Q1 2024 Retail Opportunity Investments Corp Earnings Call

Participants

Lauren Silveira; Chief Accounting Officer; Retail Opportunity Investments Corp

Stuart Tanz; President, Chief Executive Officer, Director; Retail Opportunity Investments Corp

Michael Haines; Chief Financial Officer; Retail Opportunity Investments Corp

Richard Schoebel; Chief Operating Officer; Retail Opportunity Investments Corp

Jeffrey Spector; Analyst; BofA Global Research

Todd Thomas; Analyst; KeyBanc Capital Markets

Juan Sanabria; Analyst; BMO Capital Markets (US)

Craig Mailman; Analyst; Citi investment Research (US)

Wes Golladay; Analyst; Robert W. Baird & Co Inc

Cesar Bracho; Analyst; Wells Fargo Securities, LLC

Paulina Rojas-Schmidt; Analyst; Green Street Advisors, LLC

Michael Mueller; Analyst; J.P. Morgan Securities Inc.

Presentation

Operator

Welcome to Retail Opportunity Investments 2024 first quarter conference call. Participants are currently in a listen-only mode. And following the Company's prepared remarks, the call will be opened for questions.
Now I would like to introduce Lauren Silveira, the Company's Chief Accounting Officer.

Lauren Silveira

Thank you. Before we begin, please note that certain matters which we will discuss on today's call are forward-looking statements within the meaning of federal securities laws. And these forward-looking statements involve risks and other factors which can cause actual results to differ significantly from future results. It are expressed or implied by such forward-looking statements. Participants should refer to the Company's filings with the SEC, including our most recent annual report on Form 10 K to learn more about these risks and other factors. In addition, we will be discussing certain non-GAAP financial results on today's call. Reconciliation of these non-GAAP financial results to GAAP results can be found in the Company's quarterly supplemental, which is posted on our website.
Now I'll turn the call over to Stuart Tanz, the Company's Chief Executive Officer. Stuart?

Stuart Tanz

Thank you, Lauren, and good morning to everyone here with Loren and me today is Michael Haines, our Chief Financial Officer, and Rich Schoebel, our Chief Operating Officer. We are pleased to report that we are off to a solid start thus far in 2024. We continue to make the most of the strong demand for space across our portfolio, especially as it relates to anchor space. At the start of the year, we had four anchor spaces that recently became available an unusual occurrence for us, given that we have maintained our anchor space at 100% leased for the past seven years, we are pleased to report that we currently have four terrific national tenants lined up to take all of the space and at higher rents. In fact, on a blended basis, we expect the increase in rent will be more than double the previous blended rent.
Turning to acquisitions, we recently acquired a terrific grocery-anchored shopping center located here in San Diego market. The property serves as the primary shopping center anchoring a master-planned community that is situated in one of the most sought-after affluent submarkets in San Diego, truly irreplaceable real estate through a long-standing off-market relationship. The seller came to us directly seeking to execute a quick transaction given that the property is located literally in our backyard, we knew this center extremely well, and we're in a strong position to accommodate and efficient closing center features, not just one but two supermarkets, Trader Joe's and Stater Brothers, both of which are generating strong sales numbers and have been thriving at the property for years in the few short weeks that we've owned the property, we've already leased the available space at the center. Additionally, several of our long-standing tenants, including a grocery tenant has reached out to us to express their interest and leasing space at the center. Safe to say we're very excited to own this property in terms of the numbers. We acquired the shopping center for $70 million, equating to a 6.75% cash yield, which is north of 7% on a GAAP basis. Additionally, going forward, over the next couple of years. There are opportunities to release below-market space and remerchandise some in-line space that should grow the yield. Notably with respect to dispositions, we currently have two properties under contract to sell totaling $68 million with a blended exit cap rate in the low sixes. From our perspective, selling these properties and effectively redeploying the capital accretively into an irreplaceable asset such as our San Diego acquisition, enhances the underlying intrinsic value of our overall portfolio as well as our ability to continue growing cash flow in the time ahead.
Now I'll turn the call over to Michael Haines, our CFO, to take you through our financial results for the first quarter. Mike?

Michael Haines

Thanks, Stuart. During the first quarter, total revenues increased to $85.3 million in part driven by base rents, which came in higher than our internal forecast and also in part by higher than usual amortization of above and below market rents. As we discussed on our last call, an anchor lease expired during the first quarter that was substantially below market, which accounted for the bulk of the increase and which we had taken into account with respect to our FFO guidance range for the year.
Gaap net income attributable to common shareholders was $11 million for the first quarter of 2024, equating to $0.09 per diluted share. And FFO for the first quarter of 2024 totaled $37.9 million, including $0.28 per diluted share.
In terms of same-center net operating income for the during the first quarter, same-center cash NOI increased 5.7%, which was driven by a balance of base rent and recovery increases as well as an increase in other income in connection with our lease recapture initiatives of the 5.7% increase is above our internal forecast for the first quarter. We remain cautious looking ahead, particularly given the anchor space re-leasing activity that Stuart spoke of. All we have all of the available anchor space currently spoken for there will be some downtime between leases, which is reflected in our same-center NOI guidance range for the full year.
Turning to our financing activities, as Stuart indicated, we recently acquired a shopping center for $70 million. While we utilized the credit line to initially fund the acquisition, our objective is to effectively finance the transaction with the proceeds from the pending dispositions, which we expect to close in the next 60 to 90 days.
In terms of our balance sheet and financial ratios, net debt to annualized EBITDA was 6.4 times for the first quarter, down from 6.7 times a year ago period. The start of the second quarter, we retired in full a $26 million mortgage. As a result, we currently have only one mortgage loan remaining for $34 million, meaning that 93 of our 94 shopping centers are currently unencumbered and the place mortgage matures in about 18 months from now, looking ahead with respect to refinancing the bonds that mature at the end of the year, we continue to watch the market closely and are in a position to move forward opportunistically when market conditions become more settled and favorable.
Now I'll turn the call over to Rich Schoebel, our COO. Rich?

Richard Schoebel

Thanks, Mike. As Stuart highlighted, demand for space across our portfolio continues to be strong. During the first quarter, we signed 87 leases totaling over 383,000 square feet, the bulk of which centered around renewing valued anchor tenants. Specifically, during the first quarter, we renewed seven anchor tenants totaling 207,000 square feet, three of which were actually not scheduled to mature until next year. All three of those tenants came to us early with two of the tenants seeking to renew their lease for another five years and one of them, a long-standing grocery tenant seeking to renew their lease for another 10 years. As we noted on our last call, four anchor spaces recently became available totaling 179,000 square feet and as Stuart noted, we currently have new national tenants lined up to lease the spaces, all of which will be a terrific new, strong draws to our centers. Additionally, all four leases will have 10-year initial lease terms and all at higher rents. We are currently in the process of finalizing the lease agreements. Once the leases are executed, we expect to deliver the spaces expeditiously as there is only a limited amount of prep work required on our part.
With respect to non-anchor in-line space, demand also continues to be strong during the first quarter, we signed non-anchor leases totaling 176,000 square feet. And as with our anchor leasing activity, our in-line leasing activity centered around tenant renewals with a good number of them also coming to us early to renew.
In terms of re-leasing rent growth, we posted another solid quarter, achieving a 12% increase on new leases signed during the first quarter and a 7% increase on renewals. While our first quarter leasing volume was among one of our most active first quarters on record, we are poised to potentially have an even stronger second quarter. In addition to the anchor leases that we are finalizing, our non-anchor leasing pipeline is very strong as well, being driven by a diverse mix of necessity service and destination tenants that are seeking to implement expansion plans across core West Coast markets.
Lastly, in terms of getting new tenants open, we continue to make steady progress during the first quarter new tenants representing $1.4 million of incremental annual base rent on a cash basis opened and commenced paying rent. Additionally, new leases signed during the first quarter added just over $1 million of incremental annual base rent. Accordingly, at March 31st, we had approximately $6.7 million in total of incremental annual base rent from new tenants not yet open the bulk of which we expect will do so as we move through the year.
Now I'll turn the call back over to Stuart.

Stuart Tanz

Thanks, Rich. In terms of the acquisition market and the current state of play. The recent renewed concerns regarding inflation, along with corresponding rise in interest rates has yet again caused market activity to pause on the West Coast as a number of buyers have quickly moved back to the sidelines. We think that this could potentially work to our advantage as the year progresses, especially as it relates to off-market opportunities that could arise involving private owners facing looming mortgage maturities. With this in mind, we continue to be proactively engaged and continue to have pro proactive discussions with our off MarketSoft sources.
Lastly, I would like to briefly expand on Rich's remarks regarding tenant renewals. From our perspective, tenants consistently come to us early both anchor and non-anchor tenants to renew their leases for another five to 10 years out in the face of uncertain economy, we think speaks volumes as to the continued growing appeal of the grocery-anchored sector in general and specifically speak to the attributes of our portfolio. It's also indicative of the underlying strength and stability of our core tenant base and their business prospects going forward.
Furthermore, following the pandemic tenants have since shifted to being more guarded in carefully selecting the communities and shopping centers in which to expand their businesses. Needless to say, we've worked hard to capitalize on this shift, which is reflected in our consistently strong leasing results year after year and is what drives our disciplined acquisition strategy. Looking ahead, we believe that our properties are well positioned today with their location attributes, compelling demographics and strong grocery daily necessity focus to continue being among the top sought-after shopping centers of choice on the West Coast. By these valued discerning tenants now we will open up the call for your questions. Operator?

Question and Answer Session

Operator

Thank you. To ask a question, please press star one one on your telephone and wait for your name to be announced to withdraw your question, please press star one one. Again, Please standby while we compile the Q&A roster. Our first question comes from Jeffrey Spector with Bank of America Securities. Your line is open.

Jeffrey Spector

I'm sorry if I missed this. Did you comment on your expectations for that for net acquisitions this year? Are you still in the range of $100 million to $300 million?

Stuart Tanz

Yes, we are. We are -- although the acquisition market is currently pause, things can change very quickly. But yes, the answer is yes, we are still on tap to look at external growth in that range.

Jeffrey Spector

Okay, great. Thank you. And then can you elaborate a bit more on the comments on 2Q, and I think Mike commented on expectations on 2Q leasing to be stronger. We're seeing in some other sectors where companies are slowing leasing decisions. So I found that remark to be very interesting.

Richard Schoebel

Sure. This is Rich. As we mentioned, we've got these tenants lined up for the anchor spaces and the demand for the shop space continues to be very strong. We're receiving multiple LOIs on the shelf space and on the anchor space on the leasing team, while it is still taking a touch longer to get to the signature still has a lot of demand for all the available space.

Jeffrey Spector

Great. So no, no evidence of any slowdown in leasing discussions now. And then my last, I guess, can you comment a little bit more around the senior notes coming due in December, the thinking there? And and is there a certain trigger that, you know, would push you to execute sooner than later.

Stuart Tanz

I would just say, Jeff, it's just basically market conditions in on that. Obviously, the 10 years ticked up quite a bit recently, and that's obviously not favorable for us, but it seems to move around quite a bit. So the good news is we've got a little bit of time before the end of the year and look to transact probably in the obviously the back half of the third quarter like we did last year.

Jeffrey Spector

Great. Thank you.

Stuart Tanz

Thank you.

Operator

Thank you. One moment for our next question and our next question comes from Todd Thomas with KeyBanc Capital Markets. Your line is open.

Todd Thomas

I just wanted to follow up first on the net investment guidance of $100 million to $300 million, you're roughly net neutral year to date, assuming the dispositions closed in the next 60 to 90 days, I mean, how would you how should we think about funding future investments? I think the previous guidance assumed $60 million to $180 million of equity issuance. Was that still on tap. I'm just curious, you know, sort of these are the your comments of buyers and sellers move back to the sideline and transaction activity may slow a bit and sort of how you're thinking about the capital markets within all of that?

Stuart Tanz

Sure. Well, I mean, look, we're certainly not issuing equity where our stock is currently trading. So we will accelerate, continue to look at accelerating the disposition side to help pay for more acquisitions or for more growth as we move through the year and subject to market conditions, we know if the stock, you know, does move up accordingly and we can continue to buy it accretively, then we'll look to the equity market as well, but primarily being funded through dispositions more than anything else TODD.

Todd Thomas

Okay. And then Stuart, you mentioned roughly doubling the rent on the vacant anchor GLA. How much CapEx is estimated as it pertains to those leases? I wasn't sure if that was on a net effective basis. And then can you provide some sense of timing around when rent may commence, assuming all the leases are executed as as anticipated?

Stuart Tanz

Yes. I mean, look that it's basically from a CapEx perspective on all the anchor leases, you're looking at $75 million to $100 million on our comment is around on net on a net basis in terms of doubling the rent. So as an example, the one big lease we're on is actually with an increase, it's over 300%, but after CapEx, as you heard in the comments of, you know, to double the rent so on, we're expecting again, as Rich touched on all and actually one of the leases has already been executed, but the balance to be executed during the quarter. Delivery should take place within probably depending on how much or what which we have.
We're thinking it's probably nine months in terms of fit out, as we mentioned in the comments, some of the spaces are basically in deliverable condition on, but obviously the tenants will have to do some work to fit out the space for their needs. But I mean, I think from a rent commencement, probably early 25 remainder after some of this late 24, but early 25.

Todd Thomas

Right, got it. And some of this will be same space. Some of this will will not. Is that right?

Stuart Tanz

We all think it's all single basis evolving space forever.

Todd Thomas

Got it. So we should see as leases are executed in sort of next quarter or perhaps, you know, third quarter we'll see that reflected in the comp leasing activity.

Stuart Tanz

That is correct.

Todd Thomas

Okay. And then last question, just on the same store in the quarter, Mike, expenses were down, recovery income was higher. I suspect that was that dynamic is what drove sort of the growth, the higher growth relative to budget in the quarter that I think you mentioned, but I wasn't sure if that had something to do with is there some of the anchor spaces that were recapture that were maybe paying a lower share of their expenses, but occupancy was down a little bit. Just unsure what happened there, if you could maybe talk about that and what to expect in terms of the expense recovery rate going forward?

Michael Haines

Actually, some of the same-store, I think, was the combination of a variety of things as lower bad debt this year lower decreased operating expenses, higher base rent as of the myriad of a number of things that variables came in stronger than we expected. Obviously, same-store moves around each quarter, sometimes fairly significantly. And but again, looking at full year, we're still being cautious about the 1% to 2%, hopefully at the higher end, particularly given the anchor spaces we just spoke of.

Todd Thomas

All right. Thank you.

Operator

Thank you. One moment for our next question or next question comes from Juan Sanabria with BMO Capital Markets. Your line is open.

Juan Sanabria

I'm just hoping you could talk a little bit about the latest thoughts on Wright and I think they've increased their store closure count and maybe there's some maybe delays or hesitation there and some back-and-forth in the market that they may pursue Chapter seven. So just curious on what the plan would be if that were to eventuate with Rite Aid?

Stuart Tanz

Well, yes, obviously, as you're touching on there, there's a bit of uncertainty about, you know, the final outcome of the Rite Aid situation. You know, we have reached agreements with Rite Aid on all the remaining locations on extending the terms on most of those. And we are hopeful that that plan will get approved. But, you know, in the event that it doesn't. You know, the demand for our spaces continues to be very strong. And as we touched on with the spaces, we did get back some, they were spoken for very quickly on. So while we're hoping that the plan gets approved, though, we're also prepared to capitalize on the opportunity if it doesn't.

Juan Sanabria

And then what's the closure at this point in what would be prospective in terms of what you'd need to re-lease once those stores close based on that current plan? Is it said?

Stuart Tanz

Well, if you look at what's in the pipeline in terms of leasing that wouldn't be the current locations that they gave up. So yes, we started out with 15 Rite Aid's, three of those were rejected and we did sign agreements on the remaining 12, um, they recently announced some additional closures of one of our stores was on that list. It's not an anchor space and the day after it was listed, the adjacent grocer called us about expanding. So again, you know, we feel that there's still a lot of demand for these spaces. And, you know, while we would rather not get them back on. We're prepared to get them back. And we've already, you know, got our ducks in a row and our leasing team is focused on you know talking to potential tenants in the event that that happens.

Juan Sanabria

Okay. And then how much NOI, I guess would go away temporarily on the anchor spaces that you've spoken for the lease, but just thinking about the cadence of same-store NOI growth and what those eight releases mean to your forecast for the rest of the year. Just so from a modeling perspective, we can capture that appropriately.

Michael Haines

Juan, are you referring to the three that we got back already in advance East and not and in fact, yes, we are not a lender. We didn't model anything for those spaces, and that's only for same-store NOI or FFO. So there's nothing in the numbers for that and Mike will get back in terms of the number if that's what you're looking for here, how much was in the first quarter just to make sure that we're capturing whatever the sequential drop-off may or may not be, but we can follow up off-line in Q1, there was no, there was nothing in our numbers for the three ready spaces.

Juan Sanabria

Okay. And then lastly, was there any sort of comp on issue with regards to expenses, I go back to Todd's question on same-store NOI that that may have positively impacted the year-over-year results there that we should kind of think about going forward Natalie.

Michael Haines

I know last year we had some snow removal costs were accelerated a bit outside of that. Nothing I can think of no specific items.

Juan Sanabria

Okay. Thank you very much.

Operator

Thank you. One moment for our next question. Our next question comes from Craig Mailman with Citi. Your line is open.

Craig Mailman

Just to follow up on the the anchors to leases up, are you guys able to kind of start to put through any better escalators in these deals are as you guys get early renewals is that in the conversation now with some of these anchor tenants? Or is it still kind of more of the minimal bumps relative to what you had been shut?

Stuart Tanz

Well on the one anchor big anchor vacancy. We were able to get more term than usual come from the tenant and probably even higher rent because this particular tenant needed the space extremely badly on. It's a new concept and one that they need to get rolled out very quickly. So we sort of have the upper hand there in terms of negotiation of the balance of those spaces.
Rich, just in terms of the ordinary, you know, what you would ordinarily see from these tenants?

Richard Schoebel

Yes, I think the, you know, the ongoing increases is sort of historic, which is, you know, for an anchor tenant every five years, 10% to 12%. And you know, for our shop space, we're still around 3% annually.

Craig Mailman

Okay. And this new concept, is it kind of grocery? Is it new to the U.S. or just new to your markets? And what kind of what's the credit profile look like?

Stuart Tanz

Very, very, very strong from their already in the US in a pretty big way. But this is a brand new concept that our has proven to be a lot more profitable than their current inventory of stores.

Craig Mailman

And then just on the acquisitions, I know you guys got a couple of questions on this already, but just from what was in initial guidance from a timing and kind of spread perspective relative to your cost of capital, can you just give us a sense of what that was as a contribution to the range and what it shows how much sensitivity there is the acquisition market remains a little bit stalled here and things get pushed out to year end, like how much of guidance that we have just from the acquisitions piece.

Michael Haines

So we modeled, if I recall, I think it's $25 million out per quarter or a bit more than that or our initial guidance of $100 million to $300 million. So right, really going to depend on the equity market as far as availability for equity capital on that right now, returning our capital to support the acquisition side, so it's going to depend on how the market kind of evolves over the course of the year. Obviously, if rates may not make a change in favor than rates typically respond very positively. So that could impact our stock price. It would make it more accretive to use that as a funding source.

Stuart Tanz

But we're modeling around about a six and a half cash yield typically and on the acquisitions? And or is that the cost of capital for now on the acquisitions?

Craig Mailman

Okay. And what would be the cost of kind of the capital you're putting in there?

Michael Haines

I think on a blended funding where the equity prices have identified, Ryman for the acquisition guidance was going to have to come down if the market isn't doesn't become more favorable for us. So it just depends we kept the guidance in place because, as Stuart mentioned earlier in the prepared remarks, like, yes, things can change very very quickly in the markets, as you know. So it's kind of keeping guidance as it is for now. Lots of revisit that on the next call.

Stuart Tanz

Yes, Craig, I mean, the most important thing is as we are buying is to make sure that it's accretive to our current cost of capital. That's that's the critical point from a modeling perspective on So the good news is the acquisition that we made in the fourth quarter of last year as well as in what we've just bought, we believe is being done accretively day one Okay.

Craig Mailman

I was just trying to get at if there's enough things operationally that may be going better than expected, either bad debt or lease commencement timing that could offset if you have to lower the acquisition guidance or if that load acquisition guidance will be a net negative for the range, I guess is an easier way to put it.

Stuart Tanz

Yes. I mean, obviously, we can't predict the future as we're sitting here this morning, but we feel pretty comfortable on both sides of that equation. And I'll leave it. I'll leave it at that Craig.

Craig Mailman

Great. Thank you.

Operator

Thank you. One moment for our next question. And our next question comes from Wes Golladay with Baird. Your line is open.

Wes Golladay

I'll go back to the same-store guidance. The effect of a lot of eyes when favorable occupancy or the lease rate was down quite a bit, but the base rents were up. Is there anything one-time related such as the term income and that was the percent rent rent income now percentage rent?

Michael Haines

Because it's such an insignificant number in the grand scheme, we roll it up into a rental revenue. So it's kind of in base rents. The system wasn't meaningful enough to continue breaking out relative to the total revenue number. So that's where that sits now.
And as far as the guidance, like I mentioned earlier, that moves around from quarter-to-quarter, there was nothing in terms of the quarter that was unusual. I think there's just a number of positive effects. Base rent was up, bad debt was down, but other income was relatively flat to up. So there was no no one-time drivers only on a cash basis that I can think of.

Wes Golladay

Okay. And then where could you borrow today if you had if you had issued debt and does the cost of debt increase your willingness to do something strategic for the year end if it were to stay at current levels based on where the 10-year treasury sits today in current market spreads?

Michael Haines

It's going to be somewhere around 6% to 6.5%. And we'll have to see where that where the market goes for the balance of the year. The eyes are all on the Fed. And as far as the timing of our first rate cut or indication recap, that's going to drive some of this decision-making in that regard.

Wes Golladay

If it were to stay at that 6.5% level, though, how would you approach that? Would you issue long term debt? Would you maybe look to do a joint venture, more dispositions?

Stuart Tanz

What would the thought process be we're looking at all alternatives on from that perspective West. So the good news is we have some flexibility. We've been focused on these alternatives, obviously, um, but nothing to talk about on this call today.

Wes Golladay

Okay. And then can we get your latest thoughts on the Albertsons Kroger merger if they were to have to sell more assets or any negative benefits or potential positives with it to pay you fees or if they had to sell some of your assets or that bill, some of the grocers that were part of your portfolio?

Stuart Tanz

Well, I mean, look, we continue to communicate with Kroger and Albertsons and conduct business as usual, including renewing one of their leases in the current quarter and the first quarter of the year. Obviously, that's the discussions with the government are still ongoing. As you know, they're not yet in a position to disclose what specific stores are going to be sold as part of the merger. I think that's still moving around. So we haven't spoken with C&S, but you know, I it's tough today to sort of tell you whether it's negative or positive. What I can tell you is this last time we went through this in 2015 with Haggen, it turned out to be a very positive step for the Company. So, you know, we'll see what what happens as we get through the summer here, and that's sort of where things sit as of the merger on our call having our call today.

Wes Golladay

Okay. Thanks, everyone.

Stuart Tanz

Thanks.

Operator

Thank you. One moment for our next question. Our next question comes from Caesar Bracho with Wells Fargo Securities. Your line is open.

Cesar Bracho

Very good questions asked earlier, but I guess going back to the Yum. So the anchor, the anchors that vacated from us as we think about your occupancy going forward, like would you expect and some more anchor turnover sort of like like the one that happened this quarter or would you expect more stability going forward?

Stuart Tanz

So for the balance of 2024, there's some two anchor leases remaining that will expire this year. One of those is a Rite Aid where we have reached an agreement to extend it for another five years on the other is a 17,000 square foot space that matures in the fall and that tenant has notified us they're leaving. So we're in the process of retenanting that based and hope to have a tenant lined up before they vacate.

Cesar Bracho

Got it. Thank you. And how would that be with with respect to small-shop, would you see any sort of potential move outs that could impact your overall occupancy from the small shop?

Stuart Tanz

No small shop is sitting at about 96% right now. We expect that will be the range for the balance of the year.

Cesar Bracho

Okay. Got it. Thanks. And then quickly on the amortization of some of leases like was that jumped in this quarter? Was that related to, I would guess, the anchors that vacated during the quarter in a row, and then we'll have one anchor in Q1 you have left that didn't get expired, basically has one at least one anchor. It probably will normalize sort of on a go-forward basis. Is that a fair assumption?

Stuart Tanz

For prior year, that's more than typical. We'd like 2.5 million of the typical quarterly run rate.

Cesar Bracho

Got it. Thanks. One more quick one with respect to the other guidance item that you provided in last call like bad debt reserve interest expense and G&A, like will there are there any changes to those numbers or would you expect those to be the same so I would expect those to be the same.

Michael Haines

Yes, as we move through the year, I mean so we just put that guidance out at eight, nine weeks ago that was kind of early premature. I don't see any changes in those yet. And if there's anything that causes that to move, we'll provide updated guidance in the next call.

Cesar Bracho

Okay. Got it. Thank you for taking our questions.

Michael Haines

Thank you.

Operator

Thank you. One moment for our next question. Our next question comes from Paulina Rojas-Schmidt with Greenstreet. Your line is live.

Paulina Rojas-Schmidt

You mentioned sellers moving back to the sidelines. And I was wondering if you could provide some color on how you have seen and potential buyers behave. And I'm thinking in particular about institutional investors in shopping centers. And if you have seen any pickup in interest in this cycle as a result of other property types, apartments, office is facing weakening fundamentals?

Stuart Tanz

Yes. I mean, look, I can't really comment on other property types because that's not our focus nor our specialty. But in terms of shopping centers, let's say in the first quarter of the year, the buyers when when interest rates were lower than they were today, it did look like there were a number of buyers coming back to market. But as I said in my comments, over the last several weeks, as interest rates have moved quite higher or moved higher quite rapidly. We have seen a number of these buyers again move to the sidelines. So, you know, going forward, it will just depend on interest rates, capital flows. I don't see many institutional institutions coming back into the market yet a 1031, our market is active. And then there has been some shift from other sectors to retail from a buyer profile perspective. I think maybe that's really where your question was going. We have seen our buyers that were very heavily invested in industrial multi-family, certainly move to the retail side where today they, you know, feel I think that their investment is in a different place in terms of the cash flow and stability of that of the NOI., but more importantly, retail, given the strength that we're seeing out there has attracted more of these other buyers.

Paulina Rojas-Schmidt

Thank you. And then a question about the balance sheet. Your average debt maturity is the shortest or the second shortest in the strip center space. So I was wondering if you have the goal to increase that in average maturity and what level would make you comfortable or if you're comfortable where you are by far?

Michael Haines

It's like I think when we go back to the biomarker, we'll look to do a 10-year deal. We did the deal last September on a five year because we are everything with us like everyone else was expecting rates to start coming down as the market is where it is, and we'll come back to the market later this year. The goal is to do a 10-year fixed rate offering, which will push the maturity date or extend that maturity that out. And as we move through our debt refinancing stack will be looking to do long term fixed rate bonds on a 10-year basis.

Paulina Rojas-Schmidt

Thank you.

Michael Haines

Thank you.

Operator

Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again, One moment for our next question. Our next question comes from Michael Mueller with JPMorgan. Your line is open.

Michael Mueller

Two quick ones here. I guess what made the two disposition properties properties that aren't long-term holds and I may have missed it, but did you mention the types of users that you have for those four new anchor leases?

Stuart Tanz

Well, the anchor leases are national players. And in one location, we broke up the space to two regional players. In terms of the dispositions, yes, I mean, primarily of there, one is a single tenant property and the other is a property that we've actually owned for quite some time. We've completed a lot of lease up of the property, bringing in some really strong tenants. And you know, it's just one that we don't see a lot of future growth in. So from our perspective, it was time to sell it.

Michael Mueller

Got it. Okay. Okay. Thank you.

Stuart Tanz

Yes, thank you, Mike.

Operator

Thank you. I'm showing no further questions at this time. I would now like to turn it back to Stuart Tanz, Chief Executive Officer for closing remarks.

Stuart Tanz

Great. While in closing thanks to all of you for joining us today. As always, we appreciate your interest in ROIC. If you have any additional questions, please contact Mike Rich or me directly. Also you can find additional information in the Company's quarterly supplemental package, which is posted on our website as well as our 10 Q.
Lastly, for those of you who are attending the upcoming annual ICSC convention in Vegas, please stop by our booth, which will be in the south hall on level one, specifically booth eight zero seven. We hope to see you there. Thanks again and have a great day, everyone.

Operator

This concludes today's conference call. Thank you for participating.