Christy McElroy

Christy McElroy of Citigroup inquired about the potential for debt forgiveness from restructuring talks, whether a larger debt workout is being considered, and the company's position relative to its debt covenants, specifically the interest coverage ratio.

Answer

CEO Stephen Lebovitz stated the primary focus is on secured debt maturities in 2020-2022 and declined to comment on specifics regarding broader restructuring or unsecured debt. CFO Farzana Khaleel added that while the interest coverage ratio has declined, the company still has sufficient room and is actively working to improve it by reducing debt levels and interest expenses.

Christy McElroy inquired about the potential magnitude of debt forgiveness from restructuring talks and whether a larger, comprehensive debt workout was being considered. She also asked about the company's compliance with debt covenants, particularly the debt service coverage ratio.

Answer

CEO Stephen Lebovitz reiterated the focus on near-term secured debt maturities but declined to quantify potential outcomes of restructuring efforts. CFO Farzana Khaleel addressed the covenant question, confirming the company has sufficient room and is actively working to improve the coverage ratio by reducing overall debt and lowering interest expenses through strategic loan payoffs.

Christine McElroy of Citigroup inquired about the newly formed capital-allocation committee with Exeter Capital, its level of control, and the dividend policy for 2020, including the possibility of an annual payout and the impact of NOLs.

Answer

CEO Stephen Lebovitz clarified that the capital-allocation committee is advisory and will leverage the experience of new board members Michael Ashner and Richard Lieb. He confirmed the committee is a new mechanism to focus on financial strategies. Regarding the dividend, Lebovitz stated that preserving cash flow for redevelopments and debt reduction is the priority, and the phrase 'if any' was intentional. He mentioned that an annual dividend is a consideration for 2020, but no decision has been made, and NOLs are not expected to be a significant factor.

Christine McElroy of Citigroup, along with Michael Bilerman, questioned the formation and control of the new capital-allocation committee with Exeter Capital, the future dividend policy, and the costs associated with the Exeter agreement. They also asked if recent sales growth was influenced by survivorship bias from weaker tenant closures.

Answer

CEO Stephen Lebovitz clarified that the capital-allocation committee is advisory and leverages new board member Michael Ashner's experience. He stated the dividend policy prioritizes preserving cash for redevelopments and debt reduction, with a potential move to an annual payment. Lebovitz confirmed the costs for the Exeter agreement were not significant and that sales growth reflects both the removal of weaker tenants and organic growth from core retailers.