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Kimco Realty Corp (NYSE:KIM)
Q1 2021 Earnings Call
Apr 29, 2021, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to Kimco's First Quarter 2021 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to David Bujnicki. Please go ahead, sir.

David F. Bujnicki -- Senior Vice President, Investor Relations And Strategy

Good morning, and thank you for joining Kimco's first quarter earnings call. The Kimco management team participating on the call today include: Conor Flynn, Kimco's CEO; Ross Cooper, President and Chief Investment Officer; Glenn Cohen, our CFO; David Jamieson, Kimco's Chief Operating Officer; as well as other members of our executive team that are also available to answer questions during the call.

It is important to note that we will need to keep this call focused on Kimco's first quarter earnings results and outlook as a stand-alone company, with more information forthcoming when the merger proxy statement is filed with the SEC. As a reminder, statements made during the course of this call may be deemed forward looking, and it is important to note that the company's actual results could differ materially from those projected in such forward-looking statements due to a variety of risks, uncertainties and other factors.

Please refer to the company's SEC filings that address such factors. During this presentation, management may make reference to certain non-GAAP financial measures that we believe help investors better understand Kimco's operating results. Reconciliations of these non-GAAP financial measures can be found in the Investor Relations area of our website. Also, in the event our call was to incur technical difficulties, we will try to resolve as quickly as possible, and if the need arises, we'll post additional information to our IR website. And with that, I'll turn the call over to Conor.

Conor C. Flynn -- Chief Executive Officer

Good morning, and thanks for joining us today. Today, I will focus my remarks on our leasing results, the supply and demand dynamics surrounding those results and the exciting strategic direction we are taking the organization. Ross will cover the transaction market, and Glenn will cover the quarterly numbers and our updated guidance.

2021 is off to a refreshing and good start with robust demand for space in our last mile open-air, grocery-anchored portfolio coming from both well capitalized omnichannel tenants seeking more market share as well as some smaller businesses that have regrouped and are prepared to reinvest in their business models. The largest leasing demand categories include: Restaurants, personal care, fitness and dollar stores. We also see healthy activity and have consummated multiple leases with grocery stores, off-price and pet supply retailers. Our leasing volume continued to build from the record-setting trend last quarter. Our new lease count was 121, totaling 586,000 square feet. This exceeds both last quarter and the prior year quarters. Of particular note, the 586,000 square feet of volume surpassed our five year first quarter average for new lease GLA of 506,000 square feet, and new lease spreads finished at a positive 8.2% pro rata. We closed the quarter with 237 renewals and options totaling 2.2 million square feet, with GLA exceeding the quarter sequentially and the prior year quarter. Renewals and option spreads finished at 6.4% pro rata.

These spreads continue to reflect the recovery under way and the pricing power inherent in the quality of our portfolio. Conversely, our ability to have withstood the impacts of the pandemic reflects the defensive nature and strength of our recurring cash flows. From a supply and demand perspective, the reality is that due to the speed of the recovery, pandemic-induced vacancies were short-lived. With limited new supply, market rents never adjusted down in any meaningful way. So when the demand snap back, we generated positive spreads. While our occupancy dipped slightly from year-end to 93.5%, it strengthened as we move through the quarter. It is our intent to continue expanding occupancy, and we are encouraged by multiple demand factors playing to the strengths of our last mile locations.

Our job is clear, focus on the blocking and tackling of leasing, work with best-in-class retailers, enhance the merchandising mix and let the numbers speak for themselves as we strengthen the resiliency of our cash flows. Our first, second and third priorities are leasing, leasing, leasing. And we continue to believe we are in the early innings of this reopening and recovery. In addition to leasing, we are prioritizing our smaller redevelopments that average double-digit returns to create an additional organic growth driver. Long term, we believe our entitlement program will continue to create shareholder value as we unlock the highest and best use of our real estate. The pandemic has both validated and strengthened our conviction in our strategic vision to concentrate our open-air, grocery-anchored and mixed-use portfolio in the top MSAs across the country. Tenants no longer look at the last mile stores, simply a retail destination, rather, its value to retailers is now viewed holistically, providing distribution, fulfillment and retail. In valuing the location, retailers assess their ability to integrate e-commerce and bricks-and-mortar to give the customer what they demand.

Convenience, value and a fulfilling experience continues to point to the last mile shopping center as mission-critical for both consumers and retailers. Our platform is well positioned for growth, and with that growth will come further debt reductions and other benefits of scale. We are enthused about the opportunities ahead yet recognize the challenges involved. We remain committed to prioritizing ESG initiatives and supporting our tenants and local communities as we continue to navigate the pandemic and beyond. I'd also like to touch on the exciting recent news regarding our highly strategic merger with Weingarten, a transaction that we expect to unlock considerable value in some of the highest growth markets in the country. By coming together, we will be the nation's preeminent open-air, grocery-anchored shopping center and mixed-use real estate platform. With our focus on these last mile locations and increased scale in our targeted high-growth Sun Belt markets, this transaction will significantly strengthen and enhance our portfolio quality to further gain market share and to make Kimco even more valuable to all of our tenants. In closing, Kimco's open-air and grocery-anchored portfolio, diversed tenant mix, targeted geographic presence in the strongest growth markets in the country and improving balance sheet, provide us with a long runway for growth as we move ahead. Needless to say, the entire organization is generally energized by our efforts to build shareholder value. With that, I'll turn the call over to Ross.

Ross Cooper -- President, Chief Investment Officer

Thank you, Conor, and good morning. What a difference a quarter makes. With continued recovery from the pandemic, vaccination rollout and reduced capacity restrictions across the country, we have seen optimism building from retailers, consumers and real estate investors at the highest level since the pandemic began almost 14 months ago. Specific to the transaction, industry volume, while still off nearly 40% in the first quarter of 2021 compared to 2020, has seen a meaningful uptick from the back half of 2020. The conviction and the stability of property rent rolls and by extension cash flows has grown beyond only the essential retailers and now includes other categories that were much less clear previously.

There is no doubt the grocery-anchored shopping center is still the most in-demand category of retail and continues to command the most aggressive pricing and lowest cap rates. Furthermore, open-air is valued at an even higher premium. Recent transactions with more specialty and lifestyle components in addition to traditional power centers have given transparency to the value and stability that our approach provides. Multiple grocery anchor deals have transacted at sub 6% cap rates in Dallas, South Florida, California, Philadelphia and Seattle, to name a few. There are also no signs of investor demand waning for that product type. We anticipate bidding to become even more aggressive as the spread of cap rate to interest rate remains wide for our asset class, particularly when compared to industrial, multifamily, self-storage and others. More recently, aggressive bidding extending beyond the bread and butter neighborhood product is starting to emerge. Two recent deals that have a grocery store, but also a significant restaurant and entertainment component saw bidding wars with multiple rounds of offers and pricing well beyond initial expectations. These properties located in Dallas and Denver have the mix of grocery traffic, restaurants and entertainment, last-mile infill locations and future densification opportunities that investors are excited about.

On the financing side, an equally important observation is the reemergence of the traditional lender in the space. While the down-the-fairway grocery-anchored assets have been financeable throughout the pandemic, lenders were requiring significant holdbacks and structure around deals with perceived risk. As positive trends continue to emerge, that is having direct impact on the transaction market with more deals getting across the finish line at superior pricing and terms. With renewed optimism and conviction comes a vibrant transactions market in which we will remain a disciplined player, and we expect to see deal velocity continue to accelerate, which is a great sign for the continued recovery of our industry. Now on to Glenn for the financial results for the quarter.

Glenn G. Cohen -- Executive Vice President , Chief Financial Officer And Treasurer

Thanks, Ross, and good morning. The positive results we drove in the fourth quarter last year continued into the first quarter of 2021. With the backdrop of an improving economy and strong leasing velocity, our solid performance was highlighted by improved rent collections and lower credit loss relative to the fourth quarter last year. Our balance sheet metrics also was strengthened. We continue to benefit from all the capital markets activity we undertook the past 24 months to enhance our financial structure. Now for some details on first quarter results. NAREIT FFO was $144.3 million or $0.33 per diluted share for the first quarter 2021 as compared to $160.5 million or $0.37 per diluted share for the first quarter of the prior year. The reduction was mainly driven by lower pro rata NOI of $13.6 million due to COVID-related rent abatements and credit loss as well as the impact of lower occupancy on net recovery income, below-market rent recaptures and straight-line rent. These NOI reductions were offset by a $5.5 million onetime benefit from lease terminations. Also impacting NAREIT FFO was $5.4 million of higher G&A and interest expense due to lower capitalization from development and redevelopment projects that have been placed in service. Our operating portfolio is continuing to perform effectively. All our shopping centers are open and over 98% of our tenants are operating. With the strong leasing velocity, as Conor discussed, our lease versus economic spread has increased to 230 basis points, representing a total of $27 million of pro rata ABR, which is an excellent indicator of future cash flow growth.

As expected, same-site NOI decreased 5.7% for the first quarter as it comp against a largely pre-COVID first quarter in 2020. It also marks significant progress from the prior sequential quarter, which was down 10.5%. The improvement was mainly attributable to lower credit loss. We collected 94% of pro rata base rents billed during the first quarter of 2021, up from 92% for the fourth quarter last year. Our cash basis tenants represent 8.9% of ABR, and we collected 70% from these tenants during the first quarter. In addition, our deferred rent payments have been strong as we collected 84% of deferred rents billed for the first quarter, with $34.1 million of deferred rent remaining to be built. Turning to the balance sheet. Our metrics continue to improve and our liquidity position is in excellent shape.

At the end of the first quarter, consolidated net debt-to-EBITDA was 6.7 times. And on a look-through basis, including pro rata share of JV debt and preferred stock outstanding, the level was 7.4 times. This represents further progress from the year-end 2020 levels of 7.1 times for consolidated net debt-to-EBITDA and 7.9 times on a look-through basis. In addition, Moody's has affirmed our BAA1 unsecured debt rating with a stable outlook. From a liquidity standpoint, we ended the first quarter with over $250 million of cash and the full availability on our $2 billion revolving credit facility. In addition, our Albertsons marketable security investment is valued at over $750 million.

Our debt maturities remain minimal as we have only $125 million of consolidated mortgages maturing this year, which will be repaid in the second quarter. As a result, we will be unencumbering an additional 23 properties. Our weighted average debt maturity profile stands at 10.7 years, one of the longest in the entire REIT industry. Based on the first quarter results and expectations for the remainder of the year that includes same-site NOI turning positive in the second quarter, along with further improvement in credit loss during the second half of the year, we are raising our NAREIT FFO per share guidance range to $1.22 to $1.26 from $1.18 to $1.24 previously. As a reminder, our increased guidance range is on a stand-alone basis and does not incorporate any impact from the pending merger with Weingarten. In addition, the guidance range assumes no transactional income or expense and no monetization of our Albertsons investment. And with that, we are ready to take your questions.

David F. Bujnicki -- Senior Vice President, Investor Relations And Strategy

Before we start the Q&A, I just want to offer a reminder that this call will focus on our first quarter results and request that you can find your questions and comments to these results, not the announced merger with Weingarten. [Operator Instructions] Operator, you may take our first caller.

Questions and Answers:

Operator

[Operator Instructions] The first question comes from Rich Hill from Morgan Stanley, please go ahead sir.

Rich Hill -- Morgan Stanley -- Analyst

Hey Glenn, thanks for the disclosure in the prepared remarks. I just want to make sure I was clear on the percent of rent collections to the cash-based tenants. I know it's 8.9% of ABR. You collected 70% of those tenants. Is there any way you could tell us what same-store NOI would be ex those collections, just so we can get a better sense of the core portfolio?

Glenn G. Cohen -- Executive Vice President , Chief Financial Officer And Treasurer

So just going back a little bit, the cash basis tenants, there was about $7 million collected that related to a prior period from last year. So those came in during the first quarter. So if you add -- if you didn't have those, that would have an impact on same side of about 320 basis points.

Rich Hill -- Morgan Stanley -- Analyst

Got it. That's really helpful. I appreciate that. Just a quick maybe nuanced question, but I think it's important. Could you maybe walk us through what percent of tenants are in bankruptcy and then what percent of rent you collected on those bankruptcy tenets?

Kathleen Thayer -- Vice President, Corporate Accounting

Hey Rich, it's Kathleen. I can actually help you out with that one. So if you recall, in the end of 2020, several of our tenants actually emerged from bankruptcy. So we ended the year at about 70 basis points of our ABR being related to bank tenants. And actually, as of Q1, it's down to 20 basis points. So it's a small portion of what we have in our ABR at this point.

Rich Hill -- Morgan Stanley -- Analyst

Got it. Hey Dave, is that one question or two questions? Can I ask one more?

David F. Bujnicki -- Senior Vice President, Investor Relations And Strategy

You got one more, as in like just a follow-up.

Rich Hill -- Morgan Stanley -- Analyst

Just a quick question on the 2025 outlook in the same-store NOI. I guess the question I would have is, why can't you grow faster than the plus 2% that you referenced. It would seem like given the tailwinds to the retail sector, maybe some of the e-commerce trends that are emerging, it seems like maybe you could grow above inflation. So any context there would be a little bit helpful.

Conor C. Flynn -- Chief Executive Officer

Hey, Rich, it's Conor. We definitely think that, that's an achievable goal in the near term. But again, this is a long-term goal. So the way we look at it is there's obviously going to be an uptick in terms of same-site NOI through this pandemic field recovery. And then if you noticed, we did put 2.5% plus. So our goal is to beat that metric.

We clearly see a lot of levers for growth, as we outlined in the call in the remarks. And our job is to beat that number. And obviously, we think we're in a good spot to do that in the near term.

Operator

The next question comes from Katie McConnell from Citi, please go ahead.

Chris McElroy -- Citi -- Analyst

Hey, this is Chris McElroy on with Katie. Just on the grocery leasing front, how sustainable do you view this elevated level of grocery demand? If there's more pent-up consumer demand to return to, say, restaurants or other venues post-pandemic.

David F. Jamieson -- Executive Vice President, Chief Operatimg Officer

Yes. This is Dave Jamieson. Right now, we're seeing, obviously, very strong demand. And we anticipate that this -- some level of demand will sustain longer term. I think what you're seeing is people starting to adapt and innovate to what the consumer needs, and proximity to the end customer is critical. So that last-mile distribution element, we don't really see changing in the future.

Yes, there will be a reversion of some sort of new normal where people will start to go back to restaurants and some of those dollars spent will be diverted to that category. But when you listen to some of the grocers, public companies that are making -- observing how their customers reacting and responding as new normal starts to take hold, they are still seeing a net-net gain to market share and shopping at home. And I think people have adapted to not only going in store, but obviously, utilization of omnichannel vehicles for accessing those groceries. So when you throw that all together, we still see the demand drivers being very strong. And based on where we're located, in those first ring suburbs, where there's been a lot of net migration out through the pandemic, starting to take hold, we still see the demand being strong in the future.

Conor C. Flynn -- Chief Executive Officer

Yes. The only thing I would add to that is it's great to have a diversity of demand. That's not sort of pigeon hold in one square footage category. So grocers right now spread from the bigger boxes to the junior boxes to even the midsized boxes of like 10,000 to 12,000 square feet with Trader Joe's and others. So it's really remarkable to have a growth driver that stands all the major categories in terms of square footage needs, which is really, I think, again, why we're so confident that we can continue to drive that driver for us.

Chris McElroy -- Citi -- Analyst

Yes. Got it. Helpful color. And a quick follow-up, could you comment on your strategy around some of the Albertsons investments? Just comment on some of the lockup provisions and maybe your intentions to monetize that investment?

Glenn G. Cohen -- Executive Vice President , Chief Financial Officer And Treasurer

Sure. It's Glenn. So as it relates to Albertsons, the lockup burns off 25% each six months. So the first 25% did burn off at the end of December, the next 25% would happen at the end of June. There still are other requirements related to our partners around it. And as I mentioned in my prepared remarks, we're not anticipating monetizing anything in Albertsons this year, as we've talked about.

We do see real opportunity in 2022 to start monetizing it and using it toward debt reduction or redemption of our perpetual preferred that become callable in 2022.

Chris McElroy -- Citi -- Analyst

Got it, thanks Glen.

Operator

The next question comes from Derek Johnston from Deutsche Bank, please go ahead.

Derek Johnston -- Deutsche Bank -- Analyst

Hi everybody, good morning and thanks. On private markets, Ross, can you discuss how pricing and cap rates are holding up in the Northeast versus the Sun Belt or the markets you mentioned in Dallas and Denver,or South Florida? And look, guys, I'm not asking for updated disposition guidance, right? But given the merger, there are likely some non-core dispose that you may be able to take advantage of. So any enhanced color by geography would be helpful.

Ross Cooper -- President, Chief Investment Officer

Sure. Happy to respond to that. We are seeing robust demand across the country. I mean, there's no doubt that there's significant demand in Sun Belt, other parts of the country that have been open more so than others throughout this pandemic. But when you look at the essential-based retailers throughout the country, they have been operating and doing well throughout. So we are still seeing a significant amount of demand in the Northeast, whether it be the New York suburbs, Boston, Philadelphia, etc. And when you think about the migration demographics, obviously, there's a lot of headlines about the Sun Belt in Florida and the Carolinas and Texas. But you're also seeing it here in the New York metro area, where we're based, is that a lot of people that are leaving the cities here are moving to the suburbs in Long Island, Westchester, Connecticut, etc.

So there is an uptick still happening in those suburbs, and we think that there is something to take advantage of there, and investors are certainly doing that. As it relates to future dispositions for us, we'll continue to look at our portfolio. We think that we're in great shape. We do have some non-income-producing land parcels that you'll continue to see us chip away at. But again, when we think about the lift that we've done over the last five to seven years and where the portfolio stands today, we feel very good about those markets, those opportunities that we have and the go-forward portfolio that we'll be operating.

Derek Johnston -- Deutsche Bank -- Analyst

Okay. Okay. Great. So given the pandemic washed out a lot of weaker retailers, how does your watch list stand today as we hopefully move past the pandemic and are elevated bankruptcies possibly in the rearview mirror at least for a while? This is Dave. In terms of our watch list, it's -- obviously, the categories that are most greatly affected through the pandemic, the theaters, the fitness, etc. We continue to watch, and they stay there. There hasn't been much change beyond that. Obviously, Q1 was a muted bankruptcy season. Historically, that's usually where it is a bit elevated. And when you look at those that went into bankruptcy in 2020, a lot of those reemerged with better balance sheets. They're able to recapitalize on out, trim their portfolios and start to take advantage of some of this reopening trade. We'll continue to closely watch and monitor the health of all of our tenants, really looking two years out as we start to get to a new normal and stabilize. And this surplus of cash that some did receive throughout the pandemic, it's more a matter of where they made those investments. And the operators that really started to innovate through this and stay ahead of the curve, what the expectations are for consumers, that's what we're really going to start to watch very closely. And you'll start to see sort of who the winners and losers are downstream more so than they are today.

Conor C. Flynn -- Chief Executive Officer

The only thing I would add to that is, clearly, some of the tenants that reorganized have not necessarily gotten their footing underneath them quite yet. They are still maybe in those categories that have capacity constraints so we're watching that closely as they obviously have done the debt for equity swap, but there's still some opportunities, I think, there for us to upgrade tenancy in the long term, and we're watching those tenants closely.

Derek Johnston -- Deutsche Bank -- Analyst

Thanks guys.

Operator

The next question comes from Alexander Goldfarb from Piper Sandler, please go ahead.

Alexander Goldfarb -- Piper Sandler -- Analyst

Hey, good morning. So two questions here. First, on the ESG front, and I'm not just talking like solar panels on roofs, but it would seem like shopping centers are really well positioned on the ESG front, not only supporting local economies, small business, etc, but also just from the benefit of centralized procurement, right? People drive to the shopping center.

They can return items rather than throwing them out. You don't have individual boxes. You don't have individual trucks driving the neighborhoods. What are you guys thinking around this either individually or collectively as an industry to really showcase the benefit that physical retail has in promoting ESG.

Conor C. Flynn -- Chief Executive Officer

Yes. So it's a great question. And I think you have to take into consideration all the different constituents that go into making up the shopping center, it's obviously the end shopper, the customer, the retailers and ourselves as landlord. For us as a landlord, we've always looked at ourselves as the conduit to bring all these retailers to the customer and vice versa and try to find ways in which we can service everyone collectively.

So when you think of curbside, what we did in 2020, the intent there was to build a program and infrastructure that was agnostic to the retailer so that everyone can take advantage of it to avoid having a separate approach for each individual retailer. That we saw as being very successful. That said, every retailer has their own defined strategy in which they're trying to solve for their own unique problems. And there do become challenges when you try to consolidate them all into one central vision. And that's our job is to continue working with each of these retail partners to find the best way forward.

And as we look to continue to innovate within our common areas and the way we work with our retailers, our goal is to try to find those uniformed strategies that do work for all or at least stall for that 80%. And then with the customer, obviously, the closest we are to the home, as you mentioned, it does provide that opportunity for them to return or to revisit and to cut down the travel time and the shipping costs.

Obviously, we see that as a clear advantage for retailers that buy online, pick up in store, more and more retailers are taking advantage of that today. But this is going to be an evolving process. I think the pandemic did accelerate some of those trends, i.e., with curbside that helped pull it forward a couple of years, something that we've been talking about for a while. But it's our job to continue to stay on top of that and to innovate where we can to provide those services.

Alexander Goldfarb -- Piper Sandler -- Analyst

Yes, but it would just seem like you guys have a benefit, especially as more investor funds have ESG mandates to really showcase the true impact rather than just, say, cursory things like solar panels. It would just seem that there's a lot of untapped data that you guys can provide to the investment community to really highlight the benefits of physical.

Conor C. Flynn -- Chief Executive Officer

We agree, by the way. The only thing I would add is that I think we're going to coordinate with ICSC and others to -- I think the voice is louder when we can combine all of our efforts. And so I think there's a lot of public and private landlords that can come together, and we can help facilitate that to really make that point because I agree with you, Alex.

The other piece that I was just going to mention is ESG clearly is a benefit to our entitlement program because Kimco has been so focused on this for decades. When we come into a community and showcase that we're in for the long-term and that we want to work alongside the community to make sure that the asset or the downtown that we're providing evolves alongside the community, we can showcase our ESG initiatives and all the accomplishments that we've been making to give ourselves the opportunity to partner with those folks. And it really does help when we look to try and focus on entitlements and how to unlock the highest and best use of the real estate.

Alexander Goldfarb -- Piper Sandler -- Analyst

Okay. The second question is just on rent collection. Almost all your categories have really rebounded, but fitness, personal services and restaurants are still lagging. Restaurants are doing quite well actually, but still it looks like there's some more room to go.

Is your view by sort of end of summer that really fitness and personal services, will it fully rebound to be something north of, call it, 85%? Or are there some issues that you can see that's going to hinder the recovery of those two categories?

Conor C. Flynn -- Chief Executive Officer

I think the biggest holdback is the capacity, right? I mean, despite there being some great success stories in parts of the country where capacity levels have increased substantially. There's other parts of the country that are still a little bit behind, and they're just trying to manage through the spikes of coronavirus at a local level.

So we envision as those capacity constraints continue to get lifted more broadly across the rest of the country, that will clearly be a big boost and a tailwind for those other service categories that have been hindered by that. And the summer should show quite well for that, hopefully.

There's also been -- with those operators in fitness, there's a number of operators that haven't reopened or won't plan to reopen. So when you think of the supply levels coming down a little bit, we do anticipate the demand side to build people wanting to get out of their at home gym or the garage, wherever they've been working out for the year and wa nting to get back into some sort of facility where there is some social engagement in communities, so that should help as well.

Alexander Goldfarb -- Piper Sandler -- Analyst

Thank you.

Operator

The next question comes from Craig Schmidt from Bank of America, please go ahead.

Craig Schmidt -- Bank of America -- Analyst

Thank you. I wonder -- and this may be for Ross, where do you see Class A grocery-anchored shopping center cap rates? And how does that compare to the pre-COVID level?

Ross Cooper -- President, Chief Investment Officer

Yes. I mean, they continue to be extremely aggressive. And frankly, compared to pre-COVID, in many cases, the cap rates are even lower and more aggressive. We've seen lots of different examples in the low 5s, in some cases, sub 5%. And a lot of that just has to do with some of the other dynamics of the demographics, obviously, which tenant is the anchor grocer there, what the lease looks like, where the rents are compared to market, and frankly, how much term is left where you can actually look at recasting that lease and pushing rents a little bit.

But as you've seen from the collections, there's a lot of conviction in the rent roll outside of just the grocer, the small shops, and some of the other ancillary tenants are coming back in a big way. So when you see the stability in the rent rolls, you see the stability in the cash flow and still a very healthy spread from interest rate to cap rate. There's more and more conviction in our space today than what we've seen in a very long time.

Craig Schmidt -- Bank of America -- Analyst

Yes. My sense is just the resiliency. The format showed during COVID increased its appetite to investors and with so much capital on the sidelines. It seems like cap rates could in fact be lower.

Ross Cooper -- President, Chief Investment Officer

Yes. And it's not just your typical investors that we've seen in years past. We're seeing a lot of buyers and bidders today that have historically been buying in other asset classes that they're just sick of getting priced out or getting the cap rates compressed so low that there's not enough spread, and they see the risk-adjusted return in our space.

Craig Schmidt -- Bank of America -- Analyst

Great. And then just maybe for David, I know you've been touching on this a bit, but which tenants are not participating in this reopening period?

David F. Jamieson -- Executive Vice President, Chief Operatimg Officer

When you say not participating, meaning those that have still remain closed?

Craig Schmidt -- Bank of America -- Analyst

Yes. Not only that, but they don't want to open. I mean we're hearing the FOMO in the restaurant category, that obviously had a rough time during COVID. But I'm just wondering if there are categories where there are people on the sidelines.

I know that kind of mentioned some people are still through some reorganization, trying to get their feet on the ground, but I'm just -- not every category, I assume, is participating equally in the reopening period. And I'm just wondering if you had some insights, and which ones aren't.

David F. Jamieson -- Executive Vice President, Chief Operatimg Officer

Sure. All the industry sectors are reopening at some capacity. It's -- and even with some of the big flags, they're focused on trying to get as many stores open as possible or fitness or theater locations. AMC is effectively all open.

Where there are constraints, it's either on a one-off basis, individual basis where some locales and municipalities are inhibiting that or rolling back restrictions again or it's kind of on a one-off basis. But generally speaking, I think the reopening trade is starting to accelerate as the vaccine distribution does pick up. So from an industry standpoint, we are seeing reopenings across the board.

Conor C. Flynn -- Chief Executive Officer

Craig, the only one that I can think of that's probably tied a little bit to going back to work is the dry cleaners. They obviously got hit very hard as people were working from home, and they might be beneficiaries of going back to work in the summer when offices reopen.

Craig Schmidt -- Bank of America -- Analyst

Great, that makes a lot of sense. Thanks guys for the answers.

Operator

The next question comes from Juan Sanabria from BMO Capital Markets, please go ahead.

Lili Peng -- BMO Capital Markets -- Analyst

Hi, this is Lili Peng with Juan Sanabria, good morning guys. I just have a question on inflation. Do you have any focus on leasing discussions to put the company in a better position should inflation accelerate from here? Do you have plan to change your lease per ton, what's fixed versus CPI based?

Conor C. Flynn -- Chief Executive Officer

We continue to work on a percentage -- percent increase basis versus a fixed dollar amount increase. So typically, with those percent increases in base rent, that tends to trend well with inflation.

Lili Peng -- BMO Capital Markets -- Analyst

Thank you. Just a quick follow-up. I think you mentioned payments this quarter were partially offset by some changes in reserves. Could you please break out these pieces? What's the amount reserved in period?

Kathleen Thayer -- Vice President, Corporate Accounting

Sure. So during the quarter, we recognized $8.9 million in abatements, and about half of that was related to prior periods for which there was a significant reserve on those abatements.

Lili Peng -- BMO Capital Markets -- Analyst

Thank you, appreciated.

Operator

The next question comes from Caitlin Burrows from Goldman Sachs, please go ahead.

Caitlin Burrows -- Goldman Sachs -- Analyst

Hi good morning. Sorry if I missed this, but I was wondering if you could give some color on the outlook for occupancy over the course of the year on the anchor and small shop side, I guess, given the leasing that you've done, the current watch list and upcoming maturities -- lease maturities? Do you think occupancy may have troughed? Or do you think there is still more downside risk?

Ross Cooper -- President, Chief Investment Officer

Yes, it's a great question. So we've been messaging previously that we anticipate Q2 most likely to be the trough of occupancy for '21. We continue to make great progress in headway with our lease philosophy, obviously, in Q1, and we started to see a net benefit of gaining back some of the dip toward the end of Q1, which is encouraging.

We do have Dania that's going to be placed into service into occupancy in Q2. So that is going to have a bit of an impact. But on the flip side, it also will start to expand our lease economic occupancy. So it will help continue to fuel cash flow growth through the back half of '21 into '22. So we're continuing to be encouraged by the momentum that we're seeing on the lease side and hope to see it start to level out shortly.

Caitlin Burrows -- Goldman Sachs -- Analyst

Okay. And then separately, but kind of related, Dania Pointe and The Boulevard are obviously two large developments that you guys were working on for a while, and there should be ramping up NOI. So I was wondering if you could give some detail on the amount of NOI currently being recognized by these properties versus what's still to come and kind of over what time frame we should expect that to happen?

Glenn G. Cohen -- Executive Vice President , Chief Financial Officer And Treasurer

I mean the NOI, you'll see the start ramp-up toward the second half of 2021. And for the Boulevard, it should stabilize toward the end of '22. Dania, I would say, also probably toward the end of '22, you'll have stabilization of Phases two and 3.

Caitlin Burrows -- Goldman Sachs -- Analyst

Okay, thanks.

Operator

The next question comes from Ki Bin Kim from Truist, please go ahead.

Ki Bin Kim -- Truist -- Analyst

Thank you, good morning. Can you just talk a little bit more about the 2.8 million square feet of leases that you signed this quarter. I'm curious how much of this is truly additive versus some shuffling of tenants around spaces or simply reducing space that might be currently occupied, but maybe set to expire. And if you can help us understand what type of tenants are actually driving this activity and credit quality as it compares to like a pre-COVID environment.

Ross Cooper -- President, Chief Investment Officer

Sure. Yes. So we did 121 new lease deals. So that's just roughly about 570,000 square feet of GLA. So that's all the net new add-on. On the leasing side, when you think of the type of credit or tenant, the off-price guys are obviously very aggressive. We did sign a few grocery deals as well. [Indecipherable] has been very active. Alta, small shop side restaurant operators are actually starting to come back, franchisees, for example, seeing the opportunity of restaurants that are closed through the pandemic.

These are fully fixturized units, ready to go with a bit of capital and a bit of love to get them back open. You can do it relatively quickly. So what we're seeing is a lot of people anticipating the reopening trade, the stimulus funding flowing through the economy and wanting to be prepared in a position to take advantage of that. And that's where we're seeing a lot of the great demand through our leasing.

Ki Bin Kim -- Truist -- Analyst

I see. So just to recap that. Is there much reshuffling of kind of spaces that makes its way into leasing activity in general?

Ross Cooper -- President, Chief Investment Officer

There's always some movement. It depends on -- it's situational, a lot of times in nature. The prototype of retail tenants does change. Some are expanding their footprint, others are contracting their footprint. And so there's another opportunity within the center to create a better mousetrap for them. And then subsequently, you have an opportunity to backfill that space at a higher rent.

So net-net, there's a net positive to the cash flows for the center. You'll always want to consider that because you want to make sure that, that merchandising mix is fresh and relevant to the market. But I wouldn't say that's anything that's new or different than what's normal course of business.

Ki Bin Kim -- Truist -- Analyst

Got you. And then just a follow-up on the Dania Pointe question. The leasings that didn't change much. I know it's just one quarter, and I don't want to be so myopic in this question, but just curious if you can talk about the demand you're seeing and expectations for lease-up.

Ross Cooper -- President, Chief Investment Officer

Sure. Yes. No, demand is really starting to build back as we're looking through '21 here. We did have Urban and Anthro that did open in March, and they exceeded their plan on the opening, which was excellent. And we do have the hotel operators, the two Marriott flags that will be opening summer of this year.

And then we're continuing to see active construction on a handful of new tenants as well. [Indecipherable] is targeting to open this fall and take advantage of the blockbusters that are scheduled to be distributed into theaters for the holiday season this year, and we anticipate that to be a big draw. And then on the new lease activity, it's really started to ramp. So that's encouraging. We did sign American Eagle Outfitters to take one of the other anchor spaces along Main Street, and that will be a great complement and add to what Urban and Anthro answer are currently doing.

Ki Bin Kim -- Truist -- Analyst

Okay, thank you.

Operator

The next question comes from Floris Van Dijkum from Compass Point, please go ahead.

Floris Van Dijkum -- Compass Point -- Analyst

Thanks for taking my question guys. If you could -- I'm interested in -- obviously, you can't talk about the one Garden thing. So I'm going to ask you some questions on the leasing. I noticed you had $5.3 million of lease term, which is $5 million -- approximately $5 million more than it was last year. Maybe if you can give some color on that, what that represents. And then maybe also talk about some of the regional differences, perhaps.

Glenn G. Cohen -- Executive Vice President , Chief Financial Officer And Treasurer

Just wanted to clarify the first question, the $5.3 million. Could you just sort of restate that, trying to understand?

Floris Van Dijkum -- Compass Point -- Analyst

Yes. So you recognized $5.3 million of lease term fee this past quarter. Last year, I think it was $400,000. So you had basically a $5 million increase in lease, if you give some more color on that, what that represents or is that -- obviously, presumably, that's not a sustainable number, but just to get a -- what drove that large increase? And then maybe talk about some of the other regional differences in that lease term fee that you saw.

Glenn G. Cohen -- Executive Vice President , Chief Financial Officer And Treasurer

Sure. Yes. So the LTAs -- sorry, there's the lease termination agreements, the LTAs. Yes, a portion of those were related to the tenants that want to vacate early. And so we're able to structure arrangements that were opportunistic to freedom of their liabilities while getting the net benefit of LTA, and we had the opportunity to backfill with other grocers for those spaces. So again, when you look at the net add, it made a whole lot of sense to proceed with those deal structures.

To take advantage of it, they are onetime events, which is why we want to make sure to call them out. And those do happen periodically throughout the course of our business. It just happened to be that we had a few opportunities that hit all at once in Q1. But when you look at those, it's always about what is the opportunity to backfill, how does that complement what you're already trying to do with the strategy of the site, and you want to be opportunistic at those times to take advantage of it. And in terms of regional, it's not really regional in nature. It's situational, just dependent on the center, it could vary region-to-region, quarter-over-quarter if they do exist.

Conor C. Flynn -- Chief Executive Officer

Yes, Floris, just to give a little bit more color on that. We did have a Lucky's grocery store, which was a ground lease backed by Kroger credit. Kroger decided not to move forward with the Lucky's banner.

And so what we did have was a lease termination agreement with Kroger to terminate the ground lease with us, which was in that number. And we were able to backfill that space with the Sprouts grocery store, and that's at Dania actually. So it was a net win for us there.

David F. Jamieson -- Executive Vice President, Chief Operatimg Officer

Yes, Floris. I'd also remind you that, as you pointed out, the LTAs are purely transactional. And so by no means would this first quarter be reflective of a run rate, just as you saw that the prior period was much less.

Floris Van Dijkum -- Compass Point -- Analyst

I guess my follow-up question here is in regards to leasing costs. And leasing costs appear to be pretty stable. Maybe if you can comment on what you're seeing and what you expect is going to happen to leasing costs going forward as leasing demand potentially builds. Are those going to trend up, down in your view? And maybe if you can give us some more color on that, that would be great.

Glenn G. Cohen -- Executive Vice President , Chief Financial Officer And Treasurer

Sure. As you mentioned, leasing costs were relatively stable. We do -- in terms of the scope and the demand and the requirements of the tenants, that really hasn't changed. So it's more about material pricing. That could have an impact on cost on a go-forward basis in the interim.

Obviously, with -- there are -- we're still working through some supply constraints in distribution as a result of the pandemic. So you have seen some increase in pricing for material costs, whether it be lumber, HVAC, etc. That could be short term in nature as the distribution channel start to release some of those bottlenecks that have occurred through the pandemic. And so we just have to monitor those closely. That could have some moderate impact in the near term, but we anticipate, again, that's short period of time and then hopefully would subside again. But in terms of deal costs in general, we haven't seen much change in terms of the demand of the requirements from the retailer side.

So if you net out any potential increase in the short term, you'd assume it to carry on as is. It's also dependent on the type of deals you do per quarter. It's -- if you're doing split box value creation opportunities, we had a couple of those this quarter that had elevated costs, while others are just a simple backfill. Or if you're going non-grocery to grocery, obviously, our big focus is on grocery right now. So you could seal some deal costs that are a little bit higher, but it's because of that grocery conversion. But subsequently, on top of that, you're either seeing -- you're obviously seeing increase in rent in some of those cases. But in addition, you're getting longer term. So on a net effective basis, net-net, it's working out pretty well.

Floris Van Dijkum -- Compass Point -- Analyst

So in summary, I guess, one of the fears that investors had is during the downturn. It heightened vacancies, less pricing power, tenants have greater demands -- or have greater ability to drive favorable lease terms and higher leasing packages. That's not actually occurring based on what you're seeing right now.

Ross Cooper -- President, Chief Investment Officer

No. I mean what we've seen -- so it's all dependent on quality, right? You have to start without the quality in the real estate, and that will drive demand, different than what we saw in the Great Recession, where there's this prolonged recovery cycle. The impact of the pandemic was so extraordinary and so extreme so fast. Recovery has been almost just as quick. So it's been more of this V-shape. So you haven't really seen an adjustment or a reset of market rents.

What we're seeing, especially on the anchor side, is that there's a short window of opportunity for those retailers to upgrade the quality of their portfolio, and so they want to take advantage of that and step in. But it's -- typically, if you have at least more than one person there at the table looking to negotiate a space, that helps level set the supply demand side. And that's what we're seeing. We're seeing a lot of people wanting to upgrade, get closer to the customer, expand their last-mile distribution efforts, take all the lessons learned from the pandemic really capitalize on it because the anticipation is that those opportunities won't exist for very long.

Conor C. Flynn -- Chief Executive Officer

Yes. Floris, the only thing I would add is that -- were the lack of supply, so it's been decades since we've seen any uptick in new supply. It's really benefiting us when we're focused on these last-mile locations. It was like the density that surrounds our assets really inhibits a lot of new supply coming online. And we're seriously experiencing that as the demand has been robust.

Floris Van Dijkum -- Compass Point -- Analyst

Thanks guys, appreciate that.

Operator

The next question comes from Tammi Fique from Wells Fargo, please go ahead.

Tammi Fique -- Wells Fargo -- Analyst

Hello, good morning. Conor, you mentioned in your opening remarks about enhancing merchandising as an objective. And I guess I'm wondering, longer term, where you see areas for improvement in your portfolio, and once occupancy stabilizes, I guess what types of retailers you would like to target and what categories you could see lightening up exposure.

Conor C. Flynn -- Chief Executive Officer

Sure. I can start, and Dave and others can add some color. It starts obviously with our grocery initiative. We really do believe that, that creates a halo effect on the surrounding retail because of the cross-shopping that it generates. And then you go from there and you start to continue to pick out the best-in-class of each category to make sure that you have an exciting merchandising mix.

Clearly, we've benefited from curbside pick up through the pandemic, but now our mission is to make sure that the merchandising mix is so alluring that regardless of why you came to that shopping center in the first place, your eye catches something that makes you want to come back. And so whether it's coffee or bagel in the morning, you're always looking to drive traffic throughout the entire day.

And so our mission is to really create a vibrant community center that drives traffic for multiple different demand drivers. And so when you look at the demand of the different categories that are expanding right now, it's a really nice spot to be because it's very diverse. And we can really pick and choose and understand voids and trade areas that we can then backfill some of our vacancies with.

Tammi Fique -- Wells Fargo -- Analyst

Okay, great. Thanks, and then one question for Glenn. You mentioned repaying upcoming mortgage maturities, and I was wondering if that's a function of your balance sheet and ratings upgrade goals or more a function of leverage on those particular assets and maybe lender caution on certain segments within retail?

Glenn G. Cohen -- Executive Vice President , Chief Financial Officer And Treasurer

We have historically paid off any mortgage debt that we can as soon as we can as long as there's no real significant prepayment penalties. So we had bought a portfolio of properties, you might call, the Boston portfolio years back.

And that portfolio had two large cross-collateralized pools, and they're prepayable without penalty in June. So we're going to just pay those off. So with that, well, prior to the Weingarten transaction, we'll have very little mortgage debt that remains on the balance sheet. We very much focus on just really being the borrower. It's a much better way for us to operate. It's much more efficient than having mortgage debt on individual assets.

Tammi Fique -- Wells Fargo -- Analyst

Okay, that makes sense. Thank you.

Operator

The next question comes from Linda Tsai from Jefferies, please go ahead.

Linda Tsai -- Jefferies -- Analyst

Hi, sorry if I missed this earlier. When you're looking at the leasing demand, what percentage is coming from retailers looking to relocate? And what percentage is coming from retailers looking to expand store growth?

Conor C. Flynn -- Chief Executive Officer

It really is a combination. So I think it's very clear that there is a lot of net new demand for some of our best-in-class retailers across our major categories that are looking to take the windfall from, clearly, the pandemic-induced shopping that they've experienced and expand there. But there is also, Linda, continued -- the playbook from retailers typically in downturns is, again, try and take advantage of the increased vacancy, look to upgrade their fleet and look to get into the best centers possible.

And so we do, do constant portfolio reviews with our retailers to make sure that if there is a relocation opportunity at the Kimco Center is the best-in-class opportunity for them in that corridor, so to look at that as well. But I would say the lion's share is coming from net new stores, which really is exciting because it's a nice spot to be having limited supply and a lot of different demand drivers.

Linda Tsai -- Jefferies -- Analyst

Thanks. And then just a follow-up. The tenants looking to terminate early, you gave one example involving sprouts. Was that the bulk of the $5.3 million? And then do you expect elevated lease term fees for the remainder of 2021?

Glenn G. Cohen -- Executive Vice President , Chief Financial Officer And Treasurer

Right. It was lucky that had terminated and the replacement tenant will be Sprouts. And I think, as Conor mentioned, that was Dania.

We had two other lease terminations. They were actually with -- one was with -- actually two with Lidl and then a bank pad as well. But we don't really anticipate a whole lot more for the rest of the year, maybe another $1 million to $2 million for the balance of the year.

Linda Tsai -- Jefferies -- Analyst

Okay, thank you.

Operator

The last question for today's call comes from Greg McGinniss from Scotiabank, please go ahead.

Greg McGinniss -- Scotiabank -- Analyst

Hey, good morning. Glenn, for the $7 million of repaid rent/saleable amounts from the cash basis tenants, are those tenants now fully current on rent? Or is there more owed from those tenants? So obviously, I'm just trying to get a sense for additional onetime or nonrecurring benefits that we might see this year.

Glenn G. Cohen -- Executive Vice President , Chief Financial Officer And Treasurer

No. There's still more owed from them. As I mentioned, we collected about 84% of the deferred billings that we sent out, but there's still more that is still due from those tenants. They're all not fully current yet.

And then the same thing, if you look in the first quarter, again, as we mentioned, 70% of the cash basis tenants have paid. So there's still -- when you look at those debt total, that's about $8 million that's not been collect to get. So we'll have to see how that plays out through the rest of the year and each quarter as we go forward.

Greg McGinniss -- Scotiabank -- Analyst

Okay. I was more specifically talking about tenants that did pay back some of the rent. I understand that some still aren't paying the full amount. I'm just curious of that $7 million for those tenants that did pay back rent, if those tenants are fully current or not.

Glenn G. Cohen -- Executive Vice President , Chief Financial Officer And Treasurer

So the bulk of those are fully current, yes.

Greg McGinniss -- Scotiabank -- Analyst

Okay. Great. And then from an accounting standpoint, when might tenants start moving back to accrual accounting?

Glenn G. Cohen -- Executive Vice President , Chief Financial Officer And Treasurer

So we go through a pretty in-depth process. I mean, there are certain parameters that we've kind of worked out. We want to see that those tenants are current for a certain period of time and that they have no outstanding balances that are 30 days or over.

So we evaluate it on a constant basis, but it will take some time to some of them to move back into accrual basis. Even some of the tenants that emerge from bankruptcy, they still remain on a cash basis until they really get their full footing back.

Greg McGinniss -- Scotiabank -- Analyst

Okay. And final question from me. So guidance is up $0.03 at the midpoint, which largely seems to capture the nonrecurring payments in Q1. In the opening remarks, you mentioned improvement in credit loss for the second half of the year, same-store NOI turning positive.

So becoming more positive in general, it feels like, and plus, the leasing happening. So in terms of the guidance increase here, is that more of a -- can we view that as a more conservative increase just based on what's happened so far? Or do you really think that captures the potential back half benefit we might see?

Glenn G. Cohen -- Executive Vice President , Chief Financial Officer And Treasurer

Yes. Look, I would say that it's still early in the year. We do expect that the second half of the year, that credit loss will be much better than the first half. In the guidance, there is still elevated credit loss for the second quarter. But I would tell you that the revised guidance that we're more biased toward the upper end of the range right now based on what's happened. So we are feeling good, and we will take it quarter-by-quarter.

Greg McGinniss -- Scotiabank -- Analyst

Great, thanks Glen.

Operator

There are no more questions so far.

David F. Bujnicki -- Senior Vice President, Investor Relations And Strategy

Okay. Thank you very much. I appreciate everybody for joining our call today. If there's any follow-up questions, you can go to our website in the Investor Relations area for more information. Thank you very much. Have a nice day.

Operator

[Operator Closing Remarks]

Duration: 61 minutes

Call participants:

David F. Bujnicki -- Senior Vice President, Investor Relations And Strategy

Conor C. Flynn -- Chief Executive Officer

Ross Cooper -- President, Chief Investment Officer

Glenn G. Cohen -- Executive Vice President , Chief Financial Officer And Treasurer

Kathleen Thayer -- Vice President, Corporate Accounting

David F. Jamieson -- Executive Vice President, Chief Operatimg Officer

Rich Hill -- Morgan Stanley -- Analyst

Chris McElroy -- Citi -- Analyst

Derek Johnston -- Deutsche Bank -- Analyst

Alexander Goldfarb -- Piper Sandler -- Analyst

Craig Schmidt -- Bank of America -- Analyst

Lili Peng -- BMO Capital Markets -- Analyst

Caitlin Burrows -- Goldman Sachs -- Analyst

Ki Bin Kim -- Truist -- Analyst

Floris Van Dijkum -- Compass Point -- Analyst

Tammi Fique -- Wells Fargo -- Analyst

Linda Tsai -- Jefferies -- Analyst

Greg McGinniss -- Scotiabank -- Analyst

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