Ashley Underwood - IR John Kite - Chairman and CEO Thomas McGowan - President and COO Daniel Sink - CFO and EVP.

Andrew Smith - KeyBanc Capital Markets Christine McElroy - Citigroup Alexander Goldfarb - Sandler O'Neill Collin Mings - Raymond James & Associates Craig Schmidt - Bank of America Merrill Lynch Carol Kemple - Hilliard Lyons Christopher Lucas - Capital One Securities Linda Tsai - Barclays.

Welcome to the Kite Realty Group Trust Q1 2017 Earnings Conference Call. [Operator Instructions]. I'd now like to introduce your conference - turn your conference over to Ashley Underwood, Investors Relations. You may begin..

Thank you and good afternoon. Welcome to Kite Realty Group's First Quarter Earnings Call. Some of today's comments contain forward-looking statements, that are based on assumptions 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-K. Today's remarks also include certain non-GAAP financial measures.

Please refer to yesterday's earnings press release available on our website for a reconciliation of these non-GAAP performance measures to our GAAP financial results. On the call with me today from the company are Chief Executive Officer, John Kite; Chief Operating Officer, Tom McGowan; and Chief Financial Officer, Dan Sink.

And now, I would like to turn the conference over to John..

Thanks, Ashley and good afternoon, everyone. We appreciate you taking the time to join us today.

We had a very solid first quarter of the year, but before I get into operations, I'd like to spend some time on the portfolio and the various initiatives that we've undertaken to further diversify our tenant base, our geographical presence and just improve our overall portfolio quality. First, 70% of our ABR comes from the top 50 MSAs.

The majority of the remaining properties have unique positions in their markets. Examples of properties that have fall into the latter category are properties in close proximity to a college campus like, Eddy Street Commons at the University of Notre Dame or Beechwood Commons which is approximately a mile from the University of Georgia.

In addition, several of our properties are in desirable destination locations, such as Naples, Florida. Only 20% of our 120 property portfolio consists of the traditional power center without the grocery presence.

But included in the number, are several power centers that are premier assets in their markets, such as Rivers Edge in Indianapolis which is anchored by Nordstrom Rack, The Container Store, Arhaus furniture and several highly productive restaurants. Another great example is Livingston Shopping Centers in New Jersey, just outside of New York City.

This property is anchored by Nordstrom Rack, TJ Maxx, DSW and World Market and this is one of the most affluent sub-markets in New Jersey, with an average household income of $162,000 and a 5-mile population of 150,000.

Only 20% of our portfolio contains apparel-related retailers and we focus our efforts on tenants within this category who are some of the most sought after retailers in the industry, including TJ Maxx, Ross and Nordstrom Rack. We manage our assets in 6 regions across the country.

As you can see in our supplemental, we have strategically diversified our asset base, with 24% of our annualized base rent in Florida. Approximately 18% both in the Southeast and mid-Central regions, 17% in the Midwest, 12% in the West and 11% in the Northeast regions.

The absence of geographic concentration would help insulate us from any potential economic downturn that might affect a certain region in the country.

Given the recent news around the potential retail tenant closures and bankruptcy filings, we wanted to address our overall combined exposure to rue21, Payless Shoes, Gander Mountain, hhgregg, Charming Charlie, Family Christian and Gymboree.

These tenants combined represent about 1% of our total ABR and approximately 160,000 square feet of leasable area. Now moving to some operational highlights for the first quarter. Same property NOI continued to perform well at 3.1% growth or 4% excluding the impact of our 3R initiative.

We picked up 60 basis points of economic occupancy and continue to manage expenses at the property level. We follow the solid fourth quarter of 50 tenant openings, with another 41 tenant openings in the first quarter which included a number of exciting concepts, such as discount service, restaurant and entertainment retailers.

Our average base rent is continuing to grow and is now just under $16 a square foot, including our development and 3R initiatives, up almost 20% in the last 2 years, a new high for us.

Our portfolio anchor lease percentage is consistent with our budget, as a 20,000 square foot Office Depot vacated at the end of their lease term which impacted anchor lease percentage by about 20 basis points.

In addition, our small shop percentage decreased about 30 basis points, primarily from our recapture of an outlot building, that we plan to retenant at double-digit lease spreads. Our cash lease spreads for new and renewal leases, were an aggregate 9%.

The renewal spread was 4.7% but if you exclude one strategic anchor renewal, the blended spread was 10.3% and the cash renewal spread was 5.5%. Finally, we increased our retail recovery percentage 280 basis points from 89.2% to 92%, compared to last year, which again, is another new high for the company.

This increase can be attributed to the fact that we continue to work diligently with our tenants to monitor expenses and the aggressive expansion of our fixed CAM program, especially at our new development properties. Through our initiative, we now have 15% our tenants on fixed CAM.

Looking at development in the 3R projects, we're very close to stabilizing Parkside Town Commons. We're currently 95% pre-leased or committed with the addition of a 50,000 square foot Hobby Lobby to replace the Field & Stream. Hobby Lobby is expected to open late in the fourth quarter or early in the first quarter of 2018.

We also opened a new 32,000 square-foot Stein Mart at Parkside in March. On the 3Rs, we completed 2 projects during the first quarter, Castleton Crossing and Portofino Shopping Center Phase I.

At Castleton Crossing, we successfully replaced a below market out-parcel with a new 13,000 square-foot small shop building which includes a Pie Pie Pizza company, Chipotle, Capriotti's sandwich shop and Verizon Wireless.

At Portofino, we welcomed new tenants DXL, Mattress Firm and Blaze Pizza, as part of the 2 new small shop buildings constructed over a former decorative water feature. Our combined investment in these properties totaled $8.4 million and will generate a 10.2% incremental return.

During the quarter, we began construction on Fisher Station - on the Fisher Station redevelopment project, in a vibrant suburb of Indianapolis. This center will be anchored by a 123,000 square-foot Kroger marketplace and include a new shop space and cosmetic upgrades.

We have another 8 projects under construction in the 3R Initiative, that continues to progress as planned and we look forward to stabilizing approximately half of them over the balance of the year. On to capital recycling.

In March, we completed the sale of Cove Center in Stuart, Florida, for $23.1 million of gross proceeds and a book gain of $8.9 million after holding the asset for only 4 years.

We used the proceeds from the sale to pay down the line of credit and looking over the remainder of the year, we believe we're on track to meet our previously issued asset disposition guidance of $45 million to $55 million. Shifting to our balance sheet position. We're in a very strong position today.

As of the end of March, we had only $83.4 million of debt maturing through the year 2020 and a liquidity position of over $432 million. Our variable-rate debt remains at only 7% of our total debt and our weighted average debt maturity profile is a strong 6.2 years. We continue to focus on reaching our stated goal of a low 6x net-debt-to-EBITDA.

We feel we will achieve this goal through a combination of stabilization of our development and redevelopment assets, free cash flow generated from operations and capital recycling of low-growth, non-core assets. But we would also consider additional dispositions beyond what is currently in guidance to meet this target.

In closing, we continued to make significant leasing progress and operational improvements in the first quarter. As again, we opened 41 new tenants and executed on an additional 80 new and renewal leases that include tenants we feel will further strengthen our portfolio. Our 3R Initiative remains active and continues to progress as planned.

Excluding the impact of our 3R Initiative, we achieved an impressive 4% same property NOI growth. We remain on track to deliver strong results throughout the term - duration of 2017 and our team is looking forward to a highly productive ICSC coming up here in just couple of weeks. So again, thank you, everyone, for joining us today.

And operator, we're ready for questions..

[Operator Instructions]. Our first question comes from the line of Todd Thomas with KeyBank Capital..

This is Drew Smith on for Todd. Just to follow-up on your, your....

Drew, we can actually hear you, thanks..

Just wanted to follow-up on some of the commentary about the retailers you mentioned in your prepared remarks. Well, the portfolio doesn't have too much apparel exposure overall. Just curious about tenant demand. As you may look to release some of that space if there is closures or potential closures.

Notably, ascena is on the top tenant list and thinking of rue21 and Payless as well. If you could maybe just talk about maybe the tenant demand a little bit and what that looks like maybe versus prior years for Anchor Space and Small Shop, that'd be great..

Sure. Well, look, I mean, I think pretty much everybody continues to talk the same regarding how the narrative or rhetoric is clearly a little worse than what we're actually seeing. But, again, it's early in the year and there's a lot that can happen.

But I would tell you that what's happened in the first quarter in terms of tenant closings, isn't really that different for us than it has been in the first quarter of every year, where definitely you see people that just aren't in a position to continue to make a go of it.

And that's part of owning good real estate is that you're generally the position - in fact, most often, you already have kind of a backlog as tenants, that you're - you think would make sense for that space.

So I think, that's what's happening today, when you see the big guys like JCP and Macy's closing stores, but at the same time, you see TJ, Ross and Burlington opening significant numbers of stores. The same side, the Sports Authority closures, DICKS, Academy Sports, Sierra Trading Post, those guys are all opening stores.

Now as it relates to Payless and rue21 and ascena, those are smaller spaces. But again, you've got a lot of people operating in that square-footage category like ULTA and Five Below and even DSW. So I would just tell you that it generally is similar to what it has been. But maybe Tom can add some more color to that..

Yes, the thing I'd point out is if you just look at our real estate committee and if you look at production that occurs each Monday, we're seeing the exact same production, if not better, on a week in, week out basis. And if you take a look at our first quarter production, 2016, we're actually 100,000 square feet up in the first quarter of '17.

So we're seeing the demand. We're frustrated, of course, about closures. But that's part of our business and we're going to work through it. But we feel like we've got a great line of boxes, in line tenants, et cetera, to fill these positions. And that's our job to make that happen as quickly as possible..

That's really helpful. Just a quick follow up to that a little bit about the grocers specifically.

Just curious on how your discussions might be going especially with - in relation to the Click and Collect movement type of thing? And what the real estate needs of the grocers might look like in the future? If there's anything incremental in those discussions at all? Any color would be helpful..

Yes, look, I don't think anything's changed at all, in our perspective, in terms of the grocers that we're dealing with and the demand levels that we see. You know you're always going to have individual retailers that have issues that other don't. So I know everyone loves to take one piece of information and extrapolate that across an industry.

But the reality is, as we just mentioned, we did a 123,000 square foot Kroger deal in one of our redevelopment properties. And when you look at the balance of grocers that we work with between the typical grocer like the Kroger or a Publix and then you look at what's going on with Sprouts and Fresh Market, et cetera.

There's a lot of guys that are still doing very well. And I think the idea that the click and pick up, et cetera, et cetera. It - generally speaking, the grocery business is pretty solid. It's a very competitive business with very low margins.

So for someone to want to break into that business and have an even higher cost structure via last mile delivery, I think is a lot more difficult to execute on than it sounds..

Our next question comes from Christine McElroy. She's with Citi..

Glad to be asking a question. I was starting to get a little worried there..

Yes..

Just with the Q1 same-store NOI growth comfortably being above your full year range, it definitely seems like there is some level of conservatism that's built-in in terms of maintaining that full year range.

Especially in follow-up to the last question, if you're seeing a similar level of demand? I guess I just want to maybe walk through the rest of the year, in terms of the drivers there that gets you back into that range at sort of a decelerated level, such that you would maintain that conservatism?.

Sure. Well, I think the biggest factor here is it's early. First quarter obviously, we did well. And if we - if we - if things held steady - our guidance, the unaffected guidance is 2% to 3%. And we were at 3%. So if things held steady, we'd be at the high end.

But I think one of the reasons we talked about these various retailers is it's early in the process in terms of - of all the guys I mentioned, clearly, we will get some stores back. But at this point, we don't know how many but for the hhgregg.

I think, we're going to be conservative, if that's a word you want to use or I'd say practical, in the sense that we have a lot to play out the balance of the year. That said, again, if we were to get those stores back, we do feel confident we could re-lease them. But that takes time, as you well know, Christy.

It's not something we could do the next day. So there would be an impact. So I think it's smart, at this point, in the calendar, to kind of stay where we're..

Okay.

So I guess, the 2% to 3% includes the impact of the 3R program?.

Yes..

Okay. So what do--.

The 4% - go ahead, sorry..

Right.

So how are you thinking about that sort of 2% to 3% and how much of that is being dragged down by 3R, sort of in the - I realize it was a lot in the first quarter, but sort of, looking at the whole year?.

Yes, Christy, the numbers that we provide, I know it's confusing - it's sometimes - we want to give as much transparency. Because folks use same-store NOI including redevelopment. What we're saying is each of the numbers we provide exclude redevelopment.

The difference between the 3.1% and the 4% is the 3.1% includes all the repositioning and redevelopments being excluded. Where the 4.0% only excludes the - it only excludes the redevs. So the repositioning - that just shows the effect of the repositions. So in essence, we've been giving guidance excluding redevelopment.

That's consistent with how we've done it over the past several years..

Yes, I think the easiest way to say that is the 4% we pull out all of those 3Rs and that's 18 projects. And since the NOI is being dragged down kind of across the board there, that's the impact. So you would hope that when they all get finished and completed and get back online, that you're in between those two numbers somewhere..

Got it. Okay.

And then just regarding Cove Center, what was the cap rate on that? And then, in terms of the remaining sort of $20 million or $30 million of sales in your guidance, what's sort of the execution for timings on that?.

Well, cap rate, we don't like to get too specific, but it was a good cap rate. Basically it was mid-5%. And in terms of the timing, I'd say, we're looking at the next quarter or so to try to complete that..

Our next question comes from the line of Alexander Goldfarb with Sandler O'Neill..

But just going to bad debt. I think, Dan, you had mentioned that bad debt in the quarter was pretty much in line with historic. And yet, we've had record store closings, bankruptcies, whatever metric you want to say.

So is the reason that - I mean, obviously you can say, "Hey, our portfolio is great and that's why we're not affected." But apart from that, is it - when you go - when tenants close or go through bankruptcy, by the time it all settles out, the landlord and you guys are basically made whole.

In which case, these record store closings aren't leading to an increase in bad debt? Or if that's not the case, why aren't we seeing a correlation between the increase in store closing, the hhgreggs and all this stuff, versus your bad debt staying relatively constant?.

Yes, Alex, I think when you look at the bad debt reserve, a number of these items have occurred after, say, the first quarter. I mean with the news on, the Payless bankrupt, rue21, the stoppage of rent on some of those tenants or the delayed rent happened post the first quarter.

I think, when you look at year-over-year and you compare, our bad debt is in the same-store pool is basically a $50,000 decrease from the prior year. And I think, when you go through this scenario, it all plays out. If your store is rejected, you will then have the write-off whatever was prepetitioned.

If your store is - comes out of bankruptcy, we'll be paid everything that was due, unless you negotiate a lower rent which we typically - that's on a case-by-case basis. And we spend a lot of time thinking about whether we want that tenant to be there long term or not.

So that's on a case-by-case basis that we'll review any discussions relative to rent reductions, et cetera. But really, it just plays out on how the bankruptcy process and which tenant - which leases get rejected or not..

So, Dan, are you, are you, should we expect bad debt to increase going forward, if a number of these tenants announced post quarter close?.

No, I mean, look, I think that's - we have 100 basis points in our numbers that - basically of min rent, that we've already baked in. And I think, it's hard to say that, because right now, our accounts receivable is in really good shape. It's down $5 million year-over-year, our over-90 is down over $1 million.

So I mean all the metrics are looking good. So I think, if you - if we sit here today and you look at some of the tenants John mentioned, just those tenants going out is not going to have a significant impact on our AR for the year..

And I would - basically, if all those guys went out, Alex, it will be right on top of the reserve..

Okay. John, that's helpful. And then the second question is, you guys have your 3R program, you mentioned everything currently underway is obviously on track.

But if you think about the next phase, has anything changed in your decision-making from - you know, are tenants still as eager based on the plans you've outlined or do you think there's going to be a shift in based what's happening, may the next round is smaller than what you would've thought it would've been 6 or 12 months ago?.

I would say, no. As we sit here right now. And I think the prime example is the fact that we signed a lease and began construction on the Fishers Station deal which was formerly in the pipeline. And we accelerated that deal and now it's under construction.

So when you go through what's current and what's pending, you know the pending is - are all still on track. As well look at them I mean they ebb and flow in terms of the timing, Alex. And as I think, you may have pointed out, these deals aren't huge deals. These are small, generally small per deal. When you combine all 18, it's about $150 million.

I mean, there was a time where we were doing a couple of $150 million projects at a time. So I think, that's why we've balanced this so much and wanted to be in a position that if it did radically change, then we could back off of it. And then, we would just have significantly more free cash flow to do other things with.

So I would say, as we sit today, our existing and our in-the-hopper pipeline is exactly the same as it what last quarter.

Tom, you got - what do you have?.

On the opportunities, I think we're very comfortable to see a couple of these projects move over to 2017. That is the goal of what we do, is we have projects that are under construction, they move out into the operating portfolio. And then we take these opportunities and move them to under construction. So we expect that cadence to continue.

We've got a great, great list of projects here. And so far, we have not seen any disruption in our ability to execute..

Our next question comes from the line of Collin Mings with Raymond James..

First question from me, just particularly in context of the impairment registered in the quarter. Can you just discuss your take on if cap rates have continued to move over the last few months or has that pretty much flattened out relative to the upward pressure you discussed last quarter? Again, recognizing it is going to vary property to property..

Yes, sure. I mean I think those things are somewhat tied together. But frankly, in the specifics of that particular impairment, as we said, we look at assets every quarter. And we look at what we think the continual hold period it for an asset.

And in that particular asset, we began discussing that we may - it may not meet our kind of criteria for a long term hold. So that's how we went about changing that process. And that was, frankly, that's the change in circumstance is that we felt that, that particular asset was something we would probably want to dispose of in the next four years.

And that's a big difference in terms of underwriting the cash flows, as you know. So the cap rate side of that equation is, I think that obviously, if it's an asset what we don't see long term value in, it's probably going to be an asset that we would put higher cap rate on than assets that we think are great over the long term.

And so, that played into that as well. But I would generally say that, as you've heard from most people, the core of our portfolio which we view as very strong and I think our results kind of back that up, these things are hard to come by and still trade at very aggressive cap rates.

And we sold something during the quarter that we really didn't think was great for us long term. We sold it at a mid-5% cap. So there's a big disturbance right now between what cap rates actually are and what stocks trade for..

Fair enough.

There's really no incremental move that you can see the marketplace more broadly over the last couple of months?.

Not really. Not over the last couple of months, no..

Okay. Okay. And then, John, just heading into ICSC here in about a month or so, just curious what are some of the main messages to your leasing team right now, particularly given some of the headlines everyone has been reading.

Just in the past, I know we've talked about, as an example, like the focus on escalators and achieving a certain level with that with some of the smaller shops.

So just curious, what are some of the themes that you guys are focused on in the current environment in particular?.

First and foremost, we're focused on getting deals done and being productive with our meeting schedule. And as I think you know, we take that very seriously. And every leasing agent that we have that has the pleasure of attending that, knows that they're there to the get business done.

So I don't know that it changed any differently than it has any other year. And we go into it with a very serious program and planned out and we expect these guys to come away with incremental improvement against the backdrop of our portfolio. So that's what I would say.

Tom, you want to add to that?.

Yes, we want to focus on our existing customers, because that's extremely important to us. But at the same time, we need to focus on new opportunities, new concepts that are coming to the market and really make sure that we get coverage across all range.

We have to also look at the mix, how do we make sure that we're providing the best tenant mix in each and every center.

So we're really making people think this year before they go, don't just think about tenants, but think about the right balance, think about the right mix, how we can generate sustaining growth through rent bumps, fixed CAM initiatives, all the things that we pound on. So they got a long list of requirements as they head out here in May..

Our next question comes from the line of Craig Schmidt with Bank of America..

Great. All my questions have been answered..

Thanks, Craig..

Our next question comes from the line of Carol Kemple with Hilliard Lyons..

I know you all don't have any acquisitions baked into the guidance, but what would it take for you all to get excited about acquiring something? Would price just have to come down? Would you have to see a good redevelopment opportunity there? What would it take for you to get excited about that area?.

Well, it's a great question, Carol. I think, obviously, we have to look at a lot of factors and one of the biggest factors is what is our current cost of capital against the asset that we would be acquiring. So right now, we're at a point where there's a little disruption in that. So that is a big factor that is in there.

That said, we're obviously going through a process of looking at recycling capital, recycling assets into capital and thus, we have the opportunity to look maybe a little more broadly. In that case, we want to add to the quality of the portfolio every time we do a deal.

And so the specific real estate is really always kind of sacrosanct to us, that we do not ever waver from focusing on the quality of the dirt. And then what we can do with it from there.

The particular current state of the shopping center or how good it is it or how bad it is, isn't really what we're thinking about, it's the long term viability of the dirt. So that's number one. And then if we can have the luxury of finding something that we think is mispriced or misvalued in some way, then that's generally what we've looked for.

But right now, the environment is tough for that, just based on cost of capital and what's available and where pricing is..

Next question comes from the line of Chris Lucas with Capital One Securities..

Hey, Dan. Just I wanted to go back to Christy's question a little bit, just so I am clear.

The guidance you provide, the 2% to 3% is same-store NOI ex redev?.

Correct..

Okay and the number that corresponds to that this quarter is the 4%?.

No. The number for this quarter is the 3.1%. If you go through and you look at our supplemental, I think we started this mid last year. We provided 2 numbers. The discussion was always what was the drag of the total 3Rs against the same-store pool..

Now, Chris, I just got to interject. When we say the total 3Rs, that's more than just redevelopment. That's redevelopment. That's also repositioning and repurpose. Those are 3 different categories. That's the difference..

Okay. So let me just understand. So your - is there drag from the 3Rs or are they - is that adding to the results at this point? The language is very confusing for me, I apologize..

Okay. No, that's fine. So we don't want to - the headline number and that number we give in guidance, we don't want to pull out - retenanting of anchors. So therefore, the repositionings or retenanting of anchors, so we provide our guidance that says including that downtime, we're at 3.1% this quarter.

Then we turn and say, okay, if we didn't have these repositions, because we're de-leasing projects, there's a lot of disruption in our properties, so if we pull out all of the 3Rs, as John mentioned, the redevelopment, reposition and repurpose, you're at 4%..

And just to give you a little more color, Chris. When you look at the supplemental, on the 3R pages which there's a couple, you will see that certain properties have an asterisk next of those properties. So those are the properties that have been pulled out of the 3% number. Only 9 of them, I believe. I don't know the exact in front of me.

And that's against the backdrop of actually 18 projects ongoing. So because we have various levels of these 3Rs, we determined that it was only - that to be as transparent as we possibly could be. The ones we're pulling out of the guidance number are the ones that are the most - farthest along in the redevelopment process.

And as Dan said, aren't repositionings which we're just maybe recapturing a box, okay? But when we capture a box, it still is disruptive, but we're not taking that out of the guidance number. That comes out of the larger 4% number.

I know it sounds a little confusing, but if you actually look at the sup and kind of study those pages, it's pretty clear, the difference between the 2 numbers. And what we're really trying to tell you in the end, is that the entire 3R program is disruptive to NOI.

And what we're not doing, that a lot of other people do, is to say this is what the number is including redevelopment. And that's basically adding back redevelopments before they sit out a year. To this point, we have done that, because we haven't gotten far enough along in these redevelopments that, that would make any sense.

So again, I know, it sounds complicated, but if you look at the sup and we can talk through it off-line too, to be very, very clear. But the primary difference between the 3% and 4% number is that 3% number, we're only pulling out the 9 properties out of our 120. And the 4% number, we're pulling out all 18..

Got you. Okay. And then, just remind us, so you had 3 Sports Authorities that last year that you dealt with.

Have those all been backfilled and has rent commenced on all 3 of those?.

No. One of them was assumed...

Just wanted to ask, where do we stand with that then?.

Yes, sure. One of them was assumed in Portofino by PGA Superstore. So that left us with 2, both in Florida. One of those 2, we're kind of in late stage negotiations on an LOI and early-stage lease negotiations on 1 deal. And the other one is frankly, just discussions with tenants. So we're still dealing with those 2.

Those 2 are still in all of our numbers, in terms of vacant..

[Operator Instructions]. Our next question comes from the line of Linda Tsai of Barclays..

In terms of the strong gain in your recovery ratio given your fixed CAM initiative, can you just remind us what level you think you might be able to reach on a steady state basis?.

What level on what? I'm sorry..

Oh, on the recovery ratio. Just in light of the strong gain..

Sure. Yes, I think when you look at, Linda, we're still thinking and shooting for the high-80s. I think we're - the 80s, high-80s to 90 would be an objective. I think when you look at this quarter, some - we had a successful tax real estate appeal this quarter, that helped the real estate number, real estate tax number.

Which happens - we're consistently appealing taxes when it's necessary. And we're - we've got a very strong operational person on that, that handles - she has a legal background, that handles that for us. She does a great job. She keeps the taxes at a reasonable level.

You know when they come in, a lot of times what happens is you get taxes on your properties and you'll go back and you feel like you have to appeal 30 of them because they're not at the proper levels. We have been in conversations and stay on top of those on an annual basis. So we don't have a lot of properties that - where taxes flop around a lot.

We've got a pretty good handle on it. But in this quarter, it was a property that we acquired. We were able to go back and appeal the taxes and then we were successful. So I think, on a run-rate basis, I would say, high-80s..

Ladies and gentlemen, that concludes our Q&A session. I would now like to turn the call back over to John Kite for closing remarks..

Well, again, thank you, everyone. We appreciate your time today and look forward to talking to you next quarter..

Ladies and gentlemen, that concludes the call. Thank you, for participating. Have a great day. You may now disconnect..