Geez, it's a great example or a great opportunity for us to drive value." So we're excited about assets that are out there to buy.

Haendel St. Juste -- Mizuho -- Analyst

Right. Thank you, guys.

Mark T. Horgan -- Executive Vice President and Chief Investment Officer

Thank you.

Operator

We have reached the end of the question-and-answer session. I'd now like to turn the call over to Stacy Slater for closing comments.

Stacy Slater -- Senior Vice President of Investor Relations

Thanks, everyone, for joining us today.

Operator

[Operator Closing Remarks]

Duration: 58 minutes

Call participants:

Stacy Slater -- Senior Vice President of Investor Relations

James M. Taylor Jr. -- Director, Chief Executive Officer and President

Angela Aman -- Executive Vice President and Chief Financial Officer

Mark T. Horgan -- Executive Vice President and Chief Investment Officer

Brian T. Finnegan -- Executive Vice President, Leasing

Christy McElroy -- Citigroup -- Analyst

Craig Schmidt -- Bank of America -- Analyst

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Alexander Goldfarb -- Piper Sandler -- Analyst

Greg McGinniss -- Scotiabank -- Analyst

Jeremy Metz -- BMO Capital Markets -- Analyst

Ki Bin Kim -- SunTrust Robinson Humphrey -- Analyst

Mike Mueller -- JPMorgan -- Analyst

Floris van Dijkum -- Compass Point -- Analyst

Samir Khanal -- Evercore -- Analyst

Haendel St. Juste -- Mizuho -- Analyst

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