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Retail Properties of America Inc (RPAI) Q1 2020 Earnings Call Transcript

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RPAI earnings call for the period ending March 31, 2020.

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Retail Properties of America Inc (RPAI)
Q1 2020 Earnings Call
May 6, 2020, 11:00 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Greetings and welcome to the Retail Properties of America First Quarter 2020 Earnings Conference Call. [Operator Instructions]

It is now my pleasure to introduce your host, Michael Gaiden, Vice President of Capital Markets and Investor Relations. Thank you, sir. You may begin.

Michael Gaiden -- Vice President of Capital Markets and Investor Relations

Thank you, operator and welcome to the Retail Properties of America first quarter 2020 earnings conference call. In addition to the press release distributed last evening, we have posted a quarterly supplemental information package with additional details on our results in the INVEST section on our website at

On today's call, management's prepared remarks and answers to your questions may include statements that constitute forward-looking statements under federal securities laws. These statements are usually identified by the use of words such as anticipates, believes, expects and variations of such words or similar expressions. Actual results may differ materially from those described in any forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation, those set forth in our earnings release issued last night and the risk factors set forth in our most recent Form 10-K, 10-Q and other SEC filings. As a reminder, forward-looking statements represent management's estimates as of today, May 6th, 2020, and we assume no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Additionally, on this conference call, we may refer to certain non-GAAP financial measures. You can find a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP numbers and definitions of these non-GAAP financial measures in our quarterly supplemental information package in both the fourth quarter 2019 and first quarter 2020 earnings releases, which are available in the INVEST section of our website at

On today's call, our speakers will be Steve Grimes, Chief Executive Officer; Julie Swinehart, Executive Vice President, Chief Financial Officer and Treasurer; and Shane Garrison, President and Chief Operating Officer. After their prepared remarks, we will open up the call to your questions.

With that, I will now turn the call over to Steve Grimes.

Steven Grimes -- Chief Executive Officer and Director

Thank you, Mike, and good morning, everyone. I appreciate you joining us today, and I hope all of you listening are healthy and safe. While acknowledging the work of so many people on the front lines of the COVID-19 pandemic like first responders and healthcare workers, I would like to start our call by saying thank you to all of our RPAI employees who have stepped up in a big way these last two months. Our team continues to work tirelessly to support our tenants, collect rents and reinforce our business through late nights, early mornings and weekends. And I am deeply appreciative for the above-and-beyond efforts.

We entered 2020 on the heels of one of our best years on record. We finished 2019 with record highs in occupancy at 95.2% and ABR at $19.52 per square foot and a very strong balance sheet with leverage of 5.4 times net debt to adjusted EBITDAre. We carried 2019 successes into the first quarter, which included same-store NOI growth of 1.2% as well as year-over-year gains in retail portfolio occupancy, percentage leased and ABR, highlighting the momentum of our platform ahead of the pandemic. However, we have been faced with nebulous and unprecedented conditions since early March, and it feels like uncertainty will continue for a period of time.

While many of our tenants are open and operating, many of them have closed for more than a month, and they face uncertainty as to how and when reopening can occur. Our year-end portfolio lease rate of 96.2%, combined with an unusually low lease expiration year in 2020, set the table for the current calendar year to hold lower leasing volume, which was evident in our first quarter leasing stats. However, leasing remains a core focus for us. And while many existing tenants have mailed in renewal options during the last 1.5 months, prospective tenants are currently showing hesitation in signing new leases, which we believe is temporary.

Similarly, we have put our asset dispositions on hold for the near term and our capital markets activity as well until conditions stabilize, although Julie and team have been conversing with our lenders about our interest in addressing 2021 debt maturities once the time is right. However, as I noted, many of our tenants are open and operating and paying rents. Our expansion at One Loudoun has not slowed down. Tenant build-outs are in progress. Leasing discussions are taking place.

After distilling our asset footprint through a multi-year asset repositioning program that concluded in mid-2018, we sit poised to persevere through the current environment and emerge even more relevant as less well-positioned retail real estate suffers disproportionately from COVID-19 related challenges. And we believe our investment-grade balance sheet that includes $769 million of cash on hand at the end of the first quarter and no debt maturities in 2020 provides us the strength to weather the headwinds of the present.

This management team successfully navigated through the global financial crisis and learned much in the process, which, in turn, compelled us to take action in subsequent years to place us on a much stronger footing from both an asset quality and balance sheet perspective. With a stronger operating portfolio and much stronger balance sheet, this crisis-tested team is positioned to address the challenges we face today. Our long track record of execution and experience as well as our fortitude serve as our key human capital assets at present.

As Julie and Shane will detail, we have taken numerous steps to address the current business environment, including reduced planned 2020 development spending by $75 million to $100 million, primarily at Carillon as announced on March 23rd, fully drawing on our $850 million revolver as reported on March 30th, and temporarily suspending our dividend as announced last night. Additionally, we have sharpened our pencils when it comes to G&A spend for the year, benefiting from adjustments to planned employee incentives, reductions in travel, conferences and related expenditures. And we will continue to take meaningful iterative actions to further improve our positioning. Our portfolio benefits from the 37% of our ABR tied to essential merchants and office tenants. These essential merchants supply the goods and services necessary for the public's well-functioning amid the COVID-19 outbreak. Neighborhood and community centers form the largest building block of our portfolio at 47% of our multi-tenant ABR.

While not diminishing the tough conditions of many of our tenants and various other retail sectors, I take much encouragement from both the spirit of entrepreneurism and creativity demonstrated by these merchants who have pivoted to curbside pickup, contactless delivery and other options to bolster revenue in the current environment and from the local patrons who purposely support their local shops for their authenticity and uniqueness. We very much recognize and appreciate the symbiotic relationship between tenants and their landlord. And we are working with our tenants to strike the right balance that both supports them and us during this time of crisis.

We are encouraged by the small business tenants who have secured loans in the PPP process and who have, in some cases, prepaid multiple months of rents early. Specific to the federal PPP funds, we have obtained via a recent tenant survey some relatively significant numbers, which we know provide valuable insight into our portfolio as we monitor and consider revenue going forward. Shane will provide more specifics shortly.

At the same time, we know that some of our tenants also applied and were not initially successful, but are working to obtain funding in subsequent rounds. Further, from a macro level, though the major shock to consumer confidence in spending presents a significant challenge for the retail industry overall, the federal government stimulus, now measuring roughly 10% of US GDP, provides an immense shot in the arm to help rejuvenate the economy.

We remain optimistic as state governors begin to lift shelter-in-place restrictions. 86 multi-tenant retail assets from our portfolio of 102 assets reside in the top 25 MSAs in the US. Of those multi-tenant retail assets, approximately 72% reside in states where restrictions have been lifted or modified measures have been established to allow for some level of retail shopping to continue. We anticipate the rollback of these restrictions will have a significant effect on brick-and-mortar retail, not only on how businesses will be able to operate, but will provide retailers direct access back to its core customers, even if it is in a limited capacity. However, given the uncertainties associated with the COVID-19 pandemic, we are mindful that despite the significant demand to gather in and experience open-air centers again, we continue to take an appropriate precaution at our centers.

Along with our focus on near-term execution amid the strains of the COVID-19 pandemic, we also have augmented our approach to ESG and remain focused on enhancing our commitment to this vital topic. Our team is on track to publish our first corporate sustainability report in the second half of the year, where we will provide a detailed overview of existing ESG programs, recent successes and future Company targets.

Highlighting the governance section of ESG, we have witnessed the strength of our business continuity plan, and our robust library of standard operating procedures, coupled with our long-term strategic focus on IT and data investment, have in combination driven our ability to quickly react and continue with day-to-day business operations with minimal disruption to daily activities as well as providing for data integrity and tenant communication in these difficult times, a true testament to our team and a case study that we plan to highlight in our forthcoming corporate sustainability report. As a reminder, you can review our progress to date and monitor our ongoing ESG successes via our microsite at

In summary, we are focused on delivering our updated business plan for 2020 while serving all of our stakeholders responsibly and reinforcing our strong fundamental position. We have worked through challenging times in our business before and emerged in better long-term position on the other side. And I expect a similar outcome in our present circumstance.

With that, I will turn the call over to Julie.

Julie Swinehart -- Executive Vice President, Chief Financial Officer and Treasurer

Thank you, Steve. This morning, I will review our first quarter financial results, our capital structure positioning, April rent collection progress and our ongoing response to the impact of COVID-19 on our business, including detailing some new accounting considerations as well as addressing our dividend policy.

During the first quarter, we generated operating FFO of $0.27 per diluted share, flat sequentially and year-over-year and slightly ahead of our internal expectations. Compared to Q1 2019, our same-store NOI growth and lower G&A expense in Q1 2020 was offset by lower non-cash items and lower lease termination fee income. Same-store NOI for the first quarter of 2020 grew 1.2% or $1 million compared to Q1 2019. Continuing our pattern of results throughout 2019, base rent drove our same-store NOI advancement, contributing 340 basis points with other lease-related income also contributing 20 basis points. Occupancy and contractual rent increases underpinned this base rent expansion followed by releasing spreads, demonstrating both the demand for our retail assets and our team's focus on execution. Serving as partial offsets to those growth components are higher bad debt as well as higher property operating expenses and real estate taxes net of recoveries due in part to increases in certain non-recoverable expenses and higher net real estate taxes, which were partially offset by lower snow-related expenses.

I would also like to point out that although our first quarter GAAP results include the impact of a onetime $6.1 million litigation settlement gain from a former tenant, our operating FFO and adjusted EBITDAre figures and related metrics exclude this gain.

Turning to the balance sheet. Recall that we entered 2020 with just $18 million drawn on our $850 million unsecured revolving line of credit and one of the lowest leverage positions in our peer group. Prior to the end of the first quarter, we drew nearly the full amount available on our revolver to further strengthen our liquidity position and financial flexibility amid the COVID-19 outbreak. And we subsequently deposited these funds into accounts at FDIC-insured institutions.

We ended the first quarter with $769 million of cash on hand and net debt to adjusted EBITDAre of 5.7 times, which was in line with our internal leverage expectations. With no debt maturities in 2020, the macroeconomic and retail operating environment as well as the pricing and availability of debt capital financing will influence our cash balance position going forward. We do have $350 million of debt maturing in 2021, which we plan to address over time as the debt capital markets further stabilize. We continue to actively engage in meaningful discussions with our debt capital providers, including the 14 banks in our bank group and several significant holders of both our private and public notes.

Turning to covenant compliance. As disclosed on page 7 of our quarterly supplemental, we continue to enjoy headroom with respect to our financial covenants as of March 31st, 2020. All of our covenants that contain NOI, EBITDA, interest expense or other income statement components are calculated based on the most recent four fiscal quarters, with one exception, the unencumbered interest coverage ratio, which is computed based on only the most recent fiscal quarter. Recently, we pursued an amendment to our bank credit agreement, updating the calculation of this ratio to be based on the same time period as all of our other covenants across all of our debt instruments.

I'm happy to report that we have successfully obtained lender approval for this modification. And going forward, our unencumbered interest coverage ratio will be computed on a most recent four fiscal quarter basis. In our supplemental, we have disclosed the results of the March 31st, 2020, calculation, both pre and post amendment.

While the COVID-19 pandemic did not impact our business materially in the first quarter, the outbreak has adversely impacted our operations in the second quarter. And you may notice that we have increased our level of disclosure on this topic, not only in our earnings release and supplemental information package, but also throughout our Form 10-Q, which we expect to file later today, particularly in the Risk Factors section, where we have added a COVID-19 risk factor and also throughout MD&A. Many of our tenants dealing with reduced customer traffic and revenue have requested lease concessions. In contrast, many of our numerous essential retail tenants remain open and continue to operate during this time, some of whom are experiencing record demand.

For perspective, during April, we collected more than 52% of billed April base rent, which, along with CAM, tax and insurance receipts, cover our monthly property level operating expenses and real estate taxes as well as G&A and the majority of our interest expense. The overwhelming majority of tenants who operate essential retail and services, including our office component, paid April charges, while many tenants and other use categories did not.

As Steve mentioned and as Shane will further detail, we are working through a variety of rent relief solutions with our tenants, including utilizing at least a portion of tenant security deposits to alleviate some of the liquidity pressure certain tenants are facing. Considering that many of these solutions will result in lease amendments, I'm pleased that only five of our properties are encumbered by secured debt. We will be able to navigate these workouts much more freely without the extra step of obtaining lender approval since our properties that are largely unencumbered.

Currently, I expect a material portion of tenant relief arrangements to qualify for FASB lease accounting relief provisions but cannot reasonably quantify that amount just yet. We expect to share updates on that topic in connection with our Q2 reporting. To be clear, the FASB relief provisions will not impact the reporting of cash received in Q2 and beyond. However, to the extent that our tenant deferrals fall within the provision parameters and essentially require the same total payments over the same lease time period, we expect to be able to account for revenue as if no change to the lease contract was made, meaning that we would recognize income during the deferral period.

As such, in these instances, we do expect GAAP lease income, as well as NOI, EBITDAre and other non-GAAP financial measures, to not be negatively impacted in the cases of rent deferral that fall within the allowable categories of the relief provision. Again, we expect that some, but certainly not all tenant release will qualify for this favorable accounting treatment. Given that today is just the fourth business day of May, we do not yet have firm statistics on the outlook for May rent collection. However, like what we experienced in April, I expect our cash collection time line to remain longer than usual again in May.

Our portfolio benefits from approximately 65% of our ABR coming from grocery-anchored or shadow grocery-anchored property. 37% of our ABR is generated by essential retail and office tenants, including 8% from grocery and warehouse club and 6% from office. Relatedly, we have included new information in our quarterly supplemental information package on page 16 regarding tenant resiliency and April rent collection levels.

Since late March, we have taken additional actions to preserve and enhance our liquidity and leverage position. On March 23rd, we announced the halt of vertical construction plans at our Carillon redevelopment. This decision enabled us to reduce planned 2020 development spending by $75 million to $100 million. And we are implementing plans to reduce our capital expenditures, including tenant improvement outlays and certain expenses, including overhead from our original budget. The high levels of uncertainties surrounding the ongoing and future impacts of COVID-19 compelled us to withdraw our existing full year 2020 guidance on March 30th. And we are committed to taking further iterative steps to reinforce our financial and operating position as this fluid situation continues to evolve.

While working to bolster our free cash flow generation profile, we are also working on addressing our finance-related cash flows in order to reinforce the strength of our capital position. As a result, as communicated in our earnings release last night, our Board of Directors has temporarily suspended our quarterly dividend. I would like to remind investors that we paid two quarterly dividends in 2020 already in January and again in April at our historic quarterly rate of approximately $0.166 per share. This temporary suspension now enables us to retain approximately $35 million per quarter, demonstrating prudence during these uncertain times and acknowledging the related heightened implied cost of our equity capital in the current environment.

While cognizant of the need for compliance with REIT taxable income and distribution requirements, our Board will revisit our dividend declaration decision quarterly with the timing and amount of resumption largely dependent on our operating cash flow performance and projections as well as other factors.

And now I will turn the call over to Shane.

Shane C. Garrison -- President and Chief Operating Officer

Thank you, Julie. Our first quarter saw a continuation of the momentum that our platform generated throughout 2019. Our 1.2% same-store NOI growth in Q1 was driven by corresponding 120 basis point year-over-year gain in same-store retail occupancy to 94.1%. Same-store retail percentage leased increased by smaller 30 basis points year-over-year to 95.3%, underscoring our ongoing commitment to reduce asset downtime and commence rents on time. Sequentially, our aggregate retail portfolio occupancy decreased 110 basis points to 94.1% from year-end as expected following several January move-outs discussed on our last call.

Retail portfolio percent lease declined by a smaller 90 basis points sequentially to 95.3%, highlighting our proactive approach to addressing upcoming vacancies. Following a significant amount of leasing in the last two calendar years that encompassed one-third of our GLA in total, we entered 2020 with just 7.2% of our lease roll expiring, down from 10.3% in the prior year. With a lower pool of addressable leases, we executed 33,000 square feet of comparable new leases at a blended 4.8% spread in Q1 and an additional 195,000 square feet of renewals at a 4.9% comp.

In aggregate for the quarter, we completed 82 new and renewal leases for 285,000 square feet, achieving a blended releasing spread of 4.9%. Further, we achieved average contractual rent increases of 170 basis points on our new leases, up from 160 basis points in the fourth quarter, adding to embedded contractual growth within our rent roll.

Following our first quarter efforts, just 4.4% or approximately 650,000 square feet of our GLA will expire over the balance of this year, providing for additional resources to allocate to the leasing amendments and optimization of negotiations contemplated in Q2 as we look to finalize any needed deferrals or other adjustments on a tenant-by-tenant basis. That being said, there are numerous tenants who can and should pay rent. And a significant amount of our time will be spent allocating both human and financial capital to those tenants that are in the target zone, wherein real assistance is needed and who are committed to transparency and collaboration in the spirit of mutual long-term success. While this effort will be challenging, we are not without visibility as we seek to allocate our limited capital.

Throughout our portfolio transformation, we concentrated not only on the assets but also on the platform, including data integrity and transparency. While our heavy multi-year investment in IT and systems was validated in peak cycle, it is apparent that this investment is just as valuable in the challenging environment we are in today. Specifically, through continued largely electronic tenant surveys and verbal feedback, we have aggregated and categorized significant amounts of data with the goal of understanding several points, including anchor, non-anchor data, open, closed data by category as well as PPP information, including applied versus successful. We view this data as an initial indicator of likelihood of success at the tenant level.

Looking at hard numbers. We currently have approximately 2,350 leases. And in late April, we surveyed tenants outside our top 50, representing approximately 1,800 leases. We have already received responses from tenants covering approximately 800 leases or roughly 18% of our GLA and 24% of our ABR. Of these survey respondents, approximately 26% successfully applied for PPP funds, and about 47% applied and were not successful. While these numbers are significant when considering current liquidity needs and negotiations, just as significant are those tenants that did not apply for funding at all. 27% of our survey respondents indicated no application for federal funding, and we view this as an opportunity as negotiations continue.

While this broad-based negotiation effort will be long and likely take several quarters, we have the data and platform to make rational capital allocation decisions. And we will work patiently and pragmatically, and I'm confident that given the experience of our team as well as the adjacency and community-centric nature of our assets, we will emerge from this abrupt stoppage as a better Company in every aspect. While achieving much in the first quarter from an operational perspective, our business has shifted dramatically since early March. We have seen record bifurcation in the fundamentals of our tenants. While our many essential merchants have seen strong demand from the mandated stay-at-home lifestyle, other tenants such as gyms, movie theaters and soft goods have been deeply affected by the dramatic reductions in sales and brick-and-mortar closings.

Against this backdrop, we are seeing an elongation of our leasing pipeline, particularly on new leases and expect the base absorption portion of our business to extend as tenants become more cautious driven by the macro environment as well as unknown forward sales trends and the continued attrition and overall reduction of viable retail assets in the US. However, we continue to see an inordinate benefit from our high-quality real estate, and subsequent to quarter end, executed an anchor-leased backfill at Fordham on terms that were agreed to over six months prior, reinforcing our belief that great assets will persevere, while the reduction of retail square footage overall will inevitably continue at a much more rapid pace given recent events.

This process, while painful, will make the best assets only better and we must focus on balancing economic leasing terms and duration with asset-level capital investments that provides for public safety as well as experience. On the renewal front, given our modest lease roll over the balance of the year, we continue to expect a full year retention rate of approximately 80% ex any bankruptcy disruption. Many tenants continue to press for renewals at existing successful locations, and we continue to realize significant activity with medical office and service tenants.

Turning to development activity, our recent actions taken for our expansion and redevelopment projects underscore our pragmatic approach to responding to the current environment. We announced the halt of our plans for vertical construction at Carillon on March 23rd. We remain aware of the significant demand for the medical office component of this proposed project, driven by the needs of the neighboring University of Maryland Medical Center, which serves as the shadow anchor of this project. However, the uncertainties of the current environment, the early stage of development work as well as our cost of capital justify this pause. We will continue to evaluate all of our options for this project from monetization to build-out for the medical office as well as multi-family components.

Turning to Loudoun. We continue to advance our work at Pads G & H. In Q1, we performed work on the garages and foundation and completed underground utility and infrastructure work on time and on budget. Subsequent to first quarter, we began stick-frame construction for the multifamily portion of this expansion as well as construction for the office component of Pad G. Driven by the existing retail amenity base as well as the sustained technology investment-related strength in Northern Virginia, we continue to have robust leasing activity for this office space.

At Circle East, where shell construction was nearly completed before the COVID-19 pandemic began, we advanced lease negotiations with several leading national personal service providers for small shop space during Q1 in addition to the Ethan Allen anchor lease signed detailed in our February call. While the major shift in the business climate during March paused those negotiations near the goal line, we remain in active dialogue with multiple tenants and expect progress toward lease finalization as business patterns resume more normal course over the intermediate term.

Also in the quarter, we broke ground at our shorter-term, smaller-scale projects at The Shoppes at Quarterfield and Southlake Town Square that amount to $11 million to $12.5 million in aggregate. We continue to anticipate on-time, on-budget completion of these 100% pre-leased projects at double-digit returns. While we have taken a proactive approach to all aspects of our business in response to COVID-19, I expect more to come from our experienced team. This unprecedented circumstance calls for prudence and dedication. And my confidence in our platform and team has never been higher after seeing the hard work, pragmatism and collaboration of our team over the last two months.

The current challenges facing our industry will deepen the chasm between relevant and irrelevant real estate. Against this backdrop, we are poised to perform and come through the other side in an even stronger competitive position as high-quality real estate assets likely once again lead out of the current downturn.

With that, I will turn the call back over to Steve.

Steven Grimes -- Chief Executive Officer and Director

Thank you, Shane and Julie for your reports. Obviously, a lot of information was shared with all of you just now, a lot of which is based on fluid information obtained through April 30th. While I'm certain many of you will have questions about our predictions for May, please know that, as Julie mentioned, we are in the fourth business day of May and technically have had only three business days for processing May rent collections. It is too early to predict at what rate rent will be collected for May. However, we remain encouraged by the easing of stay-at-home orders and retailers beginning to reopen, albeit at reduced capacity.

And with that, I would like to turn the call back over to the operator for questions.

Questions and Answers:


Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question comes from the line of Derek Johnston with Deutsche Bank. Please proceed with your question.

Derek Johnston -- Deutsche Bank -- Analyst

Hi, everyone. Good morning. How should we be thinking about provisions for bad debt going forward? Julie, you mentioned in the prepared remarks that unpaid rents would be booked normally. And I presume deferred receivables will increase by a like amount. Then I kind of imagine three buckets established, right, highly likely to receive, reasonably likely to receive and unlikely. So I guess the question is, how may we see bad debt flow through the model? And can we expect the unlikely bucket to be written off in the June quarter? Or what should trajectory do you guys envision realizing bad debt over the coming quarters?

Julie Swinehart -- Executive Vice President, Chief Financial Officer and Treasurer

Good morning, Derek. Thanks for the question. And I think some of your comments were spot-on with how Q2 could unfold, not so much in terms of bad debt but just in terms of both uncertainty and the heavy dependence on this FASB relief provision.

First, as I think about bad debt from Q1, we were certainly aware of some tenants being closed or more impacted by the pandemic. And I can tell you that some element of that information played into the amounts we recorded in Q1. But going forward, first to speak to the FASB relief provisions, that's to the extent that any tenant deferrals that we work out or that we anticipate working out fall within the parameters of that. And if it falls within the parameters of the FASB relief provision, you won't see an impact -- a negative impact to income. But there are many cases. I just want to make sure it's clear, whether it be abatement or if there's significant modification to terms with a tenant that we resolve in Q2, you will see a dip in NOI.

As it relates to bad debt, we're going to continue to perform the same careful assessment that we perform each quarter, which is a tenant-by-tenant basis. It's across teams. It starts with property management, asset management is involved, my collections team as well as property accounting. So it's tenant by tenant. We'll look at uncollected amounts. I believe we'll have a tremendous amount of information in Q2 as to where tenants stand with us and their ability to pay. So there should be some clarity in Q2, but I think you'll see the topic potentially move on throughout the year as it always does. So I wouldn't necessarily expect spike in bad debt in Q2. I think it'll be largely dependent on these relief provisions and what we understand about our tenant's ability to pay at that point.

Derek Johnston -- Deutsche Bank -- Analyst

Okay. Thank you. That's helpful. And I guess, secondly, how did the Board and management weigh the suspension of the dividend versus potential deeper cuts to the development platform? And what's providing confidence that continuing the large-scale redevelopment projects outweighs near-term dividends?

Steven Grimes -- Chief Executive Officer and Director

Derek, I'll start with that question, and then I'll turn it over to Shane. This is Steve. Thanks for the question. The dividend suspension was largely a discussion that we had in tandem with our discussion about the development spend and understanding the individuality of each of the development projects, which again Shane will speak to momentarily. We obviously took action there with respect to reducing the spend at Carillon, largely because we didn't have a lot of significant spend there. And we realized that, that was a larger, longer-dated project that we really needed to be very tactical about starting.

The One Loudoun asset, again, Shane will talk about, adjacent to a very high-performing center and definitely in a situation right now where it is really calling for that multifamily use. And then obviously, Circle East is just lease-up at this point in time. The other two smaller development spends, 100% leased projects are very well on track for not only completion but, obviously, tenant backfill.

The suspension of the dividend, I think you're seeing it with just about everybody in the space, and you'll probably see that trend continue. It's really just a function of the uncertainty and understanding that perhaps the suspension of the dividend on a quarterly basis, let's just say it's Q2, will give us time to better understand the impact on the business, and more importantly, the effect on E&P and our required distribution for the year. So the Board will look at dividend resumption each quarter in tandem with what our E&P is looking like and what our distribution requirements are going to be. But specific to the development, I'll turn it over to Shane here quickly. These are very specific projects that have surety of execution if you will. And Shane, I'll turn it over to you.

Shane C. Garrison -- President and Chief Operating Officer

Thanks, Steve. Derek, good morning. I think to just expand on Steve's comments a bit. Carillon, the $75 million to $100 million in savings in the current year, that was a very logical stopping point, right? We were at insight work, obviously, but had not started footers. And our utilities, the wet and dry utilities in this case, we're at a kind of a logical stopping point. So it wasn't incrementally a significant cost to cap the site.

When you look at Loudoun on mechanically, had significant lead time items on the site. The garages, the prefab, in this case, were up or going. The podium was in construction, and we looked at stopping at different stages. As an example, the podium would have had to been reengineered. Obviously, a significant cost to stop at that point. We also had another significant lead item, which was the lumber for the stick portion of the project already inbound. And that had, had a much longer lead time than we anticipated. So when we looked at stopping versus starting at least this quarter, it didn't make a lot of sense. I think we'll continue to review that, to Steve's point, every quarter. And hopefully, as we have more visibility as to the depth of the current issue, we will keep that in mind and have some better information to make that ultimate decision in the next quarter.

Derek Johnston -- Deutsche Bank -- Analyst

Okay. Thanks for the hard work, everybody.

Steven Grimes -- Chief Executive Officer and Director

Thank you.


Our next question comes from the line of Christy McElroy with Citi. Please proceed with your question.

Christy McElroy -- Citigroup -- Analyst

Hey, guys, thanks and good morning. First, I just want to thank you for the enhanced tenant exposure and collection data by category. It's really helpful. So my first question, Julie, you mentioned in your opening remarks in regard to the 52% collection in April that it covers your opex, your G&A and a majority of interest expense. It sounds like from those comments that you're already sort of in a cash burn position before capex.

And I recognize, Steve, your comments about you have very little visibility on May at this point. But let's just say, for argument's sake, that it ends up being 50% cash collection in second quarter. What are -- can you just sort of paint us a picture of what cash burn could look like? What are the levers that you have that you could pull on cost and capex, also recognizing that you suspended the dividend? But just maybe just paint a cash burn picture for us.

Julie Swinehart -- Executive Vice President, Chief Financial Officer and Treasurer

Sure, Christy. Good morning, and thanks for the commentary on the additional disclosures. Steve, I'll go ahead and start off. And then -- and if you want to enhance, please feel free to do so. So we did collect 52.4% of April rent. And I did mention, as you noted, Christy, that, that pretty much covers operating expenses, real estate taxes, G&A and interest. We're really only short, I'd say, $1 million, $1.5 million. So when I look at maintenance capex, which was a little under $7 million in Q1, a quarterly cash burn at the current April rate is about $10 million to $12 million in a quarter.

So said differently, our breakeven point would be about 60% collection. In terms of some of the levers we alluded to, G&A savings, I think you see that in the Q1 numbers, G&A was down a bit. Capex reduction, we've taken a look at what we can do there and have made another kind of similar, call it, maybe 10% reduction in that. So a 50% collection for a full quarter doesn't feel terribly impactful with that perspective. And again, just really happy that we're sitting on, call it, $750 million plus in cash at this point.

Christy McElroy -- Citigroup -- Analyst

Okay. Thank you. And then, Julie, you also mentioned that you expect to address the 2021 maturities over time. Obviously, there's no near-term need, but it is an overhang, but you've also had some conversations with capital providers. Can you just give us a sense for what those conversations entail? Where -- what are they telling you in terms of how much capital you could raise, the price at which you could raise today?

Julie Swinehart -- Executive Vice President, Chief Financial Officer and Treasurer

Sure. Yes. We have been in very active discussions with our whole bank group, especially in light of the amendment that we were able to just do across our bank instruments, which we are very happy about. So you can imagine, had many conversations in terms of near term and projected potential exploration with them.

I can tell you, today, it feels too soon to explore meaningfully, addressing the 2021 maturities. We do have $250 million in bank term debt. It's with these same bankers that are supportive of us in our line and with the amendment. We've also been conversing with some of the more significant and smaller as well private placement and public noteholders. So everyone's really interested in staying close with us, and we've been sharing our perspective and also acknowledging that there's a lot of uncertainty right now.

So I do think we'll be able to address those maturities. I can't tell you if it's going to be next quarter or the one thereafter. I'd love for it to be in 2020. But even if not, we do have the $750 million and more in cash on hand that more than -- and covers the 2021 maturities. And when I think about the revolver, it matures in 2022. It has two six-month extension options, which could effectively make it 2023, and it is by far our least expensive piece of debt right now. I mean it's bearing interest today at about 1.4%. So again, I'd love to address it this year, but we do have some coverage. And frankly, we can afford to be patient, and we will be patient.

Steven Grimes -- Chief Executive Officer and Director

And Julie, I'm just going to add on to that one for Christy here. Just this is a very different situation than we were back in 2009. Obviously, this Company lived through that. The banks and the conversations that I've been having with them have been extremely supportive of RPAI and the prudence that we have maintained throughout essentially the recapitalization of the Company over the past couple of years.

And to Julie's credit, has had ongoing conversations, keeping this bank fully informed or all the banks fully informed of our goings on, being completely transparent, and they very much appreciate that. So I would say going into a market that begins to open, we stand on pretty solid footing with these banks because of our prudence and responsibility in these uncertain times.

Christy McElroy -- Citigroup -- Analyst

That's helpful. I appreciate all the color, guys. Thank you.


Our next question comes from the line of Todd Thomas with KeyBanc. Please proceed with your question.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Hi, thanks. Good morning. First question, just, Julie, in terms of the April collections and your commentary, you mentioned -- you talked about utilizing a portion of tenant security deposits to apply against rent payments. Does the 52% figure for April rent collections, does that include the application of any security deposits? Or is that a go-forward strategy or discussion that you're having with tenants for May and beyond at this point?

Julie Swinehart -- Executive Vice President, Chief Financial Officer and Treasurer

Thanks for asking for clarification there, Todd. No, the 52.4% that we collected for April is strictly cash received from tenants in April. Security deposits is something that we're exploring. To the extent it makes sense with certain of our tenants, we would consider that more on a go-forward basis, and we'll be happy to quantify that for you going forward. We don't -- I don't expect it to be a significant impact. We have amounts that could be applied for certain tenants, and then there's probably others but -- where we wouldn't pursue that route. So not expecting it to be a material component and certainly not included in the 52.4%.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Okay. And then I know it's early in May regarding collections at this point, but do you have a sense for how they're trending? Are you able to talk about how collections to date in May thus far are maybe tracking compared to where they were in April?

Steven Grimes -- Chief Executive Officer and Director

Todd, I'll take that question. Julie, you can add on, if you'd like. Obviously, as I mentioned in my opening remarks, we're essentially day three into the application of the cash collection. I would say that they're trending a little bit slower, to Julie's earlier commentary about the elongated nature of the collections for April, and we would expect that to continue through May. But I wouldn't say that they're materially slower than they were at the beginning of April, third business day in, but they are a little bit lighter. And I think that we had fully expected that a bit. But our property management teams and asset management teams are clearly on task with seeking out rent collections to the extent possible. And we're just keeping on top of that day-to-day.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Okay. And then just lastly, I guess, sort of a bigger picture question for you, Steve. Maybe Shane can chime in. But over the last several years or so, really since the IPO, you migrated significant capital toward more lifestyle and mixed-use and sort of live, work, play assets that have a little more exposure to traditional mall-based retailers and apparel and some entertainment, One Loudoun, Downtown Crown, a few other assets and Southlake and so forth. Can you just share how you feel those assets are positioned, how they're performing today, just given that greater exposure to some of those retail categories? And also how you're thinking about the strategy going forward from here in sort of environment or after the economy reboots and reopens?

Steven Grimes -- Chief Executive Officer and Director

I'll take that briefly and turn that over to Shane. Obviously, we had shared a number of statistics in the script in terms of the performance. I would say that the lifestyle centers, compared to what you would say your traditional power or grocery-anchored centers, came in a little bit light in terms of the rent collection, which would imply that there's a little bit more trouble in some of the smaller shop tenancy there. But as a practice and as a strategy, I don't think that we're altering things very much. We still very much believe in the 102 assets that we have. All of our lifestyle centers are very strategically located. We're seeing the best occupancy that they had ever had since our IPO back in 2012. And it's just great real estate.

And I think as things come back to some sense of normal, yes, it will be on a reduced basis. But I do think people are just going to be yearning to get out and be in that type of environment as soon as practicable. So we're very committed to the strategy. And as Shane had pointed out with One Loudoun carrying on with that development, bringing the multifamily there, but also the Southlakes of the world and the Legacies of the world and even the Eastwood Towne Centers of the world, these are all very viable centers that we feel as though maybe a little bit harder hit in the early stages, but I think will probably be fairly quick to rebound down the road. I don't know if you want to add anything, Shane?

Shane C. Garrison -- President and Chief Operating Officer

No. I think you covered it well. I would just -- I guess if to add, look, I think if this had played out, I don't know, three, four, five years down the road, just let's compare situations or progress, obviously, a larger portion of our rent would be in multifamily and smaller footprint boutique office. And looking at rent receivables today in multifamilies in, what, mid-90s, and office, at least in our space or our portfolio, is mid-70s. So you could argue we would have been better for it or markedly better for it if you're just measuring us from a rent received in April standpoint.

But no, I don't think it changes the strategy, Todd. I think we're very focused on real estate at the edges, right? It's income density, income density, income density. We've talked about it before. You get there in one of two ways, extreme density with lower average incomes or like Loudoun, much higher average income to lower density, but much higher population growth. We still think those work very well long term. And I think that the current situation we are in certainly will speed up the demise of a lot of the marginal, more commodity sites and retail. And when we think about Loudoun or any of the other assets we talked about where we had expansion capability, especially vertically, I think they just get inordinately better. And we just need to have the tenacity from a balance sheet and platform to weather this, and I think we do.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Okay. Thank you.


[Operator Instructions] Our next question comes from the line of Hong Zhang with JPMorgan. Please proceed with your question.

Hong Zhang -- JPMorgan -- Analyst

Yeah. Hi. I'm so sorry if this got touched on before, but I was just wondering, in terms of the tenants that haven't paid rent, do you know what portion of those are tenants that can afford to pay but just had chosen not to?

Shane C. Garrison -- President and Chief Operating Officer

Hi. Good morning. I'll take a shot. We don't have -- I think it's a bit subjective, right. It's our interpretation of who should be paying based on their cash burn rate, and they could argue the opposite. I think that there are certainly nationals that we feel should be paying that have larger balance sheets with better liquidity -- current liquidity profiles than we do. And given that most markets we are in, as a reminder, 10 of -- our top 10 markets or over 80% of our ABR have shown either an indication for an opening date of Phase 1 or are open.

Example, Texas and Georgia and Arizona hold over 40% of our base rent, and they are largely open for business. And I think gyms and salons and bars are coming shortly. So we are certainly encouraged by that. That will give us more visibility. I think it is up for us now to set the target as far as how we are going to position and react to some of these stances, and we already have.

I think as a methodology, it's pretty simple when you're faced with what is an arduous task and certainly a significant amount of volume relative to ordinary course looking at lease modifications, even if they were all deferrals in this case. So our target is we're going to go through this process anyway. We're going to be better for it on the other end, but we'll be better as a team, but more importantly, we're going to focus on stability in the short term with maximum flexibility from a lease structure in the long term. If we're going to modify anything, we're going to be better.

So with that target, there's a menu board that we will deal with. And whether it's co-tenancy to pivot around or exclusives or prohibited uses or blackout periods or no-build areas, there is a long and deep menu that is situational to each tenant. And the team is armed with that. We are starting those negotiations in earnest. But what we were waiting for, quite honestly, were some visibility on when most of our rent would be open because, as you can imagine, a lot of the nationals have multiple locations. And to just solve broadly with one lease amendment doesn't make a lot of sense until we have visibility. So we are starting that process. I would tell you, the lion's share far and away is a deferment conversation. But again, we will go through it and certainly have statistics and more visibility in the next quarter. But we will absolutely be better for this process, no question.

Hong Zhang -- JPMorgan -- Analyst

Yeah. Thank you. Stay safe.


Our next question comes from the line of Floris Van Dijkum with Compass Point. Please proceed with your question.

Floris Van Dijkum -- Compass Point -- Analyst

Great. Thanks for taking the -- taking my question, guys. Shane, a quick one for you. The dissolution or the suspension of development at Carillon, were there any fees that you wind up having to pay to your potential JV partners there?

Shane C. Garrison -- President and Chief Operating Officer

That's a great question. No, we did not, long story short. I think better to be lucky than good, but Carillon actually has ended at a perfect stopping point, wherein we have maximum flexibility with the site planned, but we also have no encumbrances with the partner. So we had not closed on either of the JVs. We were both splitting pursuit costs. And accordingly, there was no fees to wind those up because we hadn't closed.

Floris Van Dijkum -- Compass Point -- Analyst

Got it. Okay. And how quickly do you think that you could start that up? And would they -- would you think that they would want to restart with you if you decide at the end of this year that the timing is correct to restart?

Shane C. Garrison -- President and Chief Operating Officer

Yeah. Both partners are very interested in moving forward whenever we want. And I think we're talking about different structures right now. I think both agree that multifamily and the MOB in this case are very viable. They clearly like to go right now. I think to the extent we go sooner than later, Floris, it would be a modified structure wherein we would contribute the land underneath the MOB building and, of course, the pad for the multifamily. And we would have at least 50% ownership of each of those JVs for that land contribution with no further capital requirement. And then our partner would go get a third-party loan. Those are the conversations we're having right now. I think for us, we would like some visibility, and we're working on that.

As it relates to what was the former retail Phase 1 portion, which was obviously led by a theater, which doesn't feel like the best choice right now, it doesn't mean it won't be in a year, but right now, that doesn't make sense. So to the extent we go on those two pads and keep that interest, I think it works. But again, we just want to make sure we're maintaining optionality around what a changing Phase 1 looks like.

Floris Van Dijkum -- Compass Point -- Analyst

Great. Thanks, Shane.


Our next question comes from the line of Vince Tibone with Green Street Advisors. Please proceed with your question.

Vince Tibone -- Green Street Advisors -- Analyst

Hey, good morning. How are you thinking about the rent-paying ability of certain tenants such as restaurants during the initial phases of the reopening process? I mean do you think the full-service restaurants will be able to pay their full rent at any point this year, given social distancing requirements will likely impact their sales and profitability?

Shane C. Garrison -- President and Chief Operating Officer

I'll take that, Vince. It's a great question. It is very top of mind for us, especially given our mixed-use component. And we have quite a few larger regional restaurant operators. So I don't know. I don't know the answer to that. It's more likely not than yes. I think a lot of the conversations we are having right now involve some form of short-term lease modification that involves visibility around how those operators are going to operate, what the expectations are for revised G&A. And then, obviously, sales are a bit more subjective. But let's lay it out and let's just talk through why and what it looks like.

So to the extent they are willing to put that foot forward and be transparent and help us understand the scope of the asked, we're certainly willing to listen. I think to the extent they are not, we really question viability and certainly question any additional investment in those operators or operator. And again, we should have more visibility on that in the next quarter or so.

Vince Tibone -- Green Street Advisors -- Analyst

That makes sense. That's helpful. Do you have just a rough sense or rule of thumb in terms of like what level of revenue compared to, let's say, a normal run rate a full-service restaurant will need to be profitable? I'm just trying to -- because I know it's a thin margin business to begin with. So like if they run at 80% of their revenue, do you think they're profitable? Or is it even at that level, it's still possibly not a cash flow positive business at that point for a lot of the restaurants?

Steven Grimes -- Chief Executive Officer and Director

Vince, this is Steve. I'm going to take a quick shot real quick. Shane, you can pile on. But I think that's almost really indeterminable right now. You've got a situation with most restaurants where they've had to lay off all of their labor. So there's some rehiring that needs to come back and what levels they're going to rehire at thinking that wages are probably their second largest cost or at least maybe their largest cost next to rent. So I think margins are going to be skewed all over the map as they start to attempt to rebound from this situation. It's pretty indeterminable, in my opinion. Shane, I don't know if you have anything to offer there, but I think it's pretty indeterminable at this point.

Shane C. Garrison -- President and Chief Operating Officer

Yeah. Look, it's subjective, but I think we acknowledge that it's a fairly thin margin business. And if you're facing the prospect of 25% seating in Phase 1 and then 50% seating in Phase 2 as an example, and you had a very heavy bar business and liquor business before, certainly, that's tough sledding in the interim. I think the question is, what's the proposal? And what's the visibility or transparency? And how long do we think this will last from a collaboration standpoint? We have to be transparent, and we are pushing for that. No question.

Vince Tibone -- Green Street Advisors -- Analyst

Thanks. That's helpful color. Appreciate it.


Our next question comes from the line of Linda Tsai with Jefferies. Please proceed with your question.

Linda Tsai -- Jefferies -- Analyst

Hi. I know you have fewer leases up for renewal in 2020 versus other years. But do you maybe have some tools at your disposal to help preserve pricing power?

Shane C. Garrison -- President and Chief Operating Officer

Hi, good morning. I think what preserves our pricing power is just the overall quality. We -- again last year, we finished the year at 99.2% in the anchors and the most highly occupied we ever have been as a company. And I think, again, you were starting to feel the benefit of higher quality and the best get better. So we still again, intend to have about 80% retention, which I think is probably above some expectations. So there's an indicative there. You look at our ABR, I think that's an indicative of quality.

And it's interesting. I think we see a broader bifurcation between the best and the rest, almost regardless of industry. It's very interesting. There are a couple of anchor users, national, in this case, who are using this period as an opportunity to discuss watchlist locations and very much understand if we can get control of those locations to opportunistically expand in a recessionary environment. We also have small shop tenants that have actually elected to prepay months of rent in advance upon receipt of PPP funds. We had one national tenant that viewed this temporary, call it, 6-week closing as an opportunity to run full cycle two to four week remodels and then open with kind of the new improved store format.

So those are best case situations, but I think it's an example of years of thoughtful capital allocation from a retailer perspective and being positioned to be opportunistic. So it is -- not everyone is in upheaval, I think, which is encouraging. And I think when you think about the right real estate and the high-quality nature of our portfolio, we certainly see that coming through and are still receiving options even this week.

Linda Tsai -- Jefferies -- Analyst

Thanks for that.


We have reached the end of the question-and-answer session. I would now like to turn the floor back over to management for closing comments.

Steven Grimes -- Chief Executive Officer and Director

Great. Well, thank you all for your time and the thoughtful questions today. We hope we were able to provide a bit of clarity during these unprecedented times. And more importantly, I assure you that our crisis-proven team is on task to emerge from the COVID-19 pandemic prudently and strong, supported by our resilient portfolio that Shane just alluded to, our assets, our tenants. I've never been more proud of this team and our Board of Directors. There have been a number of discussions over the past several weeks with, I think, dealing with the challenges and the curveballs and the uncertainty. But more importantly, a lot of diligence and good decision-making has taken place. While we entered the pandemic with record-high occupancy and liquidity, I am encouraged by the thoughtful and decisive actions that we've taken to further enhance our ability to emerge from this situation.

Finally, I'd like to mention that we are planning on taking NAREIT meetings virtually, and all will be -- and we will also be presenting via webcast. So should you desire a meeting, please feel free to reach out to Mike or Julie to schedule a meeting. And best of health and safety to you all. Thank you again for your time today.


[Operator Closing Remarks]

Duration: 64 minutes

Call participants:

Michael Gaiden -- Vice President of Capital Markets and Investor Relations

Steven Grimes -- Chief Executive Officer and Director

Julie Swinehart -- Executive Vice President, Chief Financial Officer and Treasurer

Shane C. Garrison -- President and Chief Operating Officer

Derek Johnston -- Deutsche Bank -- Analyst

Christy McElroy -- Citigroup -- Analyst

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Hong Zhang -- JPMorgan -- Analyst

Floris Van Dijkum -- Compass Point -- Analyst

Vince Tibone -- Green Street Advisors -- Analyst

Linda Tsai -- Jefferies -- Analyst

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