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Eastgroup Properties Inc (EGP 0.03%)
Q1Â 2020 Earnings Call
May 1, 2020, 11:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good morning, and welcome to the EastGroup Properties' First Quarter 2020 Earnings Conference Call. [Operator Instructions].
It is now my pleasure to turn the program over to Marshall Loeb, President and CEO.
Marshall A. Loeb -- President And Chief Executive Officer
Good morning, and thanks for calling in for our first quarter 2020 conference all. As always, we appreciate your interest. Brent Wood, our CFO, is also participating on the call. And since we'll make forward-looking statements, we ask that you listen to the following disclaimer.
Keena Frazier -- Director of Leasing Statistics
Please note that our conference call today will contain financial measures such as PNOI and FFO that are non-GAAP measures as defined in Regulation G. Please refer to our most recent financial supplement and to our earnings press release, both available on the Investor page of our website and to our periodic reports furnished or filed with the SEC for definitions and further information regarding our use of these non-GAAP financial measures and a reconciliation of them to our GAAP results.
Please also note that some statements during this call are forward-looking statements as defined in and within the safe harbor under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements in the earnings press release, along with our remarks, are made as of today, and we undertake no duty to update them whether as a result of new information, future or actual events or otherwise. Such statements involve known and unknown risks, uncertainties and other factors, including those directly and indirectly related to the outbreak of the ongoing coronavirus pandemic that may cause actual results to differ materially. We refer to certain of these risk in our SEC filings.
Marshall A. Loeb -- President And Chief Executive Officer
Thanks, Keena. Good morning, and thank you for your time. We hope everyone and their families are well and out of harm's way. This is the most atypical script I've written as it touches on the past, the present and the future, making feel a little bit like writing a Christmas carol. I want to start by thanking our team. They've done a great job transitioning our operating strategy quickly, and doing so while working remotely.
I'll touch on first quarter briefly. We had another strong team performance this quarter, producing such stats as fund from operations coming in above guidance, up 9.2% compared to first quarter last year. This marks 28 consecutive quarters of higher FFO per share as compared to the prior year quarter. Our quarterly occupancy was strong, averaging 96.8%, leaving us 97.3% leased and 96.7% occupied at quarter end. We also set a quarterly record with releasing spreads of 24.6% GAAP and 14.1% cash.
I realize first quarter feels years ago today. It certainly does, to me, but it's a great reminder that in a steady, open economy, our strategy works and has served our shareholders well over the years. I'm grateful we ended the quarter generally full at 97.3% leased. During 2020, we'll likely have three different operating strategies. First quarter being the end of the last cycle. One for today during the lockdown. And later, one during the recovery. As we entered the quarantine, our focus shifted from accommodating expansions and growth to maintaining occupancy and cash flow.
In terms of liquidity, I'll thank Brent and our finance team as at quarter end, we had the highest availability on our line in the company's history and one of the lowest percentages drawn on our line since 2006. Given the economic uncertainty, we're expecting higher retention rates, tenants needing economic help until the economy reopens and some tenants who simply can't survive the shutdown. Our asset teams have been working long hours with those tenants who's asked for help to gain an understanding of each particular situation. We've assisted them in obtaining PPP loans, and where needed with banking relationships. While this won't be an easy task, two things that give me comfort are the quality of our portfolio. Our properties serve as key essential infill locations for our tenants' businesses and the experience and trust our team has.
While hard to calculate in terms of the bottom line, our team has a lot of tenure together at EastGroup. For example, at the VP level and above, the average tenure is 15 years. Within accounting, it's 13 years and eight years for property management. That's a lot of teamwork, trust and experience that's been built to weather uncertain times. We know one another, we know our markets, our properties and most importantly, we've built long-term tenant relationships. That's not to say the road won't be rocky and have potholes. But experience and relationships are most valuable in a downturn.
To date, we've collected 94% of April rent and we expect for this percent to modestly rise as SBA loan proceeds or recedes and payments process. We also expect the economic impact to be cumulative, so later months will also be challenging. The unknown is when the economy reopens and how fast it reopens. We and everyone else simply have less clarity than normal. Brent will speak more about our guidance update, but in our revision, we increase bad debt rejections by 100 basis points along with an occupancy decline of 110 basis points. As the economy reopens and we collect grants, we'll update these projections accordingly.
Our goal in working with tenants and accommodating a rent relief is to collect those funds as soon as their business allows. Thankfully we have the most diversified rent roll in our sector, with our top 10 tenants only accounting for 7.7% of rents. As we've stated before, our development starts are pulled by market demand. With the shutdown, we reduced projected starts to reflect first quarter starts and pre-lease conversations that are under way.
In other words, we're not forecasting new spec developments. We're also looking at acquisitions, dispositions and value add in that same light. Other than what is in hand, we are not projecting new activity. We view operations, working with our tenants and maximizing liquidity as key goals until we reach the next market phase. And now, Brent will review a variety of financial topics, including our updated 2020 guidance.
Brent W. Wood -- Executive Vice President and Chief Financial Officer
Thanks, Marshall, and good morning. Our first quarter results continue to reflect the strong overall performance of our portfolio prior to the pandemic. FFO per share for the first quarter met the high end of our guidance range at $1.31 per share. And compared to first quarter 2019 of $1.20, represented an increase of 9.2%. Unfortunately, the current economic turbulence as a result of COVID-19 will interrupt our record-setting momentum. I will center my comments around our capital status, rent collections and deferment requests and assumption changes that lowered the mid point of our FFO per share estimate.
During the first quarter, we issued $15 million of equity at an average price of $142 per share, and closed on a $100 million seven year unsecured loan with a fixed interest rate of 2.39%. That activity, combined with our already strong and conservative balance sheet, has placed us in a position of strength entering this sudden period of economic uncertainty. In fact, at March 31, EastGroup had the most capital available on its revolver in the history of the company and one of the least drawn percentages over the two decades. Our debt to total market capitalization is 23.5%. Debt-to-EBITDA ratio was 5.2 times, and our interest and fixed charge coverage ratios are over seven times.
Our rent collections were equally strong at quarter end. We have less than 1% of March or earlier rent outstanding that wasn't either covered by a security deposit or reserved as a doubtful account. As for April, we have collected 94% of rents thus far. And today, 26% of our tenants have requested some form of rent deferment. We have only entered into five written deferral arrangements thus far that represent 0.5% of April rents. We have denied over half of the request and are in various stages of consideration on 40%, which represent approximately 11% of monthly rents.
April is the first month that we truly encountered the virus-related headwinds, and as such, there is very little actual data available to draw definitive conclusions for the near term. The depth and duration of this economic event is undeterminable. However, we anticipate some degree of tenant financial distress and decrease in leasing velocity, which resulted in changing assumptions that lowered our FFO earnings guidance by 2.5% from a midpoint of $5.30 per share to $5.17 or a 3.8% increase over 2019. Among those changes were a decrease in average occupancy from 96.3% to 95.2% and an increase in reserves for uncollectible rent from $800,000 to $3.8 million.
The new reserve represents approximately 120 basis points of income from real estate operations, which is like what we experienced during the Great Recession on average. Also note that this reserve for potential bad debt is not specific to any tenants. Rather, it is a general assumption that there will be some companies who simply aren't able to bridge the gap to the reopening of the economy. Other notable assumption revisions include the removal of unidentified acquisitions, dispositions and equity issuances for the remainder of the year.
In summary, I am optimistic that pre-pandemic trends that were directly beneficial to our Sunbelt market multitenant strategy, along with potential new trends post-pandemic, will benefit us long term. Meanwhile, we will rely on our financial strength, the experience of our team and the quality of our portfolio to navigate us through the near term.
Now Marshall will make some final comments.
Marshall A. Loeb -- President And Chief Executive Officer
Thanks, Brent. In closing, I'm proud of our first quarter results. We've said the past few years, our fear wasn't oversupply as much as a black swan economic event. You don't want either, but now we have just that. Our company and our team have worked through these before. And while certainly different, we'll work through this event as well. And as the economy stabilizes, it's the future that makes me most excited for EastGroup. Our strategy has worked well the past few years.
Coming out of this pandemic, the trends we are hearing of are companies carrying additional inventory, increased U.S. manufacturing or near-shoring in Mexico, shopping habits that have changed, accelerating the consumer to e-commerce and new industrial users as a result of those shopping habits. Meanwhile, our bread and butter traditional tenants will reopen and continue needing last-mile distribution space in fast-growing Sunbelt markets. These, along with the mix of our team, our operating strategy and our markets, has us optimistic about the future.
And we'll now open up for any questions.
Questions and Answers:
Operator
[Operator Instructions] And we will take our first question from Jamie Feldman with Bank of America. Your line is open.
Jamie Feldman -- Bank of America -- Analyst
Okay. So I guess can you just talk more about some of the markets? I think we're all a little bit more concerned about here. Houston with energy exposure and then probably Orlando with tourism exposure, even Las Vegas. I know that's a small market view, around 1% of revenue. But maybe if you could just give a little more color in terms of what you're seeing across the different types of markets with different types of economies.
Marshall A. Loeb -- President And Chief Executive Officer
Okay. Sure, Jamie. Good question, and I'll try to touch on all three without going on too much and maybe probably the market that's top of mind for a lot of people is Houston. Kind of throwing a few statistics at you to start. I'll start globally on the market and then a little bit on our portfolio. But Houston ended first quarter 6.6% vacant. There's roughly 22 million square feet under construction, which is a higher number than typical for Houston. Maybe the good news, as we dig into that, like we typically say, a lot of that is noncompetitive properties in terms of bulk buildings.
For example, five buildings, if we pull those out, that's about 6.5 million square feet or about 30% of what's under construction. So thankfully, a lot of what's being built are larger big box spaces out in Katy or down the Southeast markets where we're not. But certainly, oil and gas and COVID, Houston is an atypical market and that it's getting hit with both impacts. Thankfully, our team we ended the quarter 98.7% leased with just under 6.5% rolling. And an update as of today, thankfully, we're a little over 97%, 97.1% leased with 4.8% rolling. So we've made some headway in the last month. So we're in good shape there.
Our April rent collections in Houston were 97%, so actually higher than our portfolio today. We have literally, it's about a handful of tenants that are and some are working on the SBA loans and things like that. So we're probably and Houston is about 13% of our NOI, our earlier projections, and this year is a little more obviously, more uncertain than others, had us dropping below 13% in fourth quarter. So we'll keep working on our exposure there, kind of whittling it down. But Houston is probably I guess, on all three markets, what I would say or any of the tourism markets, things are typically never as good as people think they are, and they're usually never as bad as people think they are.
With Houston, I know you all have read, it's fourth largest city in the country. It's had a lot of in migration the last several years. It's getting hit right now, as you mentioned, with coronavirus and oil and gas, but it's an awfully resilient market. And we think long term, it's a really strong market. We've got a great team there, and we'll manage our size there but have activity in Houston. A little bit the same in Orlando, it's in Las Vegas, certainly tourism markets, but probably Orlando a little more than Las Vegas. It's really become kind of the e-commerce hub for Florida. We like that market long term. Where we've we don't have that much direct tourism exposure in Orlando.
Where we probably have some, it's really more, I guess, that is. It's convention space. And things like that. It's not as much Disney, Universal Studios, all the things like that. But Orlando and we just signed a 20,000 foot lease in Orlando. I guess it was Wednesday, we got a lease in there. So there's some activity there, certainly, and they're talking about at least now talking about reopening Disney World, Universal Studios, Sea World. So maybe it's 50% capacity is what we've heard, I believe, the governor was saying, and then moving to 75% capacity there. So hopefully, slowly reopening. Las Vegas with the Strip closed. Thankfully, we've got no lease expirations in Las Vegas for the balance of 2020. We bought three buildings last fall, maybe in early fourth quarter. Got two of those leased.
Really by the time they completed, have had activity on the balance, and that slowed down with the downturn but are working with a prospect or two on those buildings. So thankfully again, as you said, I wish we were bigger in Las Vegas than we are. We like each of those markets long term. But right now, they're all a little more being a little more hit. But at least through April, they've held up well. I'm happy to be over 97% leased in Houston with under 5% rolling. And so we'll keep chipping away at it and working with our customers. Those markets are probably a little more challenged than typical, but so far good. And probably and this is intuitive. Our sense is the market thinks they're a lot worse than they've actually done to date.
Jamie Feldman -- Bank of America -- Analyst
Okay. That's helpful. I guess just on Houston, are you able to break out what percentage of your tenant base there is actually impacted by the price of oil versus what percent is not? Like the business trailing side to oil prices.
Marshall A. Loeb -- President And Chief Executive Officer
Yes. We went through it and looked at it, and it gets a little tricky with some of the 3PLs and things like that. But we estimate, it's roughly 20%, some form or fashion related to the oil and gas industry.
Operator
[Operator Instructions] We will go next to Alexander Goldfarb with Piper Sandler. Your line is open.
Alexander Goldfarb -- Piper Sandler -- Analyst
Hey, good morning. Just continuing on Jamie's question on the tenants. Brent, you mentioned that 40% of the people who raised their hands for rent relief you think were actually will get it, and it sounds like are deserving of it. Can you just give a little bit more color as far as the tenants and what's going on? I'm assuming there are a bunch of people that just raise their hand because they could. And then you probably have some tenants who are probably on their last legs anyway, and I'm guessing that those are not part of that 40%. But if the ones who are impacted, do they just merely need their businesses to reopen and then they're good to start paying or those are tenants where you think it's going to be longer to get back those rents?
Brent W. Wood -- Executive Vice President and Chief Financial Officer
Yes, Alex. Yes, maybe to clarify that some. So to date, we said 26% of our tenants have requested for some form of relief. Certainly, some of those were just putting their hand up because they felt like they should. We've already denied 58% of those requests. We've executed some form of short-term deferral arrangement with 2%, which represented just 0.5% of April rents, for example. But the remaining 40% of those requests, that doesn't mean that we're in fact, we won't grab that many. That just means that 40% is in some stage of we've requested additional information. We're doing additional background.
We're maybe waiting to hear to see if they got PPP loans. So that just simply means that 40% is continuing to be monitored and watched. Some of that percentage will be wind up in the denied bucket, and some smaller percentage of that perhaps will wind up in the executed agreement bucket. But that 40% as of April, only represented about 10.5% of April rents. And again, the 40% is just a monitoring watch list, talking to group, and they'll yet to be determined if they'll wind up in the denied or executed agreement, but certainly not all of that will be agreed upon. So hopefully, that clarifies that a little bit.
Alexander Goldfarb -- Piper Sandler -- Analyst
Okay. And then the second question is, as far as leasing goes, you're you guys are fortunate in that a lot of your exposures are in states that are starting to reopen. I'm not sure how much in-person leasing is going to happen in the near term. But do you guys need in-person like basically, do you need people on the ground to be ticken like looking at space or transacting on buildings or because a lot of warehouse can be done through Google Earth or virtually, you could actually resume a lot of leasing and maybe even start due diligence on buildings to buy or sell or lend, you could do that virtually. So basically, how much of the resumption of your business depends on in-person travel versus how much can you actually do virtually?
Marshall A. Loeb -- President And Chief Executive Officer
Good question. And I think, really, a lot of it will be driven by the prospect of the tenant, but it's not needed. You can certainly do it. I mean, we have virtual tours and photos and drone aerials and things like that. So we can and all the tenants have a broker, and that broker is usually local or at least working with another someone else in their shop in the Orlando and Austin or whatever market the property has to be in. So it can be done. I think the other thing I like about our product type, each space has its own separate entrants. There's not a common area, say, like an office building or shared restrooms and things like that. So it can be done remotely and virtually.
And certainly, a lot of the national companies where we've seen a lot of our activity as they roll out kind of their smaller last-mile delivery, they know what they need and how many dock doors, all the things like that. So I won't say it's cookie cutter, but at least it's like opening a new retail store. You kind of have your format. So it can be done virtually. It just depends on how comfortable they are with that, but we've certainly been pushing in the brokerage group, so that we the third parties that we use all realize that. So they've ramped up their basically their technology and virtual ability to show space. So it's not as ideal as in-person and things like that, kind of the traditional model, but it certainly can be done, and it's certainly where the world seems to be evolving the last couple of months, a lot more so.
Alexander Goldfarb -- Piper Sandler -- Analyst
Okay. Thank you, Marshall.
Marshall A. Loeb -- President And Chief Executive Officer
Thank you, Brent.
Operator
Thank you. And we will take our next question from Manny Korchman with Citi. Your line is open.
Manny Korchman -- Citi -- Analyst
Okay. Marshall, can you maybe go through any commonalities or sort of just the flavor of both the companies that have requested relief and the companies that you've granted relief? And also just how you're thinking about incorporating the relief of the extensions? Is it new lease terms? What is that?
Marshall A. Loeb -- President And Chief Executive Officer
Yes. Good question. It's been a mixed bag so far for the most part. Typically, where people have asked for relief, it's usually, can I have the month of April and May, and I'll pay you back over the balance of the year. I'm thinking at one in particular we did, and they were near the port of L.A. and Long Beach. So with the slowdown in China, they needed some help there. And I think we ended up giving them negotiated like 2.5 months rents. And then we'll typically, again, you don't want to put someone in a payment plan that they can't meet, set them up for failure. But our goal is to collect it back as fast as we can. So it's not been, I need out of my lease. Thankfully, we did not adjust our termination income for the year.
It may change, but we really haven't thankfully seen any rush for people saying, I want out of my lease. It's been, I need a month or 0.5 months here, there, and we'll make it up later. In some cases, those tenants have been able to get an SBA loan since that original request came in and they since withdrawn their rent relief requests, thankfully. And so that's still in process with some of the tenants. And it's been a mixed bag. I'd say those that are related, and I kind of mentioned between Orlando and Las Vegas that are in the it's usually the convention type business, we've seen them be impacted fairly quickly.
Another tenant is they move people for the military, and the military has put moves on hold. So some that you certainly get, and there's a backlog supposedly for military moves. And once that reopens, they're qualified and have done it for years and years. So I think their business will pick back up, but it'll be a month or two or 0.5 months or two here or there. And then hopefully, we'll the goal would be to be back to for us to be back to whole by year-end. But a little bit, we'll also work with them. And again, if they need some more time or if we end up extending the lease term or some things like that, that's kind of where we're going. Okay, if we do this, for you, what can we gain in return?
And Brent, [Indecipherable]
Brent W. Wood -- Executive Vice President and Chief Financial Officer
Yes. Just one thing I'd point out, we do look at and segregate our tenants into NAICS codes. And globally, about 22% of our tenants wholesale and retail trade; about 18%, transportation and warehousing; construction related, around 18%. And our rent relief request to date literally almost mirror those percentages identically. So really, what it shows us, it's impacting all tenants equally. As Marshall said, there are some individual specific tenants certainly or greater or more, maybe quicker impact. But for the portfolio as a whole, it really there's been no one large segment of percentage you'd say, wow, that really jumps off the page. Those percentages are eerily similar to the makeup of our tenant base. So it's been pretty broad from that standpoint.
Manny Korchman -- Citi -- Analyst
Thanks guys.
Operator
And we can take our next question from Bill Crow with Raymond James. Your line is open.
Bill Crow -- Raymond James -- Analyst
Good morning. Thanks. A couple of questions. What percentage of your current portfolio is just closed where they're not operating?
Marshall A. Loeb -- President And Chief Executive Officer
I'd have to estimate. It's a very small percent. I mean it I'd say under 2%. We've got some it kind of shows where the market was when those were leased. It may be like a volleyball training facility or a YMCA or some things like that. It's small tenants here or there. But for the most part, thankfully, our markets have not been hit by the construction shutdowns in a few of the markets around the country. And I'd say it's probably under 12 tenants out of 1,600 that would be closed at this point.
Brent W. Wood -- Executive Vice President and Chief Financial Officer
Yes. And just to be clear on that, Bill, all of our buildings are, from our perspective, are "open," meaning we haven't put any restrictions. Thankfully, the way industrial works, we really don't have interior common areas. Each tenant has its own separate accessible space. So it's really our 1,600 or 1,700 customers. That's really each their own as to how many people working. If they're open, how many are there, the steps they're taking. Obviously, we're communicating with them. But thankfully, from our standpoint, we haven't had to step in and say we're going to close this or do that. It's really each tenants kind of make their own judgment calls on that.
Bill Crow -- Raymond James -- Analyst
Yes. Okay. If we go back to 2008 and 2009, one of the challenges was that you had a decent amount of exposure to smaller homebuilders. And that business had gone down dramatically. Certainly, it looks like home construction is going to hit a pause, but at least how is your exposure to local construction companies, contractors? How has that changed since then?
Marshall A. Loeb -- President And Chief Executive Officer
Certainly, homebuilding is never really I guess good analogy never come back the way it was back in 2007, '08. We have some exposure there. Although I think a lot of ours, it may be and maybe that's where the industry has consolidated, things like HVAC contractors and things like that, which is are pretty essential business. If you're in San Antonio, and it's July and August and it's Baker or Carrier or Train, Goodman, some of the HVAC contractors, as things reopen, or certainly even residential, that's there. It's high teens. That's about 18% related directly in the construction category, as we've coded it.
But to date, that has not jumped out. You're right, homebuilders and even markets like when I think of homebuilding, Fort Myers is a market where we're in, which got hit hard during the last downturn, but we're 100% leased in Fort Myers, delivering a building that's pre-leased to Home Depot there and have had good activity. Just signed a lease, again, kind of with the construction in the last 30 days with Ferguson Plumbing and expansion and activity in Fort Myers. And that's a market where we felt like we, in the last downturn, we really learned. It was very much second homes in homebuilding. But to date, it's holding up fairly well. And there'll be some bumps, you're, right. But knock on wood, that category hasn't been hit overly hard just yet or at least it hasn't rippled its way to us yet.
Bill Crow -- Raymond James -- Analyst
Yes. Perfect. One more, if I could. And if you talked about this earlier and I missed it, just move on. But is there an opportunity here where construction costs could reverse some of the gains over the last few years?
Marshall A. Loeb -- President And Chief Executive Officer
Good question. And yes, we're what we're hearing is there's labor is more available, although a little bit less efficient because of the social distancing. And the shelf costs have come down $1 to $2 per square foot. So and again, picking out kind of our construction guys' brains, the other thing I think all the industrial developers I'm going to say all, but the large national ones. Everyone's pretty much put spec development on hold. And then the other types of construction that was going on, the hotels, the retail, the entertainment, all that has really stopped. So I think we need the demand to be there, but I think the construction prices have come down a little bit, and will probably continue to come down over the next two to three months, that everybody seem to hit has hit the pause button for a little bit and some other sectors will come back more slowly than industrial. And I hope we'll be able to benefit from that.
Bill Crow -- Raymond James -- Analyst
Yeah, thanks, I appreciate your time to that sure.
Operator
Thank you. And we will go next to Jason Green with Evercore. Your line is open.
Jason Green -- Evercore -- Analyst
Good morning. I know that a lot of your transactions are locally sourced. I'm curious if you're starting to see any local owners looking for a liquidation event. And do you anticipate starting to see some attractive acquisition opportunities as a result of some of the market distress?
Marshall A. Loeb -- President And Chief Executive Officer
Jason, for the time being, we're still looking but not nearly with the same intensity we had maybe at the end of the year or the first part of the year. We're kind of at this point, we've asked our teams, keep a list of the things that are off-market, if you like, are there some deals that were on the market that got older kind of quietly on the market. I think that will be there. Although in talking to one of the national brokerage groups this week, just kind of before the call, I'm getting a sense from them what they're seeing, they I don't know that our strategy is that different.
Their comment was there's a lot of dry powder waiting for distress in the industrial space. And then thankfully, maybe, or so far, no one has seen it. So we're hopeful, but we'll wait until there's a little bit firmer footing. I think the hard part, when you think about it, we found a project in one of our markets early on that we were looking at, and we said it was leased. It's awfully hard to know which tenants are going to be there by the time we close or what rent they may be paying, that it's hard to underwrite the rent roll. And so we've kind of that's what we said. Let's keep an eye on things. And as we get to maybe a little bit firmer footing and the economy reopens. In pending we have access to debt today.
We'd like a little bit higher stock price, things like that. We'll manage our liquidity. And hopefully, there'll be some distress out there. But to date, we haven't seen it, but we're hopeful. Everything is institutionally owned. And so maybe the so much is, the good news is development stops pretty quickly because of that institutional ownership. The downside of that is there's not the distress there used to be way back when, when Brent and I were earlier in our career when so many things were, Jason, Brent Marshall, we're the local developer of the bank loan. Now it's the local developer with Clarion or Heitman or AEW as their partner type thing.
Jason Green -- Evercore -- Analyst
Got it. And then I guess now that your stock is trading back above $100 again, realize it's a significant discount from where you were earlier in the year. But would you consider raising equity at these levels? Or at these prices, are you really just much more focused on debt financing?
Brent W. Wood -- Executive Vice President and Chief Financial Officer
Yes. I would say we're always looking at both avenues. And as you saw, we did do execute some debt in the first quarter at 2.39%, which was a good spot for us. But we keep an eye on it, and we have an internal NAV, and that's probably the metric that we look at the most is how we're trading relative to NAV, and it certainly doesn't have to get back to where we were. We were fortunate to trade at a premium. So you saw from the guidance that we did pull it, and that's just given the environment, but that's just at this point in time.
Obviously, if the price were to show some strength, the economy get a little stronger. And if the price did at least probably at a minimum get what we feel is that near or above NAV, then certainly, we would view that lever as available. We've been more like Marshall said, over the last month or so, we're going a little more capital conservation mode. We're in great shape for the near term. But yes, it's certainly conceivable. But from a guidance standpoint, just given our current pricing, we pulled it. But whichever one is most attractive at that time, we would look to source capital in that way.
Jason Green -- Evercore -- Analyst
Got it. Thank you very much.
Operator
Okay. And we will take our next question from Craig Mailman with KeyBanc Capital. Your line is open.
Craig Mailman -- KeyBanc Capital -- Analyst
Hey, guys. Marshall, I know you said you don't want to do spec construction here, but could you give us just a little bit more detail on the $70 million of additional starts you have in guidance and whether those are kind of more build-to-suit or just a placeholder?
Marshall A. Loeb -- President And Chief Executive Officer
No. It's it could turn out to be spec development. If it was, it would probably be more realistically, we've got nothing planned this quarter. No starts. And it's really more of a reflection of pre-lease, so 100% are built. We I guess we prefer the term I'm splitting hairs, pre-lease over build-to-suit. Build-to-suit sounds like it's building that fits just that tenant where you typically will build something, who's the next, the second, third, fourth tenant, but pre-lease opportunities. So we have a good handful of conversations ongoing with tenants that are still active and still seeing demand. And that's really that $70 million balance for the most part between here and the end of the year. And things really came back maybe more quickly than we all feel like today.
I'd love to think we'd start spec development. But again, I like our model that it's really pulled by the field. So if the guys are saying, I've got three tenants that need expansion space, and I've got room in my park, that's where you'd see us do a spec development or maybe have a building with 50% pre-leased when we break ground because it's an existing tenant. We're moving from one building to the new one.
Craig Mailman -- KeyBanc Capital -- Analyst
Got you. And then you had mentioned you did a little bit of leasing in April in Houston. Could you just give us maybe an update of kind of the volume you guys have done here quarter-to-date? And historically, you guys have been more of a regional tenancy, I would say, but more recently, you're getting more of the nationals and e-commerce type tenants. Could you just tell us kind of with what's in the pipeline, how that mix has trended over time as well?
Marshall A. Loeb -- President And Chief Executive Officer
Sure. I think good question and, one, a little bit of a misnomer on these group or maybe I'll put it on myself, something I could or should articulate a little better. I think a lot of times, people think smaller tenant sizes means mom-and-pop tenants are more so than it it really isn't. In a lot of cases, we have large national global companies that this is just what they need in that market given how their distribution or service model is set up. I guess as an example, we've got Amazon in a space that's under 10,000 feet, for example.
We've got we've seen them in 40s and 50s and same with the Best Buys, the homes the Lowe's Home Depot, Lowe's, those type tenants, Peloton, number of Tesla. So I think our tenants, we have more national tenants than we probably have articulated. And even the local regional ones have been in business 20, 30 years. So pretty well capitalized for what they do. So we feel good about that perspective. We do see more and more what's been interesting as the national tenants roll out their model, kind of I touched on earlier, then it almost seems to go region-by-region that we're opening up our local distribution center for what we've heard at, like white goods, meaning a refrigerator, washer, dryer, and it will start in Orlando, maybe, and then we'll see them in Miami and then one we're looking in Las Vegas today and things like that.
So it seems like the national tenants are rolling out their last-mile platform. So where we've seen Wayfair once, then all of a sudden, we're in four conversations with them. And again, we won't land them in four markets, but we will get them there. So there's activity. It's definitely slowed in the month of April. Renewals have been pretty high. We had a good retention rate, higher than typical this quarter. And we kind of thought that where tenants would expect to move, we I would say, long term, if you're building a model, use a 70% retention rate for us or any of our peers for the most part. It always seemed to be kind of the average.
And we were about 86% first quarter, and that was really, for the most part, pre-COVID. So I would expect a lot of more renewals than typical this year, because I think people have put their expansion plans on hold that they had last year for the most part. April was slower, but it's large. It's e-commerce. It's kind of large national companies for the most part that have requirements for home goods or home improvement. It's food and beverage is another category where we've seen some decent activity outside of just kind of the bread and butter renewals. And then we've seen some usage COVID related, hand sanitizers.
One is portable medical testing equipment. We got a lease signed in Atlanta. This month, we competed for some space with the state of California, was out looking for immediate. So some of those will come out, and it'll be basically an immediate requirement. So that if it helps, that's kind of the nature of our leasing, the last month where it's kind of been most people are like us kind of shelter in place literally and do a renewal of some sort. Or there are companies that are, we think, probably benefiting from this shift and are out looking for space now.
Craig Mailman -- KeyBanc Capital -- Analyst
On the renewals, what has been the conversation around kind of rent? Have you guys been able to push through any bumps? Or have people pushed back? Kind of just talk about the direction of spreads and the pace of your rent growth.
Marshall A. Loeb -- President And Chief Executive Officer
Sure. Probably the good news is we have embedded rent growth. So I think it will probably and this is more probably more forward-looking than really April. We just don't have enough probably enough data points to really draw a good conclusion yet. I think rent growth will obviously slow. But thankfully, we'll be able to push ahead with rent increases. And rent bumps are still there. Probably where it's most competitive are new leasing where you've got vacancy, and I think those tenants have pushed for a little more free rent and things like that is what we're hearing. So probably seeing more competition.
It makes sense on a new lease. And then in a few cases where the tenants have said, I thought I was going to outgrow in my space. I'm thinking of one in particular where we had them vacating and they did a one or two year renewal just kind of stay in place. And there was no free rent and some rent bumps and things like that. So it's probably new leasing, and you'll see rent growth slow inevitably. But thankfully, us, and I would imagine most of our peers, have embedded rent growth given where the market has gone the last few years.
Craig Mailman -- KeyBanc Capital -- Analyst
But it seems like still just kind of usage of space and size requirements continue to trump a couple percent increase in terms of the conversation.
Marshall A. Loeb -- President And Chief Executive Officer
Yes. If you've got I guess for them. If you've got the right space and the right number of dock doors and things like that. We're not losing deals over rent. I just think it won't be frenzy is too strong of a word, but it won't be as heat in a market as it was in 2018 and 2019. And then I think coming out of it, it's going to pick up with no new supply. It's going to pick up and probably be I'm an optimist, but an even more demand market coming out than we had in 2018 and 2019, depending on not sure when we get to that point in time. But at that point in time, I think we'll be better for industrial.
Craig Mailman -- KeyBanc Capital -- Analyst
That's helpful. Thanks, Marshall.
Operator
And we can take our next question from Eric Frankel with Green Street Advisors. Your line is now open.
Eric Frankel -- Green Street Advisors -- Analyst
Thank you. So my question, I think you partially answered in some of your replies, at least on an applied basis. But maybe you could touch upon just your bad debt allowance. So I guess in 2009, certainly a portfolio in a different time than a different tenant base. I think your actual bad debt experience then was a little bit higher than what your allowance now shows for 2020. So I was hoping maybe you could explain the difference.
Brent W. Wood -- Executive Vice President and Chief Financial Officer
Eric, this is Brent. Yes. In 2009, we averaged for the year about 122 basis points of total bad debt compared to our income from real estate operation. And that really we considered many factors, but that was probably the primary factor that we used in raising our bad debt allowance for the year from $800,000 million to $3.8 million. That $3.8 million takes it to right at 121 basis points, almost the exact same spot. I think a lot of our peer group have been in and around kind of guided to that same general range relative to their income stream. And so that's really what we used as a guide. I would want to point out that, that allowance is not tenant specific.
Thankfully, we entered April with a very clean receivable balance. I think I mentioned in the prepared remarks that March or earlier, we've got less than 1% that was due to us at that time that wasn't either collected or are covered in some other way. And so yes, we based on that and whether it'll be better than that or worse than that, we're still early into this. April was really the first month that we experienced any headwinds. By the time March came around and things got more dire, for the most part, March rent collections, thankfully, were done for us.
So the only other thing I'd point out on the $3.8 million is that as you see in our guidance table, $2 million of that is based on just cash, same-store, bad anticipated bad debt or budgeted bad debt. And then $200,000 of that is cash, but non-same-store property. And then $1.6 million of that bad debt total would relate to straight line write-off of potential straight-line balances. But again, those are not tenant specific.
That's other than the $500,000 we recorded in the first quarter, the remaining $3.3 million is complete budgeted cover that we just we just think it's had to put something in, assuming that not every tenant, unfortunately, is going to be able to bridge the gap from here to reopening the economy. So we don't know who they're going to be, but we anticipate there will be some. And so that was really the impetus behind dialing that up a little bit.
Eric Frankel -- Green Street Advisors -- Analyst
That's helpful. Circling back quickly to Houston. Maybe just talk about a little bit more just about what local leasing conditions generally look like and just how dependent leasing is on oil and gas specifically at this point? And what the ramifications you think might be, even if your tenant base is not exposed directly to oil and gas or what it might look like in the next couple of years, depending on how that industry kind of shakes out?
Marshall A. Loeb -- President And Chief Executive Officer
Sure. I'll take a stab, and Brent, given your history being a color commentator. I'm thankful, supply is pretty much Houston, like all markets. So I would expect we'll work our way through the $22 million that's under construction. There'll be some downward pressure on rents. And Houston maybe the good news, what we like about our portfolio, our footprint, kind of short term and long term, when you read about markets reopening, it's Georgia somewhat reopened last Friday. I think Texas will be a market that reopens their economy, say, a little bit earlier been in New York or probably in California. So I think a lot of our markets will be earlier in the reopening. And then I think coming out of this that we expect the migration to the Sunbelt will probably pick up a whole another topic.
But in the short term, we think Houston is oil and gas. Our tenant it's not it's a big part of the Houston economy, but it's probably over exaggerated. Generally, I think kind of like tourism is in Orlando as we touched on. But I think it'll be a challenge in Houston, particularly compared to our other markets for the next year, and we'll probably be more cautious on spec development in Houston than we are in other markets. And really, part of our Houston answer is also just we're cognizant of our size there. And so we're going to manage the size. We're down from 21% to 13% of our portfolio, and we'll keep I like that we our team does a great job of developing buildings into the 7s there, but we'll also keep trying to exit buildings in the somewhere in the 4% to 5% kind of cap rate range. So Brent, color, anything to add?
Brent W. Wood -- Executive Vice President and Chief Financial Officer
Yes. No. I would agree with that. I'd just point out that Houston during the '14, 2015 downturn, this certainly has gone a little deeper than that. But through the entire period, Houston still added population and job growth. The question is, can the remaining 2/3 of the Houston metropolitan area economy help, to some extent, offset that other 1/3? And it did in '14 and 2015. It's to be determined here. Obviously, it has the COVID mixed in with that, which makes it even more challenging. But it's a large city. There are a lot of people there, which just prompt a lot of use for industrial space.
And having lived there and been there, I know that the mentality of that area is to is sort of blue collar and just roll up and get it done. So yes, long term, we feel good about the city just certainly reopening the economy and having some oil and gas consumption is going to help things. But we've got a good team, good experienced team, and we'll just continue to we're very glad that we lowered our risk there significantly. But we'll just continue to monitor it, take it space by space and tenant by tenant.
Eric Frankel -- Green Street Advisors -- Analyst
Okay, thank you for the color. Appreciate it.
Operator
And we can take our next question from Michael Carroll with RBC Capital Markets. Your line is open.
Michael Carroll -- RBC Capital Markets -- Analyst
Yeah. Thank you. I just wanted to touch on your comments about what your customers are telling you today. At least in the press release that was released last night, it sounded like that you're more cautious going into May and June versus April. Is that something that you're hearing from your tenants today? Or is that just what's your expectation on how the market's kind of been folding right now?
Marshall A. Loeb -- President And Chief Executive Officer
I think it's more the latter. And kind of our thoughts again, as Brent mentioned earlier, none of our bad debt reserve is tenant specific. It's more a thought of no business is really designed for the economy to be shut down. And so as things did move to businesses close and things like that, it's probably just cash on hand and availability. We thought your ability to pay April rent is probably easier. And then that financial burden, almost regardless, unless you're some of the exceptions, your business. It probably gets a little more challenging for them balance sheet wise in May and maybe even in June, and that's why that the sooner we can safely reopen, the better for all of those tenants.
But that's where we said it's probably cumulative in terms of carrying your employees and paying your rent and things like that. It's probably easiest the first month and a little bit harder the second and a little bit harder still the third. But that was more, I guess, intuition, much more so or completely than really anything we've heard from any tenants other than it's got to be emphasized with them. It's got to be hard when your revenue is short, sources shutdown or things like that or depending on which tenant it is as to how much revenue they're losing while the economy is kind of at a standstill.
Michael Carroll -- RBC Capital Markets -- Analyst
Okay. That makes sense. And then can you talk a little bit about, I guess, the tenant's mix? I know that you said that you have more national tenants than people probably expects. So what percentage do you say is national tenants versus the local tenants or regional tenants within the portfolio? I mean, have you looked at that? Or is that data that you could provide us?
Brent W. Wood -- Executive Vice President and Chief Financial Officer
It's the data on that is very tricky. Obviously, with a publicly traded company, it's easier to track because you can look them up. But there can be very large private companies, for example, that are well healed, but we just don't have a way or access to do that. So we don't have specific metrics. Obviously, we have their trade groups. But in terms of broken down by balance sheet size or that type of thing, we really don't have that. Marshall has mentioned a couple of times the quality of our portfolio. I would just reiterate where we operate and especially with our development and having built half our portfolio, we operate a very high-quality Class A portfolio. Obviously, I think a lot of people maybe think small tenant, they begin to think that Class B, Class C.
Obviously, as you go down the food chain in quality of building, then you're going down with quality of tenant because that's lower price point. They can afford that more, and it's not a lot different than, say, housing, whereas you go down, it's just more challenging for people potentially with difficult times. But we're in that Class A, really top end of the multitenant space. So we fared well through the Great Recession.
I would point out, we were one of the leaders coming out of that with regaining occupancy because that is the broadest base of the potential customers out there, just from a pure population standpoint, is that 20,000 to 50,000 square foot tenant. So we feel good long term about where we are, and we've been through, as a team, several of these downturns. And we feel we're we'd rather not have to deal with it, but we feel like we're in a good position to handle it.
Michael Carroll -- RBC Capital Markets -- Analyst
Okay, great. Thank you.
Operator
And we will take our next question from Rich Anderson with SMBC. Your line is open.
Rich Anderson -- SMBC -- Analyst
Hey, thanks, good morning everyone. So Brent, you mentioned that the bad debt of incrementally $3 million, $3.8 million total was not tenant specific. And yet you were able to get to this breakdown between straight line rent collectibility issue or and $2 million. I think $2 million in the cash bucket, $1.6 million in the noncash bucket. So how are you able to get that level of detail if you didn't really kind of get into the weeds within individual tenants on it? Just curious how that happened.
Brent W. Wood -- Executive Vice President and Chief Financial Officer
We've got bad debt stats going back for about 20 years. And our average mix of cash to straight line is 65%, 35%. And that holds pretty it certainly varies quarter-to-quarter and maybe a little bit year-to-year. But on average, it's very close to that. And so we just replied relied upon that historical breakdown. I mean, obviously, if you get to a point where you're pulling the plug on a tenant and just determining that account is uncollectible, you obviously have the cash buildup of just the rent. They owe you let's say, they owe you 90 days, you've got that to write off.
But then you also have whatever their straight line rent balance at that point in time might be gets written off. If you're lucky and you're toward the end of that lease, it would be a smaller straight line balance. But if you're on the front end of that lease or even toward the midpoint, then there likely would be a balance there. So we knew that it wouldn't be 100% cash because and again, just relying on our historical average 65%, 35%, that seems like a reasonable way to break that out.
Rich Anderson -- SMBC -- Analyst
Fair enough. Okay. And then maybe a broader question for Marshall or yourself. You talked about some of the positive elements that may come out of this in terms of on-shoring or near-shoring, inventory increases, changes in consumer behaviors. But in the near term, would you agree that the sort of last-mile sort of component of the business might be a little bit more exposed only because you're so reliant upon the activity, the local economies in the markets that you're serving in that sort of infill last-mile product. The big problem with larger assets is supply, as you say, a lot on these calls. And I'm curious if you feel like you're almost sort of hyper exposed to a recession because there's just people out of work in the markets that you're serving. I'd just like to hear your comment on that.
Marshall A. Loeb -- President And Chief Executive Officer
Yes. Interesting perspective and probably a longer conversation than I'll have time this morning. We certainly need the consumer pick a market, in Tampa, in Phoenix, in San Francisco. But I've actually thought the opposite of that and that people are at home now and getting more and more goods delivered or picking up curbside when you think of how people are shopping, I've actually thought it puts pressure is not the right word, but more value to last-mile locations because depending on what you're delivering, you're not going to I know they're just reopening some, well, Simons, some of their malls and things like that.
But you're not going to the mall. You may not be going and sitting in a restaurant. Your shopping has changed, and you need that last mile even more so than you did prior to this. So I think we need the consumer. We need demand to be there, but people are ordering things online and from their home or by phone. And so the last miles picked up importance. And I think that's a pattern that's going to stick there.
Rich Anderson -- SMBC -- Analyst
I appreciate the color. Thanks very much.
Operator
And we will take our next question from Elena Travis with Morgan Stanley. your line is open.
Elena Travis -- Morgan Stanley -- Analyst
Hi. This is Elena on for Vikram. Just a quick one. I'm not sure if you can provide or if it's too early, but do you know what percentage of May rents you've collected so far? And is it more or less than normal levels?
Brent W. Wood -- Executive Vice President and Chief Financial Officer
It's a fair question. And with preparing everything else, we've not did a deep dive into that. And the percentage at this point probably would be one where we wouldn't want to overly spook someone just because that percentage at this point in time isn't necessarily that high. But I would say that our anticipation and just early look at it is similar to April, maybe slightly behind normal, but nothing that's eye raising. But really, our experience has been you really don't get a good read on the month until about the 10th or so because that's when some of the penalties and late fees and things would kick in. And so it's not unusual to have pretty good velocity coming through on the cash receipts. About 10 days before quarter end, all the way up to about 10 days after. And so within about that 20-day period, you're going to get a really good idea of who's paid, who hasn't. But we're just sort of midway on that and really no additional color to provide at this time.
Elena Travis -- Morgan Stanley -- Analyst
Great, that's helpful. Thank you.
Operator
Thank you.And we can move next to Blaine Heck with Wells Fargo. Your line is open.
Blaine Heck -- Wells Fargo -- Analyst
Great, thanks. Just following up on the tenancy questions that you guys have gotten, and this might be tough to answer, too. But given the conversations you're having with tenants, do you have any idea as to what percentage of your tenant base has received or will receive some sort of government health in the form of a grant or a PPP loan? And is there any way to know how instrumental that is in their ability to pay rent? Or are they using the loans for other expenses?
Marshall A. Loeb -- President And Chief Executive Officer
No. A good question. And you're right, probably a trickier one to answer. Where we've gotten and involved, of that 26% of, say, the tenants that may come to us and say, we need help, our standard form or list of questions and things are have you applied for an SBA loan. So and we know that's kind of again, we don't want to be the lender of first resort is basically it. We'd rather if you can get the SBA loan and I'm certainly not an expert on it, but my understanding of those loans is it's the amount you end up ultimately needing to pay back, if you can show it was going to pay employees and pay your rent, that part is forgiven.
So that's where we've had a number of cases where tenants have asked for rent relief and subsequently withdrawn their request because they didn't get the SBA loan. And then the other thing we're getting an SBA loan education through this. So many of the banks as you saw the money ran out so fast. And in some cases, it's more of a political comment, it seemed to be large companies with good banking relationships got those loans. And so as some of our tenants were having trouble, we actually help them. Like here's the bank, here's the website, let us know if we can help you with a bank or a specific banker there.
So in terms of percentages, globally, it's hard to say how many. It does feel like those that did get the SBA loans are using them to pay the rent because that's what it was designed for. And they my understanding is they won't have to pay that portion of the loan back. And we're trying to work with them as best we can of making it an easy process as we can as an outsider, not their banker, not their attorney to obtain those loans. And I think there's some still going I saw an email this morning, going through that process where someone had just gotten funding. And so hopefully, that's where that May-June rent will come in.
Maybe they didn't have it in April or maybe they're just now getting it. So it's I think it's helpful, and it's not the majority of our tenants by far, but they all matter. And so everyone that can kind of get us each month, you kind of say, at least we're closer to the other side of this because we get excited about the other side of this. And so each month, we collect chips away at our bad debt estimate or our occupancy loss estimate, thankfully.
Blaine Heck -- Wells Fargo -- Analyst
Okay. That's helpful, Marshall. Just one quick one. Brent, you guys have some upcoming maturities, both this year and next. Can you just talk about what you're seeing in the debt markets today and how you're thinking about addressing those maturities as it stands today?
Brent W. Wood -- Executive Vice President and Chief Financial Officer
Yes. We do have $40 million coming, I think, in August and then $75 million that's not coming until December. So we have some runway there and then a pretty typical year next year at $125 million maturing. And we've tried to keep a very steady, as you see in the supplemental, very steady, evenly distributed maturity schedule. Right now, really good timing with the loan we did first quarter. But right now, things spreads really widened out right in the midst of all this, and that's come back down. And we think we can get 10-year long-term money in the low 3% range, which is not unattractive.
And hopefully, as things go, maybe even that will simmer down even more. But that's as of the last few days in talking to some of our private placement lenders, we feel like given our size and rating and that type thing that we would be in that ballpark. So we certainly view that as accessible and available as needed. And as you see in our guidance table, we although we pulled the equity issuance, we went to the other lever and bumped up our anticipated debt access this year. And we have been building ourselves in a position, even we've even been questioned about the rate at which we were issuing equity.
And again, our philosophy has always been when it looks do it when it looks attractive and it's available versus having to be reactionary. So fortunately, we're in a position where we can let the markets calm and cool down. And hopefully, I think maybe third quarter is the first time we've dialed going back in, but we certainly feel like that that's that lever is becoming has become more attractive just in the last 30 days, which is nice to see.
Blaine Heck -- Wells Fargo -- Analyst
Great, thanks a lot guys.
Brent W. Wood -- Executive Vice President and Chief Financial Officer
Yes.
Operator
And this does conclude our question-and-answer session. I'd like to turn the program back over to Marshall Loeb for any closing remarks.
Marshall A. Loeb -- President And Chief Executive Officer
Thanks, everyone, for your time. Certainly, last and probably most importantly, I want to thank Bruce Corkern. He is our Chief Accounting Officer. He has now survived his last quarter end close out. He's been with us over 25 years. So Bruce, thanks. Just because you're retired, you're not getting away from us. And meanwhile, to the audience, thank you for everyone. Thanks for your time. We're certainly available for any follow-up questions or comment, and we appreciate your interest in EastGroup. Thank you.
Brent W. Wood -- Executive Vice President and Chief Financial Officer
Thank you.
Operator
[Operator Closing Remarks]
Duration: 67 minutes
Call participants:
Marshall A. Loeb -- President And Chief Executive Officer
Keena Frazier -- Director of Leasing Statistics
Brent W. Wood -- Executive Vice President and Chief Financial Officer
Jamie Feldman -- Bank of America -- Analyst
Alexander Goldfarb -- Piper Sandler -- Analyst
Manny Korchman -- Citi -- Analyst
Bill Crow -- Raymond James -- Analyst
Jason Green -- Evercore -- Analyst
Craig Mailman -- KeyBanc Capital -- Analyst
Eric Frankel -- Green Street Advisors -- Analyst
Michael Carroll -- RBC Capital Markets -- Analyst
Rich Anderson -- SMBC -- Analyst
Elena Travis -- Morgan Stanley -- Analyst
Blaine Heck -- Wells Fargo -- Analyst
