Earnings Call Transcript - KRG Q1 2020

Operator, Operator

Ladies and gentlemen, thank you for joining us today for the Q1 2020 Kite Realty Group Trust Earnings Conference Call. After the presentation, we will open the floor for questions. I would like to now turn the call over to Mr. Bryan McCarthy, Senior Vice President of Marketing and Communications. Thank you, and please proceed.

Bryan McCarthy, Senior Vice President of Marketing and Communications

Thank you. And good morning, everyone. Welcome to Kite Realty Group's first-quarter earnings call. Some of today's comments contain statements that are based on assumptions of future events and are subject to inherent risks and uncertainties. Actual results may differ materially from these statements. For more information about the factors that can adversely affect the company's results, please see our SEC filings including our most recent 10-Q. Today's remarks also include certain non-GAAP financial measures. Please refer to yesterday's earnings press release available on our website for reconciliation of these non-GAAP performance measures to our GAAP financial results. On the call with me today from Kite Realty Group, our Chairman and Chief Executive Officer, John Kite; President and Chief Operating Officer, Tom McGowan; Executive Vice President and Chief Financial Officer, Heath Fear; Senior Vice President and Chief Accounting Officer, Dave Buell; and Senior Vice President, Capital Markets and Investor Relations, Jason Colton. I will now turn the call over to John.

John Kite, Chairman and CEO

Thanks, Bryan. And good morning to everyone, and thanks for joining us today. The KRG family appreciates that this has been and continues to be a very challenging time for everyone, including our investors, tenants, customers, and vendors. I hope this call finds you all doing very well. We're truly grateful for the hard work and bravery of those in the medical community, our first responders, and the employees at our retailers who are working diligently to stay open and operating through this challenging period. We fully expect and understand that the primary focus of this earnings call will be on COVID-19 and its impact on KRG. But before discussing that topic, we believe it would be a disservice to our team to ignore our solid first-quarter results. Prior to the onset of the pandemic, KRG was poised to build on the momentum we established last year with the successful execution of Project Focus. In the first quarter, we executed 41 new leases and renewals comprising over 256,000 square feet. The comparable leases generated spreads of 10% and 25% on a cash and GAAP basis respectively. Our same property NOI grew 90 basis points, which was above our internal budget and consistent with the growth trajectory we discussed on our last call. However, it’s important to note that but for a COVID-related bad debt reserve, our same property NOI growth would have been 1.3%. Finally, I'd like to point out that KRG's ABR is over $18, which is a testament to the hard work of our team and the results of Project Focus. Turning to the impacts of the pandemic, first and foremost, we focused on the safety of our employees and I've been so impressed with their level of engagement and sincere desire to help the company and our customers. We relied on our business continuity plan to swiftly transition to having most of our employees working remotely, which was a credit to our investment in technology and risk management planning. There is generally a sense of calm and confidence in our ability to navigate past the COVID crisis. Thankfully, we have one of the most experienced teams in the sector to handle this challenge at every level of the organization. Many of our senior leaders were either here at KRG or at various other real estate firms during the great financial crisis. We know how to handle the dislocation and we're used to rolling up our sleeves and digging into the details. Details are critical at these moments and rest assured, the entire team is making certain that nothing is overlooked and that we are doing everything we can for all of our stakeholders. That includes doing all we can for two of our most critical stakeholders, our tenants and their customers. The good news is that 100% of our centers are open and operating and through April, approximately 50% of our tenants have been open for business in at least some capacity. On the ground, we're assisting our open tenants in multiple common sense and creative ways to ensure they are able to meet the needs of their customers in a safe and efficient manner. As for the tenants that are yet to reopen, we're going to rely heavily on our playbook to assist them in every way and ramping back up as the world reopens. One of the silver linings of the crisis is our unprecedented level of communication that we've been having with all of our tenants. The vast majority of these conversations have been constructive for both sides, valuing the relationships we've built over the years and acknowledging that the bridge to the other side of this crisis is built on cooperation. By focusing on relationships, we have not updated any rents and we were able to collect 67% of our April rents, and we expect this number to continue to grow. A handful of the conversations have been understandably difficult, due to the fundamental principle that the retail sector operates as a virtuous cycle. Our ability to pay our obligations, including very important real estate taxes and help our most vulnerable tenants, small mom-and-pop businesses for the most part, is directly correlated to our well-capitalized tenants abiding by the rental obligations. If we can collectively help mitigate the impact of the smaller tenants, who are the backbone of our economy, they can stay open and operating. This will, in turn, strengthen the U.S. economy and potentially help well-capitalized tenants recover lost sales. The recovery of these lost sales will generate sales tax revenues. We have to remember that the sales tax and real estate taxes help fund our community services, including the critical frontline workers in this COVID crisis. In the long run, it’s a win-win situation for all parties involved. For this virtuous cycle to work, we all need the smaller businesses to survive. It's why KRG created the KRG Small Business Lending Program. On April 20th, we announced the ability for any small business tenant in our portfolio to apply for a low-interest loan to help them manage this disruption. The tenant response has been robust and we intend to make our first loans under this program as early as next week. The KRG Small Business Lending Program has been made possible by the current state of our balance sheet and liquidity profile. When factoring in capital required to complete redevelopments, KRG has one of the best balance sheets in the sector. We have no debt maturing until 2022 and only $3.5 million of remaining spend on our Eddy Street 2 development that we'll finish this summer. As we completed Project Focus last year, we thought it was the right time to begin a significant amount of redevelopment. While we couldn't have possibly predicted this crisis, we did think that 2020 was going to be a bit choppy. This conservative approach has left us with ample liquidity. As of March 31st, we have $350 million of cash on hand, with only $300 million drawn on our $600 million line of credit. We believe we have enough capital to not only weather the storm but to look for opportunities on the other side of this temporary dislocation. I wanted to point out some of the things the Company has been doing on the human side as well. Not only are we ensuring the well-being and safety of our employees, but we are doing what we can for those impacted in the communities in which we serve. Our Kite Cares initiative has been engaged on multiple fronts. We've delivered food to local hospitals, made donations to various organizations supporting furloughed workers, supplied meals to the families of quarantined first responders, and are in the midst of a week-long hunger drive to provide for individuals and families in need. Like our shopping centers, the communities we live in are a virtuous cycle. Our country is facing an incredibly dynamic uncertain crisis. At KRG, we are fond of saying it’s around the world. And with that in mind, we are committed to respecting, valuing, strengthening, and supporting all of our existing relationships. Furthermore, we're confident that we'll conduct ourselves in a way that we will create new robust relationships that will last for years to come. KRG is a tough but fair company, made up of resilient people who have created a strong portfolio of assets and a very durable balance sheet. We will, as a team, persevere and look to flourish as we emerge from this crisis. Thanks for everyone for joining the call today. And given the current situation, we won't be discussing individual tenants or any guidance related to May, June, or the rest of 2020. And with that, again, we thank you for joining. And operator, this concludes our prepared remarks and we are ready for questions.

Operator, Operator

And your first question is from Alexander Goldfarb with Piper Sandler.

Alexander Goldfarb, Analyst

Hey. We have two questions. First, John, aside from your persuasive voice, you managed to collect rent from several closed tenants, like movie theaters and those in soft goods and personal services, despite most being shut down. Can you explain what happened? It seems these tenants were closed and likely trying to conserve cash. So, do you think the high collections were simply because they didn't have any major expenses or is there another reason for the collections in these categories?

John Kite, Chairman and CEO

Our conversations with retailers involve many factors. We take pride in the deep relationships and mutual respect we have built. The quality of our portfolio reflects this, showing that these locations are very important to a majority of our retailers. Additionally, our team's dedication and hard work have been fully focused on this from the beginning. Both Tom's and Gregg Poetz's teams have been concentrated on this as well. Ultimately, the strong performance is primarily due to the quality of our portfolio and the significance of these locations to our retailers.

Alexander Goldfarb, Analyst

Okay. And then, you also talked about upfront, the fact that you need to be paid by the rents because you've obligations to property tax, utilities, insurance, mortgage and all that fun stuff. Obviously, you've had tenants and I know you're not going to comment on particular ones, but you have tenants who have chosen to not pay, you probably were in a position to pay. So how do you make sure that this doesn't become the de facto every time a tenant has trouble, outside of bankruptcy, they just start arbitrarily not paying. How do you make it pretty clear to a tenant that they need to abide by and they can't just arbitrarily not pay?

John Kite, Chairman and CEO

The reality is that this is really a question of contract law. These are contracts that must be honored, and is it a concern that this could become a frequent occurrence? No, I believe this situation is very unique. Some companies have clearly faced significant disruptions. So when I mentioned that the vast majority of our discussions have been constructive and focused on partnerships, that is completely accurate. Unfortunately, there are a few instances where that hasn't been the case, which is disappointing, and we must address those individually. This is part of why we have managed to collect nearly 70% of our rent; those problematic instances have not been numerous. The bulk of our rental disruptions are in the small shop sector, which is more understandable given their limited capital reserves. However, it is indeed disappointing when larger, well-capitalized tenants fall into this category. That said, it’s still early. We are continuing to collect rent today, tomorrow, and the days that follow. Our commitment to this obligation is unwavering. We are professionals, and we will diligently pursue this matter.

Alexander Goldfarb, Analyst

Thank you.

Operator, Operator

And your next question comes from the line of Christy McElroy with Citi.

Christy McElroy, Analyst

Hey, good morning guys. Thanks. To just follow up on Alex's question, I know we're talking a lot about collection by tenant category and your disclosure is very, very helpful in that regard. How should we think about collection by geographic market? Like, for example, did Florida have better collection rates than other markets? And thinking about your Sunbelt exposure, in terms of potentially shorter closure periods than Coastal. How do you think about the relationship as we move forward between rent collection and time period that the stores were closed?

John Kite, Chairman and CEO

Hi, Christy. It's interesting to note that it's early in this process for all the questions and answers. The procedures and rules for reopening differ from state to state, and even from city to city and county to county, leading to quite a bit of confusion. There's no perfect way to approach this. Geography clearly plays a crucial role, and the situation is particularly concentrated in certain urban areas, making things more challenging compared to the Southeast, as you mentioned. However, each city has its own dynamics, and at this stage, our collections have been fairly evenly distributed. It's more about the type of shopping center at this point. Long-term, there may be potential impacts related to livability, but it's too early to make any projections or to suggest that shopping habits have permanently changed. We don't believe that it's all settled in a straightforward manner. We need to take things step by step and see how it evolves over time. That said, we are very pleased with the composition of our portfolio, and when we made asset dispositions over the last two years, we had a clear vision of our desired outcome.

Christy McElroy, Analyst

And then, just recognizing that you haven't made a decision on the dividend yet, can you discuss some of the factors that the board will be considering in regard to whether or not to suspend or potentially cut the dividend? And I recognize you don't want to talk about May rent collections yet, but how much of a factor will that be in sort of that decision-making process?

John Kite, Chairman and CEO

Sure. Yes. We do have an upcoming board meeting and obviously, the dividend will be discussed at the meeting. And as you know, it is a board level, kind of, conversation and decision. I think there'll be a multitude of factors that the Board will look at. Obviously, again, we're in this timeframe that we're very disrupted and trying to kind of figure out what the length of it is very difficult. So, the factors will be obviously, the liquidity position that we're in, the cash flow projections that we have, the collections that we have, and I think all those will be taken into consideration as it relates to what to do this quarter and going forward, I mean, but I do think, time is your friend right now, in the sense of seeing how this evolves, I mean, literally day-by-day. So we do have some time, we will take a look at it and we will present all that data and a decision will be made.

Operator, Operator

Your next question is from Floris van Dijkum with Compass Point.

Floris Dijkum, Analyst

My question is about your small business loan program designed to assist your tenants. Can you provide an update on the applications for PPP loans and the feedback your tenants have received? Additionally, is the program aimed at specific tenants or is it available to all tenants in your portfolio?

John Kite, Chairman and CEO

Sure. Regarding the overall PPP, it has been very beneficial for the tenants who were able to access it. It's unclear exactly who has accessed it, but we can see a strong connection between those who paid their April rent and the program’s effectiveness. We believe in the program, which is why we introduced our own program. We realized that it would be nearly impossible for a government program to reach all intended recipients. Therefore, we allowed our tenants to borrow up to three months' worth of operating expenses with no restrictions on how it could be used. We feel this complements the PPP and supports the tenants well, especially since the PPP only covers 2.5 months. Our program might assist smaller tenants in navigating challenges they would not otherwise overcome. Overall, we see robust demand for both the PPP lending program and our own.

Floris Dijkum, Analyst

Great. I guess maybe one follow-up question from me is, you guys took some reserves obviously on the bad debt and also on the straight line. Maybe you could walk us through your thinking behind that and the reasoning and how you look at that going forward?

John Kite, Chairman and CEO

Heath, do you want to take that one?

Heath Fear, CFO

Yes, sure, I'll take that. Hi Floris. On the straight line reserve, there are really two things to think about. First, this reserve represents our continued desire to be conservative, especially in this current environment. And second, this is really what I'll call accounting noise. It’s a non-cash write-off. It's a receivable that depends on our ability to realize on the rent escalators in the future. So, we did an analysis. We looked at areas that we felt would be disproportionately impacted by COVID and that's the number, $2.9 million, is a number that we came up with. Again, it's conservative, it's a non-cash item and I'm fairly confident you'll see a bunch of our peers take similar charges in the next quarter. We decided to take in this quarter. As far as the bad debt acceleration, listen, we always do a tenant by tenant analysis and we had some certain receivables in March that but for COVID, we probably would not have realized them as bad debt, but when we looked at the landscape ahead of us, because what, it will be a conservative thing, so we realized another sort of $200,000 of bad debt. Again, we wouldn't otherwise, but for COVID, that $200,000 translated into 40 basis points of same-store NOI. So again, it's just this philosophy of trying to be conservative in this new environment.

Floris Dijkum, Analyst

Thanks, Heath. That's it from me.

Operator, Operator

Your next question is from Todd Thomas with KeyBanc Capital Markets.

Todd Thomas, Analyst

Hi, good morning. First question, John. Thinking about leasing in sort of post-pandemic environment here. So, fitness, food, entertainment, these were some of the categories that were active and taking space prior to the pandemic. So, how are you thinking about leasing demand going forward? I mean inevitably, even in a normal environment as a percentage of tenants don't renew and look to move locations for various reasons and space becomes available. So, have you started to field calls from users or think about how you might back fill vacancies over the next few quarters? If you could shed some light on conversations, that'd be helpful.

John Kite, Chairman and CEO

Sure, I'll start and have Tom add to that. Overall, it's still early for us to assess what the future holds and how impactful this situation will be. It's challenging to make any definitive statements about that at the moment. However, I want to emphasize that all our retailers are working tirelessly to overcome these challenges, and we are committed to supporting them in every way we can. Regarding sectors like restaurants and services that you mentioned, I've been truly impressed by the innovation within our portfolio, especially in the restaurant industry. I believe there will be positive developments from this that could lead to increased sales in the future. Tom, could you share more about the discussions we've been having with potential clients who are interested in our spaces?

Tom McGowan, President and COO

Yes. Absolutely, Todd. First of all, we're in a nice opportunity right now talking to every national retailer, I mean, that's one of the things there's processes for us. We're in constant communication with them at high levels, understanding their business, understanding what's going to happen as they come out. There are soft players that are very bullish for '21, feeling that this plays into their hands even further. So, we are having productive conversations in that regard. And then, we're being very measured as it relates to our tenants that are under construction and in the process of opening, making sure that we get them to an opening point that makes sense. And the fact, maybe pushing back 30 days, etc., we're going to do that because it's in the best centers of Kite, as well of the tenant. So, as John mentioned, this will evolve. But we're finally starting to see some glimmers of interest coming out of the tenant base.

Todd Thomas, Analyst

Okay. And then, as retailers begin to reopen and restrictions ease and sales recover, are you having conversations with tenants about structuring leases and rent to be more variable in nature, I guess sales-based or otherwise for a period of time or until certain hurdles are met. Is that part of the discussion that's ongoing now?

John Kite, Chairman and CEO

No, I mean, as I mentioned in the prepared remarks, the only action we've taken is deferrals for a limited time that will be paid back quickly. We aren't currently, and don't expect to, fully restructure any leases. I've seen some media reports about that, but it simply doesn't work that way in our case. I don't see that happening in our portfolio. One advantage of having a very strong opening portfolio is that we believe there will be ongoing demand for these spaces throughout various cycles. Additionally, the format in which we present the retail product is quite favorable in the current environment. So, to sum up, we don’t anticipate this being a significant aspect of our future.

Todd Thomas, Analyst

Okay. And then, just Heath, on the $300 million draw on the line. Is there anything specific that you're looking for to gain confidence in paying that down? I guess, how should we think about that? There is a cost to that money, so in terms of the timing or process to pay down the line balance over time. What should we be expecting?

Heath Fear, CFO

Yes. I think just when the worlds feel more normalized and whether that's a pay-down over time as things start to adjust and tenants start to come back online or whether that at some point, we'll just see we'll send the entire $300 million back. Again, too early to tell, but just like our peers, we just felt that this was an appropriate amount of money that would obviously be sufficient to allow us to continue for the foreseeable future. It's a level of drawdown that gives us very comfortable on our covenants. So, again, we'll see. Obviously, incurring the additional interest expense is something that we don't want to do, but based on the fact that the rate is so low, we think this is really cheap insurance. And again, we'll see how it goes.

Operator, Operator

Your next question is from Chris Lucas with Capital One Security.

Chris Lucas, Analyst

Good morning guys. Actually just Heath, a follow-up question to ask a question about the line of credit. How is the borrowing base for that determined and is that a quarterly or annual or trailing test?

Heath Fear, CFO

It's a quarterly test, Chris. The borrowing base is $600 million, which you'll see in our Q. Currently, our maximum borrowing base is around $585 million. So again, it's a quarterly test that evaluates our unencumbered assets, and right now, we're very close to being able to access the maximum of $600 million.

Chris Lucas, Analyst

Okay, thank you for that. And then, I guess John, I'm just curious on your disappointing conversations with some of the retailers that are in a position to pay rent. Were any of those retailers surprising in terms of who makes that list that you in previous conversations wouldn't have expected that sort of hardball tactics?

John Kite, Chairman and CEO

That's a creative way to try to get me to say who that was and I like that Chris. Yes, there were a couple. There were a couple on there that were quite surprising and frankly, opportunistic. That said, I don't want to make it sound like that is a big part of the universe. But there is a small part of that universe that is definitely taking the tact. It's an aggressive tact that is something we're going to have to deal with, and I don't think that's unique to us. I frankly think based on our relationships, had a lot less of those maybe than others. But yes, there is a couple out there that are quite surprising.

Tom McGowan, President and COO

And part of that is we said pretty clear parameters of being able to negotiate with these groups and that doesn't mean there weren't conversations. They simply didn't meet the criteria that we felt was being fair and applicable.

Operator, Operator

And your next question is from Craig Schmidt with Bank of America.

Craig Schmidt, Analyst

Thank you. I just wonder what percentage of the tenants are you in active discussions for rent deferrals and what are you generally targeting for your payback period?

John Kite, Chairman and CEO

As you can see from our disclosures, we've collected the majority of the rent, but it's not a significant amount. I don't think we will go into specifics about the details, but we did mention in our investor presentation that we are targeting around 25%. You should consider that as a general estimate. Regarding the terms, we won't delve into those either, but by the time we report next quarter, things should be clearer. As Tom mentioned, we have a specific offer that is very short-term in nature. Most of the tenants are aware of this, especially as we progress with the openings. The current situation is dramatically different from where we began these negotiations, particularly in terms of the number of tenants that will be operational.

Heath Fear, CFO

Craig, this is Heath. I just want to add on to the extent that we're doing these short-term offers, I want to make it clear, none of them are abatement. Any kind of a combination we've discussed with our tenants, is strictly in terms of deferment.

Craig Schmidt, Analyst

Okay, thank you. And then, I just wondered, given the COVID crisis, are you seeing an acceleration or an extension of your ability to services to consumers?

John Kite, Chairman and CEO

Sure. Tom, you want to hit that?

Tom McGowan, President and COO

Yes. We will definitely address that and we're having very specific conversations with our national tenants about that. And we're going to take a very cooperative approach, a very balanced approach and our marketing teams are working on to make sure that we have these clusters in place and to make them as efficient as possible for the retailer. So, we want to make sure that doesn't just address nationals but also address smaller tenants if that need exists.

Operator, Operator

Your next question comes from the line of Marnie Georges with RGS.

Marnie Georges, Analyst

So, just looking at operations I guess, directionally, how should we be thinking about the operating expenses you have just in context of all these tenants that remain closed or that are operating with reduced operations? And then, I guess how much rent could you see falling off before some of those costs on your end might become an issue?

John Kite, Chairman and CEO

Heath, do you want hit that?

Heath Fear, CFO

Sure. Listen, we're obviously, we're reviewing operating expenses in every part of the geography of the income statement. I will tell you that, there are opportunities for us to pull back some expenses. 60% of our leases are on CAM, 40% of our leases are on fixed CAM. So, some of it will benefit our tenant, some of it will benefit us. But one thing, when we're thinking about expenses that we're not going to compromise the quality of our shopping centers. We're not going to run our shopping centers in a way that's going to be anything less than first class. So, yes, there are opportunities there are being reviewed, we're being prudent and mindful and pulling back where appropriate, but again, monitoring expense of the quality of our centers.

Marnie Georges, Analyst

Fair enough. And then looking at capital allocation a little bit more broadly. Clearly, you've taken steps to enhance your liquidity position just given the uncertain environment and circling back just recognizing it’s ultimately a Board decision. Would you consider deferring a dividend, doing some kind of lump sum payment later in the year when there is better visibility? What about share repurchases? What would you want to see before you start looking at the redevelopment pipeline again?

John Kite, Chairman and CEO

We'll have to wait on discussing the dividend as it will be addressed in our upcoming board meeting, and it's a topic that will require a full board discussion. There are many factors we need to consider, especially given the unique circumstances we are in. For now, we recommend staying tuned for updates. Regarding capital expenditure and stock buybacks, preserving cash is crucial at this time, and we have effectively positioned ourselves to maintain liquidity. Our actions last year have put us in a strong liquidity position relative to our fixed costs. It will take some time to see how the situation unfolds in the coming months. We believe we are strong capital allocators, and when the opportunity arises, we will consider redevelopment. While stock buybacks have been a topic of inquiry in the past, it is challenging for operators to commit to buybacks unless there is a significant amount of free cash flow available. Currently, that is not a priority for us, but as we navigate through this, our company will be well-positioned to seize opportunities. Each of the areas you mentioned could present potential opportunities down the line.

Marnie Georges, Analyst

Awesome. Thanks so much. Appreciate the color. I'll turn it back.

John Kite, Chairman and CEO

Thank you.

Operator, Operator

Your next question comes from the line of RJ Milligan with Baird.

RJ Milligan, Analyst

John, can you talk about how you think about lending to tenants that obviously need the short-term relief versus lending to tenants through the Kite's small business program that probably won't make it in the long-term anyway? How are you having those discussions?

John Kite, Chairman and CEO

Sure. Well, let's just first say that every tenant in our portfolio we have R&D fully underwritten. So when we're saying that we're going to roll out a small business lending program to the affected small businesses, we know the credit of those companies very well and have already underwritten them. What we're looking at is the changes that have happened to them, and whether or not we deem that, that is temporary because of the COVID crisis and because of the mandatory shutdowns or whether we believe that the business will have a very difficult time recovering. So, our intention isn't to just throw money out the window like Helicopter Ben I guess. Our intention here is to make smart loans that we believe will help these businesses get to the other side and flourish. And frankly, we believe that our relationships that we have will obviously be strengthened through that. But of course, when you're in the process of lending money no different than when you're in the process of lending TI dollars, some of it doesn't get paid back and so you do have a credit loss associated with things that we've lend out. But we believe that we'll be very good at that and since we know these guys well, I feel pretty good that we will be in good shape there.

Heath Fear, CFO

Yes, John. I'll just add that this is really an occupancy preservation exercise. When we're evaluating these tenants, we're considering how well the business was performing before and how we believe it will fare in a post-COVID environment. I'll let John elaborate, but this isn't just about throwing good money after bad. This is about making a long-term, smart decision to keep the tenants we believe in and avoid having to retenant the space. We calculated in our investor presentation that the breakeven point is quite compelling. The purpose of this program is to preserve occupancy.

RJ Milligan, Analyst

Got it. And I guess, further on that point, given the long-term approach, which I think is appropriate. In terms of you want to maintain occupancy and in the future. Not only do you have returning costs, but maybe a question of actual demand for space to even be able to retenant it. So how do you think about and I know you haven't granted any rent forgiveness but why isn't that, why do you think that isn't on the table for Kite and maybe some of your peers in terms of trying to preserve that longer-term occupancy?

John Kite, Chairman and CEO

I believe there is a significant distinction between forgiveness or abatement and deferral. We are not offering abatement because we strongly view this as a situation that is specific to a particular moment in time. Anyone suggesting we extend that timeframe, even with a deferral, is something we fundamentally disagree with, as the situation is constantly evolving. We are deeply engaged in this matter and are fully aware of its dynamics. Right now, every small gain matters, and we are focused on making those incremental improvements, which will eventually lead to larger progress. When tenants express concerns about future challenges six months out, it's impossible to predict that. This is why we are maintaining a short timeframe; conditions can shift dramatically, as we've witnessed, and we are hopeful that the outlook will improve over time.

Operator, Operator

And your next question comes from the line of Tammy Fique with Wells Fargo Securities.

Tammy Fique, Analyst

Just wondering, are you seeing differences in rent collections between power centers and your more traditional grocery anchored centers within your portfolio?

John Kite, Chairman and CEO

Of course, we're seeing differences in different types of centers, Tammy. I think when you look at it, we're really looking at it more from the tenants themselves the categories themselves than we are the different centers and because of the fact that we've gone frankly the foresight we had in the asset sales last year the $550 million of properties that we sold, we've significantly changed the dynamic of our portfolio and it's obviously reflected in our collections. So, it's really more about that there. And I've always said that there the definitions are a slippery slope, there could be something that someone defined as a power center, but you could get a 100% rent collection on it and there could be a grocery anchored center that you only get the grocer so in that these are extreme examples. But I would tell you that it's really balanced, it's really more about the categories and really about the quality and I think that's why we've done well as the quality and the people that we have and the relationships that we have.

Tammy Fique, Analyst

And then, I was wondering there had been historical discussion about mall tenants moving into strip shopping centers. I guess, I'm just curious what your thoughts are on that at this point. And I guess you have a sense for what the occupancy cost differences are for tenants that have made that move?

John Kite, Chairman and CEO

It's still early to determine lasting changes, but our product has consistently proven to be an effective delivery system for retailers, which is crucial today. If any lasting effects come from this crisis, they will benefit our product due to its accessibility and convenience. Customers can easily move from one shop to another while enjoying the outdoor experience. A significant factor to consider is the cost for the retailer, but I don't think the situation is binary. I believe all retail types will eventually have a place. The key is the real estate; if you have good locations, which we do, you'll succeed. Many malls have prime locations, so it really comes down to that. We believe this trend will continue, attracting new customers to our centers who haven't explored them before. Tom, do you want to add anything?

Tom McGowan, President and COO

Yes, I would say the only other thing difference is just the sheer number of trips, so mall you may have a far limited number of trips per week. But in a open-air type scenario that could increase two times just because of these. So I think that's a big part of it.

Tammy Fique, Analyst

With the new leases signed since the end of the quarter, what are you observing in terms of spreads? I realize it may not necessarily reflect the rest of the quarter, but I'm curious if there's anything noteworthy that you can share. Thanks.

John Kite, Chairman and CEO

Yes. I don't believe there is anything occurring right now that suggests a major shift in relative lease spreads; it's still early. We haven't shared any information on that yet. However, this quarter we're currently in will be different. So, it's uncertain what to expect. I want to stress that I wouldn't advise extrapolating or trying to project anything that happens this quarter, except for the information we're providing you regarding the collectability of rents based on the strength of our real estate.

Tammy Fique, Analyst

Okay, thanks. And then, just one last question. I'm curious, when do you think you will be in a position to be able to provide earnings guidance again?

John Kite, Chairman and CEO

Again, don't know. I think we're just going to have to see how this evolves and we'll be as transparent as we possibly can. But right now, as I said it's day-by-day and inch-by-inch, so I can't tell you that yet either.

Operator, Operator

And there are no further questions at this time. Mr. McCarthy, I'll turn the call back over to you for closing remarks.

Bryan McCarthy, Senior Vice President of Marketing and Communications

Okay. We just want to again thank everyone for joining us. We appreciate and value all of our relationships as we said very much and we hope that you all stay healthy and safe and we look forward to getting to the other side as soon as possible. Thank you.

Operator, Operator

Ladies and gentlemen, this does conclude today’s conference call. Thank you for participating. You may now disconnect.