Everyone enjoyed their lunch, their hot lunch, which we pushed forward, and welcome to day two, afternoon roundtable sessions. It's my pleasure to moderate this next roundtable with Regency Centers. With us today is, to my far right, Mike Moss, CFO. In the middle, Christy McElroy, SVP Capital Markets, and I'm here with my colleague, Andrew Reale. So similar to the other roundtables, we've been giving the companies an opportunity to, you know, just provide an overview of the company. There is a mix of investors in the room. Some, I'm looking at faces, are probably very familiar and some might be newer to the story.
And then on top of the overview, if there's any, you know, particular messages you're trying to get across at the conference, I don't think you provided a quarter-to-date operating update. And then, you know, strategic positioning. And in this room, we've happened to host a lot of your peers, so hopefully we'll be able to see some of the similarities and differences as well.
Yeah, and I'll appreciate that, Jeff, and thanks for having us.
Thank you.
The conference has been great.
Thank you.
Really appreciate it. I'll make some comments just to do some table setting, if that's okay?
Yes, please.
And we'll jump into Q&A. I am really appreciative of having my partner here, Christy McElroy, and you'll hear from her as well today as we get into Q&A. So again, from a table-setting perspective, you heard it on our earnings call last month, those who are closely monitoring. We had another strong quarter benefiting from positive retail fundamentals, robust leasing demand across our entire portfolio of high-quality grocery-anchored assets. We signed over 2 million sq ft of leases in the quarter. Cash rent spreads exceeded 9%, which is meeting our strategic objectives. Our SNO pipeline, our signed but not commenced pipeline, is standing at nearly $50 million of rent. That's providing a very visible and transparent amount of momentum as we head into 2025 from an NOI growth perspective.
I'm most excited about the prospects we've had on our development pipeline. We've grown that to close to $600 million of in-process projects. Our blended yields are in the 9% area on that side of the business. In fact, and we're talking about it, post-quarter end, we've started two new projects that we've announced subsequent to our earnings release. One is an H-E-B anchored center in the Houston market, and the other is a Safeway anchored center in Northern California, in the East Bay, part of the country.
Our expansive platform, our deep tenant relationships, all of that combined with our competitive cost of capital and our balance sheet strength, is what truly differentiates us from our sector peers and those in our industry in general, as we continue to make great progress allocating our capital. We are excited by those prospects and continue to build that pipeline. To remind everyone, we do have a strategic objective of putting out about $1 billion of development and redevelopment investment over a five-year period, so we're well on our way to achieving that objective.
We often discuss the importance of our strong balance sheet and our liquidity position, and in the second quarter, we put those words into action, and we capitalized on the significant disconnect between the public and private market values that we had been seeing earlier in this year. Regency executed on a $200 million share repurchase in the quarter. From our perspective, that ability to invest in Regency-like assets from a quality standpoint at a roughly 7% implied cap rate made a lot of sense in a world where we're consistently seeing cap rates in our sector trade in the 5.5%-6.5% area, sometimes even inside of that, approaching 5%.
And just a few weeks ago, we also took advantage of a favorable window in the capital markets, on the debt side. You know, coming off of our Moody's credit rating upgrade to A3 earlier this year, we issued $325 million of notes at a 5.1% coupon, about 123 basis points credit spread. Importantly, through the repurchases and after the financing of the same, we remained in the 5 to 5.5 times area from a debt to EBITDA perspective, which is right in that sweet spot of where we want to operate our portfolio and our balance sheet. So we continue that flexibility to source new developments, source, fund new redevelopments, and when appropriate, source and fund new, acquisition opportunities. So we're excited to finish the year.
We're even more excited as we look to turn the page into 2025. Our high-quality portfolio, which is intentionally allocated across strong trade areas with a focus on necessity, value, service, and convenience, we think plays really well in today's economy. Our growing development pipeline, capitalizing on our leading market position and track record, and our sector-leading balance sheet and best-in-class Regency team, all of the above providing us the foundation for continued growth looking forward as we look to capitalize on today's tailwinds in the grocery-anchored shopping center landscape. Those are the remarks we'd like to share today. We'd be happy to take your questions. Any other questions in the room?
Absolutely, and again, you know, we wanna make this interactive, so if there are questions, just shout out or raise your hands. I guess let's start with the portfolio. Again, just to try to differentiate between you and some of your peers. I mean, we do our own retail ranking analysis, and Regency does rank tops. We have, you know, several different attributes that we gauge this on: demographics, exposure to number one grocer. You know, I guess can you talk a little bit more about that, and where you are today? Why is that important? We continue to receive that incoming question, even at this conference. A good, healthy debate on, you know, why do demographics matter in shopping centers?
Sure. So you've kinda set me up perfectly. Our intentional kinda strategy comes in two dimensions, right? It starts with a trade area focus, and then we balance that with a format focus. So from a trade area perspective, very intentionally, you know, identifying the strongest trade areas in the country. Generally speaking, high incomes, high densities is the simple formula, but what we intentionally mix into that is a supply view. So looking for low levels of retail supply on a per capita basis, low levels of GLA from a grocery perspective, as well, and then high barriers to entry. So pushing that through our proprietary DNA model that we use internally to identify the three-mile or so trade areas that we wanna invest in. We pair that with what we believe is the right kind of format strategy.
So smaller format, neighborhood-centric assets with a grocery component are... And higher propensities of shop space, those are our biases, I would say. We have anchor space in the portfolio. We like the durability of that income stream, but there is a slight bias in Regency strategy to neighborhood, smaller format, grocery anchor shopping centers. In today's economy, as you suggest, that's maximizing both the disposable income from a trade area strategy and combining that with this necessity-based merchandising strategy. So grocery stores, moderately priced restaurants, liquor stores, haircuts, nail salons, personal services, all, coffee, all of the daily, monthly, weekly necessities that our consumer, our end consumer uses in their life. We think that that combination provides durability, safety, but it allows us to play some offense, too.
And our product type right now is right in the sweet spot for retailers.
Okay. I mean, we are seeing limited new development. So just to ask-
Yeah.
Does that mean that every market has these barriers to entry? That, you know, it's really, as we think about the strategy, you know, is it more of a focus on the format and the grocer? Or you would argue and say, "Okay, yes, we've had limited development, but it's not a fair comment to say, 'Okay, you know, every market has barriers to entry,' that we will start to see some development in some markets?
Yeah, yes.
Yeah.
All the above, I think. So there will be less supply growth in our sector. There has been less supply growth. There will continue to be less supply growth, certainly compared to our sector fifteen years ago. Within that context. So that's good. That's good for our in-place portfolio. That's good for those who own high-quality grocery anchor retail environments. However, there will be population growth in select markets. There will be, groceries who are looking to expand into new markets, and in that more limited supply environment, Regency will get more than its fair share of that investment opportunity set. Again, given our differentiating advantages of our relationships with landowners, our deep relationships with tenants, and our capital access and availability, and not to mention the cost of the same. So that...
It's a really nice setup right now, from the supply perspective, for Regency to find opportunities to grow within that, yet at the same time, protect and increase the value of our whole in-place portfolio and assets.
So from your ownership or whatever analysis you're doing, simply owning the number one or number two grocer in, let's just say, weaker demographic markets, that's just not something you're gonna entertain or, or do?
Not part of our strategy, and weaker can be debated. I mean, that, that's a relative term, right? So, but-
Yeah.
But we are-
Say, lower income.
We're target-
Lower income.
Yeah.
But lower income than your portfolio.
Than our portfolio.
Yeah.
We're targeting A- as we think about incremental new investment activity. We wanna compare it to Regency today, so it's consistent with what we own today or better: quality, growth, and can we fund that creditably? That's the simple formula of how we think about-
Okay
... investing capital.
There any other questions on demographics that I'm missing? 'Cause again, it's been a big topic now for two years, I'd say, and something that, you know, it comes up a lot, whether people appreciate or not, and it goes into the, what multiple people are willing to pay for a company or not. I guess, it, you know... Please, go ahead.
Maybe on the demographics. So is the recent variance in performance assets that are, like, good demo assets versus the middle-of-the-road demo assets, as far as, like, growth rates or market growth metrics go?
Yeah. It's a good question, and it's part of the response to that is the consistency of Regency's portfolio tends to lead to the same conclusion, right? We intentionally, our assets generally look the same no matter where they're located geographically. So those trade areas are very similar. So I don't know that I could give you a fulsome picture of what a lower demographic trade area performance would look like in our portfolio because the majority of our assets are in that higher echelon. We aren't seeing much by way of differentiation geographically, whether they're north or south. From a Sun Belt perspective, we get that question often. We're not seeing much differentiation across the tenant type, really. On the margins, we're seeing some positives in medical and health-related uses on the shop space.
We're not seeing, you know, entertainment, theaters, very lower allocations within our portfolios and weaker performance. We continue to believe that that combination that we offer, higher incomes, higher densities, higher disposable income, combined with lower, like, necessity-based retail, is the right formula.
Is it simply to you feel, again, through history, that will provide the most resiliency during a downturn? And/or is it are we seeing a differentiation in cap rates, right, at, you know, between-
I think they go together.
Right.
Yeah.
Are they going together?
I think they go together. I think you're seeing-
They historically have.
Yeah.
But I think in today, all we keep hearing is, you know, this range, this very tight range, but is there a difference?
I think... So five and a half to six and a half, as I said before, sometimes better than that for our product type, something that looks like a Regency center, grocery-anchored, neighborhood format. As you kind of move out this format spectrum, and potentially on the trade area spectrum, from a quality perspective, so larger format, maybe larger, lesser quality trade area, you start to move north of that-
Okay
... on the valuation side. It's a little bit hard for us to comment because we, from a strategy standpoint, we don't target those-
Right
... we don't follow them as closely, but the data that we're looking at and the intel we're receiving is that it does gap out from a valuation side.
Then, if safe to assume all of the $1 billion and again, how much of that is ground up?
It's, there's an ebb and flow. When we talk about our development and redevelopment capacity, we talk about them together.
Yeah.
There was a period in time where it was more biased to redev. Today, it's the bias is to ground up.
Right.
I would anticipate, going forward, that, you know, there should be more than half of that coming from ground-up development as we think about that billion-dollar target.
If you think about the $250 million that we're targeting in terms of total blended development, redevelopment, we tend to ebb and flow between, call it, $50-$100 million, maybe a little bit more than $100 million of redevelopment, but that's largely dictated by the opportunities within our own portfolio, right? And, you know, a little bit of, you know, kind of core plus what we can find in acquisitions, but that's largely within our portfolio. As we think about that $250 million, as Mike said, the majority, you know, of that, more than half of that, will come from ground up as we've grown that pipeline.
From the ground up, safe to assume you're sticking with the criteria, but can you give some examples? Is it some emerging markets? You talked about population growth, like-
Yeah.
Yeah.
I think the two starts in the quarter are the perfect examples.
Yeah.
Right? You have some themes that are developing. Master-planned communities are great partner relationships for Regency to develop with. So these are landowners developing large swaths of opportunities that are gonna include multiple uses: single-family home, multifamily, maybe a regional office, maybe a hotel use, and they need a retail amenity for that grand and that larger-scale investment. That situation is where you can find that combination of land price, rent, and construction costs that make the formula for a developer work, so that we can hurdle over our yield requirements. Another example, the recently announced Safeway anchored center. Safeway, as owner of the land, right, looking to partner with a developer to then agree on a land value and a rent that will compensate for the construction cost, that'll, again, meet our yield requirements.
The benefits of Regency and why we can find these diamonds out there in an environment where there's less development happening is our scale. We have development expertise with real history, and development acumen in all of our markets. So we're looking constantly everywhere where there might be growth, our relationships with those best-in-class grocery operators looking to expand, and then again, coming back to our capital. It is harder. The vast majority of development in our space happens locally and with private developers and is definitively harder and more expensive to access capital sources. We have free cash flow as our dedicated capital source to fund our development business, and it's earmarked, it's prioritized to fund that development arm of our business. And that's a major differentiator in the space.
Can you explain the process, on, I guess, you know, land acquisitions, entitlements, permits? Like, you know, I guess, what's the... What are the steps for Regency in terms of, of-
Yeah
... land banking?
Yeah, yeah, I appreciate that.
Yeah.
So it's good, it's like-
Go, no-go.
Yeah, there's no spec development at Regency. From a risk mitigation perspective, you know, we're not closing on a piece of land without entitlements in hand, the anchor leases executed and committed, and largely, most of the shop space, at least under LOI or some visibility to demand. We're either buying out our construction contracts or have meaningful quotes in hand. So from a risk perspective, the team does a phenomenal job of managing that risk down to a level where now you're left with lease-up risk. There's always some risk in the site work when you put the first shovel in the ground. To compensate us for that, we're looking for at least a hundred and fifty basis point spread between the yield on the investment and what we would circle as market cap rates in the community.
And for that spread, and we're doing better than that today. For that spread, we think we're being more than compensated for the value, for the risk we're taking.
And so these are options on the land-
Effective-
-until you can-
Right. You're effectively partnering with a landowner-
Got it
... until you put the pieces together.
Are you seeing opportunities for even more development, where these developers, maybe they do have a great site, entitled, prospects for leasing, but they don't have the capital, where you could step in at that point?
100%. It is a unique point in time in this, where we find ourselves today, where we have where we are. There are local private developers who have projects in their hands, and we're getting called in to help maybe figure that out. And that conversation can be in the form of capital, that conversation can be in the form of expertise across the board. And we are I think we're great partners, and I think we can find ways to help unlock the opportunity that's presented there. It's not without work, and these will take, oftentimes take some rework, whether it's the lease itself, whether it's the value of the land, whether it's the construction, whether it's the design.
But we've had quite a few success stories where that trade is happening.
There are mezz finance opportunities?
Mezz finance?
In all cases.
There are capital opportunities for us to invest in, in different portions of the stack. Regency, from Regency's strategy perspective, we will use that lever, but only if the asset qualifies for ownership. So it's not. We aren't standing up a lending business, but there are others who are. Regency's not doing that, but if there's an asset where the only way to be involved is through capital for a brief period of time, maybe with an option to buy, we will absolutely consider that.
I happened to talk to a chairman today of another company, and we're talking about growth opportunities for companies and best platforms, including, you know, fund business, and, you know, she's in it. Bottom line, you know, is that something that Regency, you know, would consider doing in a bigger way again, some leveraging the platform, your expertise?
I'll start, and I'd like you to finish 'cause we have some news there. We have harvested some smaller JVs, rolled them up post-COVID to this point. So USAA, we had a partnership with, we've bought them in. CalSTRS, we had a partnership with, we bought them in. That's not a trend that I would expect to continue. We the ending joint significant joint venture partners with whom we work with are State of Oregon and CalPERS, via First Washington. Great partners, long duration, great relationships, both of which are looking to actually grow in the space, not shrink. So I would continue to expect that those partnerships will grow. In fact, we have some capital that we've raised with Oregon.
Yeah, so one of our largest partners in the State of Oregon has, and which we tend to, as we're looking at acquisitions, we provide them an opportunity to take a look at that acquisition on a rotational basis. It's about every other acquisition and whether or not they want to participate. There's a little bit more equity left in their current commitment. They've just re-up their commitment by another $150 million of equity, which provides, you know, over $300 million of additional buying power in terms of total investment. So, as we think about partnerships, you know, it, we, we think about them in three ways. Capital, right? Expertise, and access to opportunity. Expertise is more about non-retail, non-strategic types of investments.
Opportunity is, as Mike mentioned, you know, where we otherwise wouldn't have access to that opportunity. And then capital, we don't necessarily need the capital. We can do this on a wholly owned basis, but Oregon is a great partner. They love what we invest in and the type of real estate that we invest in. And it allows us an opportunity to maybe get a little bit of our... a little bit more ROI above what, you know, we can potentially get from a going-in cap rate on a traditional acquisition, especially on core properties. So, it's a great partnership. We're really happy to have grown that, and, you know, look forward to the future with them.
And so, do you prefer then to keep these investments, these partners separate, so it'd be... It's separate joint ventures? It's not one fund.
Yes.
Correct.
Separate, yeah.
That's the preference.
That's the preference. Joint ventures.
Okay.
We find that,
We did a fund pre to ICSC.
Yeah.
I know.
Yeah.
I know.
We talked about that before.
Yeah. The alignment of interest in a bilateral JV is-
It would seem like in shopping centers, it could be this, a big opportunity to fund. Again, I know it was done before world financial, but times have changed, and we keep hearing, since ICSC, the capital chasing, shopping centers, that maybe a fund today could be appealing, but it sounds like you went further joint venture.
Continue with the joint venture strategy.
Okay.
There's a lot that you have to think about in terms of leveraging the platform, right? And in some property verticals, it may make a little bit more sense where there's lower touch, the more commodity-like assets. I think about industrial. When I think about self-storage, you can leverage your operating platform to, you know, to have a fund structure or larger JV structures. In a business like ours, which is more active management at the property level, higher touch, you know, you have to consider the balance and the trade-off between, you know, leveraging your platform and what you're giving up to gain that greater size.
Fair. Proper use of time, you're saying?
Right.
Okay, that's a go, great point. You know, Mike, you started off that you're excited about twenty-five, and-
Mm-hmm.
This last earnings call, I don't know, all these years I've covered Regency, might have been the most excitement I've heard from everyone. And on the call, you talked about hitting on all cylinders, including the share buyback. So, you know, and then, obviously, investors want to hear about growth and to hear that you're excited.
Yeah.
What are the differences today, let's say, versus a year ago or six months ago?
Yeah, so you know part of that excitement was coming off of the front half of twenty-four, which had some circumstantial and somewhat intentional vacancy that we had to work through. And that message not only disappointed maybe some in the room or some of our investors, but disappointed us. We had some pretty weighty lease expirations. Two in particular were in this market in Manhattan, and it's not part of our strategy. It's kind of atypical leases, but high kind of dollar value leases that expired, and the tenants chose not to renew. Together with some circumstantial, intentional redevelopments, where we took anchor leases offline. And in fact, the deal in Norwalk, where we converted a Walmart into a Target anchored center at a significant rent increase.
But it comes with some downtime and some lost rent, lost rent. And working our way through that trough of earnings potential, you know, led to more maybe of a deflated kind of attitude that you may have been picking up on, and we've worked through that. What never changed, though, was the percent leased target at the top. We maintained our percent leased. Now, that's not rent-paying occupancy, but percent leased at the top through that change. And then very quickly, we could see that that commenced occupancy rate, which now stands at three hundred and fifty basis points of SNO, was going to start to quickly compress.
And we hit that pivot point in the end of the second quarter, highly transparent, highly visible outlook on the top line from a NOI perspective and a base rent perspective. And then the conversation then turns to the hole in the bucket. You know, what's happening with move-outs? What's happening with bankruptcies? What's happening with bad debt expense? And from a tenant health perspective, when you think about those considerations, you think, well, we're still only 1.5%-2% of watch list tenants in the portfolio. It's very low. We still are running at bad debt ratios and at historical averages, which is about 50 basis points of total revenues. From a...
And from a move-out perspective, our retention rates are at, you know, on the higher end of historical averages, 80%, on a retention ratio basis. So you feel really comfortable about not losing rent-paying occupancy, and you combine that with growing top-line base rent projections, and it's not too hard to feel pretty good about yourself going forward. And then you mix that in with this growing development pipeline, which as an aside, and Christy loves to make this point, it's a great one, doesn't come through same-property growth. It's external growth from a metric perspective, but it's $250 million that starts in 2024. I think we're gonna replicate that again in 2025. I mean, sorry, in 2023. I think we're gonna replicate that in 2024.
So that's two consecutive years of $250 million. That will eventually come into our earnings over time, as we deliver that space. It's hard, it's hard not to be excited. And then you look at the street values, you look at our... Which led us to our repurchases. We feel pretty good right now, down in, you know, in Jacksonville, as we tell our story and kind of stand behind it, from a repurchase standpoint. We are looking forward to giving guidance out on a more formal basis later, and we will do that. But our expectations right now are appropriately high.
And as you think about that runway, and we like to show this slide in our deck, showing, you know, peak occupancy, peak leased, and commenced levels, relative to where we are today. We do have about 220 basis points of potential runway in our commenced occupancy to get back to peak levels. As Mike has said many times, you know, in a really great year, we're probably at about 100 basis points of movement. So as you think about that 220, you know, it might take a couple of years, a few years, but, but that's kind of where our eye levels are.
As you know, while it's difficult to look at the SNO pipeline and say, "This is exactly how I'm gonna model it," you can look at it and say, there's a tremendous amount of leasing momentum in the pipeline and that you know, barring any you know, massive bankruptcy, as Mike mentioned, the hole in the bucket you know, we should be able to continue to move that needle forward heading into twenty twenty-five.
And then over the past couple of years, I think there was also just noise from the pandemic, right?
Yeah.
One-time items there, you know, and everyone, right? Are we past that? Like, when we-
We are largely past that.
Okay.
I mean, so yes, we're past that. We're still, in 2024, we're still comping against some prior year collections and some noise in non-cash. But we also, you know, so once we get into 2025, we'll be past that.
Sure.
We'll be past the COVID noise.
Okay.
There's still some. I mean, within non-cash, there's still some kind of movement, right? We've had some early move-outs, which, on, you know, purchase accounting assets, so where we've taken some accelerated mark-to-market revenues, which have impacted our non-cash, so there's a little bit of that in there. But largely, when it comes to one-time items, you know, we're kind of largely past that. I mean, the biggest things are just kind of the pieces as we head into 2025, the biggest pieces related to same property, which we've talked about, and then kind of this debt refinancing, you know, headwind that we're all facing throughout the REIT sector as we think about refinancing our debt. We did a bond deal in January to prefund our debt maturities, that were coming due in June.
We were able to offset that carry in deposits for the first half of the year, and then when we paid down this, you know, high threes debt with low fives debt in June, we'll start to see that impact in the second half of the year, and then that'll carry into 2025. But, you know, as you think about going forward, refinancing impact, we don't have some mortgages due next year, but the largest, our largest maturity next year isn't until November. So, you know, we are intentionally lucky in that we have a very staggered debt maturity schedule and among the lower levered in the space.
And so we're in a really good place, and on top of that, as you know, we've talked about, and as Mike talked about in his opening remarks, we do have a cost of capital advantage, especially on the debt side, relative to our peers, given our credit ratings, given our standing in the bond market and fixed-income community. But we've got a pretty low spread there on our debt.
... That's great to hear. 'Cause, I mean, you know, I'm assuming us, the sell side, buy side, everyone's been modeling, right, the refi-
Yeah.
Higher rates, right? And it's, you know, this time of the year, come November, the last couple of years in shopping centers, we've just, you know, be aware of this next year, this, there's tough comps. So it sounds like, for the most part, when we're looking at 2025, it's a bit cleaner, 2025 over 2024.
From a debt refinancing perspective?
No, no.
Just generally.
Oh, just generally.
Yeah.
It's definitely cleaner.
I agree with that.
I think the debt, everyone understands, everyone gets. It was, you know, and it was across, I mean, many sectors, many companies, but in particular, the last-
Yeah.
Year.
Prior collections.
Yeah.
COVID collections-
Correct
-behind us.
Yeah.
We have a little bit of transition from the M&A we did in 2023.
Right.
but it's small.
Right.
We're largely behind it.
Okay.
or in front of it, sorry.
So just from a mindset standpoint, we go back a year ago to today, you know, in the next couple of months, you start your budgeting process. End of the year, the mindset is positive, push, grow?
Yeah. I like to simply say it feels like, you know, the pluses are exceeding the minuses, and we have the foundation of growth in that SNO pipeline. That's where we start. We gotta deliver that, and we will. We'll manage, you know, to the best of our ability, and this is a big, this is a big unknown, and the plan is, you know, BK watch lists, what's gonna happen in that side of the business, move-outs, you know, that's the hard work of putting a plan together.
What's your Dollar Tree exposure?
Dollar store exposure? It is small, but-
Yeah, it's pretty small.
We'll get that to you.
Dollar Tree is one of our top twenty-five, but that's, that's really the largest exposure in there. Yeah.
I mean, within the watch list, the Container Store at 40 basis points is the, from a single credit-
Yeah
is the highest one.
Yeah, so our watch list is, as Mike said, about 2% today, and Container Store is the, at the 40 basis points, but that also includes tenants that have recently emerged from bankruptcy, too, so it's very manageable, pretty manageable.
We've talked about, and this is all inclusive, included in the $50 million of pre-lease, but delivering on those redevelopments, right? And that being a 100 basis points or better positive contribution to our same property growth rate next year. Historical averages is 50 basis points or better, so another really kind of positive year of delivering space, but that's, again, you can't add the $50 million plus the 100 basis points. They're, they are similar concepts. So we feel good.
And we may have missed the returns on all of this, the devs, the re-devs, right? The returns are staying?
All in, it's in a 7%-9% area. You know, the two projects I talked about earlier average on a weighted basis about seven and a quarter for two ground-up projects. So depending on the project, you're in that bandwidth.
Are there any issues there that when it comes, these projects are coming online, year one, they're dilutive because of, you know, capitalized interest?
No.
Anything like that? No risk on that.
No.
Okay, great.
No.
Okay. All right, good. I know we're out of time. Maybe we, if there was one other question. If not, we have three rapid-fire questions, rapid answers.
Oh, jeez.
I'll let Andrew handle that. Thanks, Andrew.
First, do you expect real estate transactions to increase once the Fed starts to cut?
Uh, yes.
Okay, and when do you expect them to pick up? Fourth quarter this year, first half, 2025, or second half, 2025?
Fourth quarter.
Second, how would you characterize demand for space today? Improving, steady, or weakening?
Steadily high. Steady.
And finally, how would you characterize your AI spending plans over the next year? Higher, flat, or lower?
Uh, flat.
All right. Thank you.
Thank you.
Great.
Thank you.
Thanks to the Regency team. Thank you.