Thank you for standing by, and welcome to the CTO Realty Growth Fourth Quarter and Year-End 2022 Operating Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today’s conference call is being recorded.

I will now turn the conference to your host, Mr. Matt Partridge, Chief Financial Officer. Please begin..

Good morning, everyone, and thank you for joining us today for the CTO Realty Growth fourth quarter and year-end 2022 operating results conference call. With me today is our CEO and President, John Albright.

Before we begin, I'd like to remind everyone that many of our comments today are considered forward-looking statements under federal securities law. The company's actual future results may differ significantly from the matters discussed in these forward-looking statements, and we undertake no duty to update these statements.

Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the company's Form 10-K, Form 10-Q, and other SEC filings. You can find our SEC reports, earnings release, supplemental and most recent investor presentation on our website at ctoreit.com.

With that, I’ll now turn the call over to John..

Thanks, Matt, and good morning, everyone. Our activity during the fourth quarter capped off another record year, which resulted in full year core FFO per share growth of 35% and full year AFFO per share growth of 26%.

The fourth quarter was especially noteworthy because it was our largest quarter ever in terms of investment volume and included the first follow-on equity offering in the history of the company, while 2022 was very productive across all aspects of our business, and I'll highlight a few of the more notable accomplishments.

Excluding the fourth quarter acquisitions, we signed new leases, renewals and extensions on 8% of the total portfolio square feet at an average cash rent of more than $31 per square foot. We grew same-property NOI by 13%.

Total investments were a record $375 million, meaningfully derisk our balance sheet by match funding our fourth quarter acquisition activity, and extending all of our debt maturities out to $2.25 or beyond, grew our common cash dividend by 12% year-over-year and we delivered 2022 total shareholder return in the top quartile of the entire REIT industry, including outpacing most of our retail-focused peers.

It was a great year, and our team's execution has us well-positioned for long-term success.

Notwithstanding, some near-term tenant challenges that we'll discuss as part of our 2023 guidance, we believe we've built our company and the underlying portfolio for long-term growth and value creation as we've invested in properties with very attractive demographics within markets that are projected to have some of the highest population and job growth in the country.

During the fourth quarter, we completed three transactions for a quarterly record of nearly $195 million at a weighted average going-in cash cap rate of 8%. All three investments have meaningful upside through a combination of leasing and life repositioning at an average price of less than $200 per square foot.

These acquisitions represent a terrific opportunity to invest in high-quality real estate significantly below replacement costs. Our acquisition of West Broad Village in the short submarket of Richmond, Virginia is a high-quality Whole Foods, HomeGoods and REI anchored property that comes with significant leasing upside through the acquired vacancy.

In the four months we've owned the property, we experienced very strong leasing demand, and we expect this property will be an excellent driver of same property NOI growth as our team's leasing efforts in 2023, convert to rent-paying tenants in 2024.

Our other two acquisitions in the quarter included five parcel assemblage in the tourist district of Daytona Beach and the largest acquisition in the company's history, The Collection at Forsyth in the affluent Forsyth County submarket of Atlanta.

The Daytona Beach property was a unique off-market opportunity to acquire a set of complementary parking and restaurant parcels near the beach from a successful retiring owner operator.

Given our existing investment in two high-performing Daytona Beach side restaurants, we're confident in the near-term cash flow opportunity as there is a significant operator interest in these properties. I'll move from our smallest investment during the year to our largest, which is our acquisition and collection at Forsyth.

This is a property we're very excited about and one we think will provide considerable growth in 2024, 2025 and beyond.

We continue to be a strong believer in the long-term prospects of the broader Atlanta market and the collection of that foresight was a terrific opportunity to invest in a property similar to our Ashford Lane asset, where we can up-tier the quality of the tenant mix, increase rental rates as leases roll over and really establish this property as a go-to destination for residents of Forsyth County and the surrounding area.

We've engaged our leasing team who helped us reposition Ashford Lane, which is just 20 miles down the road. We've already started to have a number of conversations with some very exciting concepts.

Additionally, there is a vacant former Earth Fare grocery outparcel that we're hopeful will be a future grocer location for the property, and we believe that, there are opportunities to potentially add green space to enhance the overall property experience.

For the year, we completed five mixed-use or retail income acquisitions for $314 million at a weighted average going in cash cap rate of 7.5% and supplemented these acquisitions with our structured investments program, where we originated $59 million of funding towards the development or redevelopment of retail and mixed-use properties in submarkets of Atlanta, Dallas and Orlando had a blended initial yield of 8.2%.

The year-end balance of these investments is just over $30 million. We continue to recycle assets through opportunistic dispositions as we look to drive attractive returns on equity through the reinvestment of low cap rate, asset sales into higher upside, higher-yielding core investments.

While we did not have any asset sales in the fourth quarter, we sold a total of six properties, including our sole remaining multi-tenanted office property for $81 million at a weighted average exit cap of 6.2%.

These sales and their subsequent redeployment generated 130 basis point net investment spread between our weighted average acquisition cap rate and our weighted average disposition cap rate, representing terrific value creation as we navigate a volatile transactions environment.

Overall, as we evaluate our execution in 2022, we've been fortunate to invest in properties anchored by high-quality tenants such as Whole Foods, HomeGoods, Publix, REI, Ross Dress for Less and Best Buy, while further diversifying our overall tenant exposure and getting our portfolio more long-term upside through lease-up of acquired vacancy and re-tenanting units that currently have below market rents.

While our investments provide additional long-term opportunities for growth, we're highly focused on maximizing the value of our existing portfolio through active asset management, leasing and our capital investment programs.

2022 was a record year of leasing for our team, and we generated 17% comparable growth in new cash-based rents versus expiring cash-based rents.

This helped drive our 13% same-store NOI growth, which will be more muted for 2023, but should see substantial increase in 2024 from tenants opening in the back half of 2023 and into 2024 across many of the properties in our portfolio.

This is not only a testament to our team and the quality of the assets, but is a direct reflection of the demographics surrounding our properties and the long-term prospects of our markets. Our properties average 5-mile household incomes of more than $136,000 and serve an average 5-mile population base of over 217,000 people.

While our portfolio is not the largest, what these demographics do indicate is that our properties are in some close proximity to more than 4 million people, and that represents a very strong base of demand, which is especially important as we are preparing for continued volatility in the broader economy.

Furthermore, as we look out over the next three to five years, some of our top markets such as Atlanta, Dallas and Raleigh are anticipating outside population employment growth, which should only benefit our tenants and properties and especially given the limited supply projected for the foreseeable future.

In the near term, we are dealing with 10 specific issues, including a few larger tenants such as WeWork at The Shops at Legacy, Regal at Beaver Creek, in The Hall at Ashford Lane.

Matt will provide more detail around our 2023 same-property NOI growth guidance, but I will note that in most instances, The Hall being the outlier, we underwrote these tenants to vacate following our acquisition of their respective properties.

The anticipated concessions or loss of these tenants do represent near-term disruption as evidenced in our guidance, but each presents a unique longer-term opportunity to explore value maximizing options, which gain as we underwrote during our acquisition process.

More specifically, with WeWork vacating the Shops at Legacy, we have an opportunity to retenant the space with the alternative use that should drive additional traffic to the property, improve overall existing tenant performance and help strengthen the future leasing efforts.

Our sold Regal location at Beaver Creek property just outside of Raleigh is separately parceled with development rights for more than 200 apartment units.

We're currently reevaluating the viability of taking a mixed-use approach to the property with the potential integration of apartments, which is in addition to the more traditional outparcel development opportunities we identified an acquisition and are beginning to take shape.

And finally, The Hall at Ashford Lane, we provide some near-term relief as a tenant has experienced delays in opening as a result of supply chain disruptions and increasing costs to their build-out, which has presented an opportunity for us to obtain more operational transparency and a more attractive percentage rent thresholds.

Overall, the vast majority of our tenants are performing well, and we believe there is substantial embedded value in our high-quality portfolio as we look to mark rents to market and grow free cash flow.

We've taken a prudent approach to our guidance and we continue to remain disciplined as we allocate capital for long-term benefits of our shareholders and execute on our strategic initiatives. I'll now pass it over to Matt to talk about our results and balance sheet in 2023 guidance..

Thanks John. Transaction activity John highlighted continues our portfolio multiyear transition into larger grocery, lifestyle, traditional retail, and mixed-use assets.

As of the end of 2022, 90% of our portfolio's annualized cash-based rents are now coming from retail and mixed-use properties, up from just over 75% this time last year, with the majority of those rents coming from grocery-anchored lifestyle and power center assets.

Furthermore, this transaction activity has increased the total square feet of our portfolio by 37% compared to year-end 2021 and from a tenant makeup perspective, our top tenant list now includes well-known retailers such as Whole Foods, Publix, Darden Restaurants, Best Buy, T.J.

Maxx, HomeGoods, AMC, Ross Dress for Less, Hobby Lobby, Burlington, Academy Sports, and REI. Occupancy at year-end 2022 was 90.2% and our leased occupancy was 92.9%.

Our operational metrics for the year were very strong with same-property NOI growth of 13%, comparable leasing spreads increasing by 17%, and overall portfolio occupancy growth of 170 basis points.

Most notably, comparable new leases signed during the year increased 58% when compared to the previous comparable cash-based rent and comparable renewals, options, and extensions signed during the year resulted in a 5.5% increase when compared to the expiring comparable cash-based rent.

Comparable leasing spreads exclude new leases that were signed for space that has been vacant since our acquisition.

For the quarter, same-property NOI decreased by 6.9%, driven primarily by the increased bad debt expense related to the hall at Ashford Lane, one-time operational and CAM-related items at Crossroads Towne Center and the Shops at Legacy, and lower year-over-year percentage rent from the Daytona Beach Restaurants, which is largely due to the more active hurricane season.

Fourth quarter 2022 core FFO was $0.34 per share, representing a 10.5% decrease compared to the fourth quarter of 2021 and fourth quarter 2022 AFFO was $0.37 per share, representing a 9.8% decrease over the fourth quarter of 2021.

Q4 core FFO and AFFO year-over-year comparisons were negatively impacted primarily by same-property NOI decreases in the quarter, higher relative interest expense, and the point in time dilution associated with our fourth quarter equity raise and the related timing of The Collection at Forsyth acquisition.

For the year, core FFO was $1.74 per share and AFFO was $1.83 per share, representing year-over-year per share growth of 35% and 26%, respectively, when compared to 2021.

Full year core FFO and AFFO year-over-year comparisons benefited from 13% same-property NOI growth, increased interest income from structured investments, growth in time-related management fees and dividend income, and was partially offset by higher relative interest expense.

As we previously announced in November, the company paid a fourth quarter regular cash dividend of $0.38 per share on December 30th. And earlier this week, the company declared its first quarter 2023 regular common stock cash dividend of $0.38 per share, which will be paid on March 31st to shareholders of record on March 9th.

Our first quarter dividend represents a 5.6% increase over the company's Q1 2022 cash dividend and an annualized yield of more than 8%.

On the capital markets and balance sheet front, we had a very productive year, including a very active finish to the fourth quarter, issuing approximately 605,000 shares of common stock through our ATM program for total net proceeds of $12.1 million at an average issuance price of $20.29 per share.

We also completed our inaugural follow-on equity offering during the fourth quarter in anticipation of funding our acquisition of The Collection at Forsyth, issuing 3.45 million shares of common stock at a price to the public $19 per share, generating total net proceeds of $62.4 million.

We ended the quarter with approximately $21 million of cash and restricted cash and $186 million of undrawn commitments under our revolving credit facility for total liquidity in excess of $200 million. Net debt to total enterprise value at quarter end was approximately 46%, and our net debt to pro forma EBITDA was 7.3 times.

With respect to our leverage, it's important to note that our 2025 convertible notes currently have a conversion price of just over $16 per share, making it likely those notes will convert into equity at or before maturity. As a result, if we remove the convertible notes from our debt maturity schedule, with no debt maturities until 2026.

Furthermore, subsequent to year-end, we entered into a seven-year $100 million interest rate swap to fix SOFR at 3.28%. This swap is currently being used to fix $100 million of our outstanding revolving credit facility balance, effectively eliminating all of our remaining go-forward floating interest rate exposure.

As part of the earnings release yesterday, we did introduce 2023 guidance. Core FFO per diluted share is projected to be between $1.50 and $1.55 and AFFO per diluted share is forecasted to be between $1.64 and $1.69.

Our guidance for 2023 reflects our same-property NOI growth forecast of 1% to 4%, which includes the effect of increased bad debt reserves, occupancy loss and associated costs related to tenants in bankruptcy or lease defaults.

Headwinds in our same-property NOI growth forecast include lease modifications, projections or lease terminations for Regal at Beaver Creek Crossings, The Hall at Ashford Lane, WeWork at The Shops at Legacy, Party City at Crossroads Towne Center and general reserves between 75 to 100 basis points of property level revenue, which is largely in line with our historical run rate.

We're projecting to invest between $100 million to $250 million into income-producing assets, including through our structured investments program at a weighted average initial investment yield of 7.25% to 8%. Our disposition guidance assumes $5 million to $75 million of asset sales at a weighted average exit cap rate between 6% and 7.5%.

Other forecasted assumptions for 2023 include general and administrative expenses between $14 million and $15 million and a weighted average diluted share count for the year between 22.8 million shares and 23.6 million shares.

While near-term headwinds related to our year-over-year interest expense and tenant credit issues do impact our 2023 guidance, we have forecasted to be between 94% and 95% leased by year-end 2023.

The year-end 2023 forecast of lease occupancy is before any potential impact from 2023, income, property acquisitions or dispositions and implies a strong base of signed leases that have yet to commence rent heading into 2024. With that, we'll now open it up for questions.

Operator?.

Thank you. [Operator Instructions] Our first question comes from Gaurav Mehta of EF Hutton Group. Your line is now open..

Yes. Thanks. Good morning. I wanted to ask you on your transaction guidance for 2023.

Can you maybe provide some color on the expected timing of acquisition and dispositions?.

Hey, Gaurav. The guidance assumes that most of the acquisitions will be back-end weighted. We have some small stuff here towards the end of the first quarter, beginning of the second quarter, but most of it's going to be probably late or early fourth.

Okay.

And maybe on the transaction volume on the disposition side, can you provide some color on the range of $5 million to $75 million? What are you guys looking for to get on the lower end and upper end of that range?.

Given the current state of the capital markets, it's causing a little bit of volatility in the transaction side of things. So there's a fairly wide bid-ask spread. And so the range reflects that.

So we have some certainty on some small single-tenant disposition that could materialize here in the next few months, but then the wider end of the range is really related to opportunistic dispositions if the market firms up..

Okay. Thank you..

Thank you. One moment, please. Our next question comes from the line of Rob Stevenson of Janney. Your line is open..

Good morning, guys.

Do you have the Regal at Beaver Creek back now or you have to wait until Regal’s bankruptcy during the summer or whatever that happens to get it?.

Yes. So Rob, so it's kind of interesting on the whole Regal because of a little bit of a surprise to us because they did not reject the lease originally. And then as you know, judge basically told them to go reject a bunch of leases. And so they reject their leases, but they had paid us rent like literally a week or two weeks before they rejected it.

So clearly, they are intending to keep the lease. So now it might be surprising to you. It's certainly surprising to me, but we've had more than 10 theater operators come out of the woodwork wanting that theater plus some other interest from other users, actually larger format than the 45,000 square feet we have there.

So it's interesting and great to see the activity. But the answer to your question is we are talking to them about a short-term deal because they want to keep the lights on there, while they figure out their bankruptcy and maybe come back to us with something more productive. So we're in negotiations with them. So it's not a clear cut right now..

Okay.

And I guess the question then winds up being, from your standpoint, I mean, thinking about the theater business and being in that longer-term versus I assume if it's going to be apartments that that's something that you would sell-off that you wouldn't partner with somebody did a merger developer to develop that for you to own longer term?.

That's -- so there's three options here. Obviously, keep it as a theater and obviously, there's tons of theater interest, but probably doesn't do a lot for a residual cap rate on that property for us. The second is a different retail user, which has better credit, and we have those looking at the property a couple of different ones.

And then, of course, the apartments. So the apartments, obviously, is definitely an easy one. With regards to whether we sell or JV at – we might be more open to JV net because, obviously, I think that would help quite a bit on the valuation of the property, having that mixed-use component with the residential side.

But obviously, we would bring in a really strong operator to do that with..

Okay.

And then, Matt, what is in your -- given the acquisition and disposition volumes, what's in your 2023 guidance in terms -- assumptions in terms of debt levels and interest expense at this point given the new swap?.

Yeah. We're generally assuming we stay leverage neutral to where we are today with the transaction guidance being assumed to be weighted towards the back-end of the year and it's a pretty wide range, just given the uncertainty of the transaction market and the broader economic environment.

That's what's causing the wide range on the share count as well. So there's a lot of timing factors in there, but generally leverage neutral from a debt and equity perspective..

Okay.

And then one last one for me, I mean what's the plan at this point for the WeWork space at Legacy?.

So we are talking with several different users; one, which we think would be very complementary to the property and be a much better use than WeWork style. So we're in negotiations or discussions with that group. So we've probably got at least 30 days to figure out, which route we're going to go..

Okay. All right. Thanks guys. Appreciate the time..

Thank you..

Thank you. One moment, please. Our next question comes from the line of Floris van Dijkum of Compass Point. Your line is open..

Thanks. Hi, good morning guys..

Good morning, Floris..

Hey. I wanted to -- maybe if you guys could comment a little bit more on your structured finance part of the business. Obviously, it creates some -- it creates a nice yield, but it creates lumpiness I believe you lost one of your loans prepaid, which causes some earnings disruption.

But maybe talk about the stuff that you've done, for example, the exchange, I know that you -- will these loans lead into future acquisitions, I guess, is what I'm trying to get at?.

In some cases, they will, for sure. But in other cases, we're looking at deals where it's a short-term bridge loan. It's obviously very nice risk-adjusted yield. And I think I saw something where John Gray said this week that they're leaning in big in the lending business, because there's -- you're picking up meaningful more yield with less risk.

So we're seeing the same opportunities, but there are other loan opportunities we're looking at where we'd actually like to own the project and gives us that optionality.

So you'll probably see us be more active on that side, but I don't think it's -- we're going to grow the structured finance portfolio a lot more than what the balance was before we got paid down.

So it's a great business in this kind of environment where developers are trying to hang on and/or do acquisitions, but the financing markets still locked up and frozen. So we'll continue to monitor those..

And could you guys maybe comment on your -- I believe you internalized the property management in Atlanta what kind of impact that has financially and also strategically? And could we expect more of the -- of that internalization of the property management part in other markets..

Yeah. It certainly is, and given our largest market, makes a lot of sense, and we're well on our way in doing that sort of process right now, with regards to identifying personnel and so forth. But I'll basically let Matt comment on what kind of impact that has on the timing.

Yes Floris. It's going to be a process throughout the year. So I would expect the full internalization of property management for Atlanta to happen more in the back half of the year. So the benefit, which we think could be between $0.01 to $ 0.015 of earnings, when fully stabilized it will really come through in 2024..

Great. And maybe one last one for me, if I may, if you could talk a little bit about -- well, obviously, the guidance here was – is a little bit lower than expectations.

But maybe would it be helpful to talk about sort of where you expect NOI for the current portfolio to be in a couple of years' time once it's fully stabilized? Because one of the issues that investors always have to try to assess with CTO, is that it's a – you bought some assets that need a little bit of work and where you can create some value – there's obviously a little bit more headwinds in 2023 partly because of the tenants issues.

But also partly because you're repositioning assets it might be helpful if you guys could share some of your – where you think stabilized NOI could trend to in two to three years' time?.

Yeah. I'll give more of the color commentary, let Matt either Dodge or answer the future number.

Basically, as we're just talking about Regal theater with them rejecting that lease and maybe doing a short-term lease that is less than what they had, the – probably, the highest and best value total return for the company and our shareholders would be to do an apartment deal, but that would mean bringing – having income come off the property for a couple of years until that's built.

And so in the – we're always trying to measure the right balance given public company dynamics and growing FFO, and that sort of thing with regards to what's the total best total return. But – we are seeing a lot – we are seeing more traction in getting tenants open. Superica just opened at Ashford-Lane. It looks like Grana will be open in May.

And – and also Hawkers will be done probably in April. So those are tenants that have taken forever to, to kind of get going and get open. But now we're seeing the fruits of that, which will obviously be more productive for our income next year.

And we're – we just signed a lease actually yesterday or day before, at West Broad where the tenant will probably not be operational until summer of 2024. So the lead times on these tenants are a little frustrating, but the – obviously, what they bear fruit at the end of the day is going to be pretty terrific.

So I'll let Matt talk about the consequences..

Yeah. Financially, I'm not going to give a hard number on NOI, but what I will say is that our expectation for 2024 is that we're going to be above where we were for 2022 from an FFO and AFFO perspective once we work through this near-term disruption. But really, at the end of 2024, going into 2025, we should continue to see pretty strong growth.

So same-store NOI growth this year was 13% as we continue to lease up these assets where we have meaningful vacancy, I think it can be in the high single digits, low double digits for the next few years..

Thanks guys..

Thanks, Floris. .

Thank you. One moment, please. Our next question comes from the line of Matthew Erdner. Your line is open..

Hey, guys.

How is it going? Could you talk a little more about The Exchange at Gwinnett and just the construction process and how that's tracking in terms of supply and getting those things built?.

Yes. So the developer who we bought the first phase of The Exchange at Gwinnett from late in 2021 is making good progress. We do expect that loan to convert into the acquisition of Phase 2.

So that will probably transact or come on board here over the next few months, and that's one of the smaller assets or set of assets that I was referring to at the beginning of the questions in terms of the smaller stuff that will close in the first half of this year..

Awesome. That's helpful.

And then in terms of other construction loans or preferred equity deals that you guys are looking at, where are you guys seeing those most?.

We're seeing them on situations where the debt coming due and the tenancy is a little bit more volatile, whether the properties have a legal type situation where lenders won't touch it, but there's a basis where if the tenant blows out, you're still very happy to own the property at that sort of basis.

So we're seeing those sort of opportunities in new acquisitions where somebody wants to transact pretty fast on an acquisition and can't wait on kind of finding a lender and going through that process, The more of a bridge loan acquisition sourcing kind of those two type of opportunities right now. .

Awesome. Thank you guys..

Thank you..

One moment, please. Our next question comes from the line of Michael Gorman of BTIG. Again, Michael Gorman, your line is open..

Yes. Thanks. Good morning.

John, just another question on kind of the current market environment, I know we've talked about a lot so far on the call, but maybe can you just contextualize and apologies if I missed it, but when you think about the potential investment activity for 2023, and I know it's maybe back-end weighted, how much of that is going to be kind of potentially atypical structured deals, unusual transactions, whether it's an assemblage like you did in the fourth quarter, or just how are you thinking about the weighting between maybe a traditional long-term hold asset like some of the centers you recently acquired versus maybe some of the more non-traditional investments?.

Yes. It's definitely going to be primarily the long-term hold sort of like the type of acquisitions we made at the end of the year. What we're seeing in the market right now is not a lot of activity. There's a reluctance for sellers to bring properties to market without clear indications of where the pricing is going to be.

I think they don't want to have something that's kind of shop worn. These are type -- there's a fairly large shadow inventory of projects that we would like to participate in and try and buy that are not on the market, had been on the market before years pandemic -- before the pandemic and the holders most likely need to sell.

So, they're trying to kind of pick their spots. So, right now, it's pretty quiet. We expect, as Matt alluded to, to be more active later in the year, where we hope that there'll be some more activity for sure.

I think the talk in the market on other product types is that the debt situation, obviously, with interest rates rising, is this going to cause more and more friction, which will probably show a lot more activity by the summer. And so that's -- I would expect by summer and back half of the year, there will be some decent opportunities.

But that's where -- look, that's where we want to focus is on the larger projects in terrific markets that we're going to do well over time..

Okay, great. That's helpful. And then maybe just as you think about not only the acquisition side or the investment side, but also maybe the disposition side. Understanding you're always targeting the highest and best return for shareholders.

As you think about it with a portfolio that's still on the smaller side and growing, how do you balance out more stable acquisitions or even disposing of single-tenant assets for a portfolio that's more weighted towards, I think, that kind of value creation component in a market that's kind of choppy like we're expecting in 2023.

How do you strike that balance, just given as you talked about before, kind of the demands of a public company environment?.

Yes. I mean I think a lot of our investors understand the value creation side of it and taking advantage of the opportunities.

I think for instance, The Collection and being able to buy that asset on 58 acres at $172 per square foot, way below where you can build it and the activity we're seeing there is really just kind of tells us that this was a terrific acquisition.

Those are the type of deals we want to make more of where whether we're buying some vacancy or we're buying where you might have some turbulence with regards to a tenant in the future, but there's a solution to it. That's kind of where we want to really grab some value and opportunity.

So, on the disposition side, really, we're going to hopefully find a larger-type acquisition where that would allow us to accelerate some of the smaller projects that we have on the disposition side, whether it's in Santa Fe and in West Cliff, those sorts of things and then have more of these dominant centers in terrific locations at kind of where the focus is..

Okay, great. Thanks for the time guys..

Thank you. I'm showing no further questions at this time. I'd like to turn the call back over to John Albright for any closing remarks..

Thank you very much for attending the call and look forward to talking with you post the call..

Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day..