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Weingarten Realty Investors (NYSE:WRI)
Q3 2020 Earnings Call
Oct 29, 2020, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the Weingarten Realty Inc. Third Quarter 2020 Earnings Call for October 29, 2020. My name is Brandon, and I'll be your operator for today. [Operator Instructions] [Operator Instructions]

And I will now turn it over to Michelle Wiggs. Michelle, you may begin.

Michelle Wiggs -- Vice President, Investor Relations

Good morning and welcome to our third quarter 2020 conference call. Joining me today is Drew Alexander, Johnny Hendrix, Steve Richter, Joe Shafer. As a reminder, certain statements made during the course of this call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results could differ materially from those projected in such forward-looking statements due to a variety of factors. More information about these factors is contained in the Company's SEC filings.

Also during this conference call management may make reference to certain non-GAAP financial measures, such as funds from operations or FFO, both core and NAREIT, which we believe help analysts and investors to better understand Weingarten's operating results. Reconciliation to these non-GAAP financial measures is available in our supplemental information package located under the Investor Relations tab of our website.

I will now turn the call over to Drew Alexander.

Andrew M. Alexander -- Chairman, President and Chief Executive Officer

Thank you, Michelle, and thanks to all of you for joining us. I want to stress that our first priority continues to be the safety and wellbeing of our associates, tenants, stakeholders and the broader community during these challenging times. We are quite pleased that our operating results have continued to improve. Our cash collections continue to trend favorably, and we are impressed with the production of our leasing team in this unprecedented economic environment.

While there are certainly many challenges, the multi-year transformation of our portfolio has made the road ahead easier. Our transformation resulted in a higher percentage of grocery-anchored centers, a much improved tenant base and most importantly, a much stronger balance sheet with little near-term debt maturities. We closed $64 million of dispositions in the quarter, including our last property in the state of Utah, further focusing our portfolio. While the timing of the recovery is uncertain, $152 million of 2020 dispositions year-to-date, further strengthens our liquidity position in addition to further improving the overall quality of our portfolio.

In an earlier press release, we announced the dividend of $0.18 per share for the third quarter. Additionally, given our dispositions, it is very likely that we will also pay a special dividend near the end of the year. We will continue to carefully monitor our cash flow and liquidity and adjusted dividend as appropriate. Finally, all three of our large new development projects are progressing nicely. There is minimal additional investment for completion and leasing is going well. At Centro, retail is 93% leased and residential is 92%. At West Alex, residential is currently 37% leased and retail 80% leased. We are very excited that Harris Teeter is under construction with an opening of their upscale supermarket expected next summer.

At the Driscoll in Houston, the residential construction is nearly complete. We've recently opened our on-site office and are already 25% leased. These are great projects, which will create good long-term shareholder value. Steve?

Stephen Richter -- Executive Vice President and Chief Financial Officer

Thanks, Drew. Core FFO for the quarter ended September 30, 2020, was $0.44 per share compared to $0.34 per share for the second quarter and $0.53 per share for the same quarter of the prior year. The increase over the prior quarter as a result of a significant reduction in bad debt expense from $19.3 million or $0.15 a share in the second quarter to $1.4 million or $0.01 a share in the current quarter. In the first and second quarters of 2020, we designated the majority of the receivables from our watch list tenants uncollectable and therefore establish reserves against them and move them to the cash basis accounting.

Thus we don't have as much bad debt for GAAP purposes, given it was never accrued. We have also provided additional bad debt disclosure on page 41 and page 42 of our supplemental. Further a reconciliation of net income to core FFO is included in our price release. With respect to our balance sheet, we have full availability under our $500 million revolving credit facility and about $13 million of excess cash on hand. With no material maturities until 2022 and limited new development funding obligations, we will have adequate liquidity after the payment of dividends to comfortably sustain and grow operations. Johnny?

Johnny Hendrix -- Executive Vice President and Chief Operating Officer

Thanks, Steve. Good morning to everyone on the call. We are pleased with the results we posted this quarter. We have a motivated team of associates and a strong diversified transformed portfolio. Over 60% of our portfolio consists of essential tenants. Today, 80% of our annual base rent comes from shopping centers with a supermarket component. Pre-pandemic, those supermarkets average very strong sales of $712 per square foot, significantly above the national average. That translates to an average of over a 100,000 customers a month visiting our properties. Not many supermarkets have reported since March, but we expect current sales have increased nicely.

While we still have a lot of work to do, cash collections have improved significantly as our tenants have reopened. Today, the vast majority about 99% of our retailers are open. And for the third quarter, we collected 90% of cash rent that was due. This is substantial improvement over the 82% we collected in the second quarter. October is trending slightly ahead of the last couple of months. This quarter, we did adjust the denominator to exclude terminations that adjustment accounted for about 2%. For the third quarter, we have accounted for 95% of the billed rents due.

Last quarter, we talked about strategic deferrals, which are with major tenants where we've been able to support their cash flow while negotiating beneficial amendments that will help Weingarten in the future. This includes suspending cotenancy, loosening exclusives or restrictions or allowing future redevelopment. Almost 40% of our deferrals this quarter are strategic deferrals. We feel strongly these will be repaid. It's also worth noting deferrals are down from 14% in the second quarter to only 4% in the third quarter.

During the third quarter, Stein Mart filed for liquidation. We have six Stein Marts and expect all to close in the fourth quarter. Those leases represent $1.3 million in annual base rent. Their average rent is $7.70 per square foot. So that's replaceable. We are also working on letters of intent for three of those locations. Tailored Brands and Ascena also filed for bankruptcy in the quarter. We started the quarter with 10 Ascena stores and two of those were rejected. We had seven Tailored Brand stores and three of those have been terminated.

Each of these tenants were designated as uncollectible last quarter, so they were fully reserved. We also remain particularly concerned about large health clubs, theaters, and large high-end restaurants. Fortunately, our exposure to these tenants is small. Combined these three categories are about 4% of our annual base rent. Now let's move to some current quarter operating metrics that are more positive. We are very encouraged to see leasing production improving. During the quarter, we executed 59 new leases for almost $4 million in base minimum rent still below historical production, but more than double the production for last quarter. September production was about the same as a year ago.

In the quarter, we signed leases with medical tenants, restaurants, home furnishings and services. We've got a good pipeline. We're executing leases that have been on hold for months. And I think production will continue to improve. Rent growth for the quarter was a positive 5.5%, and 11% increase for new leases and 4% for renewals. Its likely future periods could be more challenging as we compete with other properties, but the quality of our properties will give us an advantage.

Same property NOI was down 8.1% for the quarter. Much of the negative impact is related to the bad debt, Steve discussed earlier. Base minimum rent, which is the most significant component of same property NOI was down slightly less than 4%. The company has contractual commitments for additional base minimum rent or leases signed and not commenced of $8.7 million annually. We expect to commence $7.7 million annually over the next four quarters.

The last seven months have been challenged and we have a lot of work to do to repair the damage this pandemic has triggered. Nevertheless, operations are improving. We have a great team that is up for the challenge. Drew?

Andrew M. Alexander -- Chairman, President and Chief Executive Officer

Thanks, Johnny. Our heartfelt thanks goes out to all of our associates who are working so very hard and to our Board of trust managers who provide constant quality feedback. Great people, great properties, and a great platform equals great result. I thank all of you today for joining the call and for your continued interest in Weingarten.

Operator, we now be happy to take questions.

Operator

Thanks, Drew. We will now begin the question-and-answer session. [Operator Instructions]

Stephen Richter -- Executive Vice President and Chief Financial Officer

Before we take the first question, I would like to offer our apologies for the delay in getting our release out last night. We had some last minute issues, we needed to work through that impacted our communications and unfortunately working through our processes and the wire services took much longer than we anticipated. Thank you again for your patience and understanding.

Brandon, we'll take the first question.

Questions and Answers:

Operator

First question from Citi, we have Katy McConnell. Please go ahead.

Katy McConnell -- Citigroup -- Analyst

Great. Thanks and good morning, everyone. So I'm wondering if you could provide some more color on what's happening in the transaction market for Strip today, as far as the opportunities you're seeing come to market and what [Indecipherable] availability looks like now? And then it looks like the cap rates on your 3Q scale came down a bit. So can you touch on that and where do you think cap rates are headed overall?

Andrew M. Alexander -- Chairman, President and Chief Executive Officer

Good morning, Katy. It's Drew. I'll try to address a lot of that and then maybe turn it over to Johnny for a little extra color. He is a little closer to it on the acquisition side. So broad picture on cap rates, what I think you're seeing is, is an acceleration of what we've talked about in the past that cap rates for very good quality assets remain at their pre-COVID levels and maybe even in some cases have come down. As one moves out the risk spectrum, we see a continued widening of cap rates and a pricing deterioration.

So as far as the future in terms of modeling and what we're likely to sell, I think most quarters we will be in the middle-to-high 7s cap rates. And in some quarters, if we're successful, de-risking might even be a little above that as you accurately observed. In this quarter, we were comfortably below that. That's a function of the quality of the assets that we sold for some unique reasons that it made strategic sense.

Financing is available for good quality stuff with NOI certainty, but again, gets harder and harder to the point of almost impossible if there's a lot of risk. On the acquisition front, we're hearing about some things, but we haven't seen a lot of the good quality property that we want to buy and the little we've seen has been pretty aggressive. Anything else to add Johnny?

Johnny Hendrix -- Executive Vice President and Chief Operating Officer

Yes. We've [Indecipherable] the underlying standards for retailers and for buyers [Indecipherable].

Katy McConnell -- Citigroup -- Analyst

Okay. Thanks.

Andrew M. Alexander -- Chairman, President and Chief Executive Officer

Go ahead, Katy.

Katy McConnell -- Citigroup -- Analyst

Okay. And then just for a second question, can you provide some background on the decline you're seeing in Small Shop collections over the last few months? And has your outlook changed at all regarding fallout risks or modifications that might be necessary based on the health of those tenants?

Johnny Hendrix -- Executive Vice President and Chief Operating Officer

Katy, I think what we are looking at is, on a tenant-by-tenant basis trying to understand what their sales are, what the situation is during the shutdown and the impact of that [Indecipherable].

Katy McConnell -- Citigroup -- Analyst

Okay. Thanks.

Johnny Hendrix -- Executive Vice President and Chief Operating Officer

Thank you, Katy.

Operator

And from Bank of America, we have Craig Schmidt. Please go ahead.

Craig Schmidt -- Bank of America -- Analyst

Great. Thank you. Johnny, your comments about leasing spreads possibly coming under a little more pressure in forward quarters, are you seeing a willingness attendance to case lower rents to go to other properties? Or is that some other issue?

Johnny Hendrix -- Executive Vice President and Chief Operating Officer

Craig, I think that the biggest issue that we had is there's more available retail space that was six months ago. There were fewer qualified tenants. I think we have an advantage as we continue to try and lease space over other shopping centers. I think what you will see is, a lot of tenants moving from one shopping center to another. So there is a choice that they can make. I think there is just going to be more and more pressure on rate growth as we go forward.

Craig Schmidt -- Bank of America -- Analyst

I guess just given the recent spike up in COVID cases, what are your conversations like with your tenants in terms of how they see the next couple of months and are you much concerned that you might see further lockdowns if cases stay elevated?

Andrew M. Alexander -- Chairman, President and Chief Executive Officer

Yes. It's a good question, Craig. It's a hard one to answer. I'm not a doctor, read a lot of things. I personally would guess that in the vast majority of the geographies that we are in, we will not see significant lockdowns. We are constantly monitoring it and obviously subject to change. We did see the other day in Denver where we have a few centers, a little bit of restaurant restriction on the capacity.

But generally speaking, we think most of our markets won't lockdown, but there is a lot of forward-looking statement in that. I know our centers are good. I know our markets are good long-term. I know we have somewhere around 63% essential, but as you say, there have been some increase in cases recently and it concerns us all.

Craig Schmidt -- Bank of America -- Analyst

Okay. Thank you.

Andrew M. Alexander -- Chairman, President and Chief Executive Officer

Thank you.

Operator

From Scotiabank, we have Greg McGinniss. Please go ahead.

Greg McGinniss -- Scotiabank -- Analyst

Hey, good morning. I'm not sure if other people are having the same issue, but I'm having some trouble hearing the Weingarten team excluding Drew. So if you can get closer to the phone, I'd appreciate it.

Andrew M. Alexander -- Chairman, President and Chief Executive Officer

Yes. I think we may have had an issue with Johnny's microphone, and he has moved now. Can you hear me, Greg?

Greg McGinniss -- Scotiabank -- Analyst

Yes. Now I can. Thank you. So the first question I got to Steve, the language around the special dividends has kind of for the past couple quarters has always been in the context of the disposition program, while the dividend currently being paid this year is based on last years dispositions, is there no regular rental revenue base taxable income that needs to be distributed as well this year.

Stephen Richter -- Executive Vice President and Chief Financial Officer

Good morning, Greg. There is taxable income generated this year, but the way the tax rules work you have, you can borrow from the future year in order to calculate exactly what is required to be distributed under the tax rules. So it's not a simple calculation, but you can borrow from the next year's distributions in order to meet the requirements. So that's effectively what we're winding up doing.

But as we've noted in the last couple of quarters in the communications, we do think that we'll have a fourth quarter special dividend that would be paid in December. And it's a catch-up so to speak, so it may not be 100% just the-from the gains from the dispositions program, but that's where the calculations. We look at taxable income and we declare what we have to pay in 2020 in order to maintain REIT status. I can go through it more offline, but it's an involved calculation.

Greg McGinniss -- Scotiabank -- Analyst

Okay. I appreciate that. So there is some piece of the special dividend that maybe just in the regular taxable income this quarter or this year. And some of that maybe pushed into 2021 as well, if I'm understanding it correctly.

Stephen Richter -- Executive Vice President and Chief Financial Officer

Yes. The one follow-up I would make is, is when we rolled into the special dividend from 2019 that we've had to roll into 2020, that even further compounded the complexity of the calculation. So it's again, not a very easy straightforward calculation. Then the other point I guess I should make is that there are tremendous differences between GAAP income and taxable income that we also have to work through. So it is involved.

Greg McGinniss -- Scotiabank -- Analyst

Okay. All right. Steve, we'll have to spend some time offline on that one. And then just one more follow-up here. So the 6% of rent that was not collected this quarter and not deferred, what's your level of confidence that those rents may come back one day. I realized they're on a cash basis and you're not going to be accounting them until you actually collect it. But we're just trying to get a sense for kind of permanent rent impairment going forward here.

Stephen Richter -- Executive Vice President and Chief Financial Officer

Yes. Difficult to say a lot depends on what happens with the lockdowns and the sales of our tenants going forward. Obviously, some of the deferrals are going to convert to abatements and we're watching the tenant sales the best that we can and in the strength. At some point we're going to probably make a decision that in order for a tenant to get to the other side that we're going to go ahead and abate that rent. It's just difficult to say right now, Greg.

Greg McGinniss -- Scotiabank -- Analyst

Okay. That's fair. And Johnny, just to follow-up on your comment on the 2% change in denominator from the opening remarks, is that mean that Q2 collections have been restated based on that change or no?

Johnny Hendrix -- Executive Vice President and Chief Operating Officer

No. Thanks for clearing that up.

Greg McGinniss -- Scotiabank -- Analyst

Okay. Thank you.

Operator

From Green Street, we have Vince Tibone. Please go ahead.

Vince Tibone -- Green Street -- Analyst

Hi, good morning.

Johnny Hendrix -- Executive Vice President and Chief Operating Officer

Good morning.

Vince Tibone -- Green Street -- Analyst

I have a follow-up on the asset sales. Could you discuss how forward NOI was determined to arrive at the mid-six stated cap rate given all the operating uncertainty? I'm curious if there was a large gap between 2019 NOI and pro forma NOI using the underwriting. And also, could you just talk a little bit about the availability of mortgage debt broadly for Strip centers today and what are the buyers of your centers were able to get financing?

Andrew M. Alexander -- Chairman, President and Chief Executive Officer

Sure. Vince, good morning. So good questions, but really hard to answer, especially the first one precisely. So on the debt financing, I think they generally were in most of the cases, not all, but in the cases where they wouldn't, where they didn't say they didn't need to. And as I said, it is available, but the underwriting standards with the lenders are really challenging.

So to your first question, which is an excellent one that Johnny touched on is it's really in my view these days all about the NOI, it's not nearly the arguments about the cap rate and that's where each situation is different. The properties that we sold were generally speaking nice, good, stable assets. The one exception is the West side center that in LA, which has a guitar center, but that was seen as a great future redevelopment opportunity, so the buyer of that was private buyer was very comfortable with the long-term asset.

We were comfortable making the sale even a week that have redeveloped it too, because we felt we were getting a fair price for it. So it was a unique sale of a very high cap rate asset for us, but non-supermarket and something that we thought we were getting good value, very high percentage, probably even at or above our pre-COVID NAV. So each one is very different. We look at it. But it's a great question. It's just hard to answer. But as Johnny said, it is really all about the NOI. If you have a watch list tenant whose lease is up in 12 months, there's a lot more art than science, so how you count that NOI.

Vince Tibone -- Green Street -- Analyst

That's fair. I appreciate the color.

Andrew M. Alexander -- Chairman, President and Chief Executive Officer

We'll work on selling a lot, but we'll also be very selective that as I've told the team, it's about de-risking, it's not about monetizing in near worst case scenario. So it all comes down to the individual assets.

Vince Tibone -- Green Street -- Analyst

Yes. That makes sense. And then switching gears for a second. Could you share what percentage of your total contractual rent is currently on cash basis accounting? And then what was the third quarter collection rate from tenants that were on cash basis?

Stephen Richter -- Executive Vice President and Chief Financial Officer

Yes. Good morning, Vince. This is Steve. In the third quarter, we recognized around $16 million of BMR and triple-net rents from tenants that had been moved to cash basis. That's roughly around 14% of total rents. During the quarter, we collected 73% of that amount. So call it, $4 million-ish left is what we went uncollected. And that obviously doesn't show up in our financial statements given that they're cash basis. That's the whole issue.

Under full disclosure, those numbers have some adjustments that I'm going back and forth, but generally that's what we experienced. And just to give you a comparison, in the same cash basis tenants in Q2, we only collected 34% at the end of the second quarter compared to where we were at 73% today for the third quarter. But again, we did collect some additional-the 34% moved up as we moved into Q3. But it does give you some insight into the positive collection efforts and momentum that we saw during the third quarter.

Vince Tibone -- Green Street -- Analyst

Thank you for that. And then maybe just one accounting follow-up on that. If a tenant didn't pay their second quarter rent on time, they're on cash basis accounting, and let's say they paid five months of rent in August. Do you recognize all that rent that they-past due rent included, all of that shows up in your financial statements for the third quarter, since it's like cash basis. Is that a correct understanding?

Stephen Richter -- Executive Vice President and Chief Financial Officer

That is correct. "That is cash basis". We received the cash so we booked the revenue.

Vince Tibone -- Green Street -- Analyst

Got it. I just wanted to clarify that. Yes. I mean, there are so many moving pieces of the cash basis. It's just hard to-sometimes it's hard to follow where kind of recurring contractual revenue is trending, stripping out all the accounting. So just trying to get a handle on that.

Stephen Richter -- Executive Vice President and Chief Financial Officer

Understood.

Operator

From JPMorgan, we have Mike Mueller. Please go ahead.

Mike Mueller -- JPMorgan -- Analyst

Yes. Hi. Steve, so you basically wiped out the entire reserve this quarter pretty much. And I'm wondering, can you tie that to Johnny's comments about ABR risk from movies, dining, tenants that are bankruptcy because basically it seems like you're implying on a go-forward basis that your money good from those tenants on a go-forward basis?

Stephen Richter -- Executive Vice President and Chief Financial Officer

Mike, I would tell you that you have to also think about-we took those tenants to cash basis and so that revenue is not showing up nor is the reserve showing up. So it looks like it all went away, but again, it goes back to the cash basis accounting that is not showing up in the financial statements.

Mike Mueller -- JPMorgan -- Analyst

And I guess, what was the level of cash-the tenants on cash in Q3 versus Q2 then?

Stephen Richter -- Executive Vice President and Chief Financial Officer

Well, those were the numbers I just gave. We had about $16 million of cash basis rent generated in Q3. And we collected 73% of that. So again, about $4 million went uncollected.

Andrew M. Alexander -- Chairman, President and Chief Executive Officer

Steve, I think this is right. We can't reserve for the future for something that isn't accrued. If we don't think we're going to get rent next December from a tenant-reserve that now that we've moved them to cash basis because we're concerned.

Stephen Richter -- Executive Vice President and Chief Financial Officer

Yes. To follow-up on Drew's comment, we actually had receivables outstanding for those tenants that we took to cash basis. And last quarter, we took like $10 million of that to bad debt because that was the AR sitting out there. So in the cash basis scenario, you're not generating any AR because you're never recording the rent to start with.

Mike Mueller -- JPMorgan -- Analyst

Sure. What was the bucket of tenants who were on cash accounting dramatically different in Q3 than Q2?

Stephen Richter -- Executive Vice President and Chief Financial Officer

Not dramatically. It actually went down a little bit primarily for bankruptcies and for tenants that flush through the system.

Mike Mueller -- JPMorgan -- Analyst

Got it. Okay. That's helpful. Thank you.

Stephen Richter -- Executive Vice President and Chief Financial Officer

One other thing that it went down because of the couple of dispositions that we had also took out, made that number slightly lower. So it's bankruptcies and dispositions. I apologize for that.

Mike Mueller -- JPMorgan -- Analyst

Got it. Okay. Thanks.

Operator

From Truist, we have Ki Bin Kim. Please go ahead.

Ki Bin Kim -- Truist -- Analyst

Thanks. Good morning out there. So just to follow-up on the past couple of questions. The $1.6 million of bad debt versus 14.5, excluding the straight-line rent receivable from 2Q. Is there any sense that-are you over earning on the bad debt? I know that's kind of an odd way to say it. What I'm asking is that those tenants of cash basis-on a cash basis, if they did catch up and paid the kind of partial 2Q rent and 3Q rent in 3Q. I mean, there could be a scenario where maybe you're over earning on that. Just curious if that's the case or not?

Stephen Richter -- Executive Vice President and Chief Financial Officer

Good morning, Ki Bin. I don't think that's the case. I don't know that -- obviously, if we receive the cash, it gets booked into earnings, but I'm not aware that was a significant number in Q3.

Ki Bin Kim -- Truist -- Analyst

Okay. And lots of people looking at the reserves that you've taken, the tenants you moved to a cash basis to account for kind of anything at risk tenancy. When you did that, were you also thinking about any potential fallout come around 1Q 2021 after we get past this holiday season and inevitably there'll be some other fallout. Do you think-have we taken into account all those things already or is that an estimate we have to tap later?

Stephen Richter -- Executive Vice President and Chief Financial Officer

I would say the answer to that is definitely yes. When you take-the accounting rules, when you take it to cash basis, you're supposed to be looking at a greater than 75% probability that they're going to pay their rent over the term of the lease. So you have to look forward, at least according to the accounting literature, the way I understand it. You have to look forward and say, is this tenant going to be viable in the future. So the answer to, I think if I understood your question is very much so, but that's taken into consideration.

Ki Bin Kim -- Truist -- Analyst

Yes. That's the rule. But there is a bit on my discretion that people can take. That's why I was asking that question. All right. Thank you.

Operator

From Jefferies, we have Linda Tsai. Please go ahead.

Linda Tsai -- Jefferies -- Analyst

Hi. Given the recovering EBITDA versus 2Q your net debt-to-EBITDA rate showed healthy decline stabilization. Is there a level that you'd like to target by year end 2021? And what would you see as the main drivers?

Stephen Richter -- Executive Vice President and Chief Financial Officer

Good morning. Now, I'll tell you the main driver is the NOI piece of that calculation. Clearly, as you noted the improvement that we recognized between Q2 and Q3 is a result of the improvement in the NOI and a big piece of that obviously is the reduction in bad debt. So where it goes in the future is obviously going to be very much driven by where NOI goes. And as we've talked before, this is a challenging time to be predicting what operations look like between now and the end of the year, but clearly into 2021 as well.

Linda Tsai -- Jefferies -- Analyst

Thanks. And then the 87% collections in October, it's slightly lower than the 90% in 2Q in the individual months-I mean, sorry, slightly lower than 90% collected in 3Q in the individual months making up 3Q. Is there anything to call out there?

Johnny Hendrix -- Executive Vice President and Chief Operating Officer

Hey, Linda. Good morning. No, there's really not. It's more of a timing issue. Obviously, I've had a lot longer to collect Q3 than I have October. We're constantly collecting money and I looked at it this morning, I think we're at about 88% now. So we'll continue and improve that. I hope by the time we get to the next call, it will be greatly improved.

Linda Tsai -- Jefferies -- Analyst

Thanks. And then just finally, can you talk a little bit about the lease-up progress in both retail and residential at your three mixed-use developments? How is this trending versus expectations and what you see as appropriate given conditions in the local markets?

Andrew M. Alexander -- Chairman, President and Chief Executive Officer

Good morning, Linda. It's Drew. I went through the numbers in there in the supplemental. So I don't need to repeat those. I would say at Centro, we're very pleased with everything and we're-the resi, very pleased with the occupancy are working through some renewals, dealing with all the things to deal with in terms of the concessions. And you don't have to work through that. DC is a challenged market not great, not small either. And lot of people working from home, they're very focused on it. Do have a few of the retail tenants that we're working to get commenced. So that's an issue there.

At West Dallas, which has taken longer than we would have liked, due to some entitlement issues, some issues between Harris Teeter and the city, as we talked about, it has taken longer. And as we've also talked about, the resi has taken longer due to the pandemic and the fact that the supermarkets not open, you don't have that exciting opportunity. So we're extremely pleased that the supermarket is under construction there, and will open next summer. We also opened up a Silver Diner, very popular restaurant in the facility, which is doing very well and serving the tenants well. So we're making great progress there.

The Amazon-both properties are about 3.5 miles from Amazon HQ2, but those jobs are not on the ground yet. And generally speaking, Amazon is working from home anyway, even if they work. So the pandemic hasn't helped things, so we are pleased with the progress in light of the pandemic. And then at River Oaks at the Driscoll, to be already 25% having just opened a leasing office for a luxury high rise.

Again, in the pandemic, we're very pleased as always with apartments, some amount of concessions to work through and that's pretty normal. So as was observed in many of the analyst's reports, leasing in a pandemic is challenging. And for awhile, when they were locked down and we couldn't tour people more so, but we are pleased in a very good long-term locations.

Linda Tsai -- Jefferies -- Analyst

Thanks.

Operator

[Operator Instructions] From Compass Point, we have Floris Van Dijkum. Please go ahead.

Floris Van Dijkum -- Compass Point -- Analyst

Good morning, guys. I think one of the key things everybody is trying to figure out is, what is 2021 going to look like? And obviously nobody is giving any guidance, but it looks like, same property revenues are down 5.9%. Is that a good number to look at you think going forward?

Andrew M. Alexander -- Chairman, President and Chief Executive Officer

Floris. I'll start out and let Steve and then maybe Johnny if they want to opine. As you say, it's so hard to say, we don't know so many different things. There are lots of variables out there, vaccines, therapeutics, virus, economy, etc. I personally-I'm optimistic that whatever happens with the election, there will be another round of stimulus. That's another thing that is, I think, enormously important to many of our tenants, especially the mom-and-pops, which we had talked about earlier in the call, as well as of course of people, who are unemployed to have a bit to spend in our supermarkets, etc.

So lots of variables, lots of unknown, as we tried to give folks the parts that as Johnny said in his prepared remarks, we're very concerned about the theaters and the other uses you mentioned, but it's only about 4%. So we know we have good properties and a good balance sheet and generally good tenants, but there's a lot of uncertainty in the world. So Steve, any other thoughts?

Stephen Richter -- Executive Vice President and Chief Financial Officer

Not really. I mean, if you look at it, it's tough to pull the numbers out of the financial statements even on the same store from the standpoint of the noise that we discussed started around cash basis and not recording any bad debt for those tenants, etc. So I appreciate, we're all trying to figure out where this is all going to go and how quickly and so forth. But as Drew mentioned, there are just too many variables at this point to really get any kind of confidence level in projections going forward.

Floris Van Dijkum -- Compass Point -- Analyst

Yes. Fair enough. The other question I have is, so let me just verify one other point. So there was a 2% change in your billable rent amounts, right, from the third quarter to the second quarter. Did I catch that correctly?

Stephen Richter -- Executive Vice President and Chief Financial Officer

That's correct.

Floris Van Dijkum -- Compass Point -- Analyst

Okay. The other question, I mean-sorry, go on.

Stephen Richter -- Executive Vice President and Chief Financial Officer

I was just going to say, we talked about the "denominator effect last quarter", and that's effectively the result of what we have historically talked about in terms of the denominator effect, where it gets adjusted for bankruptcies, etc.

Floris Van Dijkum -- Compass Point -- Analyst

Okay. The other question I have-I want to get your thoughts on this, obviously you've prepared well for this pandemic in some ways with all the work you've done prior, in terms of cleaning up the portfolio and getting your balance sheet in the shape that it's in. As you think about going on offense, what are the things that you will be looking at? Do you think there's going to be opportunities on the distress side? Are you-you think it's mostly families that want to get out-private owners that are looking to sell over levered assets or where do you see the potential opportunities as we head into next year?

Andrew M. Alexander -- Chairman, President and Chief Executive Officer

Good morning, Floris. It's Drew. That's a great question. That is also quite challenging to answer. I know that we are very focused. We have kept our team intact. We've actually added people during the pandemic, principally in leasing, but our people are still very out there and focused. One of the unique things about this company is our geography is fairly focused in about two dozen markets that we want to grow basically from Seattle, Washington to Washington D.C. So we see everything and we're very focused on those opportunities.

So yes, I think there'll be some and some of the things that you identify are certainly sources, over levered assets, private owners who are tired of the fight. There's obviously a lot that could happen depending how the elections go and tax policy goes as to 10/31 and capital gains that could influence things a lot, could spend a whole [Indecipherable] the conference call, just talking about that. Even though it's not going to be known for some time, so we are positioned to take advantage of opportunities. We'll certainly look at them. We'll keep our quality standards high. We like our geography with our Sunbelt folks. And we're pleased with things. I think Johnny you wanted to add something.

Johnny Hendrix -- Executive Vice President and Chief Operating Officer

Yes. The one thing I would add is, we are going to be very focused on the existing assets. We have a lot of leasing to do. And I think we can take this opportunity to improve the tenant makeup that we have. And also the densification that we've been talking about is going to be moved forward. Not sure exactly how far, but it will be moved forward with the ability that we've gained from some of the deferrals we've done with some of the larger tenants. So it's primarily going to be focused on our existing properties.

Floris Van Dijkum -- Compass Point -- Analyst

Great. Thanks guys.

Operator

From Wells Fargo, we have Tammi Fique. Please go ahead.

Tammi Fique -- Wells Fargo -- Analyst

Hi, good morning. I'm just wondering-I wonder your peer commented that they were seeing weaker demand for the 8,000 to 12,000 square foot boxes. I'm wondering, are you experiencing the same thing or where do you see the greatest tenant demand challenges today?

Johnny Hendrix -- Executive Vice President and Chief Operating Officer

Good morning. Johnny. I wouldn't say that 8,000 to 10,000 square foot is kind of our issue. We've got a lot of dollar stores that seem to be in that range. There's a lot of demand there. They've really done well through the pandemic. I would say, it's probably going to be the smaller shop space that you're going to see a little more turnover in. We're going to lease it.

But I think it will have some pressure in terms of the turnover. I'm going to say these personal services again. There's still are the discount clothing, supermarkets, or some of the boxes, and I think we'll be fine in those areas, but I think that the smaller space is smaller than 8,000 square feet is really where we're going to have some things to do.

Tammi Fique -- Wells Fargo -- Analyst

Okay, great. And then just thinking about deferrals, I guess I'm wondering, are you starting to cycle through on like a second round of deferrals with the same tenants? And I guess if so, I know the first round was more of a negotiation, but I guess the tenants in theory have little left to negotiate. So just curious what kind of second round discussions are like, and if you're having those today.

Johnny Hendrix -- Executive Vice President and Chief Operating Officer

Yes. Most of the people that we're talking to in the second round are not national tenants and these are going to be the smaller mom-and-pop tenants. We did have about a $1.4 million of deferrals that came due in the last quarter. And about 90% of those did pay. We are pushing some of the deferrals and again, we're very focused on who we think we can shape, who we can get to the other side. There will be more deferral and some of those deferrals will turn into abatements. But it would be mostly going forward with the smaller mom-and-pop tenants.

Tammi Fique -- Wells Fargo -- Analyst

Okay, great. Thanks. And then just one last question, maybe just going back to the guidance, and I know there's still a lot of uncertainty. But I guess I'm wondering, when do you think you'll be able to have the comfort to provide guidance to the Street?

Andrew M. Alexander -- Chairman, President and Chief Executive Officer

Good morning, Tammi. It's Drew. I'll start and see if my colleagues who want to add. I don't know, I think it would be premature for us to guess, we hope sometime next year, but I think there needs to be some better understanding of pandemic conditions and lockdowns and aid and all those things. So I can tell you not anytime soon, but exactly when, hope sometime next year and hope earlier in the year than later, but I don't really know.

Tammi Fique -- Wells Fargo -- Analyst

Okay. That's fair. Thank you so much.

Operator

We have a follow-up from Ki Bin Kim. Please go ahead.

Ki Bin Kim -- Truist -- Analyst

Thanks. Did you do any lease modifications this quarter and how did that manifest itself in some of your operating stats or bad debt stats?

Stephen Richter -- Executive Vice President and Chief Financial Officer

Good morning, Ki Bin. The short answer to that is we had a couple, very few immaterial amount in Q3 for modifications. It did not really move the needle at all.

Ki Bin Kim -- Truist -- Analyst

Okay. And the 2% of lease terminations that were removed from the denominator, you said, I think pretty clearly that did not impact at all the 20% collection rate. But I'm curious, where does that 2% actually end up showing up in your financial statements? I mean guessing it's not the same store and NOI either.

Stephen Richter -- Executive Vice President and Chief Financial Officer

Yes. It basically falls out. It doesn't show up.

Ki Bin Kim -- Truist -- Analyst

Okay. So I guess you were just referring to that 2% when you mentioned that, you collected 95% of billed rents, that's the 95% that got repaid?

Stephen Richter -- Executive Vice President and Chief Financial Officer

Yes. I think, if I'm understanding your question, I think that's correct.

Ki Bin Kim -- Truist -- Analyst

Yes. Just want to clear up any kind of future noise that happens. All right. Thank you.

Operator

I think we have no further questions at this time. Drew, we'll turn it back to you for closing remarks.

Andrew M. Alexander -- Chairman, President and Chief Executive Officer

Thank you, Brandon. Thank you, everybody. I really appreciate your interest in Weingarten. I apologize, again, for the delay in the press release, but thanks again for your interest. We are around and available if there's other questions and we'll be at the Virtual Nareit shortly. So stay safe, everyone. Have a great day. And thanks again.

Operator

[Operator Closing Remarks]

Duration: 50 minutes

Call participants:

Michelle Wiggs -- Vice President, Investor Relations

Andrew M. Alexander -- Chairman, President and Chief Executive Officer

Stephen Richter -- Executive Vice President and Chief Financial Officer

Johnny Hendrix -- Executive Vice President and Chief Operating Officer

Katy McConnell -- Citigroup -- Analyst

Craig Schmidt -- Bank of America -- Analyst

Greg McGinniss -- Scotiabank -- Analyst

Vince Tibone -- Green Street -- Analyst

Mike Mueller -- JPMorgan -- Analyst

Ki Bin Kim -- Truist -- Analyst

Linda Tsai -- Jefferies -- Analyst

Floris Van Dijkum -- Compass Point -- Analyst

Tammi Fique -- Wells Fargo -- Analyst

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