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Weingarten Realty Investors (NYSE:WRI)
Q4 2020 Earnings Call
Feb 23, 2021, 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. Fourth Quarter 2020 Earnings Call. My name is Brandon, and I'll be your operator for today. [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 fourth 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 thank you all for your patience with rescheduling our call from last week. We felt that moving the call was for the best as power and Internet was inconsistent and our team was working in some difficult conditions. I want to reiterate that our first priority continues to be the safety and well-being of our associates, tenants, stakeholders, and the broader community as we begin to hopefully put COVID-19 behind us. We are pleased with our operating results for the quarter. Our cash collections continue to trend favorably, which clearly reflects the strength of our transformed portfolio of primarily grocery-anchored centers located in the southern and western United States. As most know, Weingarten embarked upon a multi-year transformation several years ago. We focused on centers with stronger demographics and selling centers with watch list tenants. Our transformed portfolio today is much better positioned for growth. We've always believed in the Sunbelt, and the growing popularity of the states in which we operate will further enhance the value of our strong portfolio. We continue to strategically hone our portfolio exiting Charlotte, North Carolina and Dallas Fort Worth, Texas during the quarter, both good markets, but we didn't see getting a real presence in either. So strategically, it made sense to exit.

For the full year, we sold property totaling $248 million, purchased $167 million of assets, and invested $75 million and our 3 new development projects. Subsequent to year-end, we sold 2 properties; one in Tucson and one in Raleigh. We are especially pleased with our purchase of the remainder of Village Plaza at Bunker Hill here in Houston, certainly one of the best properties in our portfolio. Johnny will discuss this further in a little bit. While there are challenges, we are especially impressed with the production of our leasing team in this unprecedented economic environment as they've already gained commitments from quality retailers for several of the recently vacated junior box anchor spaces. We still have a lot of hard work ahead of us as we seek to return to full occupancy, but the multi-year transformation of our portfolio has certainly 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.

With respect to our dividend, we declared an increase to $0.30 per share from $0.18 per share. Our cash collections remain strong. We have approximately $10 million of annualized revenue from leases that are signed but not yet paying rent, and an additional robust pipeline of over 60 new leases that are under letter of intent and in our legal department with annualized rents greater than $7 million that makes us very optimistic as we look to the future. Not only does this make us comfortable with our 2021 dividend, we are also bullish about 2022 NOI growth. With no material debt maturities this year and reduced capex requirement, we are also very comfortable with our liquidity. We'll certainly monitor conditions and our cash flow, but as mentioned, we are optimistic that the worst is behind us.

Finally, all three of our large and new development projects are progressing nicely. There is minimal additional investment for completion and leasing is going well. Centro is nearing stabilization with retail at 98% leased and residential at 89% leased. At West Alex, residential is currently 46% leased, retail 82% leased, and we're very excited that Harris Teeter is under construction with their opening scheduled for this summer. At the Driscoll in Houston, the residential construction is nearly complete, and we're 47% leased. These are great projects which will begin to contribute meaningful cash flow this year and they are creating good long-term shareholder value. Steve?

Stephen Richter -- Executive Vice President and Chief Financial Officer

Thanks, Drew. Core FFO for the quarter ended December 31, 2020 was $0.43 per share compared to $0.53 per share for the same quarter of the prior year. The decrease from the prior year is a result of the ongoing impact of the pandemic on our operating results, which included abatements of rent, tenants fallouts, and reserve recorded for bad debt expense and uncollectible revenue during the quarter, which together totaled about $0.08 per share. Also contributing to the year-over-year decrease was our disposition program, which cost us an additional $0.03 per share compared to the same quarter of last year. A reconciliation of net income to core FFO is included in our press release. With respect to our balance sheet, our $500 million revolving credit facility is totally available. During the quarter, we repurchased 832,000 shares of our common stock at an average price of $16.66 per share with proceeds from the disposition program. With no material maturities until late 2022, we have adequate liquidity after the payment of dividends to comfortably sustain operations and pursue select growth opportunities.

Finally, I'd like to address 2021 guidance. While there is a great deal of uncertainty remaining regarding the impact of the pandemic, we've run many possible scenarios to find the middle of the road with how our transformed portfolio will perform this year. This guidance is based on a gradual improvement in the economy and retail environment as the country moves through the vaccination process during the remainder of the year. Occupancy is expected to bottom out mid-year and build from there. Guidance for 2021 core FFO is a range of $1.65 to $1.75 per share. The range of guidance for both net income and FFO are predictably wider than normal due to the significant uncertainties. Let me highlight a few components to provide color around some major drivers using numbers at the midpoint of our guidance for simplicity. First, this guidance anticipates that bad debt uncollectible revenue will decrease from 2020 levels, but this benefit will be largely offset by tenant fallout and terminations, both fallout that has occurred as -- and additional fallout anticipated. Second, the guidance does not anticipate taking any new leases to cash basis. This, along with our normal process to budget straight-line rent, will result in a benefit in straight-line rent of $0.12 per share due to the projected absence of any straight-line rent write-offs in 2021. Third, our development program will contribute a penny per share in 2021. This includes NOI coming online of $0.08 offset by a reduction in capitalized interest of $0.05 and a reduction in capitalized overhead of $0.02 per share. Finally, we have our transactions activity. Our 2020 dispositions will reduce 2021 FFO by $0.07, which is partially offset by 2020 acquisitions totaling $0.04 per share. This guidance also includes the impact of $100 million to $150 million of dispositions, which is front-end loaded given we've already sold about $54 million in 2021. We forecast acquisitions of between $50 million to $100 million which is projected to be back-end loaded. The net impact of these projected transactions will reduce FFO of $0.05 per share in 2021. There are certainly a lot of assumptions, but we hope this helps build the bridge between 2020 actual results and 2021 guidance. Same-property NOI guidance will not be provided initially, but may be added during the year. Our guidance specifics are included on Page 10 of the supplemental. Johnny?

Johnny Hendrix -- Executive Vice President and Chief Operating Officer

Thanks, Steve. Our transformed, highly diversified portfolio continues to produce results at the top of our peer group. As of February 12, the fourth quarter collections were 94% of the rent build. Our essential tenants, including restaurants were 96%, and non-essential was 91%. Large format gyms and theaters continue to lag behind all other categories. Only 2.7% of our ABR comes from these two categories. Regionally, collections have been consistent across our portfolio with the exception of California properties, where we collected 87% of the rent build in Q4. California has recently lifted some restrictions. So we believe total collections will improve there. For the company as a whole, January collections trajectory is similar to the last several months. As of February 12, we've collected 93% of the rent build. Most of the portfolio has benefited from our geographic positioning in high-growth, pro business, low tax states, not only containing the first areas to reopen but also enjoying significant inward migration.

Occupancy for the portfolio fell to 92.9%, from 93% last quarter. That's not nearly as severe as we had feared. Keep in mind, we still have 3% of our tenants who have not signed any sort of agreement and who have not paid rent. The company is committed to working with those tenants we can help, but some will not be able to make the transition post COVID. It's important to note, there are many of our tenants who are thriving. Supermarkets, medical services, general merchandise, home improvements, sporting goods, wine and liquor, electronics, discount clothing, home furnishings, pets, Financial Services, and craft make up 50% of Weingarten's ABR. Collections for these categories were 98% in the fourth quarter. These tenants are healthy, and many of the categories are expanding. We are experiencing strong demand for available space.

During the fourth quarter, we executed 81 new leases and 91 renewals. New leases represented $6.7 million in base minimum rent. This is the highest fourth quarter production volume we've generated since 2015. The pipeline for new leases is strong. Over the last several quarters, we've been adding human resources to our production chain and we're poised to take advantage of the demand for great space. During the quarter, we executed leases with several medical clinics, and Urgent care facilities; Kelsey Seybold Clinic, PACS Urgent Care, Virginia Hospital, and Quick Care. We're also excited to have signed leases with Sprouts supermarket and Ross, along with several home furnishing retailers. Rent growth for the fourth quarter was 5.8%. Rent for new leases increased almost 10%, while renewals grew just under 4%. For the year, rent for new leases grew 11.2% with renewals at 6.6%. Management anticipates modest rent growth through 2021 as we focus on improving overall occupancy. Rent growth will likely vary considerably from quarter to quarter. Excluding River Oaks, we're completing the redevelopment of eight properties this year. We spent $41 million on these assets today, and we'll spend another $10 million, $11 million over the next 12 months. Most of these projects are outparcel buildings and we believe they provide the company with returns around 10%. The Company is very excited to have executed a transaction to obtain our partners 42% interest in Village Plaza at Bunker Hill here in Houston. We now own 100% of the project, which is one of the finest supermarket anchored shopping centers in Houston. It is anchored by a very high volume HEB Academy, Ross, Burlington, PetSmart, and Nordstrom Rack. The three mile demographics are very strong. Population of 140,000, college education is over 51%, and average household income is over $141,000 a year. This improves our very strong Houston base assets. Today, almost 80% of our Houston ABR comes from shopping centers within five miles of the Galleria.

Our three mile average population is 155,000 with household incomes of $136,000. Collections at our properties in Houston are 95%. Houston economy is strong and very diversified. Houston has regained about half the jobs lost at the beginning of the pandemic, and we expect to continue to grow our employment base through 2021. It's too early to determine the exact effect of recent migration, but we know is a positive impact on new household formations. 2021 will continue to provide challenges for the company, and I am confident our portfolio and our associates will continue to perform at the top of the peer group. Drew?

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

Thanks, Johnny. A heartfelt thanks goes out to all our associates who are working so very hard right now and to our Board of Trust Managers who provided constant quality feedback throughout these difficult times. There are still issues to deal with, but we feel things are positioned to improve through 2021. Great people, great properties and a great platform equals great results. I thank all of you for joining the call today and for your continued interest in Weingarten. Operator, we'd now be happy to take questions.

Questions and Answers:

Operator

Thanks, Drew. And we will now begin the question-and-answer session. [Operator Instructions] And from Citi, we have Katy McConnell. Please go ahead.

Katy McConnell -- Citi -- Analyst

Great. Thanks, and good morning everyone. So to start, can you provide some color on how you expect pricing to trend on both the acquisitions and dispositions for this year, [Inaudible] in the range?

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

Sure, Katy. Good morning. This is Drew. Yeah, as we said in the guidance, we have a few dispositions that we want to continue to hone the map and take advantage of things and that's where -- we're looking at that being a $100 million to $150 million. We've already sold 2 properties, one in Tucson that was more of a power center with some tenants that would be on most people's watch list, and one in Raleigh where the supermarket wasn't as strong as our average. So a few other honings, but we don't see a tremendous amount of disposition activity. Last year was a little stronger than we would have forecast, or we did forecast, largely as a result of the COVID crisis, the opportunity to buy stock back, and then the opportunity to basically do what could be considered a swap to sell our last asset in Fort Worth for the remainder of Bunker Hill. So a lot less activity on the dispositions front. On acquisitions, we are very focused, as you know on about 24 markets, coast to coast we see everything that trades will continue to be selective. We do hear some brokers talking about more property coming to market and we'll certainly look at it, but it -- good quality properties like we are looking for are still trading at pretty aggressive cap rates, call it 5%, a little less in coastal markets. So it has to have some good growth to it, identifiable growth to make sense. So we do see some transaction activity but not big in 2021.

Katy McConnell -- Citi -- Analyst

Got it, thanks. And then could you update us on the percentage of ABR that's coming from cash basis tenants today and how those collection levels have been trending so far?

Stephen Richter -- Executive Vice President and Chief Financial Officer

Good morning, Katy. This is Steve. Total cash basis tenants today are about $70.5 million, which is about 14% of our ABR. And interestingly enough, between Q3 and Q4, the collections for cash basis has been in the 79%-80% range for both quarters.

Katy McConnell -- Citi -- Analyst

Okay, great. Thanks for [Inaudible]

Operator

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

Greg McGinniss -- Scotiabank -- Analyst

Hey, good morning. Glad to hear that the team is doing all right after the winter storm, and totally understand moving the call. I'd like to talk about the dividend. We were surprised at the level of the reestablished dividend and it does not appear to give much breathing room after capex needs. Is it currently set to be matching taxable income for 2021? Are there some 2020 gains that are being distributed, or what was the reasoning for setting kind of this high level of dividend, which is one of the -- represents one of the highest yields within the shopping center group now?

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

Morning, Greg. It's Drew. Thank you for the kind wishes. It was a tumultuous week across the state, but everybody is safe and that's the main thing. So as to your question on the dividend, we're comfortable with the $0.30. It's about 70% of FFO at the midpoint of our guidance. It's middle 90s of AFFO depending upon how you score it, and it is a function of several things that you mentioned in terms of our estimated taxable income this year as well as obligations from past years. But the main thing that I would say is, what we tried to get into in the script is when we look at the -- what's going on in the portfolio, we look at the huge amount of leases that are signed, but not commenced. We look at a very strong robust growing pipeline. We also don't have that much capital left on the new developments that will continue to produce more revenues. So as we look to the end of '21 and into '22, we feel very comfortable with it. We're in a great financial position. So looking at the taxable income, the cash flows, the trends, we felt comfortable with the $0.30.

Greg McGinniss -- Scotiabank -- Analyst

Is there a -- kind of payout ratio that you're targeting at this point on an AFFO basis? So if I'm thinking about kind of outsized growth from -- and rerepopulating the portfolio with tenants and growing FFO back up from what was lost in 2020, should we expect kind of dividend to match that, so we maintain this kind of higher payout ratio, or do we expect to get to maybe a more kind of 80%-ish historical average within the shopping center payout?

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

So I'll give you my thoughts and then Steve can elaborate, but I would say what drives it is our guess and -- of our untaxable income. And that's where taxable income is really, really, really hard to forecast. Doing FFO projections is challenging in a COVID world but taxable income gets into not only how much dispositions we do but what dispositions we do. We have great joint-venture relationships, but some of those have been around for a while and there could be some changes in our joint ventures that again are very hard to forecast. You even get into issues about when your tenants pay you rent in terms of the calendar year. So it's very complicated. So I would say what drives it for us, ideally, would be to be at 100.1% of taxable income, but it's a very imprecise thing. So I think Steve is telling me I covered it. Anything else to add Steve?

Stephen Richter -- Executive Vice President and Chief Financial Officer

No, I was just going to reinforce that our long-term strategy has been to pay out kind of if you will, the minimum required in order to maintain REIT status. But as Drew articulated, you have to be careful with that 101% or whatever, because the calculation of net income is anything but precise and we're having to do that in advance. So longer-term, the strategy is a dividend is a minimum payout to maintain REIT status.

Greg McGinniss -- Scotiabank -- Analyst

All right. Okay, that's fair. And then just a quick question on the development pipeline. Leasing seem to be going well in general. Just curious if you'd comment on the Centro Arlington residential leasing decline. Then I'm also curious if you guys have any updated thoughts on the final stabilized yield of the developments?

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

Sure. Yeah, as we've talked in a couple of different formats, we as part of the whole unprecedented year we encountered at Centro a lot of push back in the fall as we tried to wean the tenants from free rent. Some of this was due to some localized conditions with some competition, but a lot of it was the whole work from home environment and we heard this from investors at different conferences that we've seen across the country that not only were people willing to move in this environment, apartment folks, they were quite happy to move to have some new walls to stare at. So we got up into the 90s, we ratcheted back a little bit on the free rent, we dropped down, and as you've heard in the prepared remarks, we're now up to about 89% leased, which is up from the end of the year that's in the supplemental that we posted. So things are going well. The projects are four miles from Amazon HQ2, more people are going back to the office. Barriers to entry are quite high. So we feel good about things as we move forward through the rest of the year.

As far as the yields, it's a bit challenging to say, but we are still looking at broadly speaking, around a 6%, 5.5%-6% stabilized yield. We are in the world as we've said before, where we are no longer capitalizing. So our investment is not going up due to the capitalized expenses. So the expenses are somewhat set and each dollar of revenue is additive. So again, we feel very good about the long-term nature. Exit cap rates for this kind of product will be in the middle to maybe even low fours. So good value creation, and we've worked on all the projects for many, many years. It's great to see them leasing up and we can't overstate how important it is to get the Harris Teeter, the Kroger supermarket open at West Alex, which should happen in the early part of the summer.

Operator

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

Craig Schmidt -- Bank of America -- Analyst

Yeah, I just wanted to dig a little deeper. You mentioned in your earnings release that you're still seeing some of the smaller shops struggle and you think might continue to struggle for some time. I noticed that the January rent collection dipped to 87% from 90%. I'm just wondering maybe you could talk about what degree -- I realize it's a smaller part of your portfolio, but what's happening with the small shops.

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

Sure. Craig. Good morning. This is Drew, I'll take a shot at it and then turn it over to Johnny. I think one of the main things that we all need to keep in mind is how generally good things are that as you know, Craig, being an astute follower of retail, this quarter is typically bankruptcy season. One of the things that we feel very good about as we look at our top 25, our top 50, our top 60 tenants, is we really don't see appreciable exposure to bankruptcies above and beyond what we're already dealing with. So we feel real good about that. But when it does come to the mom and pops especially in California, it's challenging. We -- it's hard for us to know. Don't have the sophistication levels. There have been a lot of the use restrictions. Those are getting better. There is more government programs that it looks like will be coming to the rescue. So it's very difficult for us to forecast. Johnny, what else would you have to add?

Johnny Hendrix -- Executive Vice President and Chief Operating Officer

Hey, good morning, Craig. Some of it is timing, Craig. January, I mean, has many days to collect. But overall, we've been very happy. I think some of it is some amount of fatigue. We have a lot of the service tenants who still are struggling a little bit and could certainly use some help from Washington if that is still coming soon.

Craig Schmidt -- Bank of America -- Analyst

Great. And then just maybe a little on the acceleration of leasing activity. Are you seeing that tenants willing to sign leases, but want to open later in the year or are they agnostic in terms of when they're opening? And do you think 2021 could have greater ABR in trend -- leasing net transactions than 2020 overall?

Johnny Hendrix -- Executive Vice President and Chief Operating Officer

Hey, Craig, I will say that given governmental policy, it seems to take about a year for somebody to get open. So anybody who signs the lease now, it's not going to be open for probably a year, and in some municipalities that could be even longer. I think people are anxious to get back open. They see an opportunity that could be once in a lifetime to get space and shopping centers like River Oaks and other great properties where they haven't been able to be over the last five or six years. So I think people want to take advantage of that and I think that's really a lot of what is driving leases. We are not seeing any delays in new leases. Now, we are seeing some leases where we are doing some amendments or some more deferrals, gyms, theaters where there is some amount of a delay in that taking place. But those are really the two specific areas where we're seeing any kind of delayed transactions. We did a lease in Texas, on a new gym. And there is a contingency relative to who could -- when they come out what their occupancy could be.

Craig Schmidt -- Bank of America -- Analyst

Thank you.

Johnny Hendrix -- Executive Vice President and Chief Operating Officer

Thank you.

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

Thanks, Craig.

Operator

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

Ki Bin Kim -- Truist -- Analyst

Thanks. So you guys talked about the leasing pipeline growing. You have about $15 million of signed deals this quarter, another $10 million that you've talked about signing in -- thus far in '21 and another $7 million under LOI or negotiation. I'm just curious how much of this is just replacing tenants that are paying today that may fallout or expiring leases? And ultimately I'm just trying to get to an answer about how much of those will be additive to your bottom line versus of [Phonetic] replacing other tenants?

Johnny Hendrix -- Executive Vice President and Chief Operating Officer

Ki Bin, I would say -- this is Johnny, good morning. I would say that the vast majority of the spaces that we are leasing are currently vacant. Now, when did they go vacant? Probably they went vacant over the last 12 months. So there is not very many tenants that I'm replacing while they are still in place. Again, I think I referred to this idea that we're trying to work with as many tenants as we can to get them to the other side of the pandemic. And it is -- the economics for us are significantly better if we can renew a tenant even if it's for a little less rent, even if we had to abate a little bit of rent. So we are trying to do that where we can. Most of the leasing we're doing right now is replacement of the Bealls, of the Stein Mart, and replacement of shop tenants who left during the pandemic.

Ki Bin Kim -- Truist -- Analyst

Got it. And Steve, so your same-store NOI declined 12% this quarter, worse than last quarter's minus 8%. But when you look at the high level metrics like occupancy year-over-year, it didn't change all that much in 4Q versus 3Q. If you look at the rent collection it's still pretty good. And obviously bad debt went up a little bit. So I'm just trying to put all those things together to come up with a mental bridge of why same-store NOI went from negative 8% to negative 12% and how we should think about this going forward.

Stephen Richter -- Executive Vice President and Chief Financial Officer

Good morning, Ki Bin. I think there is a lot of pieces that go into that obviously, but again, bad debt and fallout is probably the most significant. I mean, one thing I can point to, for example, is that we added some cash basis tenants in Q4. Quite frankly, about 114 tenants. And that was, you have to write off the -- any receivable there. So that caused a little bit more bad debt in Q4, but it's really all about that bad debt. And then as noted, we still are seeing some fallout. And we expect to have a little more in '21 and then middle part of the year we'll begin to build. So again, it's all around that bad debt fallout number.

Ki Bin Kim -- Truist -- Analyst

Was there a accounting element to the negative 12% same-store NOI which will be the first quarter just by a matter of fact, next quarter.

Stephen Richter -- Executive Vice President and Chief Financial Officer

I'm sorry, I missed the first part of your -- it had to do with the economy?

Ki Bin Kim -- Truist -- Analyst

No, is there any accounting aspect to the negative 12% same-store NOI that will reverse?

Stephen Richter -- Executive Vice President and Chief Financial Officer

Yeah, the cash basis, taking tenants to cash basis and having to write off the AR that's sitting on the balance sheet is certainly more of accounting than just Q4 numbers. So I mean, I think some of it is accounting.

Ki Bin Kim -- Truist -- Analyst

Okay, thank you.

Operator

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

Mike Mueller -- JPMorgan -- Analyst

Yeah, hi. Just the press release you mentioned you expect a full recovery to pre-pandemic operating results, it's going to take many months. I guess when I think of months I think of less than a year. And I just want to make sure that that's not what you're saying. And if you can give us any more color on that comment or timeframe would be great. And where do you think occupancy can trough at mid-year compared to the 9% level where it is now?

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

Good morning, Mike. It's Drew. So, yes, in terms of months, 24 months, 30 months are still a number of months. So it's very challenging to say when things get back and it will be more of an evolution but as we've commented, we are extremely pleased with the amount of activity that we saw in the fourth quarter and this year. And a lot of it has to do with what Johnny was saying earlier, that really when the vaccine announcements came out, it was sort of game on because in the barrier to entry markets where we operate, it is as Johnny said about a year. So tenants that we've been talking to for several months have been looking at opening even end of '21, into '22 and from this point forward basically '22. So they are really actively looking at space. So when all that translates and how we get those things commenced is many months and yes, could definitely be more than 12. And I'm sorry, there was another part of your question that I forgot.

Mike Mueller -- JPMorgan -- Analyst

Yeah. When you talk about occupancy troughing at mid-year...

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

Oh, occupancy. Great, great question that we don't know the answer to and we have some sort of internal discussions because our occupancy has never dropped below -- signed occupancy has never dropped below 90% in the history of the company; didn't in Texas in the middle and late '80s, didn't in the global financial crisis, and according to the business plan isn't supposed to this year, but it will be really close and right around that level. And it's totally a function of, as Johnny said, we're working with a lot of tenants, we don't have that many tenants in the really high risk categories, but we do have some. And then on the other hand, we have a tremendous amount of new leases and leases being signed. So we do, as Steve said in the prepared remarks, see it continuing to soften a little bit and then get stronger for the rest of the year. So whether not it does drop below the 90% will be a very close play at the plate, as they say.

Mike Mueller -- JPMorgan -- Analyst

Got it. And you talked about [Inaudible] as opposed to occupancy...

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

I'm personally -- I personally am taking that it won't drop, but we'll see. I'm sorry, go ahead, Mike.

Mike Mueller -- JPMorgan -- Analyst

Got it. Yeah, I was just going to say, just to clarify, you're talking about the leased rate as opposed to the occupancy rate? Is that correct?

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

Correct. That's the sign. Yes. The commenced occupancy will definitely. And we think as we've said the historic spreads between signed and commenced will widen as we try to get all these tenants backfilled and in the barrier to entry markets where we generally operate that takes a long time, it takes about a year, as Johnny said.

Mike Mueller -- JPMorgan -- Analyst

Got it, OK. That was it. Thank you.

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

Thank you.

Operator

From Compass Point we have Floris Van Dijkum. Please go ahead.

Floris Van Dijkum -- Compass Point -- Analyst

Good morning, guys. Sorry, had you on mute. Thanks for taking my question, and I hope you guys are statement saying safe there. Capital allocation, I wanted to ask you some questions on that, Drew. With some interesting developments, you exited two non-core markets and you bought presumably a very low cap rate asset in your core market in Houston. Maybe if you can talk about -- I know the demographics of Bunker Hill are great. But what's the upside potential of having full control of that asset, in your view. If you can maybe give a little bit more details on that.

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

Sure. Floris. Good morning and thank you. And yeah, it's 17 degrees and beautiful here today. I had dinner outside last night and my wife and were joking about what a difference a week makes. So thank you for your concern, but we're through it. Bunker Hill is one of the strongest assets in our portfolio. And honestly, the demographics understated in terms of the growth and the potential that it has, because the area south of it is a super zip with super high incomes, the area north of it, not so much. But it's improving dramatically. We are shooting some drone videos with the tremendous densification that's going on right across the freeway with high-rise apartments, office, new hotels, et cetera. It is just such an incredible location that economically the ability to lease it, increase rents, is great for us. This also was the opportunity to take over management and leasing of it because it is also something of a flagship asset along with River Oaks, our Centre at Post Oak. It further cements that any tenant who thinks about coming to Houston is going to want to talk to us. So it not only does it have strong economics in the growth. It also increases our platform and our leverage. And the Dallas-Fort Worth market and the Charlotte market are both great markets and if good portfolio of properties came up in either, we would certainly take a good look at it. But we've just had trouble getting any sort of presence in either one. And so strategically -- I heard somebody say the other day, you either want to be A or in A, that if we can't be a significant factor in the market then we should focus our resources where we can. So good markets, but it made sense to focus. And Bunker is just an incredible asset with a great lineup of tenants and the ability to continue to push rents. And if we did ever get any big space back we could look at densifying, but economically probably makes sense just to lease it to great, great Centre.

Floris Van Dijkum -- Compass Point -- Analyst

Thanks, Drew. I appreciate the insight. The other thing which I think was actually testament to your balance sheet. I think you're the only strip companies that I can recall that has actually repurchased shares this past quarter, significantly below where the stock price is today. How do you think about allocated -- obviously you're trading closer presumably to consensus NAV now or -- how do you think about allocating capital, presumably the fact that you're talking about acquisitions going forward, means that you -- will you look to resell those shares and dribble them back in the markets or how do you think about future capital allocation, and where do you see the greatest opportunity I guess? Is it in your core markets? Is it in the troubled markets on the West Coast? Or where do you feel that you're going to create the greatest value for your shareholders?

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

Good question there, lot to unpack. So yeah, we have tried to keep a lot of dry powder, really a lesson coming out of the global financial crisis and timing lined up that we were able to buy the stock at a price that we were very comfortable with. It was a very, very good discount to our underlying net asset value. And as you may remember, we sold a couple of pretty decent assets in the midst of the pandemic, one in Orlando and one in Durham that reconfirm to us the underlying NAV. So a lot of why our dispositions were higher in '20 than we expected them to be was a direct result of creating that dry powder because of the COVID crisis. And then we were able to take advantage of it to buy some stock back. The other reason dispositions were higher was the opportunity to swap out at a bunker that we talked about. So, we certainly want to have some dry powder and I certainly hope we don't see those kind of availability in the stock price, but if that opportunity does present itself, we'll take advantage. So we will certainly look at acquisitions across the two dozen markets where we're focused and whatever presents itself. Happy to buy other things in Houston or Florida or Washington DC or Seattle, or San Francisco area or Southern California, it's all about the individual underwriting and that if [Phonetic] assets meet the quality test and have growth. So we don't sort of pre-allocate, we are just opportunistic to where the opportunities present themselves.

Floris Van Dijkum -- Compass Point -- Analyst

Thanks Drew, that's it from me.

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

Thank you.

Operator

[Operator Instructions] On the line from Jefferies, we have Linda Tsai. Please go ahead.

Linda Tsai -- Jefferies -- Analyst

Hello, good morning. Your earlier comment on to cash basis tenants for 79% being collected in 3Q and 4Q. Just anything to highlight on why it was the same and how does this trend in the upcoming quarters.

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

Good morning, Linda. The population changes changed a little bit. In Q3, we had like $20 million, in Q4 that number was $17.5 million. So, I mean as we go through time and tenants are added or -- and/or fallout it changes. The 79%-80% for both quarters; I don't have a good indication as to why other than we continue to do the team does a great job of collecting that rent. In terms of going forward, again, I think if you think about our overall trend that we think things are -- stay a little weak for the first half of '21 and then build from that. So I don't think you're going to see dramatic shift one way or another, but could it drop down a little bit? Could it increase? Yes.

Johnny Hendrix -- Executive Vice President and Chief Operating Officer

Hey, Linda. This is Johnny. Just think about this. A large part of that are the theaters and the gyms. And they are still pretty stagnant, a lot of our theaters and gyms are in California, and there just hasn't been a lot of movement there.

Linda Tsai -- Jefferies -- Analyst

Thanks for that color. I guess related to that, the 3% that's not signed, would that kind of follow in the gym category or are those more like local tenants?

Johnny Hendrix -- Executive Vice President and Chief Operating Officer

Yeah, I would say theaters is kind of the big one. And there are a few gyms -- it's the large Jim's that are really mostly the concern. We've had very good luck with the small gyms paying or coming to some sort of agreement to defer later on. And as a matter of fact, where we've had small gyms fall out, we've had someone else ready to jump right in, you know, you have orange-theory and stretch. There is a lot of folks who are interested in that category and who believe that category will recover quickly when full restrictions are released and the vaccination becomes effective.

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

The capital requirements for those concepts that don't have big equipment is just a good, good business model for them.

Operator

Got it. And then just finally on the rent collections at 94%. Does this stay pretty steady in 2021 or does it tick up?

Johnny Hendrix -- Executive Vice President and Chief Operating Officer

Hi, Linda. I -- This is Johnny, I personally believe it ticks up. California is that -- we would be around 98% for the rest of the country and California is at 87%. So that is really the area we need to target. And a lot of the restrictions for collections are being relaxed and I think we'll see movement there. My sense is California is probably four months behind the rest of the country as you think about leasing activity and getting the resolution to some of the issues we've had. And their problems are a lot worse, a lot worse because they have been closed a lot longer.

Stephen Richter -- Executive Vice President and Chief Financial Officer

Let me just add one other thing, this is Steve on that. You never get to a 100%. Historically, we probably at the end of 30 days, we were 96%-97% historically. The actual bad debt is somewhere between half and three quarters of a percent. And -- but you always have some laggards. Now the pandemic has certainly caused collection of rents to be a little different than historical. But at the end of the day, you still don't get to a 100%. So the 90%, 94%, we think it's pretty good. We were at 93% in January already, a little over that probably. So I think it has a little room to grow but you have to put it in perspective of, you're not going to get to a 100% either.

Linda Tsai -- Jefferies -- Analyst

Great. Thanks for all that.

Operator

And from Capital One Securities, we have Chris Lucas. Please go ahead.

Chris Lucas -- Capital One Securities -- Analyst

Hey, good morning, everybody. Just going back to the capital allocation conversation, the timing mismatch between the dispositions and the reinvestment. Is that something that we should see sort of catch-up at some point in '22 or is that something that is where some of that sort of excess proceeds from dispositions is probably going to be held for sort of future investment and redevelopment projects? How should we be thinking about the timing of sort of replacing that NOI?

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

Chris, it's Drew, good morning. You're talking about in terms of the guidance that [Inaudible]

Chris Lucas -- Capital One Securities -- Analyst

Yeah, in terms of the guidance, yeah.

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

Yeah, appreciate it. Just wanted to make sure. It's totally around the opportunities, Chris, that we can't totally fine-tune it. As I think I said we are not at this exact second seeing a lot of acquisition opportunities that make sense. We think we will, and we're well positioned for that. Over time we will have more development opportunities. As you know, we have a pipeline that we've talked about in our road show that could total up to $2 billion over a multiple period of years with another $600 million just at River Oaks. Now, again in terms of '22, if we spent a lot of money on some construction drawings in '22, that would be sort of quick timing. So it is something that we want to be positioned for the long term, but I want to underline the long term. So if we can sell the dispositions and continue to hone the math and deal with watch list tenants we'll do that. I don't think it will be that much money this year and we'll be responsive to good acquisitions. But we're going to be long-term. We're not going to let the money burn a hole in our pocket, is that we're going to be focused on good assets that meet our investment criteria from a quality perspective, and have some identifiable growth

Chris Lucas -- Capital One Securities -- Analyst

Okay, thanks for that.

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

[Inaudible] the essence of your question.

Chris Lucas -- Capital One Securities -- Analyst

Yeah, so I guess just one other follow-up. In the past when you guys were going through the portfolio repositioning process, the amount of assets on the market for sale was usually significantly more than you sort of anticipated selling. Is this more of a rifle shot approach in terms of the dispositions or is it similar process on a scale basis just at a smaller number?

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

I would sort of say it's a little bit in the middle. It's -- we do have more working than we think we would sell but it's nowhere near the same magnitude. So it is more of a rifle because we just don't -- we have one center in Kentucky that we've been working on some title issues that we think will get resolved, but it's a good center. So if we hold it a little longer, we hold it a little longer. If we can exit Kentucky probably makes sense to exit Kentucky. So I would say, it probably leans to rifle that there's just not that much in terms of how we've honed and what's left to do.

Chris Lucas -- Capital One Securities -- Analyst

Okay. And then just jumping over to leasing for a second. Is there more -- or is there any difference right now in terms of anchor tenant -- what's the word here -- yeah, hustle, looking to close on leases versus shop space. Is there any difference in terms of the pace of their interest in getting something done?

Johnny Hendrix -- Executive Vice President and Chief Operating Officer

Chris, Johnny, good morning. Yeah, I think there seems to always have been the entrepreneurs, the shop guys have a lot more desire to move quickly. And when you're looking at the boxes they are working through a process that remains the same as it has been, probably a little more difficult with the work from home. And so it does seem to take a little longer to get some of the individual, the boxes done. I will complement our friends at Sprouts they have been incredible moving very quickly on the deal that we did with them and looking at some other stuff. But I would say generally the shops are a little faster. It is interesting. I meant to say a little bit earlier that one of the great benefits we've had from this pandemic is, while we were providing flexibility for some of our partners, the box tenants, we did get some loosening of restrictions and exclusives that have been very valuable for us. And a lot of what we're leasing now is the ability to lease uses that we never had the ability to lease in certain areas of the shopping centers. And so these tenants are eager to get these spaces that they've really never been able to get before.

Chris Lucas -- Capital One Securities -- Analyst

Okay, thank you. I appreciate it. That's all I had this morning.

Johnny Hendrix -- Executive Vice President and Chief Operating Officer

Thanks.

Operator

Thank you. And we'll now turn it back to Drew for closing remarks.

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

Thank you, Brandon. I really appreciate everybody's interest in Weingarten. We are available later if there's other questions. There are some conferences coming up shortly. And in the next few weeks, we'll be talking to investors. So again, thank you all very much for your interest in Weingarten. Have a great day. All the best.

Operator

[Operator Closing Remarks]

Duration: 55 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 -- Citi -- Analyst

Greg McGinniss -- Scotiabank -- Analyst

Craig Schmidt -- Bank of America -- Analyst

Ki Bin Kim -- Truist -- Analyst

Mike Mueller -- JPMorgan -- Analyst

Floris Van Dijkum -- Compass Point -- Analyst

Linda Tsai -- Jefferies -- Analyst

Chris Lucas -- Capital One Securities -- Analyst

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