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RPT Realty (NYSE:RPT)
Q1 2020 Earnings Call
May 12, 2020, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to RPT Realty First Quarter 2020 Earnings Conference Call. [Operator Instructions] Please note this conference call is being recorded.

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

Vin Chao -- Senior Vice President, Finance

Good morning and thank you for joining us for RPT's first quarter 2020 earnings conference call. At this time, management would like me to inform you that certain statements made during this conference call, which are not historical, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Additionally, statements made during the call are made as of the date of this call. Listeners to any replay should understand that the passage of time by itself will diminish the quality of the statements made. Although we believe that the expectations reflected in any forward-looking statements are based on reasonable assumptions, factors and risks could cause actual results to differ from expectations. Certain of these factors are described as risk factors in our Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the first quarter 2020.

Certain of these statements made on today's call can also involve non-GAAP financial measures. Listeners are directed to our first quarter press release, which includes definitions of those non-GAAP measures and reconciliations to the nearest GAAP measures and which is available on our website in the Investors section.

I would now like to turn the call over to President and CEO, Brian Harper; and CFO, Mike Fitzmaurice, for their opening remarks, after which we will open the call for questions.

Brian L. Harper -- President, Chief Executive Officer and Trustee

Good morning, and thank you for joining our first quarter 2020 conference call. I'd like to start by thanking all the frontline workers helping us all get through this unprecedented period in time; our employees who are working tirelessly to ensure that our centers are safe, operational and ready for the reopening of the economy; our tenants, who are doing everything they can to continue to support their customers despite widespread store closures; and to our investors, lenders and vendors, who are taking a pragmatic view of the situation to ensure that we can all prosper coming out of this pandemic.

Ultimately, our success through the pandemic lies in ample liquidity, excellence in the operations, business continuity and a strategic outlook for the future. These four principles have driven what we have done and will continue to do throughout this pandemic and in the post-pandemic environment. Led by an operationally hands-on, proactive, motivated and crisis-tested management team, we sit in a position of relative strength following a two-year transformation of our organization, our predominantly grocery anchored and value orientated portfolio and our flexible balance sheet. Combined with recent actions, we believe that RPT will be able to weather the current storm and thrive once it passes.

Regarding our financial liquidity, we took a number of quick and decisive steps when the severity of the pandemic became apparent, which we described in our earnings release and our COVID-19 update from late March. In short, the actions we took increased our cash to over $320 million at the end of the first quarter, which should allow us to weather the downturn created by COVID-19.

Looking forward to better align expenses with a current revenue stream, we made the difficult decision to reduce some of the development functions and temporarily reduce executive officer cash salaries as detail in the earnings release. As a management team, we see tremendous opportunity ahead and are in this for the long-haul and we felt that the salary adjustments were a proactive step that created alignment with our employees and our shareholders. Combined, we expect to save about $1 million in cash from these actions.

Lastly, the Board recently made the decision to temporarily suspend the quarterly common dividend, preserving roughly $18 million per quarter. No decisions regarding dividend payments beyond second quarter 2020 have been made. Future dividend decisions will be made based on liquidity needs and REIT taxable income distribution requirements. Management and the Board did not take the decision to suspend the dividend lightly. And we are committed to providing investors with a healthy and sustainable dividend as cash flow visibility improves and the longer term impacts of COVID-19 are more apparent.

Currently, all 49 of our properties are open and operational. As of May 7, 53% of our tenants by ABR are open. As of May 8, we collected 58% of our April rent and reimbursements, largely from open tenants. Of our top 25 tenants based on ABR, over 86% have paid or have agreed in principle to some form of short-term deferment. The majority of April uncollected rent was tied to the non-essential and experiential tenant categories with whom we are in active conversations with. Not surprisingly, these categories comprise the vast majority of our tamp relief requests that we have received today.

In terms of May collections, it is too early to comment given the fluidity of tenant negotiations. While the segmenting of our portfolio has importance and provides transparency into our business, the single best predictor of collections remains whether or not the store is open for business. As such, we are encouraged that some states have begun to lift lockdown orders, allowing more tenants to reopen their doors. That said, every tenant has different circumstances, each rent deferment negotiation has different considerations and there are still elements of uncertainty in all cases given the rapidly changing health environment we are experiencing today.

In order for us to clearly evaluate our cash flows by risk level, we have classified our tenants into four tiers based on our assessment of their ability to pay rent near term and the sustainability of their rent payments long term. In Tier 1 are tenants who have both good long-term business models and have largely been able to remain open through the pandemic. These include essential businesses as well as QSR and fast casual restaurants remain open, even if only a takeout, drive-through or delivery basis. 87.9% of this tier remains open and 83.9% paid April rent as of May 8. In Tier 2 are tenants with solid long-term business models and good balance sheets pre-COVID, but that sell more discretionary items. The discount apparel retailers like T.J. Maxx and Ross fall into this category along with other investment grade quality tenants not included in Tier 1. Our Tier 2 tenants paid 78.7% of April rent, but only 27.2% by ABR were opened in April. Tier 3 tenants offer more commodity like products like full-line apparel and accessories. And Tier 4 tenants are more experiential in nature, including full service restaurants and in many cases were key drivers of traffic pre-pandemic. Collectively, Tier 3 and Tier 4 tenants paid 36.1% of April rent, 35.6% by ABR remained open.

Turning now to tenant negotiations. I would characterize our approach as firm but fair. Our size is an advantage right now as our top executives are directly involved in negotiations. We understand that many of our tenants are in an extremely difficult position relative to their businesses and sales channels being turned off overnight. We are working in good faith with them to get through the current turmoil in a way that both the tenant and landlord can be successful beyond the crisis.

To assist our tenants, we started the RPT Tenant Concierge Service to support our small business partners and gaining access to various government assistance programs by hosting educational webinars and providing and paying for direct access to legal resources. Of the 275 tenants that we targeted, nearly two-thirds have told us they applied for the PPP loan. Application for an SBA loan for eligible tenants is a prerequisite for consideration of any form of deferral. That said, let me be clear. While we are empathetic to our tenants' current situations, we are actively pursuing collections and will pursue all remedies where we believe tenants have the capacity to pay rent. What we are not doing is sacrificing long-term cash flow just for short-term April-May rent gain.

April rent is still coming in and as I said earlier, we will continue to pursue collections aggressively. Getting through this will take the collective efforts of the entire ecosystem. There is no place for bad actors. For our part, we continue to service our debt to pay our real estate taxes and insurance, and are maintaining the assets to operate safely during the mandated shutdowns while preparing for the reopening of the economy.

As we negotiate any form of rent relief, we are using our tiering process to guide our decision making process and focus on deferrals to support tenants in need or granting rent relief abatements judiciously. To this point, while only 127 rent relief requests have been approved, 121 have been in the form of deferrals totaling $3.8 million and only six abatements have been granted totaling less than $71,000. Typical deferral terms call for repayment by the end of 2020 and range from one month to three months.

Please know that neither deferrals nor abatements are being granted for free, and we're using them as currency to improve lease terms that will add significant value down the road. Some examples include cleaning up co-tenancy clauses, eliminating no builds, and extending term to name a few. We have proven to be exceptional on the operational side of the business and we will navigate this storm through that exact same lens.

Although much of this focus has been on who is not paying rent, I think it's important to keep in mind that the pandemic is also highlighting the importance of key tenant categories and specifically the grocery channel. We are seeing incredible demand at our non-grocery anchored centers from grocers and are currently in negotiations with seven top tier grocers at non-grocery anchored centers in our portfolio that would improve the durability of cash flows at these centers if we -- if closed and increase the number of our centers with a grocer or grocery components by 14%.

Turning now to RPT's response to the pandemic at the organizational and community levels, which I believe is a strong reflection of the caliber and quality of the company. At the organizational level, we responded quickly and definitively in response to what was a rapidly escalating situation to ensure the safety and health of our employees and to provide uninterrupted service to our tenants. We shut down our New York office in early March, followed shortly by the closing of our Michigan office. Our employees have now been working safely and efficiently from home for almost 10 weeks, but a year ago, we established an option to work-from-home day program, which made the transition to full work-from-home environment quite smooth.

Our technology, tools and processes allowed us to rapidly evolve with the situation real-time and with limited disruption. While we are all looking forward to the day we can return to the office, we are prepared and ready to continue to work remotely as long as it takes to ensure the health and safety of our people. In addition to our work-from-home programs, we have also been working diligently to protect the ongoing health and well-being of our employees through weekly wellness emails, COVID-related seminars and weekly companywide virtual happy hours.

At the tenant and community level, RPT has been actively engaging with and supporting both our tenants and those on the frontlines of the pandemic. Today, we have donated over 20,000 meals to support school lunch programs, at-risk populations, essential workers and nursing home employees and local communities. We have also matched employee contributions to support hospital workers and volunteers. In anticipation and preparation of the reopening of many of our tenants in the coming weeks, we have developed plans for several key initiatives at our shopping centers to keep customers and tenants safe. Some examples of how we have and are preparing for the reopening of the economy are summarized in our press release, but include things like adding nearly four miles worth of social distancing for markers, curbside pickup, distributing over 120,000 masks and increasing health and safety protocol signage at our centers.

The current health crisis has caused us to reshape our business plans quickly and to refocus our efforts in the near term. Our response to the pandemic has been focused on the health and safety of our employees and their families, our tenants and our shopping center customers, maintaining business continuity during and after the pandemic and increasing liquidity to withstand the near-term financial impact of the health crisis, while positioning the company for long-term success after the crisis passes.

Though the pandemic is having a profound impact on how we think about the business, we remain confident that at its core, the value and service-orientated as well as the grocery anchored shopping center model is one that will stand the test of time as we all seek out common ground, upon which to gather experience life and yes, shop.

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

Michael P. Fitzmaurice -- Executive Vice President and Chief Financial Officer

Thanks, Brian, and good morning, everyone. Over the last several weeks since the pandemic gained force, many of our key decisions have been through the land of liquidity. Our goal is simple: focus on what you can control and prepare for what you cannot. As we outlined in the earnings release last night in detail, since the pandemic started, we have taken actions that are expected to supplement our cash position in 2020 by at least $380 million relative to our pre-pandemic plan. A significant contributor to this was our recent borrowings on our line of credit. Out of abundance of caution and after analyzing our potential cash need, we drew down $225 million from our line during the quarter, bringing our total cost position to over $320 million at the end of March.

Based on all the steps we have taken over the last two years to solidify our balance sheet, we are fortunate to not have any debt maturing in 2020, only $37 million maturing in '21, and just $53 million in '22. If our cash collections remained at the April level of 58%, we would be able to fund our ongoing operations without utilizing much of our cash on hand. Our breakeven cash collection rate is roughly 61%. In short, we believe we have more than enough liquidity to withstand the impacts of COVID-19 despite the severity of the situation. While we have no material use for cash today, we will continue to balance our future cash needs and debt covenant compliance requirements to ensure we have optimal liquidity and flexibility to operate our business. It is also important to note that 46 of our 49 properties are unencumbered, providing us with the optimal operational flexibility to make decisions quickly without the burden of servicers or lenders.

Quickly on our first quarter results. Operating FFO for the first quarter was $0.26 per share, which was in line with our internal projections. During the quarter, we recognized about $800,000 in costs related to the suspension of our acquisition and disposition program, which have been excluded from operating FFO as they are non-recurring in nature. Same-property NOI growth for the first quarter 2020 was 2.3%, which included a 120 basis point drag from rent not probable of collection reflecting the initial impact from COVID-19 attributable to a conservative approach we took with an entertainment tenant that had a substantial open AR balance that we deemed uncollectible. Absent this, same-property NOI growth for the quarter was in line with our expectation.

We ended the quarter at an occupancy rate of 93.3%, down 100 basis points sequentially given typical seasonality and recapture of an expected anchor space but up 150 basis points year-over-year. On a leasing front, volume faltered in early March due to COVID-19, impacting our new lease volume. As a result, we had a much higher mix of renewal activity during the quarter. In total, we signed 46 leases comprised of 558,000 square feet of which 60,000 square feet were new leases and 490,000 were renewal leases. We experienced blended releasing spreads of 6.2% and 36 comparable leases, including a 6.2% renewal spread and a 5.2% new lease spread.

Turning now to our outlook for the remainder of the year, in late March, we pulled our 2020 guidance given the lack of visibility created by the coronavirus. While we are not reintroducing guidance today, we want to provide some additional points to think about as you attempt to model the balance of the year relative to our previously provided guidance. We entered the quarter with signed not open ABR of about $2.1 million. Despite the pandemic, we have been able to continue most of our construction activities associated with these leases. While we have seen a slight delay with rent commencement dates, we expect the rents to commence over the next 12 months.

Regarding near-term rent expirations, we only have 3.4% of our ABR expiring over the balance of 2020, mitigating some near-term tenant retention risk. From a capital perspective, we have only $14 million of remaining committed capital spend in 2020, of which $11 million is related to our signed not open backlog and residual capital for recently opened tenants, with the balance largely related to essential maintenance capital.

Turning to the common dividend, as Brian mentioned, once the dust settles from the current disruption and longer term implications for the market become more clear, subject to Board approval, we expect to reinstitute a sustainable dividend that will again provide a stable income stream for our investors. Extrapolating the $18 million per quarter common dividend we were paying would equate to $54 million in potential capital preservation through the next three quarters.

Lastly, in the spirit of transparency, it's worth noting that we provided additional details on our tiers that Brian discussed earlier, in addition to more information on our merchandising mix and performance as it pertains to rent collections in our quarterly investor deck posted on our website.

And with that, I'll turn the call back to the operator to open the line for questions.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from Derek Johnston with Deutsche Bank. Please proceed with your question.

Derek Johnston -- Deutsche Bank -- Analyst

Hi. Good morning, everybody. Thank you. Can you give us an update on capital sources and uses, especially as it relates to the GIC JV? I do think the original plan was to partner with them on acquisitions, so little curious as to whether their appetite for retail real estate has changed since the pandemic? And then second part of this question is the $200 million capital commitment from their end, has that been funded or what was the timeline to that?

Brian L. Harper -- President, Chief Executive Officer and Trustee

Thanks, Derek, and good morning. Great to hear your voice. We're greatly excited about the GIC partnership. The timeline of that is we have three years from December 2019 when the JV closed to deploy that capital. To say the least, we have strong relationship with them and view the grocery sector, the grocery channel through the same lens as they do. I can tell you from an acquisitions perspective, it's much too early, but we expect to see a lot of opportunities with dislocations and pricing. And to say the least, this is a very unique relationship among our peer set, which gives us a major strategic advantage when the timing is right.

Right now, it's liquidity, liquidity, liquidity, but that will serve us well near-term and be a differentiator for opportunistic opportunities in the future. Capital commitment, it was being funded acquisition by acquisition. So there's no funding, but it's a funded as an -- on an as-needed basis prior to closing of each assets.

Derek Johnston -- Deutsche Bank -- Analyst

Okay. Got it. Thank you. And then, of course, the dividend suspension, it's no secret, I feel The Street maybe viewed the coverage as stretched for a time there. So given where the portfolio is at today,because the suspension perhaps lasts for a few quarters longer, as you guys maybe work to shore up capital and further reduce leverage. And then the second part of the question would be how much more do you guys have to pay out after the first quarter distribution to satisfy REIT reporting requirements?

Brian L. Harper -- President, Chief Executive Officer and Trustee

Thanks. Let me take the first part, and Mike can answer the second. We believe, first and foremost, that paying a sustainable dividend level is important and we are -- we were well on our way to covering our dividend before this pandemic had. I mean, you look at last year and sector leading with 4% plus same-store NOI and take out COVID, this would have been north of a 3% NOI quarter. And we're well on our way to coverage.

With that being said, we're in the situation. So once the dust settles from the current disruption and longer-term implications of the market become much more clear, and obviously, subject to Board approval, we expect to reinstitute a sustainable dividend that will again provide a stable income stream for our investors. The timing of such remains to be seen and again is subject to Board approval.

When we do reinstate a quarterly dividend, it will be sized appropriately to meet our REIT distribution requirements and at a level that is sustainable and can grow in conjunctions with our earnings growth. As far as any sort of catch-up payment that will be a Board decision at the time we reinstate, but unlike the preferred dividend, there is no required catch-up payment with that.

So Mike, you want to touch upon leverage and the taxable?

Michael P. Fitzmaurice -- Executive Vice President and Chief Financial Officer

Yeah, sure. As far as taxable income goes, Derek, at this point, it's a bit too early to know where our taxable income requirement will be for 2020. What I can tell you is that our taxable income in '19 was approximately $34 million and we have paid out approximately $20 million in distributions thus far in 2020. Based on this information, it gives you some sense of possibilities for taxable income in 2020 and potential remaining distributions to meet our taxable income requirements for this year.

Derek Johnston -- Deutsche Bank -- Analyst

Thank you. That's very helpful. Thanks, guys.

Michael P. Fitzmaurice -- Executive Vice President and Chief Financial Officer

Thanks, Derek.

Operator

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

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Hi, thanks. Good morning. Brian, maybe for Mike also, you mentioned it's early in May in terms of rent collections. Can you just share any detail on May, either directionally or how collections are tracking compared to April at this time? And then, there seems to be a fairly strong correlation between open and rent payment which makes sense. Do you know what their reopening timelines look like across the portfolio? Maybe how much ABR might be open by say, June 1 or July 1 based on the plans retailers are discussing with you?

Brian L. Harper -- President, Chief Executive Officer and Trustee

Yeah, and it's -- let me take the first question from May, it's too fluid. It was about on track from April, from a month-over-month right now, but it's much too fluid. And we're still getting April rents as we speak right now, but with that said, we have a very, very detailed approach to our collections and have a cash team assigned and myself even included talking with a number of C-suite level on the retailer side and there. So I do think that's an advantage, as I said in my prepared remarks that our size is an advantage, where we get, myself and Tim and others on the leasing team, David Ross, get to speak with these retailers face to face and work out something that is a win-win for both.

As far as opening up, I do feel bullish that more rent will be coming in just based on the geography that we have, where you look at our concentration in Michigan, that's mostly opening up May 15, Georgia just opened up, Tennessee opened up, Texas opened up, Colorado opened up, St. Louis opened up. So it really with the outs -- really with the exception of Chicago, we're on the pretty good geographic footprint, where no concentration in the Northeast or California or the Pacific Northwest where it's going to be a little later.

Retailers are opening by what they feel comfortable. Much more of the nationals have been doing the curbside pick-ups and are much more aggressive with opening than the regionals and locals. But that being said, the Floridas and Georgias of the world, we're seeing a good uptick with communication, we're seeing good uptick with people planning for opening.

Two, we have a whole planned opening practice with best case practices and then procedures from CDC and others from a local municipalities. So we're there to help them and our asset management team has done an unbelievable job in the success.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Okay. And then you talked about the sort of balance or the ability of tenants to pay rent both near term, but also long term. How are you thinking about future rents for restaurants, theaters, maybe fitness or other tenants that might operate at reduced levels going forward? How are you approaching those discussions?

Brian L. Harper -- President, Chief Executive Officer and Trustee

Well, we're being common steady with that approach and that is in the Tier 4 category of what we described as being much more empathetic to their businesses where those are pure government shutdowns. So in the restaurants, it's a case by case basis. I mean we look at sales pre-COVID and look at their occupancy costs, try to guess their occupancy costs going forward. So it literally, we're in the details of case by case for each restaurants. Thankfully, we have a lot of QSRs who are open with drive-through restaurants and fast casuals as well.

And then our sit downs and fine dining probably be around 25% occupancy for the near-term for the next 60 days and then get uplifted based on state orders or state mandates as they go on. That's going to set something that we're walking hand-in-hand with them. Theaters, the same bucket and then the same thing with fitness, like fitness is one of our top 20 tenant. We're in great dialogue with them and they have a great plan in place with social distancing, turning their gyms into more of cardio rooms to have more space. So that category, we're in constant dialogue with and it's a case by case basis based on the states, but based on the operator as well.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Okay. And then just lastly, so the seven grocer deals that you commented on that you're negotiating, I'd imagine that there is an urgency for grocers to open and expand their footprints during this time. Are these discussions that might advance in the near-term to lease signing and do you have space available to accommodate those grocers today and what are restrictions look like across the portfolio at centers where you already have a primary grocer? They're still opportunities for you to expand grocers or specialty food stores at those centers as well?

Brian L. Harper -- President, Chief Executive Officer and Trustee

Yeah. I mean we're in a grocery renaissance. It's unbelievable, the amount of demand and I haven't seen this in my career. And really early on, we with the leasing team talked with grocers, talked with our existing and talked with new and saw this as an opportunity to get in front of this pretty quick and saw that as a channel for growth for them, but that would mean for growth for us internally as well.

So the LOIs or leases, I am optimistic that it could turn pretty quick. A few were vacant boxes. There's one that would be a combination of spaces and reloads and identified, but Todd, these are top tier grocers, household names, strong balance sheets and voids in markets that they want to be in. And that's another reason that I'm -- I like the portfolio where we're at today. We're in the Top 40, Top 50 markets, and don't have any of other tertiary exposure. So I think that's another reason why I think some of these grocers have really been active with us is down to the real estate.

And we have a plan for every asset that's not grocer. And some have leasehold encompasses to that we can't get out of, but if a tenant falls in default or a tenant falls in bankruptcy and we see a way to get some of that real estate where we know we have a ABC Grocer, Whole Foods or Trader Joe's in our back pocket, are just more of a reason to actively negotiate our remedies for that location.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Okay. Great. Thank you.

Brian L. Harper -- President, Chief Executive Officer and Trustee

Thanks, Todd.

Operator

Our next question comes from Collin Mings with Raymond James. Please proceed with your question.

Collin Mings -- Raymond James -- Analyst

Thank you. Good morning. Brian, I just wanted to go back to Derek's question and as far as gating, you mentioned the three-year timeline, but can you just expand on what you'll look for to shift the focus back toward growth versus clearly the focus right now on liquidity? And then as you think about deploying capital either in conjunction with GIC or for RPT, how you think about the potential to look at more distressed opportunities that might emerge as opposed to focusing on properties with arguably more durable cash flows?

Brian L. Harper -- President, Chief Executive Officer and Trustee

Hey, Collin. Good morning. Thanks for the question. I think, I mean really with GIC, the JV was structured for grocery and from that channel specifically, and nothing's really changed. It's going to be -- we're looking from the markets, the same markets, the same pro-business pro-growth markets, we'll continue to pursue those markets as part of the strategy. Austin is thriving with our Lakehills acquisition. It was actually Number 1 in our April rent collection out of the entire portfolio, so we feel really good about that market and know that market well having spent the last year of knocking on doors and meeting with private owners.

And the opportunistic side of it, first, durable cash flow, I think, we'll look at both. We're looking at driving as we've always been, we've been a bottom up IRR company, period. And if we can get strong IRRs and secured IRRs from durable cash flows at a higher yield, we'll take that. If we look at opportunistic assets where we know that real estate really well and as I said earlier, we have very strong grocery relationships and we know a Amazon or Whole Foods or Trader Joe's wants to be in that market at that intersection, we could take down an opportunistic asset as well. So I think the GIC relationship is something that I'm greatly excited about and thankfully it happened at the time it did and I think that's going to be a very, very bright future for the company.

Collin Mings -- Raymond James -- Analyst

Okay. Thank you. And then switching gears, I just wanted to talk a little bit more about and recognizing clearly you're in a good position as far as flexibility going forward in terms of not having a major commitment on the redevelopment or development front. But just as you think about the physical layout of your properties and as you think about potential redevelopment opportunities going forward, just maybe touch on how you plan to maybe shift some things around or think about things differently in light of maybe social distancing being here for longer?

Brian L. Harper -- President, Chief Executive Officer and Trustee

Yeah. I mean we're really thankful we're not -- didn't have, I mean we have zero dollars from a redevelopment perspective. And I started pulling that lever back as you know eight months ago, just based on where we are in the cycle and really reallocating that capital for what would be called development into our merchandising strategy, we're getting 18% yields. So we like that box program and specifically like that mid to high teens yield obviously. But we also are looking at what is the shopping center looks like. While it's too early, personally I see it as having two front doors today. One within the store and then one outside the store and that's curbside. So we are putting resources into our curbside program. We are putting resources into analytics with video and to know capacity within the stores capacity, within outside patios capacity, within our parking lots. And we've done a huge implementation of social distancing measures already that are at our centers today with social distance yards and other things.

So it's too early to say like what else, Collin? But I think one thing we've proven is we're very operational savvy and we're proactive. And so, I think the liquidity that we have today is enormous and we're very thankful for that. And it's going to prove out to be again another differentiator for among our peers where we can play offense, but we can also play reactive on where this COVID responses is coming.

Collin Mings -- Raymond James -- Analyst

Okay. Thank you, Brian.

Brian L. Harper -- President, Chief Executive Officer and Trustee

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

Craig Schmidt -- Bank of America Merrill Lynch -- Analyst

Hey, good morning.

Brian L. Harper -- President, Chief Executive Officer and Trustee

Hey, Craig.

Craig Schmidt -- Bank of America Merrill Lynch -- Analyst

I was wondering if you knew to what extent the off price retailers, T.J. Ross and Burlington are open? And then, it seems like they have a real opportunity in terms of sourcing could be very opportunistic, but how do they balance that with the treasure hunt approach of shopping there, it seems to be at odds with the social distancing?

Brian L. Harper -- President, Chief Executive Officer and Trustee

It's a good question. So, we think there's going to be a grocery renaissance and we think there's going to be an off price renaissance as well and you look at the department store channel and T.J. Ross, Nordstrom Rack, Burlington, Saks Off 5th, they're going to be able to be buying inventories for pennies on the dollar, and we see that as a huge strength. How they -- what they're going to do within the four walls of the treasure hunt remains to be seen. That being said, T.J. in particular, we see them as one of the greatest retailers in the world and they've proven to provide growth year-after-year.

So with those smart minds, I think they'll figure it out. When they're opening, it all depends on geographically. So, we're in constant and it's changing -- we're in constant dialog and I do expect some of them to be opening here in May in certain states, and then for pretty much all the states, hopefully, in early June.

Michael P. Fitzmaurice -- Executive Vice President and Chief Financial Officer

And Craig, the only thing I would add there that 90% of our discount apparel did pay April rent and only 3% were open in the month of April.

Craig Schmidt -- Bank of America Merrill Lynch -- Analyst

Okay. And so I'm just curious, are there any off-price operators open in Texas?

Brian L. Harper -- President, Chief Executive Officer and Trustee

I mean from at apparel, we don't have any apparel at that center. We have Dollar Tree. So Dollar Tree is open if you call that off-price, but we don't have -- in that one particular center, we have no off-price.

Craig Schmidt -- Bank of America Merrill Lynch -- Analyst

Okay. Thank you.

Brian L. Harper -- President, Chief Executive Officer and Trustee

Yeah. Thank you.

Operator

Our next question comes from Floris Van Dijkum with Boenning & Scattergood [Phonetic]. Please proceed with your question.

Floris Van Dijkum -- Compass Point -- Analyst

Hey Brian, actually, it's Compass Point. But wanted to ask you guys about your covenants, you're pretty tight on your unsecured covenants, obviously, because you drew down your line. As you think about deploying that capital, does that make you want to -- or potentially pay back that your line obviously? But if you think about deploying that capital, am I right to say -- to think that if you were to invest that into JV assets for example, with the GIC joint venture that would count against you in terms of your leverage, whereas if you were to buy a fully owned assets that are unsecured that would actually improve your leverage ratios.

And then also, how do you think about potentially taking advantage of some of the price dislocations? Your preferred shares have sold off a lot, would you consider buying back some preferred and reducing your leverage even though that doesn't get counted in that covenant, I don't believe?

Brian L. Harper -- President, Chief Executive Officer and Trustee

Mike, do you want to start?

Michael P. Fitzmaurice -- Executive Vice President and Chief Financial Officer

Yeah. I can start Brian and you can talk about more of the acquisition environment long term. But Floris, like I mentioned in our prepared remarks, we pulled the line down the $225 million out of abundance of caution, similar to what many of our peers did and based on the line rate of 2% and it's pretty inexpensive insurance policy until we gain more certainty, we're going to hold tight just because liquidity is Number 1 and I would say, acquisition is Number 2.

And in terms of burn rate [Phonetic] and the unencumbered leverage ratio, look, we can send that $225 million back and get down. So what we were at the end of 2019 right around 45% and still of $100 million of cash and based on the cash burn rate analysis that I shared in my opening remarks, which is pretty negligible. We won't even eat into the $100 million if we needed to.

Brian L. Harper -- President, Chief Executive Officer and Trustee

And Floris, like I said earlier, we see huge potential dislocation. I think personally in the private market it's way too early, but we are in constant dialogue with servicers, banks as well as private owners that, that could be having some issues or are having issues with some of their CMBS loans. So it's a common steady approach, but in my opinion, it's too early for the dislocation today.

Floris Van Dijkum -- Compass Point -- Analyst

Brian, if I were to ask you presumably, you were looking out into -- in the market, you presumably had some in particular for the GIC JV, were having discussions when COVID hit. What kind of pricing difference do you think will occur, i.e., how much do you think that properties you are looking at previously, how much in terms of value will you be able to buy them and I know there is a little bit of uncertainty here, but how much of an impact to value do you expect to occur?

Brian L. Harper -- President, Chief Executive Officer and Trustee

It's tough because everything is so different. I mean, if you look at Austin's and Nashville's, Raleigh's or Charlotte's and if you had Whole Foods or Trader Joe's with a few small shop tenants, I think those small shop tenants and the cash flows are stable and secure and are open. I think -- personally I think there's a lot of capital going to be flocking to that. If you look at more of your opportunistic and more regional grocers with much more small shop and call it 100,000 square feet, I think it could take up a turn or two higher on cap rates. But it's very early and it's all depended on market and intersection, and credit quality more than ever. So, we're sitting on the sidelines so to speak right now, but with eyes on the future and in constant dialogues to see if something could break loose.

Michael P. Fitzmaurice -- Executive Vice President and Chief Financial Officer

And Floris, one more thing of clarity on your question about our leverage ratios. So buying JV assets would not impact our unencumbered leverage ratio. Now if we show -- should show -- put secured debt and pay -- and use those proceeds to pay down unsecured debt then it would help it. But buying JV assets wouldn't impact our leverage ratio, to my earlier point.

Floris Van Dijkum -- Compass Point -- Analyst

Thanks, Mike. I appreciate that. Maybe one last question in terms of -- for me in terms of your exposure to your theaters, I know you didn't take down any receivables yet in your -- on your balance sheet for some questionable financial credit, but you do have fair amount of exposure to theaters. What do you think -- how do you think that's going to play out? And do you expect -- I am just be curious to get your take on what you think is going to happen to your exposures to Regal and some of your other theater tenants?

Brian L. Harper -- President, Chief Executive Officer and Trustee

I mean, thankfully we don't have AMC. Cinemark is a great operator. We don't have any of them. And Regal is a great operator and that's our largest concentration in the theater world. We're obviously in great conversations with them. They seem optimistic in the future and are doing things internally within their four walls for social distancing and really plan to open up, call it, in June from what they've been saying could change up or back, but what they've been telling us internally. And so for them, we're feeling fine and really, we only have a Flix in Indianapolis, which is one of their top-performing theaters in their company, and then Alamo Drafthouse in Minnesota.

So, Regal is our lion's share and we have a very solid relationship with them and they are giving us a lot of commentary on what they're doing as soon as -- what they're doing now to prepare for when their doors open. So I think it's really concentrated in one for us with Regal and they're tremendous at what they do and have a good balance sheet and especially with these new investors and they're optimistic in the future.

Floris Van Dijkum -- Compass Point -- Analyst

Thanks Brian. I appreciate it.

Brian L. Harper -- President, Chief Executive Officer and Trustee

Thanks, Floris.

Operator

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

Linda Tsai -- Jefferies -- Analyst

Hi. How do you see leverage trending for the remainder of 2020 and into 2021?

Brian L. Harper -- President, Chief Executive Officer and Trustee

Mike, do you want to take that?

Michael P. Fitzmaurice -- Executive Vice President and Chief Financial Officer

Yeah. Sure. Thanks, Brian. Linda, it's a tough one. I mean, absence of potential fallout from retailers as a result of the pandemic, at this point given our liquidity position with over $320 million of cash, coupled with very limited or a little committed capital. We don't see any need to raise our debt levels near-term. As for the EBITDA side, I mean, too much uncertainty in an environment to comment right now. I'll tell you that we are committed over the long-term to leverage levels between 5.5 times and 6.5 times as we've discussed in earlier conversations.

Linda Tsai -- Jefferies -- Analyst

Thanks. And then occupancy at 93%, any sense of how that will be by year end?

Michael P. Fitzmaurice -- Executive Vice President and Chief Financial Officer

No, no sense at this point given the uncertainty in the environment.

Brian L. Harper -- President, Chief Executive Officer and Trustee

Much too early.

Linda Tsai -- Jefferies -- Analyst

One last one, from the Tier 4 tenants, do you know what percentage has applied for PPP loan?

Brian L. Harper -- President, Chief Executive Officer and Trustee

From the Tier 4, the theaters, restaurants and fitness, we don't have an exact percentage of what PPP loan. I can tell you from the locals, which represent 13% of our ABR, half has, and I really do apply that to this comp tiers program that we implemented. So that's a really good percentage and of our April rent collectibles, you had low 50s from local tenants that paid April that we think because of the PPP loans.

Linda Tsai -- Jefferies -- Analyst

Great. Thank you.

Brian L. Harper -- President, Chief Executive Officer and Trustee

Thanks, Linda.

Operator

[Operator Instructions] Our next question comes from Mike Mueller with JPMorgan. Please proceed with your question.

Mike Mueller -- JPMorgan -- Analyst

Yeah. Hi. Brian, you talked about wanting to get something in return for doing the deferrals. So for the 121 deferrals that you've mentioned that you did, what sort of adjustments did the lease terms did you make on those? What percentage of the 121 had adjustments to the lease terms, and what were some of the common ones?

Brian L. Harper -- President, Chief Executive Officer and Trustee

I don't have the exact percentage, Mike, but common would be co-tenancy clean up, old co-tenancy, extension of terms, exclusives -- opening exclusives to allow maybe some competitors into the property, adding on maybe radiuses, it was all over the Board. And the team -- any deferral goes through a process in a committee, so we have legal asset management leasing, finance, all eyes on these. So it's not done in a vacuum. So everybody is checking lease abstracts and other leases where we have operators operating in the assets to really make sure we are extracting as much as we can as we're allowing them for deferrals. So, I've been very proud and pleased of the team's effort so far.

Mike Mueller -- JPMorgan -- Analyst

Got it. Okay. That was it. Thank you.

Brian L. Harper -- President, Chief Executive Officer and Trustee

Thanks, Mike.

Operator

We have reached the end of the question-and-answer session. At this time, I'd like to turn the call back over to Brian Harper for closing comments.

Brian L. Harper -- President, Chief Executive Officer and Trustee

As I sit in my remote location separated from family, friends, and colleagues, I am sincerely grateful to be part of an organization that has risen to the current challenge in a way that goes beyond all expectation. The caliber of talent at RPT, the portfolio, our processes, and our balance sheet improvements made over the past two years as well as a partnership with GIC, I have no doubt that RPT will emerge from this crisis ready and able to capitalize on opportunities that arise from this pandemic. Thank you all for joining our call this morning and have a safe day.

Operator

[Operator Closing Remarks]

Duration: 52 minutes

Call participants:

Vin Chao -- Senior Vice President, Finance

Brian L. Harper -- President, Chief Executive Officer and Trustee

Michael P. Fitzmaurice -- Executive Vice President and Chief Financial Officer

Derek Johnston -- Deutsche Bank -- Analyst

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Collin Mings -- Raymond James -- Analyst

Craig Schmidt -- Bank of America Merrill Lynch -- Analyst

Floris Van Dijkum -- Compass Point -- Analyst

Linda Tsai -- Jefferies -- Analyst

Mike Mueller -- JPMorgan -- Analyst

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