AHH
#Thank you.
They will make it.
Yes.
<UNK>, I'm going to turn that over to <UNK> to answer more specifically, but I can answer it from a 33-year perspective.
Over those decades, we've been through four recessions, we've been through booms, we've been through busts in the Mid-Atlantic and I can tell you consistently what always survives and thrives is commodity retail, particularly well-located, grocery anchored high-volume retail.
Those are lessons that were hard-won over a long period of time.
And so we are sticking with that axiom.
<UNK>.
It's no, yes and no.
So, <UNK>, we start by reiterating for ---+.
I appreciate the question, <UNK>.
I want to make sure that we reiterate this properly.
For the first 11 years of the existence of Town Center, we effectively had ---+ did not have any space to lease.
We had been at 99% occupancy on the office side for going on a decade and basically had to say no to every 5,000 foot tenant or expansion opportunity that came along.
When we built 4525 Main, the idea was to oversize it and have some flexibility for some time to come.
We frankly had expected that some time to come would have come a little faster than it has, but we're very comfortable having that space to lease.
The second part of <UNK>'s question, is it too pricey for the market.
That's a nuanced question.
It is intended to be the most expensive address in the region, a region of 1.8 million people.
And so therefore naturally some 80%, 85% of the tenants in the market are not coming to Town Center.
It takes those tenants that are willing to pay that premium in order to have that address, be it for recruitment, or clients or what have you.
So it's by design not going to be filled with the natural growth in the market.
And thirdly, the other no to that piece of the puzzle is that there is not a competing product in the region.
There are products that offer 20%, 30% cheaper rent.
We can't compete with that, nor are we interested in.
But that's about it.
Yes, good morning, <UNK>, it's a combination of a couple items.
One is, yes, holding on to those three properties through year-end.
The other is the addition of the Southshores acquisition.
And on top of that with you know, our NOI has performed ---+ or I'm saying, our properties have performed really well in the first six months, has added to that as well.
And we've also upped guidance on the construction company as well.
Yes, we had some nice cash pickups last year.
Part of it had to do with the re-tenanting here at Town Center.
We had the big law firm there, if you remember, that took to 15 year space and all that we had some free rent and moving periods and all that had the straight-line rent adjustment.
So we really started picking up some cash there in the retail re-tenanting that we did here.
We are not out giving guidance on same-store NOI, but we certainly hope to see it back at that level.
Again, for those of you on the phone, Mike and I have been telling people for a very long time, again, having that 33-year window of what goes on in our portfolio.
Our long-term, same-store growth is in the 2% range.
We've enjoyed significantly higher gains than that over the last couple of years.
But we would expect that that would return to the center line over the long haul.
Now again, of course, what's been added to that is, there are lease-up opportunities now within the portfolio that would augment that, but that's traditionally what happens in our markets.
It's an interesting questions.
It does open up more opportunities to acquire higher quality products.
But we are really reticent to change our strategy for a short-term ---+ what could be short-term.
The development pipeline is going to continue to be our main engine.
I think where you would see what you're speaking of manifest itself more, as Mike alluded to, was using that ATM even more robustly to allow for further development opportunities.
We're still getting rent increases, but we are seeing a lot more supply come on.
And that's not just at Town Center, as you suggested <UNK>, we're seeing it in our markets in the Carolinas, as well as that Baltimore-Washington Corridor, so obviously location becomes more and more important.
So we're still eking up here.
Again, just to reiterate, the A locations are going to stand the test of time and weather any storms that might be coming.
The rate of increase might slow, but I feel that they will ---+ and this is for here, for the Baltimore's Inner Harbor, for the Fort Meade area in Washington where we are, I think they are going to continue to grow albeit at a slower pace until that new supply gets absorbed.
But at Town Center, again, just this morning coming in to work listening on the radio, heard an advertisement for yet another apartment project that is one mile east of Town Center.
And my guess is it's a couple hundred bucks a month cheaper than being in Town Center.
That's going to continue to happen and probably accelerate, but we don't really feel a whole lot of that pressure.
Yes, on the retail side, again, we look for that 20% spread between wholesale and retail.
And obviously that's different for retail than it is for apartments and that's continuing ---+ it's going to continue to hold true here.
Thank you for your time this morning.
And thank you for your interest in Armada Hoffler.
We look forward to updating you again soon.
Have a good day.
